Amity Shlaes joins Brian Anderson to discuss a classical liberal perspective on the coronavirus shutdown, the similar responses of U.S. mayors to violent disorder in both the late 1960s and in 2020, and the shift in what’s considered acceptable economic thought in journalism. Read Shlaes' latest book, Great Society: A New History, to learn more.
Brian Anderson: Welcome back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal. Joining me on today's show is a longtime friend of the magazine and the podcast, Amity Shlaes. Amity is the chair of the Calvin Coolidge Presidential Foundation, and a scholar at the King's College in New York City. She's also the chair of the Manhattan Institute's Hayek Book Prize, a prestigious award given to authors whose book reflects Friedrich Hayek's vision of economic and individual liberty. Amity is the author of a number of best-selling books, including The Forgotten Man, which gives a history of the 1930s and the Great Depression. Her latest book, which we talked about on the podcast last year is called A Great Society: A New History. The book focuses on the 60s, and the transformation of the federal government under a series of presidents, Kennedy, Johnson, and Nixon. Amity, thanks very much for joining us again.
Amity Shlaes: I'm so glad to be with you Brian, and to be with the Manhattan Institute, and City Journal, and this podcast. It's interesting, when I heard the name Hayek, I thought about the current situation, and particularly about comparing the COVID pandemic and the Great Depression. Why? Because COVID is an emergency, and the Great Depression was an emergency. And what Hayek said is that governments use emergencies, they exploit emergencies as occasions for power grabs. In Hayek's view, which is darker, the event is just a pretext. And of course, we have all thought of the famous line by Rahm Emanuel, a panic, an emergency, a crisis, is a terrible thing to waste. Politicians want to take great measures, not small measures. And when there is an emergency, whether real or in quotation marks, politicians act and believe they have more license.
Brian Anderson: Well, that was going to be the first kind of broad question I asked. During the pandemic, the countries experienced a very serious economic downturn. Really, the most significant downturn since the Great Depression. And the latter of course, is a topic you're very familiar with, because of your important book. But during this unfortunate year, unemployment has skyrocketed, there was images on the television of cars lined up at food banks across the country. Congress wound up taking some pretty dramatic actions to relieve the burdens imposed by the lockdowns, which were intended to curb the spread of the virus. So, I'm curious just to get your broader take, you started discussing that at the opening of the podcast, but your broader take on what's transpired over the last six, seven months. And what do you think are some of the lessons that we can take from the Great Depression period, and what's going on today?
Amity Shlaes: Well, thank you. You think about a government that wants to grow, wants to foster fear, because then people suspend disbelief, and give in to whatever the government wants. It's as simple as that. And you don't have to be paranoid to see that dynamic in action. Is the current downturn like the Great Depression, or must it be? Because the current downturn need not be like the Great Depression. Why? Because this was a conscious decision by the government to turn off the economy as one turns off a faucet. We have 20% unemployment because we turned off the employment, just like a faucet. It didn't happen to us because of market forces or international forces as at the beginning of the Great Depression. The unemployment was a mystery in the early 30s. Why did it come? What was monetary theory? Monetary was new then. We just recently had got a federal reserve. What was happening overseas that would affect this? Why was the demand missing? Was it the fault of capitalism?
Nothing like that happened this spring. Capitalism was doing fine. The COVID threat came, the health policy analysts in the government took over, the government's brain turned from an economic brain to a health brain for logical reasons. And the public health brain said, "Let us turn off the economy. We must do, because otherwise too many people will die." Very different. So a 20% unemployment rate, as horrifying as it is to see on a chart does not necessarily a Great Depression make. What makes a Great Depression is poor policy year in, year out. Still, there it was, a scare with television hosts emphasizing damage to demand, because most television hosts think in terms of demand, most reporters do, oh, people have no money. They won't shop. The economy will die. That's essentially the argument you hear on television.
That's not necessarily so, and our economy could come back, and indeed sort of has rebuked the politicians by coming back at least through the markets pretty strongly. So this is not like the depression, but for whatever reason, we've come to feel that it is a mysterious emergency like a Great Depression, because we have also a kind of plague upon us, the COVID-19 that we did not expect, people are thrown off, concerned, a bit weird, frankly, and therefore more susceptible to arguments for collective action.
