References and Notes
Economix covers a lot of ground and draws on many sources (see the Further Reading section for a partial list). In many cases I came across the same fact in a million places; these are generally referenced to where I happened to come across them.
Some things I left unreferenced because they’re common knowledge; if you think otherwise and want a reference (or if you think a reference is insufficient and want a better one), please feel free to contact me. I’m serious—it gratifies me when someone actually cares.
Note that this list is still being tweaked–there have been some formatting changes and suchlike, and a couple of books are lost somewhere in my apartment.
Finally, let’s start this off with a complete list of errata.
ERRATA
First off, my quote of James Watt, p217 panel 5, is unfair. See the discussion in the references to that panel.
Second, a UK Amazon review pointed out that I keep screwing up the distinction between Britain, the UK, and England. There’s no excuse–I know the differences, I just got sloppy. It’s more annoying because I was careful with the distinction between Russia and the USSR, which matters less.
Next, I’m assured that these have been fixed for the sixth printing, but if you have printings 1-5, you must suffer with:
1) The first Mexico bailout was 1982, not 1984. Curse you, original source!
2) The Pentagon hadn’t built the equivalent of 100,000 Hiroshima-size nukes by 1960. It had built the equivalent of a million. Yep, I cut it by a factor of ten and it still sounded unreasonable. This was my own math error, not my source.
3) The Newcomen engine was first placed in a mine in 1712, not 1704.
4) People won the Nobel Prize (in economic science, which is like the redheaded stepchild of the real Nobel Prizes) for figuring out what derivatives were worth in the 1990s, not the 1980s.
5) The Adam Smith quote on page 231 should read “vices and follies,” not “follies and vices.” My mistake.
6) Greenspan didn’t keep exchange rates stable in the Clinton years; he kept interest rates stable. I must have read that a hundred times and in my head it always read “interest.”
7) Page 132, panel 1, in the timeline: The Ukraine famine went from 1932-33, not 1932-39.
Finally, reader Antoine Didisheim pointed out that page 129 panel 1 is phrased poorly; it should have been “. . . went global in 1941, when Hitler . . . .” That is, World War 2 didn’t start with Hitler attacking the USSR, but the truly global phase of the war (which until then had been largely confined to Europe and a small bit of North Africa) did.
EDIT April 6, 2015: Reader Robert Riehemann points out that dinosaur on page 44, panel 3 is lying–coal is plant matter rather than dinosaur meat. The lesson here is don’t trust dinosaurs.
EDIT again: p134 panel 3: the GATT was not negotiated at Bretton Woods. I suck.
And now: To the references! (This is a very long document, but you can search on, for instance, “page 204” to get where you need.) Also, the page references still apply to the English edition but have gone wacky compared to some other editions.
REFERENCES AND NOTES
Page 10, panel 4: The idea that power matters might seem obvious, but it contradicts a decent amount of economic theory. Which is one reason this book has relatively little economic theory in it.
For instance, Paul Krugman, who’s to the left of most of the mainstream of economics, has only recently come around to the idea that power matters. Here he is in 2008, talking about the idea that inequality might be rising simply because those with power are using their power to take more: “Can the political environment really be that decisive in determining economic inequality? It sounds like economic heresy, but a growing body of economic research suggests that it can.” (The Conscience of a Liberal, p7) And here he is describing how economists normally evaluate the causes of inequality: “The procedure goes something like this: First, assume that rising inequality is caused by technology, growing international trade, and immigration. Then, estimate the effects of trade and immigration . . . . Finally, attribute whatever isn’t explained by these measurable factors to technology [and not to, say, political power].” (page 132-133.) The point is, most economists haven’t come as far as Krugman has.
UPDATE, February 2013: Acemoglu and Robinson’s paper here is a call for more politics in economic analysis; it’s also a guide to how completely politics has been excluded to this point.
Page 11, panel 4: True, one can imagine a book that deals only in unassailable facts, or in statements that logically must be true given the premises, but even then the author would have chosen to give those facts and those statements attention, while ignoring others that might be more important although less definite.
Page 12: The quote is from Page 442 of the Modern Library edition, Random House, 1994.
Page 14, panel 1: Definition of capital: There are plenty of definitions; I’m giving some of the most common.
Page 14, panel 2: Whether money spent for, say, workers’ salaries counts as investment depends in part on when and why it’s spent. Money you pay workers to build a store is usually counted as investment, money you pay workers to staff an existing store isn’t.
Page 15, panel 1: Adam Smith referred to “undertakers” (e.g., “The world neither ever saw, nor ever will see, a perfectly fair lottery; or one in which the whole gain compensated the whole loss; because the undertaker could make nothing by it.”) But the word was already a euphemism for the person who prepares bodies for burial (see Sol Steinmetz, Semantic Antics, How and Why Words Change Meaning, here), so the French word was adopted.
Page 15, panels 2 and 3: In fact, farming economies often leave capitalist functions to outsiders (Jews in medieval Europe, Lebanese in modern West Africa) to keep society as undisrupted as possible.
Page 15, panel 5: Other things people do with their savings in a farming economy: They buy land, which doesn’t encourage anyone to make more land, and they donate their wealth to churches or temples, “investing” in the afterlife. None of this creates new wealth the way true investment does.
Page 15, panel 6: Barber-surgeons used the same razor for both: See Lucille Keir, Barbara A. Wise, Connie Krebs, and Cathy Kelley-Arney, Medical Assisting, Administrative and Clinical Competencies. Page 8, here.
Page 16, panel 2: Starting with the Dutch is arbitrary; it means ignoring the Knights Templar, the Italian cities of the Renaissance, medieval Venice, even ancient Athens. But this book has only so much space.
Page 16, panel 3:
Ruled Europe’s trade: Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, page 176.
Even people at war with the Dutch bought from them: Fernand Braudel, The Perspective of the World, Phoenix Press, 2002 (1979), p170, 208; Simon Schama, The Embarrassment of Riches, Vintage Books, 1997 (1987), p238.
Page 17, panel 1: The Colbert quote can be found in Fernand Braudel, The Wheels of Commerce, Phoenix Press, 2002 (1979) page 545.
Page 17, panel 3:
1,408 threads: An actual law; the fabrics of Dijon and Sangeley had to have exactly this many, according to E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p36. I’m not sure per what (per inch? Per yard? Per cloth?)
Subsidies for exports and tariffs: http://www.encyclopedia.com/doc/1G2-3404900234.html.
Page 18, panel 1: Mercantilism caught on: For instance, with England’s Navigation Act of 1651, which declared that all imports into England had to be brought in English ships, or in ships of their country of origin. This was a blow at the Dutch, who profited off of, for instance, shipping French goods to England. A. L. Morton, A People’s History of England (page 266 of the edition I read, but I don’t remember the publisher or year).
Page 18, panel 2: Don Kalb, Central European University, personal communication. This took place during a war, but the Dutch had survived wars before without eating anyone; it’s reasonable to say that Colbert’s policies helped increase Dutch distress. Their further decline is noted in Kevin Phillips, Wealth and Democracy. Broadway Books, 2002, page 182.
Page 18, panel 4: Britain raised 10 million pounds sterling a year from 8 million people; France raised the equivalent of 15 from 24 million people. Adam Smith, The Wealth of Nations, Modern Library edition, Random House, 1994, pages 978-979.
Page 19, panel 1: Robert Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p49.
Page 19, panel 2: Henry George, The Science of Political Economy, 1953 (1897), Country Life Press (Robert Schalkenbach Foundation), p153. This phrase was around before the Physiocrats; see Robert L. Heilbroner and Lester Thurow, Economics Explained, Touchstone, 1998 (1982), p24.
Page 19, panel 3: See “Physiocratic School,” Encyclopedia Britannica, Eleventh Edition, 1910-1911. The “few people” is true in the Western world, at least; since the book came out I’ve been made (dimly) aware of a rather extensive Islamic economic tradition that prefigured some of Smith’s insights.
Page 19, panel 4: Robert L. Heilbroner, Teachings from the Worldly Philosophy, Norton, 1997 (1996), p36, 45.
Page 20, panel 1: Robert L. Heilbroner, Teachings from the Worldly Philosophy, Norton, 1997 (1996), p36, 45. They really did believe that everyone else was irrelevant. Here’s Quesnay: “The manufacturer who makes cloth, the tailor who makes clothes, the cobbler who makes shoes, do not produce wealth any more than do the cook who makes his master’s dinner, the worker who saws wood, or the musicians who give a concert.” (Heilbroner, Teachings from the Worldly Philosophy, p36)
Page 21, panel 2: Smith, Modern Library edition, Random House, 1994, Wealth of Nations. p5.
Page 21, panel 3: Smith, Wealth of Nations, p5.
Page 22, panel 1: Smith, Wealth of Nations, p4.
Page 22, panel 2: Smith, Wealth of Nations, p12 (although his example of a bigger thing is a woolen coat, not a loaf of bread).
Page 22, panel 3: Smith, Wealth of Nations, p15.
Page 23, panel 1: Smith, Wealth of Nations, p100.
Page 23, panel 2: Smith, Wealth of Nations, pp100, 114.
Page 23, panel 3: Smith, Wealth of Nations, p62. Some people point out that the phrase “Invisible hand” only appears once in Wealth of Nations, referring to a very specific situation. This is true, but it’s also irrelevant—the fact is, Wealth of Nations is an organizational mess; important points are buried in digressions, examples are separated from their general rules, and so on. So while any other writer, having hit on a happy phrase like “invisible hand,” would have repeated it wherever it was relevant, the fact that Smith does not says nothing about his ideas and everything about his writing style.
Page 23, panels 4-5: Smith, Wealth of Nations, p62-63.
Page 24, panel 1-2: Smith, Wealth of Nations, p561, 564.
Page 26, panel 1: Smith, Wealth of Nations, p745, 877.
Page 26, panel 2:
Favor war-related industries: Smith, Wealth of Nations, p492, 559.
Cap the interest rate: p388.
Protect new industries: p791.
Establish education standards: p843, 854, 845, 855; 877.
Control disease: p845.
Provide public amusements: p855.
Protect wage workers: p164.
Keep banks honest: p353, 358.
Page 26, panels 3-4: page 388. In fact, Smith thought 8% was too high. But it illustrates the concept.
Page 27, panel 1:
Smith thought high profits were bad: Smith, Wealth of Nations, p288, 662. It’s worth pointing out that Smith thought that the quest or profit was good, because it kept capital in use (page 287). But everyone’s competition for profit should keep overall profits down.
Page 27, panel 2: Smith, Wealth of Nations, p90.
Page 27, panel 3: Smith, Wealth of Nations, p90.
Page 27, panel 4-5: Smith, Wealth of Nations, p40, p287-288.
Page 28, panel 1: Smith, Wealth of Nations, p288, 662.
Page 28, panel 3 (counting the text box below panel 1 as panel 2): They could take over a market: Smith, Wealth of Nations, p75-76.
Quote: p148.
Page 28, panel 4: Smith, Wealth of Nations, p630, 792.
Page 28, panel 5: Tired, uneducated worker didn’t understand: Smith, Wealth of Nations, p286, 839-840. Merchants were principal economic advisors to government, which also didn’t understand the issues: p630.
Page 29, panels 1,2: Smith, Wealth of Nations, p288.
Page 29, panel 3: Smith, Wealth of Nations, p526-527.
Page 29, panel 5: Smith, Wealth of Nations, p69.
Page 29, panel 6: Smith, Wealth of Nations, p359.
Page 30, panels 1-5: I’m fudging a bit here, using illustrations of 18th-century corporations while describing modern corporations (for instance, limited liability wasn’t a thing until the 19th century).
Page 30, panel 5: This is a bit of a controversial thing to say; after all, a lot of our economic theory, or at least our popular discourse, is based on the idea that shareholders own their companies in exactly the same way that little Billy owns his lemonade stand. But really, if ownership mattered, changing ownership day by day, or minute by minute, would be disastrous. Which is the point I make in the next panel.
Page 31, panel 2: Smith, Wealth of Nations, p791, 793, 800.
Page 31, panel 3: Smith, Wealth of Nations, p815-816.
Page 31, panel 4: That’s what the Declaration of Independence is referring to when it indicts George III “For cutting off our Trade with all parts of the world.” See here: http://www.archives.gov/exhibits/charters/declaration_transcript.html.
Page 31, panel 5: Smith, Wealth of Nations, p662, 716, 663, 678; the quote is on p526.
Page 31, panel 1: The phrase is most commonly associated with one James Otis; see http://en.wikipedia.org/wiki/No_taxation_without_representation.
Page 32, panel 3: Technically, it was the “Act for the Restraining and Punishing of Pirates” that forbade the colonists from bringing in tea (or possibly restated the prohibition—I’m not 100% clear). Douglas Rushkoff, Life Inc., Random House, 2009, p11.
Page 32, panel 4-5: William J. Langer, ed. An Encyclopedia of World History, Riverside Press, 1952, p518.
Page 33, panel 2: Eric Hobsbawm, The Age of Revolution, quoted in Charis Conn and Lewis Lapham, eds.,The Harper’s Index Book Volume 3, Franklin Square Press, 2000, p60.
Page 33, panel 4: The estates hadn’t met for more than a century: Niall Ferguson, The Cash Nexus, Basic Books, 2001, p81.
Page 34, panel 2: People didn’t pay their rational taxes; see Edmund Burke, Reflections on the Revolution in France, on the abolition of the unequal, irrational, and pernicious salt tax: “The provinces which had been always exempted from this salt monopoly, some of whom were charged with other contributions, perhaps equivalent, were totally disinclined to bear any part of the burthen, which by an equal distribution was to redeem the others. . . . The people of the salt provinces, impatient under taxes damned by the authority which had directed their payment, very soon found their patience exhausted. . . . They relieved themselves by throwing off the whole burthen. Animated by this example, each district, or part of a district, judging of its own grievance by its own feeling, and of its remedy by its own opinion, did as it pleased with other taxes.” Also: “The people of Lyons, it seems have refused lately to pay their taxes. Why should they not?”
Leftists and rightists: http://en.wikipedia.org/wiki/Left–right_politics.
Page 35, panels 1-3: Thomas Malthus, An Essay on the Principle of Population. Norton Critical Editions, 1976 (1798), page 20. Technically he said “misery,” not starvation, was inevitable.
Page 35, panel 4: Malthus, Essay, p49, 52. Malthus also spends a lot of space arguing against the optimists of his day like Godwin and Condorcet, but his arguments are unrewarding to the modern reader.
Page 35, panel 5: Malthus, Essay, p37.
Page 36, panel 1: At least, this seems self-evidently true to me. There are those who disagree. I believe that these people are pollyannas.
A lively discussion of the arguments pro and con are here: http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/
Page 36, panel 2: I can’t give a page number for this because it’s not that Malthus dismisses birth control, it’s that he doesn’t mention it (although he does mention abstinence and dismisses it, rightly, as unrealistic). It’s the elephant in the room of his Essay.
People used birth control back then: In James Boswell’s London Journal he talks of using a condom, although he was using it to prevent STDs; Boswell lived from 1740 to 1795.
Page 36, panels 3-5: Malthus can be forgiven for not knowing this; this is basically 20th-century hindsight. Although Adam Smith, with his wide-ranging observation, was on to it when he noted: “Poverty . . . seems even to be favourable to generation. A half-starved Highland woman frequently bears more than twenty children, while a pampered fine lady is often incapable of bearing any, and is generally exhausted by two or three.” (Wealth of Nations, p90)
Page 36, panel 6: Robert Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p85. In fact, Malthus backpedaled in his second edition—he came to think that while workers will always get the bare minimum, what that minimum is is culturally determined. So if a worker can’t reproduce (i.e., if no girl will look at him) unless he has shoes, or indoor plumbing, or a car, then owning these things is the bare minimum. Thus, real conditions can improve. But Malthus’s original ideas are what caught on.
Page 37, panel 2: David Ricardo, Principles of Political Economy and Taxation, Prometheus Books, 1996 (1817), p266.
Page 37, panel 3: Ricardo never used the term “economic man”—that came later—but his equations and principles necessarily exclude any motivation except gain, and any mode of thought except rationality. This is very different from Smith, who looked at real people (for instance, Smith took into account how we don’t properly understand risks, which is why casinos can operate). And here’s Smith in The Theory of Moral Sentiments, his other masterpiece: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” (Page 3 of the Prometheus edition, 2000 (1759).
Page 37, panel 4: The “other simplifications” include time—in Ricardo’s world, anything that will happen in the long run is counted as already having happened. David Ricardo, Principles of Political Economy and Taxation, Prometheus Books, 1996 (1817), p266.
Page 37, panel 5: John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p192. It’s remarkable how little Ricardo deals with the real world—aside from a few facts about banks, there’s practically no real-world info in all of Principles.
Page 38, panel 2: David Ricardo, Principles of Political Economy and Taxation, Prometheus Books, 1996 (1817), p96.
Page 38, panel 3 to Page 39, panel 2: Ricardo, Principles, p94-95.
Page 40, panel 1: In fact, Malthus became a professor of political economy (one of my sources said he was the English speaking-world’s first professor of political economy, but I can’t find the reference now.)
Page 40, panel 3: The second point—that comparative advantage simply assumes that capital doesn’t move between countries—is explicitly stated by Ricardo (Principles, p95), but is often forgotten today. So in the debate about NAFTA, a model that assumed that capitalists could not move their operations overseas was used to justify a treaty that would let them move their operations overseas.
Page 40, panel 4: Technically, it proves that something, under certain conditions, can happen. But it doesn’t prove that anything must happen. See, for example, Alfred Marshall, Money, Credit, and Commerce, Macmillan and Company, 1929, p284.
Page 40, panel 5: Alfred Marshall, Money, Credit, and Commerce, Macmillan and Company, 1929, p190.
Page 41, panel 3-5: John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p33. Thorstein Veblen, The Engineers and the Price System, B.W. Huebsch, 1921, p31.
Page 42: Karl Marx and Friedrich Engels, The Communist Manifesto, Foreign Languages Press (Peking), 1975 (1848), p39.
Page 44, panel 1: It amazes me how many “experts” don’t seem to understand this. I’ve read explanations of the industrial revolution that focused on growth rates, or culture, or all sorts of things that miss the point. Really, it’s not rocket science: Before the steam engine, most work was done by people, so every new person who added to the pie also needed a slice of the pie. With steam engines, people still worked, but there were also steam engines doing more work, making the pie larger without increasing the number of slices. (Yes, there were also animals doing work. But they needed to be fed).
Page 44, panel 4: Barbara Freese, Coal: A Human History. Perseus, 2003, page 24.
Page 44, panel 5: Freese, Coal, p52-53.
Page 45, panel 1: Oops—the first Newcomen engine in a mine was 1712. See Freese, Coal, p58-60. The 1704 date is given in some of my other sources, but it doesn’t seem to be reliable. Technically the Newcomen engine was an atmospheric engine rather than a true steam engine; the steam displaced the air from the piston, then atmospheric pressure compressed the piston as the steam cooled.
Page 45, panel 2: Watt’s engines were four times as efficient as Newcomen’s (the Newcomen engine heated and cooled the same piston with each stroke): Barbara Freese, Coal: A Human History, Perseus, 2003, p64. Factories mostly made cotton cloth: Fernand Braudel, The Perspective of the World, Phoenix Press, 2002 (1979), p572
Page 46, panel 4-5: The Cambridge Economic History of Europe, Volume VI. Cambridge University Press, 1965, p338.
Page 47, panel 3: Three to four shillings a day: This is higher than the ordinary wages observed by Adam Smith, but it’s reasonable to think that wages went that high for at least some workers in good times.
Page 47, panel 4: People did get seven shillings a week after the Industrial Revolution: Karl Marx, Capital Volume 1, Pelican Books, 1976, Ben Fowkes translation. (Penguin 1990 reprint), p791.
Page 48: I’m giving a 20th-century explanation here; my source is Keynes, who we’ll meet later.
Page 49, panels 2-3: Economists make the distinction between “demand” (just wanting something) and “effective demand” (wanting something and having the wherewithal to pay for it). As Smith put it, “A very poor man may be said in some sense to have a demand for a coach and six [horses]; he might like to have it; but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it.”
Page 49, panel 4: John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p382.
Page 49, panel 7: For the record, the gold standard of the 19th century wasn’t softened only by the rise of fractional reserve banking. There was also a big trade in bills of exchange (yes, other debt-based money). And, entire continents were stripped of their gold (the gold rushes in California, Colorado, the Yukon, Australia, and South Africa); all that gold kept the money supply expanding.
Page 50, panel 1 to page 51, panel 1: Paul A. Samuelson and William D. Nordhaus. Economics. 18thedition. McGraw-Hill, 2005. Pages 516-520. Although it turns out that this may in fact be wrong, at least in the modern world. Here’s a paper by Carpenter and Demiralp from 2010: “Finally, the assumed link in the textbook version of the money multiplier between the creation of loans and the creation of demand deposits is dubious. According to the standard multiplier theory, an increase in bank lending is associated with an increase in demand deposits. The data as discussed below do not reflect any such link.” The freaking textbooks got me again!
Page 51, panel 2: There are people who argue against this, but I’ve never been able to make sense of their arguments. Money is valuable because it other people will give you work or goods for it; therefore, if you have money, it’s exactly like other people owing you work or goods. Yes, sometimes money is also valuable in itself, but that’s separate. Cigarettes are currency in prison, not because you can smoke them, but because other people will accept them in trade for their goods and services. If you smoke them, they stop being currency.
Page 51, panel 5: It might seem odd that a false rumor could ruin a bank, but no bank has 100% of its deposits on hand at any one time. So if everyone showed up at once, any bank would collapse back then. (Today, we have deposit insurance that prevents bank runs–even if the bank collapses you get your money back, so nobody panics, so the bank generally has no reason to collapse.)
Page 52, panel 2: John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p382.
Page 52, panel 3: This is important: the British liked free trade back then when it meant money would flow into their coffers. When free trade didn’t mean that, they didn’t like it. As I show in the next panels.
Page 52, panel 4: I’m referring to the Opium Wars; here’s a brief history: 1) The Chinese traded with the West in a limited way; they sold tea, silk, and porcelain, but didn’t want much except silver. 2) Despite their commitment to “free trade,” the British wanted to get money, not give money. 3) Finally the East India Company found out that the Chinese would buy opium. Money started flowing the other way. 4) The Chinese clamped down on the trade (which was illegal). 5) The British seized a pretext to go to war. 6) By the peace terms, China was opened to trade.
