 This is in the early part of the 20th century that the 20th century problems are different and That what the 20th century needs is some way That is neither socialism nor laissez-faire And especially what the 20th century needs are institutions which are intermediate between the individual and the state as if such things didn't exist in the 19th century But I think Cain's argument is instructive because his argument about liberalism I think exactly the opposite of the truth The state and state of city ology Preferred either the isolated individual or Failing that it prefers the dominant of domination of non-government institutions by the state and The examples the three examples that I'm going to give now are widely Spread out in history and very different examples, but all of which show the problems that the state finds or has with the institutions of civil society and how the state tries to eliminate the independence of those institutions I think that the the reason for studying this and the reason I think these examples are instructive is Because they turn our attention to the ways in which in today's world the state has tried to Weaken or eliminate the institutions of civil society and by so doing has really tried to weaken the Case for liberalism Because if the end if the the if the individual or if the citizen has to choose between an Isolated atomistic state of affairs he himself alone Versus state control of the social nature of individuals will propel them most likely to state control So this is a very important issue Okay, I have on the board of the three examples or at least the key words of the three examples the first one has to do with the Correspondence in the sense of an exchange of letters between the Roman gentlemen and governor Pliny the younger and The emperor at the time of the beginning of the second century AD the emperor Trajan now Both plenty the younger and the emperor Trajan have reputations of being very wise honest and decent people And they were trying to grapple with a problem And a very in some ways mundane problem around a hundred and ten AD Pliny was appointed by the emperor the appointed governor of the Roman province Bethany a Pontus, which is an Asia Minor now Turkey and This was the the problem that Pliny faced and I should add plenty was very cautious He didn't like to make decisions without checking with his superiors and in this case it was the emperor and His whole political career it was based on this cautious approach to those in authority so at one point in one of the cities in in Bethany a There was a major fire that caused extensive damage and Pliny concluded that the damage would have been would not have been so great had the people been better organized to fight fires So he writes a letter to the emperor Trajan and this is what he says in the letter It was some of the things he says in the letter I have to just add as a side point in high school I had to read the letters of Pliny the younger and I thought it was the most boring horrible thing It turns out that Pliny had some interesting points. We just that we never read the interesting letters We are but in any event this is what Pliny writes to the emperor Trajan. It is generally agreed That people stood watching the disaster the fire disaster without besturing themselves to do anything to stop it Apart from this there is not a single fire engine anywhere in the town not a bucket nor an appropriate nor any appropriate apparatus for fighting a fire So Pliny decides to make a suggestion to the emperor he asks him this question Would you will you consider? Whether you think a company of firemen might be formed limited to hundred and fifty members I will see that no one shall be admitted who is not genuinely a firefighter and that privileges granted shall not be abused It will not be difficult to keep such small numbers under observation You know, there's something strange going on here, right? He's not simply asking Suggesting to set up a fire department, but he's trying to allay the emperor's fears about something And I think it becomes clearer when you hear the emperor's response. So Trajan says the following to him I have received your suggestion that it should be possible to form a company of firemen in Nicomedia That's the name of the city in the province on the model of those existing elsewhere But we must remember that it is societies like these which have been responsible for political disturbances in your province particularly in its cities This is the key sentence. I think if people Assemble for a common purpose whatever name we give them and for whatever reason they soon turn into a political club It is better policy then to provide the equipment necessary for dealing with the fires and To instruct the property owners to make use of it calling upon the help of crowds which collect if they find it necessary end quote So Trajan is worried about simply establishing a fire department and His worry is that any organization of People can easily turn to political purposes Now Trajan's fear is well justified Apparently Apparently in this province there were associations in the past Originally organized for non political purposes that led to political trouble and and this is all happened throughout the Empire And in the later days of the Republic and in the Empire All clubs and organizations were subject to a system of licensing and so The the Emperor wanted to know what clubs were being formed where and to have them Officially licensed or sanctioned under certain conditions There is additional evidence apparently having to do with placards that were Made by clubs of Stensibly brought together for professional interests Apparently there were located Placards of fruit dealers. Okay clubs of fruit dealers Here who Nana who urged the election of certain people to various positions within the province There were associations of goldsmiths Association of worshipers of Isis the goddess Isis Who urged the election of certain candidates? So it turns out that clubs organizations established for any purpose under the Sun Seem to have in due course Turned to political purposes and so the Emperor Trajan I think from his own point of view was right in being suspicious of any Kinds of organizations that were independent of the state I should add that the attitude of the of the Roman Of Trajan and later Roman emperors