Well, I want to welcome you all to the Mises Institute's Supporters' Summit, which we can think of as the counter-inaugural.
For one thing, we're not using taxpayer dollars to throw ourselves a big party like the government does.
For another, we're not here to sing the praises of American socialism, as Clinton did in his despicable speech, but to destroy it.
This week illustrates once again the deep divide between the government and the rest of the country.
The man who calls himself the President announces in his inauguration speech that this country was founded on the principle of equality.
No doubt he would like to rule a homogeneous blob of perfectly equal subjects.
Meanwhile, the rest of the country still believes that America was founded on the principle of freedom.
Freedom. The man who says he's president claims we must, quote, choose to shape the
global society to form a more perfect union. That's a call for world government. Meanwhile,
the rest of the country cares primarily about individual families and communities and businesses
and doesn't give a fig for Clinton's global community. This man who says he's president
has even given us a new founding father, Martin Luther King Jr.
Actually, King and Clinton have a lot in common.
Immoral, unprincipled, proto-socialist demagogues on the run from the law.
The King holiday works a lot like the old Soviet holidays.
It wouldn't exist if it weren't enforced by law and official intimidation.
In this respect, King Day is much like the inauguration.
They're not national days, quite the opposite.
The New York Times Magazine ran its inaugural essay by the inimitable Gary Wills. In seeking to capture the moment, his thesis was appropriately as stupid and banal as anything a pundit has recently written.
He said that Bill Clinton believed strongly in government.
Now I know, try to contain your expressions of shock and astonishment of that.
Clinton himself announced that government is not the problem, government is not the solution.
The people, he said, are the solution.
But doesn't that beg the question?
He didn't say it openly, but Clinton meant that the people are also the problem.
It seemed like a line calculated to increase public hatred of government,
Even Clinton has noticed that his poll ratings are highest when he's on vacation, politicking, or otherwise not governing.
Clinton asked an interesting question in his speech.
Can we hope not just to follow, but even to surpass the achievements of the 20th century while avoiding the awful bloodshed that stained its legacy?
Every American, he said, quote, must answer a resounding yes.
By achievements, he doesn't mean home appliances, automobiles, computers, or any of the other achievements of capitalism.
He means the achievements of the central state, and of course then the answer is a resounding no.
What caused the bloodshed of this century?
Was it a mere accident of history, an incidental factor that accompanied the advent of the socialist state in Russia, Europe and the US?
Not at all, because socialism, international and national, democratic and dictatorial, was the cause of war and bloodshed.
Of a century in which a hundred million people were killed by government.
Save us from politicians who defend the root cause of the biggest loss of human life in history.
As much as he talks about the future, Clinton is merely a defender of the failed past.
A defender of the worst this century has to offer.
The theme of the presidential inauguration was, as usual, unity.
That is, unity among the political parties and the permanent bureaucracy
as they cooperate to steal ever more of our money and our freedom.
Unity is especially important this year when partisanship threatens to undermine the last
smidgen of confidence anyone has in the government.
Let's look back four years ago to the last presidential coronation.
No not to Maya Angelou's closing poem entitled Rock, Paper, Scissors or something like that.
Recall Clinton's first inaugural address.
One of the few memorable lines went like this.
In his Washington, he said, there would be no more concern about petty matters like who's up and who's down, who's in and who's out.
His administration would be set on the business of governing.
A phrase calculated to send the chills up the spine of any real American.
Now it turns out that who was up and who was down is practically all that Washington is concerned with.
Who has got more ethical troubles, the head of the executive branch or the head of the legislative branch?
Washington debates that question every day, believing that one political party benefits from the troubles of the other.
Meanwhile, the rest of the country answers the question with the plain retort that they're all corrupt.
From the standpoint of our goal of bringing about a freer society, I can't imagine a better political situation.
Public confidence in government has never been lower.
The leadership of both parties is under a constant cloud of suspicion, and rightly so.
Struggling to keep themselves out of court, barely hanging on to their jobs from one day to the next, they have precious little time to push new schemes of mandates and taxes, Washington's main weapons of social democratic tyranny.
Imagine 35 years ago, someone telling you that the Supreme Court would someday be hearing testimony over whether the sitting President of the United States can be tried for sexual abuse.
Imagine this person telling you that at the same time members of the House Ethics Committee
hearing testimony on the unethical behavior of the speaker would themselves be found guilty of ethical breaches.
At that very moment four in five people would admit to having a quote very low opinion of government.
Virtually nobody is willing to say that it is a depository of virtue or even basic decency.
