Oh dear Polly, oh dear.

The Conservatives, taking the anti-Keynesian line, have planted themselves firmly on the laissez-faire side of the argument – where Herbert Hoover was in the Great Depression,

Look love, if you want to pronounce on matters economic could you at least take the time to actually understand the subject first? Here\’s what Hoover actually did:

President Hoover made attempts to stop "the downward spiral" of the Great Depression. His policies, however, had little or no effect. As the economy quickly deteriorated in the early years of the Great Depression, Hoover declined to pursue legislative relief, believing that it would make people dependent on the federal government. Instead, he organized a number of voluntary measures with businesses, encouraged state and local government responses, and accelerated federal building projects. Only toward the end of his term did he support a series of legislative solutions.

In 1929, President Hoover authorized the Mexican Repatriation program. To combat rampant unemployment, the burden on municipal aid services, and remove people seen as usurpers of American jobs, the program was largely a forced migration of an estimated 500,000 Mexicans and Mexican Americans to Mexico. The program continued through 1937.

 

Congress approved the Smoot-Hawley Tariff Act in 1930. The legislation, which raised tariffs on thousands of imported items, was signed into law by President Hoover in June of 1930. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. However, economic depression now spread through much of the world, and other nations increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression.[24]

That just ain\’t laissez faire. Nor is this:

Hoover encouraged the member banks of the NCC to provide loans to smaller banks in order to prevent them from collapsing. Unfortunately, the banks within the NCC were often reluctant to provide loans, usually requiring banks to provide their largest assets as collateral. It quickly became apparent that the NCC would be incapable of fixing the problems it was designed to solve, and it was abandoned in favor of the Reconstruction Finance Corporation.

By 1932, the Great Depression had spread across the globe. In the U.S., unemployment had reached 24.9%,[28] a drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans, and more than 5,000 banks had failed.[29] Tens-of-thousands of Americans found themselves homeless and they began congregating in the numerous Hoovervilles (also known as shanty towns or tent cities) that had begun to appear across the country. The name \’Hooverville\’ was coined by their residents as a sign of their disappointment and frustration with the perceived lack of assistance from the federal government. In response, President Hoover and Congress approved the Federal Home Loan Bank Act, to spur new home construction, and reduce foreclosures. The plan seemed to work, as foreclosures dropped, but it was seen as too little, too late.

Is any of this looking familiar to observers of the current scene?

In order to pay for these and other government programs, Hoover agreed to one of the largest tax increases in American history. The Revenue Act of 1932 raised income tax on the highest incomes from 25% to 63%. The estate tax was doubled and corporate taxes were raised by almost 15%. Also, a "check tax" was included that placed a 2-cent tax (over 30 cents in today\’s dollars) on all bank checks. Economists William D. Lastrapes and George Selgin,[30] conclude that the check tax was "an important contributing factor to that period\’s severe monetary contraction."

Or that?

A reasonable reading of this might be that Gordon Brown is Herbert Hoover and that David Cameron is FDR:

Franklin D. Roosevelt blasted the Republican incumbent for spending and taxing too much, increasing national debt, raising tariffs and blocking trade, as well as placing millions on the dole of the government. Roosevelt attacked Hoover for "reckless and extravagant" spending, of thinking "that we ought to center control of everything in Washington as rapidly as possible," and of leading "the greatest spending administration in peacetime in all of history." Roosevelt\’s running mate, John Nance Garner, accused the Republican of "leading the country down the path of socialism".[31]

8 comments on “Oh dear Polly, oh dear.

  1. Except that FDR, once elected, brecame the most interventionalist President at the time and continued with Hoovers failed policies while adding his own.

    It is mostly thanks to FDR that the Depression continued for so long.

  2. “Except that FDR, once elected, brecame the most interventionalist President at the time and continued with Hoovers failed policies while adding his own.”

    Sounds like Cameron!

  3. Was it not the outbreak of WW2 that saved the American economy?
    And eventually damned the British economy.
    Adolph intervened too.

  4. So did “laissez faire” have anything to do with the causes of the Depression? Yep. And the solution is more “laissez faire”? Brilliant

    I think Tim, that you had better deal with the inherent weaknesses of “laissez faire” capitalism rather than assuming that it has no defects or biases.

  5. Evidently Polly has emigrated to Australia – all that was missing from that was “You pendant”

  6. Australopithecus:

    Mebbe you could lay out a few of the more glaring “inherent weaknesses” of laissez-faire
    capitalism for Tim (and readers) to address?
    But (please) not matters of externalities—they get a reasonably decent attention already.

    I’m definitely a “lassies fair” guy myself–but I’ll try to give your concerns an honest shot.

  7. Brit_in_Aussie:

    If you really think that Hoover pursued laissez-faire policies that helped cause the depression, you need to read America’s Great Depression by Murray Rothbard:

    http://tinyurl.com/create.php

    And if it’s too difficult for you to read a book all the way through, just read the last paragraph on pages 336-7.

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