Theodore Roosevelt’s election coincided with a radical shift in the Republican Party. The dawn of the Progressive Era began at the start of the 20th century as both parties sought to balance the interests of big businesses with that of workers and the environment. This was a departure from the traditional Republican Party’s onus on large companies and limited government that paved the way for the Glided Age of the previous decades that coincided with record economic growth and living standards growth, making the US the largest economy in the world by the turn of the century. By pursuing a highly interventionist agenda, Roosevelt’s progressive economic legacy set him apart from other laissez-faire Republicans, yet he remains renowned as one of their party’s most lauded Presidents.
Interventionism
Roosevelt’s key domestic economic agenda was progressive, prompting a backlash from more conservative Republican colleagues. Known as part of a ‘Square Deal’ agenda, Roosevelt sought a balance between business interests, consumers and the environment.
One of Roosevelt’s most significant legislative policies was the introduction of anti-trust laws. During the late 19th century, monopolies in oil and steel arose, leading to many uncompetitive markets. Roosevelt sought to counteract this by introducing aggressive measures against large monopolies and trusts, and electing anti-trust members to the Supreme Court. This, in particular, culminated in the breakup of Standard Oil, found guilty by the Supreme Court in 1911 of violating anti-trust laws enacted by Roosevelt, leading to its separation into many smaller firms such as Exxon Mobil & Chevron.
Additionally, Roosevelt passed environmental protection laws to restrict businesses from depleting the natural resources of the United States. In 1906, he signed the Antiquities Act, which gave the president the authority to set aside federal lands for preservation as National Monuments. This was opposed mainly by large businesses as it slowed economic growth by limiting the extraction in commodities and other minerals. Similarly, these policies needed to be more equitable and disadvantaged marginalised communities. Many local communities were forced to leave newly created ‘National Forests’ to make way for protected areas, setting a dangerous precedent by which the government could forcibly remove people from their land.
Business & Taxes
Further to the introduction of anti-trust laws, Roosevelt established the beginnings of the sizeable regulatory state that cripples small businesses in the US today. For example, Theodore established the Food & Drug Administration (FDA) alongside the Department for Commerce and Labor. The FDA has proved highly bureaucratic due to its long approval process, preventing new and innovative treatments from reaching the market since its inception. Its regulatory approach of relying on clinical trials doesn’t allow for individualised treatment plans or alternative approaches. A more market-oriented approach, with less regulation and greater competition, would be more effective in promoting medical innovation and improving public health, with Roosevelt giving birth to this interventionist environment. This is not to mention the regulatory capture that comes with FDA, preventing life-saving drugs from entering the market due to lobbying efforts from large medical corporations.
The Department of Labor has punished small businesses by interfering with the workings of the labour market by imposing regulations and restrictions on businesses. The Department of Labor’s focus on protecting worker rights and benefits has been misguided, reducing the flexibility of the labour market and making it harder for workers to find jobs. The Department of Commerce similarly contributed to the rise in protectionism over the 1920s and 1930s that has hurt US Consumers and Businesses. Trade restrictions and regulations imposed by the Department of Commerce have hindered the ability of businesses to trade and compete globally, reducing allocative efficiency and, thereby, economic growth and prosperity.
The 16th Amendment, which permitted the Federal Government to establish income taxes, was signed by Theodore Roosevelt. This was a large part of Roosevelt’s agenda to pay for his new environmental and worker protection programme. However, this gave birth to unchecked government intervention as income taxes have only been raised since, leading to slower economic growth. Income taxes have led to deadweight welfare losses by reducing economic activity and creating more work disincentives. Throughout the coming decade, the effect of higher income taxes is seen through less investment, as wealthy individuals move their capital into tax-exempt securities, leading to less productive funds for the economy. The establishment of income taxes has contributed to significant increases in government spending since, leading to record debt levels and fiscal instability. Wasteful federal spending has only ballooned since the introduction of federal income taxes, with a more decentralised fiscal regime more fitting to suit the needs of a very diverse economy like the United States.
Ultimately, there is little doubt that Theodore Roosevelt was a very progressive US President. By establishing anti-trust laws, income taxes and overbearing business regulations, Roosevelt established the beginnings of the interventionist government agenda that is widespread today.
Free Marketeer 