Friday, March 6, 2009
Brad DeLong's Distortion of Hoover Record Reaches New High (Low)
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:
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:
(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.
UPDATE: Here is DeLong's full response. Here is Steve Horwitz crying foul.
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.
UPDATE: Here is DeLong's full response. Here is Steve Horwitz crying foul.
Comments:
got to love it when you call people out on taking a quote way out of context to prove an argument...
Doesn't deLong realize that political doublespeak existed in the 1930s too?
Doesn't deLong realize that political doublespeak existed in the 1930s too?
Par for the course in regards to DeLong. You would think a blogger would realize such behavior would be nearly instanteneously revealed by someone.
# posted by 
: March 6, 2009 1:32 PM
: March 6, 2009 1:32 PM
Larry White has a paper that roughly says, "Mellon may not have said the line about liquidating everything..."
White says the quote comes from Hoover about what he thought he remembered Mellon saying but White produces some evidence that Mellon did not think/talk like that in other quotes.
White says the quote comes from Hoover about what he thought he remembered Mellon saying but White produces some evidence that Mellon did not think/talk like that in other quotes.
# posted by : March 6, 2009 2:39 PM
: March 6, 2009 2:39 PM
Doesn't deLong realize that political doublespeak existed in the 1930s too?
I think you may have misunderstood, though, Zach. Hoover wasn't engaging in doublespeak. He said quite clearly, "Some members of my administration wanted me to stand back and do nothing. But I didn't listen to them."
I think you may have misunderstood, though, Zach. Hoover wasn't engaging in doublespeak. He said quite clearly, "Some members of my administration wanted me to stand back and do nothing. But I didn't listen to them."
von Pepe,
That doesn't surprise me, and you're right to bring up that we are here relying on Hoover's recollection of Mellon's advice, written many years after the fact. (Perhaps Hoover jotted it down in his diary the day it happened; but in his autobiography I don't think he said.)
That doesn't surprise me, and you're right to bring up that we are here relying on Hoover's recollection of Mellon's advice, written many years after the fact. (Perhaps Hoover jotted it down in his diary the day it happened; but in his autobiography I don't think he said.)
Michele Boldrin stands up to the bully delong on the Hoover subject at 84:34 of the video.
# posted by : March 6, 2009 4:20 PM
: March 6, 2009 4:20 PM
I think that some academics are used to having the ability to quote some paragraph from some dense book that they know nobody else has ever read (recently, anyway), and essentially use that quote in any way that they want. The chances of being called out on it are so remote that it makes sense to use it when possible.
Kudos to you Dr. Murphy for catching it and at the very least, clearing up the point that Dr. Delong wants to up in our heads.
Kudos to you Dr. Murphy for catching it and at the very least, clearing up the point that Dr. Delong wants to up in our heads.
# posted by : March 6, 2009 6:08 PM
: March 6, 2009 6:08 PM
Alas, the policies advocated by Mellon *were* the policies of the Hoover administration. Hoover did not:
* nationalize any banks.
* rescue any bank depositor businesses whose accounts are now frozen.
* abandon the gold standard to expand the money supply.
* do anything else to expand the money supply.
* abandon the balanced-budget principle as a constraint on relief spending.
Now there is, I think, a germ of truth in what Murphy says. Unlike Ayn Rand or today's National Review, Hoover did not believe that he had a moral duty to make the little people suffer. Unlike Ludwig von Mises or Grover Norquist, Hoover did not believe that he had a moral duty to drown government in the bathtub. Hoover was eager to use government's powers to cushion--note not cure--the Great Depression, but as long as he kept Andrew Mellon on as Treasury Secretary, he could do none of the things--nationalizing banks, rescuing depositors whose accounts were frozen, abandoning the gold standard to expand the money supply, other forms of "quantitative easing," deficit-financed relief expenditures, or indeed deficit-financed expenditures of any kind--that might have actually helped.
* nationalize any banks.
* rescue any bank depositor businesses whose accounts are now frozen.
* abandon the gold standard to expand the money supply.
* do anything else to expand the money supply.
* abandon the balanced-budget principle as a constraint on relief spending.
