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Conning Americans: How Politicians Create Dependence on Government
February 13, 2002
Charlotte Twight

Contents Introductory Remarks by David Theroux

Good evening, everyone. My name is David Theroux and I’m the president of The Independent Institute. I’m delighted to welcome you all to our Independent Policy Forum program this evening. The Independent Policy Forum is a regular series of lectures, debates, and seminars that we hold here at our conference center in Oakland.

Our program tonight is entitled, Conning Americans: How Politicians Create Dependence on Government. And, as you know, our speaker tonight is the economist and historian Charlotte Twight. For those of you’ve not seen her book, and many of you have gotten it already, but those of you’ve not, this is her new book called Dependent on D.C.: The Rise of Federal Control Over the Lives of Ordinary Americans. It’s from Palgrave/St. Martin’s Press. And I hope everyone will get a copy. This is going to be a very important book, and we’re the first to hold an event based on it.

As many of you know, The Independent Institute regularly holds events like this. The Institute itself is a non-profit academic public policy research institute. We produce lots of books. We have a quarterly journal called The Independent Review. This is the current issue. I’m very pleased to say that Charlotte has been a contributor to a number of issues. The first one that relates to the topic she’s talking tonight was in our fall 1999 issue. It was the cover article, called “Watching You: Systematic Federal Surveillance of Ordinary Americans.” And she’s had a number of pieces. Our spring issue will have another important article by her on privacy issues and the dependence state.

In the aftermath of the horrors of September 11th, I think it’s fair to say that virtually everyone has recognized that those specific individuals responsible for those horrific murders must be brought to justice. Yet history teaches us that crisis periods too often produce even greater problems and suffering, as the heavy hand of government expands in unprecedented ways.

The editor of our journal is an economist and an historian. His name is Robert Higgs, and many of you may know of the book that Bob did about 15 years ago, published by Oxford University Press, called Crisis and Leviathan. And the thesis of that book is very much relevant to what we’re seeing today, as a national crisis is used by interest groups seeking corporate welfare and to trample on the Bill of Rights, all in the name of national security.

As a result, dependence on government has been growing. Again, this issue of crisis has gone on for many years, and the growth of government, as a result, has been going on for many years as well. Specifically I would say, primarily over about a 150-year period in the United States, and especially over the last 70 years.

The trend has coincided with the growth of centralized power, which, at its own discretion, is used to regulate, manipulate, tax, and prohibit. It’s driven by bipartisanship, bureaucracies, interest groups, the ambitions of various presidents. The trend has been so profound that few today can really imagine a society without government control.

This evening we’re delighted to have one of the leading experts on politics, privacy and political economy, to discuss how special interest politics created subjects and policies such as the income tax, Social Security, Medicare, and many other policies.

The question, I think, to ask is, “Has government really made us wiser, healthier, safer, or has government power been used in other ways? Would we have been wiser, healthy, and safer and maybe even more wise, healthier, and safer otherwise?”

Professor Twight is professor of economics at Boise State University. She’s contributing editor to our journal, The Independent Review. She received her J.D. and Ph.D. degrees from the University of Washington. She’s also a member of the Washington State Bar Association.

In addition to her current book, she’s also the author of an earlier book, which was a favorite of mine going back to when I was a student, called America’s Emerging Fascist Economy.

Professor Twight has also been a research fellow here. She’s contributed to a number of our books, and I hope everyone here gets those, as well. One of them is called American Health Care. The other one is an earlier book, also edited by Robert Higgs, called Arms, Politics, and the Economy, which is a critical economic analysis of the defense establishment.

Professor Twight has also contributed to many scholarly journals including Public Choice, The Journal of Economic Behavior, The Journal of Public Policy, and so forth. Her seminal articles on privacy, as I mentioned earlier, have appeared in The Independent Review, and we hope that you take advantage of this work. Another of the many reasons, of course, to subscribe to The Independent Review. By the way, subscription forms are in your registration packets.

In any event, I’m delighted to have Professor Twight speaking tonight, and we’ll have Q and A afterward. So please, Charlotte? [Applause.]

Charlotte Twight

Thank you very much, David. Good evening. Nowadays we are told that our government is here to protect us, to look after our needs, to shield us from risk, to nurture our children, to encourage our personal growth, to provide for us in sickness and in health, and to insure our comfort in our declining years. So let me describe one instance of such government beneficence.

I hold before you a sensor pad. It is a breast self-examination device that helps women feel breast lumps and detect breast cancer more easily. It rests on a woman’s chest like a cloth during examination. One reporter described the sensor pad as about as simple as a medical device can get.

Look at it. Sealed plastic sheets with lubricant in between. Its bottom sheet clings to the skin like a cloth, while the top sheet floats on the lubricant, eliminating friction so that a woman can detect a lump as tiny as a single grain of salt. The sensor pad’s life-saving potential is obvious, yet government bureaucrats kept this product off the market for 10 full years before they would even allow its sale by a doctor’s prescription. It was 12 years before they would allow its sale over the counter.

Inexplicably, the U.S. Food and Drug Administration put the sensor pad in the riskiest category of medical devices, the same category as invasive devices such as pacemakers. How many women may have died because the U.S. government denied them access to this simple $7 pad?

The suppression of this pad is just one small illustration of the enormous growth of the central government’s power in the past 70 years. In the span of barely one lifetime, a nation grounded in individual liberty has been transformed into one where federal decisions control even such personal matters as what health care we can buy.

Despite the framer’s original vision of a government of limited powers, today each of us is heavily dependent on the federal government in most areas of our lives, for our incomes, our retirement security, our education, our health care, the viability of our businesses, and much more.

Today one cannot hire or fire employees, educate one’s children, save for retirement, open or close a business, develop one’s property, purchase medical care, or market many common products without encountering myriad federal laws and regulations redirecting private choice.

Sadly, Americans have traded individual liberty piecemeal for dependence on government, without revolution, without reflection, often without systemic understanding.

