In this, the high summer of the great conservative revolt, no one, whatever his past political aberrations, can remain unaffected. I am not. Accordingly, I am here offering, also in a great conservative tradition, advice and counsel to the young—advice and counsel on how to get ahead in an ideologically restructured world. I propose to tell you, graduates of the class of 1979, how now to proceed if you wish the acclaim and goodwill as well as the income of your fellow men. The advice I offer I do not find wholly acceptable for myself. But that too is in a great tradition of advice to the young.
As an emergent citizen, you must still interest yourself in good causes. We have come a long way since this was a measure of virtue, but you cannot separate yourself entirely from the past. It is inevitable that the service you render will have a highly tangible benefit to the affluent. That is also good because the rich in our time have a far more sensitive sense of social injustice than the poor. And also they are far more articulate—sufficiently so that, in consequence, the voice of comparative wealth in our Republic is regularly mistaken for the voice of the masses. A plea by Mr. Walter Wriston for the relief of the free enterprise system from the exactions of an oppressive government is easily the equal of a thousand complaints about public squalor from the South Bronx. Mobil, in its articulation of its needs, is at least the equal of a thousand buyers of home heating oil. So be thoughtful in choosing your philanthropic clientele.
However, in doing good for those who are doing well, you must identify some gain, even if implausible, for the deprived of the land. That still shows moral purpose. The most evocative word here is incentives. There are some who would give more profits to the Seven Sisters as a matter of love. The spirit of Russell Long and John B. Connally is strong in our land as also the anathematization of the public according to Commodore Vanderbilt. But a decent regard for the sensitivities of our age requires that you say that higher profits for the oil companies, however high they may be, will go far to solve the energy crisis. And no matter how high an executive’s salary, lower taxes and higher after-tax income will cause him to work yet harder to provide more revenue for himself and more jobs for the poor. This requires a further word of explanation.
We live in a world where work is much praised. No ethic is now so ethical as the work ethic. But for the very affluent, effort is very exactly graded to income. An increase in income above the hundred thousand dollar level brings a monstrous burst of energy. Any reduction at that level brings a socially disastrous bunging off. For the man of average or sub-average income the position is different. A minimal manifestation of his work ethic requires that this fellow work hard all the time. We simply can’t have him giving less than his best, or not showing up at all because his pay is too low.
Many of you looking for a social justification for higher income for the affluent will turn, of course, to government spending. This, we now agree, sustains a totally wasteful bureaucracy and pays for crippling regulation; I would remind you that the one form of race prejudice which you can still invoke with perfect safety in our land is against bureaucrats. So taxes can be reduced and the only ones who will suffer will be these public Untermenschen.
But you must be decently selective in your attack on government. Do not oppose military expenditures; there are no real bureaucrats in the Pentagon, only dedicated Americans who understand the full dimension of the Soviet threat. Be careful about saving money on air safety. No one wants airplanes loaded with the relatively loaded running into each other at high speeds or dropping off their engines in a random way. You should never demand the lifting of the heavy hand of bureaucracy from the nuclear power industry just before an event, as it will be called, at Three Mile Island.
While all private enterprisers are righteous, all public bureaucrats are grafters, remember that someone could mention those larcenously talented unit managers at NBC. NBC was one of our moral and fiscal guardians at Watergate. Do not attack crippling regulation on the automobile tire industry just before Firestone radials blow out. And have in mind, if you go into the steel business, that while you need freedom from pollution and job safety controls, you will want intelligent government action against Japanese imports. Remember too that there could be riots in the ghettos after you get welfare withdrawn, so be ready with a condemnation of the moral deficiencies of the undeserving poor. However, you are probably safe in asserting, with Mr. Howard Jarvis and Professor Milton Friedman, that public services are in relentless conflict with human freedom. The Jarvis-Friedman thesis that human liberty is best measured by the depth of the uncollected garbage is currently getting a very full test in New York City and seems to a visitor by way of being accepted.
Your enemy, as you call down wrath on taxation and the bureaucrats, will not be the advocates of big government and burdensome regulation. They are reprehensible, all agree. Your problem is that in a complex and somewhat civilized world, they are difficult to do without. So you will risk the terrible tendency for reality to obtrude itself. You must walk very circumspectly around reality.
You will suppose that all of my advice is to those who plan to join the conservative revolt. That is not so. I have instruction also for those who, out of whatever eccentric tendency, wish to succeed in modern government. I have been studying the performance of Mr. Carter’s economists.
Here you must recognize, first of all, that your personal objectives can be very different from those of your president. He, if inflation continues out of hand, could go down the drain—or anyhow down to Plains. Voters have never responded well to severe unemployment or long-continued increases in living costs. But if you are a modern economist, you will not antagonize corporations, trade unions, or the farmers. You will seek a peaceful life in Washington. That is nice in itself. And it means that when your president goes out on his ear, you can go on to a good job in the private sector. It is our system of upward failure.
