6. The Reckoning

but Bentham's dictum rules out the true concern of the state, which is the sum of all. The good ofa greater number sometimes may best be pre served by protecting the good of a smaller number. The phi losophy of the early New Deal constantly stressed the indivis ibility of interests. Roosevelt likened the nation's economic system to a "seamless web," a phrase borrowed from Pollock and Maitland's great History of English Law. The early New Deal, still clinging to the concept of an eco nomic "seamless web," recognized that some individuals and some minorities must be protected from the "vicissitudes" of 157 The Reckoning life. This protection would be a distributed burden and would not impair the operation of a free economy. The later New Deal and the Fair Deal have energetically torn the "seamless web" bysingling out some interests for fa vor and others for disfavor. Occasionally, special favors for special welfares are justified by the claim that these welfares are essential to the whole, the general welfare. Secretary of Agriculture CharlesF. Brannan prefaces his disquisitions on his plan by arguing that the prosperity of agriculture is an essential factor in general prosperity. This postulate is cor rect, but he fails to show how an indeterminate monetary benefit to one group can indefinitely promote the general economic welfare.

The progressive increase of favors became a means of per petuating political power. Agricultural benefits would, under the Brannan Plan, be moved upward beyond the old parity formula and be based upon an entirely new calculation. The ear ly New Deal first encouraged private housing enterprises, by mortgage guarantees. Then government undertook mass housing projects for people with very low incomes. Ulti mately, there emerged the idea of building for "middleincome" people. " Finally the state-of-many-welfares becomes a mechanism for taking from those too weak to resist and givi"ng to those strong enough to control. The masters of such a state speak only in promises and only of material benefits. They neglect national unity, mutual forbearance, and common patriotism. Instead of promoting the general welfare, they promote alli ances of powerful groups, in endless conflict with other groups. The state becomes a vending machine where votes are inserted and money pours out.

The pursuit of welfare finally ends in the progressive in crease of benefits, with no end in sight as long as political of fice can be held. 158 The MaterialCosts HOW MUCH SOCIALISM CAN WE AFFORD? The British economist, Professor A. C. Pigou, in his Eco nomics of Welfare speaks of the "national dividend," which is to be nicely divided among outright provisions for welfare grants, for the sums necessary for the rehabilitation and ex pansion of the productive plant, for national defense, and for the maintenance of the bureaucracy. American politicians and reformers assume that the pro ductive forces of the nation will accommodate themselves to the progressive strain imposed upon them, and therefore lit tle or no' limit is placed on plans for increasing the load. In recent years they have expanded their plans by appropriation of larger and larger parts of the "national dividend" for eco nomic and military aid to foreign nations. These expendi~ tures have already reached an enormous total, and the end is not in sight. ·The purposes vary'from support of foreign cur rencies to undefined indeterminate enterprises in developing the resources of backward are~s--President Truman's Point Four.

The arguments in support of huge governmental expendi tures· for multitudinous purposes assume that the sources, of real wealth can be indeterminately expanded. Figures are used that have only shadowy meaning because of the progres sive deterioration of the value of the dollar. The possibility of the expansion of our real wealth is out side the realm of theory or good intentions. The most reli able measure of our 'national increase of wealth is national productivity. Between 1899 and 1939 our increase in real pro ductivity averaged 2 per cent a year per man..hour. Since 1939, the average rate has been 2~ to 3 per cent. There can be no miracles in this increase in the national product. It must always depend on the slow development of natural re sources, the rate of inventive and scientific progress, the sup159 The Reckoning ply of manpower, the capacity of management, the capital available for plant renewal .and enlargement, and other factors.

Productivity is also affected to an important degree by psy chological elements-optimism, daring, and the hope of profit and prestige. These are sheared away by state paternal ism. The relative values of these psychological elements, how ever, are subject to wide differences of opinion. In the politi cal interpretation of human impulses, speculation and wish ful thinking enjoy their greatest latitude. The statist places a high economic value on the assurances of personal security. In freedom from "want," he says, there is an elevation of spirit that moves mountains. He assumes that material secu rity makes free men, and that men thus "free" will labor dili gently for the sheer love of labor. But, he promises, there will also be freedom from labor and much more leisure for the amenities and for cultural pursuits. The magical machinery provided by state research will minimize the part that human action takes in produc tion. Mrs. Roosevelt once commended the quaint views of a theorist who anticipated a life in which labor occupied only the years between the early twenties and the early thirties.

