Celebrating Calvin Coolidge

In my lifetime, the only good president has been Ronald Reagan, whose policies restored America’s economy and led to the end of the Soviet Union’s evil empire.

But if we look at the past 100 years, Calvin Coolidge might rank even higher.

Amity Shlaes was the right person to narrate that video. She’s written the definitive biography of Coolidge.

Indeed, I’ve previously cited her expertise on Coolidge’s fiscal restraint, as well as Silent Cal’s wisdom on tax policy.

Given the tendency of politicians to buy votes with other people’s money, I’m especially impressed by his frugality. He followed my Golden Rule about 90 years before I ever proposed the concept.

Let’s further investigate his performance.

Larry Reed of the Foundation for Economic Education has two must-read articles about Coolidge’s track record.

First, to illustrate Coolidge’s admirable philosophy of fiscal restraint, he shares these key passages from his 1925 inauguration.

I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant. Economy is idealism in its most practical form. …The wisest and soundest method of solving our tax problem is through economy…The collection of any taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny. …They do not support any privileged class; they do not need to maintain great military forces; they ought not to be burdened with a great array of public employees…. I am opposed to extremely high rates, because they produce little or no revenue, because they are bad for the country, and, finally, because they are wrong. …The wise and correct course to follow in taxation and all other economic legislation is not to destroy those who have already secured success but to create conditions under which everyone will have a better chance to be successful.

Magnificent.

And you should also see what he said in 1926, when celebrating the 150th anniversary of America’s independence.

Larry Reed also debunked the silly notion that Coolidge was responsible for the Great Depression of the 1930s.

So-called “progressives” tell us that Calvin Coolidge was a bad president because the Great Depression started just months after he left office. …Should Coolidge get any of the blame for the Great Depression? The Federal Reserve’s expansion of money and credit in the 1920s certainly set the country up for at least a mild fall, but that wasn’t Coolidge’s fault. He saw the Fed as the “independent” entity it was supposed to be and didn’t meddle with it. At least once he expressed concern that the Fed might be fostering a bubble but he otherwise didn’t make a stink about it. “Not my bailiwick,” he believed. We can legitimately say that Coolidge should have criticized the Fed’s easy money policy more loudly. …In any event, far worse than the Fed’s inflation was its deflation, which didn’t begin in earnest until the final weeks of the Coolidge administration. …Every good economist concedes that erratic monetary policy at the Fed was at least a minor cause of the 1920s boom and surely a major cause of the 1930s bust. You can’t blame that on Coolidge.

If you want more information about the Fed’s role in causing economic turmoil, I recommend this video presentation from George Selgin.

Larry’s column points out that both Herbert Hoover and Franklin Roosevelt then imposed policies that lengthened and deepened the downturn.

Markets were, in fact, making a comeback in the spring of 1930 and unemployment had not yet hit double digits. Not until June 1930, when Congress and President Hoover raised tariffs and triggered an international trade war, did recession cascade into depression. Two years later, they flattened just about everybody who was still standing by doubling the income tax. …Franklin Roosevelt…then delivered…absurd interventions kept the economy in depression for another seven years.

What especially tragic about the Great Depression is that Warren Harding showed, just a decade earlier, how to quickly put an end to a deep downturn.

I’ll close with by emphasizing this quote from Coolidge’s inaugural address. Every supporter of limited government should withhold support from any politician who is unable to echo this sentiment today.

P.S. There is another president that I admire, though the number of good presidents is greatly outnumbered by the motley – and bipartisan – collection of bad presidents.

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Lessons from the 1920s and 1930s about Growth vs Equality

I have a very low opinion of leftist politicians, in large part because I suspect most of them privately understand their policies don’t work, but they don’t care because their main goal is the accumulation of political power (Crazy Bernie is an exception since he seems to genuinely believe in socialism).

But I don’t dislike ordinary people with statist views. They have good intentions.

All that’s wrong is that they think government intervention and redistribution can improve the lives of the less fortunate. Presumably because they incorrectly assume the economy is a fixed pie and that some people must be poor if some people are rich.

