Meet the economist behind the one percent’s stealth takeover of America By Lynn Parramore May 30, 2018 – INET

Ask people to name the key minds that have Carolina, where a Tea Party-dominated shaped America’s burst of radical right-wing Republican Party got control of both houses of attacks on working conditions, consumer the state legislature and began pushing through rights and public services, and they will a radical program to suppress voter rights, typically mention figures like free market- decimate public services, and slash taxes on champion Milton Friedman, libertarian guru the wealthy that shocked a state long a beacon Ayn Rand, and laissez-faire economists of southern moderation. Up to this point, the Friedrich Hayek and Ludwig von Mises. figure of James Buchanan flickered in her peripheral vision, but as she began to study his James McGill Buchanan is a name you will work closely, the events in North Carolina and rarely hear unless you’ve taken several classes also Wisconsin, where Governor Scott Walker in economics. And if the Tennessee-born was leading assaults on collective bargaining Nobel laureate were alive today, it would suit rights, shifted her focus. him just fine that most well-informed journalists, liberal politicians, and even many Could it be that this relatively obscure economics students have little understanding economist’s distinctive thought was being put of his work. forcefully into action in real time? The reason? Duke historian Nancy MacLean MacLean could not gain access to Buchanan’s contends that his philosophy is so stark that papers to test her hypothesis until after his even young libertarian acolytes are only death in January 2013. That year, just as the introduced to it after they have accepted the government was being shut down by Ted Cruz relatively sunny perspective of Ayn Rand. & Co., she traveled to George Mason (Yes, you read that correctly). If Americans University in Virginia, where the economist’s really knew what Buchanan thought and papers lay willy-nilly across the offices of a promoted, and how destructively his vision is building now abandoned by the Koch-funded manifesting under their noses, it would dawn faculty to a new, fancier center in Arlington. on them how close the country is to a MacLean was stunned. The archive of the man transformation most would not even want to who had sought to stay under the radar had imagine, much less accept. been left totally unsorted and unguarded. The That is a dangerous blind spot, MacLean historian plunged in, and she read through argues in a meticulously researched book, boxes and drawers full of papers that included Democracy in Chains, a finalist for the personal correspondence between Buchanan National Book Award in Nonfiction. While and billionaire industrialist Charles Koch. Americans grapple with Donald Trump’s That’s when she had an amazing realization: chaotic presidency, we may be missing the key here was the intellectual linchpin of a stealth to changes that are taking place far beyond the revolution currently in progress. level of mere politics. Once these changes are A theory of property supremacy locked into place, there may be no going back. Buchanan, a 1940 graduate of Middle An unlocked door in Virginia Tennessee State University who later attended MacLean’s book reads like an intellectual the University of Chicago for graduate study, detective story. In 2010, she moved to North started out as a conventional public finance 2 economist. But he grew frustrated by the way slaves,” he wrote in his 1975 book, The Limits in which economic theorists ignored the of Liberty. political process. Does that sound like your kindergarten Buchanan began working on a description of teacher? It did to Buchanan. power that started out as a critique of how The people who needed protection were institutions functioned in the relatively liberal property owners, and their rights could only be 1950s and ‘60s, a time when economist John secured though constitutional limits to prevent Maynard Keynes’s ideas about the need for the majority of voters from encroaching on government intervention in markets to protect them, an idea Buchanan lays out in works like people from flaws so clearly demonstrated in Property as a Guarantor of Liberty (1993). the Great Depression held sway. Buchanan, MacLean observes that Buchanan saw society MacLean notes, was incensed at what he saw as a cutthroat realm of makers (entrepreneurs) as a move toward socialism and deeply constantly under siege by takers (everybody suspicious of any form of state action that else) His own language was often more stark, channels resources to the public. Why should warning the alleged “prey” of “parasites” and the increasingly powerful federal government “predators” out to fleece them. be able to force the wealthy to pay for goods and programs that served ordinary citizens and In 1965 the economist launched a center the poor? dedicated to his theories at the University of Virginia, which later relocated to George In thinking about how people make political Mason University. MacLean describes how he decisions and choices, Buchanan concluded trained thinkers to push back against the Brown that you could only understand them as v. Board of Education decision to desegregate individuals seeking personal advantage. In America’s public schools and to challenge the interview cited by MacLean, the