The Freeman | Ideas On Liberty » John Chamberlain

The Case for the Free Market

John Chamberlain — Wed, 01 May 1996 08:00:00 +0000

Mr. Chamberlain (1903-1995) wrote the lead book review for The Freeman for more than thirty-five years.

Every fourth year we get involved in the frenzied madness of a presidential election. Watching the quadrennial show, Leonard E. Read correctly estimates that politicians are powerless of themselves to change things. The politico, when he is running for office, is a mere resultant of forces. The way to move society on its axis is not to play politics. It is to persuade teachable people to think as you do. and the best way to do this is to be a good personal living example of the philosophy you hope to spread.

Leonard Read is not running for office, so he can freely say what some people would describe as the damnedest things. His book, Anything That’s Peaceful: The Case for the Free Market wouldn’t get him through the New Hampshire primary. He believes that government should be limited to such things as keeping the peace, preventing fraud, dispensing justice, and fending off attacks by foreign powers. He says it is violent coercion to force Social Security on anybody. He thinks that Robin Hood, who advocated taking money from one set of people to give it to another, should properly be called Robin Hoodlum. He argues that any type of government economic intervention forces human energy into shapes that are marketable only at the end of the police club. He doesn’t consider that people think well in committee. He refuses to vote when the choice is between two trimmers. He challenges the idea that the government is peculiarly fitted to run the post office, or to maintain schools, or to plan the coming of either a good or great society. In short, his opinions are such that he couldn’t be elected to the office of dog catcher, let alone win a state primary.

Nevertheless, Mr. Read, by insisting that the state should not intervene to keep people from doing anything at all that’s peaceful, is beginning to shake up American society as no political figure has ever managed to do. I know this because I have witnessed the come-back of the freedom philosophy over the past twenty years. Mr. Read began in the nineteen forties as a still, small voice. He had a few accomplices then. There were a couple of emigrant economists of the Vienna neo-liberal school taking issue with the dominant Keynesian hosts. Three women—Ayn Rand, Isabel Paterson, and Rose Wilder Lane—were wondering what had gotten into men to make them think that the way to release energy was to deliver everybody to the dictates of a public planning authority. The columnists, radio commentators, and magazine writers who believed in economic freedom could be counted on a couple of hands. When the writer of this review teamed up with Henry Hazlitt and Suzanne La Follette to start The Freeman, he was told by an old friend, his first night city editor, that he had better consult a psychiatrist, for surely he was sick, sick, sick.

All of this was scarcely a generation ago. Mr. Read still sounds extreme to the conventional way of thinking when he says that education would be improved if there were no tax-supported public schools. But private schools throughout America have started to come back in recent years with a rush.

Mr. Read doesn’t think you necessarily have to forbid socialistic enterprise by law to restore freedom. Take this matter of the federal monopoly of mail delivery, for instance. Mr. Read is satisfied that if the law were changed to permit private corporations to undertake the delivery of mail, and if an unsubsidized Post Office were to be put on an accounting basis comparable to that forced on private industry, some ingenious free enterprisers would soon compete the government out of the mail business. For what, so Mr. Read asks, is so difficult about delivering mail? The telephone company, in transporting the human voice three thousand miles from New York to San Francisco, does something that takes much more ingenuity. And, so Mr. Read adds, the American Telephone and Telegraph Company showed a profit of $22 billion when the Post Office was losing $10 billion.

That the climate has changed since Mr. Read, with a handful of confederates, started to preach the freedom philosophy is proved by the lip service that is now being paid to libertarian generalities. A candidate for vice president resigns as co-chairman of the socialistic Americans for Democratic Action and makes a sudden appearance before a number of important businessmen to assure them that he isn’t anti-business. An occupant of the White House invites a prominent publisher to Washington to assure him he is all for self-made men. The TVA may still be regarded as sacrosanct, even when it burns coal to add to the electricity that is made by use of water power, but it is getting tougher to sell huge river development schemes to the public.

During the twenty years I’ve known him, Mr. Read has not, to the extent of my knowledge, ever argued for or against any specific Congressional bill as such. He has not attacked or supported specific men for specific public office. This is not because he values tax exemption for his foundation, for it is part of his fundamental creed. He can’t have voted very often in his lifetime, for he believes that it is just as wrong to vote for a small-scale trimmer as it is to vote for a big one. As this country reckons things, he is the completely nonpolitical man. He even argues that we might do better if we were to choose our Congressmen for non-recurring terms by lot, for by such a method we would get representatives who would have no stake in buying voters with their own money. Such obliviousness to the emotions that are unleashed in most breasts in a campaign year is a marvel to behold.

