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Planning the Great Society

with Amity Shlaes,
hosted by Richard M. Reinsch II

Is it true what they say about planning and centralized government power? Award-winning author Amity Shlaes in her new book Great Society answers in the affirmative. This wide-ranging discussion examines the intentions and consequences of this momentous quest for planning and power by the federal government.

Richard Reinsch: Today we’re talking with Amity Shlaes about her new book, Great Society: A New History. Amity is the author of four New York Times bestsellers, The Forgotten Man: A New History of the Great Depression; The Greedy Hand: How Taxes Drive Americans Crazy; and a biography of Calvin Coolidge entitled, Coolidge, which she appeared on this program, one of our first interviewers when we started this program. So Amity, glad to welcome you back, and the book has been getting a lot of attention and a lot of reviews from what I can tell, so congratulations.

Amity Shlaes: Well, thank you. Glad to be back.

Richard Reinsch: Sketch for us what was the Great Society?

Amity Shlaes:  I think if you start with where we are now; a whole lot of idealism from young people, a generational divide; young people don’t think older people appreciate their concerns; youth talking to Boomers. That’s the way it felt in the early ’60s, so my book is about idealists who were young; some socialist, some idealistic, some capitalist; and what they wanted to make their society not just good, but to superlative, great, and this was the common goal. So, that’s the early ’60s.

The Great Society was also a program, but the ultimate question is how do you get to great? Do you get to great by the public sector or the private sector? And over and over again, we chose the public sector as our vehicle and tool. It didn’t work out. So the Great Society was a 1960s program that foreshadowed all the programs we are suggesting now, and we can also see its results, and the were ranging from sub-optimal to horrible.

Richard Reinsch: When I think about the Great Society, I always think about President Johnson’s commencement address, 1964, at the University of Michigan where he issues the call and he says, “We will build a Great Society.” And I also think about his speech, I think it was a year later, you talk about it, at Howard University and the famous metaphor of life is a race. And because of the way blacks have been treated in America, the race wasn’t fair and this necessitated government intervention. But you don’t necessarily start there. You start with the show Bonanza, and you start with the Port Huron Statement of 1962. Why?

Amity Shlaes:  Well, Bonanza was the very popular show that commenced in the ’60s and it really wasn’t just about going somewhere as a lone cowboy; or I don’t know, winning the girl, or killing the bad guy, or rounding him up, corralling him. It was a cowboy show of a new genre. It was a cowboy show about what you do once you’ve settled in a community and you already are rich. It was a cowboy show about what to do with money and how to behave. So on Ponderosa, the family are always trying to show others how to behave; to civilize the Main Street of the frontier town. And that was different, and it really did reflect the ’60s; the Bonanza thesis, the Bonanza subjects, which were how do we share wealth and how do we build civilization and make it better or great? So that’s why I started with Bonanza. The book also ends with Bonanza.

Bonanza was an iconic show. It was extremely popular, and another reason it’s important is the word bonanza. In the early ’60s, most Americans thought that to be rich was our God-given right and the wealth just came from somewhere, a cornucopia or bonanza, and they took it for granted. They focused on the redistribution of it or the perpetuation of it, but they took it for granted. And what the book shows is that wealth and growth are not to be taken for granted; that you can slow growth through government policy or individual behavior, so bonanza is the theme throughout. It suggests that an emphasis on redistribution is probably ill-advised because then you have less to redistribute.

Richard Reinsch: Because I was reading that chapter and thinking about the word confident and use that word in the introduction, that a confidence drives this period, drives the policy making period. The reaction, you talk about confidence.

Amity Shlaes:  Confident, yes. They were very confident, and that, I think that’s similar to now because people think that it’s also our God-given right to see the Dow Jones Industrial Average of the S&P go up forever. Confidence, right? It’s the money’s there, the dollar is king no matter what we do. So that’s very interesting.

Richard Reinsch: The contrast though would be with your earlier work, Coolidge, because you note that Coolidge begins with thinking intensively about not wealth, but the absence of it and how one could, in grasping for it, come into ruin through debt. And so you thought about frugality, you thought about work, you thought about careful living. And yet, now we’re in this period where riches themselves seem to have overwhelmed more realistic concerns.

Amity Shlaes:  Yes. Coolidge was a cautious man. He didn’t believe you should leverage yourself to the hilt. He didn’t believe in taking an unnecessary risk in any area of life, not just materially. He believed in holding back. Given the choice between a possible good and doing nothing, he would sometimes do nothing because he would say with the possible good may come an unknown bad. Rather interesting.

In the ’60s … let’s go back to the ’20s. In the ’20s, there was the sense that America had to earn its status as super power. It was a temporary, acting super power at the end of World War I, but its predominance was not assured or rated as necessarily permanent. It wanted to become the permanent super power, so Coolidge and his Treasury Secretary, Mellon, pursued policies to that end, which included balancing the budget. Any day, the dollar could go down and sterling could go up. That sterling had been the predominant currency in the 19th century, why shouldn’t it be again? If our policy was too foolish, we’re too foolish, then England would prevail and our dollar would lose. So Coolidge was protective, prophylactic, cautious.

