How (and Why) Washington Lies About Everything

0:00Thanks to all the supporters for supporting the Mises Institute, especially some of you who have been here for years and years, and I've been around also for years and years at the Mises Institute for more than 20, I think, and I can remember this meeting, you know, the October meeting in the early days where we had about the same 20 or 22, 23 people every October, and it's grown quite a bit. And so the title I gave, as Doug said, is How and Why Washington Lies about Everything. And when they asked me to give a talk, a conference on Washington's Big Lie, it was perfect for me because back in 1992, my co-author James Bennett and I wrote this book, Official Lies, How Washington Misleads Us.

0:54And so I know a thing or two about government lying. Of course, you could write a book that would fill all of the bookshelf space here at the Mises Institute on government lies. And so I'm not going to go over and repeat a thousand government lies for you. But I thought I'd start by mentioning a few statements that government has made, and maybe you can tell me whether you think it's a truth or a lie. And here's one. Every vote counts. Congress shall make no law abridging the freedom of speech, the right of the people to keep Keep and Bear Arms Shall Not Be Infringed, We Are Winning the War on Drugs, The Constitution Applies in Good Times and in Bad Times, Applies to What They Don't Say.

2:17Your boys are not going to be sent into any foreign wars. We don't torture. That's a more recent one. And then Abraham Lincoln was a great humanitarian. That's another one that's in there. And so those are just a few off the top of my head things that I think about. And Joseph Schumpeter, whose picture is up here, Peter had Joseph Schumpeter's picture up here. The picture of the prettiest girl that ever lived will in the long run prove powerless to maintain the sales of a bad cigarette.

3:12There is no equally effective safeguard, however, in the case of political decisions. Many decisions of fateful importance are of a nature that makes it impossible for the public to experiment with them at its leisure and at moderate cost. Even if that is possible, however, judgment is as a rule not so easy to arrive at as it is in the case of the cigarette, because the effects are less easy to interpret. That's a little bit long-winded, but it's a good point. If you compare private advertising in the market to what the government does, and you could call it advertising, I guess, self-promotion and advertising, there are these fundamental, very fundamental differences in the incentive system there. And I wrote an article about this, it was in the Baltimore Sun about a month ago, and it was reprinted on lewrockwell.com, it's sort of related to this point, and it was the title the Sun gave it, it was kind of a very clunky title, it was Business Ethics

4:09The point of the article was, for years I've been annoyed at universities who teach business ethics, and especially mine, my university, at the time, like right now, they're running ads on the radio in Baltimore, that say, learn a different way of doing business, that is, they assume if you're in business, you're by definition immoral, so come and be lectured to by one of our professors, for our left-wing lawyers, and we will make you a moral person. They don't literally say that, but that's what would happen if you were a business person in Baltimore and you signed up for the MBA program at my university on the basis of, well, you want to learn about business ethics. They literally have lawyers and only lawyers who teach about ethics.

4:58And I've always thought that was hilarious, that the lawyers don't ever teach you about ethics. I mean, but that's what I do. But the point I made was that, you know, really a simple point, you know, if you're a liar in business, well, there's a penalty to be paid. There's a market feedback mechanism. Consumers will catch on if you defraud them. You won't get repeat customers. Suppliers are not going to want to do business with you. Your competitors will have every incentive to point out your lies or your fraud. You may be sued and so forth. And that doesn't guarantee honesty, but it sure provides a reward for honesty in terms of customer loyalty. and profits. And I had one of the guest speakers. I had a lecture series in my university was Rabbi Daniel Lapin, who was here, I think, two years ago.

