Big Government "Progressives

Hoover and FDR: big government "Progressives" who prolonged the Depression

 

 “A wise prince will seek means by which his subjects will always and in every possible condition of things have need of his government, and then they will always be faithful to him.” — Niccolo Machiavelli (1469–1527), Il Principe(The Prince) Many who have been “educated” at the Democrat indoctrination centers, oops sorry, government schools, support Obama’s massive government intervention because they believe a pervading myth. That is: Herbert Hoover was a laissez-faire “do nothing” president whose policies led to the Great Depression; it was only Franklin Delano Roosevelt’s government programs in his “New Deal” that saved America from this Depression.

Few who think this way stop to consider: why did the Depression last throughout FDR’s reign, or at least until the even bigger disaster of WW2? The country didn’t recover till after the war was over, when FDR was dead. But there are far more problems for the myth, which must be busted to turn American hearts and minds against the folly of government “solutions”. Obama is repeating many of the same policies of FDR, which were economically disastrous, but politically brilliant.

But first, we must expose the false portrait of Hoover as a laissez-faire capitalist: in reality, Hoover and FDR were almost economic twins.

The true and false laissez-faire Presidents A recent Patriot column remembers a true laissez-faire president, Calvin Coolidge, Hoover’s predecessor. He really did rescue America from a now largely forgotten Depression after WW1, and he did so not by big spending but by cuttingboth spending and tax rates. The result was the economic boom of the Roaring 20s, budgets in surplus, and thriving entrepreneurship that allowed millions of Americans to benefit from new inventions.

Conversely, Hoover, although widely believed to be a free market man, was anything but. Amity Shlaes’ book The Forgotten Man: A New History of the Great Depression points out that Hoover was an engineer, great humanitarian, and a businessman of the calibre of Bill Gates. But he tried to control the US economy as if it were one of his businesses—this was part of the “Efficiency Movement”, which taught that the economy would work better if experts were in charge.

When the stockmarket crashed in 1929, only eight months after he took office, Hoover went into control freak mode. He opposed the advice of long-serving Treasury Secretary Andrew Mellon, who wanted to leave things alone, as with Coolidge. Instead, Hoover called in leading businessmen and urged them not to reduce wages or to lay off staff. Then he instituted public works programs, which would now be called “stimulus spending”, something Coolidge opposed on both economic and Constitutional grounds.
But in reality, the Depression didn’t start with the ’29 crash. Dr Thomas Sowell shows that only 5% of people were unemployed in the month after Black October, and never passed single digits up to June 1930, when it was 6.3%. But on that month, Hoover signed the protectionist Smoot–Hawley tariff bill, blocking free trade. As should have been expected, this was a disaster (see also Patriot column Pummeling protectionism: free trade is good for America). Only after this disastrous bill was passed did unemployment pass double digits for the first time.

Then Hoover lurched even more to the Left. He signed the Revenue Act of 1932—the largest peacetime tax increase in history, undoing all the good work of Coolidge. While under Coolidge, the top income tax rate was slashed from 73% to 24%, under Hoover, it shot up to 63%. And his last major attempt to save the economy was passing the Emergency Relief and Construction Act, which authorized still more stimulus programs and the creation of the Reconstruction Finance Corporation (RFC).

Enter FDR
When the next election was due at the end of 1932, Hoover faced the formidable FDR. FDR had previously been the running mate for James Cox in the 1920 Presidential election—and they were obliterated with a record margin by Warren Harding and Calvin Coolidge. FDR had learned from that devastating defeat, and attacked Hoover’s policies almost from a Coolidgian angle. FDR attacked Hoover for his big spending and taxing, blocking free trade, and making millions dependent on government handouts. His running mate John Nance Garner, claimed that Hoover was “leading the country down the path of socialism”.
This should sound familiar: Obama and the Democrats attacked the Bush administration for its big spending and huge debt. Both Obama and FDR won the election easily; FDR’s victory was especially devastating, 42 states to 6, and 57.4% to 39.7% of the vote. And the sequel should be even more familiar: just as Obama increased debt and spending far more even than GWB, FDR’s policies were basically Hoover, “writ large”. New Dealer Rexford Tugwell later commented, “practically the whole New Deal was extrapolated from programs that Hoover started.”

FDR’s policies
Fortunately a couple of other books have helped to undo the FDR myth along with Shlaes’. Economic historian Burton Folsom has documented FDR’s disastrous reign in his book New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America, and describes FDR as “Hoover on steroids”. Jim Powell wrote FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression.

Economist Thomas Sowell says that the latter:

“spells out just what the Roosevelt administration did and what consequences followed. It tried to raise farm prices by destroying vast amounts of produce—at a time when hunger was a serious problem in the United States. It imposed minimum wage rates that priced unskilled labor out of jobs, at a time of massive unemployment.”

And as Patriot has shown previously, Stimulus spending is doomed to failure, because it just sucks out money from other parts of the economy. A review of Folsom’s book says:

“In May 1939, Treasury Secretary Henry J. Morgenthau Jr., one of Franklin Roosevelt’s best friends, testified before the House Ways and Means Committee: ‘I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot.’ When he spoke, unemployment exceeded 20 percent.”

Remember how Obama justified his Stimulus by alarmist talk about unemployment? But now it is worsewith his Stimulus than he claimed it would be without it.

Furthermore, FDR discouraged investment because of the uncertainty created by his constant rule changing, as well as by demonizing businessmen and confiscatory taxes. Folsom writes:

“In March 1939, for example, AIPO [American Institute of Public Opinion] asked a national sample, ‘Do you think the attitude of the Roosevelt administration toward business is delaying business recovery?’ More than twice as many respondents said ‘yes’ as said ‘no’.” (p. 248)

Similarly, today many bankers are refusing to lend, and a large part of this is being unsure about being repaid, due to government meddling. Obama’s gangster government has already harmed secured creditors to reward his union allies. Hedge fund manager Dr Cliff Asness writes:

“The President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to ‘sacrifice’ some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.”

See also his explanation in this clip:

So why did FDR win four elections?
Here is why it’s vital for conservatives to learn the lesson, so they resist Obama’s attempts to repeat. In reality, a President’s aim is to win an Electoral College majority, and the unscrupulous will not care if the country is shattered to do to.

Folsom has compared Obamacare with FDR’s massive Works Progress Administration (WPA), pointing out that both programs enable the President to grant favours in return for support. This explains more than a thousand Obamacare waivers, many to union buddies who campaigned hard for the very program they now want to escape from. In FDR’s time, much taxpayer money went to buy votes in swing states. Folsomwrites:

“When Roosevelt was reelected in 1936 Senator Carter Glass, Virginia Democrat, admitted, ‘The 1936 elections would have been much closer had my party not had a 4 billion 800 million dollar relief bill as campaign fodder.’”

So Folsom concludes, “That’s one of many reasons why the Republicans must defund or repeal Obamacare.” But will our GOP leaders realize this, or follow Chamberlain’s appeasement folly and not fight