Dispelling The Herbert Hoover Myth

NRO: Liberals Love To Point To A Do-Nothing President Hoover And Blame Conservatives For The Economic Crisis

(National Review Online)  This column was written by Jonah Goldberg.
A very old story is once again being retold, with a few of the characters’ names updated to besmirch the innocent. In this story, conservatives are to blame for an economic crisis because they allegedly believe there is no role for government in the economy, and all economic crises are due to lax regulation of markets.

Cokie Roberts recently gave a sense of how old this story is on ABC’s "This Week." She said of John McCain, “He’s a Republican, and whenever Republicans get into this kind of mess, everybody, even people who were not born or close to being born, the specter of Herbert Hoover comes out to haunt them.”

Everybody?

Roberts is correct in one sense. The specter of Herbert Hoover is conjured every time there’s an economic calamity, large or small.

But you know what? Specters are ghosts. And ghosts aren’t real.

The Herbert Hoover of popular imagination was a laissez-faire lickspittle of Adam Smith. But this idea began as Rooseveltian propaganda and endures as the creation myth of modern liberalism.

William Leuchtenburg, possibly the greatest authority on the FDR era, wrote some time ago, “Almost every historian now recognizes that the image of Hoover as a ‘do-nothing’ president is inaccurate.”

After the stock market crash of 1929, Hoover browbeat business leaders to keep wages and prices high. He invested heavily in public works projects. He pushed for an international moratorium on debts. He created the Reconstruction Finance Corporation, which later became a home for many of FDR’s Brain Trusters. Hoover increased farm subsidies enormously.

Some of Hoover’s interventions were good but ineffectual. A few were very, very bad and very effective.

In 1932, Hoover in effect repealed Calvin Coolidge’s tax cuts, increasing the rates for the poorest taxpayers by more than 100 percent and hiking the top rate from 25 percent to 63 percent. Worse, contrary to his own better instincts, Hoover signed the disastrous Smoot-Hawley trade bill that raised protectionist walls at precisely the moment the world needed trade the most.

Then there’s this idea that FDR rode to the rescue, saving the day by untying the American people from the railroad tracks of runaway capitalism. Former Clinton Treasury Secretary Lawrence Summers, now a surrogate for Barack Obama, recently said on NPR: “It’s very tempting to always think that the government should just stand back and let the private sector sort these problems out. That’s the kind of thinking that made the Depression ‘Great.’”

Summers should know better (in fact, I’m sure he does). The Great Depression was not made “Great” by government inaction. Indeed, FDR’s New Deal may have been wonderful in some mytho-poetic sense, and maybe some of its reforms can be defended in some broader context, but as an effort to end the Great Depression, the New Deal was a failure. As my colleague Mark Steyn writes, “Lots of other places - from Britain to Australia - took a hit in 1929 but, alas, they lacked an FDR to keep it going till the end of the Thirties. That’s why in other countries they refer to it as “the Depression,” but only in the U.S. is it ‘Great.’”

Today we’re hearing a similar argument about John McCain or, more often, his evil henchman, former Sen. Phil Gramm as Herbert Hoover’s mini-me.

“Phil Gramm, one of the architects of the deregulation in Washington that led directly to this mess on Wall Street, is also the architect of John McCain’s economic plan,” Obama said recently. A couple problems: Gramm is no longer with the McCain campaign. More important: This is nonsense on stilts. The deregulation that the Obama camp most often cites is the Gramm-Leach-Bliley Act, which passed the Senate in 1999 by a 90-8 margin and was signed enthusiastically by Bill Clinton. Thirty-eight Democrats voted for it, including Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle and Barack Obama’s running mate, Joe Biden. The “Leach” in the legislation’s title was a founder of Republicans for Obama.

Moreover, nothing in that law has much to do with today’s financial meltdown. Indeed, it has helped some financial institutions weather the storm precisely because they are more diversified.

Also, who are the real Hoovers here? Obama is sympathetic to protectionism, as is his party. He says he will raise taxes on the top income earners, and if he’s remotely honest about his spending ambitions, he will have to raise taxes on everybody else as well.

Meanwhile, who sought to intervene when Fannie Mae metastasized? John McCain. Who wanted to keep the party going? The party of Roosevelt. There’s blame all around, but nothing today supports the liberal ghost stories of yesterday.

[nodemotwit]

This was mentioned by Glenn Beck (10-1-08) on CNN:

www.cnn.com/video/#/video/bestoftv/2008/10/01/gb.real.story.cnn?iref=videosearch

and is detailed in the above article
and to a further extent in a fast-paced (just pause A.R.):
www.youtube.com/watch?v=NU6fuFrdCJY

You can%u2019t expect a liberal to have enough ethics to do the research (they are too busy trying to convert independents into like-minded lemmings, blaming conservatives for this financial meltdown, when it was actually decades of liberal ''''progressive'''' bank loan policies)
but perhaps independents will.

Also, not mentioned in the article above (but by Glenn Beck and in the youtube) is Obama participation in the 1994 %u2018Acorn%u2019 lawsuit forcing Citibank (and setting a legal precedent for other banks) to make more subprime home loans to financially unqualified applicants,
Which started the whole ARM and interest-only fiasco,
all courtesy of someone who wants to be the next president of the US...

