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Beck Check: Coolidge and Harding

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Glenn Beck spent a portion of his February 9 show discussing the presidencies of Warren G. Harding and Calvin Coolidge. I was interested in his talking points, so I decided to run some fact-checking. Here’s the results.

“Coolidge and Harding decreased the real per capita federal expenditures – the size of the government – from $170 per year in 1920 to $70 in 1924. These policies, along with fostering the mentality of self-reliance – the opposite of what the progressives had been preaching in the previous 20 years and the opposite of what progressives teach now. They’re not saying ‘be self-reliant’, they’re saying ‘too big to fail, you can’t make it without the government’s safety nets.’ Stand on your own two feet, America!”

This statement, like many Beck make, is a bit misleading. In the interest of time, we will limit our discussion to his comments regarding Harding, Coolidge, and their economic policies. Were they really the antithesis of the preceding years’ progressivism?

President Calvin Coolidge

We’ll start with the value of this statement ‘on its face’. Did Coolidge and Harding decrease the real per capita federal expenditures from $170 per year in 1920 to $70 in 1924? Yes and no.

Now, I’m not entirely sure what source Beck used, but one of my main sources in researching his claim was a Cato Institute publication by Randall Holcombe titled: “The Growth of the Federal Government in the 1920s.” The Cato Institute is a libertarian think-thank that describes its mission as “to increase the understanding of public policies based on the principles of limited government, free markets, individual liberty, and peace.“ I assumed that because of Cato’s reputation (UPenn gave it excellent rankings in its 2010 ranking of think-tanks, including a #2 spot in the area of Domestic Economic Policy) and its advocation of limited government (a position with which Mr. Beck would likely concur), that the research of the Cato Institute would be a fairly noncontroversial in fact-checking Beck.

First, let’s define “Real Per Capita Federal Expenditures.” Federal expenditure per capita is how much money the federal government is spending per person. That is, it is the total federal government spending divided by the population. When we define this as “Real,” it simply means we’re adjusting for inflation. Because of inflation, comparing the dollar amounts of one year to another is an unequal comparison. Thus, the amounts need to be converted in order to nullify the effects of inflation and see how much the amount really increased or decreased.

As the following chart from the Holcombe paper shows, total real per capita federal expenditures in 1920 was $390.98. In 1924, that total was $194.85.

Quite a decrease.

Much of this decrease had to do with World War I. Federal expenditures increase largely during wartime in order to fund the war, and then subside once the war is over, because the military is no longer in need of large funding to sustain the war effort. In order to try to account for this, there is a second column in the table above. This one tries to subtract defense expenditures from the total. This is where Beck, it appears, is getting his numbers. According to this table, the 1920 federal expenditures per capita, minus defense, were $170.15, and those in 1924 were $70.36. Again, a nice decrease.

It would seem, then, that Beck’s statement is somewhat true. Of course, he is discounting a large part of the federal budget, but (and this is purely conjecture based on what I have seen of Beck’s opinions), he may feel that this discounting is justified as national defense is a necessary expenditure, and he would possibly want to limit his discussion to the federal government’s expenditures of which he disapproves.

Either way you look at the numbers, however, there is a nice decrease in federal expenditures. So Beck seems justified either way.

Holcombe, though, contends that the table suggests “there are war-related expenditures in the government budget even after subtracting defense, veterans, and interest expenditures. This makes it apparent that one cannot accept nonwar expenditures as unrelated to the war.” Although the table attempts to extricate total expenditures from military spending, there is still at least somewhat of a relationship between the two.

But let us overlook this for a moment and continue on with Beck’s statement. Let us assume that Coolidge and Harding were largely responsible for the decrease in real per capita federal expenditures, and not the end of World War I (a large leap). Even if this were true, Coolidge and Harding still did not reach the pre-war levels of real per capita federal expenditures — levels that occurred during the Progressive Era. In 1916, before the war began, the total was $83.60, as compared to Coolidge and Harding’s $194.85 in 1924.

Also, Beck comments only on 1920 to 1924, which should seem odd considering the Harding-Coolidge years actually stretched to 1929. Beck fails to mention that real per capita federal expenditures minus defense (the numbers from the second column that he cites during his show) actually rose after 1924. In 1929, at the end of the Harding-Coolidge run, the total expenditures minus defense had risen to  $89.30. Not a large increase, but much bigger than the total minus defense for 1916, which was $22.75. The total expenditures until 1929 actually continued to decline until 1927, as the table shows, and then increased, reaching $195.41 in 1929.

