Governor Mitch Daniels and historian Amity Shlaes discuss misconceptions about the Great Depression and the New Deal; reevaluate the reputations of Presidents Coolidge, Hoover, and FDR; and consider the idea of the Forgotten Man.
Governor Mitch Daniels and historian Amity Shlaes discuss misconceptions about the Great Depression and the New Deal; reevaluate the reputations of Presidents Coolidge, Hoover, and FDR; and consider the idea of the Forgotten Man.
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Intro (00:02):
Welcome to the Future of Liberty, a project of Liberty Fund hosted by Mitch Daniels.
Mitch Daniels (00:19):
Greetings to our viewers and welcome to the latest edition of The Future of Liberty, the Liberty Fund’s attempt to examine that subject with the help of some of the best minds available and the most erudite people on such topics. We certainly have that today. And my favorite historian and someone who has illuminated various corners of the history of free institutions in this country, and particularly its economy, and who has a lot to say, I think to us in the times in which we're living by virtue of our command of the times through which we've lived. Please welcome with me Amity Shlaes. Amity, thanks for being with us.
Amity Shlaes (01:04):
So glad to be with you, Governor Mitch.
Mitch Daniels (01:09):
Hard for me to pick my favorite book of yours. They, they're all tied for first, I think. But your biography of President Coolidge, for whom I think we share an enormous admiration, is certainly one of those. You defined him in your inimitable way in two words, I think better than anyone has the great refrainer, and we can talk about him a little more later. But thinking ahead of today, I have come to think of you as the great debunker because much of your economic history has taken a fresh look at understandings that at least many Americans have had about big chapters in our economic life. So let's start with the New Deal, because we all learned, didn't we, that it was caused by unfettered capitalism in the 1920s. Do I have that right? Or possibly? Is there another explanation?
Amity Shlaes (02:14):
The Great Depression was caused by unfettered capitalism. That is what we learned, Governor.
Mitch Daniels (02:21):
But what you taught us something different.
Amity Shlaes (02:23):
I did. The reason we care about the Great Depression is it was the occasion for a large intervention by government, the largest peacetime intervention. It was also the justification. The depression was dark. Our parents told us it was so long. That was the thing about the Depression, not its sharpness though. It was sharp, but its duration. So you imagine a period where 20% of people in five is unemployed often, and always one in 10 for a decade. That's entirely different from a hundred percent of the people being unemployed for a month.
(03:09):
It was that duration. They gave it also an aspect of mystery. Oh, we don't go there. Only star economists go there. It's so hard to understand. So when I went back and looked at it, I did find a few things. One is that the twenties didn't cause the Great Depression. They may have caused the crash in the sense of a business cycle. The boom is followed by the bust. We know that in any economy, but they didn't cause the duration that grating miserable duration. And I also discovered by and large, I'm just writing an essay about this, Mitch, so we'll see that.
(03:55):
Think of the economy as a person, a woman, and you invite her back every year and every year she makes the choice, economies make choices, and every year for a different reason, she stays away. She doesn't come back. Why is that? All those years, 10 years. And the reason she stayed away so many times, those were various, but if you wanted to look for an overarching reason, it was the government was playing God. I didn't write that line that came from an economist in the period named Benjamin Anderson. And I would guess Governor Mitch didn't study Benjamin Anderson and I didn't. Did you? Benjamin Anderson, Economics and [the Public] Welfare.
Mitch Daniels (4:36)
I confess.
Amity Shlaes (4:37)
Right? We never heard of him. But Benjamin Anderson was the chief economist of Chase Bank. He was just like those fellows you see on TV now every night in the papers in those days, commenting about the economy. He was a real mainstream figure because he was the chief economist of Chase Bank, and he was the one who said, this all has to do with the tendency of the government to play God. And then he had a second line, which I'll paraphrase, which I like very much, he said, and when playing God failed, we just played God a little harder, which is absolutely the correct way to capture the government intervention in the thirties. So I think Anderson said it. It was a pity. We never read him.
Mitch Daniels (05:33):
If I could have learned what makes women stay away, I wish I'd read him a long, long time ago.
Amity Shlaes (05:38):
Oh, I could say a male too, but I happen to pick a female since you're a male. But why did she stay? Well, she had a different reason every year, at least a nominal reason. And then she had the big reason. And like the way that I learned about Anderson, maybe some of it had been on the Liberty Fund’s excellent site. Mises Institute has him too. But I want to mention this one time I was talking to a Soviet advisor, excuse me, a Russian advisor actually to leader Putin, but very early in Putin, period. And this advisor said to me, may even also been before Putin. I want to be sure this advisor said to me, the best American economist is Anderson. And I couldn't understand what he said, but he was saying, Anderson. I said, well, who is that? He said, how can you be from the Wall Street Journal and not know who Anderson was? They had read in Russia in Communist times in secret. They had read Benjamin Anderson. And we had not. And that tells you this thing about our university education.
