The Francis Boyer Lectures on Public Policy

THE THINGS THAT ARENITT CAESAR'S

Paul Johnson

American Enterprise Institute for Public Policy Research THE THINGS THATARENOf CAESAR'S

The Francis Boyer Lectures on Public Policy

THE THINGS THATARENITT CAESAR'S Paul Johnson

American Enterprise Institute for Public Policy Research ISBN 0-8447-1337-6 Second printing, May 1981 Library of Congress Catalog Card No. 80-67987

© 1980 by American Enterprise Institute for Public Policy Research, Washington, D.C. All rights reserved. No part of this publication may be used or reproduced in any manner whatsoever without permission in writing from the American Enterprise Institute except in the case of brief quotations embodiedin news articles, critical articles, or reviews.

The views expressed in the publications of the American Enterprise Institute are those of the authors and do not necessarily reflectthe views of the staff, advisory panels, officers, or trustees of AEI. "American Enterprise Institute" and � are registered service marks of the American Enterprise Institute for Public Policy Research.

Printed in the United States of America

American Enterprise Institute 1150 Seventeenth Street, N.W., Washington, D.C. 20036 THE FRANCIS BOYER LECTURES ON PUBLIC POLICY

The American Enterprise Institute has initiated the Francis Boyer Lectures on Public Policy to examine the relationship between business and government and to develop contexts for their creative interaction. These lectures have been made possible by an endowment from the SmithKline Corporation in memory of Mr. Boyer, the late chairman of the board of the corporation. The lecture is given by an eminent thinker who has developed notable insights on one or more aspects of the relationship between the nation's private and public sectors. Focusing clearly on the public interest, the lecture demon­ strates how new conceptual insights may illuminate public policy issues and contribute significantly to the dialogue by which the public interest is served. The man or woman delivering the lecture need not necessarily be a professional scholar, a government official, or a business leader. The lecture would concern itself with the central issues of public policy in contemporary America­ pointing always in the direction of constructive solutions rather than merely delineating opposing views.

v Lecturers may come from any walk of life-academia, the humanities, public service, science, finance, the mass media of communications, business, and industry. The princi­ pal considerations determining the selection are the quality and appositeness of the lecturer's thought, rather than his or her formal qualifications. The Francis Boyer Lecture is delivered annually in Washington, D.C., before an invited audience. The lecturer is selected by the American Enterprise lnstitute's distin­ guished Council of Academic Advisers, and the lectureship carries an award and stipend of $10,000. The American Enterprise Institute publishes the lecture as the Francis Boyer Lectures on Public Policy. The initial recipient of the Francis Boyer award was Gerald R. Ford, thirty-eighth president of the United States and the Distinguished Fellow of the American Enterprise Institute. The second recipient of the award was Dr. Arthur F. Burns, Distinguished Scholar in Residence at the American Enterprise Institute.

Vl COUNCIL OF ACADEMIC ADVISERS OF THE AMERICAN ENTERPRISE INSTITUTE

PAUL W. McCRACKEN, Chairman, Edmund Ezra Day University Professor of Business Administration, University of Michigan

ROBERT H. BORK, Alexander M. Bickel Professor of Public Law, Yale Law School

KENNETH W. DAM, Harold]. and Marion F. Green Professor of Law, University of Chicago Law School

DONALD C. HELLMANN, Professor of Political Science and International Studies, University of Washington

D. GALE JoHNSON, Eliakim Hastings Moore Distinguished Service Professor of Economics and Provost, University of Chicago

ROBERT A. NrsBET, Resident Scholar, American Enterprise Institute

HERBERT STEIN, A. Willis Robertson Professor of Economics, University of Virginia

]AMES Q. WILSON, Henry Lee Shattnck Professor of Government, Harvard University

vu PREFACE

Paul Johnson brings to this third Boyer lecture the sweep of vision we might expect of an intellectual historian currently at work on nothing less than a history of the modern world. But he also brings to it an extraordinary familiarity with the political and social detail of our lives, as we might expect from one who has also enjoyed a successful career in journalism. In 1964, in his native Britain, Mr. Johnson became the editor of the influentialNew Statesman. As he found him­ self questioning the prevailing liberalism of the day, however, his views diverged from those of that weekly, and in 1970, he resigned to devote himself entirely to writing. He soon published two works of British history, The Offshore Islanders: From Roman Occupation to European Entry ( 1972) and Elizabeth I: A Study in Power and Intellect ( 1974). These were followed by his highly acclaimed History of Christianity (1976), and his controversial Enemies of Society (1977), a critique of leftist dogma in a number of disciplines.

