I’ve just come across a, frankly, horrific opinion piece posted at GMU’s History News Network, I don’t have much time to express my fury at the moment, but let’s take a quick look. The author, Robert Brent Toplin argues that there is a parallel between our current financial “crisis” and America just before the depression of the 1930s. He states:

One element in the story of the Depression that began in the late 1920s, however, strongly resembles the emerging narrative about economic problems in our own times. In both 1929 and 2008 there was an absence of effective regulation for purposes of promoting sound business practices.

To be clear, today there is anything but an absence of “regulation” (or more properly, interference) by the U.S. government. Further, the above claim is doubly foolish, for the tipping point of our modern “crisis” seems to have been the recent failures of both Fannie Mae and Freddie Mac. Fannie and Freddie were originally created by FDR as a part of the New Deal to remedy the depression of the 1930s both have remained under Uncle Sam’s thumb as GSEs.

Toplin complains that there is no effective regulation, true, but he, for some reason, thinks that more regulation is the answer. I don’t see why? Aren’t Fannie and Freddie government monstrosities to begin with? They are. Mr. Toplin would be holding a torch with an angry mob outside of Dr. Frankenstein’s laboratory demanding that the monster be restrained, sedated and permenantly institutionalized, then Mr. Toplin would advocate for a repeat of the Dr’s experiement, but this time, he will demand, it should be more “effective.”

Toplin continues:

Decisive action by leaders from the Fed, Treasury and Congress may save America and the world from the kind of disintegration that plagued U.S. and global markets in the 1930s, but the factors that triggered economic shocks in 1929 and 2008 are strikingly similar.

This guy is delusional! The New Deal was nothing but random (but decisive) actions! Those actions caused the depression of the ’30s to hit America harder and for a longer period of time than it likely would have otherwise.

Americans are now asking how the sub-prime mortgage debacle got so far out of hand during the years when various market analysts told the public that the American economy was fundamentally sound.

Yes, because government bureaucracies had been lying to them because the HUD was pressuring Fannie and Freddie to get people in homes that they couldn’t afford. Great job, fellas.

Americans of the Depression era raised the same question.

By god… people asked questions in both cases, the similarity is uncanny.

Let me quote Don Boudreaux from Forbes.com:

Not surprisingly, many pundits and politicians are comparing today’s economy to that of the Great Depression. There are a few similarities. But–so far, at least–the differences outnumber the similarities.

The most obvious and important difference is in the labor market. While today’s unemployment rate of 6.1% isn’t sterling, it is magnitudes lower than the double-digit rates (as high as 25%, in 1933) of the Depression. Unless and until this rate reaches, say, 15% or higher, comparing today’s economy to that of the 1930s is a hysterical exaggeration.

Another difference is trade policy. Compared to the Great Depression, America today is far more integrated into the global economy. Consequently, our economic eggs–our customers, suppliers and investments–are in a greater number of baskets. We’re not as dependent now as we were 75 years ago on a recovery starting in America.

And despite the heated protectionist rhetoric of late by some prominent politicians, the post-World War II trend of increasing free trade is unlikely to be reversed. This fact is vital. One of Uncle Sam’s first moves following the market crash of 1929 was to enact the Smoot-Hawley tariff. This unprecedented hike in tariff rates told the world “America is closed for business!” Less able to sell products to Americans, foreigners earned fewer dollars with which to buy products from Americans.

The resulting contraction of cross-border trade, combined with the waste of keeping inefficient domestic producers in business, only deepened and prolonged the Depression.

Perhaps the greatest difference between now and then, though, is something simultaneously nebulous and quite real: the prevailing ideology. From the late 19th century until the 1970s, a dangerous idea took hold of the minds of intellectuals and opinion-makers throughout the world: socialism. And the grip of this disastrous, economic-growth-killing idea was strongest during the 1930s.

Apparently folks like Mr. Toplin are all too eager to make that comparison.

Toplin concludes:

It appears that we need a modern update of that governmental activism today to establish greater financial security.

No doubt, Toplin is in favor of more numerous and more comprehensive government regulation and involvement in American business. Let’s hope Toplin and his ideological brethren find many occasions to be proved wrong and disappointed.