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.
He calls for the restoration of cities and towns, the revival of the nation's industrial base through new spending programs.
He makes more housing a national priority.
He promises more education spending, new resources for the armed forces, a secure system of old-age
pensions and more equitable health care delivery.
He takes credit for a purported economic boom and further promises to surpass all previous
records in national productivity.
Now this isn't Clinton's State of the Union address, it was Stalin's 1946 speech.
He concluded as follows, the Soviet people are ready for it.
Under the leadership of the Soviet government with Stalin at its head, the Soviet people
People will transform the law on the new five-year plan into life.
Now, if anyone still took Clinton seriously, this could be a chilling comparison after
all.
There was a time when the State of the Union speech set the agenda for the nation.
Now it is seen as little more than theater.
Even the news media treated it like a movie premiere, evaluating the script, the acting,
the emotional impact, but never confusing it with real life.
In Washington now, they only pretend to make grand new policy. In fact, as Moynihan pointed
out last year, they're just trying to get through the day.
If we look at the present state of the war between government and the economy, it is
clear that the economy is winning. Technological developments far outpace the ability of government
to control them. The public is participating as never before in capital markets. Private
But arbitration is steadily replacing government courts.
The sheer power of market forces overwhelms government power on an almost daily basis.
Books on freedom and against the corruptions of government are more available than ever
before even if today's professors are still loathe to see their students get their hands
on them.
Through the internet, the Mises Institute reaches a worldwide audience on a minute by
minute basis.
Several articles, for example, that were once unavailable are now easily available and downloadable
at no charge to students and faculty around the clock and around the world.
We hear from everywhere, from the University of California to the University of Beijing.
The Austrian School has sympathizers in nearly every economics department in the country,
and in such departments as history and philosophy as well.
Meanwhile, the moral legitimacy of the government, its officials and its policies, has been on
Show me a student who aspires to enter the civil service today and I'll show you a failure.
Politicians as a group and not just one party are deeply distrusted and even detested. At
all levels of government, the competent are leaving for the private sector. The military
cannot retain pilots. The IRS cannot retain accountants. The Labor Department cannot retain
Economists. Politicians are dropping like flies and the two parties are having
trouble recruiting anyone respectable to put their name on a ballot. The Clinton
administration can't even retain cabinet members. As for voting, few bother to do
it anymore. But far from being a sad commentary on the present state of the
civic culture, non-voting is actually a form of secession from a fraudulent
system that offers the illusion of democratic participation but not its
Nobody in Washington believes in Keynesian physical planning anymore.
Sure, they play lip service to the idea, because it provides a rationale for their jobs.
But the last hint that government spending should be used to boost macroeconomic aggregate demand
came in 1993, just after Clinton was first elected.
In the meantime, the growth in government spending has slowed dramatically since the 1980s,
A decade in which 163% in government spending was accompanied by daily talk of budget cuts.
A new high-tech corporate elite is being raised up, disconnected from government. They make
their fortunes by virtue of their terrific innovations and their extreme attentiveness
to the needs of the consumer and through a competitive struggle with others who are constantly
attempting to do the same. The members of this new corporate elite are far less connected
to the idea and the regulatory apparatus of the nation state than any of their predecessors.
They have witnessed firsthand the remarkable power of the market economy to transform society
and individual lives and have seen nothing but failure from government programs and consortiums.
Now we must remember that we are in the midst of an economic boom. I'd feel a lot more
like celebrating the soaring stock market and the rock bottom unemployment rate if
If the Fed hadn't been boosting the money supply, a fact which is already showing up
in the declining value of the dollar on international exchange, in time the boom will turn to bust
and market traders will receive a new lesson in what that old-fashioned word recession
means.
But the question we have to ask ourselves is this, in the next recession, will the forces
of government be able to impose the kind of fiscal and regulatory planning they once enacted
as a matter of course?
I don't think so. To impose a dramatic step up in government power requires public consensus
in favor of government solutions that simply no longer exist. What we are witnessing is
the continuation of a process that began to be revealed in the late 1980s when socialist
regimes crumbled despite every prediction that they would be permanent. The same forces
are working themselves out in different and unpredictable ways right here at home. The
The ideological foundations of all-round statism are beginning to collapse.