toward the Christians Was was related to all of this The problem with Christianity from the Roman point of view was not that they worshiped Jesus or Or different God but that they refused to worship also the Roman gods That they believed in some sort of exclusive truth of their own God Makes it may it makes it sound like the Romans are broad-minded in a way But the point is that the the organization that religion in the Empire And in the Republic as well had an important civic function And to have a religion That did not partake of that civic function Was a threat to the stability of the political stability of the of the Roman Empire Okay, the second example Is it been in the news recently and I I hope That there are no Chinese students here not because I don't like Chinese students But because certainly the China if there's a Chinese student here, he'll know more about this than I know so I would prefer they're not be one But there is a There has been in the news recently Reports about this organization called a Falun Gong And as I understand it it's a Spiritual list movement it combines elements of Buddhism and Taoism and certain types of exercises It has certain recommendations that have to do with health without the use of medical Procedures through meditation and exercise And that they have been subject to criticism by the the Chinese government but What was the real problem is not so much the earlier criticism by the Chinese government of this movement But that when the movement decided to protest the Chinese government's criticism of them They demonstrated to the government that they had a great deal of power in terms of organizing people and getting them to together for a specific purpose And so the ability of this organization simply to mobilize large groups of people And to protest the criticism by the government and to demand official recognition again an aspect taken Similar to the to the Roman situation where organizations that are not part of the state are Supposed to be sanctioned or licensed by the state when they organized in order to demand this The government saw what power they have had and have And became frightened about the political implications now an article that I have here from the New York Times says And I don't know how accurate this is in terms of Chinese history But this is what the New York Times says It says mindful of the explosive role that groups invoking mystical forces have played in toppling weak authorities in Transitional at transitional periods throughout Chinese history Government leaders can have conducted a campaign against Falun Gong with the with market thoroughness Again what we have is an example of an organization which If we except for the sake of argument is not directly a political organization Nevertheless posing a threat to the state because of its very power to organize people and to command their loyalties again a a kind of confirmation of the Emperor Trajan's Position or opinion that organizations formed for any purpose can easily turn to political purposes and create instability now Excuse me after giving those two Rather dramatic examples or three if you count the Christians People may think that the next example is kind of absurd and that is American universities Now I obviously recognize that there is a difference between the state's influence of American private universities and what the state did in the case of the Emperor Trajan and the fire department and the Registration of groups in the Empire and the treatment of the Christians and the treatment of the Chinese government of the Falun Gong leaders But I think that it's important to see that those extreme cases also Provide a model for the tendency even though it may be exercise in a weaker way that exists in even an apparently free and Diverse society is the United States Now what am I talking about when I talk about American universities and their Relationship but to the state. I mean American private universities so-called private universities One of the things that got me thinking about this issue Was an article that appeared again in the New York Times a few days ago really on the lobbying efforts that American universities are making in order to get money for research expenses research expenditures Typically, how a university a private university gets research money in the United States is through to Primarily through two government agencies one the National Science Foundation and the other than the National Institutes of Health Now there are others but these constitute the lion's share of the resources available for research and The process is that there are committees in of supposed experts In various academic fields who then decide on which grants get funded and which grants do not But more recently what has happened is that Private universities especially and but others as well have found it easier to go directly to Congress For special appropriation for their university special projects at their university and to bypass all of the Professional review that has been set up in order to supposedly ensure that the money Is spent is spent wisely So what is happening increasingly? Is that universities are spending money on? Organizations that whose task it is to lobby Congress now what I mean by lobbying case people are not familiar with that that term is that you pay an Organization an university pays an organization professional organization, which then goes around to the key congressman and makes the case To those congressmen who are on special committees that are concerned with education or funding Why your university should get x millions of dollars for a specific research project? and It's increasingly the case that universities are spending a lot of money on this the Times reported That the biggest spender Is Boston University? Who spent which spent a seven hundred sixty thousand dollars to lobbying firms? To get funds directly from Congress, but many of the others the Harvard University Columbia University New York University Have spent hundreds of thousands of dollars in lobbying efforts Campaign contributions and this is this is what shocked me When I saw this New York University gave sixty four thousand dollars mostly to Democratic political candidates In order to make they're getting research money or easier Boston University spent sixty five thousand the Harvard University is