How Movements Turn Into Rackets

This chapter is based on Douglas E. French, “PFP236 | Doug French, How Movements are Turned into Rackets (PFS 2022),” Property and Freedom Podcast (June 19, 2023; www.propertyandfreedom.org), a speech delivered at the 2022 Annual Meeting of the Property and Freedom Society in Bodrum, Turkey (Sept. 16, 2022), a version of which appeared in idem, “How Movements are Turned into Rackets,” The Rude Awakening (Sept. 16, 2022; https://perma.cc/WYT5-FT4W). The informal tone of the speech as delivered in Bodrum has largely been retained.

Introductory Remarks

I’d like to first thank the Doctors Hoppe [Dr. Hans-Hermann Hoppe and Gülçin Imre Hoppe], for inviting me back to do this again. I was thinking earlier that Joe Biden had said it was the Russians’ fault for all the inflation in America, and now Dr. Hoppe has confirmed, in his introductory remarks, that it is indeed the Russians’ fault. So, we can say that Hoppe and Biden are right together. [Laughter, applause.] How about that?

So, I’ve got this terribly sweet spot between Sean Gabb and lunch,1 and my talk will be a little different. It’s called “How Movements Turn Into Rackets,” and it was inspired by a gentleman I studied under, Murray Rothbard. A few people in the room may have had the pleasure of meeting or working with Murray. He wrote a memo to F.A. Harper and George Resch entitled “What Is to Be Done?”, which I’ll get to in a second. A few of us know George—we used to call George to buy coins from him when he worked for Burt Blumert. So, it is indeed a small world.

Introduction

This analysis draws inspiration from Murray N. Rothbard’s 1961 memo “What Is to Be Done?” written to F.A. Harper and George Resch.2 In it, Rothbard warned that libertarian and conservative movements risk becoming “rackets” when the imperative to fundraise and wield influence eclipses principle. What follows are three examples across the ideological spectrum—left, right, and libertarian—that confirm his warning.

From the Left: Southern Poverty Law Center

My story about how movements become rackets begins not with what Murray talked about, which I’ll get to in a moment, but with one of our favorite organizations, I’m sure, in this room: the Southern Poverty Law Center, founded in 1971 by Morris Dees. Dees was a “super-salesman and master fundraiser” who viewed civil-rights work mainly as a marketing tool for bilking gullible Northern liberals out of their money. “We just run our business like a business,” Dees told reporter John Egerton. “Whether you’re selling cakes or causes, it’s all the same.”3

While studying law at the University of Alabama School of Law, in the late nineteen-fifties, “Dees sold holly wreaths and birthday cakes, published a student telephone directory, dabbled in real estate,” Egerton wrote. I don’t know how much law he learned, but he certainly was an entrepreneurial force at the law school.

Upon graduating in 1960, Dees teamed up with another ambitious student, Millard Fuller, who would go on to found Habitat for Humanity. They opened a direct-mail business in Montgomery, selling doormats, tractor-seat cushions, and cookbooks. “Morris and I, from the first day of our partnership, shared the overriding purpose of making a pile of money.”

In 1971, Dees opened the SPLC. Already a colorful and controversial figure in Alabama, he volunteered to raise money for George McGovern’s Presidential campaign, and, with McGovern’s blessing, used its donor list of seven hundred thousand people to help launch the SPLC’s direct-mail operations. Having been somewhat in the business, I can tell you that having a big mailing list is the key to raising a lot of money.

The very name Southern Poverty Law Center might lead one to think that its mission was to help poor people who are having trouble in the legal system. Dees and the SPLC soon realized that cause didn’t raise much money.

So the SPLC abandoned its focus on actual poverty and poverty law, stayed in the South, and “went into the hate business,” as insiders put it—raising money by fighting the Ku Klux Klan and rallying support and money from liberals up North. Its direct-mail campaigns painted an exaggerated picture of a small, brave legal team under constant death threats—a narrative that belied the SPLC’s reality: a massive, fortified, glass-and-steel “Darth Vader building” (as James Howard Kunstler dubbed it), guarded with heavy security.