How could such unchecked federal power develop in a society with values historically rooted in individual liberty? How did it happen and how is it being sustained today? That is the question Dependent on D.C. strives to answer. Some say that the nature of political leadership holds the answer. F. G. Bailey saw malefaction as an essential part of it, urging us to examine the dark side to leadership. In his words, leaders are often villains, and it is very difficult to be an effective leader and, at the same time, a good person.

In stark contrast, conventional wisdom often views dependence on government as an inadvertent byproduct of benign legislative intent, ultimately reflecting the will of the people. But I suggest a much more ominous and disturbing process that lies at the heart of the growth of government power. Ominous because it is used universally by both democratic and republican officials, and disturbing because it has resulted in the last century in a virtual constitutional counter-revolution.

At the core of this process is a simple but universal tactic for increasing federal authority. It entails government officials deliberately increasing citizens’ private costs of resisting government expansion.

Upon reflection, this concept may seem obvious, but the devil is in the details, and this tactic assumes more forms than most people would ever imagine.

In fact, during the 20th century, Supreme Court justices, legislators, and executive branch officials have honed this tactic into what amounts to an art form. By deliberately raising the costs to ordinary people of perceiving and taking action to resist the growth of government power, the central government succeeded in achieving control over many aspects of our lives. That is how key institutions, establishing unprecedented federal authority, were created in the United States.

Once the new powers were established, later generations’ lifelong experience of dependence on the federal government then solidified public belief that such dependence is right and good, making the dependence that we witness today largely self-perpetuating.

While this universal tactic involves diverse strategies, all of them share one defining characteristic: they increase the cost to us of resisting government-expanding measures.

How Federal Officials Expand the Government

What strategies, you may ask? They include federal officials lying about the nature and effect of federal laws and policies. Federal officials tying controversial measures to popular ones so that we must take the bad with the good. Federal officials use of incrementalism to achieve government expansion, giving us less incentive to resist each step along the way. Legislators putting the same provision in multiple laws so that even if it is overturned in one, we must fight it again and again. Federal officials’ decisions to concentrate the benefits and disperse the costs of government action so that our individual costs appear lower to us, again dampening our resistance. And finally, U.S. Supreme Court decisions that change the Constitution through the back door of the Supreme Court rather than by the Constitutional amendment process, thus entirely avoiding the formal amendment process.

One example here is judicial reinterpretation of the Constitution’s Interstate Commerce clause. As you know, that clause gave the federal government power over interstate commerce, commerce between the states, to make sure that individual states did not erect trade barriers against one another.

Commerce within the separate states was supposed to be beyond the central government’s authority, but in 1942 the U.S. Supreme Court proclaimed that under the interstate commerce clause, the central government had power to regulate even the wheat that an individual farmer grew on his own land within a single state for his own family’s consumption.

In a single decision, the Supreme Court thereby unilaterally changed our Constitution, without Constitutional amendment, and thereby opened a door that would allow the central government to embed itself in virtually any economic activity, no matter how local.

Most crucial from my perspective, however, is that this judicial reinterpretation completely shifted the costs of political action, making extra costs fall on people who desired to uphold and defend the Constitution’s original meaning. The framers’ intention, of course, was to protect the Constitution by imposing extra costs through the formal amendment process on people who desired to change the Constitution.

In Dependent on D.C., I document many more of these strategies. In each case, the government’s use of these resistance-manipulating strategies increased the cost to American citizens of perceiving and taking action to resist government power grabs. Using these techniques, the central government systematically orchestrated acquiescence to its increased power.

Income tax withholding

Let us now consider some of the core elements of this government power. Take income tax withholding, for example. Without doubt, income tax withholding increases the cost to us of perceiving and resisting the existing scope of federal authority.

Tax collections after all are its lifeblood. With withholding, the government simply forces employers to take the money out of our paychecks without our permission before we even receive it. No mess, no fuss.

Most important to the government, taxpayers never experience the pain and anger of writing a check for the full amount of their federal tax bill. Psychologically with withholding, the money remains an abstraction. It was never ours, never tangible. As a result, many Americans today have no idea what their total income tax bill is, and even have come to associate April 15th with tax refunds rather than tax payments.

Back in 1943, when today’s income tax withholding system was created, resistance-manipulating techniques were actively used to get it passed. It was sold to the public through outright deception.

For example, withholding was said to be for the benefit and convenience of the public, promising lower tax burdens if passed. Yet in congressional hearings, legislators quietly discussed the tax revenues that they said needed to be, and I quote, “pried out of the taxpayers.” How they could, quote, “get those fellows.” This was their actual language. Unbeknownst to the public, they even discussed how the new system would result in more not less tax revenue.

In short, they lied to the public, and it worked. Just as those legislators anticipated, income tax withholding became an essential underpinning of today’s expansive state. Without it, the true cost of the tax would be highly visible, and effective resistance to over-taxation would be feasible. With it, resistance to over-taxation is virtually impossible, and all Americans now turn meekly to D.C. to discover what fraction of their lawfully earned income they will be permitted to keep.

Social Security myths

What about Social Security, another source of our dependence on government? Even as the program’s destructive consequences are now becoming more apparent, government misrepresentation and other deceptive tactics continue to shape Social Security’s evolution.

For instance, acceptance of Social Security originally hinged, and still rests on, public belief in each person’s supposed insurance contract with the federal government. Yet the Supreme Court actually ruled in 1960 that we have no contractual right to benefit payments under Social Security.

In short, we—who pay 12.4% of our earnings in payroll taxes for a lifetime—have no contractual right to anything as a result. Yet even today federal officials continue to repeat what I call the contract myth.

Another myth, used from the very beginning, is that the Social Security tax burden is split between employers and employees. Although the employer does, indeed, write a check to the federal government on behalf of the employee, economists and key public officials have understood for decades that employees bear almost the entire burden of the Social Security tax, both halves of it, in the form of reduced wages. After all, to the employer, paying the government $1,000 on behalf of an employee is financially equivalent to paying the employee $1,000 in wages.

