Time period that you are looking at. Its the same era. I want to come back to this because it is the parallel between that and this that are interesting but first off in my case rural indiana. Guest im fro guest im from lakeland indiana, which i wrote about in a book that came out last year and i wrote a book about how the new deal affected people in this little farm village. So, anyway we are not talking about that book. We are talking about this one. Host i am curious how would you say growing up in indiana has influenced your opinion . Guest growing up in a small town, you have a lot of contact with other human beings. You know their secrets. Its a great deal as a journalist because it makes you see things in terms of real people rather than statistics, and i thought it was a great w way. I thought it was a great way to start out to become a journali journalist. Host the midwest is an interesting place. You learn the value of community and independence and selfsufficiency and that is something that is very much in play today in the political debate. And i noticed from reading the whole 100 plus years of coverage that you look at that journal has always taken that position around individuality. Although its changed over time. I was fascinated going back to realize the journal defended the right of coal miners to strike. Tell me a little bit about how conservatism itself has changed for how we think of it based on this 100 year plus period that youre looking at. Guest conservatism is something of a misnomer because editors over the years have been what you would call conservati conservative, but the title of the book basically is the advocates of the free markets and free people and the incident you were telling about, the founder, one of the founder but there were three of them, was very strongly believed in free markets and free people thats why there were whole miners out of work on strike, and he wrote in editorial that wasnt very popular on wall street, but he was defending their rights that workers have just as much right to organize as investors did to organize. So that was one of the points i make in the book in the philosophy as it carried on pretty much during the history of the wall street journal. They were defending people against the attorneys of the world some of which still exist so thats kind of thing that interestethe thing thatinteresty despite an enormous change in the world particularly in technological terms the journal has sort of remained constant over the years and by the way, some of the leading people were from indiana. He took over from 1928 and then he hired another and this was the creative guys have set up the wall street journal that turned it into what it is today. We are never going to come back to that later relations, the nature of defending individual and corporate rights. But let me ask you a more personal question since you also were bringing up fees past editors in the journal. Who were your favorites to work for and can you give details of how to change over time. Guest i just mentioned ernie kilgour and hes a remarkable man. He seemed very natural with a slight tic like this sometimes. He acted very human man was very nice to people. You have seen several areas of journalism come and go and what many people call disruption. Is that worse today than when you started . Started . Guest but its far more diversified. Anybody can be a journalist today. Its about half of the speculation in the wall street journal. Its electronic now so its extremely diversified and the professional journalists, people that are hired reporters on the staff of wellknown publications kind of resent that competition but on the other hand it might be good for them because sometimes they come up with pretty good stuff. Host to go to maintaining the market, i can see when youre writing in the book many examples of that and i can also see sometimes in the modern era there is a more partisan environment and i think that is something a lot of american readers worry about today is that the media has become partisan. Whats been your experience with the journal tax guest ive been on the opinion side, foreign correspondent. We are partisan. We make no qualms about it. Guest bipartisanship about ideas is what people criticize on the left and the right. Guest i think that has become a problem and some people are just kind of wearing their hearts on their sleeves so antitrump, for example and i think it has done some damage particularly when people are just full of anger. And i am not sure i think even opinion journalists should try to remain cool and analyze things and you never can be totally objective but at least you should try to be intellectually honest. Guest host i want to come back to some of your stories but let me link together a big financial topic. This is something that a lot of folks in the journal were unhappy about the jim though its more on the liberal side of the spectrum its interesting because you mentioned several other points throughout history with the Monetary Policy and i wonder if you can take us through the historic old lessons and how things might end in the next few years of this. Guest one of the classic cases from history basically was an act where it would have more value and they would when and we were on the Gold Standard at that point. It was the populace of many areas that have one of easy money so theyve had to type that over the years to try to encourage. Its about as near as you get into the journal supported the federal exchange act. Which we might get to that favorite of about 50 editorials about inflation. Its more complicateit gets mory people understand but basically. Its what causes inflation. The amount that was being done a lot of people including me thought by now we would be starting to see more signs of inflation and we are not. Is this time difference, is there something going on . Guest i am just as puzzled as you are and the quantitative easing the were certainly against that which is more a branch of the government than people realize. Its getting a Government Free money because the Federal Reserve