Quotulatiousness

November 23, 2019

Sir Charles Trevelyan, head of the Irish relief efforts during the potato famine, and creator of the modern civil service

Filed under: Britain, Bureaucracy, Economics, Government, History — Tags: , , , , — Nicholas @ 05:00

By happenstance, after posting the OSP video on the history of Ireland, a post at Samizdata covered one of the questions I had from OSP’s summary, specifically that the famine was worsened by British “laissez-faire mercantilism”. Mercantilism is rather different from any kind of laissez-faire system, so it was puzzling to hear Blue link them together as though they were the same thing. Of course, I live in a province currently governed by the Progressive Conservative party, so it’s not like I’m unable to process oxymorons as they go by…

Anyway, this post by Paul Marks looks at the man in charge of the relief efforts:

Part of the story of Sir Charles Trevelyan is fairly well known and accurately told. Charles Trevelyan was head of the relief efforts in Ireland under Russell’s government in the late 1840s – on his watch about a million Irish people died and millions more fled the country. But rather than being punished, or even dismissed in disgrace, Trevelyan was granted honours, made a Knight Commander of the Order of the Bath (KCB) and later made a Baronet, not bad for the son of the Cornishman clergyman. He went on to the create the modern British Civil Service – which dominates modern life in in the United Kingdom.

Charles Edward Trevelyan (contemporary lithograph). This appeared in one of the volumes of “The drawing-room portrait gallery of eminent personages principally from photographs by Mayall, many in Her Majesty’s private collection, and from the studios of the most celebrated photographers in the Kingdom / engraved on steel, under the direction of D.J. Pound; with memoirs by the most able authors”. Many libraries own copies.
Public domain, via Wikimedia.

With Sir Edwin Chadwick (the early 19th century follower of Jeremy Bentham who wrote many reports on local and national problems in Britain – with the recommended solution always being more local or central government officials, spending and regulations), Sir Charles Trevelyan could well be described as one of the key creators of modern government. If, for example, one wonders why General Douglas Haig was not dismissed in disgrace after July 1st 1916, the first day of the Battle of the Somme when twenty thousand British soldiers were killed and thirty thousand wounded for no real gain (the only officers being sent home in disgrace being those officers who had saved some of them men by ordering them stop attacking – against the orders of General Haig), then the case of Sir Charles Trevelyan is key – the results of his decisions were awful, but his paperwork was always perfect (as was the paperwork of Haig and his staff). The United Kingdom had ceased to be a society that always judged someone on their success or failure in their task – it had become, at least partly, a bureaucratic society where people were judged on their words and their paperwork. A General, in order to be great, did not need to win battles or capture important cities – what they needed to do was write official reports in the correct administrative manner, and a famine relief administrator did not have to actually save the population he was in charge of saving – what he had to do was follow (and, in the case of Sir Charles, actually invent) the correct administrative procedures.

But here is where the story gets strange – every source I have ever seen in my life, has described Sir Charles Trevelyan as a supporter of “Laissez Faire” (French for, basically, “leave alone”) “non-interventionist” “minimal government” and his policies are described in like manner. […]

Which probably explains why Blue used the term in the previous video. Then these “laissez-faire” policies are summarized, which leads to this:

None of the above is anything to do with “laissez faire” it is, basically, the opposite. Reality is being inverted by the claim that a laissez faire policy was followed in Ireland. A possible counter argument to all this would go as follows – “Sir Charles Trevelyan was a supporter of laissez faire – he did not follow laissez faire in the case of Ireland, but because he was so famous for rolling back the state elsewhere (whilst spawning the modern Civil Service) – it was assumed that he must have done so in the case of Ireland“, but does even that argument stand up? I do not believe it does. Certainly Sir Charles Trevelyan could talk in a pro free market way (just as General Haig could talk about military tactics – and sound every inch the “educated soldier”), but what did he actually do when he was NOT in Ireland?

