September 29, 2004
David J. Theroux
Founder and President, The Independent Institute
Good evening, ladies and gentlemen. My name is David Theroux, and Im the president of the Independent Institute. I want to welcome you all to our Independent Policy Forum this evening. As many of you know, we hold events here at the Independent Institutes conference center in Oakland, California on a regular basis.
And our program tonight is entitled, Against Leviathan: Government Policy and a Free Society, with economist and historian Robert Higgs, whos the author of the new book, Against Leviathan. In his work, Dr. Higgs combines an economists analytical scrutiny, an historians respect for the facts, and a refusal to accept the standard excuses and cruelties of government officialdom.
For those of you new to our program, the Independent Institute is a nonpartisan academic public policy research institute. We sponsor many studies and produce many books. We also publish a journal, called The Independent Review, which is also edited by our speaker tonight, Dr. Higgs. This is the current issue.
The Independent Institute aims to adhere to the highest standards of independent inquiry, and our work is pursued regardless of political or social fashion or biases. Youre all welcome to visit us at our Website, at Independent.org. Were delighted this evening to welcome viewers from C-SPAN, who can find further information about the institute at Independent.org, including our many books, the journal I mentioned, future events, and really a treasure trove of articles and studies on virtually every issue thats facing Americans and people around the world.
I also want to point out that on our Website youll find out about our next event, which will be held on October 28th, which is a Wednesday. That event is entitled, The Empire Has No Clothes: Exposing U.S. Foreign Policy. It will feature another of our senior fellows, Dr. Ivan Eland, who will discuss his new book of the same title.
The great American journalist and author H. L. Mencken once boldly wrote, The whole aim of practical politics is to keep the populace alarmed, and hence clamorous to be led to safety, by menacing it with an endless series of hobgoblins, all of them imaginary.
Could this really be true? Since the year 2001, despite low inflation, federal spending overall has increased by an astounding 29 percent, with non-defense discretionary growth of approximately 36 percent, and the highest increase in defense spending in a generation.
We now have the largest deficits in U.S. history, the highest rate of government growth since the guns and butter Vietnam War era period Presidencies of Richard Nixon and Lyndon Johnson.
At the same time, federal agencies have been given new powers to search anyones property, intercept all phone, Internet and other communications, as well as to inspect health and financial records.
During this time, President Bush has become the first full-term President since John Quincy Adamsthat goes back to Adams one-term Presidency, which was 1825 to 1829the first President not to have vetoed a single bill. In response, Senator John Kerry has been calling for even higher taxes and federal spending. And within little over a month, Americans will be choosing between these two options.
In the immediate aftermath of 9/11, while others were silent, led by our Senior Fellow Robert Higgs, we predicted an explosion of government power. Many didnt believe us. Our prediction was that politicians and special interest groups would take full advantage of a frightened American public.
Twenty years ago, approximately, Bob Higgs wrote another book, which has become something of a classic, called Crisis and Leviathan, which is this book. In the book, he looks at the question of why government grows and the nature of government power, and he finds that the engine of government power rests in governments responses and declarations of so-called national crises, real or imagined, including economic upheavals, like the Great Depression, but especially wars, such as World War I, World War II, the Cold War, and so on.
The result has been an increasing government power, which endures long after each crisis passes, undercutting both civil and economic liberties, and fostering an extensive profligacy that doesnt seem to be too much in keeping with the mandate to either protect the citizenry or advance the public welfare.
As government grows, notes Dr. Higgs, it achieves a form of autonomy, making it evermore difficult to decrease its size and scope, and to resist its further efforts to increase its reach, with one caveatso long as the citizenry remains ignorant or uninformed of its true effects.
So were delighted this evening to discuss this and related issues, especially pertaining to Dr. Higgs new book. He is a senior fellow in political economy here at the Independent Institute, and editor, as I mentioned, of our quarterly journal, The Independent Review. He received his Ph.D. in economics from Johns Hopkins University. Hes taught at the University of Washington, at Lafayette College, and Seattle University.
In addition to Crisis and Leviathan and Against Leviathan, he is the author or editor of such books as, Arms, Politics, and the Economy; Emergence of the Modern Political Economy; The Transformation of the American Economy; Competition and Coercion, Hazardous to our Health; and two other forthcoming books, one being titled, Rethinking Green, and the other one coming out from Oxford next year, called Depression, War, and Cold War.
His articles have appeared in many academic journals. He has contributed to many scholarly books, and his popular articles have appeared in the Wall Street Journal, the Los Angeles Times, San Francisco Chronicle, and many other publications. Please join me in welcoming Dr. Robert Higgs.
Senior Fellow, The Independent Institute
Thank you, David. And thank all of you for coming out tonight to this function at the Independent Institute. Even though Ive been working with David for some 20 years, and formally working with the Independent Institute for 10 years now, I dont work from this office. So Im not here very often and Im not able to enjoy functions like this myself. I guarantee you I would enjoy much more being in the audience of such an evening than I would enjoy being here as the speaker.
But I have this book, and David has led me to believe that it would be a good idea to discuss it with those who might be interested in reading it and perhaps telling others about it, helping us to spread our understanding of a number of important public policy issues.
This is more fun for me than the usual talk I might give, because in the audience tonight are some very old friends of mine, some of whom I havent seen since the 1960s, when they were classmates of mine in college. I graduated from San Francisco State College, as it was called in those days.
And even my oldest friend on this Earth is here tonight, whos been my friend from the day I was born. And so my brother is here, and Ive never had him in the audience before either, and thats really going to make me nervous.
But please bear with me. I dont pretend to be a public speaker. I do work as an editor, and when time permits, I enjoy writing. But public speaking is something that comes along and strikes me like bolts of lightning every once in a while, and Im always wondering why this keeps happening to me over and over. Its as if people dont learn not to invite me again.
But I want to tell you a little bit about this new book, and perhaps encourage you, if youve purchased a copy, to actually read some of it. Or perhaps itll work the other way around. Once I tell you about it, youll be thoroughly convinced you dont want to have anything to do with it. But either way, something will have been gained by you, if not by me.
