Well, good afternoon, ladies and gentlemen, and welcome to the final session of our ten
talks on the growth of government in the United States.
I will confess that when I started, this seemed like a very big project, and I wasn't at all
sure I was man enough to make it to the end, or at least that I had voice enough to make
it to the end, but here I am still talking, so if I can carry on for one more lecture
then I'll be ready to make one of those declarations like the chief of the Nez Perce tribe made.
In my case, I will lecture no more again, that might be a little hard promise for me
What I want to do this time is give some consideration to the most recent crisis episode that might
be viewed as fitting the mold of the ones I've discussed in the past few days and then
We tend to consider explicitly what we might expect to happen in the future in light of
our understanding of what has happened in the past.
Those of us who care a lot about history and are so audacious as to even stand up and try
The Theory of Money and Credit
What we can learn from the study of history, if combined with sound theory, is that we can make a pretty good probabilistic forecast about what future patterns will hold and expect that some of the patterns we've seen in the past to provide useful guides for shaping our expectations.
To illustrate this, I want to start off right now by giving you some excerpts from an interview I gave in September of 19, excuse me, of 2001.
In fact, on September 20th, which was just nine days after the dreadful events of the
terrorist hijacking and the collapse of the buildings in New York City with so much loss
of life, I was approached by Michael Lynch of Reason Magazine, who wanted to interview
me given what seemed to be the terrorism crisis that we were plunged into at that
time and asked me some questions about what I expected to happen given my study
of crises in the past and so this was an occasion for me in a sense to take a
I wanted to take a test to see whether in fact it is true, as I'd always insisted to students, that knowing something about how history seems to have operated is a good guide to the future.
And I answered the questions put as follows. There were a number of them. I'm not going to read the whole interview, but it did appear in Reason Online.
French said, what ought we to look for this time?
And I said, we can expect thousands of reservists to be called to active duty and taken away
from their ordinary jobs.
We can expect the assignment of military forces to some unprecedented duties.
It appears that some military units are going to be used for domestic police activities.
It is clearly going to be the case that the FBI will become far more active in surveillance activities.
The government will mount a variety of overseas actions requiring the armed forces and perhaps
a number of civilian employees to attempt to kill, to disable or to damage what are
taken to be terrorist camps, facilities and cadres.
It is also fairly clear that the government is going to have to bail out the airline industry
and maybe the insurance industry.
When the government takes large-scale unprecedented actions of this sort, unanticipated consequences
always occur, then the government has to expand even further to deal with those consequences.
Lynch asked later, what's the nature of the coming crisis?
And I replied, the whole concept of wiping out terrorism is completely misguided.
It simply can't be done.
Terrorism is a simple act for any determined adult to perpetrate, no matter what kind of
security measures are taken.
I suspect that after the government finishes making its show of force in the next few weeks,
It will only inspire new acts of terrorism, if not immediately, then eventually.
And finally, he said, what do you expect in terms of Leviathan at the end of the day?
To which I replied, the ultimate result will be an enlargement of the Big Brother state.
We were moving that way already.
This will accelerate it.
Well, I'll let you be the judge of how well my forecasts have held up to this point, but in my own estimation, I hit every single nail on the head.
Now, maybe any sensible person might have come to the same expectations that I expressed in that interview, but I don't think so.
And so I think that what has been happening in the past two years has in fact mimicked in many ways the experience of previous crises.
Obviously each one has its own specific details. No two are exactly the same.
And so, what the government does in any given crisis is always a little different from what it's done in another.
But again, there are patterns that occur again and again and again.
There is a kind of internal political logic that creates those patterns, that brings them into being.
And there is an ideological underpinning that makes possible the working through of these patterns on each occasion.
As I argued in my book, there have been crises throughout history, but they didn't always work like the ones of the past century.
They require a certain ideological context in order for them to work as they have more recently.
and that ideological context still exists despite what people seem to think for a
while in the 80s and 90s about having put the status to to route nothing of a
sort of course happened and as I told many of the people espousing those views
in the 80s and 90s you're you're just indulging in wishful thinking if you
You think somehow we've won the battle against the statist and got them on the run, that
the masses could be turned around on a dime by the simplest crisis or even by a bogus
crisis and the politicians will quickly come running to exploit the opportunities of a
crisis.
Well, what did they do this time around?
Very quickly after the attacks of September 11, President Bush asked Congress for an
emergency appropriation, apparently aimed largely at just giving $20 billion more or
less to New York City for the purpose of making repairs of the damage there.
The Congress responded not by agreeing to the President's request, but by doubling it and appropriating $40 billion to what amounted to an emergency slush fund.
The airline industry, which was plunged into even more money losing by the fallback of its demand after the attacks,
received $5 billion appropriation for cash subsidies and $10 billion authorization for the federal government to make loan guarantees if the airline companies got banks or other lenders to help prop them up during their hard times.
Congress created the Air Transportation Stabilization Board, which was to oversee the dispensing of this loot to airline companies,
many of which were on the verge of going bankrupt anyhow at their own initiative.
and so they were probably happy to have this crisis come along and provide a pretext for subsidizing them when the market was already telling them to close up shop.
Airport security, almost everybody decided, obviously needed to be nationalized.
At that time, the airline companies, under the supervision of the FAA and in accordance
with FAA rules, along with the airports, were managing these baggage checks and searches
of passengers and since the terrorists had got on board as passengers and carried out
They're hijacking. Everybody panicked and concluded that we couldn't rely on private employees to perform this critical security task.
And for some reason, even though everybody knows perfectly well that when anything is moved from the private sector to the public sector, it's done worse, not better.