During the rest of life, the packages of maintenance would be delivered to the door. Productivity, which is the source of national wealth, de pends upon human effort. Leisure, a late beginning of life's work, and an early retirement reduce productivity. The pen sioner's quest is toward pushing the age of retirement down to 62, then to 60, and even lower. Quite obviously, more and more would be living off the efforts of fewer and fewer, un less, as Mrs. Roosevelt's theorist contends, a man or woman can create a life's nest egg in a few years after maturity. But in seeking security for some the government impairs the security of many more. Savings, whether privately ac160 The Material Costs quired or gathered and "~ept" by the government, are de clining in ·real value because of the very policies that exalt the theory of personal security. We have seized the capital of the past and have denied future security to those who have put aside funds to assure it.

In determining how much socialism we can afford, we must realize that we are not dealing with fixed and unchanging forms and boundaries. The statist trend gathers momentum from the very forces that it generates. The socialist creed holds that "each should receive accord ing to his need and each should give according to his ability." Neither ability nor need are static factors, to be measured with mathematical finality. "Needs" grow to "wants," and "ability" must be measured against a· progressive disinclina tion to give. Without incentives, "ability" declines and dies. PROBABLE COSTS In the ye3:rs since 1945, the Federal Administration has proclaimed in bold terIllS its plans for the welfare state. This has stirred the minds of millions of serious people with a growing apprehension of implications and costs. Meanwhile, another great shadow has loomed over the nation-the threat of war and the need for war preparation. The vast cost of this preparation, which has risen from a few billions to more than sixty billions annually, and which promises further increases into an indeterminate future, makes it impossible to calcu late other costs of government or the means of meeting those costs or the future capacity of our economic system to sustain them.

The reality of a world war, .however, would shatter all esti~ mates and prognoses. But even with what would now seem a moderate expendi ture for arms, the additional cost of statism endangers the fu ture of a free economy. 161 The Reckoning TABLE C, WELFARE RECEIPTS These items are included in Personal Income by the Department of Comm'erce and called Transjer Payments. No services were per formed jor these payments in theyear paid. (In Millions of Dollars) Payments by Federal, state, and local governmentsjor direct relief, pensions, unemploy ment insurance and other welfare payments. Direct relief and military pensions are shown separately. 193° 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 Direct Relief S 105 176 31 7 558 745 954 635 787 965 1,024 1,01 3 985 956 929 939 986 1,177 1,·47a 1,72 7 2, 169 2,360 Military Pensions $ 468 548 571 456 382 418 433 434 446 462 476 474 476 491 649 1,013 1,693 2,181 2,297 2,389 2',467 Other $ 437 1,300 52 7 44° 425 423 1,858 630 994 1,026 1,199 1,158 1,223 1,046, 1,5°3 3,648 7,993 7,47° 6,522 7,052 9,50 3 Total Paid by Govern-Paid by ment * Business t $ 1,010 $534 2,024 649 1,415 737 1,454 659 1,552 641 1,795 594 2,926 594 1,851 567 2,405 42 9 2,512 451 2,688 431 2,617 5°2 2,.655 495 2.,466 505 3,°9 1 506 5,647 532 10,863 557' 11, 129 674 10,546 739 11,610 742 14,330 t 752 Total Welfare t $ 1,544 2,673 2,152 2,1I 3 2,,1.93: 2,389 3,520 2,418 2,834 2,963 3,119 3,119 3,150 ' 2,,971 3,597 6,179 l1,42Q 11,803 11,285 12,352 15,082 *Federal, state, and local governments. .

t Pensions paid by corporations and other businesses not included. :I: This is more than tlie avera&e annual expenditures of the Federal, state, and local governments for all purposes in the Io-year penod ended December 3I, I94o-much of which was from borrowed money. The rising costs of welfare since 1930 not only show the present burden our economic system bears for nonproductive purposes, but indicate what the future may bring-or rather, take. According to L. Robert Driver, the payments in 1930 by Federal, state, and local governments for direct relief, un employment insurance, pensions and other expenses, includ162 The Material Costs ing military pensions, were $1,010,000,000. In 1950, they were $14,330,000,000. 1 Thesum'in 1950·was nearly double the amount of corpo rate dividends paid in that year. It was more than the farm income of that year. "Welfare," as now interpreted by statist philosophy, in cludes almost every activity of the government except arma ment, foreign gifts and loans, service of the debt, and a few other items. As we have seen, the Supreme Court has'inter preted "the general welfare" as an almost unlimited sanction for Congress to expand these activities. Any effort to figure the ultimate costs must fail, because the ultimate is hidden in the mists of conjecture.

