Thomas Sowell - Page 2 - ThisIsCommonSense.org

When you don’t know what to do, the thing to do is nothing.

Well, maybe.

Economist Thomas Sowell, in a recent column, notes that we recovered from downturns in the economy more quickly before the federal government took it upon itself to fix things. The first major fix was with the Great Depression. Which dragged on and on.

Today, our leaders have spent trillions of borrowed money to fix the economy, with poor results.

Sowell’s column is great, right up until near the end, when his plea for politicians to “do nothing” ignores a lot of … something.

After the huge 1987 stock-market crash, he explains, President Reagan did nothing. But then “the economy rebounded, and there were 20 years of sustained economic growth with low inflation and low unemployment.”

But were those 20 years really so benign? Activity by presidents, by Congress and most of all by the Federal Reserve set up the systemic problems that led to the Crash of 2008. Consumer price inflation was low during Sowell’s Reagan-blessed period, but all the while the Fed was feeding first a dot-com bubble and then a housing bubble. And it engaged in a series of bailouts of financial institutions.

Maybe Reagan and later politicians didn’t do enough in the “do nothing” department. They should have reined in (or abolished) the Fed. They should have abandoned “too big to fail.” They should have stopped subsidizing creditors in busts and home-owners in booms.

This is Common Sense. I’m Paul Jacob.

The New York Times offers summer internships at $900 per week. From what I’ve gathered, most other editorial and journalistic internships don’t pay nearly that much.

Many pay nothing.

So why would anyone work for nothing? Well, for experience.

Thomas Sowell, in his recent book Applied Economics, tells the story of a young man named Frank, who applied for a position in a retail store and got it. When he asked about his wages, his employer said, “Pay you! You don’t expect me to pay you, do you? Why, you should pay me, for teaching you the business!” This, as Sowell notes, seems harsh, exploitative: Three months of hard work without pay.

But Sowell asks “Who benefited most?”

The answer is the young Mr. Frank Winfield Woolworth, who went on to found a retail empire, eventually hiring his old boss, the same man who wouldn’t pay him. But the old man sure did teach Woolworth the business.

Unfortunately, such relationships are illegal. “Convinced that many unpaid internships violate minimum wage laws,” the New York Times relates, “officials in Oregon, California and other states have begun investigations and fined employers.” The regulators’ campaign against internship programs is now going nationwide.

Bottom line: No more Woolworths.

Sure, the Woolworth chain died long ago. What’s left of the company is called Foot Locker. But I’m talking about future innovators, future Frank Woolworths.

Which makes this crackdown a prime example of a counter-productive policy.

This is Common Sense. I’m Paul Jacob.