Amity Shlaes is an author and columnist at Forbes, and currently chairs the board of the Calvin Coolidge Memorial Foundation. Her books include Germany: The Empire Within, The Greedy Hand, The Forgotten Man and Coolidge. Shlaes has also written for Bloomberg News, The Wall Street Journal, and The Financial Times, among other publications, and is also a regular contributor to Marketplace on NPR News.
TKO: Is economic inequality a problem? If so, why?
AS: Income inequality is not a problem. Inequality of opportunity is a problem. Indeed, down the years, strong economic growth generally has correlated to income inequality.
TKO: To what extent can/should the government be involved in reducing inequality?
AS: By fostering equal opportunity at the beginning of life, regardless of race or background.
Example: merit scholarships.
TKO: From Coolidge to Germany to the Great Depression, you have chosen to write about a great variety of subjects. How do you go about picking your subjects?
AS: My life started out in the humanities. As an undergraduate, I read for example some East German literature – East Germany was still communist East Germany at the time. My goal was to be a writer (humanites, again) or go to law school.
But after college I had the opportunity to go to Germany, and even into East Germany. The East Germans were proud of their writers, but it was clear those writers were so heavily influenced by Moscow. The East Germans were likewise proud of their money, the mark. But when I studied the money, and wrote a story about it for Newsweek, I could see the money was no good – it bought so little. In the end I saw that the East German regime was likewise nothing but an expression of Moscow’s plans. The German government had paid for that year – the fellowship I lived on was called a DAAD. I’m grateful to the program, since it opened my eyes to economics and policy. I went back to America and got a job not at a poetry magazine but at the Wall Street Journal.
TKO: Much of the discussion over a possible step in the right direction on income inequality has revolved around an increased tax on the top earners in this country. Given your experience with tax policy, do you see this as a viable option?
AS: Raising the top marginal rate on the income tax sounds constructive, but it often yields less revenue than expected. Lowering rates likewise sometimes yields more money than expected: example: the 1920s, when Warren Harding and Calvin Coolidge lowered rates—money flowed in. More recent experiments suggest the same: When Secretary Rubin, a Democrat, lowered the capital gains rate in the 1990s, more revenue than expected flowed in.
TKO: Is there any single lesson you believe President Obama, or more generally, any president, could learn from Calvin Coolidge’s administration?
AS: Other presidents say “do” – Coolidge said “do less.” This example can serve politicians from both parties when they become president.