The Hooverization of Bush

March 27, 2005
         Poor Herbert Hoover, the round-faced Stanford-educated wonderboy of the 1920s boom, who got elected president in 1928 on the strength of his performance as an economic management wizard, was corn-holed by the 1929 stock market crash and humiliated by several years of depression that followed it. Hoover's reputation never recovered, and he lived a long life -- another three decades -- under a cloud of ignominy.

      A similar, though probably much worse, fate now awaits George W. Bush. The Great Depression, however, was milder than what Bush (and America) now faces.

      When Franklin Roosevelt came on board in 1933, he remarked that we had "nothing to fear but fear itself." This now-hoary phrase was much more precise and astute when first uttered than it seems after seven decades of recitation. The Great Depression was indeed a mystifying event because, as Roosevelt further observed, it happened in a society that was so fundamentally wealthy -- suffering "want amidst plenty," as FDR put it. We had barely begun pumping our stupendous oil endowment. We had productive farmland in abundance (even with the dust bowl happening) and plenty of food. We had loads of manpower, oodles of mineral resources, fabulous new industries like radio, motion pictures, cars, the world's most dynamic cities -- you get the picture. And yet the nation was on the ropes in 1933.

     The Great Depression was a crisis of credit, capital formation, and markets, not of fundamental resources. It was a crisis of the abstract markers of real wealth, not the wealth itself. It was also a symptom of the diminishing returns of industrial hypergrowth, a kind of economic hormonal disturbance. It produced strange, unanticipated consequences. Hypertrophy in manufacturing led to saturated mass markets. The industrialization of farming led first to over-production of commodities and then to the dust bowl (thanks to that novelty, the Ford tractor). The system seized up. Money (credit) was scarce to an extreme. Farmers went broke. Factory workers were laid off. Essentially, it was intermission in the great industrial meta-drama. Everybody went out for a smoke.

      After the convulsion of World War Two, we went back to confidently marshalling our resources with a vengence. We took all that oil, all the mineral wealth, the raw land, the timber, and other riches and directed it into the dubious-but-profitable project of building a suburban utopia. We're now in the final act of the industrial pageant, a few minutes to curtain. The Long Emergency that we're about to enter as the world passes the all-time oil production peak will be about the depletion and scarcity of things we used to have in plentitude: energy, electricity, food, water, minerals, with a new crisis of money and credit like a cherry on top.

     Herbert Hoover was vilified for doing nothing about the depression that followed the stock market crash. When we look back on the years of George W. Bush we will marvel at his failure to lead, especially his failure to inform the public that our habits of daily life would have to change, that we could not continue to burn twenty million barrels of oil a day, and spend money we hadn't earned; that we desperately had to reform our suburban land development habits, that the WalMarts and other predatory corporations had to be restrained in their systematic destruction of local economies, that our railroads needed to be rebuilt, that our borders needed to be defended, that our local small farmers needed to be supported, that our industries needed to be re-scaled and retained here, that corporate chiseling had to be policed, that finance had to be qualitatively different than a craps game in some casino.

     The Hooverization of George W. Bush has begun. Only it will go much worse for Bush. His fall could be so hard, swift and awful that he may not be allowed to finish his second term. That's how stunned the public and even their entrenched oligarchical elites will be as the economy tanks and our national life begins to unravel. The Republican majority will go down with him, including such arrant villians as Tom Delay and the hosts of corporate CEO chiselers who sold out their workers and their country. They can pray all the want. It won't help.

Comments

[oyster]

Happy Easter to Greenspan, Bush, Cheney, Norquist, Rove and the GOP Congress... et al!

If the credit bubble pops in their faces this summer, so be it. I'd advise all aspiring FDR's (are there any?) to ready themselves, and strike while the iron is hot.

[Brian Miller]

I think the degree of self-delusion among the "Christian" right is such that they will still support the annointed one-no matter what.

[sillycanuck]

Good article Jim. And scary part is that it is not "off the wall".

[Weaseldog]

I can see the writing on the wall for a downturn, but is the their ample reason to believe in a depression forming up this year?

[orionoir]

there would have tb a trainwreck of the first order to stop today's hot trend of growth and bubbling markets. there is so much cash under the mattress waiting to become the fuel of the greater fool.

the old consensus was that doom would originate in the middle kingdom and first smack our shores c. san francisco. my new belief, still hot on the press, is that general motors is tinder sufficient & necessary for a blow-up w/ or w/o action in the east, or in washington for that matter.

here's a guess: september 2005 (scant 6 months away) will see 20% retracement in equities, bonds, and real estate. essentially you will neither be able to run nor hide, unless you are already fishing the bottom in industries such as pharma and biotech.

if the is a black day in sept, i see wailing & gnashing of teeth exactly on par with the dustbowl, 75 years ago on the nose, 25 or 6 2 4.

i should caution, however, that my sense of timing is often one full phase out of synch with how events transpire. it's not that i'm wrong: i'm too often early.

