February 27, 2013

"Gatsby, Galbraith and the Myth of Coolidge’s Crash."

By Amity Shlaes (who has a new book on Coolidge):
The corollary to the “The Great Gatsby” in the literature of economics is another old “great,” “The Great Crash 1929,” by the economist John Kenneth Galbraith. Galbraith’s narrative, like Fitzgerald’s, is subtle, conjuring complex characters. Yet the effect of both books is the same: to display the 1920s as a decade full of false numbers and false people, reckless pilots who caused an economic wreck so catastrophic it necessitated 10 years of Depression.

46 comments:

chickelit said...

So, the 1920's were a decade of "something for nothing," not unlike the dot com and housing bubble eras, and the current economic bubble called Washington, DC. Have I got that right?

EDH said...

Let Coolidge heads prevail.

bbkingfish said...

For a great read on the 20s written more or less contemporaneously, I would suggest "Only Yesterday" by Frederick Lewis Allen.

traditionalguy said...

Excess capacity to produce products without enough customers for them was not the problem in the 1920s. The problem was European Empires ran short of manpower needed to extend their grasp over Asia/China and keep Germany repressed at the same time.

Enter Japan and insane Nazi Germany and they easily that ran over everyone until the USA got back into the game by mid 1943.

WW II's end in 1945 left the USA with the only strong manufacturing base on the planet.

Today a capitalist China has replaced the USA as the world's number one manufacturer and merchant. The USA is shrinking faster and faster and Obama is our smiling undertaker set to bury us when the Reserve Currency US Dollar is replaced.

Obama's only worry is that he must somehow delay development of the oil, gas, and coal in the US to sped up our demise.

mccullough said...

It's good to see FDR's reputation take a hit and for people to know that Hoover was a major interventionist in the economy.

The economic policies in the 1930s were terrible and exacerbated the problems. FDR did a great job during WWII, which is why he is a great president.

damikesc said...

It's good to see FDR's reputation take a hit and for people to know that Hoover was a major interventionist in the economy.

People seem to forget that FDR ran to the RIGHT of Hoover in terms of spending. He complained all during 1932 that Hoover spent way too much money.

America would've been helped immensely if Coolidge decided to run for re-election in 1928.

William said...

One hundred years later on, liberals are finally willing to acknowledge that Woodrow Wilson was a white supremacist who screwed a lot of things up. How long before Roosevelt's rep takes a dive and that of Coolidge takes a corresponding rise? Don't hold your breath. One hundred years is a relatively brief time for the left to see the light.

AprilApple said...

from th link..
"Amity Shlaes, author of The Forgotten Man, delivers a brilliant and provocative reexamination of America’s thirtieth president, Calvin Coolidge, and the decade of unparalleled growth that the nation enjoyed under his leadership. In this riveting biography, Shlaes traces Coolidge’s improbable rise from a tiny town in New England to a youth so unpopular he was shut out of college fraternities at Amherst College up through Massachusetts politics. After a divisive period of government excess and corruption, Coolidge restored national trust in Washington and achieved what few other peacetime presidents have: He left office with a federal budget smaller than the one he inherited. A man of calm discipline, he lived by example, renting half of a two-family house for his entire political career rather than compromise his political work by taking on debt. Renowned as a throwback, Coolidge was in fact strikingly modern—an advocate of women’s suffrage and a radio pioneer. At once a revision of man and economics, Coolidge gestures to the country we once were and reminds us of qualities we had forgotten and can use today.

That's not revisionist history enough for the progressives.

chickelit said...

Obama's only worry is that he must somehow delay development of the oil, gas, and coal in the US to sped up our demise.

But beware his tacit support of those industries so long as it's coupled with punitive wealth transfer via carbon taxes.

William said...

So far as Roosevelt and WWII goes, I don't know that it's a proven fact that he was a great wartime leader. It's more like that's how people perceive their leaders during a great war.....I've seen photos of him during that last conference with Stalin. The man looked more dead than alive. A humbler man would have acknowledged his illness in 1944 and passed the baton. We lucked out with Truman. It could just as well have been Wallace negotiating the fate of the post war world.

ricpic said...

The twenties was good times! A chicken in every pot. Throw in some wiine and you had coq au vin.

dreams said...

I've already reserved the book Coolidge at my local library though I'm #13 in line. I read her book the Forgotten Man a few years ago, I'm a big fan of Amity Shlaes.

dreams said...

Amity Shlaes considers Coolidge as a kind of prequel to the Forgotten Man.

Colonel Angus said...

FDR did a great job during WWII, which is why he is a great president.

Yeah. The Yalta Conference was his finest hour.

ricpic said...

