It's Always Darkest Before the Dawn

0:00Well, I'm going to talk about the dark before the dawn, and in arguing that dawn will follow the present darkness, I must first establish that the darkness exists at all. If you believe Robert Bartley of the Wall Street Journal, the dawn has already arrived with the government's response to September 11th and its political and economic aftermath. Barley is a supply sider and if you know something of that school it's a very mixed bag. It can be good on the need for tax cuts and the fallacies of zero-sum thinking. However, it's dismissive towards debt and public spending and all too friendly towards inflation and state intervention in general.

0:45Barley writes that before the Bush administration's bombing campaign, America was consumed with guilt at quote being too powerful, too prosperous, too assertive. Now however with the war we can consolidate a quote new century of safety, peace and spreading prosperity. Now the supply-sitters can be an absurdly pan-glossian bunch as long as stock prices are rising and for many years the Wall Street Journal's editorial pages have never found a low No stock price it didn't believe can and should be raised with an injection of new liquidity. That leads the writers to celebrate any event that will prompt the Fed to lower interest rates, war, for example.

1:31The journal is hardly alone in the opinion that war and prosperity go together. The whole media hold that the overthrow of a tottering and thuggish regime in dirt poor Afghanistan represents some sort of triumph of the national will. A foreshadowing of the government-run utopia of peace and prosperity headed our way. The tactic here is an old one, the identification of military prowess with economic health, which conflates the voluntary sector of private productivity with the coercive sector of central planning and accepts fallacies from Keynes's view that government spending boosts productivity to Lenin's that capitalism thrives on military conquest. But Bartley goes further. His point is not only that prosperity and military assertiveness stem from the same political priorities, which is not true in any case. He actually suggests that militarism itself is what brings about prosperity. His column is a tribute not to enterprise but to the war planners. Bartley should know that it is not the military that It is prosperity that makes possible the military, like all government programs, to exist in the first place.

2:50Government revenue that funds the military is seized from the private sector the way a parasite lives off a host. The healthier the host, the happier the parasite, which is allowed to become fatter and stronger than ever. Thus it is capitalism and the astounding productivity of the free economy alone that accounts for the power and influence of the U.S. As to the government, when it isn't taxing the markets, it's draining their productive powers in other ways. The current war and recession, for example, is being funded through credit expansion, which has led to massive debt accumulation. Meanwhile, the Fed's 12-month campaign to keep the economic expansion going has been a failure. and its pushed interest rates so low that saving already at historic lows is punished severely in favor of stock speculation.

3:42In the second half of 2001, American politicians got into the act by urging consumers and businesses to go on a spending spree. This was an attempt to stymie the good instincts that people have to get their financial houses in order during a recession. Instead of dumping debt, debt of all kinds has reached very dangerous highs. America has driven up total consumer credit as well as corporate credit to record highs. Neither cheerleading nor an artificial injection of liquidity, however, is a viable substitute for old-fashioned rebuilding. As we've learned at this conference, real economic growth can't be created by a printing press. At a time when the political establishment is using happy talk to generate the appearance of happy days and spending untold billions on war and welfare, no one wants to hear the message that there is a price to pay for this fiscal and monetary profligacy.

4:39Quote, war prosperity is like the prosperity that an earthquake or a plague brings, Mises wrote. The earthquake, he said, means good business for construction workers and cholera improves the business of physicians, pharmacists and undertakers. But no one for that reason is yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest Government power and market productivity work at cross purposes as Mises wrote quote history is a struggle between two principles The peaceful principle which advances the development of trade and the militarist imperialist principle Which interprets human society not as a friendly division of labor?

5:26The Military State is a state of bandits. It prefers to live on booty and tribute. In Mises' view, there are times when employing the military is necessary. But he pleads with us not to be naive about the consequences. Consequences, quote, not only economic, but moral and political conditions will be affected, he writes, militarism will supplant democracy, civil liberties will vanish whenever military discipline must be supreme, hence says Mises, the use of the military always comes at the expense of liberty and there's no reason to pretend otherwise. We see the erosion of liberty taking place in our own time, thanks to legislation passed This fall and winter, the federal police now enjoy unprecedented rights against the people.

6:21And our supposed free media have been ignoring this or, in the most abject, toting fashion, heralding it. Right now, political deviants are being rounded up without probable cause. In recent days, students said to hold anti-government views have been visited by the FBI and the Secret Service at their dormitories. So have business professionals, overheard making cynical remarks, for example, at the local gym. As for Congress, it's become utterly useless in curbing the executive state. By congressional decree, the chief executive has been granted unprecedented authority and autonomy in complete violation of the Constitution. This only begins the catalog of interventions. In economic affairs, we now have a conservative administration calling for a Vast Expansion of Unemployment Benefits, New Restrictions on the Use of Cash, Food Stamps for Foreigners, Stepped-up Federal Spending and Control of Public Schools, More Foreign Aid, and More Federal Reserve Money and Credit to Make it All Possible. We can look forward to another round of international bailouts, possibly even of Japan where, as has been pointed out today, banks are holding a trillion dollars in bad debts and officials are burning up the phone lines to

7:39PC. Also Scott Trask mentioned to me that it's already in the Spanish language press that the US is going to be bailing out Argentina. They've already made that decision. And we shouldn't forget the billions headed towards Afghanistan to fund a massive rebuilding of what the US has just destroyed. No one should believe the Wall Street Journal that the dawn has arrived because the government believes itself to be more powerful than anyone or or anything on earth. Noah's Jefferson said the opposite is true. The more latitude the government has at home and abroad, the more we ought to be concerned for the future of freedom. Interestingly, Bartley pens a chilling sentence that would appear to indicate some knowledge of this.

