Government broadcaster PBS is running a new, five-part series on a subject naturally interesting in our time: American Experience: The 1930s. Episodes are available for online viewing here.
The program is just what one would expect from PBS: earnest, well-researched, skillfully presented, and eager to lick the boots of government while criticizing individual freedom for everything wrong in the world, S. T. Karnick writes.
There are two main lessons to be learned from the Depression, in my view:
- The government causes business cycles and downturns through its erratic, manipulative policies intended to benefit powerful voting blocs at the expense of those less able to fight back. The market works when left alone, and government interference should be limited to redressing actual harms done by one party to another. This includes combating fraud, enforcing valid contracts, and setting clear but liberal guidelines for transactions made across political borders. And nothing more.
- The Great Depression brought on a cultural conservatism and moral regeneration of the American people. This is an aspect of the era which few people seem to understand. It was in the early ’30s, for example, that the movie industry was finally badgered into imposing a Production Code ensuring all widely distributed films would conform to a set of standard plotlines, language restrictions, and limits on visual sensationalism (a move which undoubtedly had salubrious results but was probably unnecessary given the change of public taste in a more conservative direction; in addition, the movie studios engaged in it voluntarily, even if under the threat of state regulation; thus the Code was surely less drastic, damaging, arbitrary, and politically controlled than it would have been if imposed by government). During the 1930s the American people revolted against what they saw as the social and cultural excesses of the 1920s just as strongly as they did against what they saw as the economic excesses of the time. Earnestness and attention to the political, economic, and moral implications of human action were on the rise in all media. Breaking economic and political corruption was a major concern of the American culture.
The Great Depression was widely seen at the time as a punishment for the economic, social, and moral changes of the 1920s, when the nation had moved in a more classical-liberal direction affording greater economic, social, and personal freedom. The Roaring ’20s were seen in retrospect as a time of excessive license in all things (which they indeed were in some cases), and the Depression was viewed as an understandable payment that had to be made–the hangover after the party.
Thus the nation decided to swear off the booze of individual liberty altogether. As a cure, the people turned to government control of the economy and tighter moral strictures against individual freedom. If this sounds like today’s regnant political agenda, that’s because the two are indeed identical in means, motive, and opportunity. And they are both criminal in their stupidity.
I believe that both the moral reaction and economic impositions of the Depression era were overwrought and unnecessary, but the moral reaction was the more justifiable of the two because it largely avoided using government force for its implementation. As a result of its relatively voluntary, organic nature, the moral response to the Roaring ’20s managed to do some good, as noted above, while refraining from doing much harm.
Of the economic puritanism of the time, the very opposite was true. That is the way of government action.
Given PBS’s track record as a diehard advocate of a statist, progressivist agenda, it should surprise no one that the American Experience series refuses to incorporate liberal notions such as these, choosing instead to smother the truth in a miasma of irrelevant moralization.
Right at the beginning of episode 1, "The Crash of 1929," the narrator refers to "the promise and the illusion of the 1920s," setting the moralistic tone of the episode. Immediately thereafter, the noted statist economist the late John Kenneth Galbraith is shown saying, "Let us not think for a moment the illusion, the aberration of the 1920s is unique. It is intimately a part of the American character."
In other words, people will go mad if not constrained by a gigantic, all-powerful benevolent government. We are undoubtedly supposed to be grateful for the warning.
Immediately thereafter, two commentators criticize the lovely Irving Berlin song "Blue Skies" as emblematic of the 1920s "illusion" that freedom was a good thing. The machinations of stock market manipulators in the decade are limned in some detail, and the commentators explicitly condemn the lack of government regulation.
What they do not note is that fraud of the sort described in this part of the program is illegal now and was illegal then. Thus while the perpetrators of such actions were morally responsible for their wrongs, from a social perspective the real culprit behind such market manipulation was in fact the government, in failing to perform its basic function of preventing fraud, enforcing valid contracts, and otherwise preventing people from harming one another.
Indeed, a commentator in the program explicitly states that such manipulation was legal at the time, which is quite wrong and would be deceptive even if true. Yes, it was the case that there were no specific laws explicitly criminalizing a variety of particular manipulative actions in the stock market, but those acts were fraud and could have–and should have–been prosecuted under existing laws. In addition, the failure to have laws preventing such fraud would be a failure of government criminal law, not of economic policy.
Economic regulation, however, is the agenda here, and every possible means is used to argue for it. The episode briefly criticizes New York Mayor Jimmy Walker for his fiscal imprudence, but the moment is conveyed as a critique of 1920s excessive exuberance and liberality, not as a matter of government corruption and a failure of government to do its duties.
Similarly, the role of the Fed in the 1920s bubble (which it fed by debauching the currency) and in the subsequent Depression (which it created and prolonged by by tightening the currency far too much and excessively interfering in the markets, thus preventing the needed corrections from occurring) is alluded to but presented in moralistic terms, as another example of excessive liberality followed by a painful but necessary corrective action.
Individual investors are likewise presented in moralistic terms, depicted as greedily and foolishly chasing after "the one lucky break," as one person puts it. One is given no understanding of how the investors’ actions could in fact have seemed at the time to be rational, not speculative. The reality is that, then as now, an individual must look at the possible returns and risks involved in investing one’s money and also in not doing so. If the government reduces apparent risk to zero–as the Fed did during the 1920s and 2000s–what on earth does one think investors will do but continue to invest in a wide variety of ventures based on increasingly risky foundations?
This is what happens in all bubbles, and it is what happened in the most recent one, but American Experience refuses to acknowledge this critical fact. Thus here too a failure of government is elided and its effects blamed on the allegedly free choices of individuals in an allegedly underregulated market.
Tellingly, as the program describes the stock market crash of 1929 and the events that led up to it, nothing about Fed policy or the money supply is mentioned. Yet the Nobel Prize-winning economist Milton Friedman has convincingly argued that the manipulation of the money supply caused both the bubble and the bust. That particular truth, however, does not contribute to and in fact contradicts the program’s agenda for government power and against individual liberty. Thus it, too, is redacted from the story.
Near the end of the episode, Galbraith blames it all explicitly on the investors–the "suckers" as he crudely and callously calls them–and says that such crashes happen every twenty or thirty years because that’s how long it take
s for the "suckers" to forget that their earlier greed and foolhardiness led to disaster. The alternative explanation–and the true one–is not given any attention: that every twenty or thirty years the government’s renewed manipulation of the economy as a means of buying votes results in disaster.
The program concludes with an argument that what the stock market crash taught Americans was a great lesson in humility. Certainly that was the lesson that the American people took from it. The real lesson, however, is that governments’ attempts to manipulate the economy always bring catastrophic consequences in time.
Of course it’s true that many people did many bad things both in the stock market and in other areas of human endeavor in the 1920s. But that’s always the case, human beings being what we are. What was different about the 1920s and ’30s was the choices government made, and the consequences were world-changing.
The real moral failure to be found in American Experience: The 1930s is in many people’s continual refusal to recognize that freedom of choice is a good, and coercion an evil, regardless of who is doing which.
–S. T. Karnick