I cannot think of any aspect of government in the bigger island of the then UK (Britain) that Sir Charles Trevelyan rolled back. And in India (no surprise – the man was part of “the Raj”) he is most associated with government road building (although at least the roads went to actual places in India – they were not “from nowhere to nowhere”) and other government “infrastructure”, and also with the spread of government schools in India. Trevelyan was passionately devoted to the spread of government schools in India – this may be a noble aim, but it is not exactly a roll-back-the-state aim. Still less a “radical”, “fanatical” devotion to “laissez faire“.

August 10, 2019

QotD: Progressives and spontaneous order

Filed under: Economics, Government, Liberty, Politics, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

I suspect that the single biggest factor that distinguishes “Progressives” from libertarians and free-market conservatives is the simple fact that “Progressives” do not begin to grasp the reality of spontaneous order. “Progressives” seem unable to appreciate the reality that productive and complex economic and social orders not only can, but do, emerge unplanned from the countless local decisions of individuals each pursuing his or her own individual plans. Therefore, “Progressives” naturally adopt a creationist view of society and of the economy: without a conscious and visible (and well-intentioned) guiding hand, society and the economy cannot possibly work very well. Indeed, it seems that for many (most?) “Progressives,” the idea that a spontaneously ordered economy can work better than one directed consciously from above – or, indeed, that a spontaneously ordered economy can work at all – is so absurd that when “Progressives” encounter people who oppose “Progressive” schemes for regulating the economy, “Progressives” instantly and with great confidence conclude that their opponents are either stupid or, more often, evil cronies for the rich and the powerful.

Conduct an on-going experiment: whenever well-meaning “Progressives” (of which there are very many) propose this government intervention or oppose that policy of reducing government’s role in the economy, ask if these “Progressives'” stated reasons can be understood to be nothing more than a reflection of a failure to understand the power and range of spontaneous-ordering forces in private-property settings. The answer will almost always be “yes.” Very often, no further explanation for “Progressives'” policy stances is necessary.

“Progressives” simply don’t “get” spontaneous order in human society. They see a problem and leap to the only conclusion that for them is sensible – namely, that that problem’s only realistic “solution” is that it be directly addressed by government officials. Indeed, even “Progressives'” frequent misdiagnoses of the results of trade-offs as being “problems” (or “market failures”) reflect a failure to understand spontaneous-ordering processes. Many phenomena and patterns that “Progressives” assume to be problems – for example, increasing inequality of monetary incomes – are often the benign results of the countless and nuanced individual trade-offs made by individuals. For “Progressives,” though, these “outcomes” are often assumed to be the consequence of sinister designs.

Don Boudreaux, “Bonus Quotation of the Day…”, Café Hayek, 2017-06-24.

July 8, 2019

QotD: Orwell on capitalism versus socialism

Filed under: Books, Britain, Europe, History, Quotations — Tags: , , , , — Nicholas @ 01:00

Orwell’s press card portrait, 1943

No one can question the dirtiness of international politics from 1870 onwards: it does not follow that it would have been a good thing to allow the German army to rule Europe. It is just possible that some rather sordid transactions are going on behind the scenes now, and that current propaganda “against Nazism” (cf. “against Prussian militarism”) will look pretty thin in 1970, but Europe will certainly be a better place if Hitler and his followers are removed from it. Between them these two books sum up our present predicament. Capitalism leads to dole queues, the scramble for markets, and war. Collectivism leads to concentration camps, leader worship, and war. There is no way out of this unless a planned economy can somehow be combined with the freedom of the intellect, which can only happen if the concept of right and wrong is restored to politics.

Both of these writers are aware of this, more or less; but since they can show no practicable way of bringing it about the combined effect of their books is a depressing one.

George Orwell, “The Road to Serfdom by F.A. Hayek / The Mirror of the Past by K. Zilliacus”, Observer, 1944-04-09.

May 25, 2019

QotD: Orwell reviews Hayek

Filed under: Books, Britain, Economics, Politics, Quotations — Tags: , , , — Nicholas @ 01:00

Taken together, these two books give grounds for dismay. The first of them is an eloquent defence of laissez-faire capitalism, the other is an even more vehement denunciation of it. They cover to some extent the same ground, they frequently quote the same authorities, and they even start out with the same premise, since each of them assumes that Western civilization depends on the sanctity of the individual. Yet each writer is convinced that the other’s policy leads directly to slavery, and the alarming thing is that they may both be right.

