Herbert Hoover Said It First

John McCain is historically, as well as politically, tone-deaf. How else to explain his repetition a couple of days ago of Herbert Hoover’s assertion, just before the stock market crashed in 1929, that the economy was fundamentally sound?

Responding to the collapse of several major investment banks this week, John McCain reassured us, “I think still — the fundamentals of our economy are strong.” That move comes from an old playbook: On Oct. 25, 1929, Herbert Hoover declared, “The fundamental business of the country, that is the production and distribution of commodities, is on a sound and prosperous basis.”

The day before Hoover insisted that the fundamentals were strong was the day that came to be known as Black Thursday, when in heavy trading the Dow Jones Industrial Average lost about 9 percent of its value. And while, in endless stock-footage documentaries showing images of dumbfounded traders over a soundtrack of mournful jazz clarinets, the crash is supposed to begin the Great Depression, it wasn’t quite so. The real cause was the collapse of the banking system, which followed the crash in part because Hoover believed strong fundamentals would protect the economy from disaster.

For the likes of Hoover and McCain, asserting the strength of fundamentals is shorthand for saying that business leaders, with maybe a little cheerleading, can sort out the crisis and that Congress should not try to regulate their behavior. It’s too soon to know if McCain will be proved right (I doubt it), but Hoover certainly turned out to be wrong.

Paul Krugman:

I’m gathering, from my reading here and there, that most people don’t know that Herbert Hoover famously declared that the “fundamental business of the country” was sound. (Can it be “famously” if most people don’t know it? Never mind.)

That partly explains why Republicans seem eerily compelled to echo Hoover; they don’t know what it makes them sound like.

Of course, Hooverism without the word fundamental would still be, um, fundamentally the same.

Let’s hope we don’t have to go through another Great Depression to learn the same lesson all over again.

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