Lawrence Reed and the Resurgence of FEE

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Lawrence Reed

The Daily Bell is pleased to publish this interview with Foundation for Economic Education President Lawrence Reed (left).

Introduction: On September 1, 2008, Lawrence W. (Larry) Reed assumed the presidency of the Foundation for Economic Education, headquartered in Irvington, New York. After serving as President of the Mackinac Center for Public Policy for its first two decades, Reed became president emeritus of the Center upon assuming his duties as president of FEE. Reed holds a B.A. degree in Economics from Grove City College (1975) and an M.A. degree in History from Slippery Rock State University (1978), both in Pennsylvania. He taught economics at Michigan’s Northwood University from 1977 to 1984 and chaired the Department of Economics from 1982 to 1984. He designed the university’s unique dual major in Economics and Business Management and founded its annual, highly acclaimed “Freedom Seminar.” In 1982, he was a major party candidate in the general election for the US House of Representatives from Michigan’s 4th district. He moved to Boise, Idaho in 1984 to direct a policy institute there before moving back to Michigan to head up the Mackinac Center in December 1987. In the past 20 years he has authored over 1,000 newspaper columns and articles, dozens of articles in magazines and journals in the US and abroad and five books. His articles have appeared in The Wall Street Journal, Christian Science Monitor, USA Today, Baltimore Sun, Detroit News and Detroit Free Press, among many others. Reed’s most recent book is Striking the Root: Essays on Liberty. Since 1978, he has delivered more than 1,000 speeches in 40 states and 15 foreign countries, including one at People’s University in Beijing, China. 

Daily Bell: You are president of the Foundation for Economic Education, FEE. Tell us about the famous FEE and its libertarian role historically.

Lawrence Reed: FEE is the oldest educational organization in the United States devoted explicitly to advancing the economic and moral principles of a free society. Founded in 1946 by the late Leonard Read, FEE for many years was both a physical and an intellectual refuge for the tiny minority of people who saw the rise of statism in the 20th century for the serious threat that it was. In the 1950s and 1960s, before sister organizations were formed to help carry the torch, FEE helped promote the works of Ludwig von Mises, F. A. Hayek, Henry Hazlitt and other, often-lonely, free-market scholars. Today, hundreds of such organizations exist around the world and many of them are led by people who were inspired by FEE seminars or publications earlier in their intellectual careers. We played a very key role in igniting what is now a thriving, international movement on behalf of the ideas of liberty.

FEE’s work has been, and continues to be, of great importance precisely because of the uniqueness that has defined FEE since its inception. It does not lobby legislatures. It does not advise governments on how to do their business more efficiently. It does not tinker at the margins of reform. Rather, FEE’s work is that of an intellectual lighthouse; it illuminates broad principles, focusing light on the ideal. Others inspired and informed by our work then seek to change laws and policies.

The year 2012 promises to be the most important in our history since our founding 65 years ago. Getting to this point wasn’t easy. Before I became president in 2008, FEE’s very future was in doubt. The organization was in need of new staff, fresh ideas, financial resources and strategic focus. It desperately needed good management, attention to detail and a financial turnaround. In spite of the deep recession, we’ve now accomplished these things. This year we will set new records for seminar attendance, implement a dramatic overhaul of our magazine, begin new forays into multimedia and sponsor more programs for large audiences around the US and abroad. Our focus will be on the 16 to 24 year-old demographic (high school and college students). And we will be moving our headquarters from our ancestral site in Irvington, New York, to a new site in Atlanta, Georgia—cutting our operating costs substantially and positioning ourselves to better serve and access the rest of the country and beyond.

I’m happy to say that while FEE’s core principles have never wavered in our 65 years, we are placing a greater emphasis these days on the personal character component. We believe that for a free society to flourish, it’s not enough to understand economics. Practicing the virtues of character in our individual lives is just as indispensable. Any bum can live down to the standards of socialism; all that is required is that you demand something that doesn’t belong to you and be willing to support the use of force to get it. Our challenge, if we want to be free, is to live up to the lofty standards that liberty requires. That means we must be people of character, people who put a premium on honesty, patience, humility (in the sense that there will always be a universe of information we don’t yet know or understand), courage, responsibility, self-discipline, optimism and self-reliance.

