Cumberland Academy

Robert Welch 1974 by G. North

Robert Welch’s 1974 Grim Predictions: One for Ten

Gary North – February 24, 2014

Are things getting better? Are things getting worse? This question still divides the American Right.

On the moral front, things are getting worse. On the economic front, things are getting better. It is true that median family income, adjusted for price inflation, slowed dramatically, beginning around 1974. But in the crucial areas of information and communication, things are getting magnificently better. The NSA is more of a threat to our privacy, but it is still limited by bureaucratic inertia. It can find more needles in haystacks, and faster, but it rarely does anything when it finds them. What Ludwig von Mises wrote about bureaucratic managementin 1944 is still true. So is Parkinson’s law.

Let’s go back 40 years: 1974. In that year, Robert Welch, the founder and head of the John Birch Society, gave an exclusive speech to the national JBS council. It was filmed. You can find copies of this speech all over the Internet.

In his speech, he made 10 predictions. It is worth reviewing these predictions. It gives a sense of the pessimism that prevailed in American conservatism . . . and still does.

Every site that provides the video says the same thing. First, he made these predictions in 1958. But there is no proof offered that he did so. Second, every site says how accurate these predictions were. In fact, you would be hard-pressed to find a speech of 10 predictions that was more wrong.

Here is the list.

1. Greatly expanded government spending for every conceivable means of getting rid of ever larger sums of American money as wastefully as possible.

2. Higher and then much higher taxes.

3. An increasingly unbalanced budget despite the higher taxes.

4. Wild inflation of our currency.

5. Government controls of prices, wages and materials supposedly to combat inflation.

6. Greatly increased socialistic controls over every operation of our economy and every activity of our daily lives. This is to be accompanied naturally and automatically by a correspondingly huge increase in the size of our bureaucracy and the cost and reach of our domestic government.

7. Far more centralization of power in Washington and the practical elimination of our state lines. There is a many faceted drive at work to have our state lines to mean no more within our nation as our county lines do now within the states.

8. The steady advance of federal aid to and control over our educational system leading to complete federalization of our public education.

9. A constant hammering into the American consciousness of the horror of modern warfare. The beauties and the absolute necessities of peace, peace always on communist terms of course.

10. The constant willingness of the American people to allow the steps of appeasement by our government that amount to a piecemeal surrender of the rest of the free world and the United States itself.

Now let’s go through each of them.

1. Greatly expanded government spending for every conceivable means of getting rid of ever larger sums of American money as wastefully as possible.

Expanded, yes. Greatly expanded, no. Federal spending this fiscal will be in the range of $3.8 trillion. The GDP is around $17 trillion. So, federal spending is under 24% of GDP. What about in 1974? GDP was about $1.5 trillion Federal spending was $269 billion. That was 18% of GDP. So, spending has risen as a percentage of GDP, but the United States is still much more restrained than Western Europe.

2. Higher and then much higher taxes.

Yes, if we are speaking of gross taxes collected by the federal government. Wrong, as a ratio of tax revenues to GDP. The high point was 1944: the last full year of World War II. That was about 21%. It has fluctuated between 16% and 20% ever since. It was 18.3% in 1974. It was 15.8% in 2012. You can see the figures here.

In terms of personal income tax rates, Reagan reduced the top bracket from 70% to 28%. Even with Clinton, they went up to 39.6% — nowhere near 70%. There has been a significant reduction in federal taxes since 1974.

In 1958, this top rate was 91%. So, if he made this prediction in 1958, it was wrong by 1964, when the top rate was reduced to 70% under Lyndon Johnson.

3. An increasingly unbalanced budget despite the higher taxes.

Correct.

4. Wild inflation of our currency.

Wild? No. Serious, yes: 1974-1984. Then it slowed. Today, the consumer price index is in the range of 2% per annum. This is not wild inflation when compared to 1974.

5. Government controls of prices, wages and materials supposedly to combat inflation.

Wrong. Nixon’s price and wage controls controls of 1971 were removed in 1973. They were never imposed again. One of the unintended outcomes of those controls was that Ron Paul decided to go into politics. The Tea Party is one of the legacies of his decision.

6. Greatly increased socialistic controls over every operation of our economy and every activity of our daily lives. This is to be accompanied naturally and automatically by a correspondingly huge increase in the size of our bureaucracy and the cost and reach of our domestic government.

Wrong. The government owns very little, other than federal lands, which it has owned since 1848. Socialism is defined as the government’s ownership of the means of production.

