Feeds:
Posts
Comments

Posts Tagged ‘Warren Harding’

We did not get good policy during the economic crisis of the 1930s. Indeed, it’s quite likely that bad decisions by Herbert Hoover and Franklin Roosevelt deepened and lengthened the Great Depression.

Likewise, George Bush and Barack Obama had the wrong responses (the TARP bailout and the faux stimulus) to the economic downturn of 2008-09.

But people in government don’t always make mistakes. If we go back nearly 100 years ago, we find that Warren Harding oversaw a very rapid recovery from the deep recession that occurred at the end of Woodrow Wilson’s disastrous presidency.

In a column for the Foundation for Economic Education, Robert Murphy has a very helpful tutorial on what happened.

…the U.S. experience during the 1920–1921 depression—one that the reader has probably never heard of—is almost a laboratory experiment …the government and Fed did the exact opposite of what the experts now recommend. We have just about the closest thing to a controlled experiment in macroeconomics that one could desire. To repeat, it’s not that the government boosted the budget at a slower rate, or that the Fed provided a tad less liquidity. On the contrary, the government slashed its budget tremendously… If the Keynesians are right about the Great Depression, then the depression of 1920–1921 should have been far worse. …the 1920–1921 depression was painful. The unemployment rate peaked at 11.7 percent in 1921. But it had dropped to 6.7 percent by the following year and was down to 2.4 percent by 1923. …the 1920–1921 depression “purged the rottenness out of the system” and provided a solid framework for sustainable growth. …The free market works. Even in the face of massive shocks requiring large structural adjustments, the best thing the government can do is cut its own budget and return more resources to the private sector.

Writing for National Review, David Harsanyi points out that there are many reasons why Warren Harding should be celebrated over Woodrow Wilson.

Wilson was one of the most despicable characters in 20th-century American politics: a national embarrassment. The Virginian didn’t merely hold racist “views;” he re-segregated the federal civil service. He didn’t merely involve the United States in a disastrous war in Europe after promising not to do so; he threw political opponents and anti-war activists into prison. Wilson, the first president to show open contempt for the Constitution and the Founding, was a vainglorious man unworthy of honor. Fortunately, we have the perfect replacement for Wilson: Warren Harding, the most underappreciated president in American history… Harding, unlike Wilson — and most of today’s political class, for that matter — didn’t believe politics should play an outsized role in the everyday lives of citizens. …Where Wilson had expanded the federal government in historic ways, creating massive new agencies such as the War Industries Board, Harding’s shortened term did not include any big new bureaucracies… Wilson left the country in a terrible recession; Harding turned it around, becoming the last president to end a downturn by cutting taxes, and slashing spending and regulations. Harding cut spending from $6.3 billion in 1920 to $3.3 billion by 1923.

Walter Block, in an article for the Mises Institute, explains that what happened almost 100 years ago can provide a good road map if President Trump wishes to restore prosperity today (especially when compared to the disastrous policies of Hoover and Roosevelt).

…let us look back a bit at some economic history regarding recessions and depressions… The depression in 1921 was short lived—maybe not a V, but at least a very narrow U. …Happily, during the 1921 depression, the government of President Warren G. Harding did not intervene…and the entire episode was over not in a matter of weeks (the V) or years (a fattish U), but months (a narrow U). The Great Depression, which stretched from 1929–41 (a morbidly obese U) stemmed from identical causes. …But Presidents Herbert Hoover and Franklin D. Roosevelt “fixed” this by propping up heavy industries whose extent was overblown by the previous artificially lowered interest rates, in an early “too big to fail” paroxysm. The Smoot-Hawley Tariff added insult to injury, and put the kibosh on any early recovery. …I now predict the sharpest of Vs, but if and only if, all other things being equal, the Trump administration cleaves to market principles. …So, Mr. President, embrace the free enterprise system, attain a V, a very narrow and sharp one, and the prognostication for November will be significantly boosted.

Professor Block’s analysis is very sound…except for the part where he speculates that Trump will do the right thing and copy Harding.

Given Trump’s awful track record on spending, it would be more accurate to speculate that I’ll be playing in the outfield for the Yankees when they win this year’s World Series.

Suffice to say, though, that it would be great to find another Warren Harding. Here’s a chart based on OMB data showing that he actually cut spending (and we’re looking at genuine spending cuts, not the make-believe spending cuts that happen in DC when politicians boost the budget by less than previously planned).

According to fans of Keynesian economics, these spending cuts should have tanked the economy, but instead we got a boom.

P.S. By the way, something similar happened after World War II.

P.P.S. Back in 2012, I shared some insightful analysis from Thomas Sowell about Harding’s economic policy.

P.P.P.S. Harding also lowered tax rates.

Read Full Post »

I wrote back in June that I was relieved about a bureaucrat from the National Weather Service getting elected to the Bureaucrat Hall of Fame.

I realize I was being jingoistic, but after selecting bureaucrats from France and India, I had been worried that foreigners were beginning to dominate the award.

But now Americans are on a roll. We have a new honoree, and she hails from one of those bureaucracies that shouldn’t exist – the Commerce Department in Washington.

Here are some remarkable excerpts from a report in the Washington Post.

A high-ranking official at the Commerce Department took at least seven government computers home, an IT smorgasbord from iPads to Dell desktops that she rarely used for work. And if that wasn’t enough, she allowed her kids to download pornography and “racially offensive materials,” an investigation found.

My main reaction is to ask why she was given seven computers. I realize that government bureaucracies waste money and have a callous disregard for taxpayer-provided equipment, but what possible rationale could there be for that many devices?