Nonetheless, the myth of the split of the payroll tax reduces public resistance to Social Security by encouraging employees to believe that they are paying only 6.2% of their wages rather than 12.4%. So government officials cynically continue to employ the deception even today.

But were these and related strategies deliberate? Well, consider some federal officials’ own statements. At one point in a debate in 1972, a Social Security official admitted to economist Milton Friedman that the employee does, in fact, bear the so-called employer’s half of the Social Security tax. Dr. Friedman responded that he regarded it as an historic moment because, and I quote, “that admission means that many of the statements made by you and by the Social Security Administration about the relation of benefits to amounts paid are, to put it plainly, pure hogwash.”

And Wilbur Cohen, who was head of the Social Security Administration at the time, spoke candidly about the government’s promotion of Social Security as a so-called floor of protection for retirees. This is what he stated: “Its great attractiveness and usefulness has been that it can mean different things to different people. Its value is in what it conceals rather than what it reveals.”

Another Social Security official stated, “continued general support for the Social Security system hinges on continued public ignorance of how the system works. We have nothing to worry about because it is so enormously complex that nobody is going to figure it out.”

And the unpleasant truth, seldom mentioned by government officials, is that Social Security prevents poor people from saving and generating bequeathable assets that could extricate them, their children, and the next generation from poverty. Instead, all Americans forfeit what should have been the fruits of a lifetime savings, most of them forced to turn instead to D.C. for sustenance in their old age.

An equally shocking truth, known to few Americans, is that the Social Security Administration is now requiring any retiree who has paid payroll taxes all of his life, and upon retirement wants to opt out of Medicare, to forfeit all Social Security benefits and repay any benefits already received.

Federal Health Insurance

Think about that. What does that mean and imply for people’s ability to resist the government controls contained in Medicare?

Medicare itself was passed in 1965 using a bevy of resistance-stifling strategies – incrementalism, tying, and lying among them.

For example, Medicare proponents packaged the Medicare measure with the 1965 Social Security amendments, which just happened to contain a 7% increase in cash benefits for retirees. This meant that a legislator would have had to vote against the Social Security benefit increase to vote against Medicare, making such a vote politically impossible.

Moreover, government officials falsely promoted Medicare as protecting the elderly against financial ruin from catastrophic illness even though they knew that the 1965 Medicare proposal provided no such coverage. As Senator Russell Long stated at the time, “well, in arguing for your plan, you say, let’s not strip poor old Grandma of the last rest she has, and of her home, and what little resources she has. And yet you bring us a plan that does just that unless she gets well in 60 days.”

Similar strategies were used in 1996 to secure passage of the Health Insurance Portability and Accountability Act, often know by its acronym of HIPAA or sometimes it’s referred to as the Kennedy-Kassenbaum Bill. Federal officials promoted that law as merely a benign measure to increase people’s ability to retain their medical insurance when they change jobs.

Yet the 1996 act, in fact, established as statutory law, some of the most reviled features of the Clinton administration’s previously rejected Health Security Act. These included requirements for unique health identifiers for every American and for privacy-destroying uniform electronic databases of medical information on every American.

Unfortunately, the so-called medical privacy regulations that were finally implemented in April, 2001, have perpetrated yet another fraud on the American public, falsely promising privacy when ever-broader dissemination of our personal medical information is their actual effect.

Mis-educating the Public about Public Education

Everywhere one turns the story is the same. Public education laws provide another example. Deception absolutely riddled the passage of these laws, beginning with the National Defense Education Act in 1958. Federal officials leveraged that bill into law by means of the Sputnik scare, using false claims of national emergency to build a program that channeled funds to virtually all types of educational programs.

Representative Frank Thompson at the time called it a bill with a gimmick in it, namely the tie to national defense. And Senator Strom Thurmond clearly identified the lie. He said, “this bill, although it purports to be for the specific purpose of promoting the national defense, is, in actuality, general federal aid to education. This bill will not appreciably contribute to the national defense. Neither the scholarship program, nor the student loan program, are limited in any way to persons undertaking a course of study considered to be critical to our national defense. Under either of these programs, a participating student might study social welfare work, automobile driving, or for that matter, flower arranging.”

Such deception has been so recurrent and so blatant that, when a legislator repeatedly says that a proposed law will not do something, it’s a good idea to surmise that it will. That’s certainly how it happened with respect to federal denials of control over education.

As the economist Thomas Sowell has described it, “they have taken our money, betrayed our trust, failed our children, and then lied about the failures with inflated grades and pretty words. They have used our children as guinea pigs for experiments, targets for propaganda, and warm bodies to be moved here and there. They have proclaimed their dedication to freedom of ideas and the quest for truth, while turning educational institutions into bastions of dogma and the most intolerant institutions in American society.” Unquote.

It happened again in 1994 when the public was encouraged to perceive the Goals 2000 legislation as strengthening the academic rigor of public schools. Yet underneath that veneer of appealing rhetoric, the legislation established federal powers and policies that contravened the wishes of many communities, weakened the academic rigor of public schools, and accorded the federal government increasing influence over the education, ideological orientation, and career paths of American children. The federally promoted slogan of “outcome-based education” turned out to denote social outcomes desired by federal authorities, not academic outcomes desired by parents.

As a result of these and other statutes, Americans increasingly must defer to policymakers in D.C. as architects and overseers of what their children will learn in school and what jobs they will be trained to occupy.

Federal Snooping on Ordinary Americans

Then there is the dependence, rooted in recent expansion, of government data collection. Social Security numbers have become, what Paul Schwartz called, “a de facto national identification number” that now serves as a fulcrum for this vast data quest. Medical databases, accessible to a broad spectrum of governmental agencies, are now under construction. New federal education databases, mandated by recent legislation, compel increasingly detailed national records of each child’s educational experiences, and even their social and economic status.

A federal labor database of all American workers now exists, and federal law for decades, unbeknownst to many Americans, has required banks and other financial institutions to create permanent, readily-retrievable records in the form of photocopies or microfilm records, of each individual’s checks, deposits, and other financial transactions.

