by Matt Kibbe
In terms of their methods and their policy prescriptions, this was the unbridgeable gulf separating Hayek from Keynes. Hayek wanted to “pierce the veil of aggregates and look at the distortive effects on relative prices and relative output produced by boom-time credit expansions,” says economist Mario Rizzo. Hayek’s view says: “Let us look at the distortive effects that booms leave us as we work our way through a recession. Let us concentrate on sustainable lines of expenditure both during the boom and during the road out from the bust.”29
As clever as Keynes was, he presumed too much. He didn’t know what he could not know, but he was too arrogant to admit it.
HAIL, CAESAR!
AND THAT’S THE PROBLEM WITH CZARS.
They presume the knowledge necessary to outguess the millions of people who reveal their preferences in the marketplace, in a kaleidoscope of decisions, actions, and reactions to the decisions of others. And they have the power to act whether you agree with their dictates or not.
By the way, when exactly did it become acceptable in the United States of America to confer the title of “czar”? Particularly to describe the politicians and bureaucrats who supposedly work for We the People? America does not do the “czar” thing.
Americans, whose founding was a revolt against the tyranny of King George III, should revolt against the very suggestion that anyone holding public office hires a “czar” to oversee anything. It’s offensive. A czar is a dictator by another name. Former senator Russ Feingold, a progressive Democrat, said it well at a Senate Judiciary Committee hearing in 2009:
I should note that while the term czar has taken on a somewhat negative connotation in the media in the past few months, several presidents, including President Obama, have used the term themselves to describe the people they have appointed. I assume they have done so to show the seriousness of their effort to address a problem and their expectations of those they have asked to solve it. But historically, a czar is an autocrat, and it’s not surprising that some Americans feel uncomfortable about supposedly all-powerful officials taking over areas of the government.30
As Jonah Goldberg, author of Liberal Fascism, has pointed out, czar derives from Caesar and Kaiser, words not typically associated with constitutional governments. Yet the word dictator was used to describe various potentates in FDR’s administration. “We had a ‘dictator for steel’ and a ‘dictator’ over at the NRA and elsewhere,” wrote Goldberg. But “you can see the appeal as pretty much no one has a living memory of life under the Czars. Americans wouldn’t tolerate a ‘car king’ or ‘car dictator’ or even a ‘car Caesar.’ But ‘car czar’ sounds both ironic and quaint.”31 The Russian people probably had a different view of life under real czars.
This is one of the more disturbing rhetorical turns in modern American political discourse—the casual comfort with which the press and government officials seem to use the term czar, more and more often to describe politically appointed Schedule C bureaucrats assigned to various government policy portfolios. Intended or not, the term seems to cede more power, greater expected responsibility onto government officials to “take charge,” to “do something.” A “green jobs czar” infers that we need to create green jobs as a national imperative, regardless of the opportunity cost. A “car czar” suggests that America is no longer capable of making cars without the financing, control, and top-down direction of the federal government. A “health care czar” seemingly implies that decisions of patients and doctors are to be superseded by the decrees of experts who will better manage the cost and quality of the care you and your children can receive.
The very nature of our constitutional democracy prohibits such concentrated power with any individual, including the President of the United States. But it particularly prohibits such power seated with an unelected, not-accountable-to-anyone bureaucrat.
It’s a careless, sloppy misuse of language.
Or is it? The growth in use of the term seems to coincide with the expanding power of the executive branch of government over the prerogatives of the legislative branch. By some accounts, President Obama has somewhere between thirty-three and thirty-eight individual public policy “czars” working for him, the most of any U.S. president. There is no fully objective, agreed-upon use of the term, as it is used to refer to high-ranking policy officials working in the executive branch, but it usually denotes White House–appointed bureaucrats who can operate without congressional oversight and can avoid the bright spotlight of Senate confirmation hearings. Simply by appointing policy czars with direct access to the West Wing, the Obama administration has been able to avoid a great deal of congressional scrutiny that certainly would have occurred otherwise.
In April 2011, for instance, House Republicans attempted to defund four of Obama’s most prominent and controversial czars, notably his “health care” and “climate change” czars, by including language that defunded the positions in budget legislation that was signed by the president. Obama responded with “a relatively rare ‘signing statement’ after he inked the budget deal in which he argued that the legislative effort to eliminate those positions was an unconstitutional infringement on the executive branch,” according to the Huffington Post. That statement read, in part:
The President has well-established authority to supervise and oversee the executive branch, and to obtain advice in furtherance of this supervisory authority. The President also has the prerogative to obtain advice that will assist him in carrying out his constitutional responsibilities, and do so not only from executive branch officials and employees outside the White House, but also from advisers within it. Legislative efforts that significantly impede the President’s ability to exercise his supervisory and coordinating authorities or to obtain the views of the appropriate senior advisers violate the separation of powers. Therefore, the executive branch will construe [the law as to] not to abrogate these Presidential prerogatives.32
Translated, for us non-legal-scholar types, this says: “Screw you, Congress. We’re doing it.”
