A General Thanksgiving Proclamation by the President of the United States of America

Whereas it is the duty of all nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits, and humbly to implore His protection and favor; and

Whereas both Houses of Congress have, by their joint committee, requested me “to recommend to the people of the United States a day of public thanksgiving and prayer, to be observed by acknowledging with grateful hearts the many and signal favors of Almighty God, especially by affording them an opportunity peaceably to establish a form of government for their safety and happiness”:

Now, therefore, I do recommend and assign Thursday, the 26th day of November next, to be devoted by the people of these States to the service of that great and glorious Being who is the Beneficent Author of all the good that was, that is, or that will be; that we may then all unite in rendering unto Him our sincere and humble thanks for His kind care and protection of the people of this country previous to their becoming a nation; for the signal and manifold mercies and the favorable interpositions of His providence in the course and conclusion of the late war; for the great degree of tranquility, union, and plenty which we have since enjoyed; for the peaceable and rational manner in which we have enabled to establish constitutions of government for our safety and happiness, and particularly the national one now lately instituted; for the civil and religious liberty with which we are blessed, and the means we have of acquiring and diffusing useful knowledge; and, in general, for the great and various favors which He has been pleased to confer upon us.

And also that we may then unite in most humbly offering our prayers and supplications to the great Lord and Ruler of Nations, and beseech Him to pardon our national and other transgressions; to enable us all, whether in public or private stations, to perform our several and relative duties properly and punctually; to render our national government a blessing to all the people by constantly being a government of wise, just, and constitutional laws, discreetly and faithfully executed and obeyed; to protect and guide all sovereigns and nations (especially such as have shown kindness to us), and to bless them with good governments, peace, and concord; to promote the knowledge and practice of true religion and virtue, and the increase of science among them and us; and, generally, to grant unto all mankind such a degree of temporal prosperity as He alone knows to be best.

Given under my hand, at the city of New York,the 3d day of October, AD 1789

George Washington

O'Farrell and Brown Just Don't Get It

Ohio State Representative O’Farrell has introduced a bill in the State Legislature to penalize Ohio companies which have manufacturing plants overseas. According to the article, House Bill 601 will end tax breaks for Ohio companies which “create foreign positions while eliminating domestic jobs.”

In Washington, Senator Sherrod Brown of Ohio, is proposing similar legislation on the Federal level. Brown also came up with a new word, “reshoring”, which indicates bringing jobs back to the United States from overseas. Like O’Farrell’s proposal, Brown advocates elimination of various tax breaks for companies who have manufacturing facilities overseas or are using foreign manufacturers for the production of products to be sold in the U.S.

These legislative acts are well meaning and made with the best intentions. It would be wonderful were it possible to convince U.S. corporations to bring manufacturing back stateside by withdrawing financial support from companies who are making products abroad. But in fact, such legislation is attacking the symptom, not the cause of the problem.

A number of things must be considered, none of which are addressed by either Brown or O’Farrell. The basic problem is too much government. Laws effecting business operations are made by politicians who lack a practical knowledge of business or how an economy operates

Businesses exist to make a profit for the owners, including the stockholders who invest money in a business for the sole purpose of receiving a return on their investment. No return on investment, the stock becomes unprofitable, and the business goes broke. That’s the first economic law.

If expenses go up, return goes down, investment disappears. The largest expense is that of labor. Obviously, without the hands to do the work of manufacturing, nothing gets done. It was American labor which built this country, and it is American labor which may dictate its decline.

A case in point is Brockton, Massachusetts. Brockton was known for two things, Rocky Marcanio and shoe manufacturing. The Brockton shoe industry was started before the Civil War, At its high point in 1907, it employed 15,000 workers. In 1919, the 39 shoe manufactures in the city employed about 13,000 workers and produced more than eighty one million dollars worth of shoes. In the 1930s, after a violent union strike against the shoe manufacturers, companies started leaving the city for cheaper labor in the South, some moving to the Midwest to be closer to leather sources to lower their expenses. The shoe industry got a little boost during World War II, but that died shortly after when European footwear manufacturers began making shoes with proven Brockton techniques at lower cost because of the availability of less expensive workers. By 1964 there were only ten Brockton shoe factories, and they employed 2,000 workers. A revitalization of the shoe industry was attempted in the 1950s, but it failed. By the 1970s, there were only two or three operating shoe companies in Brockton. Now there is but one.

Expenses which caused the loss of business were government intervention and labor costs. Reports required by the federal government alone amounted to over 1.75 trillion dollars in costs to businesses in 2009. Add to this the ever increasing cost of labor because of government regulations which are favorable to unions especially in the fields of wage and benefit negotiations, and it is easy to see that many industries cannot afford to manufacture their products in the U.S. The combination of high cost to comply with government regulations, repressive corporate taxation, and high labor costs have driven manufacturing out of the country

Granted Brown and O’Farrell recognize a problem with jobs in Ohio and nationwide. What they fail to recognize is that they are looking at symptoms and not the cause of the financial difficulties we, along with the rest of the world, are experiencing. The cause of economic problems is too much government intervention into a field in which government has no knowledge. The bills both espouse will not fix the economy. Both are a threat to international companies who manufacture abroad. A prime consideration of manufacturing is to have a plant near the consumer. It was this reason that Caterpillar built plants in foreign countries, as have other American companies.