economist constitutional perspectives and federal policy observed that in the 1950s Americans that enabled it. She notes that he took care to commonly assumed that elected officials use economic and political precepts, rather wanted to act in the public interest. Buchanan than overtly racial arguments, to make his case, vehemently disagreed — that was a belief he which nonetheless gave cover to racists who wanted, as he put it, to “tear down.” His ideas knew that spelling out their prejudices would developed into a theory that came to be known alienate the country. as “public choice.” All the while, a ghost hovered in the Buchanan’s view of human nature was background — that of John C. Calhoun of distinctly dismal. Adam Smith saw human South Carolina, senator and seventh vice beings as self-interested and hungry for president of the United States. personal power and material comfort, but he also acknowledged social instincts like Calhoun was an intellectual and political compassion and fairness. Buchanan, in powerhouse in the South from the 1820s until contrast, insisted that people were primarily his death in 1850, expending his formidable driven by venal self-interest. Crediting people energy to defend slavery. Calhoun, called the with altruism or a desire to serve others was “Marx of the Master Class” by historian “romantic” fantasy: politicians and Richard Hofstadter, saw himself and his fellow government workers were out for themselves, southern oligarchs as victims of the majority. and so, for that matter, were teachers, doctors, Therefore, as MacLean explains, he sought to and civil rights activists. They wanted to create “constitutional gadgets” to constrict the control others and wrest away their resources: operations of government. “Each person seeks mastery over a world of 3

Economists Tyler Cowen and Alexander with the Institute for New Economic Thinking Tabarrok, both of George Mason University, (INET), MacLean described Friedman and have noted the two men’s affinities, heralding Buchanan as yin and yang: Calhoun “a precursor of modern public choice “Friedman was this genial, personable theory” who “anticipates” Buchanan’s character who loved to be in the limelight and thinking. MacLean observes that both focused made a sunny case for the free market and the on how democracy constrains property owners freedom to choose and so forth. Buchanan was and aimed for ways to restrict the latitude of the dark side of this: he thought, ok, fine, they voters. She argues out that unlike even the can make a case for the free market, but most property-friendly founders Alexander everybody knows that free markets have Hamilton and James Madison, Buchanan externalities and other problems. So he wanted wanted a private governing elite of corporate to keep people from believing that government power that was wholly released from public could be the alternative to those problems.” accountability. The Virginia school also differs from other Suppressing voting, changing legislative economic schools in a marked reliance on processes so that a normal majority could no abstract theory rather than mathematics or longer prevail, sowing public distrust of empirical evidence. That a Nobel Prize was government institutions— all these were awarded in 1986 to an economist who so tactics toward the goal. But the Holy Grail was determinedly bucked the academic trends of the Constitution: alter it and you could increase his day was nothing short of stunning, and secure the power of the wealthy in a way MacLean observes. But, then, it was the peak that no politician could ever challenge. of the Reagan era, an administration several Gravy train to oligarchy Buchanan students joined. MacLean explains that Virginia’s white elite Buchanan’s school focused on public choice and the pro-corporate president of the theory, later adding constitutional economics University of Virginia, Colgate Darden, who and the new field of law and economics to its had married into the DuPont family, found core research and advocacy. The economist Buchanan’s ideas to be spot on. In nurturing a saw that his vision would never come to new intelligentsia to commit to his values, fruition by focusing on who rules. It was much Buchanan stated that he needed a “gravy better to focus on the rules themselves, and that train,” and with backers like Charles Koch and required a “constitutional revolution.” conservative foundations like the Scaife MacLean describes how the economist Family Charitable Trusts, others hopped developed a grand project to train operatives to aboard. Money, Buchanan knew, can be a staff institutions funded by like-minded persuasive tool in academia. His circle of tycoons, most significantly Charles Koch, who influence began to widen. became interested in his work in the ‘70s and MacLean observes that the Virginia school, as sought the economist’s input in promoting Buchanan’s brand of economic and political “Austrian economics” in the U.S. and in thinking is known, is a kind of cousin to the advising the Cato Institute, a libertarian think better-known, market-oriented Chicago and tank. Austrian schools — proponents of all three Koch, whose mission was to save capitalists were members of the Mont Pelerin Society, an like himself from democracy, found the international neoliberal organization which ultimate theoretical tool in the work of the included Milton