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The Freedom Revolution has finally come home. Americans are clamoring for an end to big government.
Yet in Washington, academia and the media, the statists are far from surrendering.
They still enact and defend high taxes, regulations and other destructive policies of the welfare state.
Politics may have its place, but it's no permanent solution.
For that, we need a revolution in ideas.
The Mises Institute was founded to make that possible.
And it's already happening.
The Mises Institute is bringing about radical change for the better on campus and across America.
But we need your help as a member.
If you join, you will receive the free market, the Mises Memo and other publications,
as well as the gratitude of the students and teachers of liberty.
The free society needs fearless and passionate defenders in all walks of life.
Join us.
As Henry Hazlitt said, the times call for courage.
The times call for hard work.
But if the demands are high, it is because the stakes are even higher.
They are nothing less than the future of human liberty, which means the future of civilization.
Into his person, we've been told, are poured all our hopes and dreams, fears and pains.
He is the apotheosis of democracy, patriotism and the national will.
Pundits left and right have said as much as they have deplored the decline of the presidency
under Clinton. In fact, of course, this is his great legacy. We are no longer in awe
of the office, which is a huge step in the direction of restoring liberty.
In some ways, too, we should also be grateful to Richard Nixon, who started the debunking
process rolling. Those impeachment hearings were the first crack in the now collapsing
The only real tragedy that would come with a Clinton impeachment and conviction would be his replacement with another petty tyrant with the same power and more seeming moral authority.
In the early 19th century, Alexis de Tocqueville marveled at the institution of the presidency
and not for its power and authority.
He wrote that the president had no favors to hand out.
He ruled no one.
There was no money to be made out of the office.
He had a tiny personal staff and only a couple of agencies under his indirect control.
He could not go to war on his own.
Certainly he could not regulate business, direct schools, or tell anyone whom they must
associate with.
For the people, the presidency was largely an honorary position, a figurehead that greeted
foreign dignitaries and made eloquent speeches on special holidays, but otherwise did little.
People cared about him during elections and forgot about him afterwards.
The story of how Tocqueville's America became host to the largest and richest government
in the history of mankind, a leviathan with $1.75 trillion at its disposal every year,
is in large part the story of the rise of the executive state.
This conference will tell that story and I wish I could report to you that the papers
The speakers here will have the ring of familiarity. They will not.
Each one will tell a story that you will not read in the conventional texts of American history.
The text in which the more bloodthirsty and tyrannical the President is,
the higher he is rated on the grand scale of greatness.
We put this conference together because the story of how America lost its vision of freedom
is not told in the conventional histories. For it does not seem at all obvious to us that war and despotism equal greatness.
Presidents ought to be evaluated in terms of how well they guard the freedom that was this country's original promise,
not how slyly they betrayed the vision. We will do so.
A few housekeeping notes. We're going to have a very tight schedule, as you can tell, and so not to cut in on the speaker's time, I'll not be able to introduce most of them, but you will find short biographies of all of them in your registration materials.
Please note that we will also start each session on time to make sure that you get to hear the entire program in good order.
Order. Thank you all for coming, and to those of you who so generously donated to make this
conference possible, a special thank you. You and I will learn an immense amount today
and tomorrow, but it does not end here. The proceedings will become a volume, the first
full-scale revision of the history of the American presidency ever produced. What follows
Charles is the story of the rise of the executive state.
May this conference make a contribution to its decline and fall.
Now we're pleased to begin with distinguished professors Richard Vedder and Lowell Galloway
of Ohio University.
Presidents crave to be President of the United States for a variety of reasons.
They're guaranteed a comfortable life of moderate affluence, they usually are able to command
a lifetime income of millions of dollars in book royalties, lecture and corporate director
fees after leaving office.
A president has a great deal of power, too much of course, but it derives some satisfaction
from being the most important person in the country, if not the world.
Yet there is a third form of compensation particularly alluring, the chances of receiving
eternal recognition in the history books.
The reputation of chief executives with historians, political scientists and other presidential
scholars is important in defining a president's long-term legacy.
Thus modern presidents not only try to appeal to voters, but to a constituency of historians
and other presidential scholars who are influential in interpreting the presidency in future years.
It is our thesis that these scholars generally are dependent on government for their income
and tend to be sympathetic to an expansive role for the state.