Imagine 35 years ago hearing that the political class would someday be so terrified of the electorate
The Secret Service would be so edgy about presidential assassinations and ideologically driven ones at that, that it would have anyone arrested who so much as said an unkind word to the president.
This is our situation right now. But it would have been unthinkable in John F. Kennedy's day, when the public was brow-beaten into seeing government as a force for social and economic good.
That's not because it truly was, or because the Kennedy administration was in any sense less corrupt than the present crop of leaders.
But in those days, the respect and esteem people had for government were shaped by the Second World War,
when the government successfully unified the home front on the basis of fear of a foreign threat,
as well as the Cold War which kept public attention deflected outside our borders.
Times have changed and dramatically so.
As government has grown at the people's expense, the people themselves have grown more sophisticated
They have begun to see a different side of government, what Bastiat called the fiction
of the state. Its actual effects prove that the conventional rationales for government
power are mere excuses to cover up the institutionalization of greed, coercion and envy. The government
is now rightly seen as something separate and outside society itself, with its own interests
The law of American democracy, that the people are the government and that the system produces
what we want, no longer has the ring of plausibility.
The central government rules ultimately by the constant threat and use of force against
citizens, civic associations and lower orders of government.
We all remember outbursts of anti-government feeling in the past.
In particular, Reagan captured the White House through such a movement, and the end result was a vastly bigger leviathan.
So it was with the 104th Congress, which surprised all of us by doing absolutely nothing for the cause of American liberty,
and in many ways setting us back a step or two.
What we see time and time again in recent decades is what Stan Evans once called conservative votes and liberal victories.
More accurately, anti-government votes and government victories.
In these past failures, there is a deeper lesson for the present moment.
And it speaks directly to the theme of this conference, the bankruptcy of politics.
It is this. Our victory over statism is not going to come from the higher orders of politics.
It will not come from having the right president or even the right men in Congress,
unless, of course, it's the Congress of Ron Pauls,
or capturing a supermajority for a particular political party.
Conventional politics in this country is a bankrupt process that provides only the illusion, but not the reality, of a revolution against the status quo.
Instead, our victory will come from below, from the growing movement, both social and intellectual, that is resisting all forms of central state control,
and asserting autonomy over families, businesses, neighborhoods, churches, and lower-order political units.
In the political sphere, it will happen and is happening at the state and local level.
In the intellectual sphere, it is happening at programs like those the Mises Institute runs all year round,
where tomorrow's leaders are not babysat or indoctrinated with left-wing gobbledygook, but trained to really think.
This resistance extends across the political spectrum.
It ranges from people who were choosing educational alternatives like homeschooling
To the masses of students in classrooms across America who are fed up with political correctness and leftist indoctrination.
To the people who will no longer tolerate incessant violations of their property rights, land rights, gun rights, and instead demand the right to tend to their own affairs as they see fit.
To businessmen who find they cannot obey every jot and tittle of every regulation, tax, quota and tariff, and still stay in business, and have instead chosen profits over compliance.
To the burgeoning intellectual movement on behalf of the ideas of liberty, without which no form of political resistance stands a chance of success.
If conventional politics is bankrupt, this growing resistance movement is in a boom phase.
It is a vibrant and growing social force overtaking more and more sectors of society and its intellectual and moral authority far surpasses anything the government or its media backers have to offer.
This movement and the present trends fueling it offer strong reasons to believe that the revolt against tyranny is not only unstoppable but that it can succeed in our lifetimes.
To be sure, I do not believe that the necessity of our work for free markets and sound money and against government worship is somehow contingent on the immediacy of our victory.
In fact, the progress we are now making is due to the courage and stamina of men like Ludwig von Mises who continued the struggle in the darkest days of the century and who never lived to see anything like a popular revolt against government power.
Power. Mises and Rothbard were scorned throughout their careers, denied financial security and
social status because of their ideas, yet continued to fight at heavy personal cost.
We owe them everything for their courage and their honesty in the face of huge obstacles.
Neither do I think that our ideas are worth fighting for merely because they have only
recently gained some measure of popular acceptance. Throughout human history, popular opinion
has never been a guide to what is right and true, even if the public is generally more
sound on matters of policy than government officials.
The truth wins few popularity contests. It must be defended and advanced independent
of any social consensus or ideological fashion. It must be constantly explained and applied
if it is to overtake error and evil.
What is unique about the current movement is that the intellectual and political instincts
and the truths long established by the old classical liberals and by the Austrian School economists are converging more and more to some central norms accepted by most people including a new class of genuine intellectuals.
These norms are easy to state, let's name a few.
People in their own private affairs are better managers of their lives than distant bureaucrats.
