War's Challenge to Citizen Concern With Government


By FRED A. ELDEAN, Executive Director, Tax Foundation, New York, N. Y.

Delivered at National Tax Association Conference, Hotel Lowry, St. Paul, Minnesota, October 13, 1941

Vital Speeches of the Day, Vol. VIII, pp. 49-51.

LEAVING entirely to one side the question of whether we are to become engaged in a "shooting war," the tremendous scale of our present defense effort raises for the American people some challenging and perplexing problems.

We are faced with a fact of far-reaching importance. Overnight the Federal Government has suddenly stepped into the role where it is complete master of the nation's economic destiny. What the future will be, it alone will determine. We are caught in the grip of great titanic forces. Where these forces are carrying us, we do not know. What we do know is the uncertainty of our present position and that we have neither chart nor compass for the course upon which we have embarked.

But Mr. Hitler alone is not the only cause of our existing dangers. War merely intensifies and brings to culmination certain trends. War or preparation for defense superimposed upon government and the economic structure bring these long-time trends into sharp focus. Under the pressure of colossal war requirements stresses and strains which have been steadily developing now become clear and suddenly acute.

We are sharply brought up to the unhappy realization that already we have strained the fabric of democracy. At the very time we need its full strength, we find the democratic processes pulling at the seams.

We have turned to the state to find solutions for all kinds of problems that, we see now, might have been better solved, had we been more self-reliant, more determined to meet issues squarely, face to face, rather than to borrow from our children's inheritance.

We have leaned on the state so heavily that we are a little frightened at the very size the state has developed. We have done the very thing our fathers sought to avoid. We have created a great Frankenstein of centralized political power which casts its shadow over every citizen and over every undertaking of whatever kind.

The basic trend straining the democratic process is the steadily accelerating movement in the past few decades of shifting responsibility to a distant government. Whatever its cause, its effect upon the individual's active expression in democracy has been devastating.

Shifting of responsibility has brought government by remote control. It has accelerated centralized government. With this concentration of authority and expansion of services there has come great power—power of almost unbelievable magnitude. The centralized state has emerged. The very concept of government has been subtly changed. We see democracy and republican institutions either struck down or on the defensive throughout the world. Instead of a society made up of free men, each free to achieve his ambition in his own way, unhampered by the state, we see emerging the fetters of a state-controlled economy. We are moving from an incentive to a state society—from an industrial society of production, competitively geared, with gain as the incentive, to a state-controlled society. Throughout the world today this takes on various manifestations. We may sugar-coat what we are doing, we may even affix pretty labels to the process, but the stark fact is—a silent, non-violent revolution has taken place. However this expresses itself, whether with benevolent purpose or evil design, the fact remains that the state has become all-powerful. Those who look to the state for the answer to all problems—the statists—are in the saddle.

This is not to imply that all the actors on the scene necessarily willed changes to go so far. Though statists all over the world have worshipped the state, what some statists have not realized is that the state which can control others cannot always control itself. This may be a curious phenomenon, but state control feeds on itself. It has powerful forces within itself—and decreasing resistances from without—which steadily further growth and expansion.

Once started, state control does not say "let natural forces express themselves." It does not go back to the industrial society. Every problem must be met by some new control.

Thus, we and statists, will-nilly, are caught in a stream of forces which constantly elevates the state until we reach the ultimate of individuals existing for the state—and not the state for the individuals.

We are suddenly becoming aware that we cannot alwayscontrol forces once we set them in motion. For example, we have yet to see whether the state can control inflation. We have yet to see whether the state can control spending.

During the latter twenties there was criticism over the apparent inability to control the upward spiral. Forces were in motion which appeared beyond our ability to control. Suddenly we were over the precipice in the wild downward plunge of a Black Friday. It may not be a Friday this time, but can we stop short of some Black Monday?

Perhaps there may be a further parallel with the twenties. You may recall how those who expressed some apprehension over the rapid upward spiral were denounced as pessimists, dissenters and obstructionists. Yet we dashed madly on. We were in a new era. Today, too, we have the new era boys. Just as then—when the public had its fingers crossed—when the public felt that all did not seem well but desperately hoped it would come out all right, there again appears to be an underlying public feeling that all is not well.

Today we have a new crop of blue-sky boys—who tell us don't worry about spending—don't worry about the public debt—the public debt is different from private debt. Occasionally we hear some argue that not only should we continue to go in debt but that there are dangers in paying the public debt. Those of us who were taught that there were eternal verities cannot believe that through some mystical process we can avoid the consequences of financial indiscretions whether these be personal or those of the state.

The SEC fortunately deals promptly and vigorously with the old-time blue-sky salesman—unfortunately, it does not reach the modern blue-sky boys.

With the emergence of the state has come a new political machine. This machine is like the old just as a modern bomber is like the Wright Brothers' first airplane at Kitty Hawk—but also it is just as different. It is like the old in that it must still have a motor—and that motor is patronage. Only now it has many more cylinders and soars higher. Its swift, smooth flight is far superior to the clumsy, uncertain fluttering of the early machine.