This book, Against Leviathan, is a collectionand thats not a recommendation in general, when authors have collected works of their writings over a period of time. In this case, the contents of the book began as articles, and chapters, and independent papers that were published over a period of almost a quarter of a century. The oldest piece goes back to 1981. But the big majority of whats in the book comes from things I wrote in the past decade. So I tried not to include anything that was definitely dated, even though some of the pieces make reference to events, and policies, and other matters that were current long ago. And these are matters that recur. They keep becoming relevant again and again and again.
Crises Promote the Growth of Government
So I do believe that history has something to teach us. I do not believe in laws of history. Thats an indefensible doctrine. But even though there are no ironclad laws of history, there are recurrent patterns, and we can learn enough about history to recognize when the conjunction of events is such that we might well expect the same sort of consequences weve seen in the past.
And it was on that basis that my book Crisis and Leviathan took on kind of a second life after September 11, 2001. I got a number of calls from journalists and others asking me to comment, because I thinkand a number of people recognized themselves, having read my bookthat we might be on the verge of another episode of, as that book says, crisis and leviathan, an episode in which some grave national emergency is the trigger for a spurt in the growth of government power.
And I agreed at the time, when I was approached, that we could expect that, and I believe that, in retrospect now, with three years to look back on it, we have indeed witnessed another episodenot comparable thus far to what we saw in either World War or the Great Depression, but certainly similar in many of its general aspects.
So the title of this book, Against Leviathan, serves two purposes. On the one hand, it calls the readers attention to the books being a kind of sequel to the earlier book, Crisis and Leviathan. And indeed, many of the chapters in this collection amount to extensions or applications of ideas and themes that appeared in the earlier book. But I have, in the past 20 years, worked to develop, to extend, to apply, to dig deeper, to obtain more details on certain matters, so that even though its in some ways not a formal sequel, it definitely amounts to that in many respects.
In addition, the idea, Against Leviathan, gives you a hint as to how I feel about the size, scope, and power of government in this country today. I hold liberty in great esteem, and I believe liberty has been declining in this country. Not in every respect and not every year, but in general its been declining for some 100 years or more. And Im sorry that that has been the way history has unfolded. I believe in a free society, and Im dismayed when I look back on our history and see all the various ways in which I believe the American people have made a bad bargain. And so the ideaAgainst Leviathanexpresses a kind of testimony that I want to make, that some of us have stood throughout history and we said this is no good.
Government Violence and Fraud
Now, the book is all about government in many different respects. And of course, thats been a topic for countless philosophers, and social scientists, and thinkers of all sorts. And I dont pretend that I am offering, in this book, something that belongs on the shelf with John Lockes treatises, or some of the great works of social science or history that deal with this topic. Ive tried to make a contribution in my career, but I dont deceive myself that Ive done this at a terribly elevated level.
One of the things I believe Ive come to understand is that there are certain aspects of government that are fundamental. Many analysts have defined government as that collection of people and institutions that claims a monopoly of legitimate coercive force; that is, those people who think they have a right to use violence, as opposed to the rest of us who may do so only with their approval.
So violence is really part and parcel of government, and many of us dont recognize it because its normally in reserve. Its just out there, held back. And our rulers dont like to use violence, for the most part. They would rather just have people fall into line with what they want us to do.
But if push comes to shove, theyre prepared to use violence. And indeed, a government that isnt so prepared will probably not remain a government very long. And an alternative way to think about government is as a collection of persons who possess a comparative advantage in the use of violence. And theyve demonstrated it. Thats why theyre the government. And if they cant continue to demonstrate it, they will probably cease to be the government at some point. As I say, however, governments dont like to use violence, especially against their own peopleunless challenged seriously. And in order to avoid having to use violence in order to do what they want, they resort to bamboozlement.
There has often been a kind of union of throne and altar in history, going back to the Egyptian dynasties and many other ancient governments, and in some cases the rulers were even, themselves, supposed to be gods. And if they werent supposed to be gods themselves, they were supposed to be blessed by the gods. And so all rulers seek legitimacy in some way. Theyve sought it in many different forms of legitimation.
In modern times, they seek it not so much from divine legitimation as from some doctrine, whether its democracy writ large, or Communism, or perhaps, in some cases, Islam. They all have a body of ideology that they use to, among other things, legitimize and even glorify what they dowhat they do, being, at least in part, plundering the people they rule, because they all have to have resources at some level to operate at all.
And in many cases, they wish to control vast resources, and so they need to do a lot of plundering, and they need deep legitimation to get away with that, so that people wont just resist, even rebel against the government. So bamboozlement is part and parcel of what every government does.
David actually preempted me. He didnt know that I was planning to use that same quotation from H. L. Mencken, but now you know that indeed, all governments thrive on public fear. They like to keep people scared of things.
Indeed, Ill give you an assignment. I used to be a professor, so heres an assignment for those of you who came to my class tonight. As you watch the news, especially if you happen to watch, say, CNNs Headline News, as a convenience, or just as self-punishment, I ask you, in each full news program of half an hour, whether its on one of the networks or somewhere else, to identify each time the scare du jouris it a new chemical that is feared to be loose in the environment that could wreak havoc on our health? Is it a terrorist attack? Are they about to come ashore in Alameda County? What is it today? And I believe youll find that if youre sensitive to it, youll see that theres a scare du jour every day.
Now, some of them recur. They used that one last week, perhaps, and its still fresh, so theyre using that one again. But they try to find new ones, because they dont want us to begin to think that theyre like the little boy who cried wolf. After a while, well think there is no wolf if they keep crying the same wolf and he never comes. So fresh ones are useful.
And you may be wondering, didnt I slip from the government to CNN? Well, not exactly. They are connected. The major media are handmaidens, like it or not, for the government. They like to look critical and investigative and all that, but thats a hoax. When it comes to fundamentals, they shore up the status quo, and they have definite limits on how far they will go to question, challenge, or even dig into uncomfortable facts.
Scandal. Scandals OK, because scandal doesnt really threaten anything fundamental. Thats a personal thing, and really a form of amusement for modern Americans. Its like a soap opera to track down Bill Clintons latest peccadillo. But the media definitely have clear limits, and for the most part they play a role that is complementary to what the state wishes to do.
The state claims, of course, at all times and places, that its providing a service that we not only want, but must have. And they claim that we cant get this service from any alternative supplier. And its basically protection and justice.
All of these threats, all of these hobgoblins, or perhaps sometimes even real threats, get people alarmed and they want a savior, they want protection.
