March 14 2013
Amity Shlaes has singlehandedly created a boom of public interest in the perfect hero for the disheartened in the age of Obama: Calvin Coolidge, the 30th president of the United States, a man who left government smaller than when he found it. Coolidge’s parsimonious policies arguably ushered in a decade of prosperity.
A columnist with Bloomberg View and director of the Four Percent Growth Project at the Bush Center, Shlaes, whose earlier The Forgotten Man reexamined the roots of the Great Depression, is careful to make it clear that Coolidge, her newest book, which was in its third week on the New York Times bestseller list when IWF talked to Shlaes, is history and not veiled commentary on the Obama administration. Okay, but we can still get Calvin-envy, can’t we?
Shlaes, formerly a Wall Street Journal board member specializing in writing about economics, is used to bucking the received wisdom. The Forgotten Man, for example, which came out in 2007 and was a national bestseller, argues that Franklin Roosevelt’s New Deal actually lengthened the Great Depression.
In The Greedy Hand: How Taxes Drive American Crazy and What to Do About It, which was published in 1999, Shlaes wrote about how, increasingly, Americans “find ourselves feeling that taxes are imposed on us 'without our consent'.” It was a book that drove high-tax advocates crazy. Shlaes is a winner of the Manhattan Institute’s Hayek Prize and teaches economics of the 1930s at New York University/Stern’s MBA program.
Shlaes is married to Seth Lipsky, founding editor of the New York Sun. She also serves as a trustee of the Calvin Coolidge Memorial Foundation. Shlaes has been quoted saying that Coolidge first seriously attracted her attention when she came across him while working on The Forgotten Man and “was astounded to discover how much he had achieved … here was a forgotten president.”
Silent Cal, though Shlaes didn’t draw the analogy, is the antithesis of our loquacious 44th president. Coolidge believed in cutting income taxes and creating the kind of certainty that would encourage investors to put their money into new ventures. Indeed, Coolidge, unlike today’s Democrats, who just produced their first budget in four years, regarded a good budget as “among the noblest monuments of virtue.”
Thirty, like 44, however, came to the White House at a time of immense uncertainty. The U. S. economy was in trouble in 1923, when Coolidge assumed the presidency upon the death of President Warren G. Harding. “Coolidge came in during a period rather like our own,” said Shlaes, “when there had been a crisis—in his case World War I. The debt had gone up enormously, and there was inflation that was unacknowledged, similar to now. There was high unemployment and a sense that politics was broken.”
“The number one goal of President Coolidge, as it was for President Harding before him, was to reduce uncertainty,” Shlaes said, “and go back to a more normal situation. They called it ‘normalcy.’ What they meant was a predictable situation where people could have fun. What Coolidge said was that he wanted less uncertainty. What he did was cut the budget and reduce taxes. If we get more money from cutting taxes, we’ll put it towards paying the national debt, they said. They were trying to get back to something like a pre-war situation.”
Though the country was still on the gold standard and most Americans would have been stunned by today’s debt, Coolidge did face opposition. The Progressives, said Shlaes, were “on the march.” They did not want to return to normalcy and the pre-war level of federal spending.
“During the war, government had loomed larger,” Shlaes said, “and the real question was whether we would always be on a crisis footing, on war footing, in which case the government would always be larger. Could Coolidge abate the crisis and then abate government? This is similar to Rahm Emanuel’s now-legendary statement that a crisis is a terrible thing to waste. Coolidge, Harding and Secretary of the Treasury Andrew Mellon recognized that a crisis was an opportunity for government expansion. Therefore they wanted to reduce the sense of crisis in order to preclude government expansion.”
Coolidge cut marginal tax rates and made it clear that, if lower taxes led to more revenue for the U.S. Treasury, as they did, the additional income would go not for new programs, but for paying down the debt. Coolidge didn’t think the initial cuts he got were enough, and so he came back for more cuts later. He had to make one particularly distasteful concession to the Progressives: income tax publicity. Anybody could look at income tax returns. This was eventually abolished.
What would Coolidge say about the sequester?
“He’d say ‘sequester away!’” Shlaes laughs, quickly adding that things would not have come to such a bleak pass under Coolidge. But if it had…”What he would have said specifically,” she replied, “is that we said we would do this if Congress and the executive couldn’t come to agreement, if all the parties at the table were unable to come to an agreement about how to cut the budget. There is some value in doing what you say you will, even if the results are not pleasant.
“If the polity knows that the government will do what it says it will do, the polity will later pressure the executive or the legislature to act more prudently with more planning earlier. We are in a vicious cycle now and we don’t expect lawmakers to do what they say they will do. This is an abdication of responsibility.”
Coolidge didn’t see budgetary matters as abstractions. Elizabeth Jaffray, the White House housekeeper, found this out the hard way. Mrs. Jaffray loved shopping at specialty stores. She ended her White House career by shopping too lavishly for a dinner for VIPs. “Coolidge thought she should be shopping at the Piggly Wiggly. He favored an economy of scale. We talk so abstractly about government pork. When Mrs. Jaffray showed him a spread she had readied for guests and the president, Coolidge said it ‘looked like an awful lot of ham.’”
The American economy grew at a rate of four percent a year during Coolidge’s presidency. So it is fitting the Bush Center’s Four Percent Growth Project will host a debate on economic topics for high school students in Plymouth Notch, Vermont, where Coolidge grew up. Shlaes believes that teaching economic literacy, and teaching it early, is our best hope.
“Coolidge was parsimonious,” Shlaes said. “He was a Scrooge. The paradoxical question is: Can a Scrooge beget prosperity? And the answer is yes.”
When you see Baz Luhrmann’s new movie Gatsby, the remake of F. Scott Fitzgerald’s glittering novel about glamour and upward mobility in the roaring twenties, you might want to remember that behind it all stands the figure of Silent Cal.
And behind Silent Cal is Amity Shlaes and yet another provocative book.