5:45He gave a talk a year and a half ago. And one of the points he made in his talk was in his research, he went on a tour of the South, conducting research on Jewish businesses that have been around for generations. And what Rabbi Lapin found is that he found all these examples of communities and all throughout the South, where for generations, there have been close relationships between the local merchant and the community, they all know each other personally, they're friends, and the main point he made in talking to this group of students is that, well, how could that exist if they're cheating and defrauding these people, you know, year in, year out, generation in, generation out? Well, it couldn't, you know, it's not the nature of competitive capitalism that you get cheated, but it seems to me that, and so the point of my article in the Baltimore Sun, One was that if you want to teach people about ethical problems in society, well, government

6:39is where the real big problems are. It's like thinking, well, there's a fly on the carpet here, and that's a problem, whereas there's a dinosaur out there, Tyrannosaurus rex, charging toward this room. Let's ignore that. That's nothing to worry about. Let's get the fly. And so that's basically the point I made. Maybe later during cocktails I'll tell you about some of the hilarious email hate mail I got from some of the local commies in Baltimore about this, including the county executive in Baltimore County who's a big lefty and accused me of defending the Salmonella outbreak in eggs that was in the news a couple of weeks ago. But the incentives are totally different.

7:24In government there is no market feedback mechanism that penalizes you for being a liar. In fact, Murray Rothbard, in one of his articles, his article on Just War, he mentioned Abe Lincoln, and he said, you know, historians all call Abe Lincoln a master politician, and he was, he was, I tell people he was Bill Clinton times 10,000 in terms of being a slippery politician, but Murray's definition of a master politician is a masterful liar, conniver and manipulator, and so, and that's the way the system is, that's what gets rewarded and Politics, I would argue, because the government gives itself a tremendous degree of autonomy compared to businesses who constantly have to strive to please their customers.

8:10And here's an example of what businesses do to give themselves this, or not businesses, government, to give itself this autonomy. I don't know if people in the back can see this, but what this is is a bar chart of re-election Over the years of the U.S. House of Representatives, and I'm going to show you the Senate, it begins in 1964 and ends in 2008, and if you look at the House of Representatives, the average is about 97%. Even in 1994, the Republican Revolution year, there was still 84% re-election rate in the House of Representatives.

8:56In the Senate, there's a little more variation in the Senate, but the average still looks to be around 80 to 85% in the Senate. And so, with gerrymandering and huge staffs, which are essentially taxpayer-financed campaign staffs, The Congress has rigged the system so that almost nothing can unseat them. Barney Frank, for goodness sake, is still in the Congress. When I lived in the DC area years ago and I would read the Washington Post, I think it's been 15, maybe 20 years now, I can't remember exactly when, but Barney got caught, his boyfriend was running a prostitution ring out of the basement of their house. House. He was on the front page of the Washington Post for a whole week, and of course nothing happened to him other than he's been re-elected ten times since that.

9:45So you can, I mean, would you not end up in jail if you were running a prostitution ring in your town? Don't answer that. But, so you can get away with almost anything. I grew up in Pennsylvania and there was this politician there, a congressman named Flood, And he looked just like Snidely Whiplash in the Bullwinkle cartoons. He had a handlebar mustache. He wore a big fedora hat and a cape, a black cape. I'm not making this up. I could probably find them on Google and find Congressman Flood. And he was convicted of a felony, but I guess the Pennsylvania electoral system, he appealed and I think the electoral system, the laws said if it's under appeal, he can still run for reelection.

10:32And then if he loses the appeal, then he goes, you know, he can't be a congressman. But he was re-elected. And at the time, I was a teenager at the time, I still remember this in the newspaper. They asked people, why did you vote for Congressman Flood? Everyone knows he's a crook. And the general answer was, well, yes, they're all crooks. But he's a pretty good crook that brings back a lot of pork to our district for road building projects and all that. So we like him for that reason. So you can even be a felon, of course, and a lot of people have no problem as long as you keep bringing home the bacon, as they call it. And so, because the system is so rigged like this, there's so much autonomy, you can get away with lying. There's no penalty for lying.

11:17And on top of that, there's the economic principle that's known as rational ignorance. The people are rationally ignorant. That is, most of us spend most of our time educating ourselves on how to do our job, how to raise our families and so forth. And you don't really spend that much time educating yourself on social policy. In fact, when I talk about this to college students, I bring up on the computer in the classroom the alphabetical listing of federal agencies. If you just Google that, you know, there's a big long list, and if you just pick one or two of them out, there'll be a brief description of what it does, and it sounds like, you know, it's hieroglyphics, you know, so no human mind could possibly understand, you know, a tiny, tiny percentage of 1% of what the government does, and therefore we're all rationally ignorant, and that enables the government to get away with a lot of this misinformation that it spreads to us.