FDR had such an outsized view of his own prowess that he was confident he could handle "Uncle Joe." At Yalta Uncle Joe cleaned his admittedly barely ticking clock. Think of the immense suffering for eastern and central Europe that would have been avoided if FDR had given Patton (thru his messengerboy Ike) the go-ahead to race to Berlin or even east of Berlin instead of doing the gentlemanly thing and letting the Soviets swallow half of Europe. Compared to Churchill, who of course is Barry's premiere hate object, Roosevelt was a provincial fool.

Colonel Angus said...

He left office with a federal budget smaller than the one he inherited.

This is obviously a bald faced lie. How was this possible without causing economic chaos?

rhhardin said...

conjuring:

If I heard right, Rush just said "prestige" for "prestidigitate."

Maybe 3 minutes from the end of today's show.

It would be a question of using the tongue instead of the fingers, with respect to conjuring.

dreams said...

"So far as Roosevelt and WWII goes, I don't know that it's a proven fact that he was a great wartime leader. It's more like that's how people perceive their leaders during a great war....."

Here is a book that takes a different view of Roosevelt's war years performance by a very good author whose books are always very readable. I don't really know enough to know if he is right but given what I've seen of our current and recent leaders I think he could be right.

"The New Dealer's War: Franklin D. Roosevelt and the War Within World War II

by Thomas Fleming

About this title: For many Americans, Franklin Delano Roosevelt is a beloved, heroic, almost mythic figure, if not for the "big government" that was sponsored under his New Deal, then certainly for his leadership through World War II. Controversial and revisionist to the core, "The New Dealer's War" paints a very different portrait of his leadership. 50 photos."

Hagar said...

Should note that those with any kind of a reputation (good, that is) in economic and financial subjects that were associated with the Obama White House in the beginning, are no longer heard or seen.

As for the Great Depression, mity Shlaes is a history writer, but Milton and Rose Friedman were influential economists, and you might want to read them on the subject.

Colonel Angus said...

FDR had such an outsized view of his own prowess that he was confident he could handle "Uncle Joe."

FDR certainly felt more of a kinship to Stalin than Winston and ignored Churchill's warnings about Stalin installing puppet governments in Eastern Europe.

Colonel Angus said...

Controversial and revisionist to the core, "The New Dealer's War" paints a very different portrait of his leadership.

Well when you look at the timeline, Japan attacked the United States and our main focus was defeating a country that didn't attack us.

Michael K said...

Coolidge was trashed by the leftist historians who came after. I read a lot about Coolidge after reading her " The Forgotten Man." Coolidge saw the crash coming and worried about the speculation. However, he believed that the NY Stock Exchange was not something he could influence. It was the responsibility of the NY governor, a guy named Franklin Roosevelt.

Maybe if Coolidge had been in office he would have avoided all the mistakes Hoover made. More importantly, the mistakes Roosevelt made would have been in the next term and the recession would probably have still been going on. European debt and the Smoot-Hawley tariff were still big factors.

The series on Coolidge is over at Chicago Boyz here as a series of posts.

Hagar said...

And J.K. Galbraith was a spit-turner in the Kennedy court.
Very full of himself and given to making catchy aphorisms, but just how much of a thinker, I don't know.

dreams said...

"Since Fall 2008, Shlaes has served as an Adjunct Associate Professor of Economics at New York University Stern School of Business, teaching a course titled "The Economics of the Great Depression."[10]"

Amity Shlaes has the credentials to write about economics.

dreams said...

Most people don't know John Kenneth Galbraith wasn't an economist.

Bart DePalma said...

I am starting Shlaes book, excellent so far.

It is long past time to start correcting the self serving progressive story of the 1920s and 1930s.

Bart DePalma said...

I am starting Shlaes book, excellent so far.

It is long past time to start correcting the self serving progressive story of the 1920s and 1930s.

rhhardin said...

I heard the Depression was caused by the French accumulating gold instead of revaluing the franc the way the gold standard required.

Also several other theories.

Check out econtalk.org

dreams said...

"As for the Great Depression, mity Shlaes is a history writer, but Milton and Rose Friedman were influential economists, and you might want to read them on the subject"

I'm pretty sure Milton Friedman would have had a favorable opinion of her book, The Forgotten Man, he might have still been alive and maybe reviewed her book for all I know but all three of them are or were conservatives.

traditionalguy said...

FDR was wrong in thinking he could trust Stalin's promise of elections in the German conquered but now Russian occupied Eastern Europe. Stalin had Yalta bugged and heard everything discussed before the meetings.

Leaving desperately defended Berlin to the Russian Army was a good move. It cost the Russians 50,000 casualties.

And Patton's Army was sent into SE Germany instead for a good reason: the nuclear material and Atom Bomb scientists and other scientists who developed wonder weapons of Rockets and Jet airplanes were sitting there with their files waiting on the Third Army's arrival.

dreams said...

