WEBVTT NOTE 'Human Action' and the Politics of Freedom 1 00:00:00.000 --> 00:00:11.560 The head of state makes a speech to a packed house of legislators and is cheered to the rafters for his flurry of visionary policy ideas. 2 00:00:11.560 --> 00:00:20.800 He calls for the restoration of cities and towns, the revival of the nation's industrial base through new spending programs. 3 00:00:20.800 --> 00:00:24.160 He makes more housing a national priority. 4 00:00:24.160 --> 00:00:31.540 He promises more education spending, new resources for the armed forces, a secure system of old-age 5 00:00:31.540 --> 00:00:36.580 pensions and more equitable health care delivery. 6 00:00:36.580 --> 00:00:42.660 He takes credit for a purported economic boom and further promises to surpass all previous 7 00:00:42.660 --> 00:00:47.000 records in national productivity. 8 00:00:47.000 --> 00:01:02.640 Now this isn't Clinton's State of the Union address, it was Stalin's 1946 speech. 9 00:01:02.640 --> 00:01:06.800 He concluded as follows, the Soviet people are ready for it. 10 00:01:06.800 --> 00:01:11.080 Under the leadership of the Soviet government with Stalin at its head, the Soviet people 11 00:01:11.080 --> 00:01:15.920 People will transform the law on the new five-year plan into life. 12 00:01:15.920 --> 00:01:20.840 Now, if anyone still took Clinton seriously, this could be a chilling comparison after 13 00:01:20.840 --> 00:01:21.840 all. 14 00:01:21.840 --> 00:01:26.840 There was a time when the State of the Union speech set the agenda for the nation. 15 00:01:26.840 --> 00:01:30.040 Now it is seen as little more than theater. 16 00:01:30.040 --> 00:01:34.760 Even the news media treated it like a movie premiere, evaluating the script, the acting, 17 00:01:34.760 --> 00:01:39.680 the emotional impact, but never confusing it with real life. 18 00:01:39.680 --> 00:01:45.120 In Washington now, they only pretend to make grand new policy. In fact, as Moynihan pointed 19 00:01:45.120 --> 00:01:48.800 out last year, they're just trying to get through the day. 20 00:01:48.800 --> 00:01:55.240 If we look at the present state of the war between government and the economy, it is 21 00:01:55.240 --> 00:02:01.560 clear that the economy is winning. Technological developments far outpace the ability of government 22 00:02:01.560 --> 00:02:07.960 to control them. The public is participating as never before in capital markets. Private 23 00:02:07.960 --> 00:02:12.320 But arbitration is steadily replacing government courts. 24 00:02:12.320 --> 00:02:18.560 The sheer power of market forces overwhelms government power on an almost daily basis. 25 00:02:18.560 --> 00:02:22.760 Books on freedom and against the corruptions of government are more available than ever 26 00:02:22.760 --> 00:02:27.360 before even if today's professors are still loathe to see their students get their hands 27 00:02:27.360 --> 00:02:28.360 on them. 28 00:02:28.360 --> 00:02:32.840 Through the internet, the Mises Institute reaches a worldwide audience on a minute by 29 00:02:32.840 --> 00:02:34.840 minute basis. 30 00:02:34.840 --> 00:02:40.120 Several articles, for example, that were once unavailable are now easily available and downloadable 31 00:02:40.120 --> 00:02:45.080 at no charge to students and faculty around the clock and around the world. 32 00:02:45.080 --> 00:02:50.700 We hear from everywhere, from the University of California to the University of Beijing. 33 00:02:50.700 --> 00:02:56.120 The Austrian School has sympathizers in nearly every economics department in the country, 34 00:02:56.120 --> 00:02:59.280 and in such departments as history and philosophy as well. 35 00:02:59.280 --> 00:03:04.440 Meanwhile, the moral legitimacy of the government, its officials and its policies, has been on 36 00:03:04.440 --> 00:03:15.640 Show me a student who aspires to enter the civil service today and I'll show you a failure. 37 00:03:15.640 --> 00:03:21.080 Politicians as a group and not just one party are deeply distrusted and even detested. At 38 00:03:21.080 --> 00:03:25.560 all levels of government, the competent are leaving for the private sector. The military 39 00:03:25.560 --> 00:03:31.840 cannot retain pilots. The IRS cannot retain accountants. The Labor Department cannot retain 40 00:03:31.840 --> 00:03:36.280 Economists. Politicians are dropping like flies and the two parties are having 41 00:03:36.280 --> 00:03:41.140 trouble recruiting anyone respectable to put their name on a ballot. The Clinton 42 00:03:41.140 --> 00:03:46.800 administration can't even retain cabinet members. As for voting, few bother to do 43 00:03:46.800 --> 00:03:51.440 it anymore. But far from being a sad commentary on the present state of the 44 00:03:51.440 --> 00:03:56.080 civic culture, non-voting is actually a form of secession from a fraudulent 45 00:03:56.080 --> 00:04:00.160 system that offers the illusion of democratic participation but not its 46 00:04:00.160 --> 00:04:05.160 Nobody in Washington believes in Keynesian physical planning anymore. 47 00:04:05.160 --> 00:04:10.160 Sure, they play lip service to the idea, because it provides a rationale for their jobs. 48 00:04:10.160 --> 00:04:15.160 But the last hint that government spending should be used to boost macroeconomic aggregate demand 49 00:04:15.160 --> 00:04:20.160 came in 1993, just after Clinton was first elected. 50 00:04:20.160 --> 00:04:25.160 In the meantime, the growth in government spending has slowed dramatically since the 1980s, 51 00:04:25.160 --> 00:04:32.160 A decade in which 163% in government spending was accompanied by daily talk of budget cuts. 52 00:04:33.160 --> 00:04:39.160 A new high-tech corporate elite is being raised up, disconnected from government. They make 53 00:04:39.160 --> 00:04:43.940 their fortunes by virtue of their terrific innovations and their extreme attentiveness 54 00:04:43.940 --> 00:04:48.080 to the needs of the consumer and through a competitive struggle with others who are constantly 55 00:04:48.080 --> 00:04:53.640 attempting to do the same. The members of this new corporate elite are far less connected 56 00:04:53.640 --> 00:04:59.960 to the idea and the regulatory apparatus of the nation state than any of their predecessors. 57 00:04:59.960 --> 00:05:05.540 They have witnessed firsthand the remarkable power of the market economy to transform society 58 00:05:05.540 --> 00:05:12.760 and individual lives and have seen nothing but failure from government programs and consortiums. 59 00:05:12.760 --> 00:05:17.440 Now we must remember that we are in the midst of an economic boom. I'd feel a lot more 60 00:05:17.440 --> 00:05:22.120 like celebrating the soaring stock market and the rock bottom unemployment rate if 61 00:05:22.120 --> 00:05:26.200 If the Fed hadn't been boosting the money supply, a fact which is already showing up 62 00:05:26.200 --> 00:05:32.560 in the declining value of the dollar on international exchange, in time the boom will turn to bust 63 00:05:32.560 --> 00:05:37.620 and market traders will receive a new lesson in what that old-fashioned word recession 64 00:05:37.620 --> 00:05:39.020 means. 65 00:05:39.020 --> 00:05:44.100 But the question we have to ask ourselves is this, in the next recession, will the forces 66 00:05:44.100 --> 00:05:49.420 of government be able to impose the kind of fiscal and regulatory planning they once enacted 67 00:05:49.420 --> 00:05:51.700 as a matter of course? 