returns and its where the earnings are on the bond as you well know. It returns everything so the government is actually the low Interest Rates and where the fed have paper. I dont know how the fed did it but they just borrow it back they created reserves in the banks so that is how they managed to avoid inflation but there was an enormous distortion and thats what ive written about as well as you have. Host we are waiting to see what the impact of that is going to be. Its interesting because if you take it in the International Context there is some by europe and japan so we are not really through that cycle yet. Guest host not only has the government taken advantage that corporations have and i believe we have a record of corporate funds levels right now. What is your feeling bad about that . Guest my feeling is consistent with the journal. We worry about this as the Consumer Debt is getting very high. Its been growing ever since and now we are getting to the point they are very high, Student Loans that might be a writeoff. It has consequences and someday they have to pay for it. I agree with him on some things. Host and coming back to our mutual indiana roots but one thing that puzzled me is we dont think of the consequences of the levels for ordinary people but of course everybody borrows in this society we have a debt to society and Consumer Credit has grown the last 40 years, Corporate Credit has grown. There is any number of reasons for that that is the tax code subsidizes certain types of unproductive debt. What has been the thinking on the opinion pages you must have done some deep thinking about why have we become such a detonatioindebted nation . I know that is a big question. Guest it is a big question but an interesting question and ive thought a lot about that myself. I think probably we were conservative and it was harder than it needed to be together to get a loan from a bank and the insurance came out of the new deal. Some of them think it caused banks to be more risky. I think it seemed to stabilize the banking system. I think risktaking has become more scotfree and people are willing to do it and that is good in some sense because it keeps things going but it does have consequences. It may be permanent just because we have a low debt overhang and so much has to go back into resurfacing the debt that there is not as much available for growth so that is just one of my theories. Host on the topic of debt, you have a chapter that deals with the environment into the Obama Administration decisions that were taken. If you can time warp back what do you think we should have done differently . Guest i think it worked out okay and at the journal supported that. Some people on the Editorial Board made the final decision. Guest the critics would have been saying lets give them a little lesson in sound banki banking. Looking back i think paul was right. Giving them this backstop, he argued that this wasnt just a banking problem, it was a social problem. Corporations, consumers. They were keeping the Interest Rates down to the extent that they could to some degree. Actually it worked out okay because they paid the money back. But the big problem i had was with the socalled stimulus. I dont much believe in the fiscal stimulus because as many people argued you dont get much stimulus when you rob peter to pay paul. The liberals would argue you rob the rich people and pay the poor people and it creates the greater monetary. I do not much believe that and i dont believe in the demanding of economics very well i am a supply cider in that the demand will take care of itself. The Obama Administration spent a large amount of money getting close to a trillion just kind of passing out money and the evidence with that stimulated whats not there because we had very slow growthavevery slow gre recovery in 2009. And i dont believe in the monetary stimulus. And we were getting that as well. They were keeping the Interest Rates down but the problem with that is you also deny pension funds. In good libertarian fashion. Lets think about the interplay between fiscal and monetary. The vast majority keeps most of the wealth in their home that got limited very good for investors and people tha but it didnt really fix main street. At the supply side argument has come into some changes recently with some concerns that attacks measures did help to a certain extent in the reagan era but in the last 20 years you didnt get too much growth off the back of that. Its keeping to the line tax cuts and regulatory cuts. Do you still buy that and do you think that it will give us the point that youre talking about . Guest lets go back to the fundamentals. Supplyside economics is new. We traced it back to the one that was a 16th central liberal philosopher. Supplyside economics i think i kind of alluded to it before. But it remains you have to produce something before you can consume it. And someone places it is because they dont consume, they would like to consume as much as we do that because they dont produce. They dont have the knowhow to produce more advanced goods. They are getting their and making progress. But you have to produce something. You cant just to stimulate the demand. You have to create an environment where people will use their creativity and energy and work to actually produce goods that they can sell to other people. Thats just the kind of basic traditional economics. They came along in the 20s and 30s and has been totally misunderstood and misquoted for many years because they came up with a new idea every day. But the thing that really caught on he was the philosopher in economics and he thought you could actually moderate Business Cycles by the government stepping in and of spending. It was a very popular theory because it Gave Congress politicians and intellectuals rationale for doing what they want to do, taking money from taxpayers and spending it on their constituents and also gave economists agree to boost because they are suddenly advising the politicians on how to spend the money. So it was very popular to bring back this classical theory in the book. What we were