During the hysteria over the market crash, the silly people who constantly attack laissez faire policies added President Herbert Hoover to their rants. There was MSNBC’s Rachel Maddow saying, "You know who else had the excellent idea to freeze government spending during a recession? This guy! (holds up photo of Hoover) H.H., President Herbert Hoover."
President Hoover did indeed help turn a market crash into a depression, but not by doing nothing.
Under Hoover, federal government spending increased 50 percent.
This week, Barron’s Editorial says:
The run-of-the-mill recession that ought to have followed the crash was magnified by the policies of the federal government during the administration of Herbert Hoover…
Hoover believed high wages were the key to prosperity. For employers, he created policies that allowed firms to cooperate in order to avoid "cut-throat competition" for labor.
On the labor side, Hoover signed the Davis-Bacon Act forcing local governments to pay union wages on public works and the Norris-LaGuardia Act outlawing injunctions against strikes and picketing.
Hoover's policies did what they were supposed to do: By late 1931, real hourly earnings in manufacturing had increased by more than 10% (adjusted for deflation of prices). Yet manufacturing hours worked had declined by more than 40%...
Too many workers chased too few jobs that paid too much, and the result was men lined up around city blocks to apply for jobs.
Some other dumb things Hoover did:
- He raised the top marginal tax rate on personal incomes from 25 percent to 63 percent. The estate tax was doubled and corporate taxes were raised by almost 15 percent.
- Hoover also got the Smoot-Hawley tariff passed, which increased the average tariff on imports to nearly 50 percent. Total trade with Europe fell by two thirds over three years.
At least President Obama hasn’t done those things. At least, not yet.
Excellent piece. I have a hard time understanding why some people still believe that big government works; if more government and less freedom worked, then the U.S.S.R. would be a powerhouse in the world today. I'm excited that you're escaping that leftist network and going to a place where thoughts on classical liberalism are welcomed.
November 5, 2009 at 11:03 am
Darin Gary
There are many comparisons between history and the Obama Administration (as well as liberal congressman and women). What we see today with the Obama Administration is a sometimes suttle, sometimes overt attempt to remake the very essesnce of America; like the free market, less gov't in our lives, lower taxes, etc. Now, we are witnessing the greatest attempt to remake our liberties via these sometimes ridiculous policies that come forth from this White House and this liberal-controlled congress.
November 4, 2009 at 11:03 pm
future doc
John the libertarian thank you for the link! Awesome account of the depression policies but I have this creeping feeling that not only are the mistakes going to be repeated again under Obama but they will probably be repeated in the future as well.
November 4, 2009 at 9:55 pm
Tom Dressler
Roosevelt was worse. Roosevelt enacted a program of massive tax increases, hyper-protective trade restrictions, and the forgotten centerpiece of the New Deal, the National Recovery Act, which imposed government organized cartels — “Codes of Fair Competition” — on all aspects of the American economy on the farcical theory that the depression was caused by excessive “destructive” competition. In his spare time, he debased the currency. And he made his victoms love him.
November 4, 2009 at 8:24 pm
Kelley
Of course, FDR's continued practice of shoveling government money (that the government did not have) in the bottomless pit of the depression only served to prolong the depression. Yet, Hoover is vilified and FDR is admired. Go figure.
November 4, 2009 at 6:25 pm
John the Libertarian
Well done Mr. Stossel. It is amazing how these myths about the "great depression" have persisted after all of these years and how the general public is ignorant regarding the causes of the great depression and the government policies that turned an otherwise cyclic recession in to a decade long depression.
I’ve referenced a link regarding the myths - it will take you to a PDF file which contains an excellent treatise.
http://www.mackinac.org/archives/1998/sp1998-01.pdf
I agree, I am very glad to see you on Fox. Look forward to reading your blog each day!
People are more accustomed to watching/hearing sound bites and thinking of intentions rather than actually understanding history.
Final thought - Milton Friedman was right - the gov't is very inefficient by spending someone else's money on someone else.
