“Really, more than the previous 31 presidents, combined? Are you sure, is that really possible?” Albert said, clearly very surprised.
“Yes, it’s rather amazing, isn’t it?”
Clearly warming to his subject, Stein continued, Socrates-like,
“Is there hunger in Germany, today? What about America?”
“Sadly, there is hunger in all countries. Sad, little children go to bed hungry in all the world’s countries. I would like to think that in Germany since ’33, we have improved the lot of our people, at least I hope we have.”
“And I think you have improved the lot of the average person in Germany, at least as far as their belly goes. And I agree with you—sadly, there is hunger in all countries. So let me put you in a spaceship from Jules Verne with engines made of the finest Krupp steel, and take you to a planet where there is hunger but the state dictates that six million pigs be slaughtered and destroyed and wasted. Or that farmers are paid not to grow food, even while honorable young boys in Brooklyn hang themselves so as to not be a burden on their starving family. Or that a farmer who wants to put an acre under crop needs a government license or is fined $1,000 a day. Or that chefs are told how they must make macaroni. Or that a housewife buying a chicken cannot select the bird, but must by law be given a chicken at random. So on this fantastical planet, housewives lose their primal right of selecting the food with which to feed their family. What would you say about that place?”
“Six million pigs wasted. Well, Professor, you’re right, it is science fiction—no such place could possibly exist.”
“Albert, I have described exact events that have happened in America in the past ten years.”
Stein smiled at Albert’s frown.
“Bizarre though it sounds, since 1933, Germany’s economy has been freer than that of United States. Obviously I am speaking strictly about just the political economy, not about personal freedom, as Germany’s one-party dictatorship is just that—a dictatorship, and like all dictatorship it is a terribly brutal one: Kristallnacht; the endless hounding of Jews; the copying of the Britishers’ concentration camps of their South African wars of the last century—the list of brutalities is endless.
“But in purely political economic terms, there is less regulation and less harassment of German business men today than on the other side of the Atlantic. The wasting of the six million pigs was mandated by Roosevelt in an insane attempt to increase farm prices. Of course, that’s just another way of increasing hunger and starvation—the government told poor people to pay more to help farmers. And take the treatment of Henry Ford. When Ford refused to sign the so-called Blue Eagle code of Roosevelt’s NIRA and follow instructions that he must increase the prices of his cars, he was mercilessly persecuted. Ford was threatened by the brutal commissar, an impetuous bully named Hugh Johnson, a man Stalin would admire, both for his drinking and his explosive temper. About Ford, Roosevelt actually said at one of his press conferences that ‘we have got to eliminate the purchase of Ford cars from all government tenders;’ these are his own words, the words of the current American president. And when Ford bid on a contract for 500 trucks for one of Roosevelt’s alphabet soups—I think it was the CCC—his bid was $169,000 less than the nearest rival and yet it was rejected.
“Now Roosevelt did not start the Depression, that dubious honor is reserved for his predecessor, President Hoover, whose nickname was the ‘Boy Wonder.’ Actually the Republican Hoover was much closer to Roosevelt’s ideas than most people realize: Hoover’s backward view was that ‘high wages creates prosperity.’ Obviously, the opposite is true. So before Roosevelt, after the crash of ’29, Hoover forced companies to keep unsustainable and artificially high wages; these companies did what any rational business man would do, they simply laid off employees, which had precisely the opposite effect of what Hoover wanted. You see Albert, Hoover and Roosevelt both think that government is wiser than the market place. The Republican Hoover was the opposite of his predecessor, the Republican president Coolidge. Whereas Coolidge thought government interference caused more problems than it solved, Hoover loved to jump in, to ‘do something’—to do anything at all, no matter how bad. But the problem is that the things that Hoover did were hugely damaging. In the last stock market panic in ’21—before Hoover—companies laid off workers and business improved with the increased efficiencies, and then they hire back the workers, and more workers as well. One of the many things Hoover did that was so damaging in the ’29 Panic was he forbad companies to fire people, so many companies just went broke and shut their doors. And Hoover forced the railroad companies to spend one billion dollars, and this was at a time when the entire U.S. government budget totaled just three billion dollars.”
At this juncture the two men were joined by Sebastian, Stein’s faithful dachshund, who wandered onto the terrace and after approvingly sniffing Albert’s shoes, proceeded to lie in the patch of sunlight.
“He will get too hot in a few minutes and then will move back inside.”
Sure enough, after two minutes Stein’s prediction came true.
“Albert, you see, these days governments around the world believe that business men are more immoral than politicians, when in fact the opposite is actually true. A business man is only interested in one thing, namely profits, but politicians and their kowtowing minions in universities are only interested in power, hidden under the pretense of ‘helping people.’ Academics the world over all think they are greatly superior beings, blessed with superior intellects, conversing with superior colleagues, discussing superior topics, holidaying in superior locales, ineffectively lusting after pretty young waitresses. Fortunately, academicians are generally ignored. But politicians nowadays believe that only they can manage their country’s political economy, and that the normal and natural cathartic effects of busting of periodic bubbles with panics are unnatural. Politicians and my fellow academics don’t realize that they do more damage in the long term by trying to change human nature. And business men and especially investors are driven by the contradictory emotions of greed and fear. It would be nice to have the ideal of the ‘rational man’ but sadly people are not rational; they are primeval and crude and unpredictable; this will never change.
“Now, the Jules Verne space ship stories are all true stories from America. Both Hoover and Roosevelt believe in action and in gambling with taxpayers’ money. Most important of all, they both believe in bigness, especially bigness in government. While the government of Hoover created the depression, the government of Roosevelt has made it the Great Depression. Hoover’s government encouraged farmers to over-produce, which they were happy to do. Of course, the inevitable happened and farm prices collapsed—as there was more supply than demand. So the Hoover government put an infected and unclean bandage on another infected and unclean bandage and wasted 500 million U.S. dollars in the process trying to fix this disaster.
“And here is the most interesting point: in the same country, with the same workers, but with a different government in the decade of the 1920s, the country boomed. As you know this is a period that I have written about extensively and, of course, I observed the early years of the decade myself first hand when I taught at Harvard. In this period, President Coolidge was extremely conservative and believed that not interfering with the American economy was the best approach. Coolidge kept income tax rates low so that successful businessmen could plow back their profits into their businesses, which business men love to do as they generally treat their companies as their own little babies. And with these low taxes, Coolidge was rewarded with a robust economy. Of course, human greed took this too far, as it always does, and the American stock market became irrationally exuberant—the wild ‘animal spirits’ took over. For example, common people started to gamble on stocks and often did so using borrowed money called ‘margin’ and this was not investing for retirement but rather gambling.