How presidential administrations cheat at monopoly: the rules of the game were violated by FDR--and now by Barack Obama. Both refused to acknowledge--close to a century apart--that "recovery will not happen from the top.".

• Author: Shlaes, Amity
• Position: Business & Finance - Franklin D. Roosevelt

THE MONOPOLY board game originated during the Great Depression. At first, its inventor, Charles Darrow, could not interest manufacturers. Parker Brothers turned the game down, citing "52 design errors." However, Darrow produced his own copies, and Parker Brothers finally bought Monopoly. By 1935, The New York Times was reporting that "leading all other board games ... is the season's craze, 'Monopoly,' the game of real estate."

Most of us are familiar with the object of Monopoly: the accumulation of property on which one places houses and hotels, and from which one receives revenue. Many of us have a favorite token. Perennially popular is the top hat, which symbolizes the sort of wealth to which Americans who work hard can aspire. The top hat is a token that has remained in the game, even while others have changed over the decades.

One's willingness to play Monopoly depends on a few conditions--for instance, a predictable number of "Pay Income Tax" cards. These cards are manageable when you know in advance the amount of money printed on them and how many of them are in the deck. It helps, too, that there are a limited and predictable number of "Go to Jail" cards. This is what economist Frank Knight of the University of Chicago would call a knowable risk, as opposed to an uncertainty. Likewise, there must be a limited and predictable number of "Chance" cards. In other words, there has to be some certainty that property fights are secure and that the risks to property are few in number and can be managed.

The bank must be dependable, too. There is a fixed supply of Monopoly money and the bank is supposed to follow the rules of the game, exercising little or no independent discretion. If players sit down at the Monopoly board only to discover a bank that overreaches or is too unpredictable or discretionary, we all know what happens. They will walk away from the board. There is no game.

How is this game relevant to the Great Depression? We all know the traditional narrative of that event: the stock market crash generated an economic Katrina. One in four was unemployed in the first few years. It resulted from a combination of monetary, banking, credit, international, and consumer confidence factors. The terrible thing about it was the duration of a high level of unemployment, which averaged in the mid teens for the entire decade.

The second thing we usually learn is that the Depression was mysterious--a problem that only experts with doctorates could solve. That is why Pres. Franklin Roosevelt's floating advisory group--Felix Frankfurter, Frances Perkins, George Warren, Marriner Eccles, and Adolf Berle, among others--sometimes was known as a Brain Trust. The mystery had something to do with a shortage of money, we are told, and, in the end, only the Brain Trust's tinkering with the money supply saved us. The corollary to this view is that government knows more than American business does about economics.

Another common presumption is that cleaning up Wall Street and getting rid of white-collar criminals helped the nation recover. A second is that property rights still may have mattered during the 1930s, but they mattered less than government-created jobs, shoring up homeowners, and getting the money supply right. A third is that American democracy was threatened by the rise of a potential plutocracy, and that the Wagner Act of 1935--which lent Federal support to labor unions--thus was necessary and proper. Fourth and finally, the traditional view of the 1930s is that action by the government was good, whereas inaction would have been fatal. The economic crisis mandated any kind of action, no matter how far removed it might be from sound monetary policy...