One of Mitt Romney's strongest selling points is that his record in business makes him particularly well qualified to set economic policy in our worst downturn since the 1930's. His shortcomings include that many people doubt whether his background as a corporate raider was actually useful, and his lack of experience on foreign policy and tendency to offend potential allies.
Upon hearing such things, I am tempted to ask people who hold such a view to imagine their ideal candidate for an economic crisis. You would want a President with extensive private sector success. If possible, you would prefer him to have worked in a non-financial industry, producing actual physical things, rather than speculating in paper fortunes. It would also help if he was not born with a silver spoon in his mouth, but self-made, building his company from the ground up. Since he would be our chief executive, a high degree of administrative competence would be absolutely vital. You would want him to set aside Obama's sometime adversarial attitude toward business and think of business, instead, as a partner, distrustful of government regulation, and in favor of private initiative. You would want a real fiscal conservative, one who took balanced budgets seriously and was not afraid to raise taxes on the rich in order to achieve it. You would want someone who looked upon public assistance with suspicion, fearing it would create dependency, and preferring volunteerism to government action. Still, it would be good to have someone above any possible suspicion of being a heartless plutocrat -- a leader renowned for his humanitarian work would be ideal. It would also help if his business experience was of an international scope and he was widely respected and admired the world over. And, as a final icing on the cake, how about a leader so respected by all across the political spectrum as to seem almost above partisan politics.
Is that the sort of leader you would want in the White House during an economic crisis? And then, of course, the punchline. I have good news. He was in the White House during our greatest economic crisis. His name was Herbert Hoover.
So what is one to make of Herbert Hoover? When I was growing up and going to school, we were taught that Herbert Hoover was a good man, in over his head, that he did his best under the circumstances, but his best was not good enough. He attempted to revive the economy with public works and loan assistance, but was not successful. The hatred that rained down on him was mostly undeserved, since he was simply in the wrong place at the wrong time. None of this was permitted to detract from the magnitude of Roosevelt's achievements. Simply put, we were given the impression that Hoover's best was not good enough, but Roosevelt's was.
Starting in college, I began to see right-wing views challenging this conventional view. They argued that Hoover was, indeed, responsible for the Great Depression, not because he did too little, but because he did too much. If he had only let market forces play out on their own, the economy would have quickly recovered, but he interfered and doomed things to ruin. The rejoinder to this is obvious -- if Hoover's interference made things so bad, why did the economy improve so much when Roosevelt interfered even more?
It was not until the current crisis that I began hearing serious arguments for how Hoover could be held responsible for the Great Depression. To Keynesians, his error was trying (most unsuccessfully) to balance the budget. To monetarists, Hoover damaged the economy by maintaining a dollar peg against gold. So it turns out that, yes, Hoover really did do a great deal to damage the economy. Then again, in his defense, Hoover was only doing what conventional wisdom of the day called for. Everyone assumed that the budget should be kept balanced and the gold standard maintained. Anyone else in his place would have done exactly the same thing. Indeed, Roosevelt ran for presidency in 1932 at a "Tea Party" candidate, denouncing Hoover for running large deficits and pledging to make deep cuts in spending. Devaluing against gold was a terrifying, almost unthinkable act. And even after they were discredited, the IMF continued to demand similar policies of countries in economic distress up throughout the 1980's and '90's. And now the European Central Bank is demanding the same of peripheral Europe to this day.
So my final conclusion was that what they taught us about Hoover in school was about right. He was a good man, in over his head. He did his best, but the conventional wisdom of the day (which continues to this day, despite all evidence against it) doomed him to fail. Only when conventional wisdom had been thoroughly discredited was it possible to go against it. What is clear, though, is although Hoover had perhaps the strongest private sector resume and most impressive administrative competence of any President ever, neither of these credentials did him any good when the country hit its worst economic crisis.