Holcombe says that:

“From 1924 to 1929, before Depression-related expenditures would have found their way into the budget, nonmilitary expenditures increased by 27 percent, all during the Coolidge administration. If we take the decline in expenditures up through 1924 as a winding down of the war effort, there appears to be a considerable underlying growth in federal expenditures through the 1920s–growth worth examining more closely. What at first appears to be a relatively stable level of federal expenditures in the 1920s actually is substantial underlying growth, masked by a decline in war-related expenditures.”

Yet, Holcombe says, “It would be misleading to try to judge the growth of the federal government in the 1920s only by looking at aggregate expenditures.” With this, we go beyond Beck, who leaves the discussion simply at expenditures. Holcombe notes several areas in which the government grew under Coolidge and Harding –

  • the creation of government-owned corporations (which began prior to Coolidge and Harding, but did not stop during their terms)
  • the expansion of federal aid to states
  • expansion in the role of the post office and the salaries of its workers (“postal deficits in the 1920s were caused by the expansion of postal services and the provision of many services without charge or considerably below cost.”)
  • expanding the enforcement of prohibition (for instance, Coolidge created the Bureau of Prohibition)
  • aid to the agriculture industry (“Whether evaluated financially or with regard to programs, the 1920s saw considerable government growth in the agricultural industry, and laid the foundation for more federal involvement that was to follow in the New Deal.”)
  • antitrust action

Below is an excerpt regarding antitrust action during the Harding-Coolidge years:

Expenditures are the easiest measure of the size of government, but tell only a part of the story of government growth. Government regulation also has a substantial impact, but is harder to measure.[23] Starting with the Sherman Act in 1890, the federal government began its antitrust activity to try to limit the economic power of businesses. Only 22 cases were brought before 1905, but the pace started picking up later in that decade, which saw 39 cases brought between 1905 and 1909. From 1910 to 1919, a total of 134 cases were brought, showing increasing antitrust enforcement. But there was little slowdown in the 1920s, which saw a total of 125 cases. [24] As Thomas McCraw (1984: 145) notes, “By the 1920s antitrust had become a permanent part of American economic and political life.” One might anticipate, after an increase in cases, that firms would be more cautious in their activities to avoid antitrust cases being brought against them. But McCraw (1984: 146) further notes that in the 1920s a large proportion of antitrust cases were brought against firms that were not normally regarded as being highly concentrated. Antitrust enforcement in the 1920s was vigorous and increasingly broad in scope.

I highly suggest you read the entire Holcombe paper, but those are essentially the points in the paper that I found related to Beck’s statement. I was also surprised by how well Holcombe seems to sum up the refutation of Beck’s claims. I’ll let Holcombe’s words speak for themselves:

Normalcy, in the Harding-Coolidge sense, meant peace and prosperity, but it also meant a continuation of the principles of Progressivism, which enabled the Republican party to retain the support of its Progressive element. Despite the popular view of the 1920s as a retreat from Progressivism, by any measure government was more firmly entrenched as a part of the American economy in 1925 than in 1915, and was continuing to grow. Harding and Coolidge were viewed as pro-business, [10] and there may be a tendency to equate this pro-business sentiment as anti-Progressivism. [11] The advance of Progressivism may have been slower than before the war or during the New Deal, but a slower advance is not a retreat. [12]

Late economist Herbert Stein (Former Chairman of the Council of Economic Advisors under Presidents Nixon and Ford and a member of the board of contributors for the Wall Street Journal) also wrote of Coolidge’s economic policies in his excellent book “Presidential Economics: The Making of Economic Policy from Roosevelt to Clinton.” His conclusions regarding the Coolidge years (on page 28) also run contrary to Beck’s claims:

But if we use as a test of conservatism the degree of government intervention in the economy, the Coolidge administration was not conservative compared to its predecessors. Coolidge presided over a New Era, and the era was new not only in the height of the stock market; it was also new in the economic role of the government, and part of the confidence in the future of the American economy was so strong in the Coolidge days was confidence in the cooperative policy of government. When Coolidge said that the business of America is business he did not mean that the business of government is to leave business alone. He meant that it is the business of government to help business. That was even more positively the idea of his activist Secretary of Commerce, Herbert Hoover. Coolidge did not undo the interventionist measures of the Theodore Roosevelt and Woodrow Wilson regimes. At the end of his term the federal budget was larger than in the time of, say, William Howard Taft. He reduced income tax rates, but we still had an income tax, which we hadn’t fifteen years earlier. Perhaps most important, his term was a period of increasing acceptance of the responsibility of the Federal Reserve to help stabilize the economy.

