Welcome to Hooverville
. . . [E]conomic freedom. . . . Freedom for men to choose their own callings, to accumulate property in protection of their children and old age, freedom of private enterprise that does not injure others. . . . A large number of the men administering our preparedness program do not believe in this freedom. With a long war--and it will be long if we put our boys into it--then their methods with the inevitable debt, inflation, unemployment and demoralized agriculture will make us over into State Socialism, probably under some other name. -- Herbert Hoover, 1941
Someone, I forget who, once said the history of the world is the history of class struggle. In the current politically morbid period, where the predators and the stupids have unearned market power in the marketplace of ideas, the history of the world is the history of class struggle over taxes. But maybe not for long.
What's the difference between what John McCain characterizes as capitalism and socialism? According to the Urban Institute, it's annual tax revenues of 6/10ths of a percent of GDP, or almost $100 billion a year. (For an idea of scale, current Federal outlays are $2,955 billions.) That's the difference between the tax collections of McCain and Obama, as these plans are described by the respective campaigns. By this metric, under Bill Clinton we had Ginormous Socialism.
But Clinton's was an odd sort of socialism. The ranks of Federal civilian employees were drastically reinvented reduced. Federal non-defense public investment grew more slowly than GDP. Millions were pushed off the welfare rolls. With the see- hear- and speak-no-evil Clinton policy with respect to the Federal Reserve, coupled with Bob Rubin's inclination towards financial deregulation, Alan Greenspan helped inflate some mighty financial bubbles, first in tech stocks, then in housing, the bursting of which has destroyed trillions of dollars in middle class savings. No wonder the working class hates socialism.
Getting back to taxes, what currently passes for debate in the Gabby Hayes campaign is the charge that Obama wants to 'share the wealth.' If it isn't obvious, and it isn't because of Gabby's general political incompetence in the higher discourse, what they are actually referring to is refundable tax credits. A refundable tax credit is one that you are allowed to receive in its entirety, whether or not you pay as much (or anything) in income tax. Barack Obama has a bouquet of refundable tax credit proposals. The credits are geared to earnings, mortgage payments, child care, savings, and reducing marriage penalties. McCain never refers directly to the benefits, either because he can't remember them, understand them, or because he is afraid a more specific description might have the reverse of the desired effect. What we do hear is payments to those "who don't pay taxes." This is a replay of the Earned Income Tax Credit debates.
As with the rest of McCainian doctrine, this is an appeal to ignorance. You can't get these credits unless you work. If you work you pay payroll taxes, a good part of which funds general government activities, since there is a surplus over and above what is required to pay somebody else's Social Security benefits. So anybody who works pays taxes. Anybody carrying a mortgage is likely to be working, or living off saved earnings. And of course everyone pays gas taxes, state and local sales taxes, etc. etc. etc.
Meanwhile Gabby has his own refundable tax credit, in his case for his farkakta health insurance plan. If Obama's refundable credits send money to "those who don't pay taxes," so does Gabby's.
Broadly speaking, the logic of condemning a shift of tax burden from rich to not-rich as "class war," but the reverse as excellent economic policy, is another bit of Republican intellectual poo.
Which brings us to Joe the Plumber (sic). I know everyone is tired of hearing about him, but we have to say a few things. First of all, for Jeebus's sake lay off his personal life. The fact that he has a tax lien has not the least significance. People have been ranting about the fact that he is in no position to buy a business and would actually get lower taxes as a citizen in Obama Nation. In so doing, they miss something important.
Workers would like to escape the servitude of wage labor. (See class struggle, above.) They would like to provide for their own by their own devices, not with handouts. They would like to work for themselves, in their own business. They value autonomy. In the absence of a professional degree, privileged lineage, or a winning lottery ticket, this is the only way to become financially comfortable. Joe's type views liberal policies as an obstacle to this goal. So we get Joe foolishly mouthing libertarian nostrums that actually defeat his own self-interest, while a progressive tax system and ObamaCare would help him.
Now it's difficult to become financially secure in the only way open to most workers. Gazing over the fence to where the grass is greener, Joe cannot easily diagnose his inability to make the transition. Nobody likes to blame themselves. Joe is vulnerable to conservative propaganda, which subsists on displacing blame from corporate predators to government, reinforced by racism ("He did a tap dance like Sammy Davis"), nativism, xenophobia, and other pathologies. So we get Joe's murky understanding of tax policy, fed by the refrain of government taking from the productive and subsidizing the shiftless. This ceases to work when the Joes of the world realize that the shiftless category means anyone not rich and is defined to include their very selves.
