It bears noting, given the current implementation of recommendations first made in Academia in Anarchy, that the book’s analysis was wrong. The crisis on campus did not come from perverse incentives and outside agitators’ exploitation of them. At stake were real issues, about which millions of students felt deeply: racial inequality, a war in Vietnam so misguided that the Army had all but collapsed from soldier dissent, and the students’ own lack of voice in colleges, universities, and national politics. While hundreds of thousands were being drafted to kill and perhaps die in a war they opposed, they also could not vote. Not until 1971, with the Twenty-Sixth Amendment to the Constitution, proposed and ratified as a result of this tumult, could those between eighteen and twenty-one vote in national elections.15 What calmed the campuses was not the violent suppression and top-down transformation Academia in Anarchy urged, but the end of the draft and campus reform that treated students as stakeholders with ideas that might improve the quality of education.
It also bears noting that, for a thinker who professed devotion to liberty, Buchanan showed a marked enthusiasm for the armed suppression of rebellion, both at home and abroad. Indeed, he never questioned the rightness of American military policy in Vietnam—except to say that it should be more aggressive.16 His reductionist analysis turned young Americans with a passion to live up to their nation’s stated ideals into menaces who misrepresented their purposes for personal gain and the pure pleasure of disruption. Viewing the protesters, white and black, as spoiled work shirkers who lived off illegitimate extractions from taxpayers, he found it easy to call for the use of clubs to subdue them.
With campus upheavals attracting attention worldwide, this book garnered wider notice than Buchanan’s previous publications. Not only the conservative press but also a few newspapers with national readerships alerted readers to it, among them the New York Times, the Los Angeles Times, and the London-based Guardian. British, French, German, and Australian academic journals, across disciplines, reviewed it, often commenting on the creative application of economic analysis, even if they faulted its lack of empirical support and palpable political agenda.17
But critics could say what they would. For Buchanan, the upshot of all the commentary was that his audience was broadening. He was changing the conversation—not with the general public or the enemy, granted, but with the like-minded, who would always be the audience that really mattered to him.
• • •
It was only a matter of time before the lifelong southerner fled UCLA for the region where he felt at home. It would fall to his former student Charles Goetz to entice his mentor to an institution that, back in his haughty Charlottesville days, Buchanan had scorned as the “state’s ‘cow college.’” Situated in the small town of Blacksburg, nearly an hour from the closest city, Roanoke, Virginia Polytechnic Institute was unquestionably a second-tier state school. But that also made its administration ecstatic to recruit a scholar of Buchanan’s stature and willing to give free rein to his proposed Center for Study of Public Choice. The school had only recently made the transition to a research university. His grateful employers granted his center “a mansion, formerly the university president’s residence, on a hill overlooking the campus.” Buchanan found there the unchecked liberty and lavish institutional regard he craved. Reassembling a team of like-minded men, attended to by “Mama Betty” and able to sport their Adam Smith ties in peace, and with generous support from right-wing foundations, he and his colleagues set to work. Sharing the same assumptions, they practiced “no-holds-barred combat” in developing their variant of political economy—while, again, keeping out those who questioned their premises.18
The orderly, “cloistered” community became, said an Australian who joined the group, “the Mecca for aspiring young public choice and public economics scholars from across the world.”19 Buchanan and his team remained at Virginia Tech, as it is now known, for more than a decade. There, these libertarian radicals of the right deepened their ties to right-wing businessmen and foundations who were looking for ideas to counter the expansion of government from the New Deal and the Great Society, and whose own numbers expanded in these years. It was while Buchanan was at Blacksburg that he first got to know Charles Koch, opening a relationship of mutually beneficial exchange, as the economist might say, that reached fruition a quarter century later.