They all somehow believed that this was completely different, because this was called security or policing, and obviously we don't want private policing.
Again, flying in the face of the fact that the great bulk of real policing going on in the country right now is being done by private employees,
as opposed to these make-believe thugs who wear uniforms and steal people's property and arrest them for non-crimes.
But nonetheless, the government proceeded to nationalize airport security checks
and created something called the Transportation Security Administration,
just recently transferred to the Department of Homeland Security after it
was created. One and one-half months after the hijackings, Congress passed
something called the USA Patriot Act. Cute. What an acronym. Where do they get
with these geniuses.
This was a statute of more than 400 pages, which according to members of Congress, nobody
in the Congress read prior to voting on it.
Not that they often read much of the legislation they pass.
That in itself is not unusual, of course.
But this was an especially important law and they clearly rushed it through.
These 400 plus pages of the law consist in very large part of amendments to existing
laws which had been sought and prepared already, particularly by the Department of Justice,
which has been seeking to expand its powers for many years and to give itself more power
to spy on people and to collect and exchange information in a whole variety of ways that
were forbidden, at least officially forbidden, one always wants to take with a grain of salt
these rules that are supposedly imposed on the FBI or the CIA or the other intelligence
agencies because it's not as if they necessarily feel obliged to follow them, but at all events
they did have some constraints they didn't like and had been trying to get loosened and
they are smart guys, they know that when a certain time comes they can then come forward
with what they want and have a much better chance of getting congressional approval.
So that's what they did in the USA PATRIOT Act.
And the upshot was that the legal authority to conduct surveillance was greatly increased.
All new categories of criminal were defined, such as domestic terrorist.
But a domestic terrorist was defined in the law so loosely as to be applied to anyone
committing virtually any crime, so long as the authorities somehow linked it.
That's a wonderful word.
We're always seeing things or people that are linked to terrorism and it behooves us
to always say how, linked how says who because it's an all purpose claim that can be trotted
out and is trotted out all the time nowadays to cover what they're doing.
Anyhow, these domestic terrorists are now to be dealt with harshly and special measures are to be taken to ferret them out,
including so-called sneak and peek search of people's premises.
Normally, before police of any kind can break into your house or your car,
They need a search warrant, at least under the Constitution, it would appear that they should have one, and often they do get them.
I mean, they're not that tough to get.
All you have to do is take somebody from the prosecutor's office and have him waltz into a judge and tell some lies, and he waltzes out with a search warrant.
So, it's not as if it's a big burden on the police to get search warrants, but it's not one they like anyhow.
Sneak and peek search allows them to come onto your premises unannounced, and furthermore,
even after they've conducted their search, to not tell you for months, if they choose not to tell you.
Now what that means is that if they come and take something that wasn't even stipulated as what they were looking for in the search warrant, you have no way to know that they've exceeded the warrant.
You have no opportunity to go before a judge and ask that that evidence be excluded from any legal proceedings in which they might seek to prosecute you.
You have no way to offer an explanation of why you might be in the possession of something, in a lawful way, that they might have it linked with some crime, including terrorism.
So sneak-and-peek search warrants were a kind of authority that certainly took away some
protection that people thought they had, at least, against unreasonable search and seizure.
The law authorized so-called one-stop search warrants.
In the past, if you wanted to search somebody's house in Philadelphia, you had to go to a
to a judge in the area with jurisdiction over that house and get the search warrant.
And if the person who lived in that house also had an apartment in Miami and you wanted
to search that too, you had to go to a judge in Miami and go through the motions again
to get another search warrant.
One-stop search warrants allow you to do this once and then to search a person's property
Anywhere He Happens to Go or Anywhere He Happens to Be Living or Staying, wiretap rules were loosened and made quite undiscriminating,
internet tap rules were made looser and undiscriminating, the FBI's use of these filters, which they start out calling carnivore,
another one of their blunders. You wonder, you know, there must be a guy somewhere in charge of giving the original names to all these programs and he's the dumbest guy in the agency and he comes up with these real doozies which the minute they get out in the press just cause them no end of grief because they're all too suggestive, aren't they?
carnivore being aimed in the direction of human beings they might as well call
it cannibal or not not what you want your FBI to be doing to you but but at
all events these these electronic filters are now implanted at internet
service providers and and when you and I send our subversive emails back and
and so on and so forth, as long as we keep putting in little catchphrases like we must
do as Osama says, they filter that information right out and add us to their data banks.
So the internet is now completely vulnerable to these people's blundering filters for everybody.
It's completely undiscriminating. They don't have to have identified Mark Thornton as a potential terrorist.
His email's passing through whatever ISP he's using, and it's all being subjected, along with the other fish in that ocean, to being taken out by the net they're using.
A number of provisions were added under the Patriot Act to confiscate property.
The government has discovered in the past 20 years that confiscations are good and more confiscations are better.
So under the guise of stopping money laundering, you'd think, well, money laundering,
We're supposed to be talking about money passed back and forth in support of terrorism, but in this regard, as in many others in the Patriot Act, there's no confinement of these provisions to terrorist-related activities.
They're generally applicable, so that regardless of the kind of crime the government might pretend to be investigating, it can still go ahead and confiscate property.
and in fact it's been doing so.
There was an article just a couple of weeks ago
in the New York Times reporting a dispute
between the State Department and the Justice Department.
The State Department was reporting
that a number of foreigners were complaining
because the Justice Department
had been confiscating assets of foreign banks
And these foreigners doing some kind of business in the United States did not appreciate just having their assets snatched and so they were making diplomatic complaints and that pressure was being relayed to the Department of Justice which was telling its colleagues to go to hell.