Linked through our Social Security numbers, these financial, labor, medical, and education databases, empower federal officials to obtain an astonishingly detailed portrait of every one of us, the checks we write, the types of causes we support, and now, what we say privately to our doctors.

Fifty years ago there was little that the central government knew about us. Today there is very little that they don’t know about us. And it’s getting worse, as you know, in the aftermath of the September 11th terrorist attacks.

By so broadly compelling law-abiding Americans to relinquish their personal privacy, the federal government fosters yet another corrosive dependency. After all, authoritarian governments have known for centuries that information collection is a potent way of raising the cost to individuals of resistance, facilitating such things as political blackmail.

A government with access to personal information we give to our doctors, for example, would have little difficulty in influencing many legislators or other people’s political activities.

Freedom’s Fall and Rise

Frederick Bastiat surely had it right when he described the law as a potential instrument of plunder. He stated that, “if you make of the law an instrument of plunder for the benefit of particular individuals or classes, first everyone will try to make the law, then everyone will try to make it for his own profit, resulting in the end of all morality.” Bastiat foresaw that, in his words, “government will be held responsible for everyone’s existence and will bend under the weight of that responsibility.”

What would have to change to set us on a course toward less government power, more individual liberty? Let me describe just a few of the necessary changes. Judicial reinterpretation of key constitutional provisions, which have served as a foundation for these expanded federal powers, would have to be undone, requiring major reversals in Supreme Court interpretation of the interstate commerce clause and other constitutional provisions.

Federal statutory law, now held in place by those unsound constitutional moorings, would need to be repealed. Direct and indirect federal control over American schools would have to be eliminated. Much existing legislation establishing control over American’s retirement income, heath care, and businesses also would require repeal. Federal government databases on law-abiding Americans would need to be destroyed and forbidden. The practice of using taxpayer funds as a lever to force state action would need to stop. And the massive government control over American’s incomes, now achieved through federal income and payroll taxes, would need to be severely reduced, facilitated by elimination of income tax withholding and an end to the fiction of the so-called employer’s half of the Social Security tax.

But even if the U.S. Supreme Court were to restore the plain meanings of Constitutional provisions such as the interstate commerce clause, does anyone doubt that political elites and a now dependent citizenry would clamor for Constitutional amendments to maintain the status quo? Of course there are things that each of us can do, things within our own control, that will enhance our personal liberty while contributing to a freer society.

We can choose to home-school our children. We can routinely use encryption to the maximum extent possible under existing law. We can read more widely so as to master the arguments in defense of a free society. We can state our opinions more openly among our colleagues and friends.

We can, to a greater degree, use cash for our transactions. We can refuse to supply private information about ourselves that we are not required to give. We can plan to provide for ourselves in our old age and strive to achieve a financial position that allows us to refuse Social Security and Medicare benefits in order to maintain our independence and control over our health care as we age. We can do these things and more. But such actions are costly, so most people will not and some cannot undertake them.

Accordingly, these kinds of actions are not likely to be enough. If liberty is to flourish again in American, we must, like those who signed the Declaration of Independence, commit our lives, our fortunes, and our sacred honor to the effort.

Clearly, it will be a tremendous struggle requiring the best in each of us to make it happen. For the sake of our children and future generations, I fervently hope that there is still the time and the will to turn away from our present path and free ourselves from dependence on D.C. Thank you. [Applause.]

David Theroux

If there are any questions, Carl has the microphone and—did you want to just field the questions here, Charlotte?

Charlotte Twight

This gentleman.

Audience member #1:

Dr. Twight, I understand why the U.S. post office is failing, and public education is failing, and Amtrak. What I haven’t seen or haven‘t heard, maybe I don’t know, the whole private information issue that you addressed this evening—is there any evidence, is there anything that has happened yet, anything we can point to and say, this is why we can’t disseminate personal information. This is why it’s a problem. Has anything happened yet where the government has intruded on private information and damage has been done?

Charlotte Twight

That’s a very good question. And I would personally solicit from all of you, if you have personal experiences that you would be willing to share with me, I would like to have those instances. A particular instance does not come to mind as far as a particular individual who was damaged by this. What you have is, increasingly, the government is setting up rules that are said to be privacy rules, so that we are supposed to feel wonderful that our medical records, our financial records, all of these things are going to be protected. But what has actually happened is in the fine print, they are exceptions which allow all of this information to be shared, especially among government agencies.

And what we will encounter, what we are already encountering, for example, with medical databases that are being constructed, is that people will say, well, there’s not just one national database. And that’s true, but what they’ve done is to standardize the format of electronic databases of personal medical information on each one of us, about what we say privately to our doctor, all kinds of personal things.

And what it means is that somebody, basically, with a couple of computer keystrokes, can obtain information not only about all of our financial records – checks, deposits, those things – but also such things as our educational records, our medical records, and the like.

So to me, I think history – even though I can’t site John Jones who was damaged as a result of this – tells us in terms of what has happened in other countries, where the government has acquired this amount of control, that people have been damaged.

Also, one other thing I would point out is that Jeffrey Rosen, who is a lawyer who studies privacy issues, recently a few months ago wrote an article in the Sunday New York Times, and he told about how in Britain surveillance cameras were set up in the wake of terrorist attacks in 1992 and 1993.

They haven’t caught any terrorists, but they have a horrendous number of surveillance cameras all around London and other places in England, and what has happened, what he documented—he actually went into these places—and they are using the cameras to look at people’s social behavior—I’ll leave it at just saying social behavior. And so what people are doing is self-censoring. Self-censoring, so they act differently in public because they know they’re always on camera. And I think that the same thing applies to other types of records of our activities.

Audience member #2

If you don’t mind, I’ve got a couple examples of where people have been harmed. There are lots of them.

Charlotte Twight

Excellent.

