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home | Tea Party Economist | The Washington Beltway: Sinkhole for . . .

The Washington Beltway: Sinkhole for Donors' Funds

Gary North - March 01, 2014
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Reality Check

I turned 72 in February. I want to make a few comments on the history of the American Right, while I still have my wits about me.

I have spent my life on the fringes of academia. I earned a Ph.D., but I never went into full-time teaching. Well, not quite never. In the fall of 1979, I taught a course on the free market at a little-known Baptist college in North Carolina. At the end of the semester, I left North Carolina, moved to Texas, and did it in such a way that I avoided something in the range of $25,000 in state income taxes (1979 dollars). I never got paid personally for my teaching. I had the money paid to my foundation, the Institute for Christian Economics, from which I never drew a salary. I also taught a night school course in economics for two weeks at an Oregon community college in the spring of 1974. These schools were surely on the fringes of academia.

I came into the conservative movement in 1956 in response to a lecture by the anti-Communist Australian physician, Fred Schwarz. I was taught civics in 1958-59 in high school by the man who was probably the most conservative high school teacher in the state of California, and probably on the entire West Coast: Wayne Roy. He was legendary in the district.

I was the part of the Goldwater for Vice President movement in 1960. There were not many of us, especially in California.

I started reading The Freeman in 1957, a little over a year after it began publication. I started reading National Review in 1959, when I went off to college.


I have watched more money from conservatives go down the drain over the last 50 years than you can imagine. I have watched the same mistakes being made, over and over, all with enthusiastic financial support from donors. I have seen a few things that worked, and I have seen a lot of things that did not work. Still, in the overall sweep of life, most things don't work. But when there is a pattern to that which doesn't work, and when that pattern fails, again and again, to gain traction, I figure it's time to sound a warning.

Here is the warning: if an organization is inside the Washington Beltway, do not send any money. It doesn't need any money. It has enough donors who are doing that, donors who are terminally naïve, and will keep sending the money.

I'm not speaking here of lobbying organizations. I understand that lobbying organizations have to be inside the Beltway, or else close to it. I am also not speaking of public interest legal organizations that are trying to roll back the juggernaut federal court system and federal bureaucracy (administrative law). I am speaking here of what are euphemistically called think tanks.

The problem with most ideological think tanks is simple to describe: they are trying to gain political leverage. The closer they are to Washington DC, the more they are trying to gain this leverage at the top of the pyramid of power, or at least the visible pyramid of power. (There are three geographical pyramids of power in the United States, but there has never been a book or a documentary on two of them.) The farther away that think tanks are from Washington DC, the more dependent they are on developing philosophical principles that are not dependent upon the leverage provided by proximity to the federal government.

In 1973 and 1974, three major organizations were set up in the Washington area. They were created specifically to gain political leverage. One was the Committee for the Survival of the Free Congress, which was created by Paul Weyrich. Another was the Heritage Foundation, which was co-founded by Weyrich. The third was the Conservative Caucus, which was founded by Howard Phillips.

In terms of a long-term strategy, Howard Phillips had the best one. The problem was, he never implemented it. What he wanted was a national grassroots political organization. He wanted to train local people in local politics. Yet he never implemented this program. Like a moth attracted to a flame, he set up his organization just outside the Beltway. Unfortunately, he never had the money or the direct influence that the other Beltway conservative organizations had. He never developed a decentralized program for training people in local political mobilization, which was his original idea. He had the worst of both possible worlds. He had no influence inside the Beltway, and little influence outside the Beltway.

When you look at what the think tanks inside the Beltway have accomplished, you find essentially no traces. They have not stopped any major legislation. They have surely not passed any legislation. The most important single piece of legislation that was clearly stopped by the conservative movement was the Equal Rights Amendment, and that was stopped because of Phyllis Schlafly, who lived in Alton, Illinois. She mobilized a decentralized army of women.