Product price is another consideration. When it is less expensive to purchase a hammer made in China rather than in Ohio, there is no question that the average U.S. consumer will buy for less. The steel industry failed decades ago because the unions did not recognize the reality that if foreign steel can be purchased for less than U.S. steel at the plant, the foreign steel would be chosen. The government’s response in these situations has been to increase welfare benefits, to seize private corporations which are failing because of poor management instead of allowing them to go bankrupt, and increasing the spending to the point of bankrupting the nation.

Government intervention in business always fails. Always. But the federal government never gets it

Brown and O’Farrell should have begun by forcing the withdrawal of government from the affairs of businesses and the citizenry. They should have asked for repeal of the minimum wage laws. They should have asked for massive cuts in both state and federal budgets including welfare of all types, including long term unemployment payments. They should have demanded that money stolen from the Social Security Trust Fund, starting with Lyndon Johnson, be returned to it with interest before any appropriations are approved by the Congress with the exception of those specifically mandated by the Constitution. They should have demanded a revised Income Tax Code which includes tax cuts for all individuals and businesses and offers immediate depreciation on all business construction, improvements, and investment in equipment. Such actions would free up investment capital and get the economy rolling again.

Of course, that will never happen. What politician would ever agree to give up the power provided him which comes from government created poverty and unlimited business control?

The Presidency and the Constitution

THE PRESIDENCY is the most visible thread that runs through the tapestry of the American government. More often than not, for good or for ill, it sets the tone for the other branches and spurs the expectations of the people. Its powers are vast and consequential, its requirements impossible for mortals to fulfill without humility and insistent attention to its purpose as set forth in the Constitution of the United States.

Isn’t it amazing, given the great and momentous nature of the office, that those who seek it seldom pause to consider what they are seeking? Rather, unconstrained by principle or reflection, there is a mad rush toward something that, once its powers are seized, the new president can wield as an instrument with which to transform the nation and the people according to his highest aspirations.

But, other than in a crisis of the house divided, the presidency is neither fit nor intended to be such an instrument. When it is made that, the country sustains a wound, and cries out justly and indignantly. And what the nation says is the theme of this address. What it says—informed by its long history, impelled by the laws of nature and nature’s God—is that we as a people are not to be ruled and not to be commanded. It says that the president should never forget this; that he has not risen above us, but is merely one of us, chosen by ballot, dismissed after his term, tasked not to transform and work his will upon us, but to bear the weight of decision and to carry out faithfully the design laid down in the Constitution in accordance with the Declaration of Independence.

* * *

The presidency must adhere to its definition as expressed in the Constitution, and to conduct defined over time and by tradition. While the powers of the office have enlarged, along with those of the legislature and the judiciary, the framework of the government was intended to restrict abuses common to classical empires and to the regal states of the 18th century.

Without proper adherence to the role contemplated in the Constitution for the presidency, the checks and balances in the constitutional plan become weakened. This has been most obvious in recent years when the three branches of government have been subject to the tutelage of a single party. Under either party, presidents have often forgotten that they are intended to restrain the Congress at times, and that the Congress is independent of their desires. And thus fused in unholy unity, the political class has raged forward in a drunken expansion of powers and prerogatives, mistakenly assuming that to exercise power is by default to do good.

Even the simplest among us knows that this is not so. Power is an instrument of fatal consequence. It is confined no more readily than quicksilver, and escapes good intentions as easily as air flows through mesh. Therefore, those who are entrusted with it must educate themselves in self-restraint. A republic is about limitation, and for good reason, because we are mortal and our actions are imperfect.

The tragedy of presidential decision is that even with the best choice, some, perhaps many, will be left behind, and some, perhaps many, may die. Because of this, a true statesman lives continuously with what Churchill called “stress of soul.” He may give to Paul, but only because he robs Peter. And that is why you must always be wary of a president who seems to float upon his own greatness. For all greatness is tempered by mortality, every soul is equal, and distinctions among men cannot be owned; they are on loan from God, who takes them back and evens accounts at the end.

It is a tragedy indeed that new generations taking office attribute failures in governance to insufficient power, and seek more of it. In the judiciary, this has seldom been better expressed than by Justice Thurgood Marshall, who said: “You do what you think is right and let the law catch up.” In the Congress, it presents itself in massive legislation, acts and codes thousands of pages long and so monstrously over-complicated that no human being can read through them—much less understand them, much less apply them justly to a people that increasingly feel like they are no longer being asked, but rather told. Our nation finds itself in the position of a dog whose duty it is not to ask why—because the “why” is too elevated for his nature—but simply to obey.

