Repeal, Repeal, Repeal

The Foundation for Economic Education Irvington-on-Hudson, New York 10533 Tel. (914) 591-7230 Fax (914) 591-8910 January 1995 Repeal, Repeal, Repeal E ven if the course of the Federal Juggernaut does not change significant ly in the coming months, we are pleased to see a change of drivers. The reins of power when held for long periods of time breed inefficiency, arrogance, corruption, and many other vices. To change the drivers is to recondition the monster and make it run more efficiently. But a renovated Juggernaut may be even more predacious than one which bungles and lumbers frequently. Therefore, we are hoping for much more than a new team of eager drivers. They must brake the terrible force, halt it, and dismantle it. They must repeal the laws and regula tions which built the Juggernaut. The American people have entrusted Republicans with control of Congress only twice since 1930, in the elections of 1946 and 1952, and returned it to the Democrats each time after one term. In both cases the Republican Congress did not deviate from the given course by a single degree. On November 8, 1994, the people gave the Republicans one more chance to guide the political process along the lines of a legisla tive plan called "Contract with America."

The Contract envisions a Constitutional amendment that would mandate a balanced budget. An equality of revenue and expen diture obviously does not signal a change of direction. Given the deficits of hundreds of billions of dollars, it may necessitate expen diture cuts and tax increases. When forced to choose, most politicians prefer to increase the taxes on business, which is rather defenseless at the polls. To reduce expendi tures is to revoke entitlements which are leg islative promises made to large numbers of constituents. It takes conviction and courage to reduce or even rescind such entitlements-more conviction than most politi cians ever had and more courage than they can muster. Balanced budgets do remove the pres sures of deficit financing from capital mar kets and may lower interest rates. Yet, no matter how virtuous such a balance would be, the call for a Constitutional amendment raises many questions of politics. To wait for a Constitutional amendment is to spend time and energy and much political capital on constitutional reform rather than on the spending predilection itself. If the Republicans have the courage to cut expendi tures and balance the budget, they can start right away without a Constitutional amend ment-as they used to do so admirably before the dawn of the New Deal and New Republicanism. During the 1920s Presidents Warren Harding and Calvin Coolidge retired one third of the World War I debt.

A Constitutional amendment cannot impart temperance, prudence, and self reliance on people who prefer self-indul gence, folly, and dependence. Politicians bent on spending would easily circumvent the restraint through backdoor, off-budget spending. They would create agencies that are federally owned or controlled but deleted from the budget. Or they would spend freely through a great number of privately owned enterprises that conduct government programs such as the Federal Home Loan Bank System, the Federal Home Loan Mortgage Association, and the Farm Credit System. No political scheme or device can impose integrity on people who prefer pro fuseness, dependence, and debt. It is significant that the Contract promises various tax cuts but carefully avoids any ref erence to spending cuts. It promises to reduce the capital gains tax and even gives hope of index adjustments for inflation prof its, but remains completely silent about reductions in transfer spending. Republican leaders even reassure their voters that the very pillars of the transfer system President Roosevelt's Social Security System and President Johnson's Medicare System are untouchable. These remain off the cut ting table, as President Ronald Reagan used to put it.

To freeze federal spending or limit its growth to the rate of inflation does not reverse the path of the Juggernaut; it merely permits it to coast and gather strength for another dash in the future. It raises no questions on either suit ability or the morality of a spending program, but rather affirms it with new allocations of funds at the given rate. To freeze federal expenditures on international development and humanitarian assistance at the 1994budget estimate of $7.325billion or the 1994general science and basic research expenditure at $4.445billion is to reaffirm those programs. Yet foreign handouts visibly impede economic development by financing government enter prises and political largess. The post-World War II recovery of the European countries, for instance, was inversely proportional to the sums of Marshall aid received. Great Britain, the most favored recipient, experienced a painfully slow recovery; West Germany, the vanquished recipient with the smallest per capita aid, recovered miraculously. In recent years, Chile, with General Pinochet in power, was cut off from all U.s. handouts; unham pered by political largess, its economy grew by leaps and bounds.

Economists always return to the question of suitability: does the program actually achieve what it sets out to achieve? Their answer is universally negative. Political inter vention in economic life invariably makes matters worse by disarranging the production process. Political coercion always impairs voluntary cooperation. Yet, it may be rather popular with those individuals who expect to benefit from the coercion. It is dear to the heart of every legislator and regulator who wields the lash of coercion. The question of morality, which deals with the principles of right and wrong, while often maligned and belittled, does overshad ow all political action. It wants to know, for instance, whether the 1995 federal outlays of $11.828 billion for higher education or the $156.135 billion for the Medicare program are right and proper. The architects of these transfer systems obviously argue for the righteousness of such transfers. The critics deplore and condemn their sponsors for engaging in raw political plunder. In their judgment, transfer policies force most Americans who labor without the benefit of higher education to subsidize an educational elite whose working and living conditions by far exceed those of the workers who are forced to support them. It is political evil which brings forth ever more evil.