Audience member #2

One of the most dramatic ones that I know of was the case of Donald Scott in Malibu, California, who was a wealthy rancher. And he was seen around town passing around hundred dollar bills. So anyway the police started to investigate him, found he owned a valuable piece of property that backed up to National Park land, and decided they wanted to seize the property. The Park Service attempted to buy it, he refused to sell it. He loved the place he lived on.

So anyway what happened was that they manufactured evidence that he was growing marijuana, which was—turned out to be totally false—and the reason he was targeted was because he owned this property. And you see this again and again where people are targeted for asset forfeiture. In his case something like 32 police broke into his home early one morning and shot him dead. So that’s an example.

And there’s another example in New Jersey, another forfeiture example, this woman named Kathy Shramigan. She owned her home. She was lucky enough to own her home. And she was accused of stealing two packages from a neighbor’s porch. Two UPS packages maybe worth $50. Anyway, instead of just simply charging her of petty theft, which would be the normal thing to do, the police investigated, found out from records that they had that she owned her home, and they seized her house. They came by one evening, told her, “you have 15 minutes to get out with your children,” and took the house.

Charlotte Twight

Woman right there.

Audience member #3

Yes, I understand that historically there is a precedent, it’s something like first comes registration, then comes regulation, and this is supposed to be true in Nazi Germany where people registered their guns. So I think the big problem is, although you can’t, and I don’t know, who knows yet what they have planned for us, it’s the potential that I would believe that we’re all concerned about, and if we don’t start now, when do you do it? After it’s already a fait accompli?

So that’s why I think what you say is very relevant, because with that information, there is so much power. And it may not be today or tomorrow, but it could be next year or three years or four years from now. And I think that’s why this is a worthwhile discussion.

Charlotte Twight

I would say that a watched people is not a free people. When we are constantly watched, we change our behavior. And in terms of an historical example, I should have mentioned when the first gentleman spoke, the example in our country, the most dramatic one, is the rounding up of Japanese Americans during World War II. So that would be an example of federal information being used to the detriment of innocent, law-abiding American citizens.

Audience member #4

Yeah, I think we can all identify with this. When you buy an old home or any home, and they don’t have a low-flow toilet, you have to change it, and you must. And if not, the city comes down on you. Again, with registration comes regulation. So on a very personal level, I think there are lots of instances where all this information can be used against you.

Charlotte Twight

Thank you. Oh, in the very back. You, that person.

Audience member #5

Two quickies, Charlotte. One was: Is the information that you spoke of today, is it mostly in the book?

Charlotte Twight

Yes.

Audience member #5

Second question: The students whom you instruct, where are they on this? Are they willing to give up their Social Security? Are they willing to let government be less intrusive?

Charlotte Twight

It’s very interesting because I have started every single semester—I have to talk about Social Security a little bit, tell them some of the facts of life here—but what I do before starting to talk about that, is that I ask them to write on a little slip of paper, just without their name or anything, what the payroll tax is, what the burden is of the payroll tax to them. And almost always, except for a very few students, 90% of them say that it’s 6.2% or something in the neighborhood of that.

So my question would be how are they to evaluate the burdens and benefits and burdens of a Social Security system when they’re going around thinking that the tax is half of what it is? They’ve become, I think, a little bit more cynical and disheartened about these things, because they realize what’s coming down for them 40 years down the road, and so they know it’s going to cost them a lot of money. But even so, they do not perceive the true magnitude of the problem. So I’m doing my little part. [Laughter.]

Audience Member #6

Yeah, a lot of what you said would seem to conform to the ideas of some groups and people who believe that it’s come about in a very planned fashion, and that it may have started sometime around the early 1900s. And that they believe the next step is to formulate some form of world government, which is even more intrusive and more powerful, and I wonder what your ideas are on that?

Charlotte Twight

Well, I don’t subscribe to any conspiracy theories. My way of looking at things is that there are a lot of politicians out there, and interest groups, special interests, various people. And the politicians are using tactics that work well in politics. They’re trying to advance their own interests in one way or another. And it just so happens that it leads in one direction, towards greater power for the central government. And I hope what you said about the trend towards world government does not come to pass. We have to get smarter if it’s not going to come to pass.

I’ve been unfair to this half of the room. The gentleman in the middle there, and then the woman in front.

Audience member #7

Yes, you’ve brought up some interesting interpretations of the interstate clause the justices have used. I’ve got a question. Have you also contrasted how they’ve used the “Promote the General Welfare clause?” There is great debate in the Federalist and Anti-Federalist papers and what it really meant. Basically enumerated powers have tied to it. And it seems like they have expanded it considerably in the last 50 years or so.

Charlotte Twight

Absolutely. That’s another very good example. I think the founders never anticipated that this type of tactic could be used, where the plain meaning of the words at the time that the Constitution was adopted were simply changed by judicial action, and consequently their concept of limited government has been so dramatically altered.

Audience member #8

I’m going to play a little bit of a devil’s advocate. My question is, it seemed that our country was unprepared for the attack of September 11th. With as much information as they have about us as they do, they seemed that they didn’t protect us, which is their number one responsibility. What would you have the government do going forward instead of putting greater surveillance, greater intelligence? Because it seems like their intelligence was inferior. Obviously, it didn’t protect us.

Charlotte Twight

It’s a very interesting question. From what I’ve read, and one argument is that they had quite a bit of information, and that the difficulty was that there was already so much information clogging the pipeline, so to speak, in terms of intelligence, that there were messages that should have been decoded, but they were three days behind, and so they didn’t get to the messages until too late. So I think one argument would be that perhaps we should look at what are the sources of the intelligence failure that allowed September 11th to happen.

But it seems that people don’t want to look at why that intelligence failure happened, because that might say there’s some deficiencies in some of our intelligence gathering agencies. Instead the immediate federal response, I mean within days of the attack, instead of saying what led to these intelligence failures, having a public conversation about that, and within government, and between government, and the citizens and so on.

Instead of that, almost immediately they trotted out legislation which contained provisions that they’ve been trying to get for years and years and years. So the solution—the automatic solution—seems to be to put into place new powers instead of examining whether those in fact are called for by the circumstances.