Yet I do not doubt that Mr. Read will one day be a chief architect of a change in this country that will have a profound effect on our philosophy of government. He is a positive force, and, being such, he shapes the adaptation of other people without buttonholing them, or demanding that they vote for this or that bill or this or that man.

I say this with profound admiration, even though I have often, in my lifetime, voted for the man whom I have regarded as the “lesser evil.” I have always been hopeful that a “lesser evil” might, in office, be more likely than a “greater evil” to see the light on the Road to Damascus. Almost invariably I have been disappointed, yet I persist in coming back for more. But contact with Mr. Read has done much to make me serene in the face of continual disappointment in the electoral process. Even “greater evils” can be forced, by changes in the intellectual climate, to slow the pace toward socialist goals. And when the natural listeners and followers in the middle begin to listen to the intellectuals of the right instead of the intellectuals of the left, even the greatest of “evils” will begin a new career of trimming in the right direction.

A Reviewers Notebook: Reclaiming the American Dream

John Chamberlain — Wed, 01 Jun 1994 08:00:00 +0000

Richard Cornuelle, author of Reclaiming The American Dream, subtitled, The Role of Private Individuals and Voluntary Associations (Transaction Publishers, New Brunswick, N.J., 1993, 258 pages, $19.95 paperback), is the man who restored Alexis de Tocqueville to his rightful place in American history.

Cornuelle had worked as a young man for Garet Garrett. A good observer, he had noticed that it had become fashionable to speak of American life in terms of only two sectors: the public, a euphemism for government; and the private, or commercial sector. The division seemed somehow wrong. Cornuelle discovered the inadequacy of the two-part division by reading Tocqueville’s Democracy in America, in which the Frenchman marveled about our tendency to handle public business through associations that had no connections with the state. Americans founded associations to give entertainments, to found seminaries, to build inns, to construct churches, to diffuse books, to send missionaries to the Antipodes, and to establish hospitals and schools.

The omission of the independent sector had resulted in a tendency to shuffle off work onto government. It ignored the Kiwanis, Rotary, Civitan, and Lions clubs, as well as the Chambers of Commerce, and some 3,500 independent private hospitals. “There were,” so Cornuelle observed, “1,357 private colleges and universities, and enrollments in them went up faster than in the public schools.”

There is something of a contradiction in Cornuelle’s lament that conservatives failed to have programs or that liberals had some of the programs that they did sponsor. Cornuelle should be happy that the American dream worked for a hundred years. Our founders had taken pains to design a government with limited powers. Sometimes, this power resulted in a crazy intensity decorating the walls of Alcatraz Prison or in the frivolity of groups organized for treks in classic cars, or even in learning to be clowns. But the independent sector, as Cornuelle put it, is a kaleidoscope of human action, which takes a thousand forms. Sometimes the driving power of the independent sector may seem weak, but the demand to serve is none the less a compelling drive. “We see the services and their many alloys,” says Cornuelle, who is satisfied to observe that “145,000,000 Americans have some form of health insurance.”

Cornuelle sends me a copy of his revised book with the remark that, “Here it comes again.” (Reclaiming The American Dream was originally published in 1965.) He says in his afterword that the Reagan mission was not to repeal the welfare state but to preserve it and to accept debt or inflation for taxation.

This was all true enough for the moment, but movements have been created by Cornuelle and others that must lead eventually to less dependence on welfare. “There is,” says Cornuelle, “a sprawling politically invincible middle class, the members of which believe they could be satisfied by the free market.” That is an optimistic note. It doesn’t entirely satisfy Cornuelle. And I can see his point. We have a long way to go before reaching a totally free market. The difficulty we face is dealing with the ruined condition left us by the government process.

A Reviewers Notebook: Two World Views

John Chamberlain — Fri, 01 Apr 1994 08:00:00 +0000

As Eugene Rostow, former dean of the Yale Law School, shows in his book, Toward Managed Peace (Yale University Press, New Haven and London, $35.00), we have definitely had a foreign policy: It was to fight the Cold War. Stalin, like the Romanov Czars, continued the immemorial policy of trying to bite off more territory. His prey was anything he could pick up, but at Yalta he showed his preference for land that was contiguous to Mother Russia.

