Now, author and Calvin Coolidge president ial share, discusses the unintended consequences of Government Intervention during an economic crisis. She says, the current Economic Situation is best compared to the financial crisis which follows world war one and the spanish flu. From the heritage foundation, earlier this week, this is about 45 minutes. Id like to invite our to special guests joining me on the screen, stepman and amity shlaes. I invite them to turn on their cameras. Jay lee signal of cohost of the podcast. He is also the author of the book, warren history, the conspiracy to rewrite americas past. Welcome, garrett. Our special guest is amity shlaes, she is the guest a forgotten man, you history of the Great Depression, the forgotten man graphic the full length version of the same book, coolidge of the 13 president and the greedy hand, how taxes drives americans crazy. Shes also the author room you book, Great Society and shows a planning policy, implemented in the name of the collective hurts both the nation in the individual. Thats a theme i also believe both of our guests will like today. Amity with the kelvyn College President ial foundation among many other accolades and with that, i will turn the conversation over to jared. Well thank you so much andy. Really appreciate those introductions. Thank you miss amity shlaes for being here and the audience for tuning into this at unusual time when we are of, course webinars obviously a lot of americans dealing with these challenges. But really the challenges that we face right now is kind of a three part one, you really have the Public Health crisis of course dealing with really the worst pandemic since maybe the 1918 spanish flu. Weve got the policy crisis, how this thing started and when in china and of course the topic of discussion today, which is the economic crisis. How we deal with that as a society, the ongoings shut down, the business closures and all these kinds of things that have been very severe and obviously many are talking about what those next steps are for the United States. And of course if you look at right now the latest job reports numbers, a lot of them are very i mean we talked about 14. 7 unemployment. Many saying those numbers are actual lot higher than that. Certainly could go a lot higher. The rate in april is at 60. 2 . The lowest rate in 47 years. Maybe a bright spot is almost 90 of those job losses come from people who are temporarily laid off. Obviously congress has already taken some steps. We have the cares act. There have already been measures to fuel with this crisis and others of course are saying that dont let this crisis go to waste. I think a really important statement recently by senate minority, Chuck Schumer on msnbc said we need big bold actions, we need Franklin Roosevelt type action and we hope to take that in the house of senate in a very big bold way. So many calling for what many may see as a new, new deal or a revival of the agreement deal, which has been a proposal floating out there. Yet, after all of these members, you have to remember that in just december, i mean really not that long ago, a lot of the economic that we saw was very, very good. We were at 3. 5 unemployment, the lowest since 1969. A lot of those factors seem to be going very well until we hit this Public Health crisis. I think the very big question for you, miss shlaes is, is it premature to call ourselves entering into a new Great Depression . Glad to be here. Glad to meet you are even if its virtually. Thank you jarrett. It is premature to say we are going into a Great Depression. A gate Great Depression number, which is what that jobs number was does not make a Great Depression. The Great Depression by great we mean law, right . The Great Depression was ten years of a series of policy errors. So imagine ten years of trouble. A recovery is like a human, it makes decisions and in the thirties, in the Great Depression, every year the recovery chose to stay away for a different reason. We do have now a choice about whether we are going to have the severe downturn or really severe downturn. Our policy decisions will determine which of those we get. Absolutely. So i think one of the big certainly one of the mid house of the Great Depression and then you deal, putting into address very well forgotten the discussion about Herbert Hoover and his role in the Great Depression. Of course at the time people said there would be hoover bills. A lot of this was blamed on his policy. Him not taking a aggressive action. So i really have a two part question here. Was hoover really a limited government guy in how we approach the crisis in the crash of 29 in what followed and b, where the outcomes for president Franklin Roosevelt, who did push a lot of new deal programs, were they any better . Well, we are asking now not what happened but is the interpretation wrong . Yes the interpretation in the School Textbooks is wrong. We worry about a Great Depression but we dont really understand what happened in part because our textbooks are wrong. The mid, jarrett, there are multiple myths of the Great Depression that we get from our textbooks. The mid to with jarrett, the first myth is that Herbert Hoover, who became president in 1929 and served until the beginning of 1933, was a free