What Ever Happened to Free Enterprise
Ludwig Von Mises Memorial Lecture at Hillsdale College
delivered 10 November 1977, Hillsdale College, Hillsdale MI
[AUTHENTICITY CERTIFIED: Text version below transcribed directly from audio]
President George C. Roche III: As you know, it's the intention of the Ludwig Von Mises Memorial Lecture Series to honor the idea of a free market economy, as was reflected in the work of that distinguished Austrian School economist. Normally, the people who appear in such a series are distinguished academics, defenders of the free market -- in that area. Earlier this week, as you know, we had a Nobel Laureate here on campus in economics, Friedrich Von Hayek. Tonight's situation is a special case. We have with us a man of affairs, a man who has had the personal experience of exploring the whole question of economics and our social structure and our institutional ideas and where we indeed should go from here. He's had the responsibility of making some hard decisions in that area. So he brings a special kind of expert knowledge to us. I scarcely need to introduce our speaker this evening, so let me take the advantage of a captive audience to tell you a story which I trust will be apropos.
I know a lady, who, twice in her life has lost her country. She lost it the first time as a very young woman when, in Czarist Russia, the Bolshevik Revolution occurred and she barely escaped with her life. She came to Cuba, started again from scratch, once again built up a very successful competence, was doing very well. And this time, as an elderly woman, again, she lost her country at the time Castro took over. Now, losing one's country once would be enough for most of use, I suppose. Losing one's country twice would be enough for the toughest person in the house -- but not for this very indomitable lady. She came to the United States where again she started from scratch and again built up a very successful competence. And now as a very elderly person, I've heard her tell this story on more than one occasion and invariably someone in the audience, when she is finished, will say, "You poor, unlucky woman. How you have suffered. What an ordeal you have been through." And her answer is always the same: "I, unlucky? Ah, no. I am one of the luckiest women who ever lived. Twice I have lost my country. Twice I have had a country to which I can go. When you Americans lose your country, where will you go?" I've heard her ask the question more than once. I've never heard a convincing answer.
If you look around the rest of the world, you'll see that in terms of what we hope for for our children, in terms of economic opportunity, in terms of the dignity of individual personality, that this is a world that doesn't value such things very highly just now. If it can't be done here in this country, it won't be done. And, in fact, more and more Americans have come to realize that, and as that realization has grown, we've done what all people should do in that case -- we've looked around for leader, someone in whom we repose the kind of confidence necessary to lead us back to taking over our country once again. And, of course, we've found that man. And for millions of Americans, that one man demonstrated in elected office what he could do, and more important he demonstrated in principle and integrity and in courage what real leadership can mean. He epitomizes for us exactly the effort to take this country back, to give our children the chance for the kind prosperity and the kind dignity that used to be associated with being "typically American." Those values and those institutions are very much worthy of defense and we have with us their outstanding defender. The battle isn't over yet, but he remains our leader, as we get on with the task of taking our country back.
Ladies and gentlemen, I give you Governor Ronald Reagan.
Governor Reagan: Oh, thank you. You've done that once. Thank you very much. Thank you, President Roche -- and I hope that the people of Michigan are as intelligent as I believe they are -- one day, Senator Roche. I told some of the Press this afternoon I was torn with mixed emotions on that. I know what we means in the battle, the very important battle of preserving independent education in the United States. But I think, perhaps, he could continue doing that on a wider stage and fight for some other causes as well -- you, ladies and gentlemen, students of Hillsdale, the friends of the College, I'm delighted to be here, first time, although I've been well-acquainted for a long time with what Hillsdale means. And John, you've paved the way a little bit here -- your most gracious remarks. I didn't deserve all of them. But they eased my feeling about being here, speaking under these exact circumstances.
You know, every speaker hopes that his remarks will be well-chosen, well-suited to the occasion. And every speaker has had the experience of not having that true. We had a fellow in Hollywood once, for many years, he's an actor. He was working because his first love, really, was opera. And when he has saved enough money to study opera, he journeyed to Milan, Italy, studied opera, and after a period there was invited to sing at La Scala, the very spiritual fountainhead of opera. And they were doing Pagliacci and he sang the beautiful aria, "Veste la Juba." And when he'd finished the applause from the balcony of the orchestra seats, the galleries, were so sustained, so thunderous that the opera couldn't continue until he stepped back and repeated the aria as an encore. And again, same sustained, thunderous applause. And again, he sang Veste la Juba. And this went on until finally he motioned for quiet and he tried to tell them on this, his first appearance, what a dream come true this was -- to be greeted in this warm way. But he said, "I have sung Veste la Juba, now, nine times. My voice is gone. I cannot do it again." And a voice from the balcony said, "You'll do it till you get it right."