If we try to make such an estimate with the measuring rod of a good standard of living, we shall fail for several reasons. We cannot describe what will be deemed a good standard of living, because .wants will continue to increase long after present needs are satisfied. And those wants will be satisfied as long as political pressures, political promises, and political expediency decree that they will be satisfied. As.long. as it is politically rewarding to enlarge the range of benefits, politi cians will assume that the benefits are economically feasible. Inflation must be the ultimate answer. Nevertheless, despite the tendency of needs to expand into wants, we can make a rough estimate of what "welfare" will cost by comparing the present living standards of millions of Americans with the "standards" oratorically and officially held as adequate or necessary. For example, if we were to add $1,000 a year to the incomes of the g,6oo,ooo families now re ported to be living on $2,000 a year or less, the cost would be $g,6oo,ooo,ooo a year.

The President's Council of Economic Advisers, before the Korean War, estimated that the cost of the Administration's social insurance program alone, when fully achieved, would 1 Table C, prepared for me by Mr. Driver, shows these payments by years. 163 The Reckoning be $25,000,000,000 annually. But they included only pen sions, survivors' benefits, assistance to disabled and unem ployed, and government medicine. Immense sums must be added for housing, veterans' care and benefits, agricultural help" great reclamation and power projects, and made-work. There must also be added loans for helping business and di rect expenditures for government in business. There will be rising costs for such old, permanent. parts of government as the Congress, the courts, and the diplomatic service, in which the effect of inflation will be felt. Finally, and most impor tant, there will be the costs, direct and indirect, of keeping the boom going.

It has been estimated that special taxes on payrolls alone for old-age, medical care, unemployment, workmen's com pensation, and sickness insurance would reach 23 per cent in a few years. These charges will be largely passed on in the form of inflationary rises in the prices of manufactured prod ucts. Government planning of public works, however necessary some of them may be', always encounters a grave hazard. Plans are made on the basis of current costs. They go· to Congress for consideration, which involves delays of months or a year or two. When authorized, they may not be started for some time and may not be finished for years. Meanwhile, in an in flationary period costs rise. It has become almost the rule that in recent years great reclamation projects have ultimately cost two, three, or more times the estimates. Thus, we can never be sure even within approximate limits what the spend ing obligations of the government really are.

Figures that justify the high cost of the welfare state gener ally assume a high rate of prosperity. Most of those costs will rise sharply in any depression years. And the capacity of the economic system to sustain them by taxation will be sharply lowered in such a period. Any determination of the kinds or rates of taxation neces164 The Material Costs sary to support the statist's dream of a welfare state is impos sible, because, as I have shown,we cannot tell what the costs will be. We are told by President Truman and his economic advisers that their progressive demands for more spending will be met by increases in the national income and. wealth. We are told about a national income of a trillion dollars in the year 2000. This estimate of our future wealth is so stag gering that we are expected to believe that we can "affordthe costs of almost any possible adventures in government. Since such an estimate is made in future dollars whose value is indeterminate, it is not possible to relate it to what we know of productivity. Even if the most favorable view is taken of past progressive increases in productivity, there is no sound or plausible reason to expect that the national product can survive the drain of constantly enlarged government ben efits and other forms of government spending. 2 If inflation should continue at the rate established in the twelve months after the outbreak of war in Korea, the. Tru man trillion of national income 'Y0uld be realized in 1967.

If in our calculation we should use the increase of wholesale instead of retail prices, the trillion would be reached in 1963. This takes into consideration only the level of production and services of ·1950. If that should increase, the trillion would be realized sooner. THE ILLUSION OF REDISTRIBUTION Since government cannot by any magic formula yet de vised create wealth-only money, the pliable token of wealth -the course of the statist is to shift income from one to an other. \. But a redistribution of income can by no means meet the costs· of plans now proposed by the Federal Administration. Treasury figures on incomes show conclusively the inade 2 This point has been developed on p. 159. 165 The Reckoning quacy of individual incomes to meet future costs of the Fed eral government. Let us take those figures for the year 1948, when President Truman 'unfolded for the electorate the spec ifications of his Fair Deal.