marketeer. A restrain government person and his laissezfaire policy caused the Great Depression. Thats kind of what we learned in school, right . But Herbert Hoover, i would agree, and the evidence suggests that Herbert Hoover did a lot of damage but not because he was a free marketeer. He did the damage because he wasnt a free marketeer. So when you go back and look at his actions, youll see that for yourself. Two areas in which Herbert Hoover intervened negatively. One is he berated business so much it got scared. When the president be rates business and says this is your fall, you shouldnt traded here that way, there are consequences. And staring at businesses is not a good idea. Think of now, businesses wont cough in and so they dare go back to the market. Another thing Herbert Hoover did, which was the fashion at the time and has been under study but clearly happen, was he bought into the theory that higher wages are the most important factor in a recovery. So we want to have very high wages. That was new for downturns. It usually in a downturn, what doesnt employ do . I think if you are an employer. Now while his natural impulse is to lower wages because thats the humane thing to do. He wants to keep his people or she wants to keep her people. In those days it was early canes he is or protocanes he is them. What hubert believes and what he learned in progressive schools really was that if the worker makes more money, hill by his own car that hes making back and that will trigger Economic Activity. Thats the same kind of talking here we stimulus today. But what happened is, so therefore, he exhorted business and business did what he did sort of like President Trump exhorting now the authorities more exhorting than lost. Sometimes he exhorted business not to drop wages. He signed on to laws such as davis bacon, which sounds almost forgotten but effectively that law was outward pressure on wages. Unlike other down turns, in this downturn wages did not go down as they might have. Therefore, what were employees doing to compensate for wages . They could not afford to pay. They were rehiring fewer people or they are laying off more. Im really paying well but i only have half my staff. So thats a big tradeoff and that contributed to the terrible unemployment that we know is the Great Depression. That unemployment was really i think thats the point that certainly in our conversation before that you try to make is just how long this thing lasted. I mean something on the perspective for three months, the economic we have basically been in a shutdown. The numbers are awful. The numbers throughout the Great Depression were awful for year after year after year. This is something that was unabated, essentially, for really a generation of workers. I think that something, certainly youve written quite a bit about, something that i heard stories from my grandparents about, is how the Great Depression, within a Great Depression, within the late 1930s, 1937 being particularly bad but really those late 1930s were, in some ways, worse than the early 19 thirties. After all these programs were created, after all these measures were taken by Herbert Hoover, by Franklin Roosevelt, things in some ways were getting worse in the 1930s and of course we had piles of debts, made all the changes to our government. Can you talk about that and explain how things were worse or just as bad . Thank you, jarrett. We have a beautiful chart up. Can everyone see it . I hope so. Anyway, this is the chart of unemployment in the 1930s. As you can see, it was double digit just about all the time. The source for this, by the way, is rich out of work, a book i recommend but its still government data. So you have double the unemployment going up to 25 plus. Here it says 27. 9. And then coming back later in the decade. What jarrett is getting at is this error of thinking wages need to be high no matter what for recovery. It was an error we repeated over and over again in the 1930s. It wasnt just Herbert Hoover. When president roosevelt came along, he created a law with the minimum wage or that fostered minimum wages everywhere and he also, for example, signed the wagner act which create the 1919 union. A post war labor law, which is a little bit neutered pussycat compared to the tiger that was the wagner act, the labor law signed in 1935. Beginning to be felt for 1937. All those things in a few other measures drove wages up and therefore unemployment was higher than it might have been otherwise. You heard the phrase from the Great Depression, nice work if you can get it. Thats exactly what the 1930s were. Those were paid felt like they had pretty good money but a lot of people were not paid. You think of this story involving people. And my family, i had a member of the family went to work every morning and never told anyone that there was no work. He just pretended to say he would be at work all day and then came home with its lunch box empty for years because he didnt want to share the indignity of having lost his job with his wife. Theres more to that. It gives you an idea. Anyway, these injuring unemployment, thats what made the Great Depression great. I will add one last thing about this wage perversity, the wages being higher than they auto be in the down term. They were yet higher