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Published On: Mon, Jun 4th, 2012

The Amnesia Economist by Dr William Anderson

One of the supposed rules for New York Times columnists is that they not endorse candidates or be overly politically partisan in what they write. That is a howler, of course, as the entire newspaper is little more than the house organ for the “respectable” Left in the Democratic Party. This is a newspaper, of course, that prattles on about how DNA “exonerates” people charged with certain crimes, but was absolutely certain in the Duke Lacrosse Case that DNA did not matter at all.
(The paper wanted us to believe that three drunken young men could rape, beat, and ejaculate on a woman for 30 minutes in a tiny bathroom, leave in a hurry without cleaning up anything, use no chemicals to eradicate the mess, and yet not leave one speck of DNA. Instead, the paper insisted, they used what only could be described as a “magic towel” that would make her DNA disappear, not collect the DNA of two of the “rapists,” but have only the DNA of one person. But, according to the self-proclaimed “Newspaper of Record,” this was “proof” of a rape.)
I make this lengthy point about the NYT because this is a paper that openly and arrogantly contradicts nature itself, as the people who write for the paper, including the vast majority of its columnists, believe that laws of time and space do not apply to them. That makes them free to rewrite history and declare themselves to be akin to the Masters of the Universe.
So it is with Paul Krugman, who this week calls Mitt Romney the “Amnesia Candidate” because Romney dares hold Barack Obama’s policies as being responsible for there not being any real economic recovery. Why everyone at the NYT and Princeton KNOWS that EVERYTHING is the fault of George W. Bush BECAUSE HE CUT THE TOP INCOME TAX RATE FROM 39.6 PERCENT TO 35 PERCENT. Yes, anyone who knows ANYTHING about economics knows that slightly lowering income tax rates will cause massive unemployment, or that least that is what Krugman wants us to believe.
(And, please note that Krugman on numerous occasions has claimed that cutting tax rates has been a major cause of the downturn because, as every good Keynesian knows, government always spends more wisely than individuals can and will spend for themselves.)
At the present time, I am working on a project about the Great Depression and today, I will be writing about Herbert Hoover’s response to the stock market crash of 1929 and beyond. In my research, I came upon this gem from Krugman. First, the Hoover quote:

It cannot be borrowed without impairment of the credit of the National Government and thus destroy that confidence upon which our whole system depends. It is unthinkable that the Government of the United States should resort to the printing press and the issuance of fiat currency as provided in the bill which passed the House at the last session of Congress under the leadership of the Democratic vice presidential candidate. Such an act of moral bankruptcy would depreciate and might ultimately destroy the value of every dollar in the United States.

Then, Krugman declares:

This should (but won’t) dispel the myth that Hoover was some kind of proto-Keynesian. But look,also, at how closely Hoover’s line of argument follows that of Very Serious People today.

 Yes, one quote from Hoover means that Hoover never called a conference of business and labor leaders in 1929 and demanded that they keep prices and wages high no matter what was happening in the economy. Hoover enthusiastically signed the disastrous Smoot-Hawley Tariff, despite receiving a letter signed by 1,000 economists begging him to veto it.
Hoover never pushed through massive public works projects and Guy Rexford Tugwell, a close adviser to Franklin Roosevelt, never declared, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.” Hoover did not resurrect the War Finance Corporation to become the Reconstruction Finance Corporation (which today exists as the Small Business Administration) to make massive loans to failing companies. (After all, Hoover was a “liquidationist” and wanted the entire economy of the USA to go under so he could support the principles of “laissez-faire.”)
Of course, Hoover was a True Believer in “laissez-faire” and he never was a Progressive, although he had convened a conference in 1921 on business cycles, and at the conference he did not declare that the standard government approach to a downturn (not to intervene) was outdated and that government needed to expand credit and engage in public works programs.

Politicians and pundits portray Herbert Hoover as a defender of laissez faire governance whose dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the stock market crash in 1929. In fact, Hoover had long been a critic of laissez faire. As president, he doubled federal spending in real terms in four years. He also used government to prop up wages, restricted immigration, signed the Smoot-Hawley tariff, raised taxes, and created the Reconstruction Finance Corporation — all interventionist measures and not laissez faire. Unlike many Democrats today, President Franklin D. Roosevelt’s advisers knew that Hoover had started the New Deal. One of them wrote, “When we all burst into Washington…we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself.”

When Herbert Hoover returned to the USA after his tour of Europe following World War I, he did not outline a new economic and social “vision” for the country that so excited Progressives that “Louis Brandeis, Herbert Croly of the New Republic, Colonel Edward M. House, Franklin D. Roosevelt, and other prominent Democrats for a while boomed Hoover for the presidency.”
You see, the facts about Herbert Hoover are quite inconvenient when one wishes to portray him as something he clearly was not. So, one takes one quote from Hoover to “prove” that nothing else that historians have written about him is true. After all, when one is trying to promote a myth, a little amnesia cannot hurt.
Like the writers at the NYT during the lacrosse case, Krugman knows that if he continues to make untrue declarations, few readers will do fact-checking. After all, the Duke boys were white and “privileged,” so they MUST have raped Crystal Mangum.
Likewise, Hoover’s entire career was devoted to Progressive causes and the paper trail is long, but when Paul Krugman tosses all of the facts down the Orwellian Memory Hole, then he must be right because, after all, he is a decorated and famous economist.

Check out the “Krugman in Wonderland” posts here on DOB – click here


William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

Read more at “Krugman-in-Wonderland”

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About the Author

- William L. Anderson is an author and an associate professor of economics at Frostburg State University in Maryland. He is also an adjunct scholar with the Mackinac Center for Public Policy as well as for the Ludwig von Mises Institute in Alabama.

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