Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York—www.fee.org.This essay has been adapted for CEIL by the author from an essay first published in the March 2006 issue of National Review Online. The disaster in New Orleans from Hurricane Katrina occurred the previous August.

The year 1887 was a tough year in Texas. Day after day brought hot, dry winds that parched the land. Farmers saw their crops wither and their cattle grow weak from thirst. Spirits faltered as desperate Texans prayed for rain, seemingly to no avail. Eager to help (at least with other people’s money), congressmen pushed through a bill to provide federal aid in the form of seed, but one man stood in their way—America’s 22nd president, Grover Cleveland. At a time when the federal budget boasted a large surplus, he vetoed the bill.

What kind of man could say no to free seed for his salt-of-the-earth brethren in distress? Was Cleveland, son of a Presbyterian minister, a cold, cruel and heartless Scrooge? Could this be the same man who once taught at the New York Institute for the Education of the Blind and cultivated a passionate, lifelong devotion to helping the sightless?

Yes indeed, one and the same. But the president was no mean-spirited miser. He simply knew what almost no one in Congress today understands: He knew the decisive difference between government and everything else. If he were alive to witness the tragic antics of Federal Emergency Management Agency in the aftermath of Hurricane Katrina, he might be sorely tempted to say, “I told you so.”

A federal bureaucracy that shells out $438 per night to house New Orleans evacuees in a Manhattan hotel, blows $300 million on trailers that sit and rot many miles away from the intended recipients, stymies help from the Red Cross and other government departments, doles out $2,000 debit cards to just about anybody who needs a tattoo and a massage, and runs ice trucks to every corner of the country except where the ice is needed: These are not the fruit of the allegedly insensitive, laissez-faire 1880s. They are the product of our “compassionate” and gargantuan government, for which every need is an excuse to spend, grow, politicize and subsume.

In his veto of the Texas Seed Bill, Cleveland warned against a general disregard of the “limited mission” of the federal government. He didn’t think Congress or the president should torture the Constitution until it confessed that disaster relief was among the responsibilities of Washington, D.C. He felt that the country should heed the time-honored lesson that, as he put it, “Though the people support the Government, the Government should not support the people.”

The welfare-statists of our time have saddled us with $8 trillion in debt, a federal tax burden seven or eight times that of Cleveland’s day, and a legacy of handout programs that have yielded little more than dependency and dysfunctional families. Billions in corporate welfare have exacted a similar toll on American enterprise. Cleveland tried to tell us that government has nothing to give anybody except what it first takes from somebody, and that a government big enough to give us everything we want is big enough to take away everything we’ve got. But somewhere along the way we fooled ourselves into thinking that government can help our brothers and sisters better, more quickly, and more cheaply than we can help them ourselves. What a sorry mess of pottage we’ve mortgaged our children’s future for.

Nonetheless, Americans are still the most generous charity givers on the planet. The best evidence that we haven’t entirely lost the instincts Cleveland appealed to is the fact that when Americans want to donate money to help others, they don’t make their checks out to FEMA or any other government agency.

Cleveland didn’t say no to drought relief because he thought hurting farmers didn’t deserve relief. He urged Americans in general and members of Congress in particular to give from their own hearts and personal resources. His veto message noted, “The friendliness and charity of our countrymen can always be relied upon to relieve their fellow citizens in misfortune.” Aid from Washington, D.C., he wrote, only “encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character.”

Those farmers in Texas got their aid, all right—as much as 10 times or more in private assistance as the amount that Cleveland refused to launder first through a federal bureaucracy.

Just six years before in another example of monumental generosity, Americans came to the rescue of their fellow citizens through private means. In 1881, Clara Barton mobilized her newly formed American Red Cross in its first major disaster-relief effort, pouring a gusher of money, food, clothes and volunteers into Michigan after a raging fire destroyed much of four counties. American history is replete with similar stories of people helping people in the absence of largesse from Washington, D.C.

As the Katrina recovery continues, the federal government will do what the federal government does best. It will talk, squawk, and pontificate. It will hold hearings, point fingers, and proclaim its good intentions. It will learn nothing and change little, for that is the nature of the beast and a big reason our Founders wanted it kept small and constrained in the first place. It will, as one of Franklin Roosevelt’s cronies once said, “tax and tax, spend and spend, elect and elect.”

I suspect that meanwhile, in spite of the mind-numbing hurdles that big government puts in their way, the real heroes will be quiet folks who help their fellow citizens by what they give and by what they build. Grover Cleveland told us we could count on them because they, at least, have never let us down.

Tibor Machan teaches philosophy at Auburn University, Alabama. His recently edited volume “Commerce and Morality” was just published by Rowman and Littlefield, and he is now working on a book titled “Public Realms and Private Rights” for the Independent Institute of San Francisco.

There is much talk these days about government corruption. Scandals abound and usually involve special benefits obtained by organizations from local, state, or federal governments. Government officials are accused of playing favorites as they carry out their duties. They are charged with accepting gifts or campaign contributions in return for giving supporters special treatment.

But there is reason to believe that the more obvious improprieties are merely routine behavior carried out somewhat ineptly. In other words, it is very doubtful that politics in our society involves anything more noble than playing favorites, serving special interests—and neglecting what could be reasonably construed as the true public interest.

Although the distinction between the public and the private interest is quite meaningful, the democratic welfare state totally obscures it. Such a system favors majority role regarding any concern that some member of the public might have (if it can be brought to public attention). It treats everyone’s project as a candidate for public support. And, of course, most every person or group has different objectives. Thus, so long as these objectives can be advanced by political means, they can gain the honorific status of “the public interest.”

It is noteworthy that this may be the result of what Professor Benjamin Barber of Rutgers University has called a strong democracy—a political system that subjects all issues of public concern to a referendum. This approximation of strong democracy—where, for example, just wanting to add a porch to one’s home must be cleared with the representatives of the electorate—has produced our enormous “welfare” state. Yet it was just this prospect that the framers of the U.S. Constitution wanted to avoid. That in part accounted for their insistence on a Bill of Rights, namely, on denying to government-democratic, monarchical, or whatever—the kind of powers that strong democracy entails.

To see how confusing things have become in this kind of strong democracy/welfare state, consider a few current topics of “public concern.” Take, for example, wilderness preservation, an issue that appeals to many and cannot be considered a bad example—environmentalists who favor interventionist policies certainly believe that government preservation of wilderness areas is in the public interest.

Yet it is not unreasonable to suppose that many people do not have the wilderness as their top priority. Sure, they might like and even benefit from some of it. But in the main, they might prefer having at least part of the wilderness given up in favor of, say, housing development which might better suit their needs.

Or take all those Ralph Nader-type crusades for absolutely safe automobiles, risk-free medical research, and the banning of genetic experiments. Mr. Nader is the paragon of the so-called public-minded citizen, presumably without a self-interested bone in his body. Whatever his motives, however, his concerns quite legitimately are not shared by many citizens—.g., those who would prefer more powerful, maneuverable automobiles that can quickly get out of tight spots. These people might well lead better lives without all this worry about safety—they might be good drivers for whom Nader’s concern about safety is superfluous.

