Ronald Reagan’s Free-Market Mentors

By John Fund

Monday, February 02, 2015

Have you ever gone back and revisited or recalled the books or mentors who shaped your political or philosophical thinking? I got that chance this past weekend when I attended the annual summit meeting of the Foundation for Economic Education in Ft. Myers, Fla. A slim pamphlet reprinted by the Foundation for Economic Education was given to me by Dennis Miller, a school teacher, when I was 14 years old. It was “The Law,” by the 19th-century French economist Frederic Bastiat, and it set me on my current path of thinking.

I’m not the only one whom FEE has influenced. Milton Friedman described “I, Pencil,” FEE’s account of the hundreds of people and the raw materials that contribute to the making of that humble writing instrument, as “one of the clearest explanations of how markets work to benefit consumers” he had ever encountered. The Nobel Prize–winning economist F. A. Hayek said that FEE had helped inspire him to found the free-market Mont Pelerin Society. Ronald Reagan credited FEE materials he read in the 1950s with aiding his conversion to conservatism.

Founded in the immediate aftermath of World War II by Leonard Read, a former head of the Los Angeles Chamber of Commerce, the free-market outreach group has distributed millions of copies of classic texts such as Henry Hazlitt’s Economics in One Lesson, Hans Sennholz’s Up from Poverty, and Lawrence Reed’s Are We Rome?

FEE says its mission is to “inspire, educate, and connect future leaders with the economic, ethical, and legal principles of a free society.” In the last five years, it has shifted its emphasis to reaching young people ages 14 to 24 through seminars, readings, and social media. Detroit’s public schools have made FEE’s Common Sense Economics its primary textbook for tenth-graders studying the economy. With a budget of only $3.6 million a year, FEE punches way above its weight in reaching future “influencers” who will populate academia, business, the media, and legal circles.

Take Romina Boccia, a 30-year-old German immigrant of Italian ancestry. “When I was in state schools in Bavaria, I realized that there must be other perspectives on society I wasn’t getting,” she told me. “Then someone handed me a copy of Bastiat’s ‘The Law’ on a train, and I was hooked.” She now is a research fellow in economic policy at the Heritage Foundation.

Another person who got hooked on FEE’s materials was a middle-aged actor named Ronald Reagan. The story is fascinating, as detailed in the 2006 book The Education of Ronald Reagan, by Thomas Evans.

From 1954 to 1962, Reagan worked as the host of CBS’s top-rated General Electric Theater and served as General Electric’s official spokesman. For weeks at a time he would tour GE’s 139 plants, eventually meeting most of the 250,000 employees in them. Reagan himself estimated that he spent 4,000 hours before GE microphones giving talks that started out with Hollywood patter but ended up as full-throated warnings about Big Government. “GE tours became almost a post-graduate course in political science for me,” he later wrote. “By 1960, I had completed the process of self-conversion.”

Evans, a lawyer who served in the Reagan administration before turning amateur historian, identified Reagan’s mentor at GE as Lemuel Boulware, the man behind both the company’s PR efforts and its labor-negotiation policy. Boulware believed that at the start of contract talks, GE should make an offer it viewed as fair to stockholders, workers, and customers and then stick with it, allowing for almost no changes. This “take it or leave it” approach was so successful (strikes became almost unknown at GE) that it entered the lexicon of labor relations as “Boulwarism.”

But Boulware also believed that the policy would work only if executives went over the heads of union officials and educated the workers directly about why they had a stake in GE’s prosperity. Evans notes that “a worker who learned that GE’s profit margin was much smaller than he had been led to believe or that union officials had not been truthful with him” was unlikely to join a picket line or insist on over-the-top demands. Thanks to his outreach to workers, and his surveys of them, Boulware was “reputed to understand blue-collar workers better than anyone in the country.”

Boulware’s efforts included an elaborate campaign to educate GE’s workers as well as the public on the moral and economic benefits of free enterprise. He encouraged workers to form book clubs and read free-market texts published by FEE, especially Hazlitt’s Economics in One Lesson and Wilhelm Ropke’s Economics of the Free Society. He also encouraged his managers to read William F. Buckley Jr.’s brand-new National Review.

Boulware’s free-market message so penetrated GE’s work force that Reagan, his traveling ambassador, quickly saw how important it was for him to become familiar with what the workers were reading. Over time, his own reading and his conversations with GE workers had an effect. By the late 1950s, Reagan was lambasting those “who can’t see a fat man standing beside a thin one without automatically concluding the fat man got that way by taking advantage of the thin one.” Historian Rick Perlstein has concluded that “Reagan was an integral component in the Boulwarite system.”

The lessons Reagan had learned during his GE barnstorming stuck with him. Several passages in his famous 1964 speech on behalf of Barry Goldwater came directly from his GE talks. (“There is no such thing as a left or right. There is only an up or down: up to man’s age-old dream, the ultimate in individual freedom consistent with law and order; or down to the ant heap of totalitarianism.”)

The influence of those years lasted well into Reagan’s presidency. The Time magazine journalist Hugh Sidey recalled admiring some of Reagan’s White House speeches so much that he asked a speechwriter who exactly had written them. “Reagan,” he was told. “They were actually pretty much the speeches he had given when he worked for General Electric.” And for the GE talks, Reagan was his own speechwriter.

Of course, few of the people that FEE has influenced turned out to be the gifted popularizer of liberty that Ronald Reagan was. But FEE marches on, adapting its outreach to the digital age and the fourth generation of young people to have come on the scene since its founding. Not a bad record at all for a group that shuns harsh rhetoric in favor of quiet persuasion.