WEBVTT

NOTE The Great Depression, World War II, and American Prosperity, Part II

1
00:00:00.000 --> 00:00:05.000
Finishing up this discussion of the New Deal that we've only barely started, really,

2
00:00:05.000 --> 00:00:13.000
I want to first start off by adding one final point to one of the questions that was raised at the end of the last session,

3
00:00:13.000 --> 00:00:24.000
because somebody was asking, well, I don't remember, but one gentleman was asking the question of how did this false historiography get started,

4
00:00:24.000 --> 00:00:26.000
The Theory of Money and Credit

5
00:00:54.000 --> 00:01:02.000
The American Liberty League was mainly an organization that was really a matter of degree rather than of kind.

6
00:01:02.000 --> 00:01:06.000
They weren't absolutely opposed to all government intervention, but they were more or less anti-New Deal.

7
00:01:06.000 --> 00:01:14.000
So because Hoover became an outspoken opponent of the New Deal, I think that fact alone fed into the mythology,

8
00:01:14.000 --> 00:01:17.000
because the fact is he was an opponent of the New Deal,

9
00:01:17.000 --> 00:01:23.000
so you tend to think that he must have had exactly the opposite position, but he didn't have exactly the opposite position.

10
00:01:23.000 --> 00:01:53.000
Okay, well, where we left off was the National Industrial Recovery Act, and my aim at the end of the last session was to demonstrate that that idea did not just emerge from the brow of Franklin Roosevelt, but was the culmination of desires on the part of businessmen for the past at least decade and a half to, in effect, suppress competition and coordinate production and to proceed on a basis of cooperation rather than competition.

11
00:01:53.000 --> 00:02:23.000
Now, Roosevelt, in doing this, was not only, in effect, exceeding to this business desire for regulation, he's also, as I mentioned, involved in trying to prop up wages, because in order to get organized labor on board for this legislation, the production codes that each industry was permitted to establish would also include wages,

12
00:02:23.000 --> 00:02:44.000
So Roosevelt's stated purpose in doing all of this was to keep wages high, and the workweek short, and prices from declining too much as a result of excessive competition.

13
00:02:44.000 --> 00:02:48.000
He thinks declining prices are in some way a contributor to depression.

14
00:02:48.000 --> 00:03:03.000
Now, the effect of this was to raise prices on every good whose production had been organized into one of these cartels and on every good that used such artificially overpriced goods as inputs in its own production.

15
00:03:03.000 --> 00:03:13.000
So if FDR is saying that he wants higher wages, but he also wants business to be able to establish these production codes and establish minimum selling prices,

16
00:03:13.000 --> 00:03:20.000
and the selling prices, well that's going to tend to offset the higher wages because the things people buy are going to increase at the same time.

17
00:03:20.000 --> 00:03:27.000
So higher nominal wages don't mean a whole lot when so many goods are deliberately made more expensive.

18
00:03:27.000 --> 00:03:36.000
But nevertheless these minimum wages that were called for in these various production codes were extremely high by recent standards.

19
00:03:36.000 --> 00:03:43.000
The general minimum was 90% of the average hourly wage of 1933.

20
00:03:43.000 --> 00:03:51.000
So, when we think minimum wages, we're thinking, you know, whatever it is, $5 and change an hour in current terms.

21
00:03:51.000 --> 00:03:54.000
But these are very high minimums that are being imposed.

22
00:03:54.000 --> 00:04:01.000
And so, once again, the veteran-Galloway thesis pops in here that it's going to have the effect of discouraging employment.

23
00:04:01.000 --> 00:04:02.000
And that is, in fact, what happened.

24
00:04:02.000 --> 00:04:09.000
Wages were quite strong during the Great Depression, but the problem, of course, was that millions of Americans had no wages at all.

25
00:04:09.000 --> 00:04:21.000
In fact, as you read in that book, Out of Work, Americans, for example, bought more than twice as many refrigerators in 1935 when unemployment was over 20%,

26
00:04:21.000 --> 00:04:26.000
as they did in 1929 when unemployment was 3.2%.

27
00:04:26.000 --> 00:04:33.000
Beneath the surface of most New Deal programs, and of course the National Industrial Recovery Act was part of that,

28
00:04:33.000 --> 00:04:38.000
was the assumption that so-called purchasing power needed to be restored.

29
00:04:38.000 --> 00:04:44.000
And that, so therefore we need to increase people's wages so that they have the purchasing power

30
00:04:44.000 --> 00:04:48.000
to be able to acquire the goods that the economy is making available.

31
00:04:48.000 --> 00:04:55.000
Now of course, if you really want to increase purchasing power, the way to do that is to have more production.

32
00:04:55.000 --> 00:05:00.000
Because how, in fact, am I able to demand things in the marketplace?

33
00:05:00.000 --> 00:05:03.000
Only by virtue of my having produced something in the past,

34
00:05:03.000 --> 00:05:06.000
or contributed to the production of something in the past,

35
00:05:06.000 --> 00:05:09.000
and then I use the proceeds from that to acquire the things I need.

36
00:05:09.000 --> 00:05:13.000
So production is what makes demand of other goods possible.

37
00:05:13.000 --> 00:05:16.000
I mean, in effect, that's what Say's law says.

38
00:05:16.000 --> 00:05:20.000
But this insight does not seem to have penetrated.

39
00:05:20.000 --> 00:05:23.000
A publication called The Magazine of Wall Street

40
00:05:23.000 --> 00:05:26.920
Wall Street made an interesting observation to this effect, that purchasing power needed

41
00:05:26.920 --> 00:05:28.760
to be increased.

42
00:05:28.760 --> 00:05:32.720
Magazine of Wall Street came back and said, well, if the president really believes, as

43
00:05:32.720 --> 00:05:38.760
he seems to, that reducing the work week in order to spread work among more people and

44
00:05:38.760 --> 00:05:44.820
increasing wages would help the economy by boosting purchasing power, then the Magazine

45
00:05:44.820 --> 00:05:49.800
of Wall Street asked, why not swell purchasing power still more by establishing a 10-hour

46
00:05:49.800 --> 00:05:52.520
week and quadrupling wages?

47
00:05:52.520 --> 00:06:03.520
Well, again, this emphasis on purchasing power in itself is based on a misunderstanding of the causes of the depression, as we discussed in the last session.

48
00:06:03.520 --> 00:06:13.520
Well, given that the capital goods industries are the ones where the heaviest downturn has occurred, what can be done to reverse that?

49
00:06:13.520 --> 00:06:20.520
Well, you might think what you'd want to do is to create a climate favorable to business, and by which I don't mean subsidies to business,

50
00:06:20.520 --> 00:06:22.520
Just get out of the way of business.

51
00:06:22.520 --> 00:06:27.520
But instead, what Franklin Roosevelt did, and what came forth from his administration,

52
00:06:27.520 --> 00:06:31.520
was a series of ceaseless and bewildering regulatory measures,

53
00:06:31.520 --> 00:06:39.520
combined with tax increases, increased labor costs, and endless denunciations of economic royalists.

54
00:06:39.520 --> 00:06:41.520
And the Depression continued.

55
00:06:41.520 --> 00:06:44.520
By some miracle, apparently, the Depression continued.

56
00:06:44.520 --> 00:06:49.520
Even under these conditions of tax increases and everything else, the Depression still went on.

57
00:06:49.520 --> 00:06:54.520
Now the agricultural policies of Franklin Roosevelt are among the most interesting of all.

58
00:06:54.520 --> 00:07:00.520
If by interesting you mean hideous, evil and destructive, then yes, quite interesting.

59
00:07:00.520 --> 00:07:09.520
Falling prices are hindering economic recovery according to FDR, so therefore prices need to be raised by any means necessary.

60
00:07:09.520 --> 00:07:15.520
And he's looking at one sector of the economy at a time. Now he's going to look at the agricultural sector.

61
00:07:15.520 --> 00:07:23.520
And it's quite clear that the program of Herbert Hoover was not successful, because it was, in effect, a voluntary program.

62
00:07:23.520 --> 00:07:31.520
There was no way to prevent people from increasing their acreage or new people coming along and producing more of a given crop.

63
00:07:31.520 --> 00:07:41.520
So the Roosevelt policy in the Agricultural Adjustment Act is geared toward, in fact, placing limits on the amount of acreage you can bring into cultivation.

64
00:07:41.520 --> 00:07:57.520
So at first, the first phase of the Agricultural Adjustment Act involves dealing with the fact that at this moment, in 1933, you have supposedly a huge glut of agricultural goods.

65
00:07:57.520 --> 00:08:00.520
So we have to deal with that crisis right from the beginning.

66
00:08:00.520 --> 00:08:03.520
The very fact that that's a crisis is kind of interesting.

67
00:08:03.520 --> 00:08:20.520
And so the response is to start, as many of you know, to start destroying a lot of this surplus so as to increase prices for these goods, so to destroy 10 million acres of cotton and slaughter 6 million pigs and on and on down the line.

68
00:08:50.520 --> 00:08:56.520
in Texas, at the time that this program was initiated and he was told to plow under and destroy some cotton

69
00:08:56.520 --> 00:09:04.520
and he absolutely refused to take part in that and so in effect his cotton was boycotted, he couldn't sell it

70
00:09:04.520 --> 00:09:08.520
and he never sold any cotton ever again, is that right? That was it, that was it.

71
00:09:08.520 --> 00:09:18.520
So that, you know, that's what actually happened and it's funny that one criticism I got when I discussed the agriculture policy

72
00:09:18.520 --> 00:09:29.520
in the politically incorrect guide is that I wasn't fair to Roosevelt because I didn't outline all the arguments in favor of destroying these surpluses.

73
00:09:29.520 --> 00:09:37.520
And I thought, well, I guess I didn't, you know, throw me in jail, I guess I didn't.

74
00:09:37.520 --> 00:09:42.520
But I don't even know how to, where would I even begin to respond to that?

75
00:09:42.520 --> 00:09:47.520
Yeah, well I guess there are pros and cons to destroying wealth and crops.

76
00:09:47.520 --> 00:09:49.520
Anyway, there's no satisfying some people.

77
00:09:49.520 --> 00:09:54.520
Well, so in the short run, Franklin Roosevelt has to deal with the already existing stocks of goods

78
00:09:54.520 --> 00:09:58.520
whose abundance was leading to low prices, and so you have this destructive policy.

79
00:09:58.520 --> 00:10:02.520
But ultimately, rather than doing that every year,

80
00:10:02.520 --> 00:10:05.520
the other solution would be just simply to limit acreage in the future

81
00:10:05.520 --> 00:10:10.520
or to pay farmers to produce less or not to produce at all.

82
00:10:10.520 --> 00:10:22.520
Now, the Agriculture Secretary, Henry Wallace, who is described hysterically in John T. Flynn's book, The Roosevelt Myth,

83
00:10:22.520 --> 00:10:30.520
was a total Soviet dupe and everything else, he described this process of destroying crops.

84
00:10:30.520 --> 00:10:38.520
He said, this was a cleaning up of the wreckage from the old days of unbalanced production.

85
00:10:38.520 --> 00:10:48.520
Let's just leave that. Wallace obviously had some special insight into precisely what quantity of production would bring things into balance.

86
00:10:48.520 --> 00:11:01.520
The U.S. history text that I am forced to use, the text I use from about 1877 to the present, is by George Tyndall and David Shee.

87
00:11:01.520 --> 00:11:09.520
And they assure us that, quote, for a while these farm measures worked, unquote.

88
00:11:09.520 --> 00:11:17.520
Well, if by worked they mean that they raised the prices of food and clothing at a time when people were desperately poor, then they did work.

89
00:11:17.520 --> 00:11:23.520
Slaughtering animals and destroying crops did increase the prices of these items.

90
00:11:23.520 --> 00:11:25.520
Congratulations.

91
00:11:25.520 --> 00:11:29.520
Shortly after the Agricultural Adjustment Act was established,

92
00:11:29.520 --> 00:11:36.520
The Department of Agriculture released the findings of its study of the American diet during these difficult years.

93
00:11:36.520 --> 00:11:44.520
The study constructed four sample diets, liberal, moderate, minimum and emergency, below subsistence.

94
00:11:44.520 --> 00:11:51.520
It found that America was not producing enough food to sustain its population at the minimum subsistence diet.

95
00:11:51.520 --> 00:12:03.520
John T. Flynn said that the last course a government run by sane men would adopt to get this problem solved would be to destroy a good part of what we do produce.

96
00:12:03.520 --> 00:12:05.520
But of course that was the policy.

97
00:12:05.520 --> 00:12:15.520
When the Supreme Court struck down the Agricultural Adjustment Act and Franklin Roosevelt's program, the President conjured up a horrifying picture.