[Andy R]

I agree - this might be a "too early" prediction.
I can see why though - so many are longing for it to happen on Bush's watch ;)
Strangely enough, last year, Joe Sobran wrote an article comparing Bush to FDR - basically comparing the growth of government that each of them fostered.
An obvious difference would be that Bush did it for no other reason than political expedience while FDR had a reason...

While I don't look forward to future economic hardship, I do believe that an end to the prosperity that has kept the US citizenry basically docile since Vietnam will usher in a new age of citizen involvement in government - whether it's at the ballot box or in the streets.
Only please, no more FDRs!!
Another Jefferson would better guide through "The Long Emergency" and leave us a free people once it ends.

[One Salient Oversight]

One of the great problems that market economics has is that power resides in the amount of money (transferable wealth) a person has. For the marketplace, one man with $1 Million is equal to 1 million men with $1 each.

What is frightening, though, is that those who champion market economics, especially those who follow the Austrian school, hold to the essential philosophical belief that economic freedom is synonymous with personal freedom. Champions of this belief, such as Milton Friedman, argue that a truly free society is one in which a person is able to freely buy and sell, and to freely invest and to borrow, without any restraints imposed by the community at large.

Such an economic philosophy has become quite powerful, especially in the decades since the last oil crisis. The rich are now seen to be heroes, those whose investment decisions oil the cogs of the economy and provide employment for millions of people. The boss, once hated for his greed and selfishness, is now praised for his hard work, for his enlightened self-interest and for his intelligent risk-taking.

Yet the fact remains that the market values money over people. The marketplace does not care about poverty levels or preventable diseases or other things - yet there is no doubt that these things (amongst many), if addressed properly, may in fact benefit the market.

It all comes down to the fact that a market economy is incapable of running a functional society. Limits must be placed upon how and where money it is used - you can't hire an assassin to kill your competitors, for example, without society frowning upon it.

But limits are also expressed in economic structures like taxation and government spending. Many Western nations have universal health care that is funded by taxation, rather than leaving each individual to fend for themselves in a free market. The same can be said for education and law enforcement. There is no doubt that people who live in these societies are grateful for the care they can know they will receive.

The collapse of Communism showed that an economy cannot be controlled centrally - that individuals and groups of people were far more important in determining what was valuable than a central committee.

Yet the current situation also shows that leaving a society to market forces leads only to corruption and anarchy. The market might be strong, but it is too often blind, stupid and ignorant.

There needs to be a balance between the two systems, whereby market forces are allowed to do the things they do well, but are complemented by some forms of central planning, such as "tax and spend" efforts in areas like education and health care.

Where will such leadership come from? Certainly not the Republicans, and it is doubtful that the Democrats will even consider it without at least 5 years of recession beforehand.

[Weaseldog]

Fannie Mae is in trouble.
http://www.swissamerica.com/article.php?=SID&art=03-2005/200503211042mn.txt#anchor9

As to San Francisco, hasn't that city seen 3 month decline in real estate values?

Perhaps this will be the year of the great downturn. Economic downturns tend to follow a business quarter behind gasoline price spikes. So we may be due for another huge market and real estate correction.

[orionoir]

if i may borrow a phrase, y'all miss the point re the invisible hand of the marketplace. greed mb the obvious trait of capitalism, but in my experience (doing it for mostly finance corps) the human urge to do the right the predominates. yes, i know how naive that sounds.

to wit, i feel the following tb a self-evident untruth:

...... "Yet the fact remains that the market values money over people. The marketplace does not care about poverty levels or preventable diseases or other things - yet there is no doubt that these things (amongst many), if addressed properly, may in fact benefit the market." .....

eg, if the (western industrial) market truly is so self-deluded as to have no regard for the prevention of disease, how may we explain the existence of such institutions as (public sector) cdc in atlanta, (semi-private, elitist) yale school of epidemioly in new haven, or pfizer corp (private, profit-seeking in nyc? i believe all these entities value human well-being ahead of profits. once again, tell me i am a child.

milton friednam's work is often misrepresented by greed's apologists. imho, the guy was a careful scholar, as was that whle chicago bunch. their conclusions may now seem reprehensible, but their approach to the truth remains unassailable.

