Category: Books

Depression of 1920-21 Ended Quickly, Without Government Stimulus or Bailouts

(p. C3) Beginning in January 1920, something much worse than a recession blighted the world. The U.S. suffered the steepest plunge in wholesale prices in its history (not even eclipsed by the Great Depression), as well as a 31.6% drop in industrial production and a 46.6% fall in the Dow Jones Industrial Average. Unemployment spiked, and corporate profits plunged.
. . .
In the absence of anything resembling government stimulus, a modern economist may wonder how the depression of 1920-21 ever ended. Oddly enough, deflation turned out to be a tonic. Prices–and, critically, wages too–were allowed to fall, and they fell far enough to entice consumers, employers and investors to part with their money. Europeans, noticing that America was on the bargain counter, shipped their gold across the Atlantic, where it swelled the depression-shrunken U.S. money supply. Shares of profitable and well-financed American companies changed hands at giveaway valuations.
Of course, the year-and-a-half depression must have seemed interminable for all who were jobless or destitute. It was, however, a great deal shorter than the 43 months of the Great Depression of 1929-33. Then too, the 1922 recovery would bring tears of envy to today’s central bankers and policy makers: Passenger-car production shot up by 63%, for instance, and the Dow jumped by 21.5%. “From practically all angles,” this newspaper judged in a New Year’s Day 1923 retrospective, “1922 can be recorded as the renaissance of prosperity.”
In 2008, as Lehman Brothers toppled, the Great Depression monopolized the market on historical analogies. To avoid a recurrence of the 1930s, officials declared, the U.S. had to knock down interest rates, manipulate stock prices to go higher, repave the highways and trade in the clunkers.
The forgotten depression teaches a very different lesson. Sometimes the best stimulus is none at all.

For the full commentary, see:
JAMES GRANT. “The Depression Fixed by Doing Nothing; The agonizing but often forgotten 1920-21 economic crisis suggests that sometimes the best stimulus is none at all.” The Wall Street Journal (Sat., Jan. 3, 2015): C3.
(Note: ellipsis added.)
(Note: the online version of the review has the date Jan. 2, 2015, and has the title “The Depression That Was Fixed by Doing Nothing; The often forgotten 1920-21 economic crisis suggests that sometimes the best stimulus is none at all.”)

Grant’s commentary is elaborated on in his book:
Grant, James. The Forgotten Depression: 1921, the Crash That Cured Itself. New York: Simon & Schuster, 2014.

Stalin Showed that a Single Individual’s Decisions Can Matter

(p. C29) . . . , [Stephen Kotkin] is not shy about assailing what he regards as false interpretations by other historians. His Stalin is not a disciple who deviates from Lenin; he is Lenin’s true disciple, in pitiless class warfare, in the inability to compromise, and, above all, in unshakable ideological conviction.
. . .
There is little equivocation in Mr. Kotkin’s judgments. Scholars who argue collectivization was necessary to force Russian peasants into a modern state are “dead wrong.” The conclusion by the British historian E. H. Carr that Stalin was a product of circumstances, and not the other way around, is “utterly, eternally wrong.” On the contrary, it is one of Mr. Kotkin’s major theses that Stalin “reveals how, on extremely rare occasions, a single individual’s decisions can radically transform an entire country’s political and socioeconomic structures, with global repercussions.” Or, as he puts it in a more graphic passage: “The Bolshevik putsch could have been prevented by a pair of bullets” — one for Lenin and one for Stalin.
. . .
This reader, for one, still hopes for more evidence that Stalin was indeed singular, a historical malignancy, and not a product of circumstances of the kind that might already be shaping the next chapter of Russian history. And that only whets the appetite for the next installment, in which Stalin decides to starve Russia almost to death to bring peasants under state control. That, Mr. Kotkin has already declared, was an assault on the peasantry for which there was no political or social logic, and that only Stalin could have done. It is a testament to Mr. Kotkin’s skill that even after almost a thousand pages, one wants more.