It helped that the president of Virginia Tech, T. Marshall Hahn Jr., was a kindred spirit to Buchanan and a corporate man himself. (Indeed, he would soon become a director of the largest paper corporation in the world, Georgia-Pacific, later purchased, ironically—and apparently coincidentally—by Koch Industries.) Also helpful was that Virginia’s brief flirtation with liberal Republicanism was ending. The state’s corporate elite was regrouping, with firm dominance now in both parties and the state General Assembly.20
Backed by such partners as the Virginia Bankers Association, Buchanan and his team held periodic briefings to bring “businessmen, scholars, and policy-makers” together for discussion of “crucial economic problems facing the people of Virginia.” The new center thus resumed the base building with the state’s corporate world that Buchanan’s earlier operation at UVA had practiced. It even created a new subdivision called the Center for Economic Education, a prototype for future outreach efforts funded by Charles Koch and aimed at Washington, D.C., policymakers. Each wing would carry the authority of association with scholarly research in a public university, yet operate free of control by or accountability to that university as its operatives joined with corporate partners to promote their shared ideas to policymakers.21
In May of Buchanan’s first year at Virginia Tech, G. Warren Nutter, his old colleague and now a member of the defense department, came to speak just after four students had been killed by National Guardsmen at Kent State University while protesting the U.S. bombardment of Cambodia and Laos. As Nutter delivered the Nixon administration line on the war, eight students, each with one letter on his or her shirt, stood collectively “to spell out a vulgar word,” in the description of the shamed college president, one that began with BULL. The action staggered Buchanan, and put him into a rage.22
The following year, after some students broke windows and set fire to a building, Buchanan advised President Hahn not to pay much attention to the university’s lawyers but instead to engage in “strategic countermoves.” Hahn should punish the protest leaders and their supporters; they might not have personally violated any rules, but they had “stirred up” the campus and should pay for that. Angry taxpayers and their representatives in the General Assembly, upon whom Hahn relied for funding, would likely back him—especially if “the federal courts” sided with the dismissed students. Buchanan himself had long disdained the federal judiciary, he made clear, and he imagined the backers whose support Hahn needed did, too.23
The self-styled libertarian went further in outlining “a counterstrategy,” one he honed and shared with powerful donors, think tank staff, and like-minded public officials over the ensuing decades, for it had application far beyond the campus. The president should play “a simple tit-for-tat game” with the “undesirables.” The students who caused trouble should “be subjected to explicit harassment by the administration,” a kind of hounding “always within rules but explicitly designed to keep them busy and off balance.” There should also be a new “reward-punishment structure for faculty.” Sociology, literature, history, and all such disciplines that encouraged critical thinking: Let them reap what they sowed, he was suggesting. Let them feel some pain. It was time to alter the incentive structures. “This is rough business, and it violates sacrosanct precepts for ‘academic freedom.’ But,” Buchanan intoned, “this is a rough world.”24
• • •
Hahn, wisely, did not follow Buchanan’s advice. But in his vocal stand against the campus turmoil, Buchanan made contacts with others who shared his indignation and appreciated his recommendations. They included m
en with substantial wealth to invest. Those applauding Buchanan’s call for harsh measures and the clamping shut of tax coffers to troublesome institutions included the vice president of the Federal Reserve Bank of Richmond (a past student from the 1950s), a top corporate philanthropy official at T. Mellon & Sons, and the president of the Scaife Family Charitable Trusts, with its vast endowment from the oil-and-banking heir Richard Mellon Scaife. These men of means shared his fury over the students’ conduct—and over administrators and courts they viewed as enabling protest by insufficient repression.25
Buchanan so impressed Richard Larry, the economics specialist at the Scaife Family Charitable Trusts, then emerging as a major funder on the right, that Larry awarded a $240,000 multiyear grant (about $1.5 million in 2016 dollars) to support public choice scholarship and outreach at the economist’s new Virginia Tech center. “Our research changes the way people think about the way governments work,” Buchanan explained in applying for funds.26