And, then, I do cover the 1930s in Forgotten Man, and in Forgotten Man you have a call to a collective effort by Franklin Roosevelt and even Herbert Hoover before him, and that call is different because it’s in the face of want. One in four men was unemployed in 1932. Too, we have something in the ’60s much more similar to today. We’re all doing pretty well, but we’re not happy with all the result. We want to go from good to great. So this period is unusual in that we feel super rich. I’m trying to think of another period like it. But we feel pretty rich; we just feel everything isn’t quite fair, which is different from people are starving. You can argue people are starving, but it’s hard to make that argument today, some attempt at it.

Richard Reinsch: Something that I brought up earlier, so I said maybe the wealthiest generation in American history, the Boomers, I guess it would be early Boomers who drafted the Port Huron Statement, 1962. You include that in the second chapter as a way of thinking about the Great Society, but what’s the connection there?

Amity Shlaes: Well, we’re speaking of idealism, so the kind of Earth Day or Woke Day or Global Warming Day that you would have now was a historic meeting on Lake Huron, or in Port Huron, which happened also by the way to be the childhood dwelling of Thomas Edison. Anyway, in this otherwise unknown town, a bunch of students came together and this is a mythical story in popular cinema; the references to the Port Huron Statement of “I participated in the Port Huron Statement. I was there,” because the people who attended, some became legendary later. And the statement itself, when you look at it, is kind of benign and rambling. It looks like a C-grade essay, undergraduate paper about the future. It rambles all over the place; has a few good ideas, but not coherent. And it was written by a group.

Nonetheless, some of those people went on to, basically this was the time of the formation of Students for a Democratic Society. Tom Hayden, one of the leaders of the group, went on into the violent period of SDS, and the Yippies and so on. So this is where it got its start, in a kind of benign student meeting; meeting for all students, activists coming from across the country in their little cars; talking about this and that; really trivial stuff like what time a boy must leave a girl’s dormitory; remember, this is the early ’60s, not the late ’60s; at night.

And I tried to describe this because this was the left idealism basically, there were some libertarians but it was a left idealism. And what’s interesting is the attendees didn’t imagine they’d get anywhere, and yet pretty soon, some of their ideas were being implemented as policy by the Johnson administration. It was sort of an accident, but the Johnson administration had left after Kennedy, so Michael Harrington, a socialist who’s one of the characters, actually got into the office that formed the new poverty law, the Office of Economic Opportunity. He worked with Sargent Shriver, the poverty tsar.

So that went from sort of meaningless, goofy students to meaningful participants in society in the ’60s very fast. And the surprise for me in writing this, oh the students went there and I always thought they were very independent. You know, and they got together. And this was away from the establishment, that was the point. What I learned in the research for this book about Port Huron, imagine dumpy cabin files with students staying up all night smoking, writing paragraphs and reading them to each other, was that the event was more or less funded by organized labor.

The camp itself, Port Huron, which is also called Four Freedoms after Roosevelt, was owned by organized labor. And how did this all happen? The University of Michigan is in Michigan, where the UAW, the mighty, mighty United Auto Workers were. One of the Michigan undergrads, a young lady names Sharon Jeffrey, was the daughter of the aide de camp of Walter Reuther, the head of the UAW. And you can imagine this from the point of view of the UAW, they say, “Well, a lot of people seem to be going to college these days. We’re an industrial union, but we appreciate college, and we certainly want 10 million peoples’ worth of union dues to flow into our coffers; and we want to be the future, we don’t want to be just a bunch of has-beens old workers. We want to capture the young generation, so we’ll likely fund a student movement.” That was the thinking, you know.

And they were to be, if they had the wrong ideas … because the UAW and the AFL-CIO at that time were not communist. They were bitter enemies of the Soviet Union and the Soviet regime, but they had social/social democratic ideals. And one of the problems with these young people, one of the early fights was that the Port Huron statement was insufficiently anti-Soviet for the unions’ tastes. And they didn’t want to get in trouble, either, so you imagine this whole thing; they’re funding these young people, they’re giving them a long leash. I tweeted on check that went out to paper; Tom Hayden, the legendary progressive left leader, and I just didn’t realize until I researched in the Wayne State library and so on to what extent the union funded the student movement, and what a kind of frustration that must have been because the left student movement handed the 1968 election to Richard Nixon, who hated labor more or less.

So the unions who funded the young student movement hurt themselves through this funding in the bitterest of fashions that the union leaders felt totally betrayed by the students.

Richard Reinsch: Unintended consequences. That also-

Amity Shlaes:  No, the first example of unintended consequence. Yes.

