In her first formal appearance as head of the United States Federal Reserve, Janet Yellen obliquely suggested the Fed might not raise its mighty “federal funds” rate to tighten the economy until months after its Quantitative Easing bond purchasing ended completely, coyly portending cheap money indefinitely. The market shuddered but soon calmed at the soothing voice of its controller.
What an absolutely astounding admission former Fed boss Alan Greenspan makes about his new book The Map and The Territory: “Not a single major forecaster of note or institution caught it [the 2008 crash]. The Federal Reserve has got the most elaborate econometric model, which incorporates all the newfangled models of how the world works—and it missed it completely. I was actually flabbergasted. It upended my view of how the world worked.”
It may only be rock and roll, but Alan Krueger, the outgoing chairman of the President’s Council of Economic Advisors, likes it, not least because it is economically illuminating. Among the ways in which the economy and the recording industry are alike, he said in a recent address at the Rock and Roll Hall of Fame in Cleveland, is that outcomes in both depend substantially on luck. The suggestion is that distributions dictated by chance are arbitrary, problematic and—this last point is unstated but seemingly latent—fair game for rearranging. The typical conservative response is to deny that luck rather than merit is at play. But were the point ceded just for fun—and luck stipulated as a potent force in economic affairs—an interesting question might result: So?
Editor’s note: Stephen Schuker, a first-time contributor to Law and Liberty, assesses in this post the lengthy volume Freedom Betrayed: Herbert Hoover’s Secret History of the Second World War. Published in 2011, the book contains Herbert Hoover’s arguments that America’s commitments to individual and economic liberty and restrained foreign policy were betrayed by the Roosevelt administration and in subsequent postwar domestic and foreign policies. For a conversation with George Nash, editor of Freedom Betrayed and author of the book’s excellent introduction, about Hoover’s political and humanitarian career and his motivations in writing this grand book see this Liberty Law Talk podcast.
On 4 March 1933 Herbert Hoover accompanied his successor to the Capitol for the swearing-in ceremony. The two men maintained a frosty silence. As the economy spiraled down during the presidential interregnum, Franklin Roosevelt had refused to cooperate with the outgoing chief executive in any way. Hoover then left for Union Station, rejected by the American people, seemingly a broken man. Worse was to come. When Hoover boarded the train, his secret service detail melted away. A mob assailed him when he reached New York. Taking up residence at the Waldorf-Astoria, he found his phones tapped, his mail opened. Several members of his administration would shortly receive unwelcome scrutiny from the IRS. Even more galling, Roosevelt adopted some of Hoover’s policies, but accorded him no credit. The Republican Treasury secretary stayed on sub rosa and reopened the banks, but no one appeared to notice who had expertise and who did not. A lesser man than Hoover would have collapsed. Instead, Hoover rallied, sustained by his indomitable spirit and iron self-discipline. Over the next thirty-one years, he published more than thirty books. When Roosevelt’s biographer inquired about the secret of his productivity, Hoover replied simply: “I outlived the bastards.”
Except when giving speeches or supervising the growing collections of the Hoover Institution at Stanford, the ex-president sat tethered to his desk twelve or thirteen hours a day. After his wife died, he often rose in the middle of the night to labor two more hours. He kept six secretaries and a Ph.D. research assistant fully employed. Having caught the spirit of the age in his 1922 volume, American Individualism, a paean to the country’s exceptionalism and voluntarist tradition, Hoover followed in 1934 and 1936 with trenchant analyses of what he called New Deal collectivism. As Hoover saw it, the intrusion of the Leviathan state into every corner of American life would lead sooner rather than later to a curtailment of personal liberties and economic freedom. He thus anticipated the critique of central planning that Friedrich Hayek in The Road to Serfdom would later embed in a formal methodology. Hoover also churned out three thick volumes of memoirs, a four-volume chronicle of his efforts to provide food relief during and following the world wars, two studies of Woodrow Wilson, innumerable collections of speeches, and even a book on fishing.