Close Enough to Socialism: Amity Schlaes on The Great Society
2019-12-29 · Guest: Amity Shlaes (Historian) · 52:06
Re-evaluating the Great Society and its economic consequences
Bob Zadek interviews historian Amity Shlaes about her book, Great Society: A New History. They discuss the economic and political consequences of the 1960s, the shift from absolute to relative poverty metrics, and how Ronald Reagan’s time at General Electric shaped his free-market philosophy.
Topics: Great Society, LBJ, JFK, Richard Nixon, Ronald Reagan, War on Poverty, Socialism, Economic History, General Electric, Lemuel Boulware, Calvin Coolidge, Friedrich Hayek
Speakers: Bob Zadek, Amity Shlaes
Re-evaluating the Great Society [00:00]
Bob Zadek: Hello everyone, and welcome to the Bob Zadek Show, the longest-running live libertarian talk radio show in all of radio, and that is quite a span. Thank you so much for listening this morning. My guest has written an important book, a book that coincidentally covers the start of my voting and therefore political life. So I have lived through, as a voting adult, the span of Amity’s book. She revisits one of the most dynamic—and that’s a positive and a negative—dynamic periods in recent American history. A period that starts with the JFK administration and ends with the end of the first term of the Nixon administration. Her book, Great Society: A New History, revisits, because there has been so much scholarship or writing that purports to be scholarship covering the period—the good, the bad, and the ugly, as Clint Eastwood and others are fond of saying. Amity gives us a fascinating point of view and covers—her book is replete with anecdotes, interesting insights into important figures, probably the most important of which is a wonderful story about former President Ronald Reagan. Amity, welcome to the show this morning and thank you so much for writing your book, Great Society: A New History. Now Amity, the title is Great Society, subtitled A New History. What is the, or what was the, old history, and give us an idea as to how what’s new in a new history that corrects the errors of all of the old histories of Great Society?
Amity Shlaes: Well, thank you, glad to be here. The old history is kind of a collage. So when you cover the 60s in school, high school or college, one of the problems has nothing to do with the substance, it’s the format. The narrative falls apart and usually authors go psychedelic, if you know what I mean. So you get, I don’t know, Napalm mixed in with Woodstock and then Charles Manson and then civil rights and assassinations, and it’s violent and hard to organize for the human mind. And that’s to replicate kind of the experience of the decade. It was a tumultuous decade and it did involve drugs, if you know what I mean. When you go to a museum, it’s sort of like the art of the period; it goes abstract, it goes weird. It’s kind of entertaining, it’s definitely new, but it’s hard to remember.
So I want to mention that even before you get to the politics and philosophy of the coverage. The second thing is we tend to think that Lyndon Johnson’s Great Society was heroic. The emphasis is on the biography of the incredible facility with which President Johnson pushed through legislation. In this book, I talk also about Presidents Kennedy and Nixon, but President Johnson pushed through quite a bit of legislation. It was said he passed laws the way other people eat chocolate chip cookies. So that facility is interesting and kind of technical—Master of the Senate—but it begs the question of whether the legislation worked and advanced the principles of the United States or the prosperity or well-being, the happiness of Americans. And the evidence is that most of that legislation was overly ambitious, sometimes wrong-headed, sometimes folly, sometimes incredibly destructive. So that’s the second revision. I guess the final—I try to tell a narrative book, I try to point out the consequences of the laws rather than emphasize the facility of the lawmakers. And third, I do include Richard Nixon in the Great Society. There’s far less difference between Johnson and Nixon than we assume. Both parties wrote exaggerated law, law that hurt the economy and law which gave us the decidedly depressed decade, the decade of the 1970s.