68 00:05:51.700 --> 00:05:57.700 I don't think so. To impose a dramatic step up in government power requires public consensus 69 00:05:57.700 --> 00:06:04.100 in favor of government solutions that simply no longer exist. What we are witnessing is 70 00:06:04.100 --> 00:06:09.380 the continuation of a process that began to be revealed in the late 1980s when socialist 71 00:06:09.380 --> 00:06:14.840 regimes crumbled despite every prediction that they would be permanent. The same forces 72 00:06:14.840 --> 00:06:19.900 are working themselves out in different and unpredictable ways right here at home. The 73 00:06:19.900 --> 00:06:24.500 The ideological foundations of all-round statism are beginning to collapse. 74 00:06:24.500 --> 00:06:29.820 It has never been more likely that we will see a reflowering of classical freedom in 75 00:06:29.820 --> 00:06:32.420 our own time. 76 00:06:32.420 --> 00:06:35.340 What a distance we have traveled from 1949. 77 00:06:35.340 --> 00:06:40.780 In the year Mises's Human Action was published, capitalism seemed to have no future. 78 00:06:40.780 --> 00:06:45.300 The Great Depression was widely attributed to the failure of the free market, despite 79 00:06:45.300 --> 00:06:49.860 the valiant efforts of Henry Hazlitt to convince the world otherwise. 80 00:06:49.860 --> 00:06:54.260 The New Deal, combined with wartime economic planning, was said to have saved us from further 81 00:06:54.260 --> 00:07:00.200 ruin. The ideology of socialism was all the rage in intellectual circles as it had been 82 00:07:00.200 --> 00:07:07.520 for decades. The old idea of the liberal society was gone seemingly forever. It was a relic 83 00:07:07.520 --> 00:07:13.520 of a distant age and certainly not a model for a modern industrial society. 84 00:07:13.520 --> 00:07:17.680 The future was clear. The world would move towards government planning on all aspects 85 00:07:17.680 --> 00:07:22.120 of Life and Away from the Anarchy of the Market. 86 00:07:22.120 --> 00:07:26.440 The U.S. had fought and won a European war against National Socialism and an Asian war 87 00:07:26.440 --> 00:07:29.220 against a regional empire. 88 00:07:29.220 --> 00:07:33.160 The ideological lesson of this experience, however, was not that the free society is 89 00:07:33.160 --> 00:07:34.160 superior. 90 00:07:34.160 --> 00:07:39.520 But recall that the U.S. had been closely allied with Stalin's Soviet Union, a regime 91 00:07:39.520 --> 00:07:45.080 even more deadly and totalitarian than the foes the U.S. had battled. 92 00:07:45.080 --> 00:07:51.880 The Experienced Reinforced New Deal Statism When the U.S. government is given total power, 93 00:07:51.880 --> 00:07:56.160 so the lesson ran, it can get the job done so long as the government is granted discretion 94 00:07:56.160 --> 00:08:01.400 to choose its friends and its enemies along pragmatic lines. Moreover, the government 95 00:08:01.400 --> 00:08:06.600 must be allowed to make decisions over issues of life and death. It must be able to conscript 96 00:08:06.600 --> 00:08:11.680 as the U.S. did. It must be allowed to take innocent life with deliberate intent as the 97 00:08:11.680 --> 00:08:15.240 as the U.S. did in mass bombings of whole cities. 98 00:08:15.240 --> 00:08:20.360 In terms of the ideological superstructure, this was the era of the total state. 99 00:08:20.360 --> 00:08:25.320 People the world over had been shaken to their souls at the awesome display of nuclear weapons 100 00:08:25.320 --> 00:08:30.200 at Hiroshima and Nagasaki, at the ability of three heads of state to meet and carve up 101 00:08:30.200 --> 00:08:35.360 Europe into spheres of influence, at the seeming central role that governments played as a 102 00:08:35.360 --> 00:08:41.040 force in history, and at the awful and undeniable reality that individuals appeared to be merely 103 00:08:41.040 --> 00:08:45.840 pawns in the new superpower-driven drama of world affairs. 104 00:08:45.840 --> 00:08:50.880 In 1949, the State Department and the Defense Department drafted a document called National 105 00:08:50.880 --> 00:08:53.680 Security Council Finding 68. 106 00:08:53.680 --> 00:08:58.400 NSC 68 was a blueprint for global U.S. hegemony. 107 00:08:58.400 --> 00:09:02.560 It asserted that only the U.S. government could muster the moral, political, economic 108 00:09:02.560 --> 00:09:07.760 and ideological resources to reestablish and maintain world order, which in turn required 109 00:09:07.760 --> 00:09:13.760 a massive munitions and covert action build-up and a permanent global military and CIA presence. 110 00:09:13.760 --> 00:09:19.760 It would be a new and even more ambitious British Empire. 111 00:09:19.760 --> 00:09:24.400 We had come a long way from the original American vision of a country uniquely situated to avoid 112 00:09:24.400 --> 00:09:27.440 international political conflicts. 113 00:09:27.440 --> 00:09:32.760 In 1949, the major concern of the U.S. power elite was to cement its position by establishing 114 00:09:32.760 --> 00:09:41.760 and encouraging global institutions of unprecedented power, such as a world court, a world central bank, a world economic planner and a world police force. 115 00:09:41.760 --> 00:09:50.760 The only critics deemed respectable were Marxists, who thought this planning apparatus was entirely too enthralled with capitalist ideas. 116 00:09:50.760 --> 00:09:58.760 Meanwhile, the real resistance movements in the U.S., including the Southern Agrarians and the America First Committee, had been smashed and discredited, 117 00:09:58.760 --> 00:10:03.160 and leaders branded as reactionaries or axis sympathizers. 118 00:10:03.160 --> 00:10:07.880 The election of 1948 seemed to confirm this as the Dixiecrats were crushed and the Truman 119 00:10:07.880 --> 00:10:14.560 and Truman re-elected in an election that represented the high watermark of voter participation. 120 00:10:14.560 --> 00:10:19.280 What was left of the anti-socialist element in American life began to ignore U.S. statism 121 00:10:19.280 --> 00:10:24.680 and to focus onto a narrow anti-Soviet sentiment which was denounced and simultaneously used 122 00:10:24.680 --> 00:10:29.560 by the Truman administration to bring about a huge military build-up. 123 00:10:29.560 --> 00:10:34.240 Anyone who doubted the glories of the escalating welfare-warfare national security state was 124 00:10:34.240 --> 00:10:39.800 accused of having a, quote, authoritarian personality, in Theodore Adorno's phrase, 125 00:10:39.800 --> 00:10:45.920 that still has a prominent place in undergraduate abnormal psychology texts. 126 00:10:45.920 --> 00:10:49.520 Freedom-minded intellectuals were dying out, and the few remaining ones had virtually no 127 00:10:49.520 --> 00:10:51.640 publishing outlets. 128 00:10:51.640 --> 00:10:57.640 Most of the dissident publications that had survived the Depression had been killed off during wartime censorship. 129 00:10:57.640 --> 00:11:07.640 And shaped by years of war propaganda and fireside chats before that, radio networks and newspapers chose their programming based on nationalistic concerns. 130 00:11:07.640 --> 00:11:11.640 Love of the nation's state had even come to displace traditional religion. 131 00:11:11.640 --> 00:11:18.640 The flag became an object of worship for the second time in American history, the first being during Wilson's invasion of Europe. 