WEBVTT NOTE Tools and Charts: Intellectuals and Financial Crises as Revealed through the “Lost” Plans to End the Great Depression 1 00:00:00.000 --> 00:00:04.640 My talk is going to be about the characteristics of intellectuals in a financial crisis and 2 00:00:04.640 --> 00:00:09.360 more specifically a much shorter title would have been Popular Economist of the Great Depression 3 00:00:09.360 --> 00:00:13.880 as Hayekian Intellectuals and I'll start with this. 4 00:00:13.880 --> 00:00:19.280 See Finnegem is my firm, I'm a trader, I've been a trader for about a decade and a half 5 00:00:19.280 --> 00:00:24.940 and over time I've become sort of a buff of economic history and more specifically financial 6 00:00:24.940 --> 00:00:29.980 market history and so I found that everything I read about the Great Depression, there was 7 00:00:29.980 --> 00:00:38.060 There was some reference to popular economists. For example, Townsend, Francis Townsend, 8 00:00:38.060 --> 00:00:44.660 Huey Long, all those fellows, Father Coughlin. And the thing was that even in Rothbard's 9 00:00:44.660 --> 00:00:49.960 America's Great Depression or in Ray Moley's After Seven Years and Many Others, they allude 10 00:00:49.960 --> 00:00:53.120 to those few, but they say that there were many more. They say that there were, in some 11 00:00:53.120 --> 00:01:23.120 in some cases they say there were dozens. So, what I did was I essentially set out to try and find as many of those as I could. I wanted to first kind of catalog them and summarize them and then what I wanted to do was I wanted to look for the high level trends and recurring themes and then finally using some analytical framework which I hadn't yet determined, look for even deeper significance kind of analysis. And I did so and it took over 12 00:01:23.120 --> 00:01:43.120 The criteria I set from the beginning was that I wanted books, pamphlets, transcripts of speeches, all that sort of thing, magazine articles that were published between 1930 and the end of 1939, that were American, and more specifically that had two distinct elements. 13 00:01:43.120 --> 00:01:49.120 They had to both posit a cause for the Great Depression and then offer a specific solution, whatever it was. 14 00:01:49.120 --> 00:01:58.200 It took me about two years and I came up with 171 specific plans. 15 00:01:58.200 --> 00:02:01.640 So then I had to determine essentially what framework I was going to look at these folks 16 00:02:01.640 --> 00:02:02.640 from. 17 00:02:02.640 --> 00:02:06.800 And I determined right away that I needed something to kind of analyze intellectuals. 18 00:02:06.800 --> 00:02:10.120 So there are three, now there's four, but at the time, two years ago, there were three 19 00:02:10.120 --> 00:02:16.840 competing, I consider three competing approaches for analysis. 20 00:02:16.840 --> 00:02:21.040 One was Julian Benda, who some of you are familiar with, The Treason of the Learned, 21 00:02:21.040 --> 00:02:23.240 which was written in 1928. 22 00:02:23.240 --> 00:02:27.980 The second, of course, is Hayek, his article in 1949 about the intellectuals and socialism. 23 00:02:27.980 --> 00:02:32.400 And the last was a book published in 1969 by a guy named John Gross. 24 00:02:32.400 --> 00:02:36.080 The only picture I could find of him was him drinking wine, so I might have to choose that 25 00:02:36.080 --> 00:02:37.080 guy. 26 00:02:37.080 --> 00:02:42.080 His book was called The Rise and Fall of the Man of Letters, and all three look at intellectuals, 27 00:02:42.080 --> 00:03:00.480 Hayek and his article mentions, if you read it, you can figure out about nine or ten characteristics 28 00:03:00.480 --> 00:03:05.880 of intellectuals. I've looked at all of them and I've chosen four. The four are the most 29 00:03:05.880 --> 00:03:09.760 interesting to talk about this afternoon. 30 00:03:09.760 --> 00:03:13.660 So here's the first one. The first one is that Hayek's first point is that intellectuals 31 00:03:13.660 --> 00:03:19.000 tend to be people who understand nothing in particular really well. Their knowledge intends 32 00:03:19.000 --> 00:03:24.620 in fact to be rather superficial. They're not in possession of any special wisdom. And 33 00:03:24.620 --> 00:03:28.800 that is much to their credit for no other reason than because what their job really 34 00:03:28.800 --> 00:03:35.480 is is to take disparate information out. They take a concept from a textbook, a personal 35 00:03:35.480 --> 00:04:05.480 and Financial Anecdote Articles and what they do is they craft that into a narrative which they then put out through articles and all that sort of thing and this was certainly the case in the Great Depression and their lack of expertise was much to their credit and it made their message that much more I guess attractive because economists had been so wrong so people started to say well what do these guys have to say and so I have a few examples well first first this slide here shows the breakdown of that 171 individuals dominated by 36 00:04:05.480 --> 00:04:10.680 by writers and activists, academics, business people, all the way down to a couple of actors, 37 00:04:10.680 --> 00:04:15.680 a soldier and a poet. And a few that I couldn't even tell. Some people wrote on their pseudonyms 38 00:04:15.680 --> 00:04:19.880 and stuff, so that was hard to figure out. And by the way, I have an asterisk by academics. 