0:33 Intro. [Recording date: November 3, 2016.] Russ Roberts: Today we are talking about his recent book, Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era. Tim, welcome to EconTalk. Thomas Leonard: Thanks, Russ, it's great to be with you. Russ Roberts: Your book is fascinating. A little bit alarming. Way too educational: I learned a little bit too much about the roots of economists' attitudes in the early part of the 20th century and the late part of the 19th. But let's start with the Progressive Era itself. How would you define the Progressive Movement and the Progressive Era? Thomas Leonard: Well, one way to think about it, Russ, is a set, a rather motley set of political and social reform movements that are responding to profoundly changed conditions--economic conditions and social conditions--at the end of the 19th century. Particularly the 1890s. The 1890s were kind of--it's hard to recall in historical retrospect--but a profoundly depressing and difficult era. There was a Great Depression--the worst Depression in U.S. history, with the exception of The Great Depression in the 1930s. There was a double-dip depression, triggered, as is so often the case, by a financial crisis. There was, in addition, profoundly rapid, vertiginous[?], even economic growth going on at the same time. Sounds like a paradox. But despite the rather amazing ups and downs of the economy, over a generation or so--post Civil War--the U.S. economy is quintupling in size--1870--to turn of the century. And with that brought some amazing social changes: Lots of immigration; hopes to work in the factories and the shops and the mines. Urbanization. The rise of the American city. And along with all of that, the rise of the United States as single nation rather than a collection of states. And as, eventually, a global power. So it's a time of enormous change. And we can think about the Progressive Era as a collection of reform movements trying to cope, trying to address and remedy those many and profound changes at the end of the 19th century. Russ Roberts: And part of it involved an increased role for the state--for the government--and a concept, which we still use today: The Administrative State. So, talk about the role that played, as well as the role of expertise--which is, to me an important piece of this story. Thomas Leonard: Right. Well, everybody knows--at least everyone who has read their high school version of American history--that the Progressive Period--and here we can say roughly the first couple of decades of the 20th century--or if you want to be more precise maybe through the end of the First World War, 1918--it is a moment when the State--and particularly the Federal government, importantly the Federal government, not exclusively but for the first time, the Federal Government, takes a much larger role in economic life, especially. But it's not merely the case, as it's sometimes represented, that the Progressives "brought in the State." They certainly enlarged the State; and they, at all levels, particularly with respect to economic relations. But they also changed the nature of the State. So we sometimes read in popular accounts the idea of, you know, the State being big or small--having big government or limited government. But in fact what the Progressives advocated and ultimately succeeded in obtaining, through their activism and through their intellectual persuasion, was what they called the Administration or the Regulatory State. Which was a new beast in American economic and political life. The Administrative State surveils economic life. It investigates economic life, gathering data. It regulates economic life. And it performs all the functions, the Progressives argued, in a kind of scientific way. It's well to remember that a big part of the Progressive Movement was of course about political reform as well as about economic reform. American politics in the Gilded Age was notoriously venal and corrupt and dominated by parties. So, the Progressives not only wanted to expand government--they wanted to change government altogether. So, the Administrative State serves a very interesting and crucial role in the evolution of government economy relations.

6:24 Russ Roberts: And, that all sounds--I don't happen to agree with it, myself--but that all sounds well-intentioned, and what we would call, today, 'liberal.' Why do you call these reformers, 'illiberal'--meaning, not liberal? What was illiberal about their views and their agenda? Thomas Leonard: Two ways to think about this, Russ. The first is, the term, 'liberal'--it's an old word in English but it's a relatively new word in the political lexicon. So, after the American Civil War, say in the 1870s, if you described a person as liberal, what that meant is the person would be committed to individual freedom and to those institutions that were thought necessary for maintaining individual rights against the State. So, for example, a relatively free-market economy; and laws that protect individual rights against the State. Today we use the term 'classical liberal' to describe that view because the Progressives gave the term, at least in the United States, an entirely different meaning. The Progressives viewed this 19th century classical liberalism as inefficient, as wasteful, as corrupt. And so they certainly were reformers. But they weren't liberals. And in fact what they were trying to do was to dismantle 19th century classical liberalism in the name of health, welfare, and mores. They basically saw individual liberties--which in the American context are sort of very expressly and famously enshrined in the Constitution and Bill of Rights--they thought of those liberties as basically archaic impediments to their reform project of making, you know, the United States healthier and improving welfare and morals, too. So that's the first sense in which they are illiberal--is that there's not a lot of respect for individual rights. Particularly, in the economic context. The second sense, the additional sense in which I'd say the Progressives were illiberal, is, where first--the original sense of the term, Russ. So, when we said someone was 'liberal,' before it became a political term, what we meant is that they were open-minded or tolerant, free from prejudice and bigotry. And as you know, it turns out that a very--a shockingly high percentage of the Progressives, including the progressive economists--were anything but liberal in that traditional sense. They were closed-minded. They were intolerant. And they were bigoted. In fact they-- Russ Roberts: They were racist in ways that even--I'm a fairly cynical person from time to time--and I was shocked by the attitudes of the economists of the day, by Woodrow Wilson--a famous Progressive; Eugene Debs, a famous Socialist. And I'm going to read some quotes later, because saying that they were racist or intolerant doesn't really do justice to their attitudes without quoting their own words, which I will do later. It's kind of shocking. Thomas Leonard: It is shocking. And it shocked me when I first came across these passages piecemeal, working on a related but smaller project many years ago. I sort of was working many years ago on a history of minimum wages, and I saw these absolutely appalling, hateful discussions of workers from Asia or who were immigrants from southern and eastern Europe. African Americans, the disabled. And filed that away, thinking, 'Hmmm. There may be a story here.' And it turns out there is a story. Of the things that's most shocking is not just sort of the hateful views that they had of immigrants and what they called 'defectives,' and African Americans; but the scope of that sort of racism and bigotry. Almost no one, including even white Anglo-Saxon Protestant men, was immune from being characterized as hereditary inferiors.