What people work for they should be allowed to keep and use as they see fit.
State planning has failed.
The government lies. The political class is crooked. We should not be involved in foreign wars. Inflation is a public enemy. Tax dollars should not be gambled away on risky programs. Politically, favorite groups should not be rewarded at other people's expense.
We could list many such propositions, controversial 35 years ago, that are now commonly accepted.
When Murray Rothbard was in graduate school, it was extremely controversial to question
wage and price controls. When Henry Hazlip proclaimed that taxes harm economic productivity,
everybody was outraged that someone could utter such nonsense. Even as late as 1970, to say
there was a connection between the Federal Reserve and inflation was to be a heretic.
If you also suggested that the government couldn't control unemployment by speeding
None of this is true now. The proposition that the government can't manage the economy
is nearly conventional wisdom, even if bureaucratic structures and special interest payoffs still
allow Washington to keep trying. But it does so with no persuasive intellectual justification
and with much public opposition. To be sure, these assertions of today's common political
Social wisdom does not add up to a coherent political philosophy or a strategic program.
They don't explain why we need a gold standard or how we can get there. They don't tell us
the cause or the cure for business cycles or what to do about social security. For these
specifics we need technical understanding and deeper insight. But what these simple
maxims do is something more fundamental. They lay the groundwork for a truly revolutionary
movement capable of overthrowing a century of tyranny. Provided we are willing to follow
It is these anti-government instincts reinforced daily by the goings on in national politics that the establishment is so anxious to stamp out, starting with the idea that most of our leaders are personally corrupt.
The petty partisans in Washington who can't see beyond their beaks enjoy all these squabbles between political parties as much as the rest of the country enjoys the Super Bowl.
They believe that when one group loses, another group wins, and it is their job to make sure they're on the winning side when the clock runs out.
But does the public see it that way? Not at all. The public perception is that they're all losers in Washington.
The smart set in Washington understands this, and thus has a more sophisticated view of what's at stake.
Members of this group are, in fact, panicked about what they call the collapse of civility in Washington,
and the unbridled accusations of corruption each side is leveling at the other.
They understand how essential it is for the maintenance of democratic power that people perceive the government to be fundamentally honest and generally well intended.
They also understand how dangerous it is from the standpoint of the power elite when the public loses respect and trust in its leadership.
There is much more at stake here than opinion polls or even the next election.
Public perceptions of the honesty of government and the dignity of public officials is the very foundation on which the entire structure of the status project rests.
Without some trust and willingness to submit, there can be no such thing as a government, much less one that has grown so far beyond its constitutional bounds.
The more sophisticated types in Washington understand this and are anxious even at the cost of losing elections to ensure the long-term viability of the U.S. Central State.
We see evidence of this all around us with establishment pundits this very day demanding a truce on all accusations of corruption.
They want the Democrats to lay off the Republicans and vice versa. The Congress to lay off the White House and vice versa.
In their view, checks and balances are taken too far when they destroy Washington's precious unity of purpose.
Here's an example of what I mean. During the election, many people assume that Dole didn't attack Clinton's character because Dole was too timid or a bad campaigner.
In fact, Dole did not go after Clinton because he was doing what was necessary to ensure his place in history and his status within the establishment.
He knew as well as anyone that Clinton was the likely winner.
And he also knew that further weakening Clinton would also bring more public opposition to the presidency itself.
And make no mistake, the institution of the presidency, which is the very heart of the Leviathan, is the institution most beloved by the power elite.
Moreover, Dole's lifetime legacy is wrapped up with the moral status of the presidency,
which closely mirrors the moral status of the US Central State, of which Dole's own
Senate career is a key part. Thus, Dole knew that a deadly attack on Clinton was an attack
on Dole's own life's work, not to mention his post-election financial prospects. That's
why he shied away from the so-called character issue. Clinton then rewarded him with the
and Medal of Freedom, Dole reciprocated by recalling the times when, quote, public service becomes heroism, as when the Civil Rights Act of 1964 was passed or the Americans with Disabilities Act.
He may also have been remembering raising taxes almost every year of his career or those moving moments when as a young government official he proudly signed his grandmother's welfare checks.
Scenes like this always remind me of a Hollywood convention of crime families, with everyone deciding to bury the hatchet for the sake of their common profession.
As Michael Corleone told the Senator in Godfather II, they're all part of the same hypocrisy.
The presidential protection racket is also the key to understanding the new incessant calls for civility in public debates.
We've all heard the word a hundred times in recent months.
Of course, the term civility does not mean obeying basic moral precepts or even manners.
The term means don't disparage the government.
