Budget Deficit

Rothbard on Reagan in Reason

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In your heart you know he's Ron

In my column Wednesday about Ron Paul and Ronald Reagan, I dug up from the Reason archives some tart and early pessimism (circa the March 1981 issue) from then-Reason columnist Murray N. Rothbard, the influential economist/philosopher who nabbed a dedication in Ron Paul's latest book (and is prominently featured in Senior Editor Brian Doherty's history of the libertarian movement, Radicals for Capitalism). I thought it might be of interest to reproduce some of Rothbard's pugnacious disillusionment throughout Reagan's first term, after which his column came to a close. There are definitely some echoes here of 21st century political concerns, from debt-limit politics to war to Ron Paul himself. So here's Rothbard on Reagan, in chronological order:

June 1981, "The Reagan Fraud":

Libertarians, hard-money buffs, economic conservatives, are hailing President Reagan for his "historic," "revolutionary" cuts in taxes and in the budget and for his full-scale commitment to deregulation and the free-market economy. Liberals, too, are joining the chorus–from the other direction, howling about the millions of poor who will be thrown into the streets and about Reagan taking us back into the 19th century.

Yay or Nay: Bring back the annual financial issue?

All of this is hooey and hokum. There is no "Reagan New Deal," and nothing either historic or revolutionary is going on. The fact that a small handful of libertarians or quasi-libertarians have gotten middle-level jobs in the administration means nothing except that a different cast of characters is fattening at the public trough and that their post-Washington careers will receive a substantial financial boost. The major point is that nothing is really going on. There are no budget cuts; there is no tax cut. The government deficit continues to be huge; the disastrous inflationary monetary policy continues in place. […]

Like Mrs. Thatcher in England, the president is giving us all the fiery and hard-hitting economic libertarian rhetoric but none of the substance. Since, after a brief honeymoon, only solid reality will work, the Reagan program faces inevitable collapse. All those who care about the free market, hard money, and minimal government must begin to act now to prevent this. The Reagan program must be denounced fiercely and uncompromisingly as a fraud and a deception. Otherwise, we all might as well pack it in for another century.

Lots to look at

March 1982, "Do Deficits Matter?"

If I were ever inclined to feel sympathy for any politicians, it would be for the venerable conservative Republicans in Congress, who all their lives voted against any increase in the government debt limit. Then President Reagan, in one of the first acts of his "free market" administration, called upon Congress to vote another whopping boost in the debt limit, this time to over $1 trillion. With tears in their eyes, a host of conservative Republicans voted, for the first time, for such an increase. They did so, they explained, because now, at long last, there was a conservative Republican in the White House, and he had pledged a balanced budget by 1984.

Well, it is now a year into the Reagan administration, and that pledge has already been brutally violated. The prediction of a balanced budget by 1984 has been officially abandoned, and the September projection of a $43-billion deficit in 1982 has also been tossed cavalieerly into the dustbin of history. The latest administration forecasts are for an enormous $109-billion deficit in 1982–by far the largest in American history–to be succeeded by even more whopping deficits of $152 billion in 1983 and $162 billion in the Orwellian year that was supposed to bring us the nirvana of a balanced budget.

So the salt water we were tapping from the ocean was being poured into Stockton and then down the drain in Bakersfield

June 1982, "Yankee Stay Home!"

It's beginning to look like Vietnam all over again. There is the same massive American aid, escalating step by step from economic to military to armed "advisors," to prop up a widely detested military junta. There is the same reach for covert paramilitary action to try to topple the Bad Guys. And above all, there is the same frantic and absurd search for the "outside agitators" upon whom all the war and bloodshed can be blamed. For it is part of the essential mythology of imperialism that the natives inside the trouble spot are happy and content with their lot and that all trouble originates from a handful of outside agitators funneling arms, stirring up discord, and assassinating the "legitimate" rulers of the nation. […]

The US effort is doomed in El Salvador and in the rest of Central America, and the sooner we recognize this the better. The cause of peace, the cause of abstinence from mass murder, the cause of sanity, require that the US government get the blazes out of El Salvador, and immediately.

Ahead of our time!

September 1982, "Flat-Rate Debate"

With Reagonimics in a shambles, the administration keeps looking for some panacea, some gimmick that will bring the economy out of the doldrums and insure political victory. Other politicians and economists are also looking for some quick route out of our economic mess. The latest nostrum being seized on is the flat-rate income tax.

Neoliberal Democrats, Friedmanite economists, Reagnites, and libertarians have all jumped on the flat-rate bandwagon, hailing it as "simple" and "fair," in contrast to the present complex system that soaks upper-income groups while allowing others to avoid paying their "fair share" of taxes. Even my favorite congressman, Ron Paul (R-Tex.) has fallen for this hokum[.]