Jeremy Rifkin, a Nader type who would ban all genetic experimentation, is another of those who bill themselves as public interest advocates, presumably without a tinge of self- or vested interest to their names. But such persons in fact serve quite particular interests. These and similar-minded individuals clearly do not favor the general public. They favor, instead, some members of it. The rest can fend for themselves when Mr. Rifkin and others gain the political upper hand.

The point is that when government does so much—in behalf of virtually anyone who can gain political power or savvy—it is difficult to tell when it is serving the true public interest. Everyone is pushing an agenda on the government in support of this or that special interest group.

There is under such a system hardly any bona fide public service at all. In this case, laws often serve a private or special purpose—.g., smoking bans in restaurants, prohibition of gambling, mandatory school attendance, business regulations that serve the goals of some but not of others. Such a bloated conception of the “public” realm even undermines the integrity of our judicial system. Courts adjudicating infractions of such special interest laws become arms of a private crusade, not servants of the public.

An Erosion of Confidence

One consequence of this is that confidence in the integrity of government officials at every level, even those engaged in the essential functions of government, is becoming seriously eroded. The police, defense, and judicial functions all are suffering because government has become over-extended.

As government grows beyond its legitimate functions, scandals become the norm. They certainly should not be surprising. They merely represent the more obviously inept ways of trying to get the government to do your own private, special bidding.

It is all just a matter of getting your part of the pie out of Washington—whether it be day care for your children, a monument to your favorite subjects, help to unwed mothers, support of faltering corporations, or protection of the textile industry from foreign competition. Everyone wants to get the government on his side. Some people do this in ways that make it all appear on the up and up. They hire the necessary legal help to navigate the complicated catacombs of the welfare state. Others aren’t so adept.

In such a climate it is actually quite surprising that not more scandals erupt. Probably that is due to even more corruption—in this case cover-ups.

Were government doing something more nearly within its range of expertise—protecting individual rights from domestic and foreign threats—some measure of ethical behavior could be expected from it. But when, despite all the failures and mismanagement of government, people continue to go to it to ask for bailouts, why be surprised when some do it more directly, without finesse? And why wonder at their claim, when caught seeking favors openly and blatantly, that they are innocent?

In light of this, an old adage gains renewed support: the majority of people get just the kind of government they deserve. It is they who clamor for state favors by dishonestly calling their objectives the “public” interest. Notice how many look to political candidates for future favors, how many support this or that politician because they expect something in return once the political office has been gained. Unfortunately, many of us who choose not to play the political game have the results imposed on us in the form of higher taxes and more burdensome regulations.

It may be surprising, after all this, that there are certain matters which are of genuine public interest the Founding Fathers had a clear idea of the public interest, as have most classical liberals. The public interest amounts to what is in everyone’s best interest as a member of the community—the defense of individual fights from domestic and foreign aggression. Here is where our individual human rights unite us into a cohesive public, with a common interest. We are justified in establishing a government, with its massive powers, only if this is our goal to protect and maintain the public interest so understood.

Once we expand the scope of the public in effect make the concept “public” quite meaningless the powers of the state get involved in tasks that serve only some of the people, and often at the expense of other people. And that simply breeds bad government—whether hidden, by phony legislation and regulation, or by means of out- and-out corruption and subsequent scandal.

It is therefore not surprising that the welfare state is so susceptible to misconduct. The lesson we ought to take away is that the scope of government should be reduced to proper proportions—the defense of individual rights.

This article has been published with FEE‘s permission and has been originally published at The Freeman March 1989 • Volume: 39 • Issue: 3.

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York—www.fee.org.This essay has been adapted for CEIL by the author from an essay first published in the November 1994 issue of FEE’s journal, “The Freeman.”

Advocates of the spontaneous order of freedom and free markets are forever stomping out the fires of fallacious reasoning, anti-capitalist bias, and twisted history. It seems that as soon as we put out one fire, opponents of the market manage to ignite ten others.

We spend as much time explaining the workings of the market as we do debunking myths and clichés about it. Statists and interventionists spout an endless stream of put-downs and one-liners that pass as thorough critiques of the market, each one requiring a time-consuming, painstaking response and appeal to reason. We are constantly rewriting prejudiced accounts of history to match what really happened.

Nearly ninety years ago (note: now 105 years ago), muckraking novelist Upton Sinclair wrote a book titled The Jungle which wove a tale of greed and abuse that reverberates to this day as a powerful case against laissez faire. Sinclair’s focus of scorn was the meatpacking industry. The objective of his effort was government regulation. The culmination of his work was the passage in 1906 of the famed Meat Inspection Act, enshrined in most history books as a sacred cow (excuse the pun) of the interventionist state.

Were Sinclair’s allegations of a corrupt industry foisting unhealthy products on an unsuspecting public really true? And if so, should the free market stand forever indicted and convicted as a result? A response from advocates of freedom is long overdue. Here’s a healthy start.

The Jungle was, first and foremost, a novel. It was intended to be a polemic—a diatribe, if you will and not a well-researched and dispassionate documentary. Sinclair relied heavily on both his own imagination and on the hearsay of others. He did not even pretend to have actually witnessed the horrendous conditions he ascribed to Chicago packinghouses, nor to have verified them, nor to have derived them from any official records.

Sinclair hoped the book would ignite a powerful socialist movement on behalf of America’s workers. The public’s attention was directed instead to his fewer than a dozen pages of supposed descriptions of unsanitary conditions in the meatpacking plants. “I aimed at the public’s heart,” he later wrote, “and by accident I hit it in the stomach.” ^[1]

Though his novelized and sensational accusations prompted later congressional investigations of the industry, the investigators themselves expressed skepticism of Sinclair’s integrity and credibility as a source of information. President Theodore Roosevelt wrote of Sinclair in a letter to William Allen White in July 1906, “I have an utter contempt for him. He is hysterical, unbalanced, and untruthful. Three-fourths of the things he said were absolute falsehoods. For some of the remainder there was only a basis of truth.” ^[2]

Sinclair’s fellow writer and philosophical intimate, Jack London, wrote this announcement of The Jungle, a promo that was approved by Sinclair himself:

Dear Comrades: . . . The book we have been waiting for these many years! It will open countless ears that have been deaf to Socialism. It will make thousands of converts to our cause. It depicts what our country really is, the home of oppression and injustice, a nightmare of misery, an inferno of suffering, a human hell, a jungle of wild beasts.

And take notice and remember, comrades, this book is straight proletarian. It is written by an intellectual proletarian, for the proletarian. It is to be published by a proletarian publishing house. It is to be read by the proletariat. What Uncle Tom’s Cabin did for the black slaves The Jungle has a large chance to do for the white slaves of today. ^[3]

The Jungle’s fictitious characters tell of men falling into tanks in meatpacking plants and being ground up with animal parts, then made into “Durham’s Pure Leaf Lard.” Historian Stewart H. Holbrook writes, “The grunts, the groans, the agonized squeals of animals being butchered, the rivers of blood, the steaming masses of intestines, the various stenches . . . were displayed along with the corruption of government inspectors” ^[4] and, of course, the callous greed of the ruthless packers.

