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Wednesday, May 1, 1996

Fifty Years of Statism

Doug Bandow is a Senior Fellow at the Cato Institute and a nationally syndicated columnist. He is the author and editor of several books, including The Politics of Envy: Statism as Theology (Transaction).

Historian Paul Johnson has called the twentieth century the “age of politics,” the era in which people increasingly turned to the state to solve any and all problems. That is no less the case in America than elsewhere around the globe. In the early 1900s Progressivism and Woodrow Wilson’s messianic international crusade helped set the U.S. government on its ever-expanding course.

The growth of the state has been particularly spectacular this past half century. Since FEE’s birth in 1946, the federal Dr. Jekyll has turned into the most odious version of Mr. Hyde. Over that time Washington has become the redistributive state, the Santa Claus for any interest group with a letterhead and mailing list. It has become the nanny state, the paternalist determined to run every American’s life. It has become the militarist state, the guarantor of a veritable global empire at the expense of freedom at home. There is, in fact, little that political acolytes have not sought to entrust to the state—medicine, child care, and even spiritual fulfillment through something called “the politics of meaning.”

The necessity for FEE was obvious enough in 1946. The national government had been swollen by America’s participation in World War II and inauguration of various New Deal schemes intended to bring the nation out of the Great Depression. But for those less prescient than Leonard Read, 1946 might also have looked like the peacetime apogee of government. After all, America’s great economic and security crises, which had caused government’s dramatic and rapid growth, were receding into history. And for a time government actually did shrink. Federal outlays ran $55.2 billion in 1946, five times the last year of peace, 1940, but down from $92.7 billion in 1945. Expenditures fell to $29.8 billion in 1948. Then the trend reversed, however, and within two years the federal government was spending more than it had in 1946 (though outlays still lagged once adjusted for inflation).

The march of statism seemed to slow during the Eisenhower years: federal expenditures actually fell for a time and grew only slowly thereafter. But by 1966 real outlays had rolled past those of 1946. Uncle Sam was bigger and more intrusive than in the aftermath of economic depression and global war.

Government continued to grow steadily if slowly—1969 was the last year that the federal government balanced its budget— before the go-go years of the late 1970s and early 1980s. By 1985 the national government was spending twice as much in real terms as it had in 1946. Today, at a time when America is secure economically and militarily, the real federal budget is running nearly thrice that of 1946.

Uncle Sam’s growing budget has been matched by his expanding reach. Over the last fifty years the federal government has constantly looked for new fields to enter, creating the Departments of Education; Energy; Health, Education and Welfare; Health and Human Services; Housing; Transportation; and Veterans. Also added was a host of agencies, from the Environmental Protection Agency to the Consumer Product Safety Commission to the Legal Services Corporation to the National Endowment for the Arts to the Corporation for National Service. The last half century has seen initiation of the so-called war on poverty, hiring of politically minded legal-aid lawyers, government patronage of pornographic art, Medicare and Medicaid, federal subsidies for education, Uncle Sam as energy investor, a torrent of grants and loans for business, students, and other governments, and much, much more.

Indeed, since 1946 the government has increasingly epitomized Frederic Bastiat’s notion of legalized plunder. Three of the top five federal spending categories involve transfer programs, or “entitlements”: Social Security, Medicare, and Medicaid. Another top spending program, interest, largely reflects the expansion of the other three. Only one, defense, involves a traditional government role.

Moreover, much of the increase in so-called discretionary spending has gone to grant and loan programs that enrich the politically nimble. Cheap credit to customers of U.S. exporters, government-paid advertising abroad for American corporations, subsidized loans to well-connected small businesses, low-cost mortgages to developers, grants for college researchers, aid to students, ad infinitum. In fact, the Government Assistance Almanac, published annually by Omnigraphics, presents hundreds of pages of federal pork and loot available for the asking. The book, states its publicity materials, catalogues all “grants, loans, insurance, personal payments and benefits, subsidies, fellowships, scholarships, traineeships, technical information, advisory services, investigation of complaints, sales and donations of federal property.” Almost all of these were created during the last half century and act as vehicles to redistribute wealth.

Although Uncle Sam is the most visible villain of statism run rampant, he is not the only culprit. State and local expenditures and responsibility, too, have grown dramatically. Between 1946 and 1995 state spending jumped from $49 billion to about $606 billion. Over the same period local outlays rose from $9.1 billion to roughly $847 billion. These 100-fold increases dwarf that of Washington. Combined federal, state, and local outlays went from $61.5 billion in 1946 to almost $3 trillion last year. Adjusted for inflation, the jump was still 523 percent.

These pervasive increases demonstrate the necessity of emphasizing philosophical arguments for limited government. The hallmark of the last half century has been a belief in the rightness of government to intervene anywhere at any time in any way. Opponents have all too often criticized not so much the proposed outlay, regulation, or tax, but its amount or extent. In short, intervention was fine, though the specific proposal needed to be fine-tuned and moderated. Not surprisingly, when faced with such a choice, Americans tended to choose the real thing. And advocates of intervention always returned to push for more if they were only partially successful the first time around.

This problem remains today, even in supposedly revolutionary times. Over the years FEE has spawned a host of free-market think-tanks around the nation that present practical policy alternatives to the usual statist panaceas. These groups have helped expand the debate over a range of issues. Nevertheless, their arguments often remain constrained by the realities of the political process.

Yet believers in freedom must also challenge the philosophical basis of statism. This was, for instance, the great vacuum in last year’s budget battle. For all the hue and cry, no politician suggested that government should not guarantee medical care for every senior. No one argued that housing was not a matter for the government, let alone the federal government. No major political leader advocated getting Washington out of education. Where were the legislators saying no—that’s NO—to subsidies for state and local governments, businesses, and students? And on it went. Who asked why the national government was subsidizing energy research? Who proposed stopping Washington from pouring billions down money-losing, mass transit ratholes? Where was the politician to challenge the very notion of Uncle Sam funding welfare in every state and city in America? And on and on.

Fundamentally, the problem of the federal budget is one of philosophy. Statism has become the nation’s governing ideology: over the last fifty years the mass of people has come to believe that government can legitimately do anything. As a result, even those legislators who most rail against the deficit in the abstract are unwilling to empty Uncle Sam’s financial cornucopia.

This century, and most particularly the last fifty years, is truly the age of politics. The failures of this approach are manifold, and are obvious even to those in power. But many Americans—policymakers and citizens alike—have yet to give up their statist illusions. Many simply aren’t aware of an alternative. But there is one. One which FEE has been teaching for the last half century: freedom.

  • Doug Bandow is a senior fellow at the Cato Institute and the author of a number of books on economics and politics. He writes regularly on military non-interventionism.