We Get Bad Analysis when Statists Write Economic History
Experts-Seek out the most complex and sophisticated minds, put them in a room together, and have them ask each other the questions they are asking themselves, who will be right, and who will be wrong?
When major changes occur, especially if they’re bad, people generally will try to understand what happened so they can avoid similar bad events in the future.
This is why, when we’re looking at major economic events, it’s critical to realize that narratives matter.
For instance, generation after generation of American students were taught that the Great Depression was the fault of capitalism run amok. But we now have lots of evidence that bad government policy caused the Great Depression and that the downturn was made more severe and longer lasting thanks to further policy mistakes by Hoover and Roosevelt.
The history textbooks are probably still wrong, but at least there’s a chance that interested students (and non-students) will come across more accurate explanations of what happened in the 1930s.
More recently, the same thing happened after the financial crisis. The statists immediately tried to convince people that the 2008…
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