11:15 Russ Roberts: And part of this is what is known as eugenics. So, talk about what eugenics are, how it got tangled up with Darwinism, and then filtered through those lenses got into public policy and among economists. Thomas Leonard: Sure. Well, we have to be a little careful, as ever, Russ, because eugenics is and remains today a dirty word--precisely because of the horrors in Central Europe in the middle of the 20th century. But the Progressive Era is roughly a generation before and it had a very different meaning then than it does now. Eugenics, at the time, was the social control of human heredity. And many progressive economists and their reform allies saw eugenics as among the most fundamental of reforms that the state could carry out. In some sense, what's more important than what we would today call the human genome? So, in their view, eugenics, which comes in two flavors--negative eugenics, which is preventing children from the unfit; and positive eugenics, which is promoting more children from the fit--was at the core of any sensible social and economic policy. It's relation to Darwinism is very complicated, Russ, as you know. Each one requires a chapter in the book to sort some of these things out. A Darwinian is someone who looks at outcomes, and, in the jargon of social Darwinism says that those who survive are fittest in some sense. The eugenicist is making the opposite claim. The eugenicist is worried that those who are surviving who are outbreeding their hereditary betters need to be controlled. So, in some sense, though they both are species if you like of evolutionary thought applied to social and economic problems, eugenics starts with a very different premise--which is: The fittest are not surviving. Eugenics judges the races that are fitter ex ante, and that therefore the state must intervene to ensure that that is stopped--that the hereditary inferiors--immigrants, Catholics, and Jews from Southern and Eastern Europe, Asians, African-Americans, and the disabled--not be permitted to perpetuate their kind, or at least not be able to outbreed their biological betters.

14:02 Russ Roberts: Now, I want to talk about the concept of the state that got promoted at this time. And it's a little bit frightening to me, because it's the exact same discussion that we have today. It's come up many times on this program, and when I critique what turns out--I didn't realize this--to be the progressive attitude, people get very mad at me and write angry things. But I want to quote a little passage here. You say, The progressives developed elaborate, often anthropomorphic depictions of society as an organism.... Henry Carter Adams said the social organism had a "conscious purpose." Political journalist Herbert Croly conceived of the American nation as "an enlarged individual." Ross described society as "a living thing, actuated, like all the higher creatures, by the instinct for self-preservation." The state, Richard T. Ely declared, was "a moral person." These are all very well-respected economists, sociologists of the day. And they saw the state as a distinct thing from the people who made it up. Society, as a distinct thing. And of course government and politics were just the vehicle by which that entity acted, somehow in our interest. This--I call it a 'romance.' It's, I think, a dangerous romance. And many of my listeners--I apologize to you out there--I know you've liked that idea. What I'd like hear from you, Tim, is: Where did that idea come from? It was not in American discourse, I don't think, or other discourse, until then. It seems like it was created around then. Thomas Leonard: Well, it's a really deep question, Russ, in intellectual history. And let me break it down as best I can in short scope in our conversation. Several things are going on at the same time. I will say that you are right to identify this as a very kind of crucial watershed in American intellectual thought. It's a striking intellectual change that happens beginning in the late 19th century, this rejection of the classically liberal tradition which makes the individual prior to the state--the individual, for example, the Social Contract tradition which says that individuals pre-exist the state and they create it for their purposes and presumably can disband it if it doesn't do what those individuals want. The progressives, of course, as you suggest rightly come at it from the other end of the telescope. They think of the state as prior to the individual. And they do use it, as you said in the quote, a very biological and sometimes anthropomorphic characterization of the state. Ely, for one--and by the way, those names may not be familiar to your economist or other listeners--these are the leading lights of American Social Science. Russ Roberts: There's still a prize, I think, named after Ely-- Thomas Leonard: There is. Russ Roberts: The American Economic Association. Thomas Leonard: There are. And if you go to any university where progressives were part of the founding, like Wisconsin or Michigan or Columbia or Wharton, you'll find buildings and programs and prizes named after all these men. And they're not just leaders of the profession, the founders of American social science; they were also influential public intellectuals. Part of the progressive creed, of course, is not merely to hole up