The late senator Robert Byrd (D-W.V.), who was highly critical of the George W. Bush administration for its accumulation of executive power, expressed alarm over Obama’s czar power grab early in his administration. “As presidential assistants and advisers, these White House staffers are not accountable for their actions to the Congress, to cabinet officials, and to virtually anyone but the president,” Byrd wrote in a letter to the president. “They rarely testify before congressional committees, and often shield the information and decision-making process behind the assertion of executive privilege. In too many instances, White House staff have been allowed to inhibit openness and transparency, and reduce accountability.”33
PROGRESSIVELY WORSE
IN FAIRNESS, OBAMA IS CERTAINLY NOT THE FIRST PRESIDENT TO USE czars as an end run around Congress. The practice appears to have begun in earnest with the administration of Franklin Delano Roosevelt. And the idea of centralizing power to “experts” in Washington who can sagaciously determine how best to improve social welfare goes back to the Progressive movement of the late nineteenth and early twentieth centuries. The Progressive aim was to concentrate more and more power in the executive branch, where enlightened experts—today we call them czars—would govern the country.
In effect, the Progressives were turning the Founders’ vision upside-down. Individual liberty was not viewed as the standard by which to judge policy. Rather, Progressives sought to improve society as a whole, which meant a far greater degree of intervention into the affairs of its citizens. Hayek’s attack on “scientism”—the belief that well-educated public servants have the knowledge and skills to better run society with a certainty sought in the physical sciences—applies in spades to the Progressives and their reform agenda, which included two constitutional amendments that were perhaps the most direct attacks on individual freedom—the Sixteenth Amendment, authorizing an income tax, and the Eighteenth, prohibiting the manufacture and sale of alcoholic beverages. Th
e Progressives also ushered in the Federal Reserve, seeking a central authority to control the money supply.
And much like today’s ever-expanding government, the Progressive movement expanded in the 1870s by seducing both Republicans and Democrats with the lure of federal power. As historian Arthur Ekirch noted, elements of both political parties were drawn to “the idea of reform from the top under the leadership of the patrician or aristocratic classes of the community. . . . The reformers particularly emphasized the necessity of a civil service merit system. Better men in public positions, they hoped, would result in improved government.”34
Perhaps the first major victory of the Progressives was the accession of Theodore Roosevelt to the presidency in 1901. Roosevelt clearly identified with the Progressives and sought to stretch the Constitution to its limits. Viewing himself as a “steward of the people,” he aggressively expanded the role of government at home and abroad. “I did not usurp power,” he famously declared, “but I did greatly broaden the executive power.”35
Others did not view this expansion so kindly. Writing on Roosevelt, the legendary journalist H. L. Mencken (using the term liberal in the classic sense, before Progressives hijacked it to hide their true motives) wrote:
He didn’t believe in democracy; he believed simply in government. His remedy for all the great pangs and longings of existence was not a dispersion of authority, but a hard concentration of authority. He was not in favor of unlimited experiment; he was in favor of a rigid control from above, a despotism of inspired prophets and policemen. He was not for democracy as his followers understood democracy, and as it actually is and must be; he was for a paternalism of the true Bismarckian pattern, almost of the Napoleonic or Ludendorffian pattern—a paternalism concerning itself with all things, from the regulations of coal-mining and meat-packing to the regulation of spelling and marital rights. His instincts were always those of the property owning Tory, not those of the romantic Liberal. All the fundamental objects of Liberalism—free speech, unhampered enterprise, the least possible governmental interference—were abhorrent to him.36
Franklin Delano Roosevelt’s New Deal piled on to the Progressive movement’s push for more government, expanding government far beyond its constitutional mandate, and creating the culture of dependency through Social Security and other welfare programs that have categorically changed the relationship between citizens and the state. Likewise, President Johnson’s Great Society expanded the entitlement state’s future promises far beyond our ability to finance them.
Even Charles Beard, one of the most popular Progressive intellectuals, became disillusioned with the FDR’s New Deal and the federal spending it entailed: “The principal weakness of the whole program is its heavy dependence upon government spending and lending policies. . . . Only one thing seems to be certain. When all the merits and accomplishments are duly appreciated, it remains a fact that this dispensation has been made possible only by enormous increases in the national debt.”37 The only way the new welfare state could survive is by commanding more and more of the nation’s resources.
In addition to the direct expansion of government, the New Deal also ushered in the era of the rent-seeking society.38 If you fill the trough, feeding will commence. As the reach of government grew, more and more decisions that were once left to the market were now routed through Washington. This centralization of economic power tended to favor the crony capitalists and corporate interests with the resources required to influence the federal government. Economist Mancur Olson explained the issue very precisely in The Logic of Collective Action, first published in 1965. Specifically, he examined how interest groups operated, highlighting the benefits that accrue to small groups.