Along the way, it had accumulated an endowment topping $120 million while paying lavish salaries to its highest-ranking staffers and spending far less than most nonprofit groups on the work that it claimed to do. At the same time, Dees started earning a reputation for hitting on young female staffers. That’s a hint for things to come throughout this presentation—hitting on young female staffers.

In fact, as recounted by former staffer Bob Moser, who left in 2004, SPLC colleagues used to tell jokes “to keep ourselves sane.” When they’d walk by its Maya Lin-designed memorial to civil rights martyrs, they’d cast a glance at the inscription from Martin Luther King, Jr., etched in black marble: “Until justice rolls down like waters.” Except they’d say, in their deepest voices, “Until justice rolls down like dollars.” It was an obvious grift. Moser recounted that

The Law Center had a way of turning idealists into cynics; like most liberals, our view of the S.P.L.C. before we arrived had been shaped by its oft-cited listings of U.S. hate groups, its reputation for winning cases against the Ku Klux Klan and Aryan Nations, and its stream of direct-mail pleas for money to keep the good work going. The mailers, in particular, painted a vivid picture of a scrappy band of intrepid attorneys and hate-group monitors, working under constant threat of death to fight hatred and injustice in the deepest heart of Dixie.

But this all took place in its massive, security-riddled “Darth Vader” office building in downtown Montgomery, Alabama, which made social justice ‘look despotic.’” A co-worker told Moser soon after his arrival, “Well, honey, welcome to the Poverty Palace. … I can guaran-damn-tee that you will never step foot in a more contradictory place as long as you live.”

As Moser later wrote in the New Yorker, after Dees’s dismissal,

The work could be meaningful and gratifying. But it was hard, for many of us, not to feel like we’d become pawns in what was, in many respects, a highly profitable scam.

And as profitable as it was before, when The Donald and Melania came gliding down that escalator in 2015, the money really started rolling in. Because, as everybody knows, when Donald took office, it was hate-a-palooza in the United States, and it opened up a gusher of donations for the SPLC. They raised $50 million in 2016 and took in $132 million in 2017. The new money pushed its endowment past $450 million, which is more than the total assets of the American Civil Liberties Union. In 2019, they employed an all-time high of around 350 staffers.

Having been in Montgomery, Alabama, in the afternoon, I can tell you it seems like the whole downtown area is 350 people. But none of that has slackened its constant drive for more money. “If you’re outraged about the path President Trump is taking, I urge you to join us in the fight against the mainstreaming of hate,” a direct-mail appeal signed by Dees in 2018 read. “Please join our fight today with a gift of $25, $35, or $100 to help us. Working together, we can push back against these bigots.”

Morris Dees had turned over the reins to Richard Cohen in 2003, but at age 82, the #MeToo movement caught up with him; he was dismissed by SPLC in 2019 “amid a staff revolt over the mistreatment of nonwhite and female staffers.”

But the work goes on. The annual hate-group list, which in 2018 included 1,020 organizations in the United States, both large and small, remains a valuable resource for journalists and a masterstroke of Dees’s marketing talents. Each year, when the Center publishes it, mainstream outlets write about the “rising tide of hate” in the United States discovered by the SPLC’s attorneys. And so, the money just keeps rolling in.

From the Right: Hillsdale College

It’s not just the left that has this going on; we’ve got it on the right. Maybe you’ve heard of Hillsdale College. Maybe some people in the room have sent money to Hillsdale College. They send out this Imprimis newsletter.4 You’ve all seen it.

The guy who really got that geared up was a guy named George Roche III. A former senior-level employee of Hillsdale College called Roche “one of the great fund-raisers in the history of political ideologies.”5

Roche raised millions to build modern facilities and provide ample student aid to any of Hillsdale’s 1,200 students who needed it. If Roche seldom made rounds on campus, it was understood: He was out raising money to beat back the liberal devils lurking outside Hillsdale’s gates.

Roche was very charismatic and considered a ‘‘conservative celebrity’’ and ‘‘a hero to the movement.’’ William F. Buckley called Hillsdale “the most prominent conservative college in the country.” But said one Hillsdale professor of Roche, “This man is a phony and a fraud.” A Roche family member explained, “He’s not really the type of person that everybody thinks he is. He’s kind of like a Jekyll and Hyde.”