Page 52, panel 5: “The flag follows trade” was a phrase of the times, but I haven’t been able to track it down to its source.
Page 52, panel 6: Indian goods were banned: Claude Lévi-Strauss, Tristes Tropiques, Atheneum, 1975 (original published in French in 1955), p146.
Page 52, panel 8: I selected the 1820s somewhat arbitratrily; sources disagree on when the Industrial Revolution really started making a difference in France, Germany, and the Low Countries.
Page 53, panel 4:
Fourier quote: Robert Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p122.
Feuerbach’s commentaries on Hegel: “Practically every single avowed champion of social reform in Germany has found his way to communism by studying Feuerbach’s criticisms of Hegel’s philosophy.” Friedrich Engels, The Condition of the Working Classes in England in 1844, Stanford University Press, 1968(1845),p4.
Page 54, panel 3:
Engels predicts a crash in 1847: Friedrich Engels, The Condition of the Working Classes in England in 1844, Stanford University Press, 1968(1845), p101.
Dates of slumps: Karl Marx, Capital Volume 1, Pelican Books, 1976, Ben Fowkes translation. (Penguin 1990 reprint), p583.
Page 54, panel 4: Friedrich Engels, The Condition of the Working Classes in England in 1844, p26.
Page 54, panel 5: The crash came on schedule: Karl Marx, Capital Volume 1, Pelican Books, 1976, Ben Fowkes translation. (Penguin 1990 reprint), p583.
England came close to revolution: These were the glory days of the Chartist movement, who (like Communists) proposed many radical reforms that are accepted, or even reactionary, today (e.g., universal male suffrage was unthinkably forward-thinking back then; today it would be a step back for women).
Page 55, panel 1: Karl Marx and Friedrich Engels, The Communist Manifesto, Foreign Languages Press (Peking), 1975 (1848), p32.
Page 55, panel 2: Marx and Engels, The Communist Manifesto, p39, 55-56.
Page 55, panel 3: Marx and Engels, The Communist Manifesto, p53
Page 55, panel 4: Marx and Engels, The Communist Manifesto, p40-44.
Page 55, panel 5: Marx and Engels, The Communist Manifesto, p49.
Page 55, panel 6: Marx and Engels, The Communist Manifesto, p60, 77.
Page 55, panel 7: For an account of the hopes and failure of the 1848 revolution in Italy, I recommend Margaret Fuller’s These Sad and Glorious Days, Yale University Press, 1991.
Page 55, panel 8: Marx reached England in 1849.
Page 56, panel 2: The Cambridge Economic History of Europe, Volume VI. Cambridge University Press, 1965,p465
Page 56, panel 3: The Cambridge Economic History of Europe, Volume VI. Cambridge University Press, 1965,p465.
Even something as basic as shoes were once considered a luxury. Smith, Wealth of Nations: “Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person, of either sex, would be ashamed to appear in public without them. In Scotland, custom has rendered them a necessary of life to the lowest order of men; but not to the same order of women, who may, without any discredit, walk about barefooted. In France, they are necessaries neither to men nor to women; the lowest rank of both sexes appearing there publicly, without any discredit, sometimes in wooden shoes, and sometimes barefooted.”
Page 56, panel 4: The left picture is from the Tres Riches Heures du Duc de Berry, 1415. The right picture is The Sower, by Jean Francois Millet.
Page 56, panel 5: One in eight Irish: Timothy Guinnane, The Vanishing Irish, 1997.
Page 57, panel 1: The first government was established under the Articles of Confederation; you can see them here: http://www.archives.gov/exhibits/charters/charters_of_freedom_4.html
Page 57, panel 2:
Jay quote: Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, page 3.
Jefferson quote: Letter to W. Jarvis, 1820.
Page 57, panel 5: The fact that wages were high in America is given in Smith, Wealth of Nations, Modern Library edition, Random House, 1994, p81.
Page 58, panel 1:
Smith quote: Wealth of Nations, Modern Library edition, Random House, 1994, p 93.
Efficient to pay workers more than the minimum: This is called “efficiency wage theory” in modern economics. Some modern examples—both of higher wages and more employees being more profitable—are given in James Surowiecki, “The More the Merrier,” The New Yorker, March 26, 2012.
Page 58, panel 2: Eli Whitney first demonstrated a gun made from interchangeable parts in 1801, although not all of the parts were interchangeable; see http://www.eliwhitney.org/new/museum/about-eli-whitney/factory
Page 58, panel 3: For example, see Alexis de Tocqueville, Democracy in America, University of Chicago Press, 2000, p387: “Before reaching the end of a voyage with a long course, the European navigator believes he ought to land several times on his way. He loses precious time in seeking a port for relaxation or in awaiting the occasion to leave it, and he pays each day for the right to remain there.
“The American navigator leaves Boston to go buy tea in China. He arrives at Canton, remains there a few days and comes back. In less than two years he has run over the entire circumference of the globe, and he has seen land only a single time. During a crossing of eight to ten months, he has drunk brackish water and lived on salted meat; he has struggled constantly against the sea, against illness, against boredom; but on his return he can sell the pound of tea for one penny less than an English merchant: the goal is attained.”
This was possible because American seamen got a share of the voyage’s profit (see Melville’s Moby Dick for a discussion of how shares were calculated), at a time when European seamen (except on whalers, I think, where the share system prevailed) were almost slaves for the duration of the voyage.
Page 58, panel 5: See, for example, Frederick Law Olmsted, The Cotton Kingdom, The Modern Library, 1969 (1861). p9, p11, p141, p301, p330, p426. Yes, that’s the Central Park guy.
Also, Barbara Freese, Coal: A Human History, Perseus, 2003, 126: “[By the Civil War the] North had a decisive industrial advantage over the South with ten times more factory production, fifteen times more iron, thirty-two times more firearms production, and, most dramatic, a 38-to-1 advantage in coal.”
It’s true that the South had a lot of paper wealth, but much of that was land (which isn’t the kind of wealth we’re talking about) and a lot of the rest was slaves (who shouldn’t be counted as wealth at all—rather, they should be counted as people, reducing the per capita estimate of wealth still further). See Steven R. Weisman, The Great Tax Wars, Simon and Schuster, 2002, p58, 61-62.
Page 58, panel 6: Frederick Law Olmsted, The Cotton Kingdom, The Modern Library, 1969 (1861), p9, p141. Alexis de Tocqueville, Democracy in America, University of Chicago Press, 2000, p333, p334.
Page 59, panel 2: Adam Smith, Wealth of Nations, Modern Library edition, Random House, 1994, p418.
Page 59, panel 3: A hundred times: James Burke, The Knowledge Web, p82, available here.
Page 59, panel 4: See Olmsted, The Cotton Kingdom, p374.
Page 59, panel 5: Southerners wanted to spread slavery: That’s the point of Abraham Lincoln’s, “House Divided” speech. Available at: http://showcase.netins.net/web/creative/lincoln/speeches/house.htm. The South seceded, then attacked: There are still people who insist that the North was the aggressor, but Lincoln didn’t start raising troops until after the Battle of Fort Sumter, in which the South fired first.
Page 60, panel 1: As one Confederate wrote: “In this army, one hole in the seat of the breeches indicates a captain, two holes is a lieutenant, and the seat of the pants all out indicates that the individual is a private,” See Sally Jenkins and John Stauffer, The State of Jones, Doubleday, 2009, p125.
Page 60, panel 2: The money the North printed (“greenbacks”) wasn’t backed by anything—it was “fiat money,” where the government just prints bills, calls it money, and doesn’t promise to give anything in return. But of course, you can pay your taxes using fiat money, which is more than you can do with gold today.
Page 60, panel 3:
Fisk quote: David McCullough, Mornings on Horseback, Touchstone. p60.
An example of businesses cheating: Early in the war, one Arthur Eastman bought 5,000 old muskets from the government for $3.50 each. He sold them to another businessman, Simon Stevens, who rifled the barrels (which couldn’t have cost more than a dollar per gun) and sold them back to the government for $22.00 each. J.P. Morgan financed the deal. See E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p153).
Page 60, panel 4:
Maggoty meat: Burke Davis, The Civil War: Strange and Fascinating Facts. Barnes & Noble Books, 1960. Page 181.
Coffee for gunpowder: According to Will Catton’s Army of the Potomac series, The South had excellent gunpowder, if nothing else, while Northern soldiers got good coffee because it was distributed to them as whole beans rather than grounds (grounds would have been mixed with other crap by corrupt suppliers but beans couldn’t be).
Shoddy: That’s where the adjective comes from.
Page 61, panel 3: The quotes are from Karl Marx, Capital Volume 1, Pelican Books, 1976, Ben Fowkes translation (Penguin 1990 reprint), except “insipid nonsense,” which I missed in Capital but was quoted in Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p112.
Page 61, panel 4 (i.e., the first panel in the second row): Marx kept Ricardo’s labor theory of value: Karl Marx, Capital Volume 1, Pelican Books, 1976, Ben Fowkes translation. (Penguin 1990 reprint), p202. In fact, it’s so identified with Marxism now that many people think that Marx invented it.
He had a question: Marx, Capital, p266.
Page 61, panel 5: Marx, Capital, p417.
Page 61, panels 6-7: This is the one case where I used a secondary source’s interpretation instead of thinking things through myself. I confess that Marx’s prose has defeated me here. My defense is that the secondary source in question is Robert Heilbroner’s excellent The Worldly Philosophers, Touchstone, 1986 (1953), p160. I’m pretty sure it’s right. By “squeezing” I don’t mean “cheating,” exactly–Marx’s point is that profit comes from paying the market value of labor in a capitalist system, because this market value is far less than what the laborer actually produces.
Page 61, panel 8: Marx, Capital, p929.
Page 62, panel 2: Marx, Capital, p929.
Page 62, panel 7: The quote is from Marx, Capital p217.
Page 63, panel 1: Seven shillings a week was a real wage: Marx, Capital p791.
Page 63, panel 3: A.L. Morton, A People’s History of England, 1938, page 450 of the edition I read, but I no longer remember the edition or publisher.
Page 63, panel 4: For women and children, anyway. For a good overview of all of the factory acts, see http://en.wikipedia.org/wiki/Factory_Acts.
Page 63, panel 5: A.L. Morton, A People’s History of England, 1938,page 446 of the edition I read.
Page 63, panel 6: The limit may be around 150 people before the group stops functioning the same way. Malcolm Gladwell’s The Tipping Point talks about this, but I no longer seem to have the book so I can’t give a page reference. T
Page 64, panel 1: Workers’ lives were finally improving: Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p95.
Engels quote: Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p172
Page 64, panel 2: Barbara Tuchman, The Proud Tower, Bantam, 1967 (1966) p480; Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p79.
I may be being unfair to Marx himself here: His famous quote “I am not a Marxist” referred to the tendency of Marxists to dislike reform. See The Programme of the Party Ouvrier here: http://www.marxists.org/archive/marx/works/1880/05/parti-ouvrier.htm. So in this panel he’s serving as a stand-in for other revolutionaries so I don’t have to introduce a new face like Jules Guesde.
Page 64, panel 3: I’m not the first to notice this; here’s John Kenneth Galbraith: “Marx must on occasion have wondered, if revolution were inevitable, as he proclaimed, why it required the passionate and unrelenting advocacy which he accorded it.” —The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), p323.
I’ve also heard that there is, or was, a professor at Duke who believes that Marx didn’t actually buy into the socialist movement at all (thinking it unnecessary), and in fact tried to sabotage it.
On the other hand, George Orwell (The Lost Writings, Avon Books, 1988, page 143) points out that there’s a difference between something being inevitable (Marx’s idea) and being automatic (as some followers of Marx came to believe).
Page 64, panel 4: Joseph Schumpeter, Capitalism, Socialism, and Democracy, Harper Perennial, 1975 (1942), p330; Lenin, State and Revolution, International Publishers, 1943 (1917), p24.
Page 65, panels 1-2: Fritz Stern, Gold and Iron, Alfred A. Knopf, 1977, p219; Bismarck, quoted in Roppel Pinson: Modern Germany: Its History and Civilization, New York, MacMillan, 2nd ed, 1966, which is itself quoted in David Khoudour-Castéras, “Welfare State and Labour Mobility: The Impact of Bismarck’s Social Legislation on German Emigration Before World War I.” Journal of Economic History, Vol 68 No 1 (March 2008). Got that? Good. I live to serve.
Page 65, panel 3: Health insurance: Will Hutton, The World We’re In, Abacus, 2002, 2003 p348.
Accident insurance and old-age pensions: Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p6; http://en.wikipedia.org/wiki/State_Socialism#Bismarck.27s_social_legislation
Page 65, panels 4-5: Bismarck’s economic program is described in detail in Fritz Stern, Gold and Iron, Alfred A. Knopf, 1977, p181-224.
Page 65, panel 6: Started catching up to Britain: See p93, panel 1 of this book.
Page 67, panel 3: The labor theory assumes that things sell for their average cost: David Ricardo, Principles of Political Economy and Taxation, Prometheus Books, 1996 (1817); where Ricardo is channeling Smith.
The whole discussion that follows, through page 71, is easy to find in any econ text. It’s also explained well in every “econ for dummies” type of book, and every typical comix treatment of economics, but that’s superfluous—the typical textbook is very well expressed. And it damn well should be–textbooks have been expressing the exact same thing for more than a hundred years.
Page 68, panel 1: There’s a good discussion of diminishing returns at http://en.wikipedia.org/wiki/Diminishing_returns.
Page 68, panels 2-4: Paul A. Samuelson and William D. Nordhaus. Economics. 18th edition. McGraw-Hill, 2005. Pages 96-97
Page 68, panel 5: Paul A. Samuelson and William D. Nordhaus. Economics. 18th edition. McGraw-Hill, 2005. Pages 47, 51.
Page 69, panel 4 to page 70, panel 2: Paul A. Samuelson and William D. Nordhaus. Economics. 18th edition. McGraw-Hill, 2005. Pages 54-55.
Page 70, panel 3: Paul A. Samuelson and William D. Nordhaus. Economics. 18th edition. McGraw-Hill, 2005. Page 56.
Page 70, panel 4: It’s worth pointing out that the chart and its variants were kept in the footnotes of Principles of Economics. Marshall, I believe, understood that when we use words to describe things, we stay closer to the reality, and that while math and charts can be a useful adjunct, they can lead us astray if taken too seriously. Certainly, Marshall’s student John Maynard Keynes understood it: “[I]n ordinary discourse, where we are not blindly manipulating but know all the time what we are doing and what the words mean, we can keep ‘at the back of our heads’ the necessary reserves and qualifications and the adjustments which we shall have to make later on, in a way in which we cannot keep complicated partial differentials ‘at the back’ of several pages of algebra which assume that they all vanish.” John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p297-298.
Page 70, panel 5: Alfred Marshall, Principles of Economics, Macmillan, 1947 (1890), p461.
Page 70, panel 6: Marshall (and others) thought that their approach was transitional: Steve Keen, Debunking Economics, Pluto Press, 2001, p19; Marshall, Principles of Economics, p461. “Return to reality” is actually a quote from Walras, not Marshall; see M. DeVroey, “Marshall and Walras: Incompatible Bedfellows.” http://sites.uclouvain.be/econ/DP/IRES/2009008.pdf. But the sentiment is Marshall’s as well (in this case they were in fact compatible).
Page 71: Stay put unless you move them: Albert L. Meyers, Modern Economics: Elements and Problems, Prentice-Hall, 1947 (1937), p4, p121.
Same information: TK
Small buyers and sellers: TK
Economic man: At least, the assumption that people are basically rational and do not act against their own interest in consistent ways. (“People don’t leave $100 bills on the ground,” economists say). But in real life, we act against our own interest in all sorts of consistent ways (smoking, buying more than one lottery ticket, and so on). Economic analysis does little justice to our ability to do stupid things, even when we know they’re stupid as we’re doing them. Nor does it generally look at our social motivations.
Page 72: http://www.americanheritage.com/content/“-public-be-damned”.
Page 74, panel 2. Sally Jenkins and John Stauffer, The State of Jones, Doubleday, 2009, p282.
Also: “We must keep the ex-slave in the position of inferiority. We must pass such laws as make him feel his inferiority.” –Jackson [Mississippi] Daily News, 1865, quoted in The State of Jones, somewhere between pages 239 and 242 (sorry).
Also see, for instance, John Richard Dennett, The South as It Is, p14-15. Dennett traveled through the South just after the Civil War, and predicted, correctly, that the South would accept the postwar Reconstruction order for exactly as long as there were federal troops there to enforce it.
Page 75, panel 3: Owned most of the West: In fact, that’s still true today: http://bigthink.com/strange-maps/291-federal-lands-in-the-us.
Americans were wary of big government: It’s astonishing how small government was: In the early 1870s, it had less than 15,000 employees (exclusive of postal workers). See Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p30.
Page 75, panels 4-5: Stephen Ambrose’s Nothing Like It in the World (Touchstone, 2000) gives the story of the transcontinental railroad and the incredible corruption of those building it. The Union Pacific especially seems to have planned to scam the government and run off with the money, and wound up building a railroad despite itself. Which is why they only managed to get half of the road done even though they were building on mostly flat ground and starting from an existing railhead, while the Central Pacific managed to build just as far, through the Rockies, while transporting most of what they needed around Cape Horn.
Page 75, panel 6: I’m going by the estimate of north of 200 million acres given in Larry Gonick’s The Cartoon History of the United States, HarperPerennial, 1991, p213; Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), says 100 million acres during the Civil War alone (page 238).
Page 76, panels 1-3: E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p113-114; Alfred Marshall, Money, Credit, and Commerce, Macmillan and Company, 1929, p78.
Page 77, panels 1-4: Daniel Yergin, The Prize, Simon and Schuster, 1991, is an excellent history of the oil industry.
Page 77, panel 5: Monopoly and monopsony: http://www.stanford.edu/~sandersn/151/Monopoly_Monopsony.pdf
Page 78, panel 2: This is called “vertical integration.” The very possibility of it helps keep suppliers and others in line; see John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), p29.
Page 78, panel 3: The trick with the rebates is given in John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), p29. A similar, recent monopolistic behavior happened when Microsoft made computer manufacturers pay for every computer they sold with Windows installed (which was fair) and for every computer installed with Windows not installed (which was not).
Page 78, panel 4: Economists refer to this as “price leadership.” http://www.investopedia.com/terms/p/price-leadership.asp
Page 78, panel 6:
Would collapse of its own weight: Adam Smith, Wealth of Nations, Modern Library edition, Random House, 1994, p815-816.
The fact that Smith was describing the world around him: Robert L. Heilbroner, quoted in Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p87
Page 79, panel 2: This was true in “naturally” concentrated fields like heavy industry at first; today we buy even our hamburgers and our coffee from giant enterprises.
Page 79, panel 3: I’ve seen both 1889 and 1890 as the date for New Jersey’s act; maybe it passed in 1889 and went into effect in 1890? Either way, Delaware soon gave corporations an even better deal; it’s still a corporate haven today.
Page 80, panel 1: Not always honestly: Robert L. Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p215.
Page 80, panels 2-3: This process is described from Morgan’s perspective in Ron Chernow, The House of Morgan, Grove, 1991. (Technically, “trusts” were combinations of legally separate smaller companies that acted as a unit, but the name stuck to supercorporations as well.)
Morgan’s control was maintained by keeping his cronies as directors; the same directors would show up on the boards of many different corporations (“interlocking directorates.”)
Page 81, panel 1:
Rockefeller quote: John D. Rockefeller Papers, quoted in Ron Chernow, Titan, Vintage, 1998, pxx. [page xx, not an unknown page
Perkins quote: John A. Garraty, Right-Hand Man: The Life of George W. Perkins, New York, Harper & Brothers, 1957, p219, quoted in Ron Chernow, The House of Morgan, Grove, 1991, p110.
Page 81, panel 4: The steel mills of Pittsburgh ran 24/7: John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), page 366.
Page 82, panel 1:
$7 million in taxes: Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p305.
Vanderbilt died with $100 million: Richard Coniff, The Natural History of the Rich, Norton, 2002, p30. Really it was $110 million, but I rounded down.
Page 82, panel 2: At $100,000 a year, it would take you 10,000 years to accumulate a billion dollars. So if you started in 2012, you’d finish in 12012. Put another way: if you wanted to have it today, you should have started right after the Ice Age.
Page 82, panel 3: At least, in comparison to pre-Civil War America. Back then, people used to say “from shirtsleeves to shirtsleeves takes three generations,” meaning that a man would found a fortune, his son would be an average sort and hold on to the fortune, and his son would grow up rich, have no idea of the value of hard work or of money itself, drink or gamble the fortune away, and end up poor. Which of course didn’t happen all the time, but was at least a reasonable thing to say when “fortunes” were small. And fortunes were small. For instance, here’s John D. Rockefeller talking about his grandfather: “My grandfather was a rich man—that is, for his time he was counted rich. In those days one who had his farm paid for and had a little money beside was counted rich. Four or five or six thousand was counted rich. My grandfather had perhaps three or four times that. He had money to lend.” (Ron Chernow, Titan, Vintage, 1998, p8).
Page 82, panel 4:
The government helped the rich: Joseph R. Daughen and Peter Binzen, The Wreck of the Penn Central, Little, Brown, 1971, p36; John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), p300;
Foreign policy: Ron Chernow, The House of Morgan, Grove, 1991, p131, Joseph R. Daughen and Peter Binzen, The Wreck of the Penn Central, Little, Brown, 1971, p30; Philip Slater, Wealth Addiction, Dutton, 1980, p89; John D. Rockefeller, Random Reminiscences of Men and Events, Tarrytown, NY, Sleepy Hollow Press 1984 (originally printed 1909), p10, quoted in Ron Chernow, Titan, Vintage, 1998, p246.
Tariff: William Ralston Balch, The Complete Compendium of Universal Knowledge, Simulacrum, 1973 (1895), p379-390. The fact that it was high: Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p563.
Land policy: e.g., C. Wright Mills, The Power Elite, Oxford University Press, 1956, p100; Gifford Pinchot, quoted in Arthur Schlesinger, Jr., The Coming of the New Deal, Sentry, 1958, p344.
Immigration policy: I’m not saying that the reasonably free immigration policy at the time was wrong (many of my own ancestors arrived then), but there were strong opposition to it, and this opposition was largely overcome by corporations wanting cheap labor. See, for instance, http://www1.cs.columbia.edu/~unger/articles/immigration.html.
Page 83, panel 1: Mark Twain coined the phrase “gilded age”: Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p299.
