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You might think as someone with libertarian leanings, that I would dislike Franklin Delano Roosevelt (or as us Americans know him, “FDR”), but I actually think FDR was one of the better Presidents of the 20th Century, and that the majority of Americans have misinformed views about late 19th Century American economic policies.

There was nothing “laissez-faire” about American economic policies from 1865 – 1933. This is one of the biggest myths pushed by historians. The US was dedicated to mercantilist trade protections, that insulated domestic industries (mostly situated in the Northeast and Midwest) from foreign competition. These policies also impoverished the South, by forcing Southerners to buy overpriced goods from the North, rather than being able to import cheaper, better-quality goods from Europe. Moreover, Southerners were forced to deal with European tariffs that lowered the value of their own agricultural exports.

Herbert Hoover’s response to the Great Depression is a testament to just how much the US economy was dependent upon Federal intervention in order to protect exporting industries. Hoover enacted the Smoot-Hawley tariff, dramatically increased government spending (in order to make up for lost demand for American goods), and then dramatically raised taxes (in order to try to avoid deficit spending). It’s a classic mercantilist response and it failed miserably.  By raising spending and raising taxes, Hoover merely forced private capital out of the market, thereby creating less investment.  Moreover, the Europeans retaliated against the Smoot-Hawley tariff, further exacerbating America’s export woes.

What did FDR do? He reversed 140 years of American mercantilism and shifted the US to a free trade economy. By doing so, he finally allowed the Southern states to escape the grip of poverty, and he forced American industries’ to become more competitive with the rest of the world.

The real reason for the decline in American manufacturing after FDR was that American manufacturing was never all that competitive to begin with. We were more competitive in the service sector, where we had highly skilled labor, and could earn higher incomes.  And this shift was actually beneficial to the vast majority of Americans and helps explain a lot of America’s post-war prosperity (not to mention, prosperity in places like Japan).

While I can critique a lot of FDR’s New Deal programs, it’s a mistake to view them as a radical shift away from “small government.” Rather, FDR merely was extending what Herbert Hoover had already done.  Yet, we still mostly know FDR for “the New Deal” (which was probably slightly unsuccessful on the whole) rather than for his much more important contribution of shifting America towards a free-trade economy.

So yes, while I can find a lot of faults in FDR’s policies, the bigger picture to me is that he liberated American consumers and particularly, the US South, from the tyranny of a mercantilistic cartel.  And that when you see the prosperity of cities like Atlanta, Nashville, Dallas, Raleigh, Charlotte, and Phoenix — it’s hard to imagine that prosperity ever taking place without liberalization of trade under FDR.

I’m not saying that everyone should have a bust of FDR sitting in their living room.  But I am saying, his greatest accomplishment is often overlooked by libertarians, conservatives, and even progressives (many of whom practically worship the guy.)

FDR’s Biggest Failure

In the interest of fairness, I feel like I should also examine FDR’s biggest failures.  And if you ask me what FDR’s greatest failure was; it would be Social Security.

Yet, even that ends up having a story that makes FDR seem less to blame than it might initially appear.  FDR envisioned Social Security as a “forced savings” system more than a “pay as you go” system.  It was Congress that turned it into the latter, and created a major problem for current generations, now saddled with ever-expanding liabilities.

Robert Samuelson, of the Washington Post, explores this issue recently in his article, “Would Roosevelt Recognize Social Security?”  If the system had followed FDR’s initial design, it might have still been a detrimental program, but it certainly would not have become the unsustainable program it has become today.

Unfortunately, once the Federal government intervenes into a major part of the US economy, issues become politicized, rational thought is thrown out of the window, and poor decisions can often spiral out-of-control.  That appears to be the case with Social Security: once it became a weapon for legislators, it became a battle to dole out the most benefits, with little care for the long-term sustainability of the system, and how it might negatively impact future generations.

For this reason, even if Social Security’s largest flaws were not actually of FDR’s design, he still deserves blame for introducing the program and creating a “slippery slope” for the entitlement program.  So, I could hardly fault anyone who viewing FDR negatively on the Social Security issue.  Still, I don’t view it as offsetting what FDR did on trade; but I could understand someone taking the opposite side of that.

Worst Presidents of the 20th Century

As for American Presidents of the 20th Century that libertarians should view in the harshest light — I’d put Herbert Hoover, Woodrow Wilson, Harry Truman, and Lyndon Johnson near the top of the list.  Those four Presidents probably have the greatest claims to pursuing “statist” policies that were at odds with market forces and attempting to centralize resources within the Federal government.