Of the two, Professor Hayek’s book is perhaps the more valuable, because the views it puts forward are less fashionable at the moment than those of Mr Zilliacus. Shortly, Professor Hayek’s thesis is that Socialism inevitably leads to despotism, and that in Germany the Nazis were able to succeed because the Socialists had already done most of their work for them, especially the intellectual work of weakening the desire for liberty. By bringing the whole of life under the control of the State, Socialism necessarily gives power to an inner ring of bureaucrats, who in almost every case will be men who want power for its own sake and will stick at nothing in order to retain it. Britain, he says, is now going the same road as Germany, with the left-wing intelligentsia in the van and the Tory Party a good second. The only salvation lies in returning to an unplanned economy, free competition, and emphasis on liberty rather than on security.In the negative part of Professor Hayek’s thesis there is a great deal of truth. It cannot be said too often – at any rate, it is not being said nearly often enough – that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamed of.

George Orwell, “The Road to Serfdom by F.A. Hayek / The Mirror of the Past by K. Zilliacus”, Observer, 1944-04-09.

February 26, 2019

Laissez-faire versus “Fairtrade”

Filed under: Africa, Britain, Business, Economics — Tags: , , , , — Nicholas @ 05:00

In the Guardian, a sad tale of the fading bright hopes of the (relatively small number of) affluent westerners who passionately supported the “Fairtrade” movement:

When, in 2017, Sainsbury’s announced that it was planning to develop its own “fairly traded” mark, more than 100,000 people signed a petition condemning the move. Today, on the eve of Fairtrade Fortnight, the fact that most supermarkets have moved away from the standards developed by the Fairtrade Foundation is worrying.

While some grocery chains have sought the foundation’s stamp of approval, many have gone their own way. This means most consumers have little sense of which organisation is doing what to protect the wages and rights of developing world workers. Over the next two weeks, the foundation plans to focus its publicity efforts on cocoa farmers in west Africa and the way the Fairtrade mark can improve their lives.

[…]

That is a sad situation. After the great financial crash of 2008, a commodity boom that lasted from 2013 to 2017 turned into a slump that has robbed farmers and developing world governments of vital cash. Just as they were managing to stabilise their finances and set aside money to invest, the world price tumbled and wiped out their profit. Fairtrade practices protect farmers from this sort of setback and allow them to plan for the future.

Of course they have their critics. These are most mostly from the US – people who favour unfettered markets and seek to undermine the Fairtrade ideal, saying it is a form of protectionism that dampens innovation and ultimately ruins farms.

Theirs is an almost religious adherence to the free market that discounts the gains in stability and security that Fairtrade provides, and the scope of the community premium to promote universal education and the rights of women.

But without large employers making strides to adopt the standardised and transparent Fairtrade practices put forward by the foundation, it will be left to consumers to drive the project forward.

At the Continental Telegraph, Tim Worstall responds:

The Guardian tells us that the Great White Hope of global trade, Fairtrade, isn’t in fact working. On the basis that no one seems to be doing very much of it. To which the answer is great – for the only fair trade is laissez faire.

This does not mean that Fairtrade should not have been tried – to insist upon that would be to breach our basic insistence upon the value of peeps just getting on with doing what they want, laissez faire itself. But the very value of that last is that we go try things out, see whether they work and if they don’t we stop doing them. If they do then great, we do more of them.

[…]

So, trying out Fairtrade, why not? Let’s go see how many other people feel the same way? In exactly the same way we find out whether people like Pet Rocks, skunk or Simon Cowell. Product gets put on the market we see whether it adds to human welfare or not. If people value it – and revealed preferences please, by actually buying it – at more than the use of those scarce resources in other uses then that’s adding to human welfare and long may it thrive. If it doesn’t, if it’s subtracting value from the human experience, then we’ll stop doing it as those trying go bust.

