Bryan Caplan  

Economic Crisis: Lessons from 1932

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The Call for a Commission... Mark Thoma's Question...
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.

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COMMENTS (9 to date)
El Presidente writes:

Good reading. ROFL
Thanks for retrieving these nuggets.

Gary Rogers writes:

The only thing we have to fear is fear itself and a government that tries to help!

Selfreferencing writes:

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.

burger flipper writes:

How about the follow up to your midterm Q?

anon writes:

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Marcus writes:

Bryan,

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?

eric falkenstein writes:

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.

Lord writes:

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.

Andrew writes:

This is excellent! You had me believing that quote was in regard to the recent bailout. History really does repeat itself.

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