MeanyEcon
The following is a collection of the materials used in creating the seventh episode of the Citizen Reagan podcast about the Reagan's Radio Commentaries.
Audio
Transcript
Welcome to the Citizen Reagan podcast. As you may know, what I do with this podcast is discuss the contents of the Ronald Reagan Radio Commentaries produced between 1975 and 1979. Sometimes, I may decide to talk about some other topic, but with over 1000 of these Commentaries to cover, the bulk of my work will be on them.
The 1970s was an economically tumultuous time. High unemployment, double-digit inflation (which together was called stagflation), high interest rates, high gas prices due to actions by OPEC and a variety of other factors all contributed to what was called "Malaise." The head of the AFL-CIO at the time, George Meany, had his ideas about how to get out of it. Reagan, in spite of his feelings about Meany, was not a supporter of Meany’s ideas. In what is currently my favorite opening to a Reagan broadcast, originally recorded in May of 1975, here is "George Meany and Economics":
George Meany talking economics reminds me of the fellow who drowned trying to wade across a river whose average depth he'd been told was only three feet. I'll be right back. I knew George Meany some years back, when I was an officer of a union myself, and I like him, but I found myself dismayed by his recent tirade to a congressional committee. The point he made loudly and angrily was that one problem only, unemployment, must be dealt with as if it had no connection with the entire economic situation. He demanded a greater deficit, a hundred billion dollars if need be, to create jobs. He went on to say a big rich country like ours can afford to go in debt. Well, a big rich country like ours can't afford to go in hoc now and then, just as a solid citizen with a paid-up home, some insurance, and a reasonably safe, good income, can borrow to meet the unusual or unexpected such as hospital expenses, or maybe just to see the kids through college. But we're talking about a character who already has a double mortgage on the house, owes installments on the furniture and the car, is borrowed up to the limit on his insurance and is only working part-time. Even the economist so beloved of the liberals, Lord Maynard Keynes, said government should run deficits in bad times to stimulate the economy, but, and it's a much ignored but by those who claim to be keynesian economists, he said in good times, government should accumulate surpluses and reduce the debt. Franklin D. Roosevelt said a government, like a family, can in time of emergency go into debt but if it continues to spend more than its income, in good times and bad, a government like a family will go bankrupt. Certainly a nation must borrow to see itself through an emergency like World War II but we've kept on borrowing until our national debt is greater than the combined debt of all the other nations of the world. We're not suddenly faced with an emergency debating whether or not to raise a short-term loan. The interest on the debt we already have is ten times bigger than our whole national budget, when we first started running deficits on an annual basis. Yes, we have unemployment and few of any situations seem as tragic and as desperate to me as the person who wants a job and can't find one, but George Meany should know that the government policies he has supported, and still supports, are responsible for this country's insolvency, inflation and the unemployment that inflation brings. He wants a bigger deficit. Here's what the present deficit means to the working people Meany represents. The federal government is taking most of the available money, which should be used to finance plant expansion, to increase production, which reduces inflation and provides jobs. But it becomes more personal. Take those things that we want to buy, on the installment plan. The Treasury Department has already told the banks and lending institutions how much of their capital must be earmarked for funding the government's deficit this year. This means it will become harder and harder to buy things with the usual down payment and the easy installments, and those installments, if you can get them, will include higher and higher interest rates. A bigger deficit means higher inflation, a deeper recession, more unemployment, and there'll be George Meany asking next time for a 200 billion dollar deficit. Sometimes I think the AFL-CIO economic advisors are the kind of economists who have a Phi Beta Kappa key on one end of their watch chain and no watch on the other. This is Ronald Reagan. Thanks for listening.
This will be more of an informational and historical look at the broadcast, rather than a commentary of my own. Who was George Meany? Well, George Meany was a union man. He rose from his original occupation as a plumber to become a union leader, a position he would hold for over half a century, starting with the American Federation of Laborers, or AFL. In the 1950s, he would propose the merger of his AFL with the Congress of Industrial Organizations, the CIO, and lead the combined organization until 1979, about 3 months before his death. The AFL-CIO is currently the largest union organization in the world. It is not a union itself, but rather a collection of unions, such as the American Federation of Teachers and the American Federation of State, County and Municipal Employees. Meany had a great deal of power behind him.
Reagan isn't clear if Meany is talking about government dumping money into businesses to help them hire people, or if Meany wants the government itself to directly hire more people. Either way, Reagan does not like the idea of government creating deeper deficits at a time when things are going poorly. It just makes digging out that much harder. Most of the episode is Reagan reinforcing the point, mentioning Keynes and FDR, both favorites of the left side of the political spectrum, in the hopes that invoking their names might show that it’s not a left or right issue, it’s common sense.
Reagan likely would have favored cutting back on spending and reducing the regulatory burden on businesses, which would have made hiring easier. While he didn’t directly say anything to this point, I’m sure Reagan also would have agreed that this kind of stimulus would have been better administered at the state or local level. In numerous speeches and radio broadcasts, Reagan discusses how much money the administrative state at the federal level sucks up, reducing the effectiveness of the taxpayer's dollar. Since I mention it, I may have to do a separate episode just on that sometime. When you see an episode about "Puzzle Palaces," you'll know that’s the episode to listen to, if this interests you.
He also discusses why increasing the deficit would hurt the economy. The US government would be getting that borrowed money from banks that would normally be loaning that money out to the private sector, thus slowly growth and hiring.
Let's talk about that opening line, which I’m going to re-run just because I enjoy it:
George Meany talking economics reminds me of the fellow who drowned trying to wade across a river whose average depth he'd been told was only three feet.
When discussing economics, you can't look at one piece of data. "Buy this stock, the price is low." That’s a terrible reason to buy! It is the interaction of multiple datapoints that helps paint a picture. In this instance, with Meany so insistent that running up deficits is necessary to reduce unemployment, there are just too many other factors in play for him to be so definitive about the situation. Over-simplification is seldom a good thing.
In closing, I want to explain what I think Reagan's final comment meant, about the Phi Beta Kappa key. All of this was completely new to me. Phi Beta Kappa is an academic honor society, founded at The College of William and Mary in 1776. It is among the most prestigious in the country. The symbol of the society has always been a key. In 1912, the design, size and shape was standardized as a watchkey. Having a Phi Beta Kappa key meant you met certain academic standards, usually that you were in the top 10% of your college class. So, a person that has one has done well in school.
But, what is a watchkey? Well, listen up you whipper-snappers! Back in the old days, before batteries, watches were mechanical, using springs and gears to keep time. They were large, often worn on a chain and kept in a pocket rather than on the wrist. The vest of a 3-piece suit would have a pocket specifically for a watch. If you go back far enough, carrying a good pocketwatch was viewed as a sign of status for the wealthy. Without batteries, they needed to be wound periodically to keep accurate time. In some models, there would be a wheel at the top of the watch that would be turned to wind it up. Others had a small hole in the back where a watchkey would be placed and turned.
But Reagan said the advisors had no watch on their chain to go with the watchkey. I think Reagan’s saying they are booksmart (doing well in school), but not common-sense-smart. And there’s a big difference, though having some booksmarts would definitely be a good foundation to work from.
Maybe we need more common sense people in positions of power.
