Joseph A.J. Felcon: Tom Patterson’s Dec. 13 article, “Harding illustrated how to revive economy,” was as weak on historical accuracy as on current events.
Tom Patterson’s Dec. 13 article, “Harding illustrated how to revive economy,” was as weak on historical accuracy as on current events.
Patterson praises cutbacks made by President Warren Harding in response to the 1920 crisis, but fails to mention that those reductions left an eviscerated military. Those policies, applauded by an isolationist majority, continued under two subsequent Republican administrations. By the time President Franklin Roosevelt took office, the Army lacked a single combat-ready division. I’m not sure that was a good idea in 1920; it is sheer folly 89 years later.
Harding freely admitted that he was a man of limited talents. He campaigned on his ability to pick good subordinates. He didn’t do so well with the Interior Department — Albert Hall became the first Cabinet member to be jailed for actions in office (Teapot Dome scandal). His choice for Commerce Department is another matter. Herbert Hoover has been called our best ever secretary of commerce.
Patterson would have us believe Hoover was a failure whose ideas were rejected by the president. The truth is that Hoover received broad authority from the president to coordinate economic affairs in government. The 1921 President’s Conference on Unemployment was Hoover’s idea; he ran it and implemented its recommendations. When unemployment returned to normal in 1923 from its 1921 high (estimated at 8.7 to 11.7 percent), it was Hoover, not Harding, who received the credit.
Patterson also misstates unemployment figures (20-plus percent?) and erroneously mentions “raging inflation.” The fact is that 1920-21 was a period of massive deflation during which wholesale goods prices declined by 36.8 percent. Also, the 1920-21 recession provides a poor parallel for our times. Its root causes were the influx of veterans returning from World War I and high interest rates — very different from 2008’s mortgage bubble, for which 1929 is a much better model.
In 1929, Hoover as president initially tried voluntary cooperation between industry and government, which worked well in 1921. By the time he understood the difference between the two recessions, it was too late. His failure to use the full resources of government in early 1930 sullies an otherwise exemplary record of service to our nation.
The year 1920 does offer a lesson about successful government reaction to a recession. The Harding recession lasted from January 1920 through June 1921, but unemployment continued to rise for another quarter, reaching its peak in September and remaining high for two more years. In 1929, when government failed, the economy shrank for several years and high unemployment persisted even longer.
Now look at the current picture. Contrary to statements by Patterson, economic news is actually pretty good. After 7 consecutive quarters of economic contraction (mostly under President George W. Bush), gross domestic product is growing again. Stock prices have recovered. Durable goods inventories increased last month after 18 straight months of decline. Exports have risen for several months and our trade deficit is falling. Housing prices have stopped sinking and show signs of improvement at the low end.
We may not be out of the tunnel yet, but light from the exit is clearly showing the way.
The news on the jobs front is not so positive, but neither is it so gloomy as Patterson portrayed. Worker productivity today is higher than at any time in U.S. history, and many workers whose hours were reduced are working full time again. Temporary agencies report an uptick in requests for short-term workers, positions that may become permanent if demand continues to rise. Traditionally, this is how the job market looks just before unemployment falls. Jobs should be more available in 2010, but full recovery may take longer.
Using Patterson’s own standard, the timeline of 1920, we should be at the stage where the economy is growing again, but jobs remain scarce, and that is where we are. This year looks like 1921, not 1930.
Patterson calls Harding’s economic policy a success because the country fully recovered three years after the start of a recession, then makes a specious analysis to label President Barack Obama a failure merely because he reacted differently. He completely fails to consider the dissimilar situations and ignores the fact that both outcomes proceed on an amazingly similar timetable.
Patterson needs to stop using bad history to draw partisan conclusions. My statistics and biographic excerpts may be verified on Wikipedia.
Joseph A.J. Felcon of Chandler is a software engineer.