IX In 1980, the American Enterprise Institute named him the firstscholar to hold its DeWitt Wallace Chair in Com­ munications in a Free Society. His theme in the third annual Francis Boyer lecture is what he calls the modern "Frankenstein state," which exists not only in totalitarian countries, but in liberal democracies like Great Britain and the United States. Much of his dis­ turbing evidence is drawn from British experience, but he warns us that in almost every respect America is following in Britain's footsteps. In some ways, he contends, the Ameri­ can bureaucracy already is worse than anything he studied at home. Looking at the problem from a historical perspective, Mr. Johnson makes two main points. First, he argues that large-scale government intervention does not reflect progress and enlightenment. On the contrary, he believes it is a throwback to more primitive societies. The truly progressive pattern of society, he believes, began to emerge in the nineteenth century as capitalist democracies began to replace the overwhelming power of the state. Less authoritative governments allowed the individual and the market to achieve miracles of wealth creation and distribution. Mr. Johnson sees the Frankenstein state as the tragic offspring of two suicidal world wars and believes it is a gigantic aberration in the upward development of mankind. Second, he says the real duties of the state are defense of its territories from external assault, dispensing of even­ handed justice, and maintenance of an honest currency. The more illegitimate duties the state enters-"the things that are not Caesar's"-the less likely it will be able to discharge its primary duties. Mr. Johnson believes all three duties of the state are suffering today. He concludes on a note of hope, however. The evils of the Frankenstein state are beginning to be recog-

x nized, he says, and public opinion is being alerted to correct them. Like the first two Francis Boyer lectures, delivered in 1977 by the Honorable Gerald R. Ford and in 1978 by Dr. Arthur F. Burns, Mr. Johnson's remarks are offered as part of AEI's continuing commitment to the betterment of the public policy process and a belief in the principle that competition of ideas is fundamental to a free society.

WILLIAM J. BAROODY, JR.

President American Enterprise Institute

Xl INTRODUCTION

The Francis Boyer Lecture is rapidly becoming a part of those processes that ultimately shape public policy. It is made possible through an endowment created by SmithKline Corporation in memory of Mr. Boyer, the former chairman of the company. The general theme of the lectures is the relationship between the nation's public sector and its private sector. The series was inaugurated in 1977 with an address by President Gerald R. Ford, followed in 1978 by the Honorable Arthur F. Burns. The third lecturer in this series is Mr. Paul Johnson of the United Kingdom. Our guest was educated at Stonyhurst and Magdalen College, Oxford, with a degree in history. To be sure about the pronunciation of his college's name, incidentally, I con­ sulted my dictionary-itself having somewhat of an Oxonian connection. Up front, as it were, the dictionary commended two pronunciations-Magdalen, and Magdalene. It went ahead to observe, however, that "the vernacular form of the word is Maudlin" and that "the pronunciation represented

Xlll by this spelling is still current for the names of Magdalen College, Oxford, and Magdalene College, Cambridge." Mr. Johnson has spent much of his life in the world of ideas, and we are beginning to understand that what goes on in this world of ideas does, after all, influence the· subse­ quent world of policy and action. The work and career of our guest and, indeed, of the American Enterprise Institute for Public Policy Research illustrate what Alfred Marshall was talking about when he observed: The full importance of an epoch-making idea is often not perceived in the generation in which it is made: it starts the thoughts of the world on a new track, but the change of direc­ tion is not obvious until the turningpoint has been left some way behind.1 Mr. Johnson is widely noted for both his writings and his intellectual odyssey. From 1965 to 1970, he was editor of The New Statesman, an influential British weekly of the left. His views, however, began to change in the 1970s. In 1977, he wrote a political testament, Enemies of Society, that articulated the case against "the fascist left"-a book that was the source of controversy at home and in other nations. Mr. Johnson has also given time and energy to public service. Early in his career he was a captain in the British army, and from 1974 to 1977 he was a member of the Royal Commission on the Press. Our guest has, indeed, been a prolific writer. A few of his other titles will indicate the range of his interests­ /ourney into Chaos, dealing with the Middle East; Elizabeth I: A Study in Power and Intellect; A History of Christianity;

1 Alfred Marshall, Principles of Economics, 8th ed. (London: Macmillan, 1952), p. 205n.

xiv The Civilization of Ancient Egypt; and a forthcoming collec­ tion of essays with the title The Recovery of Liberty. For the third annual Boyer lecture, he chose the subject: "The Things That Are Not Caesar's."

