The Task Confronting Libertarians

MARCH 01, 1968 by HENRY HAZLITT

0001_the_task_confronting_libertariansFrom time to time over the last thirty years, after I have talked or written about some new restric­tion on human liberty in the econ­omic field, some new attack on pri­vate enterprise, I have been asked in person or received a letter ask­ing, “What can I do” — to fight the inflationist or socialist trend? Other writers or lecturers, I find, are often asked the same question.

The answer is seldom an easy one. For it depends on the circum­stances and ability of the ques­tioner — who may be a business­man, a housewife, a student, in­formed or not, intelligent or not, articulate or not. And the answer must vary with these presumed circumstances.

The general answer is easier than the particular answer. So here I want to write about the task now confronting all liber­tarians considered collectively.

This task has become tremen­dous, and seems to grow greater every day. A few nations that have already gone completely com­munist, like Soviet Russia and its satellites, try, as a result of sad experience, to draw back a little from complete centralization, and experiment with one or two quasi-capitalistic techniques; but the world’s prevailing drift — in more than 100 out of the 107 na­tions and mini-nations that are now members of the International Monetary Fund — is in the direc­tion of increasing socialism and controls.

The task of the tiny minority that is trying to combat this so­cialistic drift seems nearly hopeless. The war must be fought on a thousand fronts, and the true libertarians are grossly outnum­bered on practically all these fronts.

In a thousand fields the welfar­ists, statists, socialists, and inter­ventionists are daily driving for more restrictions on individual liberty; and the libertarians must combat them. But few of us in­dividually have the time, energy, and special knowledge to be able to do this in more than a handful of subjects.

One of our gravest problems is that we find ourselves confront­ing armies of bureaucrats already controlling us, and with a vested interest in keeping and expanding the controls they were hired to enforce.

A Growing Bureaucracy

Let me try to give you some idea of the size and extent of this bureaucracy in the United States. The Hoover Commission found in 1954 that the Federal government embraced no fewer than 2,133 dif­ferent functioning agencies, bu­reaus, departments, and divisions. I do not know what the exact count would be today, but the known multiplicity of Great So­ciety agencies would justify our rounding out that figure at least to 2,200.

We do know that the full-time permanent employees in the Fed­eral government now number about 2,615,000.

And we know, to take a few specific examples, that of these bureaucrats 15,400 administer the programs of the Department of Housing and Urban Development, 100,000 the programs (including Social Security) of the Depart­ment of Health, Education, and Welfare, and 154,000 the programs of the Veterans Administration.

If we want to look at the rate at which parts of this bureauc­racy have been growing, let us take the Department of Agricul­ture. In 1929, before the U. S. government started crop controls and price supports on an exten­sive scale, there were 24,000 em­ployees in that Department. To­day, counting part-time workers, there are 120,000, five times as many, all of them with a vital economic interest — to wit, their own jobs — in proving that the particular controls they were hired to formulate and enforce should be continued and expanded.

What chance does the individual businessman, the occasional dis­interested professor of economics, or columnist or editorial writer, have in arguing against the poli­cies and actions of this 120,000-man army, even if he has had time to learn the detailed facts of a particular issue? His criticisms are either ignored or drowned out in the organized counterstate­ments.

This is only one example out of scores. A few of us may suspect that there is much unjustified or foolish expenditure in the U. S. Social Security program, or that the unfunded liabilities already undertaken by the program (one authoritative estimate of these exceeds a trillion dollars) may prove to be unpayable without a gross monetary inflation. A hand­ful of us may suspect that the whole principle of compulsory gov­ernment old age and survivor’s in­surance is open to question. But there are nearly 100,000 full-time permanent employees in the De­partment of Health, Education, and Welfare to dismiss all such fears as foolish, and to insist that we are still not doing nearly enough for our older citizens, our sick, and our widows and orphans.

And then there are the millions of those who are already on the receiving end of these payments, who have come to consider them as an earned right, who of course find them inadequate, and who are outraged at the slightest sugges­tion of a critical re-examination of the subject. The political pressure for constant extension and in­crease of these benefits is almost irresistible.

And even if there weren’t whole armies of government economists statisticians, and administrators to answer him, the lone disinterested critic, who hopes to have his criti­cism heard and respected by other disinterested and thoughtful peo­ple, finds himself compelled to keep up with appalling mountains of detail.

