Friday, September 30, 2011

Those who can't remember the past are condemned to be Paul Krugman

As part of his scolding of state governors, Paul Krugman once went on about how Herbert Hoover made the Great Depression worse by balancing the Federal budget in the face of a worsening economy.  The topic also came up on the campaign trail when Mitt Romney was asked it he would be repeating the Hoover mistake by cutting the budget deficit if he becomes president.

The problem is that Hoover did not balance the Federal budget.  In fact, by his his final budget he had expanded Federal spending by 40 percent in nominal terms, and by even more than that in real terms.  Hoover was a Keynesian even before Keynes was.