America is not a dog, and does not require a “because-I-said-so” jurisprudence; or legislators who knit laws of such insulting complexity that they are heavier than chains; or a president who acts like, speaks like, and is received as a king.

The president is not our teacher, our tutor, our guide or ruler. He does not command us; we command him. We serve neither him nor his vision. It is not his job or his prerogative to redefine custom, law, and beliefs; to appropriate industries; to seize the country, as it were, by the shoulders or by the throat so as to impose by force of theatrical charisma his justice upon 300 million others. It is neither his job nor his prerogative to shift the power of decision away from them, and to him and the acolytes of his choosing.

Is my characterization of unprecedented presumption incorrect? Listen to the words of the leader of President Obama’s transition team and perhaps his next chief-of-staff: “It’s important that President-Elect Obama is prepared to really take power and begin to rule day one.” Or, more recently, the latest presidential appointment to avoid confirmation by the Senate—the new head of the Consumer Financial Protection Bureau—who wrote last Friday: “President Obama understands the importance of leveling the playing field again.”

“Take power. . .rule. . .leveling.” Though it is the model now, this has never been and should never again be the model of the presidency or the character of the American president. No one can say this too strongly, and no one can say it enough until it is remedied. We are not subjects; we are citizens. We fought a war so that we do not have to treat even kings like kings, and—if I may remind you—we won that war. Since then, the principle of royalty has, in this country, been inoperative. Who is better suited or more required to exemplify this conviction, in word and deed, than the President of the United States?

* * *

The powers of the presidency are extraordinary and necessarily great, and great presidents treat them sparingly. For example, it is not the president’s job to manipulate the nation’s youth for the sake of his agenda or his party. They are a potent political force when massed by the social network to which they are permanently attached. But if the president has their true interests at heart he will neither flatter them nor let them adore him, for in flattery is condescension and in adoration is direction, and youth is neither seasoned nor tested enough to direct a nation. Nor should it be the president’s business to presume to direct them. It is difficult enough to do right by one’s own children. No one can be the father of a whole continent’s youth.

Is the president, therefore, expected to turn away from this and other easy advantage? Yes. Like Harry Truman, who went to bed before the result on election night, he must know when to withdraw, to hold back, and to forgo attention, publicity, or advantage.

There is no finer, more moving, or more profound understanding of the nature of the presidency and the command of humility placed upon it than that expressed by President Coolidge. He, like Lincoln, lost a child while he was president, a son of sixteen. “The day I became president,” Coolidge wrote, “he had just started to work in a tobacco field. When one of his fellow laborers said to him, ‘If my father was president I would not work in a tobacco field,’ Calvin replied, ‘If my father were your father you would.’” His admiration for the boy was obvious.

Young Calvin contracted blood poisoning from an incident on the South Lawn of the White House. Coolidge wrote, “What might have happened to him under other circumstances we do not know, but if I had not been president. . . .” And then he continued,

“In his suffering he was asking me to make him well. I could not. When he went, the power and glory of the Presidency went with him.”

A sensibility such as this, and not power, is the source of presidential dignity, and must be restored. It depends entirely upon character, self-discipline, and an understanding of the fundamental principles that underlie not only the republic, but life itself. It communicates that the president feels the gravity of his office and is willing to sacrifice himself; that his eye is not upon his own prospects but on the storm of history, through which he must navigate with the specific powers accorded to him and the limitations placed on those powers both by man and by God.

* * *

The modern presidency has drifted far from the great strength and illumination of its source: the Constitution as given life by the Declaration of Independence, the greatest political document ever written. The Constitution—terse, sober, and specific—does not, except by implication, address the president’s demeanor. But this we can read in the best qualities of the founding generation, which we would do well to imitate. In the Capitol Rotunda are heroic paintings of the signing of the Declaration of Independence, the victory at Saratoga, the victory at Yorktown, and—something seldom seen in history—a general, the leader of an armed rebellion, resigning his commission and surrendering his army to a new democracy. Upon hearing from Benjamin West that George Washington, having won the war and been urged by some to use the army to make himself king, would instead return to his farm, King George III said: “If he does that, he will be the greatest man in the world.” He did, and he was.

To aspire to such virtue and self-restraint would in a sense be difficult, but in another sense it should be easy—difficult because it would be demanding and ideal, and easy because it is the right thing to do and the rewards are immediately self-evident.

A president who slights the Constitution is like a rider who hates his horse: he will be thrown, and the nation along with him. The president solemnly swears to preserve, protect, and defend the Constitution. He does not solemnly swear to ignore, overlook, supplement, or reinterpret it. Other than in a crisis of existence, such as the Civil War, amendment should be the sole means of circumventing the Constitution. For if a president joins the powers of his office to his own willful interpretation, he steps away from a government of laws and toward a government of men.