The most literal cover in Reason history?

December 1982, "Any Way You Slice It"

For nearly two years I have been engaged in a crusade to inform any who would listen that the Reagan administration is in no sense committed to invidual liberty, even, as was so widely supposed, in the area of the free-market economy. Lately I have been pushing on an open door, since the anti-free-market nature of the administration has now become clear to everyone. […]

The departure of principled free-market people from the administration–Martin Anderson, Paul Craig Roberts, Steve Hanke, Doug Bandow–still leaves the problem: How could Reagan do it?

Next thing you now, you libertarians will want PRIVATE fire stations!

March 1983, "Why We're in a Depression"

There are only two alternatives: either a short, sharp recession that liquidates quickly and generates a rapid recovery (such as the intense but very brief depression of 1920-21, the last recession in which the government refused to intervene); or a chronic stagnation, neither fish nor fowl, with recession lingering interminably. That is what we suffered in the 1930s, and this is what the gradualist Thatcher and Reagan regimes have wrought.

And so the Austrian counsel is: the Fed must stop inflating; it must slam the brakes on its own destructive inflationary policies. And then the government must keep hands off the inevitable recession.

Read Brian Doherty's relevant "A Tale of Two Libertarianisms" here, and his oral history of Reason here. Thanks to Lucy Steigerwald for helping dig some of these up.

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  1. fap, fap, fap, fap, fap, fap, fap, fap, fap, fap, fap, fap, fap, fap, fap, fap…

    1. Brilliant insight! Do you have a blog I can suscribe to? In the meantime, keep the incisive comments coming!

  2. I vote “yay” on the financial issue question.

  3. <Otto voice>Disappointed!</Otto voice>

  4. This resembles the season finale of any host of reality tv series.

    “Lets look back at what you’ve already seen”

  5. Neoliberal Democrats, Friedmanite economists, Reagnites, and libertarians have all jumped on the flat-rate bandwagon

    To which Friedman is Rothbard referring to here? I assume Milton?

    1. Tom Friedman–defiler of the art of the mustache–had not yet been released by his Chinese creators from the tard breeding pits in 1982.

      1. Yeah, he’s also not an economist. I must be confused about Friedmans today.

  6. Those are some sweet covers. And yes bring back a financial issue; since you guys only put out eleven issues in a year, why not fill that empty time slot?

    1. The 12th issue is still published. But it only goes out to long-time subscribers because it is nothing but photos of The Jacket in various international locales.

      Here it is draped over the Mona Lisa, and here seen lounging on a yacht anchored off Monaco.

      1. You you’d the links. Again.

        1. Or did I…

          1. I see links.

            1. Yeah, to 404 pages. Either SF is being snarkily meta, a possibility I don’t discount, or he screwed up the links, which is more probable.

              1. It’s an endless loop. Keep clicking on the link.

                1. “It’s forever in there.”

    1. The most surreal thing about last summer’s Koch flap was seeing all these anti-Koch insults pulled from dusty libertarian newsletters and given new life in the hands of progressives. Really warms the heart, I tell you.

  7. The Flat-Tax is “hokum”?

    We were in a Depression? It sure didn’t feel like it.

    Is this a collection of all your laughably wrong articles and predictions?

    1. We were in a Depression? It sure didn’t feel like it.

      The employment-to-population ratio was the same back then that it is today.

  8. 30 year old obscurantist arguments get me hot.

  9. Some of those look like National Lampoon covers.

    1. You know, you’re absolutely right. Huh.

      1. Especially that Making Goods Behind Bars. That had to be the same art director.

        1. The only thing that’s missing is some not-really-dressed woman.

  10. Oh, do take Rothbard’s advice and pack it [your libertarian utopia] in for another century. How about the 12th?

    1. Considering your mindset is right out of the 5th, the 12th would be a step forward.

  11. Pardon the reductio, but why don’t we simply transfer all national wealth to one person, who will then be free to hire anyone who wants a job, and, according to your theories, will be compelled to do so?

    1. Until now, I’ve never seen anyone take a swing at a straw man and hit themselves.

      1. So how much wealth concentration is too much? Or does it not matter, as that’s simply a completely unrelated consequence of your “freedom” principles?

        1. What’s paying a “fair share”? Or does it not matter, as that’s simply a completely unrelated consequence of your “stability” principles?

          1. Since there is no possible definite solution to these moral quandaries, prudence and stability seem to be what’s in order.

            1. Since there is no possible definite solution to these moral quandaries, freedom seems to be what’s in order.

        2. Right. Because it’s purely the markets fault for the wealth concentration. It has nothing to do with inflationary monetary policy or government playing favorites with business and banks.