[Weaseldog]

Is the CDC a market based institution, last I heard it wasn't.

Cholestrol control drugs are good for you. Take lot's.

People tend to be good. They dump nuclear waste down storm sewers in England. Dump nuclear waste overboard off the coast of Africa. Dump toxic waste on abandoned lots. Pollute the water supply with pesticides, herbicides and fertilizers. Declare imminent domain to destroy neighborhoods and convert them to shopping malls. Good people also keep two sets of books and steal millions from their investors. Good people dump cyanide on reefs, killing thousands of years of habitat growth, for a few hundred pounds of sushi.

Yup, people and market places always do the right thing. That's why we have no crime.

[Dave]

One problem is that the nature of our national personality has so changed under the regime of mandatory consumption supported by ceaseless advertising is that we are going to be faced with huge numbers of depressed and suicidal individuals. We need to create some kind of therapeutic support system similar to the AA movement which goes much deeper allowing for material supports along with emotional and psychological benefits. What shape that will take remains a mystery but one aspect of it I'm certain about is that it will be involved with cutltivation of the land within urban environments to secure food security. VICTORY GARDENS ! They are coming back for good when this depression hits. Dave

[kd]

"their conclusions may now seem reprehensible, but their approach to the truth remains unassailable"

What "truth"?

I dare say orionior misses the point.
People ie individual human beings may value people over money, but the market does not.
The market is neither moral nor immoral, only individual human beings have that distinction.

[orionoir]

if "the market" is not an expression of human thought & behavior than what pray tell is it?

[kd]

Of course the market is an expression of human thought & behavior. So is a machine.
But a machine in itself is not "interested" in its effect on human beings. Nor is "the market", when you speak of it (which it seems you do) as a kind of entity.

To be honest, I'm not sure I understand what you're driving at. That "the market" in itself is primarily a force for good?
And when we say "the market" (at least in this case) are we not speaking of corporatism aligned with government, not the independent small shop owner?

[orionoir]

i suppose my real point is that i want tb hooverized just like george w...

(to market, to market, to market off we go)

[Weaseldog]

Governments are an expression of human thought and behaviour.

Terrorist acts are an expression of human thought and behaviour.

Serial killers that torture their victims are expressing human thought and behaviour.

Hooverized :)

[Andy R]

There you go - Governments, Terrorists and Serial Killers - the worst of human thought and behavior, all in one neatly wrapped bundle.

How about we consider the free market in it's purest sense - individuals living in a community of individuals, each acting in their self-interest, constrained by the relationships they have with others in the community; without the burden of a strong central government prone to the undue influence of those who would use government power towards their own selfish ends.
Let's further consider that without that strong central government, we wouldn't have the even more oppresive tyranny of those who would decide what is in the best interests of the rest of us and who would seek to use that power "for the greater good" (as they see it) and consequently visit an even greater tyranny on citizens who are perfectly capable of running their own lives.
The perception of free markets has morphed into an indictment of every excess that has come from the departure from the free market ideal, starting with the Federal Reserve's gaining control of the money supply, which allowed the government the power to make the screwy decisions that exacerbated the Great Depression, and then tried to fix it by making more screwy decisions and basically taking us from one abortion to another, culminating in, I guess - the retirement of Mr Greenspan in time for him to become the Calvin Coolidge of the 2000's. How's that for a metaphor?
Did I jump too far ahead on that? - I was on a roll there...

I wouldn't trash the Austrian school of economics - they are right on target if you consider the free market without the skewed behavior borne of government interference. We should ask: Would free market behavior have caused less harm if there were no strong central government prone to the influence of the less scrupulous among us?
Maybe the answer is that there are periods in which it is necessary for checks and balances to temper free market excesses and that is when people turn to a stronger government to serve that end. But the problem then becomes, what will check the inevitable government excesses that are sure to follow?
That is what is long overdue and what was hoped for when Reagan was elected and again in the 1994 elections.

But it didn't happen because right-wing ideology got in the way and the Republicans discovered that they one hell of alot of power, thanks to the last 60 years of growth in the Federal government.

I think that is where we are now and why we should not be looking to use that power to serve other ends, but instead we should curtail it altogether and start over.
So rather than advising all aspiring FDRs to "strike while the iron is hot," maybe we should look for a Paul Revere, a Thomas Paine or better yet, a George Mason to remind us of our birthright.

[Dave]

Given the turmoil that lies ahead for each of us and for all that is worth loving and serving pehaps it is time the genius element that lies with the human mind create a new religion. A religion that will bridge the roiling, killing seas of dangerous madness that awaits the advent of the universal age of scarcity. Certainly that is what the times are calling for and the question is will the challenge of this time be answered by the genius inherent within the mind of man. Dave

[Cathode Ray]

Somehow Dave, I don't think so. Most likely scenario is crash and burn followed by die off.

