WEBVTT NOTE Crisis and Liberty: Lecture 9 1 00:00:00.000 --> 00:00:07.880 Well, good morning, ladies and gentlemen, and welcome to the penultimate session of 2 00:00:07.880 --> 00:00:16.040 our series of ten presentations on the growth of government in the United States. 3 00:00:16.040 --> 00:00:26.840 Today's talk pertains to the growth of government along non-military lines since World War II, 4 00:00:26.840 --> 00:00:38.440 I'm going to spend quite a lot of time talking about what I view as the second greatest period 5 00:00:38.440 --> 00:00:44.640 of non-war crisis, although in a sense that's misleading because war was going on at the 6 00:00:44.640 --> 00:00:54.400 same time, the war in Vietnam, but a great deal of this period's crisis atmosphere had 7 00:00:54.400 --> 00:00:59.960 had to do not at least directly with the war, but with other things as well, especially 8 00:00:59.960 --> 00:01:11.960 with the civil rights turmoil of the time. And this gave rise to a number of new government 9 00:01:11.960 --> 00:01:20.920 actions and programs, laws, many of which are still in effect today, most of which I 10 00:01:20.920 --> 00:01:30.220 I suppose are still in effect today, and in many ways it seems to be more comparable to 11 00:01:30.220 --> 00:01:40.160 the New Deal period than to say what happened during either of the World War periods. So 12 00:01:40.160 --> 00:01:48.960 I view it that way and in my work in which I've concentrated heavily on the effect of 13 00:01:48.960 --> 00:02:00.600 of Crisis. I see these years as crisis years, forming a kind of discrete episode. I think 14 00:02:00.600 --> 00:02:10.140 the period from the end of the fighting in Korea in 1953 for the next decade or so are 15 00:02:10.140 --> 00:02:25.140 are relatively placid, and then we have a period of about 10 years, let's say from approximately 1963 to about 74, 16 00:02:25.140 --> 00:02:31.140 in which all hell's breaking loose just about every year in some way or another. 17 00:02:31.140 --> 00:03:01.140 And this of all the crisis periods I've studied as a historian is the only one that I myself personally experienced as an adult and therefore can appraise a little differently and my personal appreciation of living through these years was that just about everybody in the country had the sense of Christ 18 00:03:01.140 --> 00:03:11.780 crisis, that the world seems suddenly full of turmoil and conflict and uncertainty, and 19 00:03:11.780 --> 00:03:22.220 we were not shocked when outrageous or big political events took place, when for example 20 00:03:22.220 --> 00:03:49.220 Several political leaders were assassinated, as several were in the 1960s, the president himself, and a few years later his brother, who was an aspiring president, and Martin Luther King, and people of major political importance were being killed, and that's not a routine kind of event in this country, 21 00:03:49.220 --> 00:04:11.220 But it was just one of those extreme aspects of these years, which presented all kinds of extreme actions and gave the character of danger, uncertainty, apprehension to everybody living in the country at that time. 22 00:04:11.220 --> 00:04:27.220 So, in retrospect, I look back and I see the period since the early 70s as relatively placid, as really quite different from what it seemed to be during that time. 23 00:04:27.220 --> 00:04:39.220 I don't believe we've had anything comparable since then. We've certainly had times when the populace became hysterical, as I indicated the other day they did in 1980, 24 00:04:39.220 --> 00:05:06.220 with regard to the Iranians, but it was a different kind of hysteria, a tightly focused one and not so generalized as the sense of apprehension felt by Americans during this period that coincides just about precisely with the time in office of Lyndon Johnson and Richard Nixon as presidents. 25 00:05:06.220 --> 00:05:18.220 We can pretty much say that this starts with the Kennedy assassination and ends when Nixon leaves office, if we want to put discreet beginning and end to it. 26 00:05:18.220 --> 00:05:28.220 Rothbardians like to talk about the welfare warfare state to characterize the nature of what others call big government. 27 00:05:28.220 --> 00:05:37.380 and I've talked quite a lot about the warfare state in earlier talks and today 28 00:05:37.380 --> 00:05:43.900 I'm going to be concentrating on the welfare state and I want to recommend to 29 00:05:43.900 --> 00:05:50.780 you a book that deals with many of the topics I'll be touching upon today by 30 00:05:50.780 --> 00:05:57.300 Alan Matuso. He's a historian who teaches at Rice University. He's not a 31 00:05:57.300 --> 00:06:25.300 He's not a libertarian. I'm not sure how to characterize his ideology, but he's a very good historian and I believe a very honest one who does not wear the blinders of left liberalism that at least 90% of practicing historians now do in this country. 32 00:06:25.300 --> 00:06:35.500 So, his books are very well documented and well, I believe, thought out and this is a 33 00:06:35.500 --> 00:06:42.980 very revealing book, I believe, about the nature of particularly the social programs 34 00:06:42.980 --> 00:06:49.820 undertaken by the Johnson administration and other programs in the Nixon administration 35 00:06:49.820 --> 00:06:50.820 too. 36 00:06:50.820 --> 00:07:12.820 He's also written a later book that focuses on Nixon and his policies, and I recommend that one also, but it's not quite as focused on my subjects today as The Unraveling of America, a very fine book. 37 00:07:12.820 --> 00:07:24.820 Well, what I've already tried to suggest is that this decade was one marked by a great deal of unrest. 38 00:07:24.820 --> 00:07:36.820 And much of the unrest took visible form of political protest in a way that we hadn't often seen in the past. 39 00:07:36.820 --> 00:07:59.820 In World War I, for example, even though many people didn't like the fact that the country had gone to war on the side of the Allies, they didn't get out of the street in protest, in part because they would have been arrested if they had done so and put in jail or deported from the country or otherwise shut up. 40 00:07:59.820 --> 00:08:13.820 During the Korean War, as I indicated yesterday, many people actually came to oppose the war as the casualties mounted, but they didn't get out in the streets and protest the war. 41 00:08:13.820 --> 00:08:27.820 They did make their views known increasingly through ordinary political processes, so that Truman became quite aware by the end of his term in office that he was a profoundly unpopular person 42 00:08:27.820 --> 00:08:37.980 with no political future of any kind, if you should even try to have one. But even before 43 00:08:37.980 --> 00:08:49.140 this period began, we were seeing in the United States a more active, visible, kind of in-the-street 44 00:08:49.140 --> 00:08:58.020 level of politics and it began with the civil rights movement which has many antecedents, 45 00:08:58.020 --> 00:09:02.420 we can trace them all the way back to the war between the states and the emancipation 46 00:09:02.420 --> 00:09:12.500 of the slaves, but it began to heat up as it were in the late 1950s to really spread, 47 00:09:12.500 --> 00:09:22.340 to gain confidence, to mobilize more and more people, not only blacks who decided they had 48 00:09:22.340 --> 00:09:30.660 had enough, but many white people as well were part of the civil rights movement in 49 00:09:30.660 --> 00:09:38.140 those days and were viewing the situation of race relations in this country as profoundly 50 00:09:38.140 --> 00:09:55.140 are really unjust and demanding change of a variety of kinds, but above everything else, the end of legal segregation, which still existed throughout the southern states at that time. 51 00:09:55.140 --> 00:10:21.140 So the civil rights movement attracted people to stage sit-ins, for example, lunch counters, where the seats were reserved for whites, and so black people would just go sit down, and of course they wouldn't be served, but they refused to move either, until the police came and arrested them. 52 00:10:21.140 --> 00:10:30.140 And, of course, if enough people do this, it's like a sit-down strike in the General Motors plant. 53 00:10:30.140 --> 00:10:39.140 It's very hard to remove hundreds or thousands of people who just peacefully walk into some place and sit down and won't move. 54 00:10:39.140 --> 00:10:49.140 So that kind of protest action became more and more frequent in the late 50s and early 60s. 55 00:10:49.140 --> 00:10:58.140 In addition, a number of people began to take actions to register blacks to vote. 56 00:10:58.140 --> 00:11:07.140 And at that time, of course, the laws in the South did not simply read no black may vote legally. 57 00:11:07.140 --> 00:11:11.140 The restraints on black voting were more settled than that. 58 00:11:11.140 --> 00:11:17.140 And they took a variety of forms, including such things as poll taxes, 59 00:11:17.140 --> 00:11:22.840 which had to be paid and you had to be on record as having paid by a certain time before 60 00:11:22.840 --> 00:11:31.020 you would qualify to vote or you had to pass a test of citizenship in some states and of 61 00:11:31.020 --> 00:11:38.780 course the people who administered the test were all white people who might find just 62 00:11:38.780 --> 00:11:46.900 somehow that blacks were never sufficiently well informed about the matters they tested 63 00:11:46.900 --> 00:11:53.580 of the Bond to qualify as passing the test to obtain voting eligibility. 