98
00:12:15.520 --> 00:12:36.520
He said, Are we going to take the hands of the Federal Government completely off any effort to adjust the growing of national crops, and go right straight back to the old principle that every farmer is a lord of his own farm, and can do anything he wants, raise anything, any old time, in any quantity, and sell any time he wants?

99
00:12:36.520 --> 00:12:46.520
Well, this grave peril was wisely averted.

100
00:12:46.520 --> 00:12:51.520
Meanwhile, evidence that FDR's approach was wrong-headed continued to mount.

101
00:12:51.520 --> 00:12:56.520
The Department of Agriculture's Bureau of Agricultural Economics reported in 1936

102
00:12:56.520 --> 00:13:00.520
that in the case of cotton, farm income would have been at least as high

103
00:13:00.520 --> 00:13:04.520
and perhaps even higher in the absence of the Agricultural Adjustment Act.

104
00:13:04.520 --> 00:13:24.520
Following month, Cornell University's James Boyle argued in the Atlantic that the Agricultural Adjustment Act had been responsible for the joblessness of at least 2 million Americans, especially sharecroppers and other farm laborers, because of course if you think about it, what is there for a farm laborer to do when you're not producing or cutting back on production?

105
00:13:24.520 --> 00:13:45.520
And although the AAA was intended to increase farm income, Jim Powell in his book FDR's Folly notes that farmers actually found themselves worse off because FDR's National Recovery Administration had been even more successful in forcing up the prices that consumers, including farmers, had to pay for manufactured goods.

106
00:13:45.520 --> 00:13:51.520
Now as we well know, this kind of massive government intervention into agriculture never went away.

107
00:13:51.520 --> 00:13:58.520
And the gentleman who was with the USDA, I've sort of made him promise that he's going to share at least one horror story with us later.

108
00:13:58.520 --> 00:14:05.520
But even in the 1980s, a decade that people associate with, rightly or wrongly, associate with government retrenchment,

109
00:14:05.520 --> 00:14:14.520
you still get $30 billion annually on farm programs. Two-thirds of them are subsidies, two-thirds of that money,

110
00:14:14.520 --> 00:14:18.520
and then the other in higher prices to consumers.

111
00:14:18.520 --> 00:14:27.520
The price support is the key mechanism here. The Federal Government establishes an amount that it will pay farmers per unit of a given product.

112
00:14:27.520 --> 00:14:32.520
At that price, the Federal Government will buy any amount that the farmers are willing to sell.

113
00:14:32.520 --> 00:14:37.520
So farmers are not going to sell on the market if the Federal Government is going to pay them more, of course.

114
00:14:37.520 --> 00:14:42.520
The Federal Government therefore winds up with enormous amounts of various agricultural products on its hands.

115
00:14:42.520 --> 00:14:47.360
on its hands, and so typically or at least in many cases, it will just destroy them,

116
00:14:47.360 --> 00:14:53.840
because anything else it does will just glut the market again and create more problems.

117
00:14:53.840 --> 00:14:59.260
So when you consider what's actually happening here, the logic of it is indeed quite perverse.

118
00:14:59.260 --> 00:15:04.920
By offering price supports to farmers, the federal government is going to encourage more

119
00:15:04.920 --> 00:15:09.260
agricultural production than would have occurred without such supports, so it creates surpluses.

120
00:15:09.260 --> 00:15:12.060
Then it has to figure out a way of getting rid of these surpluses.

121
00:15:12.060 --> 00:15:14.700
So it will simply destroy them very often.

122
00:15:14.700 --> 00:15:22.660
So in the 1980s, USDA marketing orders were responsible for destroying 50 million lemons a year,

123
00:15:22.660 --> 00:15:26.940
100 million pounds of raisins, a billion oranges and so on.

124
00:15:26.940 --> 00:15:33.340
Since 1937, as much as 40% of all oranges grown annually in the US have by law been destroyed,

125
00:15:33.340 --> 00:15:36.140
fed to livestock or exported.

126
00:15:36.140 --> 00:15:40.460
Quotas on peanuts have in effect doubled the price of peanuts and peanut butter.

127
00:15:40.460 --> 00:15:44.460
Dairy subsidies have amounted to each dairy cow in America

128
00:15:44.460 --> 00:15:48.460
being subsidized to about the tune of about $700 a year,

129
00:15:48.460 --> 00:15:52.460
which happens to be an amount greater than the income of half the world's population,

130
00:15:52.460 --> 00:15:54.460
according to one scholar.

131
00:15:54.460 --> 00:16:00.460
For most of the 20th century, the price of sugar to Americans was 500% higher than the world price.

132
00:16:00.460 --> 00:16:05.460
Sugar producers are getting an average of $235,000 a year from that policy.

133
00:16:05.460 --> 00:16:09.460
So again, you can understand why it is that these policies would stay in effect.

134
00:16:09.460 --> 00:16:17.460
And of course, all American industries that use sugar are at a competitive disadvantage as a result because they don't have to pay a higher price for sugar.

135
00:16:17.460 --> 00:16:20.460
So this is one of the lasting legacies of the New Deal.

136
00:16:20.460 --> 00:16:22.460
Okay, we have Franklin Roosevelt to thank.

137
00:16:22.460 --> 00:16:34.460
Basically, primarily big farmers and agricultural concerns and bureaucrats in the Department of Agriculture make very comfortable livings at the expense of the rest of us.

138
00:16:34.460 --> 00:16:38.460
The program favors the largest farmers.

139
00:16:38.460 --> 00:16:42.060
The federal payments were based on the amount of acreage that you owned and the amount of

140
00:16:42.060 --> 00:16:44.940
acreage that you could therefore keep out of production.

141
00:16:44.940 --> 00:16:52.780
So in a 1989 study, the USDA, turns out, gave in direct payment to the 29,000 largest farms

142
00:16:52.780 --> 00:16:58.020
an average of $46,000, an amount that exceeded the net worth of over half the families in

143
00:16:58.020 --> 00:16:59.020
America.

144
00:16:59.020 --> 00:17:02.520
That's a little excessive, I think.

145
00:17:02.520 --> 00:17:07.860
So that's a little bit something about the agricultural program.

146
00:17:07.860 --> 00:17:13.860
Now what I'm going to note to you now is perhaps not entirely fair, but why not at least note it?

147
00:17:13.860 --> 00:17:21.860
It's just interesting information and it probably makes more sense to discuss this in the context of the cartels

148
00:17:21.860 --> 00:17:27.860
and the National Industrial Recovery Administration Act and the National Recovery Administration.

149
00:17:27.860 --> 00:17:32.860
But this has to do with the fascism element in all this.

150
00:17:32.860 --> 00:17:47.860
And John T. Flynn points out why it is that people like Mussolini or people who had fascist sympathies in effect were sympathetic to Roosevelt.

151
00:17:47.860 --> 00:17:56.860
And in fact why it was that people who were sympathetic to Roosevelt sometimes had fascist sympathies or were sympathetic to what Mussolini was doing with the economy.

152
00:17:56.860 --> 00:18:01.900
So for example, speaking about Mussolini, John T. Flynn says what they liked particularly was his

153
00:18:01.900 --> 00:18:07.260
corporative system. He organized each trade or industrial group or professional group

154
00:18:07.900 --> 00:18:13.900
into a state-supervised trade association. He called it a cooperative. These cooperatives

155
00:18:13.900 --> 00:18:19.900
operated under state supervision and could plan production, quality, prices, distribution, labor

156
00:18:19.900 --> 00:18:25.820
standards, etc. The NRA provided that in American industry, each industry should be organized into

157
00:18:25.820 --> 00:18:28.620
to a federally supervised trade association.

158
00:18:28.620 --> 00:18:31.660
It was not called a cooperative, it was called a code authority,

159
00:18:31.660 --> 00:18:33.620
but it was essentially the same thing.

160
00:18:33.620 --> 00:18:35.340
This was fascism.

161
00:18:35.340 --> 00:18:38.980
Well, Mussolini himself, who was an admirer of New Deal policies,

162
00:18:38.980 --> 00:18:44.540
went so far as to describe FDR as a social fascist.

163
00:18:44.540 --> 00:18:46.660
But he wasn't the only admirer of the president.

164
00:18:46.660 --> 00:18:48.420
Late in the first year of his administration,

165
00:18:48.420 --> 00:18:51.980
FDR told his secretary of the interior

166
00:18:51.980 --> 00:18:54.420
that, quote, what we were doing in this country

167
00:18:54.420 --> 00:19:01.420
These were some of the things that were being done in Russia and even some things that were being done under Hitler in Germany, but we were doing them in an orderly way.

168
00:19:06.420 --> 00:19:12.420
Now Hitler himself wrote to the U.S. Ambassador in early 1934 and says,

169
00:19:12.420 --> 00:19:17.420
The Reich Chancellor requests Mr. Dodd to present his greetings to President Roosevelt.

170
00:19:17.420 --> 00:19:22.420
He congratulates the President upon his heroic effort in the interest of the American people.

171
00:19:22.420 --> 00:19:30.420
The President's successful struggle against economic distress is being followed by the entire German people with interest and admiration.

172
00:19:30.420 --> 00:19:40.420
The Reich Chancellor is in accord with the President that the virtues of sense of duty, readiness for sacrifice and discipline must be the supreme rule for the whole nation.

173
00:19:40.420 --> 00:19:53.420
This moral demand, which the President is addressing to every single citizen, is only the quintessence of German philosophy of the state, expressed in the motto, the public will before the private gain.

174
00:19:53.420 --> 00:20:04.420
Hitler later told a New York Times correspondent, I have sympathy for Mr. Roosevelt because he marches straight toward his objectives over Congress, lobbies and bureaucracy.

175
00:20:04.420 --> 00:20:10.920
Hitler later described himself as the only European leader who expressed

176
00:20:10.920 --> 00:20:16.140
quote understanding of the methods and motives of President Roosevelt all right

177
00:20:16.140 --> 00:20:20.300
well all right I don't know if that's fair or not but it did happen right can't

178
00:20:20.300 --> 00:20:26.020
I mention it I'll get a lot of hate mail for that but then I'd say well why are

179
00:20:26.020 --> 00:20:29.060
you listening to this lecture series anyway you had to know you weren't going

180
00:20:29.060 --> 00:20:51.060
Now still other aspects of the New Deal damage the economy even further. I'm going to postpone discussion of the public works programs for just a moment.

181
00:20:51.060 --> 00:21:01.060
New Deal labor laws are going to be, as I said earlier, that's the subject I'm going to cover in my discussion of labor history tomorrow.

182
00:21:01.060 --> 00:21:09.060
I had a whole chapter on the history of American labor unions that would have gone into my book, but for space reasons it just didn't make it.

183
00:21:09.060 --> 00:21:14.060
So I'll be using some of that tomorrow. So we won't talk about that right now.

184
00:21:14.060 --> 00:21:30.060
Other than to say that New Deal labor laws did in fact increase labor costs, and veteran Galloway makes some estimates with regard to just the degree to which that damaged the economy, and it was not insubstantial.

185
00:21:30.060 --> 00:21:41.060
There's also the increased labor costs associated with social security, because of course you understand that your employer puts in half of that for you, so you really are only paying half.

186
00:21:41.060 --> 00:22:11.060
The Social Security issue, I feel like this is as dead a horse as there is in terms of people writing and talking about it, so I hope you'll excuse me if I decide that Social Security

187
00:22:11.060 --> 00:22:30.060
The funny thing about Social Security though, I can't resist noting, is that the time that it was established, if you look at the average life expectancy of the American man, it's about 57, the American woman 61, so the average American by age 65 would be dead.

188
00:22:30.060 --> 00:22:37.060
You wouldn't have to pay out anything to them. So as time goes on, we get healthier and our life expectancy increases.

189
00:22:37.060 --> 00:22:50.060
We also have the fact that FDR is fairly consistently making pretty severe rhetorical salvos against the business community, like they're conspiring against recovery, and they're conspiring against him, and then the tax increases all the time.

190
00:22:50.060 --> 00:22:53.060
These are not exactly recipes for economic recovery.

191
00:22:53.060 --> 00:23:08.060
Bob Higgs, Regime Uncertainty, Help to Hinder the Recovery

192
00:23:23.060 --> 00:23:53.060
The independent review, I believe, started in 1997, and at least in the first year of that publication, Higgs had an article on, I can't think of the title of it, but it was something along the lines of why the Great Depression lasted as long as it did, and he adds this additional, it's not just some of the things we've looked at, it's also something, a phenomenon that Higgs identifies as regime uncertainty. When the business community is uncertain of the intentions of the regime, is the regime going to

193
00:23:53.060 --> 00:24:06.060
If the regime is hostile to business or is unpredictable and its programs are sort of chaotic and haphazard,

194
00:24:06.060 --> 00:24:13.060
this is going to have an effect on business confidence and a willingness to invest, and a willingness to start up businesses.

