Washington, DC -- (ReleaseWire) -- 06/17/2014 -- Nationally Syndicated Financial Myth Busting Radio Show with Host Dawn Bennett, CEO of Bennett Group Financial Services, LLC, on June 8, 2014, interviewed Amity Shlaes, New York Times Bestselling author of "The Forgotten Man: A New History of the Great Depression."
Amity Shlaes is the chairwoman of the Coolidge Foundation, a foundation devoted to advancing the ideals of the 30th president, Calvin Coolidge. She is also an author and columnist who writes about politics and economics at Forbes Magazine, the Financial Times and Bloomberg. Amity also directs the Bush Center's 4% Growth Project, which is a belief that if the economy grew at 4 percent per year, we would create 10 million additional jobs during the next decade, returning the economy to full employment through growth alone with no rise in government spending.
Here is the interview with Amity Shlaes:
Q: So, I just heard your new illustrated edition of your No. 1 New York Times book, "The Forgotten Man," is now a bestseller as well. Congratulations.
A: Thank you, and congratulations to the artist because this is a giant endeavor. It's a drawing of economic history by a very talented graphic artist named Paul Rivoche, who lives in Canada. This is a new medium for serious material. It's called the graphic novel. That sounds like fiction.
Q: It's not really fiction we're talking about, just rendering through cartoons what happened. This would be what happened in the 1930s, the Great Depression, and boy, are his pictures beautiful. But it was just a real kick to see a serious book about economics for younger people right up there with "X Men" and "Saga" and all the books that are the unusual.
A: Right, because it does have a feel like a Marvel comic book because of these black and white illustrations. It truly captures the dark period in American history and the men and women whose tough American character actually helped them to persevere.
Q: So why do you think this book is resonating now?
A: Number one, people don't know about the past and anyone who's a parent or an educator, and a lot of your listeners are, or a young person knows that the past is further away than it was 10 years ago. People ten years ago knew who Franklin Roosevelt was. More people knew what the Great Depression was. Basic stuff. What World War I or World War II was. People today are intelligent, but history isn't taught very well, and things keep happening now. So it's resonating because people know that maybe they should know what happened in the '30s. History doesn't always repeat itself, but sometimes we say it rhymes or we get a repeat.
First we get the tragedy, then we get the farce. So you at least want to know what happened, and in the financial world this is especially true. One of the gratifying things about this original book, "The Forgotten Man," which was published before the financial crisis and has been popular since, is the hedge fund managers who have come to me and said, "You know, I thought I could make my career be all about my math genius, but I've discovered now actually what happened so that I can set policy for my fund." Sometimes knowing about history helps you make money.
Q: Right. It’s the first time I’ve heard that, so I'm wondering, are you seeing any rhyming right now or similarities between that time period and 2013 and 2014?
A: We are all very concerned about the quality of the recovery. Some people in some sectors, particularly government and energy are feeling great. States with those components, Washington, D.C. with government, Texas with energy, the Dakotas, especially North Dakota with energy, they're feeling great, but the rest of the country isn't. We're all concerned about youth unemployment and sort of the general cynical feeling of young people looking at limited opportunities that they can find. So that is, like, the later 1930s. When I went back first to look at the Great Depression, what made it great, was that it was so long.
It was 10 years of double digit unemployment, high double digit, sometimes. Especially the latter '30s when you kind of thought, looking at the data and the mood, everything would get all better. It didn't. Instead we had a depression within the Depression. I don't think you can call what we have now a depression by any means, but the absence of strong recovery is puzzling and the concern also that our markets are overpriced. Interest rates now are lower than they were in 1928 or '27, which is what people look back and say, "Well, there was a lot of champagne, a lot of Great Gatsby, and interest rates were so low and that caused the crash of '29," but you want to look at those interest rates that preceded the crash of '29, and they were higher than our own.
Q: During the Depression, you had said that the phrase, "Nice work if you can get it," lived during that decade. Now, today, 92 million Americans are out of work. So what would be the phrase you think for this time period?
A: "Nice work if you can get it," again. We have the paradox whereby if you have a job, you might be doing well, but next door the person cannot get a job. There's a sort of locked out feeling or they can only get a temp job. Think of people who have the union job that's grandfathered. They're 58 years old, they have a pension, at least promised them. The younger union members, not to speak of the non-union members, don't get anything like the benefits that the people born before 1960, get. It's a divide, and it's a wrong divide, and it has to do with rigidities in the labor market just like prison walls that are caused by regulation.
Q: We don't want to be a disappointing place for young people, what can we do to fix that?
A: There you are in Washington. I'm very concerned as much as about economics with this sort of cronyism that, where you went to school, who you know, which department knows which department, which department cut a deal with another department, that's who gets a good deal, and everyone else is cut out. The book is called "The Forgotten Man" because it's about this great philosopher who said, "We remember one poor person, maybe the homeless man, but we forget another forgotten man. That's the man who pays "for the projects for the homeless person. He's the forgotten man." The taxpayer might be, and I loved this idea, which comes from William Graham Sumner, the forgotten taxpayer or bystander who doesn't get the financial aid, the special mortgage for that group, and who is yet subsidizing help for others.
Q: As chairwoman of the Coolidge Foundation, what have you learned from Calvin Coolidge about the way we should respond to our economic crisis today, our unemployment issues today?
A: Coolidge was a great president. That's why we at the Coolidge Foundation love him. We want to invite everyone to come out to his birthplace, Plymouth Notch, Vermont this summer, it's our own Williamsburg, our own Monticello, for a president who believed in saving money because interest rates might one day go up.
