I'd like to generally address the question that we're often asked.
You've probably wondered, why don't we have a Washington office?
I think that a policy institute, something like, I guess you could say we're part of a policy institute,
would have a Washington office, because that's, after all, where the politicians are, the people we need to influence.
Will there ever come a time when we pack up and go?
This happens all the time.
In the 1980s, there was a tremendous migration of conservative periodicals and think tanks
from the hinterlands into D.C. to achieve status.
What they would always claim is that we're anxious to heighten our influence.
And then, of course, they invariably make a promise that they will not go native as they
would put a person six months' time or so.
They enter into the dangerous zone, and I'm calling Washington Warp.
They say first impressions are often the lasting ones, especially when entering a new city.
This is true.
Arriving in D.C. for a journalism internship right out of college, I had an experience
that not only made an impression, but summed up the whole of Capitol Hill's reason for
existence.
One summer afternoon, I walked up the street to a Chinese carry-out restaurant and walked
I walked back to my apartment with Mugu Gaipan in one hand and Rice in the other and my Texas-sized wallet sticking out of my back pocket.
I heard footsteps behind me, felt a slight tug of my trousers and turned to see a young boy of about ten years old running away with my wallet in hand.
I stood there confused. Finally I yelled out at him something like,
Hey, come back. You can't take that from me. That's my wallet. I was raised in Lubbock,
and the whole idea of public theft of another's property just didn't seem to fit with anything
I had ever experienced. It was so brazen, so conspicuous, so fast, and so shameless.
My first thought was, of course, to call the police, an idea that sent my roommates into
They informed me that if I was lucky enough to get a policeman on the phone, he would
just wonder why I was wasting his time. He would say some perfunctory thing about putting
it on the record and be done with it. But I asked, doesn't that mean that in the nation's
capital, stealing another man's property with impunity is effectively legal? And a
And a more knowing roommate responded,
You're getting the idea, Texas boy.
I had received my first lesson in D.C. style microeconomics.
Another time I was standing near a Mercedes that a passerby mistakenly thought was mine.
I didn't have a car.
Give me some money, he said with hostility.
D.C. Macroeconomics operates pretty much the same way. The ethic of theft is the defining
cultural trait in a town that lives and thrives off $1.7 trillion that steals from the incomes
The Ethic of the Freebie
What's more, if you're cocky enough, London has its high T's, but in D.C. it's scotch on the rocks at 3.30 sharp.
What's more, you don't even have to be invited to enjoy all these freebies.
So long as you look like you know what you're doing, you can go just about anywhere.
Except into the lobby, except beyond the lobby of the Federal bureaucracy.
All of them are closed off, especially to taxpayers.
But since they don't have any premium booze and shrimp, nobody wants to be there anyway.
As a matter of fact, I had the occasion to go into a number of these. I understand that security has really been very much enhanced in the years since I've left, but when I was there, you could go into places like the Department of Transportation and Health and Human Services and HUD, you could go in there if you had a researcher in the department that would give you permission to come in. From time to time, I was doing research on some subjects and they would let me do it. It's astonishing.
I never imagined such a thing. I guess I had in my mind pictures must have been taken in the 1950s from civics books in high school where they show the bureaus and everybody's hard at work, serving the public.
But you know, you can walk through halls and halls and halls that are completely empty. You poke your head in offices and nobody's there.
In the Department of Health and Human Services one day I went from office to office to office looking for somebody that would talk to me about something and stumbled into a room with a large screen TV and there were probably 15 or 20 people just sitting around watching it. That's what they were doing.
And then over in the corners a few people flirting with each other and a hostile lady behind some desk over here and nobody at the front desk.
And then I began to ask questions and of course nobody had any answers and nobody was interested in talking to me.
When you finally do find the guy who gave you permission to come to the Bureau, he seems like a very lonely fellow.
He's sitting there smoking a pipe and sort of rather like a failed academic or something.
And anxious to see a fresh face, a person from the outside world that he could talk to and share some of his knowledge.
and some of these people are quite bright, quite talented. Their talents are of course entirely going to waste.
From time to time at the Mises Institute we get calls from people inside bureaucracies that are passing on information to us,
are anxious to see something revealed to the public about a particular matter that we've covered in an op-ed or in the free market or somewhere else.
And over time I developed a relationship, a kind of friendship with an economist who works at, I can't tell you, actually, by a powerful bureau in Washington, a high-level official.
So he began to tell me a little bit about his life, and I encouraged him to write an essay on the subject, and the result was an article that appeared about two years ago called...
