WEBVTT NOTE Academics and the State 1 00:00:00.000 --> 00:00:04.480 It's funny, I happened to see a very famous government economist just this afternoon, 2 00:00:04.480 --> 00:00:08.720 probably the most famous government economist of all, Alan Greenspan. 3 00:00:08.720 --> 00:00:11.080 Bumped into Alan Greenspan when we went out for lunch. 4 00:00:11.080 --> 00:00:14.040 We went to a pizza parlor in town and I saw him. 5 00:00:14.040 --> 00:00:15.760 I chatted with him a little bit. 6 00:00:15.760 --> 00:00:19.520 And I noticed when he went up to the counter to pick up his pizza, 7 00:00:19.520 --> 00:00:24.760 the clerk asked, would you like this to be cut into six slices or eight? 8 00:00:24.760 --> 00:00:27.560 And he said, well, I'm feeling very hungry today. 9 00:00:27.560 --> 00:00:42.040 And I thought, you're exactly the kind of person I'm going to be talking about today. 10 00:00:42.040 --> 00:00:49.160 What my subject is, a particularly important and disturbing aspect of the 20th century, 11 00:00:49.160 --> 00:00:54.600 and that is the transformation of the American University from a center of higher learning 12 00:00:54.600 --> 00:00:59.240 to an outpost for left-wing politics and culture. 13 00:00:59.240 --> 00:01:04.740 As recently as the early 1950s, the typical American university professor had political 14 00:01:04.740 --> 00:01:09.840 and social views of very little different from those of the general population. 15 00:01:09.840 --> 00:01:16.320 And today, well, you've all heard the jokes that circulated after the collapse of socialism 16 00:01:16.320 --> 00:01:21.900 in Eastern Europe and the former Soviet Union to the effect that the only place you could 17 00:01:21.900 --> 00:01:34.980 It's commonplace today that in higher education, what can you say, the inmates are running 18 00:01:34.980 --> 00:01:42.100 the asylum, all those students who were radicalized in the 1960s have now risen to positions of 19 00:01:42.100 --> 00:01:45.840 power and influence within colleges and universities. 20 00:01:45.840 --> 00:01:51.740 One needs only to observe the aggressive pursuit of diversity in admissions and hiring, the 21 00:01:51.740 --> 00:02:01.740 The abandonment of the traditional curriculum in favor of feminist studies, African-American studies, gay studies, environmental studies, you name it. 22 00:02:01.740 --> 00:02:07.740 I have to mention some course offerings I noticed in recent catalogs. 23 00:02:07.740 --> 00:02:13.740 These days you can take courses ranging from Harvard's popular course on fetishism 24 00:02:13.740 --> 00:02:19.740 to a course at Oberlin called Feminist Critique and Reconstruction of the Christian Tradition 25 00:02:19.740 --> 00:02:26.740 Stanford's notorious course, Black Hair as Culture and History. 26 00:02:26.860 --> 00:02:31.860 As the humorous Dave Barry would say, I'm not making this up. These are real. 27 00:02:31.860 --> 00:02:35.320 And just to provide you with a little local flavor, my own institution, the University 28 00:02:35.320 --> 00:02:40.260 of Georgia, just sent me last week a list of the seminars being offered this fall by 29 00:02:40.260 --> 00:02:45.840 the university's counseling and testing center. And some of them I thought were quite valuable. 30 00:02:45.840 --> 00:02:49.800 This is how the state of Georgia is using its resources. 31 00:02:49.800 --> 00:02:55.400 Here's a seminar called Saying Hello. 32 00:02:55.400 --> 00:02:57.840 Do you get tongue-tied when you meet people? 33 00:02:57.840 --> 00:03:02.440 If you do, come to this program and learn how to start conversations and keep them going. 34 00:03:02.440 --> 00:03:05.600 Another favorite, birth order basics. 35 00:03:05.600 --> 00:03:10.560 Find out how your birth order, oldest, middle, youngest or only child, may have affected 36 00:03:11.560 --> 00:03:14.320 And then here's another one from the relationship series, 37 00:03:14.320 --> 00:03:18.120 how your unconscious influences your choice of partners. 38 00:03:18.120 --> 00:03:19.480 Let me read you the description. 