I’m referring to Paul Krugman’s claim that Hoover’s administration was one of governmental “austerity.” The facts, well known to economists who aren’t propagandists for the constantly expanding state, are that Hoover was the original “big government conservative,” as Don Boudreaux’s letter below shows.
Editor, The New York Times
620 Eighth Avenue
New York, NY 10018
Dear Editor:
Describing “austerity policies” as “the insistence that governments should slash spending even in the face of high unemployment” in the hope that such spending cuts will restore business confidence, Paul Krugman remarks: “If this sounds to you like something Herbert Hoover might have said, you’re right: It does and he did” (“Pain Without Gain,” Feb. 20).
Easily accessed evidence prove Mr. Krugman wrong.
Here, for example, is economist Steven Horwitz: “the real size of government spending in 1933 was almost double that of 1929. The budget deficits of 1931 and 1932 represented 52.5 percent and 43.3 percent of total federalexpenditures. No year between 1933 and 1941 under Roosevelt had a deficit that large.” Also contrary to Mr. Krugman’s claim, Hoover proudly trumpeted hisadministration’s high-spending and interventionist policies. On the campaign trail in 1932 Hoover bragged that “We might have done nothing. That would havebeen utter ruin. Instead, we met the situation with proposals to private business and the Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic.”
Mr. Krugman’s unfamiliarity with history is disturbing.
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Of course, Krugman is also mistaken in his idea that government spending “stimulates” an nation’s economy — all that does is to shift resources away from the production of goods and services consumers want to using them for things politicians want — but that’s another matter.