It's because the freshmen in the 104th Congress attacked the government that they were considered to represent the height of incivility.
And it's because Dole was so respectful of government power that he was considered to be such a civil campaigner.
For example, attacks on the Federal Reserve system are especially uncivil.
But when the Fed inflates away our savings or gambles the national wealth in Mexico, that's responsible public policy.
Questioning the manner of the death of Vince Foster or Ron Brown is uncivil.
But sending the FBI to investigate and intimidate every political dissident is civil because it's rooting out hate.
Denouncing the federal judiciary is uncivil and a misuse of the right to free speech.
But when judges override the will of the people, as expressed in state-level elections, that's mature jurisprudence.
The media line right now tells us that the past election represented the triumph of the new moderation, the new civility, the new vital center, blah blah.
This represents more than wishful thinking. It's a deliberate attempt to distort the truth.
I know the revelation the media would attempt such a thing would come as a shock to you.
The return of the vital center, like the new civility, is nothing more than an attempt to calm everyone down and socially to marginalize political and intellectual radicals like those of us in this room.
Above all, it is intended to suppress open expressions of what the media calls hatred of government or what I call a realistic assessment of our political leaders.
Vital Center rhetoric is an attempt to quash political dissent and fill us all with a sense that, thanks to democracy, we're getting exactly the kind of government we want.
If you're like me, however, you're fed up with the liberal's constant insinuation that anyone to their political right is a potential bomber.
Meanwhile, they decry anyone who suggests that Alan Greenspan may not have the best interests of the public at heart.
Hypocrisy is rampant on the political left.
These are the people who continue to make hay out of the arsons of some abandoned churches,
but thought that burning the church at Waco with all the parishioners inside was a great thing.
Why is it that the power elite are so anxious to protect their members from personal attack?
Is it because they're thin-skinned and hate negative mentions of themselves in public?
Certainly part of it, and at the Institute we're constantly amazed at how easy it is
is to wreck the year of a politician or a bureaucrat by merely mentioning his name in bad policies in our newspaper columns or publications.
Judging from the hysterical reaction, you'd think their entire world had come crashing down.
Yet the endemic prickliness of the political class is only part of the story, and a small part.
For the rest, let's turn to Thomas Hobbes, whose perspective on politics is always from the point of view and on behalf of those in power.
In his famed defense of the total state, Leviathan, he discusses the attributes of the man who
is able to gain and hold power.
Hobbes makes it clear that this man must have more than a big stick and the willingness
to use it.
He must be respected by the other elites.
He must have wealth.
He must have a network of friends at all levels of society.
He must be popular.
He must be successful.
He must be eloquent.
Above all else, he must have a reputation for nobility, prudence and trustworthiness.
He must represent the highest moral aspirations of the community.
If fidelity is valued, he must be faithful.
If intelligence is valued, he must be smart.
If liberality is valued, he must be generous.
If manners are valued, he must be dignified.
Why is this necessary?
Well, as Hobbes put it, these are all essential prerequisites for achieving the final goal,
which is public obedience.
All the wealth, friends and success in the world are not enough to compel people to behave
in ways the sovereign dictates.
For that he must have their respect.
Man must honor him.
Only then will they obey him.
Obedience is power and that power, in Hobbes' view, can be unlimited if properly based.
David Hume famously argued that all government rests on the power over minds.
That's because the government is always in the minority and the people always in the
Only if the majority is willing to obey can a state survive. When it stops obeying, the state fails.
We can see that a state feared by all can survive. A state hated by all can survive.
But a state laughed at by all cannot survive.
Ladies and gentlemen, the U.S. government is hated and feared, but more importantly, it is also ridiculous.
This is precisely why we so often see the establishment commentators fearing that a decline in the respect for the presidency as an office, and not only for the present occupier of that office.
The presidency has been losing its moral status and legitimacy at least since LBJ.
During the Kennedy years, public protests and civil disobedience were used by the civil rights movement as a means of enhancing federal power.
The establishment, of course, entirely approved because it meant making the government bigger and property rights less secure.
However, only a few years later, the same tactics and the same movement turned on the presidency itself
when the Democrats' war in Vietnam became a major source of public controversy.
It wasn't supposed to happen that way.
For the first time in American history, a substantial number of people were thumbing their nose at the president.
The liberals loved Watergate, but it too had unintended consequences of further diminishing the presidency. What was once considered a holy office was now seen as a hotbed of crookery. The target was Nixon himself, but it quickly became impossible to restrict this sentiment to a single person. Since at least World War I, the presidency has been the godhead of the executive state, an institution which
itself has been losing moral stature. This process was only accelerated by Carter, his lousy economic policies, and his aw-shucks average guy demeanor.
