Voices of Freedom - Interview with Amity Shlaes

Episode Date: July 10, 2023

The next time you enjoy a leisurely Saturday, thank President Calvin Coolidge. The transition from a six-day work week to a five-day work week occurred under Coolidge’s presidency, an interesting footnote in American history. More importantly though, is why that came to be. Coolidge believed that smaller government and lower taxes would unleash American industry, creating more efficiency and greater productivity. Turns out, he was right. Amity Shlaes is our guest on this episode of Voices of Freedom. She has made it her mission to elevate Silent Cal’s presidency to enhance an understanding of why prosperity and civility flourished under his steady leadership. Shlaes chairs the board of the Calvin Coolidge Presidential Foundation, the official foundation dedicated to preserving and promoting the legacy of America’s 30th president. Topics discussed by Amity Shlaes and Rick Graber, President and CEO of The Bradley Foundation, include:   ·         Why President Coolidge should be ranked among America’s top ten presidents ·         This year’s centennial celebration of Coolidge’s inauguration ·         Coolidge isn’t taught in America’s classrooms - but he should be ·         Coolidge’s most important domestic policies ·         How Coolidge’s humble upbringing shaped his character and beliefs ·         The story behind the opponents of the New Deal and the nature of successful rebellion ·         Government growth during a crisis and cancel culture’s presence in the New Deal era ·         The rising support for unions among the right ·         How to inspire inquiry among younger generations  Shlaes is the author of four New York Times bestsellers, including The Forgotten Man: A New History of the Great Depression. Her latest book, New Deal Rebels, looks at the story of American opposition to the New Deal. Shlaes was a syndicated columnist for ten years, first at the Financial Times, then Bloomberg. Before that, she served as an editorial board member of The Wall Street Journal. Shlaes is also a winner of a 2021 Bradley Prize.

Hello and welcome to Voices of Freedom, a Bradley Foundation podcast. I'm Rick Graber, President and CEO of the Bradley Foundation. On the podcast, we'll explore issues that affect our freedoms with a focus on free enterprise, free speech, and educational freedom. So let's get started. Our guest today is Amity Shlaes. Amity chairs the board of the Calvin Coolidge Presidential Foundation, a national foundation whose goal is to educate Americans about our 30th president. She's the author of four New York Times bestsellers, including The Forgotten Man, A New History of the Great Depression, and her latest book, New Deal Rebels, looks at the story of American opposition to the New Deal.

And we'll chat about that today. Many in our audience first got to know Amity when she was a syndicated columnist, writing on topics from taxation to foreign policy for both Forbes and Bloomberg. The Bradley Foundation recognized her for her work in 2021 when she received a Bradley Prize and a great night that was. Amity, welcome. Glad to be here. Amity, let's jump right in. You're best known for your writing about policy issues that cover the 1920s through today. What inspired you to become a writer?

What motivates your work? Easy question. I think the short and best answer is rebellion. We all wonder whether what we're hearing is exactly right. And as a young author, I was at the Wall Street Journal. I listened to what the editors said, and I thought, maybe there's some more to that story. Maybe there's something else to say. And the point is not that one must be a ferocious rebel all the time, but that sometimes rebellion is useful if one channels it for energy. But of course, I'm a big reader. I was always a big reader. And I think I grew up living in the world of books, so I wanted to make a contribution to that world. Over the last two decades, you've spent a tremendous amount of time creating awareness about President Coolidge and his legacy.

Of all the presidents, why did you pick the 30th president of the United States? Well, Rick, presidents are like stocks. And so you invest in the one that's most mispriced. Coolidge, his rank relative to his actual worth, there's a big gap. He's ranked 24, sometimes 30, 31, 32 among presidents, and I'm pretty sure he belongs in the top 10. So he's the most wronged president in terms of his rating, and that was the challenge to try and show the world that maybe he's worth a bit more.

Second reason, though, is that Coolidge stood for economic freedom. He did say the chief business of the American people is business. That's his well-known line. But he also said the chief ideal of the American people is idealism. That is, he understood that business was not just about material gain, but also about building a world where there was time for what he called things of the spirit. So he wasn't a cartoon libertarian by any means. He was a serious free marketeer.

I should note that we're conducting this interview in the Coolidge House in Washington, D.C., which is the home of the Calvin Coolidge Presidential Foundation. And we're here because tomorrow we'll kick off the centennial celebration of Calvin Coolidge's inauguration. What are you hoping to accomplish with this event? And I know you're going to have a series of events throughout the year, but what are you trying to do here? Rather than convince people to rank Coolidge higher, which is, I think our first job is just to share Coolidge. Americans have to make their own evaluations.