39 00:03:19.480 --> 00:03:22.880 By looking at the roles your unconscious plays 40 00:03:22.880 --> 00:03:25.880 in mate selection, you can discover why you choose 41 00:03:25.880 --> 00:03:27.360 the partners you do. 42 00:03:27.360 --> 00:03:30.800 In this experiential workshop, you will identify 43 00:03:30.800 --> 00:03:34.480 your own patterns and learn ways to make healthier choices. 44 00:03:34.480 --> 00:03:37.240 Well, I can imagine a lot of undergraduate males 45 00:03:37.240 --> 00:03:40.440 who will be filling that one up really fast. 46 00:03:41.560 --> 00:03:50.560 Now, one needn't rely on frivolous course descriptions and the like to establish that most academics lean strongly to the left. 47 00:03:50.560 --> 00:04:00.560 Perhaps the most comprehensive survey of academics' political affiliations was published by Carl Ladd Jr. and Seymour Martin Lipset in 1975. 48 00:04:00.560 --> 00:04:10.560 In their survey, 80% of the faculty in the social sciences and the humanities said they regularly vote Democratic, while only 5% said they regularly vote Republican. 49 00:04:10.560 --> 00:04:16.440 and I'm not implying that to vote Republican is to favor liberty and so on but you get 50 00:04:16.440 --> 00:04:23.060 the idea that something odd is up. A 1989 study for the Carnegie Foundation for the Advancement 51 00:04:23.060 --> 00:04:27.860 of Teaching found that 70% of the professors in the major liberal arts colleges and research 52 00:04:27.860 --> 00:04:33.640 universities considered themselves liberal or moderately liberal with less than 20% identifying 53 00:04:33.640 --> 00:04:39.420 themselves as conservative or moderately conservative and of course I'm using the term liberal here 54 00:04:39.420 --> 00:04:43.820 to mean left liberal or socialist and not classical liberal. 55 00:04:43.820 --> 00:04:46.420 Now, a bit of a surprise, even in economics departments, 56 00:04:46.420 --> 00:04:50.100 63% of the faculty identify themselves as liberal, 57 00:04:50.100 --> 00:04:53.180 compared with 72% in anthropology, political science, 58 00:04:53.180 --> 00:04:57.100 and sociology, 76% in ethnic studies, history, 59 00:04:57.100 --> 00:05:01.140 and philosophy, and 88% in public affairs. 60 00:05:01.140 --> 00:05:04.740 Now, most academic economists do have some appreciation 61 00:05:04.740 --> 00:05:09.840 of How Markets Work, if their enthusiasm tends to be muted. 62 00:05:09.840 --> 00:05:14.340 According to one recent survey reported in the Southern Economic Journal, 71 percent 63 00:05:14.340 --> 00:05:19.900 of American economists believe the distribution of income in the U.S. should be more equal, 64 00:05:19.900 --> 00:05:24.460 and 81 percent feel that the redistribution of income is a legitimate role for government. 65 00:05:24.460 --> 00:05:29.340 Now listen to this, support for these positions is even stronger among economists with academic 66 00:05:29.340 --> 00:05:34.900 academic affiliations, and stronger still among those with elite academic affiliations. 67 00:05:34.900 --> 00:05:40.040 Now why do so many university professors and intellectuals more generally favor socialism 68 00:05:40.040 --> 00:05:41.540 and interventionism? 69 00:05:41.540 --> 00:05:47.800 F. A. Hayek offered a partial explanation in his very provocative 1949 essay, The Intellectuals 70 00:05:47.800 --> 00:05:49.060 and Socialism. 71 00:05:49.060 --> 00:05:54.660 Hayek asked the question why, he asked why the more active, intelligent and original 72 00:05:54.660 --> 00:05:59.220 man among intellectuals most frequently inclined towards socialism. 73 00:05:59.220 --> 00:06:04.220 His answer is based on the opportunities available to people of varying talents. 74 00:06:04.220 --> 00:06:09.220 Now, there's no doubt that academics tend to be very intelligent people. 75 00:06:09.220 --> 00:06:16.220 And given their leftward leanings, one might be tempted to conclude from this that more intelligent people tend to favor socialism. 76 00:06:16.220 --> 00:06:22.220 But this conclusion would suffer from what empirical researchers call sample selection bias. 77 00:06:22.220 --> 00:06:27.220 Let me explain. Intelligent people hold a variety of views. 78 00:06:27.220 --> 00:06:34.220 Some are lovers of liberty, defenders of property, supporters of the natural order, i.e. defenders of the market. 