The Loss of Trust in Political Leaders
Reality Check (Jan. 18, 2013)
When Ron Paul left the House of Representatives, this created a vacuum. Libertarians only had two representatives over the last 60 years: Howard Buffett and Ron Paul. That is not a lot of representatives. These days, the conservative movement seems as bereft of leaders in Congress as the libertarians are. We hear soundbites from Marco Rubio, and Rand Paul is also quoted from time to time, but there is no one who has the conservatives' ear in the way that Jesse Helms did a generation ago.
Leadership is important in every institution, but its absence becomes visible rapidly in the field of national politics. We do not think much about the fact that we cannot name the CEOs of America's 10 largest companies. We probably do not even know which companies these are. Business leaders tend not to be well known in the general population. The few exceptions to this, such as Bill Gates and Steve Jobs, are rarities.
I have no objection to this. I do not think it is a job of business leaders to spend time and money on becoming national figures unless this is going to increase revenues for the company. There have been a few like this. Colonel Sanders is an obvious example. But it was his company. Dave Thomas of Wendy's restored the company's flagging sales with his TV advertisements. People believed in him. Lee Iacocca had a similar effect in the early 1980s on the sales of Chrysler products. But this is not normal.
THE DEARTH OF POLITICAL LEADERS
When you cannot find political leadership, this is generally an indication that the political system is either in gridlock or chaos. When no single leader becomes the spokesman for a particular ideology, that ideology is surely on the defensive. If a group of ideas is not associated with a particular individual who articulates these ideas, the spread of these ideas is hampered.
In the 1930s and 1940s, there were famous leaders. Franklin Roosevelt was one of them; Adolf Hitler was one of them; Joseph Stalin was one of them; Winston Churchill was one of them. They represented gigantic populations. They took us into World War II. There has never been a degree of leadership internationally comparable to the era of World War II. Of course, given the effects of World War II, this is probably an advantage.
A generation later, we had Margaret Thatcher, Ronald Reagan, Deng Xiaoping, and, most improbably, Pope John Paul II. Except for the threat of nuclear war, the stakes were much lower in the 1980s than they were in the 1940s. The level of leadership, meaning the level of commitment by their followers, was not at the same level as it had been during the great crisis of the Great Depression and World War II. That also was a good thing.
Today, because the threat cannot be personified, the level of commitment to national leaders is almost nonexistent. There is a war against terrorism, but that war has no visible leaders. There is also no way of knowing who is winning and who is losing. There are not even criteria available for what would constitute victory. So, without personified leaders on the other side of the conflict, the level of commitment is less.
During the Great Depression, a national leader could personify his enemies. Hitler was the obvious example. Everything wrong with the economy he blamed on the Jews. Stalin had the same approach with respect to failures in the Soviet economy. He blamed the failures on the wreckers. These were sometimes latent capitalists, and sometimes they were followers of Leon Trotsky. There was always some malevolent force within the system that was keeping the system from working.
Franklin Roosevelt blamed his fellow rich bankers, the people he had sold bonds to from 1921 to 1929. He called them money changers in the Temple and "malefactors of great wealth." Nevertheless, it was pretty hard to keep blaming them, and taxing them, and still blaming them, when the economy got no better.
Then came World War II, when leaders could easily personify evil enemies. It is easier to be a national political leader during a major war in which the stakes are high. But wars eventually come to an end. Losing leaders depart. In Churchill's case, the winning leader departed. The Labor Party won in 1945. He got the boot.
Today, no national leader seems to be able to target any particular group that is solely to blame for the economic crisis. The biggest beneficiaries have obviously been the big bankers. The bailout saved them. No national leaders are going after them in public. But if you cannot blame the big bankers, or the greedy capitalists, or CEOs whose pay is too high, and make it stick politically, who are you going to blame?
If you cannot figure out who to blame, you cannot present a plausible political program to restore prosperity by placing the bad guys under restraints. Therefore, there is not much that leaders can do to demonstrate that they are successful leaders in the war against the bad economy. They just keep promising that things will get better. How, they do not say.
