Will This Never Cease? ? Hysteriography

It won?t cease, no matter what I say. Still:

The well-regarded historian Thomas McCraw, author of the recently published The Founders and Finance, who died untimely only a few days ago, has a characteristically well-written, persuasively liberal posthumous op-ed in today?s Times on Alexander Hamilton?s finance policies, which makes all the usual Hamiltonian ? I don?t know what to call them, because they can?t be mistakes ? presumptions? misconceptions? that my book Founding Finance is in part out to challenge? correct? demolish?

In the wake of the election, the moderately liberal desire to invoke Hamilton (yet again, since Paulson, Geithner, Orszag et al were self-professed Hamiltonians) as a guide to current policy certainly raises some big questions. But as a writer on the period,?I?m most bewildered by the reflexive Hamiltonian tendency to misconstrue what Hamilton actually did.

In this and many other cases, the miscontrual doesn?t even serve a ?useful purpose: McCraw?s most persuasive point ? that obsessing about ?fiscal cliffs? and lowering taxes and cutting benefits, etc., is not a realistic ?way to deal with national finance problems ? would be at least as strong with full acknowledgment of the real Hamilton plan.

To spare readers yet another review of the Hamilton basics, I refer those who want to delve deeper to this post from last year, and of course to Founding Finance. I?ll quibble for one sentence here with the idea that Hamilton ?persuaded Congress to authorize new bonds to replace existing obligations, while reducing the interest rate to 4 percent from 6 percent?: that makes it sound as ?if Hamilton was getting the creditors to take a haircut, but in fact he offered them multiple ways of taking their gold interest, including some that left the full 6% intact; it was the Senate that made the payout very slightly less of a bonanza for the investing class, but even then, payment to bondholders was wildly in excess of the bonds? market value, for cogent reasons that Hamilton clarified and McCraw endorses.

And I must make a specific dissent from McCraw?s strange assertion that

In a fiscal dilemma similar to ours but far worse, and with many fewer tools at the government?s disposal, he never considered austerity or big tax hikes or cuts as a solution. Only after the country was moving toward sustained prosperity did he increase taxes, including a controversial levy on whiskey.

First, it wasn?t a ?fiscal dilemma? for Hamilton: it was fruition of his efforts throughout the 1780?s to swell the debt to massive proportions as a driver of American nationhood. And second, the idea that Hamilton waited to levy the whiskey tax until ?the country was moving toward sustained prosperity? seems just weirdly fantastical, hopeful, an effort to make Hamilton over into someone neoliberals ?can endorse today. Exasperation leads me to the somewhat absurd presumption that McCraw simply?must have known that the whiskey excise was not only part and parcel of the funding and assumption plans but critical to them, according to Hamilton himself, who asked Congress to pass the revenue bill along with funding and assumption when he first presented them. Congress dragged its heels, but as there was no way to support funding and assumption without the whiskey tax, Congress passed it anyway in 1791. There was none of this made-up idea of waiting for the country to move forward before imposing new taxes: imposing new taxes ? especially the deeply, deliberately regressive whiskey tax ? was the whole key to getting?the country to move forward, in Hamilton?s plainly expressed view.

I never met Thomas McCraw. I?d been hoping to find a way to have these issues out in a public forum, since we had diametrically opposed books coming out at the same time; I was very startled and sorry to read about his death. ?Anyway, I?ll never know, now, what he meant by some of this. But the larger issue, for me, is the relentlessness of the Hamiltonian effort to deny what Hamilton was doing ? even when what he was really doing might make at least some of their points more forcefully.

Source: http://williamhogeland.wordpress.com/2012/11/12/will-this-never-cease/

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