“What bothers me,” President Obama told the graduating class at the University of Michigan last month, “is when I hear people say that all of government is inherently bad.” Only anarchists think all of government is inherently bad. Government has a useful constitutional function in protecting contracts and providing for the national defense. We need a government strong enough to protect our private property.
The problem is when government oversteps its constitutional limits and politicians try to micromanage the economy. That is where President Obama and the Founders disagree. President Obama in his speech defended the government’s interference in railroad building and in the Great Depression. “When we needed a way to reach the Pacific, our government helped build the railroads,” the president boasted. Then he added, “When the markets crashed during the Great Depression, and people lost their life savings, our government put in place a set of rules and safeguards to make sure that such a crisis never happened again.”
Wrong on both counts. The Union Pacific and Central Pacific were poorly built railroads, they went broke, and both cost the nation over $60,000,000 to build — a sum higher than the total national debt just a decade before they were built. By contrast, the Great Northern Railroad, which was built with private money by James J. Hill, never went broke and was arguably the best-built railroad in the nation.
On the Great Depression, government intervention did not rescue the nation. The U. S. had more than 20 percent unemployment in 1939, toward the end of FDR’s second term. On the contrary, government intervention — through the Smoot-Hawley Tariff, the Farm Board, and the income tax hike to 63 percent on top incomes — triggered the depression, and FDR perpetuated it through failed stimulus packages and higher taxes.
Because President Obama, and many others in his administration, do not understand American history, we seem destined to repeat it. President Obama addressed his historical confusion on a college campus; when a better and more accurate version of the American past reaches those campuses, we can raise up a new generation that appreciates the Founders’ dedication to limited government and individual liberty.