In the 1930s, a far more benighted and miseducated white population elevated enough Democrats to at one point give them 76 seats in the U.S. Senate, plus two Farmer-Labor and one progressive. In the House, the Republicans were reduced to 88 seats. These are the logical fruits of the Republicans' bankrupt rants about socialism and sharing the wealth.
Hooverism is back, and not a moment too soon.

















If the peasant class receives no benefit from a capitalist system, why should they support it?
McCain can’t think far enough ahead, or has no sense of history. There are significant ramifications, from the upheaval by middle class workers, afraid of poverty and being the servant class to privilege
Governments have had revolutions over these types of issues.
Maybe that's why McCain recognizes that there is soon to be a class WAR.
McCain is probably prepared to turn our troops against us. Listen to his rally’s
October 19, 2008 7:18 PM | Reply | Permalink
"You get back here you pious candy-ass sidewinder. Ain't no way that nobody is gonna' to leave this town. Hell, I was born here, an' I was raished here, an' dad gum it, I am gonna die here an' no sidewindin bushwackin, hornswaglin, cracker croaker is gonna rouin me biscuit cutter.__Gabby Hayes (or one of his reincarnations)
October 19, 2008 10:46 PM | Reply | Permalink
This is a smart blog. I mean it. You have so much knowledge about this issue, and so much passion. You also know how to make people rally behind it, obviously from the responses. Youve got a design here thats not too flashy, but makes a statement as big as what youre saying. Great job,children health indeed.
January 18, 2011 3:43 PM | Reply | Permalink
Rotwang,
one line of the Hoover quote jumped out at me;
We cannot have freedom of private enterprise that does not injure others just as we cannot have free markets that run efficiently. There will always be sharks in the water to injure others and skewer efficieny and the number of sharks in the water have increased exponentially since Reagan. I offer the last 35 years as a reflection of my point.
I was born when Calvin Coolidge was President, grew up with Hoover and FDR. Eventually, things got so good under FDR, that, to quote my mom, "People thought he was God."
The Republicans try to conflate FRD's social programs with Socialism, Communism or Fascism. And lets not forget, Hitler's party was the National Socalist Party. Their base wouldn't know Socialism if it bit them in the ass.
If they don't like Socialism, one should ask them if they want to get rid of the Veteran's Administration Medical System.
Republican rhetoric taxes the patience of rational people.
October 19, 2008 7:32 PM | Reply | Permalink
JohnW1141 wrote "If they don't like Socialism, one should ask them if they want to get rid of the Veteran's Administration Medical System.
That one would be a great question, for the Ex POW who knows they're needs.
Where was he on the Walter Reed problem, a leader or a follower?
http://thecaucus.blogs.nytimes.com/2007/03/06/mccain-apologizes-for-walter-reed/
“I will take responsibility for being a member of the Armed Services Committee and not knowing about it and not doing anything about it,” the Republican 2008 contender told a group of county officials from across the country today. “I apologize for my failure” to act, the Arizona Republican added. “I should be held accountable.”
October 19, 2008 7:56 PM | Reply | Permalink
Resistance,
speaking of POWs. Liberal ex Senator George McGovern flew 35 bombing missions over enemy territory in WWII, but since he didn't get shot down and spend time as a POW he was obviously unqualified to be President.
October 19, 2008 8:33 PM | Reply | Permalink
Rotwang, Joe's mission was to ramp-up President Obama. What's all this plumber nonsense about? It may just have well have been Michele Bachmann in Frisco jeans wearing a Groucho Marx disguise.
Nice essay, though
October 19, 2008 7:57 PM | Reply | Permalink
Thanks, neo. But obviously my subject was Joe the Idea, which I think runs very deep. I also think guys like Joe, if not Joe himself, can be turned, witness the anecdotes now circulating about avowedly racist workers declaring their intention to vote Obama.
October 19, 2008 8:09 PM | Reply | Permalink
"I dreamed I saw Joe Hill last night,
alive as you and I,
Says I to Joe you're ten years dead,
Said Joe I didn't die...
Said Joe I didn't die...
(in Paul Robeson basso profundo)
Point well taken and agreed upon.
October 19, 2008 9:25 PM | Reply | Permalink
This from Ben Smith/Politico, via MrJJ:
Man planning to vote for Obama: "I'm gonna hate him the minute I vote for him. He's gonna be a bad president. But I won't ever vote for another god-damn Republican."
(From Republican focus group.)
October 19, 2008 8:23 PM | Reply | Permalink
Tom,
the people that gave us Bush/Cheney for 8 years are now trying to give us McCain /Palin. Maybe this particular guy caught a glimpse of reality.
