Monday, February 18, 2008

What I'm Reading

I just finished reading Amity Shlaes book, The Forgotten Man. And I was very impressed. It is a revisionist view of the Great Depression, with a focus on the administration of President Franklin Roosevelt, but that largely because his administration spanned most of the period.

Shlaes offers some new insights into the backgrounds of many of the brain-trusters, as well as providing motives and goals for many of the experiments, failed and successful, of FDR's time in office. Of particular interest to me was how Hoover suggested cooperation with the newly elected but not yet inaugurated FDR to get some relief efforts started. Roosevelt, it appears, did not relish the idea of sharing any of the credit, and so put off these activities until such time as the recognition would not be shared.

Also of interest was how Shlaes followed the career of an executive in the utilities industry, Wendell Willkie, who wanted to be a true believer in President Roosevelt's efforts, but slowly found disillusionment, and later enough outright opposition to become a political opponent in the 1940 election.

For history teachers, there is value in learning an alternative view of the period. Too much of what we teach of period has not changed. The approaches have varied, but the content remains driven by a mindset shaped by The Grapes of Wrath. (I deliberately chose the video rather than the book because I suspect more people - students and adults - are familiar with the film and not the book.) That view, while valuable, is one view. There are other views. Shlaes offers some of them.

For the economics teacher, this book provides insight to address concepts related to fiscal policy, monetary policy, the role of government, and the development of economic institutions. It is likely that this period brought about more change in these areas than any other in U.S. history before or since, with the exception of the founding of the nation. And understanding what was accomplished and what was meant to be accomplished provides us with information on the possibilities and limitations of those concepts.

And as always, there are lessons in history to apply to the present. One of the points Shlaes makes late in the book has to do with the impediment to private investment that resulted from higher taxes in last years of the 1930s. Shlaes quotes William Gladstone, "credit is suspicion asleep."

When I read that I did not see a direct link between taxation and investment. Rather, I thought how it could be applied to the recent sub-prime mortgage issue. one could certainly argue that credit was more available because parties that normally would have been or should have been more suspicious about such things as credit history, income streams, risk, and the evaluation of all of these factors. Suspicion was, indeed, asleep.

To conclude, I recommend this book as good read for teachers of economics and history, as well as those who would just like to learn more about the period.

I look forward to your comments.

1 comment:

Amity Shlaes said...

Just a note to thank Tim Schilling for the mention.
TFM tries to replicate the reality of the chaotic thirties, so I didn't always spell out the economy theory.
People like Wendell Willkie told the story for me. He raged at the TVA as he watched it erase his company from history.

When it comes to underlying books that explain the policy I recommend Jim Powell's "FDR's Folly" for starters and also Randall Parker's books, which show how economists' view of this period have changed over the years. Marty Feldstein at NBER and his colleague Claudia Goldin had a wonderful conference a while back. The papers were published in a book, "The Defining Moment." This is not the book by Jon Alter of the same title, which is also good but for other reasons!
The people who have done the most to capture the cost of uncertainty are Robert Higgs, Burt Folsom, and also, in the old days, the late great Benjamin Anderson. For some reason foreigners read Anderson but Americans don't, at least not enough.
TFM is coming out in paperback this spring with some additions, including a "cast of characters" at the beginning, New Deal acronyms and so on, all of which are designed for students.
Amity Shlaes