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Barack Obama and his Fellow Democrats Adopt Hoovernomics

Politics / US Politics Jul 28, 2008 - 05:58 PM GMT

By: Gerard_Jackson

Politics It's true! The Democrats are now promoting Hoovernomics as presented by the economically illiterate Obama as the only way to create growth.. The brilliant Obama and his fellow imbeciles in Congress have declared that increased government spending and a massive tax rise is just what America needs. This is really funny because that's what the hapless Hoover also reckoned.

In a vain effort to counter the depression the Hoover administration raised spending with the result that by 1931 the government had gone from surplus in 1929 to $2 billion deficit, a huge some in those days. Despite this 'counter-recession' spending unemployment rapidly grew. Undeterred Hoover gave the country the December 1932 Revenue Act. This was one of the largest peacetime tax hikes in the country's history, ensuring that the range and height of taxes rapidly expanded. The following year unemployment jumped to about 25 per cent. So what makes Obama think this policy would work for him?

The truth is, Obama — like the rest of the Democrats in Congress — is as ignorant of history as he is of economics. Showing just how smart he is — even without a teleprompter — he would impose tariffs, just as Hoover did. Perhaps he would be so kind as to explain to his fellow Americans — not that I see Obama and most of the Congressional Democrats as real Americans — why this would work now while the same policy implemented by Hoover in 1930 (the Smoot-Hawley tariff) greatly aggravated the depression?

Very few Americans know that all of Hoover's ramshackle economic policies were taken on board with a vengeance by Roosevelt, thus giving the US the longest and deepest depression in its history.

The Democrats piously complain about the conditions of the poor and "falling wages". Unlike the Dems' phony compassion Hoover was genuinely concerned about wage rates to the extent that he refused to allow them to fall. He detested "orthodox" thinking on wages, believing instead that living standards were a product of high real wages. He made his rejection of the "old economics" clear in a speech on 12 May 1926:

There a marked change.. . not so many years ago — the employer considered it was in his interest to use the opportunities of unemployment and immigration to lower wages irrespective of other considerations. The lowest wages and longest hours were then conceived as the means to obtain lowest production costs and largest profits. . . . But we are a long way on the road to conceptions. The very essence of production is high wages and low prices, because it depends upon a widening range of consumption, only to be obtained from the purchasing-power of high real wages and increased standard of living. . . (Herbert Hoover, The Memoirs of Herbert Hoover , New York: Macmillan, 1952, p. 108).

Hoover's economic fallacies turned what would have been a sharp turn-down* followed by the usual rapid recovery in to the biggest economic tragedy in American history and one that the country is still paying for. If it were otherwise that charlatan Obama would be seen as the joke he really is

It is a sad irony and a deep reflection on American education that the man who laid the foundations for Roosevelt's New Deal is still labelled by academics and journalists as an advocate of failed free-market policies. Readers should bear this in mind next time they encounter a so-called economic arguments by vicious economic illiterates like the mendacious Richard Cohen, the insufferable Thomas Franks and the self-righteous E.J. Dionne.

*The 1919-20 boom followed by the sharpest and fastest depression in US history. Wholesale prices peaked in May 1920 and then plummeted by 56 per cent, levelling out in June 1921.

By Gerard Jackson

Gerard Jackson is Brookes' economics editor.

Copyright © 2008 Gerard Jackson

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