in the library and write treatises. They were all public intellectuals. They were all writing op-ed pieces for the newspapers and the religious periodicals. Ely was on the Chautauqua summer lecture circuit--they were public intellectuals as well as leading social scientists. So, back to this idea of the social organism. A bunch of things are going on at the same time. The first is that all of the progressives, all of the leading progressive economists and many of their activist confreres did their graduate work in Germany. In the late 1870s and early 1880s you really couldn't get a Ph.D. in the United States. You had to go to Germany. And they studied at the feet of their historicist German professors, who they greatly admired. And this idea of the state as an organic thing, as a whole distinct from its component parts, and indeed, you know, in some sense superior to its component parts, was partly the product of their graduate training in the kind of German historical school of view. And it also dovetails nicely with evolution as well. Right? If the nation is an organism, it's greater than the sum of the individuals that it comprises. A second influence, Russ, is Darwinism. Darwinism, with its kind of material explanation for evolution, for human evolution, seems to imply that the idea of having inalienable natural rights invested in you by a Creator--the language that you find in the Declaration of Independence--Darwin seems to suggest that's just kind of a nice fiction. A third influence on this crucial change in the way that Americans see the relationship between individuals and the state which we haven't touched on yet is that many of these progressives, and certainly the intellectual leaders among them, were Evangelicals. They grew up in Evangelical homes. They were the sons, and daughters, of ministers and missionaries. And they preached what was known at the time as a Social Gospel. This is a move of American Protestantism away from the idea that the individual must be saved to the idea of a more collective project of redeeming the entire country. Of redeeming America. Which the chapter title of one of my early chapters. And lastly, I would say, fourth, there is a kind of American native discourse of Pragmatism--capital-P Pragmatism--which we associate with John Dewey and others, Charles Pierce [pronounced 'perce'--Econlib Ed.]--which seems to suggest that, you know, just about any departure from previous absolutes is okay provided it proves useful for promoting good things--like welfare and health and higher wages and [?] and all the rest of it. Russ Roberts: Well, I'm always excited when someone other than me mentions Charles Pierce on EconTalk. I think this is the first time. Thomas Leonard: Excellent. Russ Roberts: I've mentioned in the past, I think, that I had a philosophy professor, Richard Smyth, who was a Pierce specialist, and after I studied it at his feet at the U. of North Carolina was able to, years later, talk to him about the relationship between Pierce's and Hayek's ideas, where Hayek was very interested in the evolutionary, practical ideas that proved their worth should be respected even if you didn't understand why they made sense. There's a certain skepticism about the power of human reason in Pierce's work, and in Hayek's, that I'm very fond of.

22:30 Russ Roberts: But I want to quote another short passage related to this point about the organism. You write, Progressive economists, notably Edwin R. A. Seligman, played a pivotal role in laying the intellectual foundations for the US income tax. Taxes, they said, were not payment for government services. Seligman argued that we pay taxes "simply because the state is a part of us." The taxpayer's duty to the state was no different than the duty to oneself and one's family. By implication, taxes should vary with ability to pay. And I think that attitude, again, is still very common among many Americans today, and elsewhere around the world--that somehow, supporting the state is just like supporting yourself: this idea that we, through the state do things; there are things the state does that benefits us. And I find that difficult, because in fact, almost everything the state does benefits some of us and hurts some of us. And I feel that many people take advantage of that romance to push things for their own self-interest, claiming they are good for all of us when in fact they are good for them and not for the rest of us. So, I was just very struck by how common that attitude was then. Thomas Leonard: Well, it's a great example, Russ, of the sort of organicist view of the state put into concrete economic action. When the Constitution was amended in 1913 to pass the income tax, economists were absolutely--today we'd call them 'public finance economists'--were at the forefront of that movement to move the United States government away from funding itself with tariff revenues and with taxes on tobacco and alcohol. And to, instead, tax income. It is a watershed moment, because if you are going to have an administrative state, it needs to be funded. And an income tax is a much better, much more reliable way of funding a large institution of the sort that the progressives imagined when they were drawing up the blueprints for the administrative state. Russ Roberts: Well, I'm going to quote Irving Fisher, who I used