PAUL W. McCRACKEN

Edmund Ezra Day University Professor of Business Administration University of Michigan Chairman, AEI Council of Academic Advisers

xv knight I am to spend thirty minutes discussing what is, perhaps, the most important, and certainly the most com­ plex, public issue which faces us today. What is the correct relationship between the state and society as a whole? Or, more precisely, how big should government be? And what should it do? Let me plunge straight into the problem by listing the three essential activities of government, with which no one but an anarchist would quarrel. First, the state has an absolute obligation to protect the nation's territorial and political integrity. Second, it must maintain internal order and administer justice impartially among its citizens. Third, it must issue and maintain a legal currency. It is at this point that the argument begins: What, in addition to these three basics, should the state do? Now here immediately we come to a widely held and profoundly mis­ taken belief. This is that the state, from its inception to the present day, has slowly and systematically added to its func­ tions-that the expansion of the scope of government is itself a reflection of intellectual advance and moral progress.

PAUL JOHNSON I I Nothing could be further from the historical truth. The earliest states were totalitarian. In the first of them, Egypt, the theocratic monarchy controlled all long-distance com­ merce and large-scale manufacturers. Three thousand years before Christ, it already had a bureaucracy, fiercelydefending its entrenched interests. An apprentice bureaucrat was taught to copy: "Put writing in thy heart, so that thou mayest protect thine own person from any kind of labor, and be a respected official." The Code of Hammurabi, the earliest law code, from 2100 B.C., has no less than seventeen provisions fixing wages and prices.1 Now that the deciphering of the Linear-B script allows us to examine the copious state archives of the Mycenaean-age cities of Greece, we wonder how such a slender agricultural and trading base could support such a prodigious bureaucratic superstructure. But the answer, of course, is that it eventually failed to do so. The societies of antiquity were frequently destroyed by the growth of the state and its parasites. The successive empires of Greece and Rome were the creation of a new spirit of individual enterprise, and it was the extinction of this spirit by bureaucratic growth which brought about their decline. That decline was already well under way by the time that the Emperor Diocletian issued his famous edict to control wages and prices. 2 Rome's suc­ cessor, Byzantium, was the bureaucratic state par excellence, in which the government had a monopoly of all industry and trade; and Byzantium was essentially destroyed, not by the guns of the Ottoman Turks, but by the competition of free­ enterprise Venice.

1 Chilperic Edwards, The Hammurabi Code and the Sinaitic Legislation (New York, 1904), pp. 67·73. 2 Roland G. Kent, "The Edict of Diocletian Fixing Maximum Prices," Uni­ versity of Pennsylvania Law Review (1920), pp. 35.47; quoted in Robert L. Schuettinger and Eamon F. Butler, Forty Centuries of Wages and Price Controls (Washington, D.C., 1979).

2 / THE FRANCIS BOYER LECTURES At all periods, the monster-state is associated with archaic notions and is ultimately the progenitor of economic decline and military ruin. I know of no historical exception to this rule. Conversely, the growth of possessive individual­ ism, at the expense of the state, is always associated with economic advance. It is no accident that the Industrial Revo­ lution, which began in England in the 1760s, took place against the background of the "minimum state," when government confined itself very largely to discharging its three basic func­ tions. The coming of industrial capitalism, not only the most important event in secular history but the most beneficial, took place not because of the state hut despite it; and its worldwide spread was made possible largely by the withdrawal of gov­ ernment from economic affairs. During the nineteenth century in every country which was industrializing itself, public ex­ penditure, as a proportion of gross national product, fell steadily. In Britain, for instance, during the sixty years 1830-1890-the longest sustained period of rising living standards in British history-public expenditure as a propor­ tion of GNP fell from 15 percent to 8 percent.3 In the United States, the figures are even more striking. Up to 1914, Amer­ ica's GNP was expanding at about four times the speed of government. The state performed merely a nightwatchman's role. In the age of Lincoln and Gladstone, the minimum state was seen as a vital element in the stream of progress, because it was associated-and rightly associated-not only with the economic betterment of the individual hut with his growing liberty. Indeed, no student of history can doubt that, in the long run, the direction of mankind is towards greater indi­ vidual freedom. We have moved progressively from the collectivist communities of antiquity to societies in which the

:JRichard Rose and Guy Peters, Can Governments Go Broke? (London, 1979).

