76-15-B6

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Economic Fairy Tales

Transcript Many decades ago the Fabian movement was born. Its purpose was to impose socialism on the world through gradual and silent encroachment. The Fabians believed that by achieving certain programs not perceived by the citizenry as socialistic the world would one day awake to find it had accumulated so many of socialism's goals that it might just as well go the rest of the way. So far, the Fabians have been pretty successful. And their success could be used as evidence that "gradualism" is the way to get things done. I'm sure the Fabians, however, didn't have anything to do with the gradualism which keeps those of us who want less government and more freedom from doing something about it. The gradualism I'm talking about is our tendency to believe that if we were to suddenly wipe out unnecessary and unwanted government programs chaos would result. Two years ago Leonard Reed, head of the Foundation for Economic Education, exposed the fallacy of this fear with three classic examples, Going back to the early 1930's -- the depression and New Deal days -- he reminded us of the National Industrial Recovery Act - know then as NRA. Its symbol was a blue eagle, which was a pretty shabby way to treat an eagle. NRA was fascism pure and simple - government control of business and industry. Their courage destroyed by the traumatic experience of the 1929 crash and the depression that followed, business and industrial leaders embraced NRA. But after a year or two of government interference the honeymoon was over. Business wanted to rid itself of the political monster. But, gradually they were convinced that to end it suddenly would wreck the economy. Then, in May, 1935, the Supreme Court declared the Blue Chicken (no one called it an eagle anymore) unconstitutional. As of that moment every provision of NRA was abolished. There was no chaos. The economic indicators started upward and, though the depression would continue until World War II, business was better not worse. Reed's second example came with V.J. day and the end of World War II. President Truman greeted the news of victory by ordering cancellation of all war contracts. They amounted to $45 billion. He was told that would ruin the economy. He replied, QUOTE: "Cancel them". UNQUOTE. Telegrams were sent, ordering all contractors to halt all production. There was no pandemonium, production of long-denied consumer items took over and again the economic indicators moved up. No one went bankrupt and there was full employment. Third example was also postwar. The allied command in Germany had imposed Keynesian economics and all manner of controls on the German industrial complex. They chose Dr. Ludwig Erhard as their German economic adviser. Then, one Sunday evening, Dr. Erhard went on nationwide radio and announced, "Beginning tomorrow morning all wage, price and other controls are off". The allied planning commission told him he could be imprisoned for such an unauthorized action. They said, "You have modified our controls". He denied this. He said, "I haven't modified your controls; I have abolished them". He was ordered to appear before the Allied Commander, our General Clay, who (bless him) told Erhard he was the economist and he would have the General's backing. We all know that chaos and disaster did not result from the Doctor's unprecedented action. An economic miracle did -- the recovery of West Germany that astounded the world. So much for gradualism. This is Ronald Reagan. Thanks for listening.		Details Batch Number 76-15-B6 Production Date 06/15/1977 Book/Page RPtV-168 Audio Youtube? No
		Added Notes West Germany, in a Decade, Works an Economic Miracle, includes the quote about Erhard abolishing price controls