He also had a reputation for possessing a free-range phallus rumored to have visited students and college employees. A senior-level employee who marveled at Roche’s fund-raising skills claims to have fled Hillsdale when he suspected Roche was putting the moves on his wife. Roche was considered downright ruthless by those unfortunate enough to cross him.

Ultimately, George Roche III shocked Hillsdale by divorcing his wife of 44 years—she had cancer—and remarrying just five months later. That’s where the story gets really interesting. His daughter-in-law, Lissa, was married to George IV, who was a professor at Hillsdale, so this was all a big family business, so to speak. She was very disturbed by the presence of a new woman in her father-in-law’s life.

Roche was hospitalized with complications from diabetes, and his distraught daughter-in-law threatened to kill herself in a phone conversation with him. The older Roche’s secretary interrupted a class taught by the younger Roche, his son, and told him what was going on. So, the younger Roche, George IV, rushed to his wife, Lissa. She was obviously upset. She didn’t care what her husband thought; she insisted on going to see her father-in-law, who was in the hospital.

There, in front of him—George III—his son, George IV, and his new wife, she blurted out that she and her father-in-law had been having an affair for the past 19 years. The son then asked the father, “Is she telling the truth, or is she having some sort of breakdown?”6 The younger Roche said his father “didn’t say a word. I could tell by looking at him that she was telling the truth. I saw that look in his eyes. He was caught.”

Lissa returned to her campus house after the confession, armed herself with a .38-caliber handgun, walked out her backyard through the college’s arboretum to a stone gazebo, and killed herself.

Hillsdale’s trustees, who reportedly believed Roche “walks on water,” tolerated his behavior—including rumors of advances on students, employees, and even a senior staffer’s wife—so long as he continued to bring in millions. But the public revelation of his 19-year affair with his daughter-in-law Lissa and having her commit suicide when it became public—proved too much to ignore.

Roche had hauled in nearly $325 million by the time he resigned. He increased Hillsdale’s endowment from $4 million to $184 million. Students and their parents were worried the scandal might cause donations to drop, that it would crimp Hillsdale’s future. That hasn’t really happened.

Roche resigned after his lover’s suicide. A member of the Roche family said that the elder Roche’s golden parachute was $3 million.

These days, Hillsdale’s making news by cozying up to Florida Governor Ron DeSantis. The Christian school has been described as a “citadel of American conservatism.” Donald Trump has connections there. Ted Cruz and Clarence Thomas have given commencement addresses, and the school has started a series of leadership seminars that sound like right-wing TED Talks. Hillsdale is also a champion of what it calls “patriotic education.”

From Libertarianism: Foundation for Economic Education

That brings us to what Murray Rothbard was writing about in his 1961 memo. There are some fascinating things in there. Murray’s memo was written to Baldy Harper and George Resch, and its subject was Leonard Read, who co-founded the Foundation for Economic Education in 1946 and served as president from 1946 until his death in 1983. Read was a well-known figure in the freedom movement for decades. According to Rothbard, writing Read’s obituary in 1983: “More than any other single person, Leonard was the founder of the modern libertarian movement. … In addition, more than anyone else Read coined the name ‘libertarian’ for the current movement.”7

Read was handsome and charismatic, but in Rothbard’s words, the Read of 1961 was

Hardly appreciative of scholarship or of the conditions of free inquiry and research, Read stifled the scholarly and creative productivity of everyone on his staff ….

Instead, the FEE founder

increasingly pitched [FEE publications] toward housewives, rather than scholars, which immediately tossed away the importance of the “pyramid of influence” from intellectual to mass. (15)

Speaking of housewives, Mr. Read, who again was remembered as a giant in the libertarian movement, is also known for his prurient interest in housewives. Brian Doherty even compared Read’s romantic exploits to Wilt Chamberlain’s, who famously claimed 10,000 lovers—earning him the nickname “Wilt the Stilt.”8 I suppose I’m just now realizing what the “stilt” meant. It’s a bit mind-boggling Read would be placed in the same ballpark as Wilt Chamberlain.