Mitch Daniels (06:46):
He's probably studying economics in the Gulag somewhere now, but…
Amity Shlaes (06:50):
No, no, that fellow is in the United States.
Mitch Daniels (06:57):
But now reading Anderson in safety, well, that's good.
Amity Shlaes (06:59):
In safety, yes.
Mitch Daniels (07:00):
But
Amity Shlaes (07:00):
That was it. And that was a transatlantic line saying, Anderson, Anderson. I was like, wow.
Mitch Daniels (07:06):
So I think that one thing, a student of yours like me learns very clearly is that Herbert Hoover got a bad rap that he deserved, but he got it for the wrong reasons. If he is remembered as some sort of flinty champion of free enterprise, who stubbornly adhered to those principles until the economy went off the cliff. What did you teach us instead?
Amity Shlaes (07:38):
Well, what did I discern instead? Oh, by the way, that Russian economist was Andrei Illarianov, who some people have met. He was at Cato, excuse me for a while. He also is a global warming skeptic, brave man. So what I was…
Mitch Daniels (07:57):
Probably in more danger here than he was preaching free enterprise in Putin's Russia.
Amity Shlaes (08:01):
Can be, right? So the thing about Hoover that we learned, I guess, was that he was a free marketeer and he was unkind to the bonus marchers and let the generals drive them back. The riot army reacts.
(08:24):
And I think we learned, that's about all we learned, but definitely the laissez-faire Hoover. So he's paired with Coolidge, but he's, and this is a poor characterization of Hoover first Mitch, because of his temperament, he was a hands-on jumping guy. If I would compare him to a modern politician, I would definitely pick the Romney Mitt Romney or even his father. For those who remember that George Romney, that is a very clever guy who's done amazing things in the private sector expressing his energy in government rescues. And that was who by temperament. Whereas Coolidge, by temperament, well better do nothing first do no harm. Very different type of guy and awfully charismatic in his younger years, Hoover's been so mocked that we forget he was much admired. He was one of the best paid men in the private sector in his generation. When he was researching energy, he was a mining engineer from Stanford and he fed the starving Belgians during World War I and after, and he fed the starving Russians. But he did intervene when he became president in ‘29. Not so much out of ideology if we put it that way, but out of political positioning,
(09:45):
He saw people were in trouble out of understanding. He understood the banking crisis better than many. He'd been at Versailles. And Keynes said of Hoover, he is the only guy who understands what we're doing to Germany. What we're doing with Versailles and all these treaties we're guaranteeing future instability by imposing too many punishments on Germany. Hoover understood that; he understood about debt and international banking. He was very skilled in that area, but he also, what else? He kind of thought he could maybe a little more taxes would be good, maybe a little more control would be good. And it was a little bit too much all about Herbert. So he knew tariffs were wrong. He knew that because he'd worked in international, anyone who's worked in international has seen the cost of tariffs. However, he allowed a bad tariff to go through. We studied that Smoot-Hawley, and he kind of fiddled with it and told his own vanity that the fiddling made it all right, that he'd signed off on Smoot Hawley.
(10:50):
He raised taxes. Well, the reasons he had to in a gold standard period, it's much harder to run deficits. But he did it a little too quick. He was a little bit too gimmicky. I don't know if you know this Mitch, but Hoover had a tax cut, Hoover's tax cut was at some point desperate, a one-year tax cut, dropping the top marginal rate down to 24 from 25. Very manipulative. Let's advance consumption by encouraging people with lower taxes, advanced transactions. And that was Herbert. He was a tinkerer. That didn't work too well. But there he is on the record for a while, he had a lower tax rate than Cal Coolidge. He beat up markets, he berated short sellers officially. And the thing I'll say, last thing that to me is worse than that, was he pressured business to pay high wages. And we know why that is. Pay high wages, well then they'll have money and buy back the car. That's what Henry Ford said of his workers. But business couldn't afford high wages. So when you tell an employer to pay high wages, when their profits are down, what does the employer do? The employer lays people off or it fails to rehire because it doesn't want to offend the president. Right?
Mitch Daniels (12:16):
Thank goodness we learned that lesson. Except in about two dozen states we could name.
