Bill Steigerwald Bill Steigerwald, 7/8/2008 [Archive]

A Page of Books - NEW BOOK REVIEWS

A Page of Books

Written and compiled by Bill Steigerwald

Book Reports: Lessons in Economics

The Forgotten Man: A New History of the Great Depression by Amity Shlaes (Harper Perennial paperback)

By any measure, writing 'The Forgotten Man: A New History of the Great Depression' has been a success for Bloomberg News syndicated columnist Amity Shlaes. Published last summer and now out in paperback, the book -- which became a national best-seller for HarperCollins (65,000 copies) -- is a readable account of the economic realities of the Depression and the often unhelpful or harmful consequences of FDR's signature New Deal policies. It is told primarily by focusing on the stories of important or interesting individuals such as Andrew Mellon, Rexford Tugwell, Wendell Willkie, Father Divine and Bill W., the founder of Alcoholics Anonymous. To find out how Shlaes' book was received and what influence it has had, I called the Council on Foreign Relations senior fellow at her home in New York City.

Q: Were you happy with the attention your book got, in terms of reviews and interviews?

A: We were very fortunate with those. We got a lot of attention. It generated a lot of hostility. A magazine like The Economist disliked it. I didn't get the impression that the economic arguments were knocked down, so it stood; the house of the book 'The Forgotten Man' stood, and that was very gratifying.

Q: Did the book influence people or change any minds about the prevailing myths about FDR or the New Deal?

A: We got very, very many letters from individual readers. I got invited to teach the book at Princeton to high school teachers -- the optimal audience. I am also teaching a course based on the book at NYU Business School next fall. I was recently interviewed by the National Endowment for the Humanities about the book. So I think it has been accepted in the academic culture.

Last weekend I spoke at Hyde Park, at the Franklin D. Roosevelt Presidential Library. They had a wonderful Roosevelt reading session where authors came and read, and there was the 'The Forgotten Man,' a skeptical book among a lot of wonderful books that were less skeptical. It reflected in that instance the graciousness of the presidential library and its director, Miss Koch, in having me there. That was very gratifying for 'The Forgotten Man' to show up at the Roosevelt Library.

Q: What turned out to be the most controversial or most challenged part of your book?

A: The most challenged part was the unemployment data. People said I was overestimating unemployment during the Depression because I was failing to include certain New Deal jobs such as the make-work jobs of the WPA -- the Works Progress Administration -- which were short-term jobs, or the CCC -- the Civilian Conservation Corps -- where you would have a job for half a year or a quarter of a year and maybe get another job. We're not talking here about jobs such as school teacher or government employee, but rather the make-work jobs of the federal government under the New Deal programs. Not counting those jobs was what I was charged with. -- . When you include those jobs in a very generous way, you get unemployment down to as low as 8 or 9 percent at different points in the 1930s, whereas my data are mostly well above the 10s -- they had unemployment of 20 percent in the 1937-1938 downturn. But even when you use the most generous figures for those New Deal jobs, you see unemployment that you would find appalling today. We're distressed at 5.5 percent. It's mostly 10 percent during the New Deal, even with the generous data, or way higher. We can't even imagine 10.

Q: The teaching material included in the paperback is aimed at whom -- and what are the lessons you are stressing?

A: I'm just trying to make the book easier to read for the high schoolers. There's a big cast of characters -- usually they have to keep a little list, and that's hard. My mother said it was like 'War and Peace,' and she didn't mean that as quite a compliment, I don't think.So this should make it easier to keep tabs on so many people. Why did I have so many people and such a confusing book? The answer is 'The period was so confusing and I was seeking to capture the chaos of events in wild period such as the Great Depression.' Separately, I'm also teaching at NYU business school, and that's the more serious economics of it.

Q: What is the big lesson of the New Deal you think every high school or college kid should know?

