Risk & Other Four-Letter Words

Wriston, Walter B.

1986

The Other Nine Amendments

Sometimes, in our day-to-day concerns with mundane problems, we fail to perceive accurately the changing nature of the world around us. It is a common failing, often with unsettling consequences, and all should take counsel from an incident recorded by Jean de Joinville, the French chronicler of the Crusades. He relates, in his semihistorical account, how a young crusader named Acephalous reached up and thoughtfully stroked his beard after being beheaded by a sword-swinging Saracen soldier. Those who fail to remember that freedom is indivisible may end up emulating Acephalous.

One of the reasons intellectual freedom has survived all these years is not only that it is an older concept than market freedom, but also because the faculties of thousands of colleges and universities are articulate defenders of their cause. It is a popular cause, as well it should be. The intellectual community, however, doesn't act much differently than any other sector of society when it comes under attack. When the late Senator McCarthy was at the height of his vituperative powers and seeing a Communist on every campus, there were depressingly few academics, such as Nathan Pusey, who stood up to do battle with him. In the end it was a tough lawyer from

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Boston who finally brought McCarthy down. The lawyer had the silent cheers but not much articulate support from the academic community, many of whom feared retribution from the senator's acidic tongue.

The business person has had no such guild to defend his right to free speech and free enterprise. Unlike the intellectual community, the business people of the world perceive themselves to be always under the threat of retaliation. Whether rightly or wrongly, they expect this retaliation to be aided and abetted by those who do not trust the free markets in goods even while they promote free markets in ideas. A railroad executive who publicly attacked the corrosive bureaucracy of the Interstate Commerce Commission, which was largely responsible for regulating our railroads into bankruptcy, feared that his next plea for a rate increase would be prejudged. A merchandiser who dares challenge some arbitrary rule promulgated by the Federal Trade Commission fears that bureaucracy will live to fight him another day. A banker who suggests that the regulatory attitudes on interstate banking are anti-consumer fears that retribution will be visited upon him by the authorities in Washington.

Many ardent defenders of freedom of speech argue that advertising copy for products and services is a fit subject for government regulation, lest the dumb citizen be bilked of his money by buying an inferior product. If inferior, doubtful, or even false opinions and ideas are put between the covers of a book, published in the newspapers, or flashed on television, the citizen no longer needs the protection of government regulation. It is an interesting piece of intellectual hairsplitting, based in part on our view of our own importance.

One thing that keeps us all going is that we view our means of earning our daily bread as making an important contribution to our world. Without bankers the economy would not function. Without bakers the world would starve. Without teachers there would be ignorance. Without politicians there would be anarchy. Make the list as long as you like and fill in

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the blanks with any known occupation. Raymond Aron, the late French political thinker, put it in this way:

A superficial explanation for their preference for free speech among intellectuals runs in terms of vertical interests . . . intellectuals are engaged in the pursuit of truth, while others are merely engaged in earning a livelihood. One follows a profession, usually a learned one, while the other follows a trade or a business.

On the other side of the fence, some businessmen speak scornfully of intellectuals who have never met a payroll.

The fact that I argue for a free market in goods and services, and that such a market would benefit my company, does not make my argument unsound. Self-interest and public policy can coincide and often do. No one attacks a newsman demanding freedom of the press just because the pursuit of that objective is what puts money in his pocket and dinner on his table. No one attacks a professor arguing for academic freedom, although its absence might cause the scholar to lose his job.

It is anachronistic that many who champion everyone's right to dissent and to demonstrate, without any government restraint whatsoever, are often the most outspoken advocates of eliminating freedom in other sectors.

If the proponents of central planning came right out and said that they wanted to create an economic police state, their cause would never get off the ground. So they resort to "doublespeak," the usual camouflage for the ultimate use of force against the individual. The Austrian economist Ludwig von Mises summed it up when he wrote:

All this talk, the state should do this or that, ultimately means the police should force consumers otherwise than they would behave spontaneously. In such proposals as let us raise farm prices, let us raise wage rates, let us lower profit . . . the us ultimately refers to the police.

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Yet, the authors of these projects protest that they are planning for freedom and industrial democracy.

Perhaps the oldest lesson of history is that an assault on one aspect of freedom is an attack on the whole, as the framers of the Constitution were well aware. To think that the bell which tolls for economic freedom does not toll for academic freedom, or for freedom of the press, is a delusion, and a dangerous one. The vigilance of the press, which helped smoke out some of the misdeeds of Watergate, should be equally focused on the economic non sequiturs coming from some of Washington's prominent citizens.

Attacks on the system that has produced our relative affluence, as well as our freedom, come in part from people seeking power and in part from a failure to understand the American experience. Pulitzer Prize historian Daniel Boorstin put it this way:

There is an increasing tendency . . . to blame the United States for lacking many of the ills which have characterized European history. Our lack of poverty is called materialism, our lack of political dogma is called aimlessness and confusion.