Genius human mind thinking up something to believe in? People will believe almost anything when they are in trouble. Aint worth s**t if it aint real.

Trouble and strife along the way? Certainly. Plenty of people are experiencing that already

[Andy R]

Kunstler has an article in this month's Rolling Stone - appears to be somewhat of a sneak preview of his upcoming book.
Check it out:
http://www.rollingstone.com/news/story/_/id/7203633?rnd=1111797407968&has-player=true&version=6.0.12.1040

[davidog]

"How about we consider the free market in it's purest sense - individuals living in a community of individuals, each acting in their self-interest, constrained by the relationships they have with others in the community;"

it is that constraint part that is the grit in the ky jelly: the rich, mostly, have no relationship, in their insectile minds, to the actual productive part of society. (like me!) the wealthy parasites- w's base- want to buy an island, mine the perimeter, and give the rest of us the finger.

if you support w, suck my tax-payin' dick. you are a tick on the neck of a dying deer. i don't care if you live or die. you are killing the rest of us, and you will go down with us, whether your get it or not. fuck you.

[Andy R]

Directly above this one; lies the first post to this blog worthy of the delete button...

[davidog]

gosh, andy, good to be worthy of something. did my language offend you, or my sentiment?

[Art]

Never credit a libertarian for knowing when to shut up.

Oh, and about that Economics 101 stuff: it's crap.

Thanks Davidog, for choosing the right moment to lose it.

[Stranger]

davidog,

Though your point is good, the way that you presented is probably what drew Andy R's ire.

"How about we consider the free market in it's purest sense - individuals living in a community of individuals, each acting in their self-interest, constrained by the relationships they have with others in the community; without the burden of a strong central government prone to the undue influence of those who would use government power towards their own selfish ends."

What one must ask here is about the opposite extreme: those who would use the absence of government power towards their own selfish ends. As davidog pointed out, your constraints don't work when a portion of the population seperates itself from the rest of the community as have the uber rich of modern America. When this occurs and those who do the work are seperated from the benefits that work provides while those who do benefit are no longer pratically involved in the creation of their own wealth (as has arguably happened here - the CEO gets the benefits, the worker gets pay cuts), then that economic system breaks down.

I believe that is what davidog was trying to point out.

Now I don't know what part of the economic strata you're in but from where I am sitting and where davidog is probably sitting, it is not government excess that are the problem, it is the excesses of the wealthy who have managed to beat a broken system. That's what I see when I look at the government, not an excessively powerful one but an excessively powerless, nonfuctional, and bloated orginization. It isn't that the government is being excessive, it is that it is no longer capable of effectively curtailing free market excesses. The excesses that are causing the difficulties aren't the government's excesses but the excesses of the wealthy. From this perspective just cutting that bloat while not restoring its functions will just lead to another laissez faire disaster like the first Great Depression.

As such and in this frame of mind, the initiatives of George Bush are seen not as curtailing government power but a selling out of that government to the offenders. Your reasoning is thus seen as something like saying government bribery is a problem so the solution is to do away with police officers. Sure you might see the government interference as unwanted and not needed if you are the uber rich, but if you're not then that same governmental interference is no longer a negative as it serves to prevent those abuses being visited on the general public.

As for Dave and his religion, there is a new religion already being formed but not in the form Dave invisions it. The driving heart of this new religion has nothing to do with the genius inherit in the minds of men but the brutality and selfishness inherit in the blackest depth's of the human heart. The religion is not one that will lead us through the turmoil peacefully, it is the one that will create that turmoil. It is the path through the battle, not through peaceful encounters, but through walking over the corpses of fallen enemies.

You can aready see it forming. Bush's rallying cry for fake freedom, a war against tyranny for the sake of American tyranny. China currently looking to secure long term future oil supplies. It is an unfortunate reality that in turmoil, the genius of man to survive it is never put towards any enlightened philosphy but to the art of killing others for one's own benefit.

As to the possibility of impending economic disaster, there is the housing bubble getting set to burst, Fannie Mae in trouble, AIG under investigation, GM in trouble, US Airways in trouble, higher long term energy costs, inflation rising, the US dollar's stability coming under question, trade deficits creating ever more worry, national deficits creating ever more worry. And even if we survive all that, there is the yearly surplus of social security set to disappear as early as 2008. The question is with this much pressure, how long can the economy continue without some major downturn? The stock market is already starting to tumble.