Amity Shlaes (12:24):
Yes, sir. And that was carried on. In fact, it episodically, but persistently throughout the thirties, they would say, let wages be up. And the companies would say, sure. But that contributed to the devastating duration of the unemployment of which I spoke earlier.
Mitch Daniels (12:43):
Yeah. So if we had it wrong about Herbert Hoover, the laissez-faire champion, surely we had it right that FDR fixed all this and his policies saved the country and therefore needed to be replicated and expanded on in the modern age. Or do I have that wrong too?
Amity Shlaes (13:04):
Well, that's what our parents told us, right? And there's certain lovable things about the New Deal. Certain people, many people, were employed through government programs who had no job. Okay, that's not so expensive even. And it's not so terrible. This sense of human dignity that the New Deal may work. Jobs accorded was important. The sense of confidence that Franklin Roosevelt gave is not to be sniffed at. He was more of an admiral than a domestic economic leader. And when the war came, he was in Navy president. He did pretty well there because that was his strength leading people in hardship. His econ though was pretty poor. So therefore, the New Deal, which was his project, didn't really help the economy. And evidence suggests that the new deal hurt the economy over and over again. And of course there were many new deals they altered, they twisted in the wind on policy in the new dealers. So
Mitch Daniels (14:09):
Unemployment at the end of the thirties, I mean there may have been a certain virtue in the make work jobs, but unemployment was as you recorded as 18%, something like that in 1938.
Amity Shlaes (14:22):
Yes. There was the so-called depression within the Depression. And that related to the labor price, by the way, for the geeks, I'll say. What happened was that we passed a strong labor law from which I believe Indiana probably liberated itself through right to Work. Right, Wagner Act? And then Taft Hartley.
Mitch Daniels (14:43):
Indiana only in 2011.
Amity Shlaes (14:45):
Yeah. Oh, very late. Alright. Strong labor law, Wagner Act, which had the closed [inaudible], that meant you probably had to be in the union even to apply and certainly to work there, and you had to pay dues in those days. They thought whether you were in the union or not and whether or not you shared the politics. So that law was a much stronger than it's been after a later law that edited it down called Taft Hartley and it terrified business. And John L. Lewis, the big labor leader mine workers, said, you're going to pay us a lot and we're going to occupy your factories, what they call a sit down strike, which is not known anymore and terrifying to an employer because it's his property, right? People are on his property occupying it until he pays them what they want. And in the background is the president who supports them, the workers, right? The workers were very important for president. The organized labor was very important for President Roosevelt's reelection in ‘36. So the businesses gave in, they paid really high wages and they didn't even know, Mitch, how high, why neither did John L. Lewis for all his sins because there was deflation.
(16:04):
And so you're paying wages that are way higher than you're used to, way higher than a trend of a century. If you go back and look, and there are full-time economists who've studied this and who taught me much, it's just Lee Ohanian and Harold L. Cole, I recommend that. But anyway, one at UCLA I believe, and the other used to be at Penn. Anyhow, so there was the wage level official mandatory more or less way high. And that pushed up unemployment in a tragic way unnecessarily. I never knew that labor part till I went and did the research. Mitch is making me pull out all these things I haven't thought about in 15 years. So here we go.
Mitch Daniels (16:47):
Well, you've helped some of the rest of us to think about it. I'll drop the sarcasm and go straight to a reality, which you depict so beautifully in The Forgotten Man, which is that FDR was- correct this if you see it differently- but to me, far less an ideologue than a constant improviser. There's a beautiful quote in your book somewhere. Someone said that attempting to divine order in his economic policies as they unfolded was like looking at the room of a teenage boy and imagining that an interior decorator had planned it that way.
Amity Shlaes (17:28):
Exactly right. I think that was probably Ray Moley.
Mitch Daniels (17:31):
I believe it was.
Amity Shlaes (17:32):
He was involved in, I believe in the founding of a EI and the tax foundation. He was editor of Newsweek. He's the one who hired Henry Haslet. Ray Moley was one of those key people you want to know about behind the scenes shaped your life. I loved, I think it was Ray Moley. Anyway, that was a long time ago. But I love that description because Roosevelt, they said first class temperament. The unkind people said second class intellect. The part of his intellect that we can say is second is second class, even if we don't want to insult him, is that he was incredibly inconsistent. So when they had tariff policy and Cordell Hull, who's relatively consistent figure said, let's reduce tariffs, and then someone else wanted something with more tariffs. Roosevelt takes his hands. He says, why don't you just weave the two together, opposing S. But he was essentially a political animal. He's a happy guy kind of guy you'd want in the room, a brave guy and a political, one of those people who pulses room together with compromise. So that was that.