A: From Herbert Hoover to Roosevelt, government intervention mostly made it worse. Uncertainty cost a lot, too. They spoke of action for action's sake. Bold, persistent experimentation. And we historically had an economic theory that was window dressing for that, which was Keynesianism, which said that action was good because government spends and government spending brings growth. But the reality is government spending is not that efficient because it's usually not that well designed. It might be somewhat good in massive amounts for short periods, but it's not where most of the growth of our country comes from.

Q: Do you think there are enough honest and critical books about FDR and the New Deal out there?

A: Oh, there are never enough books about the New Deal, on either side. Some of the books at the Hyde Park event were amazingly great books. One was by Nick Taylor, 'American Made: The Enduring Legacy of the WPA: When FDR Put the Nation to Work.' It's about the politicization of the New Deal, as well as the greatness of it. We'd all like to have those books, and we'd like to have new books too. There are certain people from the New Deal who deserve biographies and don't have them -- one is (FDR speechwriter) Ray Moley. Another is Cordell Hull, the great secretary of state who developed free trade policy for us; there are some biographies of him but they are insufficient.

Q: Sen. Obama obviously didn't read your book. He seems to think the New Deal mentality and the ways and means of solving our problems is something we should go back to. Are you worried?

A: Obama has to choose among Johnson, Clinton, JFK, FDR, Truman -- a lot of different people to choose among. He's situated himself politically as a JFK, but now he has to deliver the policies that JFK delivered, and some of those were very good -- such as a tax cut implemented by Johnson but planned by Kennedy people. So is it the New Frontier or the Great Society? I don't think he's made that decision. If you look at his tax cuts, they add up awful. I don't think that at this point that Obama has made that decision. He's not essentially an economic or a history person, he's a modern law person, which is different.

Q: What's the next FDR/New Deal book you'd like to write?

A: I'm writing the sequel to 'The Forgotten Man,' which is actually about the 1960s, and it's called "The Silent Majority." Many of my characters of the '30s reappear in the '60s, especially Senator Paul Douglas -- the Democrat from Illinois, whom I like a lot. He's sort of a Spencer Tracy character. Another book I would like to write is just a book simply on the Schechters, the family of kosher butchers whose lawsuit (Supreme Court case A.L.A. Schechter Poultry Corp. v. United States) broke the centerpiece of the New Deal, the National Recovery Administration. They were little people who fought and won.


"The Concise Encyclopedia of Economics"

@brief-text:Anyone who's ever used a copy of the 1993 "Fortune Encyclopedia of Economics" knows how handy and readable it is. Edited by economist David R. Henderson, and now available online for free at the Library for Economic and Liberty (, its 150-plus free-market-favoring entries included helpful explanations about such macro and micro topics as taxes, regulations, price controls and economic policy. An updated, revised 2008 edition of the 656-page reference book -- renamed "The Concise Encyclopedia of Economics" but still edited by Henderson -- is now being published by the Liberty Fund educational foundation ( I talked to Henderson by phone from his home in Monterey, Calif.

Q: Did it sell well?

A: The original sold about 15,000 copies, which I'm told is quite good by a volume of that length.

Q: How's the new book doing?

A: I check Amazon every week or so and it's often doing well -- especially when I write an article in the Wall Street Journal and I mention I am the editor of it, it will shoot up. They've priced it quite nicely to sell ($28 paperback; $45 hardback).

Q: What's your quick description of the encyclopedia?

A: It's written for the educated layman, the person who's never had an economics course, or maybe had one or two or above that, but who wants to have a really quick idea of what economists think in a certain area.

Q: What would be a typical entry in the encyclopedia?

A: 'Price controls.' The price control article would say here's what price controls are, here are the effects they have, here are examples of the effects and, with that particular example, why economists think price controls are a really bad idea.

Q: Are there entries particularly useful today -- on oil, health care, whatever?

A: It's funny you mention health care. I think the two articles on health care -- the health insurance and the health-care industry articles -- are particularly valuable today. There are a couple articles on free trade and protectionism -- those are particularly valuable because it seems that the belief in free trade is dying, especially in the Democratic Party. The article on immigration is written by an immigration skeptic, but nevertheless the skeptic says, on net, immigration is good for the United States.