Friedman and Friedrich southern economist. The historian writes that Hayek. But the Virginia school’s focus and Koch preferred Buchanan to Milton Friedman career missions were distinct. In an interview 4 and his “Chicago boys” because, she says, 1970s and 1980s and he advised proponents of quoting a libertarian insider, they wanted “to Reagan Revolution in their quest to unleash make government work more efficiently when markets and posit government as the the true libertarian should be tearing it out at “problem” rather than the “solution.” The the root.” Koch-funded Virginia school coached scholars, lawyers, politicians, and business With Koch’s money and enthusiasm, people to apply stark right-wing perspectives Buchanan’s academic school evolved into on everything from deficits to taxes to school something much bigger. By the 1990s, Koch privatization. In Britain, Buchanan’s work realized that Buchanan’s ideas — transmitted helped to inspire the public sector reforms of through stealth and deliberate deception, as Margaret Thatcher and her political progeny. MacLean amply documents — could help take government down through incremental To put the success into perspective, MacLean assaults that the media would hardly notice. points to the fact that Henry Manne, whom The tycoon knew that the project was Buchanan was instrumental in hiring, created extremely radical, even a “revolution” in legal programs for law professors and federal governance, but he talked like a conservative judges which could boast that by 1990 two of to make his plans sound more palatable. every five sitting federal judges had participated. “40 percent of the U.S. federal MacLean details how partnered with Koch, judiciary,” writes MacLean, “had been treated Buchanan’s outpost at George Mason to a Koch-backed curriculum.” University was able to connect libertarian economists with right-wing political actors and MacLean illustrates that in South America, supporters of corporations like Shell Oil, Buchanan was able to first truly set his ideas in Exxon, Ford, IBM, Chase Manhattan Bank, motion by helping a bare-knuckles dictatorship and General Motors. Together they could push ensure the permanence of much of the radical economic ideas to public through media, transformation it inflicted on a country that had promote new curricula for economics been a beacon of social progress. The historian education, and court politicians in nearby emphasizes that Buchanan’s role in the Washington, D.C. disastrous Pinochet government of Chile has been underestimated partly because unlike At the 1997 fiftieth anniversary of the Mont Milton Friedman, who advertised his Pelerin Society, MacLean recounts that activities, Buchanan had the shrewdness to Buchanan and his associate Henry Manne, a keep his involvement quiet. With his guidance, founding theorist of libertarian economic the military junta deployed public choice approaches to law, focused on such affronts to economics in the creation of a new capitalists as environmentalism and public constitution, which required balanced budgets health and welfare, expressing eagerness to and thereby prevented the government from dismantle Social Security, Medicaid, and spending to meet public needs. Medicare as well as kill public education Supermajorities would be required for any because it tended to foster community values. changes of substance, leaving the public little Feminism had to go, too: the scholars recourse to challenge programs like the considered it a socialist project. privatization of social security. The oligarchic revolution unfolds The dictator’s human rights abuses and pillage Buchanan’s ideas began to have huge impact, of the country’s resources did not seem to especially in America and in Britain. In his bother Buchanan, MacLean argues, so long as home country, the economist was deeply the wealthy got their way. “Despotism may be involved efforts to cut taxes on the wealthy in the only organizational alternative to the 5

political structure that we observe,” the weakening pro-public forces and enhancing economist had written in The Limits of Liberty. the lobbying power and commitment of the If you have been wondering about the end corporations that take over public services and result of the Virginia school philosophy, well, resources, thus advancing the plans to the economist helpfully spelled it out. dismantle democracy and make way for a return to oligarchy. The majority will be held A world of slaves captive so that the wealthy can finally be free Most Americans haven’t seen what’s coming. to do as they please, no matter how destructive. MacLean notes that when the Kochs’ control MacLean argues that despite the rhetoric of of the GOP kicked into high gear after the Virginia school acolytes, shrinking big financial crisis of 2007-08, many were so government is not really the point. The stunned by the “shock-and-awe” tactics of oligarchs require a government with shutting down government, destroying labor tremendous new powers so that they can unions, and rolling back services that meet bypass the will of the people. This, as citizens’ basic necessities that few realized that MacLean points out, requires greatly many leading the charge had been trained in expanding police powers “to control the economics at Virginia institutions, especially resultant popular anger.” The spreading use of George Mason University. Wasn’t