Creating an interest group is not cheap; there are resources required to maintain a presence in Washington. Further, the more members of the group, the more difficult it becomes to reach a consensus opinion for the group. Consequently, Olson reasoned, small groups will form first. In addition, the only motive to participate in a group is if it provides benefits to the individual members, and the fewer members, the greater benefits per member. For Olson, this meant concentrated benefits provided the rationale for creating special interest groups. At the same time, the costs of their demands—higher tariffs, tax complexity, barriers to entry—will be spread across the entire taxpaying population.
This iron trap of concentrated benefits and dispersed costs provides incentives for groups to come to Washington, and feeds the progressives’ push to centralize and expand the role of government, creating a symbiotic relationship between the moochers and the looters. The rest of us pick up the tab. It’s a downward spiral that is driven by the concentration of money and power in Washington.
Unfortunately, it will be the larger, well-heeled interests that come to Washington, such as GE and other corporate giants, because they have the resources to hire an army of lobbyists. Smaller businesses struggle to make payroll and their voices are not heard, just as consumers are often left out of the top-down approach to economic policy, because they have no time or resources to devote to politics and federal regulations. The larger government grows, the more inequitable things become.
This should come as no surprise to proponents of big government. After all, such concerns were raised during the Progressive era. Charles B. Spahr raised these concerns about the centralization of power in 1896: “The smaller the area, the stronger the pressure of public opinion. As a rule, the middle class can control the legislation enacted under their eyes by those whom they know, but only the wealthier classes can act unitedly and effectively upon legislation at the national capital.”39
The great push to centralize economic decision making from the top down was a fundamental departure from the laissez-faire principles that our nation was founded on, contrary to the republican ethos of Jefferson and Madison and the decentralized gaggle of pamphleteers and citizen activists that drove the Spirit of ’76. Those at the top have failed to solve the knowledge problem. Economic decision makers in Washington can never grasp the particular knowledge of time and place that Hayek so eloquently described in his study of prices and information—essential knowledge that is generated from the bottom up, not from the top down.
The Progressive goal of centralizing decisions, power, and authority in the presidency seems utterly contrary to the trends everywhere else in life. We live in a world that is more decentralized than ever before. Individuals have more power and control. We are more mobile, get our news and information from a multitude of sources, communicate via Twitter, and connect on Facebook. We are typically free to choose our own destiny, thanks in large part to the liberating forces of the Internet.
And yet we see this trend toward centralization in government and the proliferation of czars wanting to tell us what we can and can’t do with our lives and our hard-earned pay. At the top, the president is gathering executive power, wanting to redesign things in a way that no human possibly could.
Something’s got to give, one way or another.
But think about the power of decentralization, how it is possible for millions and millions of people located in disparate places—each individual in possession of a unique perspective, particular goals, wants, and needs, and a personal knowledge of their community and circumstances—to come together in voluntary cooperation and to create something far greater and more valued than any one individual could have done alone. Is it possible that freedom, from the bottom up, can beat entrenched management, from the top down?
The answer, I think, is yes.
CHAPTER 3
THE TRUTH CARTEL
Information is not knowledge.
Knowledge is not wisdom. Wisdom is not truth.
—Frank Zappa
HOW DO WE GET TO THE TRUTH OF THE MATTER? IS WHAT WE BELIEVE to be true more legitimate if it’s vetted and dispensed by the experts, from the top down?
There once was a time in the United States when we relied on Walter Cronkite to tell us what t
o think. He was “the most trusted man in America.” We had no choice but to trust him, along with some nameless producer behind the scenes at CBS Evening News, two other television networks, and a handful of national newspapers, all part of an insular cartel that sorted through the infinite bits of information of the day and determined, for us, the Truth. In this top-down system, Truth came in a one-size-fits-all package, and was allocated to the public twice daily, with delivery of the morning paper and the start of the six o’clock news.
“And that’s the way it is,” Cronkite would say, concluding the half-hour right on cue, effectively ending any debate on the subject. There would be no argument, no alternative opinions. There was no easy mechanism by which viewers could push back. An individual’s only recourse if he wanted a different set of data filtered through a different conventional wisdom was to switch channels to the strikingly similar versions of the truth offered by ABC and NBC.
Not surprisingly, Cronkite was a big believer in the positive power of centralization. He believed that the smartest people could get together in one room to solve the world’s greatest problems, even the most elusive of challenges to social order and the human condition itself. Consider the quixotic quest for world peace, as an example. “It seems to many of us,” he pronounced in an October 1999 speech before UN delegates, “that if we are to avoid the eventual catastrophic world conflict we must strengthen the United Nations as a first step toward a world government patterned after our own government with a legislature, executive and judiciary, and police to enforce its international laws and keep the peace. To do that, of course, we Americans will have to yield up some of our sovereignty,” he continued. “That would be a bitter pill. It would take a lot of courage, a lot of faith in the new order.”1