What is the Right Amount of Government?
A number of years ago, I became greatly concerned.
Virtually everyone I talked to said,
the government is getting too big.
It's pretty hard to know what too big means
unless you have something from which to measure.
How big is too big?
What is the right amount of government?
So, I began making inquiries among my friends and among learned people who had studied the
matter and many of them came back with this observation, that government should do no
more for people than those things that people cannot do for themselves.
That sounded like a good answer.
It certainly was pat and seemed to fit the proposition.
But on closer study, it became apparent that government is only people. Therefore, what
was being said was that the government, a particular group of people, should not do
anything for people that people can't do. But it is only people that will do what people
can't do, so in point of fact, we are getting nowhere. So I thought maybe there had to be
some other rule by means of which to examine the right size of government. And finally,
In talking with a great many, it worked out this way, that government should not intervene
in the economy at all, but what it should do would be to protect us. It appeared in
the minds of most of the people that I talked to that protection is a societal operation
and must depend upon a kind of collective operation. But in other areas, everything
Protection is a good. We all want to be protected. We want to be safe. And for a very long time,
I accepted this idea that the proper role of government would be to protect us in our
lives and our property. And anything that it did beyond that would be an invasion of
of the Rights of Individuals, the government was not to be a participant in human affairs,
but sort of detached like an impartial judge, making certain that no one hurt anybody else,
and aside from that, leaving us alone. But on more penetrating examination of the subject,
it became apparent finally that government didn't really protect, that it was not in
In a position to protect, and in spite of the fact that many men in government undoubtedly
are well-intentioned and hope to protect, they really cannot because of the nature of
the state itself. You see, there is a profound difference between protection and retaliation
after the protection has failed. And in essence, government is organized not to see that something
doesn't happen, but to punish the perpetrator of the malfunction after the event.
In other words, the manner in which government is organized is that of a retaliatory agency.
Firm in the concept is that the government is going to prohibit, but not prevent.
Well, that's really not good enough. To say that something shouldn't happen is a very
nice thing to say. But that doesn't prevent things happening that ought not to happen.
What we need to have is a more practical application to the problem. And I will certainly be the
first to admit that the mere fact that an agency exists which might retaliate after
to the fact, could be a contributing factor to preventing certain things from happening.
But if so, it's a very minor factor indeed for this obvious reason. Anyone who is criminally
inclined anticipates that he isn't going to be caught. He realizes that the law doesn't
prevent him from doing anything. It is merely a statement saying that he ought not do it.
But if he feels criminally inclined, he will disregard that ought not because there is nothing
really to prevent him.
Laws do not prevent anything.
They merely prohibit with the understanding that if you do something you shouldn't do
and get caught, you'll be punished.
But most criminals, as I say, are not really worried about punishment because they don't
think they're going to get caught.
And consequently, the action of government in dealing with crime has been, as in all
other areas where government functions, an outstanding failure.
In fact, I need no better evidence of this than the government's own crime report, which
comes out every year, put out by J. Edgar Hoover, the head of the FBI.
In fact, I have here the report for 1969.
is the last one available to me at this time. This is 1970 as I speak these words, but
the findings, the tabulations are never completed until the year is ended, and then it takes
several months to do the studies and print it. So all that is available to me right now,
that is the latest that is available to me, is the Uniform Crime Reports of 1969 which
which wasn't released until August of this year.
And turning quickly to it, what we discover is that crime generally is up 148% over the
past 10 years, the rate of increase is up 120%, and that is against a population increase
of 13%.
Many people suppose just offhand that the reason for the increased incidence of crime
is the increase of population.
And here we have evidence provided by the government itself that the rate of crime increase
is approximately ten times the rate of population increase.
So something is clearly out of gear.
Violent crime, the Hoover Report says, is up 130 percent.
The rate of increase is up 104 percent.
Crimes against property are up 151 percent, and the rate of increase is up 123 percent.
Now, there you have a 10-year record of what has been happening in this country where we
have relied on the government to deal with crime.
