The Business of Government; C. Carson

302 on the debt for fiscal year 1975 was $32.7 billion, and the esti mated interest for 1976 is $37.7 billion. The budget is composed of esti mates as to what a vast assort ment of government programs will cost in 1977. The programs range from school lunches for children to hospital care for veterans, from aid for fatherless children to sub sidies for the United States Post Office, from pay for soldiers in the Army to salaries for bureau crats in the Occupational Safety and Health Administration, and from support for research in ento mology to payments for dentures for retired people. There are several questions that should' be asked of every item in this immense budget. If asked and 1976 THE BUSINESS OF GOVERNMENT 303 answered with care, it is possible that the budget could be reduced to manageable dimensions. Here are some of them: • 1. Is the program for which the appropriation is being requested constitutional?

• 2. What level of government should pay for and administer any given program? Is the program local in character? Is it peculiar to the needs and interests of a par ticular locale or region? Are there variations throughout the country which would make a national pro gram disruptive? • 3. Can the program be expected to achieve its object? Has experi ence shown that programs of this kind work as they are supposed to? • 4. Who is the program expected to help? • 5. Can the United States gov ernment [taxpayers] afford the program? • 6. Is there some point at which the level of taxation establishes serfdom? • 7. In what direction does this or any similar program take us? Is it socialism? Is it premised on "From each according to his abil ity; to each according to his need" ? The answer to this question needs to be made in terms of the whole body of programs that are welfarist and interventionist in nature. A piecemeal examination of the programs will not provide the answer. The whole. body of leg islation needs to be seen in its tendency and direction.

These are questions that ought to be asked and answered for every item in the budget. The whole body of constitutional, legal, political, and economic thought ought to be brought to bear in answering them. They are mostly technical questions and, if they are answered, will probably be an swered by experts. But there is a question, or order of questions, which precedes all of the above. It is a question not to be propounded to experts only but to all Ameri cans in their capacity as citizens. It is a question not addressed pri marily to either theory or experi ence; yet one which everyone is supposed to be able to answer. The question is this: Is it right to authorize and spend money on this program? Some subordinate questions will throw this central question into relief. Of welfarist measures, we may ask: Is it right to take money from some portion 'of the popula tion and give it to others? Of reg ulatory measures, we may ask: Is it right to force people to do these things against their wills? Of def icit financing, we may ask: Is it 304 THE FREEMAN May right to go into debt to provide those goods for the presumed beneficiary? Of inflation, we may ask: Is it right to reduce the value of the money now in circulation by increasing the supply? Of the national debt, we may ask: Is it right to continue to expand and expand the debt with no provision for retiring it?

As strange as it may appear to some of us, there are many people who have, in effect, answered these questions in the affirmative. They have Inot, of course, usually phrased the issues this way. They have, instead, talked and presum ably thought in terms of the good they were supposed to be accom plishing with the spending. The moral questions they propounded would be phrased in some such fashion as this. Is it right that anyone in a wealthy country such as ours should have his needs un met? Is it right, they have asked, that this industry or that endeavor go unregulated in what they charge and the quality they offer? As for the debt, they have said, that is no great problem since we owe it to ourselves, and the more sophisticated bluntly recommend increasing the money supply to "spur the economy." But let us stay with the ques tions at the highest level, the level of what is right. To answer them, we need to remind ourselves what government is, and from that de duce what it may properly and rightly do. We need to keep in mind how government achieves whatever results it does. None of this tells us what is right, but we can apply our knowledge of right only with a clear view of the na ture of government.

Instrument of Force Government is that instrument which maintains itself by and is authorized to use force. It is not only authorized to use force but it also acts exclusively by the use of force. If there is no force en tailed~ an act ceases to be govern mental, even though someone in government performs it. 'In short, the sine qua non of government is its reliance upon and authority to use force. What functions are appropriate to government, then? To what ends may force be properly exer cised? The Founders of these United States made a general sum mation of these in the Preamble to the Constitution: to "establish justice, insure domestic tranquil ity, provide for the common de fense, promote the general wel fare, and secure the blessings of liberty to ourselves and our pos terity .... " It should be granted that there are many who can give assent to these general aims with out seeing in them any limitations 1976 THE BUSINESS OF GOVERNMENT 305 on government. This occurs, I suspect, because they do not gen erally think of them as inter twined but rather as separate and distinct functions. At any rate, let us examine a little closer into the proper Junctions of government as they are suggested by these statements.