One of my main goals is to help them understand why this is wrong.

A rising tide can lift all boats, which is why I write so often about growth in general and comparative growth between nations in particular.

And it also helps to share evidence about historical growth within a nation.

Amity Shlaes addresses this issue in a must-read article about U.S. growth in the City Journal. She starts with a pessimistic observation about malpractice by historians.

Free marketeers…are not winning U.S. history. …No longer is American history a story of opportunity, or of military or domestic triumph. Ours has become, rather, a story of wrongs, racial and social. …an axiom is taking hold: equal incomes lead to general prosperity and point toward utopia. Teachers, book review editors, and especially professors withhold any evidence to the contrary. …Decades in which policy endeavored or managed to even out and equalize earnings—the 1930s under Franklin Roosevelt, the 1960s under Lyndon Johnson—score high. Decades where policymakers focused on growth before equality, such as the 1920s, fare poorly.

This is upside down, Amity explains.

…progressives have their metrics wrong and their story backward. The geeky Gini metric fails to capture the American economic dynamic: in our country, innovative bursts lead to great wealth, which then moves to the rest of the population. Equality campaigns don’t lead automatically to prosperity; instead, prosperity leads to a higher standard of living and, eventually, in democracies, to greater equality. …growth cannot be assumed. Prioritizing equality over markets and growth hurts markets and growth and, most important, the low earners for whom social-justice advocates claim to fight. …a review trip through the decades is useful because the evidence for growth is right there, in our own American past.

The article looks at several periods, but I want to focus on what she wrote about the 1920s and 1930s.

We’ll start with the 1920s, which began with a deep downturn.

…the early 1920s experienced a significant recession. …the top rate was still high, at 73 percent. …In response, Wall Street and private companies mounted a “capital strike,” dumping cash not into the most promising inventions but into humdrum municipal bonds. …The high tax rates, designed to corral the resources of the rich, failed to achieve their purpose. In 1916, 206 families or individuals filed returns reporting income of $1 million or more… By 1921, just 21 families reported to the Treasury that they had earned more than a million. ….Against this tide, Harding and Coolidge made their choice: markets first. …Harding and Mellon got the top rate down to 58 percent. …In a second round, stewarded by Coolidge, …Mellon and conservatives would get a (somewhat) lower tax rate of 46 percent…in 1924, Coolidge joined Mellon, and Congress, in yet another tax fight, eventually prevailing and cutting the top rate to the target 25 percent. …the tax cuts worked—the government did draw more revenue than predicted, as business, relieved, revived. The rich earned more than the rest—the Gini coefficient rose—but when it came to tax payments, something interesting happened. …the rich now paid a greater share of all taxes. Tax cuts for the rich made the rich pay taxes. …the United States did average 4 percent real growth. …the 1920s economy gave workers something far more important than notional wage equality: a job. Unemployment averaged 5 percent or lower.

Excellent points about overall economic policy and lots of good information about fiscal policy.

The tax cuts were a big success, just like the Kennedy tax cuts in the 1960s and the Reagan tax cuts in the 1980s.

Moreover, the recovery from the 1920-21 recession deserves a lot of attention because it shows that spending reductions are good for prosperity.

Sadly, that lesson was almost immediately forgotten.

Here’s some of what Amity wrote about the many policy mistakes of the 1930s.

The 1930s tell the opposite story. …Hoover responded differently from the way predecessors had responded to previous crashes: he intervened. …Hoover changed policy to focus on social equality… Hoover hauled business leaders to Washington and bullied them…he cajoled Congress into passing laws…the Davis-Bacon Act of 1931…raising the top rate to 63 percent. …Hoover thoroughly intimidated business and markets… Franklin Roosevelt…sent an even clearer signal that in his presidency, equality would come first. …the New Deal’s equality measures prolonged and deepened the Depression. …For ten years, joblessness stuck stubbornly in the double digits. This mattered far more to families than any theoretical envy index. With the coming of World War II, Roosevelt pushed the top tax rate to 94 percent.