For the full review, see:
SERGE SCHMEMANN. “From Czarist Rubble, a Russian Autocrat Rises.” The New York Times (Sat., JAN. 8, 2015): C29.
(Note: ellipses, and book author’s name in brackets, added.)
(Note: the online version of the review has the date JAN. 8, 2015.)

The book under review is:
Kotkin, Stephen. Stalin: Volume I: Paradoxes of Power, 1878-1928. New York: Penguin Press, 2014.

The Case that Hamilton Was Better than Jefferson

One of my entrenched beliefs has been that Thomas Jefferson was one of the great heroes of human history, and Alexander Hamilton was not. It is rare that I read something that changes my entrenched beliefs. But Ron Chernow’s Alexander Hamilton did that. He makes a strong (and long) case that Alexander Hamilton was mainly a decent, brilliant, courageous, hard-working, self-made man, who not only talked the talk on liberty, but walked the walk (taking fire in the revolution, and strongly opposing slavery). He wasn’t perfect in either his personal life or his beliefs. But he now has my vote as one of the great heroes of human history (and Jefferson does not).
In the next few weeks, I will quote several of the most revealing or thought-provoking passages of Chernow’s book.
PS: I also previously learned a lot from Chernow’s Titan, a big book about a big entrepreneur.

Main book discussed:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

Other book, briefly mentioned:
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.

In Defense of the “Degar-Andish”

(p. C9) “The Lonely War” begins by retelling a lesson from Ms. Fathi’s mother, imparted on the first day of third grade. “If anyone asks you whether your parents support the revolution, you must say, ‘Yes, they do.'”
. . .
As the Islamic dress code became obligatory, Ms. Fathi and her sister, Goli, faced the tyranny of a “morality” teacher at school who tried to mold them into ideal Muslim girls.
The author remained steadfastly critical through it all. “To feel human,” she writes, “we needed to retake control of our minds as well as our bodies. We waged the war on both fronts.”
. . .
Defying a ban on covering the protests any further, Ms. Fathi was under surveillance at her home and tailed by government agents; her life was threatened. She, her husband and two children left Iran in June 2009.
. . .
Her portraits of the women’s rights activists Faezeh Hashemi and Shahla Sherkat make for fascinating reading. So do her accounts of other courageous Iranian women like the lawyers Mehrangiz Kar and Shirin Ebadi (the first Muslim woman to be awarded the Nobel Peace Prize, in 2003), who made legal challenges against discriminatory laws against women, and publishers like Shahla Lahiji who dared to print the work of those branded as “degar-andish,” literally, “those who think differently.”

For the full review, see:
NAHID MOZAFFARI. “Books of The Times; Portrait of Iran, Where Revolution Is Ideological and the Costs Are Human.” The New York Times (Thurs., Jan. 1, 2015): C9.
(Note: ellipses added.)
(Note: the online version of the review has the date DEC. 31, 2014.)

The book under review is:
Fathi, Nazila. The Lonely War: One Woman’s Account of the Struggle for Modern Iran. New York: Basic Books, 2014.

“In Nebraska, You Don’t Have to Die to Go to Hell”

A 1939 entry from Don Hartwell’s diary:

(p. 300) July 10
The same clear, glaring sky & vicious blazing killing sun. Cane is about dead, corn is being damaged; it will soon be destroyed. Those who coined the phrase ‘There’s no place like Nebraska’ wrote better than they thought. In Nebraska, you don’t have to die to go to hell.

Source:
As quoted in: Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.
(Note: italics in original.)

High Costs of Public Sector Unions

(p. A11) . . . the costs of public-sector unions are great. “The byproduct of political management of the economy is waste,” the author notes. Second, pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas. Increasingly, such a burden is fatal. When Detroit declared bankruptcy in 2013, a full half of the city’s$18.2 billion long-term debt was owed for employee pensions and health benefits. Even before the next downturn, other cities and some states will find themselves faltering because of similarly massive obligations.
There is something grotesque about public workers fighting for benefits whose provision will hurt the public. Citizens who vote Democratic may choose not to acknowledge the perversity out of party loyalty. But over the years a few well-known Democrats have sided against the public-sector unions. “The process of collective bargaining as usually understood cannot be transplanted into the public service,” a Democratic politician once declared. His name? Franklin Roosevelt.

