David R. Henderson  

My AEA Speech for Ed Clark, 1980

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Here is the speech I referred to in my previous post.

I would like to thank Leonard Silk for his fundamental decency and sense of fair play in letting me appear here today. I come before you to speak on behalf of Ed Clark, the Libertarian Party's candidate for President. Since my time here is short, I can but give you a brief sketch of the Libertarian Party and of their economic positions.

The Libertarian Party, which had its first national convention here in 1972, on the same weekend as the Watergate break-in, has grown rapidly. In 1972 it was on the ballot in only 3 states. This year, it will be on the ballot in all 50 states. Ed Clark received 400,000 votes when he ran for governor of California in 1978.

The fundamental principle of libertarianism is that each person, each of you, has the right to do anything that's peaceful--it includes the right to earn your income in any peaceful pursuit and the right to spend it on anything you want. Government's only function should be to protect people's rights, not to go beyond that.

On economic policy, this means the principle that "all capitalist acts between consenting adults should be permitted," to use libertarian philosopher Robert Nozick's words.

To give a few examples, this means no interference with wages or prices, neither general wage and price controls, nor usury ceilings, nor minimum wages, nor rent controls, nor price-fixing by various agencies of the government such as the Interstate Commerce Commission and the Civil Aeronautics Board. Setting a price above the market must cause a surplus, as we have seen with agricultural products and the employment of unskilled young. Setting a price below the market causes shortages, as we have seen with gasoline.

The libertarian principle means that there should be no tariffs and no import quotas. Their effect is to increase the cost of living to consumers. For instance, it means no restrictions on imports of foreign cars, restrictions such as the "American content" requirement advocated by Jimmy Carter and by Ronald Reagan through his spokesman Martin Anderson. The high level of auto workers' wages compared to the average American's wage means that the restrictions on foreign imports and, incidentally, the Chrysler bailout, transfer wealth from the poor to the rich.

This principle means that government should not be able to decide who can enter which occupation or which business, as it now does with 800 occupations ranging from tree surgery and barbering to lawyers and doctors, and countless businesses such as trucking, airlines, the postal business, banking, electricity, and telephone service. One of the most harmful effects of government restrictions has been to freeze out minorities from climbing the economic ladder. For instance, no firm engaged in coast-to-coast trucking is owned by a black person even though one man in St. Louis has been trying for years to get a permit.

On taxation, libertarians call for a drastic cut in taxes. And Ed Clark, unlike the other three candidates, has stated in a white paper how he would cut both taxes and spending in order to balance the budget at about $425 billion. He would cut not just the fat but also the lean: he would end all subsidies to business, abolish the Departments of Energy and Education, and reduce military spending by $50 billion.

This last requires some elaboration. Libertarians favor a non-interventionist foreign policy. A majority of our military spending is used to protect countries other than the United States--including rich Western European countries and Japan. There is no reason why we should pay for their defense. While America spends over 5% of its GNP on the military, Japan spends only 1.5%. [I mistakenly said "1%" in the speech.] They can afford their own.

Also, in the area of foreign policy, Clark would completely withdraw the military from the Middle East. Unlike Clark, the other three candidates are willing to risk our lives to protect what President Carter mistakenly but revealingly referred to as "our oil." It is not our oil. And we would not be nearly as dependent on OPEC oil if we had a free market in energy and got rid of oil price controls and "windfall profits taxes" that are restricting domestic alternatives.

To those who fear the Soviet government as an omnipotent monster, I say that it is a semi-developed monster. That fact is that Russia is surrounded by apathetic or openly or covertly hostile Communist states. On the longest border of the world, it has as an enemy the most heavily populated nation in the world. Four of the five countries with nuclear missiles have them trained on Russian cities. Russia has suffered reversal after reversal in the last few years--in Egypt, Somalia, and Afghanistan. It is extremely unlikely that they could take over the Persian Gulf oil fields. Even if they could, it is extremely unlikely that they would refuse to trade with the United States--our government, not theirs, has always been the first to impose embargoes. They have too much to lose by not trading.

My statement has been rather sketchy and I have not had the time to make the detailed arguments I would like to make. In case you believe that no one but wild-eyed radicals supports our tax and spending cut, let me point out that 38 economists, including Harold Demsetz of UCLA, Vernon Smith of the University of Arizona, Sam Peltzman of the University of Chicago, and Robert Clower, our new editor of our Association's journal, have endorsed it.

I would like to close with a quote from George Washington that sums up the issue: "Government is not reason; it is not eloquence; it is force! Like fire, it is a dangerous servant and a fearful master." [I have been unable to find persuasive evidence that GW actually said this, but I believed it at the time.]


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CATEGORIES: Political Economy



COMMENTS (12 to date)
Maniel writes:

Nice presentation. A couple of questions: even with the proposed cuts, $425 billion was a lot of money in 1972. What part of federal spending did you believe was worth preserving? How does your philosophy apply to state and local governments, particularly in view of the rise of public unions?
Thanks.

David R. Henderson writes:

@Maniel,
Thanks.
You're right about the $425 billion. I thought very little of it was worth preserving. I was presenting a case for Clark.
I don't quite understand your second question. Please clarify.