79 00:06:34.220 --> 00:06:41.220 Others are reformers, wanting to remake the world according to their own visions of the ideal society. 80 00:06:41.220 --> 00:06:51.220 Hayek argues that exceptionally intelligent people who favor the market tend to find opportunities for professional and financial success outside the academy. 81 00:06:51.220 --> 00:06:56.820 Those who are highly intelligent but ill-disposed towards markets are more likely to choose an academic career. 82 00:06:57.400 --> 00:07:05.140 Now this also leads to the phenomenon that academics typically don't know much about markets because they have so little experience with them. 83 00:07:05.960 --> 00:07:12.100 They live in their subsidized ivory towers. They're protected by academic tenure and so forth. 84 00:07:13.140 --> 00:07:19.420 As the great economist Joseph Schumpeter explained in his book Capitalism, Socialism and Democracy, 85 00:07:19.420 --> 00:07:25.720 It is the absence of direct responsibility for practical affairs that distinguishes the 86 00:07:25.720 --> 00:07:31.780 academic intellectual from others who wield the power of the spoken and the written word. 87 00:07:31.780 --> 00:07:36.300 This absence of direct responsibility leads to a corresponding absence of first-hand knowledge 88 00:07:36.300 --> 00:07:38.220 of practical affairs. 89 00:07:38.220 --> 00:07:43.540 The critical attitude of the intellectual arises, says Schumpeter, quote, no less from 90 00:07:43.540 --> 00:07:49.400 the intellectual situation as an onlooker, in most cases also as an outsider, than from 91 00:07:49.400 --> 00:07:55.400 from the fact that his main chance of asserting himself lies in his actual or potential nuisance value. 92 00:07:55.400 --> 00:08:04.400 Of course, Hayek's account is incomplete because it doesn't explain why academics have become more and more interventionist throughout the 20th century. 93 00:08:04.400 --> 00:08:14.400 As I mentioned at the beginning, university faculty members used to hold political views similar to those held by the general population. 94 00:08:14.400 --> 00:08:16.400 What caused this change? 95 00:08:16.400 --> 00:08:22.400 Well, to answer, we must first realize that academics receive many direct benefits from the welfare state. 96 00:08:22.400 --> 00:08:28.400 Let's begin with the obvious, not including financial aid, student financial aid. 97 00:08:28.400 --> 00:08:34.400 Public universities receive about 50% of their funding from federal and state governments, 98 00:08:34.400 --> 00:08:38.400 far dwarfing the 18% they receive from tuition and fees. 99 00:08:38.400 --> 00:08:42.400 Even the nominally private universities, Harvard, Stanford and so on, 100 00:08:42.400 --> 00:08:48.400 receive at least 20% of their funding directly from federal grants. 101 00:08:48.400 --> 00:08:54.400 And if you include indirect support from financial aid and the like, that figure is at least 50%. 102 00:08:54.400 --> 00:09:00.400 And according to the U.S. Department of Education, about a third of all students at public four-year colleges and universities, 103 00:09:00.400 --> 00:09:07.400 and half the students at private colleges and universities, receive direct financial aid from the federal government. 104 00:09:07.400 --> 00:09:15.400 Now, in this sense, the most egregious example of corporate welfare in American history would have to be the GI Bill, 105 00:09:15.400 --> 00:09:24.400 which heavily subsidized the academic sector after World War II, bloating at far beyond the level the market would probably have provided. 106 00:09:24.400 --> 00:09:30.900 The GI Bill, which was signed in 1944 by Roosevelt to send returning soldiers to colleges and universities, 107 00:09:30.900 --> 00:09:39.300 cost taxpayers about $14.5 billion between 1944 and 1956. Federal spending on the latest 108 00:09:39.300 --> 00:09:46.060 version, the Montgomery GI Bill, is projected at $1.4 billion in 1998 alone. To see why 109 00:09:46.060 --> 00:09:50.940 government aid is so important to the higher education establishment, we need only stop 110 00:09:50.940 --> 00:09:58.180 to consider for a moment what academics would do in a purely free society. The fact is, 111 00:09:58.180 --> 00:10:03.280 Research really aren't that important. In a