The Philosophical Underpinnings of JFK, LBJ, and Nixon [03:41]
Bob Zadek: Amity, it’s quite interesting you mentioned Nixon, because in my notes that I prepared in preparation of our conversation this morning, I have, and I’m looking at my notes right now, it says “Nixon - Why?” You’ve answered the question. And just an observation, if I may. I think—and you mentioned you have a wonderful anecdote, an important anecdote about Ronald Reagan that of course I’m going to ask you to share with our audience. So Reagan has a walk-on role, an important role in the book, even though you don’t cover his presidency. But it’s a story that you must tell us and we’ll have time for it during the hour. But you mentioned LBJ, JFK, and Nixon as the three administrations that you spend most of your time on in the book. And in preparing for the show, I offer for your comment the following observation. When I think about a president or an important public figure, I try to—in trying to understand them, I ask myself: What is the—when they acquire all of this power and they exercise the power of the presidency, what is the—what drives them? What is the philosophical underpinnings, if any, of the president? It helps me understand them. LBJ, of course, as you point out in your book, was an acolyte of Franklin Delano Roosevelt. And he was Roosevelt on steroids, perhaps, maybe Roosevelt with the same degree of steroids. We can discuss that perhaps. JFK, of course, didn’t really have a stated philosophical underpinnings. His underpinnings were simply the best and the brightest, the Harvard—all of the so-called intellectuals, maybe true intellectuals from Harvard, they the ones who staffed his administration and he gave them great power and had great faith simply in their intellect to do the right thing. Nixon was guided by Nixon. Nothing else. There’s no indication Nixon had any philosophical underpinnings. And it’s interesting, LBJ and JFK, of course, were Democrats. LBJ a very liberal Democrat. JFK not so; he might even have qualified by his thinking as a Republican in many ways. And Nixon was out there with no underpinnings. Is that a fair summary, since you studied these three administrations so well? Would you say I have described accurately the source of their governance?
Amity Shlaes: Well, it’s a fair summary, but it’s not the only summary. I think you can say—I got to know JFK quite a bit—that all these men had underpinnings, philosophies they believed in. But all men, whether in the Oval Office or not, are a collection of impulses and under pressure in the crucible of the presidency, some of the wrong impulses come out or some of the unexpected ones. I don’t think Richard Nixon believed he was put in office to expand government. It just ended up that he did that because of other impulses in his personality. JFK, a little bit like a figure in the Roman Senate, he really did believe in representative government, more on the republic as opposed to republican end of it. So if he was for the best and brightest, he said men need leaders to make decisions for them, men and women. And there’s—that’s not necessarily always wrong. Where he was wrong was—I fault him for his lack of interest in economics. He basically didn’t take economics seriously. He had a little bit of the banker in him from his father. His father was head of the SEC, the first early head of the SEC, the Securities and Exchange Commission. So JFK was concerned about the currency, probably rightly. I would say yes. He was concerned about the foreign challenges with which came over him, the events that changed and shaped his presidency. He wasn’t really interested in free markets, but he was interested in individuals. So that’s what you had.
And mainly, you know, just say for all three of them, this was an idealistic era. So the question is whether—how do you get to great? Everyone wanted a great society where idealism through the public sector or the private sector. Most of the time we ended up choosing the public sector as our vehicle. JFK was a little bit reserved there. He liked a symbol, such as a rocket to the moon, American greatness. He liked to win the Cold War. He was not a kind of Franklin Roosevelt child in the way LBJ was, however. Of course, his presidency didn’t get very far. Congress wasn’t with him particularly. So when LBJ came in after the tragic death of President Kennedy, LBJ had majorities in Congress and he had support just out of the sheer sympathy vote after the sudden death of the preceding president. And he had absolute mastery of the legislative process. So Lyndon Johnson did a lot of things that JFK considered, maybe liked, maybe sort of liked, which is to say Medicare, Medicaid, expansion of welfare. It goes on. Massive funding for education, which was supposed to lower the cost of college and did the reverse. It’s just a wonderful list. And LBJ’s own memoirs, he makes the endpapers of the book very carefully put all the laws he passed. Those are his credentials, his pride. Of course, the civil rights legislation. But LBJ too shifts. I don’t think LBJ ever imagined everyone would be entitled to everything. He wanted equal opportunity for all Americans, including minorities at the beginning, but he also wanted civic responsibility. “Ask not what your country can do for you, ask what you can do for your country.” He shared that with JFK. Eventually, though, again, people are collections of impulses and presidencies are crucibles. LBJ broadened the mandate and he went from equality of opportunity to a demand, a mandate for equality of result. That’s where I argue he went wrong. And by the way, Thomas Sowell is a character in the book and I do often—I do quote him. I wish it were more because he’s kind of the canary in the mine. And Nixon was driven by a good sense, good judgment, good attorney, but an incredible desire for power as well. And once he got into the presidency, he wanted to stay there. Like LBJ, he had to contend with the Vietnam War and that drove both men to undertake measures they might not have undertaken to keep tranquility at home in this tumultuous time. So Nixon, for example, things I never imagined until I did the research here, such as allowing the vast expansion of food stamps or sustained the poverty office which Republicans abhorred, sustained Johnson’s War on Poverty even though that was kind of an absurd concept in philosophy. So there you have these three fellows, particularly LBJ and Nixon. It all was about power by the end for them.
