Tuesday, August 26, 2014

Bush's Gift to Obama and the American Left

“I've abandoned free market principles to save the free market system.”- President George W. Bush, 2008

That statement was uttered on CNN by President Bush shortly before leaving office. It pretty much sums up the mentality of the man who stands for “compassionate”…i.e., big government…conservatism. Embodied in those words is the portrayal of a man who claims to be a believer in free markets, without having the slightest clue what a free market actually is. If he did, he would have known that what we were witnessing that day was not the collapse of a free market, but of the collapse of the mixed economy.

Barack Obama and the Democrats swept into power largely on an anti-Bush platform, declaring his to be a failed presidency based upon failed free market capitalist policies. They had vowed to resurrect the depression-era New Deal statism of Franklin D. Roosevelt as a model for their tyrannical governance to come.

President Bush’s presidency had indeed been disastrous, but not for its pro-free market capitalist policies. The truth is just the opposite. President Bush governed as an abject statist who expanded government and squeezed the private economy more than any president since at least Lyndon Johnson. But as a Republican…and his lip service…his statist policies were carried out under the “free market” banner. Thus, the economic crisis that followed, which was caused and exacerbated by those (and previous) statist policies, was (and is) blamed on capitalism.

The Bush presidency was catastrophic for free market capitalism. To understand why, one must look back on an almost exact, and eerie, parallel.

Herbert Hoover has been the straw man that for decades has been held up as the epitome of the failure of free market or laissez-faire economics. This caricature of the Hoover presidency, however, could not be further from the truth. Despite being a successful businessman and entrepreneur, Hoover in fact had strong statist tendencies. Although a popular commerce secretary during the 1920s, he was very much at odds with the free market-oriented President Coolidge and his tax-cutting treasury secretary Andrew Mellon. In his 1920s book, titled (ironically) American Individualism, “Hoover rejected the old brand of absolute individualism and disdained laissez-faire economics,” expressed a less-than-enthusiastic regard for private property, and “made clear that he believed America must move toward regulation.”

Hoover’s views were philosophically “in line with two academics popular in the 1920s, William Trufant Foster and Waddill Catchings,” and their “beneficent hand” theory of government. He presided over a much-expanded commerce department and, for a time, was allied with the United Mine Workers leader John L. Lewis in pressuring for above-market wages for coal workers (which proved disastrous for unionized coal companies and their workers). Toward the end of his presidency, “Calvin Coolidge concluded quite simply that ‘that man has offered me unsolicited advice for six years, all of it bad.’ ”

As president during the early years of the Great Depression, Hoover signed a massive tax increase, the Revenue act of 1932, while he “significantly increased government spending for social welfare programs,” in the process “increasing the government’s share of GNP…from 16.4% to 21.5%…between 1930 and 1931.” During the 1932 campaign, FDR, apparently out of political expediency, actually accused Hoover of over-spending and over-taxing, and calling Hoover’s “the greatest spending administration in peacetime in all of history.” And “John Nance Garner, FDR’s running mate, accused Hoover of ‘leading the country down the path to socialism.’ ” Some “laissez-faire” president!

The fact is the Hoover administration, far from being laissez-faire, “proceeded to impose massive government intervention on the economy.” Those interventions actually laid the foundation for the disastrous New Deal policies to come. In fact, “Rexford Tugwell, one of FDR’s top advisers, stated decades later: ‘We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.’ ”

(My references for the above are two well-documented books…The Forgotten Man by Amity Shlaes [pages 34, 36,38, and 131], and The Capitalist Manifesto by Andrew Bernstein [pages 380-382].)

Like Hoover, Bush's policies paved the way for a statist Democrat president to follow. Like Hoover, Bush is becoming a symbol of the failure of free market or laissez-faire economics. Bush, like Hoover, handed a gift to the American Left; failed statist policies masquerading as failed free market policies.

But any objective assessment reveals that to hold the Hoover Administration up as proof of the failure of free market governmental economic policies is to attack a huge straw man. Likewise, any objective assessment of the 2008-09 Great Recession and its causes reveals that to hold the Bush Administration up as proof of the failure of free market governmental economic policies is to attack a huge straw man. Some day, both the 1930s Hoover/Roosevelt great depression and the modern Clinton/Bush housing bust-financial crisis-Great Recession is to attack another straw man. Both Hoover and Bush were statist, not free market presidents. 

We must recognize the Great Depression and Great Recession for what they were…the utter failure of statism and central planning.

Related Reading:

The Financial Crisis and the Free Market Cure—John A. Allison

Hey “Liberals”: Obama Has Nothing On Your Should-be Hero Bush

1 comment:

Steve D said...

Funny how as we move progressively (pun intended) towards statism; our recessions get longer, harder and more frequent while our recoveries become weaker and slower.