to like until I read your book. I used to think Irving Fisher was just--I mean, he's a wonderful writer; he had a lot of good ideas about interest rates and their relationship to inflation which I found useful thinking about these things. He wrote--again, early part of the 20th century and famously lost money during the Great Depression, unprepared for that event; always entertaining for non-economists to point those things out. But, his social attitudes were rather unpleasant. Again, a quote from the book: ... social science experts gave elitism a new form and rationale in the Progressive Era, one expanded on by Irving Fisher. The United States had abandoned laissez-faire, Fisher said, out of recognition that "the world consisted of two classes--the educated and the ignorant--and it is essential for progress that the former should be allowed to dominate the latter." And that--there are many other things Fisher said that were worse than that. But I wanted to use that example--I mean, it's a perfect example of the justification for why experts should be in charge to run other people's lives. And I want to ask you: that attitude of course remains today in many forms among economists and others in power. How much do you attribute simply to the economists' desire to have more power? So, there are many, many quotes in the book from economists justifying an expanded role for the state. But it's an expanded role for themselves. So, it's a kind of awkward form of public intellectualism. And it remains so to me to this day. Thomas Leonard: I think that's well-put, Russ. Sometimes if you step back from the scholarly trees and look at the whole forest, one of the things that's most shocking, or at least striking a hundred years on, is that in proposing to fundamentally change the U.S. state and its politics and to fundamentally remake its economic life, the progressive economists--and their reform allies, in other institutions; it's not just a bunch of academics; it's also progressives who are working in settlement houses and who are investigatory journalists or who are working in other community groups, or in government--their best idea for spearheading all those reforms is, 'Well, why don't we install me and my friends?' To put it baldly. And, it is this--I don't think progressives today are quite as egregious, because, you know, experience has taught that this kind of heroic view of expertise, simultaneous heroic and self-serving, is sometimes misplaced. There is this very quintessentially American combination of naivete on the one hand--you know, Fisher was brilliant, but the economists really didn't know what they claimed to know in arguing that they should be running an administrative state. Russ Roberts: Huh. Thomas Leonard: And it was also incredibly arrogant, at the same time. Right? Naive and arrogant. Russ Roberts: I don't think things have changed at all. I'm serious. I'm not trying to be cute here. Thomas Leonard: Yup. Russ Roberts: I think the general thrust of welfare economics--which means something very specific in economic theory; it's not the study of payments to poor people: it's the study of wellbeing, human wellbeing--I find depressingly narrow, for starters. Overly confident. And I think incredibly self-serving: to place us as the engineers of the betterment of those who don't understand the world as well as we do, is the claim. And I find it depressing. Thomas Leonard: Well, there's essentially a moment, Russ, that happens at the end of the First World War. And it's a very awkward moment for the Progressives, and for the progressive economists in particular. And it's this: That the economics that they'd been preaching since their graduate school days, for a generation, was a German-style economics. One modified to American conditions, but German in spirit. And so, two[too?], was their model of the administrative state: how economic policy would be put into practice, and so, too, the idea of the expert economist as the keystone, the key figure in the administrative state. All of these ideas, they borrowed from Germany. And of course Germany became a dirty word in American discourse at all levels during WWI. Even beer was vilified for its German connections. So, having a German economics and a German view of expertise; and the Germans, Germany as the model for the world in designing a scientific, rational, expert administrative state was politically completely untenable. But what happened--and you can see this in Fisher's Presidential Address, just a month or so after hostilities have ended. His Presidential Address to the AEA (American Economic Association) meetings, 'Economists in the Service of the State,' he says 'Yes, well, we were wrong about Germany, but we're not wrong about the administrative state. We're not wrong about the necessity of having the experts in charge.' What did change, I think--one important change that takes place after the [?] period in the 1920s--economics becomes a little more technocratic: So we evolve towards the view where experts given a goal, a set of goals by some political process, and then decide the best route to get to that goal. Which is a bit different from the more heroic Progressive Era concept, which is experts not only tell you how to get from A to B, they tell you what your goals should be in the first place. Like preachers.