Page 83, panel 2: Social Darwinism: See William Graham Sumner, quoted in John Kenneth Galbraith, The Affluent Society, Houghton Mifflin, 1958, p60, for an example. (It’s worth pointing out that socialists looked at the same data—Darwinian evolution—and took a very different lesson. They saw cooperation being the law of nature. See Peter Kropotkin’s Mutual Aid.)
Page 83, panel 2: From the point of view of the farmer, anyway. Cheap food was a blessing to others.
Page 83, panels 2-5: This process was reasonably well understood at the time; hence Mary Ellen Lease’s call to farmers to “raise less corn and more hell.”
Page 84, panel 3: Frederick S. Weaver, Economic Literacy, Rowman & Littlefield, 2002, p41.
Page 85, panel 2: “Wheat sold for $2.06 a bushel in 1866 and ten years later for only a dollar. By the 1880s, wheat was down to 80 cents a bushel. By the 1890s, wheat was getting only 60 cents and farmers in the Dakotas were selling theirs as low as 35 cents a bushel. The price of corn, which was 66 cents a bushel in 1866, was less than 30 cents three decades later and Kansas corn sold as low as 10 cents a bushel.” William Greider, Secrets of the Temple, Simon and Schuster, 1987, p244-245. Monetary contraction played some part in this as well, or at least was perceived to, hence the call for “free silver” (that is, more money) later in the 19th century.
Page 85, panel 3: Farmers of the time were particularly furious at the railroads. One reason: in good harvests, there was many times more food to ship, but the same amount of railroad, so railroads raised their rates. Given that the price of food was also lower in good harvests, farmers could see their entire profit go to shipping costs.
Page 86, panel 2: Big business drove much immigration; see http://www1.cs.columbia.edu/~unger/articles/immigration.html
Page 86, panel 3: John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), page 366.
Page 86, panel 4: This bashing was most furiously directed against Chinese; Chinese immigration was actually banned in 1882. (http://www.ourdocuments.gov/doc.php?flash=true&doc=47)
Page 86, panel 5: Private armies: William Serrin, Homestead, Vintage, 1993, p80-82.
Quote: Robert Weir, Class in America, p707. Available here.
Page 86, panel 6: For instance, the army sided against the workers in the Homestead steel strike of 1892 after the private forces failed; see William Serrin, Homestead, Vintage, 1993, p84-85.
Page 86, panel 7: See the note to page 89, panel 5.
Page 87, panel 1: The case was Santa Clara County v. Southern Pacific Railroad, http://supreme.justia.com/cases/federal/us/118/394/case.html. But it was a clerk’s interpretation of the decision, not the decision itself, that proved important.
Page 87, panel 5: Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p260. Richard Hofstadter, “What Happened to the Antitrust Movement?” In The Paranoid Style in American Politics, Vintage Books, 2008 (1952), p190.
Page 87, panel 6:
Cleveland quote: Steven R. Weisman, The Great Tax Wars, Simon and Schuster, 2002, p112.
Hayes quote: David Korten, When Corporations Rule the World, Kumarian, 2001, p65
Page 88, panel 2:
Protected public lands from businesses: Theodore Roosevelt, The Autobiography of Theodore Roosevelt, Charles Scribner’s Sons, 1924 (1913), page 403.
Roosevelt’s program was the Square Deal and Big Stick: That’s a chapter title in his autobiography; the chapter deals with domestic policy. “Big stick” has come to refer to his foreign policy, not entirely inappropriately, but that wasn’t how he used it.
Page 88, panel 4: “Muckrakers” was actually TR’s phrase, and was meant perjoratively. Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p31
Page 88, panel 5: Jacob Riis, How the Other Half Lives, Penguin Books, 1997 (1901) p209.
Page 89, panel 5: This isn’t a direct quote, but the thought is from Theodore Roosevelt, The Autobiography of Theodore Roosevelt, Charles Scribner’s Sons, 1924 (1913), p472.
Also, compare the Progressive Party platform of 1892: “We believe that the powers of government—in other words, of the people—should be expanded . . . to the end that oppression, injustice, and poverty shall eventually cease in the land.” (Quoted in Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, p17.)
Also, here’s Woodrow Wilson: “I feel confident that if Jefferson were living in our day he would see what we see. . . . Without the watchful interference, the resolute interference of the government, there can be no fair play.” (ibid, p28.)
Page 90, panel 1: Standard split into 34 new companies total, with seventy thousand employees; see Ron Chernow, Titan, Vintage, 1998, p557.
Page 90, panel 2:
Beef: Eric Schlosser, Fast Food Nation, HarperPerennial, 2002, p138. Michael Pollan, in The Omnivore’s Dilemma, Penguin Books, 2006, p69, says 80%.
Defense manufacturing: William Greider, The Soul of Capitalism, Simon and Schuster, 2003, p217.
Cell phones: David Rosen and Bruce Kushnik. The secret $8 billion wireless scam: how AT&T, T-Mobile, and Verizon game the system. Available at: http://www.alternet.org/media/151317/the_secret_$8_billion_wireless_scam%3A_how_at%26t,_t-mobile_and_verizon_game_the_system/. Accessed on July 11, 2011.
Not too different from straight-up monopoly: As long as it’s being administered cooperatively. If the administration breaks down, you can get sudden, explosive competition. (The 19th-century railroads usually cooperated; when they competed you could sometimes cross half the continent for a dollar; see Joseph R. Daughen and Peter Binzen, The Wreck of the Penn Central, Little, Brown, 1971, p38.) John Kenneth Galbraith, A Life in Our Times, Houghton Mifflin, 1981, p173, Galbraith, A Journey Through Economic Time, Houghton Mifflin, 1994, p196.
Page 90, panel 3: Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p309
Page 90, panel 4: Theodore Roosevelt, The Autobiography of Theodore Roosevelt, Charles Scribner’s Sons, 1924 (1913), p578.
Page 91, panel 2: The income tax was allowed by the 16th amendment, which was actually ratified before Wilson took office (see http://www.ourdocuments.gov/doc.php?flash=true&doc=57).
Page 91, panel 3: See http://www.stolaf.edu/people/becker/antitrust/statutes/clayton.html for the (mostly) full text of the Clayton Act.
Page 91, panel 5:
Central bank definition: James D. Gwartney, et al. Economics: Public and Private Choice, 10th edition. p104.
Morgan was the unofficial central bank, with the Fed designed to take that role away from him: Paul Krugman, The Return of Depression Economics and the Crisis of 2008, hardcover edition, p156-157. Frank Albert Fetter’s Modern Economic Problems, which was published not long after, talks of “the contemporary congressional investigation of the so-called “money-trust” and the consequent desire to decrease the importance of “Wall Street” and of New York City banking power.” (p362 of 1524 in the free ebook version here.)
More support for “unofficial central bank”: Ron Chernow, The House of Morgan, Grove, 1991, p122.
Cleveland begs for gold: Chernow, The House of Morgan, p75. In an earlier draft of Economix Cleveland was saying “Morgan with your nose so bright, won’t you give me gold tonight,” but I took out all discussion of Morgan’s famously red nose. Ah, well.
Page 91, panel 6: Ron Chernow, The House of Morgan, Grove, 1991, p158-159. Vincent Carosso, The Morgans: Private International Bankers, 1854-1913. Cambridge, MA, and London: Harvard University Press, 1970, p644, quoted in House of Morgan p159.
Page 92, panel 3: Japan’s industrialization was as Dickensian as England’s had been. See Mikiso Hane, Peasants, Rebels, and Outcastes, Pantheon, 1982, for some vivid stories.
Page 92, panel 4:
The British empire dominated the world: Check out any map of the 1914 world—a quarter of the land surface was owned by Britain.
Jevons quote: Paul Kennedy, Preparing for the Twenty-First Century, Vintage, 1994 (1993), p7.
Page 93, panel 1:
The stats are from A.L. Morton, A People’s History of England, 1938,page 496 of the edition I read, but I no longer remember the edition or publisher. Similar data are presented in Robert K. Massie, Dreadnought, Random House, 1991, page 134-135.
Germans didn’t see why Britain should be on top: Massie, Dreadnought, page xxii.
Page 93, panel 2: This arms race was most publicly driven by the competition to build more and better battleships; see Massie, Dreadnought, p709.
Page 93, panel 3: The idea that war was a very bad idea economically was the theme of The Great Illusion by Norman Angell (published in the early 1900s, I’ve seen different dates), although he did not argue that war was impossible. Others took his argument to mean that.
Page 94. Keynes is quoted in Paul Krugman, The Return of Depression Economics, Norton, 1999, p168.
Page 96, panel 1: For instance, not too long before, a musketeer could shoot maybe two inaccurate shots a minute. By World War 1 a decent rifleman could get off fifteen aimed shots in a minute. (http://en.wikipedia.org/wiki/Mad_minute.)
Page 96, panel 2: The comparison of the headquarters in the rear to country estates, and the trenches to slums, was stolen from Paul Fussell, The Great War and Modern Memory, Oxford University Press, 1975, p83.
Page 97, panels 1-3. See Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 181.
Page 97, panel 4: Fussell, The Great War and Modern Memory, p17, 174.
Page 97, panel 5: Yes, they really used airships. Look up the “zeppelin raids.”
Page 98, panel 1: Alfred Marshall, Money, Credit and Commerce, Macmillan and Company, 1929, p58. Allied purchases through Morgan alone were $3.2 billion (see Kevin Phillips, American Dynasty, Viking, 2004, p22).
Page 98, panel 2: The BBC documentary The First World War, episode 7, 40:00 in.
Page 98, panel 4: Technically, Britain, Italy, and Germany were all constitutional monarchies, but Germany’s system had fewer democratic elements.
Wilson quote: http://www.nytimes.com/learning/general/onthisday/big/0402.html.
Page 99, panel 2: Friedrich Hayek, Hayek on Hayek, p11; John Maynard Keynes, The Economic Consequences of the Peace, Transaction, 2003(1920), p165-178.
Page 99, panel 3: 1988: This was the Young plan. See http://weimar_republik.enacademic.com/889/Young_Plan.
Page 99, panel 4: Not that Britain and France wanted to forgive at first.
Page 99, panel 6: In November 1923, it took four billion marks to buy a dollar, and that wasn’t even the end; eventually prices were doubling every hour. Ron Chernow, The House of Morgan, Grove, 1991, p243.
Page 99, panel 8: The new currency was called the Rentenmark. Source: The Encyclopedia of Modern German History. ed. D. Buse (New York: Garland; 1998)
Page 100, panel 1:
The incredible power of the war economy: In WWI, many civilians were better off during the war than in peacetime, despite the waste and slaughter on the front lines. That is, when things were rationed, many people got more rather than less. See Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 181. There were exceptions, generally related to blockades.
What if that effort went into something good: I haven’t actually tracked down anyone saying this after WWI, but here’s a similar emotion in WWII:
The strength we have spread around the world is appalling even to those who make up the individual cells of that strength. I am sure that in the past two years I have heard soldiers say a thousand times, “If only we could have created all this energy for something good.” —Ernie Pyle, Brave Men, Kingsport Press, 1944, p465.
And although it’s a secondary source, here’s Robert Skidelsky in John Maynard Keynes (page 501 of the single-volume edition): “The [First World] war . . . had shown what governments could achieve by mobilising the resources of their communities. If they could do this for war purposes, why not for peace purposes?”
Page 100, panel 3: Mussolini quote: Speech to Chamber of Deputies (9 December 1928), quoted in Propaganda and Dictatorship (2007) by Marx Fritz Morstein, (1936) p. 48. The book is available here: http://ia600301.us.archive.org/14/items/propagandaanddic031473mbp/propagandaanddic031473mbp.pdf
Page 100, panel 4: Fascism was actually officially hostile to big business, but in practice that was mostly just rhetoric.
Page 101, panel 2:
Engels says state will wither away: Anti-Duhring, quoted in Lenin, State and Revolution, International Publishers, 1943 (1917), p16.
Suppressed dissent and took what they could grab: Emma Goldman, My Further Disillusionment in Russia. Doubleday, Page, and Co., 1924, p8-9, 128.
Government control of everything, and the fact that this was to some degree dictated by necessity: Alexander Gerschenkron, “Industrial Enterprise in Russia.” In: Edward S. Mason, ed, The Corporation in Modern Society. Harvard University Press, 1959, page 286.
Hungry, angry country: William J. Langer, ed. An Encyclopedia of World History, Riverside Press, 1952, p1030.
Page 101, panel 3: See Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 184; also Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, page xxii.
Page 102, panel 1: New Economic Policy was a success: Shown rather backhandedly in Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, page xxii. Also see Jasper Becker, Hungry Ghosts: China’s Secret Famine. John Murray, 1996, which says that agricultural production returned to the pre-1914 level.
Page 103, panel 1:
Harding quote: Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, p51
Postwar red scare: ibid, p43.
Page 103, panel 3:
Coolidge barely said anything: William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p3.
Coolidge barely did anything: Manchester, The Glory and the Dream, p3. There’s also an entire book called Calvin Coolidge: A Study of Presidential Inaction. (Guy Fair Goodfellow, University of Maryland Press, 1969.)
Three presidents served under Mellon: That’s a quote from Senator George Norris, quoted in S.N. Behrman, “The Days of Duveen: VI: The Silent Men,” The New Yorker, November 3, 1951. Available at http://snbehrman.com/library/newyorker/51.11.3.NY.htm. The three presidents are Harding, Coolidge, and Hoover.
Page 103, panel 4:
Tax cuts and rebates: Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p219, 220. The top tax rate went from 77% to 25%.
Tax cuts: Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p384. It’s worth emphasizing that the Great Depression was preceded by major tax cuts for the rich.
Page 104, panel 3: $850: Keith Sward, The Legend of Henry Ford, Rinehart & Company, 1948, p25.
Page 104, panel 4: Half the workers quit per month: Keith Sward, The Legend of Henry Ford, Rinehart & Company, 1948, p51.
Page 104, panel 5: Keith Sward, The Legend of Henry Ford, Rinehart & Company, 1948, p54. (The Journal also called the five-dollar day a misapplication of “Biblical principles where they do not belong.” Sward, same page.)
Page 104, panel 6:
Twelve-hour days in the steel industry: John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967), p366; http://www.pbs.org/wgbh/amex/carnegie/sfeature/mf_steelworker.html
One dollar per day: The average wage in 1890 was ten dollars a week, or a little less than $1.50 a day. See http://www.pbs.org/wgbh/amex/carnegie/sfeature/mf_steelworker.html. But it’s not fair to compare average wages with Ford’s five dollars, because the $5 was for everyone (if you lived right, in any case—Ford had discretion there). So low-end wages, which were raised to a dollar per day in the 1870s (see Arthur Brenner, Benjamin Day, Immanuel Ness, The Encyclopedia of Strikes in American History, p352 (here) and presumably were still around there if the average was $1.50, is a fairer comparison.
Page 105, panel 1: The process: Keith Sward, The Legend of Henry Ford, Rinehart & Company, 1948, p56. Under $300: Sward, p195.
Page 105, panel 2: Ford quote: Henry Ford, My Life and Work, available here: http://www.gutenberg.org/dirs/etext05/hnfrd10.txt.
Page 105, panel 4:
Thugs: John A. Byrne, The Whiz Kids, Doubleday, 1993, p99.
Conspiracy theories: Keith Sward, The Legend of Henry Ford, Rinehart & Company, 1948, p159.
Page 105, panel 5: Half of households owned cars: Mark C. Schug, Jean Caldwell, Tawni Hunt Ferrarini’s Focus: Understanding Economics in United States History, says 60%. (Available here)
Page 106, panel 2: Edward Bernays, Propaganda. IG Publishing, 2005 (1928), p13, 54. Also: “The war taught us the power of propaganda. Now when we have anything to sell to the American people, we know how to sell it.” Roger Babson, 1921, quoted in Douglas Rushkoff, Life Inc., Random House, 2009, p104.
Renamed “public relations”: For a while both terms were used; for instance, Edward Bernays, the father of PR, called his 1928 book Propaganda. But his 1945 book was called Public Relations.
Page 106, panel 4: Quote: Allen Bloom, The Closing of the American Mind, p364-365. It’s not certain whether this chain of debt forgiveness would have actually happened had Coolidge supported it, but a similar offer (the Balfour Note of 1922) had been on the table from Britain for years. See Robert Skidelsky, John Maynard Keynes, Penguin Books, 2003, one-volume edition, p309.
Page 106, panel 5: The farm sector in the US went from $9.7 billion to $10.7 billion between 1919 and 1929, a time when GDP went from $74 to $104 billion. See Table 1.6 in Christian Saint-Etienne, The Great Depression. Available here: http://ia600301.us.archive.org/14/items/propagandaanddic031473mbp/propagandaanddic031473mbp.pdf
Page 106, panel 6: Paul V. Murphy. The New Era: American Thought and Culture in the 1920s. Rowan and Littlefield, 2011, p16.
Page 107, panel 2:
Alfred Marshall said that “Stock exchanges are . . . barometers which indicate the general conditions of the atmosphere of business.” Alfred Marshall, Money, Credit, and Commerce, Macmillan and Company, 1929, p89. They weren’t good barometers, but there was no other except bond prices, which basically measured the same thing (investor sentiment).
Page 107, panel 4: The tulip bubble is unforgettably described in Charles Mackay’s Popular Delusions and the Madness of Crowds. The Beanie Baby bubble has not yet had its Mackay to describe it.
Page 109, panel 1: These numbers originally came from finance.yahoo.com, which no longer allows one to access the numbers in the same way.
Page 109, panel 2: Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, 162-163.
Page 109, panel 3-4: I’m isolating one aspect of an interrelated whole here.
Page 110-111: The Dow Jones numbers came from the finance page of yahoo.com (finance.yahoo.com), which used to give you the entire history of the Dow, but it no longer allows you to get the numbers in the same way.
Page 110, panel 3: This Hoover quote is disputed—some sources present it as fact, while others say he never said it—but it’s a fair summary of his attempts to keep business morale high. Which was, in itself, a good idea.
Page 111, top right: Morgan quote: Christopher Cerf and Victor Navasky, The Experts Speak, Villard, 1998, p80.
Ford quote: Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p387.
Mellon quote: Lucy Moore, Anything Goes. 2010. The quote is here.
Page 111, panel 3: The tariff in question, the Smoot-Hawley tariff, was actually passed in 1930. But it fit well in a small box.
Page 112, panel 1:
Coolidge quote: Zinn, A People’s History of the United States, p387.
Unemployment hit 25%: http://www.econreview.com/events/ur1932b.htm.
Page 112, panel 2:
Charity was exhausted: William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p45.
Suicides: See, e.g., Peter Gruelich, The World’s Greatest Salesman, MBI Concepts, 2011, p8. “Altruistic suicide” is sometimes used more narrowly, for people who sacrifice themselves in a great cause, but I’ve seen it used for people who didn’t want to be a burden in the Depression as well.
Page 112, panel 3: Manchester, The Glory and the Dream, p42.
Page 112, panels 4-5: Cut output rather than wages: In steel, see here. Of course, wages were cut as well; see Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, p249.
Page 112, panel 7: This refers to the Reconstruction Finance Corporation.
Page 113, panel 1:
Morgan and Mellon: William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p52.
Page 113, panel 2:
Dayton’s plans: Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, p4
Farmers and workers took over towns: ibid, p220.
Page 113, panel 3:
Hoover quote: John A. Byrne, The Whiz Kids, Doubleday, 1993, p47.
Reed quote: http://www.nybooks.com/articles/archives/2009/feb/12/a-revolutionary-president/?pagination=false.
Page 113, panel 4: Manchester, The Glory and the Dream, p94.
Page 113, panel 5: See, for example, http://www.econreview.com/events/banks1929b.htm.
Page 114, panels 1-2: FDR’s inauguration speech is available here: http://www.bartleby.com/124/pres49.html/
Page 114, panel 3:
Kenneth T. Walsh, “FDR pioneered the 100-day concept.“ U.S. News and World Report. Feb 12, 2009.
Shut down all the banks: Thomas H. Eliot, Recollections of the New Deal, Northeastern University Press, 1992, p33.
Backed by bank assets: Conrad Black, FDR: Champion of Freedom, Perseus, 2003, p277. I don’t know what it means either.
Page 115, panel 1:
Arthur Schlesinger, Jr., The Politics of Upheaval, Riverside Press, 1960, p231, 232, 399. I’m ignoring two entire phases of the New Deal—one where Roosevelt mostly tried fixing the money supply, and one in which he tried controlling every damn thing through “voluntary” codes; the program I describe didn’t really come into being till the mid-1930s.
Page 115, panel 2: There is a school of thought that says that there would be more jobs available if wages were lower, so if you’re unemployed, it’s because you’re choosing leisure over work at low wages. This point of view is wrong, especially in slumps—if workers take pay cuts, they spend less, and there are fewer jobs, not more.
Page 115, panel 7-8: Michael Pollan, The Omnivore’s Dilemma, Penguin Books, 2006, p47.
Page 116, panel 2: This happened in the South Sea Bubble of the early 1700s, when shipowners kept their ships tied up at the docks because they preferred to play the markets with their money. Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p364.
Page 116, panel 4 to page 117, panel 3: Eric J. Weiner, What Goes Up, Little, Brown, 2005, p7.
Page 117, panel 5: Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p34.
Page 117, panel 6: Here’s a take on the 3-6-3 rule that sees placid banking as a bad thing (but confirms its existence back then): http://www.investopedia.com/terms/1/3_6_3_rule.asp#axzz2423AXEWI
Page 118, panel 1: The acronyms I haven’t mentioned already are: NYA: National Youth Association. NRA: National Relief Association. TVA: Tennessee Valley Authority. CWA: Civil Works Administration. REA: Rural Electrification Administration. CWP: Civil Works Projects (of the Army Corps of Engineers). OMG, WTF: I slay me!
Page 118, panel 3: They went more bonkers: One Lewis Douglas called it “the end of Western Civilization.” Arthur Schlesinger, Jr., The Coming of the New Deal, Sentry, 1958, p201.
Page 118, panel 4:
FDR tried things that made no theoretical sense: Arthur Schlesinger, Jr., The Coming of the New Deal, Sentry, 1958, p193.
Page 118, panel 5: For instance, when Mexico nationalized its oil, FDR didn’t send the army to remove the Mexican government or force Mexico to pay outlandish compensation to the oil companies.
Page 119 all: The union history: Page 186-189.
Overtime pay: The Fair Labor Standards Act of 1938, available here: http://www.dol.gov/whd/regs/statutes/0002.fair.pdf.