We appropriate vast sums of money to see that crime doesn't occur and new laws are passed
which never prevent any crime, they merely prohibit crime or certain types of actions
which are then construed to be crime and every time we appropriate additional funds the amount
of Crime increases.
Let me just state a hypothetical situation to you.
Let me suppose that you undertook to move the Great Pyramid of Giza northward to the
coast of the Mediterranean, and let us suppose that at the moment you undertook the task,
the Great Pyramid was 100 miles away from the shoreline.
So you appropriated $5 million to move the pyramid, and after you had spent the $5 million,
You find that the pyramid is now 125 miles away from the coast.
Well this might discourage you but you say the reason is that we didn't appropriate
enough money.
So you now appropriate a billion dollars undertaking to move the pyramid northward and when you
have spent the billion dollars you find that the pyramid is now 200 miles from the coast.
So you now appropriate 5 billion dollars and when you have spent that you find that the
The Pyramid is 300 miles from the coast. Would you begin to suspect that you're going in
the wrong direction? I would think so. And this seems to be precisely what we are doing
insofar as dealing with crime in this country is concerned. The more money we appropriate
and the more we turn funds over to the government to prevent crime, the higher the rate of crime
On October 26th of this year, U.S. News and World Report came out with an article relating
to the cost of crime as it relates to the Hoover Report.
So these financial figures more or less dovetail with the figures released by the Federal Bureau
of Investigation.
I'm going to have to challenge some of the figures because I don't think that the study
is as objective as it should be. Nonetheless, let me accept it. As it appears, what we have
is the cost of crime in 1969 in this country came to $51.1 billion. Now, how was that breakdown?
Well, the cost of trying to prevent crime, together with the cost of those crimes that
are not immoral but are simply illegal crimes, came to 35.4 billion, according to these figures,
whereas the criminals obtained only 15.7 billion out of the total. In other words, to prevent
Crime to the tune of $15.7 billion, we spent $35.4 billion and the rate of crime increased
and the amount of crime increased. Now, clearly, on the basis of the financial evidence, on
the basis of the statistical evidence admitted by the government in this crime report, the
government is completely inept in dealing with this area.
So something is going to have to be done and I'm going to suggest to you that the proper
way of dealing with crime is in the free market, that protection is a marketplace service and
that when you really want to be protected and you have something that's worth protecting,
the proper thing to do is to hire a free market agency, a protection agency, the merchant
police, a private detective, a night watchman or various protective devices that are now
Now, clearly, it is illegal not to pay your taxes. But I would not classify the failure
of the person to pay a tax as a crime. Now, you understand that is my own personal view.
But I contend that the individual who earned the money is entitled to the money and that
the crime involved here is the crime of taking it away from him against his will, if indeed
it is taken against his will. Now, if we were to add that cost as the cost
for Time Life, who undertook at that time to survey what he called the evil domain of world crime.
Now this is big organized crime, the syndicates, the mafia, and the interlacing network that it
has built up in the United States and all over the known world. It's a very interesting study,
and it ran serially in Life magazine beginning with the January 11th issue of 1960.
Mr. Breen made the following observations and I would like to just quote briefly from
his article,
The practitioners of international crime are hard-headed businessmen with only one guiding principle, money.
That's a quote from Mr. Breen.
And, of course, that's a very important point to keep in mind.
The men who are operating the syndicates are not guilty of crimes that we could classify as crimes of passion.
They don't commit crimes of passion. They commit crimes for money.
This doesn't mean that they might not commit a murder. If they do, they do it for money.
They're only interested in one thing, and that is the payoff. How much money can they get?
What is their normal modus operandi? What they do is they find out what goods or services exist
for which there is a high demand, and then they take steps to get those goods or services declared
to be illegal, contraband. Once it has been banned, if it is something that is in high demand,
then they will attempt to supply it and they can put any price they want to on it.