Your method, as current practice shows, is to be against inflation without doing much of anything about it. If you do anything real, you will antagonize somebody. That is because there is no way of contending with inflation without denying someone important some income that he, she, or it might otherwise have. If you reduce spending from borrowed money, or spending of consumers by imposing higher taxes, or spending for public services, or by controls on wages and prices—or, as could be a presently needed matter, if you do all of these things—you deny someone some of the income that pulls up prices or someone some of the power which gooses up profits, salaries, or wages.
All of these steps being unpleasant, the modern economist survives in high office by simulating action—by seeming to act vigorously on prices while doing nothing that is real, or slightly less. He then predicts that, as a result of his inaction, things will get better. Or, if that is too improbable, he says that things will get worse and invites praise for his candor. He will not fool other people as to his effectiveness, but he can fool himself.
Do not think I exaggerate. When Mr. Carter first assumed office, his economists persuaded him to oppose controls on prices and wages, something for which, during his campaign, he said he would ask authority. Serious controls on corporate prices and incomes would be controversial.
Prices weren’t stable. They went up. So it was agreed that price increases would be monitored. Since monitoring sounds rather like a wire tap, people would be persuaded that something fairly nasty was being done. A real step on from Gerald Ford’s WIN buttons. And stable prices were now even more strongly predicted.
Prices continued to rise. It was then said that they would be monitored more intensively.
Prices went up yet more. Unnecessary regulation was now held to be a cause of inflation, and measures designed to prevent brown lung and pollution were resisted with partial success. These initiatives do nothing perceptible for living costs, although they do eventually increase the medical bills of people who cannot afford them. Since prices were still rising, guidelines were put into effect.
The guidelines, it was emphasized, would be voluntary. To make them effective would be controversial. So one admitted to the need but not to the action. The guidelines were thoughtfully designed so as to allow any desired further increases. Alcoa, which was making large profits, could still make a large price advance. So it did and so did the oil companies. And others. So did the Teamsters. Prices, not surprisingly, continued to rise.
In these last weeks modern economic policy has entered a new phase. Mr. Alfred Kahn told a congressional committee that inflation would get worse and that nothing could be done about it. His colleague Mr. Bosworth partly disagreed; he said that inflation would get very much worse. The president supported his men. Mr. Blumenthal then went to Congress to support his president. “The president,” Mr. Blumenthal said, “is right when he says we can look forward to bad inflation figures for several more months.” Now it was the only duty of high officials to tell us how bad things would be. At long last there is a public career in which no one can fail. Some of you may wish to get in before the rush.
Mr. Blumenthal had, also, a further design for carefree survival. When asked by legislators about high corporate profits—income, one might notice though few do, that has been recycled by inflation to profits from the income of the old, the weak, and the poor—he said that it was “not clear” that there was “any major trend toward excess profit levels” (emphasis added). This is a superb example of the triple-escape qualification. Translated, it means that profits are extremely high, but I might want to go back to Bendix. Mr. Blumenthal was also resourceful when he was told by Senator Harrison Schmitt that, in predicting a lower rather than a higher rate of inflation, he had “screwed up.” The secretary said that other economists had done worse. That, as one reflects, is truly an iron-clad defense.
You will see, in this lovely summer, how rich are your public opportunities. You can join the great conservative revolt and serve the fortunate while pretending, even believing, that you are serving the public good. Or you can join Mr. Carter’s liberals in Washington and serve the rich by doing nothing at all.
But I do not wish ever to be cynical. Perhaps there are among you those who are without this contemporary instinct for public fraud. If so, another opportunity beckons. One cannot ask you in this age of Jarvis, Gann, and Governor Edward J. King to go out and comfort the afflicted. That would be eccentric. But perhaps you can afflict the comfortable. Perhaps you will wish to join in having honest amusement at the expense of those who, while protecting their income, protest their passion for the public welfare. I promise you, out of some personal experience, that they do not like it.
Thus you can make clear that what we are now having is a revolt of the rich against the poor. None can doubt that this is the meaning of Proposition 13; two-thirds of the saving went to large property owners and the corporations. The services curtailed or to be curtailed—schools, libraries, recreation facilities, police—are those most needed by the poor. And inflation transfers the purchasing power of the aged and the thrifty and the poor to the profits, dividends, and capital gains of the already affluent. But it causes anguish to have these things said.
So I urge you, if you want an interesting life, to cause this pain. It is one of the very few socially useful forms of meanness. That is because it promotes social tranquillity. Nothing so contributes to such tranquillity as screams of fiscal anguish from the affluent. The screams persuade the poor that the rich are suffering too.
July 19, 1979