Folks, I really have been trying to avoid accusations of dishonesty. As someone who has made strong claims that he’s later come to regret, I know that it is always safest to merely attribute intellectual error to someone who is completely (and demonstrably) misleading his audience on an important point. (Note that one can mislead unintentionally.)
For example, here I defended DeLong against Eugene Fama/Greg Mankiw (even though it caused me physical pain) and in the comments here I tried to get Steve Horwitz to back off accusing Paul Krugman of deliberately lying about Hoover’s record. So I sincerely hope Prof. DeLong didn’t realize that he was misleading his audience as I am about to explain. He has read my blog posts before (presumably because he traces the links or has Google Alerts on) so I also invite him to clarify here in the comments.
OK, so go to this site and start the video at 12:00. DeLong tells us:
Now Prof. Boldrin is following a very old trail, all right, his trail was in fact the ruling theory behind the Hoover Administration’s policies in the 1930s. And to quote from President Herbert Hoover’s autobiography, during his administration economic policy was made by quote “the leave-it-alone liquidationists headed by my Secretary of the Treasury Mellon, who felt the government must keep its hands off the economy and let the slump liquidate itself.”
DeLong goes on to list the shocking things that Mellon advocated, such as liquidating the farmers and labor, and how the panic would be a good thing to purge the rottenness out of the system.
Then DeLong stops quoting from Hoover’s autobiography, and explains that this view is the same of the Austrian economists who were at the LSE at the time. DeLong then refers to Milton Friedman who agreed with DeLong that these guys were nutjobs.
OK, so what’s the problem? Well, DeLong didn’t invent that long quotation–it is right from Hoover’s autobiography.
HOWEVER–and this is a big qualification–Hoover did NOT say that these were the views that ruled his administration’s policies. In the sentence right before where DeLong started reading, Hoover says: “Two schools of thought quickly developed within our administration discussions. First was the ‘leave it alone liquidationists’ headed by…”
Hmm, already that’s a little different from the picture painted by DeLong. Then, if we go to a mere three paragraphs (in my edition you don’t even have to turn the page) after the Mellon money line about purging the rottenness out of the system, Hoover says:
But other members of the Administration, also having economic responsibilities–Under Secretary of the Treasury Mills, Governor Young of the Reserve Board, Secretary of Commerce Lamont and Secretary of Agriculture Hyde–believed with me that we should use the powers of government to cushion the situation.
(These quotations come from pages 31-32 of The Memoirs of Herbert Hoover: The Great Depression, 1929-1941.)
Last point: One might think that Hoover is merely trying to cover his butt in his autobiography, and that at the time he really did side with Mellon’s counsel. But not if we use deficit spending as a measure of interventionism. As this chart shows, Hoover completely reversed the trend of the 1920s–when there was a budget surplus in every single year–and ran the largest US peacetime deficits in its history following the stock market crash. There were plenty of other things he did too, making Hoover perfectly correct in his campaign against FDR in 1932 when Hoover claimed he had done more to fight the depression than any previous president in US history. This will all be documented in my forthcoming book.