For the full review, see:
AMITY SHLAES. “BOOKSHELF; Public Unions vs. the Public; Pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas.” The Wall Street Journal (Fri., Jan. 16, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Jan. 15, 2015.)

The book under review is:
DiSalvo, Daniel. Government against Itself: Public Union Power and Its Consequences. New York: Oxford University Press, 2015.

Congress Appropriates Funds to Test Concussion Theory of Rain

(p. 190) the first century A.D., when the Greek moralist Plutarch came up with the notion that rain followed military battles. Napoleon believed as much and fired cannons and guns at the sky to muddy up the ground between him and his attackers. Civil War veterans who wallowed in cold slop believed that ceaseless, close-range artillery fire had opened up the skies. In the late 1890s, as the first nesters started to dig their toeholds on the dry side of the one hundredth meridian, Congress had appropriated money to test the concussion theory in Texas. The tests were done by a man named Dyrenforth. He tried mightily, with government auditors looking over (p. 191) his shoulder, but Dyrenforth could not force a drop from the hot skies of Texas. From then on, he was called “Dry-Henceforth.”
Government-sponsored failure didn’t stop others from trying. A man who called himself “the moisture accelerator,” Charles M. Hatfield, roamed the plains around the turn of the century. A Colonel Sanders of rainmaking, Hatfield had a secret mixture of ingredients that could be sent to the sky by machine. In the age before the widespread use of the telephone, it was hard to catch up with the moisture accelerator after he had fleeced a town and moved on.

Source:
Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.

Smart Phones Bring Power to the Patient

(p. A11) We instinctively reach for our smartphones when we need to take pictures, get directions, deposit checks or reserve a table. Eric Topol, a cardiologist and digital pioneer, thinks that they are ready to perform at least one more task: revolutionize health care. In “The Patient Will See You Now,” he argues that smartphones will democratize medicine by bringing data and control directly to the people.
The power of doctors, says Dr. Topol, “can be likened to that of religious leaders and nobility” in centuries past, when knowledge and authority belonged to a small elite. He notes that we’ve never seen “a discrete challenge to the medical profession” akin to Luther ‘s challenge to the Roman Catholic Church or democracy’s challenge to monarchy and despotism. “But we’ve not had the platform or landscape for that to be accomplished. Until now.” Smartphones, he says, enable a range of medical applications to move from the hospital to the home, and they shift medicine’s locus of control from doctor to patient.

For the full review, see:
DAVID A. SHAYWITZ. “BOOKSHELF; Doctor Android; In the same way that Luther challenged the Catholic Church, smartphones are poised to upend the medical profession.” The Wall Street Journal (Tues., Jan. 13, 2015): A11.
(Note: the online version of the review has the date Jan. 12, 2015.)

The book under review is:
Topol, Eric. The Patient Will See You Now: The Future of Medicine Is in Your Hands. New York: Basic Books, 2015.

The Federal Government’s “Arrogance on a Grand Scale” Encouraged the Dust Bowl

(p. 126) In the last years of the wheat boom, Bennett had become increasingly frustrated at how the government seemed to be encouraging an exploitive farming binge. He went directly after his old employer, the Department of Agriculture, for misleading people. Farmers on the Great Plains were working against nature, he thundered in speeches across the country; they were asking for trouble. Even in the late 1920s, before anyone else sounded an alarm, Bennett said people had sown the seeds of an epic disaster. The government continued to insist, through official bulletins , that soil was the one “resource that cannot be exhausted.” To Bennett, it was arrogance on a grand scale.
“I didn’t know so much costly misinformation could be put into a single brief sentence,” he said.

Source:
Egan, Timothy. The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl. Boston: Houghton Mifflin, 2006.