the champion here and political contributions $188,000 Now what point am I making? The point I'm making is that while America does have a large private university sector Much of its privateness Has been bought off In the cases of the the first two cases the state Seeked sought to directly repress institutions non-governmental institutions the American way is to buy them off and You know it makes a certain amount of sense. I mean, you know America is about making money and right and So in the American case Increasingly private universities are becoming politicized in the efforts to obtain funding for various projects and proposals They are increasingly dependent upon the state for their financial survival and This aspect of actual participation in the lobbying and political process is really just beginning But I think it it marks a an important turning point in the politicization of American private universities So I think in the three examples we saw We saw the heavy-handed approach To institutions of civil society which created a threat of instability in the political sphere But we also see the much more probably effective Method that the American government has used to make sure in effect not that Universities don't have individuals advocating all sorts of ideas and things of that sort But that even those individuals are still players in the political process. I was amazed a number of years ago It's nearly 20 now When Ronald Reagan first came into office and there was a large cut in the budget of the National Science Foundation Which funds economics Suddenly within within days There were letters that was actually was one main letter to the New York Times signed by Various market economists like Martin Felstein others Saying my god, how can you cut? Our budgets, how can you cut the National Science Foundation budget? Economic research is important. It has external benefits all of a sudden These people were in the panic over the loss of state funding so free market or not free market the American system has a way of ensuring that everybody plays the game and I think it's another way that the institutions of civil society have been weakened Not to the extent in my first two examples, but nevertheless more perhaps even more insidiously Because it's not so obvious, but nevertheless weakened by the activity of the state So in conclusion, my you know three examples don't prove anything But what they do show I think is that throughout the various historical epochs The state has been very concerned about the institutions that are independent of it and have and and the state has exercised a watchful eye because they understand that the the real alternative is the individual in Conjunction with institutions of civil society and if one can ensure that individuals are either atomistic Isolated or perfectly dependent upon the state then this position of the state will be stronger and and the position of Liberty will be weaker. Yeah, beautiful. We are just on time. Thanks a lot So who is asking the first question? There are no candidates. We are the Microphones. Yes, Steve. I Find the picture you paint for American universities very familiar the situation in here in Europe certainly in Britain is even worse but What I wonder is What you think can be done about this because it seems to me that the in the situation as it is The incentive for people in private institutions such as universities and others to seek to gain Advantage by cooperating with state power is absolutely overwhelming It's like being presented with a honeypot and open honey jar and you would have to be extremely foolish really in terms of narrow definition of self-interest not to Stick your paw in the pot so to speak So what do you think about that? Can you think of any way of changing the institutional incentives so that the people in such private organizations whether they be clubs or Universities have an incentive not sorry not to try and extract wealth from their fellow citizens in this way It's interesting they have in this article John Silver the Chancellor of Boston University is prominently featured as a defender of this lobbying By the way, I have nothing against Boston University But nevertheless Silver says well people say it's dirty Unprofessional to go directly to Congress. He says well let them read the Constitution We all have the right to go to Congress and ask for what we want. This is a free country, etc. Well, I think what that illustrates is that there isn't it isn't What that illustrates is that in a way it's been a miracle that it didn't happen until now but that the Universities are in a position that's really no different from anybody else who has an interest and Decides to spend money on lobbying efforts to promote that interest so I think that the the answer if you know there isn't a unitary answer, but the answers That will work in the case of universities have to be part and parcel of answers That will work in terms of limiting the ability of the state to finance special interests across the board and here the public choice prescriptions I think are important in terms of one example the idea that that Spending legislation and taxing legislation perhaps should be subject to super majorities and at the federal level and things of that sort So I have no answers apart from the general prescriptions that public choice economists have made in terms of constitutional reform and Reforming the rules of the game. I don't think you can expect that universities are going to exercise some Are going to be denying themselves what is permitted to everyone else. I know for example NYU This is not at the federal level, but it's at the state level every year when the appropriations are passed at the state level For student loans and various other goodies that the university benefits from They hire buses To bring students up to Albany To demonstrate in favor of whatever the legislation is To get the get the money and of course there are students who you know Love to do that kind of thing and they go and And you know, and I don't know what else the university gives them You know at NYU you never can find out anything. I don't know how other universities are but You can never find out what's going on but in any event so Universities are not going to deny themselves what is permitted to everyone else Okay, yes in the back row there Just in the