An Old Book's Lessons

For decades, through multiple moves and clearings out of dusty bookshelves, I’ve dragged around a book by John Kenneth Galbraith. The sole reason for keeping this timeworn tome is that Galbraith signed it and, with a hearty flourish, handed it to me when we both appeared on a national TV talk program in 1971. Yet, while flattered to catch the eye of the famous Harvard economist, I never found the time to read a doorstopper dauntingly entitled A Contemporary Guide to Economics Peace and Laughter.

After a recent move, I stumbled across Galbraith’s guide in a pile of old books stacked on my apartment floor. Leafing through it, to see if its time has come to be donated to a library book sale, I was struck by how insightful Galbraith was about current events.

“One day in the winter of 1969…a reporter asked me if I expected another stock market crash. I replied, as I had a hundred times since I wrote a book on the 1929 experience, that of course there would be,” he wrote in a chapter titled “Financial Genius Is Before the Fall.” Then he succinctly explained what he learned in studying the reasons for the financial crash that ushered in the Great Depression. “The reason is that the stock market is inherently unstable, the instability being related to its superbly orchestrated ability to attract people with a promise of effortless riches, give them a taste of such gains, give them the promise of a great deal more … and then, usually after overcoming some preliminary setbacks which greatly add to the general state of confidence, destroy these illusions in one mortal thud. What is necessary for a new disaster is only for memories of the last one to fade,” he noted in what initially was an article in Harper’s magazine.

If Galbraith were still around—he died in 2006 at 97—he’d likely dash off a zinger on the current fiscal crisis. For fodder, all he’d need would be a headline in today’s New York Times, “Economy Shrinks at Its Fastest Rate Since the 1950s,” and the accompanying time chart showing the repetitive recurrence of recessions in the USA. The chart showed 11 downturns in the national economy from 1949 to the current crash.

For those who endured the downturn of 1970, for instance, Galbraith wrote a stinging contemporary analysis in New York magazine, reprinted in his book as “The Nixon Administration and the Great Socialist Revival.” That was the year the federal government seriously weighed taking over private railroads, starting with a nearly $1 billion bailout of Penn Central and other faltering rail companies. “This dramatic rush to socialism won the initial approval of the Republican Administration. … Full nationalization of the railroads is being discussed. ‘Washington seems to be the only power that has the potential, at least, of building a rational, balanced, national rail system,’ Time magazine declared in a special editorial early in the summer of 1970,” Galbraith wrote. And who was pushing for government action? “Urged on by what Newsweek called ‘a frantic consortium of 77 banks,’ the railroad executives turned to the state.”

In a move right out of recent headlines, the government also rushed to shore up a jittery stock market. “The Wall Street vehicle of the new socialism is the Securities Investor Protection Corporation or SIPC, a fund created by the Stock Exchange which is to be guaranteed by the government to the extent of a billion dollars. This will pay off the customers, creditors and victims of the failed [stock exchange] houses,” Galbraith wrote in 1970. Galbraith’s take on all this was caustic. “I am concerned with reminding everyone that financial genius consists almost entirely of avarice and a rising market,” he wrote, describing the recurring cycles of the stock market’s ruinous losses of people’s life savings.

When he handed me his book, I knew little about economics or Galbraith, other than that he was a widely quoted author and former government official. What caught my attention was his blunt opposition to the war in Vietnam. Galbraith’s gift to me on the set of The David Frost Show was meant, I’m sure, as a sharing of his thoughts with a Vietnam veteran whose critique of the war had just appeared in The New York Times.

For all his witty quips on politics, which reporters loved to quote, Galbraith was widely experienced in what made the US government tick. Dipping deeper into this book on his take on war-making in Indochina unveils passages describing why our current wars in Afghanistan and Iraq are still being endlessly waged.

“It is impossible to think of a case more intellectually inert than that for the Vietnam war. Yet the war continues. This is because the bureaucracy, the military and intelligence bureaucracy in particular, operates not in response to national need but in response to its own needs,” he wrote in Foreign Policy magazine in 1970, reprinted in this book as “Foreign Policy: Plain Lessons of a Bad Decade.” From his perspective, which included a term as ambassador to India in the early 1960s, Galbraith wrote that “the inertial dynamic of the bureaucracy is the major explanation of the disasters of the decade. At the Bay of Pigs, in the Dominican Republic, in Vietnam, Laos, Thailand (as again in Cambodia), the bureaucracy showed its power to sweep the leadership into disaster and against all the counsels of common sense.”

What he critiqued 40 years ago illuminates the mind set that still holds sway in Washington. That mind set is fixed on mounting massive military interventions in Third World nations, leading to repeated, indecisive battles with incensed people who keep fighting to defend their lands no matter how much their impoverished region is pelted by bombs and bullets. “The proper policy toward the Third World requires not only new doctrine but also elimination of the need for a large part of the military, intelligence and civilian bureaucracy that conducts the present policy.… It would be naïve to imagine that these organizations will acquiesce easily in the change, however effectively they are proven in error and however ghastly the resulting experience. Not wickedness but the dynamics of big organization is involved. It is a far greater factor in our foreign policy than we have even begun to realize,” Galbraith argued.

“American [military] withdrawal does not ensure good international behavior … It accepts only the lesson of the last decade, which is that our intervention does us no good and, for the people involved, can make everything much worse.” Instead, Galbraith argued for mounting “orthodox diplomatic relations and the assistance in capital, technique or volunteer manpower that an economically and technically advanced country finds it morally rewarding or economically advantageous to render to its less equipped neighbors.”

Hmm, given our new Era of Change, maybe I should donate this book to the Obama White House.