64 00:11:53.580 --> 00:11:59.860 So there's just lots of little tricks like that had been adopted in the South starting 65 00:11:59.860 --> 00:12:07.060 way back in the late 19th century when the Jim Crow system really developed in the formal 66 00:12:07.060 --> 00:12:14.540 sense and so they had been in effect for a long, long time and they were well worked 67 00:12:14.540 --> 00:12:20.020 out by southern state and local officials by that time. 68 00:12:20.020 --> 00:12:27.820 So people began to move around and not only protest these things but challenge them in 69 00:12:27.820 --> 00:12:34.620 the sense of taking some well-educated black person and putting them there to be tested 70 00:12:34.620 --> 00:12:41.820 by the voting tester and demonstrating that it was a farce that when this person was failed 71 00:12:41.820 --> 00:13:11.820 at the same time some some wretched illiterate to redneck was being swept right through and passed that it was clear that it was nothing but racial distinction being made so those kinds of actions increased and in places where blacks could vote more readily there was great variation across the south and the strictness with which these kinds of restraints were being imposed in some places they weren't so strict 72 00:13:11.820 --> 00:13:34.820 and there had always been a few blacks almost everywhere that managed somehow to vote in places where they had more access than people came in and began to work to register them, say look, you know, we can get you to the polling place if we'll just register you properly, so let us help. 73 00:13:34.820 --> 00:14:00.820 And a lot of young, idealistic white people joined this kind of action in the north, college students for the most part, especially in the summertime when they weren't in class, and they'd come down to the south and they'd go out into various rural areas even, where it was most dangerous to do this sort of thing, and help blacks get registered to vote. 74 00:14:00.820 --> 00:14:30.820 Well, this was all a kind of public, political, collective action that was new, at least on the kind of scale we began to see in the late 50s and early 60s, so that by the time we get to 1963 and the great march on Washington, D.C., where Martin Luther King gave this famous speech, we hear replayed over and over and over, every Martin Luther King Day, about having a dream and so forth, 75 00:14:30.820 --> 00:14:38.820 By that time, this is a mass movement, a mass movement of blacks and whites nationwide with a lot of support behind it. 76 00:14:38.820 --> 00:14:42.820 So that, in a sense, has set the tone. 77 00:14:42.820 --> 00:15:10.820 Now, when the United States, which had started putting quite a lot of troops into Vietnam in the early 1960s, began to put massive numbers of troops there in 1965, protests broke out, particularly on college and university campuses all over the country, 78 00:15:10.820 --> 00:15:20.820 Because everybody had a model. Everybody either had seen or had already been part of the civil rights demonstrations 79 00:15:20.820 --> 00:15:25.820 and knew that if you're unhappy with some public policy, well, hold a demonstration. 80 00:15:25.820 --> 00:15:37.820 Hold what was then called a teach-in and anti-war professors would get together in some university hall 81 00:15:37.820 --> 00:15:38.820 As early as 1965. 82 00:15:38.820 --> 00:16:06.900 Oh yes, much of it in 1965, a little bit of it even earlier in fact, but it really spread 83 00:16:06.900 --> 00:16:20.000 in 1965 and 1966. So we've now got two big movements happening that have mobilized millions 84 00:16:20.000 --> 00:16:28.800 and millions of people in active, visible, in the street politics. That's not the only 85 00:16:28.800 --> 00:16:36.380 place these issues were coming into the political arena, of course. They were also being discussed 86 00:16:36.380 --> 00:16:45.380 and in a way dealt with through the normal political channels, through political party activities and more conventional means. 87 00:16:45.380 --> 00:16:54.380 But in those areas, let's say, more conservative elements tended to control the setup. 88 00:16:54.380 --> 00:17:04.380 So we didn't see so much visible pro-civil rights or anti-war politicking there for several years. 89 00:17:04.380 --> 00:17:18.380 Now eventually even the conventional political machinery absorbed those issues, indeed were overwhelmed by those issues also, but it took several years. 90 00:17:18.380 --> 00:17:28.380 After 1968 and the Tet Offensive, when many people decided that the Vietnam War was a terrible idea, 91 00:17:28.380 --> 00:17:36.040 In India, particularly in the Democratic Party, large numbers of people turned against the 92 00:17:36.040 --> 00:17:44.380 war and began to express their political opinions and influence through party channels. 93 00:17:44.380 --> 00:17:53.460 And indeed, 1968 marks a turning point for the factional support of U.S. foreign policy. 94 00:17:53.460 --> 00:18:02.740 Up to that time, from World War II to 1968, there had prevailed a so-called bipartisan 95 00:18:02.740 --> 00:18:08.300 support for U.S. foreign policy to a very high degree. 96 00:18:08.300 --> 00:18:13.340 Many people now tend to forget that it was the Democrats who were the classic Cold Warriors. 97 00:18:13.340 --> 00:18:19.540 After all, you know, it's Dean Acheson writing The Present at the Creation. 98 00:18:19.540 --> 00:18:26.540 I always love that title. It's as if he was an innocent bystander there, you know, when the Cold War broke out. 99 00:18:26.540 --> 00:18:35.540 There I was trying to innocently be Secretary of State when, boom, the Cold War broke out. What happened? 100 00:18:35.540 --> 00:18:46.540 Anyhow, it was the Truman administration that set this entire Cold War ball in motion, so far as the U.S. part of it was concerned. 101 00:18:46.540 --> 00:18:54.540 and the Republicans just came along later and decided, well, yes, we have to do this, this too. 102 00:18:54.540 --> 00:19:02.540 But from 1968 onward, big chunks of the democratic apparatus became anti-war 103 00:19:02.540 --> 00:19:12.540 and have remained hostile to the kind of international belligerency 104 00:19:12.540 --> 00:19:17.340 that became associated with the Republican Party since that time. 105 00:19:17.340 --> 00:19:26.640 And that, of course, is a switch from the old pro-isolationist Republican position of the 1920s and 30s. 106 00:19:26.640 --> 00:19:37.940 So we've had this kind of turnabout in the party lineup in relation to foreign policy positions in the United States. 107 00:19:37.940 --> 00:19:42.940 but 1968 was a critical year for that switch. 108 00:19:44.860 --> 00:19:48.340 At the same time as the 1960s went on, 109 00:19:48.340 --> 00:19:51.500 this kind of culture of protest became embedded 110 00:19:51.500 --> 00:19:55.620 in wider cultural protest, 111 00:19:55.620 --> 00:20:00.220 just kind of a counterculture in general. 112 00:20:00.220 --> 00:20:05.220 Anti-authority, kind of hippie dropout, 113 00:20:05.220 --> 00:20:15.220 out, smoke dope, to hell with the system, the establishment, all those kinds of code words that people like to throw around in those days. 114 00:20:15.220 --> 00:20:28.220 That was pretty much new. There had been beatniks and guys in Greenwich Village from way back, but they were definitely a tiny group of people. 115 00:20:28.220 --> 00:20:48.220 When we got it well into the mid-1960s, this kind of anti-establishment, counter-cultural movement had become massive and millions and millions, particularly of young people, embraced it and decided that they didn't want to be part of conventional, respectable society and ways of life. 116 00:20:48.220 --> 00:21:04.220 and so that colored to a large extent the politics of this period because a lot of it became in a sense a war between the defenders of respectability, 117 00:21:04.220 --> 00:21:12.220 and the old-fashioned type respectability and the challengers and nose-thummers of respectability. 118 00:21:12.220 --> 00:21:22.220 And such symbols as men with long hair came to mark that divide. 119 00:21:22.220 --> 00:21:30.220 Later on, of course, bizarre things happened and some of the most anti-hippie elements, 120 00:21:30.220 --> 00:22:00.220 elements, like working class young whites, adopted the long hair and stuck with it longer than anybody else, so you never know what's going to happen to symbolism once it's loosed in the world, but the beards and long hair started out as the counterculture's way of making visible its contempt for conventional standards of respectability, 121 00:22:00.220 --> 00:22:11.220 Things just turn into fashion statements. They have a way of losing their content, particularly after commercialization gets hold of them. 122 00:22:11.220 --> 00:22:22.220 Well, all of this turmoil and ferment and protest had a lot of political effect. 123 00:22:22.220 --> 00:22:35.220 Johnson, being propelled into office by Kennedy's assassination, this is where I wish Murray 124 00:22:35.220 --> 00:22:45.420 were here to give us a quick five minute explanation of who really shot Kennedy, because he would 125 00:22:45.420 --> 00:22:52.420 Lone Nut, right? Lone Nut! Who's did the benefit? 