There is federal regulation. This is fascism, not socialism. This is modern Keynesianism. This is the so-called government-business alliance. This is not the federal government’s ownership of the means of production.

To win an ideological battle, we must define our terms carefully, and then stick to them. Socialism is what Communist China had in 1974, and the USSR had in 1974. To call the American system socialism was misleading. Socialism is so out of favor worldwide today that no political party can win under that label. It has to call itself something else.

The federal government is larger than in 1974, but so is the private sector. They advance at comparable rates. There has been no dramatic increase in the ratio of government to the private sector. It’s anti-business as usual. We are not Western Europe.

In the area of government regulation that matters most in Western Europe, government support of trade unions, the United States has seen a steady decrease. Today, only about 10% of the U.S. labor force economy is unionized, and most of this is in the government sector. Trade unionism is a spent force in the United States, and it was never over 25% of the labor force, back in 1953. By 1974, it was clearly declining. It continues to decline.

If we are talking about new business formation, it is still higher than anywhere else on earth. It was in 1974, too.

7. Far more centralization of power in Washington and the practical elimination of our state lines. There is a many faceted drive at work to have our state lines to mean no more within our nation as our county lines do now within the states.

Wrong. There is a revived Tenth Amendment movement today — far more articulate than in 1974. State lines are alive and well. The federal bureaucrats have attempted to reduce their importance, but they have not been successful. Think of gun control today. The federal government is impotent in this area. It is growing more impotent in this area. Gun sales are soaring.

8. The steady advance of federal aid to and control over our educational system leading to complete federalization of our public education.

Tendency, yes. Complete federalization, not yet and surely nowhere near. The states still decide which textbooks to adopt, and the textbook firms still compete for this money. Most spending on education is at the state and local level.

9. A constant hammering into the American consciousness of the horror of modern warfare. The beauties and the absolute necessities of peach, peace always on communist terms of course.

Not just wrong — incomparably wrong. There is no more USSR, and there has not been since December 1991. You would be hard-pressed to find any prediction more inaccurate.

This country’s national government has been in war after war since 1974. The voters — not the government — are at last getting fed up.

10. The constant willingness of the American people to allow the steps of appeasement by our government that amount to a piece meal surrender of the rest of the free world and the United States itself.

Wrong. The United Nations Organization is a toothless shell. NATO is just a giant bureaucracy. It does nothing. It is incapable of doing anything.

SINGING THE OLD SONGS

There are websites that praise this list of 10 mostly inaccurate predictions as evidence of Welch’s uncanny insight. He got only one prediction right: the federal deficit.

We are far better off today in terms of the threat of World War III than we were in 1974, which is by far our greatest advantage today. Where forecasting really mattered, he was wrong.

With respect to taxes, most Americans are better off.

Price inflation was far worse in 1974 than it is today.

There is far more support today for the tenth amendment — state sovereignty — than in 1974.

I got into the conservative movement in 1956, two years before Welch started the John Birch Society. The grassroots conservative movement was mostly middle-aged women who clipped newspapers and the Congressional Record. The movement did not exist. National Review was one year old. The Freeman had started in January.

Late-comers have no conception of how much worse things were politically and philosophically in the late 1950’s than they are today.

Morally, the 1950’s were far better. But Welch never mentioned morality in his speech. The federal government has only marginal influence over morality, and most of this is the result of the Supreme Court.

It was much easier to make a case for pessimism in 1974 than today. We should rejoice when we think of Welch’s predictions. He was dead wrong where it counted most — Communism — and he exaggerated greatly on the others, with one exception: the federal deficit.

We should be thankful that he got things so wrong. But conservatives aren’t thankful. Conservatives still cling to this list, as if the Left were not in defensive mode ideologically, as if the word “liberal” were not a smear word, forcing liberals to substitute “progressive.” When we ask a room full of liberals, “All those who are liberals, please stand up,” nobody stands up if he is running for elected office.

The Internet has undermined the influence of the TV networks and the newspapers. Home schooling is growing in popularity. The tax-funded schools are worse than in 1974, but the schools are state and local institutions.

Welch was wrong. Anyone who tries to play the game of “Yes, he was right, if we re-define his words,” is living in the past. It is time for conservatives to stop living in the past. The decentralization of the media is the best testimony to the steady defeat of the Left. The Left’s hold over the media is gone forever. The Left had bet the farm on its control over the government-licensed and regulated media. It has lost the bet. The fact that you are reading this online testifies to just how wrong Welch was in 1974.

When you watch this speech, rejoice. (1) It was mostly wrong. (2) The Internet lets anyone see it, all over the world.

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