It has never been more likely that we will see a reflowering of classical freedom in
our own time.
What a distance we have traveled from 1949.
In the year Mises's Human Action was published, capitalism seemed to have no future.
The Great Depression was widely attributed to the failure of the free market, despite
the valiant efforts of Henry Hazlitt to convince the world otherwise.
The New Deal, combined with wartime economic planning, was said to have saved us from further
ruin. The ideology of socialism was all the rage in intellectual circles as it had been
for decades. The old idea of the liberal society was gone seemingly forever. It was a relic
of a distant age and certainly not a model for a modern industrial society.
The future was clear. The world would move towards government planning on all aspects
of Life and Away from the Anarchy of the Market.
The U.S. had fought and won a European war against National Socialism and an Asian war
against a regional empire.
The ideological lesson of this experience, however, was not that the free society is
superior.
But recall that the U.S. had been closely allied with Stalin's Soviet Union, a regime
even more deadly and totalitarian than the foes the U.S. had battled.
The Experienced Reinforced New Deal Statism When the U.S. government is given total power,
so the lesson ran, it can get the job done so long as the government is granted discretion
to choose its friends and its enemies along pragmatic lines. Moreover, the government
must be allowed to make decisions over issues of life and death. It must be able to conscript
as the U.S. did. It must be allowed to take innocent life with deliberate intent as the
as the U.S. did in mass bombings of whole cities.
In terms of the ideological superstructure, this was the era of the total state.
People the world over had been shaken to their souls at the awesome display of nuclear weapons
at Hiroshima and Nagasaki, at the ability of three heads of state to meet and carve up
Europe into spheres of influence, at the seeming central role that governments played as a
force in history, and at the awful and undeniable reality that individuals appeared to be merely
pawns in the new superpower-driven drama of world affairs.
In 1949, the State Department and the Defense Department drafted a document called National
Security Council Finding 68.
NSC 68 was a blueprint for global U.S. hegemony.
It asserted that only the U.S. government could muster the moral, political, economic
and ideological resources to reestablish and maintain world order, which in turn required
a massive munitions and covert action build-up and a permanent global military and CIA presence.
It would be a new and even more ambitious British Empire.
We had come a long way from the original American vision of a country uniquely situated to avoid
international political conflicts.
In 1949, the major concern of the U.S. power elite was to cement its position by establishing
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.
The only critics deemed respectable were Marxists, who thought this planning apparatus was entirely too enthralled with capitalist ideas.
Meanwhile, the real resistance movements in the U.S., including the Southern Agrarians and the America First Committee, had been smashed and discredited,
and leaders branded as reactionaries or axis sympathizers.
The election of 1948 seemed to confirm this as the Dixiecrats were crushed and the Truman
and Truman re-elected in an election that represented the high watermark of voter participation.
What was left of the anti-socialist element in American life began to ignore U.S. statism
and to focus onto a narrow anti-Soviet sentiment which was denounced and simultaneously used
by the Truman administration to bring about a huge military build-up.
Anyone who doubted the glories of the escalating welfare-warfare national security state was
accused of having a, quote, authoritarian personality, in Theodore Adorno's phrase,
that still has a prominent place in undergraduate abnormal psychology texts.
Freedom-minded intellectuals were dying out, and the few remaining ones had virtually no
publishing outlets.
Most of the dissident publications that had survived the Depression had been killed off during wartime censorship.
And shaped by years of war propaganda and fireside chats before that, radio networks and newspapers chose their programming based on nationalistic concerns.
Love of the nation's state had even come to displace traditional religion.
The flag became an object of worship for the second time in American history, the first being during Wilson's invasion of Europe.
Religious sentiments were added to the national pledge and to depreciating coinage, an act that our forebears might have regarded as blasphemous.
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.
In 1949, freedom seemed to have no future.
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.
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.
As one writer said at the time, without irony, Keynes indeed had the revelation, which he capped.
His disciples are now dividing into groups, each taking sustenance from the Keynesian larder.
The struggle for the apostolic succession is on.
