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hoover:fdr, carter:reagan, bush 2:obama?

Can you guess the analogy I’m making? It’s this: For each pair of presidents, the first started policies that the second one got credit for. The second in each pair didn’t actually reverse much done by the first, but rather just expanded and amplified the trend. For each pair, the public, and often the well educated public, believes that the second president was a complete opposite of the first. A few sketches:

  • Hoover may have talked about free markets, but pursued many policies that expanded the state’s presence in the economy. For example, Hoover pushed for protecting American agriculture via tariffs, asked employers to not lay off workers, increased government spending on infrastructure, and created institutions to save failing banks. He also established the Reconstruction Fincance Corporation to help support local businesses and agriculture. He also raised the taxes on the highest earners from 23% to 63%. FDR’s subsequent public works projects and bank regulations were built on the foundation laid by Hoover.

Of course, this phenomena is not limited to democrats who take credit for policies implemented by republicans. Conservatives should be thanking Jimmy Carter for all the help he gave to Reagan:

  • Carter began the substantial liberalization of the American economy in the 1970s. In 1979, he argued for substantial de-regulation of interstate transport. Carter’s 1979 message to Congress talks about how trucking shouldn’t be protected from competition. Same goes for dergulation of airlines, energy, and railroads. Maybe not as dramatic as Hoover’s setup of the New Deal, but still a phenomenally important change in the economy. And who gets credit for being the free market champion? That’s right: Ronald “Deficit” Reagan.

Now, we’re seeing the same process all over again with Bush. Though he talks tough on markets, his administration has essentially created giant slush funds for constituents in finance and other sectors of the economy, the opposite of “hands off.” With the meltdown in progress, Bush has now set up a number of programs that will be picked up by the next administration: bailouts for financial institutions, bailouts for mortgage holders, bailouts for Detroit. The Economist recently labeled it “disaster socialism.” Use economic catastrophes to shift risk to the public purse, and help your buddies in the process. My opinion is that Obama will be more effective at using these tools, he’s much more in command of policy than Bush seemed to be and possesses remarkable political skill to get policies that he wants. But he’ll also be the beneficiary of the Hoover effect, he’ll get credit for policy streams started by his predecessor.

Written by fabiorojas

January 8, 2009 at 5:34 am

8 Responses

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  1. Fabio, you’re absolutely correct about Hoover, the most misunderstood President in US history. Murray Rothbard’s revisionist work, e.g. here and here, provides a solid overview. As Rothbard notes:

    “In all his years in public office – from his post as autocratic food administrator in World War I through his service as secretary of commerce under Harding and Coolidge and then as President – Herbert Hoover pushed for a corporate state system of cartelized associations in industry and agriculture, all enforced, governed, and coordinated by big government. Before the great depression struck, Hoover vowed that in any such economic crisis, he would immediately deploy the massive powers of government to end it. He put that vow into effect as soon as the stock market crashed in October 1929, and he invoked every measure that would become even more visible in the New Deal: propped-up wage rates, massive public works, heavy federal deficits, huge federal loans to shaky businesses, unemployment relief, inflationary monetary policies, etc. There was no need for FDR to install a farm price support program to combat the Depression; Hoover had already carried out his pledge to the farm bloc to establish one as a permanent fixture of the economic scene, a fixture that would generate huge and unusable food surpluses in the midst of starvation.”

    What FDR did is take Hoover’s existing policies and ramp them up. Hoover objected to the magnitude and, especially, the speed of FDR’s reforms, but not to their essential character and purpose. “[L]ike so many other pioneers of revolutions, Hoover was overtaken and cast adrift by the speed and extent of the changes that occurred. All his life, Herbert Hoover had pushed for cartelization of industry promoted and coordinated by government. But in 1932, in the depths of the Depression, business leaders began to call for an accelerated and more thorough revolutionary change in this direction than Hoover was willing to accept. What they wanted was the NRA, a plan that was simply too coercive and too candidly statist for Hoover’s taste.”

    It will be interesting to see if GWB’s wildly inaccurate reputation as a “free marketeer” persists into the Obama years.

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    Peter Klein

    January 8, 2009 at 4:46 pm

  2. What’s interesting to me is that I really didn’t hear too much about Bush being a socialist in 2000 and 2004. In fact, his clear standing as a member of the Left didn’t become apparent until the economy collapsed.

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    Barbar

    January 8, 2009 at 6:01 pm

  3. Barbar: Depends who you read. Among rank and file GOP, Bush is, and will always be, a card carrying free marketer. But among intellectuals, I’d say the disillusionment set in with the 2004 medicare prescription plan. It was viewed by many as a hand out. Also, there was a failed attempt to direct state funds to religious groups, which, in more secular quarters, was viewed as a hand out. Your basic point is right, it’s only in the crisis when Bush’s policies became very clear to many in the GOP.

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    Fabio

    January 8, 2009 at 6:56 pm

  4. “Also, there was a failed attempt to direct state funds to religious groups, which, in more secular quarters, was viewed as a hand out.”

    Fabio, I’m not sure about this–although I’m open to persuasion and understand a good deal of research on the topic claims the efforts were meant to cement religious groups to the Republican coalition. Are “faith-based” initiatives more commonly viewed as a hand out to religious groups or a redirection of (unchanged levels of?) social welfare funding? There’s also the fact that such initiatives are rooted in Clinton administration “charitable choice” initiatives . . .

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    Cliff Grammich

    January 8, 2009 at 11:08 pm

  5. […] on a completely unrelated note, I would have expected this OrgTheory post from Reason magazine. […]

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  6. Cliff, you raise a good point.I am not an expert on that policy, but I think the Bush proposal had political and “pure” purposes. Some folks really thought that social support could be best done through religious groups, while others, probably the Rove crowd, saw it is a coalition building program.

    I also think your point is spot on about Clinton – the policy had earlier roots, though people remember Bush for it.

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    Fabio Rojas

    January 9, 2009 at 3:07 am

  7. Fabio, I’ll be interested to see what all Mark Chaves and his colleagues have to say about NCS data on this. As I recall, the earliest indicators were the “faith-based” groups benefiting from these initiatives were not Republican-leaning churches (e.g., liberal and black Protestant churches in inner cities). Of course, my memory may be faulty, and more recent data may indicate other things..

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    C. Grammich

    January 9, 2009 at 3:55 am

  8. I have to agree with Fabio: among conservative intellectuals, especially libertarians, Shrub was far less popular than Clinton, for example. In addition to the prescription drugs, many didn’t like NCLB, FISA, the war in Iraq, or the tax cuts (my son didn’t like any of them). Regarding the latter, few seem to recall that Bush’s first inclination was to cut Social Security taxes and only focused on the PIT after D’s in Congress yelped like whipped puppies. That is Obama’s first inclination as well (it’s the right thing to do if your aim is fiscal stimulus). Many, maybe most, conservatives don’t like deficits and that is precisely what Bush’s tax cuts produced — they were poorly timed and targeted in any case. Last Spring’s stimulus package was much smarter and more effective. Moreover, those who criticize their distributive consequences tend to focus on the top .1 percent of the population and ignore the substantial increase in the EITC brought about as well (OK to look at tax cuts, but transfers in the form of negative taxes are another matter entirely).

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    Fred Thompson

    January 9, 2009 at 8:49 pm


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