07/04/13 – Robert Higgs – The Scott Horton Show

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Alright y'all, welcome back to the show.
I'm Scott Horton.
Our first guest today is the great Robert Higgs.
He's Senior Fellow at the Independent Institute.
And the editor of their journal.
He's also the author of Crisis in Leviathan, Against Leviathan, Depression War and Cold War, Resurgence of the Warfare State, Neither Liberty Nor Safety.
Well, and it goes on and on, Opposing the Crusader State, etc. etc.
But the one we want to talk about mostly today will be Transformation of the American Economy, 1865 through 1914.
Very interesting.
An Essay in Interpretation, it's called.
Welcome back to the show.
Bob, how are you doing?
I'm doing very well, Scott.
Thank you.
Well, I'm very happy to have you here.
I appreciate you joining us today and happy Fourth of July to you.
And the same to you, my friend.
Well, it's my only favorite holiday that's not Christmas or Halloween.
It's the only one that's wrapped up in the nation state that I like because it's the celebration of Secession Day, kind of, you know?
Well, I wish it were considered in that light, Scott.
I'm afraid that for most people that's not foremost in their minds.
You know, in 1997, pretty sure it was 97, I've told this one before, sorry.
I went down to Auditorium Shores here in Austin, Texas by Town Lake where everybody's, you know, partying and drinking beer.
And they may have banned beer by now, I don't know, but setting off firecrackers and stuff.
And I was passing out copies of the Declaration of Independence.
And everybody was just taking them and throwing them in the trash or just dropping them on the ground like I was trying to sell them something or something, you know?
And the one guy says to me, what is this?
And I said, well, it's the Declaration of Independence because today's Independence Day, you know?
And he said, today's not Independence Day, commie.
It's the Fourth of July.
And he went off on his way.
But there was one person who said, hey, thanks.
You know what?
I really appreciate that.
I'm going to read this to my family right now.
Have a good one.
And walked away.
Everyone else just thought it was trash.
I was harassing them and ruining their day.
And they had no idea what the Declaration of Independence was.
So you're right.
People really do, at least from that more or less random sample of Austinites anyway, they don't even know what the Declaration of Independence is or why we drink beer and get Thursday off if Thursday falls on the Fourth of July every year, you know?
I think of the Fourth of July holiday as one of the great public relations triumphs of the American state, Scott.
From the very beginning, from the very drafting of the Declaration itself, certain groups of Americans have been attempting to justify the state, prop it up, glorify it, and dignify its kingpins.
And, of course, the Declaration was a masterful public relations stroke in that regard.
In other words, worship the Continental Congress because they're protecting you from the English.
Well, also put a gloss on your secession such that you hide the major reasons for mounting it in the first place amidst a lot of half-baked charges against the king himself, as if the king ran the British state.
And that's step one to misleading people.
And then list a bunch of grievances, many of which have substance and some of which don't have a lot.
But in any event, just write a ton of substances after explaining that it's all about life, liberty, and the pursuit of happiness.
This looks great on paper, but I like to remind people that the guys who mounted this secession and directed it during the war were the people who had very good reason to expect they would be running the American state should the revolution prove successful.
It did, and they did.
And so I have to hand it to them as the revolutionaries go.
They did a great job, and along the way they created a whole host of legends, including all the mythologies surrounding George Washington.
There's some hilarious writing in one of John Adams' letters.
I can't remember whom he was writing to at the time, but he talks about how even during the revolution, everybody understood that Washington was a blockhead.
But they needed him as this kind of symbol to get the masses to go along with what they were doing.
And having created this legend about him, they had to keep it going afterwards.
And it was like this great secret that they had been keeping for decades after the war about the great Washington.
That's funny.
Well, there's so many different ways to go there.
Let's stay focused on Washington for a minute.
He is obviously, well, I don't know, half of the mythology of the revolutionary period is about him and his leadership and his destiny.
Never mind the time between the end of the war and the creation of the Constitution.
He won the war, and then he became the first president, and everything was wonderful.
That's how you know it was all good and above board and had your best interests in mind in the first place is because it's George Washington.
That's why we trust the money is because it's got him on the $1 bill.
Well, he's certainly been represented as a noble character in all sorts of ways.
And, you know, I would have to say that while I'm making critical remarks about Washington, he was by no means the worst state leader of all time.
So, you know, there had to be grains of truth in order for the myth to take root.
And there were there were grains of truth, but I think people who studied Washington carefully see him in a much better context than the one that was created to maintain the myth of American nationality and of his fatherhood of the whole operation.
