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Hullabaloo


Monday, July 26, 2010

 
Randy Fanboy Thinks he Invented Hooverism

by digby


Matthews asked Paul Ryan (R-AynRandFanboy) today if we should let the Bush tax cuts expire:

I don't think it's a good idea, especially when we're trying to come out of a jobless recovery and slow growth recovery. We've got unemployment at almost 10%, the last thing we should be doing is raising taxes on the economy. The worst thing for deficit reduction is a slow economy. You hit small businesses with these kinds of tax rate increases and you'll slow down the economy even further...

I would rescind the unspent stimulus funds, I would rescind the all the TARP funds,I would do a federal hiring freeze and spending freeze for the rest of the year and I would go back and cut discretionary spending back to 08 levels and freeze that spending going forward.

Now you and I can get into a debate about Keynesian economics if it worked or didn't work, I don't think it did...


I suppose there's something to be said for consistency, but this perfectly illustrates just how radical Republican "thinking", such as it is, really is on economics. I suspect that he believes he's rejecting Keynesianism for Randism and that he's very cutting edge. But the truth is that this is not new, even by Rand's stale 50 year old philosophy's standards:


From before his entry to the presidency, [Hoover] was a proponent of the concept that public-private cooperation was the way to achieve high long-term growth. Hoover feared that too much intervention or coercion by the government would destroy individuality and self-reliance, which he considered to be important American values. Both his ideals and the economy were put to the test with the onset of the Great Depression. At the outset of the Depression, Hoover claims in his memoirs that he rejected Treasury Secretary Andrew Mellon's suggested "leave-it-alone" approach, and called many business leaders to Washington to urge them not to lay off workers or cut wages. ..

Calls for greater government assistance increased as the US economy continued to decline. Hoover rejected direct federal relief payments to individuals, as he believed that a dole would be addictive, and reduce the incentive to work. He was also a firm believer in balanced budgets, and was unwilling to run a budget deficit to fund welfare programs. However, Hoover did pursue many policies in an attempt to pull the country out of depression. In 1929, Hoover authorized the Mexican Repatriation program to combat rampant unemployment, the burden on municipal aid services, and remove people seen as usurpers of American jobs. The program was largely a forced migration of approximately 500,000 Mexicans and Mexican Americans to Mexico, and continued through to 1937...

Hoover in 1931 urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC). The NCC was an example of Hoover's belief in volunteerism as a mechanism in aiding the economy. Hoover encouraged NCC member banks to provide loans to smaller banks to prevent them from collapsing. The banks within the NCC were often reluctant to provide loans, usually requiring banks to provide their largest assets as collateral. It quickly became apparent that the NCC would be incapable of fixing the problems it was designed to solve, and it was replaced by the Reconstruction Finance Corporation.


By 1932, the Great Depression had spread across the globe. In the U.S., unemployment had reached 24.9%, a drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans, and more than 5,000 banks had failed. Tens-of-thousands of Americans who found themselves homeless and began congregating in the numerous Hoovervilles (also known as shanty towns or tent cities) that had begun to appear across the country. The name 'Hooverville' was coined by their residents as a sign of their disappointment and frustration with the perceived lack of assistance from the federal government. In response, Hoover and the Congress approved the Federal Home Loan Bank Act, to spur new home construction, and reduce foreclosures. The plan seemed to work, as foreclosures dropped, but it was seen as too little, too late.


Never say that Ryan or Hoover didn't want to end the economic crises they lived through. But they both believed that government should have balanced budgets with low taxes above all else, and that the people needed "tough love" or they would decline into indolence. They thought that businesses always knew best and they would voluntarily "do the right thing" (although I would argue that Ryan actually believes they cannot possibly do the wrong thing.) Hoover scrambled after it was too late to put some more rational policies in place, but not in time to halt the Great Depression of his own political ignominy.

The difference is that Hoover didn't know any better and didn't have the lesson of the Great Depression to fall back on and Ryan does. He apparently missed class that day (or made it up by reading Amity Schlaes puerile garbage for extra credit.) And anyone who knows better can do nothing but scream at the TV --- "he's actually trying to put us into another Great Depression" --- when they hear him say these things, as I just did.

He can say that Keynesianism hasn't worked in the first year of the stimulus, but that is not a repudiation of Keynes. The economy has not gotten worse, it has stayed moribund for a variety of reasons, some of which can be attributed to the restraint of Keynesiansim by neo-liberals and Randian ideologues alike, rather than its application. But on the other side we have a perfect historical example in living color with cherries and whipped cream on top of Ryan's prescriptions definitely making things worse over a prolonged period of several years. It's called Hooverism. Anyone who actually goes on TV pushing those prescriptions can never be taken seriously.


BTW: He also claimed that the taxes and the wars have nothing to do with the deficit. He lied:



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