Democracy in Chains
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In 1985, the ever enterprising university president George W. Johnson, no doubt having heard and understood Buchanan’s oft-repeated message, acquired a tiny, floundering law school housed in what had been a department store, and invited Jim Buchanan and Gordon Tullock to advise him on how to use the purchase to “make a splash.” The public choice team told Johnson that Henry G. Manne, Buchanan’s old friend and a Koch grantee whose career at Emory had just capsized owing to conduct similar to Buchanan’s at Virginia Tech, was a “hot property” to serve as dean of the law school. “They had a hidden agenda; they were going to find conservatives for him,” Manne recounted.54
Johnson was happy to go along, “because he had heavy financial support from Republican interests in Northern Virginia” and he needed to please the right-leaning General Assembly to keep George Mason growing. The “extremely conservative” economics department “creates comfortable relationships,” noted the Washington Post, “with the legislature and the businesses to which universities look for support.” Manne accepted the position on the condition that he would be granted a free hand to operate the school his way. “Act fast,” the president warned in regard to how he should deal with the existing faculty who came along with the school, “because by next April they’ll be organized.” Within two weeks Manne had fired every untenured professor and proposed buyouts to those he could not summarily send packing. “There weren’t enough of them left” to resist once they recovered from the shock, he gloated. Like Buchanan, Manne rejected the idea of open searches for the best talent, in favor of hiring kindred thinkers, all white men who felt “underappreciated” at other schools.55 “At George Mason,” he could soon advertise to prospective right-wing donors, “the entire curriculum is permeated with a distinctive intellectual flavor, emphasized and developed by almost every professor.”56
For example, Manne’s law school would stake out a position on the side of corporations against “consumerism and environmentalism,” two causes that had grown in popularity and influence since the 1970s. His faculty would advocate for the superiority of “unregulated corporate capitalism” and assert, as Manne himself argued in print, that companies needed liberation from “the distortions introduced by government intervention.”57 That included full freedom for Wall Street financial firms from government regulation.
Serendipity brought another gift to this quiet base-building project in the Reagan era: in October 1986, James Buchanan was awarded the Nobel Prize in Economic Sciences for his “contributions to the theory of political decision-making and public economics.” The Swedish Academy called him “the leading researcher in the field of what has come to be known as ‘public choice theory.’” Back when he left Charlottesville in fury and disgrace, the moment would have been unimaginable. His persistence had paid off handsomely.58
The prize was “a vindication of the outsider,” Buchanan would write, someone “far outside the mainstream”—the first southerner to have won in economic science, and also the first to have “worked almost exclusively at southern universities.” No other Nobel in economics, he pronounced, sounding almost presidential, “gave hope and encouragement to more people.” He recited his story with glee. “Here was Jim Buchanan, a country boy from Middle Tennessee, educated in rural public schools and a local public teachers college, who is not associated with an establishment university, who has never shared the academically fashionable soft left ideology, who has worked in totally unorthodox subject matter with very old-fashioned tools of analysis, chosen by a distinguished and respected Swedish committee.”59
The Stockholm judges recognized Buchanan for his foundational public choice work, mentioning particularly The Calculus of Consent (and, by neglect of his coauthor, Gordon Tullock, permanently complicating that relationship) and two of his books on public finance, as well as his “visionary approach” in more recent years to constitutional “systems of rules.” Traditional economic theory illuminated the decisions of producers and consumers in marketplace settings, the Nobel citation noted, but made no effort to explain the behavior of political actors. Buchanan’s attention to political actors’ quests for gains through exchange (of votes, benefits, or coalition partners rather than profits, per se) directed new attention to “‘the rules of the game,’ i.e., the constitution in a broad sense.” These rules, far more than actors’ stated inclinations, “determined” the results of political processes, for different types of constitutions could be predicted to produce different results. What public choice revealed, in the end, was the fallacy of assuming that market failure could be remedied through the political process, for there, too, people “behave[d] selfishly.”60
“This type of analysis has become universal in recent years,” the judges observed, with more aspiration than accuracy. (Indeed, the all-important judge Assar Lindbeck, a professor at Stockholm University, was himself a devotee of Buchanan’s diagnosis of what Lindbeck had called “Vote Purchasing Democracy” a few years earlier. Under his leadership, reports a study of the economic prize’s history, the committee “veered to the right in its awards.”) Its members also commended Buchanan’s related philosophical case for “the principle of unanimity” in constitutional rules choice and reform to make it so that “the political process” ceases to be “a means for redistributing resources.” Buchanan’s “foremost achievement,” said the judges, “is that he has consistently and tenaciously emphasized the significance of fundamental rules.”61
In a final, fitting coincidence, the day he received the Nobel Prize, the federal government temporarily shut down, “having spent all its money,” in the gleeful words of one Virginia editor.62
Back home in the United States, Buchanan’s ideas were producing “a quiet revolution in politico-economic thinking,” observed the New York Times—“quiet” because their “public recognition quotient is near zero.”63 Still, signs of that unobtrusive intellectual revolution abounded for those who knew how to read them. As the think tanks with which Buchanan worked were attracting more media attention, some converts in the Reagan administration were setting out to change the incentives of public life over the long term.