12:16And another point about government and misinformation or misinformation is, you know, the purpose of advertising, real advertising, is its competition. It's a way of competing advertising. But government is usually a monopoly in things it does. So you have to ask yourself, why does government advertise if it's a monopoly? Well, the only logical explanation, I think, is just to get the public to acquiesce in whatever it's doing, you know, not to compete because it doesn't compete, doesn't have And of course, one other point before I give you some examples is debt and inflation are the best tools the government has for hiding and lying to us about the true cost of government, not just the cost of wars, but the cost of government in general when it finances them with debt and inflation.

13:07And so, these are just some comments on how the government goes about lying to us. And maybe I should give John Kenneth Galbraith a good kick in the butt here while I have a chance. Galbraith's whole career was based on telling the same story over and over again. Basically, he wrote several books that basically say the same thing, that advertising dupes us into spending too much of our money on things that we don't really need. and therefore the government should tax us more because we're wasting our money on things that we want and we should build more things that John Kenneth Galbraith wants like statues of him in Cambridge Massachusetts or something like that that the government should put up. He spent his whole life doing that and a lot of Americans still believe this to the extent that Americans have any economic knowledge or they think they have economic knowledge that a lot A lot of them are Galbraithians, whether they've read his books or not, they were taught this

14:07in school at some point, and they had this idea. Friedrich Hayek debunked this, though, in a famous article called The Non-Secretary of the Dependence Effect, it was in the Southern Economic Journal around 1960, and Galbraith's famous slogan was that because of all this advertising, that we have a private affluence Amidst Public Squalor, that is, the government sector is in squalor, it's just so small, but we have affluence everywhere, and we're all just too stingy and we don't give the government enough of our money, and that was always the basis of it, but the basis of his argument was that only the innate wants are worthwhile, the ones that are innate within our own minds are worthwhile and worth spending our money on, and not the ones that are brought And in short Hayek responded by saying, well, food, shelter and sex are probably the only innate wants.

15:05Everything else is brought to our attention by somebody else, including the books of John Kenneth Galbraith. So if only the innate wants are worth anything, that would mean the Bible is worthless, Shakespeare is worthless, and as I said the books of John Kenneth Galbraith are worthless. But Galbraith of course got it all backwards. It's government propaganda and lying and advertising, if you want to call it that, that creates the imbalance in terms of a government that is much too big, much bigger than it would be if the citizens had more accurate information about what the government is up to. So now I'm going to give a few examples in the rest of my time. As I said, Jim Bennett and I read a whole book about this years ago. I did a little research on how Prohibition came about in the 1920s.

15:59What was the crusade for Prohibition? Who was for it? What did they say? One of the things I ran across is that the Women's Christian Temperance Union had a Department of Scientific Temperance and they got all the public schools in the country to teach students about alcohol consumption. And so this was a government program. This is before prohibition. This is sort of laying the groundwork for prohibition. So I thought I'd read to you these things and maybe some of you are medical professionals and you can tell us whether these are truths or lies. The majority of beer drinkers die from dropsy. When alcohol passes down the throat, it burns off skin, leaving it bare and burning.

16:44Alcohol causes the heart to beat many unnecessary times, and after the first dose, the heart is in danger of giving out, so that it needs something to keep it up, and therefore the person to whom the heart belongs has to take drink after drink after drink to keep his heart going. This is taught to every public school child in America. Alcohol turns the blood to water. And finally, an invalid man who never drinks liquor will get well, whereas a drinking man will surely die. And so, I just thought that would be kind of a funny thing, in terms of government lies. Another classic example of government lying is, you probably can't see this, the letters are too small.

