Economic Crisis: Lessons from 1932
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.
If you thought this year’s convention speeches were bad, that’s Herbert Hoover accepting the Republican nomination in 1932. A Republican tries Socialism 1.0, paving the way for a Democrat’s 2.0. Sound familiar?
But here’s my favorite so-bad-it’s-good passage from Hooverville:
For the first time in
the history of depression, dividends, profits, and the cost of living,
have been reduced before wages have suffered…. They were maintained
until the cost of living had decreased and the profits had practically
vanished. They are now the highest real wages in the world.
With 25% unemployment, Hoover goes before his whole party and loudly brags that real wages are unprecedentedly high, without the slightest thought that employment and the price of labor might somehow be connected. Let’s join Paul Rubin in hoping that he’s wrong about the next chapter in U.S. economic history.
Oct 23 2008 at 11:01am
Good reading. ROFL
Thanks for retrieving these nuggets.
Oct 23 2008 at 11:53am
The only thing we have to fear is fear itself and a government that tries to help!
Oct 23 2008 at 12:18pm
This reminds me of how incredibly disingenuous Brad DeLong is for throwing around the standard boilerplate about Hoover. He knows better.
Its probably old hat to readers on this blog, but it bears repeating: Hoover was not a ‘do-nothing’ president. He did some stuff, FDR campaigned against him complaining about that stuff, and then FDR won and did double and triple that same stuff.
Oct 23 2008 at 1:38pm
How about the follow up to your midterm Q?
Oct 23 2008 at 2:51pm
[Comment removed for supplying false email address. Email the firstname.lastname@example.org to request restoring this comment. A valid email address is required to post comments on EconLog.–Econlib Ed.]
Oct 23 2008 at 4:13pm
Yesterday Arnold asked, “Why does a recession show up as unemployment, rather than, say, lower wages at full employment?”
Today, you quote Hoover as saying, “For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered.”
That suggests that labor markets used to adjust wages but by the time the 30’s rolled around they didn’t anymore.
Is that correct? If so, what changed?
Oct 23 2008 at 4:18pm
With a referendum of AEA members, Milton Friedman and his supporters (that would include me) would lose by a lot. I mean, the masses are stupid, but economists aren’t a shining beacon of useful policy prescriptions in these ‘dark times’.
But, at least we can read Hoover, at laugh at the irony, considering how he is caricatured in history books and by journalists.
Oct 23 2008 at 8:03pm
And you believe he was singularly successful in bringing this about through his efforts? Seriously? Now who is being foolish? He certainly made many errors, most of which were conventional wisdom of the time such as balancing the budget, but mostly he was ineffectual.
Oct 29 2008 at 3:49pm
This is excellent! You had me believing that quote was in regard to the recent bailout. History really does repeat itself.
Comments are closed.