So, it's already an issue. Anyone who's studied things like this knows, if you create authority for one ostensible purpose, but you don't strictly confine it to that purpose, by clear language, the first thing that will happen is that it will be used across the board.
and ultimately it will be abused and it will be used for political purposes.
We've seen it again and again and again and this anti-terrorism legislation so called is tailor-made to be abused in that fashion.
The FBI pretends to have made drastic changes in its mode of operation back in the mid-70s.
After revelations were made at a considerable length in the Congress, having to do with the so-called COINTELPRO operations of the FBI between 1956 and 1971.
COINTELPRO is an acronym, and a really ugly acronym at that, for counterintelligence programs.
And it's also an inaccurate acronym because although the pretext for these programs at the FBI was to find out about communist spies operating in the United States,
the authority was quickly expanded and extended so that it wasn't just gathering information after a while, it was actively intervening.
Not just to plant agents, not just to plant agents' provocature, not just to plant misinformation, or not just to intimidate people involved in some subversive activity, but to spy on, disrupt, and to discourage, up to and including discouragement by collaborating with their murderers.
People engaged in various anti-government policy activities as people who were opposing government foreign or domestic policies.
Many of these people were radical groups, socialist groups, communist groups, some of them not so radical groups like the American Friends Service Committee of the Quakers,
which was very active in anti-war activities in the 60s especially.
I suppose they still are for that matter.
But they were subjected to dirty tricks by the evil geniuses at the COINTELPRO.
A great deal has been written about all of this and supposedly when it was revealed by the Church Committee
The FBI changed all its rules to ensure that they wouldn't engage in these kinds of actions again.
Well, all right, if you want to, you can choose to believe they stopped.
But at all events, just recently, the Attorney General has decided officially that they'll resume,
that they'll once again start monitoring and collecting information on political and religious groups.
So they would have us believe that all they're doing is sending guys into a few mosques
to make sure that the terrorists aren't in their concocting acts of terrorism,
but we all know that's not all they're going to be doing.
The Patriot Act provided for a lot of information sharing that used to be against the official rules between the FBI and the CIA and the DIA, the Defense Intelligence Agency.
And in fact, increasingly in the past two years, the Pentagon has become very much engaged in what you might call domestic police work.
This is something that historically American tradition regarded as extremely dangerous, and we thought the Army should stick to making war and should stay out of policing, but because of particularly the drug war drawing military forces into cooperation with domestic police, people have grown used to this now, so it was an easy thing to add to that kind of activity under the Patriot Act.
There's a lot more in the Patriot Act, as I say. It's more than 400 pages long, and the language being what it is, it's very difficult to decipher what it really means.
A lot of it just says that section 421 of the law of September 9, 1979 is amended to remove the word which in line 7 and add the word including, things like that.
So, you really have to put a lot of work in and almost be a specialist lawyer at the Department of Justice, and it's written that way not just because that's an easy and technically apt way to do it, but it's also because nobody else will know what they're doing.
It's very difficult even for journalists who want to write about this to know what power was actually altered or changed by this kind of law.
So, what I've told you about, we're pretty sure is there. Other things are there too, and we could indeed have a whole course on the Patriot Act if we were so inclined.
The attacks of September 11 gave new impetus to increases in the defense budget that were already beginning to be made and bigger ones planned for the future.
When the Bush administration took office, they said they would try to add some $50 billion a year to the rate of defense spending every year by the time their first term ended.
Well, of course, they've doubled that already as of next year, and so they must be very
pleased with their ability to jack up the Pentagon budget.
Now, you might say, what does this have to do with terrorism?
After all, the Army, Navy and Air Force didn't do a lot to defend us from the acts of terrorism
on September 11, and indeed should future terrorist acts be attempted, it's hard to
see how the Army, Navy and Air Force would be of much good in preventing them.
But those military services are very good at somehow transporting munitions to Afghanistan
or Iraq or any other part of the world and carrying out aerial bombardments of whoever
and more happens to be down below.
That's what they know how to do.
So as I forecasted right after the hijackings, that's what they're going to do.
They'll do what they know how to do, drop bombs.
So they dropped bombs fairly quickly on Afghanistan and they've continued to drop them ever since.
The Afghans shrewdly tried to get out of harm's way, and so they, by this time, found ways
to pretty much stay out of harm's way, although not all the villagers and people driving around
innocently in vehicles have been equally successful, but they have dropped a lot of munitions on
Afghanistan, and I'm sure they'll be doing that for a long time to come, so that's good
steady work.
And meanwhile, of course, we've had this new war on Iraq, which we all witnessed and
saw coming and argued about the lunacy of, knowing it wouldn't have any effect whatsoever
on what was about to happen.
I felt very much akin to the people in the late 1930s who saw World War II coming.
They saw how horrible it would be and they knew they could do nothing to stop it.
So for me it was personally painful to await that catastrophe and then to see it happen as it did and as it is continuing to happen now.
And many of us fear, of course, that it's just one chapter in a whole book of catastrophes that may be carried out along similar lines.
But the defense establishment, thank goodness, will now be much better funded to do its part in dropping cluster bombs on cities all over Central Asia.
A funny thing happened on the way to the forum.
The public opinion changed overnight, like that.
Government had grown, at one level at least, somewhat unpopular in the 80s and 90s.
It used to be back before the mid-60s, if you ask people questions like, how much do
How much do you trust the government officials in Washington to do the right thing?
About two-thirds of the people would say a lot or somewhat.
And then with the war in Vietnam and Watergate and all the rest of it, government didn't get so many approving answers from the public.
and with the Reagan people coming on bad-mouthing government and people rediscovering, as some said, the virtues of the free market.