November 4, 2009 at 2:59 pm
Kim O Washington
As I recall Hoover was one of the worst presidents in history. It seems that we never learn from history or literature. We continue to make the same mistakes. Our eyes should be opened and I for one have written,called and emailed my congress representives more with in the last year than ever. I hope they are listening maybe the elections in Virginia and NJ will be a wake up call to the states representives and senators. I have always enjoyed your commentaries. ABC's loss is FOX's gain.
November 4, 2009 at 10:06 am
Penny
John, thank you for this look back into the history of Hoover and the actions he took. It is amazing how similar it is to present actions.
Thank you for coming to Fox. I never missed you on ABC until we moved to Italy and now we only get Fox (CNN World and BBC). I'm so glad you bring your fair minded "give me a break" attitude to a network that desperately needs a break from the over dramatic Beck. I can't wait to see what you add!
Thanks for the history lesson!
November 4, 2009 at 4:13 am
aboutthis blog
John Stossel joined FOX Business and FOX News in October 2009. He is the New York Times best-selling author of Give Me A Break and Myths, Lies and Downright Stupidity. His "Give Me a Break" commentaries take a skeptical look at a wide array of issues, such as education, the economy, parenting, and more.
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Greg
Excellent piece. I have a hard time understanding why some people still believe that big government works; if more government and less freedom worked, then the U.S.S.R. would be a powerhouse in the world today. I'm excited that you're escaping that leftist network and going to a place where thoughts on classical liberalism are welcomed.
Darin Gary
There are many comparisons between history and the Obama Administration (as well as liberal congressman and women). What we see today with the Obama Administration is a sometimes suttle, sometimes overt attempt to remake the very essesnce of America; like the free market, less gov't in our lives, lower taxes, etc. Now, we are witnessing the greatest attempt to remake our liberties via these sometimes ridiculous policies that come forth from this White House and this liberal-controlled congress.
future doc
John the libertarian thank you for the link! Awesome account of the depression policies but I have this creeping feeling that not only are the mistakes going to be repeated again under Obama but they will probably be repeated in the future as well.
Tom Dressler
Roosevelt was worse. Roosevelt enacted a program of massive tax increases, hyper-protective trade restrictions, and the forgotten centerpiece of the New Deal, the National Recovery Act, which imposed government organized cartels — “Codes of Fair Competition” — on all aspects of the American economy on the farcical theory that the depression was caused by excessive “destructive” competition. In his spare time, he debased the currency. And he made his victoms love him.
Kelley
Of course, FDR's continued practice of shoveling government money (that the government did not have) in the bottomless pit of the depression only served to prolong the depression. Yet, Hoover is vilified and FDR is admired. Go figure.
John the Libertarian
Well done Mr. Stossel. It is amazing how these myths about the "great depression" have persisted after all of these years and how the general public is ignorant regarding the causes of the great depression and the government policies that turned an otherwise cyclic recession in to a decade long depression. I’ve referenced a link regarding the myths - it will take you to a PDF file which contains an excellent treatise. http://www.mackinac.org/archives/1998/sp1998-01.pdf
Tom
I agree, I am very glad to see you on Fox. Look forward to reading your blog each day! People are more accustomed to watching/hearing sound bites and thinking of intentions rather than actually understanding history. Final thought - Milton Friedman was right - the gov't is very inefficient by spending someone else's money on someone else.
Kim O Washington
As I recall Hoover was one of the worst presidents in history. It seems that we never learn from history or literature. We continue to make the same mistakes. Our eyes should be opened and I for one have written,called and emailed my congress representives more with in the last year than ever. I hope they are listening maybe the elections in Virginia and NJ will be a wake up call to the states representives and senators. I have always enjoyed your commentaries. ABC's loss is FOX's gain.
Penny
John, thank you for this look back into the history of Hoover and the actions he took. It is amazing how similar it is to present actions. Thank you for coming to Fox. I never missed you on ABC until we moved to Italy and now we only get Fox (CNN World and BBC). I'm so glad you bring your fair minded "give me a break" attitude to a network that desperately needs a break from the over dramatic Beck. I can't wait to see what you add! Thanks for the history lesson!