If in that year the Federal government had taken every dol lar remaining in incomes over $500,000, the additional reve nue would have been only $284,000,000, which would run the government in 1952 for just 34 hours. If it had taken everything remaining in incomes over $5°,000 the additional revenue would have been only $4,080,000,000-enough to run the government for twenty days in 1952.3 A tremendous redistribution of income has taken place over the past two decades, and any further extension would probably injure those who would receive as well as those who would give.4 Huey Long might say if he were alive: "But I would tax the corporations." That is also a great illusion. Beyond a cer tain point, probably far below present corporate rates, addi tional corporate taxes are passed on in the price of the goods produced. They fall upon consumers. The statist is like the operator of a shell game who deceives the spectator by moving the pellet from one shell to another and by shifting the position of the shells themselves. His hand must be quicker than the eye. Tpe statist's calculations must be more rapid and deceptive than those of the payers and payees.

When the government pays the cost of maintaining old people, it must convince younger people that they are re lieved of that burden themselves, and it must assure those who are growing older that they need not save. But somebody 3 Similar figures for other income groups were: Over $3°0,000, $466,000,000 -:-enough for two and one fourth 1952 days; over $25,000, $8,880,000,000, or enough for 43 days; over $10,000, $20,7'93,000,000, which would last the gov ernment exactly 101 days in 1952. These figures assume 1952 calendar year's expenditures of $75,000,000,000. 4 See the conclusions on this point in studies by the National Bureau of Economic Research and by others, summarized on pp. 58-g. 166 The Material Costs pays the cost and pays for government, too. When govern ment imposes higher and higher payroll taxes, it pacifies the worker-contributor by imposing a larger tax on the employer.

The employer calmly accepts the tax and passes it along to the consumer in higher prices. Nothing is created. In fact, less is produced' than before, because incentives to work longer hours and more years and to work more efficiently and to risk money in new enterprises are gone. All that is done is to redistribute in complex ways and with deceptive appearances whatever wealth there is. THE DEATH OF RISK There is no such thing as certainty in a free economy or, in fact, in any economy that the world has known. It cannot be assumed in economic life that every owner of capital will seek the safest investment. Such an assum ption denies not only the lessons of experience, but the plain facts of human nature. The spirit of risk, adventure, and gambling is forever on the prowl. The ages have taught men that mortal intelli gence cannot calculate, weigh, and balance all the factors that affect the course of events and hence that mortal eyes cannot peer· with certainty into the future. Men have also learned that some of them possess more of foresight and of daring than others and that rewards come from the exercise of these qualities. Hence, there is competitive struggle in which quick decisions, risk-taking, losses, and gains prevail. All that this contest demands is freedom of choice.

In the' infinite varieties of human nature and tempera ment, some will possess more daring and imagination than others. A few, perhaps a small minority, will be moved to risk money, time, and energy by the venture that promises not the smallest possible loss but the greatest possible gain. Among this minority are the greatest failures and the great est successes. But generally when one fails another profits by 167 The Reckoning that failure. And the net is progress, production, and the making of wealth. Investments are made in the face of known uncertainties in the marketplace. Noone deliberately chooses a bad invest ment. What makes an investment bad is the appearance of factors that were not or could not be anticipated. Statists have prated for years about how "idle dollars make idle hands" and derive from this generalization the theory that government must forcibly seize-or "channel," as they put it-"idle" capital and invest or spend it through the gov ernment.

There could be no greater fallacy. For there is no "idle" capital except the dollars hidden in the mattress or in the ground. There are degrees of "safety" in investments, and there are many people to whom temperament or responsibil ities dictate caution. But their capital is entrusted to others, and the very laws of survival demand that it eventually be set to work. And this capital affects economic life; it affects the volume of production, prices, and profits. The newer the enterprise, the greater are the risks of in vestment in it. Here is where the venturesome man enters the picture. The more complex and the more productive of wealth our economy becomes, the greater must be the investment in dol lars per wage earner. It has been reliably estimated that the average investment necessary per wage earner is $10,000 a year. That means that $6,000,000,000 of new risk-capital is needed in the United States every year. 5 But statism reduces, discourages, and destroys essential risk-capital. The incomes of those who have traditionally supplied it. have been the prime objects of expropriation by taxation. The average in come of people in that group after taxes has been reduced approximately 75 per cent in twenty years. And since what they now have left after taxes barely meets and in many ca,ses 5 Abels: The Welfare State, p. 127.