Our major economic problems of today, including reckless government spending and debt, stem not just from the practice of bad economics but fundamentally from the erosion of character. Socialism appeals to the worst in us (envy, laziness, stupidity, short-term gratification and dependence), whereas liberty appeals to our best and highest motives. Socialism relies on force; liberty rests upon voluntarism and respect for life, property, contract and civil society. These are the stark, essential choices people must make and their decisions will ultimately decide whether we live in freedom or serfdom.

Daily Bell: What is your agenda for FEE going forward?

Lawrence Reed: The next two years will see some of the most exciting, forward-looking changes in what FEE does and how it does it that we’ve ever rolled out. Details will be forthcoming but suffice it to say that we intend to take the offensive in making the case for liberty. Those who want to invest in young, relative newcomers to the ideas of liberty − young people who show the aptitude and talent to be future leaders and activists whatever careers they may choose − will find FEE to be the best vehicle on the market. We will do this not only through effective programs and publications but also by adhering to sound principles of internal management, long-range planning and good financial stewardship.

Daily Bell: Tell us about your background. Where did you grow up and go to school?

Lawrence Reed: I grew up outside of a small town, Beaver Falls, in the hills of western Pennsylvania. I’ve told the story of my early life on numerous occasions, including in this interview for Young Americans for Liberty, which I hope your readers will review.

I became a lover of liberty by becoming first a hater of tyranny and oppression. The plight of those living under communist dictatorships in the 1960s and 1970s stirred in me a yearning to get involved in public affairs. But as I grew in my understanding, it became apparent to me that it wasn’t sufficient to simply despise the illegitimate use of force by governments against citizens; I had to learn the economics, morality and philosophy of liberty. In that learning process, I was stunned (and still am to this day) at the boundless potential of freedom. Even a little bit of freedom goes a long way, a fact that I’ve witnessed in places as far-flung as Cambodia, Mozambique and Mongolia. I was never a socialist or a leftist of any kind; in fact, I think I inherited a streak of independence and an anti-authoritarian impulse, as well as a near-pathological optimism and uncanny good luck.

I trace my start in the liberty movement to a movie, oddly enough. I’ve written about it here, in The Freeman.

After graduation from high school, I attended one semester at the University of Pittsburgh but was so turned off by the arrogant, state-worshipping airheads I had as professors that I transferred to Grove City College, also in Pennsylvania, where I studied under the great Austrian economist, Dr. Hans F. Sennholz. After earning my M.A. degree at Slippery Rock University, Dr. Sennholz helped me secure my first teaching position at Northwood University in Michigan in 1977.

Daily Bell: Tell us about your career as a free-market writer and how you became such a well-known advocate.

Lawrence Reed: I started writing letters to the editor in my hometown newspaper as a high school student. I look back on that now and realize that it helped me develop writing skills, especially an ability to express complicated concepts in ways a lay audience could understand. At Grove City College, I started a successful student newspaper called The Entrepreneur. The first article I ever sold was for the journal published to this day by the very organization I now lead. That was for The Freeman in 1977, the first of more than 200 I’ve published in that one publication alone. I also wrote about 700 weekly columns for newspapers in western states in the 1980s and many articles for other magazines and journals over the years.

If my writing is known for anything, I think it would be clarity and simplicity. I don’t write for the sake of writing. I write to persuade and to motivate. That requires a writer to put himself in the mind of the reader, to anticipate his reaction, to think and express ideas in terms the reader can relate to. I also enjoy writing about real people in real places. A major reason I’ve traveled to 78 countries on six continents is to later write about people in those places from having met and even lived with them. Spending time with underground movements in communist countries gave me a lifetime of inspiring stories to share with readers the world over.

I’ve been amazed at how far some things I’ve written have gone. What I thought was a modest contribution and not otherwise remarkable has, on a few occasions, spread like wildfire. My Seven Principles of Sound Policy, for example, has been translated and distributed in about two dozen languages that I know of. Similarly, my Great Myths of the Great Depression seems to appear in a new country or new language about once a month, and it’s one of the consistently most popular offerings on the FEE web site.