than that because we had a deflation. The big labor leader say john a lewis, risks a high wage out of the struggling employer and he winds even more than he knows because by the time these workers get the pay that he arranged under his tough deal with the company, the money is worth more so that was a factor as well. One thing, i mean, obviously you have a deeper understanding of american economics. There has been a series of used to call them financial panics. The panic of 1819, you have the panic of 1837, but there was never anything quite like this, correct . There was never anything that was so disdained in american economics since before . It sounds like this was a unique moment in the entire history of the United States. Is that correct . That is correct, the other day and the other data lied that you would like to follow is the Dow Jones Industrial average. So the dow is really nice data sect because it goes all the way back to the preceding century so you can fool around with it. That dow high in 29, the crash of 29, was three 81. Most of us today look at the market and say that it might get down to 20,000 or 23,000 or will be back when i finish college or when i get my masters, in four years, or when i have my third child, there is a general expectation while the market might crash, it is going to come back. Well were still more or less close to who we were when it crashed. The dow in that instance did not come back, it didnt come back the entire in the forties, it that was a little bit messed up because of the war. It didnt come back. The Dow Jones Industrial average did not reach its 29 peak until the 19 fifties. That is a way of saying, wait a quarter century for the dow to get back to where was when your 401 k would your 4 01 k looked good. I. Dont think most most americans expect to wait a quarter century for the stock market come back. That is why the depression was grave. In his book, he described the myths of the Great Depression, one of the things that is very wrong about admiring the do deal is that the new deal was anti business. Business curled up and waited. It went into hibernation. The new deal was so unpredictable we, and affected many businesses. The Great Depression, that is another vector, of why it was so severe. That is a cost as to the government being the elephant in the room for years. Especially for little businesses. You see that today who benefit, a big online vendor or walmart, walmart cells flowers on mothers day, what was that about . That was in the thirties the same thing, in the 1930s the government wrote a huge pranced for handling the depression. And it was convenient for it to cut deals, with Big Companies. The Big Companies of course route rules with governments that shut up the little guys. It became a single deal with Big Companies deciding what happens in the new deal. A typical what we call capitalism, i would like to remind the audience that we are getting some very good questions, to please put your questions in the chat, and we will try to address them at the end of the show. One thing i would like to talk about, is the experiences of people in the Great Depression that we talked about before is, a lot of the bank failures. You have the stories of random banks, can you talk a little bit about about how that works and what exactly happened, and how all these banks went belly up. Can we talk about that . I teach this, the banks. We have what we call the killer slide everyones assumes what happened in the 1930s is that americans lost their money. That is the bank closed and they all lost their money and therefore we created deposit insurance. But if you actually look at the data points, indeed a great number of banks failed, boast 40 of banks failed, but only 3 or 2 lost their money. That is because the banks that filled with a little ones. This idea of this favorite cartoon, that was not the average man. Most people did not lose much rule areas lost a lot because thats we were all the little banks were just like in its a wonderful life did not have much to turn to, win they werent really part of the Federal Reserve network. That was the structural problem we had with banks, which has since been altered that we have interstate banking. At the time, it was very compelling very little banks based on one little deposit, of people in the same business. So nothing diversity was in question with that bank. One thing id like to talk about, you press this issue, that is very important, youve written about, though Many Americans dont know much about it the recession of 1920 and 1921 if you ask most americans if they know anything about this they would not know, but a very severe recession that followed were where the spanish flu as well, in the 19 eighties which killed about 600,000 americans, Million Worldwide or maybe more, that just after world war one, there was a recession, but how we came out of that recession was very different from the 1930s including the policies of the president ial administration they were very different, could you explain what that recession was at the ethos and how they were treated. Each of these decades has a lesson, you are right, the decade that is most relevant to us is not the thirties but the twenties. We had some trouble, we came out of road world world won