Is the Constitution a fluctuating and inconstant document, a collection of suggestions whose purpose is to stimulate debate in a future to which the Founders were necessarily blind? Progressives tell us that even the Framers themselves could not reach agreement in its regard. But they did agree upon it. And they wrote it down. And they signed it. And they lived by it. Its words are unchanging and unchangeable except, again, by amendment. There is no allowance for a president to override it according to his supposed superior conception. Why is this good? It is good because the sun will burn out, the Ohio River will flow backwards, and the cow will jump over the moon 10,000 times before any modern president’s conception is superior to that of the Founders of this nation.

Would it be such a great surprise that a good part of the political strife of our times is because one president after another, rather than keeping faith with it, argues with the document he is supposed to live by? This discontent will only be calmed by returning the presidency to the nation’s first principles. The Constitution and the Declaration should be on a president’s mind all the time, as the prism through which the light of all question of governance passes. Though we have—sometimes gradually, sometimes radically—moved away from this, we can move back to it. And who better than the president to restore this wholesome devotion to limited government?

* * *

And as the president returns to the consistent application of the principles in the Constitution, he will also ensure fiscal responsibility and prosperity. Who is better suited, with his executive and veto powers, to carry over the duty of self-restraint and discipline to the idea of fiscal solvency? When the president restrains government spending, leaving room for the American people to enjoy the fruits of their labor, growth is inevitable. As Senator Robert Taft wrote: “Liberty has been the key to our progress in the past and is the key to our progress in the future.... If we can preserve liberty in all its essentials, there is no limit to the future of the American people.”

Whereas the president must be cautious, dutiful, and deferential at home, his character must change abroad. Were he to ask for a primer on how to act in relation to other states, which no holder of the office has needed to this point, and were that primer to be written by the American people, whether of 1776 or 2010, you can be confident that it would contain the following instructions:

You do not bow to kings. Outside our shores, the President of the United States of America bows to no man. When in foreign lands, you do not criticize your own country. You do not argue the case against the United States, but the case for it. You do not apologize to the enemies of the United States. Should you be confused, a country, people, or region that harbors, shelters, supports, encourages, or cheers attacks upon our country or the slaughter of our friends and families are enemies of the United States. And, to repeat, you do not apologize to them.

Closely related to this, and perhaps the least ambiguous of the president’s complex responsibilities, is his duty as commander-in-chief of the military. In this regard there is a very simple rule, unknown to some presidents regardless of party: If, after careful determination, intense stress of soul, and the deepest prayer, you go to war, then, having gone to war, you go to war to win. You do not cast away American lives, or those of the innocent noncombatant enemy, upon a theory, a gambit, or a notion. And if the politics of your own election or of your party intrude upon your decisions for even an instant—there are no words for this.

More commonplace, but hardly less important, are other expectations of the president in this regard. He must not stint on the equipment and provisioning of the armed forces, and if he errs it must be not on the side of scarcity but of surplus. And he must be the guardian of his troops, taking every step to avoid the loss of even a single life.

The American soldier is as precious as the closest of your kin—because he is your kin, and for his sake the president must, in effect, say to the Congress and to the people: "I am the Commander-in-Chief. It is my sacred duty to defend the United States, and to give our soldiers what they need to complete the mission and come home safe, whatever the cost."

If, in fulfilling this duty, the president wavers, he will have betrayed his office, for this is not a policy, it is probity. It is written on the blood-soaked ground of Saratoga, Yorktown, Antietam, Cold Harbor, the Marne, Guadalcanal, the Pointe du Hoc, the Chosin Reservoir, Khe Sanh, Iraq, Afghanistan, and a thousand other places in our history, in lessons repeated over and over again.

* * *

The presidency, a great and complex subject upon which I have only touched, has become symbolic of overreaching. There are many truths that we have been frightened to tell or face. If we run from them, they will catch us with our backs turned and pull us down. Better that we should not flee but rather stop and look them in the eye.

What might our forebears say to us, knowing what they knew, and having done what they did? I have no doubt that they would tell us to channel our passions, speak the truth and do what is right, slowly and with resolution; to work calmly, steadily and without animus or fear; to be like a rock in the tide, let the water tumble about us, and be firm and unashamed in our love of country.

I see us like those in Philadelphia in 1776. Danger all around, but a fresh chapter, ready to begin, uncorrupted, with great possibilities and—inexplicably, perhaps miraculously—the way is clearing ahead. I have never doubted that Providence can appear in history like the sun emerging from behind the clouds, if only as a reward for adherence to first principles. As Winston Churchill said in a speech to Congress on December 26, 1941: “He must indeed have a blind soul who cannot see that some great purpose and design is being worked out here below, of which we have the honor to be the faithful servants.”

