Brad DeLong strikes the perfect balance on Herbert Hoover here. This is a particularly good line:
"But to say that "Hoover was no budget-cutter" misses most of the story. Hoover would have been a budget-cutter in normal times. Hoover was a budget-balancer. Hoover held the line against powerful political forces that sought to increase government spending in the Great Depression for fully 2 1/2 years before endorsing what seem to us to be half-measures."
The revisionism on Herbert Hoover has been tough to read during the Great Recession. Really, there are two revisionist stories, one that is worse than the other.
The first revisionism is one we've come to accept that guys like Paul Krugman usually just pluck from the standard history textbooks: that Hoover was a tight-fisted do-nothing and he - along with a Fed without Benjamin Strong at the helm - caused the Great Depression. That, admittedly, is somewhat unfair. Hoover supported the idea of counter-cyclical fiscal policy since the depression of 1920-1921. He started some of the programs that would continue to be featured under the Roosevelt administration (such as the Reconstruction Finance Corporation). And he did increase government spending and modestly increased the deficit, even.
Another group of revisionists takes that point and goes crazy with it. Rothbard called him a "proto-Keynesian", and many others have followed suit.
The fact is this - talking about Hoover in terms of "liquidationism" (as Brad actually has in the past) isn't particularly helpful, and talking about him in terms of "Keynesianism" is just plain wrong.
Hoover was an "associationalist" and a progressive Republican reformer (the best literature on this is by E.W. Hawley). He wasn't terrified of using the government and he even had a "government should lean against the wind" sort of instinct, but he had no instinct at all that the crisis required the production of higher public deficits to satisfy excess demand for safe and liquid assets. As a happy byproduct, he probably did shift money from lower MPC agents to higher MPC agents, but running an effectively balanced budget (or trying to) kept Hoover from anything like a Keynesian policy. Of course what response there was wasn't anywhere close to what was necessary, as well. This isn't entirely unforgiveable. This was relatively new stuff, at least as far as fiscal authorities were concerned (monetary authorities probably ought to have known better). But it doesn't make him a Keynesian either.
Hoover is one of those cases where you have to accept that just because he wasn't everything you might want - he wasn't laissez faire or a proto-libertarian - that doesn't mean he was a Keynesian or anywhere close to it.
2 hours ago