Most Americans would be surprised to know that government meat inspection did not begin in 1906. The inspectors Holbrook refers to as being mentioned in Sinclair’s book were among hundreds employed by federal, state, and local governments for more than a decade. Indeed, Congressman E. D. Crumpacker of Indiana noted in testimony before the House Agriculture Committee in June 1906 that not even one of those officials “ever registered any complaint or [gave] any public information with respect to the manner of the slaughtering or preparation of meat or food products” ^[5]

To Crumpacker and other contemporary skeptics, “Either the Government officials in Chicago [were] woefully derelict in their duty, or the situation over there [had been] outrageously over- stated to the country.” ^[6] If the packing plants were as bad as alleged in The Jungle, surely the government inspectors who never said so must be judged as guilty of neglect as the packers were of abuse.

Some two million visitors came to tour the stockyards and packinghouses of Chicago every year. Thousands of people worked in both. Why is it that it took a novel written by an anti-capitalist ideologue who spent but a few weeks there to unveil the real conditions to the American public?

All of the big Chicago packers combined accounted for less than 50 percent of the meat products produced in the United States; few if any charges were ever made against the sanitary conditions of the packinghouses of other cities. If the Chicago packers were guilty of anything like the terribly unsanitary conditions suggested by Sinclair, wouldn’t they be foolishly exposing themselves to devastating losses of market share?

Historians with an ideological axe to grind against the market usually ignore an authoritative 1906 report of the Department of Agriculture’s Bureau of Animal Husbandry. Its investigators provided a point-by-point refutation of the worst of Sinclair’s allegations, some of which they labeled as” willful and deliberate misrepresentations of fact,” “atrocious exaggeration,” and “not at all characteristic.” ^[7]

Instead, some of these same historians dwell on the Neill-Reynolds Report of the same year because it at least tentatively supported Sinclair. It turns out that neither Neill nor Reynolds had any experience in the meatpacking business and spent a grand total of two and one-half weeks in the spring of 1906 investigating and preparing what turned out to be a carelessly-written report with preconceived conclusions.

Gabriel Kolko, a socialist but nonetheless an historian with a respect for facts, dismisses Sinclair as a propagandist and assails Neill and Reynolds as “two inexperienced Washington bureaucrats who freely admitted they knew nothing” ^[8] of the meatpacking process. Their own subsequent testimony revealed that they had gone to Chicago with the intention of finding fault with industry practices so as to get a new inspection law passed. ^[9]

As popular myth would have it, there were no government inspectors before Congress acted in response to The Jungle and the greedy meatpackers fought federal inspection all the way. The truth is that not only did government inspection exist, but meatpackers themselves supported it and were in the forefront of the effort to extend it!

When the sensational accusations of The Jungle became worldwide news, foreign purchases of American meat were cut in half and the meatpackers looked for new regulations to give their markets a calming sense of security. The only congressional hearings on what ultimately became the Meat Inspection Act of 1906 were held by Congressman James Wadsworth’s Agriculture Committee between June 6 and 11. A careful reading of the deliberations of the Wadsworth committee and the subsequent floor debate leads inexorably to one conclusion: Knowing that a new law would allay public fears fanned by The Jungle, bring smaller competitors under regulation, and put a newly laundered government stamp of approval on their products, the major meatpackers strongly endorsed the proposed act and only quibbled over who should pay for it.

In the end, Americans got a new federal meat inspection law. The big packers got the taxpayers to pick up the entire $3 million price tag for its implementation as well as new regulations on their smaller competitors, and another myth entered the annals of anti-market dogma.

To his credit, Upton Sinclair actually opposed the law because he saw it for what it really was—a boon for the big meatpackers. ^[10] Far from being a crusading and objective truth-seeker, Sinclair was a fool and a sucker who ended up being used by the very industry he hated.

Myths die hard.

What you’ve just read is not at all “politically correct.” But defending the market from historical attack begins with explaining what really happened. Those who persist in the shallow claim that The Jungle stands as a compelling indictment of the market should clean up their act because upon inspection, there seems to be an unpleasant odor hovering over it.

(An extended version of this essay, with additional information on Sinclair’s activities in the decades after publication of his book, was published in 2006 by Liberty magazine and is accessible here: http://libertyunbound.com/archive/2006_08/reed-meat.html.

Endnotes

1.     Gabriel Kolko, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 (Chicago: Quadtrangle Books, 1967), p. 103.

2.   Roosevelt to William Allen White, July 31, 1906, Elting E. Morison and John M. Blum, editors, The Letters of Theodore Roosevelt, 8 vols. (Cambridge: Harvard University Press, 1951- 54), vol. 5, p. 340.

3.   Mark Sullivan, Our Times: The United States, 19001925; vol. 2: America Finding Herself (New York: Charles Scribner’s Sons, 1927), p. 473.

4.   Stewart H. Holbrook, The Age of the Moguls (Garden City, N.Y.: Doubleday & Company, Inc., 1953), pp. 1 I0-11 I.

5.   U.S. Congress, House, Committee on Agriculture, Hearings on the So-called “Beveridge Amendment” to the Agriculture Appropriation Bill, 59th Congress, 1st Session, 1906, p. 194.

6.   Ibid.

7.   Ibid., pp. 346-350.

8.   Kolko, p. 105.

9.   Hearings, p. 102.

10.   Upton Sinclair, “The Condemned-Meat Industry: A Reply to Mr. J, Ogden Armour,” Everybody’s Magazine, XIV, 1906, pp. 612-613.

by Pierre Lemieux

Mr. Lemieux is an economist and author living in Montreal.

The Canadian public health system is often put forward as an ideal for Americans to emulate. It provides all Canadians with free basic health care: free doctors visits, free hospital ward care, free surgery, free drugs and medicine while in the hospital—plus some free dental care for children as well as free prescription drugs and other services for the over-65 and welfare recipients. You just show your plastic medicare card and you never see a medical bill.

This extensive national health system was begun in the late 1950s with a system of publicly funded hospital insurance, and completed in the late 1960s and early 1970s when comprehensive health insurance was put into place. The federal government finances about 40 percent of the costs, provided the provinces set up a system satisfying federal norms. All provincial systems thus axe very similar, and the Quebec case which we will examine is fairly typical.

One immediate problem with public health care is with the funding. Those usually attracted to such a “free” system are the poor and the sick those least able to pay. A political solution is to force everybody to enroll in the system, which amounts to redistributing income towards participants with higher health risks or lower income. This is why the Canadian system is universal and compulsory.

Even if participation is compulsory in the sense that everyone has to pay a health insurance premium (through general or specific taxes), some individuals are willing to pay a second time to purchase private insurance and obtain private care. If you want to avoid this double system, you do as in Canada: you legislate a monopoly for the public health insurance system.

This means that although complementary insurance (providing private or semi-private hospital rooms, ambulance services, etc.) is available on the market, sale of private insurance covering the basic insured services is forbidden by law. Even if a Canadian wants to purchase basic private insurance besides the public coverage, he cannot find a private company legally allowed to satisfy his demand.

