Peter Boettke has an excellent commentary over at Coordination Problem, “Is This How the Myth of the Laissez Faire Herbert Hoover Was Invented?”. He concludes, “Herbert Hoover was as much of a laissez faire president as Barack Obama has been or the leaders in Europe have been. From a free market perspective, the steps taken since 2007 have turned a market correction into an economy wide crisis and then a global crisis. Those steps were anything but ‘do nothing,’ and they were taken first by a Republican President and then pursued further by a Democratic President. We have never given ‘nothing’ a chance. But mythologies need to be created in order to tell neat historical tales. Laissez faire Hoover is replaced by activist FDR and the nation is saved.”
Pierre Lemieux in Somebody in Charge: A Solution to Recessions? provides a detailed and enlightening discussion of how the issues Peter raises in his post played out in the recent crisis. Policy failure, not market failure generated the malinvestments and crisis. The rush to do something slowed recovery.
From my review essay (pdf available on request), in The Independent Review “A Crisis of Authority: Pierre Lemieux’s Somebody in Charge: A Solution to Recessions?, the SUMMARY”
“The roots of the recent financial crisis, according to economist Pierre Lemieux, lay not in greed and self-interest running amuck in unhampered markets, but in the policy and regulatory structure that created and enabled excessive leverage and risk taking. If Lemieux’s latest book were widely read, more people would believe that financial regulators and central banks are not needed to avoid financial crises and economic recessions.
And the conclusion:
“Lemieux’s conclusion that “The causes and legacy of the economic crisis of 2007-2009 reveal a deeper underlying crisis, which is a crisis of authority” (p. 162). If this book was widely read and widely used in classrooms, it could be very useful in awaking more of the public that we do not need somebody in charge. What we need is ‘Wicksteed’s car of collectivism’ to ‘be stored on a sidetrack” (p. 163).”