These public opinion polls showed less and less ostensible public approval of government and its ability to do the right thing and to do it in a competent way.
So that if we had asked that question, let's say, in the summer of 2001, as indeed some polling organizations did,
they found that only about a third of the respondents said, well, they'll do the right thing most of the time, or at least some of the time.
We have quite a bit of trust in them.
Well, as soon as hijackers come here and knock down two big buildings and kill thousands of people,
the public suddenly has renewed trust in government.
That was not a typo I spoke.
They have the old level of high trust in government all at once because two buildings have been demolished.
Now you go figure. I've got it figured out myself. I know how people respond to heightened apprehension.
They turn to their protector and modern Americans turn to government as their protector.
It's not their protector of last resort, it's their protector of first resort.
They demand immediately that the federal government do something.
And they expect that it will somehow.
It's as if every time, the fresh time, it's like the old Peanuts cartoon with kicking the football, you know.
Every time it's pulled away at the last moment and Charlie Brown falls on his butt.
But it's like a shock every time.
The American people, every time they kick and miss that football of protection that's jerked away from them by the government,
but they think it's going to be there.
Every single crisis they run thinking that football of protection is going to be held right there for them to kick.
So public opinion switched tremendously, very quickly, and it has remained at a high level.
It's fallen back a little bit, but it remains at a very high level of approving government,
of trusting government, of approving what's called the job the president is doing.
All these measures of how people feel about the state were transformed for the betterment
of state functionaries by the catastrophe of September 11.
Well, government officials, being no dummies in this respect, knew they had a great opportunity.
And so they, along with countless opportunists in the private sector, rushed to Washington,
D.C. to exploit those opportunities the crisis had created, whether it was to get a new contract
to sell your security gizmo to the FBI or whether it was an opportunity to increase the Pentagon budget or give more power to the FBI, to the President, you name it.
It was an opportunity for all those neocon intrigers who had been trying to rule the world for 30 years and hadn't quite got there yet.
It was a great opportunity indeed, because now they were able to make the president their total puppet and to use him as the ostensible actor in carrying out this plan to conquer first the Middle East and then to intimidate anyone else in the world who got out of line.
So, they set in motion very quickly. They were the best prepared of all. So well prepared that it makes you wonder.
One thing that came of this after a year or so was passage of the Homeland Security Act on November the 25th, 2002.
and this was a typical government make-believe statute.
It's almost 500 pages long, very complicated and consists mainly of just reorganizing a lot of the organization chart.
A bunch of existing government agencies were now brought under one umbrella
and made subsidiaries as it were of one big firm instead of being separate and competitive.
One upshot of this of course will be that they'll have more budget clout now acting as a unit than
they used to have when they were to some extent fighting against one another in the bureaucratic
process so they'll all end up better off is my expectation in terms of how much
loot they extract from the taxpayers they there are about 170,000 employees in
the Homeland Security Department right now and expect that number to grow the
The Act also empowered these people with a much new authority, extending to some extent
what had already been done in the Patriot Act, the power to collect information on persons
and organizations and to mine existing databases and to bring all that information together
into one gigantic de facto database was given to the government.
They started out calling this Total Information Awareness, TIA, and again it was that really
dim-witted fellow back in the basement who came up with that idea, well Melvin it's a
It's a little too Orwellian sounding, don't you think?
Yeah, so they decided to, without changing the acronym, to just call it terrorism information awareness.
And of course that solved all the problems because just saying the word terrorism always solves all these problems.
It's all we have to do. It's like a mantra. We just utter the mantra and all our woes disappear.
All our powers are magnified.
I don't know if it occurred to anyone that it's also...
T-I-A, Tia, that's the Spanish word for aunt.
You kind of get the feeling of an old lady hectoring you,
but maybe that's just my own fevered imagination that calls that to mind.
That relative who wants to give you a kiss at a family get-together and you don't want her to kiss you,
Tia Maria, she's the one, yes.
The Homeland Security Act extended the limits, or I beg your pardon, put new limits on what you could find out through a FOIA request,
The Freedom of Information Act request.
That's the mechanism that we've been using for the last several decades to try to extract information that the government holds.
And sometimes it works.
Sometimes you eventually get a little information out of them if you're patient and willing to wait a long time.
Although it may have been blacked out in large parts so that it's still near useless to you.
But there are now more limits on what you can find out by FOIA requests.
And government advisory committees have received new power to meet secretly.
And I don't know how much help that's going to be in putting down terrorism,
but it's probably going to help Vice President Cheney stay out of jail a little longer.
There were new health emergency powers in the act, powers for the government to quarantine people or even to force them to have vaccinations against various diseases, whether they wanted to be vaccinated or not, and new centralization of surveillance data was provided so that again we've made the Patriot Act even stronger.
Now, of course, you all know, I'm sure, that there's a separate movement to pass Patriot II, or, you know, Son of Patriot, or some such act, that the Justice Department has cooked up, and when that was leaked, they denied it.
Of course, by that time, the New York Times was holding a copy in its sweaty little hands, so it was hard to deny that they had done this,
This, but they recommend that we not take seriously what they've done, so don't worry.
But that's all in addition to what the Homeland Security Act has done to increase the government's
power to spy on us and to trade the information around among themselves, but to keep us from
from knowing what it is they're doing, so that in case they might say,
get one of those credit reports that we all know are impeccably accurate,
and use that information in a way that would be harmful to you, based completely on error,
well, at least this way you'll never know that that's how you came to your misfortune.
The President's request for defense money for fiscal year 2004 is just under $400 billion.
That's up from fiscal year 2000, four years earlier, when it was 294, including the nuclear program.