With the perspective of a world historian, Rostow reminds us of the origins of current events: The Cold War came to an end with the collapse of Marxism in Russia. Instead of one huge Russia we had ten or twelve smaller Russias from the Ukraine on down. The Contras controlled much of Central America and reached into South America. Chile became a benevolent dictator story. Castro was another such story though not quite so benevolent.

There isn’t much point in writing a simplified review of the Rostow book, as long as another book, Final Warning (Warner Books, New York, N.Y., $18.95) subtitled “The Legacy of Chernobyl” by Dr. Robert Peter Gale and Thomas Hauser demands attention. Gale was the doctor summoned by Armand Hammer to supervise bone marrow extraction and deposits in victims of the Chernobyl disaster. Chernobyl could have been much worse. It was pure luck that blew the wind around. The Ukraine city of Kiev might have been ruined. Odessa, on the Black Sea, might have been stricken. But Chernobyl operates still. With the prevailing world winds going from west to east, all of the new Russias (the Ukraine, etc.) are in perpetual menace. There must be no more accidents. But there have also been accidents in the Urals, as Gorbachev has inti-mated.

Together, Toward a Managed Peace and Final Warning, enable the reader to visualize two opposing worlds; a hopeful harmony, which I can’t picture at this moment in history, and a possibly disastrous conclusion to everything alive.

A Reviewers Notebook: The Politics Of Power

John Chamberlain — Sat, 01 Jan 1994 08:00:00 +0000

The Greeks had a word for it: “Nothing in excess.” Centuries later, Edmund Burke used the word prudence. He believed in a conciliatory approach to Britain’s relations with America on the one hand and Ireland on the other. Thus it could be seen that Russell Kirk has had good literary forebears for his book, The Politics of Power (Intercollegiate Studies Institute, Bryn Mawr, Pa., 304 pp., $19.95 cloth; $8.95 paperback).

Kirk has a genuine passion for order: He has orderly listings of ten conservative principles, ten conservative events, and ten conservative books. It would have offended his sense of order to have had to settle for nine or eleven books, or six or twelve events.

Kirk is against the Behemoth State in any form whatever. It forces centralization in decision- making. Variety disappears. As a disciple of the Swiss-German economist Wilhelm Roepke, Kirk is an enemy of the “cult of the colossal.” Roepke says we must find our way back to the humane scale in both economics and politics.

A Michigander, Russell Kirk is well acquainted with the gigantism of the automobile industry. Henry Ford thought that his Model T would restore the humane scale. It would allow a worker to go to work in the morning and return home to raise soybeans or whatever in the afternoon.

But the Model T failed in its mission.

The great set piece of Kirk’s book turns out to be what happened in Detroit, Kirk’s hometown before he moved to Piety Hill in a rural area. He grew up near the railroad tracks leading out of Detroit. All his life he has had to go in and out of the automobile city. The decline of the automobile business had its reflex: the city, struggling with joblessness, became a mugging center with murders common every corner. Only the foolhardy dared to go out.

Kirk has a scunner on the word “ideology.” To become an ideologue is to him, equivalent to making a pact with the devil. It may be admitted that ideology is not a pretty word. But most people use it loosely, as an object of search. To have settled with a philosophy, putting ideas together in a bundle does not mean that one can never change one’s mind.

Luckily, Kirk is a prime storyteller. He recreates the atmosphere of Tennessee agrarianism with a beautiful character portrait of Donald Davidson, who refused to go through New York City on his way to his summer home in Vermont. His picture of Detroit in decay is hereby recommended to Jack Kemp, the man who wants to bring business to the inner city.

One can forget the semantics of Kirk’s approach while delighting in his storytelling power. So read him for this and the searing section on Detroit’s collapse. Don’t worry about the book’s title.

A Reviewers Notebook: Refuting Oswald Spengler

John Chamberlain — Wed, 01 Dec 1993 08:00:00 +0000

Is there an excuse for a volume the length of The Rebirth of the West (Cambridge, Mass.: Blackwell, 1991, 736 pages, $69.95)? The answer, rather obviously, is that the book might have been published as six or seven volumes. Peter Duignan and L. H. Gann have each done many important studies for the Hoover Institution in California. Duignan has edited more than thirty volumes dealing with the Middle East, Africa, and Hispanics in America, and Gann has been right behind him.

