Scott Horton Interviews Robert Higgs

Scott Horton, August 21, 2008

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Robert Higgs, senior fellow at the Independent Institute and author of Crisis and Leviathan: Critical Episodes in the Growth of American Government, discusses the legacy of Woodrow Wilson’s Cheney, Edward Mandell House, House’s rise to power and links to big money men, Philip Dru Administrator: A Story of Tomorrow – the blueprint for a fascist America written by House in 1910-11, how House took advantage of Wilson’s narcissism to get America into World War I, the consequences of American intervention in that war, the concept of the “ratchet effect” of government expansion explained in Crisis and Leviathan, why most perceived governmental “failures” are really successes if you understand the intentions, the true character and beneficiaries of the American empire, the economics of the world’s oil market and the buried truth that all of state power is rooted in fear.

MP3 here. (54:05)

Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation.

Dr. Higgs is the editor of The Independent Institute books Opposing the Crusader State, The Challenge of Liberty, Re-Thinking Green, Hazardous to Our Health? and Arms, Politics, and the Economy, plus the volume Emergence of the Modern Political Economy.

His authored books include Neither Liberty Nor Safety, Depression, War, and Cold War, Politická ekonomie strachu (The Political Economy of Fear, in Czech), Resurgence of the Warfare State, Against Leviathan, The Transformation of the American Economy 1865-1914, Competition and Coercion, and Crisis and Leviathan. A contributor to numerous scholarly volumes, he is the author of more than 100 articles and reviews in academic journals.

31 Responses to “Robert Higgs”

  1. I greatly respect Higgs and follow his wise , witty observations in The Independent.

  2. “The Cheney crowd loved 9/11.” It was indeed a very convenient event for them. Awfully convenient.

  3. Though I think most of what Dr. Higgs said was very good, I wonder if he has done any self reflection on his view of the world oil markets. He made the statement that those who disagree with him have their judgement clouded by their personal political views. I agree with Greg Palast that if you follow the money you will be able to infer the motivations of those involved. Dr. Higgs blanket statement that cartels and oil companies are structurally ubnable to maintain control to me is naive. Yes, they will eventually implode but that doesn’t mean they can’t have a period of time of great control (people do learn from their mistakes). Maybe his world view that governments are the root of all that is bad and that free markets (no matter how manipulated they are) are the solution to all the world’s ills might be clouding his judgement on the oil market situation. I would like to believe that free markets could resolve many of our economic ills, but the reality is that markets are manipulated by powerful individuals either in government or in the business world for their own persoanl gains. Neither the government nor the business world are free of that. To claim in such a off handed way that it is mostly government that is a corrupting force shows his clouded point of view.

  4. “Maybe his world view that governments are the root of all that is bad and that free markets (no matter how manipulated they are) are the solution to all the world’s ills might be clouding his judgement on the oil market situation.”

    This is a distortion of his views, and actually internally incoherent. If free markets are manipulated by politics, they are not free markets. If there were no governments, you couldn’t complain about government manipulation of the “free market.”

  5. Alex writes: “Maybe [Dr. Higgs'] world view that governments are the root of all that is bad and that free markets (no matter how manipulated they are) are the solution to all the world’s ills might be clouding his judgement on the oil market situation.”

    Governments are exactly the mechanism by which corporations manipulate the market. And when they do so, the markets are, by definition, no longer free. As for his other point about their ability to manipulate the market, I think his point is merely that oil is fungible. Of course, keeping some oil off the market will raise the price, but it raises the price for everyone selling it, not just those who run the empire. The control is not about raising the price of oil by merely keeping some of it off the market. The control is about who gets to profit by pulling it out of the ground, shipping or piping it, refining it, and selling it.

    The control is also about one more thing: Determining whose money can be used to purchase it. If you can force people to use e.g. only dollars to buy oil, you make dollars that much more valuable, and if you’re the only one that can legally print dollars (e.g. the banks and the government), you can now more effectively appropriate the wealth of the economy. This is the primary mechanism by which wealth flows from the subjects of the empire to those running it.

  6. I wonder if Anthony Gregory could supply two or three examples of free markets unsullied by politics.

  7. “…all of state power is rooted in fear.”

    “We’re down to the wire, and if we don’t make it, you’ll be seeing major cutbacks in our coverage – which means you won’t be seeing what the warmongers have in store for us next.”

  8. Listening to this interview was a life-changing experience for me. I plan to read Hicks. Thanks so much, Scott. 8Ball above, you are crass.