Page 120, panel 1:
The economy was humming: John Kenneth Galbraith, A Life in Our Times, Houghton Mifflin, 1981, p93.
The quotes are from FDR’s second inaugural address, available here: http://www.bartleby.com/124/pres50.html.
Page 120, panel 2: Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p155.
Page 120, panel 3: Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p395.
Page 120, panel 4:
Unemployment was officially 17%: John Kenneth Galbraith, A Journey Through Economic Time, Houghton Mifflin, 1994, p116.
WPA and CCC workers counted as unemployed: Thomas H. Eliot, Recollections of the New Deal, Northeastern University Press, 1992, p92.
Page 121, panel 2: John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p371.
Page 121, panels 3-4: John Maynard Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p177, 178.
Page 121, panel 5: Keynes, The General Theory, p178.
Page 122, panel 1:
Barely in English: That’s not just my opinion; see, for instance, E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p235.
Page 122, panels 4-5: Keynes, The General Theory, p84; laid out perhaps more clearly in Robert L. Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p171-172.
Page 122, panel 6: Heilbroner, The Worldly Philosophers, p267-268. Keynes also pointed out that there’s no point in, say, building a factory during a slump because existing factories are likely to be selling cheaper. See The General Theory, p156-164. Here’s the same point made more arcanely by Robert Skidelsky in John Maynard Keynes (p533 of the one-volume edition): “an increased propensity to save was liable to have a malign effect on the inducement to invest by reducing entrepreneurs’ expectations of future consumption on which the expected profitability of investment depends.”
Page 123, panel 1: Keynes, The General Theory, p297.
Page 123, panel 2: Heilbroner, The Worldly Philosophers, p271-273. Keynes, The General Theory, p248-249.
Page 123, panel 3: Heilbroner, The Worldly Philosophers, p289.
Page 123, panel 4: The key here is businesses holding on to their cash—if people save their money and businesses invest it, that’s well and good. But if the savings aren’t invested, the result is a contraction, less investment, and so on. Heilbroner, The Worldly Philosophers, p271-273. Keynes, The General Theory, p248-249.
Page 123, panel 5: Heilbroner, The Worldly Philosophers, p271.
The quote is not actually from the General Theory (it’s from A Tract on Monetary Reform, an earlier book in which Keynes hadn’t yet unlearned his orthodoxy.) Still, it was too good not to use.
Page 124, panels 1-3. Keynes, The General Theory, page 129-131.
Page 124, panel 5:
Wasteful spending would be better than nothing: Keynes, The General Theory, p129, 131.
FDR wasn’t spending enough: Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p125. Heilbroner, The Worldly Philosophers, p275. Robert Skidelsky, John Maynard Keynes, 1-volume edition, p509.
Full employment deficit: Heilbroner The Worldly Philosophers, p 277.
Page 125: The story of the early communists is told by an eyewitness in Edgar Snow, Red Star Over China. I also remember a teacher telling us about a book from the 1930s that said something like, “And now Mao has taken the revolution into the hills, where it will die.” The point being that (in that author’s view) a communist revolution without workers was impossible.
Page 126, panel 1:
Badly needed industrial goods: An example of how bad things were in the 1920s: “The plan was presented to a Congress of the Party in Moscow in 1920 by the old Bolshevik engineer, Krzhinzhanovsky. He illustrated the plan with a vast map of Russia in which electric light bulbs showed the electrification of the future. Such was the state of Moscow’s electricity supply at the time that it was necessary to cut off almost all the city in order to ensure that these lights on the map would not cause overstrain at the power station.” Alec Nove, An Economic History of the USSR, Pelican, 1972-1969, p71
Page 126, panel 3:
Stalin’s plans undid Lenin’s NEP: Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 184.
Page 126, panel 4: This was called “the liquidation of the kulaks,” “kulak” being a term for a greedy, profiteering peasant. Of course, the “kulaks” were, by and large, the farmers who had done best under Lenin, so no matter how greedy they were, they were probably also largely the smartest and hardest-working farmers.
Page 126, panel 6. See Miron Dolot, Execution by Hunger, Norton, 1985.
Page 126, panel 7: For an engineer’s view of Stalin’s industrial plans and their problems before Stalin went full-on murderhappy, see Zara Witkin, An American Engineer in Stalin’s Russia, University of California Press, 1991.
Page 126, panels 8-9: See, eg, Sheila Fitzpatrick, Education and Social Mobility in the Soviet Union, p113, here: .
Page 127, panels 1-2: For a fictional description of life in one of these camps, see Aleksandr Solzhenitysn, A Day in the Life of Ivan Denisovitch. It’s more horrifying because it describes a good day. Solzhenitsyn’s nonfiction The Gulag Archipelago gives the whole story.
Page 127, panel 3:
Strachey quote: Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, p210.
Strong quote: Christopher Cerf and Victor Navasky, The Experts Speak, Villard, 1998, p300.
Page 127, panel 4: Bartlett’s Familiar Quotations, 15th edition, page 766.
Page 128, panel 1: Adolf Hitler, Mein Kampf, James Murphy translation, available here: http://gutenberg.net.au/ebooks02/0200601.txt
Page 128, panel 2:
40% unemployment: John Kenneth Galbraith, A Journey Through Economic Time, Houghton Mifflin, 1994, p81.
The art is a tiny bit inaccurate here (only place it is): the Nazis were not only well-to-do; they included many frustrated clerks and some of the same lower-class crowd as the communists.
Page 128, panel 3: The Nazi contribution to the German highway (autobahn) system is actually somewhat overblown; see http://www.dw.de/dw/article/0,,16144981,00.html. But they still built nearly 4,000 km of highways.
Similarly, the Volkswagen wasn’t actually built till after the war, but it was part of the Nazis’ program; see http://www.dailymail.co.uk/home/moslive/article-2027415/Mini-Volkswagen-Beetle-10-best-car-designs.html.
Page 129, panel 1:
To get Russia’s oil: Albert Speer, quoted in Daniel Yergin, The Prize, Simon and Schuster, 1991, p334. I guess it’s really Azerbaijan’s oil.
Page 129, panel 2: Yergin, The Prize, 316-325.
Page 129, panel 4 Quote: http://www.britannica.com/presidents/article-23951. Doris Kearns Goodwin (no relation), in No Ordinary Time, argues that it was Eleanor Roosevelt who preserved the parts of the New Deal that survived.
Page 130: “Selling to an Age of Plenty.” Business Week, May 5, 1956, page 121 ff.
Page 132, panel 1:
Churchill quote: William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p531. Europe was such a mess that in the midsummer of 1946, Austrians got an average of 1300 calories per day (which means that many got less). Sumner Welles, Where Are We Headed? Harper and Brothers, 1946, p169.
Page 133, panel 4: Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p376.
Page 133, panel 6; Samuelson, Economics, p376.
Page 133, panel 7: $50 billion in lend-lease: $43 billion, according to William J. Langer, ed. An Encyclopedia of World History, Riverside Press, 1952, p1170.
Page 134, panel 1: Of course, the UN has some power. My point is that it’s designed to be very limited. Also, fun fact: circa 1999, the CIA had twice the employees that the UN had. (Charis Conn and Lewis Lapham, eds.,The Harper’s Index Book Volume 3, Franklin Square Press, 2000, p70). And the National Security Agency dwarfs the CIA.
Page 134, panel 3:
Low tariffs and lots of trade: “Trade grew explosively as tariffs fell by 73 per cent between 1947 and 1961.” –Will Hutton, The World We’re In, Abacus, 2003 (2002), p234.
Page 134, panels 4-6: M.J. Stephey, “A Brief History of the Bretton Woods System.” Time, October 21, 2008. Available here: http://www.time.com/time/business/article/0,8599,1852254,00.html.
Page 135, panel 2: Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p380.
Page 135, panel 3:
Welfare states: At least, as close as the world has come to genuine welfare states. Will Hutton, The World We’re In, Abacus, 2003 (2002), p316.
Social market: Hutton, The World We’re In, p304.
Labor unions represented on corporate boards: John Kenneth Galbraith and Nicole Salinger, Almost Everybody’s Guide to Economics, Penguin, 1978, p73; Robert L. Heilbroner and Lester Thurow, Economics Explained, Touchstone, 1998 (1982), p58.
Muddle and high inflation worked surprisingly well: John Kenneth Galbraith, A Life in Our Times, Houghton Mifflin, 1981, p527.
State supervision of big business: William Greider, One World, Ready or Not, Touchstone, 1997, p362; Hutton, The World We’re In, Abacus, 2003 (2002), p304.
Page 135, Panel 4: Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p4. Also: “No country appears to desire to return to the altars of the market gods; their image failed in crisis.” Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 209.
Page 136, panel 1: To some degree Stalin rejected this generosity, but on the other hand, it was presented in a way that he was expected to reject. (And, at the end of the war, ships full of Lend-Lease supplies to Russia were turned around, because screw you, Stalin. See Richard Rhodes, Dark Sun, Touchstone, 1996 (1995), p163).
Page 136, panel 2: Sabotaged communist movements: “Indeed, the World Bank’s first loan—two hundred and fifty million dollars to France, in 1947—was withheld until the French government purged its Cabinet of Communists.” William Finnegan, “After Seattle.” In: David Remnick, ed, The New Gilded Age, Modern Library, 2001, p302.
Page 137, panel 1:
People worried that the Depression would come back: e.g., Henry Walllace, quoted in Time, December 10, 1945, referenced in Christopher Cerf and Victor Navasky, The Experts Speak, Villard, 1998, p60; For that matter, the first study question in Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), simply assumed that another depression was not far away.
Page 137, panel 3: Government said they had to be well paid: At least, government intervention increased the wages of the lower-paid workers; it tried to keep very high wages down, with limited success. See here: http://www.bls.gov/opub/cwc/cm20030124ar04p1.htm.
Page 137, panel 4-5: prices kept down: The economist John Kenneth Galbraith was in charge of prices for a while; he details his experiences in A Life in Our Times, Houghton Mifflin, 1981.
Page 137, panel 6:
The amount was $70 billion by 1943 (William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p356.). Samuelson gives the amount as $250 billion by the end of the war.
Entire federal budget: Historical Tables, budget of the United States Government, 2009. See the entry for 1939, page 24, where federal outlays were 10.3 percent of GDP, which was $89.1 billion.
Page 138-139:
Unions helped nonunionized workers, too: Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p35; Paul Krugman, The Conscience of a Liberal, Norton, 2007, pp51, 138.
Minimum wage: In the Fair Labor Standards Act of 1938, here: http://www.dol.gov/whd/regs/statutes/0002.fair.pdf
No man in the house: Walter I. Trattner, From Poor Law to Welfare State, Free Press, 1999 (1974), p310. It didn’t matter who the man was or what his relationship was to the family. This requirement lasted (I think) until 1961.
Baby boom: See http://www.prb.org/Publications/Datasheets/2012/world-population-data-sheet/fact-sheet-us-population.aspx for a chart showing the fertility drop in the Depression and the rise afterward.
Korean War: Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p437.
The tax table comes from Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p173.
Page 140, panel 1:
To see how liberal our “conservatives” used to be, check out the GOP platform for 1956, here: http://www.presidency.ucsb.edu/ws/index.php?pid=25838
Page 140, panel 2:
Joseph R. Daughen and Peter Binzen, The Wreck of the Penn Central, Little, Brown, 1971, p209
Page 141, Panel 1.
Many of these measures were the brainchild of Wesley Clair Mitchell. See Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 180.
Page 141, panel 2:
This is explained well in Frederick S. Weaver, Economic Literacy, Rowman & Littlefield, 2002, p109.
Page 141, panels 3-4:
Weaver, Economic Literacy, p107-116.
Page 142, panels 1-4:
Weaver, Economic Literacy, p107-116.
Page 142, panel 5:
Paul Hawken, Amory Lovins, L. Hunter Lovins, Natural Capitalism, p59.
Page 142, panel 7:
“Everything happens as if Saint Peter, when receiving souls in heaven to send the ones to Paradise and the others to Hell, asked them only the question: ‘What have you done to increase the gross national product?’” –John Kenneth Galbraith, quoted in Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p39-40.
Page 143, panels 1-3:
See page 164, panel 2. Economists talk about the “non-accelerating inflation rate of unemployment” (NAIRU), which is the rate of unemployment that doesn’t spark inflation. But nobody knows what it is except in hindsight; if inflation doesn’t accelerate, unemployment was above the NAIRU. If it does, it was below.
Page 144, panel 2:
Paul Samuelson, Economics, McGraw-Hill, 1948 (reprint of the first edition), p222.
Page 144, panel 3-4:
Samuelson’s achievement is described in Paul Krugman’s lecture, “Mr. Keynes and the Moderns,” June 18, 2011, http://www.princeton.edu/~pkrugman/keynes_and_the_moderns.pdf. p22-23.
Unlike Keynes: It’s not generally remembered (except by Post-Keynesians) how much Keynes rejected Neoclassical thought as a whole, not just the specific parts of it that said not to do anything in a depression. See Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p3, 16, 33.
Page 144, panel 5:
It’s now Samuelson and Nordhaus.
Page 144, panel 6:
Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p243.
Page 145, panel 1:
http://seekingalpha.com/article/123758-could-the-dow-fall-to-1600
Page 145, panel 2:
Rockefeller quote: Philip Slater, Wealth Addiction, Dutton, 1980, p144.
The very rich didn’t get richer: Between 1941 and 1950, the lowest fifth of all families saw their incomes increase by 41%; the highest fifth only by 8%; and the top 5% saw their incomes decrease by 2%. Selma Goldsmith, George Jaszi, Hyman Kaitz, and Maurice Lindenberg, “Size Distribution of Incomes Since the Mid-thirties.” Review of Economics and Statistics, vol 36 (Feb 1954). Quoted in John Kenneth Galbraith, The Affluent Society, Houghton Mifflin, 1958, p86. Also see Paul Krugman, The Conscience of a Liberal, Norton, 2007, p41.
Page 145, panel 3:
Herbert Hoover, Memoirs, Volume 3, Macmillan, 1952, p195.
Page 145, panel 4:
Noted in John Kenneth Galbraith, The Affluent Society, Houghton Mifflin, 1958, p88.
Page 145, panels 5-6:See John Kenneth Galbraith, The New Industrial State, 2nd ed. Houghton Mifflin, 1971 (1967).
Page 146, panel 1:
William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p1011.
Page 147, panel 4:
Lizabeth Cohen, A Consumers’ Republic, Alfred A. Knopf, 2003, p212.
Page 147, panel 5:
“In 1953, when Levittown, Long Island’s population reached 70,000, it was the largest community in America with no black population.” Lizabeth Cohen, A Consumers’ Republic, Alfred A. Knopf, 2003, p217. I wish I had more room for the effects, intended and not, of federal housing policies on racial politics.
Page 148, panel 1:
Jane Jacobs, The Death and Life of Great American Cities, Vintage, 1992 (1961), p282.
Page 148, panel 2:
Robert A. Caro, The Power Broker, Vintage, 1975 (1974), p795.
Page 148, panels 3-5:
Jane Jacobs, The Death and Life of Great American Cities, Vintage, 1992 (1961), p351; David Korten, When Corporations Rule the World, Kumarian, 2001, p256.
Page 148, panel 6:
Eric Schlosser, Fast Food Nation, HarperPerennial, 2002, p16-17.
Page 149, panel 1:
Schlosser, Fast Food Nation, p16-17.
Page 149, panel 2:
One might argue that the government was always and necessarily bureaucratic, but certainly it got a lot more bureaucratic in the postwar years. The State Department, for instance, went from 3,000 employees in 1945 to maybe 15,000 in 1952 (Adolf A. Berle, Power. Harcourt, Brace, and World, 1967. Page 319), and the New Deal institutions were far less bureaucratic in the 1930s simply because they were new (see Thomas H. Eliot, Recollections of the New Deal, Northeastern University Press, 1992, for vivid descriptions of how improvised all of the New Deal agencies were in the beginning.)
Page 149, panel 3:
A modern example: The New York Yankees got a subsidy from Mayor Guiliani’s admistration, which was then spent partly on lobbyists to get another subsidy. David Cay Johnston, Free Lunch, Portfolio, 2007, page 72.
Page 150, panel 2:
Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p437.
Page 150, panel 3:
One group of people: That’s the premise of C. Wright Mills’s The Power Elite, Oxford University Press, 1956.
John J. McCloy: The Power Elite, p290; http://en.wikipedia.org/wiki/John_J._McCloy
Douglas MacArthur: The Power Elite, p214
Page 150, panel 5:
The fact that Charles Wilson talked up the “permanent war economy” is given in Howard Zinn, A People’s History of the United States, HarperPerennial, 2003 (1980), p425.
Page 151, title: See above.
Page 151, panel 1:
Richard Rhodes, Dark Sun, Touchstone, 1996 (1995), p298. I’m going by the estimate of 20 kilotons for the Hiroshima bomb.
Page 151, panel 2:
“U.S. Nuclear Reductions,” in The Bulletin of the Atomic Scientists, September/October 2004, says on page 70 that the U.S. had 20,000 megatons in 1960, which is a million times a 20-kiloton Hiroshima bomb. Yes, I was off by a factor of ten and the number was still excessive.
Page 151, panel 4:
Cost-plus contracts in WWII: Robert Braucher and Covington Hardee, “Cost-plus Contracts in the United States.” http://www.jstor.org/discover/10.2307/1225962?uid=3739832&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=21101141735561. The fact that they are still doing them: https://acc.dau.mil/CommunityBrowser.aspx?id=32526
Page 151, panel 5:
Three times more for missiles than TVs: Charles E. Nathanson, “The militarization of America’s Economy.” In David Horowitz, ed., Corporations and the Cold War, Monthly Review Press, 1969, p209.
Spray can: Cans that sprayed were invented way back, but today’s commercial spray can is the descendent of the 1943 military “bug bomb.” See http://ars.usda.gov/is/ar/archive/sep05/vector0905.htm?pf=1
Page 151, panel 6:
Some of the ways it almost happened are listed here: http://www.cracked.com/article_19790_6-tiny-mistakes-that-almost-ended-world.html
Page 152, panel 1:
A few subscribers were once enough to pay a paper’s costs: Alexis de Tocqueville, Democracy in America, University of Chicago Press, 2000, p176.
The process by which cheaper papers necessarily meant fewer papers: Daniel Boorstin, The Image, Vintage, 1992 (1961), pages 7-13.
Page 152, panel 2:
For instance: “And [Walter] Cronkite, who was disturbed by what he had found in Kansas City, told Koerper at lunch that Kansas City seemed to have died, there was no spirit and excitement any more. What had happened? Then he answered his own question, it was the death of the Kansas City Journal. You get monopoly journalism, he said, and something goes out of a city, a sense of excitement and competition.” David Halberstam, The Powers That Be, Knopf, 1979, p240.
Page 153, panel 1:
Roosevelt quote: Eleanor Roosevelt, My Day, MJF books, 2001 (originally from a 1958 column), p265.
Page 153, panel 2:
“And that’s the way it is” was the signoff phrase of Walter Cronkite, the country’s top TV news anchor for decades.
Page 153, panel 3:
“The product of commercial television is not programs. If one thinks of making goods to sell, the viewers are not the customers, those who buy the product. Advertisers buy the product, pay money for it. Programs are not what they buy. What they buy, what they pay for, is audience.” Reuven Frank, former president of NBC News, quoted in Bartholomew H. Sparrow, Uncertain Guardians: The News Media as a Political Institution, Johns Hopkins University Press 1999, which is itself quoted in Will Hutton, The World We’re In, Abacus, 2003 (2002), p218.
Also, here’s the CEO of Clear Channel, quoted in Fortune: “If anyone said we were in the radio business, it wouldn’t be someone from our company. We’re not in the business of providing news and information. We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products.” Available here: http://money.cnn.com/magazines/fortune/fortune_archive/2003/03/03/338343/index.htm
Page 154, panel 1:
Power of censorship: Edward S. Herman and Noam Chomsky, Manufacturing Consent, unknown edition (I lost the book), p14.
Shirer: At least, that was Shirer’s side of it. See David Halberstam, The Powers That Be, Knopf, 1979, p133-134.
Page 154, panel 2:
See C. Wright Mills, The Power Elite, Oxford University Press, 1956, page 303-304. I think this may be why we get a self-conscious “counterculture” in the 1950s and 1960s—before that, there was no one single, unitary culture to counter. Afterward, there was.
Page 154, panels 3-5:
Here’s Victor Reuther, speaking in the 1990s: “Back then [in the 1930s], we had a feeling of progress because we were participants bringing about change. Now we are bystanders and onlookers, observing only through the media, being lectured on television.” Studs Terkel, Coming of Age, St. Martin’s Griffin, 1996 (1995), p94.
Political apathy: In 1957, the biggest election (in terms of votes cast) in the country was for Miss Rheingold. Daniel Boorstin, The Image, Vintage, 1992 (1961), page 221-222. It was an off-year, but still.
Page 155, panel 1:
Eisenhower’s presidential farewell speech, section IV, paragraph 4.
Page 155, panel 2:
Eisenhower’s presidential farewell speech, section IV, paragraph 5.
Page 155, panel 4:
Barbara Ehrenreich, Nickel and Dimed, Metropolitan Books, 2001, but I lost the page reference; it’s somewhere between pages 215 and 221.
Page 156, panel 1:
Sesame Street was part of the Children’s Television Workshop, which was folded into Head Start. See Susan Gregory Thomas, Buy Buy Baby, hardcover edition, p55.
War on Poverty was pretty successful: Thomas Byrne Edsall, Power and Money, Norton, 1988, p 291; Walter I. Trattner, From Poor Law to Welfare State, Free Press, 1999 (1974), p342. Especially, it’s forgotten how common poverty used to be among old people.
Page 156, panel 2:
The tax cut slashed the top tax rate from 91% to 70%. The boom years that followed are often cited as an example that tax cuts work. But: 1) The same people insist that 70% is still way high, and 2) we got a few good years and then inflation; in fact, real GDP increased more slowly in the 70% years, overall, than in the 91% years.
Page 156, panel 4:
I’ve seen it said that Keynes was Man of the Year for 1965, but he wasn’t (although he was on the cover for the last issue of the year). The quote is in Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p342.
Page 157, panel 4:
These are real examples. The nails are mentioned in Nicholas Dawidoff, The Fly Swatter, Pantheon, 2002, p160 (“it was difficult to find small nails in the Soviet Union,”) while the trucks driving aimlessly are mentioned in Alec Nove, An Economic History of the USSR, Pelican, 1972-1969, p355. Which also mentions how Soviet plans ordered plate glass in square feet (resulting in paper-thin sheets that broke immediately) and, unbelievably, chandeliers in tons, resulting in the sort of chandelier you would expect from the Soviets.
