CHAPTER VII: DISINTEGRATING CHARACTER OF PUBLIC OPERATION

• 1. Individuals Are Industrious and Economical; Administrative and Political Groups Are Wasteful and Extravagant.—Public Ownership Means a Topsy-Turvy World.—Changing Human Nature.
• 2. Contradictions Inherent in Public Operation.—Tax-Payers and Consumers.—Customs Duties in Switzerland.—Payment in Kind and the Raising of Salaries.—Depressing Effect of Public Operation.—Public Operation One Factor in the Problem of Unemployment.
• 3. Claude Mullins and Municipal Operation.—The Electors of To-day Are the Candidates of To-morrow.—Public Administrators the Slaves of the Employees Whom They Ought to Control.—Emphasis Not on Service, but on Political Effect.
• 4. Monarchical Conceptions of the Socialists.—Transformation of a Republican State into a Beneficent King.—Delusion of M. Fournière.—The Necessity of the Subordination of the Individual According to Philip Snowdon.
• 5. The Budget a Socialist Curb.—But the Socialists Consider Taxation an Instrument of Confiscation.—Sidney Webb on the Housing of Workmen and Ownership of the Soil.
• 6. Crisis of Parliamentarianism.—Necessity of Concentrating the Action of the State upon Fundamentals.—Security at Home and Abroad.—The Interference of Government in the Economic Activity of the Nation Means Disintegration of the State.
• Edition: current; Page: [430]7. Resistance.—Declarations of the Swiss Federal Council. —M. Brouilhet and Public Opinion in France.
• 8. Conclusions.

1. Individuals are industrious, productive and economical; administrative and political groups, both national and municipal, are wasteful and run the tax-payers into debt.

The ingenious casuist turns this statement about and says: “In the future, municipalities and states will produce and economize while individuals who have worked will rest. He who has produced shall consume; he who has economized will no longer need to take that trouble.” A truly topsy-turvy world that would be!

However, to the objections to which such a conception gives rise the reply is invariably: “A Socialist society will change human nature.”

If past experiments are mentioned, your Socialist replies: “Those experiments have been tried in a capitalist society and consequently do not count.”

In general those who are advocating most vehemently the nationalization and municipalization of all public utilities treat the officials who direct and govern them, whoever they may be, with the utmost scorn. If the Socialist could only put himself and his fellows in the high places of the government there would be nothing left to wish for.

2. Yet certain difficulties are insurmountable, even to a Socialist. When a political group exploits a utility, if there is any profit arising from the enterprise, it is made at the expense of the consumer; or, if there is Edition: current; Page: [431] any advantage in it for the consumer, the taxpayers pay the piper.

In either case the minority is favored at the expense of the majority. In fact, every government operation ends in contradictions, similar to the one pointed out by M. Favarger 1apropos of the Swiss railways:

“Through its customs duties the Federal Council raises the cost of living; then, in order to make it possible for government officials to support the heavier burden, it raises their salaries.”

I have pointed out the depressing effect produced on industry at large by any threat of government or municipal operation. Private effort finds the struggle difficult, if not impossible, against competitors who may not only bring politics to bear, but who may even make use of the courts upon occasion. For no one is naturally predisposed to invest capital in an undertaking from which he may be driven out at any moment by government or municipal competition.

Consequently every threat of socialization or municipalization is followed by loss of energy in establishing or carrying on business, as well as by tightness in the money market. Then these, in their turn, become important factors in the problem of unemployment.

3. Claude W. Mullins, in his article upon “The Municipal Activity of London,” 2 sheds great light on the disturbing character of municipal trading operations.

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“All questions become electoral questions, and this very real danger assumes a more threatening aspect when we consider the large number of employees connected with undertakings like the tramway service or water works. Municipal councillors are employers and candidates in one and the same person, a state of affairs carrying with it a serious menace to the future stability of any state.

“A president or member of a municipal committee is interested in the success of an enterprise both as a simple citizen and as a representative of his constituents.”

Officials are not judged according to services rendered, but according to the effect produced by a “dilettante administration.” The elector of one day may well be the candidate of the next; and, if his election depends upon employees in the government or municipal service, he will be at their beck and call, nor will he hesitate before any sacrifice of principle.

4. The Socialists look upon themselves as republicans in France, as in New Zealand. In reality they are monarchists, who, being at the family stage of civilization, 1 consider themselves as helpless dependents, and therefore long to transform a republican state into a beneficent ruler, whose business it is to make them happy, furnish them with bread, and otherwise provide them with all the things of which they stand in need—their needs being only limited by their desires.

Social theorists, like Eugene Fournière 2 have held, Edition: current; Page: [433] despite all the evidence to the contrary, that they are defending the rights of the individual. 1

Philip Snowden, M. P., representing the Labor Party in Great Britain, is at any rate logical when he says: 2

“The object of Socialism is not to render the individual capable of living on his personal resources. That is the theory of radical individualism. Its object is to create in him a greater and greater sense of his dependence upon the state, and, at the same time, to inculcate in him the conviction that he is a part of it and that he has a duty and responsibility toward the state; and that only in so far as he fulfills this duty can he benefit by the advantages of a complete personal and social life.”

5. The budget puts a curb on Socialism, at least in so far that it makes taxes necessary; those who would otherwise rush into reckless expenses feel the burden of these same taxes sufficiently themselves to bring home a vague realization of the following truth: Nothing is free; everything must be paid for. If the whole burden could only fall on others they would rejoice in running into debt. Far from preaching economy in the way of expenses, Socialists encourage prodigality, and they consider that fiscal confiscation is an instrument of social revolution.