The Coolidge and Harding years, it seems, were not the years of limited government and abandonment of progressivism that Beck says they were. He may have had a few numbers correct (though he failed to properly identify them), but his implications are not entirely borne out by the facts.

(Beck goes on to describe the “Roaring Twenties,” and describes them as “arguably the most prosperous 8 years this country has ever seen.” A discussion of Beck’s “Roaring Twenties” description and how that decade compares to other economic expansions in American history (post-WWII boom and the 80s/90s, for instance) is the topic for a blog entry found here.)


Who Built America, Mr. Buchanan?

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Yesterday, Pat Buchanan talked about how America was “built, basically, by white folks.” He goes on to talk about how all the founding fathers were white and how white people fought in the wars, etc… Let’s do some fact-checking.

First of all, any talk that considers ‘white folks’ is problematic for the simple question of: how do you define ‘white’? For years, many ethnicities now commonly considered ‘white’ were ‘othered’. Take this excerpt from “Performing Whiteness: Naturalization Litigation and the Construction of Racial Identity in America“, written by John Tehranian and published in the Yale Law Journal:

In reality, however, many individuals of European descent were not readily integrated into mainstream American society. If anything, they found themselves caught on the dark side of the white/black binary. The Irish, for example, endured heavy prejudice in the United States,  and, for years, they were considered the blacks of Europe.  Similarly, Italians,  Greeks,  and Slavs  suffered from low social  [*826]  status,  and their racial status was a matter of great controversy that remained unresolved for years.

…

Furthermore, through an analysis of the racial-prerequisite cases after 1923, this study supports the view that race is a social construction.  Categories are situational.  They can alter over time. For example, the notion of white has undergone a significant transformation in the United States over the past two centuries. In the early years of the republic, white referred to those of Anglo-Saxon or Teutonic descent. Thus, the Irish and Italians were viewed as outside of the category. Over time, however, the Irish and Italians became a part of a broadened, more flexible definition of white. 

However, I doubt Mr. Buchanan had this in mind. So, I’ll simply assume for the purpose of this blog post, that ‘white’ is defined as having ancestors from Western Europe.

So then, this has been a country “built, basically, by white folks” because since ‘white folks’ ‘ first trip to the Americas, they have constituted a majority that has dominated minorities. Start with the Native Americans and move forward. The structure of society places power squarely into the hands of white people (which is not to say that there were not also poor white people — because there undoubtedly were, but Mr. Buchanan is not questioning whether white people built America, only the opposite). He then latches onto a few important American events, saying how these events featured only white people.

Yet, since these events all took place in periods in which white people still held absolute power in society, it should come as no surprise that white people were the participants in said events.

Of course “white men were 100% of the people that wrote the Constitution.” Do I really need to prove to you that allowing an African American slave or a Native American to take part in the drafting of the US Constitution would have been unthinkable at the time?

Of course white men were “100% of the people who signed the Declaration of Independence.” Again, would people of color even be invited to have any serious role in declaring independence from Britain? And, too, would they feel the same imperative British colonists felt to declare themselves independent from England?

Buchanan also claims that white people were “100% of the people who died in Gettysburg and Vicksburg.”

He’s close, but not correct. There were black soldiers who fought and were killed in both battles. In fact, in searching I even came across the picture of a memorial for black soldiers in Vicksburg –

Buchanan goes on the say that whites were “probably close to 100% of the people who died at Normandy.” Well, he’s right about this one. There were black soldiers at Normandy, but not too many. And why is that? Well, because “Most black soldiers never got a chance to fight.” You know, segregation and all.

So, its not like minority groups didn’t exist or were just too lazy to participate. Quite the opposite — they did exist and were excluded from participation.

However, let’s take this discussion beyond the examples Pat points out. What were some events that helped build America and its economy? Perhaps the railroads…

And what a future. In 1830, railroads began popping up throughout the country. In December of that year, as Norfolk Southern employees will proudly tell you, America’s first scheduled railway service with a locomotive began on the South Carolina Railroad, serving the port of Charleston. It’s a myth that the South at that time was somehow “backward” in adopting new technology. Elsewhere–in upstate New York, Pennsylvania, New Jersey, and soon in other states throughout the East, Midwest, and South–railroads proliferated. In 1840, some 3,000 miles of iron routes carried trains. Most rail lines weren’t connected one with another. In 1850, there were 7,500 miles of track, with many interconnections. By 1860, about 30,000 miles of mostly interconnected routes formed a system.