PAUL JOHNSON / 3 uniqueness of the individual is conceded, theoretically at least, and the universality of human rights is given formal recognition. Few now officially deny the rights of man; virtu­ ally all agree, as self-evident truth, that freedom is a public good. Just as hypocrisy is the tribute vice pays to virtue, so constitutions, endorsing human rights, are the homage which the most obdurate and enduring tyranny feels obliged to lay at freedom's feet. Even the most depraved African despot sports some utopian certificate to give his regime a spurious legitimacy, while the Soviet Union, the most authori­ tarian and restrictive system of government ever devised, flaunts a constitution of exemplary benevolence. Of course such documents are fraudulent. Who can honestly claim that the total of human freedom has been enlarged in our century? Two horrifying world wars, in which the high liberal civilization of Europe and the Western world came close to committing suicide, have dulled our sensibilities and debauched our instinct for justice. Worst of all, these wars gave birth to that historical throwback, the modern Frankenstein state. Governments have developed not only unprecedented new means to destroy, but new instruments of oppression and new ways to lie. All over the world, the state has gorged itself on the evil novelties human ingenuity constantly makes available. It is the state which has been the principal beneficiary of our twentieth-century horrors. True, all but one of the old empires have been dismantled; but the states which replaced them have eagerly embraced and zealously fostered all the imperialist vices, especially mili­ tarism and bureaucracy, while abandoning such virtues, above all, respect for the rule of law, which imperialism sometimes possessed. In all these states, government has become ubiqui­ tous and menacing, mendacious and corrupt, and in conse­ quence arbitrary and destructive of private happiness and prop­ erty. As for the last and least liberal of the empires, Russia, it

4 / THE FRANCIS BOYER LECTURES is in rude and brutal health; it has enormously enlarged its boundaries, it constantly expands its sphere of influence, it arms without cease, and, within its totalitarian entrails, it fur­ tively breeds the ever-expanding organism of police terror. What is still more disturbing is that, even in the liberal democracies of the Western tradition, the Frankenstein state has contrived to establish itself. It is alive, well, living amongst us and flexing its muscles, looking forward with boundless confidence and insatiable appetite to an indefinite career of growth and consumption. The monster is at large all over Western Europe; and in the United States it is the last, boldest, and most insolent of all the immigrants to clamber onto her shores.

If I spend a little time on the British experience, it is partly that in Britain the Frankenstein state has done the most extensive and obvious damage, but still more because I detect unmistakable signs that almost every aspect of the British disease is spreading to the United States. I can assure you that, wherever you are now heading, we have been there before. Take warning from our bitter experience. We our­ selves were warned, in vain. In 1861, when Mr. Gladstone established the Public Accounts Committee, as a parliamentary watchdog on the growth of government, he warned: "An excess in the public expenditure, beyond the legitimate wants of the country, is not only a pecuniary waste but a great political and, above all, a great moral evil. And it is charac­ teristic of the mischiefs that arise from financial prodigality that they creep onwards with a noiseless and stealthy step, that they commonly remain unseen and unfelt until they have reached a magnitude absolutely overwhelming." 4