17:35The oil industry in America was invented right after the Civil War. John D. Rockefeller founded Standard Oil Company in 1866, and as soon as he did that, the government began predicting that we're going to run out of oil at any minute, unless the government takes over. And so let me give you a few examples. I have a chart here that I'll read from. 1866, the U.S. Revenue Commission said, synthetics will be available if oil production ends. So they were already, the year John D. Rockefeller founded Standard Oil, they were predicting the end to oil.

18:21In 1885, the U.S. Geological Survey said, there's little or no chance of finding oil in California, But then 8 billion barrels were pumped from that date to the present. Then in 1891, the Geological Survey said there's little or no chance of finding oil in Texas or Kansas. Now I'll move up to 1914, the U.S. Bureau of Mines. The total future domestic production of oil is only 5.7 billion barrels, But there have been sort of like 50 billion barrels, you know, since then, as opposed to that. Let's see, 1939, the U.S. Department of Interior said, U.S. oil supplies will last only 13 more years.

19:13And so you see, I guess you get the picture of all these crazy predictions. And of course, the purpose of this was always to try to make the case for a government takeover and the takeover of energy industries, because leaving it to the market, we're going to run out of everything, as far as that goes. So that's my second example. Another example that Bennett and I wrote about was poverty statistics. You know, the statistics that come out of government are kind of blinding, and some of the people at this conference have talked about statistics. Statistics, but in the poverty statistics there's an economist named Edgar Browning who gave a presidential address to the Southern Economic Association some years ago and he did a lot of research on the effects of the welfare states and the economics of poverty over the course of his career and published a lot of good articles on it and he took a So look at these claims that the government was making at the time that, quote, the top

20:2220% of income earners receive 44% of total income, as though that's a bad thing necessarily. I guess they're supposed to receive exactly 20% of total income. But when the government makes pronouncements like this and says therefore we need a more progressive tax system to redistribute the wealth, to quote Barack Obama, they say what What they do is, this is based on, at the time, is based on pre-tax income. So they're looking at people who make, say, $100,000 a year, but they don't subtract out the taxes they pay in order to exaggerate how much money they have, what their disposable income is. At the same time, they don't count any of the in-kind benefits that the welfare recipients got.

21:08And in some places, at the time Browning was writing this, in some places people were getting $20,000 or $30,000 a year worth of in-kind benefits, daycare allowances and that sort of thing. And so they intentionally skew the statistics that way. On farming, we had a chapter in this book on farming lies, and one of the funnier ones was the government declared, the government is always declaring that there are a lot more farmers than there actually are out there. For example, it said that there are 2.2 million farmers, but one million of these people denied that they were farmers. What are you talking about? I'm not a farmer. I have a garden in my backyard. I'm not a farmer. One of the definitions was, I think if you own any kind of livestock, like a horse, and I have friends who have young children and they buy them a horse and they keep the horse in a stable somewhere, and on weekends the girls go out and ride the horse, so they're farmers,

22:06Because they own livestock, and so whatever the next farm bill comes around, they want to be able to say this is going to help 2.2 million farmers, not necessarily. Of course, environmentalist propaganda, I could stand up here for a month repeating some of that. But if anybody is, one of the best researchers we had in this area is the late Julian Simon, it was a real loss for the whole freedom movement when Julian Simon passed away. But he was really a badger of the environmental movement and some of their claims. And there was a government report called the Global 2000 Report to the President that was a government funded research project that was supposed to look at all sorts of environmental issues and inform the President and the Congress what all the problems are.

23:01And Julian Simon got a hold of it and found that there was almost no data in there. They made all these claims about running out of resources, for example, without providing any statistics on it. And Simon was a crackerjack statistician. I'll read you some of the things he came up with, just in general. Life expectancy growth rate will decline, says this report to the president. Actually the rate, Simon says the rate is increasing at an increasing rate. Energy prices will increase, the long-term trend is for lower energy prices. Food availability will grow slowly. Simon says that per capita food production have been growing twice as fast as projected.