This is not an aberration of the system it is the system and it’s why laissez faire works. Peeps get to do whatever and we keep doing more of what works, less of what doesn’t.

Fairtrade? No, I never thought it was going to work as anything other than virtue signalling for Tarquin and Jocasta but that’s fine. Why shouldn’t Tarquin and Jocasta gain their jollies by virtue signalling? As it turns out, now that we’ve tried it, no one else gives a faeces*. So, we can stop. Except, obviously enough, for those specialist outlets like the Co Op where the odd can still gain their jollies. It being that very mark of a laissez faire, liberal, society that the jollies of the odd are still catered to in due proportion to the desire for them.

*From Gibbon, all the fun stuff’s in Latin.

October 1, 2017

Deirdre McCloskey on the rise of economic liberty

Filed under: Economics, History, Liberty — Tags: , , , , , , — Nicholas @ 03:00

Samizdata‘s Johnathan Pearce linked to this Deirdre McCloskey article I hadn’t seen yet:

Since the rise during the late 1800s of socialism, New Liberalism, and Progressivism it has been conventional to scorn economic liberty as vulgar and optional — something only fat cats care about. But the original liberalism during the 1700s of Voltaire, Adam Smith, Tom Paine, and Mary Wollstonecraft recommended an economic liberty for rich and poor understood as not messing with other peoples’ stuff.

Indeed, economic liberty is the liberty about which most ordinary people care.

Adam Smith spoke of “the liberal plan of [social] equality, [economic] liberty, and [legal] justice.” It was a good idea, new in 1776. And in the next two centuries, the liberal idea proved to be astonishingly productive of good and rich people, formerly desperate and poor. Let’s not lose it.

Well into the 1800s most thinking people, such as Henry David Thoreau, were economic liberals. Thoreau around 1840 invented procedures for his father’s little factory making pencils, which elevated Thoreau and Son for a decade or so to the leading maker of pencils in America. He was a businessman as much as an environmentalist and civil disobeyer. When imports of high-quality pencils finally overtook the head start, Thoreau and Son graciously gave way, turning instead to making graphite for the printing of engravings.

That’s the economic liberal deal. You get to offer in the first act a betterment to customers, but you don’t get to arrange for protection later from competitors. After making your bundle in the first act, you suffer from competition in the second. Too bad.

In On Liberty (1859) the economist and philosopher John Stuart Mill declared that “society admits no right, either legal or moral, in the disappointed competitors to immunity from this kind of suffering; and feels called on to interfere only when means of success have been employed which it is contrary to the general interest to permit — namely, fraud or treachery, and force.” No protectionism. No economic nationalism. The customers, prominent among them the poor, are enabled in the first through third acts to buy better and cheaper pencils.

[…]

Indeed, economic liberty is the liberty about which most ordinary people care. True, liberty of speech, the press, assembly, petitioning the government, and voting for a new government are in the long run essential protections for all liberty, including the economic right to buy and sell. But the lofty liberties are cherished mainly by an educated minority. Most people — in the long run foolishly, true — don’t give a fig about liberty of speech, so long as they can open a shop when they want and drive to a job paying decent wages. A majority of Turks voted in favour of the rapid slide of Turkey after 2013 into neo-fascism under Erdoğan. Mussolini and Hitler won elections and were popular, while vigorously abridging liberties. Even a few communist governments have been elected — witness Venezuela under Chavez.

September 19, 2017

Even in a progressive educational bubble, this isn’t correct

Filed under: Cancon, Economics, Education, Liberty, Politics — Tags: , , , , — Nicholas @ 03:00

Holly Nicholas shared this photo, which is said to be from an Alberta school:

If this is indeed how public schools are presenting the political spectrum (and it’s unfortunately easy to believe that they do), the closest thing to a “centrist” party in Canada is the loony left Green Party … who somehow pip the NDP on the right. The far right end of the spectrum, Fascism, is graphically indicated to be all about “Market Economy, Free Enterprise, and Laissez-Faire Capitalism”, because as we all remember, Hitler and Mussolini were in no way fans of state intervention in the economy, right?

