Like The Matrix, I’ve seen this movie before as well. It’s one of central leitmotifs of Amity Shlaes’s The Forgotten Man, her brilliant 2007 history of the New Deal’s long and painful impact on the country.* As Shlaes summarized in a 2011 Bloomberg News column, one of the reasons why America had a “Great” — read: interminably long lasting — Depression was an enormous sense of uncertainty in the minds of business owners as to what deleterious laws were going to come next from the entrenched and capricious Roosevelt administration:
The second under-discussed issue is what scholar Robert Higgs has called “regime uncertainty.” Roosevelt’s victory in 1936 had been so convincing that people believed he might do anything. FDR reinforced this suspicion with an inaugural address so aggressive that modern presidential advisers would never allow it on the teleprompter. Roosevelt told the nation he sought in government “an instrument of unimagined power.” That scared markets and small businesses.
Roosevelt relished hunting down big firms through regulatory action and blaming new sectors, such as utilities, for slowdowns — on some days. Other days, he invited business leaders into the Oval Office and talked about partnership and a “breathing spell.”
This inconsistency itself posed a problem. The diary of an Ohio lawyer named Daniel Roth, which was recently republished, captures the pervasive anxiety of the period. “We are having a bad steel strike in Youngstown and the mills have closed,” Roth wrote on June 22, 1937. “The state and federal governments seem to support the labor unions and there has been a complete breakdown of law and order. Business is very quiet.”
From the U.K., John Maynard Keynes wrote to FDR that it was all right to nationalize utilities or to leave them alone — but what, Keynes asked, was “the object of chasing the utilities around the lot every other week?””
Shortly before he took office, Time magazine declared Mr. Obama the second coming of FDR. Curiously, they meant it as a compliment, not realizing it was a warning of similar economic disasters to come.
* Coming next month in a “graphic novel” edition, a brilliant use of that format.