Page 157, panel 5:
This is not only a Soviet problem, of course: military procurement in the U.S. works much the same way, where the government has the choice of either getting something useless or creating reams of paperwork for every lightbulb. For that matter, the problems with No Child Left Behind—where testing children has produced children who know how to do well on specific tests and not much else (see, for example, Linda Pearlstein’s Tested, Henry Holt, 2007)—are being “solved” by more elaborate testing regimens that test more things. Which is the wrong way to go. Not that any policymaker is likely to ask me. . . .
Page 158, panel 1:
Khrushchev called cars “smelly armchairs on wheels.” I thought you should know that.
Page 158, panel 2:
Khrushchev was successor: He wasn’t Stalin’s immediate successor—at first there was a troika of Malenkov, Molotov, and Beria—but he came out on top pretty quickly.
People could breathe more freely: This was called the “Khrushchev thaw.”
Page 158, panel 3:
Sputnik, Yuri Gagarin, and Luna 2, respectively. Luna 2 was not really so much of a moon landing as a moon crashing, but that was according to plan.
Page 159, panel 1:
Upper Volta was the original name of Burkina Faso.
Page 159, panel 2:
Wherry quote: Christopher Cerf and Victor Navasky, The Experts Speak, Villard, 1998, p161.
I almost used this quote instead: “[The Arabs and the Jews should] settle this problem in a true Christian spirit.”—Warren Austin, delegate to the UN, 1948 (Cerf and Navasky, The Experts Speak, p162.)
Page 159, panel 3:
Needed land reform more than anything: This is of course my opinion, but not only mine. See, e.g., John Kenneth Galbraith, A Journey Through Economic Time, Houghton Mifflin, 1994, p165, which also stresses the confusion between land reform and communism (in U.S. eyes). Also Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p350.
Page 159, panel 4:
See, for example, here: http://www.nytimes.com/1999/12/24/world/john-paton-davies-diplomat-who-ran-afoul-of-mccarthy-over-china-dies-at-91.html
Page 159, panel 5:
This was known as the “domino theory.” Adults believed it.
Page 160, panel 2:
The muscle was often not so much troops as covert ops (“With uncanny precision, the Central Intelligence Agency uncovered communist plots just where America’s largest corporations wanted to ensure stable supplies of natural resources.”) – Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p44. But troops made a better picture. And the threat of troops was always there.
Page 160, panel 3:
BP had cheated Iran out of its oil (at least as far as Iranians were concerned): Almost any page of Manucher and Roxane Farmanfarmaian’s Blood and Oil, Random House, 1997.
Page 160, panel 4:
With CIA help: How much this CIA help mattered is still up for debate—it’s entirely possible that Mossadeq would have fallen on his own. But the fact that the CIA was involved at all made Iranians angry from that day to this, and certainly U.S. support (and specifically CIA help) went a long way to keeping the Shah in power.
UPDATE: Well, the CIA’s own evaluation of the coup has finally come to light, and they themselves say that they were responsible. See http://www.foreignpolicy.com/articles/2013/08/18/cia_admits_it_was_behind_irans_coup
Page 160, panel 5:
South Vietnam was near collapse when Johnson took office: Stanley Karnow, Vietnam: A History, Penguin Books, 1983, p325.
Page 161, panel 1:
The “blank check”: Karnow, Vietnam, p417.
Page 161, panel 2:
Inflation hit 3%: William Greider, Secrets of the Temple, Simon and Schuster, 1987, p90.
Page 162:
E.F. Schumacher. Small Is Beautiful. Paperback edition, p96.
Page 164, panel 2:
This diagram is known as the Philips Curve; see E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p242-243, Paul Krugman, Peddling Prosperity, Norton, 1994, p42. Little-known fun fact: Japan’s Phillips curve looks like Japan (do a Google image search on that phrase and you’ll see).
Page 164, panel 3-4:
Stagflation: William Greider, Secrets of the Temple, Simon and Schuster, 1987, p334.
Philips curve breaks down: Krugman, Peddling Prosperity, p44.
The contemporary confusion was well expressed by Fernand Braudel: “The present crisis which refuses to go away is more sinister, as if it cannot manage to show its true face, or find a label or model which would explain it and reassure us.” Braudel, The Perspective of the World, Phoenix Press, 2002 (1979), p81.
Page 165, panel 3:
The reliance of economists on models is well described by Paul Krugman, Development, Geography, and Economic Theory, MIT Press, 1999 (1995), pages 5, 14-16, 25-27, 41. Even though he is, mostly, arguing for it.
Page 166, panel 1:
There are many more assumptions besides what I talked about; really, most of our economic theory describes, in insane detail, one special case among many.
Page 166, panel 2:
David Warsh, Knowledge and the Wealth of Nations, Norton, 2006, p168.
Page 166 panel 3:
Steve Keen, Debunking Economics, Pluto Press, 2001, page 154; Paul Krugman, Peddling Prosperity, Norton, 1994, p215. I have Lucas doing the kicking because this idea—that macroeconomics must have “good microfoundations” was called the “Lucas Critique.” It has not performed well in real life: see http://www.c.federalreserve.gov/Pubs/IFDP/1995/506/ifdp506.pdf.
Page 166, panel 4:
Paul Krugman, Development, Geography, and Economic Theory, MIT Press, 1999 (1995), p27; Deirdre McCloskey, The Rhetoric of Economics, Wisconsin, 1985, 1988, p87-88; McCloskey states that many economists actually can’t understand economic propositions unless they’re put forth in proper axiomatic form.
Shackle quote: David Warsh, Knowledge and the Wealth of Nations, Norton, 2006, p143,
Hyperplanes: This is a real thing. Warsh, Knowledge and the Wealth of Nations, pages 161,162.
Page 166, panel 5:
Mainstream economists excluded that possibility: Consider the division between microeconomics, where single firms make decisions in an economy where prices are already set by overall supply and demand, and macroeconomics, which analyzes how those prices are determined in the economy as a whole. That neatly excludes the possibility that a single firm’s decisions can affect prices in the economy as a whole.
Page 167, panel 1:
In fact, the economic analysis of advertising may have better and more insightful in the first half of the 20th century than in the second, which a) focused more on the informative aspects of advertising, rather than the persuasive/suggestive aspects, and b) treated advertising as a separate theory rather than an integral part of the modern economy. See Kyle Bagwell, The Economic Analysis of Advertising. August 2005 version. http://www.stanford.edu/~kbagwell/Bagwell_Web/adchapterPost082605.pdf.
Page 167, panel 3:
McDonalds’ ads are actually more like $2 billion per year now (http://archive.chicagobreakingbusiness.com/2010/05/mcdonalds-looks-for-new-global-marketing-chief.html); the $1.6 billion was true when I first wrote this chapter but that was years ago.
Also, I would like to draw the reader’s attention to the phrase “the drab reality of fried meat.” That is my favorite phrase in the book.
Page 167, panel 4:
Baran and Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order. Monthly Review, 1966. Quoted in Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduct\ion to Political Economy, 4th edition, Dollars and Sense, 2005, p200.
Also, here’s one Charlie Landesfahr, an ad man, in the late 1960s: “I find my job amusing. Soaps and cars, the differences are minute. If you’re gonna write copy, you decide what the differences are gonna be.” Quoted in Studs Terkel, Division Street: America, The New Press, 1993, p216.
Page 168, panel 1:
Competition doesn’t work like it used to: John Kenneth Galbraith and Nicole Salinger, Almost Everybody’s Guide to Economics, Penguin, 1978, p50. (e.g.:“The oil companies each try to sell more gasoline; they advertise the peculiar virtues of their own brand while knowing it is interchangeable with all the others and may even have come from the same tank. But they don’t cut prices. Anything that threatens the basic control over prices is banned. That is the real manifestation of market power.”)
Set their prices: “In a fascinating study of the pricing history of thirty-five major American industries between 1958 and 1992, for instance, the economist Robert Hall found that there was essentially no connection between increases in demand and increases in price, which suggests that companies decided on the price they were going to charge and charged that price no matter what happened.” James Surowiecki, The Wisdom of Crowds, Abacus, 2004, p121.
Carve out monopolies: “Then, too, from the point of view of the businessman, business that is secured by a price cut may be lost to a competitor who cuts prices still further or offers better quality for the same price; but building a complete delusion in the mind of the buyer through advertising may secure business for the firm which cannot be taken away by a competitor’s price cut and sometimes not even by a competitor’s advertising.” – Albert L. Meyers, Modern Economics: Elements and Problems, Prentice-Hall, 1947 (1937), p290.
Here’s a modern example: “[I]nfant formula is currently a commodity market, with all products being almost identical and marketers competing intensely to differentiate their products. Even if Formulaid (the blend of fatty acids, DHA/ARA) has NO benefit, we think it should be widely incorporated into formula, as a marketing tool and to allow companies to promote their formula as ‘closest to human milk’” –Martek, Inc. Quoted in Pamela Paul, Parenting, Inc., Times Books, 2008, p56.
Robinson and Chamberlin: E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, 196-197.
Page 168, panel 2:
The high price of useless things like diamonds, compared to the low price of useful things like water, is an example of the “paradox of value,” first (I think) put forth by Adam Smith in The Wealth of Nations (Modern Library edition, Random House, 1994, page 33). To fully explain it we need to add the insights of Thorstein Veblen, who pointed out that diamonds aren’t valuable despite being useless; they’re valuable because they’re useless—they show that you have money to throw away.
I don’t know if Marshall ever gave this exact example; I’m using him because he invented the supply-demand chart that this explanation uses.
Page 168, panel 3-6:
Edward Jay Epstein, “Have you ever tried to buy a diamond?” The Atlantic Monthly, February 1982, http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/304575/. Epstein, in 1982, suggests that De Beers’s grip might be slipping, but it hasn’t to date as far as I know.
Page 168, panel 7:
Quoted in Eric Schlosser, Fast Food Nation, HarperPerennial, 2002, p143.
Page 169, panel 1:
John Kenneth Galbraith, The Affluent Society, Houghton Mifflin, 1958, page 2.
Page 169, panels 2-5:
Galbraith, The Affluent Society, page 152-154.
Page 170, panel 3:
For another electronics example, see Jane Spencer. “Companies slash warranties, rendering gadgets disposable.” The Wall Street Journal, July 16, 2002.
Page 170, panel 4.
Lizabeth Cohen, A Consumers’ Republic, Alfred A. Knopf, 2003, p294
Page 171, panel 1:
Galbraith, The Affluent Society, page 123.
Page 171, panel 3:
$10 million underwear is a real thing: http://www.divinecaroline.com/article/22262/38554.
Page 171 panel 4:
Galbraith, The Affluent Society, page 252-253.
Page 172, panel 2:
I stole this from Ralph Nader, Unsafe at Any Speed, paperback edition, p245. By one 1980 estimate, between the time we spend driving, the time we spend earning the money to pay for our cars, and the time we spend maintaining them, we spend an hour of effort for every five miles of transport, which is only a little better than walking. (Philip Slater, Wealth Addiction, Dutton, 1980, p192)
Page 173, panel 1:
John Kenneth Galbraith’s The New Industrial State is a noble try, but it’s outdated and never quite hung together.
Page 173, panel 3:
Adolf A. Berle, Power. Harcourt, Brace, and World, 1967, page 215; John Kenneth Galbraith and Nicole Salinger, Almost Everybody’s Guide to Economics, Penguin, 1978, page 67.
Page 174, panel 1:
Nixon’s PR campaign is mentioned in David Halberstam, The Powers That Be, Knopf, 1979, p605; it’s also the subject of Joe McGinniss’s The Selling of the President, which I didn’t read. The campaign was run by one Roger Ailes, who now runs Fox News. (He was fired from the Nixon administration for being too sleazy, I read somewhere.) Also see Timothy Crouse, The Boys on the Bus, Random House, 1973, p165.
Page 174, panel 2:
Expanded it to Laos and Cambodia.
Page 174, panel 3:
I don’t know whether Nixon ever said this, but people certainly said it about his diplomatic achievements. See, for example, William Manchester, The Glory and the Dream, 1973 and 1974, Little, Brown, p1559.
Page 174, panel 4:
Spent more on the poor than LBJ had: Walter I. Trattner, From Poor Law to Welfare State, Free Press, 1999 (1974), p351.
Proposed universal health care: Paul Krugman, The Conscience of a Liberal, Norton, 2007, p81.
Froze wages and prices: Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p44.
Page 174, panels 5-7:
M.J. Stephey, “A Brief History of the Bretton Woods System.” Time, October 21, 2008. Available here: http://www.time.com/time/business/article/0,8599,1852254,00.html.
Page 175, panel 3:
http://tonto.eia.doe.gov/dnav/pet/hist/mcrfpus1m.htm. Note that the scale is off; it should be thousands of thousands (ie, millions). But the pattern is right.
Page 177:
17 countries in Africa had famines: John Haywood, Atlas of World History. Barnes & Noble, 1997, p117.
No true democracy has ever had mass starvation: Amartya Sen, quoted in Niall Ferguson, The Cash Nexus, Basic Books, 2001, p349.
Giving money to own corporations: Perkins, Confessions of an Economic Hit Man p240, Thomas Byrne Edsall, Power and Money, Norton, 1988, p 291, p104. (According to Harper’s Index, 4 out of 5 dollars of foreign aid are spent in the U.S. Charis Conn and Lewis Lapham, eds.,The Harper’s Index Book Volume 3, Franklin Square Press, 2000, p70.)
Need wells more than dams: William Finnegan, “After Seattle.” In:David Remnick, ed, The New Gilded Age, Modern Library, 2001, p302. Also Ron Suskind, The Price of Loyalty, Simon & Schuster, 2004, p267: “When he [Paul O’Neill] had gone around Africa, he had been thinking about the hundreds of billions spent in economic assistance since the 1950s. What the hell was so important that water didn’t make the cut?” Although I’m not sure that there were really hundreds of billions spent since the 1950s on economic (as opposed to military) assistance.
On the other hand, it’s also true that NGOs will come in and build wells that then fall into disrepair because the locals can’t maintain them. See Robert Frank, Richistan, Crown, 2007, p176-177. But if they can’t maintain wells, then dams. . . .
Page 178, panel 2:
Donella Meadows, Jorgen Randers, Dennis Meadows, Limits to Growth: The 30-Year Update. Chelsea Green, 2004, p47
Page 178, panel 4:
Really, “demographic transition” is the better term. Sorry. There’s a good discussion at http://en.wikipedia.org/wiki/Demographic_transition.
Educations: Paul Kennedy, Preparing for the Twenty-First Century, Vintage, 1994 (1993), p342.
Page 179, panel 1:
See Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p117
Page 179, panel 3:
Paul Hawken, Amory Lovins, L. Hunter Lovins, Natural Capitalism, p3.
Page 179, panel 5:
Mathis Wackernagel and William Rees, Our Ecological Footprint. 1996, New Society Press.
Page 180, general:
The processes described in this page didn’t only happen in the 1970s; they began after WWII. See Michael Pollan, The Omnivore’s Dilemma, Penguin Books, 2006, p39.
Page 180, panel 2 (counting the text box as 1):
Lester Brown, in Thomas Malthus, An Essay on the Principle of Population, Norton Critical Editions, 1976 (1798), p247.
Page 180, panel 3-4:
Michael Pollan, The Omnivore’s Dilemma, p39.
Butz quote: Blake Hurst, No Butz About It, The American Magazine, here. This piece is a rebuttal of the story in my page 180, but as rebuttals go it’s pretty vague—as with may things from the American Enterprise Institute, it’s based on the idea that markets must work as they do in the textbooks and breaks down once you allow the idea that in the modern economy the problem may be, not to make what people want, but to sell all the crap (corn in this case) that we make.
Page 180, panel 5:
Michael Pollan, The Omnivore’s Dilemma, Penguin Books, 2006, p40.
Page 180, panel 6:
Superbugs: This was not in fact proven when the book came out, although it was pretty obvious. Now? It’s been proven.
Page 181, panels 1-3:
Thomas Byrne Edsall, Power and Money, Norton, 1988, p 291, p260.
Page 181, panel 4:
Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p96.
Page 182, panel 1:
Steven R. Weisman, The Great Tax Wars, Simon and Schuster, 2002, p358.
Page 182, panel 3:
Whip Inflation Now buttons, plus Greenspan’s involvement: William Niskanen, Reaganomics, Oxford, 1988, p297.
Page 183, panel 1:
Friedrich Hayek, The Road to Serfdom, Classics of Liberty Library, 2002 (1944), p13, 104.
Ludwig von Mises, Socialism. Pretty much the whole book, which I only skimmed and found to be too dreary and dull-minded to be worth a closer read (in contrast to Hayek’s work, which I find brilliant even when I disagree with it). This may be why modern Austrians, who are nothing if not ploddingly dull, reference Mises more than Hayek.
Page 183, panels 2-3:
This is the argument of Hayek’s, The Road to Serfdom, Classics of Liberty Library, 2002 (1944).
Page 183, panel 4:
It’s not widely recognized how poorly Hayek’s predictions have played out. Here’s Hayek in the 1940s: “That democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something so utterly different that few of those who now wish for it would be prepared to accept the consequences, many will not believe until the connection has been laid bare in all its aspects.” –The Road to Serfdom, p31. Democratic socialism, or what Hayek would have referred to as such, has had its problems, but the idea that it’s simply unachievable is disproven by the experience of the West after WWII, most of Western Europe down to today, and especially Scandinavia.
Page 184, panel 1:
E. Ray Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p281; Milton Friedman, Capitalism and Freedom, University of Chicago Press, 1962.
Page 184, panel 2:
This is explained clearly in Canterbery, A Brief History of Economics, p281.
Page 184, panel 3:
Milton Friedman, Capitalism and Freedom, University of Chicago Press, 1962, p2.
Page 184, panel 4:
Monetarism has failed: Paul Krugman, Peddling Prosperity, Norton, 1994, p173-174.
Even Friedman admitted it, not long before he died. “The use of quantity of money as a target has not been a success. I’m not sure that I would as of today push it as hard as I once did.” Quoted, for example, by Tyler Cowen here: http://marginalrevolution.com/marginalrevolution/2006/08/why_i_disagree_.html. One reason, for those who care, is that Friedman didn’t take the velocity of money into account—one dollar changing hands ten times is like ten dollars changing hands once. See William Greider, Secrets of the Temple, Simon and Schuster, 1987, p480. (This was hardly an obscure point; only someone as blind to the real world as Friedman could have missed it.)
Page 185, panel 1:
Frederick S. Weaver, Economic Literacy, Rowman & Littlefield, 2002, p58.
Page 185, panel 3-7:
Robin Hahnel, The ABCs of Political Economy, Pluto Press, 2002, p84-97.
Page 186, panel 5:
For instance, cutting sulfur emissions was supposed to cost $250-$300 per ton according to environmentalists, $500-700 per ton according to the government, and $1500 or more according to industry. The real cost was $60 per ton in 1996. Cutting CFCs has basically cost nothing. See Paul Hawken, Amory Lovins, L. Hunter Lovins, Natural Capitalism, p257-258.
Page 186, panel 6:
Friedman acknowledged role for government in theory: Milton Friedman, Capitalism and Freedom, University of Chicago Press, 1962, p34.
Licensing doctors: Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p280-281; Friedman, Capitalism and Freedom, p140.
Social Security, and the dialogue in the panel: Friedman, Capitalism and Freedom, p35-36.
Page 186, panel 7:
David Warsh, Knowledge and the Wealth of Nations, Norton, 2006, page 22, 134. At Chicago, laissez-faire economics really was taught as an ideology, with each proposition being a “sacred feature of the system,” (Frank Knight), not a simplification for ease of calculation. See Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p50.
Page 187, panel 3:
It’s often forgotten that the Interstate Highway system as originally planned was completed in the 1970s. But we kept building highways. See Ralph Nader, Unsafe At Any Speed, paperback edition, p135.
Reagan quote: From his speech at the Republican convention, 1964: http://www.reagan.utexas.edu/archives/reference/timechoosing.html
Page 187, panel 4:
“In 1965 industries subject to pervasive federal regulation accounted for roughly 7 percent of the U.S. gross national product; by 1978 heavily regulated industries accounted for over 30 percent of GNP.” Lizabeth Cohen, A Consumers’ Republic, Alfred A. Knopf, 2003, p357.
Page 187, panel 5-6:
S. Carter, Global Agriculture Marketing Management, Chapter 4 case 4.2. Food and Agriculture Organization of the United Nations. Rome, 1997. Available at www.fao.org.
Page 188, panel 3:
Ignored whatever wasn’t a number: John A. Byrne, The Whiz Kids, Doubleday, 1993, p20.
McNamara quote: Byrne, The Whiz Kids, p435.
Page 188, panel 4:
Studs Terkel, Working, Avon, 1975 (1972), p262-263; Byrne, The Whiz Kids, p517.
Page 188, panel 5:
Drucker quote: Byrne, The Whiz Kids, p411.
700 managers: William Serrin, Homestead, Vintage, 1993, p340.
Page 189, panel 1:
Studs Terkel, Working, Avon, 1975 (1972), p210, 225, 229, 262-263.
Page 189, panel 2:
James Surowiecki, The Wisdom of Crowds, Abacus, 2004, p251.
Page 189, panel 3:
Mark Dowie, “Pinto Madness,” Mother Jones, September/October 1977.
Page 190, panel 1-2:
Dowie, “Pinto Madness.”
Page 190, panel 3:
U.S. Steel survived as a corporate entity, but that wasn’t much comfort to the workers who saw their plants close in the 1970s.
Page 190, panel 4:
The Penn Central couldn’t even make a profit on the rail-friendly Northeast Corridor from Washington to Boston, which Amtrak usually does. See Joseph R. Daughen and Peter Binzen, The Wreck of the Penn Central, Little, Brown, 1971.
Page 190, panel 5:
See, for instance, William Serrin, Homestead, Vintage, 1993, p330.
Page 191, panel 1:
The slogan is given in Mark Dowie, “Pinto Madness,” Mother Jones, September/October 1977 (Technically part of a radio spot, not a billboard, but hey).
Page 191, panel 4:
Americans did not take this competition well. Here’s Congressman John Dingell: “There’s only one reason our automobile industry is hurting. Those little yellow people.” Quoted in Sasha Issenberg, The Sushi Economy, Gotham Books, 2007, p169.