132 00:11:18.640 --> 00:11:26.640 Religious sentiments were added to the national pledge and to depreciating coinage, an act that our forebears might have regarded as blasphemous. 133 00:11:26.640 --> 00:11:36.640 The middle class was roped into a growing welfare state by virtue of expanding social security, school loans and grants from government, the cult of the civil service. 134 00:11:36.640 --> 00:11:40.640 In 1949, freedom seemed to have no future. 135 00:11:40.640 --> 00:11:48.640 The only serious dispute was over the degree to which choice and autonomy should be limited in government's pursuit of the planned world economy. 136 00:11:48.640 --> 00:11:58.640 The state and intellectual classes were one, and the prophet of this new order was Keynes himself, who achieved an intellectual revolution of unprecedented completeness. 137 00:11:58.640 --> 00:12:05.640 As one writer said at the time, without irony, Keynes indeed had the revelation, which he capped. 138 00:12:05.640 --> 00:12:10.640 His disciples are now dividing into groups, each taking sustenance from the Keynesian larder. 139 00:12:10.640 --> 00:12:14.640 The struggle for the apostolic succession is on. 140 00:12:14.640 --> 00:12:21.640 Seymour Harris, an economics professor at Harvard, whose 1949 book, Economic Planning, had a huge impact, 141 00:12:21.640 --> 00:12:25.640 sums up what was considered the empirical reality of Soviet socialism. 142 00:12:25.640 --> 00:12:29.640 Twenty years ago he wrote, Russia presented her first five-year plan. 143 00:12:29.640 --> 00:12:33.640 Her phenomenally rapid rate of industrialization and economic growth 144 00:12:33.640 --> 00:12:38.640 The economic growth attracted the attention of all the major nations of the world. 145 00:12:38.640 --> 00:12:43.640 As tens of millions were shot or starved to death in the charnel house of socialism, 146 00:12:43.640 --> 00:12:49.640 Harris wrote that, quote, the numerous advantages of the socialist state cannot be denied. 147 00:12:49.640 --> 00:12:57.640 For example, it can achieve a distribution between production of essential and non-essentials, apparently impossible for the capitalist state. 148 00:12:57.640 --> 00:13:03.640 Concentration on essentials prior to producing non-essentials, the economy of the USSR has much to recommend it. 149 00:13:04.640 --> 00:13:12.640 Among the advantages that Harris lists are these, the USSR is not troubled by excessive salesmen and advertisers. 150 00:13:17.640 --> 00:13:22.640 What of Hayek's 1946 criticism that planned economies and loss of freedom are all of the piece? 151 00:13:23.640 --> 00:13:26.640 Harris claims to show that Hayek has fallen victim to an elementary fallacy. 152 00:13:27.640 --> 00:13:42.640 The fact of concomitant variations, e.g. planning and fascism in Germany, writes Harris, does not prove that planning brought fascism any more than the concomitance of marriages and the appearance of ants in June suggests a causal relation. 153 00:13:42.640 --> 00:13:51.640 This flippant dismissal of any connection between big government and loss of freedom was considered persuasive as a measure of the ideological climate of the time. 154 00:13:51.640 --> 00:13:54.640 As for the efficiency of the planned economy, there was no need to fear. 155 00:13:54.640 --> 00:13:59.640 Exhibit A in the intellectual arsenal of the pro-planning economists was World War II. 156 00:13:59.640 --> 00:14:06.640 In the U.S., production was planned, prices controlled, labor conscripted, and consumption regulated. 157 00:14:06.640 --> 00:14:13.640 And didn't we win the war? Even more impressively, didn't the war itself bring the gruesome realities of the Great Depression to a close? 158 00:14:13.640 --> 00:14:18.640 The Supreme Court was busy shredding the Constitution and centralizing power in the executive state. 159 00:14:18.640 --> 00:14:23.560 State. In 1949 the court held in Wolf v. Colorado that the search and seizure 160 00:14:23.560 --> 00:14:27.400 provisions of the Bill of Rights applied to the states and to the central 161 00:14:27.400 --> 00:14:30.660 government should be charged with protecting people from their respective 162 00:14:30.660 --> 00:14:34.920 state governments. Now of course in the original design of the Constitution the 163 00:14:34.920 --> 00:14:38.860 Bill of Rights was to protect the people of the states from the central government 164 00:14:38.860 --> 00:14:42.140 an intention that was turned on its head by the so-called doctrine of 165 00:14:42.140 --> 00:14:47.100 incorporation. But even aside from constitutional law, Hoppe served for the 166 00:14:47.100 --> 00:14:50.500 and the Feds to claim to be the guardians of freedom. 167 00:14:50.500 --> 00:14:55.920 After all, the centralization of power is one of the greatest threats to liberty ever known. 168 00:14:55.920 --> 00:14:59.820 In these years, the state and the corporate classes were one as well. 169 00:14:59.820 --> 00:15:03.900 Every major company was now beholding to the planning state, having been shaped by FDR's 170 00:15:03.900 --> 00:15:09.620 Blue Eagle program, wartime price controls and all-round unionization. 171 00:15:09.620 --> 00:15:14.420 The captains of industry were joined at the hip with the regulatory apparatus. 172 00:15:14.420 --> 00:15:20.660 The American worker was terrified for his family's livelihood and in no mood to rock the boat. 173 00:15:20.660 --> 00:15:24.700 Such traditional institutions as advertising and individual initiative were declared dead 174 00:15:24.700 --> 00:15:29.820 in plays such as Death of a Salesman and books like The Organization Man. 175 00:15:29.820 --> 00:15:33.660 In retrospect, it is clear that the foundations for the massive step up in state power of 176 00:15:33.660 --> 00:15:39.480 the 1960s and the war on such countervailing institutions as private property, the family 177 00:15:39.480 --> 00:15:44.180 and federalism were laid in the late 40s and early 50s. 178 00:15:44.180 --> 00:15:50.180 The depression and the war had demolished traditional loyalties and demonstrated the massive power of government. 179 00:15:50.180 --> 00:15:59.180 And the 1950s effort to globalize and universalize the planning state set the stage for the continued socialization of society that followed. 180 00:15:59.180 --> 00:16:07.180 Mises, who lived through it all, was singular because he had both the intellectual apparatus to fight what appeared to be an invincible foe 181 00:16:07.180 --> 00:16:13.180 and the moral stamina to do so, even though he knew he would doom any future he had in academia. 182 00:16:13.180 --> 00:16:17.180 And yet he saw what needed to be done and did it. 183 00:16:17.180 --> 00:16:22.180 The very basis of the market economy and the free society needed to be presented anew 184 00:16:22.180 --> 00:16:27.180 and reestablished on a solid intellectual foundation for new generations. 185 00:16:27.180 --> 00:16:32.180 In the midst of the war, he had already written that the most important post-war priority 186 00:16:32.180 --> 00:16:37.180 was to fight the forces of statism on the battlefield of ideas. 187 00:16:37.180 --> 00:16:41.180 With human action, he would engage in that battle nearly alone. 188 00:16:41.180 --> 00:16:46.180 And yet one reason the book stands out as it does, it is not about politics as such. 189 00:16:46.180 --> 00:16:52.180 Rarely does he directly address the burning political issues of the day and then only in a timeless way. 190 00:16:52.180 --> 00:16:59.180 Two-thirds of the book is a painstaking reconstruction of the theoretical foundations and applications of economic science. 