The other theme that I have detected, in light of the main theme of my book, is that once again they have used political language to hide what’s actually in the bills. I mean, it was very dismaying to me, when I found out that they had come up with this law, where legislators sat around in a room and figured out words, “uniting and strengthening America by providing appropriate tools required to intercept and obstruct terrorism.” Well, so you get the acronym for that and it’s USA PATRIOT Act. And so that means nobody can vote against it. And most ordinary people don’t have time to read the fine print. They’re going to assume that this is a patriotic thing, we’ve got to do it, and it’s against the terrorists, which sounds like a fine and laudable purpose.

Once you have a name like that for a statute, you can just about put anything into it, and it’s very hard for legislators to vote against it. So what we found out after the fact is that there are various provisions that many experts think are severe threats to our Constitutional rights, Fourth Amendment, and so on. So I think we should at least have a conversation about it and not just go automatically to government’s got to have more information.

Audience member #9

I have, I guess, a two-part question. Thank you. What is the connection—I haven’t read the book yet, we just got it tonight—but with multi-national corporations that I view as being engines that are providing massive amounts of money, but a lot of their loyalty and responsibility for business goes out of the country, and yet they’re American-based companies.

I view this as a possible fuel, an engine for legislators and things to get further out of control, as you’re describing. Can you discuss a few thoughts about this phenomena where, if we had established plants in China and in Europe, and they’re legitimate businesses, they’re sort of pulling us along and pulling the politicians along, and everyone.

Charlotte Twight

So when you said about the multi-national corporations providing money, did I understand you correctly, money to government officials and things like that?

Audience member #9

Yes, I think it happens here and elsewhere. But they’re a generator of power, of money power, and of product. And so this has to have some kind of impact in maybe lessening our ability to have our legislators represent us. And a strictly voting standpoint, how do you deal with that?

Charlotte Twight

I think that’s a very good question, and many people are concerned about multi-national corporations. They’re, of course, concerned about things like campaign finance and money flowing in that way.

I’m always hesitant to talk about the details of reform proposals without first just pausing to think about the fact that, in my view, a huge part of the problem is that the government has so much power to begin with. If the government didn’t have so much discretionary power, then there wouldn’t be the incentive, both for good companies and bad companies, to funnel money into the system. It’s either protection money or they’re trying to get something, but the incentive wouldn’t be there if the government did not have such broad discretionary authority to begin with.

Audience member #9

It may be an interesting topic for you to further research at some point, do another book on it.

Charlotte Twight

Perhaps so.

Audience member #10

My last question. Is that young man your son?

Charlotte Twight

No. [Laughter.]

Audience member #10

Oh, sorry. OK, that’s fine. [Laughter.]

Charlotte Twight

But he looks like a very nice young man. [Laughter.]

Audience member #11

When I hear this conversation, there’s a—in the questions to you in general—a projection about what somebody else is going to do about these issues. And so, I guess, when I listen to this stuff, I say, what am I going to do about this? And to me there’s only the question that you asked about accusing the government of not protecting us, which is true.

But the consequence of it is, instead of saying there’s a certain risk of living, of driving an automobile, living in this country, don’t play with anything, we also, each individually respond for more protection, which in my opinion, gives the government more power. But I think on an individual basis, I think we have to elect people locally—personally work to elect people locally—who subscribe to these principles. And when we don’t participate, we passively give them permission to take these kinds of powers and we give them up.

Charlotte Twight

I always think about my neighbors and why they’re not doing anything about these things. And I think many people are sort of lulled into complacency. They’ve got their jobs, their incomes and the like, and that’s an excuse—and so they don’t do anything.

Audience member #12

Isn’t it better to talk to them?

Charlotte Twight

Yes, absolutely. And from my point of view, I think people need to understand that many of their public officials have a sort of cynical disregard for them, and I think that only when more people become aware of these things will they perceive that there’s a problem. I mean people in this room obviously perceive that there’s some kind of problem. And so I think that’s a motivator to say, I’ve got to do something myself. Nobody else is going to do it for me.

Another response to what you said is it’s very striking that people in this country are willing to send young men and women abroad to fight and die for freedom, as they conceive of it, and yet, when something strikes close to home, where we might have to bear a little bit of extra personal risk if we refrain from expanding the powers of the central government, people are not wanting to do that. So I think your points are very well taken.

Charlotte Twight

Way in the back.

Audience member #13

Thank you very much. Reading Frederic Bastiat here he says, “law is justice.” It’s a terrible thing to be taxed heavily on your payroll taxes and everything. It’s even more of an infringement of the state when the cops show up at your door and lead you away in handcuffs. That’s the ultimate infringement of the state.

One of the earlier speakers mentioned the business of asset forfeiture, which is going on in spades in the drug war. Just yesterday we had the feds show up in Oakland and San Francisco and shut down our medical marijuana clubs. Let us have your comments on the whole drug war and how it fits into your way of thinking. Thank you.

Charlotte Twight

I don’t discuss the drug war in the book, so let me just give you a couple of thoughts about that. The drug war I think poses the same dangers that the war against terrorism poses—in the sense that if you have something that sounds very appealing to many people in the population, then that’s going to be used as an excuse to do a lot of things that otherwise people would not go along with. So I think that’s one of the biggest dangers. And there’s some discussion in the book about the asset forfeiture laws and how those have been misapplied, but not a broad discussion of the war on drugs.

Audience member #14

About the patriot bill, I think this is true. The patriot bill was passed pretty much before it was written.

Charlotte Twight

Oh, yes. That’s true.

Audience member #14

Even before it was written. No one even read it.That was just shocking. I mean shouldn’t these people be fired? They passed a bill into law, the USA PATRIOT Act, containing many provisions that as I said scholars are very worried about as threats to civil liberty and the Fourth Amendment and such. They didn’t read the thing. They just said, “Oh, well, it’s USA PATRIOT Act. Fine. I’m in favor of it.” Seems like that should be a fireable offense.