31:54 Russ Roberts: So, I can't help--this is not in your book, but I can't help but remark--and I am going to defend the Progressives now, which is not easy for me, but I'm going to make a go. So, there is this disillusionment or a little bit of soul-searching after WWI, because Germany was blamed, correctly or not, for the conflict. And of course Germany--it's always important to remember that Germany, this militaristic, authoritarian state, was the first state to have serious welfare, traditional welfare activity such as social security-- Thomas Leonard: That's right-- Russ Roberts: And other things. So, okay. So, they realized--oops, we've got to get rid of part--we have to concede that part of this was tainted. Then, of course, WWII and the Holocaust ends any use of eugenics and race-based thinking among liberals, for the next 75 years. And, can't one argue that, 'Okay, so progressivism has these hideous, racist'--and I'm going to give you some more quotes in a little bit; we're not exaggerating here--hideous racist origins. 'They had an intolerant and horrible set of attitudes toward women, certain nationalities, Jews, certain, again, races; and yet they also had their good stuff. So, okay, they had some bad ideas. They get rid of those and now they just have the good part.' What do you say to that? And more importantly, why should we care? I mean, this is a fascinating book, but, okay, so modern progressives have bad ancestors. Is that a big deal? Thomas Leonard: I have to say, Russ, I'm always skeptical of the argument, 'This time it's different.' As you know from reading the book, one of the main arguments argued in support of minimum wages during the 'teens, a campaign led by progressive activists and progressive economists, was that if you fixed what we today call a binding minimum wage, you would disemploy idle, inferior workers. The idea was that productivity, we'd say today, was connected with some metric of biological inferiority. So if you set a minimum wage high enough you'd make sure that the Jews and Catholics and Orthodox Christians from Southern and Eastern Europe were kept out; that the Asians, who were vilified as coolies were kept out; and those parasites already in the labor force who couldn't be productive enough to justify a properly-set minimum would be idled and could be dealt with appropriately. So that's an example of the way that progressives harnessed eugenic thinking in defense of something as anodyne as a minimum wage. The idea it was not merely raising wages but it was also performing this incredibly important and valuable eugenic social service. Russ Roberts: 'But now no one puts forward a minimum wage now as a racist. They are just trying to help poor people.' Thomas Leonard: Well, that's certainly how the rhetoric goes. There's two parts to this. If we were giving the textbook version, Russ, we'd talk about the scientific or positive claims; and then the normative claims. What's interesting in retrospect is that the original progressives, unlike their namesakes today, saw potential job loss as a feature, not as a bug, right? Whereas today it's the other way around: Folks who are honest about, say, a $15 minimum will acknowledge that, at least at that level we start to lose jobs and/or hours. And the irony, of course, is we see this, if we see it correctly today, as a cost of minimum wage set too high rather than a benefit, which is how the original progressives saw it. And I must say: I'm very sympathetic to your position at least as you sketched it. It's entirely possible to be a proponent of the minimum wage in the 21st century without subscribing to the hateful views of your namesake's ancestors. That's quite right. But I think what we need to do, though, is to step back from the sensational aspects of eugenics and racism and look at the very idea of an administrative state and expertise in the first place. So, I quite agree that 21st century progressives, those who call themselves progressive in the American political context today, do not, and thank goodness, share the views of their intellectual namesakes. And that's all for the good. But I do think, though, that a couple of notions--and we're not talking here about racism or eugenics--have carried over from a century ago. And here's what they are. One we've touched on, and that's this idea that, I think if you really sat down over a glass of wine with a thoughtful progressive, you'd find that they still hold to progressivism's core faith, is that: If smart, well-intended people are put in charge, the best and the brightest, then progress--economic progress, social progress--will inevitably follow. I think that attitude is not nearly as arrogant or heroic necessarily, but that fundamental faith remains. And the second thing I think that remains connecting 21st century progressives to their namesakes of a century ago is this idea the free markets are intrinsically--intrinsically, not in practice but in their very design, their nature--unjust and wasteful. And that means that free markets require--goes the argument--the visible hand of a vigorous, activist state that's empowered to investigate and regulate. Russ Roberts: Yeah, and I think you're right. And nowhere in the book do you claim that there's something wrong with being in favor of the minimum wage today because it has racist roots or whatever. That's not the theme of your book at all. And I think you're exactly right that what has remained which sounds benign, I find dangerous. Which is this idea that certain people know better about how to live or how other people should live. We certainly see that in the Behavioral Economics sphere to some extent, and we see it elsewhere.

