here, everybody feels persecuted and misunderstood, not appreciated, which I think is wonderful.
Q: Would you like to say something disrespectful about economists?
A: Yes. Economists never know anything until twenty years later. There are no slower learners than economists. There is no greater obstacle to learning than to be the prisoner of totally invalid but dogmatic theories. The economists are where the theologians were in 1300: prematurely dogmatic.
Until fifty years ago, economists had been becomingly humble and said all the time, “We don't know.” Before 1929, nobody believed that government had any responsibility for the economy. Economists said, “Since we don't know, the only policy with a chance for success is no policy. Keep expenditures low, productivity high, and pray.”
But after 1929, government took charge of the economy and economists were forced to become dogmatic, because suddenly they were policymakers. They began asserting, Keynes first, that they had the answers, and what's more the answers were pleasant. It was like a doctor telling you that you have inoperable liver cancer, but it will be cured if you go to bed with a beautiful seventeen-year-old. Keynes said there's no problem that can't be cured if only you keep purchasing power high. What could be nicer? The monetarist treatment is even easier: There's nothing that won't be cured if you just increase the money supply by 3 percent per year, which is also increasing incomes. The supply-siders are more pleasant still: There's no disease that can't be cured by cutting taxes.
We have no economic theory today. But we have as many economists as the year 1300 had theologians. Not one of them, however, will ever be sainted. By 1300, the age of saints was over, more or less, and there is nothing worse than the theologian who no longer has faith. That's what our economists are today.
Q: What about government? Do you see any signs that the entrepreneurial society has penetrated government as an organization?
A: The basic problem of American government today is that it no longer attracts good people. They know that nothing can be done; government is a dead-end street. Partly it's because, as in business, all the pipelines are full, but also because nobody has belief in government. Fifty years ago, even twenty years ago, government was the place where the ideas were, the innovation, the new things. Japan is the only country where government is still respected and where government service still attracts the top people.
Q: So there's nothing for government to do, in your view?
A: Oh, no, no. The days of the welfare state are over, but we are not going to abolish it. We have to find its limits. What are the limits? At what point does welfare do damage? This is the real question, and it's brought up by the success of the welfare state. The problems of success, I think, are the basic issues ahead of us, and the only thing I can tell you is that they don't fit the political alignments of the nineteenth and early twentieth centuries. They do not fit liberal and conservative and socialist. The traditional parties make absolutely no sense whatever to anybody of age thirty. And yet, what else is there?
Q: Is Ronald Reagan's administration promoting or inhibiting this entrepreneurial society of yours?
A: It's a very interesting administration: totally schizophrenic. When you look at its deeds, it hasn't done one darn thing Mr. Carter wouldn't have done. And probably he wouldn't have done it any worse either, or any better. The words, however, are different.
This is a very clear symptom, I think, that there has been an irrevocable shift in the last ten years. No matter who is in power, he would no longer believe in big government and would preach cutting expenses and would end up doing nothing about it. This is because we, the American people, are at that interesting point where we are all in favor of cutting the deficit—at somebody else's expense. It's a very typical stage in alcoholism, you know, where you know you have to stop—tomorrow.
Q: Do you think we will?
A: Alcoholics usually don't reform until they're in the gutter. Maybe we won't wait that long. Three years ago, to do anything about Social Security would have been unspeakable. Now it's speakable. It's not doable yet, but I think we're inching toward solutions.
Q: You're not too worried about the future then?
A: Well, one can get awfully pessimistic about the world. It's clearly not in good shape, but it probably never has been, not in my lifetime. One of my very early childhood memories is the outbreak of World War I. My father and his brother-in-law, who was a very famous lawyer, jurist, and philosopher, and my father's close friend at the time, who was Tomás Masaryk, the founder of Czechoslovakia, a great historian and much older of course…. I still remember our house. Hot-air heating pipes carry sound beautifully. Our bathroom was above my father's study. I was not quite five, and I listened at the hot-air register to my father and my uncle Hans and Masaryk saying, “This is the end not just of Austria, but of civilization.” That is the first thing that I can remember clearly. And then I remember the endless obituaries in the newspaper. That's the world I grew up in and was very conscious of, the last days of anything that had any value. And it hasn't changed since. So it's awfully easy for me to be pessimistic, but what's the use of it? Lots of things worry me. On the other hand, we have survived against all odds.
Q: It's hard to place you, politically…
A: I'm an old—not a neo—conservative. The neoconservatives started out on the Left, and now they are basically old-fashioned liberals, which is respectable, but I've never been one. For instance, although I believe in the free market, I have serious reservations about capitalism. Any system that makes one value absolute is wrong. Basically, the question is not what are our rights, but what are our responsibilities. These are very old conservative approaches, and I raised them in the first book I wrote, The End of Economic Man, when I was in my twenties, so I have not changed.
Q: Were you ever tempted to go into politics?
A: No, I realized very early that I was apolitical, in the sense that I hadn't the slightest interest in power for myself. And if you have no interest in power, you are basically a misfit in politics. On the other hand, give me a piece of paper and pencil, and I start to enjoy myself.
Q: What other things cheer you?
A: I am very much impressed by the young people. First, that most of the things you hear about them are nonsense, for example, complaints that they don't work. I think that basically they're workaholics. And there is a sense of achievement there. But I'm glad that I'm not twenty-five years old. It's a very harsh world, a terribly harsh world for young people.
(1985)
This interview was conducted by senior writer Tom Richman and appeared in the October 1985 issue of Inc.
PART I
Economics
CHAPTER ONE
The Changed World Economy
THERE IS A LOT OF TALK today of the changing world economy. But—and this is the point of this chapter—the world economy is not changing. It has already
