I recently had the pleasure of attending a book-signing event at Politics & Prose, a bookstore in Washington, where my friend Bob Samuelson was selling and signing his new work, “The Great Inflation and its Aftermath: The Past and Future of American Affluence.”All of us who read Bob’s columns in The Washington Post and Newsweek know him to be a prescient observer of the economic scene, and rarely if ever have his prescient observations been more needed than today. Bob took us on a journey back in time to the 60s and 70s when inflation ran riot, undermining everyone’s faith in the future. There really was something creepy about watching your money lose value year after year, but most of us have forgotten those times.

It was a deadly cycle fostered by big labor in concert with big business with their open-ended contracts that guaranteed steadily rising wages for labor and prices for products. The political class was committed to full employment and thus resisted efforts to squeeze inflation out of the system. Public opinion polls showed people were more concerned about inflation than the Vietnam War or the Iranian hostage crisis.

Along came Fed Chairman Paul Volcker determined to squeeze inflation out of the system and President Ronald Reagan who, Samuelson contends, was the only political leader of either party with the fortitude to support the Fed through that tough passage. Inflation, unemployment and interest rates were in double digits. The people were in distress and the politicians were beside themselves.

But we saw it through and got inflation under control, setting off a generation of steady economic growth interrupted by a few brief, shallow recessions. Until now, that is. Now we’re into truly unfamiliar territory.

Bob says he does not foresee another Great Depression, but he does see two similarities between the 1930s and today. One, no one knew what was going on back then and no one knows now. Two, there was no single nation willing and able to assume the leadership then or now to needed to wring order out of chaos.

It’s a good book. I recommend it.

(Editor’s note: Samuelson wrote a Washington Post column touching on the book’s themes in June, “Return of Inflation?“)

I just got back from a productive visit with our friends with Arkansas Manufacturing Solutions (AMS) in Little Rock, offering a talk about the importance of manufacturing to our economy and the challenges we face. The AMS is one of many Manufacturing Extension Partnerships (MEPs) around the country that work with small manufacturers to help them acquire modern technology, have access to professional advice, obtain funding and export their products abroad. The MEPs are a profound blessing to manufacturing and our economy, so of course the bean counters in the Office of Management and Budget try to zero out the minimal federal funding they receive each year, and every year we (the NAM) fight to get it put back. But every dollar that goes to the MEPs generates many more in economic growth, new jobs and exports.

I don’t have space to recount all of the information I picked up down there. But a couple of stories stand out. Timothy J. Grant, Chairman, President and CEO of Actronix, described how his company brought production back to the U.S. from China, primarily because of concern about quality. Lee Morgan, President of Farr Air Pollution Control, described how his company almost went under and attributed much of the credit for their survival - and expansion - to the AMS. There was lots of talk about, and interest in, green manufacturing. And everyone there was grateful to Rep. Marion Berry (D-AR) for his ardent support of the MEP program.

Many thanks to Dan Curtis and Tovia Chan of the AMS for arranging this great meeting and inviting me to speak. I had a wonderful time, and as always happens on these trips, I came back wiser than I left.

Isolationist writer Alan Tonelson has made a career of distorting economic data to convey a false image of U.S. manufacturers abandoning our country for foreign shores. The reality that the United States remains the world’s leading manufacturing country, that we enjoy an immense technological advantage, or that we actually have a trade surplus with free trade agreement nations, has no place in Tonelson’s mythical land of demons and dragons trying to subvert our way of life.

Anyone who doubts Tonelson’s estrangement from reality can allay their doubts by visiting his web site and the post, “Who’s on First?” at the National Association of Manufacturers. Tonelson  tries to get his audience to believe that NAM President John Engler has contradicted himself about implications of China’s manufacturing expansion.

In reality, as Tonelson should know if he did any due diligence at all, Engler was misquoted in The Financial Times and the editors afforded him an opportunity to state his real position. If you missed the FT retraction on September 18, you will find it on the NAM home page (www.nam.org) along with the Engler commentary.

Tonelson is entitled to his own opinions, but not to misrepresent the opinions of others.