Richard Reinsch: I also want to get your perspective on what encompasses the Great Society? I mean, you talk about the War on Poverty in the book; you talk about the housing policies and then sort of this domestic policy front, but what else? Should we include the space exploration program? Should we include the Vietnam war?

Amity Shlaes: Well, Johnson defined it: classrooms, countrysides, cities. Those were his three areas for a Great Society at that Michigan speech, where Walter Reuther was there at the end to thank him for giving it, by the way. So they were going to have efforts to improve education, and we have a number of laws, some of which helped created our student debt problem; university funding, K-through-12 funding, that came out of the Great Society. The very first component was something called the Office of Economic Opportunity, which was the poverty obliteration office led by poverty tsar, Sarge Shriver. Countryside, there was a program, a hillbilly elegy program we would say on funding Appalachia and the extreme poverty there. Michael Harrington, the author of a book called The Other America, about poverty, and he had great thoughts about Appalachia. So Johnson promised to cure poverty, not to create a palliative, but to cure it …

Richard Reinsch: To cure it?

Amity Shlaes: And then like any project, Great Society or any of them, Great Society morphed, and one of my thesis is that Nixon, a Republican whom we would expect to be different, and was different in attitude, actually ended it for political reasons of continuing the Great Society. For example, he expanded or permitted the vast expansion of food stamps, so it was just a bigger state.

I think you’re asking about civil rights, and what’s interesting there, and you really picked it up, is at first the Great Society was about equality of opportunity. That’s pretty clear. That didn’t seem enough to Johnson, so he asked after Michigan, at Howard U., in another commencement speech, for equality of results. That was an official call for a lot of programs we know of now, whether in business or affirmative action, or, or, or … And that was a shift with which everyone was not comfortable. So you have a society where, in 1961 when he’s being inaugurated, Kennedy says, “Ask not what your country can do for you; ask what you can do for your country,” to we’ve got to help everyone. We owe you, which is what it became by 1966 or ’67.

And later in the period, the courts cooperated very much. For example, there’s a Supreme Court case I describe called Goldberg v. Kelly, that basically said welfare is property. It’s your money and you are super entitled to it, not just entitled. It’s property like a patent that you wrong when you had an invention, so you have a complete switch in what individuals in their society within 10 years. It’s dramatic.

Richard Reinsch:  Is it also thinking about, I suppose Vietnam; you talked some about McNamara, it was even the way that war was fought at times; sort of the technocratic approach to it that somehow there was a strategy in a way to pursue it without actually fighting a typical war of holding ground or removing the enemy? But you could conceive of it I guess in a more tactical, precise way.

Amity Shlaes: Yes. So there’s The Best and the Brightest was the book by David Halberstam that shows what fools the planners of the Vietnam war were. And Max Boot has written about this very persuasively, too. McNamara had an idea about bombing and how it might work that didn’t correlate to reality. It just correlated to his spreadsheets, and that was part of the insanity of Vietnam. Here he was fighting against guerrillas as if they were the German army with tanks, and I always thought The Best and Brightest, that was about foreign policy. But what you discover when you look is we had the same high appreciation of intelligence, technocracy, and planning; long live consultants, long live business school graduates in domestic policy. And some of the characters carry over.

McGeorge Bundy; McNamara, who after being Defense Secretary, failing as the Defense Secretary, went over and was equally foolish and also tragic in his result at the World Bank. And one thing McNamara did gives you a good idea, I noticed this because it just blew my mind, no respect for some other space, whether it’s the local space, the regional space, the state space, the space of face; no respect for any of that. So McNamara, because he was a numbers person, figured out that if there were fewer people, maybe more resources would be available. That was his answer to scarcity.

And so he was for zero population. Okay, whatever. And there were others like that, but where did he choose to deliver an address on this? At Notre Dame.

Amity Shlaes:  So that kind of insult that you have to work hard … I mean, it takes a lot of talent to be that insulting, and he was.

Richard Reinsch: So he was that arrogant?

Amity Shlaes: Yeah. That arrogant and that insulting to not see what damage he might do, what offense he might bring, by arguing for birth control and zero population in front of the Catholic Church. You know, that’s not the only example but he’s kind of almost like Asperger-y, that people who have diagnoses now. He did not, he was so smart, he did not pick up stuff. And the tragic part was, the government used and applied his policies or the World Bank did. So you think of something like the sterilization of men in India, that came out of the mindset that McNamara shared. Less people, better. We distribute resources, and resources can’t really grow because by the way, we’re socialist, right, so we slow production.

Julian Simon and Paul Ehrlich are also characters. Those were the two opponents; one who believed that the world would run out of everything, Erlich; and the other, Simon, that growth would make life quite pleasant and more efficient in the future. And of course, mathematically Simon won that, but in the time of my book of Great Society, it looked like Erlich might.