The Reality of Poverty in the 1960s [06:45]
Bob Zadek: Now, LBJ, as I said and as you pointed out in the book, of course, very much was Franklin Delano Roosevelt once again. He worked under Roosevelt, I believe, or he certainly admired Roosevelt and what Roosevelt sought to accomplish. When Roosevelt took office, we were in the throes of, of course, the Great Depression. And that was his problem that he undertook to solve. Whether he solved it or not, it’s another book, we’re not going to discuss that. But LBJ takes power upon the sudden death, of course, of JFK. And we had a real problem, which was the problem of the lack of political and economic power for blacks in America. Clearly that was a problem that required attention. But his focus was to a great deal on poverty. That’s what the Great Society was. Poverty was the word that immediately followed in concept the Great Society of President Johnson. Was there a problem with poverty and economic growth at the time Johnson took office? Was there a poverty problem more so than in prior generations, much like there was the Great Depression when Roosevelt took office, or was this not a problem in search of a solution and just Johnson determined to be another Roosevelt?
Amity Shlaes: There’s a huge distinction between the 30s when Roosevelt brought the New Deal and the 60s when LBJ brought the Great Society. In the 30s, one in four men was unemployed. The stock market went down almost 90%, almost. We can’t even imagine that. In the 60s, we were doing pretty well. And indeed, poverty as it existed came down dramatically in the 50s and going into the 60s. So the question was: Will poverty fall of its own accord? Maybe it can never fall below say 15 or 10%. Or do we need to do something? And as you point out, Johnson felt we needed to do something. And he created the War on Poverty in which he promised not to create a palliative or anything like that, he promised to cure poverty. He used that verb, “to cure.” And what happened with the Great Society is poverty dropped, though not more rapidly than it had been dropping before. And then it settled with all our Great Society commitments above 10%, where it about is today. So we failed in that way. And it’s important to remember that at the time, just about everyone thought curing poverty would be no problem. The great writer Norman Podhoretz, who had served overseas, he said—and anyone who had served, particularly in Europe, had seen major changes, victories of the US, World War II, the postwar—Podhoretz said that the Great Society was just a mopping-up action in the view of most. That this would not be hard to cure poverty and set everything right. We had terrible discrete problems. We had lynching, we had only one in ten blacks registered to vote in the state of Mississippi, and so on. We had bad problems. Whether we had a national disaster, there’s no evidence for that. So it was a kind of bigger program than the nation needed, written in the name of idealism and ambition, the Great Society.
Defining Poverty: Absolute vs. Relative [09:43]
Bob Zadek: And what’s interesting is—well, two observations I’d like to make and ask you to comment. Of course, poverty is a very slippery, almost sinister word. What does it even mean? If poverty means “woe is us, some people have less than others,” well then you just say, “Duh, of course some people will have less than others.” That’s not a problem, that’s simply life.