Ironically, it was Ronald Reagan who set us back. Just as his defenders say, he did restore faith in government and faith in the presidency.
What I don't understand is why this should be regarded as a good thing.
He is a man of double the size of the welfare state, double the size of the national debt, enacted seven tax increases, made social security untouchable, and vastly expanded the American Empire, just to name a few of his accomplishments, and did so in the name of reducing the size and scope of government.
He was Hobbes' ideal sovereign, a man whose presence and demeanor compelled assent.
I'd much rather have Ronald Reagan than Bill Clinton as a next door neighbor,
but I'd much rather have Clinton as the symbolic head of the federal monstrosity.
I can think of any man less likely to quote, bring America back,
a phrase which actually means bringing back the government.
Contrary to what Clinton says, it's perfectly American to loathe the government.
It's loving the government that is a strange and foreign attitude.
The media, of course, still obey the old rules, where the president is to be constantly fussed over, courted and worshipped.
That's why David Brinkley's on-camera slip was so astounding.
But Clinton magnanimously, quote, forgave Brinkley for calling him boring.
Quote, David, Clinton said, we all make mistakes.
And your slip of the tongue isn't representative of your long, distinguished career in journalism.
Well, it certainly isn't.
By the way, a poll that same week reported that three out of four people found the entire presidential election, quote, dull.
The less respect that is accorded to the president, the less he is able to do politically.
It's been reported that Bill Clinton is worried about his place in history.
He wonders if he should do something huge and important to leave his mark.
In the past, that's usually meant starting a war or spending huge sums of taxpayer money.
A president's mark is usually made with innocent blood or stolen treasure.
It's how he gets historians to rate him as truly great.
But Clinton has had it with foreign policy, so his advisors are considering a number of social problems he can solve here at home.
Among the choices are liberal favorites, education, race relations and child abuse.
For some reason, medical care is not considered among the options.
Trouble is that no one in the White House can think of anything the President could do that would both enhance presidential power and genuinely improve the country in ways that would bolster his popularity.
The result is that there are no vast new programs on the horizon. Of course, he continues to try to kill with tiny cuts from his pocket knife, but it tells us something important about the bankruptcy of politics, that he is afraid to pick up his sword.
Presidential ineffectiveness might prove to be a problem in the hypothetical world in which a president actually wanted to do some good for the country by slashing taxes or reducing spending.
But so long as that is not the case, we are better off with an ineffective and distrusted man in office who fears that proposing any new initiatives will drive down his poll numbers.
Moreover, it's about time we gave up seeking a president to bring about the kinds of changes that are necessary.
The process is structured to prevent that man from coming to power, and the whole of Washington is structured to thwart a sincere libertarian reformer from succeeding if he ever got there.
Well, what exact mechanism of change will bring down the existing structure of government power and privilege?
There's no way to know for sure, but let's look at the last election for some hints.
Some extraordinary things happened this past November, and their significance has not been fully appreciated by classical liberals.
Right off the bat, we must mention the victory of Dr. Ron Paul in Texas's 14th district.
Dr. Paul is Liberty's greatest living political champion, and as the Mises Institute's distinguished counselor,
has shown the path to merging a successful public career with intellectual and moral integrity.
His presence on Capitol Hill serves as a standing rebuke to the entire political class, and believe me, they know it.
More good news. Only a quarter of the electorate reported playing close attention to the presidential race. That's down by half from 1992.
Television ratings for the debates were at an all-time low. These ratings weren't helped by the open conspiracy to keep third parties out of the debates.
The establishment didn't want interlopers bringing up uncomfortable subjects. Viewers paid them back by not watching.
Remember how Jack Kemp was supposed to electrify the Republican ticket?
Three weeks before the election, 40% of the people couldn't even name Bob Dole's running mate.
Voter turnout was the lowest since 1924 and the thinnest since 1824.
Ninety million registered voters just didn't show up.
Voting is not the secular sacrament that it used to be, and that's all to the good.
Clinton's victory says nothing about the public's attitude towards the man. Consider this, he convinced one-third of the 46 million voters who told pollsters they wanted less government that he, not Dole, was the one to give it to them.
The Clinton crew may be celebrating, but the power elite in Washington know that they have no mandate.
They fear that their hold on power may be even more precarious than they thought.
Certainly the election gave them no vote of confidence.
On the particulars of the election, let's start with taxes.
In every state that attempted limitations on taxes, they passed.
These were not naive measures.
The authors attempted to anticipate every conceivable trick the political class could come up with.
Consider here in California where most good tax legislation originates.
