A Time for Truth, by William E. Simon, New York: Reader's Digest Press, McGraw-Hill Book Co. 1978. 248 pp. $12.50.
Take heart, ye libertarians of little faith. This book was well up on bestseller lists for several months. This is fact, 1978, that could not have been recorded five, ten, or twenty years ago, even in an idealized experiment. To be sure, William Simon held high political office during the Nixon and Ford presidencies, and the autobiographical narrative offers a base to the book's central argument. Furthermore, names are named, and there are many persons of note who might have hoped that Simon would have been more politic in describing modern politics as it is, warts and all. Nonetheless, it would be wholly misleading to classify this book primarily as the reflections of an out-of-office politician. Centrally described, A Time for Truth is a well-argued, well-supported diagnosis of the socio-economic-political crisis of our nation in our time.
The book reflects the passionate intensity of its author, as soft-left critics have already noted. But Yeats need not be assumed omniscient; the best, too, can have conviction. The scenario laid out for the United States is indeed a scary one, but William Simon is no Cassandra. He does not make the self-satisfying error of confusing hope with reality, but neither does he go beyond reality to imagined fear. He does not predict dramatic revolution by either military or proletarian forces. Simon outlines the more somber, because more plausible, way toward economic dictatorship by a developing governmental apparatus that is already uncontrollable.
Government becomes increasingly irresponsible fiscally and monetarily; inflation continues and accelerates in rate; politicians succeed in shifting blame away from government and onto the evil machinations of businessmen; governmental controls spread; economic disruption necessarily ensues; direct political-bureaucratic direction of economic decisions offers the only "apparent" solution. And so it goes. The scenario is one that must be recognized by any honest person who lives within it in 1978. The wide readership for Simon's book suggests that the message may be striking sympathetic eyes.
Two central examples illustrate the argument, both of which allow Simon to draw upon direct experience. As the first effective energy "czar" during the 1973-74 crisis, Simon learned firsthand what political neglect of elementary economic principles can cost a nation and how continued neglect can convert rigidities into entitlements untouchable to the politician in democracy. Economic error, so simple when first committed, becomes politically irreversible and generates a growth of self-sustaining bureaucracy.
As our experience with energy indicates, and as Simon understands and stresses, there is no half-way house. Market prices and incentives are allowed to work, or they are not. In the latter case, controls fail to accomplish anything other than the begetting of further controls. Simon assigns to his own political superiors, Presidents Nixon and Ford, responsibility for monumental mistakes that insure the now-permanent regime of gas and oil controls. With these, a major sector of the economy has been socialized. But to treat energy as somehow separate and apart from other sectors, as subject to special treatment, reflects a common confusion that Simon warns against.
His second example is New York City, which is detailed as a microcosm of the nation. The reliance on this example is imaginative and useful; like most economists, I have made too categorical a distinction between the behavior of those governmental units that possess powers of money creation and those that do not. In Simon's analysis, New York behaved for many years as if it had sources of money, using debt obligations that were not creditworthy in any sense and essentially defrauding its creditors by the jiggling of accounts and of the promises of politicians. In this way, the latter were able to respond to the demands of the city's own employees almost without limit.
For New York, the day of reckoning seemed to arrive, and default, in effect, resulted. Simon's account of his own efforts to prevent a rush toward federal bailout is fascinating—an effort that, from the perspective of 1978, we must judge to have been only minimally successful. Since this book was published, we have witnessed the political fanfare when President Carter signed new loan-guarantee legislation. The New York story stands to be repeated for yet other municipalities.
PROBING THE TRUTH
As noted, Simon attributes New York's plight to the unwillingness of its elected political leaders to stand up to the city's own employees and their unions. At this point, I should have liked to see the discussion extended, in at least two respects. Simon does not discuss the illegitimacy of the strike threat as a part of a functioning governmental structure. Implicit in the origins of the basic ideas of collective bargaining, and notably in the law as it reflected these ideas, there was imbedded the notion that strikes become an appropriate weapon only if the adversary parties could be isolated from third parties, only if effective substitutes were readily available to consumers of the industry's product.
It is, indeed, a time for truth, and a second extension of Simon's discussion might have exposed the critical question of the voting franchise. Democratic politics generates its results as politicians try to respond to electoral constituencies. When governmental employers and beneficiaries of direct handouts are allowed to vote, should we not predict what we see? Why should not such overt conflict of interest be exposed for what it is? In the 1970s, when potential politicians must bare their closets, why do we neglect the bureaucrats or the recipient of direct transfers? No politician of our time can indirectly act to increase his private future; but we remain blind to the direct influence that government employees can exert on their own wages via their support for larger and larger budgets.
In several writings I have argued, along with Simon in this book, that improvement must take the form of the adoption of a set of principles, rather than the advancement of a particular set of legislative proposals. A public philosophy of liberty informs the consciousness of few of today's scholars, businessmen, and politicians—and even fewer of our lawyers, who are perhaps most important of all. Such a philosophy may, but need not, involve an understanding of the efficiency-generating properties of free markets. But it must embody the original American notion of individual liberty, and it must incorporate a good understanding of the necessary conflict between this liberty and the power of the national state. Markets will emerge, not only when persons understand them, but also when governments are constrained as people value liberty.
I do not fully accept the importance assigned to the egalitarian thrust by Simon. We do not need egalitarianism to explain much of what we see. A flaw in our constitutional order, along with the rent-seeking behavior of persons who have discovered it—these are sufficient grounds upon which models of modern America can be built. And I am concerned that libertarians take up the antiegalitarian crusade too eagerly and, in the process, that they alienate potential supporters. Liberty can only flourish with equality, properly defined. Equality in liberty is possible; liberty in enforced equality is not. Simon explicitly recognizes this, but careless reading may make him seem to defend inequality.
I commenced this review with a call for keeping the faith. Too many of us who share Simon's diagnosis find aesthetic satisfaction in the gloom of reality observed. Resignation must be resisted. Let us have more, not less, passionate intensity, more, not less, conviction. Perhaps few of us would want the center to hold today, but the game is not rigged as to which direction change may take.
James Buchanan is general director of the Center for Study of Public Choice, Virginia Polytechnic Institute and State University. He is the author of numerous books; the latest, Freedom in Constitutional Contract.