From the perspective of economic policy, the 1930s was a trainwreck. Hoover imposed terrible policy. Then FDR takes office and does more of the same.

Let’s now get to the main point of today’s column. Which decade was better for poor people:

Did poor people enjoy better results in the 1920s, when government did less and policy was more focused on growth and opportunity?

Did poor people enjoy better results in the 1930s, when government did more and policy was more focused on equality of outcomes?

The answer should be obvious.

It was better to be a poor person in the 1920s rather than the 1930s.

Just like poor people did better in the laissez-faire 1980s than they did in the statist 1970s. Just like poor people today do better in Chile than in Venezuela. Just like poor people did better in West Germany than East Germany. Just like poor people….well, you get the idea.

P.S. Today’s column is another reminder that Calvin Coolidge was one of America’s greatest presidents.

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Calvin Coolidge, the Declaration of Independence, and Limits on the Power of Government

To keep with tradition, it’s time to expand my collection of 4th-of-July columns.

• In 2010, I contemplated the issue of libertarians and patriotism. My view, for what it’s worth, is captured by this t-shirt.
• In 2011, I pondered research about the partisan implications of patriotism and also created a satirical Declaration of Dependency for my left-wing friends.
• In 2012, I shared an inspirational video about freedom and individualism from Ronald Reagan.
• In 2013, I discussed the proper meaning of patriotism in the aftermath of revelations about NSA snooping.
• In 2014, I decided on a humorous approach with one a Remy video about government being “up in your grill.”
• In 2015, I waded into the controversial topic of what happens when flag burning meets the modern regulatory state.
• In 2016, I looked at how government has increased the cost of celebrating Independence Day.
• In 2017, I explained the difference between the statist vision of “positive liberty” and the libertarian vision of “negative liberty.”

Today, we’re going to commemorate a great speech by one of America’s best Presidents.

In 1926, Calvin Coolidge spoke on the 150th anniversary of the signing of the Declaration of Independence. Here’s some of what he said.

When we come to examine the action of the Continental Congress in adopting the Declaration of Independence in the light of what was set out in that great document and in the light of succeeding events, we can not escape the conclusion that it had a much broader and deeper significance than a mere secession of territory and the establishment of a new nation. …It was not because it was proposed to establish a new nation, but because it was proposed to establish a nation on new principles, that July 4, 1776, has come to be regarded as one of the greatest days in history. …In its main features the Declaration of Independence is a great spiritual document. It is a declaration not of material but of spiritual conceptions. Equality, liberty, popular sovereignty, the rights of man — these are not elements which we can see and touch. They are ideals. …It was in the contemplation of these truths that the fathers made their declaration and adopted their Constitution. It was to establish a free government, which must not be permitted to degenerate into the unrestrained authority of a mere majority or the unbridled weight of a mere influential few. …These are our guaranties of liberty. As a result of these methods enterprise has been duly protected from confiscation, the people have been free from oppression.

If you have the time, click on the link and read the entire speech.  But if you don’t have time, I hope the passages I excerpted reveal Coolidge’s appreciation for the philosophy of American independence.

I also like how he links those principles to economics, which is nicely captured in the last sentence.

Sadly, the Supreme Court no longer protects our economic liberties (John Roberts providing the most recent example), but it was nice while it lasted.

Speaking of which, here’s a great conversation between James Buchanan and Walter Williams on the meaning and importance of the Constitution. But that’s just the tip of the iceberg. They cover lots of additional material, including spending limits, tax reform, and free trade.

For what it’s worth, my favorite part of the conversation is about how markets are mutually beneficial, whereas government is a zero-sum, or negative-sum game.

Let’s close with a celebration of the great American tradition of civil disobedience against the state.

Sadly, with the likely exception of gun owners, we no longer seem to have the same ornery attitude as our ancestors. Though Charles Murray has a plan to recreate a culture of civil disobedience.

P.S. Here’s a first-hand account of what patriotism means.

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