A ballot initiative, Proposition 218, passed overwhelmingly, making it impossible for government to use assessment districts as a way of getting around the already existing limitations on property taxes.
Under the new law, all assessments must pass a voter test.
Provisor number one, you have to be a property owner to vote.
Provisor number two, if you own property in California, you don't have to live in the state to have a say in how your property is taxed.
Proviso No. 3, the more property you own, the more your vote counts.
That's my kind of democracy.
However, not the kind of democracy the establishment once replicated in other states, much less at the national level.
In state after state, new spending programs also failed.
I include school vouchers in the list of spending programs and consider their complete failure to be a wonderful victory for liberty.
Initiatives the environmentalists favored also bit the dust.
Pro-Union and Anti-Gun Initiatives went nowhere, the Anti-Affirmative Action Initiative was passed in California despite the attempt to label its backers as clan members.
Compare these heroic deeds with the nonsense the Republican leadership in Congress loves.
Last session it voted to give the President the line item veto, which effectively takes away from Congress an essential constitutional prerogative.
In practice, it means that the President can demand what he wants in the budget, or threaten
particular members of Congress with striking out items of importance to them. It allows
the President to dictate how others vote on important legislation. In short, it merely
adds another pig at the trough, and is far more likely to increase rather than decrease
spending. If that wasn't enough, the 104th Congress put the EEOC and the Department of
of Labor in charge of regulating the labor practices of congressional offices, thereby
giving the executive branch a powerful supervisory role. The result is a further centralized
government to take away from good congressmen some of their freedom to push legislation
opposed by the executive branch. In another stroke of genius, the leadership suggests
that the balanced budget amendment be the first physical priority this session. Here's
an amendment in which the meaning of virtually every word is in dispute even before it comes
What's the budget of the charming practice in Washington of having spending that's on budget and also off budget?
Off budget spending doesn't count in the budget.
What's a tax? Is it a fee? Is it a user fee? What's a deficit?
Again, the official deficit is very different from the amount that the national debt goes up by every year.
What exactly does balance mean? They allegedly passed a balanced budget last year for 2002,
Congress has spent decades reducing all these terms to mere rhetoric and drivel, and now expects to pass a law based on them.
And even if the final version, and by the way the balanced budget amendment always, all these amendments balance the budget estimates, not the actual budget.
So as we know they can come up with any sorts of estimates.
Even if the final version contains tax limitations, that is, makes it harder to raise taxes, this doesn't address the key issue.
In practice, such an amendment will prevent Congress from voting on significant tax reductions on grounds that doing so would unbalance the budget.
There are two things our official political culture is apparently incapable of doing on the fiscal front.
One is cutting spending across the board. No one is contemplating such a thing, except of course Dr. Paul.
The other is cutting taxes across the board. Even the best plans for reform from the Ways and Means Committee, Bill Archer and others, raise some taxes while cutting others, thereby missing the whole point of tax cuts.
I doubt we can depend on this Congress to do what's right. The real revolution is taking place in the States and among the American people.
In the last election, two states voted to nullify the destructive federal drug war and allow the medical use of marijuana.
And when the Feds announced that they would soon start jailing doctors who obeyed state law over federal law,
the popular outcry was truly deafening and may even be enough to keep the Justice Department at bay.
The drug czar called these initiatives, quote, hoaxes,
a line you'd expect to hear from a commissar in a constitutionally illegitimate office.
He is the hoax that ought to be overruled.
However, no amount of popular outcry seems to restrain the power of the Federal Judiciary.
What can we say about federal judges who override the overwhelming will of the majority in a state?
Apparently democratic verdicts must always be obeyed in Bosnia, but not in California.
The Federal Judiciary exists, in the truest sense, outside politics.
And it's time they were called to account for their power and rulings.
There is no mandate in the Constitution for a federal judiciary.
There is only a Supreme Court and such inferior courts as Congress may create.
And there are only necessary jurisdictions around disputes on federal matters as defined in the enumerated powers.
There is no authority for a federal judge to strike down any legislation,
What can be done? Term limits for federal judges is a great idea. But in the long run, there can be only one solution to this problem. The federal judiciary, as we know it, must be done away with. Until that time, it must be ignored by courageous statesmen who are willing to stand up to these agents of oppression and say, no, you will not dictate to us. Once again, we see that the real trouble spots in American law
Admit to No Conventional Political Solutions.
They will be solved only through unconventional means
that involve delegitimizing, both morally and intellectually,
the agents and institutions of Federal power.