          I guess the answer to my question below is “NO.”

    2. Are you even capable of complex thought?

    3. “why don’t we simply transfer all national wealth to one person”

      Every libertarian agrees with this idea.

  12. Don’t blame me. I voted for David Bergland.

  13. Y’know, this retrospective just reminds me of why I dislike Rothbard so. First of all, Volcker and the Fed *were* clamping down on inflation, and had been doing so since the end of Carter’s term. That was one reason why there was a recession in Reagan’s first three years, and Rothbard is an idiot if he didn’t realize that said recession was *exactly* the sort of recession that Austrians have stated are sometimes necessary when certain interests (government, business, whoever) over-invest in goods and services that people don’t want. It’s just fucking dishonest for Rothbard to use the inflation canard when anti-inflationary efforts were the *cause* of the recession! (It’s worth noting that Rothbard’s idiotic column was written shortly before the recession ended.)

    Second: wth is wrong with a flat tax? I understand that Rothbard was an anarchist, but really: only fools demand perfection, and a flat tax was and remains and excellent incremental step towards libertarian ideals.

    Thirdly, he was dead wrong about our intervention in Latin America. Not only did we not send conventional troops to fight wars in Central and South America, the close of the Cold War brought none of the “blowback” predicted by Rothbard and others. Rather, many countries in the region moved towards more neo-liberal systems. And how cliched is it to compare every war or foreign policy decision to Vietnam? Whatever you think of American foreign policy as of late (and I don’t think much of it), that’s one dead horse that Rothbard was beating.

    1. and Rothbard is an idiot if he didn’t realize that said recession was *exactly* the sort of recession that Austrians have stated are sometimes necessary when certain interest

      What part of “government keep hands off the inevitable recession” do you not understand?

      1. We had a S&L “crisis” and a wave of banking law changes during the “inevitable recession” that followed. Government did not keep its hands off.

  14. To all the Reagan lovers I ask, in which years of his administration did federal spending go down?
    Ah. That’s what I thought.

    1. Doesn’t matter. Reagan felt things at us.

    2. To all you Reagan critics, in which years did Reagan have a veto-proof majority in Congress which shared his stated budgetary desires? How often did Congress let Reagan write a budget?

      Libertarian Reagan haters are idiots. Presidents aren’t dictators and Reagan successfully achieved much of his stated program, including the big one which was to re-build the U.S. military and confront the Soviets from a position of strength, morally denouncing communism and ending the previous U.S. policy of incremental surrender known as detente. Before Reagan, the population of the USSR could console themselves by reflecting that they lived in a powerful empire even if their standard of living and political freedom did not match that of the West. The military buildup under Reagan showed the Soviets definitively that communism as an ideology could not compete in any way with the free societies of the West, even militarily. The collapse of the Soviet Union was a long time coming and some, including the fools at Reason who like to use a quote from Gorby to make the case that American TV and rock-and-roll were the real cause of the collapse, but future historians, without the spin, will credit Reagan personally for dramatically changing U.S. foreign policy, supplying the final push that toppled the Soviets.

      Every society needs heroes and makes them out of men who are imperfect. The cynical like to pick apart those heroes, including Reagan, but it cannot be denied that Reagan changed the debate in a positive way on a number of important issues all while dealing with a hostile media, hostile elements within his own party and strong partisan opposition. He was an exceptional man and one worth admiring.

      1. Yeah but he wasn’t Rothbard or any other kind of Austrian economist.

        And since we hate both Rothy and Austrian econs we hate Reagen too.

        WTF, that doesn’t make sense to you?

        Well Matty Yglesias and Ezzy Klein realized what a brilliant insight it is.

  15. The US effort is doomed in El Salvador and in the rest of Central America, and the sooner we recognize this the better. The cause of peace, the cause of abstinence from mass murder, the cause of sanity, require that the US government get the blazes out of El Salvador, and immediately.

    Non-interventionist gets it WRONG again, refuses to even reconsider his views or the existence of the USSR. News at 5.

    1. USSR already too broke to intervene further. News at 11.

      1. They gave it a pretty good final effort.

  16. Gee, I thought if that malicious imp had died we wouldn’t have to deal with him anymore. Little did I expect a cult of intolerant bigots to grow up around him, but it did. Rothbard, with Rockwell and Ron Paul, did more to harm libertarianism than anyone else I can think of.

    1. Tom Palmer, is that you?

    2. Maybe that’s why he’s mentioned here only every 30 years.

  17. Murray Rothbard……. that’s a name I haven’t heard in a long long time.

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