Mitch Daniels (18:48):
According to Churchill, though, he made a terrible martini.
Amity Shlaes (18:51):
Well, they have different conceptions of a martini. I think that's ethnocentricism on the part of Churchill.
Mitch Daniels (18:57):
So let me ask you this question. Who is the greater threat to liberty? Or maybe put it this way, is a crafty politician, if that's the best way to look at FDR. Less a threat long-term than the committed ideologue of whom we have plenty today.
Amity Shlaes (19:21):
I don't know. I mean, they take turns, right? The ideologue gets the crafty guy into office
(19:28):
And then tells him what to do. There was a very murky ideologue whose influence I didn't truly recognize in the writing of Forgotten Man. That's the book which was written published in 2007. Now there's a writer at the Council on Foreign Relations, an economist named Ben Steil, S-T-E-I-L. And he just did a profile of Henry Wallace, the agriculture secretary, and Henry Wallace was way weirder than we knew. He talked to spirits above and set Agriculture policy off that. And he also, I'd say he was an ideologue, but it wasn't. He played the role of ideologue and he basically wrote the Ag Acts. We had several, he believed in resettling people. That was the Soviet type of thing he did. So he liked to move large populations around. We had a resettlement administration and then we had something called the Farm Security Administration that did that. And this all came from [inaudible]. And he went over to Russia and he went over to, oh my gosh, to China. And he was really tricked by the Potemkin villages. And he told Moscow sort of things. And my general take on the New Deal, Mitch is not that the new dealers, the big ones were all spies. That's not so they were just men who were overly influenced by Russia, the fools of Russia actually,
Mitch Daniels (21:02):
Well let venture, let me venture a theory that the ideologue alone is rarely successful. The Wallace, we could name people from the contemporary day who are so very, very rigid and so extreme in their views that they don't often prevail. But the crafty, the ideologue who gets a hold of a crafty politician who puts a more, let's say, moderate face on some of these policies and might have a little more adeptness at affecting them. That's a dangerous combination. Is that a way to think about a threat to liberty today?
Amity Shlaes (21:44):
Yes sir. I concur. I think that's brilliant. Yeah, I don't know. I think so. The crafty person here, or let's say the brilliant politician to be kind was Roosevelt wanted to win.
Mitch Daniels (22:01):
Yes.
Amity Shlaes (22:02):
And he had a nice leaderly demeanor. People fell on their knees in front of him just because he was this affable happy guy and kind of American royalty in terms of the Roosevelt family. But it's a bit strange.
Mitch Daniels (22:23):
Another thing that leafing back through the book, I had frankly forgotten, or at least not associated with current events, but what did we have now come to call lawfare, namely the use or abuse of legal processes in politics has a predecessor in the period of the New Deal. I'm thinking of the selective prosecutions of Andrew Mellon and Samuel Insull, which you do a great job of describing. And while we're at it, the release of tax data, which many people would be shocked to know, was not illegal until it finally was. And both those things have recurred recently and hard to think of more greater menace to freedom than practices like that.
Amity Shlaes (23:24):
Well, I think the story, I told several stories. Samuel Insull is a name. He was from Chicago, people in Chicago do not know his name even though he laid the electricity network very modern. And he built the Opera House, Insull, I never heard his name. And I went to the opera house every year with my father. So he's canceled from history I-N-S-U-L-L. And he had a large company, it had various names, but Peoples was one and he had holding companies, it's very hard to raise capital for electricity. You need a lot of it. And at companies you could question the way he did it, but in those days it was quite difficult to raise capital. And then he lost his business. What began to fail in the Depression.
(24:22):
Alright, all right. Do you ruin his life for that reason or do you help him to keep going? Because he was the innovator who wired Chicago. The government chose to prosecute him. And that was first Illinois and then the federal government, even before the Roosevelt administration and then under Roosevelt. And he spent the rest of his life in court defending himself. There's a nice cartoon of him jumping sort of on a jungle gym from one loop to the next trying to get ahead. And his life was effectively ruined. He died in Paris. He was a bit of a rogue, but entrepreneurs sometimes are. And his essential hypothesis was brilliant, which is a network of wires can wire a city instead of say every family needs its own generator or something, which other electricity innovators were trying out in New York. He other, he gave his employees shares, which was a good idea and very progressive. But when those shares were worth nothing, that was worked against him, perversely. But the hero of the book, the businessman who really warrants our attention was Mellon. So imagine Mellon was the superstar of the twenties. He was like, I don't know, Warren Buffet or…
Mitch Daniels (25:47):
President had said that Hoover was the third of three presidents who served under Andrew Mellon.
