Comments on: Economist: Hoover’s pro-labor policies created the Depression

By: He wants to be the next FDR… « Public Secrets

He wants to be the next FDR… « Public Secrets — Tue, 01 Sep 2009 22:48:06 +0000

[...] 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. [...]

By: Aronne

Aronne — Tue, 01 Sep 2009 18:54:05 +0000

Hoover also dramatically raised tax rates.

MarkTheGreat on September 1, 2009 at 10:20 AM

Sounds strangely…familiar.

By: tom

tom — Tue, 01 Sep 2009 16:32:03 +0000

Of course, modern day libs try to paint Hoover as being a right wing free market conservative, which he was not. Republicans of that era were NOT conservatives, actually the democrats tended to be. It was after World War II that the “progressive” movement shifted from the Republican to Democrat party.

wildcat84 on August 31, 2009 at 6:23 PM

I agree. It’s yet another example of people redefining terms to suit their own prejudices.

Whether Hoover was personally conservative or not, the actions he took in response to the stock market crash made it worse. He never went to the extremes that FDR did, but it’s difficult to lay the blame all on FDR when Hoover meddled in almost exactly the same ways … first!

But FDR is a hero to modern libs, and FDR was pretty strongly socialist, so naturally the FDR fans want to blame it on Hoover. And since they’re left wing, Hoover must be a right-winger free-market purist.

Look at what Hoover actually did, though, and it’s quite clear these are not the actions of someone who believed in the free market.

By: I R A Darth Aggie

I R A Darth Aggie — Tue, 01 Sep 2009 16:24:22 +0000

Hmmm…who’s engaging in pro-union policies these days…think, think!

Nope, nope, I got nothing.

By: AASLT

AASLT — Tue, 01 Sep 2009 14:51:06 +0000

The Federal Reserve created the Great Depression through its loose money supply practices. The Fed was created to reduce the drastic contraction and expansion of the markets prior to its creation, which was the free market. The Fed job was to reduce risk to corporate investors. Congress outsourced its constitutional obligations of controlling the value of and printing currency.

The Great Depression started just as the current financial downturn – over saturation of the market place with dollars. Inflation and higher taxes are coming to reduce the amount of dollars available on the internation market, has too or we become a banana republic. Which I am beginning to believe that is exactly what liberals / progressives desire – the total destruction of America.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:23:20 +0000

You are assuming that the meltdown has been averted.

Vashta.Nerada on September 1, 2009 at 9:36 AM

Worse, he is assuming that there was an incipiant melt-down in the first place, and not just a serious panic.

It’s more likely that these actions made a bad situation a little bit better, but at the cost of a worse crash later.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:20:00 +0000

I thought this had already been established?

Hoover didn’t make things worse by leaving things alone, but by monkeying with things.

Aronne on August 31, 2009 at 9:56 PM

Hoover also dramatically raised tax rates.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:18:13 +0000

I can’t think of a single “expert” who feels that the minimum wage helps the poor. Nor can I think of a single, non-discredited study, that finds the minimum wage helps the poor. (Note, Krugman-Card is a thoroughly discredited study, it’s methodology was one of the worst ever.)

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:16:04 +0000

How do you determine that the “consensus” is actually holding a valid view and not a “consensus” via manipulation to push an agenda?

How do you determine who is an “expert” and who isn’t.

Says things I want to hear doesn’t count.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:10:53 +0000

He sucks like a Hoover Deluxe. Wasn’t Hoover a cross dresser?

Geochelone on August 31, 2009 at 6:54 PM

That was J. Edgar Hoover. Different guy entirely.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:10:03 +0000

How do you know they made it worse and prolonged it? Many economists believe they helped,

tneloms on August 31, 2009 at 6:44 PM

The vast majority of economists are in agreement that the policies of Hoover and FDR made the Depression longer and worse, if they didn’t cause it in the first place.

Yes, there are a few who disagree, but their arguments have been largely discredited inside the economics community.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:06:13 +0000

I think it was Gerald Ford with his WIN campaign but good point.

fourdeucer on August 31, 2009 at 6:20 PM

Nixon had wage and price controls.
Ford’s WIN program wasn’t much more than cheerleading.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 14:04:42 +0000

Olympia snowe

texaninfidel on August 31, 2009 at 6:07 PM

Please do us all a favor, and just go away.

Ed, I do believe that this kind of abuse may justify the ban hammer. Spamming the same post to every single thread. Sheesh.

BTW, the tactics advised by this guy wouldn’t work anyway, these offices have caller ID, they know your area code before they pick up the phone.

By: MarkTheGreat

MarkTheGreat — Tue, 01 Sep 2009 13:59:58 +0000

In times of economic crisis, the temptation for public officials to do something is both overwhelming and tremendously dangerous.

Reminds me of certain blog moderators who last year scolded those of us who opposed the bank bail outs on the grounds that we had to be seen as doing something, even if it was the wrong thing.

By: Vashta.Nerada

Vashta.Nerada — Tue, 01 Sep 2009 13:36:34 +0000

bankers like Bernanke, Paulson, and Geitner have enough wisdom to prevent the sequence of events that lead to the Great Depression from playing out again. While the US may have caused the meltdown, at least we also had the brains and talent to stop it.

bayam on August 31, 2009 at 10:06 PM

You are assuming that the meltdown has been averted.