The authors have a two-part theme; the general post-war recovery, and the special role of the U.S. in creating an Atlantic Community from 1945-58. Together, they have mastered the art of interesting and relevant quotations in a way that would have pleased the late Leonard Read. They quote the British historian Macaulay:

It is not by the intermeddling . . . of the omniscient and omnipotent State, but by the prudence and energy of the people, that England has hitherto been carried forward in civilisation; and it is to the same prudence and the same energy that we now look with comfort and good hope. Our rulers will best promote the improvement of the nation by strictly confining themselves to their own legitimate duties, by leaving capital to find its most lucrative course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property, by diminishing the price of law, and by observing strict economy in every department of the state. Let the government do this: the People will assuredly do the rest.

Macaulay wrote these lines in 1830. They do not check with much that has happened since, especially after World War II. By the mid-1950s, the state in Western Europe controlled all postal communications, telephone services, nearly all radio and television stations, as well as large segments of the mining and steel industries. The state accounted for 100 percent of the coal mining in Britain and Italy, 98 percent in France, 60 percent in Holland, and 26 percent in West Germany, an anomaly.

The state patronized the arts, even to the point of sanctioning pornography. It licensed street walkers. In the name of Keynesianism it has indulged in all manner of national planning. The Marshall Plan was fundamentally a subsidy affair, deemed necessary to bring city and country together. European peasants had not seen fit to bring their food to city markets that had little to offer in exchange.

If most people took what the state offered without quibbling, there were the important exceptions. Adenauer in West Germany looked with favor on the idea of a free market. Ludwig Ehrhard, minister of Adenauer’s Rhineland economy, abolished price controls, ended rationing, and reduced onerous regulations.

In spite of all travails, the post-World War II years impressed Duignan and Gann as “marvelous”—thirty golden years of achievement “anticipated by few.”

This brings Duignan and Gann back to Macaulay: “Had he returned to survey the post war scene in the West he would have felt vindicated in his optimism.”

In “overview entries,” Duignan and Gann summarize such topics as education’, both elementary and secondary, the Berlin blockade, the decolonization schemes for Africa and Western Asia. There are chapters on the progress of the Cold War, with résumés of what was said and done at Teheran, Yalta and Potsdam. The Marshall Plan gets more than its share of attention. The literature of the U.S., Britain, and Western Europe, and the radio, television, and music are all related to the global scene.

“Our task,” say the authors, has been to fashion a synthesis based on “the best scholarship.” Oswald Spengler’s Decline of the West has been refuted, at least for the thirteen years covered.

A Reviewers Notebook: The Freeman Classics Series

John Chamberlain — Fri, 01 Oct 1993 08:00:00 +0000

FEE, under the new dispensation of Hans Sennholz, has decided to refine the gold it has scattered about in its publications, particularly The Freeman magazine. By the beginning of 1993 it had published three collections: one, called The Morality of Capitalism; another, Private Property and Political Control; and the third, Prices and Price Controls. In addition, it has published a collection of many of the Freeman essays written by Henry Hazlitt, who died in July at age 98.

The authors of the books are well aware that capitalism is not perfect. They are also aware of the fact that capitalism is, to quote editor Mark Hendrickson, “morally as well as economically superior to every known alternative, such as socialism or the welfare state.” Hans Sennholz does an informative introduction to The Morality of Capitalism. He notes that the critics of private property never tire of berating the profit motive. The critics “rail at successful merchants and shopkeepers, at wealthy bankers, stockbrokers, and capitalists.” The critics “rave at advertising, marketing, and other business practices designed to inform and influence people in making economic decisions.” But capitalism has its defenders: Orval Watts, Leonard Read, Ludwig von Mises, F. A. Hayek, Garet Garrett, Israel Kirzner. Their essays on the moral issues of our times have been taken from Paul Poirot’s special editing of The Freeman over a thirty-year period. Poirot sets the tone of the books with an essay entitled “He Gains Most Who Serves Best.” A businessman’s profits measure his efficiency in the use of scarce and valuable resources to satisfy the most urgent wants of consumers. Ludwig von Mises notes that the consumer calls the turn. But under freedom there must be access to physical property. If the government owns all the printing presses, the possibility of printing opposing arguments becomes practically non-existent.