The basic task of government is to keep the peace. Most of its functions are closely related to this job. Keeping the peace in volves, most fundamentally, pro tecting peaceful men from attacks upon them by aggressors and tres passers. These offenders may be individuals or groups, domestic or foreign. In any case, a government is providing for the common de fense and insuring domestic tran quility when it holds these at bay. Keeping the peace also involves dealing with those who have com mitted offenses, and settling dis putes that arise between individ ualsand groups. In this fashion, then, government can properly act to establish j ustice. It can be seen, too, that these are objects to which force is appropr~ate. Force can be used against aggressors and to compel obedience to the verdict of the court. The statement that government should promote the general wel fare appears to us to raise ques tions rather than to answer them.

This is so because we have been taught to misconstrue the phrase. We have been taught to believe that government may act to ad vance the well-being of some por tion of the population, perhaps at the expense of another, and that this is somehow for the general welfare. But that cannot be: The general welfare is the general wel fare, not the welfare of some part. The general welfare is the welfare of all, a welfare which no man or group of men can have more in terest in, nor less, than all others. To maintain peace in a society pro motes the general welfare - in the same fashion so does, to establish justice, to insure domestic tran quility, and to provide for the common defense. But, it may be obj ected, there are those who would disturb the peace. Just so, that is why we have government in the first place. But is the main tenance of peace in their interest? Of course it is. In the Public Interest There is another order of ser vices that a government may pro vide that can be said to be for the general welfare. They are those services of general use and benefit whose costs cannot be readily or equitably divided among users.

They consist of such things as fire protection, the providing of safety markers in waterways, the provid ing of information about -the 306 THE FREEMAN May weather, and such like. It is proper, also, that government and its instruments of force and for administering justice be supported with tax money. The keeping of the peace being for the general welfare, it must follow that all tho'se with means should contrib ute to it, whether they will or not. Government is the right instru ment, also, to secure the blessings of liberty to a people. It may see to it that peaceful men are not detained and that all such are per mitted to exercise their faculties without restraint, so long as they do not injure others and that they exercise them on their own facili ties or on those of others who have hired or invited them or in public places and at times appointed to the particular uses. Force, de fensive force, can be employed so as to prevent the strong from op pressing the weak or anyone from interfering with the liberty of another.

In the performance 'of the above functions, government is essential to social existence. It is, as the traditional phrase has it, ordained of God. For government to do those things for which it is ordained and established there should be no question of the rightness of it. The question of right arises over wel fare, interventionist, and fiscal policy. The answer lies in the crit ical area of justice and the contemporary confusion of justice and mercy. The Founders declared that one of the purposes of government was to establish justice. If that be accepted, the content of justice needs to be carefully examined. Qualities of Justice The most obvious thing we know about justice is that it is blind. Representations of justice show it blindfolded, and it is a matter of long-standing prescription that it should be. Justice - that ideal of it that has guided men in West ern Civilization - cannot see. It cannot see whether those who come before it are black or white, rich or poor, farmers or industrial workers, old or young, men whose hearts have generally been pure or are as black as the Ace of Spades. Justice is concerned with but one thing: To give each man his due. To put it in economic terms, justice is concerned with seeing that each man gets what is his. To this end, justice must at tend to the character (or nature) of acts and transactions, ignoring all else.

What is a man's due, or what is his? A man is due what has been promised him, and that is his which he has made for himself or has acquired from others by pur chase or gift. In determining any question of ownership, justice has been done when it has been de1976 THE BUSINESS OF GOVERNMENT 307 cided who made the object in ques tion and whose it is, otherwise, by transfer from the original owner, and restitution has been made. Justice, of course, has to do also with seeing to it that those who have committed offenses - crimes - against the public order are penalized. Justice here attempts to mete out punishment in accord with the gravity of the offense. Justice holds, roughly speaking, that he who does not work shall do without. He who does not earn his keep shall be deprived. Justice will not allow the excuse that a man was hungry, that his family was hungry, .that he had been ill, or that for any other reason he may appropriate the property of an other. True, men will say that before they Will let their families go hungry they will steal. That is no matter, so long as they know it is stealing, and so long as it is clear that if they are caught tak ing what is another's they may be justly punished. In the same man ner, justice requires that he who injures another in any fashion shall he made to pay. A people who attempt to establish justice have undertaken a formidable task.

Justice is blind; Mercy can see the helplessness of children, the plight of the aged, the ravages of disease, the suffering from depri vation, the discrimination because of color, the hard work that has not been rewarded with produce, the hard luck with which some are afflicted, the lame, the halt, and the blind. Mercy can distinguish between the deserving and unde serving of pity and of charity. The standard of Justice is desert; the standard of Mercy is need. Shall Government Dispense Mercy or Establish Justice? There is no doubt that many of us stand in need of mercy from time to time and place to place. But there is a question whether government is the proper body to dispense mercy. If it is the busi ness of government to establish justice, it cannot also be its task to be merciful. The two are in compatible. The question of whether justice or mercy shall be extended is an either-or proposi tion in particular instances. If government does justice, it must deny mercy; if it is merciful, it will tend to work injustice. This is so for government because force may be properly used to do justice, but mercy must be freely - not forcibly - offered else there will be injustice. Specifically, it is proper to use force to see that a man gets what is his. But mercy involves conveying upon a man that which is not his by right, that which he has not earned, that which is not his due, but which 308 THE FREEMAN May someone out of pity or charity wills that he shall have. For gov ernment to extend mercy in this manner means that it must take from someone \vho has and give to someone who had it not. In short, when government extends mercy it usually produces injustice.