Amity Shlaes: Well, what you’re alluding to is an important question today. There’s absolute poverty: Does this family have enough to eat? Does it have heat? May its children attend school? Right? That definition of poverty has been slippage to defining poverty as relative to wealth. If you are not as wealthy as another person, or you’re really only a fraction as wealthy as another person, then you have poverty, which is a second definition, which is not acceptable. But it’s much more fun for policymakers because then there is always policy because poverty is always defined as relative to wealth. So you can see actually recently the White House has been fighting a rearguard action on that with the economic report of the president. I think it’s Chapter 9. Anyway, Kevin Hassett, who was the chief advisor to the president, noted that in terms of starving hungry, we’ve got rid of most of poverty, whether through economic success or through payments to poor people and other, you know, in-kind benefits. So it’s an important term. And what’s interesting is in the early 60s, we didn’t talk much about poverty. If you go to the economic reports of the president of the 1950s, you don’t see that word “poverty” too often. You see “want,” “need,” “assistance,” “mothers,” “orphans,” and so on. But it was only in the 60s when we declared the existence of poverty. Today the book Hillbilly Elegy is often quoted as a kind of meme about the poverty and the stubbornness of trouble in Appalachia. In that time, there was a book called The Other America by Michael Harrington, which looked originally at that same area, Appalachia, and said, “This is the poor America you don’t know about. It has poverty.” And in Washington, they generated a new metric. A wonderful mind, a lady named Molly Orshansky, made a metric, the poverty metric. That was a new thing. And once we began to quantify it, then it was official. In fact, Martin Luther King said to someone—and I’m thinking now it was the union leader Walter Reuther—“We didn’t know we were poor until you told us.” That is, we didn’t know poverty was a state of existence. We might be having hard times and have had mostly hard times in the past. That doesn’t mean poverty defines us until someone tells it does. And you want to consider the destructiveness of that label.
Bob Zadek: Just a political observation. Declaring war on poverty is political genius. Like declaring war on drugs and war on terror. That is political genius because there never can be victory. No one can ever say, “I’ve come to work this morning and realized we have just killed our last terrorist. So let’s close it up, guys, we won.” The war on terror is intellectually incapable of ever ending, which means all of the abuses on our civil liberties and our freedom will never go away. They are not temporary, they are permanent. The war on drugs can never be won. Nobody can ever declare victory. And the war on poverty can never be won. So it is political genius because it assures the politicians they will always have an excuse or a rationalization to spend money. I think it’s absolutely brilliant to declare war on poverty because you’ve assured yourself re-election and unlimited funds to spend in a war that can never be won. And I think I can summarize what you’ve said, Amity, that the war on poverty was a war on a circumstance that never really existed any more in the 60s than any time before or after it. And what’s also—I think this is true, Amity, but I’d like your feedback—Martin Luther King, who of course—his campaign, his goal was political equality, political participation, and correcting all of the laws that were abusive and harmful to minorities, blacks, and others. He didn’t spend much time that I can recall or that I’ve read about complaining about poverty as such. And maybe that’s what you said a few minutes ago when you said many people didn’t realize they were poor until the government pointed it out to them.
Amity Shlaes: Well, Martin Luther King had mission creep. He—the best part of the student movement and of Martin Luther King’s movement was the work in the South, where change needed to come. Change is going to come and it did need to come. Then that movement was translated to the North. I think some of the listeners will remember that Martin Luther King spent some time in Chicago trying to desegregate housing and trying to particularly work on landlords to change neighborhoods. There was still a culture of covenants in Chicago even though the law had shifted. Well, okay, but it was a less well-defined project for King. He also marched against poverty. He was very much—but in the later years, and it was a kind of blurring of his vision and his work. But you know, leaders change. One of his allies was Walter Reuther, the man from the United Auto Workers, who actually—you know, the UAW helped to bail MLK out of the Birmingham jail. And well, the unions wanted this to be a bigger campaign, not just about voting rights in the South or an end to lynching in the South. They wanted everything to be equal everywhere, and that was an important ally for Martin Luther King. So that was sort of where the whole movement was turning. But these movements lost their focus when they did that because economic change generally is up to the individual, not to a government, and usually isn’t brought about by a new law.
