The Well-Read Investor

Episode 6: Amity Shlaes

New York Times best-selling Author, Amity Shlaes and Fisher Investments’ Mike Hanson examine the lessons we can learn today from LBJ’s Great Society.

Today Mike speaks with Amity Shlaes about her most recent bestseller, Great Society: A New History. The title reflects the era of American politics where President Lyndon Baynes Johnson pursued a set of social policies designed to help the underprivileged called “the Great Society” - a time in so many ways applicable to now, and they talk about the ways today is similar and different.

Amity has four New York Times bestsellers including The Forgotten Man: A New History of the Great Depression, and Amity’s book Coolidge, and a full-length biography of President Calvin Coolidge. National Review called the Forgotten Man "the finest history of the Great Depression ever written." The Economist made Coolidge an editor's choice for 2013.

But many readers know Miss Shlaes from the Wall Street Journal, where she served on the editorial board among many other duties, and her syndicated columns for years appeared in the Financial Times and Bloomberg. Currently Amity’s work appears in Forbes and in National Review. 

You can learn more about Amity and her work at Amityshlaes.com or follow her on Twitter @amityshlaes.

For more of The Well-Read Investor, follow us on Twitter @wellreadpod or Instagram @wellreadinvestor. If you have any questions, want to be on the show, or want to tell us what you think – send us an email! wellreadinvestor@fi.com.

Michael Hanson (00:00):

Hello everyone and welcome to another episode of the Well-Read Investor, the podcast that profits your mind and your money.

Today my guest is the ever-engaging Amity Shlaes here to talk about her most recent bestseller, Great Society: A New History. The title of course reflects the era of American politics where President Lyndon Baynes Johnson pursued a set of social policies designed to help the underprivileged called “the Great Society”. Of Course, this all happened in the late 60s—a time in so many ways applicable to now, and we talk about the ways today is similar and different.

Anyway, I mentioned Amity is a bestselling author, and in fact she has four New York Times bestsellers including The Forgotten Man: A New History of the Great Depression, and Amity’s book Coolidge, and a full-length biography of President Calvin Coolidge. National Review called the Forgotten Man "the finest history of the Great Depression ever written." The Economist made Coolidge an editor's choice for 2013.

But many readers know Miss Shlaes from the Wall Street Journal, where she served on the editorial board among many other duties, and her syndicated columns for years appeared in the Financial Times and Bloomberg. Currently Mrs. Shlaes’ work appears in Forbes and in National Review. 

You can learn more about Amity and her work at Amityshlaes.com or follow her on Twitter @amityshlaes.

Lastly, as Labor Day approaches I certainly hope you’re able to listen to this podcast with a few moments of relaxation as we start looking toward the final part of what’s been a tragic and eventful year—we all need a little rest these days and we all need to take care of ourselves sometimes and I hope you are doing that for yourself when you can. Ok, no more time to waste: here’s our conversation with Amity Shales.

Michael Hanson (01:53):

Amity first. I just want to say thank you so much again for being here and it is really our honor to have you on the show.

Amity Shlaes:

I'm thrilled to be here!

Michael Hanson:

With your books, Great Society, and then of course The Forgotten Man, which, are two huge topics about the great depression and then the idea that the new deal and the great society, why should every well-read investor read your book?

Amity Shlaes (02:13):

Well, right now, America is very idealistic. People don't want a little bit less poverty, they want no poverty. People aren't seeking a little bit higher earnings for lower earners. They're talking about broad research redistribution. And that feels very new, but of course it isn't new. The two periods where there was this much idealism, the thirties and the sixties, the period of the great progressive effort, the new deal and the period of the great progressive effort, the great society. So these are analogous periods. And I picked them even before now because I was interested in events that have consequences. And when you look at who we are, we live in Lyndon Johnson's America. That's what Joe Califano once said. And we also live in Franklin Roosevelt's America. So, to inform ourselves about where we are, the basics, it helps to go back and figure out what institutions exactly were established and why we bump up against them so often.

Michael Hanson (03:13):

Now I have to tell you, I mean, reading The Great Society: A New History currently is quite a thing because you can just read into so many parallels, but also differences of today. What are some of the parallels that you see? I mean, and as we think about this election coming up, do you see things happening in a similar way as they did in the past?

Amity Shlaes (03:32):

Great society was written a couple of years ago now, it's a new book, but books have lags. So, there was no, COVID, not on the horizon for me anyway. And there was no statue tearing down on the scale that we have now. The big parallel from the sixties was the expectation of payments from government. The idea that people are owed, not just their rights, their freedoms, but also assets. And, what is also parallel is the idea that you sideline police because they are bigoted and occasionally really do wrong. That was certainly the rule in the 1960s and the culture of the Great Watts riot started out with a back and forth with officers just as it might today.

