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."
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In 1932, Hoover in effect repealed Calvin Coolidge's tax cuts, increasing the rates for the poorest taxpayers by more than 100 percent and hiking the top rate from 25 percent to 63 percent.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 ŒGreat.'"
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