191 00:16:59.180 --> 00:17:10.180 Mises' intention was nothing short of magnificent. He had concluded from his study of history that the classical economists were the real heroes in the march of freedom. 192 00:17:10.180 --> 00:17:18.180 It was they who explained the workings of the free economy and the rationale for eliminating status restrictions on trade and labor. 193 00:17:18.180 --> 00:17:27.180 In Mises' words, they, quote, reduced the prestige of conquerors and expropriators and demonstrated the social benefits derived from business activity. 194 00:17:27.180 --> 00:17:32.260 While others attributed the rise of the glorious Industrial Revolution to mysterious forces 195 00:17:32.260 --> 00:17:37.460 or accidents of history, Mises said it was the economists who exploded mercantilism and 196 00:17:37.460 --> 00:17:42.120 made it possible for society to adopt the ideals of freedom. 197 00:17:42.120 --> 00:17:45.360 The history of the American Revolution would seem to bear him out. 198 00:17:45.360 --> 00:17:49.700 We hear often about the political education of the founders, but just as important were 199 00:17:49.700 --> 00:17:51.000 their economic ideals. 200 00:17:51.000 --> 00:17:55.980 For example, Jefferson studied the economics of Turgot, whom Rothbard has identified as 201 00:17:55.980 --> 00:17:58.820 as a founder of the Austrian School. 202 00:17:58.820 --> 00:18:01.900 As Mises looked at the ideological landscape of 1949, 203 00:18:01.900 --> 00:18:05.420 he saw the philosophical foundations of freedom 204 00:18:05.420 --> 00:18:07.140 being destroyed. 205 00:18:07.140 --> 00:18:11.260 Austria had been engulfed in statist ideology, America too, 206 00:18:11.260 --> 00:18:13.620 and he was shocked and dismayed at the status accorded 207 00:18:13.620 --> 00:18:17.260 to totalitarian regimes like the Soviet Union. 208 00:18:17.260 --> 00:18:18.700 But he also saw that the difference 209 00:18:18.700 --> 00:18:21.560 between the New Deal and Stalin's five-year plan 210 00:18:21.560 --> 00:18:24.340 was not one of kind, but of degree. 211 00:18:24.340 --> 00:18:30.840 and he set out to do everything in his power to stop the encroaching darkness and relight the flame of liberty. 212 00:18:30.840 --> 00:18:36.040 In placing blame for the destruction, he again sought an explanation in the intellectual realm. 213 00:18:36.040 --> 00:18:42.940 In Germany, it began with fallacies concerning money creation and the supposed benefits of protectionist policies. 214 00:18:42.940 --> 00:18:49.440 In the US, it was the ideological baggage of progressivist ideology working hand in glove with Keynesian economics, 215 00:18:49.440 --> 00:18:55.340 An import from Britain that had socialized so much of the birthplace of the Industrial Revolution. 216 00:18:55.340 --> 00:18:59.720 All around, Mises saw assaults on the basic tenets of sound economics. 217 00:18:59.720 --> 00:19:03.680 It was said that the price system does not work, that property rights are a hindrance 218 00:19:03.680 --> 00:19:08.880 rather than the path to economic progress, that business does not serve society but rather 219 00:19:08.880 --> 00:19:14.320 exploits it, that laborers have a friend and not an enemy in the government, that government 220 00:19:14.320 --> 00:19:18.580 can innovate much better than the market, and that the freedom of contract is a source 221 00:19:18.580 --> 00:19:22.580 is a source of waste rather than the embodiment of efficiency. 222 00:19:22.580 --> 00:19:26.580 Mises predicted that civilization, quote, will and must perish 223 00:19:26.580 --> 00:19:30.580 if nations continue to pursue the course which they have entered upon under the spell of doctrines 224 00:19:30.580 --> 00:19:34.580 rejecting economic thinking. 225 00:19:34.580 --> 00:19:38.580 So strong was his faith and ideas that he dared begin 226 00:19:38.580 --> 00:19:42.580 at the very beginning with the general science of human action, 227 00:19:42.580 --> 00:19:46.580 with the nature of man as a choosing agent, with the foundation of economic 228 00:19:46.580 --> 00:19:56.580 People who pick up Human Action for the first time are perhaps startled to discover that the first 200 pages consist of a closely argued treatment of such foundational issues. 229 00:19:56.580 --> 00:20:08.580 It is not until page 201 that we find the discussion of market institutions like prices and money, and it is not until very late in the book that we find the ways in which government policy wrecks the operation of the market. 230 00:20:08.580 --> 00:20:10.820 of the Market. 231 00:20:10.820 --> 00:20:12.420 Clearly, Mises had tremendous confidence 232 00:20:12.420 --> 00:20:13.880 in his readership, a confidence that 233 00:20:13.880 --> 00:20:15.940 was confirmed when his massive treatise was made 234 00:20:15.940 --> 00:20:17.820 a selection of the Book of the Month Club 235 00:20:17.820 --> 00:20:21.140 and became an academic bestseller almost overnight. 236 00:20:21.140 --> 00:20:22.940 More importantly, he believed that it was only 237 00:20:22.940 --> 00:20:24.780 through a painstaking reconstruction 238 00:20:24.780 --> 00:20:29.420 of economic science the tide of history could be turned. 239 00:20:29.420 --> 00:20:31.740 Mises lived to see the free market movement reborn 240 00:20:31.740 --> 00:20:33.860 as a consequence of this book. 241 00:20:33.860 --> 00:20:36.100 He died knowing that he had given the Austrian school 242 00:20:36.100 --> 00:20:40.940 in New Birth, and he thrilled to see brilliant young students like Murray Rothbard picking 243 00:20:40.940 --> 00:20:46.140 up the torch. But he did not live to see how his ideas would have a broader impact in world 244 00:20:46.140 --> 00:20:50.940 affairs. As we have learned at this conference, human action almost did not see the light 245 00:20:50.940 --> 00:20:56.760 of day. Only kind benefactors such as Lawrence Ferdig, a friendly director of the Yale University 246 00:20:56.760 --> 00:21:02.220 Press and good colleagues such as Fritz Machlup and Henry Hazlitt made it possible. Mankind 247 00:21:02.220 --> 00:21:05.000 is very much in their debt. 248 00:21:05.000 --> 00:21:08.240 But as we explore the political message of human action, I would first like to focus 249 00:21:08.240 --> 00:21:13.520 on an issue that was most pressing in Mises' time and continues to affect our own dilemma 250 00:21:13.520 --> 00:21:15.120 in the most direct way. 251 00:21:15.120 --> 00:21:20.080 This concerns a section on human action not often discussed, chapter 34, on the economics 252 00:21:20.080 --> 00:21:21.900 of war. 253 00:21:21.900 --> 00:21:27.400 He begins with this startling statement, quote, the market economy involves peaceful cooperation. 254 00:21:27.400 --> 00:21:31.240 It bursts asunder when the citizens turn into warriors instead of exchanging commodities 255 00:21:31.240 --> 00:21:34.320 and services, fight one another. 256 00:21:34.320 --> 00:21:37.520 Now in 1949 this statement flew in the face of conventional wisdom. 257 00:21:37.520 --> 00:21:42.520 It was widely believed that the Second World War, far from being contrary to economic efficiency, 258 00:21:42.520 --> 00:21:47.200 was the means by which the U.S. and its allies had pulled out of the depression. 