That's more than one-third increase in four fiscal years, but, of course, the $400 billion that's being requested does not count the $75 billion in a separate request to pay for the war in Iraq.
Because when the Pentagon gets money to make war, well, that's not really to make war.
I'm not going to get into the complications of what the money is for, if there's no war, because that's all classified.
Part of this $75 billion request for the war in Iraq is more than $3 billion for more airline bailout.
and we'll never know how that got in there, I'm sure, and some eight billion dollars for what looks for all the world like bribes to selected governments in the Middle East and Central Asia, Turkey, Israel, Jordan, Egypt, Pakistan, Afghanistan, of course with the big payoffs going to the usual suspects.
who were already getting large amounts of foreign aid and military assistance aid before this little add-on here.
So these are all some of the events that have occurred after the terrible events of September 11, 2001.
and I think they are sufficient to make the point I made in general terms at the beginning of this talk,
which is that this crisis is following the same general pattern as previous ones.
Not only is government responding by doing a lot of the things that seem plausible,
increasing funds for intelligence and war making and what have you,
But it's also using the pretext of the war on terrorism to endow itself with new powers and new funding for a lot of actions and activities and programs that really have nothing to do with wars on terrorism.
So what we're seeing is the exploitation of crisis by opportunists of all kinds, and every one of these things will create a constituency that will fight to the death to keep whatever it's recently acquired, whether it's new power, new flow of funds, or anything else, new jobs.
All right. I want to now, in the time that remains to me, look back over what I've said in the past week and see if we can learn from history again in a little more general way.
Government grew a lot in the past in the United States, and when I think in capsule form about why that happened,
I tend to see two distinct, at least conceptually distinct, sources of the growth of government, and I see them as interacting.
In a paper I've just recently written, I invented new acronyms. That's what the world needs.
I'm not even sure that they're any good at all because they're okay when written down,
but when I talk about them, they seem to be pronounced the same.
It's a really ill choice of acronyms, it turns out, but this stands for structural, ideological, political, this is for crisis ideological, political.
What I see as having happened in our history is that a number of structural changes took place as the economy developed going back to the 19th century.
Industry, industrialization, urbanization, technological changes, improvements of communications and transportation, and so on and so on.
All of these things had the effect of both creating progress and of creating a lot of people who, at least in the short term, were losers or were put at a disadvantage somehow
by the way things were developing and who turned to the political process to try to get some relief or to fight back against those they took to be the responsible parties for their plight so that these structural developments over time altered the configuration of political forces in the perpetual struggle to redistribute power and wealth that goes under the shorthand politics
At the same time, they gave rise to changes in ideology, and along with the ideological changes that seemed to be endogenous or created by these very events in some way,
The United States was subject to a variety of ideological influences by virtue of ideas that were imported from abroad, especially from Europe.
I spent quite a bit of time talking about specific ideas brought over from Germany.
Everything from socialism to the idea of letting academically well-educated experts take charge of doing what had been done via markets.
So all of these kinds of developments, structural, ideological, political changes,
had the effect of tending to produce bigger government in a variety of ways.
But then every once in a while, particularly after progressive ideology had become the dominant ideology of the country
at the beginning of the 20th century, every once in a while a crisis would come along
such as the World Wars, the Great Depression, or the events of the Johnson-Nixon years.
And during those crisis times, we would have, as it were, superimposed on these structural changes,
additional forces brought to bear, and they, of course, had their own ideological and political effects,
and they tended to, to work toward augmenting government and indeed augmenting it abruptly,
creating these bursts of government growth, superimpose on what had been a slower trend toward bigger
government beforehand. Now not only can we distinguish these two separate categories that
are promoting the growth of government but we can recognize and what I've tried to argue in my book
is that they're not independent and we certainly shouldn't see these as just aberrations or stochastic events or blips or something like that.
They work as they do because of what's been going on here.
If we hadn't had all these structural changes of the late 19th and early 20th century,
then the way Americans responded to World War I would have been different.
So these things affect how the crises play out, but in turn, when a crisis does occur, it alters the nature of how these structural changes are operating to bring about more government.
In a sense, we get these ratchet phenomena in which government may be growing slowly for these kinds of reasons.
and it might have leveled off at some lower level but for this crisis pushed it up or it may be that afterward the trend is not the same as before normally it's at some higher rate so there are inner relations the crises operate they end but they affect the workings of the post-crisis normal events
and how they tend to enlarge the scope of government.
What happened in our case is by the time we get to the end of World War II,
the country has gone sufficiently in the direction of massive government,
pervading many different aspects of society,
Society, and it has gone so far as to, by that time, as to virtually eliminate, in the
case of the Constitution, any check on the growth of government, or in the case of ideology,
to greatly weaken the kind of ideological forces that held government somewhat in check
in the 19th century, that those kinds of fundamental constraints on the growth of government count
The State is a carnival of rent-seeking, by one and all, and the proliferation of rent-seeking interest groups organized for political action has been greatly expanded, especially during that Johnson-Nixon episode, where all these people were mobilized by civil rights groups, and they were mobilized by civil rights groups.
for Political Action has been greatly expanded especially during that Johnson
Nixon episode where all these people were mobilized by civil rights and
anti-war crusades and then that spread out and spilled over onto any number of
new interest groups, environmentalist groups, feminist groups, groups
representing the elderly and the chicanos and and it just goes on and on
and on and on. So we now have this gigantic jungle filled with rent-seeking beasts of various colorations and we've had a continued development of ideology, not in the classic socialist direction, but in what you might call the soft collectivist direction,
and the direction that Tocqueville warned against when he talked about the kind of despotism
that democracies would arrive at eventually, this kind of nanny state therapeutic paternalistic
activity that more and more pervades the actions of government whenever it's not engaged in
Explicit Death and Destruction through the Armed Forces and the Police, and sometimes even when it is, strange to say.
