Book Review: Reagan: His Life and Legend by Max Boot

Max Boot’s new book, Reagan: His Life and Legend, is now the definitive biography of Ronald Reagan. The author, who once characterized himself as a Reagan Republican, did a prodigious amount of research over 10 years, which ultimately impelled him to a more balanced view of our 40^th U.S. President.

The book is most interesting in the chapters of his pre-presidential life. In these sections, spanning his childhood, his Hollywood career, his leadership of the Screen Actors Guild, and his governorship of California, there is much that was new to me and some that reminded me of certain episodes. It is interesting and provides some understanding of a man, who, for all his charming demeanor, remains somewhat of a mystery, even to his children.

One aspect of Reagan’s career in the 1960s that the book does not discuss in more than a glancing fashion is his association with J. Edgar Hoover. This is a sordid tale of a mutually beneficial relationship and is detailed in a 2012 book by Seth Rosenfeld, Subversives: The FBI’s War on Student Radicals, and Reagan’s Rise to Power. Boot is aware of this book by a former investigative reporter for the San Francisco Examiner and the San Francisco Chronicle and lists the book in his bibliography, but does not appear to have used it very much. It is part of the Reagan story.

As for Reagan as President, Boot is particularly critical of the invasion of Grenada, the Iran-Contra affair, and the response to the AIDS crisis. Moreover, Boot depicts Reagan as a bad manager; he did not pay much attention to what “the fellas” were doing. In some cases, they performed very well (for example, James Baker); at other times, it was disastrous.

Boot argues that the worst personnel move Reagan made was allowing James Baker, then Chief of Staff, to swap jobs with Don Regan, then Treasury Secretary. This was bad for the White House and Boot thinks that Nancy Reagan did the right thing by forcing Don Regan out (though the way she did it can be criticized). What Boot does not mention since this is a book about Ronald Reagan, was that the job swap was good for the Treasury Department, as I can attest from personal experience. Don Regan as Treasury Secretary made sensible policy decisions, but he created and encouraged open bureaucratic warfare among sections of Treasury. (I was involved in some bitter disagreement between Domestic Finance, where I worked, and the International division of Treasury, then known as “OASIA,” about various debt management issues. This also involved Tax Policy and the Economic Policy sections of Treasury. An organization cannot sustain that level of animosity for very long. The hostility abruptly ended when Baker became Secretary.)

Surprisingly, Boot mentions but hardly discusses a major bipartisan legislative accomplishment of the Reagan Administration, the Tax Reform Act of 1986. Whole books have been written about this; given its importance, Boot might have devoted more than a paragraph to this.

As for the ending of the Cold War, Boot takes a contrarian position that its end was due to Reagan. He thinks most of the credit should go to Mikhail Gorbachev and argues that Reagan’s insistence on the Strategic Defense Initiative (“Star Wars”) and the military buildup may have increased domestic pressure on Gorbachev to divert from his chosen path. Boot makes a strong case, and does credit Reagan for having a productive relationship with Gorbachev and putting pragmatism above his ideology.

Reagan was a significant President, and he successfully moved U.S. politics to the right. In many of his decisions he was pragmatic rather than ideological. For example, he recognized that his first major tax legislation went too far and effectively raised taxes in the following years. He also can be given credit for not interfering with Paul Volcker in the punishing and successful Federal Reserve efforts to conquer inflation.

This book is a necessary corrective to the sunny recollections many have of the Reagan years. As President, Reagan had a mixed record and at the end of his Presidency he was hardly the “great communicator.” He also appealed to racism in his campaigns but with much more subtlety than the openly racist Donald Trump. Boot comments at the end of the book:

“...by 2016, Reagan’s party had left his seemingly genteel brand of politics for the harder-edged populism of Donald J. Trump. Many analysts wonder if Trump represented a repudiation of Reagan’s legacy or a continuation of it. The truth, as with question of Reagan’s intelligence, was complicated.”

