WEBVTT NOTE The Bankruptcy of American Politics 1 00:00:00.000 --> 00:00:06.000 Well, I want to welcome you all to the Mises Institute's Supporters' Summit, which we can think of as the counter-inaugural. 2 00:00:10.000 --> 00:00:15.000 For one thing, we're not using taxpayer dollars to throw ourselves a big party like the government does. 3 00:00:16.000 --> 00:00:25.000 For another, we're not here to sing the praises of American socialism, as Clinton did in his despicable speech, but to destroy it. 4 00:00:25.000 --> 00:00:31.000 This week illustrates once again the deep divide between the government and the rest of the country. 5 00:00:31.000 --> 00:00:40.000 The man who calls himself the President announces in his inauguration speech that this country was founded on the principle of equality. 6 00:00:40.000 --> 00:00:46.000 No doubt he would like to rule a homogeneous blob of perfectly equal subjects. 7 00:00:46.000 --> 00:00:52.000 Meanwhile, the rest of the country still believes that America was founded on the principle of freedom. 8 00:00:52.000 --> 00:00:58.160 Freedom. The man who says he's president claims we must, quote, choose to shape the 9 00:00:58.160 --> 00:01:06.560 global society to form a more perfect union. That's a call for world government. Meanwhile, 10 00:01:06.560 --> 00:01:11.880 the rest of the country cares primarily about individual families and communities and businesses 11 00:01:11.880 --> 00:01:17.280 and doesn't give a fig for Clinton's global community. This man who says he's president 12 00:01:17.280 --> 00:01:21.280 has even given us a new founding father, Martin Luther King Jr. 13 00:01:21.280 --> 00:01:24.280 Actually, King and Clinton have a lot in common. 14 00:01:24.280 --> 00:01:29.280 Immoral, unprincipled, proto-socialist demagogues on the run from the law. 15 00:01:32.280 --> 00:01:35.280 The King holiday works a lot like the old Soviet holidays. 16 00:01:35.280 --> 00:01:39.280 It wouldn't exist if it weren't enforced by law and official intimidation. 17 00:01:40.280 --> 00:01:43.280 In this respect, King Day is much like the inauguration. 18 00:01:43.280 --> 00:01:45.280 They're not national days, quite the opposite. 19 00:01:45.280 --> 00:02:11.280 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. 20 00:02:11.280 --> 00:02:16.280 He said that Bill Clinton believed strongly in government. 21 00:02:16.280 --> 00:02:21.280 Now I know, try to contain your expressions of shock and astonishment of that. 22 00:02:21.280 --> 00:02:27.280 Clinton himself announced that government is not the problem, government is not the solution. 23 00:02:27.280 --> 00:02:30.280 The people, he said, are the solution. 24 00:02:30.280 --> 00:02:32.280 But doesn't that beg the question? 25 00:02:32.280 --> 00:02:36.280 He didn't say it openly, but Clinton meant that the people are also the problem. 26 00:02:36.280 --> 00:02:40.280 It seemed like a line calculated to increase public hatred of government, 27 00:02:40.280 --> 00:02:50.280 Even Clinton has noticed that his poll ratings are highest when he's on vacation, politicking, or otherwise not governing. 28 00:02:50.280 --> 00:02:54.280 Clinton asked an interesting question in his speech. 29 00:02:54.280 --> 00:03:04.280 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? 30 00:03:04.280 --> 00:03:09.280 Every American, he said, quote, must answer a resounding yes. 31 00:03:09.280 --> 00:03:16.280 By achievements, he doesn't mean home appliances, automobiles, computers, or any of the other achievements of capitalism. 32 00:03:16.280 --> 00:03:22.280 He means the achievements of the central state, and of course then the answer is a resounding no. 33 00:03:22.280 --> 00:03:25.280 What caused the bloodshed of this century? 34 00:03:25.280 --> 00:03:33.280 Was it a mere accident of history, an incidental factor that accompanied the advent of the socialist state in Russia, Europe and the US? 35 00:03:33.280 --> 00:03:41.280 Not at all, because socialism, international and national, democratic and dictatorial, was the cause of war and bloodshed. 36 00:03:41.280 --> 00:03:46.280 Of a century in which a hundred million people were killed by government. 37 00:03:46.280 --> 00:03:52.280 Save us from politicians who defend the root cause of the biggest loss of human life in history. 38 00:03:52.280 --> 00:03:57.280 As much as he talks about the future, Clinton is merely a defender of the failed past. 39 00:03:57.280 --> 00:04:00.280 A defender of the worst this century has to offer. 40 00:04:00.280 --> 00:04:05.280 The theme of the presidential inauguration was, as usual, unity. 41 00:04:05.280 --> 00:04:09.280 That is, unity among the political parties and the permanent bureaucracy 42 00:04:09.280 --> 00:04:13.280 as they cooperate to steal ever more of our money and our freedom. 43 00:04:13.280 --> 00:04:19.400 Unity is especially important this year when partisanship threatens to undermine the last 44 00:04:19.400 --> 00:04:22.600 smidgen of confidence anyone has in the government. 45 00:04:22.600 --> 00:04:28.440 Let's look back four years ago to the last presidential coronation. 46 00:04:28.440 --> 00:04:36.080 No not to Maya Angelou's closing poem entitled Rock, Paper, Scissors or something like that. 47 00:04:36.080 --> 00:04:39.200 Recall Clinton's first inaugural address. 48 00:04:39.200 --> 00:04:41.360 One of the few memorable lines went like this. 49 00:04:41.360 --> 00:04:49.360 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. 50 00:04:49.360 --> 00:04:54.360 His administration would be set on the business of governing. 51 00:04:54.360 --> 00:04:59.360 A phrase calculated to send the chills up the spine of any real American. 52 00:04:59.360 --> 00:05:04.360 Now it turns out that who was up and who was down is practically all that Washington is concerned with. 53 00:05:04.360 --> 00:05:09.360 Who has got more ethical troubles, the head of the executive branch or the head of the legislative branch? 54 00:05:09.360 --> 00:05:16.360 Washington debates that question every day, believing that one political party benefits from the troubles of the other. 55 00:05:16.360 --> 00:05:22.360 Meanwhile, the rest of the country answers the question with the plain retort that they're all corrupt. 56 00:05:22.360 --> 00:05:29.360 From the standpoint of our goal of bringing about a freer society, I can't imagine a better political situation. 57 00:05:29.360 --> 00:05:32.360 Public confidence in government has never been lower. 58 00:05:32.360 --> 00:05:37.360 The leadership of both parties is under a constant cloud of suspicion, and rightly so. 59 00:05:37.360 --> 00:05:51.360 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. 60 00:05:51.360 --> 00:06:02.360 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. 61 00:06:02.360 --> 00:06:06.360 Imagine this person telling you that at the same time members of the House Ethics Committee 62 00:06:06.360 --> 00:06:13.360 hearing testimony on the unethical behavior of the speaker would themselves be found guilty of ethical breaches. 