...Or what about the period after World War II? Twelve million American soldiers were coming home. Should we cut tax rates and spending, and let private markets expand to supply those jobs, or should we continue FDR’s losing strategy of massive federal spending on government jobs? Americans chose the free market approach–cutting federal spending by two-thirds and tax rates as well. Millions of jobs were created making a variety of products, including cars, refrigerators, and (soon) televisions.
Happily, we overrode chants for massive federal intervention that wafted through the halls of university economics departments after the war. Dr. Leo Barnes, chief economist for Prentice-Hall, summed up their view this way: “To raise employment to 60 million jobs and keep it there will demand even more thoroughgoing government direction of our economic life.” The good news, which my wife Anita and I describe in FDR Goes To War, is that in 1945 we chose more freedom rather than more government, and we beat back unemployment and ended the Great Depression. We could end the current recession by following the formula of 1945 and having less faith in government and more faith in freedom for our economy–cut Sarbannes-Oxley, Dodd-Frank. Obamacare, and the high corporate tax rate.
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