Research it.
Think about it.

[incog-nito]

Stay tune for the next article, where NRO will explain to the readers how McCarthy was really a nice guy who was just misunderstood.

[ubrew12]

incog-nito said: "Stay tune for the next article, where NRO will explain to the readers how McCarthy was really a nice guy who was just misunderstood. "

They are all misunderstood. Hoover, McCarthy, J Edgar Hoover, Nixon, Bush Jr. The GOP is full of misunderstood geniuses whose genius just coincided with horrific results, policies, and economies.

[jsl45]

Georg W. Bush, the Herbert Hoover of the 21st Century......!!!

[taxguydave]

Amazing how the wingnuts are trying to turn this back onto the Democrats. Anyone with half a brain (which excludes most of the right wingers in this country) can easily see that this crisis wasn''t brought on by bad mortgages, but by massive, unchecked securities fraud.

The mortgages going bad by themselves, would have, at worst, caused a number of banks to fail. But when the income (but not the collateral) of the mortgages were sold to more than one party via derivatives contracts, so much imaginary wealth was created on paper that the entire GDP of the American economy couldn''t back it up.

In the year 2000, less than $10 billion in derivatives were sold. Between 2001-2003 (on Bush''s watch), that number increased to the hundreds of billions a year. By 2006, sales were in the trillions per year.

But there wasn''t anything backing most of it up. This is what is known as fraud, and Bush turned a blind eye to it. Until last week, of course, when the FBI was suddenly put on the case.

Warren Buffett warned several years ago that this would happen, and his company didn''t buy any derivatives contracts.

Do your own *** research.

[kesac4650]

Bush used the same tactics to get us out of recession as FDR did, and JFK did. Reagan did the same, to great effect. The Democrats should have congratulated Bush for coming over to the Bright Side, but instead, abandoned their own principles out of pure spite because Bush had beaten them in a closely contested race.

[labourboss]

In the election between Al Smith and hoover. The republicans played the religion card. The slogan was "Rum and Romanism". The r''s were saying that because Smith was a Catholic he would take orders from the Pope. America''s prejudice voted in one of the most incompetent presidents we ever had. I hope history doesn''t repeat itself!

[andor3]

interesting that NRO sees a need to try to re-write history at precisely the moment we are reliving it.

[ausus-2009]

labourboss,

You may call Herbert Hoover one of the most incompetent Presidents we have had, but he was one of the most qualified and most experienced. He was just unlucky. Had he been elected in 1920 or 1924, he might have been remembered as one of the great presidents. I would suggest you have a look at President Hoover''s biography before condemning the man.

The Rum and Romanism slogan goes back to the Grover Cleveland years when the Democratic Party was described as the party of Rum, Romanism and Rebellion. The rebellion part goes back to the Civil War when the supporters of the Confederacy were Democrats.

[sparks224]

The NRO:
Clouding the issues (and history) with half-truths and false impressions. It''s what right-wing noise machines get paid to do.

[ausus-2009]

sparks224,

I trust you know the difference between history and historiography. Unfortunately too much of the latter is taught at schools and universities these days pretending to be the former. Historians of the left have dominated for decades and attempts to break the orthodoxy are often howled down.

[toby2957]

Georg W. Bush, the Herbert Hoover of the 21st Century......!!!

Posted by jsl45 at 06:40 PM

Now THAT is an insult to Hoover.

[ofbyfor2]

Also, not mentioned in the article above (but by Glenn Beck and in the youtube) is Obama participation in the 1994 %u2018Acorn%u2019 lawsuit forcing Citibank (and setting a legal precedent for other banks) to make more subprime home loans to financially unqualified applicants,
Which started the whole ARM and interest-only fiasco,
all courtesy of someone who wants to be the next president of the US...

Research it.
Think about it.

Posted by nodemotwit at 02:21 PM : Oct 05, 2008

It is quite possible to make loans to subprime borrowers without having the disastrous consequences we now face.

First of all ''subprime'' and ''ARM'' do not mean the same thing and do not HAVE to be linked. Subprime borrowers could wasily have been offered fixed-rate loans.

The interest rate would not be as low as that offered to prime borrowers and obviously, the amount would have to be within their ability to pay back, but still, they could have received decent loans.

Think about it.

[ofbyfor2]

Georg W. Bush, the Herbert Hoover of the 21st Century......!!!

Posted by jsl45 at 06:40 PM : Oct 05, 2008

Yes, we already have little ''Bushvilles'' and tent cities cropping up. That this can happen in America is downright shameful.

[ofbyfor2]

Bush used the same tactics to get us out of recession as FDR did, and JFK did. Reagan did the same, to great effect. The Democrats should have congratulated Bush for coming over to the Bright Side, but instead, abandoned their own principles out of pure spite because Bush had beaten them in a closely contested race.

Posted by kesac4650 at 07:46 PM : Oct 05, 2008

Please cite something to back this up, because otherwise, I think you''re talking garbage.