I dont want to appear that Im claiming all threats are imaginary. Real threats sometimes exist and people definitely want genuine security. Theres a genuine public demand for personal security. If youve ever had the misfortune of living in a time and place where that was not available to you, then you know how precious it can be, and how valuable it is, and how much you would give to have it.
But whether the threat is real or imaginary, people want security from some source, and the government pretends to provide that security. Or if it hasnt visibly provided it lately, it claims that its fixing the problem and everything will be OK. So its true, of course, that some people knocked down two big buildings in New York recently, but that was then, and theyre fixing that problem now. So trust them. Theyre working on it.
What I show, I believe, in the book, Against Leviathan, again and again in specific applications is that these claims are bogus. The government doesnt really provide much effective protection to any of us, with the possible exception of some government officials. Youll notice they have special facilities and methods and procedures worked out to protect themselves when they get scared, and they can scurry off like rabbits to their bunkers while you and I sit out here in the open.
But other than protecting themselves, they really dont do a good job protecting us. Even the police of various kinds normally come along after a crime has been committed and take some notes. They dont prevent the crime from being committed in the first place. If you want that to be done, youd better hire some private security.
But what were dealing with here, I think, boils down to fraud. And indeed, in the introduction to this book, I dwell on that a little bit. Let me just read that paragraph.
If I had to use a single word to describe what is fundamentally wrong with government today, I would use the word fraud. Certainly nowadaysand perhaps in every agegovernment is not what it claims to be, namely competent, protective, and just. And it is what it claims not to be, namely bungling, menacing, and unjust. In actuality, it is a vast web of deceit and humbug, and not for a good purpose, either. Indeed, its true purposes are as reprehensible as its noble claims are false. Its stock in trade is pretense. The velvet glove of its countless claims of benevolence scarcely conceals its iron fist of violence and threats of more violence. It wants to be loved, but it will settle for being feared. The one thing it will not do is simply leave us alone. (applause)
Now, if you think that sounds like bombast, Ill forgive you. But the book is not just 400 pages like that. Indeed, it is, for the most part, quite detailed, and Ive tried to provide evidence and documentation for the factual claims I make. And even in the more polemical chapters, Ive tried to provide, in every case, an analytical core. Theres a point, a logic. Theres an argument there. Its not just a lot of op-eds strung end to end.
I dont, as I say, imagine that Im John Locke. I know better than that. I do recommend you read Locke, though. It still fires me up even today. It actually makes me mad to read Lockes Second Treatise. I dont know if its ever had that effect on anybody else, but some of those American revolutionaries seem to have dwelt on it before they went out. So maybe Im not the first.
But this book is not a book of philosophy. Its a book more about history, more about the concrete than about the abstract. Im not a general theorist. I sometimes resort to general analysis and general propositions, although I cant claim to have invented many of them myself. I draw on a great heritage of thought related to this subject area. But what Ive tried to do is show that the concrete facts accord with some general propositions in case after case.
And Ive been at this now for some 40 years. My old friend, Dennis McDonald, sitting in the back of the room there, can testify that I started out on this no later than 1963, when I met him. And we used to sit over in the commons at San Francisco State, and I would rant and rave. [Laughter] So Ive been thinking about these things and thinking about how these facts line up for a long time now, and what you get in this book is some of what Ive found in 40 years of looking. So it is pretty concrete.
And sometimes the concrete can be startling. Let me just give you some examples. Theres a brief chapter, Chapter 6, its called, Bolingbrook, Nixon, And The Rest of Them. And this is about people who hold positions of political power, just generally what theyre doing and how theyre going about doing it.
And along the way, I have occasion to quote from some of the famous Nixon tapes. There was a real politician, a man who held a position of great political power for some time. And one day he was talking to Haldeman and Erlichman, his right-hand men, in the Oval Office, and the tape recorder was grinding away. And Nixon was asking about their new Commissioner of Internal Revenue.
And he said, I want to make sure hes a ruthless son of a bitch, that he will do what he is told. That every income tax return I want to see, I see. That he will go after our enemies and not go after our friends. Its as simple as that. Well, theres democracy in action, folks. [Laughter] Do you ever wonder what they say in private? [Laughter] Well, thats what he said in private. Im sure he didnt say that for posterity.
Well, he went on. He was somewhat obsessed with this issue, evidently because his returns had been audited in the early 1960s. And it turns out that President Kennedy was of the same mind as Nixon when it came to using the IRS to get his enemies, and Nixon had been among them, so he had been audited.
Nixon seems to have believed that his predecessors had used the IRS against them. So a few days later he asked Erlichman if he had ascertained who ordered the audit of my income tax returns in 1961.
And he continued to talk to his aides about this. He thought he could use it to get at some of the people who were supporting political opponents. He instructed Erlichman to sic the IRS on wealthy, Jewish contributors to his Democratic rivals. On September the 8th of 1973, he said, Johnthat was ErlichmanJohn, we have the power. Are we using it now to investigate contributors to Hubert Humphrey, contributors to Muskie? The Jews, you know, that are stealing in every direction. Are we going after their tax returns? I can only hope that we are, frankly, doing a little persecuting. And who said he had no sense of humor? [Laughter]
On September the 13th, Nixon told Haldeman, Now heres the point, Bob. Please give me the names of the Jews. You know, the big Jewish contributors to the Democrats. The President wanted them investigated.
Next day he was speaking to Haldeman and Charles Colson, another aide, and he came back to this. He said, What about the rich Jews? The IRS is full of Jews, Bob. And later he admonished, Go after them like a son of a bitch. Thats the man who stood up and told us, I am not a crook.
So what they say to the public and what they say in private are very different. And its not just Nixon, my friends. Its not just Nixon.
The Pretense of the Food and Drug Administration
But let me give you a different slant on some concrete government officials statements. This one was actually made in public, which makes it even more shocking. For most of the 1990s, the Commissioner of Food and Drugs was a man named David Kessler. And Kessler worked very hard to make the FDA an even more fearsome police agency than it had ever been before. And he succeeded. It had many ill consequences for public health and other valuable things, such as our liberty.
But on one occasion, Kessler said the following. If members of our society were empowered to make their own decisions about the entire range of products for which the FDA has responsibility, then the whole rationale for the agency would cease to exist. [Laughter] To argue that people ought to be able to choose their own risks, that government should not intervene, is to impose an unrealistic burden on people when they are most vulnerable to manufacturers assertions. Those are precisely the situations in which the legal and ethical justifications for the FDAs existence is greatest.