Seymour Harris, an economics professor at Harvard, whose 1949 book, Economic Planning, had a huge impact,
sums up what was considered the empirical reality of Soviet socialism.
Twenty years ago he wrote, Russia presented her first five-year plan.
Her phenomenally rapid rate of industrialization and economic growth
The economic growth attracted the attention of all the major nations of the world.
As tens of millions were shot or starved to death in the charnel house of socialism,
Harris wrote that, quote, the numerous advantages of the socialist state cannot be denied.
For example, it can achieve a distribution between production of essential and non-essentials, apparently impossible for the capitalist state.
Concentration on essentials prior to producing non-essentials, the economy of the USSR has much to recommend it.
Among the advantages that Harris lists are these, the USSR is not troubled by excessive salesmen and advertisers.
What of Hayek's 1946 criticism that planned economies and loss of freedom are all of the piece?
Harris claims to show that Hayek has fallen victim to an elementary fallacy.
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.
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.
As for the efficiency of the planned economy, there was no need to fear.
Exhibit A in the intellectual arsenal of the pro-planning economists was World War II.
In the U.S., production was planned, prices controlled, labor conscripted, and consumption regulated.
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?
The Supreme Court was busy shredding the Constitution and centralizing power in the executive state.
State. In 1949 the court held in Wolf v. Colorado that the search and seizure
provisions of the Bill of Rights applied to the states and to the central
government should be charged with protecting people from their respective
state governments. Now of course in the original design of the Constitution the
Bill of Rights was to protect the people of the states from the central government
an intention that was turned on its head by the so-called doctrine of
incorporation. But even aside from constitutional law, Hoppe served for the
and the Feds to claim to be the guardians of freedom.
After all, the centralization of power is one of the greatest threats to liberty ever known.
In these years, the state and the corporate classes were one as well.
Every major company was now beholding to the planning state, having been shaped by FDR's
Blue Eagle program, wartime price controls and all-round unionization.
The captains of industry were joined at the hip with the regulatory apparatus.
The American worker was terrified for his family's livelihood and in no mood to rock the boat.
Such traditional institutions as advertising and individual initiative were declared dead
in plays such as Death of a Salesman and books like The Organization Man.
In retrospect, it is clear that the foundations for the massive step up in state power of
the 1960s and the war on such countervailing institutions as private property, the family
and federalism were laid in the late 40s and early 50s.
The depression and the war had demolished traditional loyalties and demonstrated the massive power of government.
And the 1950s effort to globalize and universalize the planning state set the stage for the continued socialization of society that followed.
Mises, who lived through it all, was singular because he had both the intellectual apparatus to fight what appeared to be an invincible foe
and the moral stamina to do so, even though he knew he would doom any future he had in academia.
And yet he saw what needed to be done and did it.
The very basis of the market economy and the free society needed to be presented anew
and reestablished on a solid intellectual foundation for new generations.
In the midst of the war, he had already written that the most important post-war priority
was to fight the forces of statism on the battlefield of ideas.
With human action, he would engage in that battle nearly alone.
And yet one reason the book stands out as it does, it is not about politics as such.
Rarely does he directly address the burning political issues of the day and then only in a timeless way.
Two-thirds of the book is a painstaking reconstruction of the theoretical foundations and applications of economic science.
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.
It was they who explained the workings of the free economy and the rationale for eliminating status restrictions on trade and labor.
In Mises' words, they, quote, reduced the prestige of conquerors and expropriators and demonstrated the social benefits derived from business activity.
While others attributed the rise of the glorious Industrial Revolution to mysterious forces
or accidents of history, Mises said it was the economists who exploded mercantilism and
made it possible for society to adopt the ideals of freedom.
The history of the American Revolution would seem to bear him out.
We hear often about the political education of the founders, but just as important were
their economic ideals.
For example, Jefferson studied the economics of Turgot, whom Rothbard has identified as
as a founder of the Austrian School.
As Mises looked at the ideological landscape of 1949,
he saw the philosophical foundations of freedom
being destroyed.
Austria had been engulfed in statist ideology, America too,
and he was shocked and dismayed at the status accorded
to totalitarian regimes like the Soviet Union.
