Stimulus Packages: 1929 to 2008
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Posted: 02/12/08
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Stimulus Packages: 1929 to 2008
By Thomas E. Brewton
The current Republican and Democratic economic stimulus plan is the
latest version of a much tried and repeatedly untrue liberal-
progressive panacea.
Stimulus packages first surfaced in this country, under President
Herbert Hoover, as a product of the liberal-progressive-socialist
doctrine of the early 20th century. They failed miserably throughout
the Depression and haven't worked anytime since then.
The bottom line is that stimulus packages don't do the intended job
of jump-starting the economy. (See http://www.thomasbrewton.com/
index.php/weblog/why_tax_rebates_are_delusional/ ). Instead they
work against righting misallocation of economic resources and add to
inflationary pressures that rob people of the value of their savings.
Tax cuts, coupled with reduced government spending, are the only
effective and non-inflationary economic stimulants.
Why then have one-shot stimulus packages?
Socialist theory since its inception in the first decades of the 19th
century had always preached that industry could best be managed by
intellectuals, working through industry councils and bureaucratic
managers. Imposing public regulatory control (what was called
socialization) on business was presumed to make it more efficient and
thereby to raise wages and employment.
20th century American business itself ironically was partly
responsible for the popularity of the idea of scientific management
in government and its manifestation in stimulus packages.
As corporations grew to hitherto unimaginable size around the time of
World War I, management became more structured. The professional
manager came into being, and scientific management techniques came
into vogue. To that end, the Harvard Business School was founded in
1908. Business leaders and the general public alike believed that
the same highly successful business management approach should be
applied to local, state, and national government.
Such was the essence of early Progressivism and its love affair with
experts. Note that Progressivism was embraced by both liberal
Republicans and liberal Democrats.
President Herbert Hoover was a leading exponent of Progressivism in
government, despite his characterization by liberal historians as a
laissez-faire conservative. So much so that Austrian School
economists date the inception of the New Deal to the inauguration of
Hoover in 1929. Much of what President Franklin Roosevelt did with
disastrous results, from 1933 until late 1940, was merely a
continuation and expansion of President Hoover's policies.
As Amity Shlaes wrote: ( see http://www.thomasbrewton.com/index.php/
weblog/the_raw_deal/ )
"The premier line in the standard history is that Herbert Hoover was
a right-winger whose laissez-faire politics helped convert the 1929
Crash into the Great Depression. But a review of the new president's
actions reveals him to be a control freak, an interventionist in
spite of himself. Hoover signed the Smoot-Hawley Tariff Act, which
worsened a global downturn, even though he had long lived in London
and understood better than almost anyone the interconnectedness of
markets. He also bullied companies into maintaining high wages and
keeping employees on their payrolls when they could ill afford to do
so. Perhaps worst of all, he berated the stock market as a
speculative sinner even though he knew better. For example, Hoover
opposed shorting as a practice, a policy that frightened markets at
an especially vulnerable time."
Stephen W. Carson, on the Mises.org website, writes about the first
stimulus package. Read it here http://blog.mises.org/archives/
007710.asp . Be sure to read the 1929 Time Magazine article linked
in Mr. Carson's post. It's accessible here: http://www.time.com/time/
printout/0,8816,738193,00.html .
Thomas E. Brewton is a staff writer for the New Media Alliance, Inc.
The New Media Alliance is a non-profit (501c3) national coalition of
writers, journalists and grass-roots media outlets.
His weblog is THE VIEW FROM 1776
http://www.thomasbrewton.com/
Email comments to viewfrom1776@thomasbrewton.com
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