Anyway, it was by Mr. X. I had something like the life of a DC bureaucrat. He wouldn't
be able to give his name. He just called himself Mr. X. He said, you know, I have a PhD in
economics and I have some ability and truly I'm a sympathetic to the Austrian school.
That's what I care about most. I can't stand the government. They're going to be working
I have one key problem in my life. I have many virtues, but one of my virtues is not that I like to work. In fact, I'm quite lazy. I'm lazier than anybody I know, he says.
I got out of graduate, got my PhD, and this job was here, and I got on the endless cycle of higher and higher salaries, the longer you stay around, and higher and higher ranks within the civil service, and really I just can't leave, frankly I love my life.
He explained how he and his wife might as well be retired for all the vacation time that they have.
He said that quite often he will come to work at 9.30 or 10 o'clock and leave pretty quickly for a jog,
run home and take a shower, come back to the office for a few minutes, go to the grocery store afterwards.
He says, of course, all of this is in violation of the official regulations of the bureaucracy.
The problem is that since everybody else is doing it, there's no reason for anyone to
turn anybody else in.
Whistleblower is a very rare thing in Washington bureaucracy.
After we ran that Mr. X article, which is one of the funniest articles I think we've
ever published, we got just inundated with letters from public service unions that were
claiming that this article was a complete fake, that it was a fraud, that we had made
it up ourselves.
I had all the documentation on it, but I never answered these letters.
Any time I had guests coming to DC, when I was there, I'd take them on a tour.
I like to call it the Truth in Government Tour.
I took them to the Vietnam Memorial, of course. That's an amazing experience.
I encourage you to go.
I explained the true meaning behind the statue in front of the Federal Trade Commission,
which I won't tell you about now, but I'd love to tell you about in private.
I dragged people to a random subcommittee meeting to show them how inane the process of government truly is.
And thank goodness for C-SPAN, which now airs these things for the entire nation.
I took them to HUD and showed them the Department of Labor and explained that unlike Congress,
these are the institutions that are actually running the country on a daily basis.
And I took them to the several palaces of the World Bank and the IMF
I told them of the employees' high, very high, and untaxed salaries.
Take them to the Iwo Jima Memorial, which has every country the U.S. has ever invaded, etched around the sides.
It's a startling list, and if you ever doubted the U.S. is an empire, take a look at that.
I showed them the quotations, blazoned on top of the IRS,
taxes are the price we pay for civilization, and that always brings a great laugh.
What never failed to make the largest impression were the receptions.
These assumptions which are elaborate, decadent, and most importantly free to anyone with an attitude, this just doesn't happen in the real world.
DC is a very, very strange place, quite unlike any other in the rest of the country.
For example, not many people know that when I was there you could drink the water. This is a great luxury.
Nowadays, you cannot drink the water in DC. It's unsafe. You have to buy bottled water. It's like the Third World.
Christopher Hitchens reports in the New Vanity Fair that the potholes in D.C. are a favorite joke among foreign diplomats who gaily compare conditions in Cairo or Kinshasa and other hardship postings to D.C.
He says, when my son tested positive for TB, an affliction I thought had been banished roughly when up in St. Clair or the jungle, I resolved to do some unsmiling research and found that as a result of that, as of the latest annual federal figures, TB cases in Washington had increased 36% as against the decline of 7% in the rest of the United States.
Just one other small anecdote, the other day the post office of the 14th Street in Irving
Northwest had to be closed because rodents were devouring the mail.
You know, it's very common, everybody knows what a horrible place DC is in the squalor,
it's really astonishing.
And I often like to take guests by Anastas and Acosta, which really is to look like a third world.
But the common line that you hear all the time from congressmen and from apologists of the D.C. culture is that,
look, this is Mayor Barry, you know, there's nothing the federal government can do about it.
This guy's a crook and a criminal, and he's running the town under the ground, and that's it.
Well, a couple things to say about this.
Just as an aside, by the way, I actually met Mayor Barry, and you can't get this, it's sort of like Clinton, you can't get it from the television cameras, but he's actually a very impressive looking man, and he's got sort of star qualities, seems no matter, I realize how he was able to win re-election, no matter what kind of scandals surround him, but it's just not true to say that the District of Columbia government is somehow responsible for what's going on in DC. I mean, this is a city that has
has benefited from more, I don't want to say benefited, but it has been the beneficiary of more federal subsidies than any other in the country.
It is more micromanaged, and historically has always been, by the federal government than any other city, and look like results.
This is a catastrophe. It seems to me we ought to make a deal with the government that says something like this.