In this respect, the Canadian system is more socialized than in many other countries. In the United Kingdom, for instance, one can buy private health insurance even if government insurance is compulsory.

In Canada, then, health care is basically a socialized industry. In the Province of Quebec, 79 percent of health expenditures are public. Private health expenditures go mainly for medicines, private or semi-private hospital rooms, and dental services. The question is: how does such a system perform?

The Costs of Free Care

The first thing to realize is that free public medicine isn’t really free. What the consumer doesn’t pay, the taxpayer does, and with a vengeance. Public health expenditures in Quebec amount to 29 percent of the provincial government budget. One-fifth of the revenues comes from a wage tax of 3.22 percent charged to employers and the rest comes from general taxes at the provincial and federal levels. It costs $1,200 per year in taxes for each Quebec citizen to have access to the public health system. This means that the average two-child family pays close to $5,000 per year in public health insurance. This is much more expensive than the most comprehensive private health insurance plan.

Although participating doctors may not charge more than the rates reimbursed directly to them by the government, theoretically they may opt out of the system. But because private insurance for basic medical needs isn’t available, there are few customers, and less than one percent of Quebec doctors work outside the public health system. The drafting of virtually all doctors into the public system is the twit major consequence of legally forbidding private insurers from competing with public health insurance.

The second consequence is that a real private hospital industry cannot develop. Without insurance coverage, hospital care costs too much for most people. In Quebec, there is only one private for-profit hospital (an old survivor from the time when the government would issue a permit to that kind of institution), but it has to work within the public health insurance system and with government-allocated budgets.

The monopoly of basic health insurance has led to a single, homogeneous public system of health care delivery. In such a public monopoly, bureaucratic uniformity and lack of entrepreneurship add to the costs. The system is slow to adjust to changing demands and new technologies. For instance, day clinics and home care are underdeveloped as there exist basically only two types of general hospitals: the nonprofit local hospital and the university hospital.

When Prices Are Zero

Aside from the problems inherent in all monopolies, the fact that health services are free leads to familiar economic consequences. Basic economics tells us that if a commodity is offered at zero price, demand will increase, supply will drop, and a shortage will develop.

During the first four years of hospitalization insurance in Quebec, government expenditures on this program doubled. Since the introduction of comprehensive public health insurance in 1970, public expenditures for medical services per capita have grown at an annual rate of 9.4 percent. According to one study, 60 percent of this increase represented a real increase in consumption.^[1]

There has been much talk of people abusing the system, such as using hospitals as nursing homes. But then, on what basis can we talk of abusing something that carries no price?

As demand rises and expensive technology is introduced, health costs soar. But with taxes already at a breaking point, government has lit-fie recourse but to try to hold down costs. In Quebec, hospitals have been facing budget cuts both in operating expenses and in capital expenditures. Hospital equipment is often outdated, and the number of general hospital beds dropped by 21 percent from 1972 to 1980.

Since labor is the main component of health costs, incomes of health workers and professionals have been brought under tight government controls. In Quebec, professional fees and target incomes are negotiated between doctors’ associations and the Department of Health and Social Services. Although in theory most doc tors still are independent professionals, the government has put a ceiling on certain categories of income: for instance, any fees earned by a general practitioner in excess of $164,108 (Canadian) a year are reimbursed at a rate of only 25 percent.

Not surprisingly, income controls have had a negative impact on work incentives. From 1972 to 1978, for instance, general practitioners reduced by 11 percent the average time they spent with their patients. In 1977, the first year of the income ceiling, they reduced their average work year by two-and-a-half weeks.^[2]

Government controls also have caused mis-allocations of resources. While doctors are in short supply in remote regions, hospital beds are scarce mainly in urban centers. The government has reacted with more controls: young doctors are penalized if they start their practice in an urban center. And the president of the Professional Corporation of Physicians has proposed drafting young medical school graduates to work in remote regions for a period of time. Nationalization of the health industry also has led to increased centralization and politicization. Work stoppages by nurses and hospital workers have occurred half a dozen times’ over the last 20 years, and this does not include a few one-day strikes by doctors. Ambulance services and dispatching have been centralized under government control. As this article was being written, ambulance drivers and paramedics were working in jeans, they had covered their vehicles with protest stickers, and they were dangerously disrupting operations. The reason: they want the government to finish nationalizing what remains under private control in their industry.

When possible, doctors and nurses have voted with their feet. A personal anecdote will illustrate this. When my youngest son was born in California in 1978, the obstetrician was from Ontario and the nurse came from Saskatchewan. The only American-born in the delivery room was the baby.

When prices are zero, demand exceeds supply, and queues form. For many Canadians, hospital emergency rooms have become their primary doctor—s is the case with Medicaid patients in the United States. Patients lie in temporary beds in emergency rooms, sometimes for days. At Sainte-Justine Hospital, a major Montreal pediatric hospital, children often wait many hours before they can see a doctor. Surgery candidates face long waiting lists—it can take six months to have a cataract removed. Heart surgeons report patients dying while on their waiting lists. But then, it’s free.

Or is it? The busy executive, housewife, or laborer has more productive things to do be-sides waiting in a hospital queue. For these people, waiting time carries a much higher cost than it does to the unemployed single person. So, if public health insurance reduces the costs of health services for some of the poor, it increases the costs for many other people, it discriminates against the productive.

The most visible consequence of socialized medicine in Canada is in the poor quality of services. Health care has become more and more impersonal. Patients often feel they are on an assembly line. Doctors and hospitals already have more patients than they can handle and no financial incentive to provide good service. Their customers are not the ones who write the checks anyway.

No wonder, then, that medicine in Quebec consumes only 9 percent of gross domestic product (7 percent if we consider only public expenditures) compared to some 11 percent in the United States. This does not indicate that health services are delivered efficiently at low cost. It reflects the fact that prices and remunerations in this industry are arbitrarily fixed, that services are rationed, and that individuals are forbidden to spend their medical~care dollars as they wish.

Is It Just?

Supporters of public health insurance reply that for all its inefficiencies, their system at least is more just. But even this isn’t true.

Their conception of justice is based on the idea that certain goods like health (and education? and food? where do you stop?) should be made available to all through coercive redistribution by the state. If, on the contrary, we define justice in terms of liberty, then justice forbids coercing some (taxpayers, doctors, and nurses) into providing health services to others. Providing voluntarily for your neighbor in need may be morally good. Forcing your neighbor to help you is morally wrong.

Even if access to health services is a desirable objective, it is by no means clear that a socialized system is the answer. Without market rationing, queues form. There are ways to jump the queue, but they are not equally available to everyone.

In Quebec, you can be relatively sure not to wait six hours with your sick child in an emergency room if you know how to talk to the hospital director, or if one of your old classmates is a doctor, or if your children attend the same exclusive private school as your pediatrician’s children. You may get good services if you deal with a medical clinic in the business district. And, of course, you will get excellent services if you fly to the Mayo Clinic in Minnesota or to some private hospital in Europe. The point is that these ways to jump the queue are pretty expensive for the typical lower-middle-class housewife, not to talk of the poor.