Murray was more delicate, telling Harper and Resch, “purer libertarian thought was not only discouraged by Read but bitterly attacked” (15). “Read just wanted to offer his own way of understanding the freedom philosophy, in a manner more preacher than teacher,” Doherty wrote (164). That approach attracted businessmen supporters, who proselytized to their employees. But what Read did best was raise money while FEE became what Rothbard derisively called the “high school of liberty.”

Murray wrote to Harper and Resch:

It is the thesis of this memorandum that the problem of tactics and strategy for advancement of the libertarian-individualist cause is at a critical crossroads, a crossroads in the historical development of this stream of thought, transcending even the important problems of establishing a possible libertarian institute, or of deciding how to rechannel educational funds from various blind alleys into which they have fallen. (7)

… The FEE literature in sticking to generalities—and low-grade generalities at that—fell between two stools and has therefore lost influence both among the intellectuals and among the “mass base.” (15)

Rothbard in his mid-thirties was more than concerned with such thinking. In the Harper, Resch memo, he wrote,

the danger is less apparent and more insidious. For it is the danger of the hardcore libertarian being swamped by a growing mass of “conservative” and right-wing thinkers. (19)

Read, according to Rothbard, had

rationalized the processes one of “training” libertarians and then sending them off to better things, thus functioning as a “high school” of liberty. He thus ignores the fact that it could have been a lot more. (15–16)

Rothbard wrote that FEE served only as a gateway to the libertarian movement and not a libertarian center, let alone scholars forming a libertarian cadre. Addressing the influence of the right, he wrote:

This transformation, led by the theoreticians of National Review, has transformed the Right from a movement that, at least roughly, believed first of all in individual liberty (and its corollaries: civil liberties domestically, and peace and “isolation” in foreign affairs) into a movement that, on the whole, is opposed to individual liberty—a movement that, in fact, glorifies total war and the suppression of civil liberty; it also glorifies monarchy, imperialism, polite racism, and a unity of Church and State. (20)

From FEE’s launch in March 1946 to the early 1980s, Leonard Read generated a million dollars a year from some of America’s biggest businessmen. A million dollars a year might not sound like much today, but if you inflation-adjust it, that means in 1946, he raised the equivalent of $13.8 million in today’s dollars. In 1980, it was about $3.4 million. You can kind of fill in the blanks in between, and it added up to a whole lot of money that Leonard Read was able to raise, creating content for, as Murray says, housewives.

Rothbard finished the section of the memo entitled “The Decline of FEE” with

Another danger which the history of FEE and other right-wing organizations tells us: the tendency for the fellow who can obtain money to be in control of policy, and the corollary tendency to begin to trim the output of the organization to what will attract the money. When the latter happens, the gathering of money begins to become the end, not the means, and the organization begins to take on the dimension of a “racket.” (16)

Conclusion

As Rothbard foresaw, the SPLC, Hillsdale, and FEE examples illustrate a troubling pattern: when charismatic fundraisers prioritize money over mission, organizations drift from their ideals, becoming rackets where fundraising dictates policy and principles are sacrificed for profit. Morris Dees, George Roche, and Leonard Read show that Murray was right. Movements ultimately become rackets.

Thank you.

Addendum

During the Q&A, we had the following interchange:9

Hans-Hermann Hoppe (Audience)

For Doug: You said movements turn into rackets. Are there movements that didn’t?

Doug French

It’s hard to imagine. Even with the best intentions, you’d need angels running these organizations. A wise man once told me, “No tank, no think.” If you want a think tank, you need to raise money, but then money becomes the mission. It’s not too different from the private sector, but in the private sector, people pay directly for a good or service, so it’s not a scam. In nonprofits or politics, you raise money from one group and give it to another, which is always an issue. Your customers aren’t your donors. Only in a private capitalist society does a movement for a good avoid turning into a scam.

Hans-Hermann Hoppe

So, the PFS isn’t a racket, right?

Doug French

In the case of PFS, the consumers are the payers, like a private business. That means we’re angels, yes. [Applause] I assume you took that from my comment. The doctors are angels; they only reach out for funds when they have a fabulous product to provide. It’s not like Hans [Hoppe] and Gülçin [Imre Hoppe] are building pyramids in Istanbul or Bodrum for underemployed academics to do deep thinking. We provide funds willingly, enjoy the fruits, and 16 years prove it’s worth it—not a scam. Hopefully, it lasts 16, 32, or 48 more years. How long will you live, since you’re an angel?