Q: How would you characterize the political or economic philosophy of the encyclopedia?

A: I would say that there is not a dominant political or economic philosophy in the usual sense. There is a philosophy in the sense that the people who are writing it think economics matters and economics has a lot to say about the world around us and we really ought to know a fair amount of it if we are going to understand that world.

Q: Are there any superstar economists in the encyclopedia?

A: If your standard definition of a superstar is a Noble Prize winner, there are a few of those -- Gary Becker, the late James Tobin, Joseph Stiglitz and the late George Stigler. Then there is a fair amount of people who have been very well known or high up in the profession -- for example, the late Herb Stein.

Q: It's not like Milton Friedman's in there?

A:Milton wouldn't do it. He was a friend of mine. But when I asked him in the early 1990s, he was busy with his memoirs. If you talked to him from about the early '90s on, he was always afraid that he needed to get his memoirs before he died. I think he surprised himself by how long he lived. That really was always his objection. It wasn't anything else. We were friends. But he didn't want to do it. Then when I was working on the second edition, it really was late in his life. I didn't actually ask him the second time. But the article I have on monetarism, written by Bennett McCallum, is a tremendous article. I think Milton would have looked at it and said, 'Hey, this is a good article.'

Q: Do you have a favorite entry?

A: I have a few. One of them, coincidentally, is on comparative advantage by Don Boudreaux (the twice-a-month Trib columnist and George Mason University economics professor). I think he does a beautiful job on that. Another one is just a rerun, with only a slight update, from the earlier edition -- it's on apartheid. A number of people on my board wanted me not to run it again, because apartheid is dead. And I thought, 'Wait a minute. This is the memory hole. People need to know what apartheid was.' I can even tell you my favorite line from that article -- 'Apartheid is socialism with a racist face.'

Q: Ah, yes. Walter Williams wrote a book about how the labor unions and socialists ran South Africa.

A: It was a pretty decent book. But my author, Tom Hazlett, I think did a better job than Walter Williams -- per page.

Q: How has the move to online worked out?

A: I think it's worked out well. You get thousands of hits each month. Students are using it when they are doing a paper and they need some quick background. When I do a Google on some topics, the encyclopedia will often come up as the second, third, fourth or fifth item there, which is very nice. That's nice, because it's very visible. It's also great for me as a teacher, because I can say, 'Oh, you want to read more about that? Check this out.' And I don't have to go and find an article and copy it and get permission from the owner of the copyright. In this case I am the owner of the copyright, but even aside from that, you don't need a copyright to go online and check an article that's on there for free.

Q: If you sent a copy of the Liberty Fund edition to Barack Obama, which entry would you want him to read first or have him memorize?

A: Free trade. Can I do a few? (laughs)

Q: Sure.

A: What's good about free trade. What's wrong with protectionism. Marginal tax rates and why they matter. And health care.

Author's Excerpt: Blundering Brits

Pat Buchanan's "Churchill, Hitler and 'The Unnecessary War': How Britain Lost Its Empire and the West Lost the World" (Crown) is stirring up trouble and sits high atop the New York Times best-seller list. We asked Mr. Buchanan to e-mail us a 250-word excerpt from his 544-page history book, which argues that if it weren't for some serious blunders by British leaders -- primarily Churchill -- two world wars, the Holocaust, the bloody reign of Communism and the collapse of the British Empire might never have happened. Here's what he sent:

When Winston Churchill entered the inner cabinet as First Lord of the Admiralty in 1911, every nation recognized Britain's primacy. None could match her in the strategic weapons of the new century: the great battle fleets and dreadnoughts of the Royal Navy. Mark Twain jested that the English were the only modern race mentioned in the Bible, when the Lord said, 'Blessed are the meek, for they shall inherit the earth.'

Yet by Churchill's death in 1965, little remained. 'Of that colossal wreck, boundless and bare/The lone and level sands stretch far away.' ...

What happened to Great Britain? What happened to the Empire? What happened to the West and our world -- is what this book is about.

