Herbert Hoover’s Anti-Market Policies Helped Turn an Economic Downturn into a Great Depression

June 30, 2014

Phineas Fahrquar:

One of the things that opened my eyes to how badly History is taught in our schools was the realization that, far from being the laissez-faire conservative progressives made him out to be, Herbert Hoover was himself a statist whose policies helped turn a sharp recession into the Great Depression. Mitchell provides a good overview, including a must-see video from Prager University.

Originally posted on International Liberty:

There have been many truly awful presidents elected in the United States, but if I had to pick my least favorite, I might choose Herbert Hoover.

I obviously have disdain for Hoover’s big-government policies, but I also am extremely irritated that – as Jonah Goldberg explained – he allowed the left to create an utterly bogus narrative that the Great Depression was caused by capitalism and free markets.

Indeed, the Center for Freedom and Prosperity produced a video demonstrating that the statist policies of both Hoover and Roosevelt helped trigger, deepen, and lengthen the economic slump.

Building on that theme, here’s a new video from Prager University that looks specifically at the misguided policies of Herbert Hoover.

Amen. Great job unmasking Hoover’s terrible record.

As I explained when correcting a glaring error by Andrew Sullivan, Hoover was a big-government interventionist. Heck, even FDR’s inner circle understood that the New Deal…

View original 289 more words


Video: why the New Deal was a failure

December 13, 2011

Obama’s first term (1) saw a full-throated return to Keynesian economics — massive increases in government spending, debt, and (if they had gotten their way) taxes to try to stimulate the economy. As we all know, it failed miserably.

For the 2012 election, Obama has doubled-down on the Keynesianism to openly advocate policies of higher taxation, more regulation, more government-directed redistribution of income, and, yes, even more flushing tax money down the toilet stimulus spending. Obama and his people claim that this worked before under FDR, so we should do it again.

Wrong. The history of the New Deal (and its predecessor under Hoover) is almost the opposite of what we’ve been taught in school. The biggest misrepresentation of all is that it worked.

It didn’t. The New Deal was a failure that only made the misery worse, as this video from the Center for Freedom and Prosperity argues:

The real lesson we should take from the economic policies of the Hoover and FDR administrations is that big-government, statist interventions don’t work. Instead, they exacerbate the problem by hindering the self-healing properties of a free market.

In 2012, we have a choice between a party that advocates economic policies that are an empirical failure — the Democrats and the their Hoover/FDR interventionism– and one (2) offering those shown to be an empirical success, the policies of Ronald Reagan and, yes, Warren Harding.

For most voters (3), once armed with the facts, the choice becomes clear and easy.

RELATED: For more on the truth about Hoover, FDR and the New Deal, let me recommend the following:

  • Ohanian and Cole, “New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis” (Journal of Political Economy, 2004) While behind online subscriber walls, you should be able to find it at any university library.
  • Amity Shlaes, The Forgotten Man
  • Jim Powell, FDR’s Folly

Footnotes:
(1) And, to be fair, the last year of Bush’s second term.
(2) Sure, the Republicans have been far from perfect, and the eventual nominee himself may be tempted by big-government “solutions,” but they’re still a far sight better than the (Social) Demcorats.
(3) Other than a certain core that, for whatever reason, prefers to cling bitterly to their cherished myths and bad ideas and be infantilized wards of the state.

(Crossposted at Sister Toldjah)


Klavan on the Culture: Obama’s Beach Blanket Recovery

July 16, 2010

Mystery writer Andrew Klavan is back, this time to tell us how good times are, now that we’ve gotten rid of that terrible George W. Bush and replaced him with Barack Obama … who’s doing a lot of the same stuff:


He wants to be the next FDR…

September 1, 2009

…But maybe President Obama is instead the next Herbert Hoover? Studying the policies pursued by the Hoover Administration in the wake of the 1929 crash, UCLA economist Lee Ohanian found that a strong recession became the Great Depression because of Hoover’s pro-labor, statist interventions:

Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation’s gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.

“These findings suggest that the recession was three times worse — at a minimum — than it would otherwise have been, because of Hoover,” said Lee E. Ohanian, a UCLA professor of economics.

The policies, which included both propping up wages and encouraging job-sharing, also accounted for more than two-thirds of the precipitous decline in hours worked in the manufacturing sector, which was much harder hit initially than the agricultural sector, according to Ohanian.

“By keeping industrial wages too high, Hoover sharply depressed employment beyond where it otherwise would have been, and that act drove down the overall gross national product,” Ohanian said. “His policy was the single most important event in precipitating the Great Depression.”

The findings are slated to appear in the December issue of the peer-reviewed Journal of Economic Theory and were posted today on the website of the National Bureau of Economic Research (www.nber.org) as a working paper.

The article goes on to point out that Hoover’s exact solutions are not likely to be followed by President Obama. However, Ohanian argues, the disastrous results of Hoover’s interventions illustrate what can happen when government pursues hasty, ill-advised policies. Everything Hoover tried only made things worse.

And while Obama may not follow Hoover’s exact policies, we are seeing the same hasty, ill-considered rush to “do something:” the trillion-dollar pork fiesta stimulus bill; the Waxman-Markey cap-and-trade “greenhouse gas” bill; and now the health-care bill aimed at nationalizing 1/6th of the US economy. Anyone of these is bad enough; in combination, the effects on the US economy would almost certainly be horrific.
I’d go a little farther than Ohanian in his article and argue that these kind of large-scale statist interventions, whether in terms of wage control and job-sharing like Hoover or massive Keynesian deficit spending like Obama, are doomed to fail because a free market economy is too complex and has too many factors to successfully control, manage, or direct. In fact, if one looks at Hoover’s predecessors, Presidents Harding and Coolidge, one sees the right way to handle a sharp recession. Treasury Secretary Mellon advised cutting government spending and lowering taxes to free up capital in order to stimulate business, and then let the natural forces of the market economy heal itself. Which it did, bringing the US out of the sharp recession of 1919-1920 and laying the groundwork for a decade of prosperity. (And which was repeated with greater success by Ronald Reagan in the early 80s.)
Articles like this one and Ohanian’s earlier research showing that FDR’s corporatism lengthened the Depression by seven years, as well as longer works of history such as Amity Shlaes’ The Forgotten Man, are important revisionist works for two reasons. First, they dispel forever the notion implanted in popular consciousness by liberal historians and economists, that Hoover was a laissez-faire president with a do-nothing attitude toward the economy, a view used to justify the interventionist approach. Far from it, in fact: Hoover was very much an interventionist, and FDR continued and expanded several of his policies.
The second reason is that these researches present convincing evidence that the received wisdom about the Great Depression, that FDR’s policies pulled us out of it and that government intervention can fix an economy in crisis, is just plain wrong. Indeed, by 1939 the New Deal was clearly a failure and Treasury Secertary Morgenthau said (quoted in an article by Mark Levey):
By 1939 Roosevelt’s own Treasury secretary, Henry Morgenthau, had realized that the New Deal economic policies had failed. “We have tried spending money,” Morgenthau wrote in his diary. “We are spending more than we have ever spent before and it does not work. . . . After eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”
In fact, only the military draft in the face of World War II broke the back of unemployment in the US, by pulling five million men off the streets.
Obama’s an educated man: maybe he should look more closely at his predecessors’ experiences before following further in their footsteps.
(via Jonah Goldberg)
LINKS: More at Hot Air.
PS. Sorry for the bad formatting, but something in this post is killing the spaces between paragraphs. Angry

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