259 00:21:47.200 --> 00:21:52.320 Government had funded a massive amount of capital expenditure, boosted aggregate demand, 260 00:21:52.320 --> 00:21:56.140 provided work to millions, eliminated idle industrial capacity. 261 00:21:56.140 --> 00:22:01.640 War was not economically destructive, it was said, but constructive and productive. 262 00:22:01.640 --> 00:22:07.600 Mises argued that war and the market economy, war and a high civilization are incompatible. 263 00:22:07.600 --> 00:22:12.760 To be sure, he said, sometimes peoples must fight wars. But if it is necessary, only the 264 00:22:12.760 --> 00:22:19.400 classical form of warfare is acceptable. International law still applies. Civilians must be left out 265 00:22:19.400 --> 00:22:25.680 of the battle. Neither must the civilian economy be touched. Prices are not to be fixed. Production 266 00:22:25.680 --> 00:22:31.920 not to be planned. War should be defensive, limited in duration and scope. Conscription 267 00:22:31.920 --> 00:22:38.340 is out of the question. Today he says the ideology of the total state has given us total 268 00:22:38.340 --> 00:22:44.000 war as well, involving the whole of the civilian population and the whole economy. As Mises 269 00:22:44.000 --> 00:22:49.660 writes, quote, modern war is merciless. It does not spare pregnant women or infants. 270 00:22:49.660 --> 00:22:55.200 It is indiscriminate, killing and destroying. It does not respect the rights of neutrals. 271 00:22:55.200 --> 00:22:59.000 Humans are killed, enslaved or expelled from the dwelling places in which their ancestors 272 00:22:59.000 --> 00:23:02.040 lived for centuries. 273 00:23:02.040 --> 00:23:05.840 Mises says this is a direct result of the ideology that makes the state the center of 274 00:23:05.840 --> 00:23:07.760 a nation's life and worship. 275 00:23:07.760 --> 00:23:12.600 Indeed, when you consider the U.S. aggressive war against Iraq and the millions of lives 276 00:23:12.600 --> 00:23:17.120 that its bombs of embargoes have cost, you begin to gain a glimpse of what Mises was 277 00:23:17.120 --> 00:23:19.280 referring to. 278 00:23:19.280 --> 00:23:22.760 This is why it is utterly preposterous for modern conservatives to pretend to combine 279 00:23:22.760 --> 00:23:28.320 and love of the free society with love of the culture of warfare and military might. 280 00:23:28.320 --> 00:23:32.160 What too many conservatives mean when they evoke a strong national defense is not defense 281 00:23:32.160 --> 00:23:36.900 at all, but the preservation and expansion of empire. 282 00:23:36.900 --> 00:23:41.280 But if we follow Mises, we see that if we want freedom, we must embrace a foreign policy 283 00:23:41.280 --> 00:23:45.520 that rose up with the advance of freedom in the 18th and 19th centuries. 284 00:23:45.520 --> 00:23:50.240 That is to say, we must reject militarism, imperialism and foreign entanglements and 285 00:23:50.240 --> 00:23:55.520 and embrace trade instead of conflict as the basis of international relations. 286 00:23:55.520 --> 00:23:59.400 The immediate retort from today's pundits is the U.S. cannot afford to withdraw from 287 00:23:59.400 --> 00:24:01.400 a dangerous world. 288 00:24:01.400 --> 00:24:07.200 People are dying in Kosovo, Somalia, Haiti, Liberia, Rwanda, Sudan, Angola, Nigeria, Congo 289 00:24:07.200 --> 00:24:12.720 and everywhere else, and the U.S. as the world's indispensable nation has a responsibility 290 00:24:12.720 --> 00:24:15.320 for doing something about it. 291 00:24:15.320 --> 00:24:19.520 Left unexamined is the assumption that the U.S. should destroy regimes that U.S. political 292 00:24:19.520 --> 00:24:26.440 Whence this impulse to free the world of sin is defined by the State Department, regardless 293 00:24:26.440 --> 00:24:33.920 of the cost in lives and freedom? Mises traces it to the evil Wilson. Quote, under laissez-faire, 294 00:24:33.920 --> 00:24:39.720 he says, peaceful coexistence of a multitude of sovereign nations is possible. The tragic 295 00:24:39.720 --> 00:24:47.040 error of President Wilson was that he ignored this essential point. Recall, to the Wilson 296 00:24:47.040 --> 00:24:54.040 was no advocate of free markets. He was a progressivist, academic and early socialist as Rothbard has argued so persuasively. 297 00:24:54.040 --> 00:25:01.040 In fact, it should not surprise us that the President who gave us the income tax, the Federal Reserve and the direct election of senators 298 00:25:01.040 --> 00:25:07.040 would also be the first President to believe that the U.S. government had a holy mission to rid the world of all Heads of State 299 00:25:07.040 --> 00:25:11.040 whose values are different from those celebrated in the District of Columbia. 300 00:25:11.040 --> 00:25:18.280 It is long past time for us to come to terms with the fact that our country is host to 301 00:25:18.280 --> 00:25:20.280 an imperial power. 302 00:25:20.280 --> 00:25:24.560 We have loved the world over for our people and our commerce, just as our government is 303 00:25:24.560 --> 00:25:26.240 loathed and despised. 304 00:25:26.240 --> 00:25:30.800 If we believe in the old ideal of America upholding the light of freedom for the whole 305 00:25:30.800 --> 00:25:34.520 world to see, this is an uncomfortable truth. 306 00:25:34.520 --> 00:25:38.840 But nevertheless, it is a priority to come to terms with the deadly damage the U.S. government 307 00:25:38.840 --> 00:25:43.840 that is inflicted throughout the world and to oppose it with all our might. 308 00:25:43.840 --> 00:25:47.840 Mises also addressed another crucial issue of our time, namely poverty. 309 00:25:47.840 --> 00:25:52.840 As he points out, there was no question about poverty or riches in the pre-capitalist era. 310 00:25:52.840 --> 00:25:56.840 For the huge majority of the population, there was only grinding poverty. 311 00:25:56.840 --> 00:26:01.840 Capitalism made possible continuously rising living standards for the masses. 312 00:26:01.840 --> 00:26:05.840 As a result, the only people who are poor today by any historical standard 313 00:26:05.840 --> 00:26:10.640 of those who are unable to care for themselves or who refuse to do so. 314 00:26:10.640 --> 00:26:14.800 Contrary to the stereotype, Mises was a strong advocate of private charity. 315 00:26:14.800 --> 00:26:19.600 He celebrated both religious and secular groups that care for those who cannot care for themselves, 316 00:26:19.600 --> 00:26:22.080 as well as the families that provide care 317 00:26:22.080 --> 00:26:23.720 in times of need. 318 00:26:23.720 --> 00:26:27.440 He praises them for accomplishing marvels and he points out that private charity 319 00:26:27.440 --> 00:26:30.080 is dependent on the flourishing of the market economy. 320 00:26:30.080 --> 00:26:32.400 Since the more capitalism increases wealth, 321 00:26:32.400 --> 00:26:35.120 the more is available for giving. 322 00:26:35.120 --> 00:26:44.240 But Mises refuses to take at face value the claims of politicians who said they want to abolish poverty because they also desire equality. 323 00:26:44.240 --> 00:26:49.200 The goal of equality, Mises says, poses a huge danger to the market economy. 324 00:26:49.200 --> 00:26:56.200 If pursued far enough, it's capable of destroying the market since the market depends on inequality. 325 00:26:56.200 --> 00:27:01.440 That is to say, it is the radical inequality of individuals, the fact that people are unique, 326 00:27:01.440 --> 00:27:07.740 that brings about the desire to exchange goods and services to the mutual benefit of everyone involved. 