Amity Shlaes (04:18):

And the question again, is whether the problem is bigoted police who have been trained improperly, or whether our society is systemically rigged against one group, very similar. In the sixties, what happened was the federal government funded community action efforts, a pretense of helping out federalism in the States. But what I found in the research of The Great Society about the sixties was that the federal funds that float into the locales didn't help the poor people. Didn't enfranchise them particularly and caused great frustration and a lot of infighting. So, it became a fight over money instead of an effort to help people or permit them to help themselves.

Amity Shlaes (05:00):

So, what we know from the sixties vis-a-vis community action, federally supportive is it doesn't necessarily make people who are supposed to be the beneficiaries happier. That's a good start. I think you're hinting at your second question, that we had a law and order candidate in 1968 in the United States. And president Trump is thinking about being a law and order candidate. It's true. That culture changes when you have riots or violence in cities, people vote differently. The law and order candidate then was Richard Nixon. And what's interesting to me, because I am no Nixon fan, is the quality of the Nixon campaign was very high.

Amity Shlaes (05:36)

Every time Nixon got up and spoke, you thought that's right, he wasn't too crazy. He was not a crazed authoritarian. He was just an intelligent analyst on the more moderate to conservative end of it. Nixon, the president was a different guy. So, I guess the lesson for now, sir, about law and order candidates is the guy who wins on law and order is not necessarily the guy you met when he campaigned. Beware of law and order candidates, would be the takeaway from the sixties experience.

Michael Hanson (6:08):

That's fascinating. Would you say that the presidency clearly changes a person once they've come through it?

Amity Shlaes (06:15):

Yeah. The crucible of the presidency is a bore for the rest of us. I mean, how many books about presidents are there? And we all kind of think it's neat because they're powerful. And we read about every time they got their toenails clipped, I’m telling you. And, for historians, it's like a vacuum that sucks you in. Of course, people change, but the real issue is what kind of ship does his captain of the ship have to navigate? And that has to do with the structure of our government, which shifted. And in the sixties, we had expanded our government. So, the president had more room for error than he might've had in another era.

Amity Shlaes (06:15)

In my book, Great Society, I tried very hard not to concentrate too much on the beguiling, horrible LBJ, Lindon Baynes Johnson, but rather on the system that made impossible and the poor souls who worked for him. And one after the other kind of had a little harder story because it's agony to be an intelligent policy person and working government with the tide so strong. What you hope for say, Sergeant Shriver, the head of our poverty office at the time, never comes to pass because of legislative or other compromise. And then you're blamed for the result of something you never recommended. And this agony is interesting and important for us to know about. So, I focus more on the best and brightest who work for presidents rather than the chief executives themselves.

Michael Hanson (07:42):

Yeah. I noticed that, I know it was quite an interesting collection of people throughout the book. And one of the things I've heard you say now once or twice is: great ambition and a desire to be loved is one way to think of populism. And it's one of the ways these folks can get themselves into some of these policies. And I had actually heard you speak about Arthur Burns relative to these topics. And that of course is of some interest to us here in the economic and investing world. Is the fed very politicized and do you think the fed is still politicized today?

Amity Shlaes (08:09):

I’m wondering where we met… but anyhow…Burns, the story of Burns. The reason he's interesting, he's he was such a respected economist. He was the guru. He was not only a respected economist, he had essentially built out the national Bureau of economic research, which is an important institution to economists. He was friends with Democrats. He was friends with Republicans particularly, and he also had Richard Nixon's ear. So, imagine someone who's a superstar economist, invented whole areas of the field. And there he was, fed chairman, and he knew inflation was bad. That's what he taught his students. But his vanity overcame his knowledge, his desire to please his president and stay in power, which is always the way, permitted him to convince himself he should compromise principle.

Michael Hanson (09:00):

Is that basic structure still intact in your mind today? Is the fell still

Amity Shlaes (09:05)

Absolutely. Yeah. I mean, what is the, because of the fed chairman has discretion. The fed can do a lot and because every fed chairman wants to please the president, whether he can or not, or she can or not. The president can do nasty things to bother the fed, right? The Treasury's in play, the fed is different from the treasury. It's supposed to be more independent, but the fed laws itself flawed. And that's what I try to get at. I mean, the Fed's mandate is too large. I wrote a piece in the New York Times about this. You want to blame all the fed laws, which just gave the fed too much license and too much responsibility.

Michael Hanson (09:40):

I know also I've heard you say Nixon went along with certain programs in the name of being reelected you know, he wanted to rattle the chain of China, so as to stoke his reelection chances, it seems very parallel to what we see today. Our expectation of course, is you'll see plenty more of that leading up to election day. Is that what that is to you in some ways today, this kind of a political phenomenon geared towards reelection or do you see real conflict with China happening?