Some of these organizations have raised huge amounts of money. The most important things that they have accomplished have been related to publishing. They have criticized this or that piece of legislation, and although they have not been able to stop any of this legislation, they have at least provided intellectual ammunition against it. But this could have been done from anywhere in the country. The worst place that it could have been done was inside the Washington Beltway.

The terrible lure of Washington DC is simple to state: power. People who want power are playing with fire. People who want to influence the federal government are playing with fire, and they are also deluded. The federal government, whether political or bureaucratic, does not regard Right-wing think tanks as part of the loyal opposition. For these power seekers, there is no loyal opposition. There is opposition, and it must be stopped.

In 1999, Weyrich posted an open letter regarding the political strategy and tactics of the conservative movement. He said in no uncertain terms that the movement had failed.

In looking at the long history of conservative politics, from the defeat of Robert Taft in 1952, to the nomination of Barry Goldwater, to the takeover of the Republican Party in 1994, I think it is fair to say that conservatives have learned to succeed in politics. That is, we got our people elected.

But that did not result in the adoption of our agenda. The reason, I think, is that politics itself has failed. And politics has failed because of the collapse of the culture. The culture we are living in becomes an ever-wider sewer. In truth, I think we are caught up in a cultural collapse of historic proportions, a collapse so great that it simply overwhelms politics.


The Tea Party movement was the unintended consequence of Ron Paul's decision to run for the Republican nomination for President in 2007. He was an outsider's outsider. He had no allies who looked to him for leadership, despite decades in the House. He never got a single piece of legislation passed. And yet, in terms of his influence, he had enormous influence, but only because he had no power. He had no reason to compromise. That was what gave him his influence.

Ron Paul was the only man we ever had in Washington who was the incarnation of Albert J. Nock's principle of the remnant. The remnant found him. He did not seek it. Nock was opposed to political mobilization, and his classic essay, "Isaiah's Job," explained why in 1936.

A similar figure was Howard Buffett, Warren's father, who served in the Truman era.

A third man who had a career anything like this was Larry McDonald. He was the representative of the John Birch Society. He and Ron Paul cooperated. In fact, I got my job with Ron Paul in 1976 because McDonald told him that I was available. McDonald had no illusions of being able to persuade anybody in the Democratic Party of the legitimacy of his views. His views ceased to be published when Korean Airlines flight 007 disappeared. (Note: I did not write "shot down." There is a reason for this.)

H. R. Gross for a quarter of a century challenged the spending of the federal government. It did no good. But at least he became the only Congressman for whom the House of Representatives reserved the same bill number in every Congress for Gross's futile law to balance the budget: H.R. 144. (144 is a gross.)


The first libertarian think tank was the Foundation for Economic Education. It began in 1946. It had received a loan from the Volker Fund, which was run by a libertarian. FEE paid off that loan within three years.

The head of FEE, Leonard E. Read, never believed in exercising political influence. He set up FEE 26 miles north of New York City. He never went to Washington to testify about a piece of legislation. FEE never held seminars in Washington. I don't recall that FEE ever held seminars in Northern Virginia or Maryland. Read avoided the Beltway long before there was a Beltway.

He did this as a matter of principle. He did not trust political action. He was not willing to compromise in order to get pieces of legislation through Congress. He believed that the greater good would be served by publishing a small monthly magazine, a monthly newsletter called Notes from FEE, and holding small seminars. He never deviated from this position. He died in 1983. Yet Ronald Reagan read The Freeman, and so did Ron Paul.

Hans Sennholz was an economist who spent his career teaching at a small college in western Pennsylvania. It has the worst name of any four-year college in the United States: Grove City College. It sounds like a junior college. It was named after the town of Grove City. He wrote constantly, but never for scholarly publications. He wrote for The Freeman, Christian Economics, American Opinion, and similar conservative journals. In the academic community, he was unknown. He never taught any graduate students. There is no Sennholz theorem.

Sometime around 1990, he was in a line of people to shake hands with former President Reagan. When he got to the front of the line, he introduced himself. Instantly, Reagan turned to his wife. "Nancy, this is Professor Sennholz." Then he said to Sennholz: "I have been reading your articles for years." It should be noted that Reagan wrote most of his own speeches in the years before he became President.