39:19 Russ Roberts: I want to come back to the minimum wage. I'm going to talk about that in some length, and not just the minimum wage but the labor force and how policy should be toward it. But I don't want to miss a chance to discuss Woodrow Wilson for a minute. And then we'll use him as our segue to the minimum wage. Woodrow Wilson--I thought the U.S. intervention in WWI earlier on was a terrible mistake. And certainly the Versailles Treaty which Wilson championed and influenced, it appears, was also a terrible mistake. But my perception of Wilson was--he had been a professor at Princeton, and he was an idealist. That's my view of him, until I read your book--which is: 'The road to hell is paved with good intentions; he meant well; he tried to do well; and in entering WWI he tried to do well, and in emphasizing self-determination, and the Versailles Treaty's different components.' But I get a different perspective on him after reading your book. And here's a quote from the book: "Professor Woodrow Wilson"--this is before he was President; he was at Princeton, I assume-- Professor Woodrow Wilson told his Atlantic Monthly readers that the freed slaves and their descendants were unprepared for freedom. The freedmen were "unpracticed in liberty, unschooled in self control, never sobered by the discipline of self support, never established in any habit of prudence... insolent and aggressive, sick of work, [and] covetous of pleasure." Jim Crow was needed, Wilson said, because without it, black Americans "were a danger to themselves as well as to those whom they had once served." When President Wilson arrived in Washington, his administration resegregated the federal government, hounding from office large numbers of black federal employees. It's fascinating to me that this aspect of Wilson, which is absolutely horrific, is not widely known. I don't think it is. America I wrong? And why isn't it widely known, if I'm right? Thomas Leonard: Well, it's known among scholars, Russ, but I don't think it's widely known among the public. It is true. You may know that there was a controversy here--I'm sitting in Princeton University--there was a kerfuffle last year when some student activists occupied the President's office and made a set of demands for change. One of those was that Wilson's name be removed from the School of Public and International Affairs, which is where I'm sitting right now. And that his name also be removed from Wilson College, which is one of the residential colleges here, because he was a racist. And, Princeton is a university, so it responded by convening a committee of scholars, and it's elicited opinions from various scholars outside the university; and made a decision. And the upshot is nothing is happening, though they are going to, perhaps as a token, take down a mural of Woodrow Wilson in Wilson College. But the name will remain. Russ Roberts: Maybe people think it's the sporting goods company. You know, if they take down the mural. Thomas Leonard: Maybe so. He is, in fact, holding a baseball, throwing out the opening day pitch. So, I have to say, you know, part of me was proud of those students, in a sense that they had learned some of their history and they knew that Wilson's past, his record on racism as a defender of Jim Crow--and Jim Crow in this context means effectively annulling the 13th, 14th, and 15th Amendments . He advocated that. But I would want to--I would have gone further. And that's what this passage is so important about, Russ. It's not merely the fact that Wilson was a racist. Lots of people had race prejudice at that time. That was widespread. I think what we want to draw--it's helpful. History helps us to draw distinction between people who had arguably unpleasant views--and racism is certainly unpleasant--and those who acted upon those views in a way that harmed others. And third, those who acted upon those views using the coercive power of the state to harm others. Remember--you know, Wilson is elected in 1912. Okay? This is more--this is 50 years later after Appomattox. The Federal workforce is--the beating economic heart of the black bourgeoisie in Washington, D.C. It's a source of pride. It's a source of income. It's a source of social standing. It's the only place in America where a black man can give orders to a white man and have them carried out without any sort of retaliation or violence. And Wilson--who won the election mostly by accident, let's remember--he won the election because Teddy Roosevelt ran as a Progressive, capital "P"-Progressive, splitting the Republican vote--Wilson got majorities, popular majorities, only in the states of the Confederacy. And his henchmen, McAdoo and others proceeded to desegregate--or rather to resegregate--the federal workforce. It was a devastating blow. That's not just racism. That's racism acted upon. That's racism enacted using the coercive power of the state. Which is most sinister of all.

45:32 Russ Roberts: So, I'm going to read another long passage. I apologize to listeners who don't like to be read to. If all goes as planned, I interviewed Doug Lemov in last week's episode. So we talked about reading out loud to folks. So, I notice some people don't like it. But I want to read this passage because I think it is a great example of what we've been talking about. And I think some listeners might think I've been exaggerating about the attitudes of the day among economists and leading social scientists. And this will lead us into a conversation of what you call 'the menace of the unemployable'--this idea that immigrants and non-Anglo Saxon, non-white workers were bad for the country. And it has a lot of echoes of today's world where we're talking about how to deal with the fact that some workers may not be employable, may be put out of work by technology. So, this is, again, a very long excerpt; but I think it's important and I want to give people a flavor of the book; and then we'll talk about it. Thomas Leonard: Let's hear it. Russ Roberts: Yeah, I know as an author, when people say, 'Do you mind if I read you a passage from your book?' Music to my ears. Thomas Leonard: Yeah. Russ Roberts: Here we go: The term "unemployable," popularized by Sydney and Beatrice Webb, was a misnomer, for many of the unemployable were in fact employed and others desperately wanted to be. The Webbs used the term to describe people incapable of work, as well as those who could work but who accepted wages below a standard reformers judged acceptable. The latter group posed the threat.



University of Chicago Sociologist Charles Henderson put it plainly: the unemployable were those who "bid low against competent and self-supporting men who were trying to maintain or raise their standard of living. And they can do this just because they are irresponsible and partly parasitic." By "parasite," Henderson meant that the unemployable worker earned less than was required to support him- or herself, creating a shortfall that had to be met by other members of the worker's household or by private or public charity.



Henderson borrowed "parasite" from Sydney and Beatrice Webb's Industrial Democracy, which was influential among American labor reformers. The Webbs affixed the term to sweatshop industries that paid wages below a living wage, and to the workers who accepted these wages....



