Horwitz on Hoover's Economic Policies
By David Henderson
Many historians, most of the general public, and even many economists think of Herbert Hoover, the president who preceded Franklin D. Roosevelt, as a defender of laissez-faire economic policy. According to this view, Hoover’s dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the 1929 stock market crash. The reality is quite different. Far from being a bystander, Hoover actively intervened in the economy, advocating and implementing polices that were quite similar to those that Franklin Roosevelt later implemented. Moreover, many of Hoover’s interventions, like those of his successor, caused the Great Depression to be “great”–that is, to last a long time.
This is from Steven Horwitz, “Hoover’s Economic Policies,” in The Concise Encyclopedia of Economics. It just came out today.
It’s a big deal. So many people, as Steve points out above, get Hoover’s economic policies wrong. Russ Roberts recommended that I commission an article setting the record straight and Steve has done a stellar job.
Check out the opening quote from FDR advisor Rexford G. Tugwell:
When it was all over, I once made a list of New Deal ventures begun during Hoover’s years as Secretary of Commerce and then as president. . . . The New Deal owed much to what he had begun.
And here’s a snippet on Hoover’s wage policies:
On wages, Hoover revived the business-government conferences of his time at the Department of Commerce by summoning major business leaders to the White House several times that fall. He asked them to pledge not to reduce wages in the face of rising unemployment. Hoover believed, as did a number of intellectuals at the time, that high wages caused prosperity, even though the true causation is from capital accumulation to increased labor productivity to higher wages.
Once, when I was on a radio interview with Robert Reich, I accused him of advocating “Hoover-type wage policy.” If I recall correctly, he didn’t know how to handle that. Here is, I think, the link.
This article will be, I predict, quite useful for people who want a quick reference for those whom they want to inform about Hoover’s policies.