63 00:06:13.360 --> 00:06:18.360 At that very moment four in five people would admit to having a quote very low opinion of government. 64 00:06:18.360 --> 00:06:25.360 Virtually nobody is willing to say that it is a depository of virtue or even basic decency. 65 00:06:25.360 --> 00:06:31.360 Imagine 35 years ago hearing that the political class would someday be so terrified of the electorate 66 00:06:31.360 --> 00:06:48.360 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. 67 00:06:48.360 --> 00:06:59.360 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. 68 00:06:59.360 --> 00:07:06.360 That's not because it truly was, or because the Kennedy administration was in any sense less corrupt than the present crop of leaders. 69 00:07:06.360 --> 00:07:11.360 But in those days, the respect and esteem people had for government were shaped by the Second World War, 70 00:07:11.360 --> 00:07:16.360 when the government successfully unified the home front on the basis of fear of a foreign threat, 71 00:07:16.360 --> 00:07:21.360 as well as the Cold War which kept public attention deflected outside our borders. 72 00:07:21.360 --> 00:07:24.360 Times have changed and dramatically so. 73 00:07:24.360 --> 00:07:28.360 As government has grown at the people's expense, the people themselves have grown more sophisticated 74 00:07:28.360 --> 00:07:38.080 They have begun to see a different side of government, what Bastiat called the fiction 75 00:07:38.080 --> 00:07:42.440 of the state. Its actual effects prove that the conventional rationales for government 76 00:07:42.440 --> 00:07:50.400 power are mere excuses to cover up the institutionalization of greed, coercion and envy. The government 77 00:07:50.400 --> 00:07:55.560 is now rightly seen as something separate and outside society itself, with its own interests 78 00:07:55.560 --> 00:08:05.780 The law of American democracy, that the people are the government and that the system produces 79 00:08:05.780 --> 00:08:09.840 what we want, no longer has the ring of plausibility. 80 00:08:09.840 --> 00:08:14.160 The central government rules ultimately by the constant threat and use of force against 81 00:08:14.160 --> 00:08:18.760 citizens, civic associations and lower orders of government. 82 00:08:18.760 --> 00:08:22.240 We all remember outbursts of anti-government feeling in the past. 83 00:08:22.240 --> 00:08:29.240 In particular, Reagan captured the White House through such a movement, and the end result was a vastly bigger leviathan. 84 00:08:29.240 --> 00:08:37.240 So it was with the 104th Congress, which surprised all of us by doing absolutely nothing for the cause of American liberty, 85 00:08:37.240 --> 00:08:40.240 and in many ways setting us back a step or two. 86 00:08:40.240 --> 00:08:47.240 What we see time and time again in recent decades is what Stan Evans once called conservative votes and liberal victories. 87 00:08:47.240 --> 00:08:51.240 More accurately, anti-government votes and government victories. 88 00:08:51.240 --> 00:08:56.240 In these past failures, there is a deeper lesson for the present moment. 89 00:08:56.240 --> 00:09:00.240 And it speaks directly to the theme of this conference, the bankruptcy of politics. 90 00:09:00.240 --> 00:09:06.240 It is this. Our victory over statism is not going to come from the higher orders of politics. 91 00:09:06.240 --> 00:09:10.240 It will not come from having the right president or even the right men in Congress, 92 00:09:10.240 --> 00:09:13.240 unless, of course, it's the Congress of Ron Pauls, 93 00:09:13.240 --> 00:09:17.240 or capturing a supermajority for a particular political party. 94 00:09:17.240 --> 00:09:26.240 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. 95 00:09:26.240 --> 00:09:36.240 Instead, our victory will come from below, from the growing movement, both social and intellectual, that is resisting all forms of central state control, 96 00:09:36.240 --> 00:09:42.240 and asserting autonomy over families, businesses, neighborhoods, churches, and lower-order political units. 97 00:09:42.240 --> 00:09:47.240 In the political sphere, it will happen and is happening at the state and local level. 98 00:09:47.240 --> 00:09:52.240 In the intellectual sphere, it is happening at programs like those the Mises Institute runs all year round, 99 00:09:52.240 --> 00:10:00.240 where tomorrow's leaders are not babysat or indoctrinated with left-wing gobbledygook, but trained to really think. 100 00:10:00.240 --> 00:10:04.240 This resistance extends across the political spectrum. 101 00:10:04.240 --> 00:10:08.240 It ranges from people who were choosing educational alternatives like homeschooling 102 00:10:08.240 --> 00:10:19.240 To the masses of students in classrooms across America who are fed up with political correctness and leftist indoctrination. 103 00:10:19.240 --> 00:10:30.240 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. 104 00:10:30.240 --> 00:10:43.240 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. 105 00:10:43.240 --> 00:10:52.240 To the burgeoning intellectual movement on behalf of the ideas of liberty, without which no form of political resistance stands a chance of success. 106 00:10:52.240 --> 00:10:58.240 If conventional politics is bankrupt, this growing resistance movement is in a boom phase. 107 00:10:58.240 --> 00:11:10.240 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. 108 00:11:10.240 --> 00:11:22.240 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. 109 00:11:22.240 --> 00:11:32.240 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. 110 00:11:32.240 --> 00:11:45.240 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. 111 00:11:45.240 --> 00:11:52.240 Power. Mises and Rothbard were scorned throughout their careers, denied financial security and 112 00:11:52.240 --> 00:11:58.600 social status because of their ideas, yet continued to fight at heavy personal cost. 113 00:11:58.600 --> 00:12:04.360 We owe them everything for their courage and their honesty in the face of huge obstacles. 114 00:12:04.360 --> 00:12:07.800 Neither do I think that our ideas are worth fighting for merely because they have only 115 00:12:07.800 --> 00:12:13.560 recently gained some measure of popular acceptance. Throughout human history, popular opinion 116 00:12:13.560 --> 00:12:17.620 has never been a guide to what is right and true, even if the public is generally more 117 00:12:17.620 --> 00:12:21.780 sound on matters of policy than government officials. 118 00:12:21.780 --> 00:12:26.400 The truth wins few popularity contests. It must be defended and advanced independent 119 00:12:26.400 --> 00:12:32.100 of any social consensus or ideological fashion. It must be constantly explained and applied 120 00:12:32.100 --> 00:12:35.660 if it is to overtake error and evil. 121 00:12:35.660 --> 00:12:39.520 What is unique about the current movement is that the intellectual and political instincts 122 00:12:39.520 --> 00:12:52.520 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. 