middle. That's George George. I'm sorry. I didn't recognize you Yes, Mario We're hearing your comments about the universities seeking government funds Suggests an analogy with the the idea of school vouchers Of course, many classical liberals favor vouchers as an alternative to the the status quo in in In high schools and in other primary education But your argument suggests that that actually would undermine these Civil aspects this this component of civil society. What do you say about that? Well, I wish I could be in favor of vouchers. It would be easy But what I worry about is seeing time and time again when the state Directly or indirectly funds anything that people then begin to say well, you know This is we have let me back up. We have this idea in the United States that any Reduction in taxes or any Exemption or deduction is In a way a gift from the state to you The implicit assumption is the state owns all the wealth and then Spends some of the wealth On tax reduction or tax exemptions or on vouchers So it will be very easy in terms of the mentality that many Americans now have or at least American journalists have to think of the vouchers as an expenditure of state money and therefore You know, should it go just to any school or only schools that have meet certain requirements? And so what I worry about is that the voucher system will be the opening door opening of the door to Greater control of private ostensibly private educational institutions But I don't know is there something more you wanted me to connect with what I said in the in the talker The way many people conceive of them right the voucher is is is taking a given amount of taxation right, but Creating a greater freedom of choice as to how those funds can be applied And viewed that way. It's it's in a sense It's strengthening civil society or the institutions of civil society by creating alternatives more viable alternatives to the government-run schools and and all I'm the the only point of my question is to is to suggest that they're that there's a difficult tension here because I Agree with your point that whenever the state is involved in funding anything. There's a danger of it being able to Manipulate and control what it funds and in that sense it undermines what might otherwise be a good Civil institution on the other hand the private private primary schools can hardly get off the ground to a very significant extent Given the the fact that taxpayers have no choice, but to fund government-run Institutions, so it seems to me you've got to Hear a case where it's not clear what the best way to promote civil society is Well, you know when you when you enter the realm of the second best whether it's the second best economically or the second best in some moral sense It's very difficult to to set out clear rules and clear paths of behavior I Would prefer to the voucher the so-called tuition tax credit Which means that if you pay tuition to a school you can deduct that from your tax payments The voucher is different in the sense that it's like a government script or something that you're handed And it's worth a certain amount of money, and then you you purchase educational services from it The tuition tax credit is a little more indirect but you know The curious thing about Freedom is that when you mix it with other things the other things have a way of taking over and So I don't have any clear answer there But I would prefer tuition tax credit to vouchers Yeah Ian McCann My name is costed in your life. I'm from where is he? Where are you speaking here? Where's the one? Okay? I'm from Bulgaria It seems to me that this Distinguishing between the state and other institutions is not very appropriate I think that the state itself is a very natural institution and The question for me is why? Why the state is so powerful and and strong institution and the reasons reasons for that I think there is a very strong reasons for the state to be so powerful institution the point you make is actually a very complicated and Profound point And I don't want to go too far a field from what exactly you said But it rings a lot of bells in my mind First of all natural There is a very interesting passage from John Stuart mill In That's quoted in Henry Haslitz foundations of morality in which mill In effect makes fun of the concept of natural He talks about all sorts of horrible diseases and Terrible events in human history all of these he says are natural Now it's got a point It's not the point he thought he had but there but he's got a point And the point is that the way a lot of people use the term natural today Is it does not in any way? Imply or should not imply Good or beneficial it just means that there are laws of nature Okay, or laws of human behavior Which can explain or rationalize things that happen? So in some sense the state is natural In some sense the totalitarian state is natural the the communist state is natural Why because we can use certain laws? Mises would say praxeological laws to understand how such institutions come into being and and how they function and what they do to a society So natural in that sense not in the natural law sense in the correct sense the natural law theorists But in the sense that mill was using it in the sense that a lot of people use it today is Has nothing to do with good. It's just You know the way the world works But now we come to an interesting problem and the interesting problem is that there is a tension in Social science between the normative and the descriptive It's clearly has come out in economics, especially say economics of institutions in the in the form that People say well if you can rationalize or if you can explain Why a institution the state or whatever Arises how it arises why it's a inefficient adaptation to the environment And to circumstances as they exist You have thereby justified it And this is an attention that is not new it goes back Herbert Spencer got himself into a mess on this As well meaning as he was But but it's a specially acute problem now in the late 20th century So what I would say is this that in the sense of being able to understand why the state comes about and Why totalitarian state comes about why all sorts of social phenomena come about They are explicable in terms of natural or praxeological laws But that's not the same thing as saying that they're desirable From a