You know, I say I'm delighted to be here and yet I have an uncomfortable feeling that I'm saving souls in heaven. You don't need the convincing that I usually try to do when I -- when I'm speaking on this subject. But maybe I can talk to you about the need for communication. One of the most recent things that I heard, of course, was that now, like so many other schools, you have a Young American[s] For Freedom chapter on the campus, and I'm delighted to hear that because I've been a beneficiary of their support and help on a number of occasion, and I wish your new chapter well.
But this thing of communication is more important than a willing speaker and a willing listener. It requires imparting some information but also it's based on the manner in which it's done. And I had the real meaning of communication explained to me once by a fellow named Danny Villanueva, who used to place-kick for the Los Angeles Rams and later the Dallas Cowboys, and then he became a sports announcer in Los Angeles.
And he told me he was having dinner one night over at the home of young ballplayer with the Dodgers. (You remember the Dodgers.) And they were talking sports. The young wife was bustling about getting the dinner ready, and the baby started to cry. And over her shoulder she said to her husband, "Change the baby." And he was a young fellow; he was embarrassed, and he looked at Danny and back at her and he said, "What do you mean change the baby?" I'm a ballplayer; that's not my line of work. And she turned around, put her hands on her hips, and she communicated. She said, "Look buster, you lay the diaper out like a diamond. You put second base on home plate, put the baby's bottom on pitchers mound, hook up first and third, slide home underneath, and if it starts to rain the game ain't called -- you start all over again."
But, if can't save your souls, at least perhaps I might impart some information here that'll be helpful to you in the communication that has to take place. In the campaign last year, there was a great deal of talk about the seeming inability of an economic system that has provided more for more people than anything we've ever known to solve the problems of unemployment and inflation. Issues such as taxes and government power and cost were discussed. But always these things were discussed in the context of "What did government intend to do about them." Well may I suggest for your consideration that government has already done too much about them -- that, indeed, by government going outside its proper province has caused many, if not most, the problems that vex us.
There are a few of us old enough to remember that the only experience you ever had with the federal government was to go downtown to the post office and buy a stamp. They were 2 cents each for twice-a-day delivery. Now they're 13 cents for once-a-day delivery -- to the wrong address. My friend Dewey Bartlett, the Senator from Oklahoma, says that last 3 cents on the price is for storage. And he's - he has is -- he's suggested that we can improve the service is we just started paying the postal employees by mail.
But how much are we to blame for what has happened? Beginning with the traumatic experience of the Great Depression, we the people have turned more and more to government for answers that government has neither the right nor the capacity to provide. But government, as an institution, always tends to increase in size and power, not just this government -- any government. It's built-in. And so government attempted to provide the answers.
The result is a fourth branch added to the traditional three of executive, legislative, and judicial: a vast federal bureaucracy that's now being imitated in too many states and too many cities, a bureaucracy of enormous power which determines policy to a greater extent than any of us realize, very possibly to a greater extent than our own elected representatives. And it can't be removed from office by our votes.
To give you an illustration using another country, England, in 1803 created a new civil service position. It called for a man to stand on the cliffs of Dover with a spy glass and ring a bell if he saw Napoleon coming. They didn't eliminate that job until 1945. In our own country, there are only two government programs that we have totally wiped out and abolished: the government stopped making rum on the Virgin Islands, and we've stopped breeding horses for the cavalry.
We bear a greater tax burden to support that permanent structure than any of us would have believed possible just a few decades ago. When I was where you are, in college, governments federal, state and local, were taking a dime out of every dollar earned and less than a third of that paid for the federal establishment. Today, governments, federal, state, and local, are taking 44 cents out of every dollar earned, and two-thirds of that supports Washington. It is the fastest growing item in the average family budget, and yet it is not one of the factors used in computing the cost of living index. It is the biggest single cost item in the family budget; it is bigger than food, shelter, and clothing all put together.