Hans-Hermann Hoppe

I haven’t decided yet.

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1. 1 Sean Gabb, “Emperor Andronicus I Comnenos (1118–1185)—The Trump of Constantinople,” speech delivered at the 2022 Annual Meeting of the Property and Freedom Society in Bodrum, Turkey (Sept. 16, 2022), available at idem, “PFP235 | Sean Gabb, Emperor Andronicus I Comnenos (1118–1185)—The Trump of Constantinople (PFS 2022),” Property and Freedom Podcast (June 12, 2023; www.propertyandfreedom.org).

2. 2 Murray N. Rothbard, “Rothbard’s Confidential Memorandum to the Volker Fund, ‘What Is to Be Done?’”, in David Gordon, ed., Strictly Confidential: The Private Volker Fund Memos of Murray N. Rothbard (Auburn, Al.: Mises Institute, 2010; https://perma.cc/Q5NV-SNYG).

3. 3 This and other quotes in this section, unless otherwise noted, are from Bob Moser, “The Reckoning of Morris Dees and the Southern Poverty Law Center,” The New Yorker (March 21, 2019; https://perma.cc/2DJQ-NKRQ). John Denson, who went to law school with Morris Dees, personally confirmed to me that various stories about Dees such as those mentioned here and in the Moser article are true. Denson and I saw each other often socially when I worked at the Mises Institute. He and his wife Roseann attended PFS in 2011 when Deanna Forbush and I were married in a ceremony held at the Karia Princess Hotel.

4. 4https://info.hillsdale.edu/imprimis-subscription.

5. 5 This and other quotes in this section are from Jonathan Ellis, “Sex, lies and suicide,” Salon (Jan. 19, 2000; https://perma.cc/6RQG-YJ6F), unless noted otherwise. See also John J. Miller, “Horror at Hillsdale,” National Review (Nov. 12, 1999; https://www.nationalreview.com/1999/11/horror-hillsdale-john-j-miller/); Robyn Meredith, “Scandal Rocks a Conservative Campus,” New York Times (Nov. 15, 1999; https://www.nytimes.com/1999/11/15/us/scandal-rocks-a-conservative-campus.html); Joseph Sobran, “Tragedy in Paradise,” Sobran’s (Nov. 11, 1999; https://perma.cc/SW4C-V36Y); An Anonymous Alumnus, “Is It True What They say About Hillsdale?”, Liberty (Feb. 2000; https://perma.cc/99N7-8F6L; https://perma.cc/A5XA-CG54): 29–32; Gary Wolfram, “The Truth About Hillsdale,” Liberty (April 2000; https://perma.cc/5TJE-JHFB; https://perma.cc/9YYP-L4FP), p. 44; R.W. Bradford, “The Lessons of Hillsdale,” Liberty (May 2000; https://tinyurl.com/y63hpz5w), p. 28; and Robert Campbell, “Hillsdale as an Ordinary College,” Liberty (May 2000; https://tinyurl.com/y63hpz5w), p. 30.

6. 6 Miller, “Horror at Hillsdale.”

7. 7 Murray N. Rothbard, “Leonard Read, RIP,” Libertarian Forum XVII, no. 5–6 (May-June 1983): 1–2, in The Complete Libertarian Forum 1969–1984, Volume 2: 1976–1984 (Auburn, Al.: Mises Institute, 2006), pp. 1103–1104; Stephan Kinsella, “Rothbard on Leonard Read and the Origins of ‘Libertarianism,’” StephanKinsella.com (Nov. 17, 2014; https://perma.cc/3VMH-4G2C).

8. 8 Brian Doherty, Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement (New York: PublicAffairs, 2008), p. 164.

9. 9 Andreas Tögel et al., “PFP240 | Tögel, French, Groezinger, Model, Gabb: Discussion, Q&A (PFS 2022),” Property and Freedom Podcast (July 17, 2023; www.propertyandfreedom.org).

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