I love history.
Growing up, it was my favorite subject, and it still is today. What makes it especially interesting is how it keeps repeating itself. You don’t need to study too much history before you soon realize that humans haven’t changed much over the centuries. From Romans donning togas to tattooed Americans sporting Crocs, several themes are pretty constant, particularly when it comes to human nature.
Given that, it shouldn’t be too much of a surprise that what we’re seeing today with President Obama’s clarion call for raising taxes on the “rich” and the idea that somehow taking more money from this group will solve serious economic problems has all been done before.
The name Herbert Hoover instantly comes to mind. Most Americans remember Hoover as the U.S President who presided over the onset of the Great Depression. They are also generally aware that everything Hoover attempted to do to end the Depression failed spectacularly. Two very bad Hoover decisions particularly stand out.
First, there was the enactment of the Smoot-Hawley tariff in 1930. Without getting too much into the weeds on this one, suffice it to say that it was a tariff put on a number of goods which did everything imaginable to discourage trade with other countries. You don’t need a PhD in Economics to figure out this is a bad move when you’re own economy is faltering. Hoover’s other very bad policy was his support for the Revenue Act of 1932 which increased the top tax rate from 25 to 63 percent and reduced personal exemptions for these same taxpayers.
Thanks to both of these Hoover policies, the economy just kept getting worse.
This is why Herbert Hoover was a one term president. It is why many Americans of the time lost everything and were ultimately forced to live in squalid places called “Hoovervilles,” named for President Hoover, not in his honor, but rather to lay blame squarely at the feet of the man many of these good citizens felt put them there.
Today, our economy is one of the worst since the Great Depression. Parts of Europe are currently in a Depression for all practical purposes and it would appear other parts of the world could be poised to follow suit. Now is the time for measures designed to strengthen and grow our economy. It is clearly the wrong time to do anything that would have the opposite effect.
I’ve heard commentators in the last few days debating the fiscal cliff crisis suggest that increasing taxes on the wealthy is much better than increasing taxes across the board because it will have less of a negative impact on the economy. I haven’t heard one person say it will help grow or improve the economy. Not one.
So why are we doing this now?
President Obama would be wise to put a good biography of President Hoover on his Christmas List and then spend Christmas morning reading it. If not, he might not only repeat the colossal mistakes of Hoover, he may even succeed in surpassing them and that’s no easy task.