  9. My point (which I admit I did not make as well as I should have) was that no matter whether it is in the marketplace or in the political sphere you will have people trying to manipulate the system for their own benefit. It’s been going on for a long time. Some scholars believe that the original writing systems were developed to keep track of goods bought and sold (to prevent someone from manipulating the system). Anthony Gregory, if you say that political manipulation of any kind prevents free markets, and we all know that even businesses have their own political heirarchies, then there is no where that a true free market exists (government or not). We must stive to create a system where governments and businesses do not manipulate the markets for their own benefit. That to me would be a free market.

  10. Alex, free markets are markets unencumbered by force or fraud. Once the state is out of the way, what we have is a free market. Business fraud is much less common when not subsidized, encouraged, promoted by the state.

    Alan, free markets exist wherever cooperation exists and coercion doesn’t. Every human relationship entered into voluntarily is a free market relationship. If not for the voluntary sector of human activity, there would be no civilization or culture at all.

  11. Anthony, if “free markets exist wherever cooperation exists and coercion doesn’t, ” and “free markets are markets unencumbered by force or fraud” then what prevents a business from committing fraud (like overestimating its earnings or underestimating losses, can you say ENRON?) besides government? I don’t like how government has become such a prevasive force in our society but at the same time I don’t want to have multiple market crashes (like in 1929) in my lifetime. That would not be a stable and functioning economy.
    I would like to trust corporations but at the same time there is plenty of historical evidence to distrust them and want a regulatory system. Because people will try to game whatever system that exists (market or government), to me it is naive to think there could ever be a “free market”. The question is whether the regulatory system of whatever form only does what it was put in place to do and does not overstep its mission. If that’s too invasive for you then…
    How do you suggest that society checks the manipulation by businesses if not government?
    Right now some corporations are becoming so big that they no longer worry about national governments’ check on them, but use the governments to enrich themselves at the expense of others. I admit this is government turned against the people it was originally meant to protect, but what other way would anyone suggest for business manipulation?

  12. Alex,

    Your faith in the state to “protect” us from predatory corporations is really quite touching. Can these evil global enterprises force us to buy their products and services? Can they prevent competitive entry absent state intervention? To ask these questions is to answer them – unless of course you’re blinded by ideology.

    As for this “market crash” in 1929, who or what was responsible for bringing it about? Given that the Federal Reserve was established 15 years prior for the very purpose of preventing such a failure, how would someone of your world view explain its occurrence?

    Some corporations no longer worry about a government’s check on them? What planet are you living on? Governments have been crushing, regulating, and nationalizing entire industries for decades. Are you blind to this?

    While it would be naive to suggest that corporations do not curry favor with governments, they do not do so out of the general interest; they do so because the state has the power to control. Remove such power from the influence-peddlers and those corporations you howl about have no one to lobby for special privileges, rent-seeking, protective tariffs and the like. They’d be subject to the vagaries of the market, and that market is comprised of millions of consumers that don’t give a damn about a company’s size. We want what we want at a price we’re willing to pay, and who we get it from is beyond anyone’s control – at least in a free market.

    For the average Fortune 500 CEO, the effort to buy off a few congressmen is cheaper and far less onerous than complying with the wishes of their fickle customers, so they do so. The solution you seek is not to create new bureaucracies to somehow manage a complex economy, but to eliminate its interference altogether. The result may not be perfect, but it would be a marked improvement from the debacle we see today.

    Central planning has never worked and never will. To suggest that fallible human beings can be elected to somehow conjure up 5 year plans to fix things to your liking conflicts with thousands of years of experience. It’s time to put down the rose-colored glasses and see the world as it is, not how you’d like it to be in your dreams.

  13. Dear Mr. Horton – I must say this is an extraordinary series of interviews you have done with Higgs, Greenwald, Lauria, Porter et al. I’ve enjoyed them very much and learned a lot from them. Unfortunately I have to return to the one eternal criticism. How people like you and Naomi Klein can continue to at best ignore and at worst denigrate and demean the 911-Truth movement at this late date is far, far beyond my comprehension! One day this will be a central puzzle for advanced students in psychology, and sociobiology.

    That said, keep up the good work.

    Tim Howells

  14. there is no free market it’s all horseshit

  15. My appraisal and also criticism is very much the same as is Tim Howells, above.

  16. As a longtime supporter of Scott’s, I too agree with Tim and anti-neocon/anti-neolib.

    This Higgs interview was one of Scott’s best interviews. I think Wilson was our worst president and GW Bush is his reincarnation. Just think, around Wilson’s term you got prescription drug laws (the seeds of drug prohibition), the income tax, the Federal Reserve, and foreign entanglements.