126 00:22:58.660 --> 00:23:04.860 That would be most entertaining. Whoever shot Kennedy, and I have no idea myself, I have 127 00:23:04.860 --> 00:23:11.660 suspicions, but I'm quite confident it wasn't the man who was officially blamed for it. 128 00:23:11.660 --> 00:23:21.900 But at all events, Johnson was a very ambitious man in the classic American political, even 129 00:23:21.900 --> 00:23:29.340 southern sense, kind of given to populist coloration and expressions of sympathy for 130 00:23:29.340 --> 00:23:35.660 the poor and downtrodden, and a little different from the classic southern demagogue because 131 00:23:35.660 --> 00:23:43.820 Because he affected to care not only about the poor whites, but also about poor blacks. 132 00:23:43.820 --> 00:23:54.420 And that was one of the hallmarks of his political ambition that much of what he supported as 133 00:23:54.420 --> 00:24:01.780 president seemed aimed at alleviating poverty, helping people to pull themselves up by their 134 00:24:01.780 --> 00:24:07.060 Boots Straps, particularly if they'd turn around and vote for Democrats, which they 135 00:24:07.060 --> 00:24:17.660 could be counted on to do. Johnson's political hero and mentor had been, who else but the 136 00:24:17.660 --> 00:24:28.380 sainted FDR. And so he not only had learned his politics in the New Deal School and acquired 137 00:24:28.380 --> 00:24:43.380 and his ideological propensities to the extent that he had any there, but he had acquired a level of ambition that led him to look back to the New Deal as a kind of standard. 138 00:24:43.380 --> 00:24:53.380 He wanted to be a great president and he knew that to be a great president you had to do things on the scale of the New Deal. 139 00:24:53.380 --> 00:25:08.380 So he understood that the New Deal had been immensely successful politically, that is, it was just a great setup for buying votes from millions and millions of people, many of whom had never voted for Democrats before, such as blacks. 140 00:25:08.380 --> 00:25:16.380 And it was also a way for him to realize his boundless ambitions. 141 00:25:16.380 --> 00:25:28.620 So he plunged into the job and he came to the job very well prepared in the sense that he was a recognized master politico. 142 00:25:28.620 --> 00:25:41.540 He had been a leader in the Senate before he became vice president and he already had a high reputation as an arm twister and persuader. 143 00:25:41.540 --> 00:25:55.260 And if you've never seen any of those old films of Johnson getting in somebody's face to talk to him in the Senate or in the anti-room of the Senate, they're very worthwhile because there's nothing quite like it. 144 00:25:55.260 --> 00:26:06.300 I mean, the man was kind of a combination between a bully and a serpent and a good old boy, and it's hard to describe him in action. 145 00:26:06.300 --> 00:26:14.300 He'd literally get that far from somebody's face and got a bend over and hear people backing up. 146 00:26:14.300 --> 00:26:23.300 And yet it worked for him. He really was able, he understood the system, how Congress worked, 147 00:26:23.300 --> 00:26:32.300 where the strategic positions were, who had to be brought on board, who owed what political debts to whom. 148 00:26:32.300 --> 00:26:37.300 He really knew the political system inside and out and knew how to work it. 149 00:26:37.300 --> 00:26:44.300 And so he was in position as president to use all that political knowledge. 150 00:26:44.300 --> 00:26:48.300 But of course now he had much more power than he'd ever had as a Senate leader 151 00:26:48.300 --> 00:26:54.300 because he had all the discretion that rests in the hands of the President of the United States. 152 00:26:54.300 --> 00:27:03.300 He supported the civil rights bill that was pending at the time he became president. 153 00:27:03.300 --> 00:27:14.300 And that became the first of a number of very important legislative enactments during the decade we're talking about now. 154 00:27:14.300 --> 00:27:44.300 now. I listed a few of these in a table in my book Crisis in Leviathan, but it's a very small sample. One could easily make up a list five or ten times bigger, and still have only genuinely important enactments in it. But the Civil Rights Act was truly a whopper of a law 155 00:27:44.300 --> 00:27:55.220 Law, it has a whole litany of parts having to do with education and public housing and 156 00:27:55.220 --> 00:27:58.580 employment and so forth. 157 00:27:58.580 --> 00:28:09.900 And one of the things that clearly differentiates it from previous civil rights laws is that 158 00:28:09.900 --> 00:28:24.900 It's not just something stipulating how government must deal with citizens, it moves beyond government to put restraints or requirements on private individuals and the disposition of their property. 159 00:28:24.900 --> 00:28:35.900 So that if, for example, you have a hotel or a motel, that may be private property, but you're no longer in a position to say with whom you will deal. 160 00:28:35.900 --> 00:28:55.900 If you have a hotel and a black person comes in and wants a room and you have a room, and because you don't want to give a room to a black guest, you turn that person away, then you have violated a federal law. 161 00:28:55.900 --> 00:29:02.900 and likewise for people who keep a restaurant and so forth. 162 00:29:02.900 --> 00:29:09.900 It had always been the rule, of course, that people had these signs up saying we reserve the right to refuse service. 163 00:29:09.900 --> 00:29:18.900 And throughout the South, of course, they had signs that said whites only on places that wanted whites only. 164 00:29:18.900 --> 00:29:34.900 So those sorts of things became unlawful, and employment relations were no longer open to the choice of the contracting parties exclusively. 165 00:29:34.900 --> 00:29:42.900 If I refused to hire or fired somebody just because of race, I violated the civil rights law. 166 00:29:42.900 --> 00:29:55.900 Law. So freedom of association was extremely infringed by this law and this law has been 167 00:29:55.900 --> 00:30:02.120 in effect ever since. There have been some amendments, but actually only amendments that 168 00:30:02.120 --> 00:30:10.820 strengthened it, none that weakened it. So this was a big change in the government's 169 00:30:10.820 --> 00:30:18.400 Involvement in Race Relations and it spilled over and indeed what I want to suggest to 170 00:30:18.400 --> 00:30:28.540 you is that just as the civil rights protests kind of spilled over into educating the anti-war 171 00:30:28.540 --> 00:30:34.740 movement about how to go about carrying on their protests and so forth, both of these 172 00:30:34.740 --> 00:30:45.540 big political issues and movements spilled over onto a whole host of other political controversies, 173 00:30:45.540 --> 00:30:52.980 some of which might not seem to be very directly related at all, but were easily seen as, quote, 174 00:30:52.980 --> 00:31:04.620 biological extensions of anti-war or pro-civil rights actions, environmentalism, feminism, 175 00:31:04.620 --> 00:31:14.220 a whole host of actions on behalf of groups that had never been viewed as minority groups 176 00:31:14.220 --> 00:31:21.620 in the past, say the elderly. Certainly women are a majority of the population, but they 177 00:31:21.620 --> 00:31:30.420 They became viewed as a minority group deserving of some kind of federal government protection 178 00:31:30.420 --> 00:31:36.220 in the same way that blacks were being protected by the Civil Rights Act. 179 00:31:36.220 --> 00:31:42.620 So the spillovers were huge during this period from the core issues of war and civil rights 180 00:31:42.620 --> 00:31:48.620 to a lot of related issues. 181 00:31:48.620 --> 00:32:16.620 In 1965, the Voting Rights Act, which I see I didn't even list up here, was passed, and at that time, the federal government put its might behind this effort to ensure that blacks could not be kept from voting by the standard devices used in the southern states for decades. 182 00:32:16.620 --> 00:32:24.620 The so-called war on poverty was made a big part of the Johnson program. 183 00:32:24.620 --> 00:32:32.620 That had also begun to heat up in the early 60s when Kennedy was president. 184 00:32:32.620 --> 00:32:41.620 There were some token efforts made by the federal government to do something about poverty. 185 00:32:41.620 --> 00:33:02.620 During the Kennedy administration, they took the form, for the most part, of regional development programs, such as a program to assist people in Appalachia, which was viewed as a backwater, where there was little economic activity. 186 00:33:02.620 --> 00:33:32.620 and of course the interesting thing about regional development or community development or any such programs which proliferated and became lodged in the government in the 60s and are still out there is they always presume that people are stuck in some place and if that place is not doing well then you've got to somehow pour subsidies or special assistance into it rather than just 187 00:33:32.620 --> 00:34:00.620 It's as if somehow they're either incapable of getting off their butts and moving or that it would be grossly unfair to expect them to do so, notwithstanding the fact that millions of us every day do get off our butts and precisely go somewhere else in order to improve our well-being. 188 00:34:00.620 --> 00:34:20.620 Nothing could be more routine in this country than moving someplace to find better opportunity, and yet all of these geographically defined assistance programs seem to work in opposition to that obvious truth. 