All right.
Now, when you talk about the real reasons that they did what they did, I think you're referring to the Continental Congress there and the authors of the Declaration of Independence.
But hadn't the war already been on for more than a year?
And it was it really was a war by the English state against the people of America.
And the people of America were already fighting them off.
And the Continental Congress was just racing to get ahead of the parade.
Finally, right?
Well, certainly there had been there had been some fighting already going on.
But, you know, the whole the whole question of the dispute between the colonists and the British state started in a serious way, in a way that led to the revolution at the end of the Seven Years War.
And the reason it started is because the British had expended an enormous amount of money in the North American operations during that war to defeat the French.
And by doing so, of course, they had removed this substantial threat to the colonists from Quebec.
And the colonists had always been hungry to go up there and snatch the land away from the French.
Anyhow, they'd been attempting to do that for a long time in various wars they'd undertaken.
But at the end of that war, the British quite, I think, reasonably wanted the colonists to pick up some of the expense.
And, of course, the colonists didn't want to pick up any of it.
They wanted the British state's protection and any gains it gave them by way of securing Canada.
But they didn't want to pay.
And so practically everything that happened between 1763 and 1775 can be seen in light of this whole business about the consequences of the Seven Years War in North America.
That was a world war, of course.
It involved the British in other parts of the world as well.
But to me, the great issue also involves Quebec because it was the Quebec Act above all that tilted the balance toward rebellion or secession or revolution or whatever you want to call it.
Because practically all of the kingpins of the American Revolution had land claims or what purported to be purchases or ownership of land beyond the Appalachians.
And the Quebec Act basically said you can't exercise this ownership.
This land is no longer part of your colonies.
It's going to be part of Canada, part of something you don't control.
And, therefore, your dreams of wealth are just going down the tube.
And I just don't believe that these guys who were the richest, most powerful men in the colonies and expected to get much, much richer by virtue of their disposing of Western lands were willing to tolerate that.
And so they saw their chance, and they tried to work up enough support for what they were doing while concealing.
You'll notice that in the Declaration's litany of complaints, the Quebec Act is sort of indirectly mentioned without being mentioned specifically in relation to what they take to be the threat of Catholicism.
And they're being exposed to these alien elements from Canada.
But that, to me, is just fuzzing up the real issue, which is their attempt to get rich from Western lands.
Oh, man.
Ain't nothing sacred, I guess not.
No, in politics, Scott, there is nothing sacred.
I think that's something that people need to learn.
That everything you're told about politics is a lie.
Going all the way back, too.
Yeah, all the way back.
All the way back to Adam and Eve.
Well, now, here's this, too, though.
The Declaration of Independence, you're right.
It's probably the most effective state propaganda in the world for what is certainly the greatest purveyor of violence on the face of the planet right now.
It's got nothing to do with peace and freedom and liberty and justice whatsoever.
But on the other hand, it really is, at least until the first Ron Paul presidential campaign, or I guess technically the second, but the 2007 and 2008 Ron Paul presidential campaign.
This is the single biggest piece of propaganda for libertarianism in the world, too, right?
I mean, it was the fact that, you know, hey, do you or do you not believe in living out your own creed that everybody's created equal?
That kind of sentiment is, you know, what is in the process of abolishing racism.
You know, it's a slow and horrible thing.
It's a great ideal, Scott.
That's why it works so well.
But I mean, you know what?
And I wasn't there, so maybe you can correct me, but the way I heard it anyway is that when Martin Luther King called out everybody at the great Lincoln Memorial speech and quoted the Declaration of Independence and said, are you all a bunch of hypocrites or do you believe it, that that actually really worked.
And it changed the mind of a lot of people that, you know what, he's right and we've been wrong.
And that was really those kind of same principles that obviously was a horrible contradiction at the time.
But those are the same principles that ended up leading to the freeing of the slaves in the first place.
Right or no?
Well, I don't think it actually led to their being freed.
They were freed as a byproduct of the war, which was fought entirely to preserve the Union.
But during the course of the war, of course, you know, as you know, things got very costly and the casualties were horrendous and enthusiasm ebbed.
And a lot of things were looking difficult, if not impossible, for the Union.
And so the Emancipation Proclamation was another one of those great public relations strokes because it didn't free a single slave.
It was drawn up only to apply to those areas which, in effect, were the areas controlled by the Confederacy at the time.