And one of the problems of our current instruction in particularly secondary school history is that we don't teach Coolidge at all. There's a sort of philosophical problem, which is what of Coolidge is taught is probably wrong. But more important is that he's not taught at all. He's kind of a footnote, a seat warmer between Roosevelt's. You go from Theodore Roosevelt and maybe Wilson, then to Franklin Roosevelt, and Coolidge is barely mentioned. So our job, the foundation's mandate, is to share what he achieved, which is quite a lot. And this conference at the Library of Congress, with whom we're very happy to partner, will address Coolidge's tax policy.

Coolidge believed that lower rates were better for Americans, not just business, and that lower tax rates would enable businesses to create jobs. Sounds obvious. It did work out that way. He was able, through a very sustained campaign, not just a snap of the fingers, to get the top marginal rate on the income tax down to 25 percent, which is a bit lower even than Ronald Reagan's star rate of 28 percent. He also fixed the, well actually Harding fixed and Quillage sustained the capital gains rate, which is important for anyone's pension. The capital gains rate, which is important for anyone's pension. The capital gains rate, there was no clarity over that.

Our tax system was new then, our modern tax system. And people thought that capital gains, when you buy and sell a house or a company, might be taxed just the way income was, which meant that capital gains might be taxed at 70%. So business said, wait a minute, we'll sit this one out. We'll wait to see what happened. And there was what was called a capital strike in the early 20s. James Grant has also described that, a Bradley Prize winner. Yes. In his book, The Forgotten Depression. And Coolidge and Andrew Mellon, his treasury secretary, said, well, if we have a clear rate on capital gains that's low, it may not be a perfect situation. Many, many fine economists believe there should be no capital gains tax at all.

But anyway, if we have a low rate of 12.5, well, business will find that not too bad, and we'll start to create jobs again. And that's what happened. When you look at the 20s and you hear all these abstractions about taxation and productivity gains, there were interesting, strong productivity gains in that period. All you have to say is, what did Coolidge give America? And the answer is Saturday off, because the productivity gains enabled us to work for five days instead of six at the same salary. And that became commonplace in the 20s.

So think of Coolidge as the same salary. And that became commonplace in the 20s. So think of Coolidge as the Saturday president. When I think back to my own education, Calvin Coolidge was a couple of paragraphs, probably, and not much more. And this is great to learn so much more about him. And I mean, it seems that he had some qualities that just don't exist in today's world. Civility, bipartisanship, commitment to fiscal restraint. Give us a couple more examples of that civility, of that bipartisanship that is so lacking in today's world. Well, he did say, I never got hurt by anything I didn't say. And what he didn't say was insult his opponent.

He mentions explicitly in his autobiography that he did some negative campaigning early on perhaps in a contest in Northampton, the county seat where he was a town attorney in politics. He said we did that it didn't really work out. We wasted time. We wasted air time complaining about them instead of laying out the merits of our own policies, and therefore we lost. He really believed that it was not virtuous and also not necessarily efficient to spend all one's time on attack in a political campaign. Another example, he was friendly with Woodrow Wilson, who had very different views, President Wilson. He praised President Wilson.

When there was a terrible public sector strike in Coolidge's life, when he was governor of Massachusetts, he happened to be, the way the chain of command went in charge of the Boston police as governor. And the policemen broke their contract and went on strike. And, well, they broke their contract. The policemen were extremely compelling. They were indeed underpaid. There was under-acknowledged inflation, as today. And also there were rats chewing on their helmets in the station house. And also they had served double in World War I, and nobody said thank you. So imagine, they also, by the way, they were Coolidge's constituents because they were Irish-American. And Coolidge's name is an Anglo name,

but Coolidge was a swamp Coolidge, so these class, again, caricatures don't work. He was regarded by the Bostonians as a Westerner, practically, Coolidge because he was from Vermont. Where's that? That's where poor people go. That's not where we are, right? So he wasn't, and he was very good at getting the immigrant vote, more importantly because he cared about immigrants and did a lot for them in his town, Irish Americans in particular, and the policemen were Irish. So for all these reasons, Coolidge thought he would, the police thought that Coolidge would conciliate as governor when they broke their contract and went on strike. He did not. He played a pre-Reagan, basically, and the policemen were

fired. He said there's no right to strike against the public safety by anybody, anywhere, anytime. He didn't like public sector unions, and he thought they were un-American. And Wilson, and he agreed, Wilson is an example of a governor leading a president. Wilson wasn't sure. He had a lot of other things on his mind, including, I don't know, the League of Nations and a big coal strike. But Wilson saw that Coolidge was right and congratulated him. And the two effectively supported each other on this. That's an unusual example. Nowadays, they would mock each other. They didn't have to be best friends. They didn't have to be in the same book group or prayer group, but they had plenty of respect for one another. He was also very friendly with Thomas Marshall, his predecessor as vice president. So that would be Wilson's vice president. And he understood the purgatory