39 00:04:19.880 --> 00:04:26.400 Those were mostly economics and sociological professors with a couple of psychologists 40 00:04:26.400 --> 00:04:27.400 as well. 41 00:04:27.400 --> 00:04:38.240 Here's one. This was Alfred Jones' book. It's called His Fascism, The Answer. This is interesting 42 00:04:38.240 --> 00:04:42.760 because throughout the book, Jones says very clearly, he's impressed with the value, this 43 00:04:42.760 --> 00:04:48.240 is like 1932 or so, he says, I'm impressed with the value of fascism. Space doesn't permit 44 00:04:48.240 --> 00:04:52.760 a detail of their marvelous progress under Mussolini. He praises the fact that they've 45 00:04:52.760 --> 00:04:57.360 imposed a shorter working day, which he believes is responsible for the lower levels of unemployment 46 00:04:57.360 --> 00:04:58.920 and Employment at that time. 47 00:04:58.920 --> 00:05:04.360 It's a system of marvelous simplicity of economy, and he insists throughout the book that Mussolini's 48 00:05:04.360 --> 00:05:08.000 planned economy provides the essentials to economic recovery. 49 00:05:08.000 --> 00:05:11.000 But in the last couple pages of the book, he says, well, you know, I have no real training 50 00:05:11.000 --> 00:05:15.440 in finance or economics, and I presume to cover no such topics. 51 00:05:15.440 --> 00:05:19.040 So you get that at the end. 52 00:05:19.040 --> 00:05:24.040 This is a picture, and then, of course, one of the caveats that Hayek adds is it'd be 53 00:05:24.040 --> 00:05:26.920 a fatal mistake to underestimate their power for this reason. 54 00:05:26.920 --> 00:05:40.920 Goldie Ladon wrote a book called Distributism in the early 1930s and she offers not only 55 00:05:40.920 --> 00:05:45.200 a cause and solution for the depression but also a key to permanent prosperity and that 56 00:05:45.200 --> 00:05:49.080 key is of course to take women out of the workplace. 57 00:05:49.080 --> 00:05:54.200 So what she says is that all women should be forced to stay at home or they should be 58 00:05:54.200 --> 00:06:24.200 to be pensioned out of work. And her logic is, first of all, that women are taking men's jobs and also that women not being at home, and this is the 1930s, I mean, how many women were there in the workplace as a percentage, I don't even know, but the one thing that she says is that it's also women being in the workplace has taken away that sort of home economic instinct of women, so budgets are all screwed up and that's one reason why we're in the depression. And she, by the way, is the poet, so I should mention that. She was called the female poet laureate of America. 59 00:06:24.200 --> 00:06:27.800 The thing that's interesting about this is that this picture added here is of a group 60 00:06:27.800 --> 00:06:31.720 that was called the Farmers National Holiday Association. 61 00:06:31.720 --> 00:06:36.280 And they were kind of a militant, left-leaning group, which actually, for the simplicity 62 00:06:36.280 --> 00:06:42.640 of her view and for the fact that she's a poet, they adopted her as one of their pet 63 00:06:42.640 --> 00:06:43.640 economists. 64 00:06:43.640 --> 00:06:47.240 And they were fully on board with her, and this was several thousand people, tens of 65 00:06:47.240 --> 00:06:51.160 thousands I imagine, who adopted her as one of their pet economists. 66 00:06:51.160 --> 00:06:55.700 And they were responsible for a number of violent attacks, including one death across 67 00:06:55.700 --> 00:07:02.760 the Midwest in the early 1930s, and in one case pulled a judge out of a car who had upheld 68 00:07:02.760 --> 00:07:08.080 creditors' rights and threatened to lynch him. 69 00:07:08.080 --> 00:07:11.360 Not being credible doesn't necessarily mean being dismissable. 70 00:07:11.360 --> 00:07:15.080 Here's a few others. 71 00:07:15.080 --> 00:07:16.360 Top left is the Ham and Eggs Plan. 72 00:07:16.360 --> 00:07:18.520 I don't know if any of you have heard of that. 73 00:07:18.520 --> 00:07:24.760 That was proposed as a plan in California, but the backers of the plan had every inclination 74 00:07:24.760 --> 00:07:26.880 to make it a national plan eventually. 75 00:07:26.880 --> 00:07:30.880 And it was run by a guy whose name was Roy Owens, and Roy Owens billed himself as an 76 00:07:30.880 --> 00:07:34.840 engineer economist, which is an interesting title because it recurs constantly throughout 77 00:07:34.840 --> 00:07:36.120 this period. 