The graphic does, however, support certain shibboleths of the left including implying that libertarians (who are actually in favour of market economies, free enterprise, and laissez-faire capitalism) are in the same economic and political basket as actual fascists. Nice work, faceless agitprop graphic artist!

August 4, 2017

Harry Potter and the Economic Segregation of Muggles

Filed under: Books, Economics, Liberty, Media — Tags: , , , — Nicholas @ 06:00

Published on 3 Aug 2017

Harry Potter contains a ton of incredible lessons about society, authoritarianism, and the power of love and individualism in the face of people who would exclude others based on group identity. But something people don’t think about as much are some of the economic lessons that we can draw from a world segregated into wizards and muggles.

On this episode of Out of Frame, we take a look at what the world might look like if magic and non-magic people were actually allowed to trade and interact with each other without the Ministry of Magic obliviating and arresting people for it.

For a transcript of this episode and more engaging content, visit:
www.FEE.org

July 20, 2017

Deirdre McCloskey defines libertarianism as “Liberalism 1.0”

Filed under: Books, Liberty, Politics, USA — Tags: , , , , — Nicholas @ 04:00

The introduction to her “Manifesto for a New American Liberalism, or How to Be a Humane Libertarian” [PDF] states:

I make the case for a new and humane American “libertarianism.”

Outside the United States libertarianism is still called plain “liberalism,” as in the usage of the president of France, Emmanuel Macron, with no “neo-” about it. That’s the L-word I’ll use here. The economist Daniel Klein calls it “Liberalism 1.0,” or, channeling the old C. S. Lewis book Mere Christianity on the minimum commitments of faith (1942-44, 1952), “mere Liberalism.” David Boaz of the Cato Institute wrote a lucid guide, Libertarianism — A Primer (1997), reshaped in 2015 as The Libertarian Mind. I wish David had called it The Liberal Mind.

In desperate summary for you Americans, Liberalism 1.0 is Democratic in social policy and Republican in economic policy and non-interventionist in foreign policy. It is in fact mainly against “policy,” which has to be performed, if there is to be a policy at all, through the government’s monopoly of violence. (To confirm this experimentally, try not paying your taxes; then try to escape from prison.) Liberals 1.0 believe that having little or no policy is a good policy.

That does not put the Liberals 1.0 anywhere along the conventional one-dimensional left-right line, stretching from a compelled right-conservative policy to a compelled left-”liberal” policy. The real liberals instead sit happily up on a second dimension, the non-policy apex of a triangle, so to speak, the base of which is the conventional axis of policy by violence. We Liberals 1.0 are neither conservatives nor socialists — both of whom believe, with the legal mind, as the liberal economist and political philosopher Friedrich Hayek put it in 1960, that “order [is] … the result of the continuous attention of authority.” Both conservatives and socialists, in other words, “lack the faith in the spontaneous forces of adjustment which makes the liberal accept changes without apprehension, even though he does not know how the necessary adaptations will be brought about.”

Liberals 1.0 don’t like violence. They are friends of the voluntary market order, as against the policy-heavy feudal order or bureaucratic order or military-industrial order. They are, as Hayek declared, “the party of life, the party that favors free growth and spontaneous evolution,” against the various parties of left and right which wish “to impose [by violence] upon the world a preconceived rational pattern.”

At root, then, Liberals 1.0 believe that people should not push other people around. As Boaz says at the outset of The Libertarian Mind, “In a sense, there have always been but two political philosophies: liberty and power.” Real, humane Liberals 1.0 […] believe that people should of course help and protect other people when we can. That is, humane liberals are very far from being against poor people. Nor are they ungenerous, or lacking in pity. Nor are they strictly pacifist, willing to surrender in the face of an invasion. But they believe that in achieving such goods as charity and security the polity should not turn carelessly to violence, at home or abroad, whether for leftish or rightish purposes, whether to help the poor or to police the world. We should depend chiefly on voluntary agreements, such as exchange-tested betterment, or treaties, or civil conversation, or the gift of grace, or a majority voting constrained by civil rights for the minority.

To use a surprising word, we liberals, whether plain 1.0 or humane, rely chiefly on a much-misunderstood “rhetoric,” despised by the hard men of the seventeenth century such as Bacon and Hobbes and Spinoza, but a practice anciently fitted to a democratic society. Liberalism is deeply rhetorical, the exploration (as Aristotle said) of the available means of non-violent persuasion. For example, it’s what I’m doing for you now. For you, understand, not to you. It’s a gift, not an imposition. (You’re welcome.)

June 21, 2017

QotD: Profit

Filed under: Business, Economics, Quotations — Tags: , , — Nicholas @ 01:00

While capitalism has a visible cost – profit – that does not exist under socialism, socialism has an invisible cost – inefficiency – that gets weeded out by losses and bankruptcy under capitalism. The fact that most goods are more widely affordable in a capitalist economy implies that profit is less costly than inefficiency. Put differently, profit is a price paid for efficiency.

Thomas Sowell, Basic Economics (fifth edition), 2015.

June 8, 2017

Words & Numbers: Earning Profits is Your Social Responsibility

Filed under: Business, Economics, Government — Tags: , , , , , — Nicholas @ 04:00

Published on 7 Jun 2017

“We tend to demonize people who make money – how dare they have more than us? But that negative reaction forgets the voluntary role we play in profit-making every day. This week in Words and Numbers, Antony Davies and James R. Harrigan discuss just how good it is to earn a profit, and the vital difference between that and forcing money from people.”

January 27, 2017

QotD: Greed

Filed under: Economics, Liberty, Politics, Quotations — Tags: , — Nicholas @ 01:00

Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.

Milton Friedman

February 16, 2016

How Sweden got rich

Filed under: Economics, Europe, History — Tags: , , , , — Nicholas @ 02:00

Johan Norberg talks about the economic state of Sweden 150 years ago:

Once upon a time I got interested in theories of economic development because I had studied a low-income country, poorer than Congo, with life expectancy half as long and infant mortality three times as high as the average developing country.

That country is my own country, Sweden — less than 150 years ago.

At that time Sweden was incredibly poor — and hungry. When there was a crop failure, my ancestors in northern Sweden, in Ångermanland, had to mix bark into the bread because they were short of flour. Life in towns and cities was no easier. Overcrowding and a lack of health services, sanitation, and refuse disposal claimed lives every day. Well into the twentieth century, an ordinary Swedish working-class family with five children might have to live in one room and a kitchen, which doubled as a dining room and bedroom. Many people lodged with other families. Housing statistics from Stockholm show that in 1900, as many as 1,400 people could live in a building consisting of 200 one-room flats. In conditions like these it is little wonder that disease was rife. People had large numbers of children not only for lack of contraception, but also because of the risk that not many would survive for long.

As Vilhelm Moberg, our greatest author, observed when he wrote a history of the Swedish people: “Of all the wondrous adventures of the Swedish people, none is more remarkable and wonderful than this: that it survived all of them.”1

But in one century, everything was changed. Sweden had the fastest economic and social development that its people had ever experienced, and one of the fastest the world had ever seen. Between 1850 and 1950 the average Swedish income multiplied eightfold, while population doubled. Infant mortality fell from 15 to 2 per cent, and average life expectancy rose an incredible 28 years. A poor peasant nation had become one of the world’s richest countries.

Many people abroad think that this was the triumph of the Swedish Social Democratic Party, which somehow found the perfect middle way, managing to tax, spend, and regulate Sweden into a more equitable distribution of wealth — without hurting its productive capacity. And so Sweden — a small country of nine million inhabitants in the north of Europe — became a source of inspiration for people around the world who believe in government-led development and distribution.

But there is something wrong with this interpretation. In 1950, when Sweden was known worldwide as the great success story, taxes in Sweden were lower and the public sector smaller than in the rest of Europe and the United States. It was not until then that Swedish politicians started levying taxes and disbursing handouts on a large scale, that is, redistributing the wealth that businesses and workers had already created. Sweden’s biggest social and economic successes took place when Sweden had a laissez-faire economy, and widely distributed wealth preceded the welfare state.

This is the story about how that happened. It is a story that must be learned by countries that want to be where Sweden is today, because if they are to accomplish that feat, they must do what Sweden did back then, not what an already-rich Sweden does now.

February 14, 2016

QotD: President Herbert Hoover’s lasting economic legacy

Filed under: Business, Economics, Government, Quotations, USA — Tags: , , , , , , — Nicholas @ 01:00

Until March 1933, these were the years of President Herbert Hoover — the man that anti-capitalists depict as a champion of non-interventionist, laissez-faire economics.

Did Hoover really subscribe to a “hands off the economy,” free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn’t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of “reckless and extravagant” spending, of thinking “that we ought to center control of everything in Washington as rapidly as possible,” and of presiding over “the greatest spending administration in peacetime in all of history.” Roosevelt’s running mate, John Nance Garner, charged that Hoover was “leading the country down the path of socialism.” Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right.

The crowning folly of the Hoover administration was the Smoot-Hawley Tariff, passed in June 1930. It came on top of the Fordney-McCumber Tariff of 1922, which had already put American agriculture in a tailspin during the preceding decade. The most protectionist legislation in U.S. history, Smoot-Hawley virtually closed the borders to foreign goods and ignited a vicious international trade war.

Officials in the administration and in Congress believed that raising trade barriers would force Americans to buy more goods made at home, which would solve the nagging unemployment problem. They ignored an important principle of international commerce: trade is ultimately a two-way street; if foreigners cannot sell their goods here, then they cannot earn the dollars they need to buy here.

Foreign companies and their workers were flattened by Smoot-Hawley’s steep tariff rates, and foreign governments soon retaliated with trade barriers of their own. With their ability to sell in the American market severely hampered, they curtailed their purchases of American goods. American agriculture was particularly hard hit. With a stroke of the presidential pen, farmers in this country lost nearly a third of their markets. Farm prices plummeted and tens of thousands of farmers went bankrupt. With the collapse of agriculture, rural banks failed in record numbers, dragging down hundreds of thousands of their customers.

Hoover dramatically increased government spending for subsidy and relief schemes. In the space of one year alone, from 1930 to 1931, the federal government’s share of GNP increased by about one-third.

Hoover’s agricultural bureaucracy doled out hundreds of millions of dollars to wheat and cotton farmers even as the new tariffs wiped out their markets. His Reconstruction Finance Corporation ladled out billions more in business subsidies. Commenting decades later on Hoover’s administration, Rexford Guy Tugwell, one of the architects of Franklin Roosevelt’s policies of the 1930s, explained, “We didn’t admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.”

To compound the folly of high tariffs and huge subsidies, Congress then passed and Hoover signed the Revenue Act of 1932. It doubled the income tax for most Americans; the top bracket more than doubled, going from 24 percent to 63 percent. Exemptions were lowered; the earned income credit was abolished; corporate and estate taxes were raised; new gift, gasoline, and auto taxes were imposed; and postal rates were sharply hiked.

Can any serious scholar observe the Hoover administration’s massive economic intervention and, with a straight face, pronounce the inevitably deleterious effects as the fault of free markets?

Lawrence W. Reed, “The Great Depression was a Calamity of Unfettered Capitalism”, The Freeman, 2014-11-28.

November 18, 2015

Adam Smith – The Inventor of Market Economy I THE INDUSTRIAL REVOLUTION

Filed under: Britain, Economics, History — Tags: , , , , , , , , — Nicholas @ 05:00

Published on 22 Feb 2015

Adam Smith was one of the first men who explored economic connections in England and made clear, in a time when Mercantilism reigned, that the demands of the market should determine the economy and not the state. In his books Smith was a strong advocator of the free market economy. Today we give you the biography of the man behind the classic economic liberalism and how his ideas would change the world forever.

« Newer Posts — Older Posts »

Powered by WordPress