 Boot notes both policy and demeanor differences between Reagan and Trump, and clearly is much more of an admirer of Reagan than Trump, whom he probably despises. However, Boot concludes, perhaps reluctantly:

 

“...If Reagan had been alive in 2016, he undoubtedly would have been derided as RINO (Republican in name only) like the two Bushes, John McCain, and Mitt Romney; indeed, conservatives had frequently expressed their frustration with Reagan even during his presidency. Yet Reagan had helped set the GOP–and the country–on the path that ultimately led it to embrace divisive figures such as Donald Trump. Reagan’s legacy included, after all, not only empowering the Christian Right and a growing white backlash against minority empowerment but also economic policies that helped hollow out the middle class, thereby creating the conditions for Trump’s populist movement. (Of course, once in office, Trump’s policies favored the well-off as much as Reagan’s had.)”

Memories of Ronald Reagan’s presidency are fading and the current Republican Party is significantly different from the one that Reagan headed, even if he was viewed then as on the right. His presidency was consequential and important, and, even though this book has some omissions I have noted and a great amount of detail about other aspects of his life and political career, I recommend it for anyone interested in Reagan’s life or the period of American history were he loomed large. The book is both a detailed history of Reagan’s life and career and a balanced assessment of the man.

Review of “The Wealth of Shadows” by Graham Moore

The Wealth of Shadows is a historical novel based primarily on attempts at the U.S. Treasury Department to kneecap Germany economically in 1939 and 1940 and to enshrine the U.S. dollar as the linchpin of the global financial system at the end of World War II. It is based on real events, but it reads as a thriller, though there are no violent scenes. The main characters are real, including senior U.S. Treasury official Harry Dexter White, Treasury Secretary Henry Morgenthau Jr., and John Maynard Keynes. The book is narrated from the perspective of a Mr. Ansel Luxford, a tax lawyer who works for White. Though little known, Luxford is a real person who was involved in White=s efforts against Germany and his successful besting of Keynes at the Bretton Woods Conference in New Hampshire.

For those interested in this historical period, this novel is not only good entertainment but interesting history, along with ruminations about what money is. There is even a side trip to a used car dealership which provides the author an opportunity to discuss Pareto optimality and the importance of reading the fine print. This foreshadows how White manages to trick Keynes at Bretton Woods. Mr. Moore has helpfully provided endnotes which detail what is historically accurate in selected chapters and what he imagined, made up, or changed. 

Secretary Morgenthau[1] is well-known for having tried, not all that successfully, to get the Roosevelt Administration to do more to help European Jews. He is, therefore, supportive of White=s unconventional and sometimes extra-legal maneuvers against Germany at a time when the United States was officially neutral. However, White is opposed by a faction at the State Department led by Breckinridge Long, an antisemitic senior State Department official, whom White eventually manages to sideline.

For those with even a passing familiarity with the period, it does not give anything away to mention that at the end of the novel Luxford discovers that White has been providing classified information to the Soviet Union. This is a subject about which I know little, not having read the various books and articles about White=s espionage activities. According to Moore, most historians believe he did spy for the Soviet Union. Assuming they are right, it is unclear how much harm to U.S. national security or interests White=s spying did. White apparently received information from the Soviets in exchange for the information he provided. It is probable that White thought he was smarter than the Soviets and that he was using them. The Soviets most likely thought they were using White. (Pareto optimality? I don=t know.) It is probably true that White did not consider himself a traitor.

Moore does not pass judgment on White and says in his endnotes that information on White=s espionage remains murky. White died before he could be tried for spying.

Much of what happens in the novel and in reality, in addition to White=s espionage activities, is morally ambiguous. Moore does not hammer this point, but he does leave it to the reader to ponder the ethics of what people did.