123 00:12:52.520 --> 00:12:55.520 These norms are easy to state, let's name a few. 124 00:12:55.520 --> 00:13:00.520 People in their own private affairs are better managers of their lives than distant bureaucrats. 125 00:13:00.520 --> 00:13:05.520 What people work for they should be allowed to keep and use as they see fit. 126 00:13:05.520 --> 00:13:07.520 State planning has failed. 127 00:13:07.520 --> 00:13:25.520 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. 128 00:13:25.520 --> 00:13:31.520 We could list many such propositions, controversial 35 years ago, that are now commonly accepted. 129 00:13:31.520 --> 00:13:36.960 When Murray Rothbard was in graduate school, it was extremely controversial to question 130 00:13:36.960 --> 00:13:43.440 wage and price controls. When Henry Hazlip proclaimed that taxes harm economic productivity, 131 00:13:43.440 --> 00:13:49.040 everybody was outraged that someone could utter such nonsense. Even as late as 1970, to say 132 00:13:49.040 --> 00:13:54.520 there was a connection between the Federal Reserve and inflation was to be a heretic. 133 00:13:54.520 --> 00:13:58.160 If you also suggested that the government couldn't control unemployment by speeding 134 00:13:58.160 --> 00:14:07.520 None of this is true now. The proposition that the government can't manage the economy 135 00:14:07.520 --> 00:14:12.700 is nearly conventional wisdom, even if bureaucratic structures and special interest payoffs still 136 00:14:12.700 --> 00:14:19.320 allow Washington to keep trying. But it does so with no persuasive intellectual justification 137 00:14:19.320 --> 00:14:24.880 and with much public opposition. To be sure, these assertions of today's common political 138 00:14:24.880 --> 00:14:30.440 Social wisdom does not add up to a coherent political philosophy or a strategic program. 139 00:14:30.440 --> 00:14:34.280 They don't explain why we need a gold standard or how we can get there. They don't tell us 140 00:14:34.280 --> 00:14:39.160 the cause or the cure for business cycles or what to do about social security. For these 141 00:14:39.160 --> 00:14:43.960 specifics we need technical understanding and deeper insight. But what these simple 142 00:14:43.960 --> 00:14:49.540 maxims do is something more fundamental. They lay the groundwork for a truly revolutionary 143 00:14:49.540 --> 00:14:54.720 movement capable of overthrowing a century of tyranny. Provided we are willing to follow 144 00:14:54.720 --> 00:15:10.720 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. 145 00:15:10.720 --> 00:15:20.720 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. 146 00:15:20.720 --> 00:15:28.720 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. 147 00:15:28.720 --> 00:15:35.720 But does the public see it that way? Not at all. The public perception is that they're all losers in Washington. 148 00:15:35.720 --> 00:15:41.720 The smart set in Washington understands this, and thus has a more sophisticated view of what's at stake. 149 00:15:41.720 --> 00:15:46.720 Members of this group are, in fact, panicked about what they call the collapse of civility in Washington, 150 00:15:46.720 --> 00:15:51.720 and the unbridled accusations of corruption each side is leveling at the other. 151 00:15:51.720 --> 00:16:00.720 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. 152 00:16:00.720 --> 00:16:09.720 They also understand how dangerous it is from the standpoint of the power elite when the public loses respect and trust in its leadership. 153 00:16:09.720 --> 00:16:13.720 There is much more at stake here than opinion polls or even the next election. 154 00:16:13.720 --> 00:16:22.720 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. 155 00:16:22.720 --> 00:16:31.720 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. 156 00:16:31.720 --> 00:16:42.720 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. 157 00:16:42.720 --> 00:16:49.720 We see evidence of this all around us with establishment pundits this very day demanding a truce on all accusations of corruption. 158 00:16:49.720 --> 00:16:55.720 They want the Democrats to lay off the Republicans and vice versa. The Congress to lay off the White House and vice versa. 159 00:16:55.720 --> 00:17:02.720 In their view, checks and balances are taken too far when they destroy Washington's precious unity of purpose. 160 00:17:02.720 --> 00:17:11.720 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. 161 00:17:11.720 --> 00:17:21.720 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. 162 00:17:21.720 --> 00:17:24.720 He knew as well as anyone that Clinton was the likely winner. 163 00:17:24.720 --> 00:17:30.720 And he also knew that further weakening Clinton would also bring more public opposition to the presidency itself. 164 00:17:30.720 --> 00:17:38.720 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. 165 00:17:38.720 --> 00:17:44.720 Moreover, Dole's lifetime legacy is wrapped up with the moral status of the presidency, 166 00:17:44.720 --> 00:17:49.960 which closely mirrors the moral status of the US Central State, of which Dole's own 167 00:17:49.960 --> 00:17:55.440 Senate career is a key part. Thus, Dole knew that a deadly attack on Clinton was an attack 168 00:17:55.440 --> 00:18:00.960 on Dole's own life's work, not to mention his post-election financial prospects. That's 169 00:18:00.960 --> 00:18:05.440 why he shied away from the so-called character issue. Clinton then rewarded him with the 170 00:18:05.440 --> 00:18:19.440 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. 171 00:18:19.440 --> 00:18:30.440 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. 172 00:18:30.440 --> 00:18:39.440 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. 173 00:18:39.440 --> 00:18:46.440 As Michael Corleone told the Senator in Godfather II, they're all part of the same hypocrisy. 174 00:18:46.440 --> 00:18:52.440 The presidential protection racket is also the key to understanding the new incessant calls for civility in public debates. 175 00:18:52.440 --> 00:18:55.440 We've all heard the word a hundred times in recent months. 176 00:18:55.440 --> 00:19:01.440 Of course, the term civility does not mean obeying basic moral precepts or even manners. 177 00:19:01.440 --> 00:19:04.440 The term means don't disparage the government. 178 00:19:04.440 --> 00:19:11.440 It's because the freshmen in the 104th Congress attacked the government that they were considered to represent the height of incivility. 179 00:19:11.440 --> 00:19:17.440 And it's because Dole was so respectful of government power that he was considered to be such a civil campaigner. 180 00:19:17.440 --> 00:19:22.440 For example, attacks on the Federal Reserve system are especially uncivil. 181 00:19:22.440 --> 00:19:30.440 But when the Fed inflates away our savings or gambles the national wealth in Mexico, that's responsible public policy. 182 00:19:30.440 --> 00:19:35.440 Questioning the manner of the death of Vince Foster or Ron Brown is uncivil. 