195
00:24:13.060 --> 00:24:20.060
So what you tended to have, according to Higgs, was businesses refraining from investing altogether.

196
00:24:20.060 --> 00:24:30.060
Now this point is confirmed by Benjamin Anderson, who had a book on the economics of public welfare.

197
00:24:30.060 --> 00:24:33.060
Benjamin Anderson said,

198
00:24:33.060 --> 00:24:40.060
The impact of all these multitudinous measures, industrial, agricultural, financial, monetary and other,

199
00:24:40.060 --> 00:24:46.060
upon a bewildered industrial and financial community, was extraordinarily heavy.

200
00:24:46.060 --> 00:24:51.060
We must add the effect of continuing, disquieting utterances by the President.

201
00:24:51.060 --> 00:24:55.060
He had castigated the bankers in his inaugural speech.

202
00:24:55.060 --> 00:25:01.060
He had made a slurring comparison of British and American bankers in his speech in the summer of 1934.

203
00:25:01.060 --> 00:25:06.060
That private enterprise could survive and rally in the midst of so great a disorder

204
00:25:06.060 --> 00:25:11.060
is an amazing demonstration of the vitality of private enterprise.

205
00:25:11.060 --> 00:25:21.060
Now, on this thesis of Higgs on regime uncertainty, he points out that, he says, for one thing, we can engage this a little bit on the basis of polling data.

206
00:25:21.060 --> 00:25:36.060
Now, organized polling began only in the 1930s, and it wasn't until 1939 that pollsters began to compile data on the perceptions of businessmen and the general public regarding the climate for investment.

207
00:25:36.060 --> 00:25:44.060
That year, an organization called the American Institute of Public Opinion, AIPO, posed the question,

208
00:25:44.060 --> 00:25:51.060
do you think the attitude of the Roosevelt administration toward business is delaying business recovery?

209
00:25:51.060 --> 00:25:57.060
Some 54% said yes, and 26% said no, with the remainder having no opinion.

210
00:25:57.060 --> 00:26:04.060
The AIPO also asked Americans, do you think that 10 years from now there will be more or less government control of business?

211
00:26:04.060 --> 00:26:14.860
Business, 56% said more, 22% less, with 22% either expecting no change or having no opinion.

212
00:26:14.860 --> 00:26:20.360
Also in 1939, Fortune magazine asked business executives, with which of these statements

213
00:26:20.360 --> 00:26:22.540
do you come closest to agreeing?

214
00:26:22.540 --> 00:26:26.980
Number one, the policies of the administration have so affected the confidence of businessmen

215
00:26:26.980 --> 00:26:32.060
that recovery has been seriously held back, or number two, businessmen generally have

216
00:26:32.060 --> 00:26:51.060
In late 1941, on the eve of American entry into World War II, Fortune magazine polled business executives regarding the kind of economic regime they expected to see in place after the war.

217
00:26:51.060 --> 00:26:59.060
The Christian magazine polled business executives regarding the kind of economic regime they expected to see in place after the war.

218
00:27:00.060 --> 00:27:05.060
93% believed that private property would be further compromised in one way or another.

219
00:27:06.060 --> 00:27:14.060
36.7% expected, quote, a semi-socialized society in which there will be very little room for the profit system to operate.

220
00:27:15.060 --> 00:27:20.060
And another 3% anticipated a complete economic dictatorship along fascist or communist lines.

221
00:27:21.060 --> 00:27:25.700
All these figures reveal serious and ongoing misgivings and uncertainty on the part of

222
00:27:25.700 --> 00:27:27.100
business.

223
00:27:27.100 --> 00:27:32.940
And Higgs draws this conclusion, he says, given the unparalleled outpouring of business

224
00:27:32.940 --> 00:27:39.460
threatening laws, regulations and court decisions, the oft-stated hostility of President Roosevelt

225
00:27:39.460 --> 00:27:44.940
and his lieutenants toward investors as a class, and the character of the anti-business

226
00:27:44.940 --> 00:27:52.220
This zealots who composed the strategists and administrators of the New Deal from 1935 to 1941.

227
00:27:52.220 --> 00:27:56.940
The political climate could hardly have failed to discourage some investors from making fresh

228
00:27:56.940 --> 00:27:59.980
long-term commitments.

229
00:27:59.980 --> 00:28:04.540
We have further evidence of this point about regime uncertainty in financial markets and

230
00:28:04.540 --> 00:28:06.660
investment data.

231
00:28:06.660 --> 00:28:10.860
Higgs notes that investments made during the first and second Roosevelt administrations

232
00:28:10.860 --> 00:28:14.300
remained far more concentrated in short-term assets

233
00:28:14.300 --> 00:28:17.580
than the investments made during the latter half of the 1920s.

234
00:28:17.580 --> 00:28:19.980
That's Higgs.

235
00:28:19.980 --> 00:28:24.260
The kind of sustained long-term investment

236
00:28:24.260 --> 00:28:26.500
was precisely what uncertain businessmen

237
00:28:26.500 --> 00:28:27.780
were moving away from.

238
00:28:27.780 --> 00:28:29.780
In the bond market, long-term bonds

239
00:28:29.780 --> 00:28:31.980
carried a substantial risk premium,

240
00:28:31.980 --> 00:28:34.260
indicating that business leaders were very

241
00:28:34.260 --> 00:28:38.020
uncertain about the future.

242
00:28:38.020 --> 00:28:40.180
So this uncertainty about the future,

243
00:28:40.180 --> 00:28:45.220
If we add in the polling data that we just looked at indicates an uncertainty about future

244
00:28:45.220 --> 00:28:50.540
government policy. Businessmen took seriously the various ravings of the, what Higgs calls,

245
00:28:50.540 --> 00:28:56.420
anti-business zealots who occupied the White House. At one point, by the way, Roosevelt

246
00:28:56.420 --> 00:29:04.020
attempted to impose by executive order a 100% top income tax rate for anyone earning over

247
00:29:04.020 --> 00:29:11.020
The Illinois Manufacturers Association, in a statement forwarded to Roosevelt, via Commerce Secretary Daniel Roper, cautioned that the principal obstacle to business revival in the United States of America, is the lack of the ability to do business.

248
00:29:34.020 --> 00:29:36.580
with accompanying increase in unemployment

249
00:29:36.580 --> 00:29:40.900
is the almost universal attitude of uncertainty and apprehension

250
00:29:40.900 --> 00:29:45.140
on the part of business executives regarding the future policies of the federal government

251
00:29:45.140 --> 00:29:48.580
on issues directly affecting the welfare of private enterprise.

252
00:29:48.580 --> 00:29:51.300
Now that tends to lend support also to the Higgs thesis.

253
00:29:51.300 --> 00:29:54.020
I've dug up some quotations like this.

254
00:29:55.140 --> 00:29:59.780
In the fall of 1934, a meeting of more than a hundred business executives

255
00:29:59.780 --> 00:30:02.020
and financial experts was held on Long Island.

256
00:30:02.020 --> 00:30:08.660
New York, under the auspices of the American Management Association.

257
00:30:08.660 --> 00:30:13.520
Their report, which was approved with only two dissenting votes and sent to Roosevelt

258
00:30:13.520 --> 00:30:18.860
through Secretary of the Treasury Henry Morgenthau, concluded the following.

259
00:30:18.860 --> 00:30:26.620
Uncertainties concerning the fiscal situation likely to result from the government's borrowing

260
00:30:26.620 --> 00:30:31.980
and spending activities with consequent effects upon monetary and revenue policies are retarding

261
00:30:31.980 --> 00:30:34.860
in Reemployment and Recovery.

262
00:30:34.860 --> 00:30:40.700
Even Walter Lippmann, himself no libertarian and in fact an erstwhile supporter of the

263
00:30:40.700 --> 00:30:47.180
New Deal, broke with Roosevelt over the president's ongoing inability or refusal to come up with

264
00:30:47.180 --> 00:30:52.180
anything more creative than still more punitive measures against business.

265
00:30:52.180 --> 00:30:56.180
Roosevelt's measures, according to Lippmann, only retarded enterprise at a time when the

266
00:30:56.180 --> 00:31:03.980
The relief of unemployment and of insolvency depends primarily upon the revival of enterprise.

267
00:31:03.980 --> 00:31:07.400
What the economy needed, of course, was for Roosevelt to give business business a breathing

268
00:31:07.400 --> 00:31:12.180
spell free of new reform initiatives, but no such spell was forthcoming.

269
00:31:12.180 --> 00:31:18.260
Instead, in June 1935, Roosevelt proposed a series of tax increases calling for higher

270
00:31:18.260 --> 00:31:23.840
inheritance taxes, gift taxes, personal income taxes, as well as a graduated scale of corporate

271
00:31:23.840 --> 00:31:24.840
Income Taxes

272
00:31:24.840 --> 00:31:30.360
Lippmann, who is still frustrated by the New Deal, commented that the tax bill reflected

273
00:31:30.360 --> 00:31:36.000
quote, the absence of any plan and the lack of intellectual effort, the work of tired

274
00:31:36.000 --> 00:31:41.500
brains relying on their wishes and their prejudices and throwing out casual suggestions which

275
00:31:41.500 --> 00:31:44.800
they are too hot and bothered to think about.

276
00:31:44.800 --> 00:31:51.000
Even the New Republic magazine complained that the whole conception behind the tax bill

277
00:31:51.000 --> 00:31:54.860
overlooks the fundamental fact that there is little point in trying to redistribute

278
00:31:54.860 --> 00:31:59.560
wealth as long as nothing is done to produce more than a fraction of the wealth we are equipped

279
00:31:59.560 --> 00:32:01.800
to create.

280
00:32:01.800 --> 00:32:06.660
The tax bill that Congress ultimately passed fell short of what FDR had requested.

281
00:32:06.660 --> 00:32:10.880
But the effort helped to alienate a good portion of the president's supporters.

282
00:32:10.880 --> 00:32:17.680
Gary Dean Best says this, previously pro-Roosevelt newspapers, news paper men, businessmen and

283
00:32:17.680 --> 00:32:22.800
Progressives abandoned him in large numbers over the tax bill, many of them not to return

284
00:32:22.800 --> 00:32:24.760
to the New Deal fold again.

285
00:32:24.760 --> 00:32:28.960
In large part, the defection resulted because the arguments put forth in defense of the

286
00:32:28.960 --> 00:32:34.080
bill were so quickly and easily discredited, and that when these layers of argument were

287
00:32:34.080 --> 00:32:40.280
peeled away, nothing remained to justify the bill but prejudice, vindictiveness and spite."

288
00:32:40.280 --> 00:33:09.280
Okay, well now we do have to get of course to the issue of public works programs because we know that people, you know, people got jobs with these things and didn't they help the country and help people find employment and I mean that's how Ralph Cramden met Alice, he was working on the WPA and she was handing out the shovels.

289
00:33:09.280 --> 00:33:13.280
See, there used to be a show called The Honeymooners.

290
00:33:13.280 --> 00:33:18.280
Anyway, Jackie Gleason is one of my favorite old shows.

291
00:33:18.280 --> 00:33:22.280
Anyway, so he tells that story about the WPA.

292
00:33:22.280 --> 00:33:28.280
There are all kinds of jokes you can tell about the WPA and the silly jobs people were given.

293
00:33:28.280 --> 00:33:35.280
When I was doing some media thing and I was talking about the WPA, sorry, the Works Progress Administration,

294
00:33:35.280 --> 00:33:46.280
As a public works thing, the idea is that we put people to work building bridges or stadiums or whatever, anything, just to put people to work on the government dole.

295
00:33:46.280 --> 00:33:53.280
And I gave the example that some of these jobs didn't seem to me to be necessary.

296
00:33:53.280 --> 00:34:02.280
And I said, for instance, there were people under the auspices of the WPA who were paid to chase starlings off the White House lawn.

297
00:34:02.280 --> 00:34:16.280
and so I said that, and then later I looked at the transcript of the interview and it had me saying that they were paid to chase starlets off the White House lawn. Starlets, so they're obviously thinking of the Clinton White House, I guess.

298
00:34:16.280 --> 00:34:30.280
It's so cheap making Clinton jokes, isn't it? I mean, the guy's been out of office for years now, who the heck cares, but I don't know, that one just was screaming out, I hope you'll forgive me for that, it's the only Clinton joke for the whole week, so savor it.

299
00:34:30.280 --> 00:34:35.280
What we need to point out first of all is the economics of these types of programs.

300
00:34:35.280 --> 00:34:39.280
As we all know, obviously the government cannot create jobs.

301
00:34:39.280 --> 00:34:46.280
What the government does is takes money from the private sector and spends it to pay people to perform some task.