All proposals for a managed economy rest on an underestimation of the intelligence of the American people. They assume that you and I are just not smart enough to decide how to spend the money we earn. The decision must be made for us by a wise government. The intellectual arrogance of those who would substitute their judgment for that of the American people is amazing.

The clash between governmental economic planning and personal liberty is inevitable because, in the end, governmental allocation of either economic or intellectual resources requires the use of force. This power must be continuously increased to block opposition, to generate public acceptance, and to suppress doubts about the competence of the planner.

No plan that encompasses a continent with the infinite variety of America and containing thousands of parts can possibly be agreed to by experts let alone endorsed by a majority of the people. Even if by some miracle we could get all the fiscalists and monetarists to concur, the ultimate decisions would be much more political than economic. It would be impossible to get a majority vote in the Congress on every item in the economy that would have to be allocated, priced, and assigned priority. Since simultaneous political and economic agreement is a virtual impossibility, these decisions have to be delegated to the planner and, thus, can never represent the will of the majority. Such action, by definition, destroys the premise on which American democracy rests.

Those great principles of our government laid down by our Founding Fathers embody a vast distrust of centralized governmental power and an unswerving dedication to the proposition that government rests on the consent of the governed. Nevertheless, whenever we create the conditions that cause our system to appear to falter, whether through inflation or corruption, people who would destroy our liberty press forward with plans the founders rejected-old plans dressed in a new vocabulary. A good many years ago,John Randolph, the Virginia lawmaker, foresaw the danger and put it this way:

The people of this country, if ever they lose their liberties, will do it by sacrificing some great principle of government to temporary passion.

As always, passions abound in our land. When the heat rises, our memory of fundamentals seems to fade. We forget that the traditional optimism of the American people is an absolute essential to a democracy. We hear, from time to time, a rising chorus attacking the beneficent American economic system.

People who should know better waffle about human freedom and, in the moment of passion that John Randolph feared, have even suggested that some form of dictatorship

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might not be so bad after all. In the 1930s, Senator David Reed of Pennsylvania voiced it bluntly: "If this country ever needed a Mussolini, it needs one now." The senator had obviously not read an article written in 1932 by a former Italian journalist, who stated with great clarity:

The Fascist State has drawn into itself even the economic activities of the nation . . . its influence reaches every aspect of the national life . . . all the political, economic and spiritual forges of the nation.

The journalist's name was Mussolini, and he, you recall, went on to prove his point.

The admiration in the United States for the way Mussolini made the trains run on time was widespread. The in May 1933 reported that the atmosphere in Washington was "strangely reminiscent of Rome in the first weeks after the march of the Blackshirts, of Moscow at the beginning of the Five-Year Plan.... The new capital ... presupposes just such a highly centralized, all-inclusive government as is now in the making." In the 1930s it began to look more and more as if we would sacrifice some great principle and lose our liberty.

The resident philosopher in Washington in those days was Rexford Guy Tugwell, who held in contempt the consumers' ability to choose and wanted large state-controlled corporations along Fascist lines. It was all very simple and logical. He put it this way: "When industry is government and government is industry, the dual conflict deepest in our modern institutions will be abated." This old idea was revived in the mid-1970s under the new name "benchmark" corporations. In 1984, George Orwell told us, the concept would be set to music in a telescreen jingle that went: "Under the spreading chestnut tree, I sold you and you sold me."

The first major step that this nation took toward merging government and industry, and toward the total abandonment of the free market system, was the enactment of the legislation

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that created the National Recovery Administration. The NRA, with its famous Blue Eagle symbol, soon began grinding out hundreds of "codes" repealing economic freedom and arbitrarily fixing wages, prices, and hours.

In the temporary passion of that moment, many businessmen welcomed the idea of controls and were openly pleased with the idea of an escape from competition. "Codes" in the 1930s were the equivalent of the modern euphemism "guidelines." Those codes ultimately affected some twenty-two million workers. As with all schemes that require people to behave in a way they would not choose of their own free will, force eventually had to be used against the populace. Since the NRA codes required citizens to make decisions that were contrary to their own economic interests, penalties for noncompliance were severe. Tailors were arrested, indicted, convicted, and sentenced because their prices for pressing a pair of pants were a nickel below the relevant NRA code. Farmers were fined for planting wheat that they ate on their own farms. Barbers who charged less than the code rate for a shave and a haircut were subject to fines of up to five hundred dollars. Even the village handyman was prosecuted, since he did not fit the multiple wage and hour scale set up by the codes.