An example and a very pertinent example at the present time is the drug traffic in this country
and elsewhere in the world. Back in 1960, a survey was undertaken to find the number of drug abusers
in the relatively equal cities of London and New York City. I say relatively equal. I'm thinking
of populations. These are two of the major cities in the world, and their populations
are almost the same size. At that time, I think London was slightly larger than New York,
A survey was made of these two cities, and at this time, here is what was found. In New
York City, there were more than 16,000 known drug addicts. In London, the same time, at
the same year, and in a city comparable in size, there were 250. That's all. Now what
What was the difference?
In the United States, we have had laws on the books fighting the use of drugs for years.
We went into prohibiting drugs before we went into the business of prohibiting liquor.
And so we passed a great many laws against the use of narcotics in this country, and
the result is that it became profitable for the international syndicates to move in with
With all kinds of drugs, which incidentally can be manufactured very inexpensively, and
then any kind of price can be charged, and the syndicates were making a big rake off.
Actually, this is one of the most lucrative industries that they have, the running of
drugs. But in 1960, there was no syndicate operation in England. In fact, Mr. Breen,
The reason was there was no law there to encourage them. Had a law been passed forbidding the use of narcotics, then it could have been profitable to the mafia or one of these syndicates to move in and attempt to supply it.
In this country it was profitable, and in spite of the enormous sums that were spent to keep the drugs out of this country, they were in because it was profitable to bring them in.
Now since 1960, Britain has changed its laws and has now forbidden certain types of narcotics in Great Britain.
And as they did so, the drug addiction problem began to increase.
So here we have a precise illustration of the point that I mean. You see, in 1960, in England, you could go into any apothecary shop and for a shilling, purchase six fixes of heroin.
Now please don't misunderstand me. Heroin is an extremely bad drug to take. It's a hard drug. It's something you shouldn't play with at all. I'm totally opposed to this type of thing.
Nonetheless, in England, where they had made no legal effort to prevent it, they had virtually
no problem at all. 250 known addicts and anybody who wanted it could go to an apothecary shop
and openly buy six fixes for one shilling. That's about twelve and a half cents of our
money at that time. Now, at that same time, in New York City, three fixes of heroin, which
which had been split and was probably of doubtful quality could be purchased on the street from
an undercover criminal for something like $35.
The cost of making three fixes of heroin, actually manufacturing the product, would
come to maybe one or two pennies.
It's an extremely cheap drug to manufacture.
So consider the markup.
Here you have something that the syndicates can obtain for pennies and sell for $35 or
$50. And as the individual is hooked and you understand the nature of heroin, it is a very,
very difficult drug to break out of once you have incurred the habit. So people become
virtually frenzied in an effort to obtain the drug. So they'll pay any price to get
Now, there is another instance here that relates to the drug traffic. According to surveys made
in New York City recently, 60% of all crime is drug-connected. It is not connected to the
people who are on drugs at the time they're on the drugs. At the time they're on the drugs,
Drugs are useless. They can't do anything. They go off in a state of euphoria and they
couldn't commit a crime if they wanted to. However, when they come out of it and they
have to support an expensive habit and they can't hold down a job, then they have this
motivation to go out and commit other kinds of crime in order to get the money that they
need to buy drugs at this fantastically high price that is made possible by virtue of the
and the fact that the only place they can obtain it is in the illegal black market.
Now there's your problem.
Actually, we ran into that problem back during the days of prohibition in this country.
In 1918, as you recall, we had the prohibition amendment passed.
And when we did, the sale, manufacture or possession of alcoholic beverages became illegal.
Are you aware that prior to that time in the United States we had no syndicate and no mafia?
And also are you aware that at that time alcoholic consumption in the United States was among
the lowest per capita consumption in the world?
Then we prohibited it and the mafia and the syndicates moved in.
In fact, the 20s, the roaring 20s, were and became the period of time in which the gangsters
emerged.
This was the age of the gangsters and the illicit area was the speakeasy, where you
could go and get some very bad bathtub gin for outrageous prices, but you could do it
and defy the law in process.
And through that period of time, this country became very, very much interested in alcohol,
which quite frankly before they had not been, until today on a per capita basis.