302
00:34:46.280 --> 00:34:53.280
I was taken to task for suggesting that because there's no profit and loss system in government public works programs,

303
00:34:53.280 --> 00:34:59.280
we have no way of assessing rationally whether these programs are a net benefit or not,

304
00:34:59.280 --> 00:35:06.280
The government doesn't go out of business. The government's revenue comes through coercion.

305
00:35:06.280 --> 00:35:12.280
So there's no way of knowing. Would people, in the absence of this, voluntarily have paid for this project or not?

306
00:35:12.280 --> 00:35:18.280
There's no way to know. Whereas in the private sector, you have to test everything you do by profit and loss.

307
00:35:18.280 --> 00:35:22.280
If people aren't willing to purchase this product, then you go out of business.

308
00:35:22.280 --> 00:35:28.280
There's something that guides you, and you're guided in how much to produce, where to produce, what type of thing to produce.

309
00:35:28.280 --> 00:35:33.480
None of these forms of evaluation are available to a government program.

310
00:35:33.480 --> 00:35:35.180
It's just an obvious point.

311
00:35:35.180 --> 00:35:38.080
It's a point that Mises repeatedly makes in his book, Bureaucracy.

312
00:35:38.080 --> 00:35:45.280
This is the difference between a profit-making firm and the government sector.

313
00:35:45.280 --> 00:35:49.880
Now, what, in fact, these programs did was to divert capital from the private sector

314
00:35:49.880 --> 00:35:52.480
and thereby inhibit job creation.

315
00:35:52.480 --> 00:35:57.280
In fact, there are studies that are cited in the Powell book that I just refer you to,

316
00:35:57.280 --> 00:36:11.280
In which economists have suggested that the public sector jobs created by New Deal spending programs either simply displaced or even on net destroyed jobs, destroyed private sector jobs.

317
00:36:12.280 --> 00:36:22.280
So the various public works programs that FDR established and the billions of dollars spent on them served to dry up capital in an already capital starved private sector

318
00:36:22.280 --> 00:36:27.280
in favor of government projects that were, in and of themselves, ipso facto inherently wasteful

319
00:36:27.280 --> 00:36:33.280
because they lacked the kind of profit and loss test that guides entrepreneurs in their investment decisions.

320
00:36:33.280 --> 00:36:37.280
So the problem, therefore, with anecdotal evidence about the New Deal

321
00:36:37.280 --> 00:36:43.280
and people talking about, you know, what would I have done if my grandfather hadn't had the job from the WPA or something,

322
00:36:43.280 --> 00:36:51.280
is that, of course, the WPA job, you know, and I hate to lecture this group, you all know Bastiat's what is seen and what is not seen,

323
00:36:51.280 --> 00:36:54.280
But we all see the jobs created by the government.

324
00:36:54.280 --> 00:36:57.280
Nobody knows exactly which jobs are destroyed

325
00:36:57.280 --> 00:37:00.280
because of all these resources being sucked out of the private sector.

326
00:37:00.280 --> 00:37:04.280
You can't know which jobs are gone as a result of that.

327
00:37:04.280 --> 00:37:08.280
So the costs of this are, in effect, invisible or unknown.

328
00:37:08.280 --> 00:37:11.280
The benefits are clearly earmarked.

329
00:37:11.280 --> 00:37:13.280
Hey, look, these people have jobs.

330
00:37:13.280 --> 00:37:15.280
So naturally, people are going to support that.

331
00:37:15.280 --> 00:37:18.280
They have no way of seeing what the costs of it are.

332
00:37:18.280 --> 00:37:26.280
Well, there's also, as Tom DiLorenzo has pointed out, and a great many other scholars beginning in the 1970s began to point out,

333
00:37:26.280 --> 00:37:30.280
was that there's a peculiar distribution of the spending on these projects,

334
00:37:30.280 --> 00:37:41.280
because it seems to be the case that a lot of this money for WPA work went to areas of the country that didn't seem to be the most depressed areas.

335
00:37:41.280 --> 00:37:47.280
The South was hit particularly hard and yet the South received the least assistance in WPA money.

336
00:37:47.280 --> 00:37:56.280
And what has been suggested by a whole line of economic historians is that there may be a political explanation for this.

337
00:37:56.280 --> 00:38:00.280
I'm sorry that your innocent ears have to be exposed to that cynical conclusion.

338
00:38:00.280 --> 00:38:03.280
But that in fact it was a desire to get votes.

339
00:38:03.280 --> 00:38:06.280
And given that the South, the South, if Satan himself...

340
00:38:06.280 --> 00:38:08.280
Well, I don't want to put it quite that way because the South would not vote for...

341
00:38:08.280 --> 00:38:10.280
They would just not vote in that case.

342
00:38:10.280 --> 00:38:11.280
They would still not vote for the Republican.

343
00:38:11.280 --> 00:38:15.280
They would just not vote if Satan were running on the Democratic ticket.

344
00:38:15.280 --> 00:38:17.360
But they would basically vote for any Democrat at that point.

345
00:38:17.360 --> 00:38:19.720
They remember Reconstruction even still.

346
00:38:19.720 --> 00:38:21.640
They're not going to vote for a Republican.

347
00:38:21.640 --> 00:38:22.680
They're going to vote for the Democrats.

348
00:38:22.680 --> 00:38:25.840
So FDR has got a lock on that section of the country.

349
00:38:25.840 --> 00:38:30.280
So why bother with too many government jobs down there?

350
00:38:30.280 --> 00:38:32.280
But there seems to be a correlation.

351
00:38:32.280 --> 00:38:34.840
Again, it doesn't necessarily imply causation or relationship.

352
00:38:34.840 --> 00:38:39.600
But there is a correlation between how much Franklin Roosevelt seemed

353
00:38:39.600 --> 00:38:42.760
to need that state politically in terms of electoral votes

354
00:38:42.760 --> 00:38:46.040
and how many UWPA jobs they got.

355
00:38:46.040 --> 00:38:47.840
And so, as I say, this has been done,

356
00:38:47.840 --> 00:38:51.520
there have actually been studies done that have looked into this.

357
00:38:51.520 --> 00:38:55.840
Gavin Wright found that political factors, he believes,

358
00:38:55.840 --> 00:39:00.480
can account for 80% of the interstate differential in New Deal spending.

359
00:39:00.480 --> 00:39:04.640
So the South had given FDR two-thirds of the vote.

360
00:39:04.640 --> 00:39:06.480
Two-thirds of the vote went to FDR.

361
00:39:06.480 --> 00:39:09.520
So it's much more politically secure for him than the West.

362
00:39:09.520 --> 00:39:12.320
And so he didn't have as much need, in effect, to buy their votes.

363
00:39:12.320 --> 00:39:35.320
WPA workers were often pressured into supporting Roosevelt's favorite candidates, or changing their party affiliations, or contributing to FDR's re-election campaign.

364
00:39:35.320 --> 00:40:05.320
A Senate committee, in fact, undertook an investigation of these programs and found a great many cases of WPA employees being instructed to contribute a portion of their salaries to the President's re-election campaign, if they wish to remain employed, or of people being thrown off the relief rolls for refusing to pledge their support for a favored candidate, and of demands that registered Republicans on relief register as Democrats in order to keep their jobs. But there's still more political intimidation that occurred under Roosevelt.

365
00:40:05.320 --> 00:40:19.320
When Fr. James Gillis, who was a Paulist priest, sort of an old righty type guy, criticized Franklin Roosevelt and his court packing scheme, which we haven't gotten to yet, the FCC took his license away.

366
00:40:19.320 --> 00:40:29.320
As early as 1935, Roosevelt was requesting that the FBI investigate a variety of conservative, pro-market type organizations.

367
00:40:29.320 --> 00:40:40.320
and later, of course, Roosevelt became notorious for secretly seeking proof that there was Nazi money and Nazi influence going into the America First Committee,

368
00:40:40.320 --> 00:40:44.320
which was the committee that did not want American involvement in World War II.

369
00:40:44.320 --> 00:40:51.320
They never found any such money, of course, but that was sort of typical of FDR.

370
00:40:51.320 --> 00:41:04.280
Now, in 1937, we get Franklin Roosevelt's so-called court packing scheme, because the

371
00:41:04.280 --> 00:41:09.720
court has been striking down some of his most cherished legislation, and in particular the

372
00:41:09.720 --> 00:41:16.400
NRA and the AAA, and Roosevelt is going around condemning this type of horse and buggy jurisprudence,

373
00:41:16.400 --> 00:41:46.400
Robert Roosevelt was one of his students, because he says that, you know, these old fogies on the Supreme Court, they're taking us back to the horse and buggy days, you know, whereas now that we, apparently now that we have cars that operate on their own steam, the Constitution needs to be changed or something, but anyway, that's his thinking, that this is old fashioned and we need these programs for recovery and for heaven's sake. But when Roosevelt first proposes his court packing scheme, he conceals its true purpose,

374
00:41:46.400 --> 00:41:53.120
The aim was that for every Supreme Court justice over the age of 70, the president gets to

375
00:41:53.120 --> 00:41:56.520
name an additional justice.

376
00:41:56.520 --> 00:42:02.380
And given that six of the nine Supreme Court justices were over the age of 70, this would

377
00:42:02.380 --> 00:42:07.000
have increased the court to a potential 15 justices, and naturally they would have been

378
00:42:07.000 --> 00:42:12.680
justices who shared Roosevelt's very, very broad interpretation of the Constitution.

379
00:42:12.680 --> 00:42:16.680
But he portrayed this at first as an attempt to help the Supreme Court because they had

380
00:42:16.680 --> 00:42:23.360
a backlog of cases and they just needed more bodies to help them with this workload.

381
00:42:23.360 --> 00:42:27.240
And that was such an insult to people's intelligence when he tried to portray it that way that

382
00:42:27.240 --> 00:42:30.980
even his own supporters said, look, if you just want to pack the court with your friends,

383
00:42:30.980 --> 00:42:34.000
why don't you at least have the decency to come out and say so?

384
00:42:34.000 --> 00:42:38.660
So he finally did say that and say, all right, I am doing this because I think we need to

385
00:42:38.660 --> 00:42:45.660
to Rescue the Constitution from these unreasonably narrow Supreme Court justices.

386
00:42:48.420 --> 00:42:54.220
The opposition of this was unbelievable and even the Democrats, FDR's fellow Democrats,

387
00:42:54.220 --> 00:43:01.080
many of them had to depart from the President on this matter. The Senate Judiciary Committee

388
00:43:01.080 --> 00:43:08.080
said this, we recommend the rejection of this bill as a needless, futile and utterly dangerous

389
00:43:08.660 --> 00:43:23.660
Its practical operation would be to make the Constitution what the executive or legislative branches of the government choose to say it is, an interpretation to be changed with each change of administration.

390
00:43:23.660 --> 00:43:33.660
It is a measure which should be so emphatically rejected that its parallel will never again be presented to the free representatives of the free people of America.

391
00:43:33.660 --> 00:43:40.660
Well, the bill was rejected, but that does not mean that FDR's intimidation of the court had no effects.

392
00:43:40.660 --> 00:43:51.660
There's a lot of speculation that Justice Owen Roberts was sort of spooked by this whole campaign

393
00:43:51.660 --> 00:43:57.660
and began to become much more friendly to the Roosevelt administration in his decisions.

394
00:43:57.660 --> 00:44:03.660
And in any event, Franklin Roosevelt got his opportunity to influence and change the court after all,

395
00:44:03.660 --> 00:44:06.660
and not through such crude manipulation.

396
00:44:06.660 --> 00:44:11.660
Over the next four years, the president was able to fill seven vacancies on the court

397
00:44:11.660 --> 00:44:15.660
caused by resignations, retirements and death.

398
00:44:15.660 --> 00:44:22.660
So what kind of jurisprudence then do we get with this new court, the new Franklin Rooseveltized court?

399
00:44:22.660 --> 00:44:24.660
What do we wind up with?

400
00:44:24.660 --> 00:44:29.660
Here's a classic case that I think some of us have heard about, but it bears repeating.

401
00:44:29.660 --> 00:44:37.660
1942, here's a classic case of how the new jurisprudence is going to go.

402
00:44:37.660 --> 00:44:39.660
It's a case called Wickard v. Filburn.

403
00:44:39.660 --> 00:44:43.660
What we need to recall here is that one of the clauses in the Constitution,

404
00:44:43.660 --> 00:44:48.660
the Constitution has a clause about the federal government's power to regulate commerce,

405
00:44:48.660 --> 00:44:51.660
commerce among the states, interstate commerce.

406
00:44:51.660 --> 00:44:59.100
And that had been interpreted as a limitation on what fell under the authority of the Federal Government to regulate.