Amity Shlaes:  And there’s also something called the Club of Rome.

And that believes in zero growth, I guess it shows that first you aim for great, then you become profoundly pessimistic.

Richard Reinsch: So let me ask you this. We’ve been talking about sort of the intellectual architecture of the Great Society. Criticism of your book in the New York Times earlier this week I think, Binyamin Applebaum said why didn’t you include in your book more of a description of Medicare, Medicaid, food stamps, and Head Start, if I’ve got it all, which he says were enormously beneficial parts of the Great Society, and I’m curious what your response is.

Amity Shlaes: Well, I tried to do the book in real time. And if you imagine to write the way they felt, and then we know what the consequences are, right? So what were they thinking to create a giant program like Medicare, which is worse in terms of our obligations and shortfalls in Social Security, which we tend to think is the biggest program of all. Well at the time, and this is another example of unintended consequences, I don’t think they thought that much. Here’s what was in Johnson’s mind, and you can see that because he went to sign the healthcare amendment; there were amendments to Social Security; with Harry Truman, who had failed to get through some sort of nationalized healthcare in the past.

They wanted to honor Truman and say I’m doing what, something of what you thought healthcare for seniors and poor people, but basically Johnson wanted to honor Truman and bolster his party, one. Two, the war was on and Johnson wanted to throw poor and old people a really good bone because hundreds of thousands of young men were going very suddenly to southeast Asia, and some dying there. Three, he’d never imagined they would be as big as they are. So I think the New York Times review by Applebaum was a little Whig version of history; that is, it’s looking back with more knowledge than we had at the time.

In Johnson’s time, old men were dead by the time they were 70. They didn’t live ’til they were 90.

Richard Reinsch:  Yeah, that’s how the welfare state works.

Amity Shlaes: Right. So Medicare would work if everyone died very early, right? And Medicaid would work if the War on Poverty were won because there would be no poor people to claim Medicare. So this is another example in my mind of a real unintended consequence.

One of the amusing characters, and for me to say and they were wrong and it was the centerpiece of the Great Society is to misrepresent what they thought at the time of …

Richard Reinsch:  And I thought as well that is there something new about, I mean with Head Start; but is there something new about those proposals, or as just as being long-standing goals behind the creation of a welfare state, versus what I take you to be arguing the Great Society, that there’s this policy innovation, federal government power thing going on that drives the Great Society, like Sargent Shriver. As I read, I’ve never read much about him until your book, and he really is an example of someone who means well. I mean, it just seems like he fundamentally believes in what he’s doing in national service in helping the poor, and is producing all manner of problems.

Amity Shlaes:  Well, he’s an argument against social conservatism in politics because he really wasn’t a lefty. What he was saying was we must get things done that we normally do with the church, such as encourage marriage and help poor people by giving out alms. That can translate to government. The government is just a bigger charity, or it should be, and certainly we can afford that it might be. Therefore, I will do what I do at in my church at home, home and office in Washington 10,000 times larger. It didn’t work because you are cut off from your community because the federal government really can’t direct people to give up poverty and adapt a got-to-work ethic. It cannot direct how people marry or don’t. It’s just ill equipped for that, even now.

So if you’re a left conservative, sorry … if you’re a left big government person or a right one, you can take some sad lessons from Sargent Shriver. He was such a nice man, and you think his wife was … Well, they did the Peace Corps. He did that. His wife did Special Olympics, and he did Great Society. Which do we like the best? Personally I like Special Olympics.

Because it’s about what you could do if you try. The Peace Corps sounds nice, but it often terrifyingly naïve and sometimes hurts the places it aims to help. And the Poverty Office, Shriver was sort of foisted into the job by Johnson, had so many perverse outcomes and not at all he was intended, and it kind of ruined his career because Johnson, being an opportunistic rat fink, abandoned Shriver and sent him off to Paris to lick his wounds.

Richard Reinsch: So the War on Poverty fails? And just in general, an idea of domestic policy as a war, is incredibly dangerous.

Amity Shlaes: There’s a limit to what domestic policy can do. And in the book, what I try to give a sense of they tried; they failed at one thing, totally tried another thing, that failed; totally tried another thing, and each time in some way or another, the new way was more grandiose. It was always more, more, more, so the housing bill cost more than the poverty bill because it came later, and so on. It’s just more, more, more, and even more did not help or get you closer to great.

Richard Reinsch: So maybe we’re talking about this generally, talk about the sources of the unexpected tragedies of the Great Society. I think your chapter on housing was just, it left me truly sad.

Amity Shlaes: Well, you know the book’s about planning, so it actually starts in the ’50s to where our first ambition toward great involved housing. And we had urban renewal, which was premised on the idea that you should bulldoze whole areas of downtown and build utopian housing, hopefully in the international school, for poor people. And what that did was group poor people who may not have loved their tenement, but may have felt some connection to it and certainly chose which tenement they lived in within their ghetto at least, and put them all willy-nilly, more or less in tall skyscrapers, and insisted that the fathers in the family stay away because the families wouldn’t get welfare benefits or be entitled to live in subsidized housing.