Men of good will may agree that those who cannot help themselves are the proper objects of concern of those who can. It is the part of charity to render aid to such in their need. However, it does not follow that government is the proper instrument to provide such aid. Government aid is derived from taxes, and these are taken involuntarily from the taxpayers. Mercy is properly the prero gative of moral individuals, many of whom have ever shown themselves willing to help those in need when they have been left free to do so. The questions posed at the outset of this discussion reduce them selves to one question: Do men have a right to what they possess as property? Let us pose them again with this question in mind. Is it right to take' money from some portion of the population and give it to others? If men have a right to what they have produced, it is not, for if it can be taken from them to give to others they had no right to it in the first place.

Is it right to force people to do these things (by regulation to use their efforts and property in ways they do not choose) against their wills? If what a producer or ex changer has is his by right, then it is his to do with as he sees fit, so long as he does no demonstrable injury to others. Is it right to reduce the value of the money now in circulation by increasing the supply? If there is a right to money, there is a concomitant right to it without having its value arbitrarily reduced. If not, there is no right to money, for its whole value may be reduced to naught by government action. Is it right to continue to expand and expand the debt with no provision for retiring it? This is a complicated question, for the main means of raising the money is by way of increasing the money supply. There are two prongs to the answer. One is that it is not right for government to take away from property by in creasing the money supply. The other is that the future holdings of property are reduced in value by the amount of them that must be taken away to pay the interest and the debt.

James Madison answered the questions this way in 1792: Government is instituted to pro tect property of every sort. . . . This being the end of government, that alone is a just government which im partially secures to every man, what ever is his own.

1976 THE BUSINESS OF GOVERNMENT 309 Even though property is the key, it is necessary to discuss these matters in the context of the proper role or business of govern ment. This is so because govern ment - any government - costs money to operate. These costs be come, of necessity, a charge against property. If government is "insti tuted to protect prop erty," as James Madison said, it must necessarily follow that its costs must be kept down to a nominal level in order to perform its function. However, when gov ernment begins taking property for anything other than its pro tective function it becomes an invader of property rather than a protector of it. Rather than a pro tector of right it becomes itself a wrongdoer. The extent of government ac tivity today is new, but the tend ency of government to become wrongdoer is old. These questions of right were also answered, and answered vigorously at the time of its formation and the early years of the Republic. Americans experienced the wrongdoing of government depreciating the pa per money by printing more and more of it during the War for In dependence. Josiah Quincy wrote to· George Washington: I am firmly of the opinion, and think it entirely defensible that there never was a paper pound, a paper dollar, or a paper promise of any kind, that ever yet obtained a gen eral currency, but by force or fraud, generally by both. That the army has been grossly cheated; that creditors have been infamously defrauded; that the widows and fatherless have been oppressively wronged and beg gared; that the gray hairs of the aged and innocent, for want of their just dues have gone down with sor row to their graves, in consequence of our disgraceful depreciated paper currency .... 1 On the matter of public credit and indebtedness, George Wash ington had this to say in his Fare well Address: As a very important source of strength and security, cherish public credit. One method of preserving it is to .use it as sparingly as possible, avoiding occasions of expense . . . ; avoiding likewise the accumulation of debt, not only hy shunning occa sions of expense, but by vigorous ex ertions in the time of peace to dis charge the debts which unavoidable wars have occasioned, not ungener ously throwing upon posterity the burthen which we ourselves ought to bear .... 2 Thomas Jefferson, in his own inimitable way, put the business 1 Arthur S. Bolles, The Financial His story of the United States, I (New York: D. Appleton, 1896, 4th ed.), p. 208.