Page 191, panel 5:
A decent overview of Japanese informal protectionism and cooperation is here: http://money.cnn.com/magazines/fortune/fortune_archive/1992/09/07/76836/index.htm
“Forced savings” is hyperbole, of course, but is a real term to describe having no good consumption choices. See http://lexicon.ft.com/Term?term=forced-savings
Page 192, panel 1:
Better stuff: Anyone who remembers the 1970s can attest to this.
Going backwards: Andrea Gabor, The Capitalist Philosophers, Three Rivers, 2000, p140. I also remember a car-repair book (by Deanna Sklar, perhaps?) that was published in 1978 or so; it recommended buying an old used car because a ten-year-old car (which had been made well) would give you less trouble than a two-year-old car (which had not). (She was referring to cars from Detroit; foreign cars weren’t on her radar). According to the Consumers Union, though, the deterioration began in 1955. Ralph Nader, Unsafe At Any Speed, paperback edition, p41.
Page 192, panel 2:
Fewer layers of management: James Surowiecki, The Wisdom of Crowds, Abacus, 2004, p252.
Quality, innovation, and worker satisfaction: Andrea Gabor, The Capitalist Philosophers, Three Rivers, 2000, p63, p194.
100 times the suggestions: http://www.msnbc.msn.com/id/24457074/page/2/
Today, US companies are still way overmanaged (three times the managers per production worker as Germany and Japan, five times as much as Sweden). Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p209.
Page 192, panels 3-6:
Relaxed capital controls: Paul Krugman, The Return of Depression Economics, Norton, 1999, p107.
Flow of money balanced: Krugman, The Return of Depression Economics, p49. Paul Krugman, Pop Internationalism, MIT Press, 1996, page x (actual page x, not an unknown page), p76, p90.
Japanese bought American capital: Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p599.
The whole deal: James D. Gwartney, et al. Economics: Public and Private Choice, 10th edition. p430.
Page 193, panel 1:
By Warren Buffett’s estimate, we sell off close to 2% of our wealth each year to pay for imports. David Cay Johnston, Free Lunch, Portfolio, 2007, p51.
Page 194, panel 2:
Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p67; William Niskanen, Reaganomics, Oxford, 1988, p315.
Page 194, panel 3:
At first, anyway. Eventually deregulation led to a few big airlines with substantial market power (Frederick S. Weaver, Economic Literacy, Rowman & Littlefield, 2002, p73), and the “hub-and-spoke” system, where each airline had an effective monopoly in its own hubs and it could be impossible to find a nonstop flight. I remember when it could be cheaper, if you were going to one of these monopolistic hubs, to get a one-stop flight past the hub, and get off at the hub, rather than get a direct flight to the hub (because the longer flight was subject to competitive pressure but the hub was not).
Page 194, panel 4:
http://reason.com/reasontv/2009/03/09/beer-an-american-revolution.
Page 195, panel 1:
The Chrysler bailout is summarized here: http://www.npr.org/templates/story/story.php?storyId=96922222
Page 195, panel 2:
John Perkins, Confessions of an Economic Hit Man, p181.
Page 196:
Smith, Wealth of Nations, Modern Library edition, Random House, 1994, p243.
Page 198, panel 2:
Smith, Wealth of Nations, p444.
Page 198, panel 3:
Smith, Wealth of Nations, p527.
Page 198, panel 5:
Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p334. Paul Krugman, The Accidental Theorist, Norton, 1998, p45-46. Thomas Byrne Edsall, Power and Money, Norton, 1988, p 291, p189.
Scaife: See Burton Hersh, The Mellon Family, Morrow, 1978, p501ff; Edward S. Herman and Noam Chomsky, Manufacturing Consent, p27.
Another example: The book The Bell Curve—which argued, with shoddy logic, that blacks were just plain inferior—was subsidized by the Bradley Foundation and the American Enterprise Institute (Walter I. Trattner, From Poor Law to Welfare State, Free Press, 1999 (1974), p372). The American Enterprise Institute is in turn funded by GE among others (Herman and Chomsky, Manufacturing Consent, p12).
For that matter, so many conservative books puff up sales with purchases from well-funded conservative book clubs that the New York Times started noting substantial bulk purchases in its list of bestsellers, as a way of suggesting that maybe nobody was actually reading these books (I’ve never seen a non-conservative book with the notation).
It’s worth noting that those who defend the free market most vigorously tend to be corporate executives, tenured professors, and “thinkers” in this conservative welfare system—exactly those people who are least likely to ever actually have to face a free market.
Page 199, panel 1:
One example of a million: Nine out of ten books taking issue with mainstream environmental science come out of conservative think tanks. http://scienceblogs.com/framing-science/2008/06/04/ninety-percent-of-enviro-skept/
Page 200 panel 4:
The keyboard actually was the example that shocked economists out of their fog; it was presented by Paul A. David in 1985; the original paper is here: http://www.econ.ucsb.edu/~tedb/Courses/Ec100C/DavidQwerty.pdf.
Page 200, panel 5-6:
We’ll choose fairness: James Surowiecki, The Wisdom of Crowds, Abacus, 2004, p140, 142.
New Keynesian: Paul Krugman, Peddling Prosperity, Norton, 1994, p215, Uchitelle 1999, quoted in Charles Sackrey, Geoffrey Schneider, and Janet Knoedler, Introduction to Political Economy, 4th edition, Dollars and Sense, 2005, p121-122;
Monopolistic competition: David Warsh, Knowledge and the Wealth of Nations, Norton, 2006, p235
Ideas and knowledge: Claire Gaudani, The Greater Good, Times Books, 2003, p17; David Warsh, Knowledge and the Wealth of Nations, Norton, 2006, page xxii.
Real-world data: Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p250.
I don’t give these developments much space partly because they’ve had little effect outside of economics (did you know that 2700 economists, led by eight Nobel laureates, stated in 1997 that “all preventive steps are justified” to prevent climate change? That hundreds of economists, and eleven Nobel laureates, opposed the Bush tax cuts of 2003? Neither did I before I began this book.) The other reason I ignore these developments is that, while they’ve required great brainpower and cleverness, I’m just not all that impressed.
The fact is that decades of economic models didn’t acknowledge something as obvious as the fact that people don’t all have the same information should have been a sign to not take the models seriously. Instead, economists applaud themselves for painfully re-adding “asymmetric information” to their models as if it’s a brand-new concept that the world only just discovered thanks to the economics profession. And it’s still treated like some wacky special case that only economists understand.
The real task for economics is to make hypotheses and test them, not against previous models, but against the world itself. That’s how science is done. /rant.
Page 201, panels 1 and 2:
This was published before Mitt Romney whined about the 47%, but it’s worth watching him do it if you never have, while keeping in mind who the real parasite is: http://www.motherjones.com/politics/2012/09/secret-video-romney-private-fundraiser.
“Lucky duckies” Oddly, the WSJ has cut the links to the original editorials where the phrase was used. But the WSJ can’t delete everyone else’s reference to it. See, for instance, here: http://econperspectives.blogspot.com/2002/11/lucky-duckies-who-pay-no-income-taxes.html
Page 201, panel 3-4:
Back in the 1950s and 1960s, this type of right-winger was called “pseudo-conservative” by scholars to distinguish them from actual conservatives. See Richard Hofstadter, The Paranoid Style in American Politics, Vintage Books, 2008 (1952).
Page 201, panel 4:
Aimed to turn the clock back to the 1920s: Here’s Don Regan, Reagan’s treasury secretary: “We’re not going back to high-button shoes and celluloid collars. But the President does want to go back to many of the financial methods and economic incentives that brought about the prosperity of the Coolidge period.” Quoted in Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p333.
Portrait of Coolidge: http://www.calvin-coolidge.org/html/a_new_look_at_calvin__coolidge.html.
Page 202, panel 1:
From Reagan’s inauguration speech. http://www.presidency.ucsb.edu/ws/index.php?pid=43130
Page 202, panel 2:
25% effective tax rate: Or a bit more. See the Tax Foundation, special report #24, 1993, available here: http://taxfoundation.org/sites/taxfoundation.org/files/docs/bfa8597b056d0944f37b32fa39b170c6.pdf.
Western Europeans get more: Paul Kennedy, Preparing for the Twenty-First Century, Vintage, 1994 (1993), p305.
Page 202, panel 3:
Quote: http://www.americanthinker.com/2010/08/two_cheers_for_old_fashioned_p.html.
Another example, to benefit a specific stockbroker in Beverly Hills: “In the case of a broker-dealer which is part of an affiliated group which files a consolidated Federal income tax return, the common parent of which was incorporated in Nevada on January 27, 1972, the personal holding income (within the meaning of Section 543 of the Internal Revenue Code of 1986) of such broker-dealer, shall not include any interest received after the date of enactment of this Act.” Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p221]
Page 202, panel 4:
Thomas Byrne Edsall, Power and Money, Norton, 1988, p 291, p169.
Page 202, panel 5:
Bracket creep was stopped: Edsall, Power and Money, p150
Page 203, panel 1:
The quote can be found here: http://www.pbs.org/wgbh/americanexperience/features/primary-resources/reagan-recovery/
Page 203, panel 3:
May not have understood that: Stockman, The Triumph of Politics, Harper & Row, 1986, p235.
Stockman quote: William Greider, Secrets of the Temple, Simon and Schuster, 1987, p541.
Chart: The data are available here: http://www.presidency.ucsb.edu/data/budget.php
Page 203, panel 5:
GDP data: the Bureau of Economic Analysis has detailed data in Excel format that you can make your own charts out of: ww.bea.gov/national/xls/gdplev.xls
Page 204, panel 1:
138 people, actually. Haynes Johnson, Sleepwalking Through History. Anchor, 1992 (1991), p184.
Page 204, panels 2-3:
Most people wound up paying more taxes: Paul Krugman, Peddling Prosperity, Norton, 1994, p136.
The myth is so different: In fact, people still insist the myth is true today. http://www.rawstory.com/rs/2012/01/02/cantor-refuses-to-admit-reagan-raised-taxes/
Page 205:
This is explained in more or less technical terms all over (e.g., here), but if you want a view of how the Fed really works, or at least used to work, William Greider, Secrets of the Temple, Simon and Schuster, 1987, is the book to read.
Page 206, panel 1:
Robert L. Heilbroner, The Worldly Philosophers, Touchstone, 1986 (1953), p278. Milton Friedman, Capitalism and Freedom, University of Chicago Press, 1962, p38. Friedman, in A Monetary History of the United States, made the case that the Fed’s actions mattered; others have taken that point to the extreme. See, for instance, David Kupelian, “Bernanke: Federal Reserve Caused Great Depression,” WorldNet Daily, March 19, 2008. http://www.wnd.com/2008/03/59405/
Page 206, panel 2:
See, for example, William Greider, Secrets of the Temple, Simon and Schuster, 1987, p355.
Page 206, panel 3:
Inflation hit 13%: In the first quarter of 1979, at least. See http://www.frbsf.org/publications/economics/letter/2004/el2004-35.html.
Page 207, panel 1:
According to Robin Hahnel, The ABCs of Political Economy, Pluto Press, 2002, page 206, unemployment peaked on election day.
Page 207, panel 3:
The unemployment rate can be found here: http://seekingalpha.com/article/94300-unemployment-rates-recession-periods-and-stock-market-prices.
Page 207, panel 4:
The St. Louis Fed’s take on expectations can be found here. http://www.stlouisfed.org/publications/re/articles/?id=375. Of course, declining oil prices played a part as well.
Page 207, panel 5:
Paul Krugman, Peddling Prosperity, Norton, 1994, p101.
Page 207, panel 6:
Robin Hahnel, The ABCs of Political Economy, Pluto Press, 2002, p150. More recent data, according to Michael Moore (who references a University of Utah study but does not cite the actual study): “for every 1 percent rise in the jobless rate, homicides increase by 6.7 percent, violent crimes by 3.4 percent, crimes against property go up by 2.4 percent, and deaths by heart disease and stroke rise by 5.6 and 3.1 percent, respectively.” Michael Moore, Downsize This! HarperPerennial, 1997 (1996), p13. Also see this 2017 post showing how opiate deaths increase as unemployment does.
Page 208, panel 1:
William Greider, Secrets of the Temple, Simon and Schuster, 1987,
Page 208, panel 2:
See, for example, Merrill Hartson, The Associated Press, July 9, 1984, here: http://news.google.com/newspapers?nid=1948&dat=19840709&id=XHkkAAAAIBAJ&sjid=fNQFAAAAIBAJ&pg=684,5123510
Page 208, panel 3:
Most of these points have already been covered, but the idea that people were paying artificially high interest, and the point that the whole system was essentially a wealth-transfer machine, can be found in William Greider, Secrets of the Temple, Simon and Schuster, 1987, p403.
The fact that people saved less and borrowed more can be found, for example, in Marshall B. Reinsdorf, “Alternative measures of personal saving,” Survey of Current Business, February 2007, 7-13, and in http://www.nytimes.com/2009/06/01/opinion/01krugman.html?_r=2&hpw.
If you’re still not convinced about artificially high interest, consider this: In the 1980s, the amount of investable capital increased a lot, while the overall economy–and thus, the number of things to invest in—lagged. This increase in supply should have left investors desperate to get even two or three percent on their money. If the supply-demand model applied. But instead, profits have stayed high, almost as if all that money has given the rich more power to extract high profits.
Page 209, panel 1:
National debt: Track it here: http://www.brillig.com/debt_clock/faq.html
Page 209, panel 2.
This giant pool of money has been called the “global savings glut” (Ben Bernanke) and the “wall of money.” See Robert Frank, Richistan, Crown, 2007, p41.
Page 210, panel 1:
http://money.howstuffworks.com/personal-finance/financial-planning/junk-bond1.htm. It’s true that high-risk, high-interest bonds allow some enterprises that otherwise wouldn’t get funding to get a start; I read somewhere that CNN started that way. Imagine a nightmare world without CNN.
Page 210, panel 5:
Pension fund: David Korten, When Corporations Rule the World, Kumarian, 2001, p199
Page 210 panel 6:
Eric J. Weiner, What Goes Up, Little, Brown, 2005.
Page 211, panel 1:
Eric J. Weiner, What Goes Up, Little, Brown, 2005, p226.
Page 211, panel 2:
Daniel Yergin, The Prize, Simon and Schuster, 1991, p742.
Page 211, panel 5:
Will Hutton, The World We’re In, Abacus, 2003 (2002), p162.
Page 212, panel 1:
This is a tenet of “efficient markets theory.”
Page 212, panel 2:
Five years: Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p613. By another estimate, in 1960 the typical investor held a stock for 8 years. See Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p153.
Page 212, panels 3-5:
Doug Henwood, After the New Economy, p214; David Korten, When Corporations Rule the World, Kumarian, 2001, p177.
Page 212, panel 5:
Mergers: “Morgan Stanley handled $8.5 billion in merger transactions in 1982. Within two years, that figure zoomed to a record $52 billion.” Ron Chernow, The House of Morgan, Grove, 1991, p692. “Since Wall Street got a fee for every merger it arranged, it hardly mattered how the merged companies did. In fact, two-thirds of mergers reduced shareholder value” (James Surowiecki, The Wisdom of Crowds, Abacus, 2004, p269). Also Will Hutton, The World We’re In, Abacus, 2003 (2002), p168.
Layoffs: According to the American Management Association, “fewer than half of the firms that have downsized since 1990 have seen long-term improvements in quality, profitability or productivity.” Quoted in Andrea Gabor, The Capitalist Philosophers, Three Rivers, 2000, p323.
Page 213, panel 3:
Christopher Cerf and Henry Beard, The Pentagon Catalog, 1986. A $2,043 nut was actually included with the book.
Page 213, panel 4:
More than $100 billion: Actually, after nearly 30 years, now it’s up to $150 billion, according to the Missile Defense Agency’s own accounting. And that’s unadjusted dollars; a dollar spent in 1985 was worth a lot more than one spent today. See http://www.mda.mil/global/documents/pdf/histfunds.pdf.
Can’t stop a single missile: The Pentagon is still talking about what the program might do in the future; see http://www.defense.gov/specials/missiledefense/nmd.html.
Page 213, panel 5:
Alabama example, plus the general fact that this was happening: William Greider, One World, Ready or Not, Touchstone, 1997, p93-94.
Profits come entirely from taxpayers: David Cay Johnston, Free Lunch, Portfolio, 2007, p105.
Page 214, panel 1:
Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p608.
Page 214, panel 2:
Parker, John Kenneth Galbraith, p608; Paul Krugman, The Accidental Theorist, Norton, 1998, p134.
Page 214, panel 3:
Continental Illinois Bank: Canterbery, A Brief History of Economics, World Scientific Publishing, 2001, p266.
Mexico 1984: This is wrong. It was 1982.
Bank of New England: David Korten, When Corporations Rule the World, Kumarian, 2001, p191.
Mexico again: Hutton, The World We’re In, p247.
Japanese banks: William Greider, One World, Ready or Not, Touchstone, 1997, p254.
Whole damn financial world: Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p212; Hutton, The World We’re In, Abacus, 2003 (2002), p249-250, David Warsh, Knowledge and the Wealth of Nations, Norton, 2006, p371; Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, p150.
It’s worth pointing out two things: First of all, not all of these rescues cost money. The typical rescue involved providing loans that were paid back after the crisis.
Second, these were often presented as rescues for the borrowers, when in fact they were rescues for the lenders.
Page 214, panels 4-5:
There was even a name for this: the “Greenspan put.” There’s a good explanation here: http://en.wikipedia.org/wiki/Greenspan_put.
Page 215, panel 1:
Dividends: A prime example was how Morgan Stanley looted Burlington Industries, leaving it with debt and “some of its core operations, like its research department . . . chopped to pieces by cost-cutting drives.” –The Wall Street Journal, quoted in John Kenneth Galbraith, The Economics of Innocent Fraud, Houghton Mifflin, 2004, p57. Mitt Romney’s Bain Capital also profited this way. See here.
Page 215, panel 2:
Doug Henwood, Wall Street, Verso, 1997, page 3.
Page 215, panel 3:
In theory, derivative contracts end with one side or the other taking possession of the subject of the contract (say, wheat), but in practice they’re almost always closed out for cash, making them bets. In the 1990s fewer than 1% of contracts ended with possession-taking (Henwood, Wall Street, p29), and by the 2000s, the very idea of a derivatives trader taking possession of anything was way-out, “news of the weird” type stuff—see http://thedailywtf.com/articles/special-delivery.aspx.
Page 216, panel 2:
Derp! By the 1990s, not the 1980s. Specifically, Robert C. Merton and Myron S. Scholes in 1997. http://www.nobelprize.org/nobel_prizes/economics/laureates/1997/press.html.
Page 216, panel 3:
Will Hutton, The World We’re In, Abacus, 2003 (2002), p250. Two Nobel Laureates: Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p199. Greenspan bailing things out: Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, p150.
Page 216, panel 4:
Fortune magazine, quoted in David Korten, When Corporations Rule the World, Kumarian, 2001, p188.
Quote: Keynes, The General Theory of Employment, Interest, and Money, Harcourt, 1991 (1936), p159.
Page 217, panels 1-2:
Some stats:
“Between 1979 and 1989 the portion of the nation’s wealth held by the top 1 percent nearly doubled from 22 percent to 39 percent. By the mid-nineties, some economists estimated that the top 1 percent had captured 70 percent of all earnings growth since the mid-seventies.” –Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p xiii
“Between 1983 and 1989, while the wealth share of the top 20 percent of families rose substantially, the share of percentiles 80 to 99 actually fell.” –Paul Krugman, The Accidental Theorist, Norton, 1998, p56.
More stats are in Emmanuel Saez, Striking it Richer: The Evolution of Top Incomes in the United States, here http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf
This pattern continues today: “The average income for the top 1 percent of income earners grew 57 percent between 1990 and 2004, yet it grew an even better 85 percent for the richest one-tenth of 1 percent.” [Robert Frank, Richistan, Crown, 2007, p9]
Update: As of 2013, pretty much *all* of the recovery from the crash has gone to the top 1%. See http://money.cnn.com/2013/09/15/news/economy/income-inequality-obama/index.html
Page 217, panel 4:
Canterbery: A Brief History of Economics, World Scientific Publishing, 2001, p396.
Page 217, panel 5:
Cuts to education: Veronique de Rugy, “Ronald Reagan, Champion Budget Cutter” http://www.aei.org/papers/economics/fiscal-policy/president-reagan-champion-budget-cutter/
Infrastructure: Robert L. Heilbroner and Lester Thurow, Economics Explained, Touchstone, 1998 (1982), p119.
Environmental policy: For instance, a 90 percent cut in research into renewable energy. See Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p577.
Quote: See here. BUT, reader Greg Hill pointed out that the full quote is this: “That is the delicate balance the Secretary of the Interior must have: to be steward for the natural resources for this generation as well as future generations. I do not know how many future generations we can count on before the Lord returns; whatever it is we have to manage with a skill to leave the resources needed for future generations.” So what appears in my book is so truncated as to be just plain wrong. In my defense, this was how my source (and other sources) quoted him, and it didn’t raise a red flag with me because it did square with Watt’s actual policies. However, Watt was never stupid enough to lay his policies out quite so clearly. (I actually saw him speak once back in the day, and when you decoded what he was saying, it was clear that he thought that future generations, and the environment in general, had no rights in the premises, but you had to decode all the free-enterprise talk–he was never so blunt).
Page 217, panel 6:
Paul Krugman, Peddling Prosperity, Norton, 1994, p161.
Page 218, panel 1:
Local mortgages: Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), page 65.
Page 218, panel 3:
Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p601.
Page 218, panel 4:
Carter’s partway deregulation: Doug Henwood, Wall Street, Verso, 1997, p87
Reagan deregulated them completely: Paul Krugman, Peddling Prosperity, Norton, 1994, p163.
Can invest anywhere they want: Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p65.
Page 218, panel 5:
Paul Krugman, Peddling Prosperity, Norton, 1994, p163.
Page 219, panel 1:
Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p65. These wild risks could be, and often were, in the owner’s own real-estate projects. See William Niskanen, Reaganomics, Oxford, 1988, p200.
Page 219, panel 2:
Certainly, there was “no substantial reduction in or reform of federal regulations” (William Niskanen [a member of Reagan’s Council of Economic Advisors], Reaganomics, Oxford, 1988, p115. And there were more trade restraints at the end of Reagan’s administration than at the beginning. (Niskanen, Reaganomics, p137, 154). I recall quotas on cars from Japan, and William Greider, in One World, Ready or Not, Touchstone, 1997, p90 mentions a similar deal that gave US semiconductor producers a guaranteed market share in the US. The point is not that these policies were all wrong—I don’t believe they were—but that they were very different from the “deregulation” we hear so much about.
