It happened today - October 24, 2015

CrashOK, this is a bad one. October 24th 1929, “Black Thursday,” was the start of the Great Crash that triggered the Great Depression, Keynesian economics, economic nationalism and neglect of foreign problems that helped bring World War II, the welfare state and the political domination of the left. On the whole a pretty bad day.

Except that sequence isn’t strictly true. In fact Black Thursday was a bad day on the stock market, a long-overdue correction of a speculative frenzy that did trigger an economic slump. But as for the long-term consequences, well, don’t blame ticker tape.

When the economy collapsed, Herbert Hoover was president and conservative Republicans dominated Congress. And, legend has it, they did exactly what conservatives would do, being callous and stupid: Nothing. So the situation got worse until American voters came to their senses, elected that wonderful FDR and finally got big government and we all lived happily ever after.

Now here’s what really happened. In a crisis, the noted progressive Herbert Hoover leaped into frenzied action, prevailing on Congress to pass the biggest tariff increase and the biggest income tax increase in American history. The economy tanked, the other guys got elected, and began a frenzied program of intervention that was an economic disaster but a political bonanza.

Tax and tax, spend and spend, elect and elect, as one uncharacteristically frank member of FDR’s “brains trust” put it. And they did, even though the Great Depression lasted over a decade in the face of this inappropriate medicine, trade restrictions crippled international trade and helped launch Japan’s drive for a Greater East Asia Co-Prosperity Sphere (translation: conquer and torture everyone within reach).

The Republicans did not recover from the political devastation of these events until, of all things, the 2014 elections. What 2016 holds we do not of course know. But if they’d stood their ground in 1929, as they had in downturns in the 1920s and earlier, it all might have blown over.

That’s the real story of Black Thursday and it confirms that most prescient advice from the Hitchhiker’s Guide to the Galaxy: Don’t Panic.

Conservatives take heed, and do not race to the left in the face of every setback real or imagined. It does not work out.