407
00:44:59.100 --> 00:45:04.020
Because if it didn't involve interstate commerce, commerce from one state to another,

408
00:45:04.020 --> 00:45:08.340
the Federal Government could not, it was thought, interfere with it.

409
00:45:08.340 --> 00:45:13.980
Well, now what we're going to get is a Supreme Court that is going to interpret interstate commerce so broadly

410
00:45:13.980 --> 00:45:18.100
that everything will somehow be described as constituting interstate commerce

411
00:45:18.100 --> 00:45:48.020
You have here the case of a farmer growing wheat for his own use on his own property.

412
00:45:48.020 --> 00:45:51.460
This is defined by the court as interstate commerce.

413
00:45:51.460 --> 00:45:55.660
Now it's a farmer growing wheat for his own use on his own property.

414
00:45:55.660 --> 00:45:58.860
This is interstate commerce, says the court, and therefore subject to regulation.

415
00:45:58.860 --> 00:46:04.700
Now the way that the case came to court, basically what it dealt with was, this was a farmer

416
00:46:04.700 --> 00:46:10.180
who wasn't restricting himself to what the agriculture department was telling him he

417
00:46:10.180 --> 00:46:12.740
was entitled to plant.

418
00:46:12.740 --> 00:46:15.340
Just to clarify something from earlier, I said that the Agricultural Adjustment Act

419
00:46:15.340 --> 00:46:19.340
was found unconstitutional, so you may wonder, how is this still going on?

420
00:46:19.340 --> 00:46:23.340
Well, it was repackaged later as a soil conservation measure.

421
00:46:23.340 --> 00:46:27.340
So we're just conserving the soil, and that's sort of like a general welfare thing or something.

422
00:46:27.340 --> 00:46:33.340
So we get that back again. But you have a gentleman who says that, well, look, it's my property,

423
00:46:33.340 --> 00:46:40.340
and plus I'm not growing this wheat to sell it anywhere. I'm growing it for my own use and consumption.

424
00:46:40.340 --> 00:46:55.340
Well, the court said, well, nevertheless, that's still interstate commerce and still subject to federal regulation because according to the court, homegrown wheat supplies a need of the man who grew it, which would otherwise be reflected by purchases in the open market.

425
00:46:55.340 --> 00:46:59.340
Homegrown wheat in this sense competes with wheat in commerce.

426
00:46:59.340 --> 00:47:09.340
So what they're saying is that somebody who supplies himself with wheat, because he is not purchasing wheat on the market, is therefore indirectly affecting interstate commerce.

427
00:47:09.340 --> 00:47:17.340
So really anything would qualify as interstate commerce here and thereby be subject to federal regulation under that type of standard.

428
00:47:17.340 --> 00:47:21.340
That's what we have. Everything is defined as interstate commerce.

429
00:47:21.340 --> 00:47:33.340
Now a century and a half later, or a century and a half after the 10th Amendment had been drafted,

430
00:47:33.340 --> 00:47:41.340
You've got Franklin Roosevelt's court, having been either intimidated or totally changed in its personnel,

431
00:47:41.340 --> 00:47:44.340
began to redefine even what the meaning of the 10th Amendment was.

432
00:47:44.340 --> 00:47:48.340
Thomas Jefferson had said the 10th Amendment is the cornerstone of the whole Constitution,

433
00:47:48.340 --> 00:47:53.340
reserves powers to the states, it militates against political centralization.

434
00:47:53.340 --> 00:47:58.340
But a century and a half after that ratification, you've got the Roosevelt Supreme Court declaring

435
00:47:58.340 --> 00:48:04.340
In declaring, in the United States versus Derby, that the 10th Amendment was a mere tautology.

436
00:48:04.340 --> 00:48:09.340
So, in other words, it's just like all bachelors are unmarried, all powers not delegated or reserved.

437
00:48:09.340 --> 00:48:14.340
Well, sure, of course all powers not delegated or reserved, but they say that has no substantial import.

438
00:48:14.340 --> 00:48:19.340
It's just a statement of the obvious. It is not in itself a limitation of the Federal Government.

439
00:48:19.340 --> 00:48:26.340
So, everyone who thought that up to now, I guess, wasn't understanding it as well as the experts from 1940.

440
00:48:26.340 --> 00:48:32.340
It was now obvious that the Court had no intention of allowing the Interstate Commerce Clause to limit the authority of the Federal Government.

441
00:48:32.340 --> 00:48:41.340
We get other Court decisions suggesting that the Federal Government can extend its power over any area in which it might contribute to the general welfare.

442
00:48:41.340 --> 00:48:48.340
So in other words, exactly the opposite of what Madison said the meaning of the General Welfare Clause was is now the official version.

443
00:48:48.340 --> 00:48:53.340
If it's in favor of the general welfare, then the presumption is that it's okay.

444
00:48:53.340 --> 00:49:08.340
Now, we should take a brief moment to say something about the Commerce Clause, just to make clear that this is a misinterpretation and obviously an extremely broad reading.

445
00:49:08.340 --> 00:49:12.340
And just look at what was the original intent of the Commerce Clause.

446
00:49:12.340 --> 00:49:27.340
And here's an area where I think the Bill Watkins book on reclaiming the American Revolution is very good because he's got a very good synced but extremely persuasive and well argued discussion of the Commerce Clause.

447
00:49:27.340 --> 00:49:39.340
Commerce Clause basically says that Congress has the authority to regulate commerce with foreign nations and among the several states and with the Indian tribes.

448
00:49:39.340 --> 00:49:46.380
Now Watkins points out that at the time of the framing, if you look at Samuel Johnson's

449
00:49:46.380 --> 00:49:52.980
dictionary, what did commerce mean? It meant intercourse, exchange of one thing for another,

450
00:49:52.980 --> 00:49:59.580
interchange of anything, trade, traffic. So the word would not have included local concerns

451
00:49:59.580 --> 00:50:07.620
like agriculture. Now in case anyone might want to try to argue that the commerce clause

452
00:50:07.620 --> 00:50:12.380
could give the federal government the power to interfere in local matters.

453
00:50:12.380 --> 00:50:16.420
We have Alexander Hamilton in Federalist Number 17 saying

454
00:50:16.420 --> 00:50:19.660
that the Commerce Clause would not affect

455
00:50:19.660 --> 00:50:21.940
the administration of private justice,

456
00:50:21.940 --> 00:50:26.300
the supervision of agriculture and of other concerns of a similar nature.

457
00:50:26.300 --> 00:50:27.500
So this

458
00:50:27.500 --> 00:50:32.420
FDR version of the Commerce Clause is expressly ruled out

459
00:50:32.420 --> 00:50:35.220
even by someone like Hamilton.

460
00:50:35.220 --> 00:50:40.020
Now Richard Epstein makes just the simple point that if you look at the construction

461
00:50:40.020 --> 00:50:45.300
of the Commerce Clause, it says that the Congress has the power to regulate commerce with foreign

462
00:50:45.300 --> 00:50:49.020
nations, among the several states and with the Indian tribes.

463
00:50:49.020 --> 00:50:54.900
Well then if it says that, then the word commerce has to have the same meaning in each of those

464
00:50:54.900 --> 00:51:00.780
three cases in relation to foreign nations, several states and Indian tribes.

465
00:51:00.780 --> 00:51:04.140
So let's suppose that interstate commerce could in fact actually include something like

466
00:51:04.140 --> 00:51:11.140
The Theory of Money and Credit

467
00:51:34.140 --> 00:51:39.140
What eventually comes to be, though, in Wickard v. Filburn, is that if something exerts a

468
00:51:39.140 --> 00:51:46.500
substantial economic effect on interstate commerce, then it is subject to federal regulation.

469
00:51:46.500 --> 00:51:52.060
Now in the case of Wickard v. Filburn, we're talking about 11.9 acres of wheat. Again,

470
00:51:52.060 --> 00:51:57.800
very insubstantial, but the point is that what if we had a lot of guys like this? Then

471
00:51:57.800 --> 00:52:02.800
it really would influence interstate commerce. I mean, it's about as dishonest an interpretation

472
00:52:02.800 --> 00:52:09.400
as you can get. In fact, in 1997, the Solicitor General of the United States was asked by

473
00:52:09.400 --> 00:52:16.400
a Supreme Court Justice, can you name for us something, some activity that you believe

474
00:52:16.640 --> 00:52:21.220
the Federal Government under the Constitution would not have any authority over? And he

475
00:52:21.220 --> 00:52:28.220
stood there dumb-bounded. He had no answer. This is a lot of the root of that.

476
00:52:28.220 --> 00:52:58.220
Now recently, Watkins did an article trying to talk about the medical marijuana issue in relation to this because it's very interesting that the court, talking about medical marijuana, says that this is something that can be regulated by the federal government under the Interstate Commerce Clause because, and listen to the weird parallel with Wickard v. Filburn, because homegrown marijuana displaces drugs sold in both the open drug market and the black drug market,

477
00:52:58.220 --> 00:53:01.220
Regulated by the Controlled Substances Act

478
00:53:01.220 --> 00:53:08.220
So it's concluded then that Congress, or at least this is the government's brief in the case, the government's brief says this,

479
00:53:08.220 --> 00:53:14.220
Congress has the power to regulate the interstate market in marijuana as well as activity that substantially affects that market

480
00:53:14.220 --> 00:53:17.220
regardless of the purported use of the drug.

481
00:53:17.220 --> 00:53:26.220
And then Watkins goes on to make the point that if this were true, that anything that might affect the market in marijuana,

482
00:53:26.220 --> 00:53:29.620
and Marijuana. It was a market that the government doesn't even permit in the first place.

483
00:53:29.620 --> 00:53:31.700
Anything that might affect that market

484
00:53:31.700 --> 00:53:34.780
could itself be regulated. And so Watkins says,

485
00:53:34.780 --> 00:53:40.440
then why doesn't Congress claim to have a power to regulate procreation? Because the more people we create in this world,

486
00:53:40.440 --> 00:53:46.200
the more we could affect the interstate market in marijuana and the price of marijuana, the more people there are.

487
00:53:46.200 --> 00:53:49.240
Why couldn't you use the interstate commerce clause then to regulate

488
00:53:49.240 --> 00:53:51.240
World War II got the country out of the depression.

489
00:54:19.240 --> 00:54:32.240
by Bob Higgs from 1992, I'll have to get the exact site, but I haven't, where he did some excellent work on this.

490
00:54:32.240 --> 00:54:39.240
And he showed that, you know, your instinct that war can't be a source of prosperity is in fact correct.

491
00:54:39.240 --> 00:54:44.240
And that destroying things and bombing things cannot be the source of prosperity.

492
00:54:44.240 --> 00:54:51.240
In a way it's sort of related to people who say to get us out of depression we need more consumption, we need to consume more.

493
00:54:51.240 --> 00:54:56.240
Because when you think of what that's actually saying, that's saying that to become prosperous we need to use things up.

494
00:54:56.240 --> 00:54:59.240
How would that make us prosperous? We just started using things up.

495
00:54:59.240 --> 00:55:03.240
Well the same kind of thinking suggests that war is good for the economy.

496
00:55:03.240 --> 00:55:08.240
And I'm happy there are at least some conservatives who still acknowledge this.

497
00:55:08.240 --> 00:55:11.240
I was on Phyllis Schlafly's radio program and she said,

498
00:55:11.240 --> 00:55:16.240
I mean, if that were true, for one thing, it might be a good idea to be at war all the time.

499
00:55:16.240 --> 00:55:19.240
You see, now I should keep my mouth shut, okay?

500
00:55:19.240 --> 00:55:20.240
Okay?

501
00:55:20.240 --> 00:55:26.240
You know, we could get rich bombing, you know, whatever country or just a completely deserted area,

502
00:55:26.240 --> 00:55:28.240
and we put a lot of money into it.

503
00:55:28.240 --> 00:55:33.240
We could get rich bombing, you know, whatever country or just a completely deserted area,

504
00:55:33.240 --> 00:55:35.240
and we put a lot of money into it.

505
00:55:35.240 --> 00:55:53.240
Mises once said, war prosperity is like the prosperity that an earthquake or a plague brings, and that brings us back down earth.

506
00:55:53.240 --> 00:56:00.240
Well, every time there's a war or a natural disaster, you always get people who come out and say it's wonderful for the economy.

507
00:56:00.240 --> 00:56:06.240
Well, last year, just about this time, The Washington Post published an article called

508
00:56:06.240 --> 00:56:09.240
Across America, War Means Jobs.

509
00:56:09.240 --> 00:56:15.240
Now, although in parts the piece acknowledged that the matter wasn't quite so simple,

510
00:56:15.240 --> 00:56:21.240
it nevertheless quoted a great many people who argued that war was indeed a boon for the economy.