Maniel writes:

David,
Thanks for the quick response. My second question is based in the idea that, while the federal government receives most of the media attention, state and local governments provide the "useful" government services: safety; sanitation; education; building inspections and zoning; street and highway maintenance; etc. As someone who is not shy to carry the Libertarian message, do you hold the same opinion of government at the state and local levels as of federal government? This was probably a less-controversial question in 1972 before the emergence of public unions, union donations to political campaigns, taxpayer-financed health and defined-benefit retirement plans for public-sector workers, etc.

David R. Henderson writes:

Yes, I do hold roughly the same opinion of state and local government. Don't forget that they're the main ones looking to lock people up for practicing various occupations without a license and the main ones looking to lock people up for consuming various substances.
Also, state governments in the South were very oppressive of black people.
My focus was mainly on federal policy because Clark was running for President.

Mark Mc writes:

David,
Nice Speech. Change some figures and takeout the Soviet reference (insert China maybe) and you could be talking about modern events (especially the Chrysler bailout. Am I showing my age?)

Did the support for Clark ever come back to bite you when you were in the Reagan Admin?

Mark

David R. Henderson writes:

@Mark Mc,
Thanks. No, it never did bite me.

Gian writes:

One thing I never understood from libertarians is why is a commercial contract sacred and must be defended by State but a marriage contract is not and may be dissolved at will of one of the contracting parties with no penalties ?

Also, capitalistic acts are fine but you seek to restrict political acts. That is, if a group of citizens seeks to ban public displays of lewd images then it is not OK by libertarians.

John Goodman writes:

Good talk.

Did you know that I wrote the welfare plank for Clark's campaign? It was a proposal for privatizing the welfare state. We will both have to blog about it some time.

James E. Miller writes:

@Gian

It all comes down to the substance of whatever contract you are referring to. Commercial contracts may be dissolved by one party if the others decides to, say, not pay whatver obligation they initially agreed to. They are not necessarily sacred, but are agreed to with the stipulation that legal action may be taken if one party doesn't hold up to their end of the bargain.

Think about bankrupcty. Whenever a company is unable to pay their debts (salaries, wages, benefits, etc.)immediately, they enter a restructuring process in the hopes of being able to do so eventually. Did they violate the working contract they had with employees? Techically yes. Was it done to ultimately fulfill contractual obligations? Yes.

The point I am trying to make is that though liberarians value contractual law, a fluid society such as ours requires that sometimes contracts be renegotiated due to constant changing circumstances. Contractual law doesn't need to be upheld by the State in order to be effective. The reputation of whoever engages in a contract is on the line as well. If one party is unable to fulfill their side of the deal, their image is tarnished which could lead to worse consequences in the future. This is more of an incentive to fulfill an obligation than paying a monetary fine. Think of the customer returns desk at Wal-Mart.

As for marriage, I believe getting a divorce costs money and still must be signed off on by both parties. In circumstances such as adultery and abuse where perhaps one party can initiate a divorce, the contract was violated by the actions of the other. Libertarians don't tend to concentrate that much on marriage considering it is mainly a tool used to gain specific privelages from the state today.

As for banning lewd images in public, liberarians are against it if it is enforced by the state. In the natural rights doctorine, everyone has the right to express themselves as long as they are not violating the rights of others. As far as I, and most libertarians, are concernced, I don't have the right to not be offended. Sure enough, if a community got together and made it known to all the members that displaying lewd pictures in public is unaccetable, that is fine as long as violence is not initiated to stop someone from doing so. By alienating certain members (refusing to serve them in local stores and refusing to acknowledge them in public) communities can uphold their own kind of common law without violating the rights of another.

David Gay writes:

Thanks for the reminder of Ed Clark and recalling that I was a fan in 1980 while a Visiting Associate Professor at Texas A&M in 1980-81. If one could accurately judge by the Clark stickers & posters (at least as I recall them), Clark would have had a two to one (or higher) vote in the Department of Economics....

Gian writes:

Well, political acts are those that are enforced by State so you have merely rephrased my point.

If you say that lewd images are not an aggression to families and children that any viable society needs to counter than you are not legislating for flesh-and-blood men but for angels perhaps.

James E. Miller writes:

"political acts are those that are enforced by state"
So I need the government to let me speak out against something such as the military intervention in Libya? It seems as if you are asserting that the government grants us our rights. If that is your view of society, that isn't a society I would like to live in. The Constitution (a document I am not an overall fan of) is written in a manner that forbids the federal government from interferring with the freedom of speech, press, etc. It doesn't grant us our rights, it prohibits the government from taking what were seen as unalienable rights to begin with.

In regards to aggression, I consider it a violation of property rights. The showing of lewd images does not not violate such a doctrine because on the other end, people still have the "right" to turn away and ignore it. Think Westboro. What constitutes as a lewd image is entirely subjective. Government laws should not be based on subjective values but on strict and concrete instances of aggression towards another. By trying to outlaw lewd images, you get into the tricky game of trying to pick through a seemingly never ending set of subjective,negative externalities.

All in all, in George Will's words, "sensitivity is overrated in society."

I am not trying to legislate for angels or flesh-and-blood men, but simply a society of individuals whose preferenes and attitudes vary from one to another.

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