A LOSS OF TRUST
This is why the present situation is steadily undermining the public's sense of trust in national leaders. There is virtually nobody in Congress that large numbers of voters seem to trust. There is nobody in Congress with a separate movement behind him, people ready to sacrifice on behalf of the message of this leader. There is no Ted Kennedy. There is no Jesse Helms. Without Teddy, the Right has trouble raising money with scary fund-raising letters. Without good old Jesse, the Left has trouble raising money.
At some point, the public is going to figure out that there is something fundamentally flawed with the system. It is not possible to identify individuals or special-interest groups that are specifically at fault for the bad economy. National leaders cannot figure out a way to restore economic growth and a strong job market. Voters are going to lose faith in deliverance. They do not know who or what is capable of overcoming the economic problems that every large nation seems to be facing.
Without hope of deliverance, the voters lose confidence in politics as a means of healing. This is the central religion of our era. This trust is waning. The Keynesian system holds on power by default. There is no widely shared faith in what can be substituted and how.
Without evil people incarnate, it is really difficult for would-be leaders to mobilize the troops. Leadership becomes problematical, because people do not die for a cause that does not have leaders to articulate the cause. They do not sacrifice for a cause unless there is a leader out there telling them that the sacrifice will make a difference, at least in the long run, and they can be victorious.
This is why we do not have leaders today. The problems that every modern economy is facing has to do with the structure of the economy, not manipulation as such. The problems cannot be solved by tinkering with the system.
THE AUSTRIAN SCHOOL'S SOLUTION
Austrians have simple solutions: "Let the free market alone." "Less government is better." "Lower taxes increase liberty." "Trust gold, not bankers." These were basic themes in the late 18th century. They were basic themes of classical liberalism in the 19th century. They are not untried concepts. They made the West rich when they were honored.
While Austrian analysts are always ready to point out the fractional reserve banking system as a major culprit in the economic system, and that some people are profiting greatly from it, we are not so naïve as to believe we can make the economic system better simply by replacing the people at the top. We also do not believe that we can make it better by passing 2000 page pieces of legislation.
The only way we can make it better is to reduce the power and privilege of the groups, and this means passing laws against existing laws. This means replacing centralized planning, in its various forms, with the planning imposed by the free market.
This solution is rejected by Keynesians, socialists, and interventionists of all kinds. When we get to monetary policy, the Austrians' message is also rejected by the supply-siders and the monetarists: a full gold coin standard and no FDIC. So, the system does not get any better. It just gets worse.
This is why the commitment to economic principle is an important tool in developing future leadership. The concept of leadership has to shift away from "stopping the bad guys," or "stopping special-interests," to a reform of the system that really will work, which is to remove the government favoritism that makes possible the profits of the bad guys and the special-interests. This is why commitment to free market principles is necessary for any program of successful political reform. All the other program reforms tinker with the system, trying to make it more efficient. The problem is not that it is inefficient; the problem is that it interferes with people's liberties, for it attempts to centralize planning.
There is no simple solution to this, other than to persuade people that when a crisis occurs, the proper response is to shrink the government, not expand it. People generally do not want to hear this in a crisis. But if the crisis is based on the fact that the government has run out of sound money, they are going to have to listen to it.
The tools of victory which previous leaders have invoked to solve the problem, namely, a strengthening of the central government, an increase of taxation, and a forced lowering of interest rates, are exactly the policies that got us into the problem we are in. So, the proposed reforms are simply more of the same.
The general public rejects this today, but at some point, they are going to have to figure it out, because the central government will no longer have the resources available to continue to maintain the present level of government control. That is when we will need to be ready, in every community, in every local organization, with a different message, namely, that the solution to the problem is the de-funding of the state. Until people believe that, we are not going to get out of the mess in which we find ourselves.
The correct reform strategy is a program of education and persuasion. It is a long-run program, but we have time on our side. The time that we have on our side is the build-up of the massive deficit between the government's promises of future welfare payments and the ability of governments to collect the revenue necessary to deliver on the promises.