78 00:07:36.120 --> 00:07:41.040 And Roy Owens, it turned out, there's a sociological law, I don't know what it is, maybe I can 79 00:07:41.040 --> 00:07:44.520 posit it here, and that is that when organizations reach a certain size, they get investigated. 80 00:07:44.520 --> 00:07:48.120 I don't know what the size is, but there are people who do exposés and things. 81 00:07:48.120 --> 00:07:52.280 Anyway, when Ham and Eggs got big enough, an investigation showed that not only was 82 00:07:52.280 --> 00:07:56.960 Roy Owens not an engineer and not an economist, he didn't even graduate high school and he 83 00:07:56.960 --> 00:08:01.480 was an ex-felon. 84 00:08:01.480 --> 00:08:06.680 Even knowing this, a few years later this organization had 330,000 members and it was 85 00:08:06.680 --> 00:08:11.800 on a proposition in 1928 to become either a new branch of government or to occupy some 86 00:08:11.800 --> 00:08:18.000 government positions and they only lost 1.14 million to 1.39 million. 87 00:08:18.000 --> 00:08:23.000 So, once again, having a lack of credibility and no official credentials doesn't in any 88 00:08:23.000 --> 00:08:26.040 way dampen the message of a lot of these groups. 89 00:08:26.040 --> 00:08:28.280 In the middle, the utopians are coming. 90 00:08:28.280 --> 00:08:32.040 That was a group of, it was kind of like a technocratic group, if you're familiar with 91 00:08:32.040 --> 00:08:36.320 the technical alliance and all those guys, but it also had some mystical elements about 92 00:08:36.320 --> 00:08:38.880 business cycles and all that sort of thing. 93 00:08:38.880 --> 00:08:43.600 And despite the fact that the guys who met it were actors who professed from the very 94 00:08:43.600 --> 00:08:46.520 beginning no economic experience or financial knowledge. 95 00:08:46.520 --> 00:08:54.520 On June 23, 1935, over 30,000 people came to the Hollywood Bowl to listen to their speeches. 96 00:08:54.520 --> 00:08:57.400 And then the last I mentioned here, of course, is Townsend. 97 00:08:57.400 --> 00:09:02.840 It was only when Francis Townsend got in front of Congress and was confronted by a few congressmen 98 00:09:02.840 --> 00:09:08.880 that it turned out that his plan, which involved what he built as a very small tax to kind 99 00:09:08.880 --> 00:09:14.740 of pension people at that age, I guess it was over 60, would have cost half of the national 100 00:09:14.740 --> 00:09:15.740 and Financial Income. 101 00:09:15.740 --> 00:09:21.780 So it would have in some cases multiplied final retail prices by a certain amount. 102 00:09:21.780 --> 00:09:27.340 And another personal aside is that I love the response that they had when they were 103 00:09:27.340 --> 00:09:29.460 trounced in front of Congress. 104 00:09:29.460 --> 00:09:32.060 They went back to the drawing board and they came out with a new motto and the motto was 105 00:09:32.060 --> 00:09:34.540 honor thy father and mother. 106 00:09:34.540 --> 00:09:40.060 So they tried to appeal to your, if we can't do math we can at least respect the elderly. 107 00:09:40.060 --> 00:09:46.740 So, the second point of Hayek is that intellectuals generally judge all particular issues exclusively 108 00:09:46.740 --> 00:09:52.620 in the light of certain very general ideas. And this point I thought was interesting because 109 00:09:52.620 --> 00:09:59.500 it kind of ties, and it ties a little bit to some things that Rothbard said in his World 110 00:09:59.500 --> 00:10:04.500 War I intellectuals in power, World War I as fulfillment, because this was really the 111 00:10:04.500 --> 00:10:09.020 generation behind, this is really the generation after those. Those folks like Richard T. Eli 112 00:10:09.020 --> 00:10:17.740 The average age here of these folks was roughly, the average age of this 171 person was roughly, 113 00:10:17.740 --> 00:10:22.060 they were in their late 40s. They tended to be born about 1882, which if you look at the 114 00:10:22.060 --> 00:10:26.660 events in their life, it's sort of telling. They were in their early teens during the 115 00:10:26.660 --> 00:10:33.100 panic of 1893. They were going to college and school during the entire progressive era. 116 00:10:33.100 --> 00:10:37.740 Their students tended to be, their teachers tended to be those people like Eli and Woodrow 117 00:10:37.740 --> 00:10:45.180 Wilson and a lot of the progressivists, Dewey and all those guys. 118 00:10:45.180 --> 00:10:49.020 Once again, I'm not going to go through all these, but they're dominant themes. Some of 119 00:10:49.020 --> 00:10:53.220 the dominant themes are, of course, Darwinism and scientism, which they just called science, 120 00:10:53.220 --> 00:11:01.740 but it's truly scientism. That fellow in the middle you see up here, that's Taylor, the 121 00:11:01.740 --> 00:11:07.620 scientific management idea. Of course, Edward Bellamy's Looking Backward, that's the Warren 122 00:11:07.620 --> 00:11:12.620 The War Industries Board, roughly 20% that I could count, at least of those who mentioned it, 123 00:11:12.620 --> 00:11:18.620 roughly 20% of these 171 individuals served in some capacity with the War Industries Board. 