Ben Stein believes that while the recession will not turn out to be nearly as devastating as its 1980s predecessor, it is devastating enough.
But beneath the pulsating shock waves and nasty headlines, he sees something even more sinister — the collapse of family values, ethics, and education.
“This subprime crisis didn't happen by accident,” he said in his keynote address. “This was not an earthquake or hurricane. It didn't happen like a meteor from outer space. It happened because a lot of unethical people were borrowing when they shouldn't have borrowed and lending when they shouldn't have lent. People say to me all the time, ‘Bernie Madoff, Bernie Madoff. How could he have done what he did?’ Well, because he's a psychopathic freak. But how come there are so many others out there doing the same thing? A long time ago, we made the decision to banish God from the public sector. If there's no God, then people are just pieces of mud struck by lightning.”
Stein served as a speech writer and lawyer for Presidents Richard Nixon and Gerald Ford before he moved to Hollywood to become a novelist, TV sitcom writer, and movie script writer. He's very familiar with the inner workings of government, and he doesn't like what he sees.
“Regulators play cozy with the people that are regulating and try to get on the money-making side of the equation as soon as they can,” he said.“I keep thinking to myself, ‘This just isn't the way America is supposed to be.’ It's not about how much money we have in the bank. This is a terrible, terrible idea, and it's led to excessive worship of money at the expense of every other value.”
Stein says that when he's on the West Coast, he lives in a “very modest” house in Malibu. People continually ask him, “What's it like to live with the stars?” He tells them he doesn't live with the real stars. And he doesn't consider them the real stars anyway.
“The real stars are not in front of the camera,” he said. “The real stars are in Baghdad and Afghanistan. They're putting on body armor and getting paid $1500 a month and a bit more in battle pay. The policemen and women and firefighters and parents of autistic children — they are the real stars. They are what salvation is all about.”
When he's on the East Coast and staying at his DC apartment, he frequently visits Walter Reed Army Medical Center and says, “I'm your pitiful, low-grade celebrity for the day, but I want to tell you we appreciate what you do.”
He has gotten to be a friend of a soldier there, and that man always tells him, “That's what we do in the military. We take care of each other.”
“I thought, ‘Wow, when did you last hear that — that the goal was to take care of something and losing your limb? This is the spirit that will take us where we need to go. It's the spirit of being in some anonymous house in Baghdad and getting your stomach blown out.’ ”
He asked the soldier, “What are you going to do now that you're so badly injured?”
The soldier told him, “We're going to learn to use a prosthesis and then we're going to teach others how to learn to use a prosthesis.”
Stein thought, This is the future of this country, if we are very lucky.
When he leaves the hospital, he frequently drives down 16th Street until he gets to top of a little rise at Meridian Hill Park. Spread out before him, he sees the lights of the Capitol, the White House, the Jefferson Memorial. If it's not too late, he drives to Arlington National Cemetery and goes to Section 60, the final resting place for those who die in Iraq.
“The earth is still moist and damp, and there are Harry Potter books and teddy bears propped up, and pictures of the guy in his high-school football jersey and at the prom,” Stein said. “I look at these men and the other 100,000 gravestones. These are the guys who paid the price for great America.
“We will get through this (recession) and there will be brighter days. Even in the recession and with fear about the economy, we still have the greatest thing God has ever given mankind: the United States of America. This is the bargain. They pay with their lives. We get to have America. We're going to have to bring America back to where it should be. It will take awhile, and it will take a spirit of sacrifice. But we're going to get there. The way we're going to get there is to remember something John F Kennedy said at his inauguration: ‘We all ask God to bless this great country and ask God to work for this country and for the principles and people we hold dear. But here on earth, God's work is our work.’ ”
How we got here
Stein spent some time analyzing how we reached this point, discussing junk bond king Michael Milken and the subprime mortgage crisis.
“The real estate cycle changed,” he said. “Anybody who buys a house knows it inevitably will change. It started to go down, and suddenly buyers couldn't pay their mortgages, couldn't refinance and couldn't sell. Defaults spread. The price of bonds fell and short-sellers came in. People bought gigantically more insurance. The whole thing went bad. Credit markets were trembling, the stock market fell a lot and people worried. But they felt as long as no big bank failed, they'd be alright.
“Then, out of a corner of hell came (Treasury Secretary) Henry Paulson. For reasons nobody knows — and we will probably never know — he decided he'd let Lehman Brothers fail. And when Lehman Brothers failed, it was like shooting the economy in the eyes. The contract between government and the private sector that no big bank would be allowed to fail was abandoned. Stocks collapsed, lenders panicked and a depression unlike any other in finance gripped the whole world.
“The Federal Reserve has done what it's supposed to do. They've flooded society with money. And they're going to put more money in. There was a huge mistake in monetary policy. It was a giant mistake to not stimulate the economy much sooner. I don't know if the stimulus package we have now is going to work. There is no history in any country that public works, aside from preparing for war, will generate enough employment to put the economy back to work. We have a credit problem. We have to fix the credit problem first. It's not necessary to give schools solar panels. Or up-to-date, 21st-century classrooms. We've got to get lending flowing again. We have a monetary disaster of not lending.”
He said the unemployment rate pales in comparison to the Great Depression's 25%.
“In 1933, the whole corporate sector generated zero profits,” he said. “We're not going to have that again for quite awhile. Is it going to recover? It will always recover. There is no such thing as a long-term period of below-high-employment equilibrium. People say, ‘What about the Lost Decade in Japan in the 1990s?’ In Japan in the 1990s, there was no year when unemployment was higher than 4%. If we have continuous stimulus from the Federal Reserve, we will get through it. But it has to be a lot of stimulus and it has to go soon and fast and flood all sectors of the economy, including trailer manufacturing.
“I have no confidence at all that President Obama understands the problem. But no recession goes on forever. Everyone always says, ‘The Federal Reserve can print money, but you can't make people lend it.’ True. Except you can make people lend it by saying, ‘I'll guarantee your loans.’ If you are Citbank, Wells Fargo or any big bank in America and the Federal Reserve will guarantee your loans, you will loan. And we will get to that point. There is lending still going on, but not nearly enough.
“This is not the only problem we face. We have severe threats to freedom which I'm terrified of, and they come from the environmental world. I don't buy this idea that we're in an environmental crisis so severe that we need to take away people's liberties and customary ways of doing business and living their lives. There's almost always some excuse to take away our freedoms. I'd rather be a couple of degrees warmer and keep our freedom.
“We face a gigantic education crisis. We have falling education scores across the board in just about every area. It's a scary prospect for any company that wants to improve itself.”
His two big innovations: take away televisions and electronic devices; and bring back corporal punishment in schools.