By: Vashta.Nerada

Vashta.Nerada — Tue, 01 Sep 2009 13:33:45 +0000

Why does everyone here think that they know so much about economics that they can be certain that some experts are correct and other experts are incorrect? Shouldn’t you be at least a little uncertain?

tneloms on August 31, 2009 at 6:25 PM

Because we, as capitalists, know just as much as the ‘experts’ who are proven wrong over and over. One defining aspect of conservatives is that we don’t blindly follow ‘experts’.

By: mankai

mankai — Tue, 01 Sep 2009 12:14:31 +0000

Herbert Hoover’s reputation as a free-market politician gets serious revision

Hoover was FDR before FDR… both prolonged the Depression.

By: Blacksmith

Blacksmith — Tue, 01 Sep 2009 05:23:14 +0000

GM is moving to China! SHHHH!!!

sonnyspats1 on August 31, 2009 at 6:50 PM

You noticed too? They’re not technically “moving” to China – it’s more like they’re splitting into two separate companies that share the same name, with one (the bigger one in terms of sales, production, etc) having its HQ in Beijing. Right under the ChiCom thumb. We get stuck with “GM North America,” which has been sucking like the proverbial “Hoover” for the last 20 years and more. Ask th City of Flint or Delphi Automotive how well that works.

Funny thing is that even the Detroit Free Press had the story as a tiny sidebar on their web page yesterday, compared to some “big scandal” in the UM football program that got the main real estate on the web – and all of the front page in the deadtree format. A scandal which will probably blow over in time for the start of the season.

Priorities? In “Granny’s” MI? Surely you jest.

By: AUINSC

AUINSC — Tue, 01 Sep 2009 05:08:17 +0000

Now that modern economists have seen a number of financial collapses in various parts of the world- from Europe to Asia- great American bankers like Bernanke, Paulson, and Geitner have enough wisdom to prevent the sequence of events that lead to the Great Depression from playing out again. While the US may have caused the meltdown, at least we also had the brains and talent to stop it.

bayam on August 31, 2009 at 10:06 PM

A very dim-witted Post hoc ergo propter hoc argument…tag-team with tneloms I assume? He was losing badly and you are losing worse.

By: Fighton03

Fighton03 — Tue, 01 Sep 2009 05:05:44 +0000

While the US may have caused the meltdown, at least we also had the brains and talent to stop it.

bayam on August 31, 2009 at 10:06 PM

and yet nothing we have done in the last six months has changed the cycle initially predicted before the election. If anything the cycle is getting extended, again.

By: Fighton03

Fighton03 — Tue, 01 Sep 2009 04:57:07 +0000

Hmmmm. He almost laughed out loud when I read the premise that Wilson’s pro-labor policies created the Great Depression.

James on August 31, 2009 at 11:22 PM

Expect a LOT of closed minds from your professors. Nothing is as good an insulator as the ivory walls of academia.

By: Fighton03

Fighton03 — Tue, 01 Sep 2009 04:55:19 +0000

“The wage freeze effectively raised the cost of labor and, by extension, production,” Ohanian said. “If you artificially raise the price of production, your costs go way up and you pass them on to the customers, and they buy that much less.”

This is a perfect example of minimum wage. We are seeing people who are perfectly willing to take fewer hours or a pay cut to keep their jobs. Everyone has the freedom to do this except for union slaves and those who are in the most need..those trapped by the floor of minimum wage.

Oh, and those evil businesses that are scratching for every dollar they can to stay in business.

By: AUINSC

AUINSC — Tue, 01 Sep 2009 04:35:00 +0000

I did that in my first post, and then again just now.

…

neloms on August 31, 2009 at 8:50 PM

It didn’t escape my notice that you never answered my first question…then you disappeared…consumed with more research, I suppose.

Want to answer it now?

By: James

James — Tue, 01 Sep 2009 03:22:33 +0000

I brought this article up in my ECON class. Macro. Anyways, professor said he never heard of the guy (UCLA Prof.), that I should question the source, and that he never heard of the Journal of Economic Theory.

Hmmmm. He almost laughed out loud when I read the premise that Wilson’s pro-labor policies created the Great Depression.

By: Sharke

Sharke — Tue, 01 Sep 2009 03:00:02 +0000

Ed, I realize the Republicans love to blame government interference in the lending industry for the great financial crisis and panic of 2008. But it’s simply not an accurate depiction of what occurred. You really need to talk to people on Wall Street about what happened, not just conservative academics.

bayam on August 31, 2009 at 9:53 PM

The trouble is that people “on Wall Street” will be able to tell you “what happened” in very intricate and accurate detail, without actually taking the line of reasoning far back enough. The illusory conditions which allowed such irresponsible behavior to continue unchecked were not the result of deregulation but were created directly by government intervention, i.e. the Federal Reserve. Reisman said it best:

http://georgereisman.com/blog/2008/10/myth-that-laissez-faire-is-responsible.html