511
00:56:21.240 --> 00:56:27.240
If it wasn't for defense department contracting, said Brian Smith of Columbia Sewing Company,

512
00:56:27.240 --> 00:56:50.240
The economy is always helped by war, appliance salesman Gary Gayer told The Post. That's just a fact.

513
00:56:50.240 --> 00:57:06.240
I sometimes wonder what's the most depressing job in the world. I mean, I love my job, I love it, but it's depressing in that you have to answer the same myths all the time.

514
00:57:06.240 --> 00:57:15.240
But I wonder in economics if it's even more depressing that the same inane things come up again and again and no matter how many times you answer them, they come up again and again and again.

515
00:57:15.240 --> 00:57:24.240
And again, I mean, obviously war would lend a stimulus to certain sectors of the economy but it is logically and economically unjustified

516
00:57:24.240 --> 00:57:31.240
to equate that kind of stimulus with prosperity for the economy at large or the American people as a whole.

517
00:57:31.240 --> 00:57:37.240
Now, I am going to just briefly lay out the broken window fallacy for anybody who doesn't know this or is watching it

518
00:57:37.240 --> 00:57:41.240
because, you know, there was a time when some of us didn't know what that was.

519
00:57:41.240 --> 00:57:45.160
But Frederic Bastiat was a great 19th century thinker.

520
00:57:45.160 --> 00:57:47.960
Frederic Bastiat wrote this little book called The Law,

521
00:57:47.960 --> 00:57:50.080
and it's great fun to read, it's wonderful.

522
00:57:50.080 --> 00:57:54.400
I assigned it to my Western Civ classes a couple years ago

523
00:57:54.400 --> 00:57:56.800
to show them what classical liberalism was,

524
00:57:56.800 --> 00:57:58.960
because there it is in a nutshell,

525
00:57:58.960 --> 00:58:03.120
and he's explaining about, in effect, taxation being legal plunder,

526
00:58:03.120 --> 00:58:07.280
and that as soon as one group uses the state to plunder others,

527
00:58:07.280 --> 00:58:14.280
and so on, and it becomes this big anti-social mess with everybody trying to live at everybody else's expense.

528
00:58:14.280 --> 00:58:21.280
And it was sort of depressing for me because most of the students did not at all understand how radical his position is.

529
00:58:21.280 --> 00:58:26.280
I had to write on their paper. Do you understand that basically, if you take what he's saying to heart,

530
00:58:26.280 --> 00:58:31.280
that 99% at least of what government now does would be illegitimate?

531
00:58:31.280 --> 00:58:58.280
Bastiat basically answered this sort of claim because a window broken by an errant ball is said to benefit the economy since the company that fixes the window enjoys a stimulus, which in turn is passed on to those with whom the window company does business.

532
00:58:58.280 --> 00:59:04.280
Now, obviously, what you're overlooking here is what the homeowner would have spent his money on if he had not had to repair his window.

533
00:59:04.280 --> 00:59:11.280
The stimulus that would have been bestowed upon, let's say, the picture frame industry, when he spent his money on an elaborate picture frame,

534
00:59:11.280 --> 00:59:17.280
now never takes place, since the homeowner had to spend his picture frame money on replacing his window.

535
00:59:17.280 --> 00:59:21.280
Without the ball breaking his window, the homeowner would have had a window and a picture frame.

536
00:59:21.280 --> 00:59:24.280
In the second scenario, he has only a window.

537
00:59:24.280 --> 00:59:27.280
Here is the unseen counter stimulus, as it were.

538
00:59:27.280 --> 00:59:32.280
The repair of the window is what is seen and leads poor logicians to conclude

539
00:59:32.280 --> 00:59:35.280
that the breaking of the window was actually a boon.

540
00:59:35.280 --> 00:59:40.280
The lack of a picture frame by the very fact that the frame is never purchased is not seen

541
00:59:40.280 --> 00:59:43.280
but is no less a consequence of the breaking of the window.

542
00:59:43.280 --> 00:59:46.280
But since one is seen and one is not seen,

543
00:59:46.280 --> 00:59:50.280
the broken window fallacy has proven very difficult to bury once and for all.

544
00:59:50.280 --> 00:59:54.280
Well, the same kind of analysis can be truthfully applied to the case of war.

545
00:59:54.280 --> 01:00:01.280
The jobs created in the production of weapons and military equipment as well as the men and women who serve in the armed forces themselves

546
01:00:01.280 --> 01:00:08.280
are paid for by taxing the private economy, which is devoted to the production of consumer goods that cater to the well-being of all Americans.

547
01:00:08.280 --> 01:00:16.280
In addition, in order to provide goods and manpower for the military, manpower and capital goods are withdrawn from the private economy

548
01:00:16.280 --> 01:00:20.280
where they would have served to meet consumer needs. So the results are twofold.

549
01:00:20.280 --> 01:00:26.780
1. The taxation necessary to fund wartime production and the armed forces diminishes private income

550
01:00:26.780 --> 01:00:30.280
and thus the ability of ordinary Americans to purchase the goods they need.

551
01:00:30.280 --> 01:00:36.280
And 2. Because people and goods are now tied up in producing jeeps, missiles and other military equipment

552
01:00:36.280 --> 01:00:41.280
as well as serving in the armed forces, fewer people and goods are available for the production of goods

553
01:00:41.280 --> 01:00:43.280
that satisfy consumer needs.

554
01:00:43.280 --> 01:00:48.280
So in short, Americans have less money with which to buy fewer goods.

555
01:00:48.280 --> 01:00:51.280
How can this be anything other than economic retrogression?

556
01:00:52.280 --> 01:00:54.280
There are countless other damaging effects as well.

557
01:00:54.280 --> 01:00:58.280
In extreme cases, government needs to ration certain crucial goods

558
01:00:58.280 --> 01:01:01.280
in order to ensure adequate supplies for the military.

559
01:01:01.280 --> 01:01:07.280
No definition of prosperity includes restricting the civilian population's ability to acquire goods.

560
01:01:07.280 --> 01:01:09.280
But even when outright rationing is not undertaken,

561
01:01:09.280 --> 01:01:12.280
government purchases nevertheless distort the economy.

562
01:01:12.280 --> 01:01:15.280
Large government purchases of steel and similar goods

563
01:01:15.280 --> 01:01:17.280
lead to an increase in the prices of those goods,

564
01:01:17.280 --> 01:01:25.280
and other goods, thereby making it more difficult for private businesses that use those goods in their own production processes to meet their competition in the global market.

565
01:01:25.280 --> 01:01:29.280
Such purchases also lead more people to enter those industries and abandon other ones,

566
01:01:29.280 --> 01:01:35.280
thus further skewing the economy in favor of the government's preferences over those of the consumer.

567
01:01:35.280 --> 01:01:41.280
Some will object that the production of military equipment is fundamentally different from other goods the government might undertake to produce,

568
01:01:41.280 --> 01:01:46.280
since military equipment is necessary to protect the population against foreign enemies.

569
01:01:46.280 --> 01:01:56.280
Well, let's assume for argument's sake that this claim is true, and that the United States was in fact terribly threatened by the likes of Iraq, Serbia, Somalia and Haiti.

570
01:01:56.280 --> 01:02:07.280
Be that as it may, the point is that however necessary such expenditure may be thought to be, it does not in and of itself lead to prosperity, as the myth alleges.

571
01:02:07.280 --> 01:02:12.280
The mere fighting of a war does not make the American people more prosperous than they would otherwise have been.

572
01:02:12.280 --> 01:02:17.280
Whether a particular war was justified or necessary is an entirely separate issue.

573
01:02:17.280 --> 01:02:23.280
The point is that all war leads to the destruction of wealth, the distortion of the economy, and a decline in consumer well-being.

574
01:02:23.280 --> 01:02:34.280
And incidentally, we've just recently found out this current war is now equaling and surpassing the expenditures that were laid out for the Korean War in real terms.

575
01:02:34.280 --> 01:02:36.280
So I was just talking about this to somebody the other day.

576
01:02:36.280 --> 01:02:49.280
So it's getting, at the time I wrote these remarks down a while ago, it was only up to the American share of World War I, which was $199 billion, and now that's going to look like nothing, you know, and unbelievable.

577
01:02:49.280 --> 01:03:05.280
Well, part of the reason that this myth of World War II getting us out of the Depression, part of the reason it persists, you know, is that people have basically been taught this, and there's a lot of anecdotal evidence to this effect, that, you know, that we were very prosperous and this and that.

578
01:03:05.280 --> 01:03:10.280
We have to look at this more carefully and assess anecdotal evidence scientifically.

579
01:03:10.280 --> 01:03:15.280
Historians have made much of the substantial production figures that were attained during the war

580
01:03:15.280 --> 01:03:20.280
and triumphantly pointed to the great stimulus to the economy that this war production brought about.

581
01:03:20.280 --> 01:03:24.280
But most of this increase is due to the construction of armaments and military equipment

582
01:03:24.280 --> 01:03:26.280
and payments to military personnel.

583
01:03:26.280 --> 01:03:30.280
This production is not geared toward producing things that ordinary people needed.

584
01:03:30.280 --> 01:03:33.280
So from a purely economic point of view, which is what we're considering here,

585
01:03:33.280 --> 01:03:39.280
It made consumers worse off by diverting capital and other resources away from civilian production

586
01:03:39.280 --> 01:03:43.280
and toward the production of goods that no consumer would wish to purchase.

587
01:03:43.280 --> 01:03:51.280
Again, I was in a debate with a gentleman, some media thing, and he was saying,

588
01:03:51.280 --> 01:03:56.280
well, what about FDR? Look at all these great production figures from 1938 to 1943.

589
01:03:56.280 --> 01:03:58.280
Look at how great things were.

590
01:03:58.280 --> 01:04:03.280
I said, well, I mean, you're including a couple of years of World War II in those statistics, aren't you?

591
01:04:03.280 --> 01:04:09.280
And these statistics are totally unreliable because they're not in any way measuring consumer well-being.

592
01:04:09.280 --> 01:04:17.280
Between 1943 and 1945, some two-fifths of the labor force, including members of the armed forces,

593
01:04:17.280 --> 01:04:22.280
civilian employees of the armed forces, people who worked in the military supply industries and the unemployed,

594
01:04:22.280 --> 01:04:26.280
are employed with not producing consumer goods or capital goods

595
01:04:26.280 --> 01:04:29.280
that are geared toward the production of consumer goods.

596
01:04:29.280 --> 01:04:30.280
And that was not all, of course.

597
01:04:30.280 --> 01:04:35.280
The tax monies of the remaining 60% of the population went to fund

598
01:04:35.280 --> 01:04:39.280
the activities of the 40% who were not producing things consumers needed.

599
01:04:39.280 --> 01:04:42.280
So this is obviously a dramatic loss of material wealth.

600
01:04:42.280 --> 01:04:46.280
Now it's true, if you just look at the unemployment figures, it looks very impressive,

601
01:04:46.280 --> 01:04:50.280
but it disappeared primarily because 11 million people were added to the armed forces,

602
01:04:50.280 --> 01:04:57.280
Higgs himself says, during the war, the government pulled the equivalent of 22% of the pre-war labor force into the armed forces.

603
01:04:57.280 --> 01:05:00.280
Voila, the unemployment rate dropped to a very low level.

604
01:05:00.280 --> 01:05:05.280
No one needs a macroeconomic model to understand this event.

605
01:05:05.280 --> 01:05:11.280
In the healthy economy of the unhampered market, there is never a shortage of jobs, since human wants are unlimited.

606
01:05:11.280 --> 01:05:15.280
And so there is always a desire for more labor to produce more labor.

607
01:05:15.280 --> 01:05:20.780
Since human wants are unlimited and so there is always a desire for more labor to produce more goods.

608
01:05:20.780 --> 01:05:24.280
But the sick economy of the New Deal could make a dent in the unemployment problem

609
01:05:24.280 --> 01:05:28.780
only by conscripting over a fifth of the labor force into the military.

610
01:05:28.780 --> 01:05:34.780
Meanwhile, the average work week in manufacturing increased by seven hours between 1940 and 1944

611
01:05:34.780 --> 01:05:38.280
and by a full 50% in bituminous coal mining.

612
01:05:38.280 --> 01:05:42.280
And it was more difficult and sometimes even impossible to acquire the goods people needed.

613
01:05:42.280 --> 01:05:46.280
No one during the war could buy a new car, house or major appliance

614
01:05:46.280 --> 01:05:49.280
since the government had forbidden their production entirely.

615
01:05:49.280 --> 01:05:53.280
Great many other goods were either unavailable or very difficult to obtain,

616
01:05:53.280 --> 01:05:57.280
from chocolate bars and sugar to meat, gasoline and rubber tires.

617
01:05:57.280 --> 01:05:59.280
George Reisman says this.