Well, if you can find a public statement of more outrageous moral audacity than that, I would like to know what it is. A man who thinks that a government bureaucracy ought, rather than the people whose own lives are at stake, to make the decisions about their life and death.
In the book, I present a good deal of evidenceI had worked on the FDA myself for a number of years, and I present evidence I accumulated along with others, that the number of premature deaths brought about by FDA action, directly and indirectly, is at least an order of magnitude greater than the number of lives saved by that agency. And in all probability, hundreds of thousands of Americans have died prematurely, and countless people all over the world have suffered as a result of that protective agency. The protection is a fraud. Its a hoax.
Everybodys who ever looked at the FDA, for example, has noticed that it can make mistakes, that the FDA could, when it goes to consider approving the marketing of new productsmedical devices, drugs, other thingsit could make a mistake by failing to approve a product that is safe and effective. Or it could make a mistake by approving a product that is not safe or not effective.
And so, given that it can make two kinds of mistakes, the very first thing one would want to do if one were really responsible is to try to find out where the balance is being struck. Are we making more type one errors than type two? If so, were wreaking harm.
But they have never even considered making such a study. All such considerations had to be made by outsiders, such as myself, who, of course, dont have access to nearly the information that the agency has inside.
But theyre not interested in making that study. In fact, when this point is raised for them, they fall back on the assertion that theyre just a police agency enforcing the law, even though the law is what it is because of their relentless lobbyingthey being the most powerful lobbyist of all in matters pertaining to the agencys jurisdiction.
So theres a concrete case of the kind of protection that we get from government. And it is a serious matter. More people have died as a result of the FDAs actions than have died in all the wars this country has fought in the 20th Century. I have no doubt of that.
The Fraudulent Welfare State
Well, theres the welfare state, of course. We all love the welfare state. There is, I think, another vast fraud, a hydra-headed legal and bureaucratic monstrosity that purports to protect people from every common adversity of life while redistributing income and wealth in serene disregard of that redistributions many destructive consequences for the entire society. This gigantic undertaking fails every moral and practical test imaginable. Nor do its consequences take their toll once and for all. Far worse, they eat away at the moral, social, and economic foundations of what was once a considerably more honest and self-reliant culture.
You notice now that both political parties simply compete to make the bigger promise of expanding the welfare state. And the so-called conservative Republicans under the current President just made the biggest increment to the already bankrupt Medicare system since its inception. And the $500 billion they claim its going to cost over the next decade will, I guarantee you, be but a small fraction of its actual cost.
When the Medicare system itself was first put into operation in the mid-1960s, they had cost estimates, and 20 years later, the actual cost was 20 or 30 times greater than they had estimated it would be. I dont recall the exact proportion, but it was much, much, much bigger. And that is how all of these forecasts of welfare state costs have worked. They all turn out to be hugely expensive.
But thats not all they do. They have other kinds of costs, as I say. They have moral costs and they have costs in social disorganization. I live now in southeast Louisiana, about 40 miles from New Orleans, and if you want to see how the welfare system can wreck an entire city, visit New Orleans. Its the poster child of the welfare state. That was a decent city once upon a time, notwithstanding its amusements, [Laughter] a place where people did honest work to provide those amusements. No longer. Corrupt to the core, people living on crime and welfare.
Despotism From Soft to Hard
So I have in the book an opening section on the welfare state. The welfare state is a kind of soft despotism like the FDA, these other health and welfare pretenses. But the modern state also has hard despotism, the kind that uses the guns first and asks questions later. And one of the chief expressions of the hard despotism is the so-called war on drugs. And I have several chapters dealing with that in the book, including one called, Lock Them Up, which has to do with the growth of the inmate population in this country.
We now have about two million people behind bars and five million others who are on probation or parole right now. And that number has grown about threefold in the last 20 years. And a big part of why its grown so greatly is because of the drug laws, the prohibition of the use of certain drugs. And, of course, many, many evil consequences have come from the prohibition of these drugs, just as evil consequences came out of the prohibition of alcohol back in the 1920s. So I do have something to say about hard despotism also.
Blending into the soft despotism on one end and the hard despotism on the other has been increasingly the growth of something that has been called the therapeutic state. Sometimes people refer to the nanny state when they want to criticize it.
My friend, Tom Szasz, some of you may know. He is the great writer on the therapeutic state. If you havent dipped into his work, I heartily recommend it. Hes written for my journal, The Independent Review, and Im very proud that he has contributed. I consider him one of the great defenders of liberty in our day. But hes written much about the therapeutic state, particularly as its expressed by the combination of psychiatry and criminal justice, involuntary commitment, and related issues.
So we have, proceeding hand in hand with the futile crusade against drugs, an advancing secular therapeutic ethos, in which every human misstep represents a disease from which only a government-imposed treatment can save us. And in this way, a cultural development that might otherwise have been dismissed as merely misguided or silly, has greased the skids for ever more intrusive government actions that now penetrate homes, schools, courtrooms, prisons, and a variety of other venues in a quest to save people from their insufficient self-esteem, and the manifold maladies to which that insufficiency supposedly gives rise, all such programs resting, as usual, on threats of government violence.
Government Manages the Economy
Well, Im an economist and I havent said anything so far about government management of the economy, so I should say a little bit about that. I brought some data with me just to highlight some of what David mentioned in the introduction.
Government has been growing much faster lately in connection with this latest crisis of September 11 and its aftermath. Now on the graph we have some data starting in 1990, running up to 2005, the last two years being projections or estimates from the governments budgets. But this shows the annual increase in total federal outlays, and as you can see, theyve jumped up pretty much to double their level of the preceding decade during the Bush Presidency. Federal spending has been growing about 8 percent a year under Bush, roughly twice as fast as it grew under the dreaded Bill Clinton, whom all the conservatives accused of fiscal profligacy. It doesnt matter now, of course, to conservatives. Its all OK, because its all to allay the terrorist threat.
Just to emphasize again how extraordinary the current episode is, we have here the years in which the increase in real discretionary federal outlays were greatest. [Editors note: For a similar point, see the figure at http://www.independent.org/newsroom/news_detail.asp?newsID=31.]