An Enquiry Commission on Health and Social Services submitted a thick report in December 1987, after having met for 30 months and spent many millions of dollars. It complains that “important gaps persist in matters of health and welfare among different groups.”^[3] Now, isn’t this statement quite incredible after two decades of monopolistic socialized health care? Doesn’t it show that equalizing conditions is an impossible task, at least when there is some individual liberty left?

One clear effect of a socialized health system is to increase the cost of getting above-average care (while the average is dropping). Some Ix)or people, in fact, may obtain better care under socialized medicine. But many in the middle class will lose. It isn’t clear where justice is to be found in such a redistribution.

There are two ways to answer the question: “What is the proper amount of medical care in different cases?” We may let private initiative and voluntary relations provide solutions. Or we may let politics decide. Health care has to be rationed either by the market or by political and bureaucratic processes. The latter are no more just than the former. We often forget that people who have difficulty making money in the market are not necessarily better at jumping queues in a socialized system.

There is no way to supply all medical services to everybody, for the cost would be astronomical. What do you do for a six-year-old Montreal girl with a rare form of leukemia who can be cured only in a Wisconsin hospital at a cost of $350,000~a real case? Paradoxically for a socialized health system, the family had to appeal to public charity, a more and more common occurrence. In the first two months, the family received more than $100,000, including a single anonymous donation of $40,000.

This is only one instance of health services that could have been covered by private health insurance but are being denied by hard-pressed public insurance. And the trend is getting worse. Imagine what will happen as the population ages.

There are private solutions to health costs. Insurance is one. Even in 1964, when insurance mechanisms were much less developed than today, 43 percent of the Quebec population carried private health insurance, and half of them had complete coverage. Today, most Americans not covered by-Medicare or Medicaid carry some form of private health insurance. Private charity is another solution, so efficient that it has not been entirely replaced by the Canadian socialized system.

Can Trends Be Changed?

People in Quebec have grown so accustomed to socialized medicine that talks of privatization usually are limited to subcontracting hospital laundry or cafeteria services. The idea of sub-contracting hospital management as a whole is deemed radical (although it is done on a limited scale elsewhere in Canada). There have been suggestions of allowing health maintenance organizations (HMO’s) in Quebec, but the model would be that of Ontario, where HMO’s are totally financed and controlled by the public health insurance system. The government of Quebec has repeatedly come out against for-profit HMO’s.

Socialized medicine has had a telling effect on the public mind. In Quebec, 62 percent of the population now think that people should pay nothing to see a doctor; 82 percent want hospital care to remain free. People have come to believe that it is normal for the state to take care of their health.

Opponents of private health care do not necessarily quarrel with the efficiency of competition and private enterprise. They morally oppose the idea that some individuals may use money to purchase better health care. They prefer that everybody has less, provided it is equal. The Gazette, one of Montreal’s English-speaking newspapers, ran an editorial arguing that gearing the quality of health care to the ability to pay “is morally and socially unacceptable.”^[4]

The idea that health care should be equally distributed is part of a wider egalitarian culture. Health is seen as one of the goods of life that need to be socialized. The Quebec Enquiry Commission on Health and Social Services was quite clear on this:

The Commission believes that the reduction of these inequalities and more generally the achievement of fairness in the fields of health and welfare must be one of the first goals of the system and direct all its interventions. It is clear that the health and social services system is not the only one concerned. This concern applies as strongly to labor, the environment, education and income security.^[5]

A Few Lessons

Several lessons can be drawn from the Canadian experience with socialized medicine.

First of all, socialized medicine, although of poor quality, is very expensive. Public health expenditures consume close to 7 percent of the Canadian gross domestic product, and account for much of the difference between the levels of public expenditure in Canada (47 percent of gross domestic product) and in the U.S. (37 percent of gross domestic product). So if you do not want a large public sector, do not nationalize health.

A second lesson is the danger of political compromise. One social policy tends to lead to another. Take, for example, the introduction of publicly funded hospital insurance in Canada. It encouraged doctors to send their patients to hospitals because it was cheaper to be treated there. The political solution was to nationalize the rest of the industry. Distortions from one government intervention often lead to more intervention.

A third lesson deals with the impact of egalitarianism. Socialized medicine is both a consequence and a great contributor to the idea that economic conditions should be equalized by coercion. If proponents of public health insurance are not challenged on this ground, they will win this war and many others. Showing that human inequality is both unavoidable and, within the context of equal formal rights, desirable, is a long-run project. But then, as Saint-Exupéry wrote, “Il est vain, si l’on plante un chêne, d’espérer s’abriter bientôt sous son feuillage.”^[6]

Notes

1.   Report of the Enquiry Commission on Health and Social Services, Government of Quebec, 1988, pp. 148, 339.

2.   Gérard Bé1anger, “Les dépenses de santé par rapport à l’éonomie du Québee,” Le Médecin du Québec, December 1981, p. 37.

3.   Report of the Enquiry Commission on Health and Social Services, p. 446 (our translation).

4.   “No Second Class Patients,” editorial of The Gazette, May 21, 1988.

5.   Report of the Enquiry Commission on Health and Social Services, p. 446 (our Ixanslation).

6.   “It is a vain hope, when planting an oak tree, to hope to soon take shelter under it.”

This article has been published with FEE‘s permission and has been originally published at The Freeman March 1989 • Volume: 39 • Issue: 3.

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York—www.fee.org.This essay has been adapted for CEIL by the author from an essay first published in the December 2004 issue of FEE’s journal, “The Freeman.”

“Democracy,” journalist H. L. Mencken once said, “is the theory that the common people know what they want, and deserve to get it good and hard.” He also famously defined an election as “an advance auction sale of stolen goods.”

Mencken was not entirely hostile to democracy. He simply possessed a more sobering view of its limitations than today’s conventional wisdom.

Indeed, democracy may be the world’s single most oversold concept of political governance. Commonly yet erroneously romanticized, it is assumed in most circles to ensure far more than it possibly can. The Norman Rockwell portrait of engaged, informed citizens contending freely on behalf of the common good is the utopian ideal that obscures the messy details of reality.

Just how oversold democracy is came home to me recently as I listened to a group of college students debating farm subsidies. Advised that experience and economics underscore the folly of subsidies, the student consensus was nonetheless in support of “helping farmers.” Why? Because that’s apparently what the people wanted when they voted for the congressmen who gave us the handouts. To those students and a disturbing number of other citizens these days, the veneer of “democracy” somehow covers up a multitude of sins. It may even sanctify them. We need another dose of Mencken-esque reality—and that starts with a clearer view of what this thing is that enraptures so many.

Monarchy is easy to define. If you’ve got a king, you’ve got one. Military dictatorship is also stark in its manifestation. If one guy wears a uniform, has all the tanks, and tells everybody else what to do, you’ve got one of those. But what exactly is democracy?

