Obama vs FDR in 1936?


The loser wins. That’s the way it can go in presidential elections. Especially when the ballot involves a likable incumbent who happens to be failing when it comes to his task of helping theU.S. economy.

In the case of President Barack Obama’s campaign for re- election, the loser the president most resembles is the one he evokes with his radio addresses: the great radio president,Franklin Delano Roosevelt. Roosevelt came into office in 1933 on a ticket of recovery. Neither employment nor the stock market returned to pre-crash levels by 1936. Yet Roosevelt won that year, taking all but two of 48 states.

A side-by-side comparison of presidential records and the campaigns of 1936 and 2012 suggests how Obama might fare, too — minus the landslide part. The resemblance starts, of course, with the poor quality of the underlying economy in those first four years.

The U.S. grew from 1933 to 1936, but neither the stock market nor the unemployment levels got back to where they had been at the market crash in 1929. Today, our data also sketch recovery, but neither the Dow Jones Industrial Average (INDU)nor employment is back to pre-crash levels.

The second feature Obama and Roosevelt share is bad policy. More than anything else, the post-2008 economy has required a stable environment where the government stays out of the way. Whether in the automobile industry, in health care or in housing, this administration has preferred to jump in.

Propping Up Prices

People buy and sell when they know that the market sets prices, however low (houses) or high (interest rates) those prices turn out to be. The Obama administration opted to serve consumers by keeping home prices up and pressuring the Fed to keep interest rates down. No one knows what the true price of houses or money is.

The result is our “count me out” problem; businesses that could hire are not doing so; companies that invest would invest more if the market were predictable. A similar “count me out” culture prevailed in the late 1930s. A “capital strike” was what Roosevelt crossly labeled it. The third similarity is that both candidates are especially ready to assign blame somewhere else.

To the quiet concern of his credentialed advisers, Obama recently pointed at machines and globalization to explain our troubles, saying that “if you look at the trend lines, essentially what’s happened is that because of automation, because of globalization, you had a lot of manufacturing move out of the United States,” he said.

Roosevelt likewise took out his frustrations on automation. Many New Deal works programs emphasized jobs over productivity. This drove some of his credentialed staff crazy. Once Rexford Tugwell, one of his closest advisers, even ribbed the president about a construction project where men used shovels, instead of tractors. If the purpose was jobs, why not use spoons?

Why the victory, then or now? The first is the sympathy vote. Voters were down, and they identified with a president who was embattled….


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