618
01:05:59.280 --> 01:06:02.280
People believed they were prosperous in World War II

619
01:06:02.280 --> 01:06:05.280
because they were piling up large amounts of unspendable income

620
01:06:05.280 --> 01:06:08.280
in the form of paper money and government bonds.

621
01:06:08.280 --> 01:06:11.280
They confused this accumulation of paper assets with real wealth.

622
01:06:11.280 --> 01:06:15.280
Incredibly, most economic statisticians and historians make the same error

623
01:06:15.280 --> 01:06:18.280
when they measure the standard of living of World War II

624
01:06:18.280 --> 01:06:22.280
by the largely unspendable national income of the period.

625
01:06:25.280 --> 01:06:29.280
My last point is just, in fact, elaborating on this.

626
01:06:29.280 --> 01:06:35.280
And also from an article from Bob Higgs, you can do a Google search on it.

627
01:06:35.280 --> 01:06:40.280
I think the article is called From Central Planning to the Market from 1999.

628
01:06:40.280 --> 01:06:50.280
in 1999, and it's available on the Independent Institute's website, and it appeared in the Journal of Economic History, I believe, in 1999.

629
01:06:50.280 --> 01:07:00.280
And I just want to make note of his argument, because Higgs, earlier on, we saw that he said that one of the contributors to the depressed condition of the 30s was regime uncertainty.

630
01:07:00.280 --> 01:07:04.280
and then conversely, he says, that one of the contributing factors to the recovery

631
01:07:04.280 --> 01:07:09.280
after the war concluded was the resumption of regime certainty.

632
01:07:09.280 --> 01:07:14.280
And he goes on and then defends this position.

633
01:07:14.280 --> 01:07:17.280
He says, the upper reaches of the wartime command economy

634
01:07:17.280 --> 01:07:20.280
came under the control of men sympathetic to business

635
01:07:20.280 --> 01:07:24.280
even before the United States became a declared belligerent.

636
01:07:24.280 --> 01:07:28.280
By the manner in which they exercised their power, these men, thousands of whom were themselves

637
01:07:28.280 --> 01:07:31.160
and the people who helped businessmen on leave from their firms,

638
01:07:31.320 --> 01:07:34.040
transformed the climate in which investors and businessmen

639
01:07:34.200 --> 01:07:38.600
formed their expectations about post-war political and economic conditions.

640
01:07:38.760 --> 01:07:40.840
Therefore, even though the wartime administrators

641
01:07:41.000 --> 01:07:44.720
imposed extraordinarily pervasive and forceful controls on the economy,

642
01:07:44.880 --> 01:07:49.240
investors and businessmen confidently regarded those controls as temporary.

643
01:07:49.400 --> 01:07:51.840
The speed with which the controls were removed,

644
01:07:52.000 --> 01:07:56.680
most of them in 1945 and most of the rest in 1946, validated that confidence

645
01:07:56.680 --> 01:08:00.680
to ask investors and businessmen to act, for the first time since the early 1930s,

646
01:08:00.680 --> 01:08:05.680
as if their property rights in their capital and the income it generated would remain reasonably secure.

647
01:08:05.680 --> 01:08:10.680
Without that outlook, which elsewhere I've called regime certainty,

648
01:08:10.680 --> 01:08:15.680
the other measures tending to make the transition a success from central planning to the market

649
01:08:15.680 --> 01:08:17.680
would have availed relatively little.

650
01:08:17.680 --> 01:08:21.680
And then he says, restoring the regime certainty of investors and business people

651
01:08:21.680 --> 01:08:25.680
was a necessary condition for the transition to a prosperous post-war economy.

652
01:08:25.680 --> 01:08:44.680
To sum up, he says, the success of the transition hinged on the expeditious abandonment of the government's command and control apparatus and the return to resource allocation via the price system.

653
01:08:44.680 --> 01:08:54.680
It required sufficient confidence in the future security of private property rights that investors would once again place high volumes of resources at risk in long-term projects.

654
01:08:54.680 --> 01:08:58.200
Such a transition could go forward successfully only under a regime

655
01:08:58.200 --> 01:09:00.360
far more dedicated to the market system

656
01:09:00.360 --> 01:09:04.280
than the dominant faction of the latter half of the 1930s had been.

657
01:09:04.280 --> 01:09:09.480
Ironically, the war had brought into power a coalition much more congenial to the market

658
01:09:09.480 --> 01:09:13.240
and many of the most zealous New Deal planners had been pushed onto the periphery

659
01:09:13.240 --> 01:09:15.000
or completely out of the government.

660
01:09:15.000 --> 01:09:18.200
Though the post-war regime was by no means devoted to laissez-faire

661
01:09:18.200 --> 01:09:21.960
and the economy remained subject to a host of government restrictions,

662
01:09:21.960 --> 01:09:24.280
participants in the post-war market economy

663
01:09:24.280 --> 01:09:28.680
had enough confidence in the security of their property rights and enough room to maneuver

664
01:09:28.680 --> 01:09:34.760
that they could succeed in reinvigorating the private economy for the first time since the 1920s.

665
01:09:34.760 --> 01:09:38.440
So this has basically been like a totally revisionist understanding

666
01:09:38.440 --> 01:09:43.000
of the state of the economy from the 20s to the 40s that I've given you.

667
01:09:43.000 --> 01:09:49.800
I do feel it sort of incumbent on me to make at least some concluding reference

668
01:09:49.800 --> 01:09:55.640
to a debate that I was in about six or seven months ago with a professor,

669
01:09:55.640 --> 01:09:58.840
I think he's from American University, named Alan Lichtman.

670
01:09:58.840 --> 01:10:02.120
Anybody know Alan Lichtman? Okay, a few people.

671
01:10:02.120 --> 01:10:06.200
And so we were debating the New Deal, and was it a good or a bad thing?

672
01:10:06.200 --> 01:10:10.440
And he couldn't believe, he said, oh, come on, you're just repeating the old arguments we've heard for years.

673
01:10:10.440 --> 01:10:13.880
And all right, well, they could be right, the correct arguments,

674
01:10:13.880 --> 01:10:17.400
but I thought I had some fresh arguments that I didn't think he'd heard before.

675
01:10:17.400 --> 01:10:23.000
But Lichtman made this point. He said that, and this much is true,

676
01:10:23.000 --> 01:10:29.560
he said that during the Depression, 1937 to 38, you have like a depression within the Depression.

677
01:10:29.560 --> 01:10:31.560
All of a sudden, the bottom falls out again.

678
01:10:31.560 --> 01:10:33.720
I mean, just when it looks like things might be getting a little bit better,

679
01:10:33.720 --> 01:10:34.840
the bottom falls out again.

680
01:10:34.840 --> 01:10:37.400
You get unemployment soaring back up again.

681
01:10:37.400 --> 01:10:42.120
And so you get, in effect, a depression within the Depression, 1937 to 38.

682
01:10:42.120 --> 01:10:43.080
And he accounts for that.

683
01:10:43.080 --> 01:10:52.080
He says that Roosevelt had cut the budget somewhat and government spending going down led to this collapse.

684
01:10:52.080 --> 01:10:59.080
So I guess the argument being that we need government spending to keep the economy humming.

685
01:10:59.080 --> 01:11:03.080
I said that sounded like a Keynesian argument and he just scoffed at me.

686
01:11:03.080 --> 01:11:06.080
I think that is kind of a Keynesian type argument.

687
01:11:06.080 --> 01:11:36.080
So my response was, if that's true, if what you're saying is true, that if government spending is cut, and it would have been cut marginally at that point, if it's cut then we go into a terrible depression, then surely after World War II we should have been in the greatest depression in the history of mankind, when you go from the enormous budgets of World War II and then you slash that budget going into 1946, there should have been a huge depression in 1946.

688
01:11:36.080 --> 01:11:38.080
So how do you account for that?

689
01:11:38.080 --> 01:11:44.080
And then we ended up getting onto the fact that Roosevelt made it easier to join labor unions in the 30s and we never get back to this point.

690
01:11:44.080 --> 01:11:54.080
But that labor union point is actually closer to the point than I think Lichtman realized because one of the things that veteran Galloway point out in their book

691
01:11:54.080 --> 01:12:00.080
is that one of the contributing factors they say contributed to this depression, within the depression,

692
01:12:00.080 --> 01:12:09.080
is in fact the labor costs associated with this labor legislation that really began to go into effect around 1937, right around this time.

693
01:12:09.080 --> 01:12:16.080
So there seem to be a great many other explanatory factors in the point of view of government intervention that can account for this,

694
01:12:16.080 --> 01:12:20.080
rather than saying that in fact it was caused by too little government intervention.

695
01:12:20.080 --> 01:12:27.080
All right, well I think that's enough speaking on my part for today, so at this point I will happily entertain comments and questions.

696
01:12:27.080 --> 01:12:28.080
Yes, sir?

697
01:12:57.080 --> 01:13:10.080
The government was dumping large quantities of free grain out of Port of Berbera, and the food source was in the southern part of the country, and this is the northern part of the country, and they're giving away free food.

698
01:13:10.080 --> 01:13:23.080
The farmers who were producing food in the northern part of Somalia had no markets for their grain, and they went out of business and they just started hating Americans because of the socialism that we were imposing on Somalia.

699
01:13:23.080 --> 01:13:26.080
And this is usually what our aid packages are like all over the world.

700
01:13:26.080 --> 01:13:33.080
We're creating socialism other places, because these people who are trying to do subsistence farming

701
01:13:33.080 --> 01:13:36.080
and have a little bit extra to sell to their neighbor can't,

702
01:13:36.080 --> 01:13:39.080
because who would buy it if the U.S. government is giving away free food?

703
01:13:39.080 --> 01:13:45.080
Exactly, exactly. The gentleman was talking about an example in which by dumping food on Somalia,

704
01:13:45.080 --> 01:13:48.080
the problem was that it was totally disrupting the agricultural sector there

705
01:13:48.080 --> 01:13:58.080
I just couldn't help that you have a set of these economies, errors keep going again and again.

706
01:13:58.080 --> 01:14:06.080
And another one that I've heard so much is last year, is those three things that you're talking about.

707
01:14:06.080 --> 01:14:20.080
You haven't said these economy errors keep going again and again, and another one that I've heard so much is last year, is those three big hurricanes that hit Florida.

708
01:14:20.080 --> 01:14:22.080
Oh my gosh, I know it.

709
01:14:22.080 --> 01:14:24.080
At least this has created so many jobs.

710
01:14:24.080 --> 01:14:28.080
I know it, hurricanes creating jobs, I know it.

711
01:14:28.080 --> 01:14:35.080
And it's not that hard a point to grasp, is it? The broken window fallacy that hit every single time.

712
01:14:35.080 --> 01:14:39.080
I mean, I just get the feeling that I'm going to be virtually on my deathbed,

713
01:14:39.080 --> 01:14:42.080
and like the last thing I hear before I expire will be,

714
01:14:42.080 --> 01:14:47.080
the secretary of something today announced that at least the tornadoes,

715
01:14:47.080 --> 01:14:53.080
or at least the nuclear blast, you know, is going to have some kind of good effect on people.

716
01:14:53.080 --> 01:14:54.080
Yes?

717
01:14:54.080 --> 01:14:58.080
Well, I was just thinking, you know, about the, you were talking about the production companies,

718
01:14:58.080 --> 01:15:01.080
it sounds like, you know, the Soviet Union or something, you know,

719
01:15:01.080 --> 01:15:04.080
where, you know, they would, they could make a lot of stuff.

720
01:15:04.080 --> 01:15:19.080
We made all this steel. We made Russia industrialize. Who the hell cares if your people are starving? You managed to build factories in Siberia. Congratulations, they don't really produce anything worthwhile.

721
01:15:19.080 --> 01:15:24.080
I was just thinking that's sort of the same thing with all the production during World War II.

722
01:15:34.080 --> 01:15:39.080
by the 1970s, if you're still saying, hey comrades, look at how much concrete we can produce

723
01:15:39.080 --> 01:15:43.080
and by the 1980s, you're still saying, look at how much steel we're producing

724
01:15:43.080 --> 01:15:49.080
given the fact that everyone else is producing computer chips at that time, it's not really that impressive

725
01:15:49.080 --> 01:15:56.080
and in fact, by the 1980s, there were 25 million personal computers in the U.S. and there were 150,000 in the Soviet Union

726
01:15:56.080 --> 01:16:01.080
so there you go, it's wonderful you're still producing a lot of concrete, that's great, good for you

727
01:16:01.080 --> 01:16:30.080
I was just going to ask about the issue of Somalia. I don't know much about it, so I'm just asking a question. What was the reason why we weren't taking food over there? Could the people not afford to buy it for themselves, even if the farmers were producing it? How much would the farmers charge for it? Could the people afford it? That's the question I have to ask. Is that an issue at hand, or could they have actually afforded to buy the food?