Marshall went through with Wilson being ill. Well, I mean, our laws say that maybe Marshall should be in charge if Wilson is really incapacitated and that it is often purgatorial to be vice president. Our two founders at the Bradley Foundation, Linde and Harry Bradley, two brothers, were clearly free market believers and their whole career was really based on that belief. And they attribute their success to the free markets. Now, I've heard you use the term free marketeer in describing Calvin Coolidge. What about his background do you think shaped his belief in our free market, free enterprise system? Well, he lived in a very small town.

They were farmers, with quotes around, in that village. But later, the Agriculture Department went to Plymouth and ascertained that scarcely an acre of this town, Plymouth, Vermont, was actually arable. So it was kind of an exercise in desperation, and that those interested in farming or enterprising people, such as John Deere left rocky Vermont. What do you do in Vermont?

You farm rocks and went to the Midwest where it all unfolds before you and once you set up the water system. And it was a tough life. The villagers didn't have enough money to pay taxes, and yet they needed taxes to pay, to smooth the road so the sleigh could go down it. It was a very tough town. The hill was very steep up to the town. The train did not go to his town. The electricity did not come to his town for when he was a child. And he saw how the farmers had trouble making do. His father started a cheese factory. And you think, what is a cheese factory? Well, a cheese factory is simply an exercise in economic

desperation. If you have no refrigeration, but you have milk because cows can graze on rocky turf that's the one thing that you know they say vermont is v dairy so to speak dairy is important to vermont politically and for survival um his father had this cheese co-op that a version of which is still there the plymouth cheese factory which you can order we give away that cheese. Anyway, that taught Coolidge to hold on to your money, one. And he likened budget cutting to cheese pairing. Thin pieces. You have to do it very thin. And, you know, it taught him that, I think, to have respect for every individual who had to pay taxes and try to put yourself in that person's shoes.

Let's contrast that with what is now also the 90th anniversary of Franklin Roosevelt's first inauguration. Obviously a different era of government, and you've studied this. We mentioned at the outset that you have a book coming up that takes a critical look at the New Deal and the arguments from those who opposed it, which is also something you don't hear about much in the history books at all. What were the concerns of those New Deal rebels? And were they right? They were all over the map. That's the thing about rebellion.

Again, they were all over the map. And you can learn from some negative examples in that period. Some were concerned the Roosevelt administration, which was, of course, far more progressive than the coolidge administration wasn't progressive enough so you have the far left um then you have the far right then you have the middle right then you have the common sense man this was a very much a very um very interesting book to do both because of what was wrong with the Roosevelt administration, but also a chance to study the nature of successful and counterproductive opposition, of rebellion again. We're doing it with the American Institute for Economic Research. I'm

very honored to do it. It's not my book. It's an anthology of rebels. I think the most compelling was an economist named Benjamin Anderson. These are not, again, not people we studied. Benjamin Anderson. Who's that? Never heard of him. Benjamin Anderson wrote a book called Economics and the Public Welfare. He was the chief economist of Chase Bank. He was hardly a hippie or a Yahoo or whatever. He was right in the middle of the establishment. He wrote newsletters to his clients, and then he pulled together economics and the public welfare at the very end of his life. And Anderson said, well, the problem with the New Deal is that the government in the past decade or so has played God. And when playing God has not brought the result it sought,

it has played God more vigorously. I like that very much. When the government plays God. So Anderson, to me, was the most credible. The Austrian school people know him, but not very well. And once I was talking to a Russian who worked in the Kremlin a while back, a fine economist, and there were many, and he said, Amity, Anderson, Anderson, Anderson. And it turned out in Moscow they had read Anderson, Benjamin Anderson, though we hadn't at our schools. And I thought,

that's amazing. He said, Anderson explains everything. So if you go back to the New Deal, in real time, common sense people protested about certain excesses of the government, from little chicken butchers in the famous ALA Schechter poultry case that I describe in my own book about the Great, sorry, about the New Deal, which is called Forgotten Man, long ago, little chicken butchers said, well, those numbers don't make sense.