Most are politically liberal in the modern American sense of that word, and to persons
with this perspective, a good president is one who actively uses the power of the state
While a president who curtails government and allows markets greater primacy in the allocation of resources and the distribution of income is considered lackluster or mediocre.
Now, this hypothesis is testable. That's an expression, by the way, it's kind of dirty, the words among Austrians, but I'll say it anyway.
There have been a number of surveys of presidential scholars asking them to rank the presidents.
They give a good guide to the reputations of former heads of states among the group
of people who write the history books and the biographies which ultimately impact on
popular opinion.
Also there's some imperfect but useful information about the size of government.
Budgetary data, for example, are available for the U.S. government since the Washington
Administration, and scholars have likewise estimated the size of the national output
going back to the beginning of the Republic.
Accordingly, it is possible to calculate federal governmental expenditures as a percentage
of national output throughout American history.
In our classical liberal rankings that we are about to embark on with you, we calculated
the change in government spending as a percentage of output during the administration of each
president, comparing the year prior to the inauguration of the president with the president's
last year in office. Thus, in his last full year, in 1980, Jimmy Carter presided over
a government that spent 21.2 percent of the nation's output compared with 20.4 percent
in 1976, the year before he assumed office.
So if you subtract the latter figure from the former,
we could conclude that the federal government
grew about 0.8% of gross domestic product
during the Carter presidency.
So that's the technique we used in our first table
and I'll explain how we refine that in a minute.
Two of the presidents, William Henry Harrison
and James Garfield, served as presidents
for such a short time that they're excluded
from our analysis.
Now from a classical liberal or Austrian perspective, increases in government share of output are
considered bad or intrusive on personal liberty, while decreases are considered good.
So in Table 1, we rank the president solely using such a criteria, ignoring any other
factor that might be used to evaluate the president.
We also indicate what the rankings of the president was using three of the conventional
presidential scholar assessments.
One of them, by the way, involved 800 historians about, and another one involved about 800
political scientists.
Before going into the specifics of the ranking, we calculated the correlation between our
libertarian-oriented rankings and those that the historians and scholars did.
And for those of you who know statistics, it's interesting, the correlation coefficient
between our ranking in the Murray blessing assessment is minus 0.35 and was statistically
significant at the 5% level.
Since our rankings are solely based on the size of government, the results support our
initial hypothesis that other things equal.
Presidential historians prefer presidents who expand government, and within the presidential
in the Presidential Scholar Community, there's a lot of agreement between these various rankings.
The correlation between the various rankings is between .96 and .98.
Now given the limitations of time, I will only briefly comment on a few highlights of
the rankings.
The full paper has a lot more detail.
Abraham Lincoln is revered by Presidential Scholars and by most Americans, considered
the greatest president in all three mainstream surveys, greater even than such giants as
George Washington and Thomas Jefferson.
In our black box calculations, however, Lincoln appears as America's second worst president.
Under Lincoln, the government's role in American economic life grew to what were up to then
unprecedented levels.
The country was subjected to hyperinflation, ended links of the currency to precious metals,
It introduced an income tax, as well as such non-libertarian phenomena as military conscription and the suspension of habeas corpus rights.
More importantly, of course, it endured a massive civil war that killed more Americans than any other conflict in our history.
The robust rate of economic growth prevailing in the 1840s and 50s ground to a halt for several years,
and it took the South over a century to regain its relative economic standing.
To Austrians and classical liberals, this is a nightmare.
On moral grounds as well as grounds of promoting free markets for labor services,
Lincoln can be championed for ending slavery,
but such subjective considerations did not enter into our rankings based purely on statistical evidence.
Evidence. Now turning to the 20th century, we diverged sharply from the presidential scholars with respect to virtually every president. For example, Woodrow Wilson ranked sixth in all the cited polls, but he was third from the bottom on our list. On his watch, the income tax was enshrined in the American Constitution, the Federal Reserve was established, and more militant government intervention ensued in the
And from the standpoint of rankings, the most important fact of all, of course, was that the U.S. became embroiled in World War I, beginning the era of extensive American involvement in foreign disputes.
We evaluated Harding and Coolidge highly, placing them in the top ten.
Naturally, they're both in the bottom ten in the list of the presidential scholars, with Harding ranking dead last.