Amity Shlaes (25:53):
Exactly. He knew everything and it was kind of intrepid. He had three presidents and he was rather careful with his taxes. As successful business people tend to be because they don't want to waste the time of the audit. Most people are reasonably saying don't want to spend years in audit. So they'll pay or even overpay a bit in order to reduce the likelihood of attention from tax authorities. And Mellon was such a case. So nonetheless, the administration, the Roosevelt administration went after him. And this wasn't the revenue authorities. In fact, Mr. Irie, who is the head of the forerunner to the IRS, didn't want to go after Mellon particularly. It was the administration, the justice department, and the president, the president said to a young lawyer who happened to be Robert Jackson, go get him. And Morgenthau said, go get him. And Robert Jackson was from New York, like Roosevelt, and they had a little in common and go get him. And according to Morgenthau, Robert Jackson, who later of course became Supreme Court Justice and a prosecutor, ours at Nuremberg said, thank God I have such a boss. I'm going to go after this bad man Mellon. And they did for years and years and years, and Mellon was old. And to do this to an old man, I always question, is this more theater than justice?
(27:26):
When you go after someone who's over 80, no matter what they did, it's a question. And Mellon didn't do anything. So they had a lot of trouble finding any betrayal in Mellon's taxes, any illegal tricks. He took deductions that they were legal deductions
(27:43):
And it colored this whole thing colored his last five years. But I very much like, and I think it's worth it, want to recommend. At some point, I think it was Mr. Mellon's birthday and he was in court and the reporters came in the middle of the Great Depression and his endless prosecution said, Mr. Mellon, a comment on your birthday. And Mellon said, oh, this period is just a bad blip in the glorious progress of American economic growth. That is, he kind blew off the pretext of the New Deal, which is the economy doesn't work. And instead of saying, I'm innocent, which he was, he said, well, this is just a passing problem and that quality of gentlemen is worth a lot.
Mitch Daniels (28:30):
Can you think of an example of these abuses in the period between Insull and Mellon? And very recent times it would've seemed we'd learned this lesson, but these really are illicit practices. But they've reemerged,
Amity Shlaes (28:50):
They reemerged when they're personal, particularly with innovators, because innovators are always part rogue, just their temperament, right? So my children always laugh because they say mom sides with the criminal, but watching, I'm trying to think, who do you think who really didn't deserve what he got and the sustained attention he got? I'm not sure. Sometimes also one can say the market will punish the executive so the government doesn't have to. Certainly there were absurd cases like the antitrust case against Microsoft years ago. Decades ago. Do you remember that?
Mitch Daniels (29:38):
Yeah.
Amity Shlaes (29:39):
Where we were prosecuting or persecuting Microsoft for years because they had this deal with a browser and that was supposed to make them a monopoly. And the name of that browser was, we don't even remember it because Google was coming along to prove that we didn't even need Microsoft, let alone this little browser it was attached to and the idea that Microsoft could get control. And there was of course an ad hominin feature that vis-a-vis Bill Gates.
Mitch Daniels (30:16):
I think it didn't have the same political character though as the ones you wrote about, which I think were, these were political foes of the administration as we have seen also more recently.
Amity Shlaes (30:32):
So I think a good example would be Arthur Anderson, which was involved in Enron. Enron made errors. People in Enron lied to their board. Arthur Anderson was the accountant. Arthur Anderson made errors as accountant. They should have known better. They were the one in charge of discerning whether these data, these books were accurate. However, somehow the whole firm ended up casually to the hes of a set of fellows in the tax division who worked for Enron. And that was good in the sense that the partnership reduces moral hazard. If you're partners with people in Houston who are working for Enron, then it's in your interest to be sure they're not making terrible errors. But it was bad in that the punishment did not fit the prime scale.
Mitch Daniels (31:33):
Lemme ask you about title of your book on the New Deal, The Forgotten Man. And you point out there that this had been used by this term had been applied in two very, very different ways. And please describe those to our guests. But then I also want you to comment on its current use and whether there is actually a third category that now deserves that label. But talk about who is the forgotten man or person and how might that person have changed over time?
