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Volume 14, Number 12
According to official history, the 104th Congress doomed
itself when it shut down the government to force its budget
priorities on the president. People got up in arms and demanded
that government be reopened. This taught the people and their
representatives a valuable lesson. As much as we may complain, we
truly need big government. Today, we all agree with the White
House vow to never allow the government to shut down again.
Of course, everything about this story is nonsense. Shutting
down the government was this Congress's most noble act. Though
the freshmen, who forced the closing against the leadership's
wishes, didn't properly prepare for the inevitable response from
the media and the bureaucracy, they were on the right track. It
may have been the only principled act in two years of political
Moreover, nobody has produced a shred of evidence that the
government shutdown was as unpopular as the media claimed it was.
It was asserted daily, but never proven. Oh sure, we heard about
how people couldn't get passports, couldn't get into Yellowstone,
couldn't see the Vermeer art exhibit at the National Gallery of
Art. But what's most startling is that the central
government--which consumes 40 percent of the national
wealth--wasn't missed much at all.
There was a fiscal illusion at work. At issue was a budget
authorization that entitled government to spend money before it
was there to spend. But government could have reopened, and run
based on present receipts. That way the budget would be
immediately balanced. Everyone claims to want pay-as-you-go
government, but nobody suggested this as an option. They acted as
if debt finance is part of the natural law.
There is still more to learn about government during
shutdowns. Consider what is known as the "Washington Monument
Ploy." When budget cuts are threatened, visiting hours at popular
monuments are cut back. A budget cut is voted by Congress, or an
insufficient increase, and moments later an official-looking
official asks the assembled tourists to please disperse. Thanks
to those greedy Congressmen, we've been denied essential funds.
The media are there to record every word, and conduct
interviews to be broadcast on national television. Average people
tell the reporter, "my family and I came all the way from
Sacramento, but because of political bickering, our vacation has
been ruined," etc. The lesson is clear: Congress had better vote
every dime the president demands or the People will strike back
on prime time news. Sadly, this ploy works time and again.
Behind the scenes, the whole scenario has been orchestrated.
There are very few things the federal government does that people
directly benefit from. Among them are issuing passports,
delivering the mail, running monuments and museums, and
maintaining national parks. That's precisely why they take the
Now, in running the Washington Monument Ploy, the White House
has to be careful not to cause it to backfire. For example, if
the mail stopped being delivered, the public might revolt against
the Post Office itself, and fuel demands that it be privatized.
The trick is to shut down services that affect a minority
conspicuously, in ways the media can dramatize, but not generate
anger against government itself.
What's behind it all, of course, is the desire to keep the
largess flowing, not to serve the public. If the feds wanted to
serve the public, and Congress wasn't authorizing new spending,
they could divert money from services people don't need ("Social
Services for Refugees and Cuban/Haitian Entrants") to those they
do need (passports). Even better, a truly beneficent leader would
simply give away control of monuments and passport offices to
private entities to run for profit.
Here's the irony. The services that people need most from
government are the very ones that could easily be run privately.
This follows by definition: if people want something, an
entrepreneur is glad to make a profit providing it. On the other
hand, the services people don't need shouldn't exist at all.
From a strategic standpoint, the government has the incentive
to hold onto privatizable services like national parks because
they are useful in times of government shutdown. It monopolizes
some services just to keep the public from thinking they could
get along without the government.
This is more than just a budget trick; it goes to the heart of
nearly everything government does. Even at the local level, when
budgets are cut, the first thing to get the axe are extended
hours at the public library. Then the most popular periodicals
themselves are canceled. Government, in its malice, gains more
benefit from withholding useful services than providing them.
This is the very opposite of how private business operates.
When a business has to cut costs, it looks for waste and
inefficiencies, but it is loathe to cut consumer services. In
fact, it might improve them if doing so is likely to bring in
more revenue. Sticking it to the consumer would only create more
losses and drive the company toward lower profitability.
With government sabotaging any attempt to cut its budget by
cutting services people want, how can government budgets be
successfully cut? There's no easy answer--ideally the person
doing the cutting would have massive power over the
bureaucracy--but here's the first step. All so-called essential
government services should be privatized. That way government
would no longer be seen as economically or socially essential.
Let's start with the Washington Monument. There's no excuse
for not handing it over to a private company or association to
run, just as Mount Vernon is run privately. Those who say it
can't be done haven't noticed how many people visit that
political temple every year.
But isn't this monument a public good that people should have
full access to? Granted. That's why we need private enterprise,
which always focuses on the public, to provide it. The same is
true of the mails, national parks, passport offices, the
Smithsonian, or any other good or service the government provides
that people regard as necessary to their well being.
The advantage would be obvious. During the next government
shut down--let's hope it comes soon and stays long--the
bureaucracy would have fewer means of demonstrating that we
really need them. They will be reduced to showing how awful it is
that the Indian and Native American Employment and Training
Program has been shut down.
All of this presumes that government has no other means to
fund itself during emergencies. Unfortunately, that is not true.
During the 1995 shutdown, Treasury head Robert Rubin conspired
with other government-financial elites to run the government on
money looted from civil-service pension accounts, although this
Then the bureaucracy gave Congress a sock in the chops by
forwarding unearned back pay to the entire government workforce.
The whole shutdown ended up as a paid vacation for the most
despised class in the country. If anything about the shutdown
inspired public anger, it was this above all. Sadly, the
opposition party took the blame, and then let bygones be bygones.
The lesson of the government shutdown is not that people want
it to stay open, always and forever, but that the world doesn't
fall apart when Uncle Sam takes the day off. Let's give him the
next century or so, see how the people on their own can restore
prosperity and liberty. With no taxes to pay, there'd be plenty
left over to pay even exorbitant admission fees to the Washington
Llewellyn H. Rockwell, Jr. is president and founder of the Ludwig von Mises Institute