8:26Listen to his choice of language. Quote, a new era cannot be consolidated in the foreign arena alone. In the new year, Mr. Bush will have to make the point But the serious minds who can so ably run a war are also the best minds to run an economy. Nurture better education, make environmental trade-offs and save a faltering social security system. Of course, he favors central planning by Republicans as opposed to Democrats. But from the point of view of the free society, it doesn't matter whose calling card the state is carrying. that free enterprise is capable of funding a huge military empire creates something of a problem for those of us who advocate freedom.

9:12For we know that the more wealth society produces, the more governments try to steal it. This is why it's morally and intellectually incumbent on believers in free enterprise to take the lead in warning against expansions of government of every sort. One may argue, of course, that to the extent the U.S. military insists in keeping peace and stability in the world. This is good for free markets and prosperity. But is this what the Pentagon does? The terrorists who attacked the World Trade Center were striking out at wealth and those who produce it. Just as many bureaucrats in Washington strike out at market productivity on a daily basis. The damage done on September 11th was dramatic and compressed in one instant. The damage done by Washington bureaucrats is spread out over years and decades and less visible to the eye.

10:04But both forms of violence constitute the use of coercion against peaceful people. So by hating and attacking the market economy, the terrorists share a profession in common with the political class in this country, though the latter is, of course, in good standing with the law. Indeed, it makes and enforces the law. Moreover, there's more than enough evidence, including the statements of the terrorists I don't believe that US foreign policy ought to change because terrorists say so. I believe it should change because it is the right thing to do.

10:54The U.S. government somehow managed to do more than simply provide terrorists with motivation. With policies dating back decades, it made it very difficult for Americans to protect themselves, for, by example, preventing privately-owned airliners from arming themselves against hijackers and leading us to believe that a military budget larger than that of every developed nation in the world combined might actually be all the protection we would need. A government at war always uses the occasion to expand its power over the economic and social lives of its citizens. To be sure, some of its excuses are quite plausible. Everyone favors justice for those involved in killing the innocent. But unleashing the dogs of war leads to unpredictable consequences. Even after adding to Afghanistan's miserable lot and killing some 4,000 civilians who had no part in September 11th.

11:50The U.S. still hasn't caught Osama bin Laden. Perhaps there were better ways than war to pursue justice, but there was certainly no better way to increase the grip of the central state over America, which is what the government actually aims at. That we have always known. The events of recent months have reminded us again of why it is so urgent to join the And the intellectual battle in defense of the free society, particularly in the field of economics, and for the sake of our personal well-being and that of society as a whole. If there is a new faith in government today, it is not a faith that government can completely manage society as Tracks from the 1930s claimed. Instead, it is a faith that government can pulverize its enemies with ease, and to that degree, that faith is not entirely misplaced.

12:43The human mind has always been impressed by the ability of power to accomplish spectacular acts of destruction. Yet the Fed has proven itself powerless as a tool of macroeconomic stimulus. Its impotence has even startled the Fed's own economists. Think of it, we live in times when the government cannot point to a single one of its programs and call it a success. We're faced with several huge physical crises in the future involving retirement benefits, rising debt and the overvaluation of stocks. Because politicians destroy the gold standard, we have a currency that is fundamentally unsound and unchecked by any limits on the central bank. We have collapsing public schools, public transit, public services of all sorts, and other sorts, which no amount of cash infusion is going to fix.

13:36Yet there are positive signs that have emerged recently. I would name the shredding of the Kyoto Treaty and the hampering of environmentalism as a political movement. The inability of the left liberals to enact more gun laws. The sucker punch that 9-11 gave to the multicultural movement, which claims that there is something inferior is inherently awful about the Western mind. The relentless march of the homeschooling movement, the well-documented trend among students to reject the left-wing prattle of their professors, the rise of a new bourgeois cultural sensibility, and the continued growth of a diverse internet as an alternative source of news. The realization that the government, despite the Department of Homeland Defense, cannot protect us. It's probably a good thing too. It can only increase the use of market means of providing the security that we all seek. These things are not enough to bring about a new dawn of course, but we will also be helped by one thing we can be 100% sure of. The state will continue to get egg on its

14:44face whenever it intervenes in terms of spectacular scandal and spectacular Failure. Before talking about what we must do, however, let me explain what I mean by Don. For all of us, it is the free society, one in which we are secure in our property and our privacy from a grasping government, and when our families and community lives are permitted to flourish in absence of the belligerence of state officials, when the U.S. government no longer believes itself the master of the country and the world, but rather begins to observe the Constitution's limits on its power. That dawn will require first an ideological change in public opinion where people's latent distrust of government is hardened into a hardcore love of liberty itself.