124 00:11:18.620 --> 00:11:23.620 The personification of Wall Street as the embodiment of all evil. 125 00:11:23.620 --> 00:11:27.620 There's a lot of revisionist history, what taxes have done for America, everything. 126 00:11:27.620 --> 00:11:32.620 The railroads, things like that. Those are some of the recurring themes. 127 00:11:32.620 --> 00:11:46.620 Thorstein Veblen's Engineers in the Price System, Herbert Crowley's The Promise of American Life, Teddy Roosevelt, Karl Marx. 128 00:11:46.620 --> 00:11:52.620 There's probably like 15 themes which occur over and over in these writings. 129 00:11:52.620 --> 00:11:54.620 And that's somewhat reflected in their attribution. 130 00:11:54.620 --> 00:11:58.620 This is the overall attribution among these individuals for the causes of the Great Depression. 131 00:11:58.620 --> 00:12:07.620 Fully one in three attributed to planlessness. In other words, there's no more coordination between production and consumption, 132 00:12:07.620 --> 00:12:13.620 between the various stages of production, and we need the government to sort of oversee that. This is the implication. 133 00:12:13.620 --> 00:12:21.620 Overproduction, largely because a few years before the Great Depression, two fellows, I guess it was Waddle and Catchings, wrote a book 134 00:12:21.620 --> 00:12:27.820 where they posited the possibility of over-production and under-consumption and causing economic 135 00:12:27.820 --> 00:12:34.180 disconnects, a lack of purchase power, those guys down on Wall Street, et cetera, et cetera. 136 00:12:34.180 --> 00:12:38.900 Interestingly, five attributed the cause of Great Depression to government, and two of 137 00:12:38.900 --> 00:12:41.140 those said the government wasn't vigilant enough. 138 00:12:41.140 --> 00:12:45.460 We need much more government, otherwise this will keep happening. 139 00:12:45.460 --> 00:12:48.260 Let's go on here. 140 00:12:48.260 --> 00:12:53.700 A third point that Hayek made was that the power of their ideas grows in proportion to 141 00:12:53.700 --> 00:12:59.220 their generality, abstractness and vagueness. There are huge dividends to be paid by not 142 00:12:59.220 --> 00:13:06.980 being specific. Even if you are familiar with your subject, it is in their interest to be 143 00:13:06.980 --> 00:13:12.140 as vague as possible. Second, that the climate of opinion of any period determines the importance 144 00:13:12.140 --> 00:13:17.500 of new facts and opinions. In other words, if your message is going to be derailed by 145 00:13:17.500 --> 00:13:22.700 by New Information, you need to integrate it. If it's not, just pretend it's not there. 146 00:13:22.700 --> 00:13:31.580 Or more specifically, as Huey Long said, never explain details by the mother of sectarianism. 147 00:13:31.580 --> 00:13:34.460 So this fellow here, I'm sure some of you have heard of him, this guy's called, he was 148 00:13:34.460 --> 00:13:42.620 named Stuart Chase. And Chase was an intellectual. In many ways, he is kind of the quintessential 149 00:13:42.620 --> 00:13:48.900 Popular Economist, in that he was an engineer, trained at MIT, became an accountant, served 150 00:13:48.900 --> 00:13:53.700 in the war industries board, made a trip to Russia in the late 20s to kind of see how 151 00:13:53.700 --> 00:13:58.860 their experiment was going, wrote some articles, and throughout the 1920s he was a pretty 152 00:13:58.860 --> 00:14:03.660 prominent member of a technocratic group. He studied with Thorson Veblen and all those 153 00:14:03.660 --> 00:14:08.580 fellows. And so he was in a prominent position and he was highly visible during the Great 154 00:14:08.580 --> 00:14:09.580 Depression. 155 00:14:09.580 --> 00:14:13.660 And what he first said in 1930 when the crash occurred and when the depression started was 156 00:14:13.660 --> 00:14:19.020 he predicted, he said he attributed the cause to psychology, just negative psychology, it'll 157 00:14:19.020 --> 00:14:23.540 be over in about a year, everything will be fine, and he made some light references to 158 00:14:23.540 --> 00:14:29.820 a need maybe for more regulation, he was kind of non-committal about all that. 159 00:14:29.820 --> 00:14:36.420 And in 1931, as unemployment grew and as businesses started floundering, he changed his attribution 160 00:14:36.420 --> 00:14:41.540 of the Crash to Overproduction. He cited a need for more coordination, whether voluntary 161 00:14:41.540 --> 00:14:51.420 or coerced among business and the government. And in 1932, as we move on, he took a pretty 162 00:14:51.420 --> 00:14:56.740 sharp turn to the left, called Marks for Profit, endorsed the nationalization of industry and 163 00:14:56.740 --> 00:15:06.000 an inflationary campaign to spur spending. Further still, in 1933 he wrote an article 164 00:15:06.000 --> 00:15:10.540 for Harper is called If I Were a Dictator. And in that article, he not only advocated 165 00:15:10.540 --> 00:15:15.240 complete control of industry and finance, but also nationally enforced birth control 166 00:15:15.240 --> 00:15:22.120 policies and sunbathing resorts all across the country. You could see how that would 167 00:15:22.120 --> 00:15:26.320 help the economic environment as well. 168 00:15:26.320 --> 00:15:33.200 Then like that boomerang, he came right back to the middle in 1934 and endorsed FDR, saying 169 00:15:33.200 --> 00:15:38.600 The road to recovery would be through functionalism, which he never defined, but whatever functionalism 170 00:15:38.600 --> 00:15:41.840 is, this guy had it. 171 00:15:41.840 --> 00:15:50.280 By 1935, Chase decided that Roosevelt's commitment to change was highly questionable and called 172 00:15:50.280 --> 00:15:55.120 him an economic royalist who had made too many concessions to big business and finance. 173 00:15:55.120 --> 00:16:00.040 There's not that many years left, so he's running out of them. 174 00:16:00.040 --> 00:16:04.440 In 1937, he advocated a complete scrapping of the Constitution, a rewrite. 175 00:16:04.440 --> 00:16:08.760 He said, you know, it's time to start from scratch, none of this stuff is working. 176 00:16:08.760 --> 00:16:10.280 And he said, it's time to start over. 177 00:16:10.280 --> 00:16:14.120 Even the amendment mechanisms weren't enough, and it was time to start from scratch. 178 00:16:14.120 --> 00:16:21.160 And in 1939, I'm not sure exactly what happened, but he made a sort of a sheepish admission 179 00:16:21.160 --> 00:16:26.560 that maybe freer competition and prices being set by markets was a better idea. 180 00:16:26.560 --> 00:16:28.760 So he traveled the full circle. 181 00:16:28.760 --> 00:16:33.160 That illustrates Hayek's point that what's important is relevance and not consistency. 182 00:16:33.160 --> 00:16:42.220 In fact, when I was reading on this, I thought, if they say that the first casualty of war 183 00:16:42.220 --> 00:16:48.720 is truth, the first casualty of economic ideas is consistency, something like that. 184 00:16:48.720 --> 00:16:54.780 So another example of this kind of shift is seen in the very far left, the communist and 185 00:16:54.780 --> 00:16:58.360 socialist literature of the era, which was consistent throughout the entire Great Depression. 186 00:16:58.360 --> 00:17:05.520 In the beginning to the end, they were sounding the clarion for revolution, but the change 187 00:17:05.520 --> 00:17:12.680 came in mid-1935. Until then, all the literature was this kind of thing. It was rife with the 188 00:17:12.680 --> 00:17:18.120 language of class warfareism, violent revolution, all that kind of thing. There was a writer 189 00:17:18.120 --> 00:17:23.040 from New York named Akiva Liu who wrote a book where he basically said, to arms, everybody 190 00:17:23.040 --> 00:17:26.360 get your rifles, go down to Wall Street and start killing traders and brokers, and he 191 00:17:26.360 --> 00:17:34.160 be likened the victims of the crash and unemployment to the victims of the Lusitania, the main. 192 00:17:34.160 --> 00:17:37.960 And I did a little background research, and this could be completely off, but I attribute 193 00:17:37.960 --> 00:17:42.640 the change, which I'll give into a 1935, in the 6th Congress, which took place in July 194 00:17:42.640 --> 00:17:47.880 and August of 1928. That's the common turn, kind of a global jamboree for communists where 195 00:17:47.880 --> 00:17:53.360 they talk about the party line and they argue about the inaugural, I guess. They said that 196 00:17:53.360 --> 00:17:57.920 They predicted that the end of capitalism was growing near, and so kind of the word 197 00:17:57.920 --> 00:18:05.560 that went out from the organelles of whoever was saying doctrine for communism was, you've 198 00:18:05.560 --> 00:18:07.040 got to push as hard as you can. 199 00:18:07.040 --> 00:18:11.500 And when the crash came the very next year, it became an all-out, you know, this was their 200 00:18:11.500 --> 00:18:14.720 opportunity to push as hard as they could to get the great revolution going. 201 00:18:14.720 --> 00:18:17.800 This was the end of capitalism. 202 00:18:17.800 --> 00:18:22.480 The seventh congress took place in 1935, about halfway through the Great Depression. 203 00:18:22.480 --> 00:18:25.320 And the tone changed completely. 204 00:18:25.320 --> 00:18:29.000 And the reason why the tone changed, I attribute two reasons for the tone changing. 205 00:18:29.000 --> 00:18:34.100 The first being that a lot of the plans that were put in place, the real plans, not the 206 00:18:34.100 --> 00:18:38.680 proposed ones like the New Deal and such, were starting to show some traction. 207 00:18:38.680 --> 00:18:40.080 They started to see some recovery. 208 00:18:40.080 --> 00:18:44.840 And on top of that, the rise of fascism greatly worried a lot of the communists. 