Pure, undiluted democracy is unshackled majority rule. Everybody votes on everything, and 50 percent plus one decides every “public” issue—and inevitably, a whole lot of what ought to be private ones too. Perhaps ancient Athens for a brief time came closest to this, but no society of any size and complexity can practice this form of governance for long. For starters, it’s unwieldy and unworkable, endlessly contentious, and disrespectful of certain inalienable rights of individuals who may find themselves in the minority.

People like the sound of “democracy” because it implies that all of us have equal say in our government and that a simple majority is somehow inherently fair and smart in deciding all or virtually all issues. On closer examination it should become apparent that subjecting every decision of governance to a vote of the people is utterly impossible. Many decisions have to be made quickly; many decisions require knowledge that few people possess or have the time to become expert on; and many decisions don’t belong in the hands of any government at all. A pure democracy, even if possible, would quickly degenerate into the proverbial two wolves and a sheep voting on what to have for lunch.

Suppose someone says, “I just don’t like people with boats and jewelry. I think we should confiscate their property. Let’s have a vote on that.” A democratic purist would have to reply, “All in favor say aye.” A person interested in securing individual rights would have to say, “That’s not a proper function of government, and even if 99 percent of the citizens vote for it, it’s still wrong. There’s nothing about mob rule that makes such a decision legitimate.”

In common parlance, “democracy” has been stretched to mean little more than responsive government. Because of elections, government officials cannot behave in a vacuum. That fact is laudable, but it hardly makes a “democratic” government heavenly. In his penetrating book, Capitalism, Democracy, and Ralph’s Pretty Good Grocery, Ohio State University professor John Mueller writes that democracy “has been characterized by a great deal of unsightly and factionalized squabbling by self-interested, shortsighted people and groups, and its policy outcomes have often been the result of a notably unequal contest over who could most adroitly pressure and manipulate the system. Even more distressingly, the citizenry seems disinclined to display anything remotely resembling the deliberative qualities many theorists have been inclined to see as a central requirement for the system to work properly.”

Irrespective of presidential candidates’ singing interminable paeans to “our democracy,” America is thankfully not one and never has been. Our Founders established a republic, and a republican form of government modifies pure democracy considerably. It provides a mechanism by which almost anyone can have some say in some matters of government. We can run for office. We can support candidates and causes of our choosing. We can speak out in public forums. And, indeed, a few matters are actually decided by majority vote. But a constitutional republic founded on principles that are more important than voting—like individual rights—will put strong limits on all this. In its Bill of Rights, our Constitution clearly states, “Congress shall make no law. . . .” It does not say, “Congress can pass anything it wants so long as 50 percent plus one support it.”

Those democratic elements of our republic should be given their due. Elections are a political safety valve for dissident views, because ballots not bullets resolve disputes. But the saving grace of democracy is not that it ensures either good or limited government; it is nothing more than that the system allows for political change without violence—whether the change a majority favors is right or wrong, good or evil.

We should be thankful that we don’t have an absolute monarchy or a theocratic dictatorship or other truly objectionable forms of governance, but we should have no illusions about the harm that even a responsive government, whatever you want to call it, can still do.             Even the best and most responsive of governments, we should never forget, still rests on the legal use of force—an inescapable fact that requires not blind and fawning reverence but brave and determined vigilance. That calls for sober people who understand the nature of government and the importance of liberty.

By Hans Sennholz

Dr. Hans Sennholz heads the Department of Economics at Grove City College in Pennsylvania. He is a noted writer and lecturer on economic, political and monetary affairs.

During the 1984-85 school year American high school debaters have been weighing an important resolution:

Resolved: That the federal government should provide employment for all employable United States citizens living in poverty.

On the affirmative side students are expected to argue that the federal government shall strive to abolish poverty and, if necessary, act as employer of last resort; on the negative side they are likely to oppose the use of government for such ends.

High school students at last are catching up with the political debate that has animated their elders since the first New Deal. In 1935, President Franklin D. Roosevelt proposed to make the federal government the employer of last resort, proclaiming that “one third” of the American people were “underfed, under-clothed, and underhoused.” Thirty years later, President Lyndon B. Johnson declared his “war on poverty,” which was to liberate some twenty percent of the population. President Jimmy Carter, during his term of office, waged his special war on poverty. All three made the poverty of some 40 million Americans the central issue of their public pol icies. Indeed, all presidents have echoed a deep concern for the poor.

And yet, the poor are still with us. Their faces have changed, but their numbers hardly ever vary. Armed with poverty statistics, their spokesmen suggest that past government efforts were half-hearted and indecisive. The war, they argue, must be carried on with unrelenting vigor and dedication until victory is won. They would make government the employer of last resort.

Poverty in America

Other observers may draw entirely different conclusions. They may object that the poverty data itself may be erroneous and misleading. When compared with living conditions throughout the world there may be no poverty at all in the U.S. Most Americans have never seen the true face of poverty, which is visible in many other countries. It reveals hunger, disease and early death. In the U.S. even the least productive members of society live in relative abundance and comfort when compared with their counterparts abroad. Among his foreign peers the American pauper is an object of envy and the U.S. the target of pauper immigration.

American poverty statistics are built on levels of income. Families earning less than a stated dollar amount are defined as poor or poverty-stricken; families earning more are believed to be above the poverty line. A brief observation of the living conditions of the American poor, however, may suggest a different conclusion. It may reveal that forty percent of poor families own their own homes; eighty-six percent of these “very poor” homeowners have no mortgage debt. Some fifty percent have liquid savings of $500 or more. In Harlan County, Kentucky, the heartland of depressed areas, it was found that eighty-eight percent of the poor families have washing machines, sixty-seven percent have TV sets, forty-two percent have telephones, and fifty-nine percent own cars. (Newsweek,February 17, 1964, p. 20)

Most Americans now designated as poor and indigent would resent the label if they actually knew that the poverty warriors are talking about them. As a graduate student at New York University and a part-time accounting clerk, I never earned more than $1,500 a year, which sufficed to pay $35 tuition per credit and put me through school. Even as a young college instructor, the poverty definition included me. With all my heart I resent this supercilious and derogatory description of those important years of my life. It is obvious that the poverty politicians who are accustomed to spending billions of other people’s money have lost touch with economic reality and the meaning of life.

In every society some people are more prosperous than others, some are poorer than others. In the eyes of a critical observer, anyone who earns less than he does, may be poor. To a millionaire anyone with less than a million may be a pauper. To a poverty warrior anyone who belongs to the last 10 percent, 20 percent or 30 percent of income earners may be poverty-stricken. In fact, the concept of inequality of income and wealth always comprises the poor.

Government, Cause or Cure

Lengthy unemployment may impoverish a person and put him in a poverty bracket. More than seven million Americans are mostly unemployed, suffering declining incomes and living conditions. Alarmed at such statistics, the poverty warriors managed to pass the Humphrey- Hawkins Full Employment and Balanced Growth Plan Act of 1978. And yet, unemployment continued to rise. Defining “full” employment as no more than 3 percent adult (4 percent overall) unemployment, the warriors are now proposing to reach that level by using government as employer of last resort.

