All Commentary
Thursday, October 1, 1992

The Education of a Politician

Experience taught one former politician an important economic lesson.

For 24 years George McGovern was in political office as a U.S. Congressman and Senator, and was also an unsuccessful Democratic candidate for President. Then in the hopes of realizing “a longtime dream” he invested in “a combination hotel, restaurant and public conference facility—complete with an experienced manager and staff,” only to have his hopes dashed when the hotel went bankrupt.

McGovern and his business associates found that they had to live with Federal, state, and local rules, “all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting [their] customers from fire hazards, etc.” All noble goals, to be sure. But McGovern now realizes that what “most often eludes legislators is: ‘Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape?”

McGovern’s hotel “went bankrupt for a variety of reasons, the general economy in the Northeast being a significant cause. But that reason masks the variety of other challenges. . . that drive operating costs and financing charges beyond what a small business can handle.” And beyond what consumers can and will pay.

Faced with higher prices, consumers can make other choices, spend less, go elsewhere, vacation in their backyards, stay fewer nights in hotels, eat out less, and forgo various services such as car washes and shoeshines. “Every such decision eventually results in job losses for someone,” McGovern laments. “And often these are the people without the skills to help themselves—the people i’ve spent a lifetime trying to help.”

Thus experience taught one former politician an important economic lesson: Government controls and regulations end up hurting the very persons they are designed to help.

—Bettina Bien Greaves

The Munchies

Communism has a lot going for it—a totalitarian political doctrine, a utilitarian ethical code and a brutalitarian leadership. There was even something called, as in the title of Edward Luttwak’s book, The Grand Strategy of the Soviet Union. Surely, nothing could stand against a country and a movement which was blessed with a “grand strategy.”

Nothing, that is, except the munchies. Over the centuries men, women, and children got hooked on eating food. Then, they started dressing in non-burlap shirts and wearing shoes instead of wrapped rags. This nascent consumerism served human beings well, while doing the dirty on feudalism and, more recently, on Communism.

In the United States, the munchies struck citizens at movies and at celebrations following office softball games. Joe Six-Pack and, for that matter, everyone else shooed them away at Miller Time with saturated fats, starches, and other good things. Americans lived, loved, fattened, and expired from seizures. The German economist Werner Sombart hit it just right. “Socialism,” he wrote when explaining the failure of the doctrine in the United States, “has always foundered on the shores of roast beef and apple pie.”

—Larry Parr, writing in the July-September 1990 issue of Glasnost

Early Warning

All the books which recommend the establishment of a planned economy in a civilian society paint an entrancing vision of what a benevolent despotism could do. They ask—never very clearly, to be sure—that somehow the people should surrender the planning of their existence to “engineers,” “experts,” and “technologists,” to leaders, saviors, heroes. This is the political premise of the whole collectivist philosophy: that the dictators will be patriotic or class-conscious, whichever term seems the more eulogistic to the orator. It is the premise, too, of the whole philosophy of regulation by the state, currently regarded as progressivism. Though it is disguised by the illusion that a bureaucracy accountable to a majority of voters, and susceptible to the pressure of organized minorities, is not exercising compulsion, it is evident that the more varied and comprehensive the regulation becomes, the more the state becomes a despotic power as against the individual. For the fragment of control over the government that one man exercises through his vote is in no effective sense proportionate to the authority exercised over him by the government.

Benevolent despots might indeed be found. On the other hand, they might not be. They may appear at one time; they may not appear at another. The people, unless they choose to face the machine guns on the barricades, can take no steps to see to it that benevolent despots are selected and the malevolent cashiered. They cannot select their despots. The despots must select themselves, and, no matter whether they are good or bad, they will continue in office so long as they can suppress rebellion and escape assassination.

Thus, by a kind of tragic irony, the search for security and a rational society, if it seeks salvation through political authority, ends in the most irrational form of government imaginable—in the dictatorship of casual oligarchs, who have no hereditary title, no constitutional origin or responsibility, and who cannot be replaced except by violence.

—Walter Lippmann, writing in The Atlantic Monthly, 1937

The Long Run

It is true, many people believe that economic policy should not bother at all about long-run consequences. They quote a dictum of Lord Keynes: “In the long run we are all dead.” I do not question the truth of this statement; I even consider it as the only correct declaration of the neo-British Cambridge school. But the conclusions drawn from this truism are entirely fallacious. The exact diagnosis of the economic evils of our age is: we have outlived the short-run and are suffering from the long-run consequences of policies which did not take them into consideration.

—Ludwig von Mises, Planning for Freedom

  • Contributing editor Bettina Bien Greaves was a longtime FEE staff member, resident scholar, and trustee. She attended Ludwig von Mises’s New York University seminar for many years and is a translator, editor, and bibliographer of his works.