Brian Anderson: I'd like to shift terrain a bit and talk about Great Society. In particular, one chapter in that book, which was called Revolt of the Mayor. Now, in your book, you described politicians of that era like Richard Daley in Chicago, Sam Yardi, in LA, John Lindsay in New York, Frank Rizzo in Philadelphia, all of them known today as kind of pivotal figures for better or worse. And then you can look at today's mayors who are in the news a lot. You've got Ted Wheeler in Portland, who has seen massive protests for over a hundred nights in a row in his city. Although the recent wildfires seemingly have slowed down the protests.
You have mayor Jenny Durkan in Seattle, who allowed activists to establish the now infamous autonomous zone within the city, which resulted in a lot of chaos and a couple of deaths. You have Bill de Blasio, a mayor we've criticized quite a bit on this podcast who isn't the most popular of New York mayors. I'm just curious how you compare the mayors of that 60s period that you described in Great Society with today's crop, and whether there's any lessons to learn from the earlier experience for how we think about today's cities.
Amity Shlaes: Well, yes, when I wrote Great Society, I was writing about the past, but we're seeing some of the past repeat itself in 2020. The first similarity was that there were newer media, at that time television, so people could see what other people had and they didn't have. And that's important too. The second similarity was the mayors in my book, Sam Yardi, and even Richard J. Daley fancied themselves reformers, Richard J. Daley of Chicago was a loyal Democrat, but he was also a loyal democratic reformer. And they thought, that this was all before riots mostly in the 60s that, well, the police were problematic. That was similar to now, there were police events where the police were awful, were bigoted were violent or inappropriate and so on. Well, okay. And they thought we have poverty. So that's similar to now. But some people really have not what they need.
And these mayors were mulling it over all across the nation. And they thought let's elect maybe a Democrat, because Democrats are more humane and progressive. And that was the thought train as far as it went, Lyndon Baines Johnson was elected in part because what he would do in the cities, he committed with his Great Society to support cities. The cities were one of his three Cs, classroom, countryside, and cities. Okay, so those mayors expected that they would get money to train their policemen, to employ under-employed minority males and young ladies in the 60s. So in the summer, people would have things to do and learn trades and have a hope of a better life. That was the mayor's expectation. And what amused me was particularly Daley, who was key to electing both Johnson, and before him Kennedy, put all his poverty ideas in a box, and mailed it to Johnson's new poverty office, postally, and said, "Here's my poverty plan, and here's where you write the check to." But the Johnson administration, and particularly the poverty czar, Sargent Shriver didn't want to send money to the mayors.
The Johnson Administration's staff considered the mayor's discredited, part of the problem, well, Richard J. Daley, he's a big hit, we want to send our money to more interesting newer institutions, the equivalent of Black Lives Matter, for example, in Chicago was the Woodlawn Organization, or even the Blackstone Rangers, which was a gang on the South side of Chicago, which had some interesting aspects. You think of Jesse Jackson coming out of that culture, and maybe we'll look closer than Richard Daley to what was happening to black males on the South side. So the mayors to their fury were bypassed and saw the money going to these more radical groups who in turn fought and somebody or other in one of the radical new groups favored by the administration and its budget said well, this isn't radical enough, and they would splinter off and have Black Lives Matter ultra. And there was a kind of jurisdictional chaos and multiple groups competing for new money to basically subordinate the police and infranchise the community through federally funded community action.
Very similar to the kind of impulse we're seeing now, and now at least there'll be money flowing to cities, it won't directly to mayors, even democratic mayors, but will go to newer institutions favored in the moment, who will then squabble among themselves. And the consequence was riots. What's forgotten is all this was done in the name of preventing riots, but the great riots that we remember the real tragedies for the cities you think of Watts, particularly in Los Angeles or Detroit, where the downtown was destroyed, came after community action to train police, to teach police, to get along with youth, to empower youth, to create jobs, to have discussions, to find tenable apartments for people, et cetera after.
So the lesson of the 60s is when you give cities something to fight over, sometimes there was more arrests than there was before. That was the tragic absurdity of the 60s. And if you go back and look at the articles about Chicago, particularly where I grew up on the South side, people were really appalled because in the end funds did flow to a true gang, the Blackstone Rangers in large increments, sort of in the way Brian, we spend money overseas now to calm terrorists and drug companies, such as Columbia, money was sent to the FARC to turn them into a kind of vigilante police who would keep the peace, it was sort of like that. That was not reassuring to residents, black or white to have a gang ruling with federal support in their neighborhood.