free society, there would probably be far 112 00:10:03.280 --> 00:10:09.300 fewer of them than there are today. Their public visibility would be quite low. Most 113 00:10:09.300 --> 00:10:15.740 would be poorly paid. Perhaps a few would be engaged in genuine scholarly research, 114 00:10:15.740 --> 00:10:19.780 but the vast majority would be teachers, whose job it would be to pass on the collective 115 00:10:19.780 --> 00:10:25.040 wisdom of the ages to the next generation. In all likelihood, there would be far fewer 116 00:10:25.040 --> 00:10:27.160 were students as well. 117 00:10:27.160 --> 00:10:31.200 The brighter students would continue to attend traditional colleges and universities, but 118 00:10:31.200 --> 00:10:35.080 many more students would attend technical and vocational schools, where their instructors 119 00:10:35.080 --> 00:10:38.340 would be men and women with practical experience. 120 00:10:38.340 --> 00:10:43.400 Of course, today, most academics at major research universities do very little teaching. 121 00:10:43.400 --> 00:10:49.560 Their primary activity is research, though very little of that could be considered real 122 00:10:49.560 --> 00:10:50.960 scholarship. 123 00:10:50.960 --> 00:10:55.280 One needs only to browse through the latest specialty journals to see the kinds of scholarly 124 00:10:55.280 --> 00:11:00.200 research that goes on today. 125 00:11:00.200 --> 00:11:05.960 For example, if you happen to run across the spring 1997 issue of the journal New Literary 126 00:11:05.960 --> 00:11:11.720 History published by the University of Virginia Press, you must be sure not to miss the article 127 00:11:11.720 --> 00:11:18.300 by Robert Clark and Claire Sponsler titled, Queer Play, The Cultural Work of Crossdressing 128 00:11:18.300 --> 00:11:21.900 in Medieval Drama. 129 00:11:21.900 --> 00:11:26.260 Of course much of this research is funded by government agencies such as the National 130 00:11:26.260 --> 00:11:30.820 Endowment for the Humanities or the National Science Foundation. 131 00:11:30.820 --> 00:11:36.060 The large universities have tens of thousands of students themselves supported by government 132 00:11:36.060 --> 00:11:38.580 subsidized loans and grants. 133 00:11:38.580 --> 00:11:43.940 Why President Clinton himself has even said on many occasions that four years of college 134 00:11:43.940 --> 00:11:48.380 or University Education is an entitlement for every American. 135 00:11:48.380 --> 00:11:50.860 Beyond university life, academics also compete 136 00:11:50.860 --> 00:11:53.980 for prestigious posts within government agencies. 137 00:11:53.980 --> 00:11:56.340 Consider my own field, economics. 138 00:11:56.340 --> 00:11:58.540 The federal government directly employs 139 00:11:58.540 --> 00:12:02.100 at least 3,000 full-time economists. 140 00:12:02.100 --> 00:12:04.020 That's about 15% of all the members 141 00:12:04.020 --> 00:12:06.660 of the American Economic Association. 142 00:12:06.660 --> 00:12:07.980 The Federal Reserve System itself 143 00:12:07.980 --> 00:12:11.420 employs several hundreds of economists, 144 00:12:11.420 --> 00:12:16.260 and there are also advisory posts, affiliations with important government agencies, 145 00:12:16.260 --> 00:12:20.220 memberships of federally appointed commissions and other resume patterns 146 00:12:20.220 --> 00:12:23.180 that are actively sought. 147 00:12:23.180 --> 00:12:26.940 Now we mustn't think that these benefits are strictly financial. 148 00:12:26.940 --> 00:12:29.180 They're also psychological. 149 00:12:29.180 --> 00:12:33.700 As one of my colleagues Dwight Lee has put it, 150 00:12:33.700 --> 00:12:38.540 like every other group, academics like to exert influence and feel important. 151 00:12:38.540 --> 00:12:43.640 Few scholars in the social sciences and humanities are content just to observe, describe and 152 00:12:43.640 --> 00:12:49.180 explain society. Most want to improve society and are naive enough to believe that they 153 00:12:49.180 --> 00:12:55.220 could do so if only they had sufficient influence. The existence of a huge government offers 154 00:12:55.220 --> 00:13:00.980 academics the real possibility of living out their reformist fantasies. 