The author is Professor of Money and Credit at Claremont Men’s College, California. This is an excerpt from his address to the California Taxpayers’ Association at Los Angeles, February 18, 1958.
One major obstacle to achieving true economy in government is the willingness of many people to accept superficially plausible programs having multiple, and often mutually incompatible, objectives. There is literally no end to the number of socially desirable projects governments can dream up. Each one can be clothed in the most fetching garments and surrounded by such an aura of righteousness that opposition to it can be made to resemble attacking one’s sister and setting fire to the old homestead. But, if the ends we seek include the retention of our traditional liberties and self-respect, as well as the multitude of socially desirable projects, we may end up by achieving none of them in an effort to have all of them! Like Don Quixote, we seem determined to ride off madly in all directions.
To overcome this kind of obstacle requires the establishment of priorities in our objectives. It requires a constant reappraisal and restatement of the raison d’être of our political and economic society. For example, some groups wish to increase the degree of centralized direction of political and economic affairs — in brief, they seek a high degree of socialization. In other words, some persons desire enough power to impose their values on other persons. They do not fear inflation, or a government deficit ; in fact, they welcome both, for such conditions are quite likely to lead to demands for price-fixing, priorities, rationing, allocations, and so on, all of which are excellent instruments of social control and economic subjugation.
There are others who believe an individual’s income is spent most efficiently, and most properly, when he spends it himself in such a manner as he may choose. This second group, in contrast to the first, favors greater economy in government as a means of reducing taxes and thus minimizing the proportion of everyone’s income disposed of by political, decision.
Unfortunately, there also exists a third group that does not aim at socialized control and favors economy in government in the abstract, but seeks to use the coercive powers of government for its own particular advantage or special privilege. In this group lies the prime obstacle to economy in government. To call upon government to exercise its powers on behalf of one group — whether labor, or farmers, or businessmen, or school teachers, or whatever — inevitably leads to further interference on behalf of others. The end product, as Henry Simons sagely pointed out two decades ago, is an accumulation of governmental regulation and interference which produces all of the disadvantages and none of the advantages of either a free society or socialism itself. We are running the danger, today more than ever before, of drifting into a society which, in performance, is the worst of both worlds.
A Matter of Principle
From the standpoint of moral principle I find it difficult to subscribe to the glorification of economy per se. If it could be demonstrated that a centralized system was more efficient in all respects than a decentralized system with its division of sovereignty and separation of powers, I should still prefer the latter. Fortunately, this is not presently the case; instead, we can probably have our cake and eat it too. If we desire efficient production of the things people want to have, it is almost beyond dispute that a free and voluntary society is much more capable of accomplishing that goal than a directed, centralized system of imposed values.
It should be recognized, too, that there are two kinds of economy in government; two ways, therefore, to economize. One is to achieve greater efficiency in the operations of government — in producing better defense for less money, in performing governmental services of all kinds at lower cost, in reducing employee turnover, and so forth. The second way is to reduce the functions performed by government and to keep all government activity as close to the individual as practicable. This means avoiding government ownership and operation of enterprises, avoiding subsidies whether direct or indirect, and whether or not they have pleasant names like aid to education, school lunches, or pensions for unmarried mothers.
There is, in my opinion, no excuse for the agricultural subsidies, the TVA and public power subsidies, the public assistance programs, the vast aid to education programs, the housing subsidies, the subsidies for water transportation, the hidden and open subsidization in many items of public works, and the amazing subsidies to users of mail services. And if someone wishes to raise the question, I am prepared to argue that the largest part of the $60 billion of postwar foreign aid, instead of protecting this nation’s defense, has weakened our ability to achieve peace and to wage war, has lost us the respect of a large part of the world, and has seriously undermined the political and moral bases of our very existence.
As early as 1800, Thomas Jefferson wisely observed in a letter to Gideon Granger:
“Our country is too large to have all its affairs directed by a single government…. if the principle were to prevail of a common law being in force in the United States (which principle possesses the General Government at once of all the powers of the State governments and reduces us to a single consolidated government) it would become the most corrupt government on the earth….
“Let the General Government be reduced to foreign concerns only, and let our affairs be disentangled from those of all other nations, except as to commerce, which the merchants will manage the better the more they are left free to manage for themselves, and our General Government may be reduced to a very simple organization and a very inexpensive one…”
Ideas On Liberty
Despotic Government
It covers the surface of society with a network of small, complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided: men are seldom forced by it to act, but they are constantly restrained from acting: such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrious animals, of which the government is the shepherd.
Alexis De Tocqueville, Democracy in America