When government tells us, as it did a few weeks ago, that in the last year the people of America have increased their earnings 9 percent, and since the inflation was 6 percent, well we're still 3 percentage points better off -- richer than we were the year before -- government is being deceitful. That was before taxes. After taxes, the people of America are 3 percentage points worse off, poorer than they were before they got the 9 percent raise. Government profits by inflation.
At the economic conference in London several months ago, one of our American representatives there was talking to the press. And he said, "You have to recognize that inflation doesn't have any single cause. It's caused by a number of things, and therefore there is no single answer." Well, if he believed that, he had no business being at an economic conference. Inflation is caused by one thing, and it has one answer. It's caused by government spending more than government takes in, and it will go away when government stops doing that, and not before.
I could give a figure that I think would explain it because government has been trying to make all of us believe that somehow inflation is like a plague, or the drought, or the locusts coming, that no one has any control over it and we just have to bear it when it comes along and hope it will go away. No, it's simpler than that. From 1933 until the now, our country has doubled the amount of goods and purchases that are available for purchase -- goods and services. In that same period we have multiplied the money supply by 23 times. So eleven and a half dollars are now chasing what one dollar used to chase. And that's all that inflation is: a depreciation of the value of money.
I know that his is called the Ludwig von Mises series. But do you know that before I knew that I had a line that I intended to give you. It's a quote of his if you haven't heard it. Ludwig von Mises said that, "Government is the only agency that can take a perfectly useful commodity like paper, smear it with some ink, and render it absolutely useless."
Sometimes I think that government fits that old-fashioned definition of a baby: An alimentary canal with an appetite at one end and no sense of responsibility at the other.
There are 73 million of us working and earning in the private sector. We support ourselves and our dependents. We support, in addition, 81 million other Americans totally dependent on tax dollars for their year-round living. Now it's true that 15 million of those are public employees and they also pay taxes, but their taxes are simply a return to government of dollars that first had to be taken from the 73 million. I say this to emphasize that the people working and earning in the private sector are the only resource that government has.
Political demagogues aided by spokesmen for a variety of causes, some worthy in themselves but questionable as to whether they're a proper concern of government, have created a political and economic mythology widely believed by too many people. This is why we need the communications. This, more than anything else, has increased government’s ability to interfere, as it does, in the marketplace. “Profit” is a dirty word, blamed for most of our social ills. In the interest of something called "consumerism," free enterprise is becoming far less free. Property rights are being reduced and even eliminated in the name of environmental protection. It is time that a voice be raised on behalf of the 73 million, pointing out that profit, property rights, and freedom are inseparable and you cannot have the third unless you continue to be entitled to have the first two.
And yet -- And yet even among us who perhaps believe that way, we have fallen into the habit of when something goes wrong -- that saying, "They're ought to be a law." Sometimes I think there ought to be a law against saying “there ought to be a law.” A German statesman, Bismarck, said, “If you like sausages and laws, you should never watch either one of them being made.”
It’s difficult to understand the ever-increasing number of intellectuals and the goals of academia, present company excepted, who contend that our system could be improved by the adoption of some of the -- of the features of socialism. It isn’t that these eminent scholars are ignorant; it’s just that they know a number of things that aren’t true. In any comparison between the free market system and socialism, nowhere is the miracle of capitalism more evident than in the production and distribution of food. We eat better for a lower percentage of earnings than any other people on earth. It averages about 17% of the average family income after taxes. The American farmer is producing two and half times as much as he did sixty years ago, with 1/3 the man-hours on 1/2 the land. And if his counterparts worldwide could reach his level of skill, we could feed the entire world population on 1/10 of the land that is now being farmed worldwide.
The biggest example I think, of course, comes when you compare the two superpowers. I'm sure that most of you are aware that some years ago the Soviet Union had such a morale problem with the workers on their collective farms that they finally gave each one of those workers a little plot of ground and told him he could farm it for himself. And, if he wanted to, he could sell on the open market what he raised. Today, less than 4% of Russia’s agricultural land is privately farmed in that way. And on that 4% is raised 40% of all of Russia’s vegetables and 60% of all the meat.
Some of our scholars did some research on comparative food prices. They had to take the prices in the Russian stores and our own stores and translate them into minutes and hours of labor at the average income of each country. And, with one exception they found that Russians have to work two to ten times as long to buy the various food items than do their counterparts here in America. The one exception was potatoes. There the price on their potato bins worked out to less work time for them than it did for us. There was one hitch though -- they didn't have any potatoes.