If I’m well-known, it’s probably only partly due to my writing. It may be due as much to the encouragement I’ve tried to give, often behind the scenes in quiet ways, to people in many countries who are working for liberty. Few things give me more pleasure than helping a kindred spirit who is fighting for the right ideas. In a world full of bad people who seek to impose their will on others by force, the courageous few who both preach and practice the principles of liberty are genuine heroes. I don’t seek nor do I need recognition for assisting those heroes because what they do for liberty is all the reward I require. And I have to admit, it’s really cool being able to go to any one of a hundred countries and have good liberty-loving friends there.

Daily Bell: You have referred to the Czech cause as a “flowering of liberty.” Why?

Lawrence Reed: That’s a reference to “Prague Spring” in 1968, when a new regime under Alexander Dubcek began moving Czechoslovakia away from totalitarianism. By the summer, there was even serious talk at the highest levels of allowing free, multi-party elections. The Soviets couldn’t allow these changes to continue, let alone spread to neighboring satellites, so they invaded in August 1968.

I watched Prague Spring unfold as a high school student. When the Soviets crushed it, I became an ardent anti-communist, which then led me to free-market economics and the philosophy of liberty.

Daily Bell: When did you become a convert to Austrian economics?

Lawrence Reed: I was aware of the Austrian school of economics as early as the fall of 1968, when I started reading The Freeman. It was about that time that I also read Henry Hazlitt’s Economics in One Lesson (later, in the 1980s, I came to know Hazlitt personally and proudly keep a file of our correspondence to this day) and F. A. Hayek’s The Road to Serfdom. My “Austrianism” was solidified when I studied under Dr. Sennholz at Grove City College. Sennholz was one of just four individuals to earn a Ph.D. under Ludwig von Mises, so I was just one generation removed from the great man himself.

I appreciate the many contributions to economics of non-Austrians but as I’ve written elsewhere, “No school has all the answers, but I think it is ever more apparent with time that the Austrian school starts from the right premises, analyzes the economy with the proper tools and humility, and yields the most fruitful insights of any school of thought.”

Daily Bell: You were chairman of the Department of Economics at Michigan’s Northwood University from 1982 to 1984. You founded the school’s annual “Freedom Seminar.” Tell us about that.

Lawrence Reed: When I started teaching at the university level in the fall of 1977, I was not content to confine my influence to the classroom. I was a missionary for liberty and wanted to reach a broader audience. So within a year, and with the full support of the university administration, I started a week-long summer program called a “Freedom Seminar.” In the seven years I ran it, I brought dozens of big-name speakers to campus. Students attended for academic credit, but the program also attracted attendees from around the country. I developed life-long friendships with many of the speakers, including Ron Paul, Walter Williams and Russell Kirk.

I can’t overestimate the impact on me of my seven years of teaching at Northwood University. I loved every minute of it. One of the most gratifying things in my life these days is hearing from students I taught in the classroom 30 years ago. When they tell me I made a difference in their lives, in their appreciation of liberty, it’s a real thrill.

I became chairman of the Department of Economics at Northwood when I designed a unique, four-year dual major in economics and business management. My experiences as a university professor were invaluable but after seven years, I welcomed new opportunities that would allow me to start traveling the world and taking some risks as a freelance journalist, often behind the Iron Curtain.

Teaching students in a Michigan classroom was always great, but nothing beats living with anti-communist rebels in Mozambique during a civil war or visiting with underground activists in communist Poland. Those are the kinds of things I was able to do in the years after I left teaching in 1984.

Daily Bell: Tell us about the Mackinac Center for Public Policy?

Lawrence Reed: In December 1987, I started work as the first president of a brand new think tank in Michigan, the Mackinac Center for Public Policy. Our first year’s budget was just $80,000 and I had to raise most of it. Twenty years later, when I handed the reins over to a successor, we had built the organization into the largest and most influential of more than 50 state-focused free-market think tanks in America. We built and paid for a beautiful headquarters building and generated an international following for our combination of free-market scholarship and sound institutional management. I am immensely proud of our achievements in those years and the picture-perfect transition to new leadership when I left to take charge of the Foundation for Economic Education in 2008.

Daily Bell: Tell us about your interest in spontaneous order of pricing systems, voluntary contractual agreements and limited government intervention in all aspects of life.