moral perspective No, I'm disturbed by your talk and it reminds me of something else that appeared in the New York Times a few months ago on a weekend edition Which was about the question of how we decide what quality of university work we want What should what quality of university work we want normally in private American universities cover most of their running costs and More through tuition fees and you would normally have thought that the quality of a service is Determined by what the customers are willing to pay for it If you now covered most of your running costs through tuition fees that mechanism that test seems to be satisfied if you go for more money Government money Presumably that buys higher excellence now how where is the test to determine how much excellence we want as opposed to Reductions in the teaching loads of professors or some other rent-seeking object I don't know exact figures But I know that the majority the major part the majority of the budget of NYU private University they call themselves because sometimes people especially non-americans think that New York University is the same thing as the city University of New York You see a slight difference in name is all the difference in the world the city University of New York is a public University But New York University is a private University as they say in the public service I didn't like that when they started doing that private University Why can't they just say it's a private University in the city of New York or something like that? But it's in the public service. Okay, so I'm a public servant But you know the majority of its budget it does not come from tuition Foundation grants of course are important, but there is Also if even if you include tuition, I mean, how do people pay tuition? There are all sorts of a federally guaranteed loans Is that count as private money? I mean when in fact you're able to borrow money and much below market rates of interest In order to pay the tuition So the idea surely the the universities operate in a market But a mark markets and markets are not all the same. I mean there are markets which reflect the demands of different constituencies You know who are my colleagues working for in my department say who am I working for? I'll be quite honest with you. I do not think of myself as working for the students I think of myself as working for Austrian economics, whatever that means And I have to teach these students because then I know I otherwise I won't get a paycheck and you know I like eating and going places But I never think of myself in fact the whole concept if a student were to come up to me and say I pay your salary. I mean I thought the people like the mortal sin I mean I I would never forgive the student for saying such a impertinent thing like that personally doesn't pay my salary and Secondly the whole attitude is that we're of all the faculty. We're not working for the student. We have to do this Who are we working for? We're working for our peers. We're working for others in the profession We're working for those others who consume the ideas that we produce How is this possible? well the state is a large part of the reason why we have that luxury and So You know what determines excellence in that context? Well now certainly with the direct lobbying you can't argue that it's the board of expert advisors We need the what was the the name of the person the so the metaphysical advisor was that What Okay, I want to bring a case under consideration Poland does have a private university established in 1918 Which survived the war and the communist system? This is the Catholic University of Lublin and a few years the University Never took even one single slot if from the communist government When we have that change Then there was an issue of whether the Catholic University should take money and there was a big discussion Whether it would involve Or subject the University to the governmental authorities the answer of the rector and the Senate Who decided to take some money covering certain part of expenses Was that this is not a grace or benefit which we are taking from the government? This is a restitution Because there are no other mechanisms by which parents or students Can deduct the money that they are paying anyway to the government So this is the this is the thing that so to speak getting back what we Paid in a in a Indirect way, I mean if there were other mechanisms, but we don't have and it would not be possible to cover through tuition taking into account that a salary of our Average person is about three hundred dollars So It's a hot case When you first started to tell the story, I thought what you were saying was Restitution for the oppression that the communist government placed the Catholic Church under all these years and now they're getting but do you mean something? You mean a refund of the of the taxes, you know See this is the problem this is exactly the problem is that there are also given the state's involvement in Civic life the life of the of the people to a great extent there become then many rationalizations for additional involvements or modifications of the involvement So given that the state say takes Certain amount and taxes then people can legitimately argue. Well, I'm just getting my tax money back I knew a student at the University of Chicago when I was a student there years ago who hadn't held the job In the private sector in his life, but immediately started working for the state of Illinois And he said he was getting this tax money back and I asked him what tax money. You never had a job What tax money you're getting? He says I'm getting my tax money back in advance For when I get a job in the private sector This is the problem I mean this is why there is something, you know known as the slippery slope et cetera is because Interventions lead to very reasonable respectable rationalizations for further Intervention and we go down the road and I don't know what to say about any you know given That there's a certain situation in place Then it you know, it is reasonable for individuals in certain circumstances then to to demand their share but It's reasonable in one sense and of course in the collective sense it produces the Result that the civil society is co-opted or dominated by the state Okay So much so so much. Very good. Thanks to tomorrow and to everybody