The cause would be helped along, too, by the fact that popular trust in government was dropping precipitously. The fall was due above all to the conduct of elected officials, from Lyndon Johnson’s lying about the war in Vietnam to Richard Nixon’s Watergate crimes. Buchanan believed his school’s work had contributed, too.64 It had long urged seeing political actors as self-aggrandizing individuals rather than the civic-minded altruists they portrayed themselves as. “What we did was take the bar-room approach to politics, and bring it out in the open,” as Tullock later put it with his usual bluntness, by presuming that politicians were “crooks,” voters were “selfish,” and “bureaucrats” were “incompetent.” With these portrayals, the libertarian mavericks had aimed to show that government action would cause worse trouble than the problems it was called on to cure.65
Buchanan’s Nobel advanced the cause as nothing else had to that point, invigorating his allies and quickening their ambitions. Since founding the Thomas Jefferson Center in 1956, Buchanan had worked with nearly every libertarian think tank, publication, and training endeavor, among them the Cato Institute, the Independent Institute, the Center for Libertarian Studies, and the Earhart Foundation—as well as their counterparts abroad, including the Institute of Economic Affairs and the Adam Smith Institute in England, the Fraser Institute in Canada, and the Centro de Estudios Públicos in Chile. For all the money flowing in, the libertarian “movement” was small enough that those there from the beginning—mainly academics and idea-oriented businessmen—were well acquainted. “I think I know personally each and every member of the board that is listed in your letter,” Buchanan thus told the Center for the Defense of Free Enterprise in 1980. He spoke at conferences, served on advisory boards, and helped select fellows for career investment from libertarian funders.66 Two leading libertarian think
tanks organized large national black-tie dinners to honor him. “All my friends,” Buchanan joked, seemed to be tripping over themselves in competition to host such events.67
• • •
Was it the high energy he saw coming out of Buchanan’s team that led Charles Koch to move the institution nearest to his heart, the Institute for Humane Studies, from California to George Mason at mid-decade? Did his earlier decision to give up on the Libertarian Party as a hopeless cause make him more receptive to other routes forward? We don’t know.
We do know that the university administration invited the move and promised the institute’s staff carte blanche. And that the institute’s president, Leonard P. Liggio, a loyal member of the cadre himself, was thrilled to be relocating to a community with “nearly twenty faculty members closely associated with our work,” Buchanan the towering eminence among them. “The imprimatur of George Mason University,” he exulted, “alone will aid our program.” And, he happily reported to Buchanan, a “crucial point” in the negotiations was that “we will retain complete program and financial autonomy,” while “our post doctoral programs will have full and equal standing” with other GMU programs. He foresaw “crop after crop” of advocates.68
Charles Koch, Liggio’s boss, became a more regular campus visitor after the IHS moved to George Mason. And more and more he looked to Buchanan and his team to teach and inspire the participants in the institute’s annual summer training programs for “intellectuals and scholars.” Within a decade, a listing of IHS alumni with faculty positions ran to ten pages; its growing staff would offer generous grants to graduate students to bring them into the fold.69
The wider circles of the right were eager to get closer to Buchanan as well. National Review marveled at the “sea change” Buchanan’s work had produced in economists’ thinking about government, making reliance on it “seem not nearly so credible as in the Fifties or Sixties.” The Virginia school’s was “a more fundamental critique than the usual free-market economist’s,” it informed novice readers. “By casting doubt on whether [government] can” do what citizens look to it for, “Buchanan challenges the idea that it ought to try.”70 President Reagan commended the Virginia school’s founder on his “wide influence inside and outside of government” on behalf of “economic freedom.”71
So it was not surprising that before long, the head of the Institute for Humane Studies was writing to invite Buchanan to speak on “Constitutional Economics” for the national conference of a recently launched organization that over the next few decades would do more than any other to transform the nation’s judiciary and law schools. Liggio reported that “IHS has been working with the Federalist Society for several years”—that is, since roughly its creation with inspiration from Ed Meese.72
No wonder some insiders began to speak of the “Kochtopus”: there were so many arms that when they all got to waving at once, it was hard to notice the human body behind them, the man whose checks kept everything moving. For his part, Charles Koch came to see, perhaps in the light of all the Nobel attention and talk of a new economic constitution for America, that Buchanan possessed the key he had been searching for over so many years. Public choice thought could guide the strategy he needed to get what he wanted. It was time to go from theory to practice in a way that even Koch-supported operatives had never been asked to do before.
CHAPTER 12
THE KIND OF FORCE THAT PROPELLED COLUMBUS
By the mid-1990s, a colleague reported, Charles Koch had grown increasingly frustrated with the lack of progress being made in furtherance of the cause.1 Among trusted allies, he revealed his weariness with the sometimes cultlike libertarian movement, “ossified by purity tests” and plagued as it was by “personality cults.”2 Nor was he all that impressed with the elected officials to whom he was more and more looking for help. The cause’s most recent near miss—the “Contract with America,” with its marquee pledge to amend the U.S. Constitution to require a balanced budget—might have caused someone with a less steely determination to give up. But Koch just kept on looking, firm in the belief that somewhere out there was the set of ideas that could break through the impasse.3 That search would lead him back to James Buchanan’s front door, which the scholar opened wide, not knowing that after doing so he would find himself exiting out of the back.