Bob Zadek: This is Bob Zadek. I’m speaking this morning with Amity Shlaes. Amity has written an important book, Great Society: A New History. When we come back from our very short 30-second break, we will discuss with Amity news we all can use, as they say, the issue of socialism. Was Lyndon Johnson a socialist? Were his policies socialist? What can—since socialism is so much in the news today and will be in the news in the 2020 election, I suspect—what can we learn about socialism in its former and present form? What can we learn from the book that will help us be informed voters? More when we come back in just 30 seconds. Please stay tuned.
[Commercial Break]
The Creep of Socialism in the Great Society [13:37]
Bob Zadek: Welcome back to the Bob Zadek Show, longest-running live libertarian talk radio show in all of radio. This morning we are speaking with Amity Shlaes. Amity has written Great Society: A New History, where she covers in fascinating detail, covering a lot of really interesting characters, the period of time starting with the JFK administration, the Lyndon Johnson administration in detail, and the first term of President Nixon as well, and that’s where the book ends. Now Amity, in your book, you have socialism as a word, as a concept, appears several times. And I quote you as saying that Johnson’s effort to build a great society was, in your words, “close enough to socialism to cause economic tragedy.” Now, we have of course in the news Bernie Sanders and Senator Elizabeth Warren, who—Elizabeth Warren claims not to be a socialist, she claims to be a capitalist because she picks up a few votes. Sanders claims to be a socialist. Socialism is in the news every day, accurately and inaccurately. And Lyndon Johnson would never have self-identified as a socialist, and there was little in his policies that were socialism as an economic concept. So tell us—take the word socialism and drop it down into the Johnson administration and tell us the relationship.
Amity Shlaes: Well, in the Cold War—and we’re not in the Cold War anymore, how liberating, right?—we said, “Over there are the communists and the big-S socialists who live in Russia or Hanoi and they redistribute everything. We don’t have that. We have a little bit of comfort or social programs to sustain our capitalism. But we’re not traitors. We just add a little bit of government here and there, just the way the army adds an extra blanket for a soldier or an extra benefit to keep capitalism strong.” And we do that here and we do it in Western Europe. Social democracy in Western Europe was to protect against true socialism, keep the Europeans happy and peaceful, allow them to rediscover prosperity so they won’t go communist. That was the whole argument. And it made it very hard to admit, to concede the damage that even a little bit of socialization does. You don’t have to report to Moscow to hurt the economy and hurt people. You just have to impose programs that make the economy uncompetitive, make life too expensive for people, and in the end kill jobs. And that was the beginning of what happened in the 60s with social democratic measures. And because young people speak of socialism today, well, you and I can speak of it too, and we can say that a little bit of socialism, social democracy, does quite a bit of damage and makes for a lot of sorrow. Today, more proximate for younger people perhaps, is that the social democratic programs we introduced will be an incredible burden on them and prevent them from having a good old age because Medicare and Medicaid are too expensive and they will pay the tax, whether through inflation by government or through simply technically higher statutory taxes. So there are a lot of consequences, short and long term, from expanding the government.
Private Sector Innovation vs. Government Planning [16:21]
Amity Shlaes: I want to mention, though, that the 60s were very interesting because there was a lot of serendipity and happiness in that period too. Everybody wanted a great society, even the private sector. And in the book, I profile three companies. One is what became Intel, which the men were at Fairchild at that time, Fairchild Camera, which discovered—where scientists, engineers, Bob Noyce, Gordon Moore, discovered that they—that science could work in the private sector, didn’t need to be part of the military-industrial complex, could improve lives, give us the small electronics we now have in our hand, improve everything in every way as idealistically and dramatically as any government program. This is the microchip business. And I trace the evolution of Fairchild into Intel in the book and the importance of the individual and the ideas they came up with. You know, government is a sort of Murphy’s Law: everything that can go wrong does go wrong. But there’s also Moore’s Law, Gordon Moore’s idea that we geometrically increase the quality and efficacy of little chips in our lives to also in the end geometrically increase our own well-being. So that was very exciting. Another company in the book is Toyota, which challenged Detroit and said, “Detroit, Henry Ford, UAW, you’re too expensive. You are murdering your own city,” that is Detroit or Flint, “by pricing our American auto industry out of existence.” So Toyota is the intruder in the book, the bad-news messenger. And the third company in the book is General Electric, and I know you want to talk about that too.