    Scott even mentioned my favorite libertarian, Szasz.

    Just as it’s not too much to ask for impeachment, it’s not too much to ask for a 9/11 reinvestigation, and to hold those who failed on that day, for whatever reasons, accountable, instead the administration distracting us from it in a warfare machine.

    It’s interesting that the anthrax story gets more skeptical coverage, in more news and editorial outlets, than 9/11 does. I’m not convinced of the government’s story on either of them.

    What would I have us believe? Nothing at the moment. I still have questions. People don’t like living with uncertainty, so it leads to beliefs, beliefs which might agree or disagree with government, but can’t be argued without more evidence.

    I agree that without Congress doing its job and exercising its powers fully, and with most of the evidence destroyed or suppressed, it may be futile to speculate on what really happened on 9/11. And that the current war makes such speculation a waste of time because there are more pressing issues to talk about.

    I also think that many positive assertions about what really happened on 9/11 are pure speculations without any evidence, some of them hilarious. They are either not falsifiable, or even if they are, the evidence which could verify or disprove them is gone.

    The reason why these hypotheses maintain a following is that many questions remain unanswered, and until they are answered, such as by whistleblowers coming forward or documents being declassified, a significant part of the population will feel unsatisfied and disenfranchised. In absence of any real action towards government accountability, hope and fear will fuel speculation, some of which is not implausible if evidence is found to support it. I don’t think this means people are “kooky”.

  17. The libertarians think that whenever govt does ANYTHING it’s doing something coercive and…wrong..Fellow citizens are like ships that pass in the night and supposedly have no obligation to help those less fortunate or sustain their country’s middle class…” Well, they could contribute on their own…you know voluntarily..” But any govt response is sneered at…even if it’s 1. stopping the drug trade..2. formulating a common sense immigration policy that doesn’t more resemble an invasion that overwhelms the host country…3. Discouraging pornography ( which is almost impossible now with this wonderful internet ) and the sex trades..

  18. Chuck Baldwin…Constitution Party 2008…No fundraising scandals as of yet and, as far as I know, isn’t on his 4th wife..

  19. You’re right Bill:

    1. There are still some brown people walking around free, so drug war hasn’t gone far enough. But surely the government will shut it down any day now.
    2. Them there Mexicans shore are invadin’ this here nation aren’t they now. Better get down to the border and start picking them wetbacks off or they’ll take over!
    3. How dare people view images of sexuality, have they all forgotten that all sex other than a husband and wife in the dark with the wife on her back and her eyes closed thinking of something else is sinful and worthy of punishment in Satan’s lake of fire for all Eternity?

  20. Again I am attacked for proposing that people like Dr. Higgs (and Lee K) could have their judgement of the world of politics and finance clouded by their libertarian philosophy.
    My basic point is that there can not be a free market anywhere. The free market ideal is a pipe dream because governments, businesses or other powerful individuals and groups will try to game the system for their own benefit. Government has its evils but so do businesses and markets. They always have and always will. This is not to say we can not strive for as much limitation on that influence as possible, but there never can be a totally “free market”.
    If we didn’t have taxes like in Andrew Jackson’s day, libertarians would complain that tarriffs were protectionist and limiting markets. If we relied totally on the business world to get anything done we’d have a country of haves and have nots. The middle class would be almost non-existent (without unions or their precursors tradesmen organizations), and services like electricity and phone service would only exist in urban areas like in India.
    I am not a defender of government. It has an almost unending list of faults. But I also think that unrestricted business can or does have many of the same faults as govenment.
    Some and possibly many of our regulations on markets were because someone in the past tried to game the system and the majority of decisions makers decided that it was “unfair”. The regulation was put in place to prevent someone from repeating the same mistake. Businesses often have similar internal rules, to prevent future problems. Like government more business rules mean more bureaocracy and less efficiency. The advantage of business is that it is more likely and more quickly able to shed it excess weight in times of change.
    With both government and business institutions the common person has little to no influence. Both claim that the little guy can demonstrate his power by voting at the voting booth (except when voting electronically) or cash register. Neither is influential enough unless a large number of people band together with a common interest to influence the powerful (which can end up as a political or governmental movement). This often ends up with political parties who end up caring more for their own power then the people they were sent to represent. The rich or politically powerful can ride out a populist storm until people get sick of the protest (that’s what is happening now on a variety of fronts where the two political parties think they can keep the country distracted or nationalistically inclined long enough that we will stop protesting their lucrative war).
    Again I’ve branched off into tangencial topics but the core message is “free markets are an impossibility,” because of the fact that humans are at the controls of either governments or businesses.