For those looking for an engrossing summer read, I recommend this book. It may even motivate some to learn more about this period, perhaps by looking at some of the books Moore said he consulted.[2]

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[1] Secretary Morgenthau deserves praise for his efforts to help the Jews. However, as Secretary, his record is mixed. For example, the journalist Diana B. Henriques, in her book Taming the Street: The Old Guard, the New Deal, and FDR=s Fight to Regulate American Capitalism (2023) writes: AFDR=s conservative Treasury secretary, his Hyde Park neighbor Henry Morgenthau Jr. was a decent but limited man with vague economic ideas firmly rooted in the Victorian era. Even as the market slump worsened, he argued that only a balanced budget would provide the big dose of >business confidence= the economy needed.@ Also, after the war he proposed that Germany be deindustrialized and made into an agrarian economy, the AMorgenthau Plan.@ Fortunately, President Truman opted in 1948 to implement the Marshall Plan.

 [2] Among other recommendations, the author notes that The General Theory by Keynes is Ahis most accessible book.@ However, reading and understanding that book is a challenge.

Brief Book Review: New Cold Wars: China’s Rise, Russia’s Invasion, and America’s Struggle to Defend the West by David Sanger with Mary K. Brooks

David Sanger, a long-time journalist for the New York Times, has written an interesting book with his researcher, Mary K. Brooks, about major global issues confronting the U.S. Most of the focus is on Russia’s invasion of Ukraine; the economic and political relationship of the U.S. with China, including Taiwan; conflicts in the Middle East (e.g., Iraq, Iran, Israel); and cyber warfare. The narrative jumps around from issue to issue and location to location, but the main point is that the world has become an exceedingly dangerous place with multiple players, any of whom might make a catastrophic mistake. Also, the three main countries (U.S., Russia, and China) have made policy and judgement errors and have had to deal with internal problems with implications for foreign policy. The book recounts fascinating, though selective, recent history.

The analytical points, though, are less well-developed than the stories of recent events. Analysis gets a bit lost in the skipping from story to story and also seems not to be completely formulated. Key questions are sometimes only tangentially addressed. For example, the original Cold War was characterized as both a power and an ideological competition. The new cold wars (plural), as Sanger points out, includes one power, China, having important economic relationships with the other two main antagonists. Is this global state of affairs the result of policy mistakes or was some kind of dangerous competition among these three countries inevitable?  How should policymakers deal with this new, more complicated configuration? Are there policies that can reshape the current relationships among great powers or are we fated to ad hoc reactions to crises as they arise and hope that we can muddle through?

It is unfair to be too critical. The questions, such as the ones I have posed, are difficult, and they and others will generate debate among political scientists and historians. Sanger is right to conclude that recent history demonstrates the dangers we are facing and that the great power relationships are challenging. Fortunately, rationality triumphed to bring an end to the most dangerous episode in the Cold War, the Cuban missile crisis. There can be hope, but not assurance, that rationality would triumph once again if the world again faces the abyss. Sanger concludes with more aspiration than prediction that the current great powers can continue “an eight-decade-long streak” of avoiding “direct conflict,” no matter their differences.

Treasury Considers Green Bonds

The U.S. Treasury’s financing decisions are not something most people need to pay much attention to unless their profession requires they pay close attention to fixed income markets. Now that I am no longer involved in Treasury’s debt management I rarely pay attention to the Department’s Quarterly refunding announcements. However, recently it caught my attention that Treasury may be considering issuing green bonds. The Treasury Borrowing Advisory Committee recommended it as one of the innovations that Treasury should consider. (Here is a TBAC document  where green bonds and other possible debt management innovations are discussed.)

The proceeds of green bonds are restricted to environmental initiatives, which would need to be defined. The rationale for issuing these bonds would be that it would broaden the market for Treasury securities to entities which have restrictions on their investments. The TBAC document suggests that green bonds may have a lower yield than regular Treasury securities, but they are unsure about that.