In his essay, “Think Twice Before You Disparage Capitalism,” Perry Gresham says, “Capitalism is the one system of political economy which works, has worked, and will continue to work.” The alternative system is socialism which tends toward tyranny and serfdom. Gresham has three pages of lyrical acclamation of capitalism. “It is no relic of Colonial America. It has the genius to change with the times and to meet the challenges of big industries, big unions, and big government if it can free itself from interest-group intervention, which eventuates in needless government spending.” Capitalism, an economic system which believes with Locke and Jefferson in life, liberty, and property, and the inalienable rights of man, denies the “banal dichotomy between property values and human values. Property values are human values” (italics are Gresham’s).

A reason for beginning with the selections in The Morality of Capitalism becomes apparent if you turn the whole business around. Immoral capitalism is theft. It is an easy way to get capital, but it can’t last. The Golden Rule and The Ten Commandments must be obeyed, lest people kill each other off.

Capitalism, so Gresham says, is belief in man. It recognizes the potential tyranny of any government. To quote, “The government is made for man, not man for the government. Therefore, government should be limited in size and function, lest free individuals lose their identity and become wards of the State. Frederic Bastiat has called the state a ‘great fiction wherein everybody tries to live at the expense of everybody else.’”

Capitalism denies faith in the state to control wages and prices (see the third book in the FEE series, Prices and Price Controls). A fair price “is the amount agreed upon by the buyer and seller. Competition in a free market is far more trustworthy than any government administrator.”

Capitalism gives a poor person the chance to become rich. It does not lock people into the condition of poverty. Capitalism offers full employment to those who wish to work. A worker is free to accept a job at any wage he can get. He can join with his fellow-workers in voluntary association to improve his salary and working conditions. He can start his own business. “Capitalism,” says Gresham, “is a belief that nobody is wise enough and knows enough to control the lives of other people . . . . Capitalism respects the market as the only effective and fair means of allocating scarce goods. A free market responds to shortages and spurs production by rising prices . . . . Capitalism is a natural ally of religion. The Judeo-Christian doctrines of stewardship are reflected in a free market economy . . . . Capitalism depends on the family for much of its social and moral strength. When the family disintegrates, the capitalist order falls into confusion . . . . Dividends paid to those who invest capital in an enterprise are as worthy as interest paid to a depositor in a savings bank. The idea abroad that risk capital is unproductive is patently false.”

“The consumer,” says Gresham, “is sovereign under capitalism. No bureaucrat, marketing expert, advertiser, politician, or self-appointed protector can tell him what to buy, sell, or make.”

Property is necessary to capitalism. Individual rights are extensions of property rights. All rights depend upon property, according to the second book, Private Property and Political Control, which clarifies the inadequacies of the socialist concept of rights.

A Reviewers Notebook: Costly Returns

John Chamberlain — Sun, 01 Aug 1993 08:00:00 +0000

Despite the reassurances of James L. Payne in his Costly Returns: The Burden of the U.S. Tax System (265 pages, $14.95) that the IRS is not really out to get anybody, there is no way to dodge worry about the tax collector. The Institute for Contemporary Studies, Payne’s publisher, may say that the Constitution has its guarantees against the seizure of bank accounts, salaries, houses, and cars without due process of law, but the guarantees are meaningless if you can’t survive an audit. Good intentions won’t save you from sudden changes in the tax code. Nor will they counter stupidity.

The IRS happens to be recruited from the lowest third of our law school graduates, which would seem to guarantee stupidity. The recruits are certainly not error proof. Congressman Christopher Shays, a Republican from Connecticut, upon listening to details about the error rate at a GAO hearing, said, “I am not used to hearings where I learn that 47 percent of all written response to taxpayers is incorrect, or that I learn that 36 percent of the non-computer kinds of responses, the personal contacts over the phone are incorrect. It just raises some questions in my mind that I haven’t been able to sort out yet . . . if we can make such a colossal number of mistakes, how does that translate in the other things we haven’t looked at? Here we are saying it is close to 50 percent . . . half of what we do are errors.”

Payne estimates that Americans spend more than five billion hours annually on tax compliance. It is theoretically voluntary, but if you take anybody’s word for that you are crazy. If you choose freely not to pay taxes, jail awaits. Voluntary compliance automatically means less money for investment. The disincentive effect of a tax destroys jobs.

Payne has a suggested cure: Let the government pay an audited person for the time he spends being investigated. When, in a rough analogy, the government seizes land to build highways, it forces policy makers to recognize the true cost of highways and therefore discourages them from building as many as they otherwise would. This suggests that there wouldn’t be so many audits if the tax collector’s money were used to finance them.

