A Warning For Obama: President Hoover’s Fealty to Unions Worsened Great Depression

An economist is saying that President Hoover set the stage to worsen The Great Depression because of his pro-labor union stance.

Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation’s gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.

Lee E. Ohanian, a UCLA professor of economics, lays the worst of the Depression at the feet of Hoover who, in his opinion, made the recession “three times worse” by keeping industrial wages too high which “sharply depressed employment.”

Ohanian’s study is being published by the peer-reviewed Journal of Economic Theory in December and was also posted at www.nber.org, the site of the National Bureau of Economic Research.

Hoover’s approach is unlikely to be considered today as a means of responding to economic crisis, but it does illustrate the perils of ill-conceived government policies in times of economic upheaval and confusion, says Ohanian, a macroeconomist who specializes in economic crises.

“Hoover’s response illustrates the danger of knee-jerk policy reactions in a time of crisis,” he said. “Almost always when bad policies are adopted, it’s during a period of crisis. The real risk is picking a cure that turns out to be worse than the disease.”

Of course, President Roosevelt made matters worse by continuing and even expanding many of Hoover’s worst mistakes, many economists are concluding.

As we’ve said many times here on the blog, unions are antithetical to good government as well as economic success.

And now, to today, we can tremble in fear for our economic health as we see a president about to repeat every mistake that Hoover and FDR made by nationalizing industries, forcing a top-down economy, and being a slavish devote of Big Labor.

Democrats do not learn from history.

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