183 00:19:35.440 --> 00:19:42.440 But sending the FBI to investigate and intimidate every political dissident is civil because it's rooting out hate. 184 00:19:42.440 --> 00:19:48.440 Denouncing the federal judiciary is uncivil and a misuse of the right to free speech. 185 00:19:48.440 --> 00:19:55.440 But when judges override the will of the people, as expressed in state-level elections, that's mature jurisprudence. 186 00:19:55.440 --> 00:20:03.440 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. 187 00:20:03.440 --> 00:20:09.440 This represents more than wishful thinking. It's a deliberate attempt to distort the truth. 188 00:20:09.440 --> 00:20:14.440 I know the revelation the media would attempt such a thing would come as a shock to you. 189 00:20:14.440 --> 00:20:26.440 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. 190 00:20:26.440 --> 00:20:36.440 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. 191 00:20:36.440 --> 00:20:45.440 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. 192 00:20:45.440 --> 00:20:53.440 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. 193 00:20:53.440 --> 00:20:59.440 Meanwhile, they decry anyone who suggests that Alan Greenspan may not have the best interests of the public at heart. 194 00:20:59.440 --> 00:21:02.140 Hypocrisy is rampant on the political left. 195 00:21:02.140 --> 00:21:06.740 These are the people who continue to make hay out of the arsons of some abandoned churches, 196 00:21:06.740 --> 00:21:13.140 but thought that burning the church at Waco with all the parishioners inside was a great thing. 197 00:21:13.140 --> 00:21:19.640 Why is it that the power elite are so anxious to protect their members from personal attack? 198 00:21:19.640 --> 00:21:24.140 Is it because they're thin-skinned and hate negative mentions of themselves in public? 199 00:21:24.140 --> 00:21:28.140 Certainly part of it, and at the Institute we're constantly amazed at how easy it is 200 00:21:28.140 --> 00:21:36.140 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. 201 00:21:36.140 --> 00:21:41.140 Judging from the hysterical reaction, you'd think their entire world had come crashing down. 202 00:21:41.140 --> 00:21:48.140 Yet the endemic prickliness of the political class is only part of the story, and a small part. 203 00:21:48.140 --> 00:21:56.140 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. 204 00:21:56.140 --> 00:22:01.820 In his famed defense of the total state, Leviathan, he discusses the attributes of the man who 205 00:22:01.820 --> 00:22:05.220 is able to gain and hold power. 206 00:22:05.220 --> 00:22:09.540 Hobbes makes it clear that this man must have more than a big stick and the willingness 207 00:22:09.540 --> 00:22:11.140 to use it. 208 00:22:11.140 --> 00:22:13.700 He must be respected by the other elites. 209 00:22:13.700 --> 00:22:14.960 He must have wealth. 210 00:22:14.960 --> 00:22:17.800 He must have a network of friends at all levels of society. 211 00:22:17.800 --> 00:22:19.220 He must be popular. 212 00:22:19.220 --> 00:22:20.660 He must be successful. 213 00:22:20.660 --> 00:22:22.300 He must be eloquent. 214 00:22:22.300 --> 00:22:27.500 Above all else, he must have a reputation for nobility, prudence and trustworthiness. 215 00:22:27.500 --> 00:22:31.400 He must represent the highest moral aspirations of the community. 216 00:22:31.400 --> 00:22:34.860 If fidelity is valued, he must be faithful. 217 00:22:34.860 --> 00:22:37.740 If intelligence is valued, he must be smart. 218 00:22:37.740 --> 00:22:40.780 If liberality is valued, he must be generous. 219 00:22:40.780 --> 00:22:44.060 If manners are valued, he must be dignified. 220 00:22:44.060 --> 00:22:45.060 Why is this necessary? 221 00:22:45.060 --> 00:22:50.120 Well, as Hobbes put it, these are all essential prerequisites for achieving the final goal, 222 00:22:50.120 --> 00:22:52.560 which is public obedience. 223 00:22:52.560 --> 00:22:56.420 All the wealth, friends and success in the world are not enough to compel people to behave 224 00:22:56.420 --> 00:22:59.160 in ways the sovereign dictates. 225 00:22:59.160 --> 00:23:01.240 For that he must have their respect. 226 00:23:01.240 --> 00:23:02.880 Man must honor him. 227 00:23:02.880 --> 00:23:04.920 Only then will they obey him. 228 00:23:04.920 --> 00:23:10.200 Obedience is power and that power, in Hobbes' view, can be unlimited if properly based. 229 00:23:10.200 --> 00:23:15.760 David Hume famously argued that all government rests on the power over minds. 230 00:23:15.760 --> 00:23:18.960 That's because the government is always in the minority and the people always in the 231 00:23:18.960 --> 00:23:25.960 Only if the majority is willing to obey can a state survive. When it stops obeying, the state fails. 232 00:23:25.960 --> 00:23:31.960 We can see that a state feared by all can survive. A state hated by all can survive. 233 00:23:31.960 --> 00:23:35.960 But a state laughed at by all cannot survive. 234 00:23:35.960 --> 00:23:42.960 Ladies and gentlemen, the U.S. government is hated and feared, but more importantly, it is also ridiculous. 235 00:23:42.960 --> 00:23:52.960 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. 236 00:23:52.960 --> 00:23:58.960 The presidency has been losing its moral status and legitimacy at least since LBJ. 237 00:23:58.960 --> 00:24:05.960 During the Kennedy years, public protests and civil disobedience were used by the civil rights movement as a means of enhancing federal power. 238 00:24:05.960 --> 00:24:14.960 The establishment, of course, entirely approved because it meant making the government bigger and property rights less secure. 239 00:24:14.960 --> 00:24:21.960 However, only a few years later, the same tactics and the same movement turned on the presidency itself 240 00:24:21.960 --> 00:24:26.960 when the Democrats' war in Vietnam became a major source of public controversy. 241 00:24:26.960 --> 00:24:28.960 It wasn't supposed to happen that way. 242 00:24:28.960 --> 00:24:34.960 For the first time in American history, a substantial number of people were thumbing their nose at the president. 243 00:24:34.960 --> 00:25:04.960 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 244 00:25:04.960 --> 00:25:13.960 itself has been losing moral stature. This process was only accelerated by Carter, his lousy economic policies, and his aw-shucks average guy demeanor. 245 00:25:13.960 --> 00:25:24.960 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. 246 00:25:24.960 --> 00:25:28.960 What I don't understand is why this should be regarded as a good thing. 247 00:25:28.960 --> 00:25:46.960 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. 248 00:25:46.960 --> 00:25:52.960 He was Hobbes' ideal sovereign, a man whose presence and demeanor compelled assent. 249 00:25:52.960 --> 00:25:56.460 I'd much rather have Ronald Reagan than Bill Clinton as a next door neighbor, 250 00:25:56.460 --> 00:26:00.960 but I'd much rather have Clinton as the symbolic head of the federal monstrosity. 