155 00:13:00.980 --> 00:13:05.780 So it's clear then that there are many benefits for academics to living in a highly interventionist 156 00:13:05.780 --> 00:13:11.700 Society. It should be no wonder then that academics tend to support precisely those interventions. 157 00:13:12.580 --> 00:13:16.580 Now, I'd like to take just a moment or two to speak about my own profession, economics. 158 00:13:17.540 --> 00:13:21.460 As I suggested earlier, even in this field, there's a surprising degree of sympathy 159 00:13:21.460 --> 00:13:26.020 for government intervention in the economy. Further, many professional economists play 160 00:13:26.020 --> 00:13:31.860 active roles as government bureaucrats, creating and sustaining the oppressive welfare state 161 00:13:31.860 --> 00:13:34.380 that now surrounds us. 162 00:13:34.380 --> 00:13:39.980 Murray Rothbard devotes an interesting chapter of his 1970 book Power and Market to the proper 163 00:13:39.980 --> 00:13:44.260 and traditional role of the economist in public life. 164 00:13:44.260 --> 00:13:48.480 Rothbard notes that the functions of the economist on the free market differ strongly from those 165 00:13:48.480 --> 00:13:51.220 of the economist on the hampered market. 166 00:13:51.220 --> 00:13:55.420 What can the economist do on the purely free market, Rothbard asks. 167 00:13:55.420 --> 00:14:00.500 He can explain the workings of the market economy, vital tasks, especially since the 168 00:14:00.500 --> 00:14:06.180 The untutored person tends to regard the market economy as sheer chaos, but he can do little 169 00:14:06.180 --> 00:14:13.580 else. Rothbard continues, contrary to the pretensions of many economists, he is of little use to 170 00:14:13.580 --> 00:14:18.220 the businessman. He cannot forecast future consumer demands and future costs as well 171 00:14:18.220 --> 00:14:24.420 as the businessman. If he could, then he would be the businessman. This is of course a variant 172 00:14:24.420 --> 00:14:31.780 of the popular question, if you're so smart, why aren't you rich? Furthermore, economists 173 00:14:31.780 --> 00:14:37.700 are not traditionally very popular as policy advisors. Why is this? Well, economics teaches 174 00:14:37.700 --> 00:14:44.460 that resources are limited, that choices made imply opportunities foregone, that our actions 175 00:14:44.460 --> 00:14:49.540 can have unintended consequences. These are not the kinds of things that government officials 176 00:14:49.540 --> 00:14:56.800 When they propose an import tariff, for example, to help domestic manufacturers, we economists 177 00:14:56.800 --> 00:15:01.780 explain that this protection will come only at the expense of domestic consumers. When 178 00:15:01.780 --> 00:15:07.900 the politician suggests a minimum wage law to raise the incomes of low-income workers, 179 00:15:07.900 --> 00:15:11.640 we show that such a law would hurt the very people it's intended to help by throwing 180 00:15:11.640 --> 00:15:13.580 them out of work. 181 00:15:13.580 --> 00:15:22.580 And on and on it goes, to every utopian reformer who says, yes, we can create a better society for you. 182 00:15:22.580 --> 00:15:26.580 The economist replies, no, no, no. 183 00:15:26.580 --> 00:15:31.580 This is why people say we're not fun at parties. 184 00:15:31.580 --> 00:15:36.580 Public officials for sure do not like the fact that we live in a world of limited resources, 185 00:15:36.580 --> 00:15:39.580 that this thwarts their many creative schemes. 186 00:15:39.580 --> 00:15:50.580 This is particularly true for public officials in a democracy who must make promises to win public support. More guns and more butter. A chicken in every pot. 187 00:15:50.580 --> 00:16:02.580 By the way, I was reminded how universal this truth is just this past June when the new president of the University of Georgia, fellow named Michael Adams, made his first public appearance on campus. 188 00:16:02.580 --> 00:16:09.580 Adams is himself a seasoned politician, a former top aide to Howard Baker and Lamar Alexander. 189 00:16:09.580 --> 00:16:16.580 And I remember his opening speech to the university community where Adams outlined his priorities as incoming president. 