Amity Shlaes (10:07):

I don't know anything about China and I can't comment on that, but I can say, Nixon basically saw all domestic policy and all economic policy as negotiable. What was important to Richard Nixon was foreign policy. If we won the war in Vietnam, if we settle with China and he became superstar who opened China, only Nixon could go to China while the rest would all fall in line, including the currency. That's not illogical. But anyway, in the meantime, what he did was trash everything domestically, for the sake of getting reelected. So he could pursue his Vietnam slash China policy. And turned out to be much more expensive than he thought. He sort-of created a great populist package for the country. Very much in the way any populist president would, a package that felt great, like a shot in the arm.

Amity Shlaes (10:58):

That was an upper for the economy, the package there, there were tax breaks to help us businesses. The list went on and he closed the gold window. But, it was a counterproductive package and everyone who worked on it at Camp David in summer of 1971 for Nixon knew it, it was a deal with the devil to get Nixon and reelected. Very, very interesting.

Michael Hanson (11:19):

You know, I've seen you speak several places and one of the things that you lament at times is that we just don't seem to have taught history very well to the current generations. Given the current circumstances and everything going on in the world, social unrest and COVID - what's your current perspective on that? Do you think that's even more acute a problem than it has been?

Amity Shlaes (11:38):

Yeah. You know, if you say we haven't taught well enough that understates it, we have failed teach history because we have failed to show history's relevance, apparently, and we can't just blame it all on teacher unions or something. It's very interesting, I think in a moment of introspection warranted.

Michael Hanson (11:58):

One of the ways I became a huge fan of yours, in fact, was not just for The Forgotten Man, but for the comic book adaptation to The Forgotten Man, done by Chuck Dixon in particular. And I'm just wondering, how did you come to agree to that project? We're just interested in the lore of it.

Amity Shlaes (12:12):

Well, thank you for asking that. I am very concerned that we are failing to present information in a way that younger people find relevant. So, it's nice to write a big book and have all your friends read it. But if 20 year olds aren't reading it, then you failed. So, I thought, well, what can I do? And I really like graphic novels. What we're talking about here is cartoon books that are long and drawn more seriously than Tintin, but sort of in that style, you know, superhero comic book.

Amity Shlaes (12:44):

And I see that the visual has the capacity to convey really difficult topics such as, there's a comic book about the Holocaust called Maus. And I know something about the Holocaust, and I was very skeptical. What? A comic book about the Holocaust? Well, it's a serious topic. And by the way, the Germans, are what, cats? And the Jews are mice and Poles are pigs, and I'm a German, Polish, Jew, I'm offended on three counts. I'm no pig, you know? And I could see that book Maus, had a tremendous effect on the younger generation. It's sold th e hundreds and hundreds of thousands to young people. It's beautiful. And it gets them the material on the Holocaust in a tolerable way, because that story is intolerable. There's a similar one Persepolis on the Iranian revolution.

Amity Shlaes 1334:

Again, really difficult topic made palatable to young people. So we tried this book and Chuck did work on it. The artist is Paul Rivoche. The world's greatest cartoon artist. It was a major venture to draw 1800 pictures of the great depression. It made number one on the cartoon book bestseller list. It was one of those experiments that that's promising and piloting, but doesn't yield you scale. So if you're brave, you just try again. And that's what I hope to do.

Michael Hanson (14:02)

Chuck Dixon, of course he, one of the greatest comic book writers of all time and I read him so much throughout my youth, but I've always kind of felt that economics books and perhaps even history books really can do the visual medium. I mean, it's narrative and it's visual. It's primarily what these things are.  This is a reading group here are reading podcasts. What kind of things do you read in your free time and what do you enjoy reading?

Amity Shlaes (14:23):

I read a lot of Greek and Roman history right now, particularly about Cicero and by Cicero, because the change of the Roman empire from Republic to more democracy autocracy, right, is very interesting. If you want to learn about populism, that's where you learn about it. I read a little bit about, Peron and Argentina because Argentina was such a promising country with so many more resources than most countries. And look what became of it as a result of populism. I've been reading quite a bit, about the Weimar Republic and there's a recent book about the monitoring banking experience of 1931, I really enjoyed that too. Because, you know, the great depression did not have to happen. Bad things never have to happen. It's just certain bad events, and certain bad luck can change everything. That's the way history works.  I'm quite interested in Hjalmar Schacht, the German central banker and in Walther Rathenau, he was a political leader who was assassinated and in the monetary and economic decisions that were part of the third reich selling it.

Michael Hanson (15:33):

It sounds like pretty heavy reading for fun reading, but it sounds like something

Amity Shlaes 1536:

No, it's not. I mean, if you're in banking, you'll just hear him saying the same things you're doing at work. You know what a good one is too? King Lear, if you want to hear about power and plans gone wrong, I was just listening to King Lear this morning, and there was a sort of Arthur Burns situation where someone says I'm doing wrong, but it's for a good end.