And here’s Robert Reich: “Conservative ideologues fulminate over the number of regulations . . . without acknowledging that a large portion of them are put on the books because corporate lobbyists and lawyers have gone to battle for them.” (Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p155)
Page 219, panel 3:
Predicted: For instance, in William Niskanen, Reaganomics, Oxford, 1988, p201-202.
Half a trillion: That’s the number given in Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p610. Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p68, says $600 billion. But estimates vary widely.
Page 219, panel 4:
John Kenneth Galbraith, The Economics of Innocent Fraud, Houghton Mifflin, 2004, p181.
The interest on the debt was, in the words of a Wall Street Journal editor, greater than “the combined amounts that government spends on health, science, space, agriculture, housing, the protection of the environment, and the administration of justice,” either then or shortly after. Quoted in Paul Kennedy, Preparing for the Twenty-First Century, Vintage, 1994 (1993), p297.
Page 220, panel 4:
William Greider, One World, Ready or Not, Touchstone, 1997, p13.
Page 220, panel 5:
The Yugoslav system is something I haven’t managed to find much info on except oblique references. But apparently it worked okay (see Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p325). Some people (e.g., Strobe Talbot) even think that the NATO intervention in Kosovo was more about ending self-management in the rump Yugoslavia than protecting Kosovars, but I don’t have the facts.
Page 220:
Jason Vuic makes this point here: http://www.time.com/time/business/article/0,8599,1972071,00.html
Page 221, panel 1:
Polish Academy of Sciences, quoted in William Greider, One World, Ready or Not, Touchstone, 1997, p428.
Page 221, Panel 3:
“Naturally, when it’s your company, your productivity is bound to go up—it belongs to you,” said Curtis Brown, a forty-seven-year-old worker [at Solidarity, an employee-owned temp agency] who had scuffled in low-wage jobs since he was seventeen. “It’s not us against them; it’s all us. . . . I’ve seen guys, I know myself, glad to go to work, happy to work. Everybody’s working to get the job right.” — William Greider, The Soul of Capitalism, Simon and Schuster, 2003, p70. Also supported on page 85-87.
Page 221, panel 5:
For instance, here’s Thorstein Veblen back in the 1920s: “They [financiers] are experts in prices and profits and financial maneuvers; and yet the final discretion in all questions of industrial policy continues to rest in their hands. They are by training and interest captains of finance; and yet, with no competent grasp of the industrial arts, they continue to exercise a plenary discretion as captains of industry.” The Engineers and the Price System, B.W. Huebsch, 1921, p40.
Page 222, panel 2:
James Carroll, House of War, Houghton Mifflin, 2006, p379. The “usual oomph” included firing into crowds of workers, as the Polish government did in 1970; see http://en.wikipedia.org/wiki/Polish_1970_protests.
Page 222, panel 3:
Okay standard of living: Frederick S. Weaver, Economic Literacy, Rowman & Littlefield, 2002, p220: “From the 1920s to the 1970s, the command economy of the Soviet Union ruthlessly transformed a rural, backward, and war-torn society into an industrial nation with substantial education, health, and social welfare provisions and world-class cultural, scientific, and military establishments. And it did this within two generations, which included the terrible ravages of two world wars, an achievement that should be compared to the progress experienced by India or Brazil over the same time rather than with standards of life in already–industrialized economies.” The Soviet Union could even stand comparison to Japan at least into the 1960s, given that Japan was far poorer than today. For instance, Japanese consumers in the 1960s called a washing machine, a refrigerator, and a television the “three sacred treasures.” (See Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, page 143.) On the other hand, by 1972 a Russian filmmaker used real footage of a drive through Tokyo as an example of a sci-fi futuropolis for Russian audiences.
Page 222, panels 4-5:
That was the Western perception, anyway—that Soviets waited on line for everything. And certainly they joked about it enough—see http://en.wikipedia.org/wiki/Russian_political_jokes#Everyday_Soviet_life.
Page 223, panel 1 (the text box):
Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p283.
Page 223, panel 2:
Kennedy, Preparing for the Twenty-First Century, Vintage, 1994 (1993), p234.
Page 223, panel 5 (the one with Reagan):
It’s not generally appreciated how much Reagan stepped outside of his usual role here. It took his people (his crappy, crappy people) a while to regain control, and before they did Reagan and Gorbachev almost decided to eliminate nuclear weapons. See, for example, here.
Page 224, panel 1:
Needed help: The number given was $30 billion per year for five years, or $150 billion total. See http://jeffsachs.org/2012/03/what-i-did-in-russia/
Page 224, panel 3:
The dates in question were August 1 and 2nd. See James Carroll, House of War, Houghton Mifflin, 2006, p434.
Page 224, panel 4:
Quote: Howard Zinn, A People’s History of the United States, HarperPerennial 2003 (1980), p625.
Page 224, panel 5:
Powell quote: Zinn, A People’s History of the United States, p652.
Page 224, panel 6:
Economists: It’s worth pointing out that Russian policy was in the hands of domestic free-market reformers like Yegor Gaidar before the Westerners arrived. See http://jeffsachs.org/2012/03/what-i-did-in-russia/.
Page 225, panel 3:
Fewer employers provided health insurance: “Benefits Dwindle.” New York Times, June 14, 1998. Quoted in Phillips, Wealth and Democracy, Broadway Books, 2002, p133. Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p102.
Page 225, panel 4:
Paul Hawken, Amory Lovins, L. Hunter Lovins, Natural Capitalism, p54.
Page 225, panel 5:
It also exists, in pristine serenity, on the packaging of our industrial food.
Page 226, panel 2 (the one with the gated community):
David Callahan, The Cheating Culture, p96. Or see http://www.pewsocialtrends.org/2012/08/01/the-rise-of-residential-segregation-by-income/ for the increase in residential segregation in general. Gated communities are becoming somewhat like separate municipalities, almost separate countries; see Will Hutton, The World We’re In, Abacus, 2003 (2002), p200.
Page 226, panel 3:
Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p579, Frederick S. Weaver, Economic Literacy, Rowman & Littlefield, 2002, p130, Bureau of Economic Analysis and OECD Economic Outlook, June 2001, quoted in James D. Gwartney, et al. Economics: Public and Private Choice, 10th edition. p113.
Page 227, panel 3:
Parker, John Kenneth Galbraith, p633. Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p126.
Page 227, panel 4:
The top and bottom tax brackets are here: http://www.npr.org/templates/story/story.php?storyId=129838013
Page 228, panel 3:
Paul Krugman, The Conscience of a Liberal, Norton, 2007, p220.
Page 228, panel 4:
Krugman, The Conscience of a Liberal, p221.
Page 228, panel 5:
Private insurance and Medicare: Krugman, The Conscience of a Liberal, p222. I’ve seen other estimates that only 75% of our money goes to health care.
Canadian system has a 1% overhead: http://www.denverpost.com/recommended/ci_12523427.
Page 228, panel 6:
“According to the Bureau of Labor Statistics, only 26 percent of employers in the bottom 10 percent had health insurance [in 1996] provided by their companies, down from 49 percent in 1982. For mid-range employees, 84 percent had coverage in 1996, down from 90 percent in 1982.” Kevin Phillips, Wealth and Democracy, Broadway Books, 2002, p133. And this has continued: “As recently as 2001, 65 percent of Americans had employment-based coverage. By 2006 that was down to 59 percent. . . .” — Paul Krugman, The Conscience of a Liberal, Norton, 2007, p225.
Page 229, panel 2:
“Worse” in the sense that the system was operating even farther below its potential, and at even more unnecessarily high cost, as compared to other countries’ systems. In fact, lifespan continued to increase slightly, but the gap between the US and other first-world nations (or maybe, between the US and actual first-world nations) grew.
Page 229, panel 3 (the text box):
Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p115, 146. Some people think that the fact that there was no evidence of inflation is to Greenspan’s credit, that he was somehow so perceptive that he could see lurking inflation when nobody else could. I think he was chasing phantoms.
Page 229 panel 4:
Norquist quote: See Monika Bauerlein and Clara Jeffrey, “The Job Killers,” Mother Jones. http://www.motherjones.com/politics/2011/10/republicans-job-creation-kill
Page 230, panel 1 (the text box):
See panel 4 of this page.
Page 230, panel 2:
Richard Coniff, The Natural History of the Rich, Norton, 2002, p163.
Page 230, panel 3:
For instance, the first color TVs cost over $2,000, and in the 1950s you could pay $1,300 for a microwave oven. And that was back when a dollar was worth a lot more. See Robert Reich, Supercapitalism, Alfred A. Knopf, 2007, p92.
Page 230, panel 4 (the first one with the CEO):
40 times: Lizabeth Cohen, A Consumers’ Republic, Alfred A. Knopf, 2003, p396. David Cay Johnston, Free Lunch, Portfolio, 2007, p285
500 times: “Why CEOs are so unloved.” BusinessWeek, April 22, 2002, available at http://www.businessweek.com/magazine/content/02_16/b3779125.htm, accessed on 12/28/08.
Page 230, panel 5:
Louis Uchitelle, “The richest of the rich, proud of a new gilded age.” New York Times, July 15, 2007. (“I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.” “I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard.”)
Page 230, panel 6:
Business Week, May 1, 1989. Quoted in Phillips, Wealth and Democracy p154.
Page 230, panel 7:
www.faireconomy.org/press_room/2000/disney_shareholders_protest_ exclusion_of_resolution, accessed on 1/27/09.
Page 231, panel 1:
$50,000 per year was well paid for a teacher: http://www.payscale.com/research/US/All_K-12_Teachers/Salary accessed on December 28, 2008
Page 231, panel 2:
Doug Henwood, After the New Economy, p216, Will Hutton, The World We’re In, Abacus, 2003 (2002), p168
Page 231, panel 3:
Not much happier. It’s pretty obvious that if there’s a hole in your soul that isn’t filled by ten million dollars, it’s not going to be filled by fifty million. And if your problems are caused by your immense wealth, more wealth will just worsen them.
Here’s a Mellon descendant: “Perhaps the saddest thing is that everybody wants what we’ve got, but we want what everybody else apparently has, and obviously there’s no way to make the exchange.” –James R. Mellon III. (Burton Hersh, The Mellon Family, Morrow, 1978, p457).
And William Vanderbilt: “My life . . . was laid out along lines which I could foresee almost from my earliest childhood. It has left me with nothing to hope for, with nothing definite to seek or strive for. Inherited wealth is a real handicap to happiness.” (Philip Slater, Wealth Addiction, Dutton, 1980, p104).
Page 231, panel 4:
Jared Diamond, Collapse, Viking, 2005, p98.
Page 231, panel 5:
Isadore Barmash’s Welcome to Our Conglomerate—You’re Fired! (1971) singles out Kirk Kerkorian’s 10,000-square-foot house as an example of excess. (Page 159 of the edition I read, but I no longer have it). Mid-level managers: I actually knew one in the mid-90s. She and her girlfriend count as two, so I can use the plural.
Smith quote: Adam Smith, The Theory of Moral Sentiments, Prometheus, 2000 (1759), p47. But it’s “vices and follies,” not “follies and vices.” Sorry.
Page 231, panel 6:
People actually do this. See Jared Diamond, Collapse, Viking, 2005, p61.
Page 232, panel 4:
Clearly getting hotter: See, for instance, http://www.ncdc.noaa.gov/cmb-faq/anomalies.php.
Page 232, panel 5:
Al Gore had woken up to the dangers: he says this in the movie An Inconvenient Truth.
Page 232, panel 6-7:
The standard was an average, across a carmaker’s fleet, of 27.5 mpg for cars and 20.7 mpg for light trucks. The Republican congress refused to close the loophole. http://www.policyalmanac.org/environment/archive/crs_cafe_standards.shtml.
Page 233, panel 1:
Gingrich quote: “The Real Ethics Debate.” Mother Jones, October 30, 1989, page 31. Available here: http://books.google.com/books?id=EecDAAAAMBAJ&pg=PA30#v=onepage&q&f=false
Page 233, panels 2-3:
Elizabeth Fernandez, “From stepdaughter to caretaker to wife.” San Francisco Chronicle, August 18, 2002.
Page 233, panel 6:
In 1999. See http://www.exxonmobil.com/Corporate/history/about_who_history.aspx.
Page 234, panel 1:
These social programs don’t include welfare, which Clinton gutted in 1996. See David Cay Johnston, Free Lunch, Portfolio, 2007, p212.
Page 234, panel 3:
The government surplus was largely imaginary, once you counted in the Social Security surplus, but still, it was an impressive achievement.
Page 234, panel 4:
For middle-income married-couple families with children. See Lawrence Mishel, Lawrence R. Mishel, and Jared Bernstein, The State of Working America, page 34. Here.
Page 235, panel 1:
Barbara Ehrenreich, Nickel and Dimed, Metropolitan Books, 2001, p221.
Page 235, panel 3:
David Korten, When Corporations Rule the World, Kumarian, 2001, p226.
Page 235, panel 4:
America’s biggest corporation: Paul Krugman, The Conscience of a Liberal, Norton, 2007, p139.
Government assistance: The documentary Wal-Mart: The High Cost of Low Price.
Page 236, panel 1:
Derp! Interest rates, not exchange rates. See the flat line from 1994 to 2000 at http://chartingtheeconomy.com/?p=516.
Page 236, panel 3:
Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p221.
Page 236, panel 5:
The chart: All the charts I’ve seen show the same basic pattern, but they’re all slightly different. I did my own calculation based on productivity data from the Bureau of Labor Statistics here: http://www.bls.gov/bls/productivity.htm and wage data here: http://research.stlouisfed.org/fred2/series/AHEMAN/downloaddata?cid=32311.
Smith quote: Smith, Wealth of Nations, Modern Library edition, Random House, 1994, p113.
Page 236, panel 7:
People working hours they weren’t being paid for: Thomas Hine, I Want That!, HarperPerennial 2002, p204.
Page 237, panel 1:
See, for example, Arthur C. Clarke being interviewed in 1974, here: http://www.youtube.com/watch?v=OIRZebE8O84
Page 238, panel 1:
Actually, by day’s end it was $58, but it had hit $75. http://money.cnn.com/magazines/fortune/fortune_archive/2005/07/25/8266639/index.htm
Page 238, panel 2:
One observer dates the bubble from the IPO of theglobe.com, “the first nonexistent company to go public.” Eric J. Weiner, What Goes Up, Little, Brown, 2005, p440.
Page 239, panel 2:
Mark Crispin Miller, “What’s Wrong With This Picture?” The Nation, 12/20/2001. Available here: http://www.thenation.com/doc/20020107/miller.
Edward S. Herman and Noam Chomsky, Manufacturing Consent, unknown edition (I lost the book), page xxiii
Page 239, panel 5:
Steven Johnson, Emergence, Scribner, 2001, p225
Page 240, panel 1.
Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, p244; Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p156-158.
Dictators: For examples, see Robin Hahnel, The ABCs of Political Economy, Pluto Press, 2002, p192;
Page 240, panel 2:
William Niskanen, Reaganomics, Oxford, 1988, p217.
Page 240, panel 3:
Full of neoliberals: Agh–one of my sources laid this out very clearly, and I stupidly didn’t write it down at the time. Still looking for it.
Privatization: John Perkins, Confessions of an Economic Hit Man, p198. Mike Davis, Planet of Slums, paperback edition, p153.
Cut spending but not military spending: Davis, Planet of Slums, p148.
Page 240, panels 3-4:
Will Hutton, The World We’re In, Abacus, 2003 (2002), p246
The way all these institutions shared basically the same ideology was called the “Washington Consensus.” See Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p237; Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p163 ff. More support for panel 4 is found in Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, page xiv and Klein, The Shock Doctrine, p147.
Page 240, panel 5:
People hated structural adjustment: Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p133. Protected democracy: Klein, The Shock Doctrine, p204.
Page 241, panel 1:
Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p160. Naomi Klein, Fences and Windows, Picador, 2002, p9.
Page 241, panel 2:
Mike Davis, Planet of Slums, paperback edition, p152.
Page 241, panel 6:
Bruno quote: Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p259-260. These are not sequential; the second part appears on page 6 of Bruno, Deep Crises and Reform: What Have We Learned? (available on Google Books), while the first appears on page 25. But the juxtaposition is fair. I think.
Page 242, panel 1:
Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p 289-297. Not all of the economists advising Russia demanded full-on shock therapy, Russian economists were driving the process (“It was a time when you can do everything you can do, and as rapidly as you can”—Yegor Gaidar), and certainly things would have worked better with Western aid. But still.
Page 242, panel 2:
William Greider, One World, Ready or Not, Touchstone, 1997, p439.
Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p232-233.
Page 242, panel 3:
Falling lifespan: Daniel Yergin and Joseph Stanislaw, The Commanding Heights, Touchstone, 1998, p306; Richard Parker, John Kenneth Galbraith, Farrar, Straus, & Giroux, 2005, p622.
Joke: William J. Duiker, Jackson J. Spielvogel, World History Since 1500, page 763. Available here.
Page 242, panel 4:
Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p225-226, 229.
Page 243, panel 2:
John Perkins, Confessions of an Economic Hit Man, page xxii. According to Perkins, the amount of debt service is actually 20 times more than the amount of aid, but the text had to fit in the arrow. And remember, 4 out of 5 dollars of “foreign” aid are spent in the U.S. (Charis Conn and Lewis Lapham, eds.,The Harper’s Index Book Volume 3, Franklin Square Press, 2000, p70.)
Page 243 panel 3:
William Greider, One World, Ready or Not, Touchstone, 1997,p95-96.
Page 243, panel 4:
For instance, Bechtel took over the water works in Bolivia and quickly doubled water rates (although they backed down); Edward S. Herman and Noam Chomsky, Manufacturing Consent, unknown edition (I lost the book), page xv. In Dar-es-Salaam, the company didn’t back down; people now pay more for worse water. See Mike Davis, Planet of Slums, paperback edition, p146. Also see the documentary Flow, around 22:40 in: “By telling a woman who’s got nothing, ‘In order to get your water, you must put in a card that takes your meager amount of money,’ what is she going to do but go to the river and take that dirty water and die of cholera? And then you say, ‘people don’t know how to practice hygiene.’” –Ashwin Desai
Page 243, panel 5:
David Korten, When Corporations Rule the World, Kumarian, 2001, p161.
Page 244, panel 1:
Joel Bakan, The Corporation, Free Press, 2004, p66-67.
Page 244, panel 2:
http://www.eonline.com/news/38744/kathie-lee-s-latest-sweatshop-scandal
Page 244, panel 5:
Naomi Klein, No Logo, p127.
Page 245, panels 1-2:
Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, p216, p227. David Korten, When Corporations Rule the World, Kumarian, 2001, p170. Charis Conn and Lewis Lapham, eds.,The Harper’s Index Book Volume 3, Franklin Square Press, 2000, p127. It’s not entirely true that the WTO can void American laws–in fact, American law is expressly given priority (see here). But the fact is that WTO decisions are taken seriously, at least when the interests that they hurt are not powerful. When they are–for instance, American exports of subsidized food are exactly the sort of thing the WTO was set up to end–then they are ignored.
Page 245, panel 5:
Edward S. Herman and Noam Chomsky, Manufacturing Consent, unknown edition (I lost the book), page xliv
Page 246, panel 4:
ABC news quoted in Herman and Chomsky, Manufacturing Consent, page xliii.
Page 247, panel 1:
Paul Krugman, The Great Unraveling, Norton, 2005, p88.
Page 247, panel 3:
James Surowiecki, The Wisdom of Crowds, Abacus, 2004, p71.
Page 247, panel 4:
Quoted in Doug Henwood, After the New Economy, p196.
Page 247, panel 7:
An old friend said that this panel spoke to him more than anything else in the book; it apparently described his experience at his own company, where the company had atrocious results except, conveniently, for the one thing that just happened to be what the CEO’s bonus was based on.
Page 248, Panel 1:
Conflicts of interest: Most noticeably, Merrill Lynch’s analysis division fired an analyst who was raising questions about Enron’s prospects; this was not unrelated to how Merrill Lynch’s investment banking division got $50 million in business from Enron. See 40 minutes into the documentary Enron: The Smartest Guys in the Room.
Page 248, panel 2:
http://www.accountingtoday.com/news/congress-sarbanes-oxley-anniversary-63434-1.html
Page 248, panel 3:
This particular solution is from a talk I saw by Lucy Komisar. And here’s one example from a million: “IBM reported to its stockholders that a third of its worldwide profits in 1987 were earned by U.S. operations, but it told the Internal Revenue Service that it earned almost nothing in the United States. . . . despite $25 billion in American sales that year.” William Greider, One World, Ready or Not, Touchstone, 1997, p95.
Page 248, panel 4:
Paul Krugman, The Great Unraveling, Norton, 2005, p88.
Page 249, panel 1:
Quote: Ron Suskind, The Price of Loyalty, Simon & Schuster, 2004, p90.
Alcoa price supports: Joseph Stiglitz, “The Roaring Nineties,” The Atlantic Monthly, 2002. http://www.theatlantic.com/past/docs/issues/2002/10/stiglitz.htm. Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, p172.
I don’t think I’m being unfair to Paul O’Neill here, exactly, but I do wish I had space for some of his better actions as well. He is, like many business leaders, rather clueless about the economy, but—unlike many business leaders—his heart seems to be in the right place, more or less.
Page 249, panel 2:
Usually spoke in gobbledegook: This was so well-known that it became a joke; Greenspan once said “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.” (Quoted in William Lutz, Doublespeak, p5.) He also had to propose to his wife three times before she understood him (according to Bob Woodward, Maestro, Simon & Schuster, 2005 (2000), p180).
Quote: Woodward, Maestro, p237
Page 249, panel 3:
Greenspan’s speech did the trick: “You could almost hear the ice cracking across the Capitol” –the Washington Post, after Greenspan’s speech (Quoted in Woodward, Maestro, p237)
Page 250:
http://online.wsj.com/article/SB122476545437862295.html
Page 252, panel 2:
Moyers quote: From a speech at the Environmental Grantmakers Conference, October 16, 2001, http://www.thefarm.org/nuke/moyerskeynote.htm. If you haven’t read it, you should.
Page 253, panel 1:
Paul Krugman, The Great Unraveling, Norton, 2005, p176.