... Since "parasites," by assumption, could not pay their own way, their economic competition served only to drag down the wages of their betters. Letting the unemployable work was thus socially destructive, so, went the argument, they should be removed from the workforce, kept at home, segregated in rural labor colonies, or placed in institutions. And you go on to write, and I'm going to now indict, with your words, Woodrow Wilson again and Richard Ely, prominent economists of the day: The low-standard or undercutting-of-wages part of the theory, got its start with the violent activism of white Americans against Chinese immigrant workers. The title of a pamphlet published by the American Federation of Labor trenchantly captured the heart of the claim: Meat versus Rice: American Manhood against Asiatic Coolieism, Which Shall Survive? If wages were determined by living standards rather than by productivity, then the meat-eating Anglo-Saxon could not compete with the Chinese worker accustomed to eating rice.



Professor Woodrow Wilson, in his popular History of the American People, preferred the same theory of low-standard races undercutting American wages, adding a fillip of racism to cement the notion that race explained the low standards. White laborers, unable to "live upon a handful of rice for a pittance," could not compete with the Chinese, "who with their yellow skin and strange debasing habits of life seemed to them hardly fellow men at all but evil spirits, rather." And now I'm going to quote where you talk about Richard Ely, and this is so depressing: The fullest unfolding of our national faculties, Ely asserted, required the "exclusion of discordant elements--like, for example, the Chinese." Ely assumed that a unified American nation required racial homogeneity. As for South Asians, Ely proposed that famine-relief efforts in India should be suspended. Why not, Ely ventured, "let the famine continue for the sake of race improvement?" And the quote goes on to talk about anti-Semitism, from John Commons--is it John Commons, is that correct? Thomas Leonard: John R. Commons. Russ Roberts: Who was--who was John R. Commons? Thomas Leonard: John R. Commons was the leading labor historian and economist of the day. There's a building named for him still at Wisconsin. He was a colleague of Richard T. Ely's and Edward A. Ross's, founders of Wisconsin Social Science and also key leaders in what's known as the Wisconsin idea--the sort of prototype of the administrative state, first built in Wisconsin.

50:40 Russ Roberts: So, this idea, that certain races, nationalities, etc., would drag down the wages of native-born Americans, is tragically still in our discourse today. But in its day, in the Progressive Era, this idea that somehow a Chinese worker, because of his desire for rice, would be willing to work for a lower wage than a meat-eating Anglo-Saxon--I can't tell you how disturbing that idea is to me. And again, I'm not naive--like you said, we understand that people of that era didn't have the same attitudes we have. But to use that as a justification for keeping them out of the workforce is so sad. Thomas Leonard: Yeah. Viewed from today, it's pretty ugly stuff, Russ. Some of these passages that you've read aloud were hard for me to write. But for the most part, these quotes are, if you like, letting the men who said them hang themselves. It doesn't require any further sorts of indictment than to see what sorts of arguments that they made. One thing that--it turns that the Chinese play a really key role in the American anti-immigration movement. The Chinese were the first race--using the terminology of the day--to be legally excluded from the United States on racial grounds because they were Chinese. The Chinese Exclusion Act dates to 1882, and it follows a decade or more of [?] mob violence against Chinese immigrants and Chinese workers in California. And if you think about it, it's ugly of course, but it's also a little bit odd. Because the Chinese worker who they are vilifying as coolies--that's a very important and particular usage--the Chinese worker is basically being accused of being hard-working, of being law-abiding, of being frugal and resourceful. And these are quintessentially American virtues, aren't they? At least in the small-'r' republican tradition. So, if you are going to try to demonize someone as a threat, as a hereditary threat, as a political threat, and of course as an economic threat to Anglo-Saxon American workers, you have to come up with someone else. And so, what they came up with--the progressives, activists, the economists, and some of the labor unions--was that they had this sort of supernatural ability to subsist on nothing. And that was in fact linked to their race. Today we might give it a cultural explanation, but at the time it was deemed an innate quality. And furthermore, that living standard, this ability to live at subsistence, was not only determined by race but it also somehow led them to accept unusually substandard low wages. Of course, that doesn't follow at all if you think about it. Just because you live frugally doesn't mean that you are willing to accept low wages. If there's any competition in the market, you won't. It just means you are saving your money so that maybe you can bring some more of your family to safety, or maybe start a small business. So the actual economics of it are a little bit puzzling. And we could talk about that if you want, but I don't want to get too far in the weeds. This is the moment where Labor Economics, which it was not yet called--that's anachronistic--still hadn't fully adopted marginal productivity as a theory of how wages are determined. It's sort of a mishmash, say: there's still an idea that wages are partly determined by living standards and if you can say that living standard is a function of race or indeed of gender, then you are off to the races. And, just to finish the thought, Russ, this model of demonizing the Chinese as under-living--that was sort of the term of the art; that's what made them a threat--was later adapted and applied to immigrants from Southern and Eastern Europe, and