Hoover, friend of Labor?
This report will certainly ruffle some political and pundit feathers: A UCLA economist is publishing a study on the Great Depression and how, in the economist’s belief, President Hoover’s pro-labor actions at the end of his administration worsened the Depression.
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.
“By keeping industrial wages too high, Hoover sharply depressed employment beyond where it otherwise would have been, and that act drove down the overall gross national product,” Ohanian said. “His policy was the single most important event in precipitating the Great Depression.”
“These findings suggest that the recession was three times worse — at a minimum — than it would otherwise have been, because of Hoover,” said Lee E. Ohanian, a UCLA professor of economics.
My knowledge of Hoover is not that strong, so I can’t comment on this being true or not. The report will be published in the December issue of the Journal of Economic Theory (it’s peer-reviewed) and were apparently posted today, as a working paper, at the website for the National Bureau of Economic Research, available for subscribers.