But he also saw that the difference
between the New Deal and Stalin's five-year plan
was not one of kind, but of degree.
and he set out to do everything in his power to stop the encroaching darkness and relight the flame of liberty.
In placing blame for the destruction, he again sought an explanation in the intellectual realm.
In Germany, it began with fallacies concerning money creation and the supposed benefits of protectionist policies.
In the US, it was the ideological baggage of progressivist ideology working hand in glove with Keynesian economics,
An import from Britain that had socialized so much of the birthplace of the Industrial Revolution.
All around, Mises saw assaults on the basic tenets of sound economics.
It was said that the price system does not work, that property rights are a hindrance
rather than the path to economic progress, that business does not serve society but rather
exploits it, that laborers have a friend and not an enemy in the government, that government
can innovate much better than the market, and that the freedom of contract is a source
is a source of waste rather than the embodiment of efficiency.
Mises predicted that civilization, quote, will and must perish
if nations continue to pursue the course which they have entered upon under the spell of doctrines
rejecting economic thinking.
So strong was his faith and ideas that he dared begin
at the very beginning with the general science of human action,
with the nature of man as a choosing agent, with the foundation of economic
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.
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.
of the Market.
Clearly, Mises had tremendous confidence
in his readership, a confidence that
was confirmed when his massive treatise was made
a selection of the Book of the Month Club
and became an academic bestseller almost overnight.
More importantly, he believed that it was only
through a painstaking reconstruction
of economic science the tide of history could be turned.
Mises lived to see the free market movement reborn
as a consequence of this book.
He died knowing that he had given the Austrian school
in New Birth, and he thrilled to see brilliant young students like Murray Rothbard picking
up the torch. But he did not live to see how his ideas would have a broader impact in world
affairs. As we have learned at this conference, human action almost did not see the light
of day. Only kind benefactors such as Lawrence Ferdig, a friendly director of the Yale University
Press and good colleagues such as Fritz Machlup and Henry Hazlitt made it possible. Mankind
is very much in their debt.
But as we explore the political message of human action, I would first like to focus
on an issue that was most pressing in Mises' time and continues to affect our own dilemma
in the most direct way.
This concerns a section on human action not often discussed, chapter 34, on the economics
of war.
He begins with this startling statement, quote, the market economy involves peaceful cooperation.
It bursts asunder when the citizens turn into warriors instead of exchanging commodities
and services, fight one another.
Now in 1949 this statement flew in the face of conventional wisdom.
It was widely believed that the Second World War, far from being contrary to economic efficiency,
was the means by which the U.S. and its allies had pulled out of the depression.
Government had funded a massive amount of capital expenditure, boosted aggregate demand,
provided work to millions, eliminated idle industrial capacity.
War was not economically destructive, it was said, but constructive and productive.
Mises argued that war and the market economy, war and a high civilization are incompatible.
To be sure, he said, sometimes peoples must fight wars. But if it is necessary, only the
classical form of warfare is acceptable. International law still applies. Civilians must be left out
of the battle. Neither must the civilian economy be touched. Prices are not to be fixed. Production
not to be planned. War should be defensive, limited in duration and scope. Conscription
is out of the question. Today he says the ideology of the total state has given us total
war as well, involving the whole of the civilian population and the whole economy. As Mises
writes, quote, modern war is merciless. It does not spare pregnant women or infants.
It is indiscriminate, killing and destroying. It does not respect the rights of neutrals.
Humans are killed, enslaved or expelled from the dwelling places in which their ancestors
lived for centuries.
Mises says this is a direct result of the ideology that makes the state the center of
a nation's life and worship.
Indeed, when you consider the U.S. aggressive war against Iraq and the millions of lives
that its bombs of embargoes have cost, you begin to gain a glimpse of what Mises was
referring to.
This is why it is utterly preposterous for modern conservatives to pretend to combine
and love of the free society with love of the culture of warfare and military might.
What too many conservatives mean when they evoke a strong national defense is not defense
at all, but the preservation and expansion of empire.
But if we follow Mises, we see that if we want freedom, we must embrace a foreign policy
that rose up with the advance of freedom in the 18th and 19th centuries.
That is to say, we must reject militarism, imperialism and foreign entanglements and
and embrace trade instead of conflict as the basis of international relations.
