Professors Vedder and Gallaway provide a comprehensive examination of unemployment in the last century of American economic history, using a persuasive mix of Austrian theory (on money and business cycle), empirical methods, and narrative history. They show that government can produce all the unemployment it desires by intervening in the ability of the market to adjust wage rates according to prevailing economic conditions.
Why is this important? Unemployment is used to justify ever bigger government programs—-from national industrial policies to high military expenditures to a return to New Deal-type "make work" projects. Increases in unemployment are a predictable source of public disgruntlement with economic affairs, and a precipitating trigger of ever more government involvement.
Amassing a huge amount of data, and examining the full range of existing literature and research, the authors target Keynesian fiscal demand-management and show that such policies as minimum wages, labor controls, unemployment compensation, and welfare have played significant roles in generating joblessness. They further show that the policies of both President Hoover and President Roosevelt prolonged and exacerbated unemployment during the Great Depression.
"Not only has the state aggravated the problem of unemployment for Americans, it has done so differentially. The biggest losers from state intervention have been the very people that advocates of activism have claimed need the most help, namely nonwhites, women, and unskilled and inexperienced youths. The strong, skilled, and comparatively affluent have managed to adjust to state intervention, although not without cost. The burden of the welfare state has fallen inordinately on those it was supposed to benefit the most."
This 400-page book is a seminal contribution to Austrian literature that didn't receive nearly enough attention when it was published in 1993--and deserves far more attention today, not only from Austrians and people intersted in free-market thought but from anyone who is prepared to completely rethink the subjects of unemployment and business cycles.
The quality and rigor of the research makes it suitable for graduate study or individual research. But it is also well written enough to make a great read for anyone interested in the relationship between economics and human well being.
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Austrian Economics, Freedom and Peace