The issuance of green bonds would be a significant departure from the way Treasury debt management has been conducted. Treasury does not issue securities to the public to fund particular expenditures. In determining its planned issuance, Treasury makes estimates of the daily cash inflows and outflows for the month or so ahead, and sells enough securities so that its cash balance at the Federal Reserve does not go negative. It may have targets for a particular amount of cash. If Treasury issued green bonds, it would need to segregate those funds somehow to meet the expenditure requirements. If Treasury set up a trust fund for green expenditures, the result would be a lot of accounting with little real effect. Treasury would issue green bonds, the funds would be credited to a trust fund. Treasury could then issue non-marketable securities to the trust fund and spend the money. Alternatively, it could not invest the money in the trust fund. In either case, the funds raised by the issuance of green bonds would actually go into Treasury’s account at the Fed and would be spent. Since money is fungible, there would be no determination on what the initial money raised was spent on. The press would presumably explain all this, and green bond investors would likely not be happy.

Given the issues with a trust fund, another option would be for the Treasury to deposit the proceeds from the green bonds into a fund at the Fed separate from its general account. Then the Treasury could tell the Fed to transfer the funds to the general account when it needed them for green expenditures. This arrangement would probably satisfy green bond investors.

However, note that even using the Fed option, this does nothing to increase green expenditures. Treasury cannot affect government expenditures by using debt management. Congress must appropriate the expenditures. In fact, all this accounting does not accomplish anything, except presumably make some investors happy that their money is not being used to finance expenditures they do not like. However, since money is fungible, nothing has really been accomplished here except to make debt management more complicated.

Book Review: “Ours Was the Shining Future: The Story of the American Dream” by David Leonhardt

The declining belief in the “American dream” is the story presented in New York Times journalist David Leonhardt’s new book, Ours Was the Shining Future: The Story of the American Dream. The book is part political science and part history, and helps explain the current troubling U.S. political situation.

The current rise of the right in the United States and European countries is dismaying to many. In the U.S., those of us not charmed by Donald J. Trump can be mystified about his appeal to many of our compatriots. For one, I am at a loss to understand or explain the attraction or even the entertainment value of his long rants at his rallies.

One aspect of the appeal of the right’s siren call, though, has been glaringly obvious: the failure of liberalism to deliver for the working class. The growing disparity of income over the past decades has generated anger and unpleasant political consequences. This is the theme of Leonhardt’s book.

Leonhardt begins by praising the glory years after World War II, which were marked by government investments in infrastructure (e.g., the interstate highway system) and education (e.g.the GI Bill, the reaction to the Sputnik scare), the increasing power of labor unions, and improvement, albeit slow, on race issues. However, later in the last century and continuing in the current one, things shifted. Republican policies, especially starting with the Reagan Administration, hastened the decline of the labor movement, and generally benefitted the more wealthy. Government investment declined, with the idea that a “rough and tumble” capitalism with less government intervention would best serve the country. On the Democratic side, Leonhardt argues that there was an emphasis on social issues and the professional elites dominating the party paid too little attention to working class concerns such as crime and visible job losses due to immigration. Democrats de-emphasized the useful government role in the economy, with Clinton famously saying that “the era of big government is over.”

I generally agree with many of the points the book makes, but there are some important developments that I think it misses. For example, in tax policy, the book makes no mention of the Tax Reform Act of 1986, which was a Reagan Administration initiative but enacted with bipartisan cooperation and enthusiasm among many Democrats in the Congress. This legislation strived to tax various sources of income equally and to make the Internal Revenue Code fairer. It has been mostly undone in subsequent years. For example, the current difference in tax rates for favored investment income, including long-term capital gains and most dividend income, and those for ordinary income is contrary to what the Tax Reform Act was trying to do. An analysis of the initial success and subsequent political failure of this initiative would have been useful.    

In addition, Leonhardt could have provided more discussion concerning Social Security and Medicare. Much of the current public discussion is misleading, with, among other issues, sleight of hand being played regarding confusing government accounting issues. Leonhardt is well qualified to cut through the debates on these issues and to discuss the real motivations of those advocating changes to these programs.