The immediate retort from today's pundits is the U.S. cannot afford to withdraw from
a dangerous world.
People are dying in Kosovo, Somalia, Haiti, Liberia, Rwanda, Sudan, Angola, Nigeria, Congo
and everywhere else, and the U.S. as the world's indispensable nation has a responsibility
for doing something about it.
Left unexamined is the assumption that the U.S. should destroy regimes that U.S. political
Whence this impulse to free the world of sin is defined by the State Department, regardless
of the cost in lives and freedom? Mises traces it to the evil Wilson. Quote, under laissez-faire,
he says, peaceful coexistence of a multitude of sovereign nations is possible. The tragic
error of President Wilson was that he ignored this essential point. Recall, to the Wilson
was no advocate of free markets. He was a progressivist, academic and early socialist as Rothbard has argued so persuasively.
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
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
whose values are different from those celebrated in the District of Columbia.
It is long past time for us to come to terms with the fact that our country is host to
an imperial power.
We have loved the world over for our people and our commerce, just as our government is
loathed and despised.
If we believe in the old ideal of America upholding the light of freedom for the whole
world to see, this is an uncomfortable truth.
But nevertheless, it is a priority to come to terms with the deadly damage the U.S. government
that is inflicted throughout the world and to oppose it with all our might.
Mises also addressed another crucial issue of our time, namely poverty.
As he points out, there was no question about poverty or riches in the pre-capitalist era.
For the huge majority of the population, there was only grinding poverty.
Capitalism made possible continuously rising living standards for the masses.
As a result, the only people who are poor today by any historical standard
of those who are unable to care for themselves or who refuse to do so.
Contrary to the stereotype, Mises was a strong advocate of private charity.
He celebrated both religious and secular groups that care for those who cannot care for themselves,
as well as the families that provide care
in times of need.
He praises them for accomplishing marvels and he points out that private charity
is dependent on the flourishing of the market economy.
Since the more capitalism increases wealth,
the more is available for giving.
But Mises refuses to take at face value the claims of politicians who said they want to abolish poverty because they also desire equality.
The goal of equality, Mises says, poses a huge danger to the market economy.
If pursued far enough, it's capable of destroying the market since the market depends on inequality.
That is to say, it is the radical inequality of individuals, the fact that people are unique,
that brings about the desire to exchange goods and services to the mutual benefit of everyone involved.
It's no coincidence, Mises says, that, quote, the most despotic system of government that history has ever known,
Bolshevism, parades the very incarnation of the principle of equality.
In a similar vein, he writes that egalitarianism is, quote, very clear in its abomination of large fortunes.
It objects to big business and great riches.
It advocates various measures to stunt the growth of individual enterprises
and to bring about more equality by confiscatory taxation of incomes and estates
and it appeals to the envy of the injudicious masses.
The results of Mises is an accumulation of power in the hands of a political elite,
the destruction of private savings
and the dramatic curtailing of private initiative.
Until we learn to celebrate natural inequality,
we cannot appreciate the greatest virtue of the market economy,
its ability to coordinate the needs and desires of all individuals
through Peaceful Exchange.
In Mises' section on interventionism,
he advances a theory concerning the inevitable exhaustion
of the reserve fund, his phrase for the capital stock
built up under capitalism.
He predicts that as the reserve fund
is increasingly looted by government,
society will grow poorer and more stagnant
and eventually the system will fail.
The market economy will then be reestablished
only if the right intellectual conditions are in place.
He confidently predicts in 1949 that we will exhaust the reserve fund in the United States
just as Britain had.
And yet it does not appear that the interventionist state has exhausted itself.
Government spending is at an all-time high and tax revenues as well.
Was Mises wrong?
Well, let's look at the sectors of the economy that are the most unworkable, most dilapidated,
most stagnant.
We can start with the public schools, the postal system, government transit system,
The military, the courts, and the inner cities that have received so much loving attention from the government over the last few decades.
In every case, we see stagnation, waste, vast bureaucracy, and lack of innovation.
That is, we see the hand of the state.
These institutions are incapable of rational economic calculation,
and they look increasingly ridiculous and broken down when compared to the market-driven sectors.
