In my last post, I challenged the conventional view that the Democratic Party was the dovish one, in contrast to those hawkish Republicans. I pointed out that Democrats had been in the White House during both World Wars and the major escalation in Vietnam, and that Barack Obama has utterly repudiated the hope that he would represent a new direction for America after George W. Bush. In the present post, I want to do something similar for the equally popular–but also erroneous–view that the Republicans support the free market.
As I did with the Democrats on war, here let me list some major violations of free-market principles that occurred during Republican administrations:
==> Abraham Lincoln quite openly was a proponent of the “American System” in the tradition of Alexander Hamilton and Henry Clay, which consisted of “protective” tariffs designed to promote industry (not just raise needed revenue), infrastructure spending, and central banking. Lincoln also presided over the famous “Greenback” episode that so inspires inflationists to this day.
==> Theodore Roosevelt is another icon of Republicans. Let’s look at his manly policies, as Wikipedia describes them:
Roosevelt became President after McKinley was assassinated in 1901. He was inaugurated at age 42, the youngest person to become president. He attempted to move the GOP toward Progressivism, including trust busting and increased regulation of businesses….Roosevelt called his domestic policies a “Square Deal“, promising a fair deal to the average citizen while breaking up monopolistic corporations, holding down railroad rates, and guaranteeing pure food and drugs. He was the first president to speak out on conservation, and he greatly expanded the system of national parks and national forests.
Hmm that doesn’t sound exactly like the epitome of a laissez-faire radical, does it? That phrase “Square Deal” sounds familiar, perhaps it inspired something later in U.S. politics?
==> One of the biggest myths is that Republican Herbert Hoover sat by and watched the country slide into the Great Depression, paralyzed by his free-market ideology. No no no. I have written an entire book on the topic, but in a nutshell: Herbert Hoover increased federal spending and budget deficits, to a degree that was unprecedented in U.S. peacetime history. After the stock market crash in late 1929, Hoover famously called business leaders to Washington and urged them not to cut wage rates. Union leaders praised the enlightened president in January 1930. (You can see me elaborate on some of these claims in this lecture I gave at the Mises Institute.) Hoover engaged in “public works” spending on infrastructure; you may have heard of the “Hoover Dam”? (However, that project was underway before the Crash; it wasn’t specifically conceived to fight the downturn.) Hoover oversaw the creation of the Reconstruction Finance Corporation, which provided more than $1 billion in loans to jump start recovery. (And that was when $1 billion meant something.) Later in the decade one of FDR’s inner circle admitted that everything they had done in the New Deal had its origins in the Hoover Administration.
==> Without Dwight Eisenhower…who would build the federal roads?!
==> Richard Nixon, the “arch conservative,” took the U.S. off the gold standard, enacted wage and price controls (something a bit odd for a believer in free markets), and signed into law the Environmental Protection Agency, which is not exactly Rush Limbaugh’s favorite organization on the planet.
==> Ronald Reagan taught us that government is the problem, not the solution, which is why federal spending as a share of the economy was significantly higher than it had been when Carter handed over the reins, for just about his entire time in office (remember Reagan won the November 1980 election, meaning he was sworn into office in January 1981):
For people who hate ObamaCare, I also note that Reagan signed the EMTALA into law, which health care analysts will tell you is a huge reason hospitals are in such financial trouble and why we “needed” reform so that the whole system didn’t collapse.
==> And let’s not forget George W. Bush, who signed the Medicare Part D prescription drug benefit that added $7 – $8 trillion in unfunded liabilities to Medicare, using a 75-year window. If you’re really glad Bush won the election and kept that tree-hugger Al Gore out of the White House, keep in mind that the ethanol mandates all happened under Bush. And then of course, the $700 billion TARP program occurred in his last few months in office, where the United States government forcibly took ownership interests in major financial institutions. If this move had occurred under Hugo Chavez, Fox News would have absolutely flipped out over the communist “nationalization of banks.”
In conclusion, the Republicans in practice have not actually lived up to their public rhetoric of being the champions of small government and sound money. It’s almost like these politicians are a bunch of liars, ya know?