728
01:16:31.080 --> 01:16:39.080
The decision was made to go in there, I think, while George Bush was a lame duck president. Is that not correct?

729
01:16:39.080 --> 01:16:42.080
Basically, on his way out, he made the decision to go in.

730
01:16:42.080 --> 01:16:49.080
And the impression that I had was that all the internal fighting was making society just so disorderly.

731
01:16:49.080 --> 01:17:00.080
I was assuming that production and distribution were impaired and impeded to the degree that the idea was that the U.S. would bring them the food that they couldn't otherwise get.

732
01:17:00.080 --> 01:17:07.080
Yeah, first of all, they had a transportation problem in Somalia, getting rain from the north to the south.

733
01:17:07.080 --> 01:17:11.080
There was no problem in production. They had a food store in the south part of the country.

734
01:17:11.080 --> 01:17:17.080
But what does the U.S. government do? They go to Port of Berbera. Berbera is in north of Somalia, not to Mogadishu.

735
01:17:17.080 --> 01:17:23.080
They ended up in rain in the north where they had plenty of food, and they're not getting the food back to the south.

736
01:17:23.080 --> 01:17:34.080
How the Foreign Agricultural Service used to maintain getting products to places is like we dump it on the country and then they'll go and determine, get it down to where they need it.

737
01:17:34.080 --> 01:17:43.080
Well Berber was a major port the Soviets built for the Soviets left. So there was a port that could receive large rain ships.

738
01:17:43.080 --> 01:17:51.080
So that's why the U.S. government was told to give grain, food grain to Somalia. They dumped it in an area where they really didn't need it.

739
01:17:51.080 --> 01:17:57.080
right okay okay and and and even even even even food aid I mean you know

740
01:17:57.080 --> 01:18:01.640
obviously private organizations helping people is something to be applauded but

741
01:18:01.640 --> 01:18:05.960
so often the state causes problems with this and I have a chapter on foreign aid

742
01:18:05.960 --> 01:18:09.280
in my book the church in the market they should all rush out and make sure and

743
01:18:09.280 --> 01:18:14.240
get all right I haven't been a total jerk at any time the whole week so I

744
01:18:14.240 --> 01:18:17.440
had to do it at least once okay Kevin and then we'll go one two and then over

745
01:18:17.440 --> 01:18:22.440
I remember when I first started learning about this and I had a discussion with my father.

746
01:18:22.440 --> 01:18:28.440
He says, well, when I was very young, being in World War II, hearing what he was talking about, the impression,

747
01:18:28.440 --> 01:18:33.440
what I hear of Roosevelt was because they were just sort of languishing in poverty.

748
01:18:33.440 --> 01:18:38.440
And then the WPA comes out and gets in the own roads and stuff that's, you know, still around.

749
01:18:38.440 --> 01:18:41.440
Council of Los Angeles, which is where they grew up.

750
01:18:41.440 --> 01:18:51.440
And I understood that the court was sort of, you know, they're sort of languishing in it, and what it really was was like that the government had a kind of, put a kind of energy, it sort of got them off their ducks, you know.

751
01:18:51.440 --> 01:19:04.440
Now, if you don't omit the fact that the government had made it impossible for them to do a whole lot of other things in a whole variety of ways, but it does raise a kind of issue, which is that, you know, we get to these questions.

752
01:19:04.440 --> 01:19:12.440
There's debates a lot, being libertarians, where you see the market, what they care about, and it's not obvious to some people.

753
01:19:12.440 --> 01:19:16.440
They're saying, well, what if the future sits there? What if they don't do anything?

754
01:19:16.440 --> 01:19:22.440
And it's always weird to respond to it, because you say, well, historically they always have.

755
01:19:22.440 --> 01:19:27.440
But that's no guarantee that they will in the future. I mean, maybe people won't do anything.

756
01:19:27.440 --> 01:19:31.440
What do you do with a counter factor like that? And what do you do with that?

757
01:19:31.440 --> 01:19:37.440
Well, maybe they won't, or what if they don't? I mean, it's not like you can make an argument.

758
01:20:01.440 --> 01:20:07.440
I'll jump off a cliff and hope that I invent a parachute on the way down.

759
01:20:07.440 --> 01:20:14.440
I think sometimes an argument like this may just be a personality type.

760
01:20:14.440 --> 01:20:19.440
If you're the Julian Simon type, you just have this natural optimism about the way life is.

761
01:20:19.440 --> 01:20:21.440
There are other people who just...

762
01:20:21.440 --> 01:20:24.440
Unless you have absolute guarantees...

763
01:20:24.440 --> 01:20:28.440
The market thing is something that you either see or you don't, I think.

764
01:20:28.440 --> 01:20:35.440
After a lot of reading and studying it, it just becomes part of the sinews of yourself.

765
01:20:35.440 --> 01:20:42.440
I don't really exactly know how to answer that other than to, as you say, try to give specific historical episodes and say,

766
01:20:42.440 --> 01:20:54.440
here's how normal people operating freely with their resources have produced all this wonderful stuff in the past and in all these different trying circumstances.

767
01:20:54.440 --> 01:21:01.440
Or maybe you could think of examples where it was against incredible odds that people produced wonderful things and all that.

768
01:21:01.440 --> 01:21:02.440
Well, here's how I respond.

769
01:21:02.440 --> 01:21:03.440
Oh, let's hear. Let's hear. I'd love to hear.

770
01:21:03.440 --> 01:21:09.440
It was that, you know, a lot of people make this distinction between the way they think about different institutional structures,

771
01:21:09.440 --> 01:21:12.440
when they think of some of them in terms of, well, let me give you the example.

772
01:21:12.440 --> 01:21:15.440
People will say things like, well, the market may or may not respond.

773
01:21:15.440 --> 01:21:19.440
And what I sort of said was, well, maybe the government will or will not respond in certain circumstances.

774
01:21:19.440 --> 01:21:21.440
I mean, it's just people from another institution.

775
01:21:21.440 --> 01:21:36.440
The thing is people tend to think of governments as rational deliberative groups, people that respond and think responsibly and follow norms very clearly, and then they analyze markets in terms of like sort of anything goes, maybe, maybe not.

776
01:21:36.440 --> 01:21:41.440
And the whole question that I try to pose at this point is, well where does this distinction come from?

777
01:21:41.440 --> 01:21:56.440
I mean, what's the basis of thinking that the government's going to engage in deliberative action, that it's always going to follow the rules it sets up for itself, that there are guarantees in government, that there aren't guarantees in the market? I mean, ultimately, it's a comparison between, well, who's more likely to respond?

778
01:22:11.440 --> 01:22:16.440
Laws are guaranteed, and they don't think institutional incentives are guaranteed.

779
01:22:16.440 --> 01:22:19.440
It's the whole rationale behind all kinds of things going on.

780
01:22:35.440 --> 01:22:38.440
You're talking about public and human certainty.

781
01:22:38.440 --> 01:22:47.440
I was trying to find out how the government is restraining trade on the trade of businesses

782
01:22:47.440 --> 01:22:56.440
and how they sort of got there with certainty to their profits by having the government involved.

783
01:22:56.440 --> 01:23:01.440
And it seems like ultimately the government's involvement can't affect their profits.

784
01:23:01.440 --> 01:23:08.440
and ultimately there's various plans for what socialist dictatorship or whatever will enact

785
01:23:08.440 --> 01:23:13.440
and so it will favor some over the others even if they do have to come to the government.

786
01:23:31.440 --> 01:23:36.440
For that sort of thing to work, you need a certain type of person in government.

787
01:23:36.440 --> 01:23:41.440
And I think they're coming to that conclusion.

788
01:23:41.440 --> 01:23:48.440
But also, business needs a regime that is not sort of weirdly changing all the time,

789
01:23:48.440 --> 01:23:51.440
where the tax laws are going to be different every three seconds.

790
01:23:51.440 --> 01:23:53.440
This is not the kind of climate they envision.

791
01:23:53.440 --> 01:23:56.440
They envision a kind of a partnership between government and business,

792
01:23:56.440 --> 01:24:03.440
I was reading a few years ago about the debate between Ricardo and Mollusk that took place in their letters regarding the issue of natural disasters or war and consumption in Russia.

793
01:24:26.440 --> 01:24:34.440
Ricardo was, he believed in Say's Law, so he understood the problem with under-consumption theories and said to Malthus,

794
01:24:34.440 --> 01:24:41.440
if what you're saying is true, then it would be a benefit to the national product if my house were swallowed by an earthquake.

795
01:24:41.440 --> 01:24:44.440
And Malthus said, no, no, no, you're not understanding what I'm saying.

796
01:24:44.440 --> 01:24:48.440
Ricardo said, well, I do understand what you're saying, you're just wrong.

797
01:24:48.440 --> 01:24:55.440
And it reminds me of Rothbard saying sometimes that you can't caricature some positions

798
01:24:55.440 --> 01:24:59.800
because you make fun of them you draw other logical consequences if this is

799
01:24:59.800 --> 01:25:03.600
true that earthquakes are good for the economy and they'll just accept that

800
01:25:03.600 --> 01:25:09.080
I know it I know it you have to yeah the reductio ad absurdum argument in when

801
01:25:09.080 --> 01:25:14.120
you're living in an absurd age is a very dangerous very dangerous method to use

802
01:25:14.120 --> 01:25:16.080
yes

803
01:25:25.440 --> 01:25:31.560
______ structure could be any less under war time production than under say increase in the money supply.

804
01:25:31.560 --> 01:25:38.240
So why do you think that we didn't have an Austrian style business bust after World War II?

805
01:25:38.240 --> 01:25:45.300
Yeah, that's a good question. I mean, I think, I know I will have to roll that around in my head a little bit,

806
01:25:45.300 --> 01:25:51.160
and plus look at the Higgs article with you, and I'd like to see what Bob has to say on that question.

807
01:25:51.160 --> 01:25:54.240
Okay, yes, and then we'll see if we have time for the gentleman in the back here.

808
01:25:54.240 --> 01:26:18.240
And I just had a comment on this particular section of the lecture. I really think that the depression in World War II era is a sort of a special sort of pace in that people are so emotionally tied to the events that the kind of criticism that you have offered up will not really resonate with people of some kind because they are so attached to the Tom Brokaw generation.

809
01:26:18.240 --> 01:26:32.240
My grandfather was a veteran of the Second World War. I'm very happy that you're working on these problems and other people are, but I think it's something that really won't make any ground for number 23.

810
01:26:48.240 --> 01:26:59.240
It's difficult to call out cold logic and say let's throw some cold water on this and look at the actual facts.

811
01:26:59.240 --> 01:27:03.240
People aren't going to want to listen to that, they're not going to be interested in that.

812
01:27:03.240 --> 01:27:11.240
Also it's why it's difficult talking about the justice or injustice of certain wars with someone who fought in them.

813
01:27:11.240 --> 01:27:24.240
There are exceptions. Some people are just so exceptionally geared toward wanting to know the truth that it doesn't matter what their own experiences have been, but that's really rare, and so you're right.

814
01:27:24.240 --> 01:27:32.240
In the short run, there are so many people who have lived through this that it would be difficult to make headway on this, and that's true in a lot of areas.

815
01:27:32.240 --> 01:27:38.240
I mean, that's true in some matters pertaining even to the Catholic Church, where with me,

816
01:27:38.240 --> 01:27:44.240
I'm so frustrated about the new liturgy, but there are bishops who made their whole careers out of developing this new liturgy.

817
01:27:44.240 --> 01:27:49.240
So there's no way I'm going to persuade them that we should have the old, so you have to just sort of sit and wait.

818
01:27:49.240 --> 01:27:53.240
That's kind of morbid sounding. I don't mean we're waiting for all you folks to drop dead,

819
01:27:53.240 --> 01:27:59.240
but I am saying that it is difficult to deal with matters that are emotional.

820
01:27:59.240 --> 01:28:05.240
At the same time, we shouldn't underestimate the number of people who were bitterly opposed to Roosevelt, even though he did keep getting elected.

821
01:28:05.240 --> 01:28:11.240
He had people who were just as bitterly opposed to Roosevelt as the bitterness against Clinton was.

822
01:28:11.240 --> 01:28:17.240
And, I mean, I remember PJ O'Rourke went on, I don't know, I think Jay Leno or something,

823
01:28:17.240 --> 01:28:23.240
and he was saying that one of his older family members, when they came out with a Franklin Roosevelt postage stamp,

824
01:28:23.240 --> 01:28:26.240
she didn't know which side she should spit on.

825
01:28:26.240 --> 01:28:30.240
So anyway, all right, I think that's all the time, all the time we have, so thanks.