So Mises was right.
These institutions have largely exhausted themselves. In the coming decade and maybe sooner, they
will crumble. Meanwhile, the sectors governed by market forces and voluntary choices, which
thus enjoy the fruits of innovative human energy, will continue to thrive and grow and
displace the old creaking interventionist apparatus. Mises was right. Interventionism
is not a permanent system of social organization. If we set out to list all the areas in which
In which Mises was prescient, we would be here all afternoon.
Just for starters, he demonstrated the economic impossibility of socialist economy and foretold its collapse.
He saw early on in his career that central banking would lead to inflation and business cycles.
He predicted that social welfareism would lead to social disintegration.
He saw that socialized medicine would produce the ironic result of less good health.
He foresaw that interventionism would lead to the opposite results of those promised by its proponents.
I'd like to draw your attention to a paragraph on page 859.
Here Mises talks about the role of public opinion, a subject much in the news today.
He writes that one of the great benefits of the market economy
is that members of the public can benefit from technical expertise they do not themselves possess.
You do not have to know how to build a website in order to order a book from Amazon.com.
You don't need to know how to pilot a 747 to fly coast to coast.
But matters are different regarding economic policies.
The practical use of the teachings of economics presupposes their endorsement by public opinion.
Mises writes, and he's very emphatic on this point, the best theories are useless if not
supported by public opinion.
They cannot work if not accepted by a majority of the people.
Whatever the system of government may be, there cannot be any question of ruling a nation
lastingly on the grounds of doctrines and variance with public opinion.
Because Mises held this view, he devoted enormous personal resources to teaching average people
about the benefits of economic freedom.
Here Mises was basing his practice on the theory of La Bodie and Hume that all governments,
no matter how powerful seeming, are fundamentally fragile and cannot rule solely by fear and
and coercion because the enforcers are necessarily always in the minority.
They depend, all of them, on some measure of public willingness to be ruled.
Thus, all governments pursue policies that are in some measure, at least tacitly, supported
by the people.
Hence, the new deal was only made possible by the dying public consensus in favor of the
market economy.
And hence, the always economically disastrous Soviet Union finally collapsed when the public
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.
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.
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.
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.
Others complain that the wrong products are chosen by the people. For example,
cigarettes are more valued than copies of the State of the Union address.
The truth is that the market
is a daily and hourly plebiscite over who or what will be the winners or losers.
And the market has proven itself capable of serving a vast range of interests.
Classical music aficionados are served as efficiently as those who prefer country music.
Moreover, we can have some confidence in the outcome of this vote,
because people are laying their own personal property on the line
and putting their money where their values are.
In all of human history, philosophers have sought to find a system
of social organization that truly embodies the will of the people.
With the market economy, we have that system.
How disgraceful that week after week on Sunday talk shows we hear politicians explaining to us
the American people want this and the American people want that.
How can they know?
The polls they cite represent nothing but words in the air.
Just once I would like to hear one of these politicians tell the truth.
We know what the American people want based on which entrepreneurs and companies make the most money.
We cannot know whether the American people truly want federal government education standards.
But we can know because we have eyes to see that they want imported cars that work,
Books delivered to their doorsteps overnight, and lots of do-it-yourself home improvement products.
We know this because the companies that effectively deliver these products are flourishing.
Well, what about those public opinion polls?
Well, the dirty secret is they nearly always consist of random calls to people's homes,
and two-thirds of the people who pick up the phone hang up, refusing to answer the questions.
If you've received a call from a polling firm, you know why people are reluctant.
There is nothing in it for you. It feels like an invasion of privacy. You have no way of
judging the veracity of the caller. If your political opinions are politically incorrect,
that is, if you disagree with Clinton or CBS, you are far less likely to talk. An official
pollster might as well be from the so-called Justice Department for all any citizen knows.
Hence, participants tend to have conventional opinions they feel safe in spouting off to
Most people are unwilling to express an un-PC opinion at a cocktail party, much less to
a pushy character interrupting their dinner. Pre-election polls provide a good test of
all this, and they are less and less able to predict actual results. The more unconventional
an opinion is, for example, that a pro-wrestler named The Body ought to be elected governor,
The less polls are able to discover.