168 The Nonmaterial Costs is less than their cost of living, their margin for new invest ment has practically vanished. Moreover, since many are now paying their living expenses out of capital, their old invest ments are shrinking, too. A wry reaction to this· by many people is that they cannot feel sorry for those well-to-do people who must live on smaller incomes. That reaction is, of course, heightened by the political incitement of class feeling over the past few years. But nobody needs to feel sorry for the people who now have large incomes. They will live and live well. What has been accomplished by leveling them is the destruction of what they hitherto contributed to those economic ventures which make national wealth, and create new businesses and more jobs. The statist has missed his victim and injured the very people he professes to help. Since tax resources are inadeq uate to support a welfare economy, the next recourse of the politicians who support it must be the deadly harvest of inflation.

There is no escape so long as the trend toward the welfare state continues. The final chaos and ruin of inflation would be bound to come. Values would be·meaningless in· terms of money. There would bea flight from money to things. Gov ernment credit would collapse when no one would buy bonds. Financial institutions could not survive the fall in value of their securities. The past would be pillaged by the ruin of savings. The future would be buried in debt and con fronted with the almost insuperable task of reconstructing a financial and industrial system. The Nonmaterial Costs PLANNING FOR THINGS ENDS· IN PLANNING FOR MEN John Jewkes, a brilliant British economist, offers this con clusion in his book Ordeal by Planning: "The modern plan169 The Reckoning ning movement sets out, 'with good will and noble intentions, to control things and invariably· ends up by controlling men." 6 Professor Jewkes may be straining a point in attributing good will to the entire planning movement. We can waive the issue of motives, but. it is true that personal and property rights are so closely bound together that the denial of one leads immediately to the denial of the other.

When planners mask their purpose under the term "na tional" or "social" planning, they do not point out that the real plans are, after all, made by human beings who are in public office by political skill or charm or sham. Authority is in the hands of, and plans proceed from, the brains of people who generally have little knowledge of economic life. The single will of the governing person or groups makes the essen tial decisions; and in a nation where the externals of popular government prevail, the rules of politics rather than those of economics prevail. Our own blundering experience with such partial planning as price-and-wage control and economic mo bilization should teach us this fact. The tragic lack of competence of political figures to grasp the realities of the economic institutions that they undertake to direct was well illustrated when the socialist government in Britain took over the coal industry. The Minister of Fuel and Power confessed: "I have been talking about nationaliza tion for forty years, but the· implications of the transfer of property have never occurred to me." The Parliamentary Secretary of this man had only this to offer: "It is not for me to say ... the precise criteria which should be applied to measure efficiency, but it is a subject which would repay thought and some of us are thinking about it."

Such "thinking" as these people might apply to an eco nomic problem would, to say the least, be fruitless. They have never known the economic process from the inside, and 6 (London: Macmillan & Co., Ltd.; 1949). 170 The Nonmaterial Costs their thinking would in any event be frustrated by their basic prej udices. Of course, we may assume that all kinds of technical and economic information is at the disposal of a government. But even if we further assume that government planning can or ganize and grasp the outlines of this material, the govern ment still has no reliable means of economic calculation, be cause the normal activities of a free market do not prevail in a planned economy. A first-year medical student may profit from the dissection of a cadaver, but he cannot practice medi cine until he learns about the behavior of living people. When there is no free market to determine prices, there is no way to measure values. If government devises means ofhav ing people act under regimentation only as if they were buy ing and selling, the reality of values is not present. People cannot play market as children play soldier in the front yard or fisherman in the bathtub.