[babooph]

The author left out something -Hoover sold his stocks just prior to the crash-looks like he was an insider who was in on the rip off all the way !!

[matter77]

babooph - you''re full of ***.

This is a good article.

[Razzl]

It''s always amusing to watch the NRO crowd try to castigate FDR or build up Hoover. Yeah, heaping new taxes on the poor and erecting tariff walls were terrible ideas that made the Depression "Great", and the dozen years of totally unregulated stock market activity under Harding and Coolidge set up the Crash, so how have you made a case for Hoover? And not even a specific on the things you claim FDR did to prolong the Depression? Lame, lame, lame. FDR was the greatest American president (Lincoln the best-loved) for having made the country modern and progressive. The social democracy which we will eventually become and which Goldberg can''t stop with his pitiful propaganda was made possible by the New Deal, and Hoover, Harding, and Coolidge set the table for it in the way Bush and Cheney and the NRO neocons have ushered in the Obama presidency...

[eskieville1]

babooph is correct. Hoover did sell his stocks just before the crash. Most of todays citizens are not familiar with the great dpression an d that probably also means mr. goldgerg as well. Most people do not know that the Socialists smelled blood by 1932! With 25% unemployment and "Hoovervilles" in just about every large urban area along with large numbers of Hobos roaming tne country, we may have been on the verge of revolution. At least this was the fear and it was real!! FDR promised to experiment and he delivered giving hope to millions and effectively blunted the Socialists. Did all his ideas and programs work ? No. However if we would have stayed with Hoover who knows what could have happened. The people were fairly happy with FDR, after all they elected him four times!!

[imnho]

It seem that the author is engauged in revisionist history. The country would have gone belly up if not for FDR. He kept people from losing complete faith in the goverment. He kept trying things untill he found something that worked.

[newlifestyle]

Sen. Obama plans to drop the President Bush tax cuts.
He claims only the rich have benefitted from the tax cuts. But he never gives you the facts.

Here''s the facts. The low income rate of 10% will jump to 15%. The other four rates will increase: 25% to 28%, 28% to 31%, 33% to 36% and 35% to 39.6%. This hurts everybody.

This will be a 50% increase on mainly young low income workers. Not as high as President Hoover''s 100% increase.

But these tax increases will put a severe strain on our economy.

The truth is 100% of Americans will get a tax increase in 2011 with the repeal of the President Bush Tax Cuts. Not the 5% that he claims.

[tallyman2008]

No Politics

Is History and Economics



Andrew Bacevich - Limits of Power



West Point, Vietnam, Ret. Colonel, Boston University Professor, Father of Dead Soldier in Iraq



Good overview is recent PBS interview with Bill Moyers



Free Video here


http://www.pbs.org/moyers/journal/08152008/watch.html

[kansas1946]

Mr. Goldberg, why would anyone but a far-right apologists take anything seriously that the NR(O)has to say. National Review is tilted so heavily to the right that it is useless for anything other than making righties feel good. There are far-left leaning journals that are just as useless, because you know you won''t get the truth, just stuff that will make far-lefties feel good. I don''t pay much attention to those either. They are propaganda rags for the left, just as your is a propaganda rag for the right.

[nodemotwit]

Amazing how the wingnuts are trying to turn this back onto the Democrats. Anyone with half a brain (which excludes most of the right wingers in this country) can easily see that this crisis wasn''''t brought on by bad mortgages, but by massive, unchecked securities fraud.
:
yada-yada
:
Do your own *** research.
Posted by taxguydave at 06:49 PM : Oct 05, 2008
========================
Only to the extent Dems deserve it.

Regardless, if mechanisms for subprime lending were not available,
OR
if they were -BUT- the borrower were STILL
required to meet the same income criteria as
a fixed-rate mgtg,
regardless of which type of mgtg they got,
THEN
there would be no subprime component to securities fraud.

Suggest you revisit
www.youtube.com/watch?v=NU6fuFrdCJY
and pause it, often, and take notes and google for the facts.

[nodemotwit]

First of all ''subprime'' and ''ARM'' do not mean the same thing and do not HAVE to be linked. Subprime borrowers could wasily have been offered fixed-rate loans.

The interest rate would not be as low as that offered to prime borrowers and obviously, the amount would have to be within their ability to pay back, but still, they could have received decent loans.

Think about it.
Posted by ofbyfor2 at 08:04 AM : Oct 06, 2008
======================

While " ''subprime'' and ''ARM'' do not mean the same thing" necessarily,
they are intrinsically linked as the latter (and interest-only) are often
the only mechanism(s) available to subprime borrows to get a given mgtg,
especially when those same mechanisms are also contributors in the housing speculation which drove the price of homes well beyond traditional
appreciation rates. All of which means the homes that subprimers could afford with a traditional mgtg were substandard in quality and size.
That''s not ''The Dream'' pushed by the gods of consumption.

Suggest you revisit
www.youtube.com/watch?v=NU6fuFrdCJY
and pause it, often, and take notes and google for the facts.

(also worth watching)
http://www.youtube.com/watchv=1RZVw3no2A4&feature=iv&annotation_id=event_597487