The great dictator

By Anish Krishnan

As conventional wisdom tells us, Herbert Hoover was a hands-off, laissez-faire capitalist who smoked his pipe in the Oval Office while the economy crumbled around him. It was only after his presidency when Franklin Delano Roosevelt took matters in his own hands and brought peace and prosperity to the country. Is any of this true? No, as is often the case with conventional wisdom, but what surprises me is how rampant this belief is. I equate it to intelligent design—I cannot blame creationists for believing what they do, but I can (and do) certainly blame its vocal proponents for their abject misinformation. In other words, Paul Krugman is the Kent Hovind of economics. The truth is that Herbert Hoover was not the person our textbooks make him out to be, nor was FDR successful in the least – in fact, he was only a little short of a tyrant, and definitely not someone who deserves the praise he receives nowadays from the left and right alike. Herbert Hoover was a spender—he poured money into public works projects, emergency loans, bailouts, and relief programs, so much so that his successor (FDR) criticized the Hoover administration’s reckless fiscal policy during his 1932 campaign. Economist Steven Horwitz aptly states that “the budget deficits of 1931 and 1932 represented 52.5 percent and 43.3 percent of total federal expenditures. No year between 1933 and 1941 under Roosevelt had a deficit that large.” In addition, Hoover signed into law the Smoot-Hawley Tariff Act, the largest piece of protectionist legislation in American history. He also artificially held wages constant when market prices were plummeting, putting firms across the country out of business. As Secretary of Commerce, none of his suggestions were taken by the conservative Calvin Coolidge, and while Coolidge oversaw the Roaring Twenties, Hoover’s term was much less successful. However, he prided himself on his active economic interventionism, remembering that “[his administration] might have done nothing. That would have been utter ruin.” Franklin Delano Roosevelt did not change a thing, neither in terms of policy nor in terms of results. He did not end the Great Depression, but rather prolonged it for ten years. Once again, he propped up wages and prices when they desperately needed to fall. This was done through the Agricultural Adjustment Act, which destroyed farmland and livestock in an effort to raise the value of agricultural goods, and also through the National Industry Recovery Act, which gave the federal government the authority to protect monopolies and cartels for the same reason. The National Labor Relations Act was another measure that kept wages high through the protection of unions. But what the market needed desperately was for prices to fall, for businesses to make cuts, and for consumers to start saving again. The static nature of the Keynesian economic model (derived from the ideas of John Maynard Keynes, the leading economist at the time) leads one to believe that decreased consumption and increased saving leads to economic turmoil, but conveniently ignores the fact that healthy investment in lines of production requires saving, by both the investor and the consumer, who will use his/her deferred consumption to make such an investment successful. In addition, high government spending during the Depression diverted resources from their market uses and allocated them improperly, crowding out private investment. What the government should have done was slash spending and taxes and let the market breathe, and it did the opposite. Interestingly, a similar and equally severe economic downturn occurred in 1920 under Warren Harding’s administration. Harding refused to increase spending or fix prices and the economy recovered within a year, which is why we don’t hear about it. To make matters worse, Roosevelt seized gold from the populace and banned its ownership, further hindering saving. It is sometimes said that World War II brought us out of the Great Depression. While it is true that it lessened unemployment through a massive draft, it did not create long-term prosperity, nor did it encourage sound investment. Rather, when the federal government made massive post-war spending cuts against the wishes of Keynes’ followers, the economy skyrocketed. Outside of economic policy, was FDR a good president? Sadly, the answer is still no. He ordered the internment of Japanese Americans, German Americans, and Italian Americans without any reason other than the fact that they shared the same ancestry as those in the Axis Powers. While Japanese Americans received minor reparations and an apology, the latter two groups never did. Roosevelt had assumed complete control over the country and used it to marginalize racial groups in the face of the ostensibly American principles of individuality and freedom. It is ironic that the left unwaveringly lambasts the right for its supposed “racism,” and yet lionizes a tyrant who sent entire families to concentration camps. Aside from internment, the firebombing of Dresden and FDR’s lack of response towards the Jewish refugees aboard the MS St. Louis don’t help his case either. Given the oppressive nature of his policies, I’m quite surprised that the man didn’t win the Nobel Peace Prize. It is indeed saddening that we praise Franklin Delano Roosevelt’s legacy and commend his actions when the last thing the country needs is another president like him. The Constitution under the Roosevelt presidency became a loose set of guidelines, fragmented to the point of invisibility. Although we won’t likely have another FDR (partly due to term limits), we are seeing a dangerous resurgence of his ideals that one can only hope will not last. As a Mac student, I cannot endorse his institutionalized racism. And as an American, I cannot endorse his lack of respect for the individual. Sources: Meltdown by Thomas Woods, The Ludwig von Mises Institute, The Cato Institute Anish Krishnan is Co-Chair of Macalester Young Americans for Liberty refresh –>