DIGG THIS

There are some writers in politics whose prose seems to overcome the limits of the passage of time and the coldness of the printed word, writers whose thoughts are so scintillating that reading them causes you to lose track of where you are and who you are and become part of their very thought processes, and leave you changed. Your heart races as you read, you see things a new way, and you marvel at their capacity for framing the debate in a way that has eluded the whole of the mainstream political culture.

I have to count Garet Garrett among those writers. And I’m reminded of this after having read Insatiable Government, the title essay of a new collection of some of Garrett’s best writing, as edited by Bruce Ramsey. Actually I’m not entirely sure what it means to refer to his “best writing,” since that is just about everything he wrote between The Driver in 1922 and The Wild Wheel in 1954 should be considered classic. And yet this essay, which has been unnoticed for three quarters of a century, should somehow stand out.

It was written in 1932: as an attack on the Hoover administration. You know President Hoover, the guy who the textbooks say did nothing to stop the worsening depression. We are told that he didn’t take the problem seriously and instead trusted market forces to work themselves out.

We are told that he let the banks fall, the unemployment lines lengthen, the business sector collapse, and, stuck in his 19th century frame of mind, did nothing that he should have done. It took the white knight named FDR to show up and take charge, using emergency powers and Keynesian theory to save the day.

Okay, if so, consider this from Garrett in 1932. He presumes that Hoover is using every power available to him to do precisely what the historians claim that FDR started. More profoundly, Garrett observes that success in these endeavors would be far worse than failure, because it would establish the principle that government should grow without end.

I know that long quotes are not reader friendly but this is irresistible. Thank goodness for Bruce Ramsey for highlighting it and bringing it back to public attention.

There is a crisis in the economics of human welfare. The intention is to overcome it. If truly it could be overcome by the use of public credit, no objection on the ground of precedent or political theory would long prevail. Public credit belongs to the people as a whole and they may do anything with it they like. Therefore, as to these ideas — any and all of them — there are only two questions:

First, will they work? Nobody can answer that. Nobody knows what lies in the future. Sometime the tide, of itself, will rise again. We take that for granted. Therefore these unprecedented uses of the public credit now being made, and proposed to be made, are to meet a crisis that must soon pass.

President Hoover says: "I have no taste for any such emergency powers in the Government. But we are fighting the economic consequences of overliquidation and unjustified fear as to the future of the United States. The battle to set our economic machine in motion in this emergency takes new forms and requires new tactics from time to time. We used such emergency powers to win the war; we can use them to fight the depression."

But the risk is real. If the natural level of economic recovery were long delayed, then all these measures would very soon fail in the total ruin of public credit.

Yet suppose differently. Suppose they did work, the tide rising to save and redeem them, and that we should be able to perform the terrific gymnastic feat of getting back our equilibrium What then?

Well, in that case we should have established certain things in the way anything is established by the fact of its having once been done before, such as these:

That when the industrial rhythm breaks and there is a crisis in employment, it becomes a function of government to provide people with work; thus responsibility for unemployment comes at rest not upon industry, where we had thought it belonged, but upon government the state — and must be charged to the public credit.

That when from bad banking, wild speculation, senseless credit inflation, or no matter from what cause, the private banking structure seems about to fall, it becomes a function of government to support it with public credit, not particularly to save the banks, but to save depositors. Thus responsibility for the solvency of banking as a whole passes to the government.

That when railroads, in a crisis, are unable to meet their interest charges, it becomes a function of government to save them with loans of public credit, as through the Reconstruction Finance Corporation, not for the sake of any railroad as such, but because if the railroads go bankrupt the savings banks, the insurance companies and many thousands of investors who hold railroad bonds will be hurt.

That when liquidation of commodities and securities has gone too far it becomes the business of government to stop it, using public credit by such means as it may think fit.

That when prices are too low — prices taken all together — it becomes a function of government to manipulate them back to where they belong. This it will do by inflating money and credit.

And it follows by necessity that certain functions of government are assumed, as, for example, the wisdom to know when a crisis is such a crisis, to know when liquidation has gone far enough, when prices are too low, when they are high enough again, how many bank failures constitute a crisis in banking, how many railroad failures constitute a crisis in railroad credit, and so on.

Whether this would be all for the best, or otherwise, is not yet the point. There cannot even be a discussion of it until we see clearly where we are going. It may be that industry cannot accept responsibility for unemployment; if so, perhaps the government must. It may be that in a crisis finance cannot any longer be responsible for its own solvency, nor business for its own continuity. It may be that we are done with the anarchy of prices which we have so long justified by supposing a law of supply and demand.

But if these things are true, and if now in any crisis such responsibilities must pass to the government, we have gone far unawares toward an experimental state we know nothing of by experience, almost nothing of by theory. That is to say, we have not consciously intended it. We have not considered what kind of state that would be, much less to decide if we want it. It is clear, however, that in passing these responsibilities to government we should be exchanging freedom for something else as yet unnamed….

There are many aspects of government. The one least considered is what may be called the biological aspect, in which government is like an organism with such an instinct for growth and self-expression that if let alone it is bound to destroy human freedom — not that it might wish to do so but that it could not in nature do less.

No government ever wants less government… that is, less of itself. No government ever surrenders power, even its emergency powers — not really. It may mean to surrender them, but on the first new occasion it will take them all back. One of the American Government’s wartime powers was the War Finance Corporation. The present Reconstruction Finance Corporation is a revival of that power in time of peace. And so it goes.

Observe that in time of prosperity government is bound to extend itself because revenues are plenty and there is always a purblind demand for special benefits to be conferred by public credit. If now it is established that in time of depression government must extend itself even faster, prodigiously, in order to meet the responsibilities which we are so willing to pass to it by default, then the growth of government will be uninterruptible, without time or season, and the last problem of all is how people shall defend themselves against it.

Already the cost of government is absorbing, roughly, one-quarter of the total national income. One day’s work in every four belongs to government. We speak here of all government — national, state, city and local — from Washington above down to the counties, townships, boroughs and districts, all exercising the tax power.

As the total national income falls, the proportion of it absorbed by government will rise. It must rise because government is the one thing that cannot be liquidated or deflated in time of economic depression. To the contrary, as we have seen, it must extend itself to meet new responsibilities. Therefore, taxes must be increased, first in order to provide as much public revenue as before, and then further increased to provide more revenue than before. Thus, in bad times like these, the proportion of the total national income absorbed by government will rise in a special manner.

He continues to warn about what all this would mean in our future: Leviathan unchecked, killing the country and everything it has produced and stands for as a matter of principle. Now, can you point to any other American writer of his then-prominence who spoke so presciently? No one. They had to silence the great Garrett. But he is silent no more!

Jeffrey Tucker [send him mail] is editorial vice president of www.Mises.org. Comment on the Mises blog.

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