  21. Enron was, first of all, connected at the hip to the state. Its candal was brought about by government regulation and only exposed and stopped by market forces. Bad example.

  22. Monopoly is a creature of the state.

  23. And don’t get me started on trade policy…Libertarians see no reason to try to maintain a manufacturing base…In fact nations aren’t really nations by their definition…just a collection of workers and consumers who happen to live in the same place…

  24. Its human nature.

    Government or not we will always have those who seek to gain wealth, power or control thru whatever means possible.

    Social Darwinists.

  25. By observing the trail of statements made in this blog (by Alex and the embarrassingly self-defined LegendaryBill), I become confirmed in my thesis that a defense of the state is often based on powerful psychological needs. Note that Anthony has politely corrected a series of erroneous “facts” and preconceptions made by both parties. Instead of going back to their rooms to ruminate on the consequential outward-rippling flow of reconstructions made necessary by these corrections, Bill/Alex merely proceed to a new set of errors and misperceptions—never once acknowledging that they have lost every preceding argument and that they should indeed go back and do some homework and self-criticism. In a healthy and active thinking process, when fundamental contradictions are pointed out, one must go back and “level” (in the sense of destroying) the superstructure built upon the errors and misperceptions and then begin anew. Nonetheless, despite the holes in the foundation uncovered by the proponents of libertarianism, there is no evidence that statists are capable of reflecting upon the changed status quo or of the need to reconstruct the superstructure as a necessary result. This appears to be a clear marker of the inability to think—something along the lines identified by Hannah Arendt when she explained her subtitle to “Eichmann in Jerusalem” (the phrase ‘the banality of evil’). With each new series of comfort-food-statements about the state made by its defenders (these provide a psychological refuge because we are trained from an early age to recognize “authority”—if for no other reason than we were all children in a world of adults at one time), it becomes clear that no progress is being made. Even worse, there is an endless supply of these errors upon which to draw. As Mencken said about “democratic man”: “…though he quickly reaches the limit of his capacity for taking in actual knowledge, remains capable for a long time thereafter of absorbing delusions. What is true daunts him, but what is not true finds lodgment in his cranium with so little resistance that there is only a trifling emission of heat.”
    http://www.strike-the-root.com/82/ludlow/ludlow2.html
    If they are honest in their pursuit of truth, the statists really should consider the following: Most of us were not born libertarians. We, like them, were inculcated in statism and learned to accept it as children. At some point as adults, the contradictions between reality and our programming became clear, and this opened us to alternatives. Consequently, we began exploring—often in a hit-and-miss fashion—ideas of liberty. Along the way, we constantly revised our world-outlook based upon new information. Nonetheless, one thing is clear: it was a long process. One cannot reconstruct a political philosophy in a blog-length argument. If this were possible, I would be alarmed. Anything that claims to solve all things in a sound-bite cannot elucidate very much. Do the statists really expect Anthony Gregory or anyone else to re-type into this blog several books worth of learning for their singular and narcissistic pleasure? No. If you are serious about learning, the erroneous one-shot remarks and come-back errors cannot be taken seriously. I encourage Alex/Bill to take a step outside of their comfort zones and read something about libertarianism from someone who really understands it. There is no better communicator than Murray Rothbard. His books, “For a New Liberty” and “Ethics of Liberty” are the cornerstones of the movement—and I think I can make that statement with some certainty. Then move onto something like “Market for Liberty” by Morris and Linda Tannehill to see these ideas in action. What is important about Rothbard (and Hoppe has a sequel to this in his books) is his recognition of the nonaggression axiom and the self-ownership concept. These short statements are an exception—as all axioms are—of my previous warning about philosophies that claim to live in a nutshell. A short axiom tells a lot, and the refusal of Alex/Bill to eschew coercion completely undoes them as serious proponents of ideas. Any proponent of the initiation of force necessarily undercuts their standing as an “honest dealer.” It is a confession of impotence, and it—in effect—broadcasts that they are willing to slaughter anyone who does not willingly go along with them. Hans Hermann Hoppe even goes so far as to say that the mere act of asserting anything is an acknowledgement of the self-ownership axiom. The point is, Alex and Bill (legend though he may be in his own mind) are not arguing in any philosophical way and may, in fact, be incapable of it as Hannah suggested to us about statists. I encourage both of them to go back, lick their wounds, and admit defeat. It is a profoundly liberating experience to admit an error and begin to see the world in a new way. By holding onto their errors in desperation (out of a psychological need to exculpate what they have identified with far too closely), they are merely burying themselves and wasting their valuable life energy. I assure you that your world will not crumble if you learn something new. Learning can be scary, but it is the only way to really grow.