327 00:27:07.740 --> 00:27:13.040 It's no coincidence, Mises says, that, quote, the most despotic system of government that history has ever known, 328 00:27:13.040 --> 00:27:18.840 Bolshevism, parades the very incarnation of the principle of equality. 329 00:27:18.840 --> 00:27:24.940 In a similar vein, he writes that egalitarianism is, quote, very clear in its abomination of large fortunes. 330 00:27:24.940 --> 00:27:27.440 It objects to big business and great riches. 331 00:27:27.440 --> 00:27:31.240 It advocates various measures to stunt the growth of individual enterprises 332 00:27:31.240 --> 00:27:36.540 and to bring about more equality by confiscatory taxation of incomes and estates 333 00:27:36.540 --> 00:27:40.440 and it appeals to the envy of the injudicious masses. 334 00:27:40.440 --> 00:27:44.720 The results of Mises is an accumulation of power in the hands of a political elite, 335 00:27:44.720 --> 00:27:46.740 the destruction of private savings 336 00:27:46.740 --> 00:27:50.240 and the dramatic curtailing of private initiative. 337 00:27:50.240 --> 00:27:53.440 Until we learn to celebrate natural inequality, 338 00:27:53.440 --> 00:27:56.640 we cannot appreciate the greatest virtue of the market economy, 339 00:27:56.640 --> 00:28:00.240 its ability to coordinate the needs and desires of all individuals 340 00:28:00.240 --> 00:28:01.580 through Peaceful Exchange. 341 00:28:03.240 --> 00:28:05.060 In Mises' section on interventionism, 342 00:28:05.060 --> 00:28:07.800 he advances a theory concerning the inevitable exhaustion 343 00:28:07.800 --> 00:28:10.680 of the reserve fund, his phrase for the capital stock 344 00:28:10.680 --> 00:28:12.080 built up under capitalism. 345 00:28:12.960 --> 00:28:14.560 He predicts that as the reserve fund 346 00:28:14.560 --> 00:28:16.440 is increasingly looted by government, 347 00:28:16.440 --> 00:28:18.680 society will grow poorer and more stagnant 348 00:28:18.680 --> 00:28:20.520 and eventually the system will fail. 349 00:28:24.380 --> 00:28:27.040 The market economy will then be reestablished 350 00:28:27.040 --> 00:28:30.080 only if the right intellectual conditions are in place. 351 00:28:30.080 --> 00:28:34.880 He confidently predicts in 1949 that we will exhaust the reserve fund in the United States 352 00:28:34.880 --> 00:28:37.120 just as Britain had. 353 00:28:37.120 --> 00:28:40.920 And yet it does not appear that the interventionist state has exhausted itself. 354 00:28:40.920 --> 00:28:44.520 Government spending is at an all-time high and tax revenues as well. 355 00:28:44.520 --> 00:28:46.000 Was Mises wrong? 356 00:28:46.000 --> 00:28:51.520 Well, let's look at the sectors of the economy that are the most unworkable, most dilapidated, 357 00:28:51.520 --> 00:28:52.520 most stagnant. 358 00:28:52.520 --> 00:28:58.520 We can start with the public schools, the postal system, government transit system, 359 00:28:58.520 --> 00:29:05.520 The military, the courts, and the inner cities that have received so much loving attention from the government over the last few decades. 360 00:29:05.520 --> 00:29:10.520 In every case, we see stagnation, waste, vast bureaucracy, and lack of innovation. 361 00:29:10.520 --> 00:29:12.520 That is, we see the hand of the state. 362 00:29:12.520 --> 00:29:16.520 These institutions are incapable of rational economic calculation, 363 00:29:16.520 --> 00:29:22.520 and they look increasingly ridiculous and broken down when compared to the market-driven sectors. 364 00:29:22.520 --> 00:29:24.520 So Mises was right. 365 00:29:24.520 --> 00:29:29.960 These institutions have largely exhausted themselves. In the coming decade and maybe sooner, they 366 00:29:29.960 --> 00:29:35.680 will crumble. Meanwhile, the sectors governed by market forces and voluntary choices, which 367 00:29:35.680 --> 00:29:40.600 thus enjoy the fruits of innovative human energy, will continue to thrive and grow and 368 00:29:40.600 --> 00:29:45.920 displace the old creaking interventionist apparatus. Mises was right. Interventionism 369 00:29:45.920 --> 00:29:51.820 is not a permanent system of social organization. If we set out to list all the areas in which 370 00:29:51.820 --> 00:29:55.820 In which Mises was prescient, we would be here all afternoon. 371 00:29:55.820 --> 00:30:01.820 Just for starters, he demonstrated the economic impossibility of socialist economy and foretold its collapse. 372 00:30:01.820 --> 00:30:06.820 He saw early on in his career that central banking would lead to inflation and business cycles. 373 00:30:06.820 --> 00:30:10.820 He predicted that social welfareism would lead to social disintegration. 374 00:30:10.820 --> 00:30:15.820 He saw that socialized medicine would produce the ironic result of less good health. 375 00:30:15.820 --> 00:30:21.820 He foresaw that interventionism would lead to the opposite results of those promised by its proponents. 376 00:30:21.820 --> 00:30:25.820 I'd like to draw your attention to a paragraph on page 859. 377 00:30:25.820 --> 00:30:30.820 Here Mises talks about the role of public opinion, a subject much in the news today. 378 00:30:30.820 --> 00:30:33.820 He writes that one of the great benefits of the market economy 379 00:30:33.820 --> 00:30:39.820 is that members of the public can benefit from technical expertise they do not themselves possess. 380 00:30:39.820 --> 00:30:44.820 You do not have to know how to build a website in order to order a book from Amazon.com. 381 00:30:44.820 --> 00:30:50.700 You don't need to know how to pilot a 747 to fly coast to coast. 382 00:30:50.700 --> 00:30:54.260 But matters are different regarding economic policies. 383 00:30:54.260 --> 00:31:00.380 The practical use of the teachings of economics presupposes their endorsement by public opinion. 384 00:31:00.380 --> 00:31:04.900 Mises writes, and he's very emphatic on this point, the best theories are useless if not 385 00:31:04.900 --> 00:31:07.060 supported by public opinion. 386 00:31:07.060 --> 00:31:10.740 They cannot work if not accepted by a majority of the people. 387 00:31:10.740 --> 00:31:15.260 Whatever the system of government may be, there cannot be any question of ruling a nation 388 00:31:15.260 --> 00:31:20.700 lastingly on the grounds of doctrines and variance with public opinion. 389 00:31:20.700 --> 00:31:26.060 Because Mises held this view, he devoted enormous personal resources to teaching average people 390 00:31:26.060 --> 00:31:29.060 about the benefits of economic freedom. 391 00:31:29.060 --> 00:31:34.540 Here Mises was basing his practice on the theory of La Bodie and Hume that all governments, 392 00:31:34.540 --> 00:31:40.220 no matter how powerful seeming, are fundamentally fragile and cannot rule solely by fear and 393 00:31:40.220 --> 00:31:45.020 and coercion because the enforcers are necessarily always in the minority. 394 00:31:45.020 --> 00:31:49.940 They depend, all of them, on some measure of public willingness to be ruled. 395 00:31:49.940 --> 00:31:55.540 Thus, all governments pursue policies that are in some measure, at least tacitly, supported 396 00:31:55.540 --> 00:31:56.540 by the people. 397 00:31:56.540 --> 00:32:01.300 Hence, the new deal was only made possible by the dying public consensus in favor of the 398 00:32:01.300 --> 00:32:02.740 market economy. 