‘Often wrong but never in doubt’ is a phrase that summarizes much of what was done a century ago by Presidents Theodore Roosevelt and Woodrow Wilson, the two giants of the Progressive era.
Their legacy is very much alive today, both in their mindset — including government’s picking winners and losers in the economy and intervening in foreign countries — as well as specific institutions created during the Progressive era, such as the income tax and the Federal Reserve System.
Like so many Progressives today, Theodore Roosevelt felt no need to study economics before intervening in the economy. He said of “economic issues” that “I am not deeply interested in them, my problems are moral problems.” For example, he found it “unfair” that railroads charged different rates to different shippers, reaching the moral conclusion that these rates were discriminatory and should be forbidden “in every shape and form.”
It never seemed to occur to Roosevelt that there could be valid economic reasons for the railroads to charge the Standard Oil Company lower rates for shipping their oil. At a time when others shipped their oil in barrels, Standard Oil shipped theirs in tank cars — which required a lot less work by the railroads because they didn’t have to load and unload the same amount of oil in barrels.
Roosevelt was also morally offended by the fact that Standard Oil created “enormous fortunes” for its owners “at the expense of business rivals.” How a business can offer consumers lower prices without taking customers away from businesses that charge higher prices is a mystery still unsolved to the present day, when the very same arguments are used against Walmart.
The same preoccupation with being “fair” to high-cost producers who lose customers to low-cost producers has turned antitrust law on its head, generations after the Progressive era. Although antitrust laws and policies have been rationalized as ways of keeping monopolies from raising prices for consumers, the actual thrust of antitrust activity has often been against businesses that charged lower prices than their competitors.
Theodore Roosevelt’s antitrust attacks on low-price businesses in his time were echoed in later “fair trade” laws, and in attacks by the Federal Trade Commission, another agency spawned in the Progressive era against “unfair” competition.
Woodrow Wilson’s Progressivism was very much in the same mindset. Government intervention in the economy was justified on grounds that “society is the senior partner in all business.”