Tuesday, February 9, 2010

will Obama follow in FDR's footsteps and continue attacking business?

From Amity Shlaes in the WSJ...

You get the feeling President Obama is girding for battle with the financial sector. In last week's State of the Union address, he promised to regulate the industry. On Jan. 21, he was blunter, warning that he would not let companies that enjoyed "soaring profits and obscene bonuses" block his financial reforms. "If these folks want a fight," he said, "it's a fight I'm ready to have."

This declaration of war echoes that of Franklin Delano Roosevelt....

Mr. Obama might want to stick to a moderate approach. FDR's war against business played to the crowd, but it hurt the economy. While monetary policies impeded recovery in the late 1930s, it was the administration's assault on companies and capital that ensured the Depression's duration....

And Roosevelt, like Presidents Obama and Bush, dumped billions in cash onto the country. There was, not surprisingly, a Roosevelt market rally, just as there has been an Obama rally. But complete recovery proved elusive....

The attacks started with taxes....The 1935 Wagner Act was a tiger that makes today's union law look like a pussycat. It favored unions over companies in nearly every way, including institutionalizing the closed shop....The result of it all was the Depression within the Depression of 1937 and 1938, when industrial production plummeted and unemployment climbed back into the higher teens. Even John Maynard Keynes chided FDR for his attitude about businessmen: "It is a mistake to think they are more immoral than politicians"....

The 1930s story suggests not that any individual reform is wrong per se. It reminds us rather that frustrated presidents are inconsistent, that antibusiness policies are cumulative, and that hostility yields more damage than benefit. Presidents can choose between retribution and recovery. They cannot have both.

1 Comments:

At February 10, 2010 at 12:51 PM , Blogger William Lang said...

"will Obama follow in FDR's footsteps and continue attacking business?"

Apparently not: http://krugman.blogs.nytimes.com/2010/02/10/clueless/

 

Post a Comment

Subscribe to Post Comments [Atom]

<< Home