And so the slaves were freed only as the Union armies advanced into the Confederacy, and the slaves then saw their opportunities to run away.
And when they did so, of course, the Union armies generally did not welcome them, but considered them great nuisances and baggage, and didn't really want to take care of them or feed them and put many of them to work as, dare I say, as slaves, making barricades and digging ditches and whatnot.
But yes, because of the war, the slaves were freed, and this could all be covered over as it was during the war between the states with another dense fog of ideological propaganda.
But at least there was an element of honesty infusing that war in that it was a war for the Union, and that's really what it was.
Sure.
But then didn't William Lloyd Garrison and all the rest of them always cite the Declaration of Independence and the hypocrisy of...
They did, and I give them credit.
These guys were genuine.
But I'm just trying to give Jefferson a little credit, right, for saying, for teaching people the slogan that, hey, we really believe that people are born free, and we don't have like an except in this case or this case in parentheses here or whatever.
It just says everybody.
And it's self-evident.
We don't even have to prove it.
Just we say so.
And so it's pretty damn universal as far as a slogan goes, that's all.
But it's blatant hypocrisy.
It's written by Thomas Jefferson, a man who lived his entire life off the labor of enslaved people.
So, you know, it sounds great, Scott.
I love the sound of it.
I believe in it myself, but the people who run the state, who create states, who mount revolutions, they don't believe in it.
They believe in something else, and they know that what they believe in can be promoted if they can jive the masses and going along with them with high-flown propaganda.
And so they've been doing that from the days when they used religion thousands of years ago and had the union of the throne and altar.
And they're still doing it today in different forms.
It's ideological more than religious now.
Well, yeah, and as you've written before, that all states are based on fear.
And even if you take the least warlike state from northern Europe in the last few hundred years or whatever, still their excuse is, but what would happen to you if it wasn't for us?
The criminals would get you.
The hunger would get you.
Yeah, and the boogeyman would get you.
I mean, they're all facing other states, and the fact is states generally would love to gobble up their neighbors if they saw some advantage in doing it.
But again, the fear that states use has always had at least a grain of truth.
That's why it is so effective.
It is the case that life has threats in it, and that people are sometimes vicious and hostile.
And states use that reality and turn it to their own advantage by purporting to be protectors.
But the only protection they provide in reality is the kind of protection the shepherd provides the sheep.
Yes, he wards off the wolf, but not because he really gives a damn about the sheep.
When it serves his purpose, he will shear the sheep or slaughter the sheep.
But meanwhile, he wards off the wolf because that does not serve his purpose to let the wolf come and eat up some of his wealth.
All right, now, so this brings us to the subject of your book that I mentioned here, The Transformation of the American Economy, 1865-1914, and I know you wrote it 40 years ago.
And you say in your introduction that you certainly read it as though it was written by somebody else, but then again, you wouldn't throw the whole thing out.
There's still some great analysis in there, even though it's not the same point of view that you'd come from anymore.
But the point that I'm trying to get to is when we're talking about the post-Civil War era, the so-called Gilded Age, and then into the Progressive Era is, well, the way the story goes in the government school that I went to was that just look at the dog-eat-dog Gilded Age.
And it was called Gilded, of course, that means it doesn't matter what it is on the inside.
It's got a thin coating of gold on the outside, but it could just be the basest metal within kind of thing, to fool you.
But then the Progressive Era came, and people finally used the democratic power of their democracy to control the government, to reform the civil service, and professionalize the police, and to make everything great.
They created a central bank to smooth out the booms and busts, and thank goodness, right?
We've had another John F. Kennedy hero president since then.
That's the dominant historical storyline.
So but where's the – I mean are they – okay, you're willing to concede your kernels of truth here and there where they exist?
Oh, absolutely.
See, I mean in the case of the mainstream historians, they're not just kernels of truth.
There's all sorts of truth there, but the difficulty comes in general in the interpretation that historians have given to why these horrible things were happening when they were, and how they were altered, who the good guys and bad guys were.
And of course, not one historian in probably 100 has a clue about economics, and that's one of the most important reasons why this story is so cockeyed.
But they don't understand, for one thing, that most resource allocation in those days was market-directed.
It didn't involve robber barons in any way, that the development of the economy between the war between the states and World War I was overwhelmingly positive in the sense that the rate of economic growth was very high, higher than before or afterward, and that that economic growth was widely shared.
And it was, of course, the case that there were a lot of very poor people still, that not everybody had got appreciably better off, and that if you just looked out at the world in 1880 or 1890 or 1900, you could see millions of desperately poor people either working on farms or in rural areas or in cities and so on.
