How the Bull Moose Undermined the Bull Markets

Teddy Roosevelt is simultaneously loved and reviled by both parties. His enigmatic legacy comes as a result of his stances that maddened even his own party at the time, along with his unprecedented use of presidential power. He simultaneously attacked corporations, other countries, and racial equality, all while creating the internationally involved vision of America that we know today. He believed that he could use the presidency however he wanted as long as there was no law directly against it. He had huge positive cultural impacts on America, yet his use of the Sherman act and new vision for the presidency have led to long-lasting ramifications that even he would not approve of. While at the time he hated nothing more than corporate cronyism, his legacy has enabled more crony capitalism and unfair advantage than any other president.

Roosevelt weaponized the Sherman act based on his personal conviction that there were good and bad corporations. He thought that some big corporations were harmful to consumers and the economy, and other corporations were necessary and efficient. The problem is that his vague thinking infected antitrust with a prioritization of feeling over anything verifiable. Anti-trust in the first place is problematic because the theories behind it are not true, but Roosevelt used it as little more than an extension of his ire. While current antitrust moralists have some models they use to justify the will of the state, Roosevelt demonstrated its real basis by simply prosecuting unpopular companies. Companies could be targeted merely because of what other companies or citizens said about them. Roosevelt created an environment of boundless fear by subjecting all businesses to almost inherently random scrutiny. The President’s personal opinion as an arbiter of legality was no solution then, and it is certainly no solution now. 

Roosevelt set a dangerous precedent of individually tailored governmental solutions for each corporation. The potential for individual rather than legal treatment of each company opened the door for the current synergy of government and corporate control. While Roosevelt was only thinking of penalizing some companies, the standard he set means that local, state, and national government bargains with companies directly for a wide range of purposes. Whether in antitrust or environmental legislation, every government intervention has clear winners and losers. To think that lobbyists would have been able to engineer this level of government complicity without Teddy Roosevelt is nonsensical. In 1902 Roosevelt intervened in a coal workers strike on behalf of the miners with the intention of helping the miners and the economy. While this is a sweet story, where Teddy Roosevelt actually made the overall outcome better, he allowed government to insert itself wherever it wanted. Roosevelt even threatened to run the mines with troops if they could not come to an agreement, an overreach of presidential power which has been replicated recently. Roosevelt invited both parties to the White House to negotiate, and the unstructured and personal nature of the negotiation created an unsustainable institutional precedent. This sort of negotiation has taken many forms in the Trump and Biden administrations. Inevitably, this sort of motive-driven intervention leads to distorted and unpredictable business outcomes, taking resources away from those who can use them best and giving them to whoever can curry favor. 

Roosevelt’s expansion of Federal power at home and abroad cleared the way for the current state of our bloated red-tape production factory. In addition to informal discretion-based interventions, Roosevelt created several national regulatory boards and aggressively intervened in foreign wars. His belief in the high power of the presidential office allowed him to act so boldly and break rules to justify his goals. He overrode the sovereignty of other countries and states if it meant that he could reform the world in his image. He seemed to have little understanding of how destructive his actions could be if someone who disagreed with him held his same view of the presidency. He made the task of self-control far harder for all preceding presidents, as they were able to see how much overreach was accepted. Most Federal agencies gained a higher view of their own authority after the Roosevelt years, except for when they had to go head to head with the presidency. While growing Federal reach overall, Roosevelt decreased the power of congress by acting outside of it whenever possible. This transfer from law-based to discretion-based governing has created huge risks for both American business and those seeking to do business with America. Government intervention has only grown since Roosevelt, and it has contributed far more macroeconomic uncertainty than it has prevented.

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