Is the myth of the “do nothing” Herbert Hoover dying? Michael Kitchen at MarketWatch writes:
…Herbert Hoover — only nine months into his presidency — assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package. The proposal called for $160 million in tax relief — only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008. Read Time’s original coverage of the plan.
Also on the table was an assurance from the Federal Reserve that it would provide cheaper credit.
Has someone been reading Rothbard? [Thanks Digg]
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Out of all the myths I have wanted to die…
Greetings from the other side of the Atlantic Ocean. I live in Norway and I read the new articles posted on Mises’ and Lew Rockwell’s sites every day.
Anyway, here is a comment about a phenomenon that applies equally well in the USA and in Norway. Why is it that the politicians always talk about tax cuts and stimulus packages, only when there are recessions. If it helps people and privately owned companies to cut taxes, why on earth were the taxes increased in the first place? As Mises’ site often mentions, it is probably the confiscatory tax level and never ending public interventions that created the crisis in the first place.
Therefore, if it is a benefit to allow people to keep more of their own money and also is a benefit to give money back to businesses to help them survive, then the solution would be to keep the taxes low always. You obviously have not actually done a good deed by first taxing companies to death, and then giving some of the taxed money back to certain companies, only when bankruptcy and a recession are knocking at the door.
From that 1929 article in Time:
“Yet despite his difference with the President’s opinion about the condition of business, the general note of the Ford economic analysis was similar to the Hoover position that: Past market breaks created caution; caution hurt buying power; lack of buying power caused business recessions. Therefore: let the U. S. spend freely regardless of security levels. ”
There it is: the “wealth effect” hypothesis. All that’s lacking is the name.
Jone: “If it helps people and privately owned companies to cut taxes, why on earth were the taxes increased in the first place?”
That’s because politicians in the US don’t believe that taxes hurt the economy. They consider taxes an “investment.” In their minds, speculators, greedy corporations and random “shocks” hurt the economy. Taxes never hurt. But when speculators, greedy corporations or random shocks wound the economy, it’s the job of government to step in and “heal” the economy.
In the US, you’ll rarely find a politician who will admit that the government can cause harm.
“Out of all the myths I have wanted to die…”
Too right. They usually quote Andrew Mellon’s advice to “Liquidate everything” and leave unspoken the false assumption that Hoover actually followed it.
Actually, I was searching for the source of “liquidate everything”, believing it to be Benjamin Strong, and I see that someone’s made some good Austrian additions to the “Great Depression” entry on Wikipedia. Maybe the current crash should give us hope for a resurgence of Austrianism! It’s not like they can blame sound money anymore (as they have with all previous depressions), although Soros et al. can always blame “Deregulation” and the “free market”.
A confidence trick or confidence game widely known as scam is an attempt to defraud a person or group by gaining their confidence. It’s wondering why the government should conduct this callous deed. Many people are wondering if they’re going to get a stimulus check. Knowing that is the reason why there are some stimuli scams starting to pop up. Ads promising extra funds from the economic stimulus package, but requiring a fee to get the know-how are the usual stimulus scams. These scams can run people dry if they get their hooks in deep enough. If you get an e-mail from the IRS (supposedly) that asks for any personal info so you can get stimulus money, delete them.
Hi,
Very nice post and i think it good for mister Herbert Hoover. Really nice job done for this article.
Thank you for all of these information.
Sincerely
Antique Clocks
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