Most government programs seeking to alleviate poverty are treating the effects of unemployment; they never touch the causes. In fact, they completely reverse the cause and effect relationship by depicting the federal government as a source of employment rather than a primary cause of unemployment. They blame commerce and industry for the unemployment and call on government to correct the evil. They propose to grant more power to politicians, officials and bureaucrats and call for extensive government intervention. And yet, by confusing cause and effect they fail to accomplish their stated objectives and even make matters worse. During years of radical government intervention unemployment actually rises and levels of living usually fall.

The champions of government power and intervention are sadly unaware that government is the primary cause of unemployment. They do not understand that employment is a price and cost phenomenon, and that mass unemployment is the inevitable effect of any government measure that directly or indirectly raises labor costs. A law or regulation that boosts Social Security taxes, unemployment compensation taxes, workman’s compensation taxes, or in any way raises the cost of labor, reduces the demand for labor and creates unemployment. Boom and bust policies conducted by the Federal Reserve System may generate cyclical unemployment. Minimum wage legislation may deny employment to the least productive workers. Labor legislation that grants restrictive powers to labor unions may bring stagnation and unemployment to unionized industries.

Minimum wage legislation bars millions of young people from the labor market. Although they have limited training and experience, the federal government may issue an order that they be paid a minimum rate of $3.35 per hour. Moreover, it forces employers to pay a number of fringe benefits, from Social Security to national holidays, which may boost the worker’s employment costs to $5 or $6 per hour. If a person does not add this amount to production, if he fails to cover his employment costs, he is a candidate for unemployment.

Before the days of minimum wage legislation high school and college students were always welcomed by commerce and industry. From the first day of vacation to the last, young people used to work in offices and stores, workshops and factories, working their way through school or supplementing family income. Unfortunately, these ways of the past have given way to minimum wage legislation, which condemns young people either to remain in school, to join the armed forces, or be unemployed. At $5 or $6 an hour there may be no economic demand for their services.

Minimum wage legislation is the evil product of a political system that bestows favors and benefits on some classes of people at the expense of others. It favors the employment of skilled workers who are earning more than the minimum by denying employment to unskilled workers earning less. This is why labor unions representing skilled workers are fervent champions of minimum wage legislation.

Business Provides Employment

Poverty warriors like to depict business as the culprit behind poverty and unemployment. In reality, business is the only genuine source of production, employment, and income. It is bidding for labor in order to serve its customers. It eagerly employs labor as long as it is “productive,” that is, its net addition to output is positive. In other words, as long as it does not cost more than it is producing, labor is in great demand. When it costs more than it is adding to the production process, when it takes income from investors and entrepreneurs, when it becomes “destructive” to employers, it is discharged. In this case production is more productive without it.

Governments and unions are forever raising labor costs and thereby causing unemployment. Business is adjusting continually in order to prevent the unemployment. When the federal government raises its Social Security exactions and state governments boost unemployment compensation taxes, which may significantly raise the cost of labor and thus the rate of unemployment, business is straining to prevent the unemployment through cost adjustments. It may seek to offset the mandated costs with other cost reductions. In particular, it may reduce fringe benefits, delay inflation adjustments, elicit greater effort and draw out more efficient production. Whenever and wherever business is successful in offsetting the boost in labor cost it succeeds in preventing threatening unemployment. If laws, regulations and work rules prohibit the cost adjustment, business has no choice but to lay off loss-inflicting workers. Production is more productive with out them.

It is no coincidence that the strongholds of unions are also the centers of unemployment. In the steel and auto industries the union rates are more than double the market rates of industrial wages paid for similar labor throughout the American labor market. Union rules generally deny efficient use of labor and prevent cost adjustment. Ugly strikes by angry workers further increase labor cost. It cannot be surprising, therefore, that unionized industries are barely managing to stay afloat in an ocean of unemployment.

Job Programs Destroy Jobs

The unemployment generated by governments and unions is as severe and persistent as the force that is causing it. It is holding millions of Americans in its sinister grip and reducing them to poverty. To make government their employer of last resort is to put the culprit in charge and urge him to continue his transgressions. He will create more unemployment than he will provide jobs through a variety of make-work schemes. Facing mass unemployment, government may launch leaf-raking and snow-shoveling programs, build highways and public buildings, embark upon slum removal and urban renewal, or engage in any other economic activity. It may ostentatiously hire thousands of idle workers and become their employer of last resort. Unfortunately, the politicians who launch the programs and the poverty warriors who advocate them, are blissfully unaware of the consequences of their policies. They completely overlook two inevitable effects that tend to destroy more jobs than government can create:

1. When government appears on the labor market and engages idle labor it tends to support or even raise the labor costs that are causing the unemployment. It is removing the pressures for readjustment. By placing purchase orders for steel, automobiles, trucks and tanks it gives employment to idle steel and auto workers. But it also sustains their wage demands that exceed market rates, and thereby reinforces the cause of unemployment. Government tends to prolong and intensify the suffering of idle workers by encouraging them to cling to unproductive labor costs.

2. Government has no source of income and wealth of its own. Every penny spent is taken from someone. It may be exacted from taxpayers, borrowed from lenders, or snatched from inflation victims. If it takes $50,000 to give employment to one idle worker, taxpayers, lenders or inflation victims must be reduced by that amount. Their reduction consumes business capital, which in turn lowers labor productivity. Falling productivity, together with rigid labor cost, render more labor “unproductive” and cause it to be unemployed. And even if it were to consume no business capital, and labor productivity were to remain unchanged, the losses suffered by taxpayers and inflation victims would force them to curtail their consumption and the employment they would otherwise provide. While government may create one $50,000 job, which under bureaucratic conditions and circumstances would be a low-cost job, it probably destroys the jobs of two or three workers serving taxpayers and inflation victims.

Federal Assistance Reduces Levels of Living

Government reports are quick to point out that government assistance is sustaining those truly in need. According to one study, without any kind of assistance forty-one million people, or 18.8 percent of the population, would live below the poverty level. Cash assistance alone allegedly cut this number in hall If in-kind transfers are included, 13.5 million Americans are left in poverty. If medical care is included in the calculation, the poverty level includes only nine million people, or 4.1 percent of the population. (Press Release, Executive Office of the President, Office of Management and Budget, March 12, 1982)

In 1983 Federal cash programs supported 24.5 million elderly people living in retirement, 4.3 million disabled workers and their dependents, and 8.9 million survivors. They provided Medicaid and Medicare assistance to 47 million aged, disabled and needy Americans, ap proximately 20 percent of the total population and 99 percent of those over 65. They granted housing assistance to 3.4 million American households, and subsidized approximately 95 million meals per day, or 14 percent of all meals served in the country. They made available 6.9 million post-secondary awards and loans to students and their parents, and provided training for almost one million low-income disadvantaged people. They paid supplemental allowances to more than 7 million people, unemployment compensation to more than eight million, and granted food stamp assistance to 18.6 million individuals. Government sustained 3.5 million men and women on active military duty and their dependents, and some 27 million civilian employees and their dependents. Altogether, some 80 to 90 million Americans are dependent on tax dollars.