While Harding's administration was marred with scandal, those scandals appeared modest relative to those of the Clinton era.
Incidentally, all those scandals occurred after Harding died.
I mean, you know, the revelation of the teapot don't, all the prosecution, all was after he was dead.
Moreover, taxes were slashed and industrial production during Harding's tragically short
tenure rose 61%. Furthermore, Harding let markets work to end the 2021 depression. Playing
golf and poker and drinking whiskey, Harding allowed, and other things that have come out
in the during the last few months. Monica is not new in American history. Harding allowed
the price mechanism to lower unemployment from the double-digit levels when he assumed
office to less than four percent when he died. Yet given the existence of what Robert Higgs
calls ratchet effects in government spending, the combined exertions of Harding and Coolidge
and Reducing Government, while commendable, did not return to the pre-war norm.
Now Herbert Hoover is a horse of a different color.
No one seems to like Hoover, but we like him even less than the presidential scholars putting
him on our short list of worst presidents.
Aside from being a pre-Keynesian big spender, Hoover interfered in major ways in the labor
Markets, Setting the Stage for the Great Depression. He was a meddling interventionist, a Franklin
D. Roosevelt without the charisma. Now, in the large presidential surveys, Franklin D.
Roosevelt ranks above George Washington, right next to Abraham Lincoln. In our objective
of Evaluation, he was absolutely the worst American president. Roosevelt, more than any
other man, set the stage for the modern American welfare state. We're still grappling with
problems that are part of the Roosevelt legacy, ranging from social security to an anachronistic
laws regulating labor and financial markets. Now, in table two, which you don't have,
we refine these rankings based on size of government consideration using two other ways
of Measuring the Size of Government, and the net effect of all this is to lower our
valuation of recent presidents.
You can read the paper for details when it comes out.
Now, there are arguments for or against any set of our rankings or, for that matter, of
the mainstream scholars.
In Table 3, we present a composite of both our and the mainstream rankings, ordering
Combining the president from best to worst by summing our three rankings from tables one
and two and by combining the rankings shown in the three polls of scholars which are included
in table one.
If you compare our rankings with their rankings, the differences are profound.
Let's for the sake of discussion say that the top one-third of the 39 presidents that
we have in our discussion were good, that the middle one-third were average and the
bottom one-third were poor.
Using that taxonomy, the majority of the presidents considered good by us, using government size
as a measurement of assessment, were considered poor by mainstream scholars, specifically
I'm speaking of Andrew Jackson, Warren G. Harding, U.S. Grant, Zachary Taylor, Calvin
Coolidge, Don Tyler and Chester A. Arthur.
Almost half of the presidents of the mainstream scholars considered good, we assessed as being
poor.
Abraham Lincoln, Franklin D. Roosevelt, Woodrow Wilson, James Polk, Lyndon Baines Johnson
and James Madison.
All six of these present, by any definition, were activist chief executives.
Others on their good list, such as Andrew Jackson and Theodore Roosevelt, also were known
for their aggressive use of presidential authority.
Thus the good presidents, as evaluated by the mainstream scholars, were mostly highly
activist while their poor president list was dominated by relative laissez-faire types
such as Arthur, Taylor, Coolidge and Harding.
Now another way we differ from the mainstream scholars is that we tend to find most of the
good guys in the early decades of the republic.
Well we evaluate the more recent presidents far less favorably.
Why is this?
In the modern era, government spending has tended to grow fairly consistently as a share
of our national output and the most conservative and lazy fairs of presidents, and Ronald Reagan
and in particular comes to mind, have done, been able to do or have done relatively little
about it. In the early years of the republic, this strong upward tendency for government
spending was simply not apparent.
Now any mechanistic procedures for evaluating presidents based on a single criteria is bound
We do not really believe, for example, that Harry Truman is the best of all presidents, although we would agree that such presidents as Franklin D. Roosevelt and Woodrow Wilson are probably about as bad as the rankings indicate.
One important factor that's not included in these rankings that you can measure is price stability.
Most economists, virtually all free market ones, would argue that price inflation is a bad thing.
Five percent inflation annually is worse than one percent inflation, which in turn is worse than overall price stability.
Now, while most economists, with an appreciation of the powers of markets in allocating resources, would agree that inflation is bad,
To add, there is some division of opinion as to what is optimal regarding the purchasing power of money.