Oliver Wendell Holmes once said he didn’t mind paying taxes, for “they bought him civilization.” Payne turns Holmes around. “Taxation,” says Payne, “may have been a minor nuisance in Oliver Wendell Holmes’ day, in 1904, long before the adoption of the graduated income tax. Now, grappling with a full-blown welfare state tax system we are left pondering the converse of Holmes’ dictum.”

Actually, Holmes was dead wrong. Taxes are the price we pay for being uncivilized. There is a violation of conscience involved in most tax payments. Taxes are no longer seen as funds needed for comprehensive rational purposes but as part of a system of rip-offs needed to pay for special interests.

“What is a tax?” Herbert Stein asked in The Wall Street Journal. “A tax is a financial burden levied by some citizens or residents of the country to provide benefits to others.”

We have a “culture of taxes” that militates against tax repeals. At a Congressional Tax Administration hearing of a House Ways and Means Subcommittee, 17 officials for the IRS showed up to have their say, but there was only one representative from the American Bar Association.

A Reviewers Notebook: Out of Work

John Chamberlain — Mon, 01 Mar 1993 08:00:00 +0000

After last fall’s election George Bush said he beat himself. But history asks of Bush no such abasement. History tells us that when unemployment is high, presidential incumbents always lose.

In a fantastically detailed book called Out of Work: Unemployment and Government in Twentieth-Century America (New York: Independent Institute, Holmes and Meier, Foreword by Martin Bronfenbrenner, 326 pages, $27.95, $16.95), Richard Vodder and Lowell Gallaway controvert Bush’s assessment. I’ll take Vedder’s and Gallaway’s word for it. They seem to know every bit of evidence about unemployment going well back into the nineteenth century. Their conclusion is that government action aimed at eliminating unemployment of more than seven percent defeats itself. The best way, they say, to reduce unemployment is to do nothing.

In 1929, when Herbert Hoover was running things, we had an activist who had fed the Belgians and Russians. He thought he knew everything about stabilizing markets by government interference. The word that went out from the White House was that money wages should not be cut. High wages would maintain purchasing power. The purchasing power fetish, with Hoover’s sanction, became the orthodoxy of the time. When Franklin Roosevelt took over, he saw no reason to change things. After all, he had been an activist too.

Simply put, this meant that there was a bottom rigidity to a key factor of production. The free market was not allowed to work.

To force things, deficit financing was resorted to in various combinations. The National Industrial Recovery Act set prices under the so-called Blue Eagle until the Supreme Court invalidated it, but this was by no means the end of the high-wage story. The Wagner Act, the Social Security Act, the Fair Labor Standards Act, all contributed to maintaining high labor costs. The Smoot-Hawley tariff added a protectionist bias that provoked foreign retaliation. American employers went along with Franklin Roosevelt (Ford and Thomas Edison were with them), but only up to a point. When a person could not earn the minimum wage he was understandably jettisoned.

Quoting from a National Review summary of their book, Vedder and Gallaway say that “market forces tend to end recessions naturally by forcing a fall in the adjusted real wage . . . .” The 1920-21 recession, infinitely worse at the outset than the Great Depression, dissipated itself within a year under “do nothing Presidents” (Woodrow Wilson was too seriously ill to pursue his natural inclinations, and Warren Harding wasn’t interested).

The Great Depression, by contrast to that of 1920-2 I, got worse after continual market meddling. More recently, the 1982 recession lasted only about a year, with no special attempt on the part of the Reagan Administration to end it. As labor markets softened, real wages fell.

Vedder and Gallaway take four vivid impressions from reading American macroeconomic history. One is that the worker needs prosperous capitalists to provide for job opportunities. The second is that government efforts to reduce unemployment must worsen the problem. The third is that long-term improvement in living standards requires improvements in productivity, better understood by reading Adam Smith than John Maynard Keynes. The fourth impression is that “experts” are dangerous and should be listened to skeptically. Being “kinder and gentler” by approving a morass of new environmental, civil rights, minimum wage, and other legislations has hurt American workers. The “experts” are to blame.

As they keep reiterating, Vedder and Gallaway are bent on keeping government out of it. They pound this in: the best thing to do in dealing with unemployment is to leave it alone.