I mean, you want to remember the New Deal had premises. We have our intellectual fads today. The New Deal had a tremendous number of intellectual fads. One was that consumer choice slowed the economy. So if consumers could pick something, that slowed down the assembly line. Imagine a sort of visual of an assembly line like Charlie Chaplin. And therefore, the economy was slow. So therefore, there must be no choice, and the economy would move faster if the assembly line of uniform black cars from Ford or uniform chickens, in the case of the Schechter's and New Deal law, emerged, I don't know, into the hands

of the buyer. Today, we have whole industries built on the premise that consumer choice creates demand. Think of Starbucks, whose culture is basically with soy latte, half and half, or whole milk. And people luxuriate in the simple choices of the purchase. Or when you tailor your own Dell computer or your own Mac. That's very important to consumers and very important to economic growth. The New Deal was premised on the idea that it was the opposite, or more painfully, that prices had to be high so consumers would earn money so they would spend.

The Ford worker would buy back the car if he were paid well enough. Well, it's fine for Henry Ford to say that, and sometimes it's true, but if the government says that prices have to be high and wages have to be high, the prices are too high for people who have no job. That was the Great Depression. The wages are too high for employers who have no profits. So the employers re-employ more slowly if they're forced to pay high wages. And that is one explanation, as the people in my book point out, for slower rehiring.

What was so bad about the Great Depression? What was so bad about the Great Depression was the duration of unemployment. For 10 years, more than 1 in 10 people did not have a job. So the New Deal didn't work. Its primary goal was to put people back to work. It didn't. And a philosophy such as that, wages have to be high, is particularly hard on employers. What you see when you look at the New Deal and at these rebels who really didn't gain purchase, that is, didn't really have much effect in their period. Roosevelt was re-elected again and again.

What you learn from it is that sometimes you don't win, and you have to be at peace with that, but you must make your case. What you also learn, though, is negative campaigning may not succeed, and populist anger won't either. Some of the pieces in this book scream at the president and the man. The problem wasn't the president, as interesting as Roosevelt is, and there's also a lot to like about him. It was that our polity ceded authority to him, and out of fear, laziness, affection, intimidation, all those things, didn't take back control. The country did not have to re-elect Roosevelt in 1936 or 1940.

There were whole books about why a third term for a president was wrong, but it was a combination, I think, again, intimidation and almost politeness that people didn't go at the New Deal, which is why New Deal rebels are so interesting. They weren't exactly popular, and he sent some of them to jail. Well, Annenberg family, for example, the publishers, the older Annenberg, went to jail.

Roosevelt would go after his opponents. He used ad hominem attack all the time, particularly in the attacks area. I was shocked to see how much he persecuted. So these rebels were shouted down. They were shouted down, or even worse. And Andrew Mellon was a kind of rebel, because he had been Treasury Secretary in the preceding era. So he was number one scapegoat in the Depression.

Well, somehow Andrew Mellon caused this. He spent his 20s, excuse me, he spent his 80s, late 70s in court. I'll say that one more time. He spent his late 70s in court defending his own record. And the IRS men said to the president and to the Treasury Secretary Morgenthau, we don't think you should spend so much time trying to prosecute Andrew Mellon. He's so wealthy that he probably has pretty good tax lawyers, and he may not have done that much wrong. But the Roosevelt administration went after him, and Mellon

struck back in the following way. One day, I believe it was his 80th birthday, the reporters at his trial stuck their faces in his, or maybe even their mics under his nose and said, say something on your birthday. And he said, well, the Depression is just a bad quarter hour in the glorious history of America. Growth was his suggestion. And that's the thing. That was a true blow to the New Deal, because the premise of the New Deal is the Depression

is so bad and it's been so long, it shows you why we always need the government, that this crisis is not going away. You sustain the crisis, you sustain the justification for intrusion and spending. Mellon, with very cool blood, said, it's just a bad quarter hour, friends, and walked off. And that was the worst blow one could deal to crisis monitors. We hear so much about people being canceled today. Perhaps this was an earlier version of being canceled. Oh, so many were canceled in that period.

In my Great Society book, I talk about Daniel Patrick Moynihan being canceled as the first modern cancelee, canceled one. But in the 30s, for example, all theater that wasn't New Deal style was less interesting. So today you hear about someone writes a play and it's not, I don't know, it doesn't check a box. It's not about social justice.