And Lyndon Johnson gets the prize for the two years with the fastest growth. But the next three go to George W. Bush, from fiscal years 2002, 03, and 04. And theres not a whole lot of hope on the horizon for slowdown here. So if you like runaway government spending, then I guess the current administration is your cup of tea. But if you think that that raises certain economic and other problems, then you might want to rethink your support of the current administration.
Its not all the administrations fault, I might add. Congress and both parties have been in therein the trough with both feet, furiously buying votes in all directions where they think a vote can be bought. So the Democrats in Congress have been fully involved in this, and indeed, one of the unfortunate aspects of crisis is that theyre dealt with by bringing all the parties that have any political clout into the game simultaneously, because the usual tradeoffs no longer have to be made in a crisis. People will tolerate more plunder in a crisis, and so all the plunderers have a field day at once.
I have one more display here that emphasizes that aspect. In this, we have the real discretionary outlays in levels here. And as you can see, adjusted for inflation, back in Reagans day, non-defense discretionary outlays didnt really make any headway. Defense outlays were built up, of course. And then they came together again after Reagan was about to leave office.
But what you see lately is that both defense and non-defense are moving almost on the same track, so that if the Democrats have their favorite set of boondoggles, then the Bush administrations perfectly happy to pay them off and give them what they want in exchange for their supporting the administration in things like the adventures in Iraq and also the rest of the world.
As Ive already mentioned, public fear plays an indispensable role in these crisis episodes. Its the mothers milk of all modern government. And if no crisis came along, then the government would be more or less compelled to invent some crisis. And its for that reason that we have scares du jour, just to keep us going between the major events.
Well, Ive talked probably long enough to give you a flavor of the book, Against Leviathan, so I will close. We have time for questions and answers.
When you show those charts, the second of the charts talked about percentage increase, and Im wondering what was the base. Was ityou know, when you said 1 percent increase or 14 percent for this President, 14 percent above
The previous year.
The previous year?
Oh. Thank you, that makes a big difference.
If you want to think about these things in an easy way, theres a little rule of thumb you can use, called the Rule of 72. And if you know how fast something is growing in percentage terms per year, then this really tells you how long itll take that thing to double. Something that grows 7 percent a year takes about 10 years to double or become twice as big.
So you might want to remember that, if you dont know it already, to help put into perspective what these growth rates mean, because it doesnt take very long for things to get much, much bigger when theyre growing at rates such as the current federal budget8 percent a year or so. Thats only going to take about nine years to double if that continues. Yes, sir?
I was doing fine until I got to chapter 11 of the book. And let me preface my question with a couple of quotes. [Laughter] In those days, there was no king in Israel, and everyone did that which was right in his own eyes. And then Moving to the 1940s was a popular radio show, called The Shadow. And it opened with this question, Who knows what evil lurks in the minds of men? [Laughter] My question to you is how many Americans have died at the hands of drunks since Prohibition was repealed in 1933?
Well, I dont have a precise answer to your question about how many people have been killed by drunks. Im sure its a large number.
What we found out in Prohibition was that if the government forbade people to manufacture and sell alcoholic beverages, first of all, it wouldnt succeed. They would continue to manufacture and sell and drink alcoholic beverages. And, in fact, they would not only drink what they had drunk before, but they would resort to more potent drinks, because a barrel of whiskey occupied less space and had more value than a barrel of beer or wine. So that during Prohibition, Americans continued to drink heavily and to bear all the consequences, including automobile and other accidents that result from drunkenness.
But it was worse, because not only did they drink more potent alcoholic beverages, but then they had all the crime that was laid on top of the fact that they now had to obtain that product in a black market. And when you have markets that are available only illegally, it attracts people who are just inclined to get involved in illegal things of all sorts. After all, what do you have to lose? If youre already a burglar, well, suppose you smuggle along with burgling? Youve already shown youre the sort of person willing to break the law and take risks. So the kinds of people that are attracted to black markets tend to be unsavory.
And we see the same phenomena in the drug war. As the drug war came along and was tightened up in the 1980s, the drugs got more and more potent, people switched from lighter drugs and more harmless drugs, like marijuana, to harder drugs, drugs that gave them more effect of some kind. So we have laws against using drugs, but probably any school kid in Oakland can tell you where to get them. And unfortunately, some of those kids are getting them themselves right now.
So the Prohibition, whatever you think about it, one, doesnt work, and two, is worse than it doesnt work. It has undesirable consequences that make the problem even worse than if we simply left these products legal and attempted to deal with their ill consequences in other ways, through education, through teaching children whats good for them, and through a variety of voluntary measures to try to prevent harm that might otherwise be caused.
Some of us have been around long enough to realize that if people want to kill themselves, theyll find a way to do it. And that includes very dangerous drugs and a variety of other activities that seem bizarre to some of us, but if we start dictating to people what they put in their bodies, weve gone down a tyrannical path. And thats unfortunately one weve now gone down, and we know what happened. Yes, sir?
Mr. Higgs, youve given us several examples of the growth of this so-called leviathan. And leaving motivations aside, I think it is clear that government has grown inexorably. And were probably witnessing a geometric upturn in the growth of this leviathan. What Id like to ask, though, is aside from describing the problems that this presents, what are your judgments as to steps that might be taken to find a solution or to bring us back to some sort of appropriate equilibrium? Theres no clear answer to that, or course, but what kind of steps need to be taken now and into the immediate future?
Right. Well, first of all, Im not a snake oil salesman. If I gave you a remedy, chances are it would be, itself, a con job. But I have become convinced, from the 40 years Ive spent studying this matter, that its unlikely to be changed very much. I have a reputation professionally, to the extent that I have any at all, as a pessimist. But I think thats the wrong way to characterize my views. I dont think its a matter of psychological leanings or optimism or pessimism. For me, its a matter of where I see the logic and the facts leading us.
The crises of the past century have all occasioned the ratcheting growth of government not just because we had national emergencies, but because when those national emergencies took place, the people had already adopted views, and what I call the dominant ideology, about the proper role of government in society.
And the big sea change in our history occurred during the Progressive era, roughly the first 15 years of the 20th Century. And at that time, first many opinion leaders and gradually the mass publicsome of them not for decades latercame around basically to viewing government as the savior of first resort, whereas Americans had, for a long time, thought self-reliance was laudableits something we should encourage in everyoneand had been skeptical of government, fearful even of government, afraid of tyranny, still remembering the grievances that drove their ancestors to rebel against the British Empire when we achieved our independence.