Ronald Reagan and the GE “Propaganda Mill” [19:31]
Bob Zadek: I was, you know—it’s fascinating, Amity, your discussion, the points you raise follow precisely the outline I have in front of me. I don’t need my outline. You instinctively, you just know where I would love to go next. So of course GE is exactly what I want to talk about. Because in the background, during LBJ and JFK and Nixon administration, in the background is a B-grade actor who becomes, of course, President Reagan. And tell us, if you can, briefly but include all the juicy detail, how General Electric, a Fortune 500 company, one of the most trusted companies in America if not the world, what in the world did they have to do with delivering President Reagan to us? And I should mention before I turn the microphone over to you is that I mentioned earlier LBJ was driven by and guided by Roosevelt. JFK was guided by to a substantial degree the brain trust, the best and the brightest from Harvard. Nixon seemed to be guided by Nixon. And Reagan, as we will learn, was guided by Friedrich Hayek, Austrian economist. And he was, when he started, Amity—and you’ll take over now—when he started, he was a rock-ribbed Democrat in the Franklin Delano Roosevelt mold. So tell us about General Electric and President Ronald Reagan. It’s a wonderful story.
Amity Shlaes: Well, yes, and it starts not even with Reagan, but with the company General Electric. Companies have souls. They’re like people. And GE’s soul was divided. GE on the one hand was kind of a bunch of Mad Men who were quite cynical and thought a lot about marketing at this point, I mean in the early 60s, and wanted to be cool and create slogans and have good distribution and make money and work with government very cynically. You know, GE was a big provider, sold turbines to the Tennessee Valley Authority, which is government from the New Deal. On the other hand, though, there’s the old GE, which was very individual. Thomas Edison, a man alone in a lab, comes up with an idea that changes the world. And that man works better when he’s really all alone and he doesn’t think anything about who’s going to buy the product, certainly not about the next government contract. And the GE was concerned about unions, actually. They were concerned that unions were pricing American innovation out of its own market. There was a fellow named Lemuel Boulware, who’s completely forgotten, but he was kind of a guru there. And anyone who gives money away anywhere might want to think about this because Boulware was making essentially an intellectual policy, a philanthropic bet, which is he needed to train people in the merits of free-market capitalism and the history of GE with, you know, Edison and Charles Steinmetz, the original financial innovator with the company, by reminding them where growth comes from. That is, it’s like spending money on backing a capitalist history book is what Lemuel Boulware as an executive at GE wanted to do. So he created a little propaganda mill at GE to teach the workers, more than 100,000 people, all about the benefits of capitalism. And he mimeographed little pamphlets about Hayek, the free-marketeer, and about the work of Henry Hazlitt, who popularized Bastiat and Hayek, and taught them all about how ideas come about and handed all this out. And it seemed like a silly effort to many. And one of the things Boulware did was hire an aging actor who was not very popular and as you mentioned was a rock-ribbed Democrat at that time, rock-ribbed Democrat Ronald Reagan, to be the spokesman for all these capitalist ideas. And Reagan needed a job and he liked the job, but he wasn’t really sure about the capitalism at first. And he went around on the rubber chicken circuit and gave lectures to workers and in town halls about the merits of capitalism and the problems of unions. And gradually Reagan, this actor who was nothing more than a PR man at this point, became convinced of the ideas. One reason was he followed the