Charlotte Twight

Yeah.

Audience member #15

What can we do to punish them?

Charlotte Twight

Don’t vote for him. Vote for different ones.

David Theroux

Shame them.

Charlotte Twight

Shame them. David said “shame them.” I think that’s a really good thing to publicize these sorts of actions, and talk to your neighbors about it and your colleagues.

Audience member #16

I’d like to point out a factual matter, and then pose a question slightly on a different subject. One thing that this obsessive gathering of information did for the Germans was that they had it neatly filed away and easily retrievable by the latest state-of-the-art predecessor to the computer, the card sorter made by IBM Corporation, so that when they wanted to find a particular group of people, it was very easy to pull up all their names, addresses, and every other characteristic they might need to find them and go after them.

You say that you don’t believe in any conspiracy theory, and yet throughout your presentation this evening you’ve –

David Theroux

Turn it horizontal.

Audience member #16

You said that these people went at it essentially with malice aforethought. That is they understood the implications of what they were doing. They realized that if they presented things in certain ways, or hid their true meanings, that they would get what they wanted. Of course, these people all acted totally independent of each other and never discussed it with anyone else. They would have to be at least conspiring with their immediate fellows in the thing. And I suggest also that, in many cases, such legislation is now proposed by think tanks, groups of people who have resident experts who have done deep study on psychological motivations, and political levers, and word-twisting, and things of that sort, and they’re well aware of the cumulative effect of some new proposed legislation with what already exists.

So I would suggest that there is at least if not some over-arching single conspiracy that subsumes them all together in one, that there are at least many other small conspiracies going at any one time to bring this about.

Charlotte Twight

I would agree that like-minded people in Congress, as in other places, try to do things that will get them more of what they want with less resistance from other people. But it seems to me that, in any group of human beings, you have some people who are trying to do devious things to get more power, exert power over others, and there are other people who are trying to do a good job. I have what I think is a really nice historical quote in the book from Isabel Patterson, saying that most of the harm in the world is not done by evil people, but from people persisting in trying to bring about what they think is going to be for the good.

But be that as it may, I actually have many instances documented in the book, where some group of so-called experts in Congress—have a particular interest in one bill—will actually try and orchestrate the circumstances so that it is very difficult for their colleagues to know what’s in the bill, or to vote against it. I have a fancier term in the book for it. Because it’s within government, sometimes within government you have this sort of effort by various individuals to try to raise the cost to other people in government of figuring out what’s going on and resisting it if they might like to resist it.

A colleague of mine once said it’s less like a conspiracy than writhing snakes trying to accomplish something. So they have their individual purposes. Sometimes they come together, sometimes they do not, but the overall pattern is towards their success. I mean, what seems to work in politics is these, what I call, transaction cost manipulating strategies that raise the cost to other people of perceiving what’s going and taking action to resist it.

Audience member #17

It seems to me like those folks who write laws have found ways of using the give and take between security and liberty. And the example that comes to my mind right now is the one where we’ve got these cameras on traffic lights to take pictures of cars that go through yellow and red lights, and then you get a bill in the mail. And maybe you could react to that.

Charlotte Twight

Yes. To me one of the most worrisome things about that is this idea of people getting used to the change. So if people just adjust to that and say, well, OK, these are the rules now, we have these little cameras around, what’s the next step? What’s the next generation going to think about those things? Well, there will have been cameras around on the traffic lights, and wherever else, for all of their lives. And so suddenly it gets ratcheted up to a new stage where the next level of surveillance will encounter even less resistance.

Audience member #18

And we rely on the courts to protect us from things like that, and now the courts have said that that’s perfectly OK.

Charlotte Twight

It’s a troublesome thing.

Audience member #18

The logic would tell you that there’s something wrong with that.

Charlotte Twight

I agree. I agree. There was a gentleman right behind you.

Audience member #19

I want to go back to the prior question about the tangled worms.

Charlotte Twight

The writhing snakes?

Audience member #19

Writhing snakes, yes. One word comes to mind, as you were talking about that, and that’s Enron. Because of what’s happened recently with Enron, we’re seeing legislative initiatives with regard to retirement plans, with regard to campaign finance, and with regard to accounting, so forth and so on. And obviously that has happened because there’s this feeling of there’s something wrong and terrible that’s happened, and we’ve got to take action.

Now the politicians are in a feeding frenzy about it, and I understand why, but what’s interesting to me is that the media seems to have a presumption that we must do something. Their reporting is generally along those lines.

Now there are some exceptions, like the Wall Street Journal today was talking about how campaign finance reform is not campaign finance reform. But that doesn’t happen very often. Could you talk a little bit about what the media has to do with a lot of this.

Audience member #20

Read the book by the former CBS newscaster. There’s a new book out called Bias that may answer that.

Charlotte Twight

Yes. That’s number one on the charts now, I think.

Audience member #21

If you can find it –

Charlotte Twight

Yeah. I guess it’s hard to get a hold of a copy right now, but I’m sure they will reprint a lot more. I think that that is a very important thing. In fact, in one part of my book in chapter two, I talk about the role of the media in concealing some of these types of strategies that I’ve been talking about this evening. So in my own view, I think that’s a big part of it.

And it’s very interesting in the case of Enron. Once again, something happens, people think it’s terrible. The first move is, as you said, to suggest all of these other government powers that we need to establish.

And I’m also led back to the comment that you were reacting to, because it’s very nice. You have a quick solution so my neighbors can say, “oh, well, that’s taken care of. They’re going to pass some new laws. I don’t have to do anything.”

So, I hope that eventually all of our neighbors will become alert to the fact that there is a problem, and that they are going to have to do something, or their children are going to come to maturity in a much different society than the one that we’ve been privileged to experience.

Audience member #22

This whole situation, of course, is very worrisome, but I’m mindful that there are possible solutions which have been alluded to from time to time within the last six months. Antonin Scalia made an offhand comment at the end of a speech that the American people, at any time, can propose Constitutional amendments, but most people aren’t aware of this.