so-called defectives--people with physical and mental disabilities. And ultimately to women, too, using the same sort of argument. Russ Roberts: Just the parallel where today people say that 'We need a minimum wage because people can't live on the wages they are earning'--I'm always--that phrase always strikes me as bizarre. I mean, everybody would like to earn more. And certainly many of us would like to see poorer people earn more. But the idea that they are not living somehow because they foolishly accepted these wages and we should effectively stop this legal transaction, make it illegal, by a minimum wage. And then, when you ask people, 'Well, what if there are people who are going to be put out of work?', first they argue, 'Well, they probably won't be. But if they are, that's why we need, say, universal basic income, or expanded welfare state.' And this steering of--there's no possibility of people climbing the ladder, no possibility of people getting work experience to improve themselves, no recognition of the importance of work for human wellbeing and a sense of pride and dignity--again, I feel like a lot of what we hear today in the debate is--it's the same argument, just not quite as racist. Thomas Leonard: That's right. I think that's exactly right. And I should say that this notion that these various inferior peoples, races and genders and the disabled are wrongfully usurping the jobs that rightly belong to white, male Anglo-Saxon workers, has a second component, too. That's where the term 'Race Suicide' comes from. The fear--and this is where eugenics adds meat to the argument--it's not just, 'It's unfair economic competition.' The idea is that the American working man will not lower his standard to the coolie level, and will instead have fewer children. And because of that, the inferior, the hereditary inferiors, will outbreed their biological betters. That's what Race Suicide means. That's what Edward A. Ross named the process. And the idea-- Russ Roberts: He was a Sociologist, correct? Or was he an Economist? Thomas Leonard: He was a Sociologist, and probably the most prominent intellectual among Sociologists of the day. If you'd asked an American, 'Name a Sociologist,' they probably would have named Ross, a pioneer in the field. And 'Race Suicide' is what President Theodore Roosevelt called the greatest problem of civilization. It's not just a bunch of academics discoursing on theories of wage determination. This was viewed by Roosevelt and many other progressives as a profoundly important economic problem. And, you know, I think, one of the things we might want to say, Russ, since I see we're running out of time, is that the original progressives--and this I hope will connect with your last point--were deeply ambivalent about the poor. It's really, I say in the book, the Great Contradiction at the heart of the Progressive Era reform movement. I think they felt genuine compassion for "the people," right? Which is to say those groups they judged worthy of American citizenship and employment. And they were offered the helping hand, the deserving poor, of state uplift. But simultaneously, they scorned millions of ordinary people who happened to be disabled or belonging to a "inferior race," or female. And they were offered the closed hand of exclusion. And I think that's what connects to today's discourse. There's still--you kind of can't believe it, but if you haven't been living under a rock for the past few months, there is still a view at large that certain classes--indeed, entire races--are not worthy of American citizenship, much less employment.

59:39 Russ Roberts: I'm glad you mentioned that, because I wanted to make it clear that although I've been critical of progressives' views towards, say, minimum wage or other issues, it's now the case that the Right in America has taken up a big chunk of the kind of argument progressives were making, and making the same kind of arguments--just not from the Left, from the Right--about the need to keep America pure. An implicit form of eugenic thinking without the worst pieces of it. But not really that much different in its intellectual roots. Thomas Leonard: That's quite right. The kind of right-wing populism you are hearing from, the Trump campaign, is just eerily similar to the arguments that were sketched in my book of a period a hundred years ago. When I set out to write this book, it never occurred to me that these sort of ugly sentiments would again become an important part of our national political discourse. But here they are again. Russ Roberts: Yeah. The Race Suicide idea is really rampant among the American Right today--this idea that America needs to be white, or pure, or somehow our national destiny is going to be contaminated by immigrants of certain kinds because they are not capable of becoming part of a democracy, part of the workforce, whatever it is. And again, those attitudes are all over your book, which were common in the 1880s, 1890s, 1910, and about immigrants whether they were from Eastern Europe as Jews, the Chinese, Italians, Irish, or African-Americans. It's just very depressing. Thomas Leonard: And I would also say, Russ, something we really want to avoid doing, in retrospect, looking backward a century, is: We want to make sure we don't make the tempting mistake of condemning all that's eugenics and race science as pseudoscience. That would be our view of it, today. But at the time, it was nothing of the sort. It was the best science of the day. And Progressivism is nothing if not scientific in the way it conceives of the relationship of the expert to the administrative state and the relationship of the administrative state to the economy. It's really hard to appreciate in retrospect. But these people were not cranks. They were not proto-fascists or any such thing. They were the leading lights, intellectually and politically of their time. And they thought they had it right. They thought that they were simply taking the best science of the day and applying to important economic and social problems. I think, if nothing else, it should counsel humility for economists and others who do policy today.