So we now have reached this situation, which I must confess seems like a very unpromising one for Friends of Liberty.
Our liberties have not all been totally crushed yet.
And so the question is, as we look forward, can we expect anything to change in the process
that has operated for some 100 years to bring us to where we are today?
My own answer is no.
I don't see anything about how the process is operated that has changed for the better,
tells me it's not going to work this way anymore. Now, of course, I may be wrong. I may be totally
cockamamie in my understanding of how we got here to begin with. So maybe there's no no force to my
argument. But if my argument has a measure of validity, then the only way we can expect the
future to be different is it's something about the process as it's operated in the past will
will be different in the future.
And frankly, I don't see any element of it
that I see operating differently,
at least so far as my vision can penetrate
into the fog of the future.
Now, there have been many people, of course,
who have imagined that counter forces not only exist,
but that they are actually becoming stronger.
So I'm quite prepared to consider some of these potential or actual counter forces and one of them is one I've always regarded as extremely far-fetched, but nonetheless it has a very good paternity, as it were.
And that is that the whole system, this political economy of rent-seeking, nannyism, pervasive government, could just crack up.
There could be some massive meltdown or it would break apart somehow.
And actually, I think that is the expectation you get from reading Mises.
And Mises wrote a lot about the mixed economy.
And what he wrote is that it has an internal logic.
The interventionists set out to do something by intervening in the market, but by virtue
of interventionism and what it is, they're unable to achieve their objective.
And furthermore, in the course of carrying out their intervention, they create even more
problems and difficulties.
So then they intervene in new ways to take care of the new problems they've created
or to cut off what seems to be interfering with the realization of their first intervention
and they enter into a kind of spiraling intervention, every element of which fails and ultimately
They arrive at a kind of full-fledged socialism, and for perfectly good Misesian reasons, we know that can't work, and that will crack up, it will break up, and Mises argued that at that point the system would revert to laissez-faire.
Idiotically illogical interventionism until the system eventually reaches the point where it's so absurd that we have a total breakdown.
The good news, of course, is that then we have laissez-faire and everything is wonderful.
So some of us might say it's an acceptable price to pay.
That's a possibility. That's a possibility. I won't say it has probability zero. I personally have argued in the paper I'm floating around right now and will present this September at the Mone-Pellerin meetings, I argue that that is not what I expect to happen.
I do expect that there will be accumulating idiocies and that the interventions will create more problems and elicit more intervention to deal with them and so forth.
I simply part company with Mises at the final step.
I don't think there will be a crack-up. I think there will be perhaps a fallback at some point.
There will be ad hoc repair efforts. There will be limited concessions. There will be
opening up enough room for maneuver in the market that entrepreneurs can at least keep
the ship afloat. And I think that might well happen at some point. We may have some ebb
The given flow of the Leviathan that has developed, it may actually move back at some point rather than relentlessly forward.
I just don't expect the system to crack up and revert to laissez-faire because it seems to me that ideologically,
Modern Americans and modern Western Europeans and modern just about everybody else, these people are unwilling to live in a free society.
They don't want individual responsibility. They can't tolerate it and they can't live with it.
And so I just don't think they will tolerate the kind of individual responsibility that is part and parcel of a genuinely free society.
and I'm not sure how they could ever be brought to a position where they would
tolerate it either. So if you can imagine that I'd be happy to be educated about it
but nonetheless that that is the main constraint I see keeping the system from
ever going back toward a very free condition. Now another counterforce that
some people have put a lot of weight on is what you might call Tebow type
Competition, named after Charles Thiebaud, a man who used to teach economics at the University
of Washington and for some reason chose to drop dead the year before I joined the faculty
there.
His ghost was still about the corridors when I arrived and it used to bother me a little
and how even if you had a lot of different units of government and they
all provided different kinds of services to the residents of their their towns or
districts that you might end up in a situation where all these citizens got
exactly the collection of services they wanted from government even though these
governments were as it were inflexible and not willing to make concessions to
to what people wanted, but people would just move around and relocate themselves in those areas where the local government happened to provide things that they valued more and flee from those places they found most disagreeable.
Now there's no doubt that that kind of voting with defeat takes place.
I've done it myself more than once to get into different jurisdictions. In my case I did it to get out of the Seattle School District because my child was going to school in the government schools and I was taking intolerable offense at the way he was being treated.
So I moved to another district and that worked out a lot better for him and me and millions of Americans have made moves for that exact reason and many others.
And of course this kind of voting with defeat operates internationally.
Many people have migrated to another nation state where they consider their prospects better or their freedoms fuller.
And we like to tell ourselves in the United States that that's why those 30 million Europeans once picked up and left their homes and came over here to find freedom.
But, okay, so you can vote with your feet. It's costly. Even local move is costly. International move is very costly, especially for people who don't know the language of the place they're going, the customs, the laws.
That doesn't make it impossible. Millions of them do it anyhow and manage to succeed or even thrive, but it makes it costly.
And whenever we raise the cost of anything, we discourage it to some extent.
So a question exists as to how much effect we can have in restraining government by people's voting with their feet.
Sometimes we can have a lot of effect, I think. That's why the Berlin Wall was built in the first place,
because Germans were voting with their feet and leaving East Berlin, so they just physically stopped them from doing it.
A few were so intent on leaving that they took unbelievable measures to leave, nonetheless, at risk of life and limb.