Now there is, I think, a germ of truth in what Murphy says. Unlike Ayn Rand or today's National Review, Hoover did not believe that he had a moral duty to make the little people suffer. Unlike Ludwig von Mises or Grover Norquist, Hoover did not believe that he had a moral duty to drown government in the bathtub. Hoover was eager to use government's powers to cushion--note not cure--the Great Depression, but as long as he kept Andrew Mellon on as Treasury Secretary, he could do none of the things--nationalizing banks, rescuing depositors whose accounts were frozen, abandoning the gold standard to expand the money supply, other forms of "quantitative easing," deficit-financed relief expenditures, or indeed deficit-financed expenditures of any kind--that might have actually helped.
brad: "Hoover did not...abandon the balanced-budget principle as a constraint on relief spending"
If Hoover didn't then neither did FDR, judging by the UCSB chart that Bob links. Hoover's deficits look a lot like FDR's. In Hoover's last two budgets, outlays doubled receipts...in the fiscal year that began October 1, 1937, the budget was balanced...plenty of odd-looking facts like that in the table.
brad: Hoover was eager to use government's powers to cushion--note not cure--the Great Depression
Was there any reason then to believe the government could "cure" panics, recessions or depressions? Is there any reason to believe such today?
If Hoover didn't then neither did FDR, judging by the UCSB chart that Bob links. Hoover's deficits look a lot like FDR's. In Hoover's last two budgets, outlays doubled receipts...in the fiscal year that began October 1, 1937, the budget was balanced...plenty of odd-looking facts like that in the table.
brad: Hoover was eager to use government's powers to cushion--note not cure--the Great Depression
Was there any reason then to believe the government could "cure" panics, recessions or depressions? Is there any reason to believe such today?
Interesting debate. The debaters agree that Hoover is not a reliable witness (selective memory plays tricks even on the honest). I think the key data are the budget deficits.
If, as Brad claims Hoover rejected deficit spending, then, why were there deficits ?
An answer is that deficits were not forecast, but economic performance was worse than forecast. Since the GNP decline was unprecedented this seems likely.
So it is possible that Hoover tried very hard to balance the budget and had every reason to think he had done so, but ran persistent deficits because of persistent amazingly bad economic events.
I'd say the open and key issue is whether Hoover ever said deficits were acceptable or whether he always insisted they had to be eliminated immediately (and just failed to do so because even the most conservative revenue estimates turned out to be over optimistic).
Hoover was a fascinating person and I'd love to learn more. In any case, a civil debate in the blogosphere between two people who absolutely disagree is so novel as to be fascinating.
If, as Brad claims Hoover rejected deficit spending, then, why were there deficits ?
An answer is that deficits were not forecast, but economic performance was worse than forecast. Since the GNP decline was unprecedented this seems likely.
So it is possible that Hoover tried very hard to balance the budget and had every reason to think he had done so, but ran persistent deficits because of persistent amazingly bad economic events.
I'd say the open and key issue is whether Hoover ever said deficits were acceptable or whether he always insisted they had to be eliminated immediately (and just failed to do so because even the most conservative revenue estimates turned out to be over optimistic).
Hoover was a fascinating person and I'd love to learn more. In any case, a civil debate in the blogosphere between two people who absolutely disagree is so novel as to be fascinating.
Robert: If, as Brad claims Hoover rejected deficit spending, then, why were there deficits ?
An answer is that deficits were not forecast, but economic performance was worse than forecast. Since the GNP decline was unprecedented this seems likely.
So it is possible that Hoover tried very hard to balance the budget and had every reason to think he had done so, but ran persistent deficits because of persistent amazingly bad economic events.
This doesn't make sense. Look at the table: receipts for the FY starting 10/1/31 were 1.9 billion...and yet expenditures for the FY starting 10/1/32 were 4.6 billion. Surely, in planning the latter budget, the government did not expect that its receipts were going to come in 150% higher than they had the year before.
An answer is that deficits were not forecast, but economic performance was worse than forecast. Since the GNP decline was unprecedented this seems likely.
So it is possible that Hoover tried very hard to balance the budget and had every reason to think he had done so, but ran persistent deficits because of persistent amazingly bad economic events.
This doesn't make sense. Look at the table: receipts for the FY starting 10/1/31 were 1.9 billion...and yet expenditures for the FY starting 10/1/32 were 4.6 billion. Surely, in planning the latter budget, the government did not expect that its receipts were going to come in 150% higher than they had the year before.