23:50Overpopulation is catastrophic, they said. And of course, Simon says, well, not necessarily. Look at Hong Kong. Why is it catastrophic there? It is if you don't have capitalism as your economic system, but not necessarily. And so he looked at every one of these claims and debunked them. Of course, Simon is famous for his bet with the environmental hysteric Paul Ehrlich. He made him a bet. I think the way the bet went was he said, Ehrlich, you pick any five minerals in the world and we'll bet an amount of money that the price of every one of those minerals will be lower 10 years from now than it is, betting that they will become more abundant in supply and the Increased Supply will drop the price, and Ehrlich won the bet, and then he asked, not Ehrlich, Simon did, our guy won the bet, and then he asked Paul Ehrlich if he would like to double the money and bet again, and he turned him down.

24:53But Paul Ehrlich is a celebrated entomologist, he's trained in entomology, but he's one of the authors of several famous books, The Limits to Growth was one of his, and it was was all thoroughly debunked when it came out, and he keeps writing the same book essentially about every 10 years, claiming the whole world is going to hell environmentally. I think he predicted there would be 25 million people left in America by 2000 in the 1960s, but he's still, you know, endowed chair holder at Stanford the last time I looked him up and that sort of thing. A few more examples of government lying that are worth mentioning here by the time I have. Here's a good one. This is on the war on drugs.

25:39This is from a government ad in the early days of the war on drugs. Marijuana causes insanity. It incites its users to rape. Those who indulge in its habitual use eventually develop a delirious rage after its administration, During which time they are temporarily at least irresponsible and prone to commit violent crimes. I went to school at a time when half of the student population were potheads, and they were the least violent people you would ever want to see. I never knew a violent pothead. It was the beer drinkers who were the rowdy, violent ones.

26:27And this is a drug administration commissioner, I guess they call him commissioner, in the early days of the war on drugs. He's talking about opium and marijuana. He says, but here we have a drug that is not like opium. Opium has all the good of Dr. Jekyll and all the evil of Mr. Hyde. This drug, marijuana, is entirely the monster Hyde. So that's the sort of thing we got from the war on drugs. And then a final thing that's related to the war on drugs, you know the government publishes all sorts of reports on how good a job it's doing on the war on drugs and I always get kind of a chuckle out of this because it claims to know with great precision down to the decimal points of the decline in drug use that's out there and you've got to wonder how do they know how much illegal heroin use is going on out there.

27:25There's one announcement, we have reduced adolescent drug use by 10%. How would they know that? We reduced adolescent cocaine use by 20% from 1988 to 1999, and so, again, how would they know that? So they give these exact percentages, which is really kind of crazy as far as that goes. And yeah, that was the best one I had here. There's another ad that the government put on TV about drugs, about teenagers, and said something like, if your teenager is feeling lazy, grades are lower, they're depressed, then they're on drugs, and you better do something about it, so teenagers never get depressed over losing a girlfriend, or get lazy, don't want to do their homework, but that's the And so I think what I'll conclude with here is another quote from Schumpeter, Joseph Schumpeter, on the whole racket of government propaganda and lying, where he said, politicians are able to fashion and within very wide limits even to create the will of the people.

28:41People. What we are confronted with in the analysis of political processes is largely not a genuine but a manufactured will. So far as this is so, the will of the people is the product and not the motive power of the political process. The ways in which issues and the popular will on any issue are being manufactured is exactly analogous to the ways of commercial advertising. We find the same attempts to contact the subconscious. We find the same technique of creating favorable and unfavorable associations which are more effective the less rational they are. We find the same evasions, the same trick of producing opinion by reiterated assertion that is successful precisely to the extent to which it avoids rational argument and the danger of awakening the critical faculties of the people.

29:29That's the last thing the government wants to do is to awaken the critical faculties of the people. After all, that's what a public school is for, isn't it? To put those faculties asleep? And of course, that is probably the biggest sin of government lies and propaganda is running the public school system because that's where the lies and propaganda come from. Where else would everyone learn that Abe Lincoln was a great humanitarian, for example? And that's about all I have time for. Thank you very much.