This is beginning to happen in the judiciary,
just as it has happened to the Congress,
to the Presidency, to the regulatory agencies,
and with recent revelations about rapes of white female recruits
by black sergeants and black officers,
and even the foreign policy enforcement arm of the Central State.
What about the Federal Reserve, an agency as menacing as anything the Congress and the presidency have ever created?
It is a relentless thief, stealing from us in ways that are increasingly difficult to detect.
Every year, on average, the Fed loots from the purchasing power of our dollar an amount equal to the rate of national productivity.
If we are looking for a reason why the standard of living has not steadily increased since 1972,
despite incredible advances in technology and an explosion in the size of the workforce,
the Fed is the place to look.
So the elite have a solution.
They will redefine the consumer price index so as to make inflation disappear.
I won't go into the reasons why this would be a disaster.
A major project of the Institute for several months has been to show why the rationales for doing this
is a concoction by people loyal to power instead of truth.
These are people who claim that a car, twice as expensive as it used to be,
has actually gone down in price if it has such amenities as a better stereo, and I'm not making that up.
The Fed has been under fire for some time partly because of its incoherent and probably non-existent monetary policies,
but mainly because of its undemocratic and secret ways.
An extraordinary speech by Alan Blinder, who sat as vice chairman for the Fed from 1994 to 1996, buttresses this.
By way of background, Fed policy has probably never been more openly political than over the last few years.
Whether bailing out the stock market and the government of Mexico, holding down interest rates for Clinton,
or bullying the Japanese government on behalf of US exporters,
the Fed is the leading source of government intervention in the economy,
and one whose motives are discernible to anyone who bothers to look.
And what are those motives?
To serve the present administration and keep the fractional reserve banking industry and its affiliates profitable.
But not according to Blinder.
Quote, whom does the Fed serve, he asks?
Congress and the President?
Most certainly not.
Although the Fed is a creature of Congress and its governors are all presidential appointees,
the Fed does not exist to do their bidding.
That's right Alan, we all know that game. Never admit to doing the President's bidding, as former Fed Chairman Arthur Burns said, because that might undermine the claim that the Fed is independent.
Byrnes actually said in one of the greatest scenes ever in a press conference at the airport in Germany
when he arrived to become ambassador to Germany after serving his term as Fed Chairman
he was questioned by a reporter, how could you have gone along with Nixon
in this horrible inflation that's wrecked such havoc in America and indeed the whole western world
and Byrnes said, well you know the Fed has to do what the president wants otherwise it would lose its independence
When it comes time to defend the Fed against the charge that it's undemocratic,
Blinder changes his position.
Now he says, quote, the bank's basic goals are chosen by elected politicians,
not by unelected technocrats.
By the way, the term technocrat is the word ex-bureaucrats use to describe their buddies.
It's only seemingly disparaging while actually making them seem a lot smarter than they are.
Then Blinder considers a second group that may influence the Fed, the bankers.
And here he admits that the Fed is a bank for banks, the lender of last resort, which does the bidding of the industry.
Quoted, it is a very odd arrangement when you think about it, he admits, the Fed is regulating its own customers.
He draws no conclusions from this strange fact.
Finally, he considers another common answer to the question of whom the Fed serves.
Is it the financial markets?
Offhand, he points out that the Fed is, of course, quote, naturally and certainly, the ultimate guardian and protector of the entire financial system, unquote.
Now, we all know this is the case. What's strange is to hear the fact, announced openly and discussed as if it were a foregone conclusion, that the Fed is not only there to bail out the banks, but also the bond market, the stock market, and presumably every other institution in America that is considered to be part of the financial system, including insurance companies, investment banks, mutual funds, and so on.
banks, mutual funds, money market funds, pensions and even the social security system.
Considering all this, it's no wonder that people who study this stuff closely are so
alarmed by the prospect of a financial meltdown.
With so many liabilities and so little backing them up, we may someday witness the greatest
explosion of inflation in Western history, right under our noses.
But somehow this possibility wasn't raised by Mr. Blonder.
After all, he claims there's no connection between the Fed's promise to print money until
the end of time and the general level of prices.
He then follows with a hilariously stupid recounting of Keynesian theory, which he claims
there's no connection whatsoever between the general price level or the purchasing power
of the dollar and credit expansion.
When it comes time to consider the future of the Fed, however, Blinder makes some revealing
comments.
After all, his title is Central Banking and Democracy.
And it turns out that the democracy is not at all happy about this cadre of conspirators
and the Fed attempting to run the national and the world economy with no mandate whatsoever
from the people most affected.
The Fed, it turns out, is very unpopular with the public.
He complains that one columnist, and hope you're prepared for this, even called Blinder himself
intellectually and morally unfit for public life.