209 00:18:44.840 --> 00:18:51.520 So they specifically went out and tried to soften their message. 210 00:18:51.520 --> 00:18:56.800 And they took a highly conciliatory turn and toned down their rhetoric starting in 1935. 211 00:18:56.800 --> 00:18:59.680 So what you started to see is things like this. 212 00:18:59.680 --> 00:19:01.800 This plan is called democratic distribution. 213 00:19:01.800 --> 00:19:04.120 The word democracy is all over these things. 214 00:19:04.120 --> 00:19:08.360 And this fellow's name was Lewis Waldman, who had previously been a really hardcore 215 00:19:08.360 --> 00:19:10.160 communist in this country. 216 00:19:10.160 --> 00:19:15.600 And in 1936 or so, what he did was he broke from the hardliners and he actually converted 217 00:19:15.600 --> 00:19:22.640 and several hundred thousand communist voters to FDR. 218 00:19:22.640 --> 00:19:23.640 Just two quick charts. 219 00:19:23.640 --> 00:19:26.520 I know charts are not... 220 00:19:26.520 --> 00:19:29.300 This has to do with the climate of opinion, and what I wanted to demonstrate here was 221 00:19:29.300 --> 00:19:34.960 I charted basically changes in the Dow Jones Industrial Average with the number of plans 222 00:19:34.960 --> 00:19:37.320 that were issued within the following six months. 223 00:19:37.320 --> 00:19:41.400 You can see a very strong relationship here, and this has to do with that climate of opinion. 224 00:19:41.400 --> 00:19:43.240 As the market gets worse, as that sort of... 225 00:19:43.240 --> 00:19:47.680 If you look at the market as I do in some context, as a sort of great voting mechanism, 226 00:19:47.680 --> 00:19:58.040 as the environment gets worse, as the economic outlook gets poorer, there's a rush to judgment 227 00:19:58.040 --> 00:20:05.480 and there's a whole bunch of this rush to introduce alternatives and that sort of thing. 228 00:20:05.480 --> 00:20:07.000 That's all I meant to show here. 229 00:20:07.000 --> 00:20:11.360 And then this isn't going to come out really well, but what I sought to show here were 230 00:20:11.360 --> 00:20:16.160 The colors, the bands, are, with each planet that came out during the Great Depression, 231 00:20:16.160 --> 00:20:19.160 what they attributed the cause of the depression to. 232 00:20:19.160 --> 00:20:20.840 And those were pretty homogenous across. 233 00:20:20.840 --> 00:20:28.720 There's no real consistent trend in that case of intellectual opinion. 234 00:20:28.720 --> 00:20:35.360 On the other hand, the attribution of solutions was traveling in very distinct, discrete sort 235 00:20:35.360 --> 00:20:36.880 of waves of opinion. 236 00:20:36.880 --> 00:20:39.400 Early on it was government-business partnerships. 237 00:20:39.400 --> 00:20:43.120 And there was more of like a coercive element to it, cartelization, forcing the businesses 238 00:20:43.120 --> 00:20:46.520 together and then make programs and all that. 239 00:20:46.520 --> 00:20:50.640 Finally, you know, in the 1930s, there was anything goes, just everything, which I'll 240 00:20:50.640 --> 00:20:53.820 talk about in a few minutes, some of those more interesting ones there. 241 00:20:53.820 --> 00:20:58.280 National planning, and then of course you had FDR come in, and then you've got more, 242 00:20:58.280 --> 00:21:03.800 it went from a business to a more monetary, and then finally to a more fiscal basis. 243 00:21:03.800 --> 00:21:15.800 Fiscal policy, setting wages, taxes, pensioning people out of the workforce, constitutional revisionism, of course, was an area of interest with the court-tacking decisions and such. 244 00:21:15.800 --> 00:21:27.800 And then finally, what I call reconciliationism. All the books there had titles like The New Government, The New Frontier, you know, it was kind of like almost cathartic in the way they treated the changes that had been made in the New Deal. 245 00:21:27.800 --> 00:21:33.320 And there's two very high-level memes that I detected here. In the early part of the 246 00:21:33.320 --> 00:21:38.760 Great Depression, everything was about coordination. It was coordinating production, coordinating 247 00:21:38.760 --> 00:21:46.840 people's interests, coordinating just every element of economic discourse you could imagine. 248 00:21:46.840 --> 00:21:52.400 And later, everything was about democracy. It was almost as if the meme was to sort of 249 00:21:52.400 --> 00:21:59.240 of Comfort, those who questioned where we were and what the changes had been, you know, 250 00:21:59.240 --> 00:22:05.000 sort of the, it was almost, again, it was almost cathartic, it was almost like they 251 00:22:05.000 --> 00:22:09.840 were saying, don't worry, this is, what we have here is real democracy now, which is 252 00:22:09.840 --> 00:22:10.840 arguable. 