The Burden of Dependents

Whatever their numbers, the dependents weigh heavily on the economic well-being of their supporters, the taxpayers, lenders and inflation victims. Their inactivity and absence from economic production keeps society poorer than it otherwise would be. It visibly reduces the levels of living of the providers, discourages their productive efforts, and deprives them of the funds needed for productive investments. Surely, there cannot be any doubt that 80 to 90 million dependent Americans constitute a heavy burden on productive Americans.

Poverty warriors are encouraged by these transfer statistics. If 80 to 90 million Americans already are enjoying full support, another 7 to 10 million may not upset the transfer system. The warriors may be right. But they, too, must admit that there are limits to the burden the remaining producers can carry. All transfer systems have limits beyond which economic production is bound to decline and poverty is certain to multiply.

This article has been published with FEE‘s permission and has been originally published at The Freeman January 1985 • Volume: 35 • Issue: 1.

Lawrence W. Reed is president of the Foundation for Economic Education in Irvington, New York—www.fee.org.This essay has been adapted for CEIL by the author from an essay first published in the July 2007 issue of FEE’s journal, “The Freeman.”

In 1800, fewer than 1 million people lived in London; a century later, well over 6 million. As the 20th century dawned, London had already been the most populous city on the planet for seven decades. Britain’s population as a whole soared from 8 million in 1800 to 40 million in 1900. In the previous 2,000 years, even a fraction of such population growth anywhere in Europe was usually nipped in the bud by famine, disease, falling incomes, and population retrenchment.

But Britain in the 19th century was a special place, the legendary “workshop of the world.” London had become the capital of capital, with private investment in agriculture and manufacturing burgeoning at a record-breaking pace in the latter half of the century. The year Victoria ascended to the throne, 1837, saw fewer than 300 patent applications for new inventions, but by the end of the century the number exceeded 25,000 annually. Per capita income on the eve of World War I was three times what it was a century before and life expectancy had risen by 25 percent. There were many more mouths to feed and bodies to clothe, but British entrepreneurship was feeding and clothing them better than the world had ever experienced. It was the greatest flowering of problem-solving creativity, ingenuity, and innovation in history.

Colin Pullinger, a carpenter’s son from Selsea, typified the 19th century British entrepreneur. He designed a “perpetual mousetrap” that could humanely catch a couple dozen mice per trap in a single night, and then sold 2 million of them. Perhaps Emerson had Pullinger in mind when he famously wrote, “If a man write a better book, preach a better sermon, or make a better mousetrap than his neighbour, tho’ he build his house in the woods, the world will make a beaten path to his door.”

As the 1800s drew to a close, the framework that made possible these extraordinary achievements — capitalism — fell under assault. As poverty declined massively for the first time, the very presence of the poverty that remained prompted impatient calls for forcible redistribution of wealth. Around the world, Marxists painted capitalists as exploiters and monopolists. In Britain, Charles Kingsley argued that Christianity demanded a socialist order, and the Fabian Society was formed to help bring it about. Many unscrupulous businessmen turned to the state for favors and protections unavailable to them in competitive markets. Would anyone come to the defense of capitalism with as much vigor and passion as those who opposed it?

At least one group did: the Liberty and Property Defence League. Though its work has been largely forgotten, what the world learned about socialism in the following century surely vindicates its message. Its name derived from the members’ belief that liberty and property were inseparable and that unless successfully defended, both could be swept away by the beguiling temptations of a coercive state.

The founder of the League in 1882 was a pugnacious Scot by the name of Lord Elcho, later the 10th earl of Wemyss as a member of the House of Lords and thereafter known simply as “Wemyss.” Originally elected to parliament in 1841 as a protectionist Tory, he eventually embraced free trade and repeal of the Corn Laws by 1846. He later evolved into a full-throated advocate for what we today would call “classical liberal” ideas. At the organization’s third annual meeting in 1885, he expressed his hope that its efforts to educate the public would “cause such a flood as will sweep away, in the course of time, all attempts at state interference in the business transactions of life in the case of every Briton of every class . . . . No nation can prosper with undue state interference, and unless its people are allowed to manage their own affairs in their own way . . . .”

Wemyss and his friends rounded up spokespersons and financial support. They enlisted writers and public speakers. They published and circulated essays and leaflets. The organization operated as an activist think tank with a lobbying arm. The League attempted to mobilize public opinion against specific bills, functioning as a “day-to-day legislative watchdog” in the view of historian Edward Bristow. It even arranged testimony before parliamentary hearings. One League pamphlet attacked the introduction of “grandmotherly legislation” as a transgression against the freedom of contract. Armed with arguments provided by League members and sympathizers, Wemyss’ allies in Parliament killed hundreds of interventionist bills in the 1880s and 1890s.

Opponents often accused the League of being motivated by its members’ bottom line drive for profits, but in actuality its philosophical ideals were paramount. Among its members were some of the brightest intellects of the era, Herbert Spencer being perhaps the most notable. Author of the libertarian classic, “The Man Versus the State,” Spencer was the best-selling philosopher of his day and was nominated for a Nobel in literature.

Spencer saw liberty as the absence of coercion and as the most indispensable prerequisite for human progress. The ownership of property was an individual right that could not be morally infringed unless an individual first threatened the property of another. Spencer has been demonized as an apostle of a heartless “survival of the fittest” Darwinism by those who choose to ignore or distort his central message, namely that individual self-improvement can accomplish more progress than political action. One creates wealth, the other merely takes and reapportions it.

Auberon Herbert was a Spencer acolyte whose championship of voluntarism found fertile soil among fellow League members. His now century-old warning about the danger of state intervention is positively prophetic: “No amount of state education will make a really intelligent nation; no amount of Poor Laws will place a nation above want; no amount of Factory Acts will make us better parents . . . . To have our wants supplied from without by a huge state machinery, to be regulated and inspected by great armies of officials, who are themselves slaves to the system which they administer, will in the long run teach us nothing, (and) will profit us nothing.”

In a 1975 essay in The Historical Journal from Cambridge University Press, historian Bristow contended that the Liberty and Property Defence League changed the language in one important, lasting way. Prior to the 1880s, “individualism” was a term of opprobrium in most quarters, referring to “the atomism and selfishness of liberal society.” The League appropriated the word and elevated its general meaning to one of respect for the rights and uniqueness of each person.

But was the League successful in its mission to thwart the socialist impulse? In the short run, lamentably, no. By 1914, socialists had convinced large numbers of Britons that they could (and should) vote themselves a share of other people’s property. Two world wars and a depression in between seemed to cement the socialists’ claim that their vision for society was inevitable.

Good ideas, however, have a way of resisting attempts to quash them. Bad ideas sooner or later fail and teach a valuable lesson or two in the process. Britain and most of the world gave socialism in all its varieties one hell of a run in the 20th century. The disastrous results now widely acknowledged underscore the warnings of those who said that we could depart from liberty and property only at our peril.

The warriors of the Liberty and Property Defence League may have lost the battle in their lifetimes, but a hundred years later they offer prophetic wisdom to those who will listen.