Too Many Cases to Follow

The National Labor Relations Board, for example, hands down hundreds of decisions every year in passing on “unfair” labor prac­tices. In the fiscal year 1967 it passed on 803 cases “contested as to the law and the facts.” Most of these decisions are strongly biased in favor of the labor unions; many of them pervert the inten­tion of the Taft-Hartley Act that they ostensibly enforce; and in some of them the board arrogates to itself powers that go far be­yond those granted by the act. The texts of many of these decisions are very long in their statement of facts or alleged facts and of the Board’s conclusions. Yet how is the individual economist or editor to keep abreast of the decisions and to comment informedly and intelligently on those that involve an important principle or public interest?

Or take again such major agen­cies as the Federal Trade Com­mission, the Securities and Exchange Commission, the Internal Revenue Service, the Interstate Commerce Commission, the Food and Drug Administration, the Federal Communications Commis­sion. All these agencies engage in quasi – legislative, quasi – judicial, and administrative functions. They issue rules and regulations, grant licenses, issue cease-and desist orders, award damages, and compel individuals and corpora­tions to do or refrain from many things. They often combine the functions of legislators, prosecu­tors, judges, juries, and bureau­crats. Their decisions are not al­ways based solely on existing law; and yet when they inflict injury on corporations or individuals, or deprive them of constitutional lib­erties and legal rights, appeal to the courts is often difficult, costly, or impossible.

Once again, how can the indi­vidual economist, student of gov­ernment, journalist, or anyone in­terested in defending or preserv­ing liberty, hope to keep abreast of this Niagara of decisions, regu­lations, and administrative laws? He may sometimes consider him­self lucky to be able to master in many months the facts concern­ing even one of these decisions.

Professor Sylvester Petro of New York University has written a full book on the Kohler strike and another full book on the Kingsport strike, and the public lessons to be learned from them. Professor Martin Anderson has specialized in the follies of urban renewal programs. But how many are there among us libertarians who are willing to — or have the time to — do this specialized and microscopic but indispensable re­search?

In July, 1967, the Federal Com­munications Commission handed down an extremely harmful de­cision ordering the American Tele­phone & Telegraph Company to lower its interstate rates — which were already 20 per cent lower than in 1940, though the general price level since that time had gone up 163 per cent. In order to write a single editorial or column on this (and to feel confident he had his facts straight), a conscien­tious journalist had to study, among other material, the text of the decision. That decision con­sisted of 114 single-spaced type­written pages.

… and Schemes for Reform

We libertarians have our work cut out for us.

In order to indicate further the dimensions of this work, it is not merely the organized bureaucracy that the libertarian has to an­swer; it is the individual private zealots. A day never passes with­out some ardent reformer or group of reformers suggesting some new government interven­tion, some new statist scheme to fill some alleged “need” or relieve some alleged distress. They ac­company their scheme by citing statistics that supposedly prove the need or the distress that they want the taxpayers to relieve. So it comes about that the reputed “experts” on relief, unemployment insurance, social security, medi­care, subsidized housing, foreign aid, and the like are precisely the people who are advocating more relief, unemployment insurance, social security, medicare, subsi­dized housing, foreign aid, and all the rest.

Let us come to some of the les­sons we must draw from all this.

Specialists for the Defense

We libertarians cannot content ourselves merely with repeating pious generalities about liberty, free enterprise, and limited gov­ernment. To assert and repeat these general principles is abso­lutely necessary, of course, either as prologue or conclusion. But if we hope to be individually or col­lectively effective, we must indi­vidually master a great deal of de­tailed knowledge, and make our­selves specialists in one or two lines, so that we can show how our libertarian principles apply in spe­cial fields, and so that we can con­vincingly dispute the proponents of statist schemes for public hous­ing, farm subsidies, increased re­lief, bigger social security bene­fits, bigger medicare, guaranteed incomes, bigger government spend­ing, bigger taxation, especially more progressive income taxation, higher tariffs or import quotas, restrictions or penalties on for­eign investment and foreign travel, price controls, wage con­trols, rent controls, interest rate controls, more laws for so-called “consumer protection,” and still tighter regulations and restric­tions on business everywhere.