The Contract with America was not a public choice document, per se, although the man most responsible for its creation, Richard “Dick” Armey, could not have been a more loyal, dedicated, or hardworking convert to the cause. A believer in public choice theory, he had earlier been chair of the economics department at North Texas State (now the University of North Texas). “The market’s rational, the government’s dumb” was “Armey’s Axiom No. 1,” which he repeated constantly, as if that settled the matter. When the university grew too “liberal and politically correct” for his comfort, a right-wing oilman on the board of regents persuaded him to run for Congress on the Republican ticket in 1984. Armey brought a zealot’s determination to the fight for “drastic reforms,” including abolishing the minimum wage and ending Social Security. Once elected to the House of Representatives, he turned to the Cato Institute for help in staffing his congressional office. His first decade had gone well.4
With his trademark cowboy boots and Texas swagger, and a readiness to roll up his sleeves when needed to do the hard work of shepherding stray Republicans back into line, he quickly became something of a hero among his fellow GOP congressmen. When they learned that Armey was the true intellectual and strategic force behind one of the most daring forays in modern U.S. politics, every one of the 367 Republican candidates for the House and nearly all the incumbents got on board. On a late September afternoon, nearly two hundred staged a signing of the contract before news cameras at the Capitol, one by one publicly affirming their commitment to the agenda.5
The signing occurred six weeks before the 1994 elections, midway through President Bill Clinton’s first term in office. The signers promised that if the American people voted Republican, giving them the majority of seats, their new majority would bring up every item of the contract for a vote within the first one hundred days of the 104th Congress. They would radically “transform the way Congress works.” The candidates pledged, above all, to back ten legislative bills that together would answer the American people’s deep-seated desire for change.6
Six weeks later, on Election Night, Republicans swept both houses of Congress in what one political historian called “the most impressive off-year comeback in modern times.” Talk filled the press and the airwaves of an impending “Republican Revolution” to complete what Ronald Reagan had begun. White southerners—and those who identified with the South’s traditions, even if born elsewhere—now so dominated the GOP delegation that one of the first acts of the new leadership was to hang a portrait of Virginia’s old warhorse Howard W. Smith in chamber where the Rules Committee met. Smith had been Harry Byrd’s alter ego in the U.S. House of Representatives. He had led the fight against the Wagner Act, “bottled up” the Fair Labor Standards Act, helped defeat President Harry Truman’s push for national health care, and tried to sink the Civil Rights Act. As chairman of the Rules Committee, Smith became a legendary tactician of the manipulation of legislative rules to prevent the majority from achieving its will. Not just Democrats, the new leadership was saying, but their own party’s “moderates got too much deference.”7
In the weeks and months that followed, the media flocked to Georgia’s Newt Gingrich, who was coauthor of the contract and now, as a result of its success, Speaker of the House. But although he became the visible voice and limelight seeker of the cause, the real work of getting the agenda passed, in particular the balanced budget amendment so important to the libertarians, was being done by Armey. 8
Armey was in some ways like Koch, in that he was very systematic in pursuit of his goals as the cause’s “legislative tactician,” in the words of one
seasoned observer, not simply its chief ideologue. Armey studied the fine print of the House’s complex rules in order to determine with precision how best to move the items in the contract through the knotty legislative process. To shore up doubters, he walked the corridors daily, answering questions and, where necessary, using his new power as House majority leader to enforce discipline. Anything less than unity would have doomed the plan, for, as team member John Kasich of Ohio noted, their budget proposals would mean cuts in Medicare “unlike any this town has ever seen before.” Another team member boasted that his subcommittee was so tight, “we could kill motherhood tomorrow if it was necessary.”9
Because every vote counted, Armey urged that a school prayer amendment be added to the contract to keep the Christian Coalition on board. He lost on that and some other tactical suggestions, in a pattern that ultimately contributed to the defeat of the most ambitious goals of the promised revolution—including the balanced budget amendment. Worse, loss turned to failed brinkmanship when the House Republicans voted for two protracted government shutdowns in order to, in effect, force the government to stop spending by refusing to raise the debt ceiling. Turning public opinion against “the extremists,” the shutdowns also, according to one study, made them seem both “heartless and reckless.”10
In the end, as their representatives in Washington should have known all along, even those voters who revered Ronald Reagan, and cheered on the contract-signing candidates in principle, were not ready when they learned that freed markets would leave them with sole responsibility for their own fates, to give up their Social Security and Medicare, their public schools, and their government-backed air, water, and earth protections. As important, Bill Clinton’s legendary ability to “triangulate”—taking on as his own some of the goals they proposed while drawing the line against such extreme measures as a balanced budget amendment—took the steam out of the House GOP’s sails. To be repeatedly outwitted by Clinton, a president the radical right had spent much effort and untold treasure trying to undermine, made the sting of defeat all the more sharp.11