Powerful economic incentives sparked and spread this explosive growth, in a chain reaction of national development. Economic historians have shown that, compared to roads and turnpikes, the new railroads cut overland time-in-transit for passengers and goods by two- to six-fold, while cutting cost-per-mile to shippers and travelers in real dollars by two- to four-fold. Compared to canals, the time was cut by a factor of eight to ten. As any hand-held business calculator today will reveal, such a combination of cost-and-time saving creates a dramatic leap in economic investment rates of return for manufacturers. The improved financial return rates are permanent, because the increased speed of economic flows is sustained thereafter. There had never before been this kind of economic leap in human history.

And while thousands of railroad employees went to work building the tracks and running the trains, railroad companies ordered huge and increasing amounts of rail, fuel, and construction supplies, which required thousands of other employees throughout American industry. The secondary impacts on the economy were without precedent. Whole ironworks were devoted to making rails, while trains consumed–and distributed–increasing proportions of the nation’s rapidly growing energy production.

Now take this description of the men who built the railroads:

After the Central Pacific (CP) started building the Transcontinental Railroad eastward from Sacramento, demand for Chinese workers increased greatly. The CP figured they needed 5,000 workers to build the railroad, but the most they ever had just using white workers was about 800. Most of these stayed only long enough for a free trip to the end of the track and then headed for the gold fields. The CP hired all the available Chinese workers and then sent agents to Canton province, Hong Kong, and Macao.

With an average height of 4’10″ and weight of 120 lbs., many doubted these men could handle 80 lb. ties and 560 lb. rail sections. But handle them they did, as well as most other construction jobs. So well in fact that by the time they joined the rails at Promontory Summit, Utah on May 10, 1869, more than 9 out of 10 CP workers, over 11,000 in all where Chinese.

Much of the work they did has become legend. Driving through California’s Sierra Nevada Mountains, they were faced with solid granite outcroppings. After the CP’s imported Cornish miners gave up, the Chinese with pick, shovel and black powder progressed at the rate of 8 inches a day. And this was working 24 hours a day, 7 days a week, from both ends and both ways from a shaft in the middle. The winters spent in the Sierras were some of the worst on record with over 40 feet of snow. Camps and men were swept away by avalanches and those that weren’t were buried in drifts. The Chinese had to dig tunnels from their huts to the work tunnels. Many didn’t see daylight for months.

At Cape Horn in the Sierras, they hung suspended in baskets 2,000 ft. above the American River below them and drilled and blasted a road bed for the railroad without losing a single life (lots of fingers and hands though). After hitting the Nevada desert they averaged more than a mile a day. But working in 120 heat and breathing alkali dust took its toll. Most were bleeding constantly from the lungs.

And then, of course, there’s the effect the African-American slave population had on the American economy.

African peoples were captured and transported to the Americas to work. Most European colonial economies in the Americas from the 16th through the 19th century were dependent on enslaved African labor for their survival.

According to European colonial officials, the abundant land they had “discovered” in the Americas was useless without sufficient labor to exploit it.

…

Each plantation economy was part of a larger national and international political economy. The cotton plantation economy, for instance, is generally seen as part of the regional economy of the American South. By the 1830s, “cotton was king” indeed in the South. It was also king in the United States, which was competing for economic leadership in the global political economy. Plantation-grown cotton was the foundation of the antebellum southern economy.

But the American financial and shipping industries were also dependent on slave-produced cotton. So was the British textile industry. Cotton was not shipped directly to Europe from the South. Rather, it was shipped to New York and then transshipped to England and other centers of cotton manufacturing in the United States and Europe.

…

In sum, the slavery system in the United States was a national system that touched the very core of its economic and political life.

The situation is much more complicated that Mr. Buchanan’s brief comment would suggest. America wasn’t simply built by one group of people. Did one particular group hold the reins during America’s more formative years? Yes, but that by no means validates Mr. Buchanan’s viewpoint — like I’ve said, it is not because white people wanted to actively build America while minorities looked on from the sideline; it is because white people were in control, they had the power. Again, please note that I am not saying all white people were rich wealthy leaders of the country, because there were poor white people as well. It is just that there were virtually no rich wealthy colored leaders.

Also, look at the numbers. White people made up the vast majority of the population. Even if you wholly ignore the essential elements of discrimination and segregation, there’s also the fact that due to their status as a majority, white people would naturally have a higher percentage of participation in things like the military.

America was built by many different people, and I would think that Americans would not try to downplay that diversity.