Michael Hanson (15:58)

It's funny, you mentioned Shakespeare because once upon a time I taught a class at Cal Berkeley and finance. And in fact, I had them read The Merchant of Venice, because if you want to understand money, that's in fact, one of the best places you can start. But you were talking about reading the classics and you mentioned Cicero who I also believe is probably the greatest orator at least that we know of all time. But we had just recently had John Gaddis on the program from Yale. And I know you hail from Yale and, you know, we were talking about history and he was sort of accentuating the idea that, you know, the classics are still so relevant. Do you find that to be true when you're thinking about history, thinking about historical narratives of the 20th century, do those classics come back to you or is there something you referenced?

Amity Shlaes (16:38)

Human nature is very important. And if you read all these books, you see nothing is new. Man has always riven, the good and the evil. I mean, if you're advising your children and they get a business degree undergrad, then they get a business degree grad, they kind of miss something. The problem is the way the humanities are taught currently is not attractive. And it's kind of stressful for common sense people. So you sort of have to do your own reading course. So, the Coolidge Foundation where I'm chairman, what we do is we basically have Coolidge courses.

Amity Shlaes (17:09):

And if anyone wants to bring his or her class to Coolidge, we will host them. We have an office in Washington, too, with nice chairs for your students where we tend to do debate because it's more fun for the kids than sitting and listening to people. I love the humanities and I love our history. They learned about the history of other quarantines. You don't do too well without much knowledge of the past, no matter how much of a math genius you are.

Michael Hanson (17:34

So, we didn't even get to Coolidge, which I suppose we'll have to mostly save for another time, but I do want to ask you, I mean, whenever your name is spoken, there's also this kind of idea of pretty legendary productivity. And I wonder if you'd just leave us with a little bit of thinking about what's next for you, what are you working on and maybe just a little bit on your process and how you approach finding work that, that you want to write about?

Amity Shlaes (17:55):

Well, thank you for saying legendary productivity. I need advice on what to write about next. I'm thinking of writing a short, picture of Tocqueville in America, because it's the America Tocqueville saw that we're losing slash have lost, right? I'm thinking of writing a short economic history of America in the 20th century, so that people can have a shorter book in hand. That's not a popular idea because it's so economic, but I think might be useful just to have 150 pages of what happened in the 20th century.

 

Amity Shlaes (18:25):

I have four children I'm married.  People often ask how can a woman get all this done? I think it's not hard for women to be just as productive as men. One thing that is important for women or anyone who has creative projects, male or female, is the ability to have some flexibility at work. Because it's almost impossible to write a book and be in charge, being chief of staff in an office, or be chief of meetings or be the go along, get along person, who has to be there for every shift and consensus to set direction. So, my bit of advice is turn to projects, deliver on your projects and you will find you have a lot of time, and then you can use the rest of your time to do whatever else all you want to do.

 

Amity Shlaes (19:15):

And my second point, just for the fathers and mothers who might be listening. It is totally possible for a mother to work full time and be an okay mother. I wouldn't say perfect, but okay. And it is totally possible for that to happen. It’s not always going to work, but it works plenty of the time. So, this idea that you have to stop working is not necessarily true. So, it's a much more creative process, parenting, than I think young people imagine. If you're a good parent, your work is completed shortly and they are, you know, that's the thing about parenting. If you succeed in it, you don't have to do it anymore because the children leave and you miss them, whether you like it or not. So, this is not a change in identity. You're still the same person at the other end. If you're 60 years old, you might very well be the same person you were at 25 before you had all these children. I'm there at the other end now. I just say be a little more confident. Children need attention but it's not impossible to do major things, whatever your gender with children.

Michael Hanson (20:16)

That is fantastic advice. Thank you so much. My guest today has been Amity Shlaes. Amity, thank you so much again for doing this.

Michael Hanson (20:32):

That was our conversation with Amity Shales. We study a lot of history at Fisher Investments and people ask me why. It’s not because history repeats, it’s because people do. Today is far different than 50 years ago in many ways, but human reactions of greed, fear, love, anger, hope—all those things are universal and those are the things that repeat and they play huge roles in how market cycles work. I think Amity’s books shed such great light on that subject during pivotal political moments of the 20th century, and that’s why I read her.

So, in 2 weeks we have Lawrence (Larry) Siegel in to discuss his book, Fewer, Richer, Greener which is a totally quirky and fun conversation. Larry is a long-time investor and researcher with a great set of experiences who will challenge the way you think about the future one way or the other. That’s coming September 9th.

And wherever you may be hearing the Well-Read Investor, please comment, like and subscribe—it really does help us. You can visit our website: wellreadinvestor.com or send us an email at wellreadinvestor@fi.com.

Until then everyone, here’s hoping all your reading profits your mind and your money. Take care.