Amity Shlaes (32:18):
It's a very important question I don't know much about today. I would say it's just a good phrase, but going back, we'll do it chronologically. There was a Yale professor named William Graham Sumner, and we didn't learn about him, just like Benjamin Anderson, he's been a bit canceled. He said some eugenicist things, alright, whatever. He was a fantastic guy. He was free trade, he was very good in econ. And he said he had a little algebra. And this is not like a one-year class again. As with Benjamin Anderson, he was known to everyone in his generation. He taught this 30 years, they all talked about it. So his little, little algebra, he said, A and B want to get together and help X poor man, the man who needs nothing wrong. With that comes the problem, A and B get together and they coerce C into co-funding, supporting living with, they're perhaps good, but perhaps dubious project for x.
(33:16):
C is the forgotten man. The man who pays, the man who prays, the man who is not thought of. And that could be the taxpayer, anyone roped into a project because of where he lives or where he works or what is the jurisdiction he's in. And I like that a lot. And in the graphic novel of Forgotten Man, which I have right behind me, I'll show you, wait, this the cartoon version, which I like very much, not stupid, but definitely cartoon. Sometimes I teach it. We have lots of pictures of the forgotten man. So Roosevelt took that phrase, not really thinking about where he came from though he'd probably at some point heard about see the taxpayer and turned it and said, I want to help the forgotten man at the bottom of the economic pyramid. So he was referring to X, fine, but he forgot about C.
(34:14):
And in the thirties they were better educated than we were, and they remembered Sumner and they remembered the whole thing. So they would debate who has the right forgotten man? Maybe President Roosevelt has the wrong forgotten man. C is the forgotten man. And certainly towards the end of the Great Depression, for example, in Muncie, in the paper there was an interview with a guy who said, who is the forgotten man? I know him as well as my own undershirt. He is the guy who is trying to get through working and is watching while others are on the dole. It was a little bit of a harsh statement, but there it is. And that's in the Middletown book Middletown too about, isn't it Muncie? Am I right?
Mitch Daniels (34:59):
It is.
Amity Shlaes (35:00):
Yeah. It's Muncie. It's called Middletown, but it's actually Muncie. It's a beautiful portrait by progressives of American in the thirties. But there's much truth in it. I think they did an honest job and it's a wonderful book. Middletown, Middletown to the L’s. So those are the forgotten men.
Mitch Daniels (35:21):
Okay, well now another.
Amity Shlaes (35:22):
Forgotten Men is the army, right? And today I would say the forgotten men to whom President Trump is referring. And this is real topical, isn't it, Mitch? Because I saw the forgotten men at the top of the GOP document. That's like their platform last night. I think he's referring to people who are roped into projects again that more like Sumner that they might not agree with, whether those are social projects, weird medicine, or whether they are economic projects, high taxes. I think that's who President Trump is referring
Mitch Daniels (36:05):
Probably. I mean to the extent that it has substance, it may have a more cultural and economic context. Today, people who feel that their liberty to live lives as they've chosen is constantly under pressure with regard to the A, B, C, and X formulation with the most progressive tax code in the OECD with 1% of American income taxpayers at least are paying half roughly of all the income taxes. And those statistics it sees not really as much on the hook as he might have been before.
Amity Shlaes (36:57):
I would say C would be a good example would be when there was inflation in California, property taxes went up. And that gave rise to famous proposition and so on. It's someone who nobody ever said, if Arthur Burns did not say to himself, if I accommodate President Nixon to save democracy, I will hurt every California homeowner first generation. But that was the unexpected consequence. Or I would say another forgotten man, and I've just been studying this, is people who used to go in gifted programs in secondary school or even before in eighth grade. I'm not a huge fan of gifted programs because they segregate kids, but sometimes with the kid who needs extra attention to learn a lot and gets bored, a gifted program prepares him for high school. We've by and large abolished gifted programs in many places because they sound snobby to us. And as a result, we've hurt many of those students. But students, I'm thinking, you could learn trig in ninth grade or eighth grade and instead only get to it in 11th, and by then they're too distracted by other projects outside school and they don't learn the trig. That would be a small forgotten man. Who do you think is the forgotten man?
Mitch Daniels (38:30):
Well, I think it is to an extent. It is the person whose values have been trampled, not only by or been disparaged, at least marginalized not only by the government but by like-minded people who control the so-called commanding heights these days in an information world.
Amity Shlaes (38:57):
Well, can I say one thing or are we out of time?
Mitch Daniels (39:00):
No, we got a little, I got a couple more questions. So say quickly. Can I just say one? I'll move on something else.
Amity Shlaes (39:04):
You heard there's a mean thing people say about older women, they call them Karens. Have you heard that expression?
Mitch Daniels (39:12):
Yes.
