The crash the government made worse
On October 24, 1929, the NYSE lost 11 percent at the opening bell. The standard narrative: market failure. Friedman and Schwartz spent a decade examining the Fed’s response and reached a different conclusion. The crash was ordinary. The depression was manufactured — the Fed allowed the money supply to contract by a third. The market broke a leg. The government amputated it.
For every crisis attributed to capitalism, we can show you the government fingerprint on the detonator. 2008 was caused by government-sponsored enterprises, ratings agencies under regulatory mandate, and a Fed holding rates at 1 percent. The response was Dodd-Frank — 2,300 pages that consolidated the largest banks and crushed community banks that had nothing to do with mortgage-backed securities.
What the Nordic homework actually says
The social democrats point at Denmark. We have read the homework. Denmark’s corporate tax rate is 22 percent — lower than the pre-2017 American rate. No minimum wage. Among the freest business environments on earth. The American left wants the safety net without the free-market foundation and without the 25 percent VAT. They want Denmark’s net and France’s labor rules, which gets you France’s unemployment rate.
Tariffs are the current test. The 2018 steel tariffs saved 1,800 jobs in steel and cost 75,000 in steel-consuming industries. For every steelworker saved, forty-two workers elsewhere paid the price. The trade deficit is arithmetic, not a crisis.
We wish everyone would read the caveats our tradition actually includes. Friedman supported a negative income tax. He understood the greatest threat to free markets was crony capitalism — regulations written by the regulated.
Where we concede ground: Real wages for non-supervisory workers stagnated since the 1970s despite massive deregulation. We owe Youngstown more than a lecture.
What would change our mind: Comprehensive deregulation producing accelerated monopoly and wage suppression rather than competition.
Read the full synthesis: Is capitalism broken?