Thursday, January 10, 2019

Did Thomas Sowell at Age 86 Become a Rothbardian?

Thomas Sowell
This is pretty amazing.

In the clip below (at the 1:30 mark), Thomas Sowell starts to discuss the Warren Harding administration and points out that in 1921 and 1922 he did absolutely nothing to attempt to revive the economy and that it recovered rapidly without such government interference (There was however Fed money printing.-RW note)
Sowell then goes on to state that the next downturn in a business cycle occurred in the 1930s, when both Herbert Hoover and FDR intervened.

This is right out of Murray Rothbard. He wrote in America's Great Depression:
In In the 1920–1921 depression, government intervened to a greater extent, but wage rates were permitted to fall, and government expenditures and taxes were reduced. And this depression was over in one year—in what Dr. Benjamin M. Anderson has called “our last natural recovery to full employment.”
Laissez-faire, then, was the policy dictated both by sound theory and by historical precedent. But in 1929, the sound course was rudely brushed aside. Led by President Hoover, the government embarked on what Anderson has accurately called the “Hoover
New Deal.” For if we define “New Deal” as an antidepression program marked by extensive governmental economic planning and intervention—including bolstering of wage rates and prices, expansion of credit, propping up of weak firms, and increased government spending (e.g., subsidies to unemployment and public works)—Herbert Clark Hoover must be considered the founder of the New Deal in America. Hoover, from the very start of the depression, set his course unerringly toward the violation of all the
laissez-faire canons. As a consequence, he left office with the economy at the depths of an unprecedented depression, with no recovery in sight after three and a half years, and with unemployment at the terrible and unprecedented rate of 25 percent of the labor
Hoover’s role as founder of a revolutionary program of government planning to combat depression has been unjustly neglected by historians. Franklin D. Roosevelt, in large part, merely elaborated the policies laid down by his predecessor. 

Now, Sowell is certainly a capable enough scholar to do the research on his own and come up with the same conclusions as Rothbard, but it is fascinating that they are both coming up with the same conclusions.

He also indicates in the clip that he is no Keynesian by clearly stating that "it drives Keynesians crazy" when the Harding-type policy is implemented where government spending is cut during a downturn.

The clip closes with Sowell stating that there have been more extremes with regard to the business cycle, price inflation and unemployment since the Fed entered the picture than before that.

Pure Rothbardian analysis.

I follow Sowell pretty close, but he is very prolific, so I don't catch everything he writes or says but I believe this is the first time that he has expressed his thinking in a very Austrian business cycle school manner.

The interview appears to have taken place when Donald Trump was running for the presidency and Barack Obama was president, so around 2015-2016. Sowell would have been around 86.

So Sowell may have turned Austrian in his 80s.


1 comment:

  1. He's called to end the Fed as well (this is from 2010):

    Milton Friedman also called to end the Fed towards the end of his life