253 00:22:10.840 --> 00:22:16.720 Okay, and this is the last point I have, and that is that Hayek wrote that speculations 254 00:22:16.720 --> 00:22:22.080 about the possible entire reconstruction of society, rather than practical and short-run 255 00:22:22.080 --> 00:22:25.080 Give public intellectuals a visionary character. 256 00:22:25.080 --> 00:22:29.080 It's really not fun to talk about free markets and all that. 257 00:22:29.080 --> 00:22:31.080 I mean, I think it is, but most people don't. 258 00:22:31.080 --> 00:22:35.080 Because it is conservative, not in a political sense, 259 00:22:35.080 --> 00:22:38.080 but it involves adhering to what got us where we are. 260 00:22:38.080 --> 00:22:42.080 It's more fun to talk about radically recreating the world in interesting ways. 261 00:22:42.080 --> 00:22:45.080 And it gives them an opportunity for the play of the imagination. 262 00:22:45.080 --> 00:22:48.080 Those who are unencumbered by much knowledge of facts, 263 00:22:48.080 --> 00:22:56.360 Tax. They tend to be disinterested in technical details or practical difficulties. If you 264 00:22:56.360 --> 00:23:01.600 haven't thought any of this stuff was funny yet, you might now. Here's an example of something 265 00:23:01.600 --> 00:23:07.640 that occurs regularly, a pretty frequent proposal was that somewhere out there there was a mathematical 266 00:23:07.640 --> 00:23:13.320 equation which if we just followed it, everything would be okay. In this case, this is the prosperity 267 00:23:13.320 --> 00:23:14.320 and Formula. 268 00:23:14.320 --> 00:23:20.200 It is actually, this author says, in seventh commandment of God, in economic matters, thou 269 00:23:20.200 --> 00:23:21.200 shall not steal. 270 00:23:21.200 --> 00:23:25.640 I actually agree with that, but anyway, it's an extreme beauty, not only those who are 271 00:23:25.640 --> 00:23:27.280 able to think, but will discover. 272 00:23:27.280 --> 00:23:32.000 So this book is full of equations, which of course, if you follow those, we would never 273 00:23:32.000 --> 00:23:35.840 have gotten into that situation in the first place. 274 00:23:35.840 --> 00:23:36.840 Here's another one. 275 00:23:36.840 --> 00:23:41.240 This guy, what was his name? 276 00:23:41.240 --> 00:23:42.240 I can't remember his name. 277 00:23:42.240 --> 00:23:45.040 The idea is planned obsolescence. 278 00:23:45.040 --> 00:23:46.680 So what happens in this system? 279 00:23:46.680 --> 00:23:53.120 Well, the way to spur consumption, which some authors attribute as the way to get the economy 280 00:23:53.120 --> 00:23:56.680 back on track, was to... 281 00:23:56.680 --> 00:23:59.080 The problem was that people were holding on to things for too long. 282 00:23:59.080 --> 00:24:05.640 So what they recommended is if the shoe manufacturer is having a bad quarter, he tells the government, 283 00:24:05.640 --> 00:24:06.640 my sales are down. 284 00:24:06.640 --> 00:24:10.160 And what the government then does is require you to turn in your shoes. 285 00:24:10.160 --> 00:24:14.040 You turn in your shoes and you get a ticket, and that ticket has a certain amount of money 286 00:24:14.040 --> 00:24:18.120 that you can use to offset the price of buying new shoes. 287 00:24:18.120 --> 00:24:22.200 You can only imagine how this would be abused. 288 00:24:22.200 --> 00:24:25.080 Every time I think about it, I think this is the government that couldn't run the cash 289 00:24:25.080 --> 00:24:27.800 for clunkers, something that every junkyard does anyway. 290 00:24:27.800 --> 00:24:32.320 They're going to do this to the entire economy? 291 00:24:32.320 --> 00:24:33.320 There are two here. 292 00:24:33.320 --> 00:24:35.640 The one on the left is the New Market Cities Plan. 293 00:24:35.640 --> 00:24:37.880 It will create permanent mass consumption. 294 00:24:37.880 --> 00:24:40.080 It's got to be true because it's all capitalized. 295 00:24:40.080 --> 00:24:47.400 And basically, what they proposed was that they take two million people and build more 296 00:24:47.400 --> 00:24:48.400 cities. 297 00:24:48.400 --> 00:24:49.400 Who's going to live in them? 298 00:24:49.400 --> 00:24:50.400 What's going to happen there? 299 00:24:50.400 --> 00:24:51.400 That's all. 300 00:24:51.400 --> 00:24:52.400 Those are later details. 301 00:24:52.400 --> 00:24:53.400 We're just going to build them. 302 00:24:53.400 --> 00:24:54.400 We're going to build cities. 303 00:24:54.400 --> 00:24:58.480 And this guy, Adolf Gang, recommended essentially that all savings be in the hand of the government 304 00:24:58.480 --> 00:25:03.200 because the notion of hoarding, that if you're not spending, you're not consuming, and that's 305 00:25:03.200 --> 00:25:07.080 keeping the economy down so that the government would essentially take control of all savings. 306 00:25:07.080 --> 00:25:09.360 A couple more. 307 00:25:09.360 --> 00:25:15.640 The one on the left is one of the ones here placing one of seven of our present charitable 308 00:25:15.640 --> 00:25:20.280 family cases on farms, just relocating people out to the countryside. 