4 See "Public Accounts," Parliamentary Debates (Hansard), House of Com­ mons, Monday, December 4, 1978, cols. 1036fJ.

PAUL JOHNSON / 5 This unheeded warning has been proved justified in every particular. Year after year we in Britain have handed over more and more responsibilities to the state. To para­ phrase the Bible: We have rendered unto Caesar the things that are not Caesar's. In Mr. Gladstone's day, the British government employed only 75,000 people, most of them in the Customs and Excise and Post Office. Inthe central depart­ ments of civil government there were only 1,628 officials." By 1974, there were nearly a million of them, and there were more than 8 million employees in the public sector as a whole-27 percent of the entire working population.c By the time public opinion woke up to the magnitude in the rise of public expenditure, in the last two years, it had become what might well be called "absolutely overwhelming." In Mr. Gladston�'s day we spent 8 percent of the GNP on govern­ ment. By 1974, it had reached nearly 50 percent, and it was on a rising curve.7 By this point, all rational sense had been lost as to what the government should or should not do. It was-is­ doing a bit of everything. One middle-ranking civil servant, taking over. new responsibilities, found that in his area alone, government employees were running a gravel pit, a sawmill, a sign-writing center, a road-sweeping service, nurseries pro­ ducing shrubs and trees, a domestic water-supply plant, and a machine-maintenance business. The elements of this little empire had only one thing in common: all were "totally un­ economic." In every case, he wrote, "we could buy the same services or the same products for a fraction of the cost else-

5 1861 census returns. G Economic Trends, No. 268, HMSO, February 1976; C. Sanford and A. Robin· son, "Public Spending: A Decade of Unprecedented Peacetime Growth," The Banlcer, No. 125 (1975). 7 Geoffrey K Fry, The Growth of Government (London, 1979), p. 232.

6 / THE FRANCIS BOYER LECTURES where, even without making allowance for the concealed capi· tal investment which was nearly always involved." 8 This pattern is repeated, on a gigantic scale, at the national level. By the middle of last year, the British govern­ ment found itself owning, wholly or in part, 1,104 busi­ nesses-the great majority of them running at a loss. Apart from that, they seem to have nothing in common. They in­ clude businesses making concrete, asbestos, electrical equip· ment, chemicals, ships, aircraft, and marine equipment; businesses engaged in printing, publishing, construction, civil engineering, cold storage, furniture-removals, nuclear power, oil, gas, rolling mills, quarries, canals, harbors, every con­ ceivable kind of transport, hotels, motels, safari lodges, cater­ ing, communications of all kinds, textiles, cotton, sugar, tea, cocoa and coffee estates, waste-incineration, laboratories, tan­ neries, finance companies, movie studios-everything includ­ ing a chain of bars, a string of racehorses, and a football 0 team. You name it; we own it, and it runs at a loss. As for government agencies-in addition to the main government departments-we have expanded them from less than 10 in 1900 to (at the latest count) 3,068. Among other things, they tell us how to grow apples and pears, market milk, cure alcoholism, make movies, organize supporting activities, dig china clay, train midwives, fix dentistry rates, preserve the Welsh language, make hearing aids, run the herring industry, control detergents, and grow hops. They give advice and enforce laws concerned with horseracing, beer, meat, metrication, medical supplies, pigs, potatoes, red deer, theaters, libraries, and water sports-and a thousand other activities. They include a Consultative Council on Badgers, a Commission for Motor Rallies, and a Working

8 Leslie Chapman, Your Disobedient Servant (London, 1978), p. 51. O Susan Wamhurst, State Interest in British Industry (London, 1978).

PAUL JOHNSON/ 7 Group on Back Pain. In 1975, the last date for which I have full figures, these agencies-Quangos as we call them-em­ ployed 184,000 people and cost the taxpayer nearly $5 billion.10 The spread of government activities has brought into existence whole new categories of workpeople, whose very existence was undreamed of even fifteen or twenty years ago. Here, in the field of social welfare alone, are some of the new officials, using the standard government nomenclature: "Intake Social Workers, Home Help Organizers, Juvenile Delinquency Project Coordinators, Senior Social Workers, Residential Child Care Officers, DeputyCommunity Education and Recreation Officers, Social Workers for Alcoholics Re­ covery Projects, Locum Development Workers, Youth Project Leaders, Day-Care Advisers, Senior Playleaders, House­ parents, Group Controllers of Domiciliary Services, Supervis­ ing Wardens for Traveller's Sites, Team Leaders, Adventure Playground Leaders, Area Coordinators for Self-help Projects, Long Term Play Leaders, Care Coordinators and Play Spe­ cialists." 11 All these people, I may say, are full-time em­ ployees, entitled to life tenure and comprehensive civil service benefits, including noncontributory index-linked pensions. And I should add that, when all the social workers in the east London area went on strike in 1978-1979, and were absent from duty for nearly a whole year, it appears to have made no perceptible difference and led to no recorded complaints among the people they were paid to serve.

