Book review: Meltdown by Thomas E. Woods Jr.

Meltdown, released in January 2009 by Thomas E. Woods Jr., is subtitled “A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.” If that isn’t enough to hint you at the author’s views, the top of the book proudly pronounces “Foreword by Ron Paul” and the back of the book contains nothing but an excerpt from the aforementioned forward with the words “Ron Paul” being the largest on the page. The dedication of the book is to Murray Rothbard and Ron Paul, “who told the truth.”

I must admit that the people marketing this book did their job well because I ended up noticing this book at the bookstore due to all of the things mentioned above despite the growing number of new releases about the current state of the economy. Meltdown stood out because none of those other books have a foreword by Ron Paul.

The inside front jacket of the book starts by asking the question “Is Capitalism the Culprit?” The obvious answer is: of course not. The book covers an expected range of topics, including how we got into this mess, with chapter titles of “How Government Created the Housing Bubble,” “The Great Wall Street Bailout,” and “How Government Causes the Boom-Bust Business Cycle.” One particularly insightful passage in a section titled “The folly of public-works stimulus” rings true regarding the recent economic stimulus package passed by Congress:

Government … has no non-arbitrary way of knowing how much of something to produce… Private firms use a profit-and-loss test to gauge how well they are meeting consumer needs. If they make profits, the market has ratified their production decisions… If the post losses, that means they have squandered resources that could have been more effectively employed on behalf of consumer welfare elsewhere in the economy. Government has no such feedback mechanism, since it acquires its resources not through voluntary means, as in the private sector, but through seizure from the citizens, and no one can choose to buy or not to buy what the government produces with those resources. The purpose of production on the market is to satisfy real consumer demand; politically motivated and economically arbitrary diversions of resources do absolutely nothing to set the economy on a long-run path of accomplishing that. So these projects squander wealth at a time of falling living standards and a need for the greatest possible efficiency with existing resources.

If you are already familiar with the details of many of Ron Paul’s economic views or the Austrian School of Economics and the writings of Ludwig con Mises and Murray Rothbard, then Meltdown is helpful in applying that ideology to the current state of economic affairs. If you are not familiar with any of the above, Meltdown provides valuable insight into the true reasons behind the current economic crises. Those reasons have nothing to do with the failure of the free markets and everything to do with government intervention and manipulation of the money supply by the central bank (federal reserve).

Rating: 9 out of 10.