These welfare specifics often. And in the institution that I profile is the housing projects, the largest called Pruitt-Igo in St. Louis, and there were a few premises, additional premises to Pruitt-Igo. One was that St. Louis would always grow, so if they packed these buildings dense enough, eventually people would move from poverty into working class and would be able to pay the rent. And if there were enough of them, the housing projects could support the poor and be concerned.

Well, the growth stayed away. And so the simple arithmetic of the solvency of Pruitt-Igo just didn’t work. There was way too much vacancy, and then bad gangs moved into the empty apartments or took over the halls, and there were too few tenants, too few working tenants and very few men to fight back those teenage and mobs, what’s become a sad cliché, right? So that’s what went on, and over and over again in the ’60s, including with Sargent Shriver and actually Romney, George Romney, the father of Mitt who was Housing Secretary, they tried to fix Pruitt-Igo, and the idea was always build something big or bigger; cars are important; streets, a pedestrian zone is not important; and we know what we’re doing. This is so much of a piece with the bombing of North Vietnam; it’s sort of like the … it’s a very similar bird’s eye view of a very specific place.

Amity Shlaes: And in the case of Pruitt-Igo, what I argue is big housing’s not a good idea. Sometimes small housing started by locals is much better. And the person I bring in here who economists don’t normally bring in, but I think she is Jane Jacob, who in New York protected Greenwich Village from the highway builder, the housing and highway tsar, the infrastructure tsar, Robert Moses. And she said, “What a minute. My street might seem tacky. It might be blighted. You could condemn it under Berman v. Parker, the Supreme Court decision, but I think it can un-slum. I think it’s on its way to un-slumming because people here like it.”

So she talked a lot about that, and she talked about the importance of architecture and houses with eyes. The International School might be fashionable again now, but it’s just profoundly isolating in terms of mentality. You know, it’s really collective. It’s not forgiving. it’s not everyone his own window; it’s a common space. Modern architecture was a disaster in terms of poor people because it isolated them in tall buildings and put parks around with no commerce.

In Jane Jacobs’ The Death and Life of American Cities, it’s still a prophetic book; very easy to read by the way. I recommend it, the audio, about how neighborhoods can cure themselves and how you actually are doing malpractice surgery when you roll highways through. Not everyone likes cars; even some Republicans are pedestrians by nature. When we talk about this, I always hear from Republicans ‘Republicans like cars.’ I don’t believe that. I think some people are car people, and some people are go on foot people, and they’re for both parties.

Anyway, Jane Jacobs wasn’t of a party. She was really independent and very much opposed to the war by the way, but she’s this little lady, very good architectural journalist, but just one lady who led the fight against Moses, and really the fight against the Great Society housing. I want to mention one other thing. There was complete hypocrisy in terms of housing policy in the United States subsequent to World War II, and amplified in the [inaudible 00:33:28] period and ’60s period. On the one hand for the middle class people, we had this kind of Tocqueville policy, which is you go to a town; we’ll subsidize your house if you’re a veteran or in some other way through Fannie May and Freddie Mack, and you’ll get a house and you’ll become part of a community, and your children will play with the other children in the cul de sac, and you will go to church together. That’s kind of the middle class of City Vision.

So the middle class people get Tocqueville; the poor people get Karl Marx. You will live in a tall building in a city, and then as an anonymous worker, you will get into an anonymous tram or something like that, and ride to your factory, which by the way hasn’t materialized because that’s what workers like. And you have to ask yourself what would have happened if we had done Tocqueville for poor people as well. This idea dawned on planners by the end of the ’60s, and you see that led by Chuck Percy, the Senator from Illinois. And by some people’s names we know such as Clifton Muse and John McLowry. They worked on housing policy that would help enable poor people to buy homes and get property.

So the real debate for us is do we think property is necessary in the Tocqueville vision, and I would say absolutely. I don’t believe renting or defensible suffices unless you’re in a very strong community where, a religious community say, where the management, the leader of the church rents. I believe individuals should own their property. Jane Jacobs didn’t go that far, but her data did. And the real tragedy was that we condescended to poor people with this tacky, ill thought out, Marxist policy in terms of housing.

Richard Reinsch: I guess, listening to you I was thinking about, which a lot of conservatives rejected later in the Obama administration, I don’t know if this’ll be an example of that whereby it was proposed policies of moving say urban poor out of inner cities or downhill cities, and moving them into, out into suburbs, surrounding suburbs. I wonder if that’s maybe an example.

You also noted the Detroit riot, that it started at the epicenter of where people had been relocated once the neighborhood had been destroyed.