The complexity of the codes soon antagonized labor as well as management. The average factory worker, who had been earning twenty-five dollars a week, was cut back to eighteen dollars and sixty cents under NRA codes. As a result, strikes became a way of life, and auto workers, frustrated by red tape, began calling the NRA the National Run Around. When the textile code authority cut production in the mills in 1934, another great strike began in the South. Before the strike ended, the national guard was called out in seven states and scores of textile workers were killed and wounded. A few months later, NRA administrator General Hugh Johnson resigned in a storm of criticism-or, as he phrased it, "an ever increasing volley of dead cats."

As was the case with the rights of minorities in the 1950s and '60s, or with Watergate in the '70s, few had the courage

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to challenge the power of the state. A fairly small business, the Schechter Poultry Company, refused the NRA standards of "fitness" regulating the slaughter of chickens. When the case reached the Supreme Court, the NRA was unanimously declared unconstitutional. The Court wrote: "Such a delegation of powers is unknown to our law and it is utterly inconsistent with the constitutional prerogatives and duties of Congress."

After the decision was read, Justice Louis Brandeis said to one of President Roosevelt's legal aides, "I want you to go back and tell the President that we're not going to let the government centralize everything." That was a call to return to fundamental American principles.

What I am suggesting is that we must examine with great care and skepticism any proposition that government regulation of goods and services is any more a legitimate function of government now than it was then. It is predicated on the dogma that consumers lack the intelligence to make choices, that they are incapable of sorting out a good idea from a bad one without government help. We should question the logic that leads some people to conclude that a so-called truth-inadvertising law is good, but a truth-in-media law is bad. On a purely logical basis, it is hard to sustain the argument that the public is unable intelligently to choose among competing dog foods without government help, but it is competent to sort the true meaning of a senator's speech.

More and more educators feel the hand of government within their campuses, despite our long tradition of academic freedom. Academicians are learning the old lesson that if you take the king's shilling, you will do the king's bidding. If you accept the proposition that government intervention in the dissemination of ideas is bad, which is one I strongly hold, you must then review in your own mind whether it makes any sense to argue for governmental intervention in the individual's choices among goods and services. Whatever conclusion you come to on this proposition, you should not fool yourself that economics and politics live on separate islands.

Those who would substitute the judgment of the bureaucrat

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for the judgment of the consumer inevitably forget that the free market for goods and the free market for ideas stem from the same root-freedom. They are inseparable. It was no accident that intellectual freedom disappeared under the Nazis and did not reappear until the free market system was reestablished in West Germany after the war. Russia and other Communist countries that control their economies also control their press and their professors. The road to serfdom is paved with the demands for governments to take over more and more economic activity.

Why the attitude is so persistent that business should not share freedom is somewhat of a mystery. The late Chet Huntley, a respected newscaster, wrote after his retirement:

One general characteristic of the American press, which seems inexplicable, is the basic antipathy toward business and industry, which I believe exists in our journalism.

Huntley suggested that a possible reason for this perceived antipathy is the assumption by the press that business is more concerned with making money than providing the people with what they want. They forget that without money people cannot buy, and if people do not buy, there is no business or products or jobs or tax revenues. The tendency to deplore profits stems from the medieval idea that one person's profit is another person's loss. There is no question that there are shoddy practices in every profession and that our economy produces goods that are often vulgar or poorly made. The beauty of the system is that if the consumer doesn't want to buy certain goods, the businesses that produce them will either shift to new products or they will fail.

The critics of business labor under the illusion that they can draft a law to protect every right, defend every privilege, and anticipate every threat. When regulation fails, as it inevitably does, they do not repeal the laws but amend them into infinite complexity until the purpose of the original law is lost. The use

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of the regulatory reflex merely feeds an insatiable appetite for power on the part of an expanding government bureaucracy. We have now reached the point where one-sixth of the American labor force works for the government, and government expenditures are beyond 40 percent of the gross national product. Even some of the regulators are denouncing other regulators as barriers to better productivity.

The hand of government touches every aspect of human productivity. It is not only wasteful, but serves to destroy incentive and to discourage ingenuity. It is ironic that a society which looks to industry for the solution of many of its most pressing problems inhibits the ability of industry to respond. While present technology does not permit us to have surgically clean air and plentiful electricity at less cost at the same time, there is no reason to believe that future technology will not provide those benefits. The essential ingredient is freedom to act and an understanding that individual liberty is not only precious but efficient.

The time has come for businessmen to do two things -- restudy the philosophy of free enterprise and recognize that they have the same rights under the First Amendment as any other group in our society.

The businessman, like the professor and the commentator, has the right under the First Amendment to express his views to the public and to his elected representatives. He is not a second-class citizen. Running a successful business enterprise calls for ethical men with the wisdom and patience to make prudent and responsible decisions in a highly competitive and fast-changing market.