And yet, in spite of all the evidence that points to the free market as the most efficient system, we continue down a road that is bearing out the prophecy of the Frenchman who came here 130 years ago -- de Tocqueville. He was attracted by the miracle that was America. Think of it, our country was only 70 years old and already we had achieved such a miracle of standard of living and of productivity and prosperity that the rest of the world was amazed. So he came here and he looked at everything he could see in our country, trying to find the secret of our success and then went back and wrote a book about it. But even then, 130 years ago, he saw signs that prompted him to warn us, that if we weren’t constantly on guard we would find ourselves covered by a network of regulations controlling every activity. And he said, if that came to pass we would one day find ourselves a nation of timid animals, with government the shepherd.
Well we are covered by tens and tens of thousands of regulations to which we add about 25,000 new ones each year. One of the newer agencies, the Occupational Safety and Health Administration, has touched virtually everyone’s life (OSHA). There’s a fellow in Indiana with a shop. He’s got seven employees. At the front and back of his tiny shop there was a twelve foot door -- each end. OSHA has just told him he has to install exit signs in the event that a new employee might become confused in case of fire and not be able to find his way out. He asked a pretty logical question. He said if he can’t see a twelve foot door, how’s he going to see that exit sign?
Now, I’m sure that everyone in this room, at some time of other, has had an occasion to climb a ladder. Simple wooden ladder. You put it up and climb it. How in the world did we ever accomplish that without OSHA’s 144 rules and regulations with regard to climbing a ladder, they’ve now written? The first of which is that to climb a ladder you begin by facing it. And then, of course -- I don’t know whether you know about their discovery of the hazards of farm life -- they wrote quite a manual on that to save the farmer from accident. One of them said that in walking about the farm one should keep his eyes on the ground because here and there, there might be a slippery substance which, if you step in it, could cause a nasty fall. You know no farmer would have thought of that by himself.
Well now, they’ve discovered deep sea divers. There are 600 of them in the whole United States. It’s a hazardous profession and their pay reflects it. They get from fifty to a hundred thousand dollars a year. But it isn’t going to be as dangerous if OSHA has its way. They’ve got a whole manual, now, rules, regulations and required equipment. They haven't implemented that program as yet because the United States Navy also has divers. And it has informed OSHA that if they implement their [OSHA's] program henceforth each diver will go beneath the waves weighing 1000 pounds. The General Accounting Office, which is responsible for public employee safety has just recently inspected the building in Washington where OSHA is headquartered. The have found it in violation of 300 of OSHA's safety rules.
But all of this becomes deadly serious when you think about the expense. A study of 700 of the largest corporations has found that if we could eliminate unnecessary regulation of business and industry, we would instantly reduce the inflation rate by half. Other economists have found that over-regulation of business and industry amounts to a hidden five-cent sales tax for every consumer. The misdirection of capital investment costs us a quarter of a million jobs. That's half as many as the President wants to create by spending 32 billion dollars over the next two years. And with all of this comes the burden of government-required paperwork.
It affects education. All of you here are aware of the problems of financing education, particularly at -- at the private educational institutions. I had the president of a university tell me the other day that government-required paperwork on his campus alone has raised the administrative costs from 65,000 dollars to 600,000 dollars. That would underwrite a pretty good [faculty] chair. Now, the president of the Eli Lilly drug company says their drug company spends more on time -- man-hours on government-required paperwork than they do today on heart and cancer research combined. He told of submitting one ton of paper, 120,000 pages of scientific data most of which he said were absolutely worthless for FDA's purposes, in triplicate, in order to get a license to market an arthritis medicine. So, the United States is no longer first in the development of new health-giving drugs and medicines. We're producing 60 percent fewer than we were 15 years ago.
As late as 1962 the average cost of developing and testing a new medicine was about 1,000,000 dollars, and it took about 2 to 4 years. Now, it is 40,000,000 dollars and it takes anywhere from 7 1/2 to 20 years. The change came with the adoption of some amendments to the Food, Drugs, and Cosmetics Act of 1962. We could do something about it. There's a young rancher who's now a Congressmen, Steve Sims. There, in Washington, he has, before Congress with 113 cosigners, a bill to simply repeal those amendments and not replace them with anything. It wouldn't affect our safety one bit. All it takes to get them repealed is if enough people could be aware that that bill is there and write letters to their Congressmen and their Representatives and make them know that we want such a bill passed. Why not? It adds 50 cents to the cost of this paperwork that I'm talking about -- adds 50 cents to the cost of every prescription written in the United States.