Right. There’s a wonderful … I mean, you’re saying that the Obama administration recommended moving poor people out of cities?

Richard Reinsch: Out of cities and out to …

Amity Shlaes: Is that what they did?

Richard Reinsch: The recommendation was that. I think Ben Carson canceled it, but the idea was you had to move them into surrounding towns and into homes. Yeah, thinks like that, but I’m not actually an expert on the policy.

Amity Shlaes: Well, we do have a policy. Now we have basically rental vouchers, which came out of this period which gives people more choice. They can take their money and go look for housing that will accept their voucher, and they’re going to make sure there is such housing. But the idea of moving people en group outside of cities is crazy.

Richard Reinsch:               Well, the cynicism there, too, is then you would move wealthy people probably back into the land they left and you would have a …

Amity Shlaes: You move … right. So they move them to some safe place like Ferguson, Missouri. That’s really safe for Michael Brown. This is the young man who was shot in Ferguson. Misery doesn’t care where it lives, and sometimes misery does better in the city. So there you are. I don’t know. I don’t think the suburbs are any better or worse. Sometimes they’re worse because you need a car. So there we are.

Richard Reinsch: Well, Watts and Detroit, so we have the Great Society programs being implemented, and then we get riots. You have a chapter on these events, and mayors in your book report being very fearful of protests and riots breaking out in Los Angeles and other cities throughout the country, and yet we’re the cusp of this vast revolutionary pro-government change.

Amity Shlaes: Well the standard history of the period is there was nothing, and then the federal government came along and did something for poverty. And what that history overlooks is the entire tradition of towns dealing with poverty in their towns. That was the scope of the town, the municipal authority, or maybe state as we discussed, but not really a federal job. So when the Johnson administration came through, it sent sort of virtual bulldozers to run over policies of mayors and towns. And you know what, the mayors were elected to take care of the town, so they had the reasonable claim to authority here.

Amity Shlaes: And I always learned that Mayor Daley of Chicago was a corrupt creep, right, and that Mayor Yorty of Los Angeles didn’t care about poor people, and none of this was true. What happened was you have a jurisdictional clash. The mayors had poverty programs, and if they were Democrats they expected to get federal money for them. They had helped to elect Johnson; they deserved poverty money. They had a poverty office. Mayor Daley took all his poverty ideas and put them in a big box, and mailed them to the poverty tsar, “Here’s what Chicago, what your appropriation should be for, my Chicago plan. Yours, Richard J. Daley.”

But Sargent Shriver and the administration, that would be the Johnson administration, didn’t think that way. They wanted their own poverty programs. They wanted to be like the Peace Corps going in, ignoring all jurisdictions, all government, all past, church, everything, and do their own thing, and so there was a real clash. And in the case of Los Angeles, this is kind of the sense of federalism. It’s a federalist uprising by the mayors. But in the fight, Los Angeles didn’t get the money Mayor Sam Yorty was expecting to get, and he had promised a lot of jobs to young people over the summer. And the fight between Mayor Yorty, who wasn’t wrong, and the federal government, which was more wrong but not entirely, delayed help for Los Angeles, froze the city, and contributed to the explosive environment in which the Watts riot occurred.

It’s not as though … what happened was Yorty said there will be jobs paid for by the federal government. We will give you a great summer. I’m not saying I approve of that because the government does that, but he established that expectation among the citizens of Los Angeles. And then when the presents did not materialize, the people were all the more, became all the more cynical and angry. In Detroit, what happened was slightly different and that was later. In Detroit, one reason there was so much anger in Detroit was that sort of delayed built up anger over urban renewal. The whole community there was still angry over being displaced, their favorite streets being mowed over by these bulldozers, and the newspapers commented that at the time.

Mixed in there is the selective service, going to Vietnam, the switch to higher skilled jobs that come as the economy develops. Muscle, there was less of a premium on muscle and more of a premium on training or thought. Even in the 1960s, there had been the [inaudible 00:41:39], so what’s going to happen. But these were all factors.

I was just going to say I ended up liking the mayors, these mayors I always thought were so awful. But they were like, “We don’t want any Marxists coming in our city. We have our own poverty plan and here it is.” David Beito has written a wonderful book, which I’m sure you’ve mentioned on your show, called Mutual Aid to the Welfare State, about all the places and institutions existed in a kind of incomplete but rather extensive patchwork across the country that was Tocqueville’s America, so you’d have the Italian-American burial service, the Irish-American family insurance, the church. It didn’t mean everyone was always taken care of, but a lot of people were and there was a plus because it was by the community.

Effectively, a community can always serve its people better than someone far away. It’s very rare for someone far away to guess that your school needs a gym, not a computer, and you think a gym would be more important because you happen to have 20 computers. Someone in Washington is terrible at judging that, so there are very few examples. In the book, I kind of make the call that if eight percent of the people who are black can vote in Mississippi, there’s something wrong with that; more the people of Mississippi should be able to vote. So maybe the Voting Rights Act and the Civil Rights Act were necessary, but not the laws after that.