Charles Eames and his wife Ray are not household names, and yet their inventive genius is present in just about every household – not to mention airports, restaurants, and other public places all over the world.
They got their start during World War II creating laminated plywood splints for wounded military personnel. They were better than the metal splints that easily transmitted vibrations to wounds and fractures.

When the war ended, Charles and Ray branched out, applying what they had learned about hot-molding wood laminates to furniture design. All across the country, there was a mad scramble to build houses for returning servicemen, and all those houses needed furniture.

Charles and Ray entered a furniture design contest run by the Museum of Modern Art with a single shelled molded plywood lounge chair that was comfortable even though it had no upholstery. It was designed of soft but lasting material to fit the design of the human body. And being so simple, it was inexpensive to make, also a major plus. They won the contest.

That chair was introduced commercially in 1946 and is still being made. In its last issue of 1999, Time magazine named it the Best Design of the 20th century.

The Eames didn’t just invent creative furniture; they also invented the tooling to make it. Manufacturers just loved them and with reason. Their chairs were, and are, comfortable, simple and inexpensive.

One of my favorite scholars, Professor Jean Smith of Marshall University, in Huntington, W.Va., has a typically well-written and thought provoking op-ed in today’s New York Times, “We Should Still Like Ike,” in which he recommends that Barrack Obama reach out to traditional Eisenhower Republicans, an often neglected group. (Smith’s op-eds appear in the Times fairly frequently, but this time his Marshall connection is omitted in favor of a reference to his most recent book, a fine biography of FDR.)

Smith makes a compelling case that Eisenhower was, after FDR, the most successful president of the 20^th century. He cites Ike’s successes on the home front – integration, the Interstate Highway System, defense of Social Security and unemployment insurance – and his refusal to embark on foolish military adventures abroad. “After Eisenhower made peace in Korea,” Smith writes, “not a single American died in combat for the rest of his presidency.”

I attended a reception/dinner at the Embassy of Canada last night and I was most impressed – by the beauty of their building, the quality of the cuisine and the intensity of their commitment to international trade. Canadian Ambassador Michael Wilson reminded everyone – as if we needed reminding – that Canada is our largest trading partner by far. U.S.-Canadian trade supports more than 7.1 million jobs in the U.S. He reiterated also a well known fact of life – that the North American Free Trade Agreement (NAFTA) has been a rousing success, stimulating economic growth and job creation in Canada, the U.S. and Mexico. He expressed incredulity that there is criticism of NAFTA in Congress and even talk of re-negotiating NAFTA. Incredulity is in order.

Opposition to NAFTA and international trade in general cannot be understood in terms of reality, but rather an angst in the heartland that things aren’t going well and surely someone must be to blame. This reflects an age-old isolationist mentality among the public, dating back to the time of the Founding Fathers, that has never completely subsided and continues to surface from time to time. It is the responsibility of political leaders of all parties and ideological persuasions to steer the voters away from this folly. The world today is more economically interdependent than ever before. Should we permit protectionism to find expression in actual policy, it will have calamitous consequences.

In 1872, the famous newspaperman Horace Greeley was candidate for President for both the Democrat and Liberal Republican Parties. Trouble was, he was up against President Ulysses Grant of Civil War fame, one of the most popular Presidents ever.

Greeley was 60 years old and in declining health. His wife was on her deathbed. He wrote a friend, “I wish she were to be laid in her grave next week, and I to follow her the week after.”

On October 30 Molly Greeley died. Greeley wrote to his friend again, “I am not dead, but I wish I were. My house is desolate, my future dark, my heart a stone.”

Grant was re-elected in a landslide. Greeley carried only six states. The distraught man, his mind going, had to be institutionalized. On November 29, three weeks after the election, Greeley died.

When the electoral college met in December, three electors from Georgia insisted on voting for Greeley even though he was dead. But Congress refused to count their votes.

So poor Horace Greeley, in less than a month, lost his wife, the presidency, his mind and then his life. He was the only major presidential candidate to receive no electoral votes.

And you think you had a bad day.