By slow, gradual steps unperceived by many we have come into a new era of power politics. Today we have streamlined politics upon a basis which has no comparison with the past century or with the early days of this century.

We cannot blink at the fact that modern streamlined power politics is fueled by a steady flow of public funds in great volume. Whether power politics brought on vast public spending or public spending made possible the era of power politics is perhaps to raise the question of which came first—the hen or the egg. The observable fact is that both exist side by side.

No useful purpose would be served in citing the extent of our public spending and debt as there is a high rate of obsolescence in these figures. Like the lawyer who confined his study of the law to the statutes and found the legislature presently had repealed all he knew, so we find the rapid expansion quickly making our knowledge out of date. If we comprehend the figures at all, we are lost in their enormity. Those who are not totally oblivious to the figures and their implications are, I am afraid, punch drunk.

At the very time when we need to draw upon the nation's utmost strength we find that strength depleted by a long economic illness from which we have not yet made a complete recovery. We approach a great and vital turning point in our history, not with sureness and confidence, but with doubts and misgivings.

Now this is a completely new experience for the American people. We are suddenly confronted with the fact that we have too long been prodigal with our vast resources, and we have the prodigal's twinge of conscience on a sad and sober morning—after awakening. We have been prodigal with billions, and now we see these billions that have been spent menacing the future in the form of a $100 billion or $200 billion national debt.

Whatever the current-up-to-date figure on public spending and debt is, the vital over-all pressing issue is "what is going to be done about it?" So far, there has been little to indicate that we are to slow down as we hurtle through space at a rate that can be counted only in astronomical billions. We do not deny the necessities of defense—but even there we can insist on getting values without waste. We understand that we cannot have butter and guns too. We accept it. But the public will not accept oleomargarine if government bureaucracy is to have fat creamy butter. Government must lead the way in sacrifices in non-defense items. The challenge to the state and to power politics is: Can it reverse the trend, quickly and broadly enough to save us from what the Secretary of the Treasury says "is a distant threat no longer?" The state is in control. Can it control the forces it has set in motion? That is its responsibility; it cannot be shifted.

Some feel we are over the brink already. Others that we have only months in which to put our house in order. One of the few hopeful signs is the action of Congress on Senator Byrd's proposals calling on the Budget Director for specific economy suggestions of $1 to $2 billion; the other calling for a joint Congressional Committee on Economy. These may be frail reeds but they give us some hope, even as we sweep on in the crest of a swollen flood.

There are six powerful basic resistances opposing any change in the volume of spending.

First, spending is the easy course to pursue.

Second, power politics requires spending—and on a larger scale—to sustain itself. Internal forces within our modern political machine thrive upon spending. Old-fashioned patronage has been replaced by a streamlined super vehicle. Granting the sincerity of the public officials within the governmental machinery, we must nevertheless note that internal conflicts and internal pressures result in more, and not less, spending.

Third, vast segments of the voting populating have a direct financial interest in retaining the state's return to them. This is swelled by the sizable groups with less direct, though important, personal interests.

Fourth, shifting of responsibility has brought with it the vicious practice of looking to this distant government for funds. Municipalities look to the state, and the states join local governments in a tin-cup parade to Washington. Thus, we have government by hand-outs. This "free money" philosophy has accentuated fiscal irresponsibility at all levels of government. It has tended to make the average citizen more and more indifferent to government waste and inefficiency. It has fostered a spending philosophy, not only among our public officials, but among the mass of citizens.

A fifth powerful factor is the pressure groups. These have grown with the expansion of government. They thrive in the trend toward centralized government. They flourish, wax fat and powerful, under government by remote control. The farther government is removed from the citizen, the less articulate he becomes. In the absence of clear expression of the public mind, the pressure groups are able to exert a greater influence as the legislator comes to depend upon the persuasive expression of minority groups.

Sixth, we have had a ten-year educational course in spending. Through a decade the citizen and his political representatives have been taught that public spending andpublic borrowing are not an evil, but a necessary good. The easy-spending habits constitute a real obstacle to reversal of the trend.

These are powerful forces to overcome. The prospect is not bright.

Against this, what have we?

In a practical way, the cost of our public financial indiscretions begins to come home. One of the most hopeful developments is the recent expansion in the number of citizens who are being called upon directly to pay for government costs. Many who heretofore have not felt these costs in any observable way now suddenly are rudely awakened by the impact on their own pocketbooks.

A further hopeful sign is the appearance of resistance to the pressure groups as citizens organize themselves. Perhaps it would be better if there were no pressure groups. However, so long as they do exist on one side there is need for resistance on the other—for unopposed they unbalance democracy.

Third, and the most basic, is what I would like to call the application of our social intelligence to high moral purpose. During the past two decades there has been a lack of a spiritual sense, which has been a major contributing factor to the forces now predominating in the world.

If, and I believe we can, if we can restore our faith in the dignity of the individual man, if we can remember that the state exists to serve man and not man to serve the state—then there is some hope.