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Where shall we go from here? There are two possible scenarios. The one is that we shall continue in the direction in which we have been going,with gradual increases in the scope of government and government control. If we do continue in that direction, two results are inevitable. One is financial crisis and the other is loss of freedom. Great Britain is a frightening example to contemplate. It moved in this direction earlier than we and has gone much farther. The effects are patent and clear. But at least when Britain moved in this direction and thus lost its power politically and internationally, the United States was there to take over the defense of the free world. But I ask you, if the United States follows the same course, who is going to take over from us? That’s one scenario, and I very much fear it’s the more likely one. The other scenario is that we shall, in fact, halt this trend that we shall call a halt to the apparently increasing growth of government, set a limit, and hold it back. There are many favorable signs from this point of view. I may say that the greatest reason for hope, in my opinion, is the inefficiency of government. Many people complain about government waste, but I welcome it. I welcome it for two reasons. In the first place, efficiency is not a disirable thing if somebody is doing a bad thing. A great teacher of mine, Harold Hotelling, a mathematical economist, once wrote an article on the teaching of statistics. He said, “Pedagogical ability is a vice rather than a virtue if it is devoted to teaching error.” That’s a fundamental principle. Government is doing things that we don’t want it to do; so the more money it wastes, the better. In the second place, waste brings home to the public at large the fact that government is not an efficient and effective instrument for achieving its objectives.
One of the great causes for hope is a growing disillusionment around the country with the idea that government is the all-wise, all-powerful big brother who can solve every problem that comes along, that if only you throw enough money at a problem it will be resolved. Several years ago John Kenneth Galbraith wrote an article in which he said that New York City had no problem that could not be solved by an increase in government spending in New York. Well, since that time, the budget in the city of New York has more than doubled and so have the problems of New York. The one is cause and the other effect. The government has spent more, but that meant that the people have less to spend. Since the government spends money less efficiently than individuals spend their own money, as government spending has gone up,the problems have gotten worse. My main point is that this inefficiency, this waste, brings home to the public at large the undesirability of governmental intervention. There are also many unfavorable signs. It’s far easier to enact laws than to repeal them. Every special interest, including you and me, has great resistance to giving up its special privileges. I remember when Gerald Ford became president and called a summit conference to do something about the problems of inflation. I sat at that summit conference and heard representatives of one group after another go to the podium—a representative of business, a representative of the farmers, a representative of labor, you name the group—they all went to the podium and they all said the same things: “Of course, we recognize that in order to stop inflation we must cut down government spending. And I tell you, the way to cut down government spending is to spend more on me.” That was the universal refrain.
Many people say that one of the causes or hope is the rising recognition by the business community that the growth of government is a threat to the free enterprise system. I wish I could believe that, but I do not. You must recognize the facts. Business corporations in general are not defenders of free enterprise. On the contrary, they are one of the chief sources of danger. The two greatest enemies of free enterprise in the United States, in my opinion, have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country. They are enemies for opposite reasons. Every one of my fellow intellectuals believes in freedom for himself. He wants free speech. He wants free research. I ask him, “Isn’t it a terrible waste that a dozen people are studying the same problem? Oughtn’t we to have a central planning committee to decide what research projects various individuals undertake?” He’ll look at me as if I’m crazy, and he’ll say, “What do you mean? Don’t you understand about the value of academic freedom and freedom of research? ” But when it comes to business he says,“Oh, that’s wasteful competition. That’s duplication over there! We must have a central planning board to make those things intelligent, sensible!”So every intellectual is in favor of freedom for himself and against freedom for anybody else. The businessman and the business enterprises are very different. Every businessman and every business enterprise is in favor of freedom for everybody else, but when it comes to himself, that’s a different question. We have to have that tariff to protect us against competition from abroad. We have to have that subsidy. Businessmen are in favor of freedom for everybody else but not themselves. There are many notable exceptions. There are many business leaders who have been extremely farsighted in their understanding of the problem and will come to the defense of a free enterprise system. But for the business community in general, the tendency is typified by U.S. Steel Company, which takes ads to extol the virtues of free enterprise but then pleads before Congress for an important quota on steel from Japan. The only result of that is for everybody who is fair-minded to say, “What a bunch of hypocrites!”