President Obama returned to the FDR well tonight, trying to summon popular support by invoking Roosevelt and his decade-long battle against the Great Depression:
It will take more than a few years for us to solve challenges that have built up over decades. It will require common effort, shared responsibility, and the kind of bold, persistent experimentation that Franklin Roosevelt pursued during the only crisis worse than this one.
Obama meant his citation of Roosevelt’s 1932 call for “bold, persistent experimentation” as a rallying cry, but investors and economic analysts are likely to be unsettled by his historical invocation. One of the biggest reasons for our current economic malaise is Obama’s embrace of experimental nostrums and dubious bailout programs. The uncertainty such programs have helped keep over $2 trillion of capital on the sidelines of our economy, unavailable for job creation and economic expansion.
Amity Shlaes, author of a dramatic reinterpretation of the Great Depression called The Forgotten Man, notes the arbitrary nature of Roosevelt’s actions hurt confidence in the economy. “The New Deal centerpiece, the National Recovery Administration, helped some businesses compete and criminalized others for the same behavior. Sometimes Roosevelt goaded federal prosecutors into harassing corporate executives. Other times, he schmoozed the same execs at the White House,” Shlaes wrote. “The ‘deal’ part of the New Deal phrase was problematic; businesses didn’t want individual favors, they wanted clear laws for all.”
The turbulence and mixed signals created by the Roosevelt administration were brilliantly described by one of the country’s leading investors of the time, Lammot du Pont. He wrote in 1937:
Uncertainty rules the tax situation, the labor situation, the monetary situation, and practically every legal condition under which industry must operate. Are taxes to go higher, lower or stay where they are? We don’t know. Is labor to be union or non-union? . . . Are we to have inflation or deflation, more government spending or less? . . . Are new restrictions to be placed on capital, new limits on profits? . . . It is impossible to even guess at the answers.
If President Obama is reelected by promising to continue the same kind of uncertainty FDR pursued, we can expect him to deliever on that promise and usher in a much longer period of economic stagnation and pain — with many similarities to the stalled economy of the 1930s. That’s the real lesson to take away from Obama’s invocation of Roosevelt tonight.