Richard Reinsch: Thinking here also, you know the Great Society spreads across the Kennedy, Johnson, and also the Nixon administration. We get in the Nixon administration, Daniel Patrick Moynihan emerges and the family, what comes to be called the Family Assistance Plan and something like a guaranteed income, which is now in vogue again, but we get a forerunner of that, a taste. And then you know Moynihan loses a lot of these battles, but how does this and this seems to me, part of your book that I thought relevant, and is particular the discussion of this Disraeli, Benjamin Disraeli idea of conservatism, of sort of a one nation conservatism; a conservative party that also serves the working class with policies, et cetera, et cetera, and so that’s how Nixon continues in many ways the Great Society, among other ways.

Amity Shlaes: Yes, Nixon was a conservative who continued the Great Society. I don’t think that reflected well on him, unfortunately, in the end. What happened with Moynihan, very current, similar to the guaranteed income idea you’re hearing about now, what conservatives and progressives got together and said this idea of providing services to the poor people hasn’t worked out. We’re feeding the horses to feed the sparrows, the horses being the welfare workers; that is, the bureaucratic establishment to serve the poor gets more out of our programs than do the actual poor. So let’s give the poor money; that seems more honest. And that idea has great appeal today, and in Friedman’s concept this was what’s called a negative income tax, where you get money back for working so you don’t lose a lot when you start working.

Moynihan had a very brave and bold effort to do something like this also for the working class, not just the poor. So for whites and blacks who are poor, not poor, he was going to do this but he didn’t do the arithmetic very well. Because what happens when you give people money back at the bottom is pretty soon they have an income where they lose benefits; that is, their disincentive. And the marginal cost of working harder is far greater than they expect. All of a sudden they lose their housing, but what’s that worth? They lose four weeks, they lose Medicaid when they have too much money. And the arithmetic of which disincentives, which program costs in the context of also supplying people with money is almost impossible to do.

As Friedman said, probably we’d have to get rid of all payments in order for a universal payment, all other programs to quote-unquote, “work.” I think the more profound argument against guaranteed income is it teaches people they’re entitled. That’s a terrible thing to do for young people; that you’re owed something every month. That is just, that’s what gave us the problem we have now; the infantilization of our society through a social democratic effort, through parents, through the healthcare program and so on. People need to think they’re independent and they’ve earned money, so that’s why … That’s what Congress, particularly this Senate, had against Moynihan’s program. They said, “Some of us are Republicans and some of us are Democrats. And some Democrats and many Republicans think that it’s a bad precedent to just pay people money for existing. We’ve done too much of that, not too little, so let’s cut back.”

Richard Reinsch: It’s like Social Security.

Amity Shlaes: Yeah, it’s like Social Security for all, not just old people or disabled people, or widows and orphans, and so on. And it was very expensive, too; that’s the other thing. But the Senators said this is not particularly American, let’s not do it, and Moynihan lost and he had to go back to … he was this great intellectual this was before he was a Senator and he went back to Cambridge, and the war was part of the story, too.

I will say the grandest kind of planning is at the end of the book, and I do want to get to that when you’re ready.

Richard Reinsch: And we can do that now, then also I was going to end with Reagan because you have a chapter on the Governor from California, and sort of what do you think he’s learning from this. And I think also your book the questions he learned through governing as Governor of California as well, which as you note in the book, it’s not just a recent thing. California has a long-standing history of being a powerful government and being depended upon or interacting with the federal government, so if can just end with all of that.

Amity Shlaes: Right. Let’s say two things. One is, what’s the planning behind the planning? Which says we can micromanage the economy through the Fed and the administration, and maybe with Congress. And there’s the fiction there, the pretense that every twist and turn we can address … I mean, they used to have ideas such as changing Social Security payments to be cyclical, so when the economy needed a boost you’d get more Social Security money, and when the economy didn’t need a boost or you’re afraid of inflation, you get less money. Can you imagine what kind of abuse of trust that would feel like to a pensioner when they get a letter saying this month your Social Security is less because the economy needs it to be less of that money, because otherwise … and of course.

Anyway, so they really thought they could manage the economy. This was the era of change, and in the book I tell this story about how even if that did work, it would be impossible because people are people, and they’re humans and they’re political, and no planner runs the U.S. alone like the Wizard of Oz. It’s always a compromise. So the story I tell is of Richard Nixon, who’s supposed to be a free marketeer, imposing a terrible economic program, the Camp David program in the summer of 1971, something worthy of Juan Peron, upon the United States in the name of winning reelection. And the struggle in that case was between him and Arthur Burns, the Fed Chairman, who knew better, sort of kind of recalls the President and Fed Chairman Powell today or also Johnson and William McKinsey Martin, his Fed Chair.

