Economic Illiterates of the Great Depression
By Bryan Caplan
According to my paper on the idea trap, economic downturns reduce economic literacy. Just when people need their economic common sense the most, they open their hearts to the crackpots. Perhaps the best example is the Great Depression, when every breed of nut got his fifteen minutes of fame. The Economist’s Apprentice has just shined her spotlight on one of the worst, Father Coughlin:
His possession of something resembling a coherent monetary policy seems almost accidental given his economic illiteracy. Although he struggled with the little economics that he had in school, he felt confident enough to espouse a laundry list of crazy economic views. For example, he supported the proposed Frazier-Lemke bill, which would have the federal government purchase outstanding farm mortgages by printing billions of dollars in paper money. This would seem consistent with his desire for cheap money, but he actually argued this would not be inflationary because the new money would be backed by the mortgages. Like many others during the time, he believed that the government propping up wages would ease the economy out of recession.
An amazing thing about Coughlin is that as media demagogue, he was able to convince many listeners that he was an expert in monetary policy. At least early in his career, he even convinced quite a few senators and congressman, who petitioned that Coughlin be appointed as a U.S. delegate to the London Economic Conference. Later, he lost his reputation for economic expertise, as his rhetoric degenerated to anti-semitic conspiracy theories…
When I count my blessings, one of them is that I missed the Great Depression. The quality of economic thought is so much higher today that even our one-year-olds can run circles around the talking heads of the 30’s.