the, government had too much debt, workers were unhappy and striking and we had the spanish influenza, also a time of high taxes should stimulate . Give workers money so that they could buy a car . Or should get out of the way and let business take the lead . With the government response, and the fed response were that were opposite of what we would do today. The fed titan, the, market was tightening for my money that is not what you are supposed to do according to economic teachings if you are studying now, or you are a banker now. Youre supposed to be counter cyclical. Counter the wind as in a sailboat. The other thing done that the government itself did, it didnt spend but it actually cut back, so there was a negative stimulus so to speak, the government come back spending them. Oh my, how could you withdraw money . How could you fare fail to still this downturn was severe, it was called a depression. There was unemployment in the early twenties of or for 15 in some places we just had a hard time. But then the government also sent a signal that we are going to get out of the way of business, this was the harden coolidge campaign of 1920. When i was a student and i heard that they called for normalcy, i thought such a stupid word. But what he meant was common sense situation where the parameters are the usual and we allow business to operate. We dont text too heavily, that is what hurtings normalcy was win they came in in 1921 committed to reducing taxes. They said the only direction taxes can go is downward, notwithstanding a heavy debt. Taxes and businesses we were suddenly going to be going down and they did. As you know coolidge, here is his picture, he became president when hurting passed away. And he continued this policy. The result was a very positive economy, a very strong economy. The Roaring Twenties did roar. They were not just a great gasp east champagne glass, we had a wonderful period people got jobs, productivity zoomed ahead, people had to work less, when it gifts of the 1920s is what we call saturday, because saturday used to be one of the six workdays. So they became this free day american scott indoor plumbing in that decade. It was a wonderful decade in terms of progress for the country, we can distinguish that in from 19 thirties, pulsing the new deal, or the government policy in england in the 20s in the uk. The uk took the progressive route and they had terrible and unemployment the, uk had double digit unemployment for two decades, not one. Part of that was monetary and part of that was progressive roth. I really find this remarkable that this period of the 1920s, its so much like modern life that we take for granted now but they cant started to come to being. The idea of having a Family Vacation and take some time off, that was something that was only rich people could do that in the 1920s you had middle class families who are able to do that, this is following the most terrible wars in our history, this is following a pandemic, all the seemingly pricey, you have this type of prosperity that came in its place, its great that you highlighted coolidge and hearting as i understood just like you that when you learn about these things in college, you learn about them as this two nothing president s. They are planted unremarkable compared to the genius of Franklin Roosevelt and the new dealers. I think a lot of your histories show that they had a different ethos that led to a positive outcome that a lot of our history books, certainly in the ethos at promote are very different than the rhetoric. Different in the perspectives of the people of that time. One thing i would like to address, the 1930s were terrible economically, we had world war ii, and a quarter of a century a very little economic growth. What eventually pulled the United States out of that Great Depression . What pulled this country out . Was it world war ii . We hear that a lot, that it brought us out of the depression. Can you talk about that . I want to give up a plug for coolidge, thanks for plugging him. He was a great president , he believed in chief business, he believed in Economic Activity as piloted for trouble. He was cautious, he was believer in the states. He was a strong federalist. People will take a look at him and get to know him, i am the chairman of the coolidge foundation. We even have a project at the foundation right now by which you could help at his papers. Its kind of citizen library, and comment on his papers and why you should care is because a lot of speeches addressed issues that have to do with the covid speeches now. Why saving is important in a downturn. What about family . All of those things . The second question you had, did world war ii and the Great Depression, thats what we hear from her mothers. In fact, democrats or progressives are often apologizing, only the war ended the depression. For instance Franklin Roosevelt. There embarrassed about that. The red question is not how did the war, but there is make a spending, but why did that depression last all the way to that war. Today we did something dramatic, we turned off the economy like a faucet. We now roosevelt turned on Something Like a faucet, federal spending went 10 20 30 gdp in a matter of minutes. That felt healthy, just getting like a transfusion feels good to a sick