There is only one year before Hoover on the chart, even though it says it's supposed to start with T. Roosevelt.
Hey folks, let me just clarify some stuff about the federal budgets back in the day.
First, it's a bit weird that the site I linked to lists 1934 as a Hoover budget. I think that should probably be counted as an FDR one.
What's going on is that back then, the president got sworn in in March 4th, and the fiscal year started in July. So Hoover was elected in November 1928, was sworn in in March 1929, and the fiscal 1930 budget started in July 1929. So I think that's why the people who assembled that list classified FY 1930 as a Coolidge budget, since Hoover would have only been in office 4 months when it started.
(In contrast, nowadays the president gets sworn in in January, and the fiscal year starts in October. So it's much easier for Obama--elected in 2008--to be responsible for the FY 2010 budget.)
So if you're going to say Coolidge gets the credit/blame for the 1930 budget, then by consistency you might say Hoover gets all the budgets through FY 1934.
However, that's probably wrong because the whole "100 hundred days" etc. under FDR were revolutionary, and I am almost positive that legislation affected the FY 1934 budget (which started July 1933.)
Last point: It's true that link doesn't give you the earlier federal finances. If you want to see a bigger picture, and appreciate just how profligate Hoover was compared to his predecessors, I show you where to look in this blog post.
As far as Brad DeLong's follow-up, the other stuff is debatable but he is obviously wrong if he's claiming that Hoover shied away from deficit spending as a way to try to ease the Depression. It's true, DeLong (and Krugman) can always say, "Well he didn't spend enough!" but let's give the guy credit for basically doubling federal spending as a percentage of GDP in two years. That's pretty radical, no? How anybody can call that a liquidationist strategy is beyond me.
First, it's a bit weird that the site I linked to lists 1934 as a Hoover budget. I think that should probably be counted as an FDR one.
What's going on is that back then, the president got sworn in in March 4th, and the fiscal year started in July. So Hoover was elected in November 1928, was sworn in in March 1929, and the fiscal 1930 budget started in July 1929. So I think that's why the people who assembled that list classified FY 1930 as a Coolidge budget, since Hoover would have only been in office 4 months when it started.
(In contrast, nowadays the president gets sworn in in January, and the fiscal year starts in October. So it's much easier for Obama--elected in 2008--to be responsible for the FY 2010 budget.)
So if you're going to say Coolidge gets the credit/blame for the 1930 budget, then by consistency you might say Hoover gets all the budgets through FY 1934.
However, that's probably wrong because the whole "100 hundred days" etc. under FDR were revolutionary, and I am almost positive that legislation affected the FY 1934 budget (which started July 1933.)
Last point: It's true that link doesn't give you the earlier federal finances. If you want to see a bigger picture, and appreciate just how profligate Hoover was compared to his predecessors, I show you where to look in this blog post.
As far as Brad DeLong's follow-up, the other stuff is debatable but he is obviously wrong if he's claiming that Hoover shied away from deficit spending as a way to try to ease the Depression. It's true, DeLong (and Krugman) can always say, "Well he didn't spend enough!" but let's give the guy credit for basically doubling federal spending as a percentage of GDP in two years. That's pretty radical, no? How anybody can call that a liquidationist strategy is beyond me.
Am looking forward to your book on the New Deal. Am just wondering, does it address the rapid increase in GDP in the 1930s? This is the argument the Keynesianisn use to claim Roosevelt "saved" the country.
# posted by : March 7, 2009 8:54 AM
: March 7, 2009 8:54 AM
Richard wrote:
Am looking forward to your book on the New Deal. Am just wondering, does it address the rapid increase in GDP in the 1930s?
The book will make all your dreams come true.
Am looking forward to your book on the New Deal. Am just wondering, does it address the rapid increase in GDP in the 1930s?
The book will make all your dreams come true.
Wonderful job; DeLong should be ashamed.
I am wondering whether you have read Eugene Lyons' biography of Hoover? His revelations, if they are to believed, are truly mind-blowing. However, the biographer himself admits to being highly biased in his appraisal. I am wondering what you think.
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I am wondering whether you have read Eugene Lyons' biography of Hoover? His revelations, if they are to believed, are truly mind-blowing. However, the biographer himself admits to being highly biased in his appraisal. I am wondering what you think.
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