Posted by: David Offutt | April 25, 2009

Plutocracy: The Great Depression and the Periodic Return of the Republican Policies of Herbert Hoover

wall-street Republican Herbert Hoover dominated the 1920s, first as Harding and Coolidge’s Secretary of Commerce and then as President. He “returned” the nation to the 1880s and ‘90s: a time of plutocratic rule, government by the few with great wealth; a time of laissez-faire, in which the government didn’t help the people and didn’t regulate Big Business; and to a time of “trickle-down” economics, in which the government helped the wealthy and presumed the people would benefit by receiving jobs. The result was the Great Depression! The stock market crashed, millions of jobs were lost, banks closed and deposits were lost, homes and farms were foreclosed, and nobody had any savings to fall back on.

When Democrat Franklin Roosevelt won the Election of 1932, someone told him that if he could get us out of the depression he would be the greatest president in American history. FDR reputedly responded, “If I don’t get us through this mess, I may be the last president in American history.” That really wasn’t much of an exaggeration. Capitalism had failed, and revolt from the masses was already underway. Unemployed, fearful, hungry, homeless people are often willing to give up their freedoms in exchange for security; but FDR was offering them a “New Deal.” Before the people gave up on their democratic system in favor of a dictatorship under fascism or communism, they wanted to give him a chance to save it.

The New Deal consisted of relief, recovery, and reform. Many public works projects were created that provided jobs constructing public buildings, roads, bridges, dams, and parks. Agencies were created to insure bank deposits, to regulate practices on Wall Street, and to regulate fair business practices. Workers were guaranteed a minimum wage and the right to form unions, which led to the rise of our large middle class. The crown jewel was the Social Security Act. Republicans accused FDR of being “a traitor to his class.” They expected him to help his own kind – the wealthy, not the common folk.

The New Deal’s dramatic success has been the inspiration for all Democratic presidents since, including Harry Truman’s “Fair Deal,” John F. Kennedy’s “New Frontier,” and Lyndon Johnson’s “Great Society.” Jimmy Carter, too, although he holds the unfortunate distinction of being the only Democrat since FDR to have had a really bad economic year – it was the inflation-plagued 1980, an election year!

The passage of time, faded memories and/or the apathy of voters intermittently cause us to return to Hooverism and flirt with policies that gave us the Great Depression. In the 1950’s the Republicans returned to the White House with Dwight Eisenhower. Their efforts to restore the plutocracy, laissez-faire, and balancing the budget three times led to three recessions, which inspired JFK’s slogan during his 1960 campaign: “We need to get the country moving again.” However, Eisenhower refused to try to undo the New Deal, which was what his party expected him to do.

Republican Richard Nixon (1969-74) was a firm opponent of government regulation of Big Business and otherwise was interested only in foreign policy. Howard K. Smith, the ABC news anchorman, said that Nixon’s eyes would glaze over when asked about domestic issues. In his negotiations for a Strategic Arms Limitation Treaty with the Soviet Union, Nixon sold our surplus grain to the Russians at a bargain price. As a result, our food prices began to soar. Meat became extremely expensive. When Nixon was asked about how consumers were to get their diet of protein, he answered, “Eat cheese.”

Inflation caused prices to go up on everything, so Nixon was routinely asked what he planned to do. His answer was always the same: “The game plan is working.” He didn’t plan to do anything! Things got even worse when OPEC created an oil shortage causing gas and all other related prices to shoot up. Not wanting to be the next Herbert Hoover, Nixon finally acted. He mandated wage, rent, and price controls and even asked for personal sacrifices: he wanted us to set our heating thermostats at 68 degrees and reduce highway speed limits to 55 mph. When he was compared to FDR, Nixon lost whatever conservative support he still had!

In 1988, no Democrat with any national name recognition wanted to run for president – Michael Dukakis (who?) got the nomination. The reason was that no one wanted to be the next Herbert Hoover. Eight years of Ronald Reagan’s reckless economic roller-coaster ride of laissez-faire, trickle-down, borrow-and-spend policies had increased the annual deficit and national debt and had created pockets of depression scattered around the country. Everyone expected a major economic disaster. Reagan was known as the “Teflon President” because nothing he did ever stuck to him. Whoever followed him would surely be blamed for whatever happened.

Incredibly, Republican George H. W. Bush won the election in 1988 with a negative campaign and a foolish promise of “Read my lips: no new taxes.” However, he broke his promise because the housing market completely collapsed, the economy stagnated, and the national debt and deficit continued to soar. He knew he had to do something. It was he in 1980 who described Reagan’s economic policy as “voodoo economics.” The economy did begin to grow again, but it was so imperceptible that the public failed to notice. Bill Clinton defeated Mr. Bush in 1992 with a campaign focused on “It’s the economy, stupid.”

The Elections of 2000 and 2004 are recent prime examples of voters’ periodic willingness to throw caution to the wind and give Hooverism another chance.  About half the voters rejected the possibility of four more years of Clinton-Gore prosperity and chose to return to a plutocracy of laissez-faire, trickle-down economics. Apparently, those voters hoped that Bush-Cheney might be the first to make Hooverism work for the good of all. No one should be surprised at the deplorable results.

Since the 1930s, Democratic safety-net programs (Social Security, Medicare, Medicaid, et al.) have prevented Republican recessions from slipping into Hoover-like depressions. However, even during the 2008 campaign,  Republican presidential nominee John McCain wanted to cut back and/or privatize those programs so he could make Bush’s tax cuts on the wealthy permanent! The Democrats, led by President Barack Obama, will have their work cut out for them in 2009. Even after selfish and irresponsible Republican policies have messed things up seemingly beyond repair, FDR and, more recently, Bill Clinton proved that it is possible to turn the country around.

by David Offutt
Revised October 14, 2009: A version of this essay was published June 3, 2008,
in the El Dorado News-Times as a letter to the editor.

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