There are overwhelming reasons for kinship, instead of hostility, between the free market for intellectual life and the free market for economic life. There is a similarity of interests: Both call for voluntary effort. Neither fraud nor coercion is within the ethics of the market system, since the competition of rivals provides alternatives to buyer and seller. So, too, free thought in our society is preserved by open competition among scholars. Just as thought control is the great enemy of

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freedom of inquiry in both the press and academia, economic controls are the great enemy of the entrepreneurial spirit.

Rediscovering the indivisibility of political and economic freedom will take time in a society that has become so accustomed to over-reliance on government. The intellectual bias against the market is strongly entrenched, and there are some who always find a platform to continue to feed this bias out of hostility or a complete misunderstanding of the market function.

One of our least admired Presidents-Martin Van Buren -was characterized as one who approached power with muffled oars. Those who depend for existence on the First Amendment should sensitize their ears to pick up the sound of muffled oars seeking to approach power though a planned economy. That suggestion is in accordance with the sound liberal doctrine expressed by Woodrow Wilson: "The history of liberty is a history of limitations of governmental power, not the increase of it."

We should never forget that American life is a unique amalgam of political, religious, and economic pragmatism. Each sector contributes to, and indeed forms, part of the other sectors. An attack on one sector undermines the others. The lesson of history is that everything is connected to everything else.

The American press would not tolerate for one moment an attempt by the government to suppress news of riots or political demonstrations on the grounds that it wants to "ensure domestic tranquillity." The press knows a threat to the First Amendment when it sees one. However, when the government assumed the power to order what could be paid for our labor and what could be charged for products, on the grounds of "insuring price stability," the only question asked by most of the press was "Will it work?" That was the wrong question. The right question was "How did it affect individual liberty?" Is not one of the most basic human rights the right of a person to sell his or her labor at what the market will bring?

What really bothers me about price and wage controls is not only that they do not work, but the fact that 230 million

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fellow Americans have a tradition of inventing everything from the long rifle to the computer chip. They can figure out eighty ways around anything. It's destructive to our society for the executive branch to promulgate a law without benefit of legislative process, and then to say if you do not obey my law, I will penalize you by sending in the IRS, blocking government contracts, or whatever. If a definition of an imperial President is wanted, I can't think of anything more imperial. Once this process starts, disrespect for the law is built in over time.

Whatever the government-any government-decides to call its economic control methods does not really matter. Whether it's jawboning, incomes policy, voluntary guidelines, mandatory ceilings, or an economic police state, it means that the government threatens to hit you harder later on if you do not behave after it hits you the first time. History demonstrates that once a government picks up that club, it is very hard to put that club down again.

There are ten amendments in the Bill of Rights, although sometimes it seems that the press is so busy defending the first one that it is hard to get equal time for the other nine.

Let me recall one of them-the Ninth Amendment which few people ever read anymore, let alone defend. It says:

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

For Americans, price controls and censorship of the press came into the world together. Both were expedients justified at the outset of World War II only by the overriding need for national survival. But those were simpler times. We began to experience events like Korea and Vietnam, which may have felt like war to soldiers but were officially labeled something else. And so the justification for expanding government controls became not just war, but "war or national emergency," and sometimes merely "national security."

The press has been vigilant in rebuffing the government's

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efforts to impose the equivalent of wartime censorship under the flag of anything short of war. It stands up for the First Amendment, but it often remains silent about, or sometimes even greets with approval, the steady infringement of virtually every right that does not involve free speech. Justice Arthur Goldberg, in his opinion in in 1965, put it this way:

The Ninth Amendment to the Constitution may be regarded by some as a recent discovery and may be forgotten by others, but since 1791 it has been a basic part of the Constitution which we are sworn to uphold.

One of the great unreported stories of the past thirty years, in my view, is the steady erosion of individual rights that is turning us into a different kind of country. If you put a floor under wages and a ceiling over prices, a free man cannot long stand erect.

In talking about what "the government" is doing, it would be more accurate to speak of what we are doing to ourselves. The government adopts monetary policies and fiscal policies which produce inflation in response to popular demand. Since there is no "Truth in Politics" law, we must rely on the vigilance of the press to reveal the true costs of these policies. When we come to understand what is happening, I do not believe Americans are ready to sell their birthright of individual freedom. But someone has to make it clear that the collision course between government economic controls and personal liberty is inevitable because, in the end, government allocation of economic resources required force. Someone has to point out-and keep pointing out-that every time the tide recedes a little after one of those floods of "emergency" regulations, there is a little less sand left on the beach for free people to stand on.

If it finally gets down to a single grain, even though that grain is labeled "free speech and the First Amendment," you'll find that it isn't worth much.