15:31This change must begin in the world of ideas, the world to which the Mises Institute is dedicated. Through it all, the Institute's intellectual work proceeds apace and with astounding results. Our teaching and resident fellow programs prepare the cadre that any revolution needs. Our journals overflow with outstanding scientific and historical scholarship. All of this, which you helped make possible, is laying a foundation for the future, just as Rothbard and Mises did. However, that doesn't mean that good scholarship in the Austrian tradition goes unnoticed today. The IMF, for example, just released a working paper that does a credible job presenting the Austrian theory of the and the business cycle. If you think about this, it's astounding for a theory that was supposedly killed off in the 1930s to be emerging into discussion today.

16:23But it is happening and at far more places than the IMF. This is the power of ideas at work. Recently, Gene Callahan mentioned that there were so many articles appearing in the popular press that discussed Mises that you can't swing a dead cat without hitting one. that would have been unthinkable 20 years ago. Every summer we bring in hundreds of brilliant and dedicated students, leaders on their campuses to receive systematic instruction in economics, history, ethics, law, social theory. They leave telling us that their time here has had a greater impact on their education than anything at their colleges and universities. Dozens of dissertations and books have been completed based on ideas sparked at these conferences.

17:09We have hundreds of young professors, teachers, researchers and writers doing the hard work of liberty. Our daily editorials reach tens of thousands of the world's smartest students, educators and business professionals. The intellectual movement backing our ideas has become nothing short of a well-oiled international machine, spreading truth and good sense at all levels of academia, society and culture. I submit to you that this trend should make make us more bullish on liberty despite any political or financial crisis. Time is ripe for the Austrians to be heard. Only the Austrian School has coherently explained what is happening right now in Argentina and Japan. Only the Austrian School has provided a full account of what has brought us to the present economic downturn in America and why welfare and warfare and inflation only make things worse. Only the Austrian School has has offered a consistent vision of a radical alternative, one that is capable of attracting young minds and appealing to society's cultural and intellectual leaders.

18:16Our greatest patron in this battle is the free economy itself, which daily astonishes us with its ability to provide, innovate and expand in the midst of so many attacks. The creative power of commerce dumb-founds those who continue to fortell its death. The state may pave, but the flowers of enterprise break up the concrete. And by commerce and enterprise, what I really mean is human action. The choices of individuals to embrace their own self-interest, and that of their families and communities, rather than to live for the political aims of the omnipotent state. For hundreds of years, and more so now than ever, the market has outrun the ability of of Interventionist Governments to Make it Conform to some Predetermined Plan.

19:05Despite the boom and bust of dot-coms, thanks to the Fed, the internet continues to grow as a source of commercial strength, as an alternative also source to news and of analysis, not cleared with DC in advance. With the aid of human motivation and innovation, human action in the marketplace, aided by by those institutions that sustain it in society will see our way out of the mire. We must be aware, of course, that those of us who champion a consistent vision of a free society without apology or compromise are going to come under fire. These criticisms can be brutal, but they're no different in character from what they've always been. The fundamental tactic is to question our motives and disparage our cause as only another special interest.

19:55But liberty is not the demand of a pressure group. It is a plea for the good of the entire society, and that makes it unique. Ours is not a mass movement, of course, and it need not be. Throughout history, the true friends of freedom, the ones who believe in it as a matter of hardcore principle, have always been few, and we've been reminded of this in recent days. How much more important than to stress and restress our continuing themes, liberty for For everyone, state privilege for no one. This is the social framework of a market economy. This is a message that no faction within the ruling class wants to hear. No matter how divided the factions are among themselves, they form a united front against the libertarian idea. That's why to sign up with the cause of liberty is to take a principled step. It means rejecting the dominant strain of politics, that the state ought to be used to promote The Cause of Liberty rejects all this, not because we have a special interest, but because we stick by the most unpopular claim of all, that society ought to be permitted to organize itself so that it benefits everyone in the long run.

21:16There is only one system that does so, and that is the competitive market economy operating under the natural order of liberty. We must never, even now, underestimate the power of ideas. The state, even with its attacks on freedom and peace, is ultimately no match for the truths we love and defend with all the energy we have. Our tradition of thought is deeply rooted in European and American history. It flourishes today among students, faculty and professionals all over the world. Those who seek to stamp it out through intimidation are no match for a body of ideas that has withstood every crisis that has befallen it for centuries, survived and flourished as new young minds joined its cause.

22:04One of the blessings of prosperity is that it permits serious scholarship and teaching, in addition to art and music and all the humane studies, to flourish. In this way, through the intellectual means, civilization perpetuates itself. There will always be crises, financial, economic, social and political. But there will also be great opportunities for change. If we adhere to the spirit as well as the ideas of freedom, then there will indeed be a new dawn. As Mises said, quote, ideas and only ideas can light the darkness. We have the ideas, and they will light our way to victory. Thank you. Do you want any questions or is it time for dancing? Christy? Jeff, the music director?

23:15Let's head out.