This means, among other things, that libertarians must form and maintain organizations not only to promote their broad principles — as does, for example, the Foun­dation for Economic Education —but to promote these principles in special fields. I am thinking, for example, of such excellent exist­ing specialized organizations as the Citizens Foreign Aid Commit­tee, the Economists’ National Committee on Monetary Policy, the Tax Foundation, and so on. I am happy to report the very re­cent formation of Americans for Effective Law Enforcement.

We need not fear that too many of these specialized organizations will be formed. The real danger is the opposite. The private libertar­ian organizations in the United States are probably outnumbered ten to one by communist, socialist, statist, and other left-wing or­ganizations that have shown them­selves to be only too effective.

And I am sorry to report that almost none of the old-line busi­ness associations that I am ac­quainted with are as effective as they could be. It is not merely that they have been timorous or silent where they should have spoken out, or even that they have unwisely compromised. Recently, for fear of being called ultracon­servative or reactionary, they have been supporting measures harmful to the very interests they were formed to protect. Several of them, for example, have come out in favor of the Administra­tion’s proposed tax increase on corporations, because they were afraid to say that the Administra­tion ought rather to slash its pro­fligate welfare spending.

The sad fact is that today most of the heads of big businesses in America have become so confused or intimidated that, so far from carrying the argument to the enemy, they fail to defend them­selves adequately even when at­tacked. The pharmaceutical indus­try, subjected since 1962 to a dis­criminatory law that applies ques­tionable and dangerous legal prin­ciples that the government has not yet dared to apply in other fields, has been too timid to state its own case effectively. And the automobile makers, attacked by a single zealot for turning out cars “Un­safe at Any Speed,” handled the matter with an incredible com­bination of neglect and ineptitude that brought down on their heads legislation harmful not only to the industry but to the driving public.

The Timidity of Businessmen

It is impossible to tell today where the growing anti-business sentiment in Washington, plus the itch for more government control, is going to strike next. Only with­in the last few months Congress, with little debate, allowed itself to be stampeded into a dubious ex­tension of Federal power over in­trastate meat sales. When this article appears, or shortly after, Congress may have passed a Fed­eral “truth-in-lending” law, forc­ing lenders to calculate and state interest rates the way Federal bureaucrats want them calculated and stated. There is also pending an Administration bill in which government bureaucrats are to prescribe “standards” telling just how surgical devices like bone pins and catheters and even artificial eyes are to be made.

And a few weeks ago the Presi­dent suddenly announced that he was prohibiting American busi­ness from making further direct investments in Europe, that he was restricting them elsewhere, and that he would ask Congress to pass some law restricting Ameri­cans from traveling to Europe. In­stead of raising a storm of pro­test against these unprecedented invasions of our liberties, most newspapers and businessmen de­plored their “necessity” and hoped they would be only “temporary.”

The very existence of the busi­ness timidity that allows these things to happen is evidence that government controls and power are already excessive.

Why are the heads of big busi­ness in America so timid? That is a long story, but I will suggest a few reasons:

  1. They may be en­tirely or largely dependent on gov­ernment war contracts.
  2. They never know when or on what grounds they will be held guilty of violating the antitrust laws.
  3. They never know when or on what grounds the National Labor Rela­tions Board will hold them guilty of unfair labor practices.
  4. They never know when their per­sonal income tax returns will be hostilely examined, and they are certainly not confident that such an examination, and its findings, will be entirely independent of whether they have been person­ally friendly or hostile to the Ad­ministration in power.

It will be noticed that the gov­ernmental actions or laws of which businessmen stand in fear are ac­tions or laws that leave a great deal to administrative discretion. Discretionary administrative law should be reduced to a minimum; it breeds bribery and corruption, and is always potentially black­mail or blackjack law.

A Confusion of Interests

Libertarians are learning to their sorrow that big businessmen cannot necessarily be relied upon to be their allies in the battle against extension of governmental encroachments. The reasons are many. Sometimes businessmen will advocate tariffs, import quo­tas, subsidies, and restrictions of competition, because they think, rightly or wrongly, that these gov­ernment interventions will be in their personal interest, or in the interest of their companies, and are not concerned whether or not they may be at the expense of the general public. More often, I think, businessmen advocate these interventions because they are honestly confused, because they just don’t realize what the actual consequences will be of the par­ticular measures they propose, or perceive the cumulative debilitat­ing effects of growing restrictions of human liberty.

Perhaps most often of all, how­ever, businessmen today acquiesce in new government controls out of sheer timidity.