As Americans, we inherit what Lincoln in his First Inaugural called “the mystic chords of memory stretching from every patriot grave.” They bind us to the great and the humble, the known and the unknown of Americans past—and if I hear them clearly, what they say is that although we may have strayed, we have not strayed too far to return, for we are their descendants. We can still astound the world with justice, reason and strength. I know this is true, but even if it was not we could not in decency stand down, if only for our debt to history. We owe a debt to those who came before, who did great things, and suffered more than we suffer, and gave more than we give, and pledged their lives, their fortunes, and their sacred honor for us, whom they did not know. For we “drink from wells we did not dig” and are “warmed by fires we did not build,” and so we must be faithful in our time as they were in theirs.

Many great generations are gone, but by the character and memory of their existence they forbid us to despair of the republic. I see them crossing the prairies in the sun and wind. I see their faces looking out from steel mills and coal mines, and immigrant ships crawling into the harbors at dawn. I see them at war, at work and at peace. I see them, long departed, looking into the camera, with hopeful and sad eyes. And I see them embracing their children, who became us. They are our family and our blood, and we cannot desert them. In spirit, all of them come down to all of us, in a connection that, out of love, we cannot betray.

They are silent now and forever, but from the eternal silence of every patriot grave there is yet an echo that says, “It is not too late; keep faith with us, keep faith with God, and do not, do not ever despair of the republic.”

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The preceding is adapted from a speech delivered on the Hillsdale College campus on September 20, 2010, by Mike Pence, who graduated from Hanover College in 1981 and earned his J.D. from Indiana University School of Law in 1986. After running for Congress in 1988 and 1990, he was named president of the Indiana Policy Review Commission, a state think tank based in Fort Wayne, Indiana, in 1991. He was first elected to Congress from Indiana’s 6th District in 2000 and was most recently elected to a fifth term in 2008. That same year he was elected to serve as House Republican Conference Chairman. During the 109th Congress, he also served as chairman of the House Republican Study Committee, the largest caucus in the House of Representatives.

Reprinted by permission from Imprimis, a publication of Hillsdale College.

Feds Shell Out $1 Billion to Dead People

The federal government has paid out well over $1 billion to 250,000 deceased individuals over the past decade — and can’t figure out how to fix the problem, according to a new report from Sen. Tom Coburn.

“Washington paid for dead people’s prescriptions and wheelchairs, subsidized their farms, helped pay their rent, and even chipped in for their heating and air conditioning bills,” the Oklahoma Republican’s report says.

Among the disclosures, based on a review of government audits and reports by the Government Accountability Office, inspectors general, and Congress:

● The Social Security Administration sent $18 million in stimulus funds to 71,688 dead people, and $40.3 million in questionable benefit payments to 1,760 deceased individuals.

● The Department of Agriculture sent $1.1 billion in farming subsidies to dead farmers.

● The Department of Health and Human Services sent $3.9 million to 11,000 dead people to help pay heating and cooling costs.

● Medicare paid up to $92 million in claims for medical supplies prescribed by dead doctors and $8.2 million for medical supplies prescribed for dead patients.

In some cases, the payments went to dormant bank accounts, while in others they landed in the pockets of living people who are “defrauding the system by collecting benefits meant for a now-deceased relative,” according to Coburn’s report.

The detected waste “is likely only a small picture of a much larger problem,” the report notes.

In June, the Obama administration announced new steps to avert payments to the deceased. Federal agencies are now required to check their payees against the Social Security Administration’s Death Master File.

“But SSA admits its records are fraught with errors,” the report states. “It is extremely expensive and may even be impossible to determine if a person is alive or dead, particularly if the person died many years ago.”

Coburn concludes: “At this point in our nation’s history, it is of the utmost importance that every tax dollar spent by the government be put to good use. This means spending within our means on the living, not outside our means on the dead.”

Government Workers Overpaid

Bureaucrats Irked: Heritage Foundation Finds They Are Paid Too Much

In an interview with the Washington Post, the Director of the Office of Personnel Management, John Berry, directly credits The Heritage Foundation as having moved public opinion on the issue of overpayment of federal officials:

He said he was frustrated that “the Heritage and Cato misinformation campaign has obviously gained traction.” The two Washington, D.C., think tanks have produced widely discussed reports indicating that federal workers are paid too much. A “pretty prolonged misinformation campaign over the last six month leading up to this,” [Berry] said, “has worked.”

Berry was steaming over that last point.

The Heritage Foundation has been at the forefront of the overpayment issue. Heritage research has found that the average federal employee earns an annual salary almost 60% higher than the average private-sector employee — $79,000 vs. $50,000. Even after controlling for education and experience, federal employees get paid significantly better — 22% more per hour, on average — than private-sector workers. Once you add up the benefits, the gap in total compensation rises even higher — 30% to 40% above comparable private-sector workers.

