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20130407 Coolidge – the last president of limited government



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It is quite interesting that the author of eyes opening book about malignant mutation of American society into big government society during the Great depression (The Forgotten Man) decided to write book about Calvin Coolidge – the last American President who presided over a mostly limited federal government. I think it is a very important book because it brings to light results of amazingly successful experiment in limited government, especially in tax policies of low rates of taxation and economical policies of doing nothing and allowing market to resolve problems created by economic cycle without throwing in monkey wrench of government intervention.

It is especially interesting because the successful experiment was conducted just before tsunami of XX century big government was about to engulf United States denying its people for generations many opportunities of private enterprise despite the fact of even the big American government being relative benign especially if compared with big governments of Fascist Italy, Nazi Germany, Communist Soviet Union, or China.

I have no doubt that Coolidge would be quite amazed if somebody told him that he is conducting experiment. He would be vehemently denying it and insist that he is just conducting regular conservative policies of not interfering in complex things that one does not understand. He would probably concede that his tax rate decrease policy is somewhat experimental, but would insist that it based on scientific taxation ideas of Andrew Melon which are not really that experimental, but rather follow accumulated business knowledge of human economic behavior. The resulting increase in tax revenues confirmed that this knowledge was correct.

Few people know that American economy had a pretty big dive in the beginning of 1920s with Harding and Coolidge doing nothing. Consequently economy moved into roaring 20s fixing itself without government intervention resulting in tremendous increases in productivity and volume. The after Coolidge activist government of Hoover and then triple activist government of FDR coincided with pain and suffering of great depression.

Certainly coincidence does not mean cause, but activist government in economy always reminds me my childhood experiences with poorly manufactured Soviet TV – when it stopped working a few fist hits on the side would make it come back to life. It would work for a while, but then stop again and after a number of iterations would completely die.

The lesson is that if one deals with more or less complex things that one does not completely understand, the proposition of using fist or hummer or stimulus maybe not be a very good idea especially when this thing is complex self-adjusting market economy rather then simple TV of 1960s design. Calvin Coolidge understood this, but his intellectually inferior, but supremely arrogant successors did not and still do not.

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