Look, if you think you can run the country, if you can put together a central plan that's going to bring us utopia, fine, we'll give you that power.
But first do it in D.C., make this the model city, and then we'll think about what you can do to the rest of the country.
In fact, it's quite the opposite, it's the worst city in the country.
Last year, Congress took over the government of the District of Columbia, and Newt Gingrich made it his personal mission to make the nation's capital, what else, a shining city on the hill.
So, we'll see how he does.
There's much about Capitol Hill that runs contrary to the rest of the country. For example, in a regular job market, your wages and salary are linked to how much you contribute to the overall productivity of the firm. Your future job prospects have determined how well you do, and your present one.
Leftists have long denounced the supposed Good Old Boys Network that determines who gets what jobs in the private market, but as we all know, knowing the right person can only get you so far in the private sector, it won't make a millionaire out of an incompetent, unless of course the EEOC is pulling the strings with the threat of a class action lawsuit.
But in DC, the Good Old Boys Network is really all that does exist. In fact, getting ahead is about who you know, and almost exclusively so.
The idea of networking is such a crucial part of the daily life of a capital-hilled loopy,
but this reality eventually takes its toll on people's sense of themselves,
knowing that it's not their productivity and talents that account for their position.
Connections and who you know comes to define who you are and what you are.
Your home, your socializing skill, your ability to drop names, your titles, your inside information,
and you do this most of the waking day.
and in the struggle for social status in D.C. position Trump's productivity every time.
So who is this typical Capitol Hill groupie?
He's a person who hates his hometown and works to banish all traces of regionalism from his manor.
He sneers at the political ignorance of his parents but loves nothing better than telling them what is really going on in the hills since of course he has inside information.
The media is always denouncing the supposed cynicism of the American public,
Public, but let me tell you, there is no cynicism to compare with the double-edged anger and
deeply cynical worldview of a typical D.C. hack. There are no idealists here, and everyone
knows it's a racket, but there are proofs of it nonetheless. The typical Capitol Hill
group, he doesn't believe that someday he'll be running Capitol Hill because truthfully
he's already convinced that he does. He believes that without his vital contribution, no matter
How petty and irrelevant it is that the whole place would fall apart in an instant as it's an intoxicating atmosphere and the drug is power.
I once knew an aide to an aide to an aide of the secretary of HUD, who was then Jack Kemp, but from his manner you would have thought that he had founded Microsoft.
That's a very widespread attitude.
At the Mises Institute we've learned that there are two types of phone manners.
The first lesson anyone learns in Washington, besides the importance of not walking at night with both arms full of Chinese food, is that a principled stand on behalf of some policy matter will get you nowhere but down.
Of course, it's permissible to make principal statements when the television cameras are rolling or when the Post,
Washington Post is on the other end of the phone, profiling you for the style section.
But let's not pretend that this is real. Everybody knows that it's all just fun and games.
People with principles are treated as well by Washington political culture, as whistleblowers are treated by the bureaucracy.
To be principled in Washington is to expose yourself as an outsider, a man with no influence and no friends, a person who will soon be leaving town.
The phrase you often hear is this. Don't let the perfect be the enemy of the good. That's the way the official culture slaps down idealists.
And with that phrase, every manner of duplicity and dissembling is given a philosophical sign of justification.
You learn to never tell the truth. You learn to never let the truth get in the way of a believable justification for selling out.
Now, in the campaign finance hearings this past year, and in this past week, Republicans
kept hollering about how the Clinton campaign accepted contributions from businesses and
individuals on a quid pro quo basis. The number of favors this administration does you, they
claim, is directly proportional to the extent that you fund their party machine. And I kept
thinking, do these guys really think that we are so stupid as to believe this is an
I mean, this isn't a campaign to finance scandal at all. This is called public policy.
And, of course, eventually, the Republicans agreed and dropped the whole matter.
Recall that during the heady days when people were denouncing the so-called corruption of the government,
where people was paid for favors from the government,
at the same time, Microsoft was being berated because of its arrogance for only having two lobbyists in D.C.
My goodness, a company of that size should have an entire team to have 15, 20, 30, 40.
You have to pay off the right people in order to have a free way in the marketplace.
This is coming from very respectable commentators who are making this kind of critique, so-called critique of Microsoft.
No doubt DC is an imperial city founded on theft, sustained by lies, but sometimes you have to wonder, how does it all work?
Why do its victims put up with it? That boy who stole my wallet, for example, was never apprehended, but surely we can all agree that what he did was wrong.
How is it that DC can accomplish not just petty theft, but grand larceny on an unimaginably huge scale, but the whole town not being apprehended?
