The Bear’s Lair: I hate Ike

The reputations of past Presidents are continually being re-evaluated. Woodrow Wilson, a demi-god at the time of the 1944 film “Wilson,” has now been sharply downgraded by both left (for his racism) and right (for his rigid Progressivism and his share in the disastrous Versailles Treaty). Conversely, Harry Truman and Calvin Coolidge have been rehabilitated by history. Another such rehabilitation is being attempted on Dwight Eisenhower, not highly regarded at the time of his departure; I will argue that the rehabilitators are wrong, and that for several reasons he was a thoroughly unsatisfactory President.

Eisenhower came to the Presidency with neither experience nor a network of contacts in conventional politics. That is not to say he lacked political skills; he had been the most political of Generals, and his success in World War II had been due far more to his ability to schmooze Franklin Roosevelt, George C. Marshall and Winston Churchill than to any particular insight in military strategy or tactics. Military academies of today still study the campaigns of Douglas Macarthur, George C. Patton and Bernard L. Montgomery; there are no such close studies of Eisenhower’s military decision-making, because it was conventional, indeed uninspired.

Nevertheless, Eisenhower in 1952 had a bright aura as the “man who had won the war” similar to Ulysses Grant’s in 1868 or even George Washington’s in 1789, though Grant and Washington were both considerably better Generals. His problem was that having little in the way of political ideas or contacts, he was forced to attach himself to one or other faction within the Republican party (he had turned down the chance to run as a Democrat in 1948) and adopt their political positions. Regrettably, the dominant conservative faction of the party already had a candidate, Robert A. Taft. Hence Eisenhower was forced to attach himself to the “New Deal Lite” faction, led by the double Presidential election loser (1944 and 1948) Thomas E. Dewey.

The Dewey faction were overjoyed to have Eisenhower as their figurehead; it enabled them to overcome the ill-odor with the Republican electorate from which they suffered from having lost an eminently winnable election in 1948 and from offering no significant principled opposition to Truman’s policies, which were “neocon” abroad and increasingly socialist at home. (You may object that the term “neocon” had yet to be invented in 1952, since the thinkers and journalists concerned were all still communists, but the noxious tendency, a symbiosis of Woodrow Wilson’s arrogance and moralism with Theodore Roosevelt’s tendency to meddle unnecessarily in foreign disputes, was already apparent in such as John Foster Dulles, to become Eisenhower’s Secretary of State.)

Without Eisenhower’s decision to run for President in 1952, the Fifties would have been very different. Robert A. Taft, isolationist and small-government like the admirable Coolidge, would have won the Presidency easily against Adlai Stevenson, but alas, he was fated to die the following year, so the eight happy years of Taft Republicanism would never have happened. We would have been at the mercy of whoever Taft had selected as his running mate, possibly Richard M. Nixon, who would have done as creditable a job as he did 16 years later in much less happy circumstances than the benign 1950s.

As President, Eisenhower quickly made it clear that reversing the government bloat and creeping socialism of 20 years of New Deal economic fantasy was not on his agenda. The top rate of income tax remained at 91% throughout his 8-year Presidency, thus spawning a huge new industry of semi-fraudulent tax dodges that has never gone away, despite subsequent rectification of the tax code. Since government spending fell by 6% of GDP in 1953-55, due to the end of the Korean War, leaving plenty of room for tax cuts, this omission can only be explained by Eisenhower’s utter ignorance of elementary economics. As a result of Eisenhower’s failure to cut taxes, his time in office was blighted by three recessions, and the growth in GDP per capita in the eight years 1953-61 was only 0.92%, far below the levels of any comparable period in the future, even Jimmy Carter’s miserable years, until the wokie-caused economic sclerosis of today.

As a result of the Eisenhower era tax rates, entrepreneurs without private capital were unable to save enough from their after-tax salaries to capitalize a small business, and there was no venture capital industry to speak of. Thus, the founders of Digital Equipment Co., the greatest computer sector entrepreneurial success of the next two decades, in 1957 were compelled to give away 70% of their company, in return for $70,000 (about $3 million in today’s money) from a local venture capitalist.

The era’s premier electronics innovator, William Shockley, the inventor of the transistor, was unable in 1955 to form his new company, Shockley Semiconductor, in Mountain View, Ca. without corporate sponsorship from Beckman Instruments. Consequently, he was unable to reward his key engineers properly (the eight leading ones left to form Fairchild in 1957) and his company was sold by Beckman in 1960, never achieving a significant presence. Making it worse, companies formed by the “Traitorous Eight” who had left Shockley were estimated by TechCrunch to be worth $2.1 trillion by 2014. Shockley was certainly a genius; he may or may not have been a competent manager, but in any other era but Eisenhower’s he would have ended up a happy if eccentric billionaire anyway.

Instead of cutting taxes and reducing government bloat, Eisenhower became paranoid about the military capabilities and intentions of the failing Soviet and Chinese economies and embarked on an utterly futile peacetime defense build-up. Defense spending including investment climbed to an extraordinary peak of 12.9% of GDP in the year to June 30, 1959, compared to a mere 3.6% of GDP today. The result was a magnificent array of new bombers, some of which such as the B52 are still in use today (presumably with updated electronics) as well as the first missiles and the beginnings of a space program, the result of another panic after the Soviets launched Sputnik-1 in 1957. You would think all those brilliant young minds at the new CIA could have figured out that Soviet and Chinese capabilities were nowhere near sufficient to justify this (let alone justify the ‘missile gap’ panic in the 1960 election) but apparently the CIA’s brilliant young minds were all too busy spying on each other or inventing exploding cigars for Fidel Castro to do their jobs properly.

Eisenhower’s foreign policy was no better than his economic policy, though it had its bright spots, notably his successful end to the Korean War on coming to office in 1953. His main “achievement” was his resolution of the Suez Crisis. The left-nationalist Egyptian leader Gamal Abdel Nasser had nationalized the Suez Canal, built and owned by Britain and France, and those countries had intervened militarily to recover their property and re-establish one of the world’s most important communication links. Regrettably instead of marching in, as they had every right to do, the British and French, led by Prime Minister Sir Anthony Eden, were excessively wimpy about appearing colonialist, so concocted a phony scheme under which Israel would invade the Canal Zone and Britain and France would then intervene as “peacekeepers.”

The scheme worked, and the Anglo-French force was in the final stages of taking over the Canal Zone, when Eisenhower intervened at the United Nations against supposedly his closest allies, compounding the error by staging a “run” on the pound, unstably locked into the highly damaging Bretton Woods scheme of nominally fixed exchange rates. It then took only a sleazy intervention by Harold Macmillan, the British Chancellor of the Exchequer spotting a means of self-advancement to force Eden to halt the troops’ advance and hand the Canal over to Egypt (Britain should have abandoned its Bretton Woods parity and moved to a floating exchange, as had been recommended four years earlier at the time of the “ROBOT” scheme).

By betraying his closest allies, Eisenhower achieved nothing but disaster. Nasser remained a Marxist stooge of the Soviet Union, while France, though not the ever self-abasing Britain, was thoroughly anti-American for the next two decades. Arab nationalism, previously quiescent, was immensely stimulated, resulting between 1958 and 1979 in the overthrow of several solidly pro-Western Middle Eastern governments and their replacement by leftist dictators (Syria, Iraq) Islamist fruitcakes (Iran) or chaos (Lebanon). It was a bigger defeat for Western interests than Vietnam, and it was almost entirely Eisenhower’s fault.

Dwight Eisenhower. Mediocre general, subverter of a potential era of conservative Republican governance and all-around lousy President. Not a model for today’s statesmen!


(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)