Coercion, therefore, is indispensable to planning. The planner must make people work where he decides they should work. He must determine what workers must do. He must direct the flow of income and the use of property. Hfl must eliminate· the consumer's freedom of choice. He must impose these restrictions on freedom o! he cannot plan, for he is dealing with a massive, complex, and interrelated or ganism. Ultimately, those freedoms which the socialist piously promises to preserve are gone. A planned economy cannot be operated by a parliamentary body where votes determine hundreds of subsidiary decisions. The sanctity of the dwell ing must be violated. Jewkes points out that Prime Minister Attlee admitted in 1947 that "seventeen Ministries have power to authorize inspections involving the entry into pri vate houses and premises without a search warrant." 0 bvi ously, the gentle stream of planned decisions cannot be ruffled by· judicial intervention. In the end, freedom of speech itself 171 The Reckoning falls a victim of atrophy, because there is nothing left to be determined by public opinion. .

THE MORAL CLIMATE OF STATISM At least four of the initial assumptions of statism lead to stark materialism, domestic tensions, envy, and hatred. These assumptions are: That the basic purpose of the state is to supply the indi vidual with more of the material means of life; That political power is attained by the promise of those benefits; That political power is further assured by creating envy and hatred among social groups-in short, class feeling; And that since the natio~al government is to be the source of benefits, the loyalty of the individual must be to that source, rather than to his immediate neighbors and local in stitutions. The foregoing assumptions of statism have in recent years become more and more evident iIi our public life. The literal application of the assumption that the state ex ists only for material ends is obvious in the speeches and propaganda of politicians now in power and of statist politi cal-action organizations. The traditional spiritual values are mentioned only in the form of more or less irrelevant catch words, mainly as material for perorations and slogans.

Reckless promises are made by politicians, with all the pol iticians' callous assurance that if their promises cannot be fulfilled the blame can be cast on the stubborn opposition, and that the same promises can be renewed from time to time. Since the beginning of the great expansion of state power and indiscriminate benefits, the fissures of class and group prejudice have been widened. Unpopular minorities have been pilloried for purposes quite similar to those for which 172 The Nonmaterial Costs dictatorships abroad have reviled religious and racial groups. After the great depression, the businessman was used as a target for demagogues, just as was the Jew in Na~iGermany and the kulak in Soviet Russia. With the source of ,benefits reserved to Washington, there has been a weakening in loyalties to the neighborhood, to fellow workmen and employees, and to local government. There has been ample evidence in. the past four or five years that as the size and power of the Federal political ma chine have grown, shady practices have appeared in high places. Corruption will appear wherever money accumulates and responsibility is difficult to place. These evils and their revelation have their corroding effect far down the line in the private lives of citizens. An immature college boy who is ap proached by a gambler with a proposition to throw a basket ball game might well be moved to evil by the reflection that the newspapers every day tell about offices sold for cash and bad government loans arranged. through influence.

It must be underscored that these changes in the moralcli~ mate are due in the main to the materialistic postulates of statism. For even if the material objectives of statism. can be obtained, the plenty that might miraculously· result would be the beginning, not the end, of the good life. But the greatest blow to morality is the self-evident fact that the promised plenty is not attainable under socialism. Thus, the appeal is not only created for ends that are not the best objectives of life, but its pretensions are themselves frau dulent. THE TWILIGHT OF LIBERTY From time to time I have referred to the losses of personal liberty through the progressive adoption of statist policies. In thi~ chapter of reckoning, despite some repetition, a number of those losses should be summed up. 173 The Reckoning The farmer has paid for his benefits by successive surren ders of freedom. First, he accepted restrictions on his acreage.

Then, as he exercised his remaining freedom to intensify the efficiency of his production, "marketing quotas" were estab lished-a further denial of freedom, for which he received a cash return. Under the Brannan Plan he would surrender still more freedom in return for cash benefits. That plan would compel a limitation on the size of his farm or he would lose the benefits. It would substantially permit govern ment to tell the farmer what to plant. All government policies in soil conservation and irrigation have tended to force farming into units of a specific size. The farmer whose property holdings grow because he succeeds and buys more land finds the hand of government bearing down harder and harder. The ultimate under such policies would be farms of standardized size, crops within specified limits, assured but limited profits, and even the loss of choice in what the farmer might raise.