189 00:34:20.620 --> 00:34:41.620 The War on Poverty took the form of a whole host of federal government programs in areas where the federal government had not been much involved before, education, training, a lot of sort of community make-work programs. 190 00:35:11.620 --> 00:35:21.620 to just having a good time. Alan Matuso's book has quite a bit of information about the Community Action Grants. 191 00:35:21.620 --> 00:35:37.620 Head Start was put into effect reaching down to preschool children who were seen in those days and indeed still seen by some people in some places 192 00:35:37.620 --> 00:36:07.620 in some places as needing federal government assistance and the belief has been that somehow if you can just do a little more to teach four and five year olds what's going on and socialize them a little bit so that they do better when they start the first grade then you have made a permanent boost in their trajectory in life 193 00:36:07.620 --> 00:36:33.620 A number of studies have shown, I think, quite decisively that that's just not the case, that even the benefits that seem to come from the Head Start program evaporate quite quickly so that after a few years there's no effect anybody can find between the children who went through Head Start programs and those who didn't. 194 00:36:33.620 --> 00:36:52.620 So, it was one of those heart-rending appeals that were made frequently in connection with these kinds of programs and it's just based on bad information, among other things. 195 00:36:52.620 --> 00:37:22.540 Food stamps were made a mass subsidy during this time and they were not only made available to give people a kind of ration ticket to cheap food but the government made big efforts to go literally door to door telling people about the food stamps and letting them know that they might be eligible. 196 00:37:52.620 --> 00:38:03.620 If you have any kind of sensibilities in public choice training, you say, well, the poor don't have any political clout, why would they ever get anything from government? 197 00:38:03.620 --> 00:38:15.620 Why would anybody who can actually exert control over the political process squander that by letting anything slip away into the hands of poor people? 198 00:38:15.620 --> 00:38:20.620 If anyone can be neglected in the political process, surely it's the poor. 199 00:38:20.620 --> 00:38:22.620 Why do they get anything? 200 00:38:22.620 --> 00:38:27.620 And I think very often we find that they're just a cover. 201 00:38:27.620 --> 00:38:34.620 They're an excuse for something that really channels benefit to somebody who is politically influential. 202 00:38:34.620 --> 00:38:39.620 In this case, for example, the food stamp program, this was something, 203 00:38:39.620 --> 00:38:46.860 is one of many government programs that propped up the demand for what farmers produce and 204 00:38:46.860 --> 00:38:52.980 they were well organized and politically influential and so this, if you look at how the votes 205 00:38:52.980 --> 00:39:00.120 line up on this, you see this curious kind of coalition of Midwestern, farm-connected 206 00:39:00.120 --> 00:39:06.100 senators and representatives voting along with people representing black constituencies 207 00:39:06.100 --> 00:39:08.340 in the Big Central Cities of America. 208 00:39:08.340 --> 00:39:14.380 Well, that's not a typical lineup, but that's the one you see when they vote on the food stamp program. 209 00:39:14.380 --> 00:39:25.380 So it's a fraud as most of these programs, if not all of them are. 210 00:39:25.380 --> 00:39:34.420 Starting in 1965, we got the, I haven't listed it either. 211 00:39:34.420 --> 00:39:44.180 This was regulatory legislation, and so that explains the failure to put the Medicare program there, 212 00:39:44.180 --> 00:39:48.900 although a number of regulations came along with the Medicare program. 213 00:39:48.900 --> 00:39:54.820 It's not a regulatory program per se. 214 00:39:54.820 --> 00:40:03.180 Medicare was created in 1965, and another huge piece of legislation that has turned out to be a whopper, 215 00:40:03.180 --> 00:40:08.060 Comparable to the Civil Rights Act and in terms of fiscal impact maybe even a 216 00:40:08.060 --> 00:40:14.660 bigger deal. I just happened to see yesterday posted on a list I get every 217 00:40:14.660 --> 00:40:18.820 day an abstract of an article about Medicare because of course there's a 218 00:40:18.820 --> 00:40:23.940 great crisis now about the cost of Medicare and someone had gone back and 219 00:40:23.940 --> 00:40:29.900 found that when Medicare was created there had been projections of what it 220 00:40:29.900 --> 00:40:51.900 In the 1990s, it was not simply more than had been forecasted. It was seven times what had been forecasted. 221 00:40:51.900 --> 00:41:11.900 It was seven times what had been forecasted. Seven times, director. Now, if you were running a business and you couldn't forecast any better than that, you'd be broken a day. 222 00:41:11.900 --> 00:41:36.900 And in fact, these costs got out of control immediately. Because what they did was to create a so-called insurance, but basically just a setup for the government to pay hospitalization and doctors bills beyond a very small amount paid by the patient. 223 00:41:36.900 --> 00:41:43.900 And so the marginal out-of-pocket cost of consuming these health care services was zero. 224 00:41:43.900 --> 00:41:46.900 Well, that's a good price. 225 00:41:46.900 --> 00:41:51.900 If you've got any ache or pain, then go to the doctor. 226 00:41:51.900 --> 00:41:56.900 If you're worried about anything, get yourself put in the hospital. 227 00:41:56.900 --> 00:41:59.900 So that's exactly what people did. 228 00:41:59.900 --> 00:42:29.900 Furthermore, the medical establishment, having fought socialized medicine tooth and nail for decades, and having failed now, the federal government has come in and halfway socialized medicine by embracing what looks like a small group of people, the elderly, but in terms of medical care, is a giant share of the medical care market, because they're the people who have this big demand, 229 00:42:59.900 --> 00:43:16.400 of the unlimited demand by elderly patients and the game playing by doctors who would, you know, do every test you could think of and, you know, readily send people to hospital confinement and why not? 230 00:43:16.400 --> 00:43:21.900 You know, there's an additional amount to be collected by them every time they make a move. 231 00:43:21.900 --> 00:43:30.900 So there was nobody watching the store as to how much they charged and so this was heaven on earth. 232 00:43:30.900 --> 00:43:39.900 So the combination of the suppliers taking advantage of the program and the demanders exploiting it to the maximum 233 00:43:39.900 --> 00:43:46.900 drove these costs up at a very high rate. And indeed they're still going up at a very high rate. 234 00:43:46.900 --> 00:43:57.900 So this program has become gigantic. I'll put some data up in a minute to show you just how big the increase has been. 235 00:43:57.900 --> 00:44:03.900 A series of laws were passed having to do with consumer protection. 236 00:44:03.900 --> 00:44:11.900 Well, how's the consumer come into here? Well, we're sort of protecting defenseless people under Johnson. 237 00:44:11.900 --> 00:44:28.900 So, some people claim consumers are defenseless. They're just at the mercy of greedy sellers and capitalists and people who foist incomprehensible contracts on them that they have no choice but to sign. 238 00:44:28.900 --> 00:44:34.900 Because, of course, they can't just say, no, thank you, I don't want this good or service. 239 00:44:34.900 --> 00:45:03.900 Service. So, consumer protection laws, the Truth in Lending Act in 1965, the Consumer Product Safety Act a little later in 72, and on both ends of this period, related FDA powers were created in 1962, a very important amendment, 240 00:45:04.900 --> 00:45:34.900 to the Food and Drug Act were put into place that have had a major impact on the well-being of all of us actually and if not directly then potentially and indirectly because they had big effects in reducing the rate of innovation in the pharmaceutical industry and bringing about long delays between drugs that were created 241 00:45:34.900 --> 00:45:37.540 and their availability on the market. 242 00:45:37.540 --> 00:45:44.900 So the FDA amendments of 62 and then in 76, just after the end of this period, similar 243 00:45:44.900 --> 00:45:50.180 laws were put into effect for medical devices with the same result. 244 00:45:50.180 --> 00:45:58.300 So we've got more protection and remember to apply Higgs law of political rhetoric here 245 00:45:58.300 --> 00:46:03.300 when something is described as protecting us, chances are very good it's harming us 246 00:46:03.300 --> 00:46:31.300 The Coal Mine Safety Law was passed in 1966, by 1966 the accident rate in coal mines had fallen to probably 10% of what it had been at the end of the 19th century. 247 00:46:31.300 --> 00:46:45.300 It's very often the case that after something has happened on its own, the government comes along and passes a law against what has almost disappeared already. 248 00:46:45.300 --> 00:46:52.300 And then people assume that, but for the government, we'd still be having coal mines just as they were in 1890. 