Gradually, those views were overcome for a variety of reasons, but its clear there was an ideological shift of great significance around the turn of the 20th Century. And at that point, then when a crisis came along, people demanded immediately that government do something whether it was a threat of massive economic dislocation or unemployment during the 1930s. People then looked to government as their grandfathers never had.
And, of course, government officials were always prepared. They were prepared, in many cases, from the beginning to step forward and exercise greater power. So there was no shortage of politicians who said, well, we can do something. We can use government to help you out. And as a result of that, each episode saw a burst of government growth, new programs, new laws, new court decisions, new fiscal actions, more spending, more taxing, new kinds of taxes. And each time a crisis passed, some of those changes stuck and became permanent so that they built up over time and brought us to where we are today.
Now, I mentioned earlier that when the most recent crisis, this terrorist crisis, occurred in 2001, I said to myself or I said in response to queries, what will happen is government will come forth and take a variety of actions. And I identified what they would be. Thats what theyve been.
Its not clear how the crisis that began in September of 2001 is ever going to be resolved, particularly as its been dealt with thus far. Its only been exacerbated by the invasion of Iraq. But if it should ever be resolved, it will leave legacies. It too will have residues embedded in our laws, embedded in our views of the world, and embedded in our ideas about what is right and proper and constructive for government to do.
We cannot outlive our history. Some people think that we can do things, as William Graham Sumner said: You can experiment with society and then just drop the experiment whenever you choose. But Sumner went on to say that you cant do that. The experiment, in his words, enters into the life of society and never can be got out again.
And for that reason, it would behoove all of us, when some crisis does occurand we can be sure some kind of crisis will occur; theyre inevitablethat when they occur, we keep our composure, that we not simply accept every huge government response.
Six weeks after those attacks in September 2001, the USA Patriot Act was passed. When it was passed, not one complete copy existed available to the members of Congress to read, to even know what they were passing. And yet, they passed these terribly invasive authorizations that have allowed federal authorities to snoop on every one of us without cause. Everybody.
You need not get a warrant. You need not show probable cause. You need not link anything to a crime or the probability of the commission of a crime in the future. We are all under the magnifying glass now. Our e-mails, our mails, our phone calls. And if you think they wont use this for their purposes, then youre not reading the newspapers, youre not reading history, and youre not reading Against Leviathan. [Laughter]
Theyve already used the Patriot Act, for example, in a variety of cases that have nothing to do with terrorism, mainly to track down people they want to extract taxes from and to seize peoples assets so those people will be unable to defend themselves against federal prosecutors in a trial and compelled to plead.
Anytime you give the power to confiscate bank accounts, cash, and other property to federal officials, youve surrendered a just system of justice, because every prosecutor then has a club that he can use to convict anybody, by simply removing your ability to effectively defend yourself and then putting you in a position where youre charged with 20 or 30 crimes, and if you know whats good for you, youll plead guilty to five or six of them and hope for the best. This is a racket. Its a racket. And confiscation acts are its most potent tool. (applause) Yes, sir?
Thank you for your talk, sir. I wanted to ask you if you could just juxtapose the dysfunctional welfare culture of New Orleans with that famously hellish welfare-laden metropolis of Copenhagen, Denmark, because I had always thought that New Orleans problems were a result of slavery, and Jim Crow, and the legacy, and didnt really have anything to do with government programs.
Well, I cant speak with great authority about Copenhagen, but I do have Danish friends who have spoken to me and written very intelligently and knowledgeably about it. And so far as I do understand the Copenhagen case, it very much confirms the general logic of whats happened in New Orleans and other American cities, that in fact the welfare system has had many dire effects on the Danish people.
One of the things you will discover if you dig into the literature on the European welfare systems is that theyre all bankrupt. That is, they cant continue as they are now for long. And many people have known this for years and years, and a few people have had the courage to come forth and propose reforms that would redosort of eliminate some of the benefits that are available or alter the rules that make it so encouraging for people to leave work early, or to stay unemployed, or act in other ways that are not socially productive. But the European populations have become habituated to living on the dole at a very high level. And so they tend to vote down any politician that proposes to take even a little bit away from them.
But someone will have to, because they just wont be able to pay for all this. They face a demographic crisis similar to the one we face, as the population ages. And European populations all have negative rates of natural increase, so that but for immigration, they would all be declining ultimately, and some of them fairly soon.
And as they decline, the population structure will become more and more heavily skewed to consist of elderly people drawing on pensions, and theyre very great demanders of medical care. And there wont be enough workers paying into the funds to support all of this benevolence.
So the Europeans will have to bite the bullet. And, in fact, theyre going to have to bite it, to some extent, within the next decade. Germany and France are in very serious trouble already. Ive noticed theyve made some token reforms in Germany just recently, but not nearly what they are going to have to make.
We in this country face a similar problem, its just that we have a little longer horizon before we have to retrench to the same extent. But our problems are similar. And if the anti-immigration people have their way, the day of reckoning will come even sooner, because, of course, the immigrants tend to be working age people and also people who do work, believe it or not. [Laughter] Despite what you may have heard, most people come to this country to work. And so that helps bail out the welfare system here, because these people end up paying tax. And, in some cases because theyre undocumented, they dont go and collect benefits, because theyre afraid they might be discovered and sent out of the country.
But there are problems, of course, in Europe and here, related to immigration. And this terrorism problem that Europe faces along with the United States has shined a new and different light on that problem, and how many people are becoming afraid, particularly of immigrants from Muslim countries. And many of those people who have moved to Europe in the past several decades come from Muslim countries.
So theyre in a bind. Many Europeans want to get rid of the aliens, even those that were born there to parents that came from Algeria or Turkey or somewhere. But at the same time, they want to keep living at somebody elses expense, and theyre not going to be able to do this. This is a circle that cannot be squared. Yes, sir?
It seems like the crux of the matterthe fundamental problem that is being addressed hereis the fear in the public. And its that fear that enables government to kind of take over and assume power.
For example, you had 3,000 people die in New York on 9/11, and we find ourselves in Iraq in probably whatll be a trillion dollar war, yet alcohol and tobacco, which kill 400,000 people a year, still remain legal. And its the fear factor that seems to blow things out of proportion.