it just a pre-emption by GOP-controlled state new, particularly vicious wave of partisan legislatures to suppress local progressive politics? victories such as living wage ordinances is It wasn’t. MacLean convincingly illustrates another example of the right’s aggressive use that it was something far more disturbing. of state power. MacLean is not the only scholar to sound the Could these right-wing capitalists allow alarm that the country is experiencing a hostile private companies to fill prisons with helpless takeover that is well on its way to radically, and citizens—or, more profitable still, right-less perhaps permanently, altering the society. undocumented immigrants? They could, and Peter Temin, former head of the MIT have. Might they engineer a retirement crisis economics department, INET grantee, and by moving Americans to inadequate 401(k)s? author of The Vanishing Middle Class, as well Done. Take away the rights of consumers and as economist Gordon Lafer of the University workers to bring grievances to court by making of Oregon and author of The One Percent them sign forced arbitration agreements? Solution, have provided eye-opening analyses Check. Gut public education to the point where of where America is headed and why. ordinary people have such bleak prospects that MacLean adds another dimension to this they have no energy to fight back? Getting it dystopian big picture, acquainting us with what done. has been overlooked in the capitalist right Would they even refuse children clean water? wing’s playbook. Actually, yes. She observes, for example, that many liberals MacLean notes that in Flint, Michigan, have missed the point of strategies like Americans got a taste of what the emerging privatization. Efforts to “reform” public oligarchy will look like — it tastes like education and Social Security are not just poisoned water. There, the Koch-funded about a preference for the private sector over Mackinac Center pushed for legislation that the public sector, she argues. You can wrap would allow the governor to take control of your head around, even if you don’t agree. communities facing emergency and put Instead, MacLean contents, the goal of these unelected managers in charge. In Flint, one strategies is to radically alter power relations, such manager switched the city’s water supply 6

to a polluted river, but the Mackinac Center’s for several of Buchanan’s contributions and lobbyists ensured that the law was fortified by acknowledges that the southern economist protections against lawsuits that poisoned “thought more consistently in terms of ‘rules inhabitants might bring. Tens of thousands of of the games’ than perhaps any other children were exposed to lead, a substance economist.” known to cause serious health problems The rules of the game are now clear. including brain damage. Research like MacLean’s provides hope that Tyler Cowen has provided an economic toxic ideas like Buchanan’s may finally begin justification for this kind of brutality, stating to face public scrutiny. Yet at this very that where it is difficult to get clean water, moment, the Kochs’ State Policy Network and private companies should take over and make the American Legislative Exchange Council people pay for it. “This includes giving them (ALEC), a group that connects corporate the right to cut off people who don’t—or agents to conservative lawmakers to produce can’t—pay their bills,” the economist explains. legislation, are involved in projects that the To many this sounds grotesquely inhumane, Trump-obsessed media hardly notices, like but it is a way of thinking that has deep roots pumping money into state judicial races. Their in America. In Why I, Too, Am Not a aim is to stack the legal deck against Conservative (2005), Buchanan considers the Americans in ways that MacLean argues may charge of heartlessness made against the kind have even bigger effects than Citizens United, of classic liberal that he took himself to be. the 2010 Supreme Court ruling which MacLean interprets his discussion to mean that unleashed unlimited corporate spending on people who “failed to foresee and save money American politics. The goal is to create a for their future needs” are to be treated, as judiciary that will interpret the Constitution in Buchanan put it, “as subordinate members of favor of corporations and the wealthy in ways the species, akin to…animals who are that Buchanan would have heartily approved. dependent.’” “The United States is now at one of those Do you have your education, health care, and historic forks in the road whose outcome will retirement personally funded against all prove as fateful as those of the 1860s, the possible exigencies? Then that means you. 1930s, and the 1960s,” writes MacLean. “To value liberty for the wealthy minority above all Buchanan was not a dystopian novelist. He else and enshrine it in the nation’s governing was a Nobel Laureate whose sinister logic rules, as Calhoun and Buchanan both called for exerts vast influence over America’s and the Koch network is achieving, play by trajectory. It is no wonder that Cowen, on his play, is to consent to an oligarchy in all but the popular blog Marginal Revolution, does not outer husk of representative form.” mention Buchanan on a list of underrated influential libertarian thinkers, though Nobody can say we weren’t warned. elsewhere on the blog, he expresses admiration