10 Philip Holland, Quango, Quango, Quango: The Full Dossier on Patronage in Britain (London, 1979) ; Gordon Bowen, Survey of Fringe Bodies, Civil Service Department (London, 1978). 11 Selection from public appointments advertised in a single issue of the journal New Society (June 1978).

8 / THE FRANCIS BOYER LECTURES This is not just a case of Ye Olde Englishe customs. The Frankenstein state is America's most recent immigrant, but I have the impression that it is growing even more rapidly over here than in Britain. Between 1971 and 1976, welfare programs in the United States expanded at the annual rate of more than 25 percent-two and one-half times the growth of the gross national product. Estimated welfare expenditures in 1977 were $210 billion and in 1979 were $250 billion, so that growth rate is being well maintained, despite President Carter's so-called reform program.12 Indeed, I detect areas in which the United States is al· ready outstripping Britain in the nurturing of the Frankenstein state. One excellent index of bureaucracy is the level of paperwork generated by central government. I see thatfederal expenditure on paperwork doubled between 1955 and 1966 and nearly doubled again by 1973, and that in the four years 1973-1977, it leapt by a further 186 percent, to reach a total of $45 billion a year. A great part of this terrifying increase springs from new or greatly expanded utopian pro· grams, such as Basic Educational Opportunity, Equal Em­ ployment Opportunity, Environmental Protection, Occupa­ tional Safety and Health, Food Stamps, Student Loans, Price Controls, Supplemental Security Income, and so on. The paperwork involved in licensing a nuclear power plant, for instance, now frequently exceeds 15,000 pages-the size of a multivolume encyclopedia-and may cost $15 million to the utility which makes the application.13 Last year the U.S. Comptroller General calculated that U.S. businesses, in ful­ filling over 2,100 federal reporting requirements, have to

12 Charles D. Hobbs, "The Goals of the Welfare Industry," Policy Review (Spring 1978). 13 U.S. Commission on Federal Paperwork, Final Summary Report, U.S. Gov· ernment Printing Office (Washington, D.C., 1977); Janet T. Bennett and Max­ well H. Johnson, "The Political Economy of U.S. Government Paperwork," Policy Review (Winter 1979).

PAUL JOHNSON/ 9 spend nearly 70 million hours a year on government paper­ work at a cost of over $1 billion.14 This rapid growth of the public sector is not only an evil in itself: it breeds further evils. It corrupts the political system. We calculated that at Britain's last general election in May, considerably more than half of all Labour voters were either government workers or in receipt of government assistance. It is now not only technically possible, but even likely that Labour may be able to win an election entirely by the votes of nonproductive workers and welfare recipients. In the United States the position is different, but only in degree, not in kind. You already have a welfare industry composed of 5 million public and private welfare workers, distributing government payments and services to 50 million people.15

By far the most important consequence, though it is little discussed, is that when the state begins to do the things that are not Caesar's, it inevitably begins to neglect Caesar's primary duties. It is not a question of the state taking on additional roles; beyond a certain point, it is a question of alternatives-of either/or. Let us take the government's basic duties in turn. First, the stability of the currency. As long ago as 1945, the British economist Colin Clark argued that a democratic state in peacetime could not take more than 25 percent out of the GNP without generating increasingly rapid inflation. Everything that has happened in the last decade shows how right he was. In the 1970s, the British state was not only grabbing half of the GNP, but in one year, 1976, its borrowing requirements alone were 11 percent of

H Report of the Comptroller General of the United States, Federal Paperwork: Its Impact on American Businesses, November 17, 1978. 15 Hobbs, "Goals of the Welfare Industry."

10 / THE FRANCIS BOYER LECTURES GNP. The result was hyperinflation. The state reneged on its basic obligation to maintain an honest currency. The United States is now undergoing exactly the same experience, and for exactly the same reasons. Of course, the value of the currency is the index of the health of the economy-in my opinion, the only true index in the long run. If the state plunders the nation's resources, the wealth-generating sector must suffer. And it suffers in a funda­ mental way, by being starved of investment. The studies of Robert Bacon and Walter Eltis in Britain have proved beyond any rational doubt that the growth of the state sector is the primary reason why investment in British industry is so low, and therefore productivity so stagnant.16 With the growth of the Frankenstein state here, America's recent productivity record has been worse even than Britain's; and as last month's OECD report made plain, this is due to reduced private in­ vestment, a lower ratio of research as a proportion of GNP, and increased government regulation.17 But why do we need to be told these obvious truths? They were spelled out with admirable clarity by Adam Smith two hundred years ago. One of the central themes of his Wealth of Nations is that private individuals create wealth, and government consumes it. 18 The more the government con­ sumes, the less the private sector has to invest. So wealth accumulates more slowly, or not at all, or even declines. Of course, Smith was thinking in terms of the court of Versailles, the largest, most ostentatious and prodigal of the governments of his day. But in economic terms, there is no difference between an eighteenth-century court government and a modern