But defenders of the federal pay system, including the OPM, have mischaracterized our analyses by suggesting they ignore skill differences between the public and private sectors, resulting in an “apples to oranges” comparison. On the contrary, Heritage has carefully accounted for skill differences, always comparing apples to apples.

In a letter the Washington Post this week, Heritage economist Bill Beach directly addresses those critical of our analysis:

Ignoring this evidence [of standard practice in calibrating data], government and union representatives quoted in your column attack our findings by relying on a survey that examines job descriptions. But federal workers tend to be less skilled within an occupation level - a senior accountant may qualify only as a junior accountant in the private sector. So economists look at skills and experience, not just official duties.

Amazing Grace

Turn up the volume and go to the link below. Turn up the volume. Trust us on this one.

http://www.youtube.com/watch?v=TY8J35OXVxg&feature=related

The Rules of the Game and Economic Recovery

The Rules of the Game and Economic Recovery
By Amity Shlaes

The Monopoly board game originated during the Great Depression. At first its inventor, Charles Darrow, could not interest manufacturers. Parker Brothers turned the game down, citing “52 design errors.” But Darrow produced his own copies of the game, and Parker Brothers finally bought Monopoly. By 1935, the New York Times was reporting that “leading all other board games … is the season’s craze, ‘Monopoly,’ the game of real estate.”

Most of us are familiar with the object of Monopoly: the accumulation of property on which one places houses and hotels, and from which one receives revenue. Many of us have a favorite token. Perennially popular is the top hat, which symbolizes the sort of wealth to which Americans who work hard can aspire. The top hat is a token that has remained in the game, even while others have changed over the decades.

One’s willingness to play Monopoly depends on a few conditions—for instance, a predictable number of “Pay Income Tax” cards. These cards are manageable when you know in advance the amount of money printed on them and how many of them are in the deck. It helps, too, that there are a limited and predictable number of “Go to Jail” cards. This is what Frank Knight of the University of Chicago would call a know- able risk, as opposed to an uncertainty. Likewise, there must be a limited and predictable number of “Chance” cards. In other words, there has to be some certainty that property rights are secure and that the risks to property are few in number and can be managed.

The bank must be dependable, too. There is a fixed supply of Monopoly money and the bank is supposed to follow the rules of the game, exercising little or no independent discretion. If players sit down at the Monopoly board only to discover a bank that overreaches or is too unpredictable or discretionary, we all know what happens. They will walk away from the board. There is no game.

Relevance to the 1930s

How is this game relevant to the Great Depression? We all know the traditional narrative of that event: The stock market crash generated an economic Katrina. One in four was unemployed in the first few years. It resulted from a combination of monetary, banking, credit, international, and consumer confidence factors. The terrible thing about it was the duration of a high level of unemployment, which averaged in the mid teens for the entire decade.

The second thing we usually learn is that the Depression was mysterious—a problem that only experts with doctorates could solve. That is why FDR’s floating advisory group—Felix Frankfurter, Frances Perkins, George Warren, Marriner Eccles and Adolf Berle, among others—was sometimes known as a Brain Trust. The mystery had something to do with a shortage of money, we are told, and in the end, only a Brain Trust’s tinkering with the money supply saved us. The corollary to this view is that the government knows more than American business does about economics.

Another common presumption is that cleaning up Wall Street and getting rid of white collar criminals helped the nation recover. A second is that property rights may still have mattered during the 1930s, but that they mattered less than government-created jobs, shoring up home- owners, and getting the money supply right. A third is that American democracy was threatened by the rise of a potential plutocracy, and that the Wagner Act of 1935—which lent federal support to labor unions—was thus necessary and proper. Fourth and finally, the traditional view of the 1930s is that action by the government was good, whereas inaction would have been fatal. The economic crisis mandated any kind of action, no matter how far removed it might be from sound monetary policy. Along these lines the humorist Will Rogers wrote in 1933 that if Franklin Roosevelt had “burned down the capital, we would cheer and say, ‘Well at least we got a fire started, anyhow.’”

To put this official version of the 1930s in terms of the Monopoly board: The American economy was failing because there were too many top hats lording it about on the board, trying to establish a plutocracy, and because there was no bank to hand out money. Under FDR, the federal government became the bank and pulled America back to economic health.

When you go to research the 1930s, however, you find a different story. It is of course true that the early part of the Depression—the years upon which most economists have focused — was an economic Katrina. And a number of New Deal measures provided lasting benefits for the economy. These include the creation of the Securities and Exchange Commission, the push for free trade led by Secretary of State Cordell Hull, and the establishment of the modern mortgage format. But the remaining evidence contradicts the official narrative. Overall, it can be said, government prevented recovery. Herbert Hoover was too active, not too passive—as the old stereotypes suggest — while Roosevelt and his New Deal policies impeded recovery as well, especially during the latter half of the decade.

