Why did the recession of 1929-30 turn into the Great Depression? A major reason ws regime uncertainty. (See previous posts on this subject.) Roosevelt said that businessmen as a class were “stupid.”
He threatened to confiscate their assets and to dictate how they could behave. This frightened private capitalists -- why invest if the government is simply going to expropriate your returns? In addition to restricting the behavior of private businesses, in 1932 taxes were raised by the largest percentage in American history. State govts followed suit. The taxes, the government spending and debt added to the regime uncertainty did nothing but extend the length and depth of the depression.
Today, we are seeing an analogous but perhaps worse intervention on the part of government.Obama refers to “greedy” and “stupid” Wall Street types and he and Pelosi call insurance companies evil. But starting tonight, things are bound to get worse. President Obama is making a national speech on the BP well disaster. I suspect he is going to threaten BP, perhaps even expropriate assets as he demands they put money into a fund the government can use to compensate victims and others and not to pay a dividend and to bear higher taxes. In addition, he is likely to tax all oil compenies to create some huge special emergecy fund.
Mr Obama has been touring Mississippi, Alabama and Florida, on his fourth visit to the region since the spill. He has promised Americans living on the Gulf of Mexico that their beaches would be restored to pristine condition, vowing that he would bring full force to bear on BP to pay for the damage from oil pollution. If this Administration destroys BP and penalizes other private companies, why would any foreign firm do business in America? Why face the highest corporate taxes in the developed world and also fear your assets will be stolen by the government?
Obama said, "Beyond the risks inherent in drilling four miles beneath the surface of the Earth, our dependence on oil means that we will continue to send billions of dollars of our hard-earned wealth to other countries every month - including many in dangerous and unstable regions." "In other words, our continued dependence on fossil fuels will jeopardise our national security. It will smother our planet. And it will continue to put our economy and our environment at risk.
His remarks followed comments in which he said the ongoing oil spill would change the way the US thinks about energy forever - comparing the effect of the disaster on the environment to the way 9/11 shaped US security policy. But, he hasn't commented on the obvious that regulations forced BP and other companies 50 miles offshore and drilling miles below the sea level. Drilling on land would have been so much less expensive and so much less damaging to the environment.
There is no cost efficient energy available other than fossil fuels. The Aministration's attempt to force it to be otherwise will, as Obama said, necessarily cause electricity prices to skyrocket.
Perhaps the worst aspects of this crisis, is the Obama Administration's policy of not letting a good crisis go to waste. The Administration believes now is the time to push through the cap and trade bills and to limit what oil companies can do. It is one large step for socialism and one massive move away from liberty.
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