399 00:32:02.740 --> 00:32:06.980 And hence, the always economically disastrous Soviet Union finally collapsed when the public 400 00:32:06.980 --> 00:32:36.980 What can we say about our own time? What does public opinion support today? In the media, we hear the public is very happy with the rule of Clinton. The polls seem to indicate support for his policies a factoid, which has caused supporters of the market much despair. In an effort to sort out this mysterious subject, I'd like to distinguish three methods of discerning public opinion. The first is that which Mises identified. 401 00:32:36.980 --> 00:32:46.980 If we seek a society in which the desires of the public are manifest in the use of social resources, the market economy provides it. 402 00:32:46.980 --> 00:32:54.980 Only here do we have the means of discovering the values of the masses and signaling businessmen what to produce and in what quality and quantity. 403 00:32:54.980 --> 00:33:05.980 The failure to understand this leads the likes of Janet Reno to conclude that the wrong firm has temporarily won the software battle or that a toy retailer is too large. 404 00:33:05.980 --> 00:33:09.260 Others complain that the wrong products are chosen by the people. For example, 405 00:33:09.260 --> 00:33:15.380 cigarettes are more valued than copies of the State of the Union address. 406 00:33:15.380 --> 00:33:17.500 The truth is that the market 407 00:33:17.500 --> 00:33:22.380 is a daily and hourly plebiscite over who or what will be the winners or losers. 408 00:33:22.380 --> 00:33:27.340 And the market has proven itself capable of serving a vast range of interests. 409 00:33:27.340 --> 00:33:32.700 Classical music aficionados are served as efficiently as those who prefer country music. 410 00:33:32.700 --> 00:33:36.140 Moreover, we can have some confidence in the outcome of this vote, 411 00:33:36.140 --> 00:33:39.300 because people are laying their own personal property on the line 412 00:33:39.300 --> 00:33:42.460 and putting their money where their values are. 413 00:33:42.460 --> 00:33:45.580 In all of human history, philosophers have sought to find a system 414 00:33:45.580 --> 00:33:50.180 of social organization that truly embodies the will of the people. 415 00:33:50.180 --> 00:33:53.860 With the market economy, we have that system. 416 00:33:53.860 --> 00:33:58.380 How disgraceful that week after week on Sunday talk shows we hear politicians explaining to us 417 00:33:58.380 --> 00:34:02.500 the American people want this and the American people want that. 418 00:34:02.500 --> 00:34:04.500 How can they know? 419 00:34:04.500 --> 00:34:08.620 The polls they cite represent nothing but words in the air. 420 00:34:08.620 --> 00:34:12.380 Just once I would like to hear one of these politicians tell the truth. 421 00:34:12.380 --> 00:34:19.300 We know what the American people want based on which entrepreneurs and companies make the most money. 422 00:34:19.300 --> 00:34:25.260 We cannot know whether the American people truly want federal government education standards. 423 00:34:25.260 --> 00:34:30.100 But we can know because we have eyes to see that they want imported cars that work, 424 00:34:30.100 --> 00:34:35.600 Books delivered to their doorsteps overnight, and lots of do-it-yourself home improvement products. 425 00:34:35.600 --> 00:34:41.100 We know this because the companies that effectively deliver these products are flourishing. 426 00:34:41.100 --> 00:34:44.100 Well, what about those public opinion polls? 427 00:34:44.100 --> 00:34:48.600 Well, the dirty secret is they nearly always consist of random calls to people's homes, 428 00:34:48.600 --> 00:34:54.600 and two-thirds of the people who pick up the phone hang up, refusing to answer the questions. 429 00:34:54.600 --> 00:34:59.100 If you've received a call from a polling firm, you know why people are reluctant. 430 00:34:59.100 --> 00:35:03.440 There is nothing in it for you. It feels like an invasion of privacy. You have no way of 431 00:35:03.440 --> 00:35:09.620 judging the veracity of the caller. If your political opinions are politically incorrect, 432 00:35:09.620 --> 00:35:15.620 that is, if you disagree with Clinton or CBS, you are far less likely to talk. An official 433 00:35:15.620 --> 00:35:20.980 pollster might as well be from the so-called Justice Department for all any citizen knows. 434 00:35:20.980 --> 00:35:25.860 Hence, participants tend to have conventional opinions they feel safe in spouting off to 435 00:35:25.860 --> 00:35:33.940 Most people are unwilling to express an un-PC opinion at a cocktail party, much less to 436 00:35:33.940 --> 00:35:40.180 a pushy character interrupting their dinner. Pre-election polls provide a good test of 437 00:35:40.180 --> 00:35:46.380 all this, and they are less and less able to predict actual results. The more unconventional 438 00:35:46.380 --> 00:35:51.940 an opinion is, for example, that a pro-wrestler named The Body ought to be elected governor, 439 00:35:51.940 --> 00:35:54.540 The less polls are able to discover. 440 00:35:54.540 --> 00:35:57.200 Political outliers, even if they are in the majority, 441 00:35:57.200 --> 00:36:00.940 fly under the polling radar screen. 442 00:36:00.940 --> 00:36:03.980 The question of whether a president ought to be removed from office 443 00:36:03.980 --> 00:36:07.340 falls into the potentially dangerous category. 444 00:36:07.340 --> 00:36:08.740 If the person agreeing to the poll 445 00:36:08.740 --> 00:36:11.500 senses that he will be regarded as a kook for saying 446 00:36:11.500 --> 00:36:14.420 the president ought to be tried and convicted, on the margin 447 00:36:14.420 --> 00:36:16.340 he will say what he is supposed to say 448 00:36:16.340 --> 00:36:19.580 and not say what he is not supposed to say. 449 00:36:19.580 --> 00:36:24.360 This thesis is easily tested. Find a medium that represents something of a cross-section 450 00:36:24.360 --> 00:36:29.980 of the population, where people can express their political opinions without fear of reprisal 451 00:36:29.980 --> 00:36:34.740 or consternation. Compare answers on that medium to the results of the typical phone 452 00:36:34.740 --> 00:36:40.900 poll. As it happens in the last year, massive internet news sites like AOL, CNN and MSNBC 453 00:36:40.900 --> 00:36:48.700 have become such outlets. Phone polls show 65 to 70 percent of 500 compliant people favoring 454 00:36:48.700 --> 00:36:53.780 Clamoring a censure resolution in the Senate, the very thing the media are clamoring for. 455 00:36:53.780 --> 00:36:58.980 But web polls show exactly the opposite. Between 65 and 70 percent of participants, tens of 456 00:36:58.980 --> 00:37:05.980 thousands of willing clickers want a full-blown trial and half say Clinton should resign immediately. 457 00:37:05.980 --> 00:37:10.220 In addition, the results of these polls fit with most people's experience of their neighbors' 458 00:37:10.220 --> 00:37:15.460 opinions. Now, I know these polls always have this caveat, the quote, they are not scientifically 459 00:37:15.460 --> 00:37:30.460 But in what sense is a phone poll of 500 self-selected people brow-beaten into saying what they're supposed to say any more quote scientific than an internet poll soliciting the opinions of tens or hundreds of thousands of separate and anonymous mouse clickers? 