Would you also maybe talk a little bit about where the end of the road is? Because it seems like we cant keep spending ad infinitum, so that right there would seem to be an end as well.
I dont know where the end of the road is. I do know that theres going to have to be some changes of course. This problem of fiscal resources Ive been discussing in the last few minutes is very serious. If the government were to try to make all the benefit payments to which its now committed by laws already on the books, it would, within a matter of 20 years, be in a deep fiscal crisis.
Now to some extent, its possibleand my forecast is that this is what will happenyou can push out the day of reckoning.
For example, we know already that they will raise the retirement age for drawing Social Security benefits. Theyve already begun to do that. Theyll do more. You can raise the Social Security tax rate. Theyve done that indirectly already by the way they treat income that was previously protected from taxation and made it subject to taxation. Theyll do more of that. So theyll find ways to get more Social Security revenue, reduce some of the benefit payments they otherwise would have been committed to make. Theyll tinker with the system. Thats how they saved Social Security back in the 1980s, by tinkering with it that way. Yes, Greenspans brainchild.
But again, there are limits to how far you can go with that tinkering. They do not resolve the fundamental problem. And estimates of the unfunded liabilities of the government right now range up to the neighborhood of some $40 trillion. Now thats almost four times the entire output of this economy in a year, in the current economy. So its not doable. They can never, by any kind of tinkering thats feasible, keep those promises.
So theyre going to have to find a way of breaking them. And governments are good at breaking promises. If youre looking at the debates and the candidates right now, just make a checklist and then you can come back in a year or two and check off that: yes, this was broken, this was broken.
When politicians make promises, they dont really mean it. And somehow along the way, we citizens have got used to that and accept it and do not hold them accountable when they lie to us. And thats the ultimate reason why this system keeps operating the way it does, is because we tolerate it.
I dont have any magic bullet to fire at this problem, but I think one of the necessary conditions of doing anything effective about it is increasing the level of general public understanding. And right now, that level is abysmally low.
Most people are just simply clueless about what the government does and how it does it. And as a result, they are easy pickings for these politicians promises, for fake solutions to problems, and for all the rest of this make-believe.
So I, myself, attempt, along with the Independent Institute and the many people who work at the institute, to try to give the public a more accurate and deeper understanding of exactly what the problems we face are, what is a feasible kind of solution and what is just pie in the sky. And the political discourse we get from both major parties is entirely smoke and mirrors. Its not to be taken seriously on either side. Yes, sir?
Oh, thank you. On the fear factor, isnt it worth mentioning that George Orwell put it very beautifully in 1948 when he wrote 1984, that the three nations on the surface on the planet planned their own attacks on their own people, of course attributing it to the other enemies, just to keep the fear factor alive? So it was very clearly put then, that the only way to lead your people is to keep them terrified.
I think under a free system, there would not be any federal parks. And they dont have any essentially in Europe, because people were able to chew up everything then. So would you comment on that or supply some example where the government isnt all bad? [Laughter]
Right. Unfortunately, its in the nature of government that even when it does something good, its bad because of the way it does it. It compels us at gunpoint to surrender resources for whatever it does. So that contaminates all its actions.
Now, sometimes it does undertake activities that are perfectly benign, at least harmless. And I think, on occasion in our history, governments have done some valuable things. The one I have studied myself, and my first Ph.D. student actually wrote a dissertation about, involved public health programs in the late 19th and early 20th Century, to build sanitary sewers, and pure water supplies, and things of that sort. That was enormously beneficial. And for better or worse, those were government programs that brought about the modern infrastructure of water supply and sewerage in the United States.
It was, by the way, done at the local level of government mostly by cities, not by the federal government. It had no involvement whatsoever.
So Im sure there are things local governments do that people value, for good reason. Most of us want to be able to call the fire department if our house is on fire. It doesnt mean we couldnt have private fire departments. We could. But nonetheless, we have these government departments, and they provide something we value.
Sometimes the police might provide a service, although I think its relatively rare. We like having the water thats drinkable when we turn on the faucet and the sewer system. But its really a small number of things.
And heres the way to identify what it is that people really value about government. If you think about those occasions which come up every once in a while, when theres some threat of government shutting downmaybe the public employees are threatening to strike or theres some fiscal crisisyoull notice that the politicians always then come to the public and say, but if we shut down the government we wont have any X. Right? Well, if you guys fill in the blank for X here, well have identified a principle. And it was actually given a name one time. Its called Fire the Firemen Principle.
So when governments were threatened with a cutback in their revenues from a tax revolt or some such cause, the politicians would go out and say, Unfortunately, if this goes through, well have to lay off all of these firemen. They know that thats really what people want out of government: the ability to call the fire department when their house is on fire.
There are a thousand other things the government has thrown into the mix for some special interest. Most people dont give a damn about those things, and so theyre not mentioned when the threat of a government shutdown looms. Only the critical things that we really want government to do ever are brought up.
Fire the Firemen. Its also sometimes called, in D.C., Close the Washington Monument Principle, because all these tourists go to D.C. and they want to go up in the Washington Monument. Well, if they shut that down, all hell breaks loose in the nations capital. So thats what they threaten to do first, the Park Service is going to close the Washington Monument. But this is just manipulation.
Now let me say one thing, because I see my old friend, Andy Rutten, sitting there in the crowd. And Andy knows all about Ravenna Park. This is an area in north Seattle. In the late 19th Century, some people bought the area that includes the Ravenna Ravine. Its a cut with a creek running through it. And at the time, it had some of the largest cedar trees on Earth and an abundance of other Northwest vegetation.
It was one of the wonders of the world. Indeed, people cameBritish royalty came, President Roosevelt came, everybody came. And the reason they came is that after these people bought this and made it their private estate, they began to develop it. Not only did they preserve what they found there, but they planted all of these new trees and flowering plants, and it became a most magnificent park.
Eventually, the city of Seattle built the rail service out as far as Ravenna Park, because people would go out there on the weekends and pay an admission to the owners, who would let them come in, and picnic there, or just admire the setting. It was unique. It was a marvelous natural treasure that was not only preserved but enhanced by the people who owned it as private property.
Well, some politician decided that there was an issue there, and so back in the Progressive Era, he started drumming up complaints and enlisting the newspapers to attack the owners of this property. Remember, one of Teddy Roosevelts pet projects was parks, and national forests, and preserving our national and natural heritage.