Lawrence Reed: One of the best arguments for freedom and the free economy is that they don’t require arbitrary contrivances to emerge and flourish. They are simply what happen when people are left alone, when their lives and property are respected. All forms of central planning (of socialism or government control) have always struck me as arrogant and silly contraptions created by children disguised as adults. But if you believe in liberty, you understand that an individual human being is not somebody else’s plaything.

The spontaneous order of a free society is a truly wondrous thing. Great achievements occur, and benefit others far more than they typically benefit the achiever, through the marvelous workings of incentive, the profit motive and free prices. I feel sorry for the intellectually lazy people who think an economy must be “decreed.” They live in a dark little world that looks nothing like the spectacular possibilities of a free society.

Daily Bell: Tell us about the advantages of competition generally.

Lawrence Reed: Competition in the marketplace means nothing less than striving for excellence in the service of others for self-benefit. In other words, sellers cooperate with consumers by catering to their needs and preferences.

Governments don’t have to decree competition; all they have to do is prevent and punish force, violence, deception and breach of contract. Enterprising individuals will compete because it is in their financial interest to do so, even if they’d prefer not to.

Competition spurs creativity and innovation and prods producers to cut costs. You wouldn’t think of stopping a horse race in the middle and complaining that one of the horses was ahead. The same should be true of free markets, where the race never ends and competitors enter and leave continuously.

Competition is healthy and it’s what free humans do. A world without it would be dull and deadly.

Daily Bell: Tell us about the “Seven Principles of Sound Public Policy” that you invented. They are as follows:

1) Free people are not equal, and equal people are not free.

2) What belongs to you, you tend to take care of; what belongs to no one or everyone tends to fall into disrepair.

3) Sound policy requires that we consider long-run effects and all people, not simply short-run effects and a few people.

4) If you encourage something, you get more of it; if you discourage something, you get less of it.

5) Nobody spends somebody else’s money as carefully as he spends his own.

6) Government has nothing to give anybody except what it first takes from somebody, and a government that’s big enough to give you everything you want is big enough to take away everything you’ve got.

7) Liberty makes all the difference in the world.

Lawrence Reed: That’s the essay I mentioned earlier. It actually started as a speech. The first time I gave it was about 15 or 20 years ago, to the Detroit Economic Club. I’ve since delivered it probably 500 times, in many countries, including to an audience of 200 students and faculty at People’s University in Beijing.

The principles themselves, I am always quick to point out, are not original with me. I’ve simply restated them and added illustrations and examples. Audiences find it compelling and refreshing. I think that’s because the principles are hard to argue with. They are rather self-evident, even if we often act as though we’re unaware or even opposed to them. They provide a very good framework from which to see the world of public policy.

Anyone who would like get better acquainted with them can do so here.

Daily Bell: Tell us about your book, Striking the Root: Essays on Liberty.

Lawrence Reed: The title of that volume, published about five years ago, derives from an observation of Henry David Thoreau: “There are a thousand men hacking at the branches of evil for every one who strikes at the root.”

The book itself is an anthology of essays that first appeared in The Freeman. My purpose in writing it was to provide a quick and easy overview of the philosophical building blocks of the freedom philosophy. More recently (December 2011), I co-authored with historian Burton Folsom a volume on economic history entitled, A Republic—If We Can Keep It. It’s available on Amazon.

Daily Bell: How about Lessons from the Past: The Silver Panic of 1893?

Lawrence Reed: That book, published by FEE about 20 years ago, was based upon my Master’s thesis. The focus is on the monetary policy of silver subsidies and paper money that produced America’s second worst depression. Your readers can see a condensation of it here.

Daily Bell: You endorsed the Free State Project in 2001. How is that doing?

Lawrence Reed: I haven’t followed it in recent years but I endorsed it because I thought the basic idea was sound: Encourage enough liberty-minded people to move to one state (New Hampshire) to make a difference in politics, perhaps even making it a shining reminder for the country about what liberty can accomplish. The problem may be that at least as many statist retirees from Massachusetts have moved there as have libertarians.

Daily Bell: Now some more general economic questions. First, are we headed into a depression?

Lawrence Reed: When it isn’t beating up the economy with stupid regulations and fruitless interventions, government is busy drugging it with depreciating paper money. It’s amazing how resilient markets are in the face of this ongoing onslaught but we haven’t repealed the business cycle. Governments cause it, and government policies perpetuate it. In the near term, I think the economy may recover somewhat before another downturn but there’s no question in my mind that lots of price inflation and probably a severe depression are likely within the next decade.

