Herbert Hoover's New Deal

Over at the Volokh Conspiracy, Ilya Somin has a great post explaining why Columbia University historian Alan Brinkley is wrong to describe President Herbert Hoover as a champion of laissez-faire:

Far from being "unwilling to challenge the pillars of free-market capitalism," Hoover reacted to the Depression by promoting extensive government intervention. For example, he established the Reconstruction Finance Corporation, a new federal agency that gave massive loans and grants to banks, failing businesses and state and local governments—a policy similar to today's bailouts. He also supported (albeit reluctantly) the enactment of the Smoot-Hawley tariff, a protectionist measure intended to strengthen American businesses by shielding them from foreign competition. Furthermore, he sponsored a massive increase in federal spending on a variety of relief programs. Similar to today's Democratic Congress, Hoover sought to stimulate the economy by increasing federal funding for public works through the Emergency Relief and Construction Act.

Speaking before the 1932 Republican Convention, Hoover boasted that he had rejected the "disastrous" option of doing "nothing" and instead had "met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic." In that same 1932 campaign, FDR even denounced Hoover for overspending and promised to enact a balanced budget.

[…]

After Hoover left office, New Dealers used the myth of his supposed adherence to laissez-faire as a justification for discrediting free market policies. Today, we are seeing the creation of a similar myth about Bush. The truth, however, is almost the exact opposite of the myth.

Whole thing here. Back in April 2008, Jesse Walker looked at how FDR's 1932 campaign rhetoric "resembles his actual policies about as closely as the last seven years reflect George W. Bush's promises to give us a smaller federal government and a 'humble foreign policy.'"

Comments

[Sam Grove]

Sign of the left, their myths are usually the opposite of the truth.

I don’t know what to say about the right, perhaps ‘logically flawed’?

[dhex]

“myths are usually the opposite of the truth”

myths generally are the opposite of truth, no? that’s what makes them…mythic!

[BDB]

People who say Hoover was for laissez-faire are as historically ignorant as people who scream about Carter being a leftist (even though he was a de-regulator and appointed Volcker).

[Episiarch]

“It’s a myth!”

“Yeah, but she’s my myth!”

“No, MYTH. MYTH!”

“Yeth?”

“Good grief, it’s a running gag.”

[TallDave]

I think we may have lucked out a bit on Obama. Thankfully, he doesn’t appear to buy much of his own primary-campaign rhetoric, and gives every indication of governing mostly as a pragmatist in the Clinton model.

What he does on free trade will be a significant measure, I think, but so far the first black president looks a lot like the “first black president.”

[TallDave]

Of course, it probably also helps that Obama isn’t being advised by Communists spies like Harry Dexter White.

[R C Dean]

I thought this was the best part:

In that same 1932 campaign, FDR even denounced Hoover for overspending and promised to enact a balanced budget.

Change You Could Believe In, circa 1932.

[BDB]

but so far the first black president looks a lot like the “first black president.”

I’ve been saying he would be for months and I’ve only been proven more and more right.

[BDB]

I also said it even while you were swearing to me Obama was a secret radical communist, TallDave. FWIW.

[Lester Hunt]

Hoover only decided he liked the market after he left office. A common syndrome.

[parse]

Has Bush ever disputed the portrait of his administration as anti-regulation and pro-free market?

[Gilbert Martin]

“After Hoover left office, New Dealers used the myth of his supposed adherence to laissez-faire as a justification for discrediting free market policies.”

Bingo.

In order to exalt FDR and his interventionism, the creators of the fairy tale had to artificially create a contrast in approaches between Hoover and FDR.

[Paul]

Thankfully, he doesn’t appear to buy much of his own primary-campaign rhetoric,

In defense of Obama, quite a bit of his primary-campaign rhetoric was imbued upon him by his supporters.* He says the word ‘change’ a thousand times per speech, and his supporters insert their own meaning per each occurrence.

*hence their disappointment with him before he’s even inaugurated.

[Erm]

parse:

Bush, like his predecessors, purposefully inflated the housing bubble. Well, actually, it was all couched in terms of “affordable housing,” “everyone deserves a shot at the American dream,” blah blah blah. Por mi parte, when I heard Bush announcing his intention to do this, I thought, “this is going to backfire. I like people having houses, too, but this is going to backfire.”

But I think I know what you’re getting at. If people who say they’re free-market act like this, then isn’t the theory discredited? Any attempts to defend it, understandably, come off as a “True Scotsman” fallacy.

But Bush deviated from free-market ideology in very clear ways. Some of these deviations were ultimately responsible for the housing crisis. There is an objective standard by which we can measure Bush, and he failed.

[True Scotsman]

Aye, ye shouldn’a be dippin’ yer balls in the loch when ye don’ know how cold she be…

[Sam Grove]

Has Bush ever disputed the portrait of his administration as anti-regulation and pro-free market?

Bush is a politician.

Some portion of his base expect to hear support for free markets from their candidates.

Promise broken.

Surprise!

[parse]

But I think I know what you’re getting at. If people who say they’re free-market act like this, then isn’t the theory discredited? Any attempts to defend it, understandably, come off as a “True Scotsman” fallacy.

