Opinion column by Aubrey Herbert (pseudonym for Murray Rothbard), published in Faith and Freedom, Volume VI, Number 8, April 1955, pp. 8-9

Along Pennsylvania Avenue - Aubrey Herbert

Our politicians must suffer from poor stage direction. When the play's a tragedy, the audience laughs. Serious affairs of state come out as a farce. We saw congressmen call on each other to have enough "courage" to take the bull by the horns and give themselves a $10,000 pay boost. Millions of Americans struggling to make ends meet saw congressmen complain that they could not live on $15,000 a year.1

Had not the purchasing power of the dollar fallen in half over the last twenty years? Was it not only fair then that congressional salaries be doubled as compensation? We could echo their lament. But who sees to it that our salaries always increase to offset a decline in the value of the dollar?

Many unfortunate Americans live on more or less fixed incomes: ministers, teachers, widows, retired people. They cannot conveniently vote themselves increases when inflation eats away the value of their earnings. And how many of them boast a $15,000 income?

The irony of the affair deepens when we realize who has caused this inflation. The answer is: Congress itself. Congress was responsible for the series of huge deficits (and the sale of government debt to the banks) that swelled the money supply and thus the prices of goods and services. Congressional inflation of the number of dollars available, caused the dilution of the purchasing power of each dollar.

Of course, the Executive consistently took the lead in sponsoring the inflation. But, Congress ratified this program and gave it the force of law.

During the debate on the pay raise, some congressmen taunted their reluctant colleagues, saying: "Aren't you worthy of your hire?" This raises many interesting questions. How do we know when a congressman is getting paid commensurate with the service that he renders? Congress is the only body in the country that has the absolute power of deciding its own salary. It is difficult to believe that they underrate themselves. But how can we set any figure that will not be arbitrary?

The Segal Commission, established by Congress to investigate its salary, compared the sum with the far greater income of corporation executives. A way exists of determining the worth of the services rendered by executives, or by anyone else in private business: the amount that consumers are willing to pay for these services on the free market.

But for government officials, including congressmen, no such test of worth exists. It is intriguing to speculate how much income these officials would receive if they had to subsist on voluntary contributions from the public? How much would you contribute to a few you know about?

Last year, Congress gave tax relief to dividend receivers. This year, congressmen fortified themselves with a pay hike. All this time, the government continued on its familiar route of deficit financing. In fact, many observers noticed that, in the President's January Economic Report, the goal of a balanced budget had faded into oblivion.

An Angry President

But what happened when the Democrats seized upon the idea of granting everyone of us a $201 a year tax cut? Suddenly, the Republicans rose up in arms, castigating the Democrats for "fiscal irresponsibility." An angry President Eisenhower charged that the Democratic move would plunge the country back into deficit financing. The "balanced budget," having been quietly buried, was resurrected for the moment and laid before the Democrats.

Unfortunately, many conservatives in Congress were convinced that they must oppose a tax cut to defend a non-existent budget balance. Yet a mere budget balance is not a worthy goal. The important target is a balanced budget at a low level of expenditures and taxation. Representative Daniel Reed, (R., N. Y.), ranking Republican member of the tax-writing House Ways and Means Committee, erred when he termed the tax bill a "$20 handout." Can we call it a "handout" when the government permits people to keep a little more of their own money?

The people need and deserve far more substantial tax cuts than the Democrats offered. If the Administration wishes to balance the budget, it can use a simple device: cut its expenditures. No tax cut ever proposed need plunge us into "fiscal irresponsibility" if the Administration is willing to cut its expenses enough. Even deficit financing, though deplorable, is not inflationary if the Administration paid enough interest to borrow from individuals instead of from banks.

Our era of inflation and fiscal irresponsibility will never end so long as the government can persist in refusing to give back the gold which it took from us in 1933. This seizure was touted to last only for the duration of the depression "emergency." Now, twenty-two years later and the depression forgotten, the return of our gold looms as far away as ever.

The gold standard question has failed to stir the public because discussion has been waged on a highly technical level. The vital issues in the gold problem must not be lost in a maze of technicalities. They are twofold: one, the public must not be deprived of the right to own gold.

Second, paper money and book credits can be inflated at will by the government. Gold cannot. Therefore, if paper and book credits are payable in gold, the people can exercise a check on inflationary overissue by the government. And the people can then fall back on a "hard" money that cannot be diluted by government edict.

The question of statehood for Alaska or Hawaii blooms as a hardy perennial in the halls of Congress. Yet no problem rouses less interest in the American public. Every year, Congress wrestles with statehood in lacklustre fashion. Only the Alaskans and Hawaiians themselves play an active role in the struggle. As a result, only luck so far has spared the nation a step that receives none of the attention it deserves.

Very few on either side have presented basic arguments for or against statehood. The argument for statehood boils down to the proposition that the people of the territories favor admission to the Union. This may flatter the United States, but it hardly furnishes sufficient reason for their entry.

Opposition has centered on irrelevant and superficial issues. The main stumbling-block to statehood has been the accidental fact that Hawaii tends to vote Republican, and Alaska Democratic. Each party adopts one favorite, and disapproves the other.

Southerners tend to oppose new states for the historic reason that they are apt to favor FEPC and similar measures. Many critics point to the incidence of communism in Hawaii. Others attack the polyglot nature of the island's population, forgetting that the population of the American Republic is no less polyglot.

None of these arguments pinpoint the main issue. For the first time, the organic American Republic would extend beyond the confines of the American continent. For the first time, the United States would include non-contiguous territory, leaping over thousands of miles of ocean and foreign land. This could be a momentous and fateful step.

The might of the Civil War has apparently ended the right of secession by a state. Nor can a state presumably be expelled from the Union. Admission of a new state becomes irrevocable. If Alaska or Hawaii acquire statehood, the possibility of a future return to a policy of American Continental isolationism disappears forever. No longer, for instance, could we ever hope to disengage ourselves from the quarrels and hatreds of Asia. No longer could we look to disentanglement as a way to peace.

We sympathize with the desire of the inhabitants of Hawaii, Alaska, and Puerto Rico to be free of their dependent roles. We employed rare vision to grant national independence to the Phillipines. Why not to our other dependencies as well?

  1. Based on the Consumer Price Index, calculated by the Bureau of Labor Statistics, $15,000 in 1955 was approximately equivalent to $140,000 in 2018 and $20 in 1955 is about $190 in 2018.