Here was an unknown professor teaching at an unknown college and writing for an almost unknown magazine that was published by an unknown think tank 26 miles north of New York City. Ronald Reagan knew exactly who he was. This was Nock's principle of the remnant in action.

In 1982, Lew Rockwell set up the Mises Institute. He was far away from the Washington Beltway. The Mises Institute had a very loose connection to the economics department of Auburn University. It had an office in the building. Auburn University is not a major academic institution, although it has a very good athletics program. The Mises Institute began republishing books by Mises and by Murray Rothbard. You could not imagine two highly creative men who were further away from the seats of influence in academia than Mises and Rothbard. Mises after 1936 had been regarded by the entire economics profession as an anachronism. Nobody was supposed to defend the free market with the same degree of tenacity and ideological narrowness that Mises did. The academic world could barely tolerate Hayek from 1936 until 1974, when Hayek won the Nobel Prize in economics. Hayek was always soft-core. He always compromised with the idea of the welfare state. Rothbard was even more tenacious than Mises, and his rhetoric was even more confrontational. They were marginalized institutionally.

Then, in 1996, came the World Wide Web. The Mises Institute was geared to publishing, and the greatest breakthrough in publishing since the invention of movable metal type is the Internet. Over the next decade, the Mises Institute and Lew became the two dominant websites devoted to economic theory. In terms of its influence, the Mises Institute has four times the Web traffic of the American Economic Association.

Because the Mises Institute puts classic economics books into PDF format, and then makes them available for free, it has changed the nature of intellectual evangelism, recruiting, and training. Books that were virtually unavailable to scholars, and had been unavailable for decades, were put online free of charge.

Today, the Mises Institute is by far the most influential think tank within the libertarian camp. Again, this is the principle of the remnant in action. The World Wide Web is by far the most effective instrument of remnant attraction in the history of man. It is based on free search engines, free PDFs, and an uncompromising commitment to a specific intellectual paradigm. The Mises Institute has become the archetype for all ideological organizations that seek to recruit people, train people, and provide outlets for those willing to communicate the message. Nothing like this has ever been seen before in academia. That is because Rockwell was never inside academia as a tenured bureaucrat. He is what Leonard Read had been, namely, an entrepreneur in the nonprofit world. There are not many of them.

The Mises Institute was built in terms of an attitude regarding political power. Rockwell did not think that there was any payoff for being inside the Washington Beltway. He did not see any advantage to being in the corridors of power.

Ron Paul never had any power. But he had a mailing list. Actually, he had several mailing lists. For six months, I wrote his congressional newsletters. I wrote them in order to get out the message of the freedom philosophy, not to mobilize support for particular pieces of legislation. Those who succeeded me in later years presumably did the same. He used his position, in the words of Teddy Roosevelt, as a bully pulpit. But he never pounded his pulpit. He just kept getting the message out. It was the message that mattered, not legislative leverage.

When he announced that he was going to run for the Republican nomination for President, someone he knew nothing about used the web to raise $4 million in one day in what later became known as "the money bomb." Washington insiders could not believe it. The establishment news commentator, Bob Schieffer, revealed just how thunderstruck he and his peers were. You can see it in this interview on Face the Nation.


If somebody were to ask me where to set up a think tank on the Right, I would tell him to go to College Station, Texas. There, Texas A&M teaches over 45,000 students a year. For a tax-funded university, it probably has more conservatives on the faculty than any other large school. In any case, Texas parents who do not want to send their teenagers into the Left-wing tar pit of the University of Texas at Austin send their children to Texas A&M. There is a tremendous library. If you want to deal in ideas, it is best to do so close to a good library.

Ultimately, it really does not matter where you are located. The Mises Institute has proven this. With the World Wide Web, you can be located anywhere. But there is one place where you had better not be located: inside the Washington Beltway.

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