190 00:16:16.580 --> 00:16:25.580 What kinds of things does he favor? Well, as it turns out, he favors more resources for teaching, more resources for research, 191 00:16:25.580 --> 00:16:31.580 more resources for outreach and public service, more resources for facilities, and so on and so on. 192 00:16:31.580 --> 00:16:39.580 you get the idea. I remember thinking to myself, hmm, something's got to give here. I hope it's not football. 193 00:16:46.580 --> 00:16:53.580 Unfortunately, over the last several decades, the role of the economist has changed dramatically. 194 00:16:53.580 --> 00:16:59.580 Partly for the reasons we discussed earlier, the welfare state has largely co-opted the profession of economics. 195 00:16:59.580 --> 00:17:07.080 Why is that? Well, just as a higher murder rate increases the demand for criminologists, 196 00:17:07.080 --> 00:17:13.280 so the crippling of a market economy by government intervention increases the demand for policy 197 00:17:13.280 --> 00:17:19.680 analysts, antitrust consultants, tax and regulatory experts, and various forecasters. 198 00:17:19.680 --> 00:17:25.660 As Rothbard explains in Power and Market, quote, when government intervenes in the economy, 199 00:17:25.660 --> 00:17:30.580 The usefulness of the economist expands. In the realm of the free market, the economist 200 00:17:30.580 --> 00:17:36.120 must give way to the entrepreneurial forecaster. But government actions are very different 201 00:17:36.120 --> 00:17:40.320 because the problem now is precisely what the consequences of government actions will 202 00:17:40.320 --> 00:17:46.160 be. Here the economist, with his knowledge of various alternative consequences, comes 203 00:17:46.160 --> 00:17:52.500 into his own. Rothbard continues, in a hampered market economy, indeed, the economist often 204 00:17:52.500 --> 00:17:57.060 becomes useful to the businessman, where change of economic reasoning become important, for 205 00:17:57.060 --> 00:18:02.620 example, in analyzing the effects of credit expansion or an income tax, and in many cases 206 00:18:02.620 --> 00:18:05.740 in spreading this knowledge to the outside world. 207 00:18:05.740 --> 00:18:10.900 And I'm sad to say, however, that economists do much more than advise businessmen on the 208 00:18:10.900 --> 00:18:12.860 effects of regulation. 209 00:18:12.860 --> 00:18:16.420 In many cases, they themselves are the regulators. 210 00:18:16.420 --> 00:18:21.740 Herbert Stein, who was chair of the Council of Economic Advisers in the Nixon administration, 211 00:18:21.740 --> 00:18:27.840 Hans remarked that he and his cronies knew that price and wage controls, when they imposed 212 00:18:27.840 --> 00:18:34.480 them in 1971, would have a crippling effect on the economy, but they did so anyway because 213 00:18:34.480 --> 00:18:38.720 drafting those rules was a lot of fun. 214 00:18:38.720 --> 00:18:42.940 Here's a quote from Harvard University's Lawrence Sommers, former chief economist at 215 00:18:42.940 --> 00:18:51.040 the World Bank and also U.S. Undersecretary of the Treasury. Sommers says, quote, market 216 00:18:51.040 --> 00:18:56.640 Development itself requires government action. The socialist economies in transition from 217 00:18:56.640 --> 00:19:00.680 Eastern Europe to East Asia are finding out that the establishment of the rules of the 218 00:19:00.680 --> 00:19:06.000 game by the government is crucial to the success of market reforms. And by the way, by rules 219 00:19:06.000 --> 00:19:10.360 of the game, he doesn't mean the rule of law, establishing property rights and so on. 220 00:19:10.360 --> 00:19:17.360 He means infrastructure, so-called public goods and so on. And by the way, some economists 221 00:19:17.360 --> 00:19:34.360 I remember a classmate in graduate school telling me that her goal after graduation was to work for the International Monetary Fund because you get to travel all across the world first class and you get to keep all the frequent flyer points. 222 00:19:34.360 --> 00:19:39.360 That is an absolutely true story. 223 00:19:39.360 --> 00:19:42.360 Now how did we get to this state of affairs? 224 00:19:42.360 --> 00:19:49.360 Well, to some degree, the increasing professionalization of the economics business must take some of the blame. 