A generation ago, in his pessi­mistic book, Capitalism, Socialism and Democracy (1942), the late Joseph A. Schumpeter maintained the thesis that “in the capitalistic system there is a tendency toward self-destruction.” And as one evi­dence of this he cited the “coward­ice” of big businessmen when fac­ing direct attack:

They talk and plead — or hire peo­ple to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interests — in this country there was no real resistance anywhere against the imposition of crushing financial burdens during the last decade or against labor leg­islation incompatible with the effec­tive management of industry.

So much for the formidable problems facing dedicated liber­tarians. They find it extremely difficult to defend particular firms and industries from harassment or persecution when those indus­tries will not adequately or com­petently defend themselves. Yet division of labor is both possible and desirable in the defense of liberty as it is in other fields. And many of us, who have neither the time nor the specialized knowl­edge to analyze particular indus­tries or special complex problems, can be nonetheless effective in the libertarian cause by hammering incessantly on some single prin­ciple or point until it is driven home.

Basic Principles upon Which Libertarians May Rely

Is there any single principle or point on which libertarians could most effectively concentrate? Let us look, and we may end by find­ing several.

One simple truth that could be endlessly reiterated, and effec­tively applied to nine-tenths of the statist proposals now being put forward or enacted in such pro­fusion, is that the government has nothing to give to anybody that it doesn’t first take from somebody else. In other words, all its relief and subsidy schemes are merely ways of robbing Peter to support Paul.

Thus, it can be pointed out that the modern welfare state is mere­ly a complicated arrangement by which nobody pays for the educa­tion of his own children, but ev­erybody pays for the education of everybody else’s children; by which nobody pays his own medi­cal bills, but everybody pays ev­erybody else’s medical bills; by which nobody provides for his own old-age security, but everybody pays for everybody else’s old-age security; and so on. Bastiat, with uncanny clairvoyance, exposed the illusive character of all these wel­fare schemes more than a century ago in his aphorism: “The State is the great fiction by which everybody tries to live at the ex­pense of everybody else.”

Another way of showing what is wrong with all the state hand­out schemes is to keep pointing out that you can’t get a quart out of a pint jug. Or, as the state give­away programs must all be paid for out of taxation, with each new scheme proposed the libertarian can ask, “Instead of what?” Thus, if it is proposed to spend another $1 billion on getting a man to the moon or developing a supersonic commercial plane, it may be point­ed out that this $1 billion, taken in taxation, will not then be able to meet a million personal needs or wants of the millions of tax­payers from whom it is to be taken.

Of course, some champions of ever-greater governmental power and spending recognize this very well, and like Prof. J. K. Gal­braith, for instance, they invent the theory that the taxpayers, left to themselves, spend the money they have earned very foolishly, on all sorts of trivialities and rub­bish, and that only the bureau­crats, by first seizing it from them, will know how to spend it wisely.

Knowing the Consequences

Another very important princi­ple to which the libertarian can constantly appeal is to ask the statists to consider the secondary and long-run consequences of their proposals as well as merely their intended direct and immediate consequences. The statists will sometimes admit quite freely, for example, that they have nothing to give to anybody that they must not first take from somebody else. They will admit that they must rob Peter to pay Paul. But their argument is that they are seizing only from rich Peter to support poor Paul. As President Johnson once put it quite frankly in a speech on January 15, 1964:

“We are going to try to take all of the money that we think is unneces­sarily being spent and take it from the ‘haves’ and give it to the ‘have nots’ that need it so much.”

Those who have the habit of con­sidering long-run consequences will recognize that all these pro­grams for sharing-the-wealth and guaranteeing incomes must reduce incentives at both ends of the economic scale. They must reduce the incentives both of those who are capable of earning a high in­come, but find it taken away from them, and those who are capable of earning at least a moderate in­come, but find themselves supplied with the necessities of life with­out working.

This vital consideration of in­centives is almost systematically overlooked in the proposals of agitators for more and bigger gov­ernment welfare schemes. We should all rightly be concerned with the plight of the poor and unfortunate. But the hard two-part question that any plan for relieving poverty must answer is: How can we mitigate the penal­ties of failure and misfortune without ‘undermining the incen­tives to effort and success? Most of our would-be reformers and humanitarians simply ignore the second half of this problem. And when those of us who advocate freedom of enterprise are com­pelled to reject one of these spe­cious “antipoverty” schemes after another on the ground that it will undermine these incentives and in the long run produce more evil than good, we are accused by the demagogues and the thoughtless of being “negative” and stony-hearted obstructionists. But the libertarian must have the strength not to be intimidated by this.