249 00:46:52.300 --> 00:46:57.300 But that was not the case. 250 00:46:57.300 --> 00:47:01.300 The Occupational Safety and Health Act was passed in 1990, 251 00:47:01.300 --> 00:47:06.300 a much broader law affecting workplace safety 252 00:47:06.300 --> 00:47:10.300 and leading to a very intrusive bureaucracy 253 00:47:10.300 --> 00:47:13.300 that has created headaches for employers all over the country 254 00:47:13.300 --> 00:47:19.300 by enforcing a lot of ostensible safety regulations, 255 00:47:19.300 --> 00:47:26.300 Many of which are not sensible or worthwhile in terms of their costs and benefits, 256 00:47:26.300 --> 00:47:30.300 and many of which are just simply idiotic. 257 00:47:30.300 --> 00:47:36.300 Anybody who ever worked in a dangerous workplace understands, first of all, 258 00:47:36.300 --> 00:47:45.300 that most of the accidents are caused by carelessness or by people just doing something that they already know not to do. 259 00:47:45.300 --> 00:47:57.300 But they take chances or they just say all hell with it and they don't do what they know is the safe way to do something and an accident results. 260 00:47:57.300 --> 00:48:06.300 So as long as you have human beings, especially the kind of human beings that work in factories and mills and farms in this country, 261 00:48:06.300 --> 00:48:12.300 you're never going to get rid of all the accidents no matter how you regulate the workplace 262 00:48:12.300 --> 00:48:20.300 I maintain that workers will find a way to hurt themselves. They're very clever about that. 263 00:48:20.300 --> 00:48:25.300 I used to work in a factory part of the time when I was growing up. 264 00:48:25.300 --> 00:48:34.300 I've seen some pretty gruesome things, all of which were owing strictly to stupidity. 265 00:48:34.300 --> 00:48:41.300 I'm not denying it, I acted stupidly myself on occasion too, but I was lucky. 266 00:48:41.300 --> 00:48:48.820 I just never had the nail come down on me, or the gear eat up my fist. 267 00:48:48.820 --> 00:48:58.660 In 1969, something called the National Environmental Protection Act was passed, and it's from 268 00:48:58.660 --> 00:49:04.580 that that we get this requirement for environmental impact statements that have to be written 269 00:49:04.580 --> 00:49:09.580 up and approved before big public projects can be carried out. 270 00:49:09.580 --> 00:49:21.580 Of course, we know that that became a way for environmentalists to halt projects by challenging those statements and even going to court about them if need be. 271 00:49:21.580 --> 00:49:25.580 So that became a really swell idea. 272 00:49:25.580 --> 00:49:55.580 In 1970, the Clean Air Act amendments were passed and then Nixon gave the EPA enforcement power over the air pollution regulations and in 1972, the Clean Water Act, as it's usually called, was passed and the EPA took over enforcing that and those became the authority by which 273 00:49:55.580 --> 00:50:24.580 by which the federal government has imposed massive costs on all kinds of producers ever since and some people argue in fact that the productivity slowdown that took place from the early 70s onward for decades and maybe still can persist despite the apparent speed up of productivity in the late 90s, 274 00:50:24.580 --> 00:50:43.580 That slowdown in the rate of productivity growth owes a great deal, maybe even the greater part, to the anti-pollution laws and the way that EPA not only chose to enforce these laws, but to keep pushing the envelope. 275 00:50:43.580 --> 00:50:49.580 These laws were fairly broad and EPA was authorized to spell out the details. 276 00:50:49.580 --> 00:51:05.580 Well, they've got EPA lawyers working day in and day out, spelling out more and more details, pushing these regulations out, making them more stringent all the time, and imposing more costs on the people who have to comply with them. 277 00:51:05.580 --> 00:51:12.580 Nixon was supposed to be a conservative. 278 00:51:12.580 --> 00:51:18.580 There's a book by Herbert Stein called Presidential Economics. 279 00:51:18.580 --> 00:51:32.580 I actually recommend this book. Stein is certainly not an Austrian economist. He was not. He was a kind of conservative Keynesian, I guess is one way to describe him. 280 00:51:32.580 --> 00:51:41.580 But he was not a stupid guy, and he circulated throughout his life in or near high policymaking levels. 281 00:51:41.580 --> 00:51:48.580 Father Benstine 282 00:52:11.580 --> 00:52:20.580 and more than one, called conservative men with liberal ideas, and I think that really 283 00:52:20.580 --> 00:52:26.920 helped to capture why the Nixon administration played out as it did. Nixon was supposed to 284 00:52:26.920 --> 00:52:31.860 be a conservative, you know, he'd come up as a rabid anti-communist, that's how he made 285 00:52:31.860 --> 00:52:39.760 his political reputation in the beginning, and he had served as a kind of attack dog 286 00:52:39.760 --> 00:52:54.760 for the Eisenhower administration, and a lot of people disliked him because he was a kind of man full of rage, it seemed, you know, like he might blow up at any given moment. 287 00:52:54.760 --> 00:53:05.760 How much of that was real and how much was posturing is hard to say because he was not a guy, I think, who ever really revealed his true self, if indeed he had a true self. 288 00:53:05.760 --> 00:53:16.260 But Nixon cared about sort of being seen as an ideological throwback. 289 00:53:16.260 --> 00:53:22.760 On the one hand, he understood, for example, that wage and price controls were futile. 290 00:53:22.760 --> 00:53:26.760 That, you know, that was not an effective way to control inflation. 291 00:53:26.760 --> 00:53:30.760 He didn't care a lot about economics. He was really more interested in foreign policy. 292 00:53:30.760 --> 00:54:00.760 but he understood that that wouldn't work as an anti-inflation program but at the same time a lot of respectable people, all the Democrats and a lot of professional economists in the early 70s were recommending a so-called incomes policy, wage and price controls because the price level had begun to creep up and high levels of inflation had not been seen in this country since the Korean War. 293 00:54:00.760 --> 00:54:30.760 and people began to get really worried about three or four percent rate of inflation as measured by the standard indexes so Nixon perceiving this to be a political threat to himself looked at this advice he should clamp down legally on wages and prices and stop inflation by law and he thought well that's dumb but then he decided well yeah it's dumb 294 00:54:30.760 --> 00:54:42.160 In 1970, Congress passed something called the Economic Stabilization Act, and this was 295 00:54:42.160 --> 00:54:47.120 a kind of ploy in its own right, a dare, if you like. 296 00:54:47.120 --> 00:54:54.160 Because these Democrats, giving Nixon more credit than he deserved for honesty, thought 297 00:54:54.160 --> 00:55:00.000 here's this conservative who despises wage and price controls and is on record as saying 298 00:55:00.000 --> 00:55:06.160 And they're stupid, so he'll never put them into effect, so they passed a law authorizing 299 00:55:06.160 --> 00:55:13.160 him to put them into effect. And the idea was, now, this inflation, we will blame on 300 00:55:13.160 --> 00:55:18.960 the president. We'll say, we've got this terrible inflation of 4% a year, and the president 301 00:55:18.960 --> 00:55:25.960 has been authorized to stop it, and the blockhead won't do it. He won't use the very authority 302 00:55:25.960 --> 00:55:37.720 We've Given Him. He showed them, he turned around in August 1971 and imposed this very 303 00:55:37.720 --> 00:55:45.400 creative new economic program. I really doubt that any of the people who concocted this title 304 00:55:46.520 --> 00:55:54.520 knew that Lenin had called his program of 1921 the same thing, but well just an accident and 305 00:55:54.520 --> 00:55:56.600 and they do happen, okay? 306 00:55:56.600 --> 00:55:59.960 So part of the new economic program 307 00:55:59.960 --> 00:56:03.720 was comprehensive wage price controls. 308 00:56:04.560 --> 00:56:08.520 Starting off with a total freeze of 90 days 309 00:56:08.520 --> 00:56:10.440 in which it was unlawful for anybody 310 00:56:10.440 --> 00:56:12.880 to change a wage or price at all. 311 00:56:12.880 --> 00:56:15.400 Imagine that, locking the price system 312 00:56:16.560 --> 00:56:19.160 absolutely rigid for three months. 313 00:56:19.160 --> 00:56:20.880 I mean, that doesn't seem like very long, 314 00:56:20.880 --> 00:56:23.520 but prices change every day. 315 00:56:23.520 --> 00:56:32.520 Every day, millions of prices change to some extent, some change a great deal on any given day. 316 00:56:32.520 --> 00:56:40.520 So the idea that no harm will be done, and in fact good might come from locking the price system in place for 90 days, 317 00:56:40.520 --> 00:56:48.520 was a level of abysmal economic understanding. 318 00:56:48.520 --> 00:57:15.520 Nixon's advisors, his economic advisors, knew this, even though they weren't Austrian economists, they were economists of some kind, and even neoclassical economists understand this, so Herb Stein and his colleagues on the Council of Economic Advisors knew that this was a stupid idea from an economic standpoint, but they weren't the ones making the decision. 