trying to do is bring back the classical theory that you have to produce, you have to create an environment for people to produce and one thing that you dont do is put a tax on the people that are producing something and you dont overregulate them unnecessarily on things. They came out with the application if you get a tax is too high you get less revenues. That actually happened in the reform of the tax in the 1980s so it can happen. Host Warren Buffett makes the argument and i would agree you have higher tax rates on corporations and individuals and period of the 1950s and 60s when the u. S. Was stronger than it is now and there is evidence in the last 20 years tax cuts havent created a kind of growth so has something changed . Guest absolutely things have changed. The 1950s and 60s we were recovering from world war ii. All the other countries were flat on their backs in american corporations were investing overseas into the dollar was very much in demand and strong and of course we have growth. They had discarded under eisenhower a lot of the new deal innovations that killed the industry and thats why we had a crash then things got screwed up in the 70s for the price controls so Ronald Reagan had to straighten things out again and the supplyside politics and things picked up. Host he deserves a lot of credit in my opinion to stand up to political forces. He was a tough guy from the new york fed to have done something about it. Host i am serious. That puts me in mind a lot of folks have spoken about the financial crisis and its aftermath putting aside what you think the government should or shouldnt have done there was the need for more strong people in the room telling bankers. Do you think there is an argument to be made around that as the great man theory. Host we will get to the all the cracks in just a moment. He was a special guy even when he was being hired by the president when he got that job for what jimmy carter wanted him to do. He called bob work we end me over to the fed and said when there is blood all over the floor whos going to support me and i held up my hand and there was blood all over the floor. We had a recession, countries that bar road wer road were in , farmers were in trouble, they over bar road. There was a lot of blood on the floor but we staffed by then and when it was all over we got Economic Growth again. Host you spent a lot of your career overseas as a columnist reporter. Give us some of the highlights of what was it like being a correspondent back then im always jealous of that era i felt like youve got to do incredibly cool things. [laughter] guest because it was great fun, it shouldnt be called grief uncovering terrible things but i did have some fun. It was nice to work for the wall street journal because we were doing special stories in africa once and then do a story on missionaries is fascinating. One day a bunch of guerrillas came into town and she stood in front of her school and said dont touch any of these girls and they didnt. It was great fun i covered the union and it was fascinating. Talk about a place that was screwed up. There were terrible things but also i was just having a good time covering things going on like this strike in france where everything shut down. Host tell us about that. Guest it was remarkable because as i say, everything did shut down. I flew to brussels and printed a volkswagen and wrote it down to the border and filled it up with gasoline and drove down to france to have enough to get back. Roger and i the place was being run by a few managers and roger and i went around to the theater where there was a nonstop 24 hour discussion of revolution going on where the press are always fascinated by this revolution that they have on how it works out and how to do it again and that is what they were discussing so it apparently had something to do with organizing and this claim. I asked him what are you protesting against and i said i supposed against or father. That is an interesting answer. Host do you think this is a turning point for the neoliberalism to get its mojo back. I think that is a Good Development for france. They are so demanding of employers people dont want to hire them. If you make a lot of liberals too tough, they dont harm people and then it also causes competitive problems in the international economy. Host its interesting because the same time hes going to do all this stuff hes going to work with germany. Whats been the position on the creation of the euro and where do you think it is going are we at a Tipping Point . Guest we supported the creation of that European Union and of the euro. They actually advised them on creating the euro and we supported the back. I think it will be around and wont disappear. There were some good reasons why britain it is true that European Union created an enormous bureaucracy in brussels to work for themselves they were interfering in all kinds of policies it interfered in a lot of policies that they were not empowered to defend the constitution. Now they are going to try to figure out how they implement. Host they think that britain is going to be meaner to this do you agree . Guest could be. It depends on the terms they work out. If they are really smart, if youre up to the krispy six europe tries to create the terms are reasonable so that britain can continue to contribute to its trade to the European Community and it depends on where britain goes from here. They were between the u. S. And britain, canada. If we can avoid protectionism creeping back and the trade barriers, trade, monetary, immigration, those things all happened creating a more integrated the economy. Host its interesting because it is the more malevolent organization the world has ever known. You are talking about the new communities with the transatlantic alliance. It puts me in mind what you said earlier if you are a supply sider and referenced also that you need skills to do that. European one thing and the new configuration in america and canada to be more integrated with shorter supply chains for the production cycle do you think that is going to happen and woul