How can the criminal state be so brazen, so conspicuous, so shameless?
I think Lew touched on the idea last night. It lies in the rationales used to cover up the essential immoral character of what is going on.
If a gang of thieves suddenly announces it's to a productive nation of 250 million people
that wanted 1.7 trillion dollars by the year end, years in, for no good reason the gang
would be ignored or rounded up and dealt with soundly.
But if those thieves convince you that they are necessary for your well-being, that they
are providing you essential services, that they are contributing to the overarching moral
climate, holding society intact, keeping polar caps from melting, making the economy run
One right, representing the people of whatever the racket is, becomes a little bit more plausible.
In the 19th century, there were no think tanks.
By the way, this is why it's necessary for government to have an intellectual basis,
to have a group of intellectuals to explain and justify what's going on all the time.
Otherwise the thing wouldn't work.
In the 19th century, when government was relatively small,
There were no think tanks in Washington devoted to pursuing public policy research. There was no occupation called a public policy analyst in DC palaces where people could make a living doing this sort of thing.
The biggest one-time explosion in state power obviously occurred with Lincoln, and though his primary intention was invading the South, invading the South was to collect the tariff.
Charles Adams has shown he weaved an elaborate tale about the desire to set slaves free and keep the Union intact in order to mask its real purposes.
But by the progressive era, new rationales for state power had grown and become far more sophisticated.
Now the government needed to exist and expand the pursuit of social science in the name of government management.
That's the phrase public policy for the first time it was born.
And what is this thing called public policy?
Policy. It was supposed to be some third path beyond pure scholarship and mere political
agitation. Its purpose was to put a smooth and respectable gloss on a power grab to achieve
social management in the name of science. And the nation's first think tank, in fact,
was founded at the height of the progressive era. In 1916, as the Institute for Government
Research, it was initially funded entirely by the Rockefeller Foundation to carry out
are the dreams of the Ivy League political science profession for scientific public policy.
Here's how the Institute for Governmental Research came about.
President William Howard Tass' administration, a group of these progressive political scientists and municipal reformers,
were charged with the way of coming up with improving data collection techniques.
Data collection is a central function of the modern state.
The Commission recommended that Congress reform a consolidated information and statistical arm of the entire national government.
And at the heart of this statistical arm would be the Budget Division that would present
a quote, annual program of business for the Federal Government to be financed by Congress.
A quote.
A bill was drafted, it went to Congress, but Congress said no way, and deep-sixed the whole
idea on grounds that it seemed absurdly socialistic.
Disgruntled members of the committee set up the Institute for Government Research and
later a certain St. Louis industrialist, an educator, took over the job of financing it.
His name was Robert S. Brookings, after whom the Institute for Government Research was
eventually renamed to become the Brookings Institution.
Now the reason I tell the story of the Brookings Institution is to show that the relationship
between the think tank in Washington and the government has always been intensely close.
It can't really be any other way.
That's always been the function of public policy research institutes and to some extent
The story of Mr. Brookings is fascinating in its own right. In World War I, he was called to Washington to be the Commissioner of Finished Products and Chairman of the Price Fixing Committee on the War Industries Board.
In short, he was a central planner on the totalitarian model, a man who hoped that many more could follow him and enjoy the thrill of fixing other people's prices and running the economy into the ground.
So, from its inception, the idea of the think tank was that it would serve the cause of
government, working as government's research arm and serving as a way station for political
appointees and civil servants as they moved in and out of office. While they're in office,
they operate the mechanisms of power, and while they're out of office, sitting at the
think tank, they cheer on those who operate the mechanisms of power and feed them data.
Working served this function of shoring up the imperial state and giving it scientific
Laws for a very long time and in the meantime the next research institute to be founded was the Council on Foreign Relations which handled the foreign policy side of government policy and then finally the National Bureau for Economic Research which handled economic policy.
The premise of all three of these organizations is apparently illiberal. Society cannot run itself, they believed.
It meets top-down rule of an extremely smart, well-trained, public-spirited intellectual,
from very good families to do it for them.
With the founding of the American Enterprise Institute in 1942, the think tank culture took a slightly partisan turn, a partisan spin.
And over time, Brookings functioned as a Democrats' think tank, and AEI served as the Republicans' think tank.
In those days, there was a revolving door between the regime and the White House, and its political appointees, and the think tanks which housed them in the off years.
Now, as the years have gone by, the rationale for why think tankers in Washington have slightly changed.
It's no longer that the think tank serves as the core intellectual basis for justifying the regime in all respects.