A Reviewers Notebook: Government Racket

John Chamberlain — Fri, 01 Jan 1993 08:00:00 +0000

In the course of assembling material for his book, Government Racket: Washington Waste from A to Z (Bantam Books, 270 pp., $7.95 paperback), Martin Gross has had to have recourse to the twenty-six letters of the alphabet. It’s all a manner of speaking, of course. Gross needs a double and triple alphabet. He has had to use the letter C at least a score of times (C for Consultants, C for Congressional Committees, C for Chief Executive, etc., etc.).

His book abounds in singularities. He has discovered, for instance, that the Department of Education doesn’t teach a single one of our children—and only contributes six percent of the massive cost of education. States and districts account for the rest. The Department of Transportation covers less than half the cost of our roads. The Department of Energy doesn’t pay our electricity, oil or gas bills. The Department of Health and Human Services doesn’t furnish a majority with any medical care. The Department of Agriculture provides services to farmers whose number decreases every year, even as the number of its bureaucrats increases.

So where does the money go? The old answer was that it went to buy my baby clothes just to keep her in style. But this was a gag. The money goes to buy aircraft and limousines to keep government employees—mainly bureaucrats—rolling through the skies and on the ground. Their wives must roll, too. New buildings go up in Washington and New York “like in the Roman Empire.” The census counters do more than count individuals every tenth year of their supposed mission. In between times they may inspect what you keep in your freezer.

Anyone could lead the House of Representatives in opening prayers—but the House Chaplain gets a salary of $155,300—and this, says Gross, is “no typo.”

Washington’s biggest growth industry is the Congressional Committee—today there are approximately 300 committees in the House and Senate. Joint committees have proliferating sub-committees, each with its own chairman, staff, office, and perks.

We’re talking, says Gross, about a small army: “7,800 people in the House and 4,000 in the Senate—a total of almost 12,000 federal employees.” Each Senator has 40 aides, not counting those on his Committees.

The growth of staff has pushed Congress into looking for still more space. In addition to the three House Office Buildings (Cannon, Rayburn, and Longworth) and three Senate Buildings (Hart, Dirksen, and Russell), Congress has taken over two more buildings near the Capitol and renamed them in honor of former Speaker Tip O’Neill and former President Gerald Ford.

Besides the Washington office, each Congressman has also up to three offices in his home district. Says Gross, one district office is enough for any Congressman. The others should be closed.

Then there is “the shadow empire.” This consists of outside consultants who get up to a thousand dollars a day with the taxpayers footing the bill. Reagan considered this scandalous. But instead of getting angry, all Jimmy Carter and Reagan had to do was to sign an executive order outlawing all consulting contracts. “Just a stroke of the pen,” says Gross, who adds, “We’re still waiting.”

The General Services Administration has allowed one Congressional leader to pay more than $3,000 for a single desk. So how much is spent on furniture and decorating each office? “No one in the government really knows,” says Gross.

There have been 11,000 members of Congress, with some 800 still alive. About 600 belong to the U.S. Association of Former Members of Congress, which makes them “super lobbyists.” They are privileged to walk on to the House floor at all times. Armed with status and access to former buddies “even in the House or Senate cloakroom, dining room, gym, or swimming pool,” the super-lobbyist can accomplish miracles.

Gross says we are in terrible shape with a federal debt that has passed the four trillion dollar mark. In 1993, it will cost us $315 billion just in interest. We do crazy things, such as spending nearly one billion dollars for unwanted honey just to keep beekeepers happy. In one year we gave away the total honey crop while the American people bought the same amount of honey from overseas. We have stored a billion dollars worth of helium underground, enough to last to the twenty-second century. And the junkets go on, with no real demand for travel to distant places. One hundred people went to the Paris Air Show for $200,000.

The $4 trillion debt looms like Mount Everest until we come upon Gross’s item about land purchases. The government, he tells us, owns thirty percent of all land in the United States. At this point, one is inclined to say, “Wow!” If we were to sell the land to tax-paying people we’d be out of debt, wouldn’t we? Yes, but it isn’t going to happen. Congress has just paid $1.9 billion, or $50,000 an acre, for raw forest land.

Pork takes up considerable space in Gross’s book. Do we really need to spend $107,000 to study the sex life of the Japanese quail? Or $60,000 for Belgian endive research? Or $84,000 to find out why people fall in love? Gross quotes Senator Proxmire as saying, “I have spent my career trying to get Congressmen to spend money as if it were their own, but I have failed.”