It's not about racism. It's not about Ukraine. Well, it's not interesting. That happened on steroids in the New Deal because the government funded the theater. And what did the government fund? Its politically correct shows. So in an election year, it would fund the value of its agricultural program in a play,

or it would mock plutocrats in a play. And as I mentioned before, occasionally, people went to jail over the New Deal. Let's switch gears a little bit and talk about unions. You've written extensively about the history of unions. Union membership is at an all-time low. The numbers speak for themselves. Notwithstanding President Biden's very, very strong support for unions, why do you think American workers just aren't joining unions the way they used to? Well, the first thing to say about unions is people tend to want to unionize when there's inflation. And you can't blame them because, of course, awareness about pay doesn't come to an employer that easily. Oh, and not every system has inbuilt COLAs, adjustments. But the second thing is we had a natural experiment in the United States

and demonstrated to Americans that unions might not be the best vehicle for prosperity, growth, and flourishing. What was that experiment in specific? We had a rough union law called the Wagner Act. And then we had a second union law, very important to the Midwest, where Bradley is called Taft-Hartley. Taft-Hartley created a natural experiment by codifying right-to-work states. He said a state can set up and say it's going to have fewer union strictures. And in that state, there'll be fewer rules. It will be easier to work if you choose to for a non-union company or and so on and then we saw which states the right to work states or the old heavy union states grew faster and if you look at that data over time and in my great society book i do have a chart about it if you look at them and that data

over time you'll see that the less unionized states, the right-to-work states, did better. And Americans saw that, too. And therefore, they became less interested in unions. We actually had a learning curve about what unions can do for America. Let's turn to debt and get back to President Coolidge. Calvin Coolidge's, certainly one of his primary focuses, was to reduce the debt after World War I. No one on either side of the political aisle is talking about debt these days in any sort of meaningful way. But that's not Calvin Coolidge. What can we learn from him? He was very successful

in bringing this country's debt under control, whereas today's politicians run from it. Well, there are two kinds of politicians. There are governors and there are national politicians. And isn't it interesting? Governors have a constraint. Governors have a constraint. What is that? Their bond rating, basically.

If they run their state too much into debt or they allow their legislature to do that, the state's bond rating goes down and suddenly life becomes more painful in the state. Our federal government doesn't have that because we can swing with impunity. We are the currency of reserve. In fact, we have a terrible perversity. When the U.S. gets in trouble, money flees to the U.S. So it's as if our debts

don't matter currently. The federal government doesn't have the constraints of the states. In Coolidge's time, the federal government had the constraints that a U.S. state would have now. That is, if the U.S. ran too wide a deficit, the money would go somewhere else. It wasn't so sure that the dollar was the currency of reserve. It just wasn't clear the dollar was the currency of reserve. And we were operating under a gold standard system, so the gold would get on a ship and go to England if foreign investors didn't like the state of the U.S. household. So there would be a natural contraction in the U.S. economy, just the way there's a tightness in a state whose bond rating goes down and the state has a lot of debt, if Coolidge ran great wide deficits.

So he ran surpluses. Will this situation where the U.S. government will always have money and can do whatever it wants abide? Probably not. The dollar will be challenged one day, and the dollar challenge is much closer than it would have been 20 years ago had we had this conversation. Fascinating. Last question. In your Bradley Prizes speech, Amity, you talked very eloquently about the wonder of inquiry as you described your process of discovering Calvin Coolidge. How are you encouraging younger Americans to explore the past and what can we all do to inspire that

same sense of awe that you've had in the next generation? At the Coolidge Foundation, we spend a lot of energy with young people. We have a debate program, and the students, as I mentioned, I think, are debating the merits of Calvin Coolidge, whether he deserves to be in the top ten or just to stay at 34 or lower. They have to argue both sides. We don't say, join us in unreflected patriotism and praise of Coolidge. We don't cheerlead. We just say, argue both sides and consider it for yourself. Young people really do not like to be condescended to or cheerlead

most of the time. The main thing is to be sure that they get the knowledge. And in the application process for the Coolidge scholarship, with those tens of thousands now, we ask the students to write two or three essays about Calvin Coolidge. Every year we increase the challenge a little bit and they don't have to turn into Coolidge fans. We're just asking them to look at the material. I think the other thing is and we're all and I know Bradley does this so very well, we want to build institutions where all Americans can learn all points of view and all histories

and then let people decide for themselves. Thanks for listening to this episode of Voices of Freedom. Join us next month on Apple Podcasts, Spotify, or wherever you get your podcasts for our next conversation on issues impacting our freedom and America's foundational principles. And make sure to subscribe so you don't miss an episode. I'm Rick Graber,

and this is a Bradley Foundation podcast. Thank you.