309 00:25:20.280 --> 00:25:24.460 And the interesting thing here is this was in some sense realized through the Resettlement 310 00:25:24.460 --> 00:25:26.440 Administration, which was run by Rexford Tugwell. 311 00:25:26.440 --> 00:25:27.880 I actually tried some of this. 312 00:25:27.880 --> 00:25:30.720 Also Eleanor Roosevelt's Pet Project, Arthordale. 313 00:25:30.720 --> 00:25:35.640 All of these were notions of resettlement of individuals out to the countryside, thinking, 314 00:25:35.640 --> 00:25:39.640 and I guess that they had to more evenly distribute the populace or something like that. 315 00:25:39.640 --> 00:25:45.640 And on the left is, this book is called Capitalism and Communism and Reconciliation. 316 00:25:45.640 --> 00:25:47.640 This is a great one. 317 00:25:47.640 --> 00:25:51.640 So this guy, this guy's a professor and he said, you know, there's really no way of determining 318 00:25:51.640 --> 00:25:53.640 whether communism or capitalism, which one is better. 319 00:25:53.640 --> 00:25:57.640 So why don't we have a great, a huge contest? 320 00:25:57.640 --> 00:26:04.640 So what he proposed was that there would be metrics proposed such as, you know, longevity and GDP 321 00:26:04.640 --> 00:26:09.620 and that the two governments would agree to not compete with each other, would compete 322 00:26:09.620 --> 00:26:15.200 over a period of 10 years, and then a winner would be declared. 323 00:26:15.200 --> 00:26:19.000 I can't even measure the levels of naivety it takes to think that one government would 324 00:26:19.000 --> 00:26:23.960 say, you're right, we lost, we'll step down. 325 00:26:23.960 --> 00:26:28.440 The loser's state would amicably just step to the side and say, it was a good contest, 326 00:26:28.440 --> 00:26:30.600 but that was his proposal. 327 00:26:30.600 --> 00:26:36.440 And, of course, no financial crisis would be complete without an appearance by the Malthusians 328 00:26:36.440 --> 00:26:44.360 and the Eugenicists, where this book has a chapter called Eugenics and Industry, and 329 00:26:44.360 --> 00:26:48.160 in one sense he agrees with all the other planners and popular economists of the Great 330 00:26:48.160 --> 00:26:53.040 Depression that the problem is overproduction, but he's overproduction of people in his case. 331 00:26:53.040 --> 00:27:01.640 So he certainly, he seeks to dampen that. And is this the two more? Meritism. Here's 332 00:27:01.640 --> 00:27:05.760 another good one. No more money. Let's get rid of money. It's a problem. Instead what 333 00:27:05.760 --> 00:27:11.400 we do is the government decides what you do, or rather what the point value is of what 334 00:27:11.400 --> 00:27:17.040 you do. So if you, you know, if you're a, if you're a doctor, you get a hundred points 335 00:27:47.040 --> 00:27:57.440 And here's the last one. There's a lot of talk and many references are made to war being 336 00:27:57.440 --> 00:28:08.580 a solution for a bad economy. And I was able to find one in this group of, in this universe 337 00:28:08.580 --> 00:28:15.800 of popular economists. This is a kind of mysterious army officer who recommended in 1935 that 338 00:28:15.800 --> 00:28:20.240 The best way to get out of the Great Depression would be to essentially wage war against 339 00:28:20.240 --> 00:28:27.200 Canada, Mexico and take control of the hemisphere from the North Pole to Panama. 340 00:28:27.200 --> 00:28:31.140 In case you think this is a bad idea, first of all, he says, a real American doesn't 341 00:28:31.140 --> 00:28:36.840 shudder and shrink at the notion of blood spilled on the sands of time, especially when 342 00:28:36.840 --> 00:28:39.440 great affairs are in the offing. 343 00:28:39.440 --> 00:28:44.220 But hopefully that comforts you, hopefully that will get you where you're going. 344 00:28:44.220 --> 00:28:48.620 It's also interesting that a huge part of this book is dedicated to fighting communism, but 345 00:28:48.620 --> 00:28:59.020 one of the core beliefs that communists hold about capitalism is the necessity of imperialism. 346 00:28:59.020 --> 00:29:07.020 So he's sort of playing right into their hands with this proposal. 347 00:29:07.020 --> 00:29:12.580 And just in closing, I was just going to say, I mean, today, these are all recent images 348 00:29:12.580 --> 00:29:18.300 and such. These ideas are live and well. The professional thinkers are going to be with 349 00:29:18.300 --> 00:29:24.100 us in every economic environment. And you can see echoes of all these guys. For example, 350 00:29:24.100 --> 00:29:29.780 I don't know if any of you are familiar with Larry Kudlow on CNBC. Well, for years, Larry 351 00:29:29.780 --> 00:29:34.200 has been saying that he's a free marketeer and all that. In September, maybe the week 352 00:29:34.200 --> 00:29:42.540 before Lehman fell down, he threw his weight behind Paulson, saying, you know, echoing 353 00:30:12.540 --> 00:30:16.540 are effectively the battle for ideas. Thank you.