Political outliers, even if they are in the majority,
fly under the polling radar screen.
The question of whether a president ought to be removed from office
falls into the potentially dangerous category.
If the person agreeing to the poll
senses that he will be regarded as a kook for saying
the president ought to be tried and convicted, on the margin
he will say what he is supposed to say
and not say what he is not supposed to say.
This thesis is easily tested. Find a medium that represents something of a cross-section
of the population, where people can express their political opinions without fear of reprisal
or consternation. Compare answers on that medium to the results of the typical phone
poll. As it happens in the last year, massive internet news sites like AOL, CNN and MSNBC
have become such outlets. Phone polls show 65 to 70 percent of 500 compliant people favoring
Clamoring a censure resolution in the Senate, the very thing the media are clamoring for.
But web polls show exactly the opposite. Between 65 and 70 percent of participants, tens of
thousands of willing clickers want a full-blown trial and half say Clinton should resign immediately.
In addition, the results of these polls fit with most people's experience of their neighbors'
opinions. Now, I know these polls always have this caveat, the quote, they are not scientifically
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?
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.
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.
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.
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.
When Mises writes of public support for market economics, he's speaking on a different level.
He's addressing the most basic ideological preferences of the public.
What kind of society do we want to live in?
One planned by the government, or one in which free individuals have control over the means of production
and can accumulate wealth through serving the consuming public?
A society in which the government confiscates income or one in which wealth can be passed to new generations.
These are fundamental questions and the way they are answered really do determine in the long run how a political system is organized.
The public's passion for a free society was destroyed by the intellectual class of the progressive era
and this culminated in a dramatic shift in public opinion during the 1930s away from market economics and towards a planning mentality.
The years between 1930 and the mid-1970s were characterized by a notable lack of support for freedom among the intellectual classes.
The glorious news that I can report to you today is that this has begun to change.
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.
Today, we are overwhelmed and even lack the resources to serve them all as we would like.
And these are not marginal students, but rather the best, the ones so smart that even their left-wing professors dare not dismiss them.
Since 1982, we have developed a massive network of dissident intellectuals to fight the socialistic status quo on campus.
And what thrills me the most is not the numbers, after all.
Many more will attend this year's Socialist Scholars Conference than our own Austrian Scholars Conference, but rather the trend,
The energy, the excitement, the new ideas, the genuine scholarship are all working in our direction.
Meanwhile, the left is tired, spent and increasingly desperate.
Now the obvious objection to my thesis is that the government is not getting any smaller.
The regulators are on the march, the judges are monsters.
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.
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.
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.
Gorbachev's anti-drinking campaign alone led to mass spying, mass arrests, and mass confiscation of income.
Huge vineyards were plowed under, distilleries were destroyed, people were frog-marched through the streets and dragged into jail in public humiliation.
Moreover, Gorbachev raised instead of lowered taxes, managers were granted less, not more, autonomy.
Urey says it was precisely this step up in enforcement that helped lead to the downfall of the Soviet system.
The public consensus for Soviet statism was no more, and in a few years the apparatus of socialism came tumbling down.
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.
Does that consensus against government really exist today in America?
The seeds are planted and growing, although we have much work to do.
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.
It's also important to teach businessmen that what they do as a matter of course is extremely beneficial to their fellow man.
As Mises says, quote, economics must not be relegated to the classrooms and statistical offices.
It must not be left to esoteric circles.
It is the philosophy of human life and action that concerns everybody and everything.
It is the pith of civilization and of man's human existence.
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.
It was the genius of Mises that he could even imagine this possibility in the dark days in which he wrote his treatise.
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.
From time to time I hear freedom-lovers despair over our supposed lack of progress and the unlikelihood of victory.
But the evidence of our eventual triumph is all around us.
Mises, the master economist who showed us the way, did not have the benefit of seeing
what we see and yet he never gave up hope and he never stopped working for freedom.
The members and faculty of the Mises Institute have a special understanding of what it will
take to succeed and what it will require to defend the basis of civilization against those
who would destroy it.
Therefore, it is our moral obligation, it is our intellectual duty, it is our profound
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.