251 00:26:00.960 --> 00:26:05.960 I can think of any man less likely to quote, bring America back, 252 00:26:05.960 --> 00:26:09.960 a phrase which actually means bringing back the government. 253 00:26:09.960 --> 00:26:14.960 Contrary to what Clinton says, it's perfectly American to loathe the government. 254 00:26:14.960 --> 00:26:18.960 It's loving the government that is a strange and foreign attitude. 255 00:26:18.960 --> 00:26:25.960 The media, of course, still obey the old rules, where the president is to be constantly fussed over, courted and worshipped. 256 00:26:25.960 --> 00:26:29.960 That's why David Brinkley's on-camera slip was so astounding. 257 00:26:29.960 --> 00:26:34.960 But Clinton magnanimously, quote, forgave Brinkley for calling him boring. 258 00:26:34.960 --> 00:26:38.960 Quote, David, Clinton said, we all make mistakes. 259 00:26:38.960 --> 00:26:43.960 And your slip of the tongue isn't representative of your long, distinguished career in journalism. 260 00:26:43.960 --> 00:26:45.960 Well, it certainly isn't. 261 00:26:45.960 --> 00:26:52.960 By the way, a poll that same week reported that three out of four people found the entire presidential election, quote, dull. 262 00:26:52.960 --> 00:26:58.960 The less respect that is accorded to the president, the less he is able to do politically. 263 00:26:58.960 --> 00:27:02.960 It's been reported that Bill Clinton is worried about his place in history. 264 00:27:02.960 --> 00:27:07.960 He wonders if he should do something huge and important to leave his mark. 265 00:27:07.960 --> 00:27:12.960 In the past, that's usually meant starting a war or spending huge sums of taxpayer money. 266 00:27:12.960 --> 00:27:17.960 A president's mark is usually made with innocent blood or stolen treasure. 267 00:27:17.960 --> 00:27:21.960 It's how he gets historians to rate him as truly great. 268 00:27:21.960 --> 00:27:28.960 But Clinton has had it with foreign policy, so his advisors are considering a number of social problems he can solve here at home. 269 00:27:28.960 --> 00:27:34.960 Among the choices are liberal favorites, education, race relations and child abuse. 270 00:27:34.960 --> 00:27:38.960 For some reason, medical care is not considered among the options. 271 00:27:38.960 --> 00:27:49.960 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. 272 00:27:49.960 --> 00:28:02.960 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. 273 00:28:02.960 --> 00:28:12.960 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. 274 00:28:12.960 --> 00:28:22.960 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. 275 00:28:22.960 --> 00:28:28.960 Moreover, it's about time we gave up seeking a president to bring about the kinds of changes that are necessary. 276 00:28:28.960 --> 00:28:39.960 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. 277 00:28:39.960 --> 00:28:45.960 Well, what exact mechanism of change will bring down the existing structure of government power and privilege? 278 00:28:45.960 --> 00:28:50.960 There's no way to know for sure, but let's look at the last election for some hints. 279 00:28:50.960 --> 00:28:57.960 Some extraordinary things happened this past November, and their significance has not been fully appreciated by classical liberals. 280 00:28:57.960 --> 00:29:03.960 Right off the bat, we must mention the victory of Dr. Ron Paul in Texas's 14th district. 281 00:29:03.960 --> 00:29:08.960 Dr. Paul is Liberty's greatest living political champion, and as the Mises Institute's distinguished counselor, 282 00:29:08.960 --> 00:29:14.960 has shown the path to merging a successful public career with intellectual and moral integrity. 283 00:29:14.960 --> 00:29:22.960 His presence on Capitol Hill serves as a standing rebuke to the entire political class, and believe me, they know it. 284 00:29:22.960 --> 00:29:31.960 More good news. Only a quarter of the electorate reported playing close attention to the presidential race. That's down by half from 1992. 285 00:29:31.960 --> 00:29:39.960 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. 286 00:29:39.960 --> 00:29:47.960 The establishment didn't want interlopers bringing up uncomfortable subjects. Viewers paid them back by not watching. 287 00:29:47.960 --> 00:29:52.960 Remember how Jack Kemp was supposed to electrify the Republican ticket? 288 00:29:52.960 --> 00:29:58.960 Three weeks before the election, 40% of the people couldn't even name Bob Dole's running mate. 289 00:29:58.960 --> 00:30:04.960 Voter turnout was the lowest since 1924 and the thinnest since 1824. 290 00:30:04.960 --> 00:30:09.960 Ninety million registered voters just didn't show up. 291 00:30:09.960 --> 00:30:14.960 Voting is not the secular sacrament that it used to be, and that's all to the good. 292 00:30:14.960 --> 00:30:36.960 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. 293 00:30:36.960 --> 00:30:42.960 The Clinton crew may be celebrating, but the power elite in Washington know that they have no mandate. 294 00:30:42.960 --> 00:30:47.960 They fear that their hold on power may be even more precarious than they thought. 295 00:30:47.960 --> 00:30:51.960 Certainly the election gave them no vote of confidence. 296 00:30:51.960 --> 00:30:54.960 On the particulars of the election, let's start with taxes. 297 00:30:54.960 --> 00:30:58.960 In every state that attempted limitations on taxes, they passed. 298 00:30:58.960 --> 00:31:00.960 These were not naive measures. 299 00:31:00.960 --> 00:31:05.960 The authors attempted to anticipate every conceivable trick the political class could come up with. 300 00:31:05.960 --> 00:31:10.960 Consider here in California where most good tax legislation originates. 301 00:31:10.960 --> 00:31:22.960 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. 302 00:31:22.960 --> 00:31:26.960 Under the new law, all assessments must pass a voter test. 303 00:31:26.960 --> 00:31:30.960 Provisor number one, you have to be a property owner to vote. 304 00:31:30.960 --> 00:31:37.960 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. 305 00:31:37.960 --> 00:31:42.960 Proviso No. 3, the more property you own, the more your vote counts. 306 00:31:42.960 --> 00:31:44.960 That's my kind of democracy. 307 00:31:44.960 --> 00:31:51.960 However, not the kind of democracy the establishment once replicated in other states, much less at the national level. 308 00:31:51.960 --> 00:31:54.960 In state after state, new spending programs also failed. 309 00:31:54.960 --> 00:32:02.960 I include school vouchers in the list of spending programs and consider their complete failure to be a wonderful victory for liberty. 310 00:32:02.960 --> 00:32:05.960 Initiatives the environmentalists favored also bit the dust. 311 00:32:05.960 --> 00:32:15.960 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. 312 00:32:15.960 --> 00:32:21.960 Compare these heroic deeds with the nonsense the Republican leadership in Congress loves. 