It’s second-term scandal season in Washington, D.C. The folks at Fox are eating it up. But over at MSNBC, not so much.
First it was Hillary Clinton’s role in Benghazi; then the AP wiretapping; and of course, the IRS looks more evil, stupid, and wasteful with each passing day. More scandals than usual? Hardly. Remember Monica and “Scooter” and Oliver and — well, the list is endless.
The real scandal is bigger, longer, and more imposing. It is government itself, in all its sheer immensity: a gangly, clumsy octopus with legs flailing about, neither in sync nor having a clue what the others are doing. It would be hilarious if it were not so tragic. One wonders how we got here. A nation created with libertarian principles has morphed into a scandal-ridden banana republic.
Robert Higgs slices open the beast’s belly and gives us an unvarnished look at what we’re up against in his book Against Leviathan: Government Power and a Free Society. Higgs is not only a first-rate historian, but also a high-caliber economist who can make sense of the machinations of government and its implications.
Your blood may be boiling because the IRS spent $50 million of taxpayer money on conferences, happiness experts, and art sessions for its employees, but the real outrage is that our money is being redistributed at all. The fact that tax collectors are attending extravagant boondoggles just adds insult to injury. In one chapter, Higgs lists 19 neglected consequences of income distribution.
Taxes take away income, capital, incentives, goods, services, and wealth. Heck, taxes even take their toll on your own health (although Higgs doesn’t say that). The expectation of less income in the present and future means people will “exert less effort to earn income.” Those on the receiving end of redistribution lose their self-reliance and become dependent upon government.
Taxation breeds resentment between rich and poor, young and old. In between lies a vast, expensive bureaucracy that receives the transfers and doles out the proceeds.
When government is set up to redistribute, it “will become more powerful and invasive in other ways,” writes Higgs, who goes on to quote James Madison: “One legislative interference is but the first link of a long chain of repetitions, every subsequent interference being naturally produced by the effects of the proceeding.” For example, the government’s creation of Medicare and Medicaid was the start of what would eventually turn into the current crisis of escalating costs in medical care.
We read plenty about the “great presidents,” and combining many polls taken over the years puts Lincoln at the top, followed by FDR, George Washington, Thomas Jefferson, Teddy Roosevelt, and Woodrow Wilson. These six killed many while taxing and regulating the rest.
Higgs has a different list. “I hold no brief for John Quincy Adams, Martin Van Buren, or Chester Arthur; but I think we ought to give them their due: At least they did not spill the blood of their fellow citizens,” he writes. Grover Cleveland, Higgs thinks, “may have been the best of them all,” for respecting the Constitution, keeping the country at peace, and preserving the gold standard.
Higgs turns to economics about a third of the way through the book, beginning with an enlightening chapter on government statistics that the author wishes were never created. Why? “Because many official economic statistics are ill-defined conceptually, they fail to capture what they purport to measure,” Higgs writes. The author is like most of us who write about economics. We cite the government’s numbers knowing they, at best, only somewhat resemble the truth.
Many of these stats just can’t be tabulated in an accurate fashion. Higgs wonders how all of the official poor afford big-screen TVs and shiny cars. Just how much of the economy has gone underground, undetected and uncounted by the government’s bean counters? Thank goodness for what has.
Higgs cites the godfather of government statistics skeptics, Oskar Morgenstern, who warned, “We must carefully distinguish between what we think we know and what we really do and can know.” The bigger issue that Higgs puts his finger on is that a government of the proper size and scope wouldn’t have use for the reams of statistics generated by thousands of mathematicians in the government’s employ. “None of these statistics can assist in the defense of the citizens’ just rights.”
Part V of the book is right in Higgs’ wheelhouse: “The Political Economy of Crisis.” My first introduction to Higgs’ work was in Murray Rothbard’s U.S. Economic History class at the University of Nevada, Las Vegas. Rothbard thought so much of Higgs’ book Crisis and Leviathan that he assigned it as a text for that class.
The author has done pathbreaking work exposing war as a direct catalyst for the growth of Big Government. How many times do we hear the argument that WWII pulled the U.S. economy out of the Depression? This bit of misinformation is tossed off as fact constantly, not to be questioned. War is the ultimate Keynesian government stimulus program.
But the fact is it’s not true. Sure, the unemployment rate dropped from 9.5% to 1.2% from 1940-1945. That will happen when 22% of the labor force is pulled (by force) into the military. The cost of the WWII stimulus: billions of dollars, over 400,000 lives and 670,000 wounded. The war controlled so much employment that consumer and capital goods production slowed to a crawl with shortages and rationing of many necessities. This is not exactly the definition of prosperity.
By adjusting away national defense spending from GNP in 1944, Higgs points out that gross national product was 12% lower in 1944 than it was in 1941. Contrary to what is commonly believed, “Only with the end of the war did the economy at last break out of its 15-year substandard performance, jumping nearly 27% between 1945-1946,” Higgs explains.
In a chapter on big business, Higgs highlights the work of historian Burton Folsom, who separates entrepreneurs into two distinct categories. There have been entrepreneurs who have made millions by creating and selling new or high-quality products. At the same time, others have made their fortunes “grasping the helpful hand of government, thereby gaining subsidies, tariff protection, and restrictions on the entry of competitors into their markets.” The distinction is important. Market entrepreneurs create something out of nothing. Political entrepreneurship “is part of a negative-sum game.” Some gain benefits at the expense of others while creating perverse incentives that lead to the misallocation of resources.
Higgs ruminates on Bill Clinton’s line from his 1996 State of the Union address: “The era of Big Government is over.” To most of us, increased government intrusion continues apace. Higgs does make the point that in the halls of academia, the acceptance of free market ideas has become friendlier. However, while the political whims of the public ebb and flow, the view of the public is best captured by a protester’s sign during the 2008 presidential campaign: “Keep government’s hands off my Medicare.”
The rugged individualism that embodied the psyche of this country seems long gone. Higgs quotes a wistful passage from Alexis de Tocqueville, who described Americans as becoming “a flock of timid and industrious animals, of which government is the shepherd.”
Higgs gives us plenty to shake our heads in disgust about. He provides no promise that change is eminent. In fact, Higgs writes about Americans, “That such people stand on the verge of a libertarian ideological conversion is a prospect too preposterous to take seriously.”
Why in this land of the free and home of the brave do we have a government that grows like topsy? Mencken put his finger on it. “The fact is that the average man’s love of liberty is nine-tenths imaginary, exactly like his love of sense, justice, and truth.”
To spend time with Higgs and Against Leviathan is to hang out with your brilliant, articulate friend who delivers you bad news in a way that makes you thank him or her for setting you straight.
Read Higgs and know the truth while you enjoy the government’s scandal show.
Sincerely,
Doug French