Another way that Tebow-type competition operate doesn't require anybody to move himself but involves the movement of other resources and a lot of people have talked in recent decades about international capital markets particularly as electronic funds transfers were developed and made accessible very easily even to individuals so that now with the click of a mouse you can move your investments around the world.
World, and some people do that all the time. It does require some investment in either
getting an expert to help you do it or in learning how to do it yourself, so it's not
something everybody is prepared to do this afternoon, but it's not that tough. There's
There's an interesting book by Dwight Lee and Richard McKenzie called Quicksilver Capital
published in the early 1990s and at that time they were arguing that indeed the growth of
government was slowing and the main thing that was slowing the growth of government
was that people were just removing their wealth from jurisdictions that taxed people too heavily
or regulated them too abusively or acted in some other way they didn't like.
So they just, as it were, packed up their capital and went elsewhere.
Well again, I don't have any doubt that that to some extent serves as a counter force to
restrain governments from abusing people.
The question is how much does it restrain governments and in what way does it restrain
and how much effect does it have? I criticized the Quicksilver Capital book at the time and I really haven't changed my mind about why I criticized it. I think they just put way too much weight on that argument.
Ultimately, many of these forms of resource mobility can be squashed by government when governments decide that they really need to squash them.
They can either build a Berlin Wall or if, say, they don't like you transferring your capital electronically and the law they pass forbidding it is not a law you're obeying,
they may try to just send an agent into your house and arrest you or come with a baseball bat and do a job on your computer.
that governments ultimately have coercive force, and if worse comes to worse, they can deploy that coercive force.
So it's all wonderful to think that we're freely sitting at our computer monitors, and that makes us free citizens of the world, because what can government do?
And the answer is they can always kill us.
And if they feel seriously threatened enough, they will do so.
They're willing to do that. A lot of Americans, I think, don't face up to the murderous capability of their own gruelers.
These people will kill, and they won't just kill foreigners either.
They will kill people right here if they feel that a great need will be served by doing so.
So I think these arguments about quick silver capital and voting with defeat have some force,
These people have the biggest scam in the history of the world in the United States.
Look at how much they rake in every year.
Close to 40% of the national income of the United States is taken into the hands of government
officials.
That is such a gigantic sum of wealth that it boggles the mind.
They take it in year after year after year and use it for their purposes at our expense.
And they're not going to just stop doing that because we take offense.
So we've got serious problems here with relying on Tebow-type competition.
Well, ultimately, everything, as Hume told us, rests on public opinion.
As I myself argued, none of this would work as it does, but for the dominant ideology.
Well, ideologies can change. Why not this one?
Some of us might say that's what we're trying to do indeed, that's how we spend our days in a sense is working toward a change in the dominant ideology that has brought these conditions into effect.
I certainly accept that ideologies can change.
I'm inclined to think that they rarely change quickly for large groups of people, even for individuals.
Ideological change is normally a gradual process in which more and more one becomes unhappy with one's old set of beliefs
decides that there's a preferable way to understand the world and evaluate it.
So ideological change, I don't think, is ever something that on a large scale happens quickly.
But it's possible that slow accumulating ideological change eventually becomes great enough that it alters the character of a dominant ideology or replaces it with a new one.
The dominant ideology of this country circa 1885 was totally different from the dominant ideology circa 1945 and even more so from today.
So we know ideological change can take place, it may take 50 years, it may take 100 years.
The question then becomes, what would make it change?
I've tried to argue how some of the historical events, some of the ideological occurrences,
importations even in the past, led to the kind of ideological change that occurred in
this country.
Well, how is the ideological change of the future, if there's to be one, going to come
about?
Maybe, maybe you all will make it happen. I hope so. I hope so. Well, let me stop there.
We've got some time for questions and comments. It's been, as it turned out, a lot of fun
and to talk to you this week and so have at it if you want to lambast me for what I've been saying.
Yes sir.
Yes sir, I have two questions.
First of all, can you confirm or deny reports circulating that you are linked to terrorism?
I deny those reports, categorically.
I came across this book in a library called Crisis and Leviathan, and I wanted to read a short section to see if you could comment on it.
It says, we must have government. Only government can perform certain tasks successfully.
Without government to defend us from external aggression, preserve domestic order, define and enforce property rights, few of us could achieve much.
And so just in light of all that we've learned this week, I was wondering how a statement like that could be.
He's a bright guy.
I was just paraphrasing Ludwig von Mises, and I defer to his authority.
The easy way out would be to say, that was written by my evil twin.
I think I stand by the statement, but I understand it in a different way than I did when I wrote it.
When I wrote it, I understood it in a straightforward way that probably most readers would.
When I referred to government, I referred to the kind of government we're used to,
The Actual Kinds that Exist and Operate in the World
I still think that we need government to perform those tasks.
I think there's a legitimate, honest, real demand for some agency,
someone who specializes in those tasks to undertake them.
I've learned a few things in the past 17 or 18 years since I wrote those words and I now have greater conviction that the government we need to perform those tasks might conceivably be one that would rest on a very different basis from the governments that actually operate in the world.
that would be more more like a government we hired to perform those
services or contracted with in an open and explicit way that is to say we would
have got a government by the consent of the government governed in a very
literal sense it wouldn't be this kind of metaphorical oh yes we have government
by the consent of the governed in the United States well I never gave my
Why consent? Why wasn't I asked? I mean, they enforce their laws on me and they force me to pay tribute, but I never consented to this.
And who did? None of us ever consented to this. We found ourselves in this situation, and we've kind of made our calculations and decided to tolerate it, all things considered, but that's very different from consenting to it.
So, I think people need government and want government, but they don't have to have the kind of coercive, imposed, oppressive apparatus that the governments of the world we live in amount to.
Karen?