313 00:32:21.960 --> 00:32:29.960 Last session it voted to give the President the line item veto, which effectively takes away from Congress an essential constitutional prerogative. 314 00:32:29.960 --> 00:32:36.920 In practice, it means that the President can demand what he wants in the budget, or threaten 315 00:32:36.920 --> 00:32:41.640 particular members of Congress with striking out items of importance to them. It allows 316 00:32:41.640 --> 00:32:45.900 the President to dictate how others vote on important legislation. In short, it merely 317 00:32:45.900 --> 00:32:51.080 adds another pig at the trough, and is far more likely to increase rather than decrease 318 00:32:51.080 --> 00:32:55.900 spending. If that wasn't enough, the 104th Congress put the EEOC and the Department of 319 00:32:55.900 --> 00:33:00.660 of Labor in charge of regulating the labor practices of congressional offices, thereby 320 00:33:00.660 --> 00:33:06.420 giving the executive branch a powerful supervisory role. The result is a further centralized 321 00:33:06.420 --> 00:33:10.620 government to take away from good congressmen some of their freedom to push legislation 322 00:33:10.620 --> 00:33:16.000 opposed by the executive branch. In another stroke of genius, the leadership suggests 323 00:33:16.000 --> 00:33:21.220 that the balanced budget amendment be the first physical priority this session. Here's 324 00:33:21.220 --> 00:33:25.360 an amendment in which the meaning of virtually every word is in dispute even before it comes 325 00:33:25.360 --> 00:33:32.360 What's the budget of the charming practice in Washington of having spending that's on budget and also off budget? 326 00:33:32.360 --> 00:33:35.360 Off budget spending doesn't count in the budget. 327 00:33:35.360 --> 00:33:41.360 What's a tax? Is it a fee? Is it a user fee? What's a deficit? 328 00:33:41.360 --> 00:33:46.360 Again, the official deficit is very different from the amount that the national debt goes up by every year. 329 00:33:46.360 --> 00:33:51.360 What exactly does balance mean? They allegedly passed a balanced budget last year for 2002, 330 00:33:51.360 --> 00:34:03.360 Congress has spent decades reducing all these terms to mere rhetoric and drivel, and now expects to pass a law based on them. 331 00:34:03.360 --> 00:34:14.360 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. 332 00:34:14.360 --> 00:34:18.360 So as we know they can come up with any sorts of estimates. 333 00:34:18.360 --> 00:34:26.360 Even if the final version contains tax limitations, that is, makes it harder to raise taxes, this doesn't address the key issue. 334 00:34:26.360 --> 00:34:34.360 In practice, such an amendment will prevent Congress from voting on significant tax reductions on grounds that doing so would unbalance the budget. 335 00:34:34.360 --> 00:34:40.360 There are two things our official political culture is apparently incapable of doing on the fiscal front. 336 00:34:40.360 --> 00:34:46.360 One is cutting spending across the board. No one is contemplating such a thing, except of course Dr. Paul. 337 00:34:46.360 --> 00:35:01.360 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. 338 00:35:01.360 --> 00:35:09.360 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. 339 00:35:09.360 --> 00:35:16.360 In the last election, two states voted to nullify the destructive federal drug war and allow the medical use of marijuana. 340 00:35:16.360 --> 00:35:22.360 And when the Feds announced that they would soon start jailing doctors who obeyed state law over federal law, 341 00:35:22.360 --> 00:35:28.360 the popular outcry was truly deafening and may even be enough to keep the Justice Department at bay. 342 00:35:28.360 --> 00:35:32.360 The drug czar called these initiatives, quote, hoaxes, 343 00:35:32.360 --> 00:35:37.360 a line you'd expect to hear from a commissar in a constitutionally illegitimate office. 344 00:35:37.360 --> 00:35:40.360 He is the hoax that ought to be overruled. 345 00:35:40.360 --> 00:35:46.360 However, no amount of popular outcry seems to restrain the power of the Federal Judiciary. 346 00:35:46.360 --> 00:35:52.360 What can we say about federal judges who override the overwhelming will of the majority in a state? 347 00:35:52.360 --> 00:35:58.360 Apparently democratic verdicts must always be obeyed in Bosnia, but not in California. 348 00:35:58.360 --> 00:36:04.360 The Federal Judiciary exists, in the truest sense, outside politics. 349 00:36:04.360 --> 00:36:10.360 And it's time they were called to account for their power and rulings. 350 00:36:10.360 --> 00:36:14.360 There is no mandate in the Constitution for a federal judiciary. 351 00:36:14.360 --> 00:36:19.360 There is only a Supreme Court and such inferior courts as Congress may create. 352 00:36:19.360 --> 00:36:26.360 And there are only necessary jurisdictions around disputes on federal matters as defined in the enumerated powers. 353 00:36:26.360 --> 00:36:30.360 There is no authority for a federal judge to strike down any legislation, 354 00:36:30.360 --> 00:37:00.360 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 355 00:37:00.360 --> 00:37:03.360 Admit to No Conventional Political Solutions. 356 00:37:03.360 --> 00:37:06.360 They will be solved only through unconventional means 357 00:37:06.360 --> 00:37:10.360 that involve delegitimizing, both morally and intellectually, 358 00:37:10.360 --> 00:37:13.360 the agents and institutions of Federal power. 359 00:37:13.360 --> 00:37:15.360 This is beginning to happen in the judiciary, 360 00:37:15.360 --> 00:37:17.360 just as it has happened to the Congress, 361 00:37:17.360 --> 00:37:20.360 to the Presidency, to the regulatory agencies, 362 00:37:20.360 --> 00:37:23.360 and with recent revelations about rapes of white female recruits 363 00:37:23.360 --> 00:37:26.360 by black sergeants and black officers, 364 00:37:26.360 --> 00:37:30.360 and even the foreign policy enforcement arm of the Central State. 365 00:37:30.360 --> 00:37:37.360 What about the Federal Reserve, an agency as menacing as anything the Congress and the presidency have ever created? 366 00:37:37.360 --> 00:37:44.360 It is a relentless thief, stealing from us in ways that are increasingly difficult to detect. 367 00:37:44.360 --> 00:37:53.360 Every year, on average, the Fed loots from the purchasing power of our dollar an amount equal to the rate of national productivity. 368 00:37:53.360 --> 00:37:59.760 If we are looking for a reason why the standard of living has not steadily increased since 1972, 369 00:37:59.760 --> 00:38:04.660 despite incredible advances in technology and an explosion in the size of the workforce, 370 00:38:04.660 --> 00:38:08.060 the Fed is the place to look. 371 00:38:08.060 --> 00:38:09.960 So the elite have a solution. 372 00:38:09.960 --> 00:38:15.660 They will redefine the consumer price index so as to make inflation disappear. 373 00:38:15.660 --> 00:38:18.460 I won't go into the reasons why this would be a disaster. 