In short, the prolonged Depression can be put down to government arrogance—arrogance that came at the expense of economic common sense, the rule of law, and respect for property rights.

Arrogance and Discretion

Consider the centerpiece of the New Deal’s first 100 days, the National Recovery Administration (NRA), which was in effect an enormous multi-sector mechanism calibrated to manage the business cycle through industrial codes that, among other things, regulated prices. The principles on which its codes were based appear risible from the perspective of microeconomics and common sense. They included the idea that prices needed to be pushed up to make recovery possible, whereas competition constrained recovery by driving prices down. They held that big firms in industry—those “too big to fail”—were to write codes for all members of their sector, large and small—which naturally worked to the advantage of those larger firms. As for consumer choice, it was deemed inefficient and an inhibitor of recovery. The absurdity of these principles was overlooked, however, because they were put forth by great minds. One member of the Brain Trust, Ray Moley, described the myopic credentialism of his fellow Brain Truster, Felix Frankfurter, in this way:

The problems of economic life were to Frankfurter matters to be settled in a law office, a court room, or around a big labor-management bargaining table. The government was the protagonist. Its agents were its lawyers and commissioners. The antagonists were big corporate lawyers. In the background were misty principals whom Frankfurter never really knew at first hand. These background figures were owners of the corporations, managers, workers and consumers.

One family that was targeted by NRA bureaucrats was the Schechters, who were wholesale chicken butchers in Brooklyn. The NRA code that aimed to regulate what they did was called The Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and about the City of New York. And according to this code, the Schechters did all the wrong things. They paid their butchers too little. They charged prices that were too low. They allowed their customers to pick their own chickens. Worst of all, they sold a sick chicken. As a result of these supposed crimes, they were prosecuted.

The prosecution would have been comic if it were not business tragedy. Imagine the court room scene: On one side stands Walter Lyman Rice, a graduate of Harvard Law School, representing the government. On the other stands a small man in the poultry trade, Louis Spatz, who is afraid of going to jail. Spatz tries to defend his actions. But he barely speaks English, and the prosecutor bullies him. Nevertheless, Spatz is now and then able to articulate, in his simple and common- sense way, how business really works.

Prosecution: But you do not claim to be an expert?
Spatz: No.
Prosecution: On the competitive practices in the live poultry industry?
Spatz: I would want to get paid, if I was an expert.
Prosecution: You are not an expert!
Spatz: I am experienced, but not an expert . . . .
Prosecution: You have not studied agricultural economics?
Spatz: No, sir.
Prosecution: Or any sort of economics?
Spatz: No, sir.
Prosecution: What is your education?
Spatz: None; very little.
Prosecution: None at all?
Spatz: Very little.

Then at one point this everyman sort of pulls himself together.

Prosecution: And you would not endeavor to explain economic consequences of competitive practices?
Spatz: In my business I am the best economist.
Prosecution: What is that?
Spatz: In my business I am the best economizer.
Prosecution: You are the best economizer?
Spatz: Yes, without figuring.
Prosecution: I wish to have that word spelled in the minutes, just as he stated it.

Spatz: I do not know how to spell.

This dialogue matters because little businesses like Schechter Poultry are the natural drivers of recovery, and during the Great Depression they weren’t allowed to do that driving. They weren’t allowed to compete and accumulate wealth—or, in terms of Monopoly, to place a house or hotel on their property. Instead they were sidelined. The Schechter brothers ultimately won their case in the Supreme Court in 1935. But the cost of the lawsuits combined with the Depression did not go away.

Regarding monetary policy, it is clear that there wasn’t enough money in the early 1930s. So Roosevelt was not wrong in trying to reflate. But though his general idea was right, the discretionary aspect of his policy was terrifying. As Henry Morgenthau reports in his diaries, prices were set by the president personally. FDR took the U.S. off the gold standard in April 1933, and by summer he was setting the gold price every morning from his bed. Morgenthau reports that at one point the president ordered the gold price up 21 cents. Why 21, Morgenthau asked. Roosevelt replied, because it’s 3 x 7, and three is a lucky number. “If anyone knew how we set the gold price,” wrote Morgenthau in his diary, “they would be frightened.”

Discretionary policies aimed at cleaning up Wall Street were destructive as well. The New Dealers attacked the wealthy as “money changers” and “Princes of Property.” In 1937, after his re-election, Roosevelt delivered an inaugural address in which he described government as an instrument of “unimagined power” which should be used to “fashion a higher order of things.” This caused business to freeze in its tracks. Companies went on what Roosevelt himself resentfully termed a “capital strike.”

