My Amazon Review of A.J.Baime's "Dewey Defeats Truman: The 1948 Election and the Battle for America's Soul"

Never Give Up, Never Sit on a Lead

Political journalist A.J. Baime tells the often told story of Truman’s come from behind victory over Dewey with great insight and drama, no easy feat. Simply put President Harry Truman never gave up and New York Governor Thomas Dewey sat on a lead. Further Truman was handicapped by having Progressive Henry Wallace run to his left and Dixiecrat Strom Thurmond run well to the right thereby splitting the Democratic Party.

Of interest is that contrary to the title the election was not about America’s soul. Dewey and Truman agreed on international affairs, expanding social security, supporting a federal role in housing and on civil rights. As governor of New York Dewey pushed through the first major civil rights legislation in country. To be sure during the campaign Truman was far more full-throated in his support for civil rights. Dewey along with his running mate California Governor Earl Warren were perhaps the two best governors in America at the time. Had they won, my guess is that it would have been a successful administration.

What Truman understood is that there was a fundamental split between liberal Dewey and the largely conservative congress. Truman was not running against Dewey, per se, but rather on cross country whistle stop tour he lambasted the do nothing Republican Congress while begging for cash to keep the campaign going. While Truman was outlining specific programs, Dewey was mouthing the platitude of “unity.”

Truman had more on his mind than winning re-election. He was running the Berlin Airlift, negotiating with the Russians in Paris and dealing with the Arab-Israel War. He also found the time to order the integration of the armed forces.

Baime is especially good on his discussion of the Wallace campaign, a campaign largely run by a Communist Party cell. Wallace praised Stalin and attacked the Marshall Plan with great vehemence. Along the way he attracted a coterie of celebrities who objectively acted as, in Lenin’s term, “useful idiots.”

Then why did Truman win against all odds and with 90% of the newspapers against him including The New York Times. Baime suggests it was a combination of broad prosperity, strong labor union support, the Black vote in the great urban centers, technical changes in farm legislation that made it hard for farmers to profitably store their 1948 bumper crop and perhaps most important, the American people admired Truman’s spunk. It makes for a great read.

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My Amazon Review of David Paul Kuhn's "The Hard Hat Riot: Nixon, New York City and the Dawn of the White Working-Class Revolution"

The Day the New Deal Coalition Died

On May 8, 1970, the 25^th anniversary of VE Day and four days after the Kent State shootings a mob of construction workers, many of whom were veterans, assaulted a large group of anti-war demonstrators in New York’s financial district. With great acuity political journalist David Paul Kuhn not only describes with fully sourced details the progression of the riot, but he also sets the stage by describing the New York City of the 1960s and the political aftershocks of the riot.

For the most part the police stood by as the construction workers assaulted the demonstrators. After all the police sympathized with them and they lived in their neighborhoods. Theirs were the neighborhoods of Staten Island, Queens and Brooklyn, not the elite upper eastside of Mayor Lindsay and the suburbs of Westchester and Long Island from whence most of the students came. Simply put is was a class war. Remember the Vietnam War was fought by the children of the working class of all races, not by the children of the elite.

Interestingly the construction workers also opposed the Vietnam War, what they didn’t like is the appearance of a strain of anti-Americanism among the antiwar demonstrators. Removing American flags from flagpoles and shouting support for the Viet Cong hardly improved the situation. But perhaps far more important was the image of privileged upper-middle class college students protesting a country that had given them everything. The typical construction worker only wished that someday his children would be able to go to college.

Beneath the veneer of a construction boom in low Manhattan (i.e. the World Trade Center was under construction) New York City was falling apart. Crime was rising rapidly and the profligacy of the Lindsay Administration was undermining the fiscal health of the city. Further the workers knew that they not only would pay higher taxes to fund the fiscal profligacy of the city, they would also bear the brunt of school busing and scatter-site public housing projects.

In the White House President Nixon and his aide Pat Buchanan were watching with great interest. In the hard hat riots the saw the collapse of the New Deal coalition which at its core was the white working class. To the extent that the Republican Party could pick off these voters a political realignment of monumental proportions could take place. The fruits of which were harvested 10 years later with Reagan’s victory in 1980 and in 2016 with Trump’s surprising win. Simply put the Democratic Party became an image of Mayor John Lindsay’s coalition in New York City, upper-income liberals, minorities and young voters and that coalition haughtily looks down as white working class voters as know-nothing racists. That is certainly not the way Franklin Roosevelt viewed them.

To me Kuhn’s book was very personal. I grew up in middle-class Queens and in 1970 I was going to graduate school in Los Angeles after just getting out of the army.  While in the army I watched with my fellow soldiers the demonstrations at the 1968 Democratic Convention in Chicago. Most of us were all for the demonstrators until they flew the Viet Cong flag and with that most of their support melted away. To me that reaction typified the hard hat reaction two years later. In 1972 I canvassed the working class neighborhoods of Los Angeles with other veterans for George McGovern and after that experience I knew McGovern was a goner.