2 Henry S. Commager, ed., Documents of American History, I (New York: Appleton-Century-Crofts, 1963), 173.

310 THE FREEMAN Ma.y of government clearly and suc cinctly in his First Inaugural Address: ... Still one thing more, fellow citizens - a wise and frugal Govern-' ment, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and im provement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good gov ernment .... 3 Martin Van Buren stated simi lar principles, though in some greater detail: All communities are apt to look to government for too much. Even in our own country, where its powers and duties are so strictly limited, we are prone to do so.... But this ought not to be. The framers of our excel lent Constitution and the people who approved it with calm and sagacious deliberation acted at the time on a sounder principle. They wi$ely judged that the less government interferes with private pursuits the better for the general prosperity. It is not its legitimate object to make men rich or to repair by direct grants of money or legislation in favor of particular pursuits, losses not incurred in the public service. This would be sub stantially to use the property of some for the benefit of others. But its real duty - that duty the performance of 3 Ibid., p. 188.

which makes a good government the most precious of human blessings is to enact and enforce a systEfm of general laws commensurate with, but not exceeding, the objects of its estab lishment, and to leave every citizen and every interest to reap under its benign protection the rewards of vir tue, industry, and prudence. 4 As thing$ have been going in these United States, it is not dif ficult to make some predictions about the budget for 1977. It is most unlikely that spending will be kept within the extensive bounds of $394.2 billion. There are all those programs already authorized which cost more and more each year. Then, Congress is apt to tack on yet more programs which will add to the expense of government. Already, predictions have been made that the deficit will not be kept to $43.1 billion but may well continue to balloon at the current rate. There are many indications that the spenders still have the momen tum behind them. Even if they did not at this moment, authori zations made in times past carry their own momentum. And, re gardlessof the feeling in the Con gress, the vast Federal bureauc racy stands ready with its public ity apparatus to continue present 4 Henry S. Commager, ed., Living I deas in America (New York: Harper and Bros., 1951), pp. 323-24.

1976 THE BUSINESS OF GOVERNMENT 311 programs and present justifica tions for new spending. It will not do to try to stop at the present level; it is necessary to begin to remove programs already estab lished in order to stem the tide of rising expenditures. 'There is, I suspect, only one level of looking at the matter at which there is any hope of re versal and a return to a modicum of fiscal sanity. It is at the level of what is right. So long as there is general acceptance of taxing, inflating, borrowing, and spending what the government does not have upon welfare, subsidies, and regulation, these things will con tinue. So long as people generally believe that it is right to take from some and give to others, that government should regulate and control business, that deficit financing is right and proper, that it is all right to reduce the value of the money in circulation by increasing the amount of it, and the debt does not have to be re paid, just as long these things will continue.

When and if it is understood that it is wrong for government to act in this way, then, and only then, is it likely that we will re verse our direction. Then, too, ar guments about the constitution ality of programs, results of past programs, and so forth, will be come powerful adjuncts in support of right. , IDEAS ON LIBERTY Providential Agency No PEOPLE can be bound to acknowledge and adore the Invisible Hand which conducts the affairs of men more than those of the United States. Every step by which they have advanced to the character of an independent nation seems to have been distin guished by some token of providential agency; and in the impor tant revolution just accomplished in the system of their united government the tranquil deliberations and voluntary consent of so many distinct communities from which the event has resulted can not be compared with the means by which most governments have been established without some return of pious gratitude, along with an humble anticipation of the future blessings w1hich the past seems to presage.

GEORGE WASHINGTON, First Inaugural Address, 1789 A REVIEWER'S NOTEBOOK THE BIGGEST CON: JOHN CHAMBERLAIN How the Government Is Fleecing You THE GREAT VIRTUE of Irwin A. Schiff's The Biggest Con: How the Government Is Fleecing You (Arlington House, $9.95), is, as I have already suggested in a fore word to the book, the author's ability to put it all together to show how the "critical mass" of five trillion - yes, five trillion - in government debt must end either in repudiation or a ruinous infla tion. This is tough medicine, and no politician is going to swallow it immediately, particularly in an election year. But Mr. Schiff is in exorable - he simply adds things together to show how a lot of wel farist measures which looked good 312 individually have combined to de stroy the possibility of paying off the whole in honorable and non inflated coin. To begin, we don't have money any more; we have what Mr. Schiff calls unmoney. Neither the Trea sury nor the Federal Reserve sys tem recognizes a duty to redeem any note or government bond in anything more than successive issues of new LO.D.'s. What the government chooses to call its na tional debt is bad enough; when Mr. Schiff was writing it camoe to some $540 billion (the June 30, 1975, figure). But this is just the tip of the iceberg. When you add 1976 THE BIGGEST CON 313 in the Social Security payments that the government is obligated to make good out of future income Cit has already squandered the pay ments of the past forty years by its refusal to fund the debt in any thing more than LO.D.'s), some $2.1 trillion more must be raised, according to a government admis sion made in a footnote. (Does anyone really believe that we can tax at that rate even in annual in crements without breaking the middle class as inflation adds more trillions to the $2.1 trillion as of 19751) Aside from Social Security, the government has other obligations reckoned in the trillions. There are annuities, student loan guaran tees (an incredible $1.9 billion), crop guarantees, veterans' benefits, and so on. The big figures and the little figures combine in a total debt (funded, unfunded and con tingent) of $4.3 trillion. It will be $5 trillion, including the "regular"