This country is one of the largest consumers of alcohol, and it happened during this period
of prohibition when, with the best of intentions in the world, people such as the Women's
Christian Temperance Union and so on were working to try to get people to turn away
from that particular beverage.
So you can see how the use of the law does not prevent, it merely prohibits, and when
you prohibit, you don't prevent, indeed if you prohibit in such a way that it becomes
profitable to raise the price, then the price goes up and it becomes very expeditious for
For hard-headed businessmen who are interested in only one thing, profit, to run the risks
of arrest, which actually are not too great, because you have to keep in mind that the
government cannot prevent a crime from occurring.
And think how terrible it would be if they could.
Suppose they could arrest you before you committed a crime.
What tyranny?
You can't have that.
When the government is engaged in operating, the government has to act after the fact.
And it has to be in a position where it can prove that the fact is a fact.
And it has to be able to take that to court and convict.
So this whole system that we have, where we depend upon the government for protection,
obviously doesn't work.
On the basis of the facts and figures, it doesn't work.
On the basis of the evidence gathered today and over the past 10 years, it doesn't work.
And yet, when I suggest to people that maybe the government is not the proper agency here,
they look at me in a state of sheer terror and they say, well, you would leave us unprotected.
No, you are unprotected now. What we need is protection. And the marketplace is the
place where it can be provided.
Let me turn again to Mr. Breen's article. He points out, whatever the local conditions
of Geography, Law and Police Work, one condition for a flourishing international crime overrides
all others, the opportunity for profit. Criminals will go to any lengths and take any risks when
this opportunity exists. Of course, they completely thumb their nose at the law. They will do
whatever they have to do and take any risk in an effort to obtain the customers that
that they want when they are trying to furnish an illegal product.
Note this, that when Breen is discussing this problem of international crime, he makes it
clear that we are dealing here with crimes that have no victims.
These are crimes where there is a product or a service and not a victim.
For example, according to the U.S. News and World Report financial figures, some $15 billion
was spent in 1969 by gamblers.
Now these gamblers were not herded up to the gambling tables at the point of a gun and
compelled to risk their money.
These are people who like to gamble.
I'm not recommending gambling.
I don't know that it's necessarily a wholesome or a worthwhile pursuit.
I'm only pointing out that people like to gamble.
And the syndicates and mafia understand this, and consequently, when gambling is banned,
and it is in this country, except in one state, and I think it is generally public knowledge,
that many of the gambling operations in Nevada are owned and operated by the syndicates.
And that's exactly the way they wanted.
You see, if it was opened up in every state, they couldn't manage it.
by having an exclusive area where they can operate legally without fear of arrest, then
you've got all kinds of illegal gambling going on in other parts of the country where
people are doing the same thing that they do in Nevada. Illegally in Nevada it's legal,
but here is the expenditure of $15 billion going to the syndicates. And again, there
There are no victims here. There is simply a service. I am not recommending it as a worthwhile
service, but there is a service that customers want. If you think that things of that sort
are the only kind of products that the international criminals deal with, let me again turn to
Mr. Breen.
Automobiles offer incredible opportunities for profits in some parts of the world. Smuggling
Buying cars out of Germany, for example, is a big business, and some 2,000 persons are
listed by police as smugglers.
Volkswagens, Opels and Mercedes bring 2 to 3 times as much in Greece and Turkey as they
do in Germany.
In the Middle East, the ratio is 3 to 4 times as much.
In South America, it is 6 to 8 times as much.
An automobile costing $2,400 in Germany could be sold, and this is in 1960, in Brazil for
$19,200.
Now that's an automobile.
And other things of this type are being used as products by criminals, and this is what
we call the illegal area.
But it is obviously not the same type of area where you have immoral crimes in the sense
not of taste or public acceptance, but in the sense that a person's will is violated
in respect to his own person and property.
So if you would like to cut down on crime, and I know of no way to create a perfect situation,
may I suggest that you turn to the market and not to government and hire your own protectors
and buy your own protective devices and use them there.
as it works out, is not efficient at anything. And the less we have of it, the better off
we're going to be. Thank you.