Well, that was a popular thing for politicians to talk about in those days, so a local politician set up such a furor about the outrageous private ownership of Ravenna Ravine, and how as long as these private citizens owned it, we could never be sure itd be there for generations to come.
Theyd already proven that they could not only preserve it, but enhance it. Nonetheless, they whipped up enough political furor that the city condemned Ravenna Ravine and took possession of it and turned it into a city park, you know, for all of us, like the national parks.
Well, in the late 1920s, somebody began to notice that the great cedar trees were starting towell, where were they? Theres the stump. What happened to that tree? And indeed, by the time anybody got around to doing anything about it, virtually every one of those great cedar trees, which had taken, I dont know, a thousand years to growthey were old, old, old trees, just gianttheyd been cut down.
Theyd been cut down by the man in the City Parks Department, and theyd been sold for cord wood. And he was pocketing money, of course. Because it wasnt his property. And thats always the case when the government owns something. The people who manage these properties for the government dont own it. Its not their capital loss if they ruin it, squander it, waste it, despoil it. And indeed, all over this country, thats precisely what theyve done.
If you compare the national forest, mostly in the Western states, with the pine forest of the Southeast, its night and day. The Southeast is a flourishing, healthy, high-yielding, abundant forest reserve with more trees than ever, because they never put national parks in there. You probably know what happens to the national forests out here in the West. These properties have been despoiled in one way and then back in another way. Theyve been mismanaged from A to Z. Properties worth trillions of dollars yield negative rates of return. Well, I think that tells us something. Yes, sir?
Well, I have two things. I want to see what you think about these two things. First of all, Congressman Ron Paul, Ive heard good things about him. Is he for real? Is he making a difference? And the second thing is, whats your opinion of the movement to separate school and state?
Ron Paul is for real. Hes making no difference whatsoever. [Laughter] And the reason hes making no difference whatsoever is because hes for real.
I think Ron is a very interesting man. He stands for liberty. Hes against a whole array of government actions that threaten our liberties, and our finances, and just our well-being.
But a man like that is miraculous, because how he even gets re-elected is something of a puzzle. In general, if a person went out and took Ron Pauls positions, he would lose the next election. I guarantee it. Ron is a unique case, so Im glad hes there. I love to see the noises he makes. I support him. I even
Send him money?
send material to his staff. [Laughter] But you know, we shouldnt fool ourselves that Ron or anyone who takes that position will have any effect in Congress. Thats not what Congress is there for.
Now, separation of school and state. Absolutely. Absolutely. I think its criminal, in a society where we all understand why we separate church and state, that we have yet to understand why, for much the same reason, we should separate school and state. For us to surrender our children to government schools, where they get what they getand you know what it isis verging on criminal.
But again, its one of those things that a great many Americans simply have never considered as anything but a state of nature. We have the public schools. And I confess, when my son was young, I still tended to think a little bit that way myself. We have these public schools, Im paying taxes, if the schools not very good, Ill try to switch him to a better one. But the idea that we would even be outraged by the government conducting education is relatively new.
Now some people are outraged, and, in fact, home schooling is a fairly rapidly growing activity in this country. I have some doubt about how long it can continue to grow rapidly, because Im not sure that there are a great many people who are willing to pay the price that it takes to school their children at home.
Public schools serve, more than anything, as vast holding tanks, day prisons where people can slough off their children and get rid of the responsibility for eight hours or so while they do things they want to do, whether its go to work or other things.
So you notice when these schoolteachers always go on strike just before school starts in the fall? Thats one of those Fire the Firemen operations, because they know that millions of people are counting on the availability of those holding tanks for their children, and theyve really got them where it counts. Yes, sir?
You used the term while you were talking, mothers milk. Where did that come from? Ive only heard that once in Texas.
I believe thats a very old English expression, but Im not sure what the exact origins are. Im sure it goes back long before Texas.
OK, one other question. Have you looked at the Grace Commission and what they tried to do? And have you seen whether they were good or bad?
Yes, Ive looked at reports of a number of commissions. One of the recurrent events in American politics is the appointment of a commission. [Laughter]
When theres public outcry over something, the way politicians choose to do nothing about it is to appoint a commission to study it. And then, of course, if you name the right people to the commission, you can be sure that no fundamental criticism will ever be made and that it will take years for the commission to render its report. Once its report has been rendered and made available, it will immediately be trashed and never heard about again. [Laughter]
So commissions come, commissions go. Thats all part of the political show, the parade. Yes, sir?
The next question was the 9/11 Commission. [Laughter] Any comment on that?
I believe I just made a comment. (laughter, applause) Last question, please.
OK, well, so the government, its force and fraud. The men with guns. They plunder and oppress. We pay and obey. And you understand this perfectly, but you seem cheerful and happy, [Laughter] and I just wantany advice you have. How do we live knowing this?
Well, Im not as happy as you may think. [Laughter] I think it behooves everybodyIm not inclined to give advice, but let me give some anyhow. I think it behooves all of us to try to separate our political sensibilities and our personal lives. Life goes on.
You know, there have been terrible situations, much worse than the one we live in here, in which people had to survive and try to thrive. So try to do that.
But remember, as youre doing that, that there are important things at stake. I actually tremble for the future, because I have beliefs about the likely course this country is taking, and I dont really want that to be the world that my children inherit. But meanwhile, each of us has a life to live, so live it to the full. (applause)
David J. Theroux
One thing I might underscore that Bob also mentioned is that the fatal flaw in this kind of a situation is the lack of information or ignorance that people have about the world they live in. And they can be manipulated by groups that use government power for their own purposes.
Economists describe this process as a process of redistributing wealth from the many to the few by using power. And education is key. Those who understand this idea understand that essentially were talking about the role of entrepreneurship in many respects, as far as providing information. And thats what Bob and other scholars that we have the pleasure and privilege of working with at the institute are devoted to doing.
I want to thank Bob for his work and for his new book. I want to thank all of you for joining with us and making this evening so successful. I want to thank C-SPAN for joining with us. There are copies of Bobs book, Against Leviathan, upstairs for those of you who dont have copies. And Im sure he would autograph them for you.
Our next event, again, is on October 28th. And we look forward to seeing you then. Thank you and goodnight.