Now, maybe some say, "Well it's not our problem. Leave it to the drug industry." Well, then, how about the independent businessmen and women of this country who spend 50 billion dollars a year sending 10 billion pieces of paper to Washington where it costs 20 billion dollars each year of tax money to shuffle and store that paper away. I've already mentioned the overhead for complying of colleges and universities.
But we're so used to talking billions. Does anyone realize how much a single billion is? A billion minutes ago Christ was walking on this earth. A billion hours ago our ancestors lived in caves, and it's questionable as to whether they'd discovered the use of fire. A billion dollars ago was 19 hours in Washington, D.C. And it'll be another billion in the next 19 hours, and every 19 hours until they adopt a new budget at which time it'll be almost a billion and a half. But let me really paint the picture for you. If you gentlemen sent your wives out on a shopping spree, and gave them each a billion dollars, and told them not to spend more than a thousand dollars a day, they won't be home for 3000 years.
But, you know, if you lose your economic, you lose your political freedom, all freedom. Freedom is something that cannot be passed on in the blood stream, or genetically. And it's never more than one generation away from extinction. Every generation has to learn how to protect and defend it, or it's gone and gone for a long, long time. Already, many of us, particularly those in business and industry, there are too many who have switched rather than fight. And it's time that particularly, some of our corporations learned, that when you get in bed with government, you're going to get more than a good night's sleep.
We should take inventory and see how many things we can do ourselves that we've come to believe that only government can do. Let me take one that I'm sure everyone thinks is a government monopoly -- and properly so. But do you know that in Scottsdale, Arizona there is no city fire department? That the per capita cost for fire loss is one-third of that of other cities of similar size. And the per capita cost for fire protection is one-third. And the insurance rates reflect this. Scottsdale contracts out with a private, profit-making, fire-fighting company, which now has about a dozen clients out in the western states, cities doing the same thing.
Denton, Arkansas, had a hot lunch program and they were having trouble with it in their school. The kids wouldn't eat there because the food, they said, was too poor in quality. The school board was losing about a 1000 dollars a month. Finally, in disgust, they went out and talked to McDonalds. McDonalds came in and set up shop in the school cafeteria. McDonalds is making a profit; ten times as many kids are eating there every noon, and the school board's saving the tax payers a 1000 dollars a month.
Two-thirds of the cities and towns in American contract out with private companies for garbage disposal. Those two-thirds of the cities and towns in this country get their garbage picked up for 68% less than the cities and towns that have their own municipal departments.
Have the great corporations -- Sometimes I worry -- have they abdicated their responsibility to preserve the freedom of the marketplace out of a fear of retaliation or a reluctance to rock the boat. If they have, they're feeding the crocodile hoping he'll eat them last. We can fight city hall, and you don't have to be a giant to do it. In New Mexico there's a little company -- a husband and wife own it. She's the president. And they have five employees. And the other day two OSHA inspectors arrived at the door. And they demanded to come in, to go on a hunting expedition [to] see if there were any violations of their safety rules, and if there were there were automatic fines. There's no appeal. And she said, "Where's your warrant?" And they said, "We don't need one." She said, "You do to come in here," and shut the door. Well, they went out and got a warrant, and they came back, but this time she had her lawyer with her. He looked at it and he said it does not show probable cause. And a federal court upheld her right to do this.
Up in Pocatello, Idaho, was a man, elderly man, with grown sons. They owned a sub-contracting plumbing and electrical firm -- 35 employees. He had known that someday they would get to his door, and he'd wondered what he would do. And he knew about -- he'd heard about the woman in New Mexico. Sure enough, they came to his door, and he said, "not without a warrant." And they read him paragraph 8(a) of the OSHA Act. And he pointed to a framed copy of the constitution on the wall of his office and said, "I think there's a higher law ." Well they came back not with a warrant, but with a court order. He defied it. He was cited for contempt. He got a lawyer. Now his friends, and even the lawyer tried to talk him out of it. They said, "You can't fight the government. That's too big for you. And just love what he said to his friends. He said, "You know, we send our young fellas out to fight and die for freedom. Maybe it's time some of us old duffers did something for a change. Today, his case is before the United States Supreme Court because a federal court has ruled that OSHA is in violation of our constitutional protection against illegal search and seizure.
