Allan Meltzer (1928 – 2017)–In Memoriam

May 11, 2017
By

Renowned economist Allan Meltzer, author of the seminal book “Why Capitalism” and a magisterial two-volume history of the Federal Reserve as well as ten other books and 400 papers died on May 8, 2017 at age 89.  He was also a consultant for congressional committees and a member of the President’s Council of Economic Advisers.  He served with the U.S. Treasury, the Board of Governors of the Federal Reserve, several foreign governments and their central banks.

Two weeks before he died and at age 89 he published a paper for the Hoover Institution citing three Democrat errors in the 2016 Presidential election.  I would like to republish it below:

Three Democrat Errors

by Allan H. Meltzer

Tuesday, April 25, 2017

In the months following the presidential election, Democratic Party leaders have made a number of decisions that are neither in the near- nor the long-term interest of the party or the public at large. Two are narrowly political; a third is more fundamental for our future. Together, they show the party following the familiar path: stand for nothing, but let members agree with constituents about legislation they favor or reject.

First, leaders of the party are making the mistake of concentrating all of their internal attention on the loss to Trump. In the week before the election, I made several small bets that Trump would beat Hillary Clinton. I based that on three data points. Pollsters weigh random samples of voters by past voting outcomes. It seemed unlikely that black voters would come out for Clinton as they had for Obama. They didn’t. The same was true of young democrats. They had voted solidly for Bernie Sanders and were unlikely to shift massively back. And third, as I watched the spirited, enthusiastic crowds at Trump’s campaign stops and compared them to the uninspired voters at Clinton’s rallies, I concluded an upset was coming. Voters at Trump rallies were wildly enthusiastic. Also, when we drove to rural Pennsylvania, we saw very many Trump signs—and almost no Clinton signs

The Democrats have failed to recognize that the only elections they have won since 2008 were elections in which Barack Obama was on the ballot. A majority of voters liked President Obama. They showed no corresponding support for the party’s programs. And they rejected his health plan as too costly and requiring too much income redistribution. By concentrating on the presidential election and ignoring the loss of elections in Congress and at the state and local levels, the party’s leadership is not asking the right question—which is: Why are voters rejecting the party’s programs and candidates at many levels?

I believe there are two related reasons. First, the United States is a right-of-center republic that moves to the left mainly in crises. Second, a central, dominant idea is popular sovereignty. Our founding fathers vested sovereignty in the voters, meaning voters choose legislators to carry out the programs that voters want. Voters make major decisions by electing representatives who enact their ideas into laws. This is the basis of a government of laws and not of individuals.

Which brings us to the second failure of the Democrats: They have been replacing popular sovereignty–America’s heritage—with rule by experts who claim to know what is right for the populace. That violates the voters’ belief in their role and their right to decide how the country is ruled. Instead of popular sovereignty and the rule of law, we get numerous regulations chosen by officials. That’s government by rulers, not by rule of law. The so-called Affordable Care Act is an example of the choices made for the public that are costly, unpopular, and politically toxic. And that is just one example of the regulated economy created by the Obama administration. In the 2010, 2014, and 2016 elections, voters signaled that they did not want such an economy. They wanted popular sovereignty and the rule of law.

But instead of popular sovereignty, the Democrats gave them government by coercion. If a voter rejected the choices offered by the Affordable Care Act, he or she paid a fine; party leaders extended many rights to gay individuals and even decided where some children went to the bathroom over the outcry of parents and individual schools. This is government by authorities—select men and women—not government by the people. A free people rejects the loss of sovereignty, as they have done.

After the election, the leadership showed no evidence of moving back toward popular sovereignty. An obvious way to do that would be bargaining for their constituents with President Trump. The president is a negotiator. He even put his name on a book about negotiating. He is not a traditional Republican, so he might be open to some Democratic programs on health care in return for votes on his legislation to repeal and replace Obamacare. Or he could reach agreement with Democrats on some tax changes. That’s what successful presidents, including Ronald Reagan, did.

The Democrats have rejected compromise. They chose to oppose all appointments and all policy changes. This achieves nothing for their constituents. Negotiating with President Trump was the better course. Their failure reinforces the image of the Democratic Party as ideologically driven by a vocal group promising a social revolution that such programs of redistribution can never achieve.  No prominent Democrat in elected office has spoken out about the events at Middlebury College, where a distinguished social scientist, Charles Murray, was prevented from speaking by a group of students who disliked what they had been told about his views. What happened at Middlebury is part of a repeated series of attacks against free speech and heterodox ideas at Yale, Brandeis, Berkeley, and beyond.

The first amendment to the U.S. Constitution protects freedom of speech. It does not limit the protection to those we agree with. In fact, the whole purpose of it is to protect the speech of those we disagree with. The left, though, demands that we protect individuals from hearing speech that might offend them. Candidate Clinton supported a revision of the Constitution’s first amendment to protect people against unpleasant speech. Presumably, the government would decide what was acceptable. What a nightmare for freedom that would be.

In the 1930s, the Nazis monitored public discourse to prevent speakers from advocating positions they did not favor, including freedom to speak against Nazism. That’s how it begins. And it ends badly unless political leaders and many others speak out and oppose it. That’s what ended the career of Senator Joseph McCarthy in the 1950s.

Today, though, the assault against speech requires college presidents, deans, and political leaders on the left to offer a strong defense of open discussion. Unlike the president of Middlebury, who placated the protestors by saying she agreed with them and disagreed with Charles Murray, leaders must insist on free speech for those whose views and words differ from those that give us comfort and ready agreement.

Students who do not wish to hear ideas they oppose should stay away from liberal arts colleges, where the purpose of an education is to teach them how to think. In the case of Middlebury, the students may have learned something new—namely, that The Bell Curve does not advocate racism. But much more needs to be done to strengthen a free society. Beyond repudiating the culture of micro-aggressions and “trigger warnings,” colleges must undertake to expose faculty and students to a mix of ideas and encourage them to form their own set of beliefs.

Thank you, Professor Meltzer.  Thank you for everything.  I wish you bon voyage.  May you always have fair weather and a following sea.