Austrian economists tend to look with great disdain on the discretionary creation of money by central banks.
From that perspective, a zero rate of reported inflation is not necessarily good.
Austrians in general applauded the moderately deflationary monetary record of the last third
of the 19th century during the heyday of the classical gold standard, for example, and
would have condemned a sort of a stable price monetary policy in that period had it been
implemented that augmented the monetary growth from increased gold stocks with paper money
creation in order to keep prices stable.
In our Variant 1 in Table 4, which is our preferred rankings by the way, final rankings,
a negative rate of inflation is considered good and the more negative the better.
In Variant 2 in Table 4, we assume that the optimal amount of inflation is zero.
Now in Table 4, we report our rankings of presence with an inflation adjustment.
We took the rankings in table three, based on size of government, added the numerical
rankings based on the rate of inflation, and then ranked the presidents based on the sum
of these two measures.
The lower the number, the better the perceived performance.
In other words, we're putting an equal weight on the size of government consideration and
on the price stability consideration.
One could quarrel with this, but we thought we'd try this and see what happens.
Now turning to the Variant 1, which we believe many Austrians would find preferable.
Joseph Salerno, if he's here, would probably like it.
Six presidents move at least 10 ranks from that reported in our rankings based on the
size of government consideration alone in Table 3.
Harry Truman, for example, goes from first, which we are very uncomfortable with subjectively,
to Tide for 13th, still probably too high, but better. Because of the lifting of World
War II price controls in 1946, the reported inflation rate is probably too high for Truman
and too low because of the price controls for Roosevelt. So there's a little distortion
there.
Now two other presidents fell, fall dramatically on the basis of high inflation. George Washington
goes from 5th to 22nd, which we think may be very unfair, given the particular dubious
quality of the data in that era.
Austrians find price indices abominations in the best of times, and actually there isn't
a consumer price index for the 1790s.
I invented one through a regression technique, which I won't bore you with, but the devil
is in the details, and there's a lot of devil there.
So it may be unfair to Washington.
Bill Clinton goes from being tied for 15th to 27th, which we subjectively view as being
very fair indeed.
Three presidents move up in the rankings substantially.
Polk goes from being tied for 30th to being tied for 16th, that is from being clearly
in the list of bad presidents to being one that might be called roughly average.
The same thing even happens more dramatically to Herbert Hoover who moves from 36 to 18.
Now Hoover moves up because there was negative price inflation to Hoover's age and that kind
of implies we think that Hoover presided over an intelligent monetary policy in that period
and I don't know any economist, even the most root canal sadist and masochist economist
who has that perspective.
and the Keynesian. No one, you know, agrees, you know, loves Hoover.
Lastly, the modern deflation of the Hayes presidency helped him move from 21st to 11th in our rankings.
With either set of inflation-rated rankings, the modern presidents fare poorly.
Using variant one, eight of the 13 worst presidents are from the modern era, which we define as from Coolidge to the presidents.
None of the top ten presidents in either list is from the modern era.
The inflation associated with the era of Keynesian economics leads to relatively low evaluations
of modern presidents.
Now the mainstream scholars, of course, are largely liberal and probably most vote for
Democratic party candidates, for president.
So conventional wisdom would say that the Republican candidates tend to favor smaller
Government and Sound Money. So our classical liberal ranking should be expected to give
higher assessment of Republicans than Democrats. Examining the president since 1860 when the
first Republican was elected, namely Lincoln, we can look at the party affiliation of 24
of the presidents who were either Republicans or Democrats, and I excluded Andrew Johnson
from the list, who was technically not a member of either party at the time of his election
to the Vice Presidency.
And let us arbitrarily give the grade of A to the top eight ranked of all the 29 presidents.
I tend to grade on a curb, by the way.
I'm an old-fashioned scholar that believes you can give grades below A's.
I believe in the principle of scarcity.
We give eight B's to the second eight presidents, eight C's and so on.
So ranking all the Presidents, the mainstream scholars gave the Democratic Presidents a cumulative grade point average, a GPA of 3.0, a B, and they gave the Republicans an average of C minus.
So the mainstream scholars said Democrats are Bs, Republicans are C minus. So much for their bias, pretty clear.