But why don't more of us challenge what Cicero called the arrogance of officialdom? Why don't we set up communications between organizations [and trade associations to rally others to come to the aid of an individual like that, or to an industry or profession when they're threatened by the barons of bureaucracy, who have forgotten that we are their employers. Government by the people works when the people work at it. We can begin by turning the spotlight of truth on the widespread political and economic mythology that I mentioned.
A recent poll of college and university students -- they must have skipped this campus -- because in this poll they found that the students estimated that business profits in America average 45 percent. That's nine times the average of business profits in this country. But it was understandable that the kids made that mistake, because the professors in the same poll guessed that the profits were even higher.
Then there's the fairy tale born of political demagoguery that the tax structure imposes unfairly on the low earner with loopholes designed for the more affluent. Well, again the truth. At 23,000 dollars of earnings you become one of that exclusive band of 10 percent of the earners in America; and that 10 percent pays 50 percent of the income tax but only takes 5 percent of all the deductions -- the so-called "loopholes" that are allowed by law. The other 95 percent are taken by the 90 percent of earners below $23,000 who pay the other half of the tax.
The most dangerous myth is the demagoguery that business can be made to pay a larger share, thus relieving the individual. Politicians preaching this are either deliberately dishonest, or economically illiterate, and either one should scare us. Business doesn't pay taxes, and who better than business to make this message known? Only people pay taxes, and people pay as consumers every tax that is assessed against a business. Begin with the food and fiber raised in the farm, to the ore drilled in a mine, to the oil and gas from out of the ground, whatever it may be -- through the processing, through the manufacturing, on out to the retailer's license. If the tax cannot be included in the price of the product, no one along that line can stay in business.
But if you want to explain it simply, a loaf of bread: If the farmer can't get enough for his wheat to pay the tax on his farm -- the real estate tax -- he can't go on raising wheat. And so when you buy that loaf of bread tomorrow, just take a look: a hundred and fifty one taxes are in that loaf of bread amounting to more than half of the price of bread.
The federal government has used its taxing power to redistribute earnings to achieve a variety of social reforms. Politicians love those indirect business taxes, 'cause it hides the cost of government. During the New Deal days, an under-secretary of the treasury, told the Congress -- indeed wrote a book in which he said that taxes can serve a higher purpose than just raising revenue. He said they could be an instrument of social and economic control to redistribute the wealth and income and to penalize particular industries and economic groups.
We need to put an end to that. We need a simplification of the tax structure. We need an indexing of the surtax brackets, a halt to government's illicit profiting through inflation. It's as simple as this: every time the cost-of-living index goes up one percent, government's revenue goes up one and one-half percent. And above all we need an overall cut in the cost of government. Government spending isn't a stimulant to the economy; it's a drag on the economy. Only a decade ago, about 15 percent of corporate gross income was required to pay the interest on corporate debt; now it's 40 percent. Individuals and families once spent about 8 percent of their disposable income on interest on consumer debt -- the installment buying, mortgage, and so forth. Today, it's almost one-fourth of their total earnings. State and local government in the last 15 years has gone from $70 billion to $220 billion. The total private and public debt is growing four times as fast as the output of goods and services.
Again, there's something we can do. I don't know, has Jack [Kemp] been here yet in this series or is he coming?
President Roche: He's coming
Governor Reagan: He's coming. Well, you'll be treated to Jack Kemp -- used to quarterback for the Buffalo Bills, and now he's a Congressman from New York. He has a bill before the Congress. It is designed to increase productivity, to create jobs for people, and it's as simple as this: It calls for over a three-year period reducing, across-the-board, the income tax for all of us by a full one-third. And also, it would reduce the corporate tax from 48 to 45 percent. The base income tax would no longer be 20 it would be 14 percent, and the ceiling would be 50 percent instead of 70, and it would double the exemption for smaller businesses before they get into the surtax bracket.
It would do all the things that we need to provide investment capital, and to increase productivity and create jobs. We can say this with assurance because it's been done twice before: in the '20's under Coolidge and again in the '60's under John F. Kennedy. In the '60's the stimulant to the economy was so immediate that even government's revenues increased because of the broadening base of the economy. But the Congress, the majority is concerned with further restrictions on our freedom, land planning that threatens the very concept of private ownership, the Humphrey-Hawkins bill which would regulate this economy into an extent that has never been practiced outside of socialist or totalitarian power. In my own state of California, the legislature's talking about using tax funds to establish a stated-owned bank to compete with private banks.