Offshore money supports terrorists as well as tax cheats: Joseph Stiglitz, Globalization and Its Discontents, Norton, 2002, p228.
The idea that terror alerts were used for political purposes is supported here: http://www.usnews.com/blogs/washington-whispers/2009/08/19/tom-ridge-on-national-security-after-911.html
Page 253, panel 3:
Conservative program: Here is Bush specifically informing congress that he was seeking to create a “free-market democracy”: http://www.gpo.gov/fdsys/pkg/CDOC-108hdoc55/html/CDOC-108hdoc55.htm. Also see Paul Bremer’s 100 orders, for instance here: http://web.archive.org/web/20100206084411/http://www.cpa-iraq.org/regulations/. Note that changing the laws of an occupied country is against international law.
And Paul Krugman, with the big picture: http://www.nytimes.com/2011/02/25/opinion/25krugman.html?_r=3&ref=paulkrugman
Economist quote: The Economist has had the decency not to take this article down; it’s right here: http://www.economist.com/node/2092719.
Page 254, panel 1:
Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p531. Generally, The Shock Doctrine is the only source I’ve come across that really nails down the underlying story of the war.
Page 254, panel 2:
Available here. Riverbend is anonymous, and she hasn’t posted in years. (UPDATE: She posted in April 2013). I guess it’s possible that Riverbend was a fake account by a non-Iraqi, but if so the author still made a lot of sense.
Page 254, panel 3:
BBC, “Looters ransack Baghdad Museum.” http://news.bbc.co.uk/2/hi/middle_east/2942449.stm
Page 254, panel 4:
Warren Vieth, “Privatization of Oil Suggested for Iraq,” Los Angeles Times, February 21, 2003, mentions that the Iraqi oil industry had been nationalized for three decades. “That’s the problem” is my own opinion.
Page 254, panel 5:
Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p364.
Page 254, panel 6:
Klein, The Shock Doctrine, p355.
Page 255, panel 1:
Klein, The Shock Doctrine, p348.
Page 255, panel 2:
Body armor: Associated Press, “Soldiers in Iraq Still Buying Their Own Body Armor.” March 26, 2004. Viewable here: http://www.usatoday.com/news/world/iraq/2004-03-26-body-armor_x.htm
Vehicle armor: Michael Moran, “Frantically, the Army Tries to Armor Humvees.” MSNBC, April 15, 2004. Available at http://www.msnbc.msn.com/id/4731185/
Food: Pretty much every website detailing what to put in a care package mentions beef jerky, trail mix, and so on. Can the Pentagon really not afford these things?
Page 255, panel 3:
Got pretty much nothing: Naomi Klein, The Shock Doctrine, Metropolitan Books 2007, p357.
Bechtel and the quote: Klein, The Shock Doctrine, p358.
More about Bechtel’s mucking about can be found here: http://www.nytimes.com/2007/07/26/world/middleeast/26reconstruct.html?adxnnl=1&pagewanted=all&adxnnlx=1345568404-72UgR1yyUUgBIMdNdCtNXg&gwh=47FD87B7E17FA8ACB90D0EAFF8DFB292
Page 255, panel 4:
“I found a vacuum, and no-one filled the vacuum.” Moqtada al-Sadr, militia leader, quoted in Klein, The Shock Doctrine, p359.
Page 256, panel 1:
The tax cuts are described here. http://usgovinfo.about.com/cs/taxes/a/bushtaxcuts.htm. Note that they are described as a stimulus for the lagging economy. Given that the economy was not exactly stimulated over the next several years, we can conclude that the idea behind this—that tax cuts for the rich stimulate the economy—was incorrect.
Cheney quote: http://www.laweekly.com/2004-04-22/news/liars-and-lunatics/
Page 256, panel 2:
Paul Krugman, The Conscience of a Liberal, Norton, 2007, p162.
Page 256, panel 3:
I’m not against Medicare providing drugs, but there were two problem with the drug benefit. First, it wasn’t paid for in any way (like with taxes; see http://www.salon.com/2012/07/27/blame_the_republicans/). Second, Medicare isn’t allowed to use its buying power to get discounts. That’s just a plain old giveaway to the drug companies. See, eg, Robert Pear, “Bill to let Medicare Negotiate Drug Prices is Blocked.” New York Times, April 18, 2007.
Page 256, panel 4:
Another site for deficit data is here: http://www.whitehouse.gov/omb/budget/Historicals
Page 256, panel 5:
The early Bush job numbers are given in a figure here: http://factcheck.org/2012/06/obamas-economic-sleight-of-hand/
Page 256, panel 6:
See the second table at http://krugman.blogs.nytimes.com/2008/01/17/not-so-fast/
Page 256, panel 7:
The documentary Maxed Out (2006) is prescient, and worth a watch in view of what came later.
Page 256, panel 8-9:
“bad credit” = “subprime,” which is the type of loan that did the damage.
Page 257, panels 1-4:
There’s a cool slideshow here that gives the whole story in stick figures. https://docs.google.com/present/view?skipauth=true&id=ddp4zq7n_0cdjsr4fn
Page 257, panel 1:
The full(ish) story: Banks would take, say, 90 mortgages and bundle them into three “tranches” (slices) of 30. All payments received from the 90 homeowners would go to one tranche first, then another, then the last. So if 30 homeowners defaulted, one tranche would be worthless but two would be fine. The last tranche wouldn’t have a problem until 61 homeowners defaulted, which was considered to be so unlikely that nobody worried about it and ratings agencies rated the last tranches as being very safe.
Pay off rating agencies: Not directly, as far as anyone has proven, but there were what were politely called “conflicts of interest” at the agencies (http://www.sec.gov/news/press/2008/2008-284.htm), which meant that the game was set up so that agencies were paid for giving good ratings, not honest ones.
Page 257, panel 6:
“Live richly” was a Citibank campaign to encourage people to borrow more.
Page 257, panel 7:
Wages falling back: “Bush reorients rhetoric, acknowledges income gap.” Wall Street Journal, March 26, 2007 (behind subscription wall but quoted here http://www.dailykos.com/storyonly/2007/4/2/162947/5397.
Gerald quote: 30 days, season 1 ep 1, 12:04 in. He was less angry and more resigned than the words themselves suggest; he said “I call it slavery” with a sad chuckle.
Page 258, panel 1:
Elizabeth Warren quoted in the documentary Maxed Out, DVD extras, 4 minutes in. When I put her in the book I had no idea she’d be in the news (she’s now Senator from Massachusetts). Same with Newt Gingrich in the Clinton section–he was a historical figure when I wrote that section, but he keeps coming back to torment us.
Page 258, panel 3:
Reuters, “Volcker blames Fed for ‘bubbles,’ says it isn’t in control.” January 17, 2008. Available here: http://www.usatoday.com/money/economy/2008-01-16-volcker-nytm_N.htm
Page 258, panel 4-6:
Joe Nocera, “Propping Up a House of Cards.” The New York Times, February 28, 2009.
Page 259, panels 1, 2, and 4:
Joe Nocera, “Propping Up a House of Cards.” The New York Times, February 28, 2009.
Page 259, panel 6:
Or earlier; here’s a description of the tightening credit market in early 2008: http://www.nytimes.com/2008/03/19/business/19leonhardt.html?_r=2&hp
Page 260, panel 1:
Fed lends $2 trillion: http://bloomberg.com/apps/news?pid=20601087&sid=apx7XNLnZZlc&refer=home
Page 260, panel 3:
This is all stuff we’ve talked about already, except:
~$70 billion in stock buybacks in July 2007: “Back of the Envelope,” New York Times, August 3rd, 2007 pC5.
GM started losing money in 2005: http://www.gm.com/corporate/investor_information/stockholder_info/.
GM kept paying dividends: http://finance.yahoo.com/q/hp?s=GM&a=00&b=2&c=1962&d=01&e=1&f=2009&g=v.
Reserved for our Social Security contributions; that’s what the mid-2000s push for turning Social Security into a bunch of “private accounts” would have done—flooded Wall Street with more money. (It would also have involved mandates.)
Page 261, panel 1:
See Allen Sloan, “What’s still wrong with Wall Street.” Time, October 29, 2009. http://www.time.com/time/magazine/article/0,9171,1933201,00.html
Page 261, panel 2:
Michael Moore’s Capitalism: A Love Story includes footage of politicians warning about what would happen if we didn’t pass the bailouts. They’re describing pretty much exactly what happened. Things might have been worse without the bailouts, but the bailouts were sold to us as a way to prevent this depression, not to weaken it.
Page 261, panel 3:
Bush quote: http://ca.news.yahoo.com/s/afp/081216/usa/finance_economy_us_bush
Page 262, panel 2:
Michael Lewis’s “Wall Street on the Tundra,” Vanity Fair, April 2009, is an excellent source for how Iceland got into its mess.
Page 262, panels 3-5:
See Ann Pettifor, “We can learn from Iceland’s crash—and their recovery,” New Statesman, April 25, 2012. And this shows how angry foreign banks were: http://www.economicdisasterarea.com/index.php/features/twenty-seven-foreign-banks-suing-the-icelandic-state/.
Even the IMF praises Iceland now (http://www.businessweek.com/news/2012-08-12/imf-says-bailouts-iceland-style-hold-lessons-for-crisis-nations), although they don’t mention how Iceland succeeded because it didn’t listen to the IMF.
Page 263:
A good overview of the Greek situation is here: http://www.scribd.com/doc/78505894/The-Greek-Crisis-Causes-and-Consequences-PP
Page 263, panel 1:
Couldn’t just print the money: See Paul Krugman, Europe’s Crisis of Currencies. http://truth-out.org/index.php?option=com_k2&view=item&id=3011:europes-crisis-of-currencies
Page 263, panel 4-Page 264, panel 3:
A more technical description of how bonds work is here: http://money.cnn.com/magazines/moneymag/money101/lesson7/index3.htm. The interest is called a “coupon” because, up through the early 20th century bonds were commonly of another type, where you paid, say, $100 for a bond, and got a physical piece of paper with coupons around the edges that you cut off and sent in for your interest payment (say, every quarter). When these coupons were gone, you cashed the bond in for its full face value. Which is why old books talk about rich people living by clipping coupons; it once meant something very different than it means today.
Page 264, panel 4:
Slightly more: See Figure 3 here: http://www.stlouisfed.org/publications/cb/articles/?id=2264. On this chart, 100 basis points = 1% more interest than German bonds, so until the crash you got barely any more interest for buying Greek bonds than for buying German bonds.
Page 265, panels 1-2:
Of course, saying they should have known is hindsight, and some of Greece’s problems were concealed, but many of the problems listed here (http://www.scribd.com/doc/78505894/The-Greek-Crisis-Causes-and-Consequences-PP), like declining exports, were obvious (or should have been) before the crisis.
Page 265, panel 4:
http://www.spiegel.de/international/world/the-crash-specialists-argentina-s-lessons-for-a-crisis-ridden-europe-a-804856.html. Or, http://truth-out.org/index.php?option=com_k2&view=item&id=6270:rooted-in-politics-austerity-worsens-the-greek-tragedy.
Page 266, panels 2-3:
Michael Lewis’s When Irish Eyes are Crying, Vanity Fair, March 2011, is the piece to read here. The government wasn’t just deceived in this case, it was very stupid.
Page 267, panel 1:
Most notably Argentina, which suffered IMF-led policy for decades before finally just defaulting on their damn debt (http://www.guardian.co.uk/business/2011/jul/10/european-debt-crisis-argentina-imf), but Bolivia and Ecuador as well (http://www.nytimes.com/2005/12/14/business/worldbusiness/14iht-water.html?pagewanted=all)
Page 267, panel 2:
“Venezuela’s President Hugo Chávez has taken over from Fidel Castro the mantle of Latin America’s leading opponent of the United States, which remains the largest customer for Venezuela’s oil.” New York Times, World topics, accessed August 22, 2012.
EDIT, late 2016: Chavez is dead now, and Venezuela is clearly a clusterfuck.
Page 267, panel 3:
If showing a dictator being supported by big business seems radical to you, check this out: http://www.salon.com/2012/01/04/lockheed_martin_goes_to_bat_for_oppressive_regime/
Page 268, panel 1:
Derp! President Obama is left-handed.
Page 268, panel 2:
See, for example, here: http://www.motherjones.com/kevin-drum/2010/09/private-sector-vs-public-sector. Note that this only shows private-sector jobs.
Page 268, panel 3:
http://www.bloomberg.com/news/2010-10-20/bailout-of-wall-street-returns-8-2-profit-to-taxpayers-beating-treasuries.html
Page 268, panel 4:
Of course, we can be much clearer about the number of jobs lost than the effect of the stimulus. So estimates vary, and I stayed on the conservative end—here’s an estimate that the stimulus saved or created 4 million jobs: http://money.cnn.com/2011/09/08/news/economy/stimulus_jobs_record/index.htm. I used the CBO estimate, which gave a range between 500,000 and 3.3 million. (http://www.politico.com/news/stories/1111/68965.html). I figured 2 million was the middle of the range.
Page 269, panel 5 to Page 270, panel 4:
I actually read the entire act; if you’re a masochist you can too! http://www.ncsl.org/documents/health/ppaca-consolidated.pdf.
Page 270, panels 1-2:
Leemore S. Dafny, “Are health insurance markets competitive?” American Economic Review, September 2010, 1399-1431. The author proves: no, they’re not, and the fewer insurers there are the less competitive they are.
Page 270, panel 4:
Worried about inflation: Here’s Paul Krugman getting fed up, in 2012, after three years of warnings about inflation: http://krugman.blogs.nytimes.com/2012/03/31/floodgates/.
And Bernanke responding: http://www.bloomberg.com/news/2012-04-25/bernanke-rejects-criticism-he-ignores-his-own-policy-advice.html.
I stole the obesity joke from Keynes: “To bring up the bogy of inflation as an objection to expenditure, is like warning a patient who is wasting away from emaciation of the dangers of excessive corpulence.”(Quoted in Arthur Schlesinger, Jr., The Crisis of the Old Order, Houghton Mifflin, 1957, p450).
Page 270, panel 5:
I’m referring to “quantitative easing” here, which hasn’t done jack for anyone who isn’t a bank.
Page 270, panel 6:
The chart is from the Calculated Risk blog, but I found it here: http://www.thiscantbehappening.net/node/644
Also, many of the jobs that did “come back” were worse than the ones they replaced; see Mark Provost, “Why the Rich Love High Unemployment.” http://truth-out.org/index.php?option=com_k2&view=item&id=1025:why-the-rich-love-high-unemployment.
Page 271, panel 1:
Beck quote: http://www.outsidethebeltway.com/glenn_beck_theres_a_coup_going_on_a_stealing_of_america/
Page 271, panel 2:
Cut taxes on the rich, and down with the last restraints on corporations: See, for example, Michelle Bachman’s call for a big corporate tax cut along with a middle-class tax increase: http://truth-out.org/index.php?option=com_k2&view=item&id=3011:europes-crisis-of-currencies.
Astroturfing: George Monbiot, “The Tea Party, Deluded and Inspired by Billonaires.” The Guardian, October 25, 2010, http://www.guardian.co.uk/commentisfree/cifamerica/2010/oct/25/tea-party-koch-brothers.
Page 272, panel 1:
This is the Citizens United decision, available here: http://www.supremecourt.gov/opinions/09pdf/08-205.pdf
Page 272, panel 2:
http://mises.org/daily/5009. I’ve also seen this as “Reagan proved that deficits don’t matter.”
Page 273, panel 1:
Actually, there were more cap increases, but we didn’t want to crowd the panel with arrows. See the chart here: http://www.businessinsider.com/10-things-you-need-to-know-about-the-debt-ceiling-2011?op=1
Page 273, panels 2-3:
A summary of the “compromise” can be found here: http://www.cbsnews.com/8301-503544_162-20086655-503544.html. At the time I wrote it, I thought the automatic spending cuts would trigger another crisis within the year, but Congress has put things off until after the election.That may be the real effect of Occupy Wall Street–it got people talking about our real problems and not talking about how to cut more government programs, which is all we were talking about before.
This was not, in my view, a compromise because the Democrats and Republicans had already worked out the budget, compromising along the way. When you have X taxes and X+Y spending, you’re going to have Y increase in the debt. So Republicans, in the budget negotiations, had already agreed to the debt increasing; the debt limit fight just let them get more concessions. One side demanding everything, and getting something, in exchange for nothing, is not a compromise.
Page 273, panel 4:
Here’s David Stockman, Reagan’s first budget director: “Once Governor Reagan got an electoral mandate for Kemp Roth [the 1981 tax cut] and 10-5-3, then we would have the Second Republic’s craven politicians pinned to the wall. They would have to dismantle its bloated, wasteful, and unjust spending enterprises—or risk national ruin.” Stockman, The Triumph of Politics, Harper & Row, 1986, p68.
And here’s Milton Friedman, explaining why “he never met a tax cut he didn’t like” (because it forced government to cut spending; subscription required): http://online.wsj.com/article/SB1042593796704188064.html.
Also see William A. Niskanen. “Limiting government: the failure of ‘starve the beast.’” Cato Journal. Volume 26, number 3, Fall 2006: 553-558.
Page 273 Panel 4:
Here’s a list of each department’s contingency plans for the 2011 shutdown. It’s bewilderingly extensive (DC courts?).
Pages 274-275:
This was written as it was happening. In retrospect, Occupy seems to have died for the nonce, but its big achievement was to reframe the debate so that we were talking about other things except how much to give the Tea Party.
Page 276, panel 2:
Food crisis: See, for instance: http://www.moneycontrol.com/news/market-outlook/rising-food-prices-to-fuel-inflation-again_698095.html
Page 277, Panel 1:
This was combined from The Automotive Family Tree, available here: http://www.techautos.com/2010/09/01/the-global-automotive-family-tree/, and Ben Oliver, “Who Owns Who in the Auto Industry: The Tube Map,” available here (I used the 2005 version): http://www.carmagazine.co.uk/Community/Car-Magazines-Blogs/Ben-Oliver-Blog2/Who-owns-who-in-the-car-industry/.
Page 280, panel 1:
Did OK at first: Until the mid-1950s, at least if you look at the production stats. (I got my info from a 1985 economic atlas published in China, the Zhongguo Zonghe Dituji).
Page 280, panel 2:
40 million dead: Jasper Becker, Hungry Ghosts: China’s Secret Famine. John Murray, 1996.
Page 280, panel 3:
I used to read enough Chinese that I could understand just how dull Mao’s writings are. They are very dull. “Who are our enemies? Who are our friends?”
Page 280, panel 4:
Literacy: As far as we know, anyway. See http://blog.socialventuregroup.com/svg/2009/07/literacy-in-china.html for an estimate of 70%-75% literacy around 1976, compared to ~20% before 1949.
Gender equality: Remarkable by Third World standards, at least; Chinese women had (and have) a long way to go by Western standards. But compared to, say, Pakistan, or most of India, or the Arab world, Chinese women were doing okay. And compared to their traditional position, they were doing great, although some of that progress (e.g., the end of footbinding) came before the communists.
Page 281, panel 3:
Quote: William Greider, One World, Ready or Not,Touchstone, 1997, p155. The full quote is: “In some factories, the party chief is a big help: he might act like a cooperative labor-union president who will pressure you for better wages and housing, but will intervene with great authority when workers are causing problems for you.” I think my redaction was fair but I’m still a little iffy about it–it makes the WSJ author sound like more of a tool than he/she was.
Page 281, panel 4:
I remember this from a trip in China in 1994; between early and late 1994, it became much harder to find pirated CDs because the government was cracking down on them under U.S. pressure. But not cracking down on who was making the CDs.
Page 282, panel 1:
For instance, Mexico lost jobs to China. See, for instance, Oscar Montealegre, “Mexico’s Moment,” Diplomatic Courier, April 13, 2012.
Page 282, panel 4:
GM had 700,000 employees at its height: Kevin Phillips, Wealth and Democracy. Broadway Books, 2002. Page 160. This is the number for the mid-1990s, but I haven’t found any higher number, and I’ve seen the 700,000 elsewhere.
350,000 workers:
At the Foxconn plant. Nobody’s sure exactly how many workers (except Foxconn); this article says 300,000 (http://articles.latimes.com/2010/may/26/world/la-fg-china-suicides-20100526), while this says it’s expected to fall from 450,000 to 300-350,000. (http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?ID=201008190012&Type=aECO). I figured 350,000 was safe.
Page 282, panel 5:
In fact, the Chinese do seem to be starting to learn to protest; see http://www.businessinsider.com/mass-effect-chinese-protesters-rack-up-another-win-2012-8.
Page 283, panels 1-3:
http://www.nytimes.com/2011/09/15/business/global/china-ties-aiding-europe-to-its-own-trade-goals.html?_r=4&partner=rss&emc=rss
Page 283, panel 4:
World Economic Forum, “Wen [Jiabao] Pledges China Will Lead Sustained Growth, Boost Domestic Demand.” http://www.weforum.org/news/wen-pledges-china-will-lead-sustained-growth-boost-domestic-demand. And Chinese governments are boosting the minimum wage, sometimes substantially; see http://www.businessweek.com/articles/2012-03-07/china-boosts-the-minimum-wage.
Page 283, panel 5:
Jared Diamond, Collapse, Viking, 2005, p373.
Page 284-285:
No fish: See Christensen, V., S. Guénette, J. J. Heymans, C.J. Walters, R. Watson, D. Zeller and D. Pauly. 2003. Hundred year decline of North Atlantic predatory fishes. Fish and Fisheries 4(1): 1-24.
Yellow River drying up: Jared Diamond, Collapse, Viking, 2005, p364.
Colorado River drying up: http://www.smithsonianmag.com/science-nature/The-Colorado-River-Runs-Dry.html
Aral Sea drying up: “Dried up” would be a better term. See the pix here: http://en.wikipedia.org/wiki/File:Aral_Sea_1989-2008.jpg
Plastic Soup: Alan Weisman, The World Without Us, hardcover edition, p123. Also: http://edition.cnn.com/2012/05/21/world/asia/algalita-eco-solutions/index.html?
Dead zones: Weisman, The World Without Us, p160
Page 287, panels 5-6:
This is an idea that goes back to the 1930s at least. It would also require an “intercorporate dividends tax” or some other way to prevent a big corp from *looking* like a bunch of small corps.
Page 289, panel 1:
The financial transactions tax is discussed well here: http://www.huffingtonpost.com/2011/12/16/financial-transaction-tax-obama-2012_n_1153841.html
And that’s all! Phew!