Finally, the libertarian who wishes to hammer in a few gen­eral principles can repeatedly ap­peal to the enormous advantages of liberty as compared with coer­cion. But he, too, will have influ­ence and perform his duty properly only if he has arrived at his principles through careful study and thought. “The common peo­ple of England,” once wrote Adam Smith, “are very jealous of their liberty, but like the common peo­ple of most other countries have never rightly understood in what it consists.” To arrive at the proper concept and definition of liberty is difficult, not easy. But this is a subject too big to be de­veloped further here.

Legal and Political Aspects

So far, I have talked as if the libertarian’s study, thought, and argument need be confined solely to the field of economics. But, of course, liberty cannot be enlarged or preserved unless its necessity is understood in many other fields — and most notably in law and in politics.

We have to ask, for example, whether liberty, economic prog­ress, and political stability can be preserved if we continue to allow the people on relief — the people who are mainly or solely supported by the government and who live at the expense of the taxpayers —to exercise the franchise. The great liberals of the nineteenth and early twentieth centuries ex­pressed the most serious misgiv­ings on this point. John Stuart Mill, writing in his Representative Government in 1861, did not equivocate:

“I regard it as required by first principles that the receipt of parish relief should be a pre­emptory disqualification for the franchise. He who cannot by his labor suffice for his own support has no claim to the privilege of helping himself to the money of others.”

And A. V. Dicey, the eminent British jurist, writing in 1914, also raised the question whether it is wise to allow the re­cipients of poor relief to retain the right to join in the election of a member of Parliament.

An Honest Currency and an End to Inflation

This brings me, finally, to one more single issue on which all those libertarians who lack the time or background for special­ized study can effectively concen­trate. This is in demanding that the government provide an honest currency, and that it stop in­flating.

This issue has the inherent ad­vantage that it can be made clear and simple because fundamentally it is clear and simple. All infla­tion is government-made. All in­flation is the result of increasing the quantity of money and credit; and the cure is simply to halt the increase.

If libertarians lose on the infla­tion issue, they are threatened with the loss of every other issue.

If libertarians could win the in­flation issue, they could come close to winning everything else. If they could succeed in halting the in­crease in the quantity of money, it would be because they could halt the chronic deficits that force this increase. If they could halt these chronic deficits, it would be because they had halted the rapid increase in welfare spending and all the socialistic schemes that are dependent on welfare spending. If they could halt the constant in­crease in spending, they could halt the constant increase in gov­ernment power.

The devaluation of the British pound a few months ago, though it may shake the whole world cur­rency system to its foundations, may as an offset have the longer effect of helping the libertarian cause. It exposes as never before the bankruptcy of the Welfare State. It exposes the fragility and complete undependability of the paper-gold international monetary system under which the world has been operating for the last twenty years. There is hardly one of the hundred or more currencies in the International Monetary Fund, with the exception of the dollar, that has not been devalued at least once since the I.M.F. opened its doors for business. There is not a single currency unit — and there is no exception to this statement — that does not buy less today than when the Fund started.

The dollar, to which practically every other currency is tied in the present system, is now in the gravest peril. If liberty is to be preserved, the world must eventu­ally get back to a full gold stand­ard system in which each major country’s currency unit must be convertible into gold on demand, by anybody who holds it, without discrimination. I am aware that some technical defects can be pointed out in the gold standard, but it has one virtue that more than outweighs them all. It is not, like paper money, subject to the day-to-day whims of the politi­cians; it cannot be printed or otherwise manipulated by the poli­ticians; it frees the individual holder from that form of swind­ling or expropriation by the poli­ticians; it is an essential safe­guard for the preservation, not only of the value of the currency unit itself, but of human liberty.

Every libertarian should support it.

I have one last word. In what­ever field he specializes, or on whatever principle or issue he elects to take his stand, the liber­tarian must take a stand. He can­not afford to do or say nothing. I have only to remind you of the elo­quent call to battle on the final page of Ludwig von Mises’s great book on Socialism written 35 years ago:

Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping toward destruction. There­fore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the in­terests of everyone hang on the re­sult. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us. 

Bob Wenzel’s 30 Day Reading List

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