stock of GE and he bought some stock for his son so his son could see the way markets worked and the beauty of compounding and a few things like that. And at the beginning of the book, what happened is GE got caught up in its own divided soul, its own hypocrisy, for executives at GE had been colluding illegally in violation of American antitrust law with Westinghouse and other companies in their industry to fix prices and charge too much to the TVA. Oh my gosh, GE was cheating the American taxpayer. So there was a bloody court case, actual GE executives went to jail, which is unusual in antitrust. The unions crowed with laughter at this slip-up by GE. The stock went in the toilet. And Mr. Boulware’s department, his little propaganda mill, fell apart. Mr. Boulware retired. Mr. Reagan was fired and his TV show, GE Theater, part of the propaganda effort, was canceled. So you think it’s all washed up. And what’s interesting is that Reagan remembered all this even if he wasn’t at GE anymore and he thought he might go in politics and he began to give speeches about markets and what was wrong with the socialization of medicine and so on. And his ideas and his performance took hold. So this long-shot propaganda philosophy effort by Boulware paid off. Sometimes you undertake a project of political or philosophical education, it does not pay off for 10 or 20 years. It doesn’t pay off till after your death. But that doesn’t mean the duration of the period doesn’t mean the undertaking isn’t worth it. Boulware and GE’s investment in Reagan and free-market ideas paid off exponentially for those investors just over quite a long period. So I like that and I like the way Reagan absorbed this blow, because it was a blow. He had to lose his job, look around, think about politics. And he did correspond with Boulware when he ran for governor, his first big political effort, extremely successful gubernatorial run in California. So that’s all in the book. Reagan starts out down, GE starts out down, but they do well later.
Economic Amnesia and the Return of Socialist Ideas [23:31]
Bob Zadek: And what’s fascinating is Boulware, who had his goal the education first of the workers, then with the GE Theater and early black-and-white television program in the during I guess the 50s and early 60s, Boulware’s goal was to educate the public. And not only did he educate the public, but he educated a president or a soon-to-be president beyond his wildest dreams. So I’m just reinforcing, Amity, what you said about sometimes you plant a seed and the gestation period is very lengthy, but sure enough, up grows a sequoia tree or a redwood tree. And talk about an accident. The accident of Boulware trying to educate workers on the merits of capitalism and ends up giving us a two-term president who becomes president, of course, at exactly the right time. We were in the economic pits when Reagan took office and not Boulware’s teaching, but the teachings of the Austrian economists, of Hayek and Bastiat, who of course was French in the 1850s, their teaching is what guided Reagan through the 80s. And Amity, if you could take a step back and we look at this arc, we look at Johnson who damaged the economy with his guns and butter policy perhaps, but spending on Great Society. Clearly it was a failure, it gave us the 70s. Nixon imposed wage and price controls and as you said increased spending for Medicare. So Nixon damaged the economy. Along comes Reagan and fixes everything in the glorious economic 80s. Why wouldn’t that—and now I’m asking you to go beyond the scope of the book—why wouldn’t that have ended the argument? Why wouldn’t that show: Here we lived through several decades, we tried one approach it failed, another approach it succeeded. Why are we not still in the Reagan economic era? What happened to the country—you’re an observer—that caused us to now forget that comparison between the 60s and 70s and that economic approach and the 80s and a different economic approach?