This said blinder defines irresponsible journalism.
Blinders quite worried about the trend of open ridicule of the Fed, and hopes to stave
off such irresponsible talk by opening it up, or at least seeming to.
If the Fed expects to survive the growing anti-government insurgency, he says, it better
loosen up and allow the people to believe it is something other than a gigantic machine
for personal privilege that it really is.
So I think we can look forward to further opening up at the Fed and this is all to the good.
The key to the Fed is its aura of mystery. Strip it away and someday the central bank
will be seen as merely another part of the Leviathan as vulnerable to being dragged before
the guillotine as the rest of the federal apparatus. It can't happen too soon. The
Fed is the very embodiment of the bankruptcy of politics and on our present course it could
would be the final bankruptor of the present political order.
A generation ago, economists did not mention the role of the Federal Reserve.
This was a taboo the Mises Institute set out to break and we've come a long way towards that goal.
A graduate student of ours recently went for an interview at a well-regarded small liberal arts college in Missouri.
Afterwards, some of the faculty took him to dinner to discover more about what he thought.
When economists lowered the boom,
what's your opinion of the Fed, he said.
Our student blanched and he considered hemming and hawing,
and then he said, no, I've got to say what I believe,
and he said, well, I think it should be abolished.
At this point, everyone at the table cheered
and said he would fit right in in this economics department.
This is a scene that would have been unimaginable 10 years ago.
The state of intellectual culture helps drive
have and closely parallels trends in social and political affairs, which is why we concentrate
so much in this area.
You could easily get depressed by looking at the papers being delivered at official
professional meetings, examining the course curricula at most colleges and universities,
or scanning the type of academic work being put out by major scholarly publishing houses.
Not only is it leftist and silly, the triumph of multiculturalism ensured that much of it
is surprisingly low level. But the views and interests of those who dominate the profession's
mask a much more important underlying reality. The students aren't buying it anymore. When
professors stand before students and celebrate affirmative action or socialism, they might
as well have a flashing sign on their forehead that reads, liar. Today's student population
is far too sophisticated to believe this nonsense. Many of the newest generation of academics
come from a free market perspective. They find to their delight that they are serving
as the prime intellectual mentors to the smartest students on campus. This is an exact replication
of the process that led to our present predicament, except this time we are on the winning side
and intellectual history is moving in our direction. In our academic programs we are
constantly impressed with the level of intense interest, the quality of the students now
pursuing deep studies in the Austrian School, and the enthusiasm with which they defy the
by the professors they do not trust and cling to those they do trust, many of whom are associated
with the Mises Institute.
We are always told that the radicalism of the Austrian School of Mises and Rothbard
and our faculty will drive away students, quite the contrary. We have the advantage over the
myriad of competitors for students' attention in part because it's Mises, Rothbard and
the Austrians their left-wing professors denounce the most. This, by the way, is precisely how
by our senior fellow Yuri Maltseff came to know of the Austrian School in the Soviet Union
and it's an instructive analogy.
Students are attracted to radical solutions to present problems
because they see the failure of the socialist age all around them.
The smartest ones want to work for a free society
and do so from a consistently libertarian framework
that decries the status errors and crimes of our century.
In the post-political age, the really important intellectual and social movements exist as powerful undercurrents to a thin layer of official political culture on top.
That layer gets thinner by the day, while the undercurrent is dealing with the truly important questions.
What kind of society and economy do we want for ourselves?
Will it be one managed and mismanaged from the top, with a sovereign state holding all power?
Or will it be a society managed by people in their private capacities, as members of families and communities, owners of capital and defenders of their rights and liberties against all forms of invasion?
After the century of statism and the vast cost it has imposed on civilization itself, these are really the only two options.
And the answer should be clear.
We cannot and will not allow the gross injustice, the immense immorality, the deadly destructiveness of the omnipotent state to continue.
Instead, we will bring it down, for we are prepared to overcome every obstacle that stands in our way.
It requires that we throw ourselves into this battle, not as full-time political activists or as functionaries in some party machine.
That route has been tried, and it has failed.
Instead, we must be active members of the social and intellectual movement on behalf of American liberty
and American Liberty that upholds, without compromise, the principles of private property, freedom of contract, freedom of association, the right of personal accumulation, and family self-management.
When a people holds an implacable belief in these institutions, the foundation of the natural order of liberty, no would-be sovereign and no central state stands a ghost of a chance of mis-governing them.
Perhaps we can say that the people, led by the ideas of liberty and guided by the intellectual vanguard currently being raised up by the Mises Institute with your help, really are the solution. Thank you.