374 00:38:18.460 --> 00:38:23.260 A major project of the Institute for several months has been to show why the rationales for doing this 375 00:38:23.260 --> 00:38:27.260 is a concoction by people loyal to power instead of truth. 376 00:38:27.260 --> 00:38:32.260 These are people who claim that a car, twice as expensive as it used to be, 377 00:38:32.260 --> 00:38:38.260 has actually gone down in price if it has such amenities as a better stereo, and I'm not making that up. 378 00:38:38.260 --> 00:38:47.260 The Fed has been under fire for some time partly because of its incoherent and probably non-existent monetary policies, 379 00:38:47.260 --> 00:38:51.260 but mainly because of its undemocratic and secret ways. 380 00:38:51.260 --> 00:38:59.260 An extraordinary speech by Alan Blinder, who sat as vice chairman for the Fed from 1994 to 1996, buttresses this. 381 00:38:59.260 --> 00:39:05.260 By way of background, Fed policy has probably never been more openly political than over the last few years. 382 00:39:05.260 --> 00:39:11.260 Whether bailing out the stock market and the government of Mexico, holding down interest rates for Clinton, 383 00:39:11.260 --> 00:39:15.260 or bullying the Japanese government on behalf of US exporters, 384 00:39:15.260 --> 00:39:19.260 the Fed is the leading source of government intervention in the economy, 385 00:39:19.260 --> 00:39:23.260 and one whose motives are discernible to anyone who bothers to look. 386 00:39:23.260 --> 00:39:25.260 And what are those motives? 387 00:39:25.260 --> 00:39:32.260 To serve the present administration and keep the fractional reserve banking industry and its affiliates profitable. 388 00:39:32.260 --> 00:39:34.260 But not according to Blinder. 389 00:39:34.260 --> 00:39:37.260 Quote, whom does the Fed serve, he asks? 390 00:39:37.260 --> 00:39:39.260 Congress and the President? 391 00:39:39.260 --> 00:39:41.260 Most certainly not. 392 00:39:41.260 --> 00:39:45.260 Although the Fed is a creature of Congress and its governors are all presidential appointees, 393 00:39:45.260 --> 00:39:47.260 the Fed does not exist to do their bidding. 394 00:39:47.260 --> 00:40:02.260 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. 395 00:40:02.260 --> 00:40:09.260 Byrnes actually said in one of the greatest scenes ever in a press conference at the airport in Germany 396 00:40:09.260 --> 00:40:13.260 when he arrived to become ambassador to Germany after serving his term as Fed Chairman 397 00:40:13.260 --> 00:40:18.260 he was questioned by a reporter, how could you have gone along with Nixon 398 00:40:18.260 --> 00:40:23.260 in this horrible inflation that's wrecked such havoc in America and indeed the whole western world 399 00:40:23.260 --> 00:40:28.260 and Byrnes said, well you know the Fed has to do what the president wants otherwise it would lose its independence 400 00:40:32.260 --> 00:40:38.260 When it comes time to defend the Fed against the charge that it's undemocratic, 401 00:40:38.260 --> 00:40:40.260 Blinder changes his position. 402 00:40:40.260 --> 00:40:44.260 Now he says, quote, the bank's basic goals are chosen by elected politicians, 403 00:40:44.260 --> 00:40:46.260 not by unelected technocrats. 404 00:40:46.260 --> 00:40:52.260 By the way, the term technocrat is the word ex-bureaucrats use to describe their buddies. 405 00:40:52.260 --> 00:40:56.260 It's only seemingly disparaging while actually making them seem a lot smarter than they are. 406 00:40:56.260 --> 00:41:01.260 Then Blinder considers a second group that may influence the Fed, the bankers. 407 00:41:01.260 --> 00:41:07.260 And here he admits that the Fed is a bank for banks, the lender of last resort, which does the bidding of the industry. 408 00:41:07.260 --> 00:41:13.260 Quoted, it is a very odd arrangement when you think about it, he admits, the Fed is regulating its own customers. 409 00:41:13.260 --> 00:41:17.260 He draws no conclusions from this strange fact. 410 00:41:17.260 --> 00:41:22.260 Finally, he considers another common answer to the question of whom the Fed serves. 411 00:41:22.260 --> 00:41:24.260 Is it the financial markets? 412 00:41:24.260 --> 00:41:33.260 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. 413 00:41:33.260 --> 00:41:53.260 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. 414 00:41:53.260 --> 00:42:00.060 banks, mutual funds, money market funds, pensions and even the social security system. 415 00:42:00.060 --> 00:42:03.260 Considering all this, it's no wonder that people who study this stuff closely are so 416 00:42:03.260 --> 00:42:06.060 alarmed by the prospect of a financial meltdown. 417 00:42:06.060 --> 00:42:11.020 With so many liabilities and so little backing them up, we may someday witness the greatest 418 00:42:11.020 --> 00:42:16.580 explosion of inflation in Western history, right under our noses. 419 00:42:16.580 --> 00:42:20.280 But somehow this possibility wasn't raised by Mr. Blonder. 420 00:42:20.280 --> 00:42:23.360 After all, he claims there's no connection between the Fed's promise to print money until 421 00:42:23.360 --> 00:42:27.040 the end of time and the general level of prices. 422 00:42:27.040 --> 00:42:31.880 He then follows with a hilariously stupid recounting of Keynesian theory, which he claims 423 00:42:31.880 --> 00:42:35.640 there's no connection whatsoever between the general price level or the purchasing power 424 00:42:35.640 --> 00:42:38.880 of the dollar and credit expansion. 425 00:42:38.880 --> 00:42:42.560 When it comes time to consider the future of the Fed, however, Blinder makes some revealing 426 00:42:42.560 --> 00:42:44.280 comments. 427 00:42:44.280 --> 00:42:48.080 After all, his title is Central Banking and Democracy. 428 00:42:48.080 --> 00:42:52.820 And it turns out that the democracy is not at all happy about this cadre of conspirators 429 00:42:52.820 --> 00:42:57.280 and the Fed attempting to run the national and the world economy with no mandate whatsoever 430 00:42:57.280 --> 00:43:00.000 from the people most affected. 431 00:43:00.000 --> 00:43:03.700 The Fed, it turns out, is very unpopular with the public. 432 00:43:03.700 --> 00:43:08.440 He complains that one columnist, and hope you're prepared for this, even called Blinder himself 433 00:43:08.440 --> 00:43:12.080 intellectually and morally unfit for public life. 434 00:43:12.080 --> 00:43:18.640 This said blinder defines irresponsible journalism. 