October 19, 2008 8:36 PM | Reply | Permalink
Ah, but what is "Hooverism"?
Answer: The ideology of the middle class' professionals -- the belief that government belongs in the hands of university graduates -- in a word Progressivism.
FDR: a Progressive with charm.
October 19, 2008 10:05 PM | Reply | Permalink
"We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started." Rexford Tugwell quoted by Jonathan Alter in The Defining Moment (2007) @ p.78.
Debate and Discuss.
October 19, 2008 10:24 PM | Reply | Permalink
Well, I think there is something to be said for that theory. The Norris-LaGuardia Act, which virtually eliminated the ability of the federal courts to enjoin labor strikes, and the Davis-Bacon Act, which required the payment of prevailing wage on federal work projects, were both enacted during Hoover's Administration. I still think, however, that it's kind of a stretch to conclude that the scope and breadth of the New Deal was prompted at the threshold by these enduring but limited examples of Hooverian protective labor legislation.
October 19, 2008 11:23 PM | Reply | Permalink
It’s one thing to have the tools; it's another to use them properly.
You could plant a tree with a spoon.
If a shovel was available or a backhoe, and you didn't recognize how they could assist you, having them and using them are two different things.
Hoovers Sec Treasury Andrew Mellon, mislead him with advise as "Let it alone" or "purge the rottenness out of the system"
This is why I was worried, during this current financial difficulty; many were advocating, "purge the rottenness out of the system"
Been there done that!
October 19, 2008 11:27 PM | Reply | Permalink
Bad history.
Hoover rejected Mellon's advice.
Mellon himself, being overseas negotiating WWI reparations most of the years he served, was uninvolved in crafting Hoover's policy responses to the depression.
October 20, 2008 1:17 AM | Reply | Permalink
Exactly. During 1929 and 1930, the Fed's interest rates went from 6% to 2%. This is an attempt to prop us bad debt through money creation, not liquidationism.
What we need is a total rejection of Friedman and Keynes and a move toward the Austrian School.
October 20, 2008 1:59 AM | Reply | Permalink
Democrats were in control of the Congress in 31 and 32. When were these acts passed and who proposed them?
October 19, 2008 11:38 PM | Reply | Permalink
I would like to remind everyone that the democratic party in 31 and 32 was dominated by southern democrats who opposed Roosevelt on labor issues. The south loved its chain gangs which were basically a reinstitution of slavery. The southerners used this as a tool to resist labor unions. Globalization and Immigration is being used to fight the labor movement today. Old paradigms are still with us. The credit we live on hides that fact from us.
October 20, 2008 2:52 AM | Reply | Permalink
I must admit to being a "liquidationist" a la Secretary Mellon -- a believer that when income is inadequate to pay back the debt which supports the elevated "value" of assets, then, the proper response is "debt destruction." If you like, you may call it a Jubilee Year -- a year being just about the time it takes to accomplish the economic cure.
IMO the New Deal maintained debt peonage to the benefit of creditors and privileged those who had jobs over those seeking them (maintaining wage rates via Hoover's RFC and FDR's NRA and by excluding immigrants).*
* Prices fell with the result that wage rate maintenance meant real wages went up for all except the unfortunate unemployed. Rising real wages during a recession/depression lead to employment reductions.
N.B. On the other hand, I would not criticize the retirement, unemployment and welfare benefits enacted in 1935 (the Social Security Act known as the "Second New Deal") if supported by deficit spending.
October 20, 2008 12:58 AM | Reply | Permalink
Damn it took you a long time to say that Ellen. I've been waiting for you explain your position for several weeks now. I think I agree with you on general principle of asset values and debt. For me though, I can help but think there may be better solutions to these problems. Damned if I know what they are myself. I think that's where the debate should go. I think society has some obligations to all its citizens, such as providing some measure of health and public safety. If we could get a majority to accept that premise, then we could move on to talk about proper solutions to achieving those goals. I'm not hopeful though as the lower classes have chosen individualism and self reliance as the only path. Until people see any value in the principle of the common good, we'll get no where. I guess people won't miss Social Security until its gone.
October 20, 2008 2:23 AM | Reply | Permalink
Ellen,
BZZZT! WRONG!! At least in my humble opinion. You need to try some of this demand-side koolade. Consider this problem.
1 Expansion:Recession :: Inflation:?
A) Conflation
B) Reflection
C) Deflation
D) Correction
So in recession, demand drops, production drops, employment drops, income drops, demand rops, rinse and repeat.
But when real wages (income) rise, consumption aka demand rises, production rises (after inventory workoff), employment rises, income rises, and the wheel goes the other way.