10 Robert Bacon and Walter Eltis, Britain's Economic Problem: Too Few Producers (London, 1976) ; and the subsequent discussion in Economic Journal (June 1979). 17 Christopher Lorenz, "Now America Needs Its Own Miracle," Financial Times, November 21, 1979. 18 Especially Bk. 2, Chap. 3.

PAUL JOHNSON I II welfare bureaucracy. Whether Louis XV gives the cash to Madame du Barry or President Carter spends it on Equal Opportunity programs, the damaging effects on productive investment are exactly the same. Near where I live, our local government bureaucrats have, in fact, just built themselves a palace, even larger than Versailles, at a cost of $50 million. Of course it is not called a palace, but a "Community Center." It does not have a Hall of Mirrors, but it has air-conditioning and an ultramodern "communications system." Our bureau­ crats do not see themselves as parasites. Nor did the Ver­ sailles courtiers, who also argued that they performed indis­ pensable functions. And the courtiers at least did not have unions to protect and swell their numbers and increase their stipends and privileges. The old-style court, as a vested in­ terest, was a fairly fragile corporation. The modern welfare bureaucracy, by contrast, has powerful institutional defenses and a noisy moral ideology.

The second of the state's obligations is the dispensing of justice. Here again, the Frankenstein state makes it in­ creasingly difficult for the primary duty to be discharged. In the United States and Britain, the ideology of the hyperactive state is the promotion of social justice. But there is no such thing as social justice; or rather, it is a contradiction in terms. What is meant, of course, is social engineering, for the only form of justice is individual · justice. The sole aspect of equality which the state has a right, indeed an overwhelming duty, to promote is equality before the law. The pursuit of social and economic equality is, and must be, the enemy of justice. Positive discrimination, for instance, does and must mean injustice to individuals, and in almost every case to underprivileged individuals. Social engineering in education must mean injustice to individuals; indeed, it is deliberately

12 / THE FRANCIS BOYER LECTURES designed to produce it. In that model welfare state, Denmark, the notorious state plan, called U-90, produced by the Ministry of Education, states explicitly that particularly bright and well-motivated children should be discouraged from learning, and taught that their individual success and the pursuit of their personal interests is unfair to others and should be sup­ pressed.10 These methods have been practiced for some years in Sweden and are already reflected in the lamentable eco­ nomic decline of that bureaucratic country; they are implicit in much educational theory already applied in British and American state schools. There are other ways in which the monster state ac­ tually impedes its own primary functions of enforcing the law. In Britain, and, indeed, in America too, it is now a common­ place for social workers to spend much of their time locked in battle with the police and other law-enforcement agencies. In Britain, the state-financed Community Law Centers-in­ stitutions we borrowed from America-regard the police and other government bodies as their natural and inveterate enemies, to be fought with every taxpayer's penny they can command. Two of our newest and most active state agencies, the Equal Opportunities Commission and the Race Relations Commission, spend a great and growing proportion of their time "investigating" and suing government departments. We have in Britain, and you will shortly be getting in America, a Frankenstein state so big that it fights internal pitched battles and civil wars, and in which government officials incite and assist citizens to break laws which other government officials are paid to enforce. The monster state, indeed, is taking us along a road toward a divided and querulous society in which everyone

JO David Gress, "Trends in the Scandinavian Left," paper presented at the Institute for European Studies Conference, Milton Hill House, Oxfordshire, November 1979.