The favorable recognition that the Virginia school received in a 1971 journal article by two public choice scholars, Mancur Olson and Christopher K. Clague, helped in fund-raising. The article, which Buchanan shared with prospective funders, highlighted the irony that radical right and radical left economists now seemed to share a “skepticism about bureaucracy, government, and majority rule” that might prove transformative.27
Delighted to find allies with deep pockets, Buchanan also reached out to the “libertarian-conservative” Cornell Alumni Committee for Balanced Education. Its members were fighting perceived liberal dominance among arts and sciences faculty by marshaling pressure to hire faculty of a Mont Pelerin Society bent. From the outraged ranks of the Ithaca institution’s alumni came one especially consequential contact: John M. Olin. After seeing Cornell administrators cower, in his view, before armed black activists, Olin decided to donate a goodly share of his vast fortune to subsidizing the hiring of pro-capitalist faculty on U.S. campuses.28
In the meantime, assigned to speak about education at the Munich meeting of the Mont Pelerin Society, Buchanan minced no words. Modern society, with its widespread affluence, was showing itself “willing to allow for the existence of parasites,” freeloaders who took from it without adding value. “This is essentially what the student class has already become,” he told the scholars, businessmen, and funders. “If we do not like what we see,” the “simple solution” was clear: “close off the parasitic option.”29 Before the decade was out, he would be recommending that for nearly all who looked to government for assistance with one thing or another.
PART II
IDEAS IN ACTION
CHAPTER 8
LARGE THINGS CAN START FROM SMALL BEGINNINGS
On a warm Friday evening in Richmond, Virginia, in late September 1973, James Buchanan took the podium to deliver the opening banquet address. He was speaking to the founders of the International Atlantic Economic Society, at its inaugural meeting. It was to be a scholarly society, but one that welcomed economists from business and government, too, and took interest in how economic thought could be applied to public challenges, ranging from the problems of inner cities to tax reform and energy and ecology. Styling himself as “a social philosopher” and not simply an economist, Buchanan used the opportunity to outline a vision and a plan he had been forming in his head and setting to work on with a small circle of like-minded and trusted men and funding from the Scaife Foundation. This would be the first time he discussed it in public.1
Earlier that year, he had privately reached an important conclusion. “The Watergate mess” had set the political right back badly. President Nixon had promised “budget restriction” but was too wounded now to deliver. And those who believed in true economic liberty remained a tiny, embattled minority in the academy and scarcely audible beyond it. The cause was in trouble. Even tax anger was backfiring. Lower- and middle-income taxpayers had begun to bridle at how much they were paying, true, but instead of pointing fingers at a federal government that kept spending, they were calling for the wealthy and corporations to pay more, to relieve the “pocketbook squeeze” on those with less income. The demand for “tax justice,” as this campaign became known, proved popular, scoring successes at the local and state levels and inducing alarm on the right.2
The time was right for a more ambitious approach, Buchanan believed. Scattered thinkers, even if they were grouped in friendly institutions like Virginia Tech, the University of Chicago, and UCLA, were not going to stimulate a counterrevolution. The more he thought about what the new approach should be, the more he felt that the answer lay in organization, in connecting like thinkers and linking them to funders who could help them create enough surrogates to spread the message across the country from varied locations, yet as with one voice. The reality had to be faced—and might even prove useful: most citizens knew little about government. Gordon Tullock called it “rational ignorance”: the individual voter had scant effect on outcomes, so why bother to follow politics closely? Busy with other matters, “they devote relatively little time and effort in acquiring information about social policy alternatives”; rather, “they accept what they are told” by news sources they trust. And so it was incumbent on the cause to change what they were hearing and from whom. His vision was to start by converting people of power in domains that mattered: politics, business, the media, and the courts.3