Coolidge was one of Reagan's favorite presidents and he had his portrait prominently displayed in the white house.

edutcher said...

Galbraith helped give us the War On Poverty, too.

mccullough said...

It's good to see FDR's reputation take a hit and for people to know that Hoover was a major interventionist in the economy.

Ms Shlaes has been doing that for some time. Her last book fried the whole Keynesian myth of how Roosevelt saved the country. If Choom was half the intellect he claims to be and had read, "The Forgotten Man", the Crash of '08 would be a distant memory.

William said...

So far as Roosevelt and WWII goes, I don't know that it's a proven fact that he was a great wartime leader. It's more like that's how people perceive their leaders during a great war.

No, the media machine that deified him during the Depression kept right on going during the War.

George Marshall was the one who ran the war effort and did so brilliantly.

William Chadwick said...

You should see the 1940s movie version of "Gatsby," with Alan Ladd in the title role. Not only is it noteworthy in that it's the only movie version to open with a gunfight (Gatsby in a car chase, shooting it out with his pursuers, presumably rival bootleggers), but the framing device of the movie is to posit that the prosperity and the "excesses" (i.e., having a good time) of the prosperous brought about the Depression--sort of like "God punished them." It's an interesting combination of traditional American puritanism with Hollywood-Left party-line-ism.

William Chadwick said...

You should see the 1940s movie version of "Gatsby," with Alan Ladd in the title role. Not only is it noteworthy in that it's the only movie version to open with a gunfight (Gatsby in a car chase, shooting it out with his pursuers, presumably rival bootleggers), but the framing device of the movie is to posit that the prosperity and the "excesses" (i.e., having a good time) of the prosperous brought about the Depression--sort of like "God punished them." It's an interesting combination of traditional American puritanism with Hollywood-Left party-line-ism.

Calypso Facto said...

I'm about half way through the Sobell biography of Coolidge. Hopefully Shlaes' version continues to burnish Coolidge's image while also being a little more entertaining of a read.

Allan said...

Galbraith also was a strong proponent of wage and price controls.

That
sure worked out well for Nixon.

edutcher said...
This comment has been removed by the author.
edutcher said...

While we're on the subject of Choom and FDR, he's emulatinghim in a way that will make all the Lefties absolutely climax.

Hagar said...

I don't think Obama believes any of their theories. Not that he knows any of them, but just instinctively.

I think that for him, and those he listens to, it is more important to take down the rich white guys than to raise the poor.

And that while for themselves, they have seen what the Clintons and the Clintonistas did for themselves while in office, and they want in on the action.

Hagar said...

The leadership of the Democrat Party - in or out of office - are some of the richest and whitest people around, which I think Obama & Co. surely must be conscious of, but I wonder if these people really have been paying much attention to what Obama & Co. actually are doing.

William said...

I read The Forgotten Man. Any book on economics that I can finish is very well written. She pointed out that the AAA sent a party to Russia to study how the collective farms were run with an eye to applying those valuable techniques here. That's the kind of info that's not available in most histories of the New Deal. Generally the New Deal is described as a success because they instituted FDIC and Social Security. The fact that the New Deal never actually lifted us out of the Great Depression is considered a secondary detail. Give them another fifty years.....

Rusty said...

olonel Angus said...
Controversial and revisionist to the core, "The New Dealer's War" paints a very different portrait of his leadership.

Well when you look at the timeline, Japan attacked the United States and our main focus was defeating a country that didn't attack us.

It was shortly after the attack on Pearl Harbor that Germany declared war on the United States. That being said, it was shameful the way the Pacific theater got short changed on men and material.

amity shlaes said...

"So we beat on, boats against the current, borne back ceaselessly into the hands of Galbraith."

Craig Howard said...

The definitive story of the cause of the Great Depression is here. "America's Great Depression" by Murray Rothbard is provided free-of-charge by the Ludwig Von Mises Institute.

It's a fascinating read, very-well researched, and, unsurprisingly, the cause was the Federal Reserve and its inflationary monetary policies. The same ones which created the recessions of 1958, 1961, 1979, 1990, 2001, and 2008.

Hey, it's free. Read it and weep. And learn something about the dreaded Austrian School of economics to boot.

Astro said...

Most people don't know John Kenneth Galbraith wasn't an economist.

I guess that would include the people who gave him his job as a professor of economics at Harvard.

/His PhD was in 'agricultural economics' from UC Berkeley.

Astro said...

Craig Howard said... The definitive story of the cause of the Great Depression is here.

That only took about 80 microseconds to download! Thanks for the link.

I was a big fan of Rothbard back in the day. I still remember his tongue-in-cheek narration of a film of the demolition of the Cabrini-Green housing project.