These capital strikers mattered because they were even more important to recovery than the Schechters. Consider the case of Alfred Lee Loomis, who had the kind of mind that could contribute significantly to Gross Domestic Product and job creation. During the First World War, he had improved the design of firearms for the U.S. Army. In the 1920s, he became wealthy through his work in investment banking. He moved in a crowd that was developing a new form of utility company that might finally be able to marshal the capital to bring electricity to the American South. But when Loomis saw that the Roosevelt administration was hauling utilities executives down to Washington for hearings, he shut down his business, retreated to his Tudor house, and ran a kind of private think tank for his own benefit. We have heard a lot about a labor surfeit in the 1930s. Here is a heresy: What if there was a shortage of talent brought on by declarations of class warfare?

Another challenge to the Depression economy was tax increases. While these increases didn’t achieve the social equality at which they aimed, they did significant damage by confiscating too much individual and corporate property. As a result, many individuals and businesses simply reduced or halted production—especially as the New Deal wore on. In the late 1930s, banker Leonard Ayres of the Cleveland Trust Company said in the New York Times: “For nearly a decade now the great majority of corporations have been losing money instead of making it.”

As for big labor, the Wagner Act of 1935 proved to be quite destructive. It brought on drastic changes at factories, including the closed shop—the exclusion of non-union members. Another innovation it helped bring about was the sit-down strike, which threatened the basic property right of factory owners to close their doors. Most importantly, it gave unions the power to demand higher wages—and they did. A wage chart for the 20th century shows that real wages in the 1930s were higher than the trend for the rest of the century. This seems perverse, considering the economic conditions at the time. The result was high paying jobs for a few and high unemployment for everyone else. The reality of overpriced labor can be seen in several stock phrases coming out of the Great Depression—“Nice work if you can get it,” for example, was the refrain of a Gershwin song performed by Fred Astaire in The Damsel in Distress, a film released in 1937 at the zenith of union power.

To return to the Monopoly board metaphor, the problem in the 1930s was not that there was no bank. It was that there was too much bank—in the form of the federal government. The government took an arbitrary approach to the money supply and made itself the most power- ful player. It shoved everyone else aside so that it could monopolize the board. Benjamin Anderson, a Chase economist at the time, summed it up in a book about the period: “Preceding chapters have explained the Great Depression of 1930 to 1939 as due to the efforts of the governments and very especially the government of the United States to play god.”

Relevance for Today

It is not hard to see some of today’s troubles as a repeat of the errors of the 1930s. There is arrogance up top. The federal government is dilettantish with money and exhibits disregard and even hostility to all other players. It is only as a result of this that economic recovery seems out of reach.

The key to recovery, now as in the 1930s, is to be found in property rights. These rights suffer under our current politics in several ways. The mortgage crisis, for example, arose out of a long- standing erosion of the property rights concept—first on the part of Fannie Mae and Freddie Mac, but also on that of the Federal Reserve. Broadening FDR’s entitlement theories, Congress taught the country that home ownership was a “right.” This fostered a misunderstanding of what property is. The owners didn’t realize what ownership entailed—that is, they didn’t grasp that they were obligated to deliver on the terms of the contract of their mortgage. In the bipartisan enthusiasm for making everyone an owner, our government debased the concept of home ownership.

Property rights are endangered as well by the ongoing assault on contracts generally. A perfect example of this was the treatment of Chrysler bonds during the company’s bankruptcy, where senior secured creditors were ignored, notwithstanding the status of their bonds under bankruptcy law. The current administration made a political decision to subordinate those contracts to union demands. That sent a dangerous signal for the future that U.S. bonds are not trustworthy.

Three other threats to property loom. One is tax increases, such as the coming expiration of the Bush tax cuts. More taxes mean less private property. A second threat is in the area of infrastructure. Stimulus plans tend to emphasize infrastructure—especially roads and railroads. And after the Supreme Court’s Kelo decision of 2005, the federal government will have enormous license to use eminent domain to claim private property for these purposes. Third and finally, there is the worst kind of confiscation of private property: inflation, which excessive government spending necessarily encourages. Many of us sense that inflation is closer than the country thinks.

If the experience of the Great Depression teaches anything, it is that property rights must be firmly established or else we will not have the kind of economic activity that leads to strong recovery. The Monopoly board game reminds us that economic growth isn’t mysterious and inscrutable. Economic growth depends on the impulse of the small businessman and entrepreneur to get back in the game. In order for this to happen, we don’t need a perfect government. All we need is one that is “not too bad,” whose rules are not constantly changing and snuffing out the willingness of these players to take risks. We need a government under which the money supply doesn’t change unpredictably, there are not too many “Go to Jail” cards, and the top hats are confident in the possibility of seeing significant returns on investment.

Recovery won’t happen from the top. But when those at the top step back and create the proper conditions, it will happen down there on the board—one house at a time.

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AMITY SHLAES is a syndicated columnist for Bloomberg and a senior fellow in economic history at the Council on Foreign Relations, a graduate of Yale University and pursued postgraduate studies at the Free University in Berlin. She has served as a member of the editorial board of the Wall Street Journal and as a columnist for the Financial Times.

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(Reprinted by permission from Imprimis, a publication of Hillsdale College)