225 00:19:49.360 --> 00:19:58.360 The Economist's premier professional society, the American Economic Association, was itself created as an explicitly progressive organization. 226 00:19:58.360 --> 00:20:05.360 Its founder, the religious and social reformer Richard T. Ely, planned an association, as he reported to a colleague, 227 00:20:05.360 --> 00:20:11.360 of economists who repudiate laissez-faire as a scientific doctrine. 228 00:20:11.360 --> 00:20:17.360 The other founding members of the AEA, all of whom had been trained in Germany under Gustav Schmoller 229 00:20:17.360 --> 00:20:25.360 and the other members of the so-called Younger German Historical School, were similarly possessed with reformist zeal. 230 00:20:25.360 --> 00:20:29.360 The Constitution of the American Economic Association still contains references to 231 00:20:29.360 --> 00:20:35.360 quote, the positive role of the church, the state and science in the solution of social problems 232 00:20:35.360 --> 00:20:38.360 by the development of legislative policy. 233 00:20:38.360 --> 00:20:52.360 However, if I had to select a single event that most encouraged the transformation of the average economist from a critic of intervention to a defender of the welfare state, it would have to be the Second World War. 234 00:20:52.360 --> 00:20:59.360 Now, to be sure, it was the progressive era that saw the permanent introduction of the income tax, establishment of the Federal Reserve System. 235 00:20:59.360 --> 00:21:10.360 It was during the Great Depression that Washington DC first began to employ a substantial number of economists to join central planning agencies such as the National Resources Planning Board. 236 00:21:10.360 --> 00:21:17.360 But still, even in those days, the average economist favored free trade, low taxes and sound money. 237 00:21:17.360 --> 00:21:22.360 World War II, however, was a watershed event for the profession. 238 00:21:22.360 --> 00:21:29.960 For the first time, economists joined the ranks of government employees in mass. 239 00:21:29.960 --> 00:21:34.200 Why did they do so? Well, one activity was to control prices. 240 00:21:34.200 --> 00:21:37.640 And this was done with the Office of Price Administration, 241 00:21:37.640 --> 00:21:41.480 led by Leon Henderson and later led by John Kenneth Galbraith. 242 00:21:41.480 --> 00:21:47.000 And this group included even such free market economists, quote-unquote, 243 00:21:47.000 --> 00:21:51.080 as Herbert Stein and George Stigler of the Chicago School. 244 00:21:51.080 --> 00:21:54.280 Economists also went to Washington to study military procurement, 245 00:21:54.280 --> 00:21:57.580 what later became known as operations research, 246 00:21:57.580 --> 00:22:01.480 with groups such as Columbia University's Statistical Research Group, 247 00:22:01.480 --> 00:22:06.380 and that included Stigler, Milton Friedman, Harold Hotelling, Abraham Wald, 248 00:22:06.380 --> 00:22:11.780 Leonard Savage, and a number of other well-known economists and statisticians. 249 00:22:11.780 --> 00:22:16.080 Also with the Army's Statistical Control Group, which was led by Tex Thornton, 250 00:22:16.080 --> 00:22:20.380 later president of Litton Industries, and the so-called Whiz Kids, 251 00:22:20.380 --> 00:22:24.220 And the most famous of the Whiz Kids was Robert McNamara, 252 00:22:24.220 --> 00:22:27.660 who would later apply these same statistical control techniques 253 00:22:27.660 --> 00:22:30.820 to the management of the Vietnam War. 254 00:22:30.820 --> 00:22:33.940 Rothbard points out in Power and Market 255 00:22:33.940 --> 00:22:37.260 that whatever the usefulness of operations research 256 00:22:37.260 --> 00:22:41.300 and related statistical techniques for business or military planning, 257 00:22:41.300 --> 00:22:44.140 these techniques are not economics, 258 00:22:44.140 --> 00:22:46.300 but they're increasing popularity, 259 00:22:46.300 --> 00:22:49.700 made possible by the arrival of high-speed computing, 260 00:22:49.700 --> 00:22:54.900 sharply diverted economists' attention away from genuine economic problems. 261 00:22:54.900 --> 00:23:02.000 Before World War II, the primary language of economics in the English-speaking world was English. 