This was why Buchanan had invited a group of close associates to his cabin in the country that March to test out his new plan. “If a history of the Third Century movement is ever written, it can talk about origins in a log cabin deep in the Virginia mountains,” he forecast with glee in convening the gathering. “A roaring fire will add a bit of conspiratorial flavor” to the conclave of a small circle with a big plan for the future. It included his longtime ally Tullock; his Academia in Anarchy coauthor, Nicos Devletoglou; his fellow Mont Pelerin Society economist J. Clayburn La Force Jr., former department chair at UCLA; and the department chair at Virginia Tech who had brought in Buchanan’s team, Wilson E. Schmidt, now President Nixon’s deputy assistant secretary of the U.S. Treasury. Schmidt had been seeking the help of like-minded economists to prevent higher taxes from becoming the answer to the emerging “fiscal crisis.”4
What the cause needed, Buchanan told the men he brought together, was to “create, support, and activate an effective counterintelligentsia” to begin to transform “the way people think about government.” A kind of bottleneck existed in which liberal intellectuals influenced the media, which in turn influenced the “elected political leaders,” thwarting the men’s shared cause. The center-left all but owned the university, and its “intellectual establishment” effectively indoctrinated political actors in both parties. Because of this, any attempt at fundamental change would be “frustrated and subverted.” It was essential, therefore, to pull together the like-minded and seed a new crop of surrogates who could be “indoctrinated” with intellectually compelling arguments and then “mobilized, organized, and directed” to spread them in a strategic manner. If the job was done right, ultimately, in time, this new “vast network of political power will be the Establishment.”5
It sounded like the plan he had first proposed to President Darden all those years ago—but on a far grander scale. This was a multitiered vision no longer focused on developing an academic school of thought. He had created that, after all. The new stage was “Practical Strategy.” Buchanan made one more important point to his invited guests. The key thing moving forward, he stressed, was that “conspiratorial secrecy is at all times essential.”6
Now, tonight, in his Richmond banquet address, he would make the dream public (but not the stealth organizing to realize it). “The issue that the Third Century faces,” he announced, was how to put manacles on what he referred to as Leviathan. He spelled out what he saw as the world-historic peril of government growth. The Civil War had ended the possibility that states might use the threat of exit to check f
ederal action. The concept of states’ rights had also lost its power. As a result, “since the Great Depression, we have witnessed a continuing and accelerating growth in the American Leviathan,” evident in the enlarged public sector. “The monster” was “on a rampage.”7
To give his listeners hope, the economist scanned the news hungrily for signs of popular malaise among taxpayers “against the oppression” of being forced, by the government, to “support unproductive and essentially parasitic members of society.”8 He enlisted the racially coded stereotypes commonly used at the time to decry allegedly freeloading black welfare recipients to tarnish a much broader swath of society that would include, say, laid-off steelworkers granted unemployment compensation, students provided low-cost tuition at state colleges and universities, and retirees who received more from Social Security and Medicare than they had paid in.9
Jim Buchanan continued to think of himself as a populist in a fight against the eastern establishment, but his way of seeing the world upended that of the movement whose voters had elected his grandfather in 1890. The original Populists had extolled the ordinary men and women who produced needed goods by the sweat of their brows and reviled as “parasites” the mortgage bankers, furnishing merchants, and robber barons who lived in luxury by exploiting them. The People’s Party called on the federal government to intervene, as the only conceivable counterweight to the vast corporate power altering their society. Because that government was representative of the people (or could be made so, through organizing), they saw it as wholly legitimate to endow Congress with new powers that the people believed it needed to ensure justice in a land changed by concentrated corporate power.10
By contrast, the twentieth-century libertarian directed hostility toward college students, public employees, recipients of any kind of government assistance, and liberal intellectuals. His intellectual lineage went back to such bitter establishment opponents of Populism as the social Darwinists Herbert Spencer and William Graham Sumner. The battle between “the oppressed and their oppressors,” as one People’s Party publication had termed it in 1892, was redefined in his milieu: “the working masses who produce” became businessmen, and “the favored parasites who prey and fatten on the toil of others” became those who gained anything from government without paying proportional income taxes. “The mighty struggle” became one to hamstring the people who refused to stop making claims on government.11
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