Sidney Webb says: “The housing of the poor will absorb, through taxation, a continually increasing share of the income of the nation; and this increase of Edition: current; Page: [434] local taxes is an unheeded sign of the gradual nationalization of the soil.” 1

We shall be almost at the “great day” of “the social cataclysm,” when, after refusing to pay the debts due the government and municipal creditors, the Socialists are able to exclaim: “At last we have gone bankrupt.”

6. We hear frequent remarks concerning the crisis of parliamentarianism, of the inefficiency and lack of power of our representatives. As a matter of fact, our representatives are guilty of wishing to do that which they know perfectly well no one of them can do, whatever be his efficiency or his capacity for work.

Now, parliamentary government is possible only on condition that it be divorced from all secondary questions, and all questions which do not concern domestic or foreign security are subsidiary and more or less negligible, in so far, at least, as direct government interest is concerned. Parliamentary government will be strong in proportion as its activities are confined to the fundamental duties of a state.

Statesmen who pursue an opposite policy are paving the way for anarchy. They are surrendering the institutions and the general policy of the country to the will of those who see only their own interest. They become the protegés of the employees whom they ought to control. They defer all questions to the convenience of the ringleaders of associations of their employees.

In the measure that they are willing to burden themselves with functions properly belonging to individuals Edition: current; Page: [435] they are sacrificing the general interest and endangering the security of the state, and chiefly for the sake of employees who consider themselves as the real proprietors of services which they are paid to perform.

The interference of the state in the economic activity of the nation means the ultimate disintegration of the state.

7. The message of the Swiss Federal Council 1 to the Chambers, proposing the creation of an administrative tribunal, contains the following passage:

“In the degree that a modern state extends the circle of its functions and that its component parts penetrate within the domain reserved down to the present to private enterprise, the number of its employees increases to vast proportions and the citizen, threatened in his individual rights by an official autocracy, scents the danger of encroachment on the part of the all-powerful state and feels an instinctive need of efficient protection against this inimical force.”

M. Brouilhet, French socialist reformer and partisan of government intervention, says:

“We can remember when public opinion was most lenient to the government; but since the government, desiring to conciliate the people, has become an active participant in trading enterprises, a reaction has set in, and truly public opinion is now lacking in indulgence.”

As for France, M. Brouilhet concludes:

“Before the government absorbs another tenth of the general activity of the country a long time will certainly elapse.”

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In a remarkable article, appearing in the Gazette de Lauzanne, Edouard Secretan, member of the National Council, declares:

“About 30 years ago the Federal power was first and foremost political. Its principal business was the national defense, and the relations between Switzerland and foreign countries.

“In domestic affairs its action in regard to the cantons was advisory and disinterested in character, its intervention as limited as possible. It governed from above and devoted itself mainly to establishing national unity. Under this régime we became a nation under a Federal government chiefly interested in seeing the right prevail.

“But things have changed. The Federal government has chosen to become banker, common carrier, insurance broker, and it is only a question of time before it will become a merchant. It is only half a banker, but it has become a real common carrier and this operation has made it a debtor for 1,500,000 francs, owed almost exclusively to foreign creditors.

“To the enormous enterprise of transportation has now been added insurance. Here, again, we must count by millions.

“To-day our whole political life is dominated by financial preoccupations, and technical experts have taken the place of statesmen.

“They impose themselves on the Federal Council on the basis of responsibilities they have themselves incurred, and the Federal Council transmits to the Chamber the will of this or that general manager of some public undertaking. In fact managerial authority has a tendency to become dictatorial authority.

“The German part of Switzerland, Bern, Zurich, Aaron, etc., is the storm center of all this propaganda. Edition: current; Page: [437] Romance Switzerland still resists. It has twice rejected the state bank, twice the insurance monopoly, and once, at least, the purchase of railroads.”

8. The experiences arising from state and municipal trading operations lead inevitably to the following conclusions:

• 1. Public monopolies kill the spirit of initiative by destroying competition. The ultimate result is fatal industrial lethargy.
• 2. Public operation emphasizes the special demands of the community, rather than fundamental necessities, and provides opportunities for nepotism, graft, and corruption.
• 3. Operation by states and local governments is more difficult than private management. This is a rule which holds good, despite a few apparent exceptions.
• 4. Government employees, paid for their loyalty to the public interest, come to consider their positions as their own private property, and, the more numerous they are, the more they incline toward exchanging their rôle of subordinates for that of masters; from being directed they become the directors.
• 5. Intervention of the public power has an adverse influence upon the distribution of wealth; sometimes it is the whole body of taxpayers who must suffer for the sake of some privileged class, sometimes the consumer is defrauded to benefit the taxpayer.
• 6. In every public enterprise the risks of loss are borne by the taxpayers, and, in order to realize their immediate ideals, and, while waiting for the hoped-for Edition: current; Page: [438] increase of personal influence, statesmen or municipal officials tie up the finances for a more or less long period, meanwhile burdening the taxpayers of the future with expenses for which they will have to provide without having consented to them.
• 7. All such trading operations oppose political to economic competition.

The propaganda of public ownership has established more firmly than before the truth of the following industrial laws:

First: Neither states nor municipalities should attempt tasks especially adapted to individual effort.

Second: In the case of those utilities in which the public interest is general, as railways, water, gas, electricity, tramways, etc., there must be a physically and morally responsible body, accountable to the public on the one hand and the service on the other, and protected by contracts against vacillations of public opinion and the extortionate demands of interested groups, whether employees, consumers, or politicians.

Third: For individuals the watchword should be action; for local and state governments, control.

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