  26. Tell me Troy, does porno do anyone any good? Really? Tell me how it’s made you a better husband..Not a husband yet? Perhaps because you’re too lost in pornographic fantasies ( facilitated by the internet )..
    A couple of yrs ago Chuck Hagel and a democrat whose name escapes me ( Kennedy? ) passed an immigration bill increasing legal immigration to 2 million a yr…sound beneficial to you? On top of the skilled H1-b’s which for the most part aren’t needed ( unless you resent employees with enough bargaining power to command wages high enough to house and feed themselves )…and on top of the million or so illegal immigrants…So, that doesn’t sound like a problem to you? Anyone who thinks it is( and is concerned about the resulting sprawl, traffic congestion, packed classrooms and over-stressed hospitals, depressed wages for the less skilled, etc ) is just an angry xenophobe, huh?
    Yeah, this is the problem w/libertarian ideologues..

  27. The main problem with your analysis of immigration is that you see the immigrants as a net drain on the economy. While the welfare state allows for immigrants to be on the government dole, that doesn’t mean that they’re only Welfare Queens living off the rest of us. It’s similar to the problem with protectionism, you keep the wages artificially high, lower productivity and decrease your competitiveness in the global economy. Immigrants don’t just take jobs and valuable space, they (like other gainfully-employed members of society) produce goods and services through their labor and in turn increase demand for goods and services produced by others. In short, immigration is helpful for the economy.
    But I will grant your that the current immigration system is rigged so that the power elite can get the poorest of the poor foreigners to do their work for them for the lowest cost possible. However that’s just another part of this authoritarian-corporate system in which we live that distorts economic conditions and everything else that it can to maintain its own power. As for the “pornographic fantasies” that I’m apparently lost in, they haven’t affected me to the point that I can’t have this discussion with you. I could make some jibe about what I think your home life is like, but I really don’t want to know and it’s none of my business.
    About the “libertarian ideology turns us all into isolated individuals with no connection to each other except when it comes to the satisfaction of various appetites” point, maybe libertarians could uphold some greater meaning for us to follow like “nation greatness”. Or even better, restrict people in whom they can associate with to avoid unwanted interactions that would disrupt the societal order, like those useful old “Jim Crow” laws.

  28. Sheldon Richman has a good article about this issue.
    http://www.fff.org/comment/com0705j.asp

  29. But I will grant your that the current immigration system is rigged so that the power elite can get the poorest of the poor foreigners to do their work for them for the lowest cost possible. -Troy

    Well, this is what business teaches, what it doesnt teach is the end result of such practice, that is what happens when cheap labor no longer exists and wealth has been transferred to fewer and fewer hands until only a few businesses exist and everyone is working for poverty wages? The corporation would have no buyers and need no workers.

    The only solution is moderation. Libertarian ideology is simply unworkable. Communism is unworkable as is capitalism.

    Wars destroy what the people create. Unfortunately this scenario has become prevalent, that is, until resources to make weapons have expired.

    We must change our thinking and unify the earths people, and I dont mean communism. I mean moderation in all things and the realisation we are all humans and we are all Gods children

  30. What we have now, or arguably had depending on what you define as fully communist, is a moderate system. There aren’t departments that dictate directly how many employees every business will have for example. The problem is that such a system allows those who have power and influence to affect the system so that they can maintain and expand their own power and eliminate competition.

  31. [...] Robert Higgs helps us all understand in this great interview by Scott Horton at Antiwar Radio. They discuss the relationship between the inflation of World War One, the roaring ‘20’s and the Great Depression, Fed chief Ben Strong’s deal with the Bank of England’s Montague Norman to inflate in the 1920s in order to help England and how this created the stock market bubble (and others) in the 20s, some of the ways that the near-totalitarian New Deal interventions of Wilsonian Republican Herbert Hoover and Wilsonian Democrat Franklin Roosevelt compounded and prolonged the depression, the myth that World War II ended the Great Depression, the Korean War and switch from World War to Cold War, the state’s scare tactics to strong-arm government growth, chaotic interventionism in the market and the status of the dollar as the world’s reserve currency. [...]

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