Until last June, Steve H. Hanke was a senior economist on President Reagan's Council of Economic Advisers. He emerged, during his stint with the government, as a persuasive spokesman for the privatization of federal lands. Much of the national debate about the issue is due to his influence in the White House. He describes his departure from the halls of power as "a mutual parting of ways."
Hanke came to government from Johns Hopkins University, where he had been teaching economics since 1969. He brought with him an international perspective gained from research, while on leave from Johns Hopkins, in France, Austria, and Sweden. Perhaps his time spent in Europe explains his evident appreciation of "Continental" traditions.
Yet Hanke says, although in moderate and reasonable tones, some of the most radical things ever spoken by 20th-century employees of the US government. For instance: "I'm very much opposed to virtually all the public-sector activities except for some police functions and national defense, and even those could be contracted out."
His candid characterizations of the Reagan administration were a source of embarrassment to the political sensibilities of those in power. Through his experience, he concluded that it "is just a typical traditional Republican administration—perhaps even more Republican than most Republican administrations because they've got control of campaign funds with the national Republican Party. It's basically the Nixon-Ford administration without either Nixon or Ford. If you have strong preferences like I do, there's really nothing for you to do."
Nevertheless, Hanke did help make privatization of federal lands an issue so hot that it made the cover of Time. About that, Hanke says: "It had nothing to do with private property as an institution, and I viewed private property as the basic policy issue. Minor reforms, trying to make the system work better, are just futile. Once I got in, I realized that the only way to solve a problem was to peel it out of the public sector somehow." Hanke says he got support from "some political people" for budgetary reasons—"though they continually instructed me not to use the words property rights because that was ideological and to 'stick with the numbers.' All the good arguments, they did not use."
Hanke has been involved in the push for privatization of services as well as government land. In Europe, he spent a good deal of time studying the provision of what we regard as public services. In France, for instance, water systems are run by private enterprise. And land in Europe is almost entirely in private hands. "Europeans are stunned," he says, "when they learn how much land the US government owns.…They ask, 'Who's more socialistic? We have nationalized industry, but you have nationalized land.'" Hanke also points out superior conservation in Europe.
Hanke stresses privatization as a good issue for several reasons. The first is his belief that government can be relied on to muck things up. That's why he would have government whittled back just to protection of individual rights—via police, courts, and national defense. "I think a strong defense is extremely important," he explains. "Governments are liable to foul things up, meddling in things they have no right to meddle in, but that is a separable problem."
The other major reason is that he sees privatization as a core issue when it comes to liberty. "Many of the opponents," he notes, "are outright socialists, and they will have to show their true colors. It's such a clean, pure, perfect issue. Either you do want property rights or you want public, collectivized arrangements. There's no middle of the road."
"The test is now," Hanke says. "It will be won or lost depending on whether or not people come forward to make the case." He adds, with a seriousness that masks his passion: "You have to literally get out in the field and make people aware of these arguments so they can put pressure on the people in office."
Hanke points to the REASON article "Saving the Wilderness: A Radical Proposal" (July 1981) as an example of the liberation of the privatization issue from the status of an internal memo passed around among academics. Although Hanke has returned to his post at Johns Hopkins University, he warns, "I don't plan to just retreat back to the university. For one thing, I'll continue to write for REASON." He is also an adjunct scholar at the Heritage Foundation (he's currently working on a chapter for a Heritage Foundation book on the New Federalism, giving lessons from Europe) and the Cato Institute and has joined the Reason Foundation Advisory Board. "In older countries," he says, "intellectual life does not revolve around universities and never has. Most of the intellectuals are not university people."
Talking to Hanke, one realizes that his Continental point of view fits well with the revolutionary words he speaks. One such group of American people are now called the Founding Fathers. Hanke, in fact, traces the American tradition of privatization back to that group. "Hamilton wanted to sell government lands to pay off the Revolutionary War debt, and Jefferson wanted to give them away."
Hanke is of the same mold, a revolutionary gentleman. He is polite but blunt, and his grasp of the importance of individual rights, including property rights, is impressive. It's no wonder he didn't get along with the Reagan administration, and it is clear while talking to him that Patrick Henry and Sam Adams would have had the same problem.
Patrick Cox is a free-lance writer.