Daily Bell: is some sort of lawless cabal running the US? In other words, do laws apply to some and not to others?

Lawrence Reed: There’s no question that as government has grown in America, the country has developed an insulated elite, people who care little about liberty or the Constitution and a lot about their own power, wealth and notoriety. It’s nothing new. It’s the natural, predictable consequence of the concentration of power. I’ve written about its parallels with ancient Rome and other civilizations. Lord Acton was right when he famously said, “Power corrupts and absolute power corrupts absolutely” but I like to add my own amendment to that: “Power attracts the corrupt.”

Do laws apply to some and not other others? Too often (and increasingly), the answer is yes. Part of the problem is power itself, as I’ve suggested above. Another reason for it is the sheer size of government and the incomprehensible volume of its rules. The rule of law breaks down any time the laws outnumber the ability of even a large enforcement apparatus to oversee. Yet another reason is the erosion of personal character. When people lose respect for the lives and property of others, when they become takers instead of makers, equality before the law is one of many casualties.

Daily Bell: Is there an American Empire? Is it a good idea? Is it failing?

Lawrence Reed: Of a sort, yes. Not quite like a traditional, textbook empire of forcible conquest but certainly an “empire” of extensive, unsustainable overseas commitments. We meddle everywhere. We have troops in countries that could afford to defend themselves. My favorite British Prime Minister, William Ewart Gladstone, wisely said, “My first principle of foreign policy is good government at home,” which is precisely what we no longer have. We desperately need to put our government in its proper place, both at home and abroad.

Daily Bell: How would you fix the American financial system?

Lawrence Reed: Stop the bailouts. End all special privileges and subsidies for all firms. Junk the whole sorry mess of central banking, one of the most costly and monumental failures of the last century. Introduce genuine competition and private provision of currency and credit. Slash government spending by at least half within two years. Educate people so they understand that putting their financial destinies in the hands of politicians and bureaucrats is about the dumbest and most dangerous thing any people have ever done.

Daily Bell: Does the world need a globalized system of finance?

Lawrence Reed: The last thing the world needs is a global finance system that is centrally planned. It needs a global financial system that evolves from the decisions of market participants unencumbered by political directives and power. I have no more confidence that politicians can design and direct a financial system than they can run inner-city schools.

Daily Bell: Are there some who are promoting a New World Order? Who are they?

Lawrence Reed: I don’t think there’s a common definition of “New World Order” but if you’re asking, “Are there people in the world who would love to be in charge of anything they can get their hands on?” then the answer is yes. There are lots of them, too numerous to mention by name. I know some who live down the street from me. They vote for whoever promises to concentrate power and bestow benefits at other people’s expense. They may never make it higher than the local zoning board or the university tenure committee but give them just a little power and they behave like Nazis. If they prevail, then yes, there will be a New World Order and it won’t be pretty. As Hayek warned, the worst will get to the top.

Daily Bell: Is the euro going to fail? How about the EU?

Lawrence Reed: The euro’s days are numbered. If it doesn’t collapse in the current round of financial earthquakes, it will in the next one. A single monetary policy in a zone with 17 fiscal policies in not workable, sustainable or desirable. Trying to fix it by further centralizing policy in Brussels would create its own set of insoluble problems. So far, European leaders have shown little understanding of monetary issues. They are resorting to short-term measures that only set the region up for future, bigger crises.

Daily Bell: Where is gold headed? Silver?

Lawrence Reed: Both metals, gold especially, are headed higher so long as governments issue fiat money, though there will be fluctuations along the way.

Daily Bell: Any books or websites you want to mention?

Lawrence Reed: There are so many good web sites these days that I risk leaving some out by trying to site them, so I’ll mention one: We invite your readers to visit our site and also our FEE Facebook page. I have my own “public figure” Facebook page and would welcome any of your readers if they choose to “like” it. Many thanks!

As to books, both Bastiat’s The Law and Hazlitt’s Economics in One Lesson are available free on the FEE web site. They are unsurpassed for their eloquence in making the case for a free society.

Daily Bell: Thank you for your courageous work and for speaking out. Good luck with FEE!

Lawrence Reed: Thank you.

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