460 00:37:30.460 --> 00:37:42.460 The most absurd public opinion polls are those on taxes. Now if there's one thing we know about taxes, it's that people do not want to pay them. 461 00:37:42.460 --> 00:37:50.460 If they wanted to pay them, there wouldn't be a need for taxes. People would gladly figure out how much of their money the government deserves and send the check. 462 00:37:50.460 --> 00:37:59.460 And yet we routinely hear about opinion polls that reveal that the public likes the tax level exactly as it is and might even like it higher. 463 00:37:59.460 --> 00:38:09.460 Next they'll be telling us that the public thinks the crime rate is too low or the American people would really like to be involved in more auto accidents. 464 00:38:09.460 --> 00:38:19.460 When Mises writes of public support for market economics, he's speaking on a different level. 465 00:38:19.460 --> 00:38:23.460 He's addressing the most basic ideological preferences of the public. 466 00:38:23.460 --> 00:38:26.460 What kind of society do we want to live in? 467 00:38:26.460 --> 00:38:32.460 One planned by the government, or one in which free individuals have control over the means of production 468 00:38:32.460 --> 00:38:36.460 and can accumulate wealth through serving the consuming public? 469 00:38:36.460 --> 00:38:42.460 A society in which the government confiscates income or one in which wealth can be passed to new generations. 470 00:38:42.460 --> 00:38:50.460 These are fundamental questions and the way they are answered really do determine in the long run how a political system is organized. 471 00:38:50.460 --> 00:38:56.460 The public's passion for a free society was destroyed by the intellectual class of the progressive era 472 00:38:56.460 --> 00:39:05.460 and this culminated in a dramatic shift in public opinion during the 1930s away from market economics and towards a planning mentality. 473 00:39:05.460 --> 00:39:14.460 The years between 1930 and the mid-1970s were characterized by a notable lack of support for freedom among the intellectual classes. 474 00:39:14.460 --> 00:39:20.460 The glorious news that I can report to you today is that this has begun to change. 475 00:39:20.460 --> 00:39:28.460 When the Mises Institute was founded in 1982, I was thrilled to find even one student interested in the thought of Mises and Hayek and Rothbard. 476 00:39:28.460 --> 00:39:34.460 Today, we are overwhelmed and even lack the resources to serve them all as we would like. 477 00:39:34.460 --> 00:39:42.460 And these are not marginal students, but rather the best, the ones so smart that even their left-wing professors dare not dismiss them. 478 00:39:42.460 --> 00:39:51.460 Since 1982, we have developed a massive network of dissident intellectuals to fight the socialistic status quo on campus. 479 00:39:51.460 --> 00:39:54.460 And what thrills me the most is not the numbers, after all. 480 00:39:54.460 --> 00:40:01.460 Many more will attend this year's Socialist Scholars Conference than our own Austrian Scholars Conference, but rather the trend, 481 00:40:01.460 --> 00:40:08.460 The energy, the excitement, the new ideas, the genuine scholarship are all working in our direction. 482 00:40:08.460 --> 00:40:13.460 Meanwhile, the left is tired, spent and increasingly desperate. 483 00:40:13.460 --> 00:40:18.460 Now the obvious objection to my thesis is that the government is not getting any smaller. 484 00:40:18.460 --> 00:40:22.460 The regulators are on the march, the judges are monsters. 485 00:40:22.460 --> 00:40:30.460 Never before in American history outside of World War has the government controlled so much of our lives and taken so much of our property. 486 00:40:30.460 --> 00:40:39.460 All true. But let me tell you about an insight passed on to me by Yuri Maltsev, who worked as an economist during the Gorbachev era. 487 00:40:39.460 --> 00:40:48.460 Contrary to what the U.S. press said at the time, the sheer viciousness of the state was more on display in the 1980s than under Brezhnev. 488 00:40:48.460 --> 00:40:56.460 Gorbachev's anti-drinking campaign alone led to mass spying, mass arrests, and mass confiscation of income. 489 00:40:56.460 --> 00:41:04.460 Huge vineyards were plowed under, distilleries were destroyed, people were frog-marched through the streets and dragged into jail in public humiliation. 490 00:41:05.460 --> 00:41:11.460 Moreover, Gorbachev raised instead of lowered taxes, managers were granted less, not more, autonomy. 491 00:41:12.460 --> 00:41:17.460 Urey says it was precisely this step up in enforcement that helped lead to the downfall of the Soviet system. 492 00:41:18.460 --> 00:41:25.460 The public consensus for Soviet statism was no more, and in a few years the apparatus of socialism came tumbling down. 493 00:41:26.460 --> 00:41:36.460 His point is that the end times for a regime, we can expect it to behave like a wounded rat, more vicious in its death throes than in full health. 494 00:41:36.460 --> 00:41:41.460 Does that consensus against government really exist today in America? 495 00:41:41.460 --> 00:41:47.460 The seeds are planted and growing, although we have much work to do. 496 00:41:47.460 --> 00:41:55.460 I'm convinced, as was Mises, that it is far more important to raise up a new class of intellectuals than to get the right people elected to office. 497 00:41:55.460 --> 00:42:02.660 It's also important to teach businessmen that what they do as a matter of course is extremely beneficial to their fellow man. 498 00:42:02.660 --> 00:42:09.460 As Mises says, quote, economics must not be relegated to the classrooms and statistical offices. 499 00:42:09.460 --> 00:42:12.060 It must not be left to esoteric circles. 500 00:42:12.060 --> 00:42:17.660 It is the philosophy of human life and action that concerns everybody and everything. 501 00:42:17.660 --> 00:42:21.860 It is the pith of civilization and of man's human existence. 502 00:42:21.860 --> 00:42:35.860 And it is the natural, commercial and professional elites of society working with a liberty-minded class of intellectuals that will ultimately tip the balance in favor of freedom and bring an end to the interventionist system. 503 00:42:35.860 --> 00:42:45.860 It was the genius of Mises that he could even imagine this possibility in the dark days in which he wrote his treatise. 504 00:42:45.860 --> 00:42:59.860 But he knew that society was the product of a body of ideas, and to his mind it was an unfortunate but reversible reality of 1949 that the wrong intellectuals and the wrong ideas had triumphed. 505 00:42:59.860 --> 00:43:06.860 From time to time I hear freedom-lovers despair over our supposed lack of progress and the unlikelihood of victory. 506 00:43:06.860 --> 00:43:11.860 But the evidence of our eventual triumph is all around us. 507 00:43:11.860 --> 00:43:16.100 Mises, the master economist who showed us the way, did not have the benefit of seeing 508 00:43:16.100 --> 00:43:21.860 what we see and yet he never gave up hope and he never stopped working for freedom. 509 00:43:21.860 --> 00:43:26.100 The members and faculty of the Mises Institute have a special understanding of what it will 510 00:43:26.100 --> 00:43:31.820 take to succeed and what it will require to defend the basis of civilization against those 511 00:43:31.820 --> 00:43:33.500 who would destroy it. 512 00:43:33.500 --> 00:43:39.540 Therefore, it is our moral obligation, it is our intellectual duty, it is our profound 513 00:43:39.540 --> 00:43:48.540 to carry on the work of Mises and to make proper use of the rich treasury of knowledge he left us for the advancement of human liberty.