Wednesday, November 23, 2016

Yes, Businessmen can be Good Presidents, by Heinz Schmitz

Yes, Businessmen can be Good Presidents, a Response to:- _Sorry, Trump: Past businessmen did poorly as presidents_  article by Paul Brandus at

The list of businessmen turned presidents usually like this:

Warren Harding
Calvin Coolidge
Herbert Hoover
Harry Truman
Jimmy Carter
George H.W. Bush
George W. Bush

Firstly, no one really thinks of the Bush family as primarily businessmen as they have been heavily into politics since Prescott Bush over 70 years ago.

Herbert Hoover was indeed a poor president, but not for the reasons most people believe. Myth has it that Hoover was a laissez-faire, do-nothing president.

"Did Hoover really subscribe to a 'hands off the economy,' free-market philosophy? His opponent in the 1932 election, Franklin Roosevelt, didn’t think so. During the campaign, Roosevelt blasted Hoover for spending and taxing too much, boosting the national debt, choking off trade, and putting millions of people on the dole. He accused the president of 'reckless and extravagant' spending, of thinking 'that we ought to center control of everything in Washington as rapidly as possible,' and of presiding over 'the greatest spending administration in peacetime in all of history.' Roosevelt’s running mate, John Nance Garner, charged that Hoover was 'leading the country down the path of socialism.' Contrary to the modern myth about Hoover, Roosevelt and Garner were absolutely right."

However, when Franklin Roosevelt took over he simply continued the Hoover interventionisms. Interestingly, for doing so, FDR is ranked highly as one of the good presidents in most conventional rankings all the while prolonging the depression more years than it needed to be.

Now take Harry Truman. His presidency saw one of the greatest economic booms in American history starting from 1947.

"By 1947, government spending had dropped 75 percent in real terms, or from 55 percent of GDP to just over 16 percent of GDP. Over roughly the same period, federal tax revenues fell by only around 11 percent. Yet this “destimulation” did not result in a collapse of consumption spending or private investment. Real consumption rose by 22 percent between 1944 and 1947, and spending on durable goods more than doubled in real terms. Gross private investment rose by 223 percent in real terms, with a whopping six-fold real increase in residential- housing expenditures....When the war ended, however, the command economy was dismantled. By the end of 1946, direct government allocation of resources—by edict, price controls, and rationing schemes—was essentially eliminated. Tax rates were cut as well, although they remained high by contemporary standards. By any measure, the economy became less subject to government direction. Despite the pessimism of professional economists, resources that previously would have been directed to the production of war goods quickly found their way to other uses. The business community did not share the economists’ despair. A poll of business executives in 1944 and 1945 revealed that only 8.5 percent of them thought the prospects for their company had worsened in the postwar period. A contemporary chronicler noted that in 1945-1946 businesses 'had a large and growing volume of unfilled orders for peacetime products.' In fact, the elimination of wartime economic controls coincided with one of the largest periods of economic growth in U.S. history."

While Jimmy Carter does rank poorly by many on both the Democrats and Republicans, but in his defense he "...inherited stagflation caused by the Vietnam War and past presidents’ poor economic policies. At first, he made it worse but then nominated Paul Volcker as Chairman of the Federal Reserve. Volcker restricted the money supply and drove inflation out of the economy; and this tight-fistedness contributed greatly to the prosperity of the Reagan and Clinton years. In addition, Carter was able to reduce government spending as a portion of GDP and increase economic efficiency by deregulating the transportation, communication, energy, and financial services industries."

Gene Healy adds: "by serially deregulating airlines, trucking and railroads, the man from Plains broke special-interest strangleholds over transportation, helping usher in the dynamic, competitive economy of the '80s." [If only Obama were as good as Carter]

Warren Harding often ranks as one of the worst presidents in US History, and Calvin Coolidge does not rank much better, but is this fair? Harding's administration was marred by scandals (which should be more properly attributed to his underlings), he does however set an example other presidents should have followed. As Thomas Sowell writes: "In 1921, under President Harding, unemployment hit 11.7 percent -- higher than it has been under President Obama. Harding did nothing to get the economy stimulated. Far from spending more money to try to 'jump start' the economy, President Harding actually reduced government spending, as the tax revenues declined during the economic downturn. This was not a matter of absent-mindedly neglecting the economy. President Harding deliberately rejected the urging of his own Secretary of Commerce, Herbert Hoover, to intervene. The 11.7 percent unemployment rate in 1921 fell to 6.7 percent in 1922, and then to 2.4 percent in 1923. It is hard to think of any government intervention in the economy that produced such a sharp and swift reduction in unemployment as was produced by just staying out of the way and letting the economy rebound on its own."

Jerry Shenk continues with a similar narrative: "You will never hear a Keynesian economist mention the depression of 1920-1921, or accurately explain what brought America out of it.  The facts don't fit the Keynesian narrative.  President Warren Harding cut the federal budget 48% from 1920 to 1922.  The economy boomed.  President Calvin Coolidge continued Harding's fiscal prudence, spending less in 1928 than Harding did in 1922.  America enjoyed nine years of budget surpluses and arguably the best national economy in the world, post-World War I."

Continuing with Coolidge: "Calvin Coolidge lived in such a time—as do we. At the end of World War I, the national debt stood at $27 billion, nine times its level before the war. But Coolidge, and Harding as well, slashed the country's credit obligation to just $17.65 billion. They did it by cutting taxes, generating economic growth and, in the process, flooding federal coffers with surplus dollars."

David Resler adds: "Historians are predisposed to judge presidents by the boldness of actions taken and often ignore the possibility that inaction may sometimes be the more courageous path. Maintaining control over government spending required both diligent attention to detail and courageous resistance to the politically expedient expansion of the reach of government. Coolidge, for instance, resisted demands to expand government support for veterans because he recognized that the precedent could become boundless. The various entitlement programs that now jeopardize our long-run fiscal health would likely be less threatening had the generations of politicians since Coolidge heeded his style of budget discipline and vigilance."

Perhaps it is for these reasons that the book, Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty by Ivan Eland ranks Carter, Harding and Coolidge as 3 of the best 10 presidents in US History.

See also The History & Mystery of Money & Economics-250 Books on DVDrom

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