Amity Shlaes (39:12):
Yeah. Well, I was like, well, who are these Karens? They're older women. They're not rich necessarily, but they're the kind of bossy lady who says to the kid in the supermarket, don't lie on the belt because your hair might get caught. I mean bossy lady who's bossy in a room. And there's a whole culture of nastiness. I think the Karens are the keepers of the flame of civilization, these older moms, maybe that's I'm one. And the other day someone was a little bit irritated with me and he said, what's your name? I said, Karen, I'm going to be Karen because I want to speak because these older women, they're the keepers of the flame and no one, and they have a lot of knowledge. Nobody listens to them. They're not new, they're not young.
Mitch Daniels (40:01):
So I say, I ask you about younger people, you're another of your great books, your book on the Great Society, reexamining the Great Society begins with the line, why not socialism? And this many of our younger people, at least according to surveys, we all read, think socialism, however they understand it, sound like a swell idea. Where does that come from and what's the antidote?
Amity Shlaes (40:34):
Thank you for noticing that, Mitch. It's always a pleasure to be Governor Mitch because he notices the parts I care about the story about the boys' room. And now this, well, I believe that book has a little epigram at the beginning and it's actually from Coco Chanel. She said, nothing is new, it's just forgotten. That is you bring in a new fashion, it looks new, but that's because it's just long enough
(41:03):
That people don't remember that it was there before, whatever it is. And we always forget the importance to young people of being new and different of rebellion. And one reason socialism is popular is it's fun to support that thing the older people so seem to dislike and you don't really have the evidence anymore why they dislike it, because you didn't experience it yourself. You didn't go to East Urban in 1989, you weren't even born in 1989. So unlike us older people, they didn't have that experience of seeing the damage of socialism. So it's a combination of ignorance and just a generational rebellion.
Mitch Daniels (41:53):
Our old friend PJ O'Rourke and how I miss him, had a fairly economical diagnosis of this problem. He said, young people like people everywhere wish the world was nicer. They want somebody to make the world nice, he said, but they're broke. And so they want to make the world nice with your money and your time, and it may not be much more complicated than that, but in any event, none of them will have read your books very likely, let alone some of the greats that you have cited during our conversation here.
Amity Shlaes (42:36):
I think a lot of them have read, I mean, well, I won't say a lot of people have read these books. They're generally speaking, even if they did read them, the content would be so foreign to them
(42:53):
That this is not such an outrageous thing to say that Franklin Roosevelt was a mediocre economist. About 50% of economic historians who are trained in econ as opposed to those acknowledge that repeatedly, but it's so foreign into them. And some of these errors are our fault. This situation is our fault. Why? I believe we just failed to understand how important it was to teach square history in schools. That's basically all I do with Coolidge is teach square history, by which I don't mean right-wing history. I mean kind of fair square history, both sides and why so many people, for example, opposed the New Deal, which many did. Roosevelt won elections. But I just published with the American Institute for Economic Research, a little book of the critiques of the New Deal. And they were numerous and some were brilliant. This is kind of our fault that we didn't get through the teachers' union. Maybe the teacher's union likes government. And so it's in charge of picking teachers that we didn't inform our students. That to me, that's a big one.
Mitch Daniels (44:10):
Professor. I was fortunate enough to spend more than a decade in higher education, and a professor said to me one time, he said, it used to be that students would come to college and you would worry that they might be indoctrinated while there. He said, now they arrive indoctrinated or maybe they simply arrive uneducated. You're a graduate of Yale University, one of the most prestigious that we have. And they've had some trouble there recently where it appears that a large percentage anyway of young people aren't imbued with passion for freedom and free institutions as we've known, whether it's free markets or a Republican form of government. What gives there?
Amity Shlaes (45:06):
Well, first I want to say I agree with your professor and at Coolidge we work basically with high schoolers and beginning college, that's when we get them anyway.
Mitch Daniels (45:14):
You're talking about the Coolidge Foundation?
Amity Shlaes (45:16):
Yeah, the Coolidge Foundation where
Mitch Daniels (45:18):
I asked you about, but please say a word about it because it's an interesting project.
Amity Shlaes (45:21):
Just say no. So Calvin Coolidge had a few values and he lived them. He didn't enunciate them, give great speeches. He also lived them. And he believed in restraint government. He believed in civility, he believed in debate. He's a big debater. He believed in low taxes. He believed in the individual, individual liberty. The reason we exist is to bring Calvin to young people, and we do that through a scholarship on whose jury Governor Mitch has sat. That scholarship is currently the most popular in the United States. It's almost as innovative as what Mitch did at Purdue. The scholarship is to honor Coolidge, and we had 4,200 candidates for five scholarships this year. And every candidate for that darn scholarship has to write two essays, research essays about Calvin Coolidge policy. So it's a way of teaching a lot of young people. So imagine two or three essays, sometimes it's three about Calvin Coolidge by 4,200 kids.