person. That test of true Economic Health is what you do at peace time. And what result you get. We what followed world war ii and the reason that we didnt continue the depression, is there is a general consensus that that new deal had gone too far. That was a hard earned kissed census, example i used earlier, which is very important, some of you are in union states, the tafthartley act, the union law created the possibility of the right to work it created that opt out because its saw that the wagner act, which made every was to oppressive them. There is various lightnings, unburden inks, but someone spurred things after world war ii, and also that consensus, a really heavy social democratic new deal is not right for the United States. I would argue that is why we didnt repeat the depression. I think that, the ethos of the new deal for this the question i would like to ask you, Ronald Reagan used to say the scariest word in the english language is we are here to help. Do you think that is still true today . You i think it should be. We always say that natural disasters or an event like a pandemic are the worst test for free marketeers. What is a Health Disaster . Suspend all freedom for, free market ideas but what you will see in a recent crisis is that the government will see something but doesnt know everything. The government did know about masks. The government didnt know that ventilators were right for some of the covid patients, government had its learning curve to, that is respect for the private sector. The sixties basically, the government was very ambitious for other reasons, and the question is government that is going to make america adjust acidity, or the private sector. And what happened in the 19 sixties and seventies and eighties, is the private sector delivered less than expected. That is where we are now. It is time for the private sector to be allowed to lead them. Absolutely. Well turn one thing before i turn it over to questions, what can the private sector do right now . We would like to find some solutions. Some do you think of something that the private well, be open when you can. I wont say when it is safe because none of us ever are completely safe but what it is less risky. The private sector, i couldnt give advice to the private sector. But they are furiously innovating and finding solutions to a lot of these problems so what the citizens can do is respect the power of the private sector to make decisions. Across the nation we are trying to decide whether summer camp should be closed or open. All parents who send their parents to summer camp, but the truth is nobody knows. Some wisdom may actually come from the camp itself. It might not necessarily come from the county Health Office or the federal government. Respect local isnt. Respect what communities are doing. Let communities decide for themselves web and where to open what. I absolutely. The first question id like to go with them, who asked issues with china and covid19 leave to more protectionism . Causing recovery to take longer . Thank you for that, in the 1930s, we slapped on a new protectionist law, and that made matters worse. So i believe that the u. S. Will have to protectionism in the United States, because fear breeds that, and that was lower economy. Another one here, we are getting them from multiple people, in the forgotten highlighted stories, designed by the government to help, it shows they really are the harming the people they are supposed to help, can you give us an example. Some of the programs today that they have, to anywhere you . It is that microregulation today that is like the 1930s, and got in the way. You can sense the business a check but you might not sense the right amount and you might encumber that business by giving it a lot of paperwork to handle the check to decide when to pay back and what is the forgivable loan. It is an oxymoron. Its a loan . Or its a gift . That was very 1930s and then the intense regulation regarding health. I want to mention one example that we wrote about, because it is so controversial, it was even attacked by harvard law professor recently. It was attacked well past ten years then it was written. There was a Little Chicken company in brooklyn, that wanted chicken if it was a jewish kosher chicken company, the federal government and its Industry Leaders and its regulators came to the business it said you are slaughtering the chicken the wrong way. You cant let people pick their chicken. The person just has to take the chicken that comes in his hand, if you let the people pick their chicken that will slow recovery. It is a logical. Now when we, the idea that choice grows slows growth. It creates economic growth. Look at starbucks. That was the theory, and the poor little business got in trouble and it was called a el a poultry. And they almost went to jail them. They appealed, and it violated all the rules of the chicken code, the poultry code for the area, and it went to the Supreme Court. The Supreme Court found for the chickens, they said this big regulatory law is unconstitutional. It is the wrong kind of delegation, it violates interstate con mers. Some of its is where chickens only live in one place which is brooklyn. It is a wonderful case about a mehl meaning looks a man a well meaning le