October 21, 2008 7:27 PM | Reply | Permalink
Ellen;
Hooverism =
Slop Cake; mix flour and water, make patty, fry, using coal you found walking railroad tracks, in suet that fell off rendering truck.
October 20, 2008 11:57 AM | Reply | Permalink
"IMO the New Deal maintained debt peonage to the benefit of creditors and privileged those who had jobs over those seeking them (maintaining wage rates via Hoover's RFC and FDR's NRA and by excluding immigrants).*"
So you think public works projects are bad?
October 20, 2008 2:44 AM | Reply | Permalink
The nature of the continuity between Hoover and FDR is interesting and important. Others are better situated than I to unwind it. But Hooverism in my sense is an ideology. It is founded on misguided adherence to tight money, balanced budgets, limited government, and free trade. (Yes I know Hoover signed Smoot-Hawley into law.) It's what conservatives tell themselves they stand for.
On the merits, after some missteps and an initial embrace of Hooverism, FDR came around to a tenable economic policy, including the institution of social insurance. That is why he is a hero and Hoover is a goat.
People associate Hoover with economic policy failure, and FDR with success. In economically hard times, the Hooverism that the unimaginative McCain has embraced is a political loser. McCain the man of experience should have realized that, but he shows no sign of it. He should have applied himself a bit more at Annapolis.
October 20, 2008 9:19 AM | Reply | Permalink
People associate Hoover with economic policy failure, and FDR with success.
"When you say Budweiser, you've said it all."
PR and nonsense do seem to go together, don't they.
October 20, 2008 9:56 AM | Reply | Permalink
Madam, it is not nonsense to elevate FDR over Herbert Hoover in the field of economic policy.
October 20, 2008 10:55 AM | Reply | Permalink
Read -- nay, reread -- your history, Sir, and you shall come to understand that there wasn't a dime's worth of difference between the two -- except charm.
October 20, 2008 11:55 AM | Reply | Permalink
Amazing! That's exactly the way we see it on the planet Spectra, too.
October 20, 2008 12:32 PM | Reply | Permalink
You might want to look at the post at the top. If you admit a Hoover 1941 quote as history, and thus as a misprediction of the result of FDR's 1941 policies, as a finding of the mole of economic disagreement while turning a nations's back on the bandersnatch of an impending world war, then go ahead, FDR = HH. You're in a distinguished minority.
October 21, 2008 8:17 PM | Reply | Permalink
"Historians and economists are very good at creating and perpetuating myths that justify increasing the power placed in the hands of government." Reuven Brenner
October 20, 2008 1:34 PM | Reply | Permalink
"Class warfare" seems to have gained acceptance on both sides of the partisan aisle as campaign terminology. That's what the term has always been: a weapon in a campaign for control.
"Situational adaptation" more accurately describes what's going on with people in the US. Putting people into 'classes' or categories serves a political purpose but isn't reality. Taxation itself reinforces categorization. Prices and what is affordable categorizes people. And categorization reinforces prejudices associated with ego ties to the categories.
Still, it is a delusion to classify people by their cages.
October 20, 2008 9:53 AM | Reply | Permalink
Mike,
hasn't class warfare been with us since the dawn of man? Hasn't every civilization that ever was experienced class warfare?
Class warfare isn't a nefarious liberal plot as the Republicans would have the public believe,
its simply a fact of life in every society.
I think the wealthy usually win the class warfare battle, but their triumph is only temporarily because just when they take that extra bite of the apple a revolution starts and the guillotine is dusted off.
October 20, 2008 10:27 AM | Reply | Permalink
I don't think it works that way in small groups of primates. Dominant males and females will arise and there will be a pecking order, but I think neither dominance or its limited inheritance is more than a precursor of class. Isn't a large, stably-associating, and multi-generational population of humans necessary for a caste/class system to emerge? There are some gradations of sharpening class distinction between the "noble savage" and the townsman, but there is a usually sharp distinction between classless primate societies and the civilized world.
October 21, 2008 8:32 PM | Reply | Permalink
Prescription for enjoying the coming depression, via Roger Cohen and his friend, actor Jy Murhpy:
“People can stop worrying about their portfolios, and spend more time starving with their families. It’s bound to put a dent in the national obesity rate. More people will use mass transportation, like railroad freight cars. We’ll have authentic stories of hardship to guilt-trip our spoiled grandchildren. And once the Depression is over, we’ll be ready to win a world war again!”
http://www.nytimes.com/2008/10/20/opinion/20cohen.html?hp
October 20, 2008 11:54 AM | Reply | Permalink
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