(46:30):
Over the years we've had many tens of thousands of essays, and that is a way that we get to high schoolers. So that's what the foundation was speaking about. Yale or any school, I think the tragedy, I don't believe in writing them off. I do believe perhaps giving to such universities is not a great idea right now. They have plenty of money. Universities change. A university isn't just what it is in a moment. It's what it was often. But the particular tragedy of these schools, and it's not just Yale, is that the world invested a huge amount in creating the Yale community, the Princeton community, the Harvard community with beautiful dormitories on squares, quadrangles where children could meet, students could meet and debate with one another and shut out the world. And what's happened is when you go to Yale or Princeton or Harvard or frankly any other school, and there are many in Indiana too, you look around and say, that's a lot of horticulture.
(47:36):
How many gardeners did it take to take care of these? I don't know, magnolias, these whatever is these pines. Oh my gosh, this is a beautiful place. And what this political correctness movement and the general, I don't know, the general student protest movement has done is trample those spaces without regard for what the institution is trying to do and without any love for the institution. I think what bothers many undergraduates at all these institutions and certainly Yale, is not just the content of what the protestors might be saying, their disloyalty is what bothers them. So I hate Yale. Why should I be respectful of Yale? It gave me financial aid, but it's a crook, no thankfulness. And Coolidge was a very thankful man, and he taught gratitude. And the net effect is the century-old effort to create a commons where they can be interesting discussions. Where we can learn is so undermined and dashed by this instead the campus.
Mitch Daniels (48:41):
Have you been invited back to talk about your work or any of your books?
Amity Shlaes (48:44):
Oh, a number of times. Yeah. I have by the Colleges, by Saybrook and by the Buckley people, which is an outside group, but also within Yale in a seminar on the history of economics told in unusual books. So I don't think Yale is awful. The department of econ is interesting. Last year, Mitch, I won the Buckley Prize. So I had a look at what Buckley did. So I went back and read God a man at Yale, which I'd never read because I wasn't sure about God. And I'm a woman and I was at Yale and Buckley didn't really like co-ed. I knew that from personal interactions. I was like, I don't need to read that. But I finally went back and read it. I won this prize honoring me and him. And that is a phenomenal book. A large share of it is about the teaching of economics. And I don't know if you've had a look at it, but two or three chapters described the revolution in economics instruction that came to Yale around 1945. All the old people like William Graham Sumner were canceled. All the free market stuff was canceled. And in came this kind of
(50:04):
Flashy bog
Mitch Daniels (50:06):
People who thought the new deal was a swell deal. They hadn't read your book,
Amity Shlaes (50:11):
Bogus Keynesianism and Buckley discredit actually, he doesn't just get the course names, he gets the syllabi. He was an undergraduate at Yale and takes some apart and takes the teachers apart. Not to be mean, but to show how fast and far Yale shifted from 45 to 55. And I thought, this is really good. And of course they kind of stayed that course ever since, unfortunately, but so have basically the other schools. So I would never bash Yale especially.
Mitch Daniels (50:48):
Well, I didn't expect you to or want you to. And if they're inviting you back on a regular basis, there's hope for 'em. Amity, I've made it a practice now to close these conversations by asking our guests just to speculate. You'll be there to see it. I won't. But in 2050, will America be more or less free than today? And why do you think that?
Amity Shlaes (51:16):
Well, Mitch always flatters people. I doubt I'll be there, but I will be optimistic about 2050. I think that particularly because I worked on the Great Depression, nobody ever thought we'd get out of the Great Depression some years 35. So I think we'll get out of our confusion too. And we've got to train new leaders, not what to think, but how to think. And I am so glad to work with Mitch in that endeavor.
Mitch Daniels (51:47):
Well, we are delighted to work with you and so grateful for your time today, but more for your life of illuminating the rest of us, and we know there's much more of that to come. So Amity slays, congratulations on all you've achieved. Thank you once again for joining us here and we look forward to seeing and reading you frequently in the years ahead. Thank you.
Amity Shlaes (52:12):
Thank you.
Mitch Daniels (52:13):
And thanks to all our guests for joining us. We'll continue this series and hope that you will provide us your feedback and your suggestions for guests as delightful as the one you just listened to. Thank you very much.
Outro (52:30):
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