to argue for the free market:
“The wood came from Washington State, the graphite came from South America, and the rubber came from Malaya—literally thousands of people on three different continents each contributed a few seconds of time to make this pencil. What brought them together and induced them to cooperate? There was no commissar sending out orders from some central office. Because there was demand. When there’s demand for something, markets find a way.”
I used Friedman’s ideas when debating with Sargent Shriver about the price of milk. Sarge was saying, “I remember we campaigned in Wisconsin, and they had so much milk that the price was dropping. And then we went to Illinois, where milk was scarce and the price was going up, so I got on the phone and complained to the regulators …”
I said to him, “Don’t you think the market could have sorted that out? If there was that much need for milk in Illinois, eventually someone would’ve brought it in from Wisconsin or some other state. I think they wanted to keep milk tight so they could jack up the price. They made that conscious decision in the private sector. But you used government power to interfere with supply and demand, and I don’t feel government should do that.”
Much later I learned that when you get in the trenches, pure laissez-faire principles fall short. There’s a gap between the theory and the reality. Just from a public investment standpoint, it makes sense to put taxpayer money into after-school programs if you want to save many dollars down the line on crime and prisons. You can’t put the burden of a disabled child all on the family if the family is poor. There has to be a social safety net. There has to be investment in the public good.
The Friedmans were short, lively people who seemed perfectly in sync. Someone had told me, “Make sure that you talk to Rose. They see each other as equal partners, but too many people talk to him and ignore her because he’s the Nobel Prize winner.” So I was careful to ask Rose as many questions as I asked Milton. That unlocked the conversation. We spent a wonderful evening talking about economics, their lives, the books they’d written together, and their involvement in the TV series. One of the fascinating things Friedman told me was that he’d worked for the government during the New Deal, President Franklin D. Roosevelt’s program in the 1930s for economic recovery and social reform. “There were no other jobs,” he said. “It was a lifesaver.” Even though he was against most regulation, I was impressed to hear that he favored government relief and government jobs during mass unemployment because this could inspire the economy to grow.
As good as Reagan’s administration was for returning coherence to the US economy, I’d have made more money if Jimmy Carter still occupied the White House. Under Carter, real estate was going nuts, with properties appreciating by 10 percent to 20 percent every year. My partner Al Ehringer and I were about to make a killing on our investment in Denver: a whole city block in a blighted area of town down by the railroad tracks. Thanks to President Carter’s programs for dealing with the oil crisis, the energy business in Denver was booming, and a real estate consortium was planning to build a thirty-story tower on our land. We were ready to sign papers when Reagan came in and put the squeeze on inflation. Suddenly people started looking at energy and real estate in a different light. The project fell apart. The developers told us something like, “Economic growth is slowing down, money’s not as available as we thought. Shale oil exploration has stopped. This whole thing’s not going to happen.” Ultimately Coors Field, home of baseball’s Colorado Rockies, was built a block away, and our big payday came. But for many years that Denver property felt a little like the supersonic airport that Franco and I had bet on years back. This kind of volatility was normal in real estate, where you accept higher risks in hopes of higher returns. Reagan did the right thing to tighten credit, but the tightening hit us the wrong way.
The real estate opportunities I found under Reagan were closer to home. Santa Monica’s Main Street had begun to change just as Al and I had hoped, with the alcoholics and vagabonds slowly giving way to pedestrians and little restaurants and shops. Now you’d actually hear people say, “Let’s go to Main Street.” The revitalization hadn’t reached all the way south to the Santa Monica–Venice border, though, where Al and I were sitting on an entire city block of empty lots. It was land from the old Red Car trolley system that in the 1940s used to connect downtown LA, Santa Monica, and Venice Beach. Now it was no-man’s-land. The last building at that end of Main was a bar called the Oar House. Next door stood a health food store run by guys who wore turbans. And across the street were a little synagogue and a boarded-up building that belonged to a famous comedian. The nearby storefronts were all cheap to rent, and several were occupied by odd little religions and sects. There was a Scientology location. It was all really, really run down, with no foot traffic and very few shops. Our plan was to build a beautiful block-long low-rise red-brick building featuring shops at street level and a couple of floors of office space above. We wanted other investors and businesses to say, “Wow, they’re building that far south; maybe we should also.”
It was a big roll of the dice for us: a $7 million, thirty-nine-thousand-square-foot project capitalized with our profits from the office building we’d redeveloped farther up Main Street. In the last year of the Carter administration, we’d sold it for a $1.5 million profit. Al and I figured that we would control the risk by making sure the building was fully leased the day it opened. To do that, we put together a slide show selling the bright future of the neighborhood. We made the presentations ourselves and accomplished our goal.
I had a good feel for the neighborhood because my office was still right there. Oak Productions—a reference to my nickname in bodybuilding, the Austrian Oak—had moved to a corner loft in an old gas company building in Venice, just a block away from Main. It had a big bank of windows, white-painted brick walls, and a high open ceiling with skylights. I had the idea of leaving the ductwork exposed and painting the pipes bright red and blue. My inspiration was the Centre Pompidou, a postmodern cultural center in Paris, and everyone loved it. The office was also decorated in old oak furniture, red carpet, and a blue L-shaped sofa across from my desk, which gave it a very patriotic feel. The partitions were made of glass so that we could all see each other, and a separate area had little wall-mounted cubicles to store T-shirts and booklets for the Arnold mail-order business.
With my business and movie careers expanding, I’d finally broken down and hired more assistants. Ronda was still my mainstay. She’d worked for me since 1974, and now she was in charge of investments and keeping the books. Although she had run a toy store, she had no formal training as a businesswoman, so she took business classes at Santa Monica College and UCLA. I remember a few years later, the first time we got a million-dollar check as part of a real estate deal. She came running into my office holding it and said, “Oh my God, I’ve never held this much money. What am I supposed to do with it? I’m so nervous.”
Anita Lerner, a thirty-year-old assistant who had to learn about travel, took over scheduling and trip planning, while the mail-order business went to an artist in her twenties named Lynn Marks. We’d bring in a fourth assistant to handle special projects such as books, photo permissions, seminars, and bodybuilding events in Columbus in partnership with Jim Lorimer. Mail order still provided a lucrative income stream because of those Ohio events and because stories about me were still a key element of Joe Weider’s magazines. Scarcely an issue of
Sales of my books, meanwhile, were going great guns; I had a mainstream publisher and a literary agent taking care of those. We were just putting the finishing touches on the
We all had new things coming our way. Lynn might point out, for example, “We’re getting an enormous amount of mail from people who want a lifting belt like you wore in
“Let’s add that,” I’d say. So then we’d all team up to create the product. You couldn’t buy the belts ready- made, or there would be no profit. So where would we get the leather? We’d need to commission a manufacturer. And what about the buckle? How would we make the belt look aged and spotted with sweat so that it seemed authentic? We all started calling our contacts and calling companies and found all the elements. Within a couple of days, we’d have it figured out. Then the next question would be, How do we package the belts? How do we deliver them fast and cheap?
I was pushing all the time, and from the perspectives of Ronda, Anita, and Lynn, the work could be incredibly hectic. We were juggling projects in movies, in real estate, in bodybuilding. I was flying around constantly, schmoozing with people from all walks of life. Everything just nonstop. But they were not average workers with a