319 00:57:15.520 --> 00:57:24.040 Indeed, the decision was being driven mainly by the advice of John Connolly, the Texas 320 00:57:24.040 --> 00:57:30.860 politico who had been brought in to be, of all things, Secretary of the Treasury and 321 00:57:30.860 --> 00:57:37.000 had been given additional authority and making him into a kind of all-around economic czar. 322 00:57:37.000 --> 00:57:45.480 Well, what did John Connolly know about economics? Basically zero. He didn't know anything, 323 00:57:45.480 --> 00:57:55.080 But he was a successful politician and he believed in the grand gesture and football metaphor, which Nixon liked to use. 324 00:57:55.080 --> 00:58:08.280 Connolly believed in the big play. You've got third down and three yards to go, so drop back and go for the end zone 70 yards away with the Hail Mary pass. 325 00:58:08.280 --> 00:58:16.120 That was Connolly-style politics, so Connolly said, you know, we'll do the shocking thing, 326 00:58:16.120 --> 00:58:23.240 we'll really get attention brought to our program with this new economic policy, we'll stop inflation 327 00:58:23.240 --> 00:58:28.680 cold with a freeze and then after that we'll lighten up a little bit and let some adjustments 328 00:58:28.680 --> 00:58:33.800 take place but we'll keep the controls in place, we'll stop inflation, the people will love it, 329 00:58:33.800 --> 00:58:39.600 you know the grandstands will go wild with applause and in addition to that 330 00:58:39.600 --> 00:58:44.120 they closed the gold window they stopped redeeming gold for anybody even foreign 331 00:58:44.120 --> 00:58:51.040 central banks so that was the total end of any semblance of the gold standard in 332 00:58:51.040 --> 00:59:00.840 this country August 15, 1971. They imposed a surtax on imports and they 333 00:59:00.840 --> 00:59:09.720 They added a list of other measures in their plan, all of them goofy, but grand and shocking 334 00:59:09.720 --> 00:59:16.200 and attention-getting, I mean, none of us could ignore this price freeze, that was for 335 00:59:16.200 --> 00:59:17.200 sure. 336 00:59:17.200 --> 00:59:22.240 All the consumers are quite aware of that and every seller. 337 00:59:22.240 --> 00:59:31.560 So they did this and then they progressively first after the 90 days administered the prices 338 00:59:31.560 --> 00:59:36.800 for a while and of course everybody was coming in wanting exemptions and special treatment 339 00:59:36.800 --> 00:59:43.160 and appealing and as they always do when you run a program like that and so it became a 340 00:59:43.160 --> 00:59:50.240 hodgepodge of arbitrary and capricious administration but they knew they couldn't do this for very 341 00:59:50.240 --> 00:59:55.120 very long without wrecking the economy. Even Nixon understood that. So their idea was they 342 00:59:55.120 --> 01:00:02.680 would gradually loosen up and by the time they got down the road a little ways Nixon 343 01:00:02.680 --> 01:00:08.680 would have been re-elected and everything would be irrelevant anyhow after that point 344 01:00:08.680 --> 01:00:13.600 so they could abandon the controls and go back to letting the price system clean up 345 01:00:13.600 --> 01:00:20.220 the mess. That was the plan. Things didn't work out quite according to plan because the 346 01:00:20.220 --> 01:00:25.540 The program began to unravel quicker than they thought, and their enforcement wasn't 347 01:00:25.540 --> 01:00:32.140 very good, and the prices began to go up again, so Nixon decided in the middle of 1973, against 348 01:00:32.140 --> 01:00:36.340 everybody's advice, to put another freeze on. 349 01:00:36.340 --> 01:00:44.020 And that time, the effect was immediate and disastrous, because then farmers stopped selling 350 01:00:44.020 --> 01:00:51.820 any steers to the meatpacking plants and there was no hamburger in the supermarkets and poultry 351 01:00:51.820 --> 01:00:56.860 farmers were drowning their chickens rather than bringing them to market and when these 352 01:00:56.860 --> 01:01:04.800 kinds of news items appeared in the paper the political blowback was terrible and so 353 01:01:04.800 --> 01:01:11.340 after about a month they lightened up even on that second freeze and began to move to 354 01:01:11.340 --> 01:01:40.340 to a final phase of administered controls which allowed all kinds of adjustments and discretionary relief to particular sellers and then when the law, the Economic Stabilization Act, expired in April 1974, they said, adios, been nice to know you, and everybody was happy to have these price controls over with, 355 01:01:40.340 --> 01:01:49.040 But meanwhile, they had done a lot of damage to the workings of the economy and they had damaging legacies. 356 01:01:49.040 --> 01:02:05.880 One was that while they had been in effect, the so-called energy crisis had burst forth in 1973 in the form of the OPEC embargo. 357 01:02:05.880 --> 01:02:16.280 And that action would not have had much impact on anybody, except that these price controls were in effect. 358 01:02:16.280 --> 01:02:27.120 And with the price controls in effect, the price system couldn't serve to help people adjust to the effects of the embargo. 359 01:02:27.120 --> 01:02:57.120 and so these limited supplies of petroleum products were rationed by the usual kinds of the rationing devices when there's great access demand and the gas lines, gas lines and that was almost the first, you know, gas lines had been short during World War II but in those days there was a system, a rationing system, you didn't have to line up and sit in your car for four hours to get gas you just had to acquire 360 01:02:57.120 --> 01:03:04.920 and F-ration tickets to buy the gas that was available in the fall of 1973 people 361 01:03:04.920 --> 01:03:09.160 didn't quite know what was going on they just knew that that a lot of gasoline 362 01:03:09.160 --> 01:03:15.680 stations ran out of fuel or didn't have very much and and that a lot more 363 01:03:15.680 --> 01:03:20.400 motorists wanted to fill up and so people were lining up and sometimes 364 01:03:20.400 --> 01:03:25.640 sitting in their cars for hours and hours waiting to to get to the pump to 365 01:03:25.640 --> 01:03:32.720 Buy Some Fuel. Of course, this was a situation in which the sellers, with only a limited 366 01:03:32.720 --> 01:03:39.760 amount available, could suit themselves. Say, since they were able to sell all they had 367 01:03:39.760 --> 01:03:47.240 available and they could only charge the controlled price, well, the way to improve their well-being 368 01:03:47.240 --> 01:03:51.720 was to cut their costs. Their revenue was going to be the same no matter what, but their 369 01:03:51.720 --> 01:03:58.720 The Federal Reserve, fiat money, fractional reserve banking, Human Action and State, The Theory of Money and Credit 370 01:04:21.720 --> 01:04:28.680 and Ensuring Your Tires was routine service at gas stations before 1973. 371 01:04:28.680 --> 01:04:31.200 After that, it just about disappeared. 372 01:04:31.200 --> 01:04:36.080 It was no longer part of the protocol of the pump attendant. 373 01:04:36.080 --> 01:04:42.240 They stopped opening service bays where people could get repairs made on their cars. 374 01:04:42.240 --> 01:04:45.920 And, well, that's not worthwhile anymore. 375 01:04:45.920 --> 01:04:54.000 and so people found themselves short of fuel and wasting tremendous amounts of time in these gas lines 376 01:04:54.000 --> 01:05:00.800 and they went crazy about it. Some people absolutely went ape. They couldn't stand this. 377 01:05:00.800 --> 01:05:06.960 Americans had never had to deal with these kind of communist lineups before. 378 01:05:06.960 --> 01:05:12.800 You know, everybody in the Soviet Union stood in a line for 60 years and they were used to that, 379 01:05:12.800 --> 01:05:18.800 But Americans weren't used to lining up to buy something they had normally been able to buy in five minutes. 380 01:05:18.800 --> 01:05:21.800 So it made a lot of people angry. 381 01:05:21.800 --> 01:05:24.800 I was living that year in California. 382 01:05:24.800 --> 01:05:27.800 Actually, I was working at Stanford that year. 383 01:05:27.800 --> 01:05:34.800 And the Californians, I think, went crazier than anybody because they have an automobile culture. 384 01:05:34.800 --> 01:05:41.800 And so they were goaded painfully by these gas lines. 385 01:05:41.800 --> 01:05:51.800 One morning, I turned on the news and heard about some guy who had run out of gasoline out in the country somewhere, 386 01:05:51.800 --> 01:05:59.800 and it made him so angry that he had taken his gasoline can, he had walked five miles to the next station, 387 01:05:59.800 --> 01:06:05.800 he had somehow managed to get a can full of gas, and he had walked all the way back to his automobile with it, 388 01:06:05.800 --> 01:06:34.800 Another fellow, somewhere in the Bay Area where I was living, got so impatient waiting in line that finally he pulled out of the line and began to systematically ram every car in front of him with his car until he'd rammed five or six and finally disabled his vehicle. 389 01:06:34.800 --> 01:06:48.800 So it's obvious that Americans are not really cut out to be good Q-standers, and these gas lines were just intolerable. 390 01:06:48.800 --> 01:06:54.800 And they were unnecessary too. They were wholly the product of price controls. 391 01:06:54.800 --> 01:07:02.800 They would have disappeared instantly, as indeed they did disappear instantly when finally the price controls were taken off. 392 01:07:02.800 --> 01:07:12.500 But meanwhile, when the comprehensive price controls expired in the spring of 1974, 393 01:07:12.500 --> 01:07:20.500 this so-called gas crisis or oil crisis was still going big time. 394 01:07:20.500 --> 01:07:29.000 And so the government in its wisdom decided that it wouldn't let the price controls expire in that sector. 