Amity Shlaes: Amnesia. We’re a casualty of our own success. We can’t remember how bad the 70s were. That’s the big thing. How bad the 70s were. If you were one of the—almost one in ten unemployed in the 70s, if you were unable to buy the house you needed—remember the 70s was a period when people thought houses would have to become ever smaller, where we thought we could never turn the thermostat up to 70 again because we didn’t have enough energy and we never would have. What comes at—you know, it was a terrible claustrophobia, a period of scarcity and a sense of even worse scarcity coming. The 70s were a dark time. So we’ve forgotten that now. So long. People who are retiring now lived mostly in a bull market after the 80s. Just to give the listeners one measure. Today we tend to think of an ever-rising stock market as our birthright. You put the money in the 529 plan and it will grow by X and your child will have some money for university. The Dow Jones Industrial Average was flat—and I’m not even counting the inflation—from the mid-60s all the way into the 80s. Almost a generation. It did not want to cross the thousand line. Very different experience. You can reckon in the dividends if you want to and get a slightly better number, but there it was. The average stayed below a thousand and that’s nominal. So oh, when you include the big inflation, it’s much lower. So that’s what it was like. And we’ve forgotten that. And the book has an epigram: “Nothing is new, it’s just forgotten,” as in fashion. Socialism is not new and socialism’s failure or social democracy’s failure, those are not new, but we forgot about them. It’s too long ago. And many Americans haven’t served overseas, they haven’t seen communism or economic trouble. They haven’t lived in a place where the money doesn’t work. And there are a lot of those places. So that’s the change.
The Legacy of Calvin Coolidge [26:31]
Amity Shlaes: But we do have this evidence if only we can recall it. One of the things that I do, if you don’t mind me mentioning, is we—I work at the Calvin Coolidge Foundation. And what we do is try to remember the past with that, because Coolidge too lived in a—he defined a Reagan-like period, a period where we understand the importance of markets and we understand the importance of federalism and restraint of government. Reagan, we like to praise him, but government did grow under Reagan. Under Coolidge, the government actually shrank. And your listeners are sophisticated, so they’ll say, “Is that real, Amity, or is that nominal?” The government really shrank in real terms. So wow, how does a president shrink the government and not just merely contain its growth? Quite an interesting challenge.
Bob Zadek: I should mention, of course, Amity, we ought to mention your book on Coolidge. You wrote a New York Times bestseller on Calvin Coolidge. It was one of four bestsellers that you wrote. And if you don’t mind, I’d like to point out to our listeners that you’ve also written the bestseller The Forgotten Man: A New History of the Great Depression. You’ve written a wonderful bio on Calvin Coolidge, and you also wrote—this will catch everybody’s attention—The Greedy Hand: How Taxes Drive Americans Crazy. So Amity, you have written four New York Times bestsellers, and maybe I’ll say five, it just hasn’t become a New York Times bestseller yet, but it will for sure. It is a fascinating book. And Amity, in your book, one of the wonderful things you did is you introduced us to so many interesting, complex, quirky characters. So you not only discuss in great and incredibly accurate detail the work—the economic history and the political history, but between Tom Hayden and Harrington and Boulware, who we mentioned earlier, the characters that you have drawn out to us in a wonderful writing style make the book eminently readable. So not only is it a political history, not only is it an economic history, it’s a wonderful book chock-full of anecdotes. Now Amity, we have only a minute left. Tell us about the Coolidge Foundation and tell us, if you will, if you have another project in mind so we can start to salivate uncontrollably, impatiently waiting for your next project.
Amity Shlaes: Well, for the next book, I’m taking suggestions. Please email, we’re looking. But the Coolidge Foundation is dedicated to the memory of Calvin Coolidge. And in Coolidge’s honor, the honor of the 30th president, we have a full-ride scholarship for academic merit. Some of the listeners will remember the Westinghouse or the Intel. We’re endowing that scholarship. It’s a very expensive scholarship, but it’s worth it. And in addition to the winners who win a full ride wherever they go to college, we also have a program for the finalists, the top 100 kids are called Senators, and we like to support them too. This is just about effort, high school effort. So if you would like to support effort by kids, please consider supporting the Calvin Coolidge Senators program, which is for the scholarship. I do believe it’s an important era for many of us to build new big institutions. And the Coolidge is a small institution, just getting started, but we do believe it can make a difference, just as the Rhodes Scholarship has in American consciousness and the ambition and hope of young people.
Bob Zadek: Amity, we’re going to go off in 10 seconds. Sorry to cut you off. I wanted to, on the air, thank you so much for giving us an hour of your time this Sunday morning and most importantly for the work you have done giving us a great read. Thank you so much and have a good Sunday.
Amity Shlaes: Well, thank you.