is supposedly looking out for the health of the customer that is actually doing the opposite. People actually wanting to pick their chicken is because there is a lot of disease, chickens werent bathed in antibiotics, so people wanted a healthy chicken for their families or the restaurant. Going into this in such detail because it reminds us today when all of a sudden very navy regulations, have the opposite effect of what theyre meant to. Im talking about covid regulations. That was an example of trouble. It is amazing looking back on the sheer power of the nra, not to be confused with the rifle association, but look going through old movies you see the blue eagle stamp and how much control they had over the economy they had. It is almost hard to relate how big the staffing of this agency was, how many controls it had, even over small decisions in peoples lives. It is truly staggering, and it was validated by the Supreme Court. It is an interesting legacy of that era. Im going to take one more question before we wrap up, this is from alan, today the fear of the coronavirus is a brutal problem, even if businesses open up people wont come, what does fear play in the economy . That is a great question. I do not know, during the depression there wasnt that great spanish influenza. But there was another kind of fear that is related. Fear is when people suspend the belief. Im gonna believe anything because i am panicked. I will say the dust bowl was a good example or floods. Because it was a decade of job, one trial after another, the dust bowl cover the entire plains with dirt, you couldnt go outside, you couldnt grow, it seemed like it was sent from god, it wasnt sent from god it was a agriculture policy. It is the way we dug up the planes. The answer to fear is not hope. The answer to fear is logic. We are logical beings. We need to respect our own logic and proceed according lee. That is a good question. Theres a lot of fear but have a different nature. Fear gives politicians power. Think of wars, politician says the enemy is going to attack or has. People line up behind the leader. The politicians says, covid is a pandemic. It is and it is true. People line up behind authority, but you have to ask you yourself what is the cost of freedom in the future. Absolutely. Is there anything else she would like to add in the discussion before we wrap up . Message that you would like to give people especially your knowledge and those of us that are worried about potential depressions. My message is education. Educate yourself and others. You have a wonderful book where he says a sales the misstep people get in school. But the teachers get away with in terms of textbook is embarrassing. If we have had this conversation ten years ago we wouldve said that, but now the classrooms are much worse and they were ten years ago in terms of content. Educate yourself. The truth is out there. These data points are not my opinion, they are the real data points from the period. Go find the data and see what you make of the data. Then you will have a better understanding of the 20th century economy. I love that comment about self education. Your book helped me very much when i was in college and helped me understand the new deal era and kelvin coolidge, who now i have enormous respect for, i didnt understand what a great president in man he was. Hopefully that self education, to understand our history and what is happened in the past so that we can make better decisions about our future which is really what this is about right now. We are dealing with a potential economic crisis after a pandemic, the but the decisions we bake, will determine how our future goes. If this is going to be something we are dealing with in the next generation also, as a result of this, or something that we recover quickly. Were gonna have a depression in 19 thursdays or were gonna have another royal rule twenties. His very pouring to talk and understand this. Thank you so much for being here. This was a great discussion. I am going to turn things back to andy so he could wrap up the show, thank you so much, thank you to the audience for being here. The wonderful thank you jarrett and amy, for hosting this conversation. There are important lessons for american history, where wellmeaning laws and regulations have the opposite effect. If you want to learn from her history, as society opens up and economics opens up. Thank you again for your comments and your continued scholarship, books and writings can be found at her website. You can find more about the kelvin clutch president ial and jareds writings or a daily signal. Com. Thank you for tuning in, theres a short survey and please give us feedback to see what you liked and what you would like to see more of, you can also visit Resource Bank dot work for more of these sessions. In closing i would like to comment that its been great cross her National Coronavirus commission has published hundred 79 regulations both that the federal stake and local level to secure lives and livelihoods. Across that they have thousands of tv, radio, podcasts and media mentions in all this research could be found at heritage dot orgs slash coronavirus. Check that out. Check out her books and wonderful scholarship and jarretts writings. Thank you for joining us today