395 01:07:29.000 --> 01:07:55.000 It would keep the controls on fuels, and it did, and it created a series of administrative organizations to allocate petroleum and its products to different users in the country and to manage this system, which could not succeed, of course. 396 01:07:55.000 --> 01:08:04.360 The Energy Czar, Nixon named William Simon to be the Energy Czar and he became 397 01:08:04.360 --> 01:08:09.160 probably the most newsworthy man in America for years. He was on the news 398 01:08:09.160 --> 01:08:14.760 every night answering questions and explaining the situation to people and 399 01:08:14.760 --> 01:08:21.920 and in the late 70s after he had left the government he went on from Energy 400 01:08:21.920 --> 01:08:28.560 are to be Secretary of the Treasury, for which, oddly enough, he was much more qualified than 401 01:08:28.560 --> 01:08:35.560 most Secretaries of the Treasury. But he wrote a book called A Time for Truth. You should 402 01:08:35.560 --> 01:08:42.320 read this book. It's really good reading. It's his kind of first-hand report on the 403 01:08:42.320 --> 01:08:52.320 and the stupidities of attempts to do economic planning by the central government. 404 01:08:52.320 --> 01:08:58.320 It's very good reading. I don't know if he had a ghostwriter or not. I suppose he didn't. 405 01:08:58.320 --> 01:09:07.320 I used to know Bill Simon personally, so I just never asked him if he sat down and wrote that himself or not. 406 01:09:07.320 --> 01:09:09.320 Also the father of Simon who just ran for governor. 407 01:09:09.320 --> 01:09:19.600 Yes, right. I think father was a bit brighter light than son, but Simon was an interesting 408 01:09:19.600 --> 01:09:26.720 character too because just as LBJ was an abrasive character, Bill Simon was an abrasive character 409 01:09:26.720 --> 01:09:32.720 too and he would get right in people's faces and for that reason he had no political future 410 01:09:32.720 --> 01:09:42.400 after he left the government in 1977. Even conservatives and Republicans couldn't stand 411 01:09:42.400 --> 01:09:50.080 to deal with him. He was not sufficiently amenable to compromise with people who differed 412 01:09:50.080 --> 01:09:57.360 with him. Well, it was not until, of course, Ronald Reagan was elected that ultimately 413 01:09:57.360 --> 01:10:04.940 these price controls on oil were finally abandoned for good and meanwhile we had 414 01:10:04.940 --> 01:10:12.320 that second energy crisis in 1979 and 80 again gas lines and all the screw-ups 415 01:10:12.320 --> 01:10:23.280 that had occurred in 1973-74 and they disappeared instantly you know the 416 01:10:23.280 --> 01:10:53.280 The minute the price controls came off, all the problems went away, the gas lines disappeared, stations had fuel, and it showed that the entire problem that people had put up with for a decade was wholly artificial, it didn't have to have happened, it was put there by politicians trying to give the appearance of doing something that helped people 417 01:10:53.280 --> 01:11:08.280 There's a lot more here and I'm not going to walk through every item because our time is limited. 418 01:11:08.280 --> 01:11:17.280 Let me just say a little bit about some of the enduring legacies of what was done during this 10-year period. 419 01:11:17.280 --> 01:11:21.280 There were many, I think. Some of them were institutional. 420 01:11:21.280 --> 01:11:38.280 A lot of these government administrative agencies, programs, laws and so forth remain in effect today and there were very serious fiscal implications. 421 01:11:38.280 --> 01:11:43.280 I mentioned Medicare earlier and how rapidly its costs ran up. 422 01:11:43.280 --> 01:11:55.280 In 1980, Medicare had already become vastly more expensive than anyone had expected, and the cost in 1980 was $32 billion. 423 01:11:55.280 --> 01:12:06.280 That was more than initially projected. It would be in 1990, several times more. So it was growing very fast. 424 01:12:06.280 --> 01:12:21.280 In 1990, Medicare costs were $98 billion, and in 2002 Medicare costs were $231 billion. 425 01:12:21.280 --> 01:12:30.320 This thing is growing exponentially at a very high rate, and it will, before long, unless 426 01:12:30.320 --> 01:12:38.320 If something is done to change the program, it will be the one big gorilla that eats the entire federal budget. 427 01:12:38.320 --> 01:12:43.320 But it's not the only one that's behaving this way. 428 01:12:43.320 --> 01:12:47.320 When the Medicare law was being debated in Congress, 429 01:12:47.320 --> 01:12:52.320 Wilbur Mills, a powerful congressman from Arkansas, 430 01:12:52.320 --> 01:12:56.320 who headed the Ways and Means Committee of the House of Representatives, 431 01:12:56.320 --> 01:13:23.320 Wilbur Mills used his clout to stick something else into this bill, a little thing called Medicaid, and this was to subsidize the medical care of poor people. 432 01:13:23.320 --> 01:13:34.320 Eventually it spread out, as they all do, and embraced the not-so-poor, and people in other categories were swept in too. 433 01:13:34.320 --> 01:13:47.320 65, it was part of the original act of 65. It was a multi-part law, part of it created Medicare, another part Medicaid. 434 01:13:47.320 --> 01:14:08.320 If we follow that, we find that I don't have Medicaid singled out here, but in the table I just looked at, there's a category called health that doesn't include Medicare, and it's for the most part, it's the federal government's payments for the Medicaid system. 435 01:14:08.320 --> 01:14:25.320 In 1980, these health expenses were $23 billion. In 1990, they were $58 billion, and in 2002, they were $197 billion. 436 01:14:25.320 --> 01:14:36.320 So you're seeing there the same kind of rapid exponential growth of expenditure. 437 01:14:36.320 --> 01:14:44.320 A final big gorilla in this same general category is the social security benefits. 438 01:14:44.320 --> 01:14:53.320 We know those go back to 1935, and for several decades they didn't really amount to anything much. 439 01:14:53.320 --> 01:14:59.320 As late as the mid-1950s, 20 years after the system has been created, 440 01:14:59.320 --> 01:15:28.320 There's just an almost trivial amount of money being spent on old-age pensions, but the outlays began to pick up, particularly in the 60s and 70s, because Social Security was something that politicians in the 50s, 60s and 70s discovered as a beautiful campaigning issue. 441 01:15:28.320 --> 01:15:48.320 And so what everybody who wanted election or re-election to Congress would do would be to promise the voters that if you elect me, I will raise Social Security benefits and indeed I'll take some of you people who aren't eligible for benefits now and I'll put you into the system too. 442 01:15:48.320 --> 01:16:02.640 I'll put the disabled in there for example, so the social security system got improved 443 01:16:02.640 --> 01:16:11.160 every year for about 25 years from the early 50s into the 1970s and the deal got sweeter 444 01:16:11.160 --> 01:16:17.400 and sweeter and the pensions got adjusted for changes in the price level and at one 445 01:16:17.400 --> 01:16:23.400 at one point they even got double adjusted because of a misconstruction in the law. 446 01:16:23.400 --> 01:16:28.400 They were adjusted twice over for price level changes. 447 01:16:28.400 --> 01:16:35.400 That's the kind of cost of living adjustment we would all love to have. 448 01:16:35.400 --> 01:16:39.400 Profit from inflation. 449 01:16:39.400 --> 01:16:46.400 Social Security costs, even as late as 1966, $21 billion. 450 01:16:46.400 --> 01:17:09.400 In 1980, they'd gone up almost six-fold. They were up to $119 billion in 1980. By 1990, they were up to $233 billion, and in 2002, they were $456 billion. 451 01:17:09.400 --> 01:17:17.500 So, if you go back and look at the division of all federal spending between, say, these 452 01:17:17.500 --> 01:17:25.480 welfare state transfer payments and defense spending. In the mid-fifties, defense is way 453 01:17:25.480 --> 01:17:32.540 up here. It's well over half of all federal spending, and these welfare transfers are down 454 01:17:32.540 --> 01:17:38.640 here at about a third of the budget, and then there's everything else making up the difference. 455 01:17:38.640 --> 01:17:46.420 But what happens in the late 60s and early 70s is that as fractions of the budget they 456 01:17:46.420 --> 01:17:55.140 change places in about a 10 year period so that by the mid 70s the proportions are almost 457 01:17:55.140 --> 01:18:02.120 the exact opposite of what they had been just a decade earlier and then the divergence just 458 01:18:02.120 --> 01:18:07.920 keeps getting bigger as these transfers get a bigger and bigger proportion. 459 01:18:07.920 --> 01:18:14.800 There are currently about two-thirds of all federal spending and growing. 