The farmer's financial affairs, including his credit and his debts, have to a degree moved within the jurisdiction of the bureaucracy. Finally, he is told by President Truman that since his pros perity is considerable, he would be most ungrateful if he should vote against the political regime "responsible" for the improvement. The worker's freedom has been restricted by the govern ment's alliance with his leaders. His income has grown, but his liberty has diminished. His ambition to excel other work ers finds impediments in union discipline, featherbedding, and make-work practices. His livelihood becomes dependent on good standing in the union because his leaders hold over him the threat of the loss of his seniority, pension rights, and ,other benefits. The penalty for recalcitrance is expulsion from the protective custody of the union. Moreover, since power has passed from local to national and international 174 The Nonmaterial CO~8 unions, largely through the operation of Federal law and. po litical alliances between union leaders and Federal politi cians, the card-carrying member is ruled from afar and by persqns whom he has never seen and over whose right to of fice he has precious little control. If he and his fellow mem bers in a local take independent action, the whole group may be expelled or merged with another larger and more obe dient local.

Even his political rights have in some instances been ruth lessly suppressed. Locals or the officers of locals have heen summarily punished for supporting candidates opposed by the national union. Money collected in dues has been con tributed to political parties or used by the political-action ad juncts of national unions by national union. leaders .. Mem bers are asked for donations for political purposes in a way that is hard to refuse. The businessman hardly needs to be reminded of the grow ing limitations on his freedom. The shrinkage of risk capital through taxation is met by inducements to become the debtor of a government bureau. Government lending agen cies often dictate in matters of business judgment. Masses of regulatory laws, many of which have outlived their purposes, impose the yoke of bureaucrats on businesses. Companies are told that they must or must not expand. Political decisions arbitrarily favor some businesses at the expense of others.

The citizen's right to keep or dispose of his savings has been greatly impaired by taxes and the inflationary·spending of the welfare state. Stockholders, too, large and small, have received less and less of the proceeds of the businesses in which they have invested. '{ Higher education in privately endowed institutions, long the true sanctuary of freedom, suffers from the invasion of statism. The income of such institutions is squeezed by heav ier and heavier taxation_of former and prospective support'{ See p. 48. 175 The Reckoning ers. Government grants for this or that are eagerly accepted by desperate trustees and administrators. ~he president of one of our great universities told me re cently that in another generation the great majority of pri vately endowed colleges and universities will either become dependent on government aid or pass out of existence. At the moment, gifts are forthcoming from friends who made their money in past years. But the children of those friends may, like the meek, "inherit the earth," but not their fathers' money.

Experience under the G.1. Bill of Rights, a fair and just measure in itself, is pointing the way to free government paid scholarships for everyone. There has also been a heavy draft of college instructors and officers for government work of all kinds or for projects that supplement salaries. A conse quence of this has been an infusion, into the teaching of these people, of propaganda favorable to more and more gov ernment. In the lower schools the trend toward Federalism is already apparent in the proposal for Federal aid to education. How ever this might be hedged in words to leave state and local schools free, it is idle to deny that where Federal money goes, control will follow. Other cultural and welfare institutions are driven to seek and accept government bounties because of the drying up of philanthropic money. The vast social security setup is gradu ally shaping the policies and methods of all private social welfare work. Inevitably, the notable professional associa tions, schools, and agencies of social work which have hith erto built up technical standards and ideals will be dominated by government workers who can scarcely be uninfected by the bureaucratic virus of statism. The ideal of the welfare state is, of course, to absorb all private charity except perhaps a few oases protected by powerful religious groups.

Since the growth of statism means that more members of 176 The Nonmaterial Costs medical, legal, engineering~ and related professions must turn to the government for employment, the freedom of those who adopt those professions is steadily restricted. The number of lawyers required to administer the vast bureauc racy that has grown up in the Federal government since 1933 is very large. Likewise, great numbers of accountants, pub licity. men, engineers, and many other professional people have been swept into government work. The Truman Ad ministration's plan for government medicine would almost immediately take into government service a substantial ma jority of doctors and dentists and related technical men. The person who works for the government enjoys measurably the right to quit and go into private business or employment. But as the area of governme,nt expands, the great attribute of liberty--the right to choose the place and nature of one's job -is steadily narrowed.

In the final end of statism everyone would work for one authority. There would be no other means of earning a live lihood. And the inflexible rules of civil service would prevail. Under such conditions, a choice between political parties, if there were more than one party, would be merely a ques tion of· degree and of personalities. Ifa nation once accepts statism as away of life, the drab choice, if there remains a choice, is between one or another set of masters. But when a political regime gets its hands on the administrative devices of an all-powerful government, it will use those means to keep itself in office. President Roosevelt said in his Annual Message to Con gress in 1936: "Our resplendent economic autocracy ... realize that . . . we have built up new instruments of pub lic power. In the hands of a'people's' government this power is wholesome and proper. But in the hands of the political puppets of an economic autocracy such power would provide shackles for the liberties of the people."