So, that's what I learned from Coolidge. I'm his biographer, which is how I got the job of working for the foundation with some wonderful colleagues. What we do up there is entertain people, along with the state of Vermont, the host, who want us to get to know a president who believed you have to cut budgets. You can't just reduce the increase. In certain ways, Coolidge is better than Ronald Reagan. He actually cut the budget. His top marginal tax rate, I'm just thinking about that, and I know you have some listeners who followed Reagan, Coolidge's top marginal rate was 25%. Reagan only got the top marginal rate down to 28%. So he's a great hero. Right now people think "Oh, we don't need him. Interest rates are low. Maybe we can grow out of this." When you feel a bit of tension about the interest rates, look to him. We all know we can't quite grow out of everything.
Q: President Obama's been quoted to the effect of, "The Depression lasted as long as it did because FDR didn't act even more boldly." So, do you think insufficient interventionism was the problem, or is our problem?
A: There's plenty of evidence that they intervened too much. President Obama is speaking of stimulus, and it's true. Their stimuli were not as great as ours. The New Deal, as radical it was, did not stimulate, i.e. spend in terms of the economy as much as we do when we spend. That's what he was talking about. He's probably wrong. What is the evidence? There's enormous evidence that the arbitrary nature of the intervention terrified markets.
That's hard to quantify, though now we're beginning to lern how to do that. When a government is truly arbitrary, and I know the head of the Chamber of Commerce gave a speech about this a couple of years ago, then markets freeze, or they freeze in some areas, or they're cautious, you think about your business, you don't know what's going to be the outcome of the health care, so maybe you're going to hire less or borrow less for six months or a year. So, that was the part of Roosevelt that slowed the economy. He basically said, "I'm going to take over all the private economy if I feel like it," on some days. He was extremely inconsistent, President Roosevelt. He had a bunch of competing impulses in his brain and breast as we all do, and one was save money and another, though, was bust in. So the economy froze up. It's especially those last five years of the 1930s, and the artist draws this so beautifully in this cartoon book, that our own opportunity's squandered because we probably could have recovered by '35 or '36, and we didn't because the government was so terrifying.
Q: So, fast forward today. Is president Obama suffering from some of the things that FDR did?
A: Yes, and I'd say a lot of us do. It's a legal approach.
“I'm going to write law, and that will bring recovery. I'm nice and fair and make the society a better place with projects that probably aren't related to the economic problems, and that will bring recovery. Health care for example, or in Roosevelt's case, there were all kinds of social interventions. I'm a good person.
The progressive impulse is probably better than the private sector. What's interesting is John Maynard Keynes, whom conservatives often vilify, was the wise man here, and we drew pictures of Keynes sending counsel to president Roosevelt, who was prosecuting the utilities to death. Keynes said, "Well, why not, you can nationalize those utilities or you can leave 'em alone, but there's no use chasing them around the lot every other week." That is, regulating them like crazy when you feel like it, because you're hurting utilities.
Keynes said to Roosevelt, "Businessmen aren't wild beasts, that is, enemies you have to slay with your sword. They are more like domestic animals. You have to treat them pretty okay, and then they'll treat you pretty okay." It's very interesting that at the time, and none of our children learn this in their books, Keynes understood the failings of Roosevelt and articulated them.
Q: Do you see, again, the same failings today?
A: Totally. It’s an arrogance of power, and I would say it's a legal arrogance. You can see it in Republicans too, though. I do not want to be partisan in this. It's the idea, the general approach, the progressive impulse came from the Republicans in the beginning.
Theodore Roosevelt, the cousin of Franklin, was not a Democrat and he was a progressive. All of this history is not quite on the S.A.T. It's not all quite conveyed in our history books for kids. It's our job to get our kids, our investors, this knowledge, and I'm really hoping that we get this cartoon book, which is a big, fat book, not a light one, but a life story translated into Spanish 'cause "Forgotten Man" has so many Spanish readers, and they want to share it with their children.
Q: President Obama, largely credits himself with having saved the economy from the worst recession since the Great Depression, to use his oft-stated line. As an economic historian, how do you rate this kind of argument and will it be validated?
A: Personally, I don't think it was. This is my own personal analysis. No, President Obama did not save the economy. Even Chairman Bernanke certainly in fact did not save the economy. All things being equal, the U.S. economy will recover. The real question is, why did it take so long? Probably larger government is to blame.
Q: Are you optimistic about America's future?
A: I always am because all things being equal, we like to grow.
We have to learn the lessons from ourselves. What is it that's happening in Texas that we could replicate? Well, start with the no income tax.
Q: "The Forgotten Man, Graphic Edition." It's a new history of the Great Depression. It's at Amazon. Go and get it. I did. It's a great book. And Amity, I'm going to thank you so much for being on "Financial Myth Busting."
A: Thank you. I hope to see some of you in Vermont this summer. Bring your children to see the president who saved money and was polite.
Q: Do you have a website for that?
A: We have Calvin-Coolidge.org, which is more archival, and we have a new one where you can follow our Blast, Coolidgefoundation.org. People can also contribute to our Blast. Send us notes if you know something about Coolidge and you want us to say something about Coolidge. Coolidge is everyone's president, and he's not well known yet.
About Bennett Group Financial Services LLC
Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill. For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com.
Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.
About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program on http://www.WMAL.com called Financial Myth Busting http://www.financialmythbusting.com.
The show airs live on www.WMAL.com each Sunday at 11 am EDT. It now has over a year’s worth of achieved interviews for listeners free on-demand at http://www.financialmythbusting.com.
Dawn discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included Rock Legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN as well as take podcasts on the road and forums for interaction. The show is a great complement to Dawn’s monthly investing seminars that take place at Tysons Corner in McLean, VA, where she discusses investing.
She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett or firstname.lastname@example.org