460 01:18:14.800 --> 01:18:24.040 Now, any number of people know this can't continue, but what do the politicians do? 461 01:18:24.040 --> 01:18:31.880 Well, even as we enjoy ourselves in Auburn today, they are hard at work adding a major 462 01:18:31.880 --> 01:18:38.960 New Spending Program to the Social Security Program, Prescription Drug Benefits, which 463 01:18:38.960 --> 01:18:49.800 is forecasted to cost, in the Republican version, a mere $400 billion dollars, but yeah, multiplied 464 01:18:49.800 --> 01:18:55.400 by seven, you see that prescription drugs alone will take up 90% of the federal budget 465 01:18:55.400 --> 01:19:25.400 So, again, this is no secret. We all know this. People all over the country know this to be the case. But what are these politicians finding in their interest? They're finding it in their interest to go on wrecking the economy and the society, by making these promises to people that they know cannot be fulfilled for long. But all the long they care about, 466 01:19:25.400 --> 01:19:39.400 What we care about is next fall. These are promises that will help these guys get themselves re-elected in 2004. 467 01:19:39.400 --> 01:19:43.400 You can bank on it. That's their specialty. 468 01:19:43.400 --> 01:19:47.400 I'm always saying, what do they know about this? What do they know about that? 469 01:19:47.400 --> 01:19:53.400 Well, there's one thing they do know about, and that's what you need to do to get re-elected. 470 01:19:53.400 --> 01:20:04.400 We know they know that because every year almost every one of them gets re-elected, so they understand, they've proven they understand how the system works. 471 01:20:04.400 --> 01:20:17.400 And if wrecking the economy and wrecking the society is what it takes to get re-elected, then they are fully prepared to wreak wreckage, and that's what they're doing right now. 472 01:20:17.400 --> 01:20:30.840 much of this we owe to this great period of turmoil and social unrest between 1963 473 01:20:30.840 --> 01:20:37.080 and 74 which built into our polity and our institutional arrangements a series 474 01:20:37.080 --> 01:20:42.600 of time bombs well let me stop here and take your questions Bob I know when I 475 01:20:42.600 --> 01:20:48.600 I talk to people now about the gas line. Many people think, oh, it's because OPEC did what they did. 476 01:20:48.600 --> 01:20:55.600 At the time, were there at least some op-ed writers that knew what was going on and explained to people? 477 01:20:55.600 --> 01:20:59.600 Very few, I would say. Very few. 478 01:20:59.600 --> 01:21:04.600 Of course, people were making all kinds of suggestions about how to improve things. 479 01:21:04.600 --> 01:21:34.600 Friedman was probably one of the only major ones... 480 01:21:34.600 --> 01:21:45.600 I've looked at all the big city opinion columns. I'm sure you would have found few of them recognizing what was really going on and what had to be done about it. 481 01:21:45.600 --> 01:21:51.600 I thought that prescription drugs were being attached to Medicare and not Social Security. 482 01:21:51.600 --> 01:21:59.600 It's the same law. Medicare is part of the Social Security system. 483 01:21:59.600 --> 01:22:00.600 Joe? 484 01:22:00.600 --> 01:22:10.600 Before you talk about safety regulations, I remember about 1972 reading a story in the paper. 485 01:22:10.600 --> 01:22:17.600 Some guy decided to work on Saturday, a rainy day, probably working in two inches of water. 486 01:22:17.600 --> 01:22:22.600 He didn't work with just one electric screw gun, he was working with two. 487 01:22:22.600 --> 01:22:27.600 So of course he got electrocuted, there was an ocean inspector around who was talking to him about doing this. 488 01:22:27.600 --> 01:22:35.600 These things happen. I mean, I quit a job once, because these guys would build this redneck dust trap, which they called Scamper. 489 01:22:35.600 --> 01:22:41.600 And it was the unsafest thing I've ever seen. You'd walk out in the middle of the park, and you'd sink about six feet. 490 01:22:41.600 --> 01:22:45.600 Then you'd go over where you're supposed to be working, and they wouldn't put a decent board in there. 491 01:22:45.600 --> 01:22:53.600 Well, all you could do in any case like that is quit the job. That's my own sort of safety aspect of it, taking over. 492 01:22:53.600 --> 01:23:08.600 You gave us some figures on Medicare, Medicaid and Social Security benefits. Do you have the figures on what they're drawing in on the revenue set? 493 01:23:23.600 --> 01:23:31.440 are interested in these things about the government's budget. You can go online and just do a Google 494 01:23:31.440 --> 01:23:42.040 search for budget of the United States and it will take you to the website of the Bureau 495 01:23:42.040 --> 01:23:49.840 of Management and Budget and to the budget documents and their PDF files. So what you're 496 01:23:49.840 --> 01:23:54.840 is exactly what you'd see if you had the hard copies of these documents. 497 01:23:54.840 --> 01:24:04.840 And every year, the budget of the United States, besides having all the proposals that the executive branch is sending to Congress, 498 01:24:04.840 --> 01:24:18.840 has a volume of historical series which pulls together just all sorts of categorizations of the federal budget going way back in history. 499 01:24:18.840 --> 01:24:33.840 History. So it's a very useful source, I find, for my own looking into exactly how big some of these programs are and how much they've grown. Brad? 500 01:24:33.840 --> 01:24:46.840 The Immigration Act of 65, what were the political groups that were behind it? Were they the same sort of lineup, or was that sort of spurred by something, by maybe different considerations? 501 01:24:46.840 --> 01:24:52.840 I know it's totally changing the face of the American political landscape, but I wonder how it fits with what? 502 01:25:16.840 --> 01:25:23.480 Bill, at that time, had the old quota system that had been put into place in the 1920s. 503 01:25:23.480 --> 01:25:29.680 And the original quotas were themselves based on the relative numbers of different national 504 01:25:29.680 --> 01:25:39.200 groups in the country in 1920. So the quotas were very high for a lot of European countries, 505 01:25:39.200 --> 01:25:45.800 which were places from which relatively few wanted to come to the United States. So many 506 01:25:45.800 --> 01:25:53.000 Many of those quotas were not filled in the 50s and early 60s, whereas other parts of 507 01:25:53.000 --> 01:25:59.040 the world, where many people wanted to migrate to the United States, had very, very small 508 01:25:59.040 --> 01:26:07.000 quotas. So there was pressure, and I don't know exactly what interest groups or what 509 01:26:07.000 --> 01:26:14.560 members of Congress were involved in actually pushing that law to enactment, but I do know 510 01:26:14.560 --> 01:26:43.560 Well, I see a claim when I read some of these left-wing magazines, of which there's quite a few, and they say, well, it's true people complain about being put in jail for filling in a ditch, but I think that air quality is better. So they make this claim, well, air quality is better, so that sort of justifies the whole ecological establishment. Where do they get this? 511 01:26:44.560 --> 01:26:54.560 There are data measuring air quality levels for a number of substances that EPA has been measuring. 512 01:26:54.560 --> 01:27:02.560 If you look at just the concentrations of ozone or particulate matter or nitrogen oxide or so on and so forth, 513 01:27:02.560 --> 01:27:13.560 you can find a data series and almost all of those particular measures of pollution levels do show declines in the past 30 years or so. 514 01:27:13.560 --> 01:27:25.560 Now, many forms of pollution were declining long before there was an EPA or any federal intervention in this area at all. 515 01:27:25.560 --> 01:27:31.560 So, it doesn't follow, of course, that EPA made these declines happen. 516 01:27:31.560 --> 01:27:39.560 But even if EPA did make them happen, it doesn't follow that it was good to make them happen, 517 01:28:09.560 --> 01:28:16.560 I'm very interested in the period that you addressed, the Nixon administration basically, the closing of the gold window, the price controls of Watergate and all that stuff, it almost seems like it really qualifies as one of your crisis periods, and I was wondering if you had any thoughts on that? 518 01:28:39.560 --> 01:28:52.560 What would you recommend in terms of the best sort of comprehensive overall history of the price of wage controls and the closing of the gold window and all that business? 519 01:29:09.560 --> 01:29:22.560 and went on later to become Secretary of State and an all-around military industrial complexer, heading up Bechtel and discovered all the bases. 520 01:29:22.560 --> 01:29:29.560 I would love to see a really good Life and Times biography of George Shultz because that would tell many tales. 521 01:29:29.560 --> 01:29:43.560 But, Schultz and Dam published a book, I believe in 1977. Kenneth Dam was a lower level functionary, and he's been in and out of the government several times himself. 522 01:29:43.560 --> 01:29:55.560 This book is called Economic Policy Beyond the Headlines, and it's quite worthwhile. It's got a lot of information about all those policies you mentioned. Karen? 523 01:29:55.560 --> 01:30:00.560 You're off on the board there. I'm too self. I wrote a book about two years ago on the Nixon economy. 524 01:30:00.560 --> 01:30:01.060 Yes. 525 01:30:01.060 --> 01:30:04.060 And it's a great rundown on all the Nixon evils. 526 01:30:04.060 --> 01:30:13.560 Yeah, I referred elliptically to that book a while ago. I recommend that too. Yeah, that's a very good source as well. 527 01:30:13.560 --> 01:30:16.560 Well, I think we've come to the end. Thank you very much.