Now 50 years later, America has changed. The white working class is a shadow of what it once was and for the most part real wages have gone nowhere so perhaps the Democrats can resurrect the Lindsay coalition in 2020. But I would warn them that with crime once again on the rise, public safety will once again become a potent political issue that will affect all races. Read this book to see how we got here.

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My Amazon Review of Steven Johnson's "An Enemy of All Mankind: A True Story of Power and History's First Global Manhunt"

Piracy on the High Seas

Steven Johnson tells a true story of how a 1695 mutiny on the British ship Charles II, renamed Fancy, led to an historic act of piracy off the coast of India a few months later. Henry Every capably leads his band of pirates to capture the Indian treasure ship Gang-i-Sawai loaded with a thousand pilgrims on their way back from Mecca. Once on board the pirates raped, pillaged and plundered their way to about $20 million in bounty. One of the victims was the granddaughter of Grand Moghul Aurangzeb.

Because the pirate ship was waving the British flag it leads to the jailing of British East India company officials. It is with that Johnson tells of the intrigues within the East India Company both in Britain and India designed to maintain the company’s tenuous position in India. To avenge the piracy Britain authorized a global manhunt to bring Every and his band to justice. They are called “hostis human generis” or enemies of all mankind.

Every escapes first to the Bahamas and it is there the crew splits up. Some going to America and others going to Britain and Ireland. Some get captured, others not. Along the way we learn about pirate life and the egalitarian nature of governance aboard ship and the equitable sharing of the bounties earned. It was a hardship filled risky life, but if successful the rewards were great.

Meantime as a result of British efforts, the East India Company entrenches its position in India and lays the basis for the empire that was to come. The book is far more interesting on the pirate side then on the politics of the British position in India. One thing I would have liked to learn is how Every learned and used his navigational skills, first to intercept his prize and later to make the journey to the West Indies, no easy task in 1695.

Johnson tells a good story and there is much to learn about the globalizing world of the late 17^th Century.

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My Amazon Review of Matthew Klein's and Michael Pettis' "Trade Wars are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace"

Global Keynesians

Barron’s economics columnist Matthew Klein and  Peking University economics professor Michael Pettis have written a widely discussed book bemoaning the global savings glut that they believe to be the cause of the increase in trade tensions over the past two decades. And it is the high rate of savings by the wealthy that reduces aggregate demand globally thereby suppressing output and wages. It is Keynes’ classic under-consumption view of the world. Klein and Pettis try to prove their point by examining the economies of China, Germany and the United States.

But before that they go through a serious history of trade policy and economic crises from the 1820’s on. Unfortunately they make a few mistakes along the way. They admire Henry Clay’s American System of tariffs, internal improvements and national bank. However they ignore the secret sauce of American protectionism in 1800s, that being a tidal wave of immigration. Instead of importing products, America imported labor, much of it skilled. When immigration was cut-off in the 1920s and record high tariffs were imposed, the economy collapsed into the Great Depression. Along the way the authors surprisingly have some nice things to say about the gold standard.

Klein and Pettis early on cite Keynes’ discussion of how well the French economy fared with the payment of an indemnity arising out of their defeat in the Franco-Prussian War. What they leave out is that the excess savings generated by the French economy in the 1850’s and 1860’s was the source of funds. Hence what the Asian nations and Russia learned after the 1997-98 crisis, was the need for central banks to establish precautionary balances. It is those balances that make nation resilient to the vagaries and vicissitudes of the international economy. And as Klein and Pettis rightly note, the Asian and Russian response to the crisis greatly contributed to the savings glut.

The overarching thesis of the book is that capital flows drive trade flows. Simply put a trade deficit in the U.S. requires a capital inflow and a trade surplus in China requires a capital outflow. The authors use accounting identities to make their point. However accounting identities do not define causation because other items are not held constant. For example an increase in government spending, other things being equal increases GDP, but other things do not remain equal as consumption or investment or exports could be simultaneously reduced.

The authors make a very straight forward case that China should reduce its exports, which line the pockets of the Communist Party Bigs and the industrial elite at the expense of the workers. In turn the economy should shift towards domestic consumption through a policy of higher wages and a stronger social safety net. That all makes sense, but the high wage-stronger social safety net policy is inimical for the trade deficit-prone United States. All that would do is increase the U.S’s trade deficit.

Klein and Pettis also offer up other polices one of which is akin to modern monetary theory. Simply put, if the world is short of safe assets, the U.S. should sell all the bonds the rest of the world is demanding. They leave unsaid the impact of that policy on the foreign exchange value of the dollar. They also believe that the Dollar Standard that the global economy is now is instead of it being an exorbitant privilege, it is now an exorbitant burden. They would substitute Keynes’ Bancor, an idea that failed at the 1944 Bretton Woods Conference, but it is certainly worthy of discussion today.

There was one line in the book that really intrigued me. The authors note that the three areas of intense government involvement; housing, healthcare and higher education are the primary drivers of U.S. inflation. I would suggest that it would be in keeping with their concern about the immiseration of the U.S. working class to focus their next book on this topic.

To sum up, the Klein-Pettis book is being taken very seriously in policy circles and it could very well have a real influence on a potential Biden Administration. It is worth a critical read.

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