After all, D.C. is a highly partisan culture.
This has an unfortunate side effect though. It creates the impression or rests on the assumption that DC is a big debating club, that if we all just sort of go there and throw our two cents in, what will eventually emerge is a wonderful policy consensus around us and the rest of the country.
This is a particular problem for those of us who want to cut government. When you come to Washington, you have to play this game. You have to embrace this policy, debating society model of the central state.
The core problem with it is that it masks the essential reason for why government exists, namely to exercise power.
Let's be perfectly clear on one thing. There is no room in D.C. for a seriously thriving intellectual culture,
any more than there was an intellectual culture in Moscow under Stalin, in Berlin under the Nazis, or Beijing under Mao.
In the centers of power, bad ideas drive out good ones, or more clearly still, power is the enemy of honest thinking.
The most absurd attempt recently to portray D.C. as a debating society occurred recently
when Clinton was encouraging us to have a national dialogue on race.
The implication is somehow that he is open to every point of view and just needs to be
persuaded by the voices of reason.
In fact, Clinton is head of a totalitarian racial project and is sort of like the robber
asking his victims to enter into a dialogue about the merits of mugging or something.
There can be no dialogue when the power relations are so seriously skewed in one direction.
I've known many men, young men who were extremely bright, and women were extremely bright, and have a passion for ideas and also even Austrian economics,
go into Washington policy society with great hopes and get chewed up and either leave or stay completely compromised.
I think it's a tremendous tragedy and anytime I have a chance to encourage people not to go, I do so.
When you're there, it doesn't take long that whatever idealism you go into the city with just ends up being banished from your brain.
You grow older, you grow wiser, so-called. You understand the whole thing is a racket after all.
But you also understand it's pointless to call it a serious change.
to become part of the crowd, hoping someday you will rise above it by being more cynical, more manipulative, more pushy, an overall much worse human being than your peers.
The worst rise to the top says Hayek, and you're going to make darn sure that you get there earlier than anyone else. This is a very typical attitude.
It's very interesting to see that Clinton, when he went into the White House, drew in a lot of people from New York and Arkansas, a lot of more young idealists.
I mean, they don't hold our views, but they did have, you know, very, you know, they had basically, you know, many, many socialists that he brought in around this administration.
Over the course of the years, of course, they've, they've given up any kind of hope of, you know, a serious revolution or just enjoying the process of, of, of exercise of power.
I was intrigued the other day to watch that Ohio demonstration, knowing that many employees of the White House know for a fact that if they were younger and they had been in college, they would have been one of the protesters, instead they're on the other side, it doesn't bother them.
Same thing happened with the Reagan White House.
Arthur once knew a famous and very good economist who made a name for himself arguing against a particular version of the tax reform for five years. I don't want to tell you which version it is because you might know who he is.
He was slaying his opponents in the worst way, becoming a one-man army against this particular brand of tax reform, and he did this for five years, and finally drove the opposition to take a very extreme step.
They decided to hire him, and after which time he changed his mind and wrote in favor of the other tax reform. Very, very common.
DC policy culture has the effect of turning people into secret anarchists or secret totalitarians, and the anarchists eventually moved to Seattle or to Auburn.
A picture that has never left my mind, and one of my happiest memories from Washington
is from mid-November 1992. It was a gathering of Bush administration employees in far-flung
sectors of the executive branch, along with their cohorts and various Republican think
tanks and bureaus. It was supposed to be a ball. The mirror lights turned and the band
played and the champagne bubbled from the fountain, but the 300 or so people present
Meritorious engagements were announced, others muttered about going home to mom and dad, a few talked about starting their own consulting business, which in DC is code for being unemployed, and thank goodness, it was just a thrilling thing to see, at last this entire crew had been dethroned, their power, their contacts, their social status was all in tatters, completely destroyed, and of course the looting hasn't stopped in the meantime, a new group of people rose to take their place,
They no longer have that high-minded purpose that it once had.
Clinton has a hard time retaining employees, for example.
Those who used to worry about turnover in Congress no longer do.
The civil service is seen as best people bought off by the private sector,
and those who remain are demoralized.
Worse, nobody seems to care.
So, you know, it's not possible to think straight on capital health.
It's the bottom line.
It literally takes over your brain,
becomes a part of your life. Most of the creative thought going on in this country is occurring outside of Washington.
The Manhattan Institute, for example, we don't always agree with what they say, but far more creative, far more creative intellectually than its counterparts in D.C.
Those who are going to make a difference in our future, they're far, far away. Thank you.