And my husband and I frequently have disputes about this, that this whole thing has come about, I believe, because the American people have wound up having laws made or passed to their detriment by the legislative bodies, which instead of – at one time, historically, they were part-time legislatures, would only be there for like three months and then go home. And the emphasis at that time was legislation – quality of legislation, not quantity. Now we have the flip side of that.

And I have privately told people from time to time over the past several years that I think, at least to my mind, one way that could put a brake on that kind of thing is a Constitutional amendment for Congress that no legislation could be passed unless every single member of Congress who voted yea or nay—an abstention wouldn’t qualify—but that they had to sign a declaration with that legislation that they had read it first.

Charlotte Twight

Excellent. I think that’s an excellent idea. It’s very interesting, though, about Scalia’s comments. I believe, if I’m thinking of the correct remark, he was talking about the Trusted Traveler Program. And he said –

Audience member #23

He didn’t specify it.

Charlotte Twight

Oh.

David Theroux

It was the Trusted Traveler.

Charlotte Twight

Yeah. The comment that I read was he was speaking to—was it a college group, I think? And he made the remark that, well, if you don’t like this Trusted Traveler card, which many people fear is going to grow into what amounts to a national ID card, then why don’t you just go ahead and propose a constitutional amendment to forbid it?

Well, a friend and colleague of mine, Sheldon Richman, sent me a note about this and he pointed out how this exactly dovetails with my theory, because the costs of political action were exactly flipped by this means. They’re saying now that the default is the government can do whatever it wants to do. If we want to stop it, we have to bear the cost of putting into place a Constitutional amendment to forbid it. So there are some big problems, I agree with you.

Audience member #24

In regard to one of the first statements—Collected information has often been used by people who leak it to the press to do somebody in, and the press tends to go along with it. And that’s one of the real down sides of having all kinds of information out there.

One of the things I wanted to point out about the 9/11 event, and our protection, I believe that if some of the controllers had told the media the minute that the airlines had been hijacked, a lot of people would have been able to figure out that they were headed towards the World Trade Center and Washington, DC, and thousands of people might have been saved.

Charlotte Twight

That’s s good point. That’s a very good point. In the back.

Audience member #25

What are your thoughts on the Libertarian Party as an antidote to some of the problems you raised?

Charlotte Twight

I’m in favor of any group or organization that’s working towards liberty. I think that we need to change people’s ideas, and I think that’s what The Independent Institute is about. I think that’s what the Libertarian Party’s about, and so, I think that’s a fine thing to the extent that they are informing people about some very fundamental issues pertaining to liberty.

I would also note that the election rules, as you know, are so structured against third parties that it makes it very, very difficult for them to be successful at the ballot box.

David Theroux

OK.

Charlotte Twight

We’re done? Thank you.

David Theroux

A couple items I might just throw in from my own perspective, for those of you who can bear it. On this issue of conspiracy theory, one way to look at this is that people have ambitions, and they plan, and they try to see goals for whatever purposes, but I think a lot of economists would suggest that there are competing interests who do this within the government system. And to do that, to essentially acquire the police power to use for their own purposes.

The problem is not just that there’s this process where people try to use government power for their own purpose, because the power is there, as Charlotte is saying, but also the process itself actually creates a problem, because there is no real check on it, and that’s what the founders were basically saying, that you have to check the power of the state, because voting is very inefficient, and voters don’t know what’s going on, and so on and so forth.

One thing that we have had great pride in is in working with Charlotte, because Charlotte exemplifies the scholar who takes enormous care, and is very precise in her work, in documenting each step of the way. The academic world, in many respects, is politicized, like many other parts of our lives, but Charlotte Twight is one person who is not. And that’s another reason why this book is a very important one.

Two other small little things I might just throw out also. In the aftermath of the 9/11 tragedy and horror, in looking at the failure of U.S. intelligence, another dimension of this, I think, is to realize that this is really a reflection of the failure, in my opinion, of centrally planning information gathering, which was not what the founders had in mind, either.

One area that we were involved in, doing work on, one of our fellows has done studies on our Web site, for example, on one provision in the Constitution, which is right after the war making power in the very first article, is the provision where Congress can issue so-called Letters of Marque and Reprisal. And for those of you who are not—let me ask—anybody who is not familiar with Letters of Marque and Reprisal? Please raise your hand.

Letters of Marque and Reprisal were used by Congress the first 50 years or so of the Republic as the major means of raising a military force by hiring privateers. And this was done through the War of 1812, and many other conflicts, going after pirates, essentially, and terrorists of that age. And there are quotes from Jefferson, and Madison, and others, who were quite pleased with this process of having competing entities which were bonded, and yet they would be responsible if they themselves committed murders and so forth.

And it was so efficient that there was a treaty drawn up in the mid-nineteenth century to outlaw in among all the governments, because the government navies that existed, which were the major military forces then, didn’t like being shown up by these different entities. If you’re interested, it’s on our Web site under Working Papers.

And right after the 9/11 incident, there was a bill submitted by Congressman Ron Paul to authorize the use of Letters of Marque and Reprisal. There is also news accounts of a billion dollar bounty fund that was being put together by a number of high-tech executives.

And you can imagine the possibility of raising a bounty fund from the families of those who were killed, the insurance companies, and most Americans. It would be an enormous fund. And those of you who follow such things will know that in the criminal justice field, bounty hunters are far more efficient than any police agency in getting their man, because that’s how they get paid. And it was our suggestion that that would be the way to proceed without the need for bombing villages and so on and so forth.

Anyway, without going off on other further tangents, those of you who have not obtained a copy, again, of Charlotte’s book, we hope that you will do so. And I’m sure she’ll be delighted to autograph copies for those of you who’ve not had your copy autographed. We’re delighted that you joined with us. I want to thank Charlotte again for her work and for you all for joining with us and making this such a successful event. We look forward to seeing you next time. [Applause.] Good night.

END



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