Well, Jack Kemp's bill has been voted down. He's brought it up five times and the majority in Congress has voted it down., but every time more come across the aisle and vote with him. The last time he had 195 votes and he's getting ready to put it up for the sixth time. Again, if the people will make their wants known to Congress, you'll get what you want. You see it isn't necessary to make Congress see the light. Just make them feel the heat.
Well, I've talked about the communications we need. We can't let the doctor remain alone in his lonely fight against socialized medicine, or the oil industry fight its own battle against divestiture or crippling controls, repressive taxes; or the farmer who hurts more than most because of government harassment and rule changing in the middle of the game. All of these issues concern each one of us regardless of what our trade or our profession may be. Corporate America must begin to realize that it has allies in the independent businessmen and women and the shopkeepers, the craftsmen, the farmers, and the professions. All these men and women are organized in a great variety of ways. But we talk within our own organizations about our own problems -- the drug industry for itself. What we need is a liaison between these organizations to realize how much strength we as a people still have, if we'll use that strength.
I mentioned oil. Is there anyone that isn't concerned with the energy problem? Government caused that problem while we all stood by unaware that we were involved. Unnecessary regulations and prices imposed -- price limits -- back in the '50's are the direct cause of today's crisis. Our crisis isn't because of a shortage of fuel; it's a surplus of government. Now we have a new agency -- we have a new agency of enormous power -- 20,000 employees and a 10 and 1/2 billion dollar budget. That's more than the gross earnings of the top seven oil companies in the United States. And that's just to start with. It is nothing more than a first step toward nationalization of the oil industry.
And, you know, when they tell us about the conservation -- of course we should save. No one should waste a natural resource. But they act as if we've found all the oil and gas there is to be found in this continent, if not the world. Do you know that 57 years ago our government told us we only had enough for 15 years? And nineteen years went by and they told us we only had enough left for 13 more years. Now, we've done a lot of driving since then and we'll do a lot more if government would do one simple thing: get out of the way and let the incentives of the marketplace urge the industry out to find the sources of energy this country needs.
You know, it has been said that politics is the second oldest profession, and I've come to realize over the last few years, it bears a great similarity to the first. Why can't we look at other nations that have chosen this path of government intervention before us? Our British cousins, they're where we'll be in 15 years if we continue on the present course -- if we have that much time. For 40 years Sweden has been held up to us as an example that socialism really will work. There's an enlightened country, they say, and look how well they're doing. Well, it was just a little over a year ago that the Swedes went to the polls and voted against Karl Marx. I think, maybe, the straw that broke the camel's back was a change in the income tax laws. They changed the tax to read that at 33,000 dollars of earnings, the tax rate was 102 percent.
We've had enough of sideline kibitzers telling us the system which they themselves have thrown out of sync with their social tinkering can be improved or saved if we'll only have more of that tinkering or even government planning and management. They play fast and loose with a system that for 200 years made us the light of the world; the refuge for people from all over the world who just yearn to breathe free. You heard the moving story of the woman who came through two countries and finally to this country.
It's time we recognized that the system, no matter what our problems are, has never failed us once. Every time we have failed the system, usually by lacking faith in it, usually by saying we have to change and do something else. If you want an example of the power of this system, the government told us a short time ago that the new poverty level in the United States was 5,500 dollars of earnings. At 5,500 dollars you are living in poverty in America. 5,500 dollars is eight times as high as the average standard of living for the rest of the world.
A Supreme Court Justice has said the time has come, indeed is long overdue, for the wisdom, ingenuity, and resources of American business to be marshaled against those who would destroy it.
What specifically should be done? The first essential for the businessman is to confront the problem as a primary responsibility of corporate management. It's been said that history is the patter of silken slippers descending the stairs and the thunder of hob-nail boots coming up. Back through the years we have seen people fleeing the thunder of those boots to seek refuge in this land. And now too many of them, like the lady from Cuba, have seen signs, the signs that were ignored in their homeland before the end came, signs appearing here. They wonder if they'll have to flee again, but they know there is no place to run to. Will we, before it is too late, use the vitality and the magic of the marketplace to save this way of life, or will we one day face our children, and our children's children when they ask us where we were and what we were doing on the day that freedom was lost?
Thank you very much.
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