By Kenneth G. Pringle
Jan. 14, 2021
Clarence W. Barron had been waiting all his life for Calvin Coolidge.
The 1924 Republican nominee for president was both a true proponent of laissez-faire economics and a scrupulously honest politician—a difficult combination to find, as the scandal-ridden Harding administration had just shown.
Barron’s called Coolidge’s landslide election a “sweeping triumph of both political and economic common sense”—and the Dow Jones Industrials agreed, rising nearly 155%, to 313.86 from 123.26, during his term.
Eight years and one economic disaster later, America took a hard left turn and elected Franklin D. Roosevelt, the anti-Coolidge. Barron’s warned that the Democrat was a “public-ownership” devotee at “the ‘red’ end of the spectrum,” and Roosevelt did indeed usher in the era of big government.
Yet during FDR’s first term, the Dow soared to 185.96 from 53.84—a jump of 245%, surpassing Coolidge’s bump by a wide margin.
If this tells us anything about presidents and their economic success, it’s that timing is everything. Take Herbert Hoover. He assumed office at the Coolidge peak and got buried when it collapsed. War and disease upended other presidencies. All administrations are subject to larger global forces that often scuttle even the best-laid economic plans.
Barron’s had crowed that there “has never been a President with a fundamental understanding of economics better” than Hoover’s, yet the stock market crash of 1929 and the onset of the Great Depression were so severe that Hoover had little scope for action. His bad fortune provided the impetus for the turn to Roosevelt, which to Barron’s dismay would last a generation, including eight years of Harry Truman and his “big-government boys.”
But the pendulum would eventually swing back, and American politics since then has been characterized by fairly rapid swings between the extremes of laissez-faire on the right and big government on the left.
Dwight D. Eisenhower, though a Republican, was hardly in the Coolidge mold; his signature presidential accomplishment would be a massive government program, the Interstate Highway System. Yet Barron’s saw in him a man with “the calibre and integrity to clean out the mess” left by the Democrats while “arresting and reversing the drift to socialism.” The Dow liked Ike, too, gaining 65% in the first four years of his term, rising to 475.90 from 288.
The market thought well of John F. Kennedy, as well, even as Barron’s viewed his New Frontier as a warmed-over New Deal, with goals “to extend unemployment compensation, aid depressed areas, and boost minimum wages.” By the time Kennedy was assassinated on Nov. 22, 1963, the Dow had gained 12%, rising to 711.49 from 634.37. For the full four years of the term, the gain was 41%, to 895.31.
Sometimes a president’s ideological bent has little to do with economic results. Barron’s saw Lyndon Johnson as one of the great proponents of “the modern welfare state,” and Richard Nixon as “salutary for the economy”—but such assessments proved to be beside the point. The economic records of both men were tied to an unpopular war and, in Nixon’s case, a global oil crisis.
As late as 1976, Up & Down Wall Street columnist Alan Abelson described Gerald Ford as “the last of the laissez-faire presidents” and Jimmy Carter as “a born-again New Dealer.”
But Ronald Reagan took up the conservative torch in 1980 with an economic program linking tax cuts to “an assault on spending” and a pledge to reduce “the costs and burdens of government regulation,” as Barron’s wrote. George H.W. Bush’s bold pledge of “no new taxes,” however, didn’t fool Abelson. (Should Bush ascend to the presidency, the columnist declared in October 1988, “He will increase taxes.”)
Bill Clinton ran as a moderate Democrat, which to Abelson simply meant “someone who isn’t of a mind to soak the rich, merely inclined to hose them down,” and Clinton did indeed raise taxes on the wealthy. George W. Bush promptly lowered them once more, “promoting his tax measure as a quick fix” for the dot- com-bust economy, as Abelson wrote. (For more of Abelson’s observations about newly elected presidents, see Barrons.com/presidents).
Poor Hoover got dragged back into the political debate in 2008, when columnist Jim McTague wrote that it was “almost as if [Barack] Obama wants to repeat the mistakes of Herbert Hoover” by “raising taxes on the rich and redistributing wealth to the poor and middle class.”
The one election that didn’t offer a stark, black-and-white choice for Barron’s was 2016. Even if Hillary Clinton was a fairly standard New Dealer, Donald Trump was by no means a classic laissez-faire candidate, with his calls for China tariffs and an “adamant refusal to address ballooning entitlement costs,” as Barron’s called it.
How did Barron’s choose between the two?
A March 2016 article “sized up each candidate’s positions on taxes, spending, trade, and other issues that directly affect markets”—and concluded that Clinton “is the more investor-friendly of the two.”
As it turned out, investors did just fine under Trump, with stocks setting records even amid a pandemic. Now, in Joseph R. Biden Jr., we may have the most left-leaning administration since FDR’s. The pendulum swings once more. It remains to be seen if the economy will care.
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