Anyway, Nixon wanted to kill Burns that Burns wouldn’t lower interest rates, or lower them faster. He certainly wanted to kill Burns when Burns raised interest rates.

The Fed Chairman went to the White House’s church services on Sunday; one of Burns’s weaknesses here was he was ethnically Jewish. I don’t know if he was a religious Jew or not, or what he thought his religion was, but he had a Jewish background. And Burns would go to these church services. Why? Because you need access to the President if you’re Fed Chairman from time to time. And on the Friday night, Saturday night before the church service at the White House, Nixon would get up one of his people, Haldeman or Erlichman, to call Burns and say you’re not invited to church, because he’d been a bad boy. Your monetary policy is too tight, and even also went os far as to plant a smear of Burns in the Wall Street Journal, which I read about.

So anyway, the net was Burns went along with a policy that gave us terrible inflation, smaller houses, two fewer bedrooms than we otherwise would have had because of interest rates that were 15 percent in the ’80s. Those were the interest rates. It’s tough to suppress the inflation that Arthur Burns permitted because he wanted to stay friends with Richard Nixon. Just like that.

So, human error, human temperament, human weakness is a big part of the failings of the best and the brightest. McNamara was sad because President Johnson didn’t like him, so he cuddled up with the Kennedys. That made Johnson dislike him even more, therefore his policy was very poor, and so on. It’s not just this fiction that there’s one government running policy. It is, indeed, fiction; usually it’s a bunch of personalities with competing theories.

Richard Reinsch: And fiefdoms.

Amity Shlaes: And we all have to live with the compromise result; the perverse compromise result.

Richard Reinsch:  So Reagan at the end here, he seems, he’s a part of your book and he’s learning dramatically from what’s going on. You see him as a I think someone who’s part of this opposition, forming opposition to the Great Society at an intellectual and then a political level.

Amity Shlaes: Right. I mean in a book, a book is like a novel except you try to make the facts be facts. And in a period, there’s someone who’s like more like a drama, a theater play. There is someone who’s in the chorus or who’s the clown, who’s noticing what is going on and is a character. It’s halfway between audience and character. You know, he steps out from time to time and comments. You know, who is the commenter at the end of Romeo and Juliet?

So there are two characters in the book who are like that. One is Moynihan, who gets … Nixon gets the better of him unfortunately. He was a nice man with a lot of original ideas, and spoke truth to power, and the other is Reagan. So Reagan starts out very low in the book as a kind of has-been, and I do talk about his company, which is one of those companies that did take the country to great, General Electric. And at GE, Reagan learned all about free market because GE had a current little propaganda mill to teach its workers that there was more to the world than Karl Marx, and they could one day own three refrigerators, and even who knows what; a pink radio, a really good car.

So they hired Reagan, who was a has-been actor, to learn all about capitalism, and then teach it at their plants over, you know, in the cafeteria practically. You know, not very glamorous, but he went around the country, spoke in hundreds of hundreds of backwood halls and lunchrooms about the merits of capitalism and the young to middle age factor; not really young. And he happened to kind of internalize the GE argument, which he learned from a forgotten figure named Lemuel Boulware, and also from books we know today that are in Liberty Fund’s Library; Hayek, and so on.

Amity Shlaes: And what was Reagan going to do with this? He parted ways not too happily with GE for a bunch of reasons, including GE’s own hypocrisy. What’s he going to do with it. Well, he decides he’s going to try out politics and he gives an important speech, Time for Choosing, in 1964 to support Barry Goldwater. It doesn’t get Barry Goldwater elected, but it does show the country what Reagan could do. And then as Governor of California, he confronts the results of the Great Society, including for example gangsters in courtrooms shooting a judge.

Or kind of … Or the Great Society’s office, the poverty tsar’s office, the Office of Economic Opportunity sending lawyers to California on its dime to sue Reagan, whose obligation by the way as Governor is to balance the budget, to make it impossible for him to balance the budget with class actions demanding payments for people. So he kind of gets disgusted with the Great Society along with the country, and that shapes his policy program, and that’s the Reagan that we got; someone who learned a bitter set of lessons from the Great Society.

Amity Shlaes:                     And I never really knew that. I never knew much about his gubernatorial period. Remember, too, that California’s growing in that time, and it kind of didn’t want to hear from New York. It’s surpassing New York, right?

I call it the Creative Society, is what he … He doesn’t want a Great Society; he used the phrase creative. So it’s the Creative Society versus the Great, and he has a great appreciation, Reagan does, in this period of entrepreneurship, even though I have zero evidence he understood the potential of Silicon Valley.

Amity Shlaes:                     He did generally appreciate entrepreneurship. So there we are.

Richard Reinsch:               Thank you, Amity Shlaes, so much for your time. We’ve been discussing your new book, Great Society and New History. I wish you every success.

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