Catotonic History

If you glance at the names of conservative think tanks, you may notice a touching solicitude for the past. This species of head-piece heritage is, alas, a foreign country. The U.K.-based Adam Smith Institute, for example, is dedicated to the kind of free-market thinking you may think Adam Smith represents only if you have never read Adam Smith saying businessmen are apt to engage in conspiracies against the public at a moment’s notice. The original Tea Party was a protest against government tax cuts extended to a global corporation (the British East India Company, in point of fact)—which is pretty much a photographic negative of the image of the Tea Party movement cooked up at the Heritage Foundation. But let’s give the laurel for most misleading think tank brand to the Cato Institute. Do you suppose this uber-libertarian idea shop (literally owned by the Koch Brothers), was named after one of the Roman Catos, perhaps the stern Cato the Younger? Ha, ha, guess again. In the institute’s own words:

Cato owes its name to Cato’s Letters, a series of essays published in 18th-century England that presented a vision of society free from excessive government power. Those essays inspired the architects of the American Revolution. And the simple, timeless principles of that revolution—individual liberty, limited government, and free markets—turn out to be even more powerful in today’s world of global markets and unprecedented access to information than Jefferson or Madison could have imagined. Social and economic freedom is not just the best policy for a free people, it is the indispensable framework for the future.

This is accurate as far as it goes, with just one telltale omission: Cato’s Letters were primarily inspired by a belief that some bailed-out bankers should be killed, pour encourager les autres.

The 144 letters in the series railed against corrupt government, restrictions on freedom of speech, the danger of monopolies, and the sickness of religious tyranny. But they positively raged at bailed-out bankers. The letters were published between 1720 and 1723 by Messrs. Thomas Gordon and John Trenchard as a response to the South Sea Bubble, a complex set of interlocking schemes that pumped up the stock price of the South Sea Company tenfold and more, so that insiders could sell stock they received for £100 at £1,000. Thousands of people, from dukes to doormen, were ruined when the bubble eventually burst, and the British economy was sent spinning into what we would call a recession. Because the South Sea Company was involved in servicing Great Britain’s national debt, the financial functioning of the state was involved as well. In a series of events that will sound familiar to anyone who lived through 2008–2009, prime minister Robert Walpole bailed out the company itself while investors and members of the public who had lost money were hung out to dry.

The sense of betrayal was acute. The second of Cato’s Letters declared that while sixty-thousand people had recently died in a plague at Marseilles, it would be joy itself “to have chosen rather to fall by the hand of God, than by the execrable arts of stock-jobbers” at home. Cato said that while private persons, as Christians, should eschew revenge, nation-states were under no obligations of mercy: “nations should be quick in their resentments, and severe in their judgments.” What in particular should be done? Trenchard and Gordon were quite clear: “load every gallows in England with directors and stock-jobbers . . . A thousand stock-jobbers, well trussed up, besides the diverting sight, would be a cheap sacrifice to the [gods] of trade.”

And Cato’s third installment warned against what would today be called “looking forward”: “If this mighty, this destructive guilt, were to find impunity, nothing remains, but that every villain of a daring and avaricious spirit may grow a great rogue, in order to be a great man” (cf. Larry Summers). The government should stamp out those “constantly coining a new sort of property, of a precarious, uncertain, and transitory, value.” And here’s a passage that today’s Cato fellows may have trouble choking down: government experts should set the price for all securities, excluding the “stock-jobbers” or else “the greatest part of the property of a kingdom [will] be got into the hands of but a few persons, who will then undoubtedly govern all the rest.”

While the Cato Institute and Cato’s Letters share concern for the disastrous consequences of national debt, their attitude towards dealing with it could not differ more. The institute calls for decreasing federal infrastructure spending. Cato in Letter No. 89 had this to say to those who opposed canals, the major infrastructure investment of the day:

Who does not see the benefit of navigable rivers, which makes the carrying out our own commodities, and the bringing to us what we want, cheap and easy; and consequently increases the price of the former, and lessens the price of the latter? And yet a project of that kind always meets opposition from any people upon trifling motives, without ever considering the advantages on the other side, which most commonly must overbalance their imaginary losses.

The same letter (which bore the piquant title Every Man’s true Interest found in the general Interest. How little this is considered) held tax evasion by the wealthy to be a major cause of the national debt and called for trade protections against foreign competition. It was “gentlemen of great estates [who] have denied their countries this general good” of restricting foreign imports. Incidentally, Cato mentioned that restricting foreign imports would benefit not only the workers, but also the wealthy to whom they paid rents. Things would trickle up.

Cato’s Letters were not just worried about financial speculation; they also condemned the corporation as a form of business. In Letter No. 90 we learn that managers owned little, and would undoubtedly rob the real owners, while at the same time suppressing the small businessman—the real source of innovation. In Letter No. 91 we learn that a further danger of corporations is that they will have undue influence on government: “Very great riches in private men are always dangerous to states.” “The benefits arising by these companies, generally, and almost always fall to the share of the stock-jobbers, brokers, and those who cabal with them.” And what do these people do with their unearned riches? They use them to corrupt public policy:

How often have the cries of the whole kingdom of England been able to prevail against the interest of the East-India Company? . . . they have been able to contend and get the better of the tears and complaints of the whole kingdom besides.

How often, indeed? No question could better capture the feelings of the public toward the Koch-backed government shutdown and their hirelings in D.C.