And my secondary thought is to wonder whether she “allowed” her kids to download inappropriate material or they did it behind her back.

If it’s the latter, then I’m not really sure why it matters. And I’m not even upset that she then tried to erase the info. I can understand why a parent would want to get rid of evidence that their kids were looking at porn.

When investigators started asking questions, they said, she tampered with evidence by erasing the offending material on some of the computers.

Though it’s far less excusable that she tried to penalize lower-level bureaucrats as part of her efforts to hide her misbehavior.

…and in retaliation moved to discipline a woman on her staff who cooperated with the probe.

If the information we’ve looked at was the extent of the matter, this bureaucrat wouldn’t be eligible for the Hall of Fame. However, she also engaged in other behaviors that make her a stellar candidate.

Including lavish trips with taxpayers picking up a big chunk of the cost.

This accumulation of misdeeds described by the Commerce Department watchdog in an investigative report released last week also included a layover in Paris en route to a European conference, partly funded by taxpayers. The official told colleagues her primary reason for going to the conference was to shop, the report said.

And she apparently didn’t think goofing off at her desk was a valuable use of her time, so she played hooky so she could goof off elsewhere.

Investigators said they also found a suspicious pattern of inconsistencies in when the official said she was working and what the swipe records on her security badge showed, including one day when she said she was on the clock for eight hours — but really worked just 20 minutes.

But here’s the clincher, the final piece of evidence that she belongs in the Bureaucrat Hall of Fame.

The statement doesn’t say whether the employee, a GS-15 on the federal pay scale, faces misconduct charges. She now works in another job at Commerce.

Isn’t that wonderful. Based on the GS-15 pay rules, she’s getting paid at least $125,000 per year (and perhaps as much as $158,000) and so far gets to keep her job notwithstanding serial misconduct.

A truly deserving candidate for the Hall of Fame!

P.S. I’ve previously written about America’s very quick and very successful recovery from a deep recession thanks to good fiscal policy in the early 1920s.

Writing for the New York Times, Ronald Radosh and Allis Radosh argue that the President during that time, Warren Harding, is mistreated by history. They start by noting Harding’s low ranking.

From the first poll of historians ranking the presidents, conducted in 1948 by Arthur M. Schlesinger Sr., to the most recent one in 2015, Harding has always come in either at the very bottom of the list, or one above James Buchanan.

They then point out that Harding took office during a grim period.

By the time Harding was inaugurated, in March 1921, the nation was in the doldrums, experiencing a postwar depression. In 1918, four million doughboys came home from the war and many could not find jobs. Unemployment hit African-American soldiers especially hard, and race riots broke out in the Midwest industrial belt. Harding, much like Ronald Reagan in 1980, brought an upbeat message to Americans.

And the part of that upbeat message that gets me juiced is smaller government.

A fiscal conservative, he pledged to right the nation’s finances and resuscitate the economy by lowering taxes, reducing the debt, balancing the budget and making government smaller and more efficient. …By…June 1922, the federal budget had been balanced, revenues exceeded expenditures and the public debt had been reduced. Spending had been $6.3 billion in 1920; by 1922 it had dropped to $3.3 billion.

Harding even had enough principles to reject politically popular spending bills. What a remarkable contrast with a recent Republican who was profligate with other people’s money.

Most telling was Harding’s veto of the popular so-called bonus bill, which would have given veterans an expensive bonus paid over time through deficit spending. The country, he told Congress in a speech, simply did not have the money. He argued it would also set a precedent to use public funds to pay for anything if it was “publicly appealing.”

And there were many other reasons to admire Harding. Unlike his predecessor, the notoriously racist Woodrow Wilson, he supported full equality and protection of the law for all Americans.

Harding immediately stressed his commitment to equal opportunity for all Americans, men and women, “whatever color, blood or creed.” …Harding was a racially enlightened president, especially for the time. During the campaign and his presidency, he supported an anti-lynching bill proposed by Republicans. …In October 1921, Harding traveled to Birmingham, Ala., where, in a powerful speech to a mixed-race (though segregated) audience, he demanded justice for African-Americans. In the first speech in the South by a sitting president on race, he argued for full economic and political rights for all African-Americans.

He also defended the rights of political minorities, again in contrast to Woodrow Wilson’s noxious actions.

Harding also stood out on civil liberties. On his first Christmas in office, Harding commuted the sentence of the Socialist Party leader Eugene V. Debs, who had been imprisoned under the Sedition Act under Wilson… Later, Harding commuted the sentences of the remaining political prisoners still incarcerated.

Pretty impressive.

I know that Reagan and Coolidge are the two best Presidents of the past 100 years, but I’ve never given much thought about who would be in third place. Seems like Harding might be the obvious choice.

Picking the bottom three would be harder because we’ve had so many bad Presidents. Wilson almost surely belongs on that list, but it would be tough to narrow down the list because FDR, Obama, Hoover, Carter, and Nixon would provide strong competition.

P.P.S. Returning to our original topic, here’s my collection of bureaucracy humor. I’ve targeted particular bureaucracies, such as the Postal Service,IRS, TSA, Department of Energy, and National Park Service.

We also have jokes about an Indian training for a government job, a slide show on how bureaucracies operate, a cartoon strip on bureaucratic incentives, a story on what would happen if Noah tried to build an Ark today, and a top-10 list of ways to tell if you work for the government.

There’s also a good one-liner from Craig Ferguson, along with some political cartoons from Michael Ramirez, Henry Payne, and Sean Delonas.

Read Full Post »

%d bloggers like this: