Monday, November 10, 2014

White House Fool Report: Hoover's on First

Bonus March encampment, 1931. Via Great War Society.
In July 2009, Kevin Baker at Harper's (H/t marie2 at BooMan's place) issued an assessment of Barack Obama's first 100 days in the presidency, comparing him to—well, to Herbert Hoover.

Not in a bad way! Baker pointed out that Hoover was, as Obama is, probably the smartest and best educated person in a position of authority in Washington in his time (definitely better educated than the frat-boy FDR), as well as the one with the most personal experience of hardship, and a truly pragmatic leader impatient with partisan shibboleths; and that what he set out to do in 1929, to use the tools of fiscal management and presidential power to rescue the United States from economic collapse, was something presidents before him and indeed after him (with two very important exceptions) never did.

Nevertheless Hoover did fail (that's usually the only part we remember). Though the titans of industry and finance promised at meeting after meeting to keep employment strong and money loose, they didn't do it; the French and British governments turned down his offers to suspend their loan payments to the US if it meant they'd have to stop collecting blood money from Germany. Congress did little, and he himself began running out of ideas:
Hoover, as the historian David M. Kennedy writes, had shown “himself capable of the most pragmatic, far-reaching, economic heterodoxy,” a trait that “would in the end carry him and the country into uncharted economic and political territory....” The only problem was that it did not work. The nation’s credit system still would not thaw, banks kept falling like dominoes, unemployment rates and human suffering continued to rise. For all of his willingness to break with precedent and intervene directly in the economy, Hoover remained unable to turn his back fully on what Kennedy describes as the prevailing “legacy of perception and understanding of economic theory.”
And Obama, Baker thought, was likely to do the same, with his Rahm and his hidebound economic advisors.

I'd never seen this essay before, and I very much liked the way the paralleling of Hoover and Obama gave a certain kind of depth to the picture of the non-ideological person, like the illusion of three-dimensionality of a stereopticon, created by the difference between the images in your right and left eyes. Seeing how unimportant it was for Hoover to be a conservative at that stage of his life threw a kind of shadow behind the idea of how it could be unimportant for Obama to be a "liberal" or a "progressive". I disagree that it is unimportant—in the end I think you have to have some kind of coherent picture of the causes of economic suffering before you can put together a coherent picture of what you want to do about it—but I'm starting to see how a smart and compassionate person could feel that way.

But what I really wanted to say is that Baker has been proven wrong by events: Obama didn't fail, or didn't fail in the same way as Hoover. Baker's idea of the personal parallels between Hoover and Baker may work, but the structural parallel is more complex, because, as mentioned above, there have been four presidents who took an extraordinarily activist approach to financial crisis, and they come in pairs: Hoover plus his successor, Obama plus his predecessor, whatisname.

Because the Bush administration did take extraordinary measures, if a day late and a trillion short as it were. However un-Hooverian young Bush may have been in personality, the government (including the Fed under Actual Economist Ben Bernanke) did massive amounts of Hoover-like work to deal with it, flooding the market with liquidity, rescuing endangered banks, setting up programs to save homeowners from foreclosure. Only it didn't really work—the programs for homeowners in particular didn't work, as if the government somehow couldn't manage to focus on simple people.

In the structural picture, Obama corresponds, obviously, to Roosevelt, but that adds a complexity of its own, because as Baker himself notes there were two New Deals, one essentially a continuation of Hoover policies concentrated on the macroeconomic management of the National Recovery Administration and giving somewhat less attention to the class conflict issues of poor relief and labor organization; and the other, not really beginning until the Second New Deal of 1935, which constituted the revolution we remember.

The Obama administration approach to the mortgage crisis, as we can see, had much more in common with the first FDR than the second, and the form recovery has taken reflects that, with the amazing prosperity of the corporations and mediocre gains of the vast majority of humans. The big question, in this way, isn't about what happened in 1933, but what happened in 1935: why didn't Obama evolve in the way FDR did, why didn't we get our revolution?

Part I of the answer is, of course, that we did: Labor Secretary Frances Perkins set out in 1935 to accomplish three central foundational pieces of a welfare state, unemployment insurance, retirement insurance, and health insurance, and managed two out of three; and in 2009 the Obama administration succeeded, just barely, in squeezing the third out of the Congress.

Part II is politics: in 1934, the Democrats won an unprecedented midterm victory, adding nine House members and nine Senators to their caucuses, enabling the more radical basket of policies of the Second New Deal; and in 2010 they got a "shellacking", losing the House altogether. It is Congress that really differentiates the two eras: the wonderful 73rd Congress that took office in 1933 which was willing to try just about anything proposed by the president's Brain Trust, and the unhappy 111th Congress, with its Senate nearly paralyzed by Mitch McConnell and his application of the 60-vote cloture rule to virtually every piece of legislation and by refractory "conservative" Democrats—Nelson, Lincoln, Lieberman, and so on—who held every bit of business hostage to their own vanity.

The voters punished them, too, as they rewarded the 73rd Congress Democrats, and as they punished anti-Obama Democratic Senators this year (I know some Obama supporters lost, too, but it's no coincidence that the one Southern Democrat that has survived to a runoff is the one, Mary Landrieu, with the courage to take a stand against racial injustice, and the one liberal incumbent that lost, Mark Udall, has detached himself from Obama on the dudebro side). But Senators just don't learn very fast. And unfortunately in our zero-sum electoral system the punishment takes the form of electing a Congress that's even worse than the one it's replacing.

Obama may resemble Hoover more than FDR—
FDR was by no means the rigorous thinker that Hoover was, and many observers then and since have accused him of having no fixed principles whatsoever. And yet it was Roosevelt, the Great Improviser, who was able to patch and borrow and fudge his way to solutions not only to the Depression but also to sustained prosperity and democracy. It was FDR, brought up with the entitled, patronizing worldview of a Hudson Valley aristocrat, who was able to overcome attachments to all classes, all theories. It was Roosevelt who understood the imperfections, the rough-and-tumble of politics. The programs of the First and Second New Deals were a hodgepodge of ideologies—which is precisely why they worked. The innovations they brought about, however sloppily, were the core of twentieth-century American liberalism in that they reflected the complex ever-changing realities of the modern world.
—but what he could have done to get a more left outcome I just can't imagine.

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