Gross’s own cure for the whole business of waste is to suggest the creation of two executives to run the government in the president’s name. One would be Chief Operating Officer; the other would be Chief Financial Officer. Their big function would be to by-pass the cabinet. With “ZBB,” or Zero Based Budgeting that pays no attention to last year’s appropriations, and with the president having a line-item veto, we might have real reform. On the other hand, only a limitation of the terms of office for Senators and Representatives (twelve years for Senators, eight for Representatives) could spread the fear of God through Capitol Hill.

A Reviewers Notebook: Forge of Union

John Chamberlain — Sat, 01 Aug 1992 08:00:00 +0000

With the publication by Jameson Books of Ottawa, Illinois, of the third volume of his “eyewitness” narrative history of the founding of the U.S. government, Jeffrey St. John, radio and television commentator, has completed the job he set out to do. His idea was to pretend that he was “there” when General Washington, James Madison, Alexander Hamilton, Patrick Henry, Thomas Jefferson, Benjamin Franklin, John Adams, and the other founders were deciding to cut loose from King George the Third, whose government tried to tax them without their permission.

For his volume one, Constitutional Journal, St. John pretended that he was in the room at Philadelphia and sneaking out daily reports of the new Federalist effort to provide something more solid in the way of government than the Articles of Confederation, which had staggered through seven years of war without the taxing authority needed to pay Washington’s troops.

In volume two, Child of Fortune, St. John gave a weekly recounting of the battle in the states to ratify the Philadelphia constitution. It was hard going for the Federalists to combat the Anti-federalists led by Patrick Henry, of “liberty or death” fame, who wanted to scrap the centralizing work of Madison and Hamilton. There had to be a promise of a Bill of Rights to get the Constitution adopted in recalcitrant states.

St. John’s volume three, Forge of Union, Anvil of Liberty, (320 pages, $24.95 cloth) reports on the first Federal elections and the creation of the Bill of Rights, a list of which was reduced from seventeen, then to twelve, and finally, with merger phrasing, to the familiar ten.

One interesting thing in St. John’s Forge of Union, Anvil of Liberty is the way in which Washington relied on Madison to keep Patrick Henry and the Anti-federalists at bay. With the Spanish and the French and the British egging the Indians on in Florida and in the Mississippi Valley, care had to be taken in pursuing a foreign policy. Monetary policy was important too: Alexander Hamilton proposed that the federal government assume at face value the debts incurred by the states during the recent war, adding them to the debts carried by the general treasury. The government’s taxing power and the projected national bank would assure repayment. Patrick Henry “could find no clause in the Constitution authorizing congress to assume the debts of the states,” but President Washington, without fully understanding what Hamilton was proposing, backed him. “This is the first symptom,” so Hamilton wrote of Patrick Henry’s attack on debt assumption, “of a spirit which must either be killed or will kill the Constitution . . . .”

The difference between the American and French revolutions is continuously stressed through letters and documents produced by St. John. A parenthetical refrain running through the book is St. John’s boast of “a copy having been obtained by this correspondent.”

There was a savagery to the French revolutionary uprising that was, in St. John’s words, fueled by a burning hatred for the aristocracy. “This type of savagery,” says the author, “was almost totally absent during the American revolution . . . . in the last two years it has been demonstrated to a disbelieving world that it is possible, on this side of the Atlantic, to effect revolutionary political reform without recourse to mob violence and internal bloodshed. Even during the long War of Independence, the conflict was governed within specific codes of conduct that prevented it from degenerating into a savage civil conflict between people of the same cultural traditions.”

Savagery, remarks St. John, was a commonplace in such collisions as those that Washington had witnessed in western Pennsylvania, but, “its appearance on the supposedly civilized streets of Paris has shocked and stunned American political leaders.”

Violence might have developed from the Founders’ failure to rid their culture of slavery. But compromise was possible here—in the so-called Northwest Ordinance territory, no slaves were permitted in new states north of the Ohio Riven Kentucky and Vermont could peaceably join the union as the fourteenth and fifteenth states without provoking trouble.

New Jersey became the first state to adopt a Bill of Rights. The struggle for a permanent site of government was settled in favor of the “Powtomac” (the upper Potomac) at the expense of the Susquehanna, which was too far north.

Having emerged from the 18th century, Jeffrey St. John will be looking for something to do. He is tempted by the subject of the Cold War. But that would mean spending inordinate time with the ghosts of Stalin and Brezhnev. Better, one thinks, to stick with the 18th century. Why not a history of the Louisiana Purchase, which gave us half a continent?