And that gave rise to the first great exodus from the city, the famous flight that we all actually regret. And that was only beginning to be repaired in recent decades with people moving back into the city from the middle class. So it was a terrible dynamic and the people who suffered most in one way or another, the agony of the mayors who were democratic mirrors, because they did believe in reform. The revolution in that period did eat its own. And it was so appalling that such policies were not endorsed by mayors of either party for decades to come.
Brian Anderson: Well, we risk repeating that dynamic again today. It's very troubling. Your principal area of expertise I think you'd agree is in American economic history. You've written a lot about it. You've been an eloquent advocate for classical liberal economics, which you encourage at the Coolidge Foundation, and also with the Institute's High Price, which we discussed earlier. I think it's fair to say, and we've written a bit about this in City Journal, that there's been a remarkable shift in what's considered the acceptable range of economic thinking certainly in the press today, but also in the Academy. I'm wondering how you're seeing that over the last few years, when it comes economic theory and writing in journalism, which ideas are getting attention, which aren't, and what's going on exactly there.
Amity Shlaes: Well, redistribution gets attention. Redistribution makes you feel better, if you're appalled. It makes a voter feel better. Oh, we will give some more of what they have to them from group A to group B. The question is empirically, does it work, and setting aside the moral disadvantages of that, redistribution usually doesn't work. What happens is the people who are being forced to give more move. It's as simple as that. Men change countries, women change countries, they change States, they change cities, they move, they don't stand up and say, "I'm moving over tax." They say something like, "I want to get the children out of the COVID environment," or 2020. But they move when they're overtaxed, or overly challenged. Redistribution is taxation. So that's the first part of it. And an acknowledgement of that data is just honesty.
So what is interesting to me is the extent to which current economics is denying reality. That's shocking. What's another way to put it? Another way to put it that what would happen in the United States if we cut the tax on stock sales, the capital gains tax down to 5%, it might be 20 or more now. What if we cut it to 5%? Well, we would never do that because that's politically inappropriate because only rich people sell and buy stocks in the cliche, only they do. What would happen to the economy? I would love to have an economist answer that question because very few, not even a Marxist-leaning economist would deny that if the United States cut the capital gains tax to 5% and somehow promised to keep that cut for five years, that all our unemployment that's supposed to be so evoke the depression would go away. It would go away. No question.
If we had a 5%, everyone would have a job. And we might even have better jobs, because companies would need people, and so would invest more training them. It wouldn't just be nickeled and dimed jobs, but nobody is led to say, let us cut the capital gains tax to 5%. Nobody would dare say it, because it sounds like, just sounds like it's helping the rich. So this quite a distressing denial, and a newer denial. And here, I would say, Brian, it's no accident that Alberto Alsina won the high prizes here for a book about austerity, because this winner of the High Price who unfortunately has passed away, wrote, he's Italian originally. And he speaks with experience from the world. So he's not subject to the US amnesia, and what he said was the US is going to come to a period when we need to impose austerity, because we will need to pay for all the things we're currently buying.
And we will have to cut our government back. And then he reviewed different forms of government austerity and concluded that even tax cuts might be a better kind of austerity for growth, because they would permit growth, even as the government recouped and saved. It would be harder for an American that is a pure American who would also spend time in America to even say that. But foreigners can say that because they have evidence from many other foreign countries. So I don't think it was an accident that we got an Italian lesson this year vis-a-vis Hayak and the prize. I think the only people who dare speak truth to power are non-US people currently, which is an amazing statement.
Brian Anderson: Thanks very much Amity. Don't forget to check out Amity's work at the Coolidge Foundation. You can find that at www.coolidgefoundation.org, and the book that we've mentioned a few times on the podcast, Great Society: A New History is readily available on Amazon or wherever books are sold. It's really a terrific book, published by Harper. You can follow Amity Shlaes on Twitter, it's @AmityShlaes, and make sure, please, that you follow City Journal on Twitter as well. That's @CityJournal, and we're on Instagram, @CityJournal_MI. And as always, if you like what you've heard on the podcast, please give us a ratings on iTunes. So thanks again for listening, and thanks very much Amity for joining us.
Photo by master1305/iStock