Bryan Caplan  

Roosevelt's Law of Tooth and Claw

The New Deal and the Great Dep... What Was the New Deal?...

Hamilton and Arnold are making a lot of sense. On the negatives of the New Deal, though, it's also worth pointing out how scary Roosevelt's policies and populist rhetoric were to business. If I were a potential investor in 1933, I'd be thinking about how to protect my assets, not looking for good projects to invest in.

I don't think that Brad DeLong would deny that Mugabe has made people afraid to invest in Zimbabwe. Why should he doubt that - on a smaller scale, of course - Roosevelt made people afraid to invest in the U.S.?

But you don't have to take my word for it. Here's Roosevelt himself (Green Bay, Wisconsin address, August 9th, 1934):

But, my friends, action may be delayed by two types of individuals. Let me cite examples: First, there is the man whose objectives are wholly right and wholly progressive but who declines to cooperate or even to discuss methods of arriving at the objectives because he insists on his own methods and nobody's else.

The other type to which I refer is the kind of individual who demands some message to the people of the United States that will restore what he calls "confidence." When I hear this I cannot help but remember the pleas that were made by government and certain types of so-called "big business" all through the years 1930, 1931 and 1932, that the only thing lacking in the United States was confidence.

Before I left on my trip on the first of July, I received two letters from important men, both of them pleading that I say something to restore confidence. To both of them I wrote identical answers: "What would you like to have me say?" From one of them I have received no reply at all in six weeks. I take it that he is still wondering how to answer. The other man wrote me frankly that in his judgment the way to restore confidence was for me to tell the people of the United States that all supervision by all forms of Government, Federal and State, over all forms of human activity called business should be forthwith abolished.

Now, my friends, in other words, that man was frank enough to imply that he would repeal all laws, State or national, which regulate business—that a utility could henceforth charge any rate, unreasonable or otherwise; that the railroads could go back to rebates and other secret agreements; that the processors of food stuffs could disregard all rules of health and of good faith; that the unregulated wild-cat banking of a century ago could be restored; that fraudulent securities and watered stock could be palmed off on the public; that stock manipulation which caused panics and enriched insiders could go unchecked. In fact, my friends, if we were to listen to him and his type, the old law of the tooth and the claw would reign in our Nation once more.

Somehow I doubt that Roosevelt's businessman was really a radical "smash the state" libertarian. I suspect the businessman merely advised a more moderate rate of growth of government. But like a typical demagogue, Roosevelt reply to wise criticism was an outraged "You're with us or against us!"

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COMMENTS (5 to date)
Steve Sailer writes:

During the long interregnum between his November 1932 victory and his March 1933 inauguration, FDR acted in an irresponsible manner. Terror over his becoming President drove the economy into the abyss of the Depression in early March 1933. Then, FDR's masterful inaugural address and brilliant PR blitz of the 100 Days lifted spirits, especially in contrast to the despair of the last weeks before his taking over. In the media memory, the pre-Inaugural collapse of the economy is now blamed on Hoover, rather than on FDR. Did FDR plan it this way? Who knows?

pgl writes:

Arnold and James did make sense as does Tyler Cowen. Hate to add to the fire, but over at Angrybear, I suggested that your suggestion that FDR scared investors doesn't square well with the evidence.

Mr. Econotarian writes:

Look at what Chavez doing for foreign investment in Venezuela over the last few days...for example this link from Wednesday:

German bank warns against investment risk in Venezuela

The socialist revolution heralded by President Hugo Chávez, in addition to increasing public expenditure and overpowering state management represents an enormous risk for investors, said Wednesday German DZ Bank
pgl writes:

The Mugabe comparison has drawn fire from Brad DeLong. Beyond you having gotten the facts wrong on investment demand, Brad's suggestion that the Mugabe comparison was inappropriate seems exactly right to me. Bryan - may I suggest you apologize for lowering the standards of this (admittedly nasty) debate here.

Ray G writes:

FDR's "radical" businessman was just as likely to have been a figment of his political imagination. Much like Dick Gephardt's slew of imaginary friends who were begging him to raise taxes a few years back.

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