IF THE WELFARIST-SOCIALIST-INFLATIONIST TREND of recent years continues in this country, the outlook is dark. It is a prospect of mounting taxation, snowballing expenditures, chronic deficits, a budget out of control, an accelerating rate of inflation of the kind endemic in Latin America (at least for the last generation), a collapse of the dollar, increasing world currency chaos, and more and more ruthless price, wage, and exchange controls, leading toward a regimented economy and dictatorship. And if this trend is interrupted temporarily, it may be by riots, assassinations, and a breakdown of law and order.
But it is within our power not only to avert this nightmarish prospect, but to restore order, justice, constitutionalism, limited government, economic and personal liberty, internal peace, and stable prosperity and growth.
The remedies we must apply are implicit in the evils already described. We must halt and in most cases reverse the “remedies” that have brought us to our present predicament. In the last chapter we discussed at length, but also in a rather random way, a few of the true remedies which libertarians should support. But by way of summing up, I should like to list here, even at the cost of some repetition and overlap, just eight real cures of our present political and economic disorders based on the analysis in the preceding chapters.
1. We must start reducing the grossly extended powers of all levels of government, local, State, and Federal. We must start decentralizing power, not only from the Federal Government back to the States and localities, but within each level of government, especially the Federal. The powers of the American presidency have grown beyond the ability of any human being to exercise them responsibly and wisely.
The crying need today is not for more laws, but for fewer. The world must be saved from its saviors. If the friends of liberty and law could have only one slogan it should be: Stop the remedies! Stop the remedies! Or even shorter: Repeal! Repeal!
2. Stop the profligate spending. Stop the deficits. Return to balanced budgets as the norm rather than the exception. Stop the constant increase in the national debt. Stop the inflation.
3. To stop the inflation, the government must stop expanding the issue of paper money and credit.
The International Monetary Fund ought to be dismantled. The Articles of Agreement should at least be amended to remove all provisions that oblige the strong currencies to support the weak—in other words, that oblige the countries that manage their fiscal and monetary affairs prudently to support those that mismanage their monetary affairs altogether; that oblige the “surplus” countries to support the “deficit” countries; that permit debtor countries to put off payment in gold indefinitely and compel other countries to become or remain their creditors. This means that the “special drawing rights”—“paper gold”—should never have been permitted to come into existence.
The “gold-exchange” standard (more accurately, the dollar-exchange standard) should be liquidated. This means that the United States should stand ready to redeem in gold on demand the present dollar-holdings of foreign central banks, and that these banks should by a self-denying agreement refuse to increase their present holdings of dollars as part of their official “reserves,” and provide for at least the gradual liquidation of such holdings.
The United States Government should abandon all exchange controls, all attempts to forbid, restrict, or penalize foreign travel, or purchases of imports, or foreign investments. Certainly not least, the government should repeal its 36-year-old prohibition on the purchase, sale, or ownership of gold by its own citizens.
The United States should plan for eventual return to a full gold standard. This will now probably have to be by stages. What seems most likely at the moment of writing is that we shall soon find ourselves off even the token gold standard we are now on. We will be probably unable to set up a full gold standard except at a much higher dollar-price for gold than the present $35 an ounce.
But it is too early to specify all the conditions of such an eventual return to gold. All we can say now is, that as long as the world’s money continues on a fiat paper basis, there will be monetary unreliability and unsettlement, if not monetary chaos.
4. Repeal all minimum wage laws. Repeal the Norris-LaGuardia Act of 1932. Repeal or drastically modify the Wagner-Taft-Hartley Acts of 1935 and 1947. Stop compelling employers by law to continue negotiating with unions that are making unreasonable or exorbitant demands. Allow struck employers to try to continue their business peaceably with non-strikers or with replacements for strikers. Forbid all intimidatory mass picketing. Enforce existing common law or written statutes against intimidation, vandalism and violence. Reduce the Taft-Hartley Act to a simple prohibition of discrimination against either union or non-union workers. If the unions refuse to accept this two-sided prohibition, repeal the law entirely.
5. Let the government refrain from all “guidelines” for prices or wages, all controls of prices, wages, interest rates or rents, and all threats of such controls.
6. Stop the continuous increase in the national burden of Social Security, housing subsidies, farm subsidies, and the rest of the proliferating “antipoverty” programs.
Only three or four specific suggestions can be offered here:
Several eminent economists (notably Professors James Buchanan and Colin Campbell) have shown how Social Security could be converted from its present ambiguous but compulsory mixture of insurance and relief to a voluntary insurance program.
Federal grants to the States and localities to pay for relief and “antipoverty” programs should either be discontinued entirely or made only to the poorer half or even the poorest fifth of the States. The latter plan would take the political profit out of Federal grants-in-aid.
There should of course be no attempt to seize the earnings of those who work in order to provide “guaranteed incomes” to those who won’t work.
The army of relief and other subsidy recipients will continue to grow, and the solvency of the government will become increasingly untenable, as long as part of the population can vote to force the other part to support it. Such eminent nineteenth and early twentieth century liberals as John Stuart Mill and A. V. Dicey agreed that the franchise should be withheld from the recipient of poor relief as long as he remains on relief. If the fear of offending or the temptation to propitiate such voters could be removed, there would be a startling improvement in the quality of candidates for office. The whole tone of our public life would be raised.
7. The graduated personal income tax should be abandoned in favor of a strictly proportional income tax. The argument against the “progressive” tax rate was conclusively stated as long ago as 1833 by the Scottish economist J. R. McCulloch: “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit.”
It is also clear that no income tax rate above 50 per cent should be permitted. It is prima facie confiscation when a man is allowed to keep less than half of his earnings for his own family.
We have already seen that the income tax rates above 50 per cent raise negligible revenue, and that even with present profligate spending a flat income tax rate of 21 per cent would raise all the revenue now being raised from the whole range of rates from 14 to 77 per cent.
8. The present appalling power and omnipresence of government must be forced back within tolerable limits. Traditional liberals since Adam Smith have agreed on only two indispensable functions of government: first, to protect the nation against aggression or invasion from any other nation; and second, to protect every member of the community from the aggression, injustice, or oppression of any other member.
Some libertarians would add other functions: the provision of sewage, water, and other health and safety services in cities, the construction and maintenance of streets and roads, and, for national governments, the provision of a trustworthy monetary system, the setting of standards of weights and measures, and the collection and publication of certain kinds of information.
But about the nature and precise limits of these other governmental duties there is considerable disagreement. What can be said with confidence is that every extension of the functions and powers of the State beyond its primary duty of maintaining peace and justice should be scrutinized with jealous vigilance. Precisely because the State has the monopoly of coercion it can be allowed the monopoly only of coercion. Only if the modern State can be held within a strictly limited agenda of duties and powers can it be prevented from regimenting, conquering, and ultimately devouring the society which gave it birth.
The solution to our problems is not more paternalism, laws, decrees, and controls, but the restoration of liberty and free enterprise, the restoration of incentives, to let loose the tremendous constructive energies of 200 million Americans.