Those "instruments" are much more numerous and more 177 The Reckoning powerful now. They are in other hands. They are in the hands of a "resplendent" political machine. It is hard to see, despite the protests of such socialists as Clement Attlee, how the ultimate of socialism can be but· one party and, in that party, one master. Free speech might theoretically remain. But the power and vitality of expression would slowly ebb in a society without wide freedom of choice. Public debate might prevail, but it would be without bite or purpose. In Britain, where government has a strong hand in the ad ministration of the Church of England, there were evidences under the Attlee government that strongly socialistic min isters of the Gospel were assigned to strongly Conservative parishes. Thus, along with the Lord's word there were scattered among the faithful overtones of the great doctrine of "fair shares."

Finally, under growing government, the invasions of pri vacy multiply.8 Hosts of inspectors and others are at large, checking the citizen's whereabouts, peering at his business records for one reason or another, and flooding him with gov ernment directives and propaganda. These invasions of lib erty are inevitable. The terms of statist philosophy demand them. The moral and spiritual implications of a paternal state under the external forms of free institutions were vividly de scribed by Alexis de Tocqueville in his comments on Ameri can institutions in the 1830's. This is his prophecy, which may yet be fulfilled: I think, then, that the species of oppression by which demo cratic .nations are menaced is unlike anything that ever before 8 The invasion of the regulators under one of our welfare measures is thus described by a member of a New York law firm: "A girl from the Wages and Hours agency spent a day and a half in our office interviewing each of our women employees to see if she was fairly treated. Our girls get a minimum of $65 a week. Our office boy gets $45 for a 32-hour week. This is $1.40 per hour.

But we were forced to post a sign in our office that no one on the premises can work for less than 75 cents an hour." 178 The Nonmaterial Costs existed in the world; our contemporaries will find no prototype of it in· their memories. I seek in vain for an expression that will ac curately convey the whole of the idea I have formed of it; the old words despotism and tyranny are inappropriate: the thing itself is new, and since I cannot name, I must attempt to define it. I seek to trace the novel features under which despotism may appear in the world. The first thing that strikes the observation is an innumerable multitude of men, all equal and alike, incessantly endeavoring to procure the petty and paltry pleasures with which they glut their lives. Each of them, living apart, is as a stranger to the' fate of all the rest; his children and his private friends consti tute to him the whole of mankind. As for the rest of his fellow citizens, he is close to them, but he does not see them; he touches them, but he does not feel them; he exists only in himself and for himself alone; and if his kindred still remain to him, he may be said at any rate to have lost his country.

Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual child hood: it is well content that the people. should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their secur ity, foresees and supplies their necessities,· facilitates their pleas ures, manages their principal concerns, directs their industry, reg ulates the descent of property,. and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living? . . .

After having thus successively taken each member of the com munity in its powerful grasp and fashioned him at will, the su preme power then extends its arm over the whole community. It covers the surface of society with a network of small cOlnplicated rules, minute and uniform, through which the more original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, 179 The Reckoning bent, and guided; men are seldom forced by it to act, but they are constantly restraiIl;ed from acting. Such a power does not de stroy, but it prevents existence; it does not tyrannize, but it com presses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and in dustrious animals, of which the government is the shepherd. 9 9 Alexis de Tocqueville: Democracy in America (New York: Alfred A.

Knopf; 1945), Volume II, pp. 318-19. The title of the chapter in which this appears carries an ominous warning: "What Sort of Despotism Democratic Nations Have to Fear." 180 PART III A ROAD AWAY FROM SOCIALISM CHAPTER VII Progress with Liberty1 Socialism Is Not Inevitable Back in high school days, in every debate on socialism, we heard the stock argument that socialism is·inevitable. It went something like this: Over the·years government has been tak ing ov~r an increasing number of activities-schools, water supply, road and bridge building, and other services that have hitherto been private activities. This expansion of gov ernment has been necessary because of the increasing com plexity· of life. There has been a drift of people toward cities, where life is more complicated and people need more protec tion and assistance. Since this drift· will ~ontinue, the expan sion of government will go on toward Jltimate socialism.