The Medicare program raises a similar question of political morality. Is it fair and proper for the working population which is struggling to raise a new generation to pay some $156 billion in medical bills for a leisure class of retirees whose personal wealth visibly exceeds that of the working class? Is it moral to seize income and wealth from any individual for the benefit of other individuals? The Republican Congress must raise these questions if it aspires to dismantle the terri ble force. It must unhesitatingly reject all political plunder and dismantle the transfer system with all its entitlements and man dates. It must rid the country of affirmative action policies which alienate and disinte grate, and eliminate all special privileges based on race, gender, disability, and sexual orientation. It must rescind all laws and reg ulations which strangle business and torment businessmen. In particular, it must repeal the Disabilities Act, the Clean Air Act, and other regulatory acts passed in recent years, and liquidate the FDA, FTC, EEOC, OSHA, EPA, HHS, HUD, BATF, CPB, NEA, and many other regulatory authorities. In short, it must dismantle the task forces of the feder al Juggernaut.

Human history must be understood as a theater of diverse groups of individuals guid ed by incompatible ideals and values and pointing in opposite directions. Our theater is managed by the forces of political power and legislative and regulatory command; the forces of individual freedom and private enterprise have barely been audible in the din of command politics. The November 8th elec tion has given them another opportunity to be heard in the coming session of Congress. History will judge them not by the speeches they will give and the number of new laws they will pile on the mountain built by their predecessors, but by the number of laws they will repeal. To be discernible in American history they must repeal, repeal, repeal. Hans F. Sennholz Back in print! The Classic Books of Henry Hazlitt Now available: FEE reprint editions, in paperback, of three of Mr. Hazlitt's most enduring works: The Failure of the HNew Economics"

A brilliant analysis of the Keynesian fallacies. $14.95 The Conquest of Poverty Capitalist production, not government programs, has been the real conqueror of poverty. $19.95 The Foundations of Morality Mr. Hazlitt presents a consistent moral philosophy based on the principles required for voluntary social interaction. $18.95 Spread the Word! A year's subscription to The Freemanis a perfect birthday or thank-you gift for dis cerning relatives, friends, and neighbors. First gift (or your own new subscription or renewal): $30.00 Each additional gift $15.00 Call us at (800) 452-3518-or fax your order: (914) 591-8910. For orders outside the United States: $45.00 for the first subscription; $22.50for each additional gift. Spring Round Tables R eserve these days for our spring 1995 series of Round Table events! We've set up an exciting lineup of speakers for your enlightenment that includes Dr. Jane Orient and Dr. Mark Skousen. Don't miss these stimu lating evenings, which begin at 5:00 with a reception and dinner, and then go on to a lively discussion session. Charge: $40 per person per event; certain dis counts are available.

March 4 with Dr. Jane Orient April 1 with Joe Sobran May 6 with George Reisman June 3 with Mark Skousen Coming Seminars at FEE Undergraduate seminar April 6-8 Austrian Seminar (by invitation) July 9-14 Call or write: Dr. Barbara Dodsworth, 30 South Broadway, . Irvington-an-Hudson, NY 10533; (914) 591-7230.

1995 Summer Seminars At FEE P or the 33rd consecutive summer, FEE will conduct its noted seminars in the freedom philosophy and the eco nomics of a free society. Here, in the com pany of like-minded individuals, with experienced discussion leaders, and in a setting ideal for the calm exchange of ideas, is an opportunity for those who believe that the proper approach to economic problems is through the study of individual human action. These seminars continue to attract individuals from all walks of life who seek a better under standing of the principles of a free society and are interested in exploring ways of presenting the case more convincingly. Each seminar will consist of 40 hours of classroom lectures and discussions in economics and government. In addition to the regu lar FEE staff, there will be a number of distinguished visiting lec turers. The FEE charge for a seminar-tuition, supplies, room and board-is $400. A limited number of fellowships are available. We especially encourage the application of high school and college teachers or administrators, but all are invited.

Individuals, companies, and foundations interested in furthering this educational enterprise are invited to sponsor students and assist with the financing of the fellowship program. The formal announcement giving details of the seminars will be sent immediately on request. First session: July 23-28, 1995 Second session: August 13-18, 1995 Write: Seminars, The Foundation for Economic Education, 30 South Broadway, Irvington-on-Hudson, NY 10533; or Fax: (914) 591-8910.