No, that wasn’t what I was getting at. I was asking a plain-old question about whether Bush describes himself and his administration as anti-regulation and pro free-market.

[Shannon Love]

I think it important to remember that pro-freemarket and anti-freemarket are simply relative standards and do not possess any kind of absolute definition.

Regardless of what a politicians believes before they get elected, once they assume office their interest begin to align with that of the state and against the interest of the citizens. To remain in office, they need people to need them and that means they need people to need the state.

Basically, we get to choose between those that gain some of their support from the productive who get taxed and regulated and those who get none of their support from the productive. In the former case, we get slightly slower growth of state power while in the later we get the fast track.

The state always feeds itself. Only external competition can stall its growth.

[Robert]

Did I mention I flew with Herbert Hoover between NY & Miami?

[Brandybuck]

I think we are in a new 1932, and that libertarianism will retreat to the underground for the next half century. Bush redefined free markets and small government into their opposites. It will be decades before we can recover.

[Ken Shultz]

People shouldn’t let facts get in the way of telling a good story.

Making comparisons, yeah, people should let facts get in the way of that.

[BakedPenguin]

Bush redefined free markets and small government into their opposites. It will be decades before we can recover.

More like he managed to discredit them without ever doing anything to promote them, other than mouthing empty banalities. The last sentence is entirely true, and miserably so.

[Ken Shultz]

“I think we are in a new 1932, and that libertarianism will retreat to the underground for the next half century.”

Where’s it been for the last half-century?

Yeah, we had a few things that seemed libertarian here and there, some trade liberalization here, some tax cuts there. But in terms of momentum for anything anyone would call a libertarian economic policy, what are we talkin’ about? A few years here and a few years there?

Markets will make mincemeat out of those who ignore economic forces for too long. …and just like the world benefited mightily from what little economic liberalization we accomplished, we’re sure to reap some benefits from whoever else out there in the world decides not to follow our stupid policy for too long too.

It’s like trying to defy gravity. Somebody somewhere will eventually stop trying to flap their arms to fly. The laws of economics are much like the laws of physics that way in that eventually they prevail, so you can color me optimistic. Eventually the fools will fail.

[Isaac Bartram]

People who say Hoover was for laissez-faire are as historically ignorant as people who scream about Carter being a leftist (even though he was a de-regulator and appointed Volcker).

Carter also tried to cut spending growth but was blocked at every turn by Congress.

Of course, cutting spending might’ve caused the country to go through a recession and a painful period of adjustment. Thank goodness that never happened…Oh, wait a minute.

Back to the thread topic. It’s worth remembering that Hoover was known in the 20s as “The Great Engineer” but it wasn’t because of his early life profession.

[R C Dean]

Of course, cutting spending might’ve caused the country to go through a recession and a painful period of adjustment.

Yeah, that whole stagflation thing didn’t happen until after Carter left office. And the Reagan/Volcker recession had nothing to do, nothing at all, with correcting prior administrations’ fiscal irresponsibilities.

[Isaac Bartram]

RC

In case you missed it that’s kinda why I added the “…Oh, wait a minute” part.

Another part of my point was that with friends like the Dem Congress, Carter didn’t need Republicans.

Look, I think it was too late to do anything by the time Carter took office. But I’m sure it’s unfair to blame him for stagflation.

The whole groundwork for that had been being laid for years.

[Isaac Bartram]

Or if you like,

the Reagan/Volcker recession had noeverything to do, nothing at all, with correcting prior administrations’ fiscal irresponsibilities.

And unfortunately the Reagan/Volcker recession didn’t produce a meaningful change in practice.

And now we might have to go through it all again.

[the great garbanzo]

“Bush, like his predecessors, purposefully inflated the housing bubble. Well, actually, it was all couched in terms of “affordable housing,” “everyone deserves a shot at the American dream,” blah blah blah. Por mi parte, when I heard Bush announcing his intention to do this, I thought, “this is going to backfire. I like people having houses, too, but this is going to backfire.””

Erm – care to explain how Bush “purposefully inflated the housing bubble”?

[robc]

Isaac,

And unfortunately the Reagan/Volcker recession didn’t produce a meaningful change in practice.

While this is true, I dont think that is the blame for the current recession. The business cycle exists. Recession and growth will occur. The best thing to do is go Calvin Coolidge on its ass and do absolutely nothing. Recessions end on their own. Action can only make it worse.

[Andrew Mellon]

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. . . . Purge the rottenness out of the system.”

[Henry Morgenthau]

“We are spending more money than we have ever spent before, and it does not work. ? I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. ? I say after eight years of this administration we have just as much unemployment as when we started ? and an enormous debt, to boot.”

[Herbert Hoover]

“we might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action. . . . No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times. . . . For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered. . . . They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.”

[sooo]

compare what Mellon recommended… with what Hoover says they did… and what Morgenthau says Roosevelt did…. does it look like laissez-faire was the prescription chosen?

[Isaac Bartram]

robc @ 9:43pm

I agree.