435 00:43:18.640 --> 00:43:22.440 Blinders quite worried about the trend of open ridicule of the Fed, and hopes to stave 436 00:43:22.440 --> 00:43:27.080 off such irresponsible talk by opening it up, or at least seeming to. 437 00:43:27.080 --> 00:43:32.200 If the Fed expects to survive the growing anti-government insurgency, he says, it better 438 00:43:32.200 --> 00:43:36.200 loosen up and allow the people to believe it is something other than a gigantic machine 439 00:43:36.200 --> 00:43:40.400 for personal privilege that it really is. 440 00:43:40.400 --> 00:43:44.560 So I think we can look forward to further opening up at the Fed and this is all to the good. 441 00:43:44.560 --> 00:43:49.460 The key to the Fed is its aura of mystery. Strip it away and someday the central bank 442 00:43:49.460 --> 00:43:53.700 will be seen as merely another part of the Leviathan as vulnerable to being dragged before 443 00:43:53.700 --> 00:43:59.860 the guillotine as the rest of the federal apparatus. It can't happen too soon. The 444 00:43:59.860 --> 00:44:04.300 Fed is the very embodiment of the bankruptcy of politics and on our present course it could 445 00:44:04.300 --> 00:44:08.300 would be the final bankruptor of the present political order. 446 00:44:08.300 --> 00:44:14.300 A generation ago, economists did not mention the role of the Federal Reserve. 447 00:44:14.300 --> 00:44:19.300 This was a taboo the Mises Institute set out to break and we've come a long way towards that goal. 448 00:44:19.300 --> 00:44:26.300 A graduate student of ours recently went for an interview at a well-regarded small liberal arts college in Missouri. 449 00:44:26.300 --> 00:44:31.300 Afterwards, some of the faculty took him to dinner to discover more about what he thought. 450 00:44:31.300 --> 00:44:33.660 When economists lowered the boom, 451 00:44:33.660 --> 00:44:36.700 what's your opinion of the Fed, he said. 452 00:44:36.700 --> 00:44:41.140 Our student blanched and he considered hemming and hawing, 453 00:44:41.140 --> 00:44:43.380 and then he said, no, I've got to say what I believe, 454 00:44:43.380 --> 00:44:47.220 and he said, well, I think it should be abolished. 455 00:44:47.220 --> 00:44:48.900 At this point, everyone at the table cheered 456 00:44:48.900 --> 00:44:53.100 and said he would fit right in in this economics department. 457 00:44:53.100 --> 00:44:56.820 This is a scene that would have been unimaginable 10 years ago. 458 00:44:56.820 --> 00:44:59.220 The state of intellectual culture helps drive 459 00:44:59.220 --> 00:45:04.740 have and closely parallels trends in social and political affairs, which is why we concentrate 460 00:45:04.740 --> 00:45:05.740 so much in this area. 461 00:45:05.740 --> 00:45:10.460 You could easily get depressed by looking at the papers being delivered at official 462 00:45:10.460 --> 00:45:15.540 professional meetings, examining the course curricula at most colleges and universities, 463 00:45:15.540 --> 00:45:20.940 or scanning the type of academic work being put out by major scholarly publishing houses. 464 00:45:20.940 --> 00:45:26.300 Not only is it leftist and silly, the triumph of multiculturalism ensured that much of it 465 00:45:26.300 --> 00:45:32.660 is surprisingly low level. But the views and interests of those who dominate the profession's 466 00:45:32.660 --> 00:45:39.060 mask a much more important underlying reality. The students aren't buying it anymore. When 467 00:45:39.060 --> 00:45:43.620 professors stand before students and celebrate affirmative action or socialism, they might 468 00:45:43.620 --> 00:45:49.260 as well have a flashing sign on their forehead that reads, liar. Today's student population 469 00:45:49.260 --> 00:45:55.940 is far too sophisticated to believe this nonsense. Many of the newest generation of academics 470 00:45:55.940 --> 00:46:00.260 come from a free market perspective. They find to their delight that they are serving 471 00:46:00.260 --> 00:46:06.140 as the prime intellectual mentors to the smartest students on campus. This is an exact replication 472 00:46:06.140 --> 00:46:11.420 of the process that led to our present predicament, except this time we are on the winning side 473 00:46:11.420 --> 00:46:16.680 and intellectual history is moving in our direction. In our academic programs we are 474 00:46:16.680 --> 00:46:20.900 constantly impressed with the level of intense interest, the quality of the students now 475 00:46:20.900 --> 00:46:25.780 pursuing deep studies in the Austrian School, and the enthusiasm with which they defy the 476 00:46:25.780 --> 00:46:31.180 by the professors they do not trust and cling to those they do trust, many of whom are associated 477 00:46:31.180 --> 00:46:33.900 with the Mises Institute. 478 00:46:33.900 --> 00:46:37.620 We are always told that the radicalism of the Austrian School of Mises and Rothbard 479 00:46:37.620 --> 00:46:43.420 and our faculty will drive away students, quite the contrary. We have the advantage over the 480 00:46:43.420 --> 00:46:48.020 myriad of competitors for students' attention in part because it's Mises, Rothbard and 481 00:46:48.020 --> 00:46:53.460 the Austrians their left-wing professors denounce the most. This, by the way, is precisely how 482 00:46:53.460 --> 00:46:58.460 by our senior fellow Yuri Maltseff came to know of the Austrian School in the Soviet Union 483 00:46:58.460 --> 00:47:01.460 and it's an instructive analogy. 484 00:47:01.460 --> 00:47:04.460 Students are attracted to radical solutions to present problems 485 00:47:04.460 --> 00:47:09.460 because they see the failure of the socialist age all around them. 486 00:47:09.460 --> 00:47:12.460 The smartest ones want to work for a free society 487 00:47:12.460 --> 00:47:15.460 and do so from a consistently libertarian framework 488 00:47:15.460 --> 00:47:19.460 that decries the status errors and crimes of our century. 489 00:47:19.460 --> 00:47:30.460 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. 490 00:47:30.460 --> 00:47:36.460 That layer gets thinner by the day, while the undercurrent is dealing with the truly important questions. 491 00:47:36.460 --> 00:47:40.460 What kind of society and economy do we want for ourselves? 492 00:47:40.460 --> 00:47:46.460 Will it be one managed and mismanaged from the top, with a sovereign state holding all power? 493 00:47:46.460 --> 00:47:57.460 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? 494 00:47:57.460 --> 00:48:05.460 After the century of statism and the vast cost it has imposed on civilization itself, these are really the only two options. 495 00:48:05.460 --> 00:48:07.460 And the answer should be clear. 496 00:48:07.460 --> 00:48:15.460 We cannot and will not allow the gross injustice, the immense immorality, the deadly destructiveness of the omnipotent state to continue. 497 00:48:15.460 --> 00:48:21.460 Instead, we will bring it down, for we are prepared to overcome every obstacle that stands in our way. 498 00:48:21.460 --> 00:48:29.460 It requires that we throw ourselves into this battle, not as full-time political activists or as functionaries in some party machine. 499 00:48:29.460 --> 00:48:32.460 That route has been tried, and it has failed. 500 00:48:32.460 --> 00:48:37.460 Instead, we must be active members of the social and intellectual movement on behalf of American liberty 501 00:48:37.460 --> 00:48:51.460 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. 502 00:48:51.460 --> 00:49:04.460 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. 503 00:49:04.460 --> 00:49:16.460 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.