Now, in Figure 2, which we include, we show how our distribution of grades is using the
same grading scale for Republicans and Democrats using the first variant of Table 4 as our
measure.
Our distribution of grades of Republican is almost even across the board, with 3 at every
level except D. The cumulative grade point average is a lowly 1.93, a little below a
The cumulative average is 1.0 or a D. So while it's true that we find the Republicans on average to be better than the Democrats, modern presidents of either political affiliation have tended to be mediocre Democrats, somewhat more so than Republicans.
The four statistically significant instances of upward ratcheting in the size of government which we can't go into the details of how we measure this in this presentation.
But the four statistically significant instances of awkward ratcheting the size of government are associated with the phenomenon of war.
Specifically, the War of 1812, the Civil War, and the two World Wars.
Further, there's a pronounced association between major wars and presidential rankings offered by both mainstream experts in us.
The so-called experts ranking of the four presidents associated with these four wars is on average 5.5. That is, on average they ranked fifth best, with Madison being the lowest at 13. So war presidents did really well with the mainstream scholars.
On the other hand, we rank these four presidents during these four wars at an average ranking of 35.6 in the bottom five.
So more generally, the mainstream scholars liked all war presidents, including presidents who presided over other wars, the Vietnam War, they liked Johnson, et cetera, kind of like McKinley, et cetera.
So, to the extent that presidents try to maximize their historical legacy, the pro-war bias of the conventional historians and political scientists suggests that at the margin, some wars may be fought to enhance presidential reputation, rather than to right wrongs or maximize the national interest.
In making a cost-benefit calculation, whether to engage in war, presidents might consider
the private benefit they receive from a probable enhancement in their presidential reputation.
Wars make presidents look heroic, and everyone loves a hero.
Now should the experts exalt wartime leaders, or should we denigrate them?
We think the weight of the evidence on this issue is on our side.
While it may be inappropriate to assign complete responsibility for the advent of war to the
nation's chief executive, war does not occur in a policy vacuum. It is the culmination
of a series of public policy positions either avowed or pursued prior to its outbreak. Of
course, war impacts on our presidential rankings by increasing the level of federal spending.
However, such surges in spending are not permanent. Or are they? Whatever the reason for government
spending, it diverts resources from the private sector or the economy. In the process, the
public becomes accustomed to a lower level of private consumption. Customarily, this
is regarded as acceptable in the short run in the name of patriotism or some other civic
Virtue. At the conclusion of the hostilities, this period of public sacrifice is over and
there exists what has been called a, quote, peace dividend that may be, quote, spent.
The operative word here is spent. The simplest thing to do with a peace dividend is to give
it back to the people who earned it, to be used in the pursuit of its private consumption.
However, once resources have passed under the control of the central government, it's
often difficult to retrieve them.
To be sure, some of the peace dividend will be returned to the private sector, but much
of it will be retained in the public arena to enhance social spending.
A large pool of public resources is an irresistible attraction for what Manser Olson has called
These are called distributional coalitions in a society to the extent they are able to capture a portion of the peace dividend for their special interest purposes.
The volume of public spending will be maintained at levels that are greater than the pre-war ones.
This is the Higgs Ratchet.
Now, individual happiness is not created in large part through the actions of political leaders.
The dynamic, chaotic market processes of individual human action have far more to do with America's material prosperity and happiness than the behavior of any president.
Yet bad political leaders can have lasting negative consequences.
The half-life of the adverse consequences of ill-conceived and ill-considered political activism is long.
Classical liberal scholars should ponder why this is so.
Why cannot or did not, say a Ronald Reagan, do much to roll back government?
Why was the seemingly moderately promising laissez-faire behavior of the 94th Republican Congress, 95-96,
26, not followed by a really substantial retreat of government, rather than the tepid amounts
observed to date.
Insights by Austrian and public choice scholars on the nature of government, bureaucracy,
special interest groups and so forth can help pave the way to finding answers to these questions.
But one of the special interest groups is academia and its government-funded pro-interventionist
That bias, as demonstrated in the mainstream presidential performance polls, it contributes
to the reluctance of presidents to be decisive in reducing the federal role in our affairs.
In striving to please the academic mandarins evaluating the presidency, modern chief executives
have stimulated the growth of Leviathan and the Nanny State.