-By Warner Todd Huston
An economist is saying that President Hoover set the stage to worsen The Great Depression because of his pro-labor union stance.
Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation’s gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.
Lee E. Ohanian, a UCLA professor of economics, lays the worst of the Depression at the feet of Hoover who, in his opinion, made the recession “three times worse” by keeping industrial wages too high which “sharply depressed employment.”
Ohanian’s study is being published by the peer-reviewed Journal of Economic Theory in December and was also posted at www.nber.org, the site of the National Bureau of Economic Research.
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A Warning For Obama: President Hoover’s Fealty to Unions Worsened Great Depression”