For it was the war begun in 1914 and the Paris peace conference of 1919 that destroyed the German, Austro-Hungarian, and Russian empires and ushered onto the world stage Lenin, Stalin, Mussolini, and Hitler. It was the war begun in September 1939 that led to the slaughter of the Jews and tens of millions of Christians, the devastation of Europe, Stalinization of half the continent, the fall of China to Maoist madness, and half a century of Cold War.

Every European war is a civil war, said Napoleon. Historians will look back on 1914-1918 and 1939-1945 as twophases of The Great Civil War of the West, where the once-Christian nations of Europe fell upon one another with such savage abandon they brought down all their empires, brought an end to centuries of Western rule, and advanced the death of their civilization.

Box of Books

The Dirty Dozen: How Twelve Supreme Court Cases Radically Expanded Government and Eroded Freedom

by Robert A. Levy and William Mellor (Sentinel HC)

Described as a non-lawyer's guide to the worst Supreme Court decisions in history, the book's influential libertarian co-authors examine 12 relatively unknown cases since the New Deal that have seriously crimped the individual freedoms of Americans in favor of government power. Robert Levy of the Cato Institute and William Mellor of the Institute for Justice, both lawyers, are uniquely well-qualified to write about constitutional matters. Levy was largely responsible for bringing last week's historic Second Amendment case before the Supreme Court and it was Mellor's activist group that argued the losing side in one of the 'Dirty Dozen' -- Kelo v. City of New London (2005), which declared that the government can seize private property and transfer it to another private owner. Another member of the "Dirty Dozen" cases is Wickard v. Filburn (1942), which opened the door for Congress to use the interstate commerce clause to regulate even the most trivial activities. Eugene Volokh, UCLA law professor and founder of the Volokh Conspiracy blog, called the book "passionate, thoughtful and provocative.'

While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis

by Roger Lowenstein (Penguin Press HC)

Pittsburgh taxpayers know too well the future dangers of governments giving over-generous pensions to unionized public employees. But financial journalist Roger Lowenstein shows how both government entities and major corporations like GM have made billions in promises to their retirees they can not possibly keep -- and why tomorrow's taxpayers ultimately will pay their bills. The common -- and obvious -- theme running through the disastrous pension failures at GM and in New York and San Diego is the involvement of unions, which is why Lowenstein concludes that 'The story of pensions is, in fact, largely the story of the slow accretion of power by the labor unions.' The New York Times reviewer, predictably, said this slur on unions was unproven but he wrote, correctly, that in GM's case and others, spineless, reckless or devious management (private and public) was also heavy with blame. In any case, it's unlikely we'll ever see Lowenstein's solution for avoiding future pension bailouts: "The most effective remedy -- in pensions, health care, and even in Social Security -- is to banish the credit card. Benefits should not be charged to a future generation; they should be paid for now."

Three Cups of Tea: One Man's Mission to Promote Peace ... One School at a Time

by Greg Mortenson and David Oliver Relin (Penguin Non-Classics)

Currently parked at No. 1 on the New York Times nonfiction paperback list, this 2006 book recounts how one dedicated man -- mountain climber Greg Mortenson -- has raised money from private sources to build more than 60 small village schools in Taliban-controlled parts of rural Afghanistan and Pakistan since 1993. Critics have nitpicked its literary quality. But the inspirational story of Mortenson's efforts to address poverty and educate children -- particularly girls -- while dealing with enormous cultural gaps, religious extremism and even death threats have made it a best-seller and recommended reading at colleges across the country. As James Payne pointed out in the April Freeman magazine, Mortenson, who now does his good works through the Central Asia Institute (, is the latest example of how the power of 'voluntarism' can make the world a better place. Mortenson worked his magic by relying not on government force, government bureaucrats or government money, Payne said, but 'on persuasion and his own example of sacrifice and commitment.'

Bill Steigerwald is a columnist at the Pittsburgh Tribune-Review. E-mail Bill at© Pittsburgh Tribune-Review, All Rights Reserved.

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