You said in your first lecture that if you go back in time there's a lot you would change in this book, especially the first few chapters.
Are you going to do an updated edition at some point in time?
I doubt it. I thought about it and I've been collecting information since that book itself was written to, as it were, revise it.
I'm just skeptical that I'll ever have the opportunity to do that and a little skeptical too about whether it's a good idea.
I will have two books coming out next year, which are collections of papers, all of which bear in some way on the themes of this book and will, I think, be seen by anyone who's read this book as obvious sequels.
almost everything in those two collections was written after I wrote this book and so my mind was already working along those lines but as I've just indicated I've learned a few things and I've worked on some new topics and I've pursued some of the subjects I touched on in the book much more thoroughly so I think these volumes will have to substitute for a revised edition of Crisis and Leviathan.
Bob, I wanted to ask you about something that's really not in your theory of the growth of government, but it relates to the crisis.
Most Americans view these crises as being exogenous or random events.
But now the balance of information and evidence suggests that our leaders actually caused these crises or egged these crises on.
Some of us hope that if we can make people more aware of what is going on in the world,
If we can make people more aware of what has happened historically, then we can moderate this sheep-like behavior that characterizes their response to any given crisis.
If people weren't going to respond so readily as they always do to the occurrence of a crisis, then there'd be no profit in creating a crisis for the rulers.
They'd get nothing out of it. In fact, they might be blamed. It might be unprofitable for them and therefore restrain them from doing it.
So I believe that it's important to try to give people a better understanding of what has happened in history
and how our leaders have not been innocent bystanders as the series of great crises came along.
They weren't just bolts from the blue at all, and if we can imagine making some headway
in that educational effort, then I think it will have an effect.
It seems to me that these kinds of educational efforts ebb and flow, and they depend, I think,
not so much on the efforts of those of us who are trying to do the education as on the
The receptivity of the people we're trying to educate.
If we go back, say, to the 1960s, even though there are many things that all of us dislike
about that time, the general profusion of anti-authority feeling that characterized
the 60s was actually a good thing for restraining the government.
Unfortunately, some of the people who pretended to be against authority turned out to be just some species of leftists who really was willing to buy into authority if used for purposes they approved of.
But still, I think it's true that in the days when people had bumper stickers saying things like question authority or defy authority,
That was fertile ground for us to make our arguments.
On other occasions the ground is very hard and it's almost hopeless to go out and try
to persuade people to see the light because they're just hell bent on following even if
the leaders are taking them over the cliff.
What you said about education. People are educated to worship the state from the time they were five years old and sent to public school.
These kind of things are great, but we're all adults. These kids who go and they're raised in the schools by and taught in the schools by people who get paid by the state to spread the curriculum of the state.
You went to those schools and you are what is called by the mainstream a member of the lunatic fringes.
Dan?
Well, yeah, I'm actually going off of what was just said, actually.
As far as questioning authority goes, that can be beneficial to the extent of questioning government authority.
But on the other hand, there are other authorities that might be opposing the government,
whether churches or something. It seems like questioning authority can actually counterproduce those exposures.
And that really leads to my question, which is, what hope do you think there is of forming some sort of institutional base,
Some sort of cultural countermeasures against the state, for example, a home school that seems like a good tendency that's going to undermine the state a little bit, at least.
And perhaps other things as well, alternative media, perhaps, things like that, just institutional.
Well, I think there's some hope. Indeed, I think education may be one of those few places where the hope is significant,
The failure of the government schooling system is so utter and complete and atrocious that it's almost impossible for anybody to pretend that it's anything else.
As a result, a lot of people have been willing to at least listen to proposals for making changes or reforms of some kind.
Now, unfortunately, many of the reforms that have been put forward are the kind of measures
that don't cut to the ground.
Vouchers, for example, seem like a great proposal, except that the very real danger attaches
to them that not only will they not work very well to do what people want them to do, but
at the same time, they will kill that little remnant of genuinely private schooling that
exists right now, because the minute a school accepts a student with a government-issued
voucher, it's going to make itself subject to all the rules that will come along as strings
tied to that voucher, and it will be very tempting. Many of these private schools struggle
School, financially, they'll be very tempted to accept voucher students if such students
exist and come to them, and they will for certain, I'm sure, many of them find themselves
hog-tied and be made de facto government schools at arm's length, and I don't favor
Home schooling is an important counter trend in education. Genuinely private schooling
is all for the best. If some way could be found to get people to just say, what we want
is to eliminate school taxes and then just let people do what they will. At least they
They won't be forced to pay taxes to schools they may not want.
If they still want to take their kids down to the government school, alright, they can
go down there and turn around and pay a fee.
What would have been collected in taxes, for example, and send them there, but at least
they would have the option and the choice would really be freely theirs rather than
and already rigged somehow and made part of a system that would insinuate government control
into what had been privately controlled before.
Now, there are any number of other kinds of political and cultural initiatives we can
imagine that are anti-statist and thrust, and I think the more the better.
We all have varied interests, we all have varied knowledge, and what I think will work
best is that if we can make anti-statism a kind of counter-culture widespread in its
own right, if we can somehow just get people to immediately react to the idea that government
is doing anything, whether it's X, Y, or Z, with the idea, well, that's stupid, how
How could we do that in some other, better way than we would have the problem half solved already?
Because once people are able to cut their thinking free of dependency on government,
then the world is full of creative, knowledgeable people, capable of performing all kinds of miracles.
We don't know what is possible in a free society.
It's glorious to imagine, but so long as people can't allow themselves to imagine those possibilities,
we're never going to find out.
So I'm all inclined to let a thousand flowers bloom.
Thanks.
Thank you very much.