Because the book is U.S. focused, it does not discuss that a growing disparity of income and the rise of the right have also been taking place in European countries. The postwar history of Europe is different from that of the U.S., as have been government policies. This suggests that something more general has been afoot in both continents fueling growing inequality of income and the migration of some of the working class from the left to the right. (In Western Europe, the postwar left had been much further to the left than in the U.S.) Of course, a comparative politics study of the rise of the right would be another book.

It is interesting to note that under President Biden, some of the “third-way” Democratic policies have been effectively jettisoned. Biden is in favor of using tariffs and tax incentives to promote a type of industrial policy favorable to the environment. Also, he is wary of the Chinese and is not averse to using tariffs and other measures. Leonhardt believes that this is warranted. 

As far as whether the right will be successful, it is anyone’s bet about whether it will be in the U.S. for the short-term. Unlike other western countries, the U.S. has political arrangements that are currently helpful to the right, such as the unrepresentative U.S. Senate and the Electoral College. On the other hand, it has a political culture that is wary of the extremes. It is reasonable to think that ultimately the right will fail, but it may take longer than many of us would wish.

Even though, as I have argued, this book does not provide a complete view of how we have arrived at the current state of affairs, I can strongly recommend it for its analysis and the interesting history it presents. Moreover, it is well written and engaging. Whether or not one agrees with the author in general or on particular points, it provides the reader with a better understanding of how we have arrived at our current situation and provides information and analysis that should serve as fodder for thinking about current problems

Book Review: “Material World: The Six Raw Materials that Shape Modern Civilization”by Ed Conway

Ed Conway is a British economics journalist who works for Sky News and writes a column for The Times (London). His book, Material World, focuses on six raw materials: sand, salt, iron, copper, oil, and lithium. The point the book relentlessly drives home is that, for all our attention to the virtual  world, we are all dependent on real, material things. It also points out environmental tradeoffs. For example, making solar panels is an international endeavor requiring mining and a good deal of energy. Another example is electric cars, which require considerably more copper wiring than car with internal combustion engines, and the mining of copper is not without its problems. Moreover, the use of these materials, which involves mining, transportation, processing, and manufacturing of useful products, is not the province of a single country and requires considerable international trade.

While the author tries to be optimistic in his conclusion, the message of the book is the complexity of dealing with the environmental challenges. While the chants on the right of “drill, baby, drill” are nonsense as a solution to our real problems, environmental groups are also often simplistic in their approach in opposing many projects. Environmentalists might want to set up input output models or other analytical techniques to evaluate tradeoffs.

Also, while Conway praises the use of fertilizers to grow the necessary crops to feed the world’s population, he does not discuss that continuing population growth may be part of the problem. Also, deforestation in order to make more land available for farming with the miracle fertilizers has its environmental problems, as does animal agriculture. The benefits from these materials in making possible more food, in other words, create other problems. There are tradeoffs everywhere.

This book also provides some interesting history. For example, during World War I, Britain had a shortage of binoculars and Germany had a shortage of rubber. According to this book, there is evidence that Britain and Germany effectively traded binoculars and rubber in neutral Switzerland during the war. One can also learn why Bolivia is a landlocked country because of a 19th century war during which Chile obtained Bolivia’s coastal regions, which also happen to be mineral-rich.

In addition, one can learn a bit of chemistry in reading about the processing of various materials and their conversions into useful products, such as batteries. Perhaps there is more detail than some readers may want, and it is difficult to recall it all, but it is interesting.

Conway did a great deal of research to judge by his endnotes and bibliography as well as the international travels he recounts to various mining and production sites around the world. While competently written, the book is not exactly a page-turner. Amusingly, he relies, perhaps a bit much, on his inner Kurt Vonnegut in the repeated use of the phrase – “So it goes in the Material World.” Reading the book all at once, as I did, may not be the best approach. There is a lot of information to absorb. 

I recommend the book as a useful contribution to understanding the environmental challenges ahead from a different perspective than is usually offered. It is not the whole story, but an important part of the story.