Wet shops and factories and mines and what have you.
And if you compare their conditions with the conditions of our own time, it looks as if they were just right up against it.
But what you don't understand when you do that is that they had been even worse off 50 years before, and that millions and millions of people were living better than ever by virtue of the economic growth that was taking place, and taking place overwhelmingly in a market-directed process.
Now, if you seize on some of the aspects of this, like the government subsidies to the transcontinental railroads and some of the monetary hanky-panky and what have you, you can tell a story that makes it look as if this is an economy dominated by rich plutocrats.
But the problem with that is that it claims too much.
Yes, there were powerful people.
Yes, they made bad public policies in their own self-interest and so forth.
But that was not the whole of what was happening in the economy.
And to think that you could have had that kind of situation being the whole of the economy, yet had this rapid economic growth, tells us that the historian doesn't know any economics.
Because you can't get a progressive economy unless you have widespread private property rights good enough to lead to a great deal of entrepreneurship, not just a little here and there in one industry or another.
You have to have almost pervasive entrepreneurship throughout an economy to generate a high rate of sustained economic growth.
And that's what the U.S. economy did in that period.
And that's why, in a way, despite all these dark spots and all these evil aspects of it, it's still glorious, because all in all, life was getting better for the common person.
And that's the thing I've been at pains to get across here throughout my career as an economic historian, has been a tough sledding.
Of course, because the politicians always get to – well, they've got the flag.
They've got the Declaration of Independence to wrap themselves in, and they always get to claim credit for everybody else's successes.
And I'm trying to remember, it could have been an essay by you or perhaps Lou Rockwell or someone that talked about the real American heroes and how the way they teach history, for example, again, in government school, elementary and junior high and high school level thing, everything that happened is the history of the things that the politicians did and the wars that they got us in and whatever.
And, yeah, they'll throw you a little bit of Thomas Edison to be proud of and some Mark Twain here or there, but mostly the history of America and Americanism is the history of everything the government did.
That's why everybody is so happy to read The People's History by Howard Zinn as soon as they hear of such a thing, because they don't even necessarily know that it's coming from a kind of left anarchist point of view or that kind of thing.
They're just interested in finding out, well, what was going on with the people during that time, because we never even get to hear about that.
Who were the real heroes that made the world turn during the last 200 years?
There was a movement, and there still is a movement for that matter, that grew up 40 years ago or so in the historical profession to move away from political history and to do a lot more social history.
And you'd think that when that happened, it would have been the kind of movement you were talking about, learning more about ordinary people and less about movers and shakers in the state.
But although it was that, in a way, unfortunately the whole social history movement became to a very large extent a kind of outreach of multiculturalism.
And so even when the lesser sorts were being studied, they were still being misunderstood and put in this light of domination, submission all the time.
American history is flush with heroes.
Probably any nation's history is flush with heroes, but they're not the ones in the history books, except rarely.
There are a few people that show up in the history books that were for real.
And then mostly they just get expropriated and taken over and sold out, dance with vacuum cleaners in commercials after they're dead.
But the fact is, the really glorious, heroic things that were done were not newsworthy.
They didn't involve battles or killing people or waving flags.
They involved hard work and the application of genius and the striving to build enterprises and to make the world better off in a million different ways, each one generally fairly localized to dealing with conditions that ordinary people found themselves in.
But when you add that all up, it makes an enormous difference.
If you have a society that is so oppressed that ordinary people just put one foot in front of the other from day to day in the same way they've always done it before, because there's nothing in it to act any differently, then you just have a stagnant society.
You have perpetual poverty, and that's what most of the world has had throughout most of human history.
But what was truly glorious about the 19th century in the United States, and to some extent even persisted in the 20th despite the growing weight and oppression of government, is this local heroism, this glorious entrepreneurship, this creativity at the local level.
That's what made the country truly prosperous and affluent.
It wasn't the obstructionism of governments at every level.
That, by and large, just slowed down the process.
Yeah.
Well, I'm sorry.
You probably won't approve, but I include you as one of those heroes that helps enrich the society.
I appreciate you very much.
Thank you for your time on the show today, Bob.
You're welcome, Scott.
Good to talk to you.
That's the heroic Robert Higgs.
He's the editor of the Independent Review, senior fellow at Independent.org, the Independent Institute there, and author of Depression, War, and Cold War, and Crisis and Leviathan.
We'll be right back.
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