262 00:23:02.000 --> 00:23:09.200 Since then, economic theory has come to be expressed in obscure mathematical jargon, 263 00:23:09.200 --> 00:23:13.400 while economic history has become a branch of applied statistics. 264 00:23:13.400 --> 00:23:19.000 It's common to attribute this change to the publication in 1947 of Paul Samuelson's 265 00:23:19.000 --> 00:23:22.680 A Mathematical Treatise, Foundations of Economic Analysis 266 00:23:22.680 --> 00:23:25.360 and this is no doubt very important, 267 00:23:25.360 --> 00:23:28.680 but I claim that it was the taste of central planning 268 00:23:28.680 --> 00:23:32.280 that economists, even nominally free market economists, 269 00:23:32.280 --> 00:23:34.160 got during World War II 270 00:23:34.160 --> 00:23:37.520 that forever changed the direction of the discipline. 271 00:23:37.520 --> 00:23:41.560 Now, what does the future hold for academics and for economists? 272 00:23:41.560 --> 00:23:46.160 Well, it's very unlikely from the evidence that's available to us today 273 00:23:46.160 --> 00:23:50.160 that the traditional university will ever regain its place as a center of 274 00:23:50.160 --> 00:23:55.080 genuine scholarship and higher learning. The very future of the traditional 275 00:23:55.080 --> 00:24:00.040 university is in doubt. Of course, the main problem is cost. Private universities 276 00:24:00.040 --> 00:24:05.320 now cost up to $30,000 per year. Public universities are facing increasing 277 00:24:05.320 --> 00:24:11.320 budget scrutiny. Cutbacks, downsizing and reorganization loom on the horizon for 278 00:24:11.320 --> 00:24:15.960 all major institutions. At the same time, the quality of higher education is 279 00:24:15.960 --> 00:24:25.960 is perceived to be declining. Students are increasingly dissatisfied with large classes, indifferent instructors, poor facilities, and safety, and so on. 280 00:24:25.960 --> 00:24:29.960 In all likeliness, the university of the future will be radically decentralized. 281 00:24:29.960 --> 00:24:39.960 Already, much of the intellectual activity in the United States has been farmed out to private organizations, think tanks, like the Mises Institute, for example. 282 00:24:39.960 --> 00:24:47.660 If I could quote from Paul Vitz, a psychologist at New York University, who's written extensively about the future of the university, 283 00:24:47.660 --> 00:24:54.960 quote, when universities fail to provide a decent environment for their original major functions, i.e. research and teaching, 284 00:24:54.960 --> 00:24:57.960 other institutions come along to replace them. 285 00:24:57.960 --> 00:25:04.960 The result is the development of a large intellectual community which no longer has any vested interest in the universities. 286 00:25:04.960 --> 00:25:15.460 Furthermore, increasing numbers of students are uninterested in pursuing a higher education at a traditional college or university. 287 00:25:15.460 --> 00:25:21.960 For example, if you think about homeschooling, the popularity of which is at an all-time high, 288 00:25:21.960 --> 00:25:27.460 just imagine what kind of educational environment those students expect. 289 00:25:27.460 --> 00:25:33.960 They expect personal attention, a serious curriculum, etc., precisely the things the modern university lacks. 290 00:25:33.960 --> 00:25:38.960 These students will be looking, in all likelihood, at alternative forms of higher education. 291 00:25:38.960 --> 00:25:45.960 Community colleges, specialized programs, video classes, classes on the internet, who knows? 292 00:25:45.960 --> 00:25:52.960 But to serve this cohort of students, radical decentralization of the traditional university will be necessary. 293 00:25:52.960 --> 00:25:57.960 Perhaps in this new environment, genuine scholarship will flourish again. 294 00:25:57.960 --> 00:26:00.960 Economists can return to their traditional and proper role 295 00:26:00.960 --> 00:26:07.560 of explaining how markets work and why interventions in the marketplace have various unavoidable consequences. 296 00:26:07.560 --> 00:26:14.260 Then, maybe academics can go back to being real scholars, not simply apologists for Leviathan.