The More Things "Change," The More They Stay The Same

By: Mr. Curmudgeon
mrcurmudgeon@inthepublicsquare.com

The President of the United States, his country gripped by economic upheaval, said in a speech before an assemblage of his fellow Republicans:

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.

If you attribute the aforementioned statement to President George W. Bush, you are wrong. Herbert Hoover uttered these words during his acceptance speech after receiving his party’s nomination to run for a second term as the nation’s Chief Executive.

Just as our current President struggles to manage the economic crisis caused by the sub-prime meltdown, Mr. Hoover sought to mend the economic downturn that began with the great stock market crash of 1929 by flexing the considerable coercive muscle of the federal government.

On June 17, 1930, Hoover signed the Smoot-Hawley Act, raising import tariffs in an effort to “save” American jobs. The legislation had a remarkable effect; American unemployment rose from 3.5 to 8.7 percent and industrial production, which represented 42.5 percent of the planet’s industrial output, eventfully fell by 77 percent.

One year later, as unemployment climbed to 15.9 percent, Hoover signed the Wagner Employment Stabilization Act into law. The legislation earmarked taxpayer funds for public work projects. By 1932, Hoover also approved an increase of the top tax rate from 25 to 63 percent.

Contrary to the claims of today’s historians, Hoover was extremely proactive in his attempts to “jumpstart” the U.S. economy. 

In 1933, the New Deal policies of Franklin D. Roosevelt — that came in the first 100-days of his administration — rested on a foundation built by a misguided Republican administration.

By 1934 the unemployment rate rose to 21.7 percent and never dipped below 17 percent until the American economy was resuscitated by a brutal but necessary two-front world war that cost 406,000 American lives.

Lee Ohanian and Harold Cold, economists at the University of California at Los Angeles, contend that without the federal government’s intervention the Great Depression would have ended in 1936.

In a recent interview on ABC’s This Week with George Stephanopoulos, Vice President elect Joseph Biden commented on our current economic difficulties:

…The economy is in much worse shape than we thought it was in…every economist that I've spoken to, from well-known economists on the right, conservative economists, to economists on the left and everyone in between, says the scope of this [economic stimulus] package has to be bold, it has to be big.

If the eerie similarity between then and now sends an icy cold shiver up your spine, it proves that you — unlike most Americans — are conscious.

The good news for government interventionists, and bad news for the rest of us, is that despite the fact U.S. unemployment remained agonizingly high throughout the helicon days of the New Deal, a personality-cult built and cultivated by uncritical media lackeys helped secure FDR an unprecedented four terms in the White House.

The lesson for the incoming Obama administration is this: the American people rewarded the principle architect of government programs that prolonged the Great Depression and their misery — proving that in American politics, nothing quite succeeds like failure.

--Mr. Curmudgeon