PAUL JOHNSON/ 13 pursues rights and no one accepts duties. In both our coun­ tries, government agencies encourage a maximist attitude to rights-that they must be exacted always, to the limit, and re­ gardless of the cost to the community. In Britain, the legal luminaries of the Labour party now demand a comprehensive and free state legal service, on the grounds that, if rights are guaranteed by law, "effective means of enforcing them should also be provided." They define such rights as "security in home and employment, minimum income, right to liberty and freedom from physical attack and injury." 20 I would argue that these are rights that no state can truthfully guarantee and no legal system effectively enforce. Similar demands are made here. It is a formula for a litigational society. Such a society cannot produce an extension of rights. It can only end in producing a conflict of rights, since the sum of all our national rights is greater than the amount of freedom available to accommodate them. And a conflict of rights which society is powerless to resolve is bound to end in violence. The final paradox of the democratic monster state is not only that it destroys its own currency, not only that it undermines its own framework of law and order, but that it cannot even defend its vital interests and the lives of its citi­ zens from external outrage and murder. In Britain and America, while the proportion of the GNP the state takes has been rising steadily, the proportion of that income it spends on defense has been falling. The results are becoming pain­ fully and visibly apparent. You cannot relieve a beleaguered American embassy by airlifting a regiment of welfare workers. You cannot frighten Mr. Brezhnev with food stamps. The more the state attempts to invest its citizen with the illusory rights of utopia, the less able it becomes to guarantee him the

20 Submission by the Society of Labour Lawyers to the Royal Commission on Legal Services, London, 1978.

14 / THE FRANCIS BOYER LECTURES ones that really matter-life, liberty, and the enjoyment of what he has earned. The more the state expands, the more it loses its credibility as a benevolent and paternal protector. When Caesar becomes a nursemaid, he ceases to be a soldier. The monster state, with its prodigal waste, its promotion of injustice in the name of equality, and its muscle-bound im­ potence, cannot inspire respect, let alone love: in the last resort the only emotional response it evokes is fear. The citizen becomes a mere subject. Patriotism is replaced by indifference-oreven hatred. I once regarded the state as a means whereby the less fortunate among us could be enabled to achieve the self­ expression and moral fulfillment which is their aspiration as creatures made in God's image. While continuing to desire the end, I no longer have any confidence in the state as the means. On the contrary, I have come to see it as the biggest single obstacle to the individual self-expression and moral maturity of all of us, and not least the poor, the weak, the humble, and the passive. My change of view has been brought about by ex­ perience, notably the grim record of the last decade in Britain, where the cumulative evils fed by the growth of collective power and state expansion have become overwhelmingly mani­ fest. But it has also been brought about by historical study. History is a powerful antidote to contemporary arrogance. It is humbling to discover how many of our glib assumptions, which seem to us so novel and plausible, have been tested before, not once but many times and in innumerable guises, and discovered to be, at great human cost, wholly false. It is sobering, too, to find huge and frightening errors constantly repeated; lessons painfully learned, forgotten in the space of a generation; and the accumulated wisdom of the past heedlessly ignored, in every society, and at all times.

PAUL JOHNSON/ 15 Of all those lessons, the one which history most earnestly presses upon us, and which we most persistently brush aside, is: "Beware the state." Man, as history shows only too clearly, has that element of the divine in him, the element which causes him ceaselessly to strive for the ideal. It is his glory and his ruin. For in his utopian quest he em­ braces the political process as the road to perfection. But the political process is itself a delusion, more likely to lead to hell than to heaven. If a society is unlucky, the political pro­ cess, pursued relentlessly enough, will carry it straight to Auschwitz or the Gulag Archipelago. But even the most fortunate societies, such as ours, will find nothing at the end of that dusty track but the same man-made monster, the state, as greedy and unfeeling as it was when man first invented it in the third millennium before Christ, with its cavernous mouth, its lungs of brass, its implacable appetite and unap­ peasable stomach, but with no heart, no brain, and no soul. I believe it is possible to detect, on both sides of the Atlantic, hopeful signs that we are learning this lesson. The claims of the monster state are being exposed, one by one, as fraudulent, and the evil consequences of its expansion are being examined and publicized. In those parts of the world where debate is still free, the advocates of collectivism are already on the defensive. We are winning the battle of the intellect, and in time we shall win the battle of government too. By the end of this century, if Western civilization exists at all, it will have resumed its progress toward the liberation of human spirit and genius. When we look back from the year 2000, I think we shall see the end of the 1970s as the turning point, when the civilized world, not without pain and grief, returned to its senses, and the democratic state ceased to be our master and became again the servant of the people.

16 / THE FRANCIS BOYER LECTURES American Enterprise Institute