David Boaz

Donald Keough, who was president of Coca-Cola, has died at age 88. All the obituaries lead with his role in the New Coke debacle. On April 23, 1985, Coca-Cola replaced its amazingly successful product with a new formula, called New Coke. Some people liked the new flavor, but many did not. On July 11 the company reversed its decision and reintroduced the original formula, called for a time Coca-Cola Classic. Wikipedia reports, “ABC News’ Peter Jennings interrupted General Hospital to share the news with viewers.”

The experience was generally regarded as one of the biggest stumbles by a major corporation in memory. But what struck me at the time, and what I’m reminded of now, is how fast the company realized its error and reversed it – less than 11 weeks.

How well do governments do at realizing their errors and reversing them? The obvious comparison at the time was the Vietnam War. It took the U.S. government about 14 years, from 1961 to 1975, to realize and reverse that mistake.

Today we might think of the Iraq War. The United States invaded Iraq in March 2003, based on mistaken intelligence reports, a hazy sense that somehow Saddam Hussein was involved in al Qaeda’s 9/11 attacks, and deeply flawed assumptions about the ease of the undertaking. The war officially ended in December 2011, though of course we still have 3,000 troops there and are contemplating further involvement in response to the ISIS insurgency. Taking the official end of the war, the U.S. government continued that mistake for about 8 years and 9 months.

What about other government failures? How fast were they reversed? Let’s consider:

Alcohol prohibition – 13 years

Marijuana prohibition – approximately 84 years and counting

War on drugs – 44 years or 101 years and counting

The Pruitt-Igoe housing project – 18 years

Airline price and entry regulation – 47 years

Soviet communism – 74 years

And that’s without even counting the mistaken programs that aren’t yet widely agreed to be failures, from the Federal Reserve to the welfare state. 

Incentives are different in business and government. Some critics of capitalism suggest that democratic government is more responsive than corporations are. But voting is a flawed way to register dissatisfaction. When businesses make mistakes, they tend to lose customers. And they know that very quickly. Because business owners have their own money at stake, they have a strong incentive to correct mistakes promptly. Government officials run little risk of losing their jobs for failure. Indeed, government officials who fail to solve a problem – poverty, homelessness, dropout rates – may be rewarded with more money and staff. No wonder government failures last so long.

A diamond is forever? Government failure is forever. 

At the end of the American Revolution, King George III asked his American painter, Benjamin West, what George Washington would do next. West replied, “They say he will return to his farm.”

“If he does that,” the incredulous monarch said, “he will be the greatest man in the world.”

Colloquially we now call the federal holiday on the third Monday in February “Presidents Day.” Legally, though, it’s still “Washington’s Birthday.” Which is appropriate, because without Washington we might not have had any other presidents.

George Washington was the man who established the American republic. He led the revolutionary army against the British Empire, he served as the first president, and most importantly he stepped down from power.

In an era of brilliant leaders, Washington was not the deepest thinker. He never wrote a book or even a long essay, unlike George Mason, Thomas Jefferson, James Madison, Alexander Hamilton, and John Adams. But Washington made the ideas of the American founding real. He incarnated liberal and republican ideas in his own person, and he gave them effect through the Revolution, the Constitution, his successful presidency, and his departure from office.

“Washington made the ideas of the American founding real.”

What’s so great about leaving office? Surely it matters more what a president doesin office. But think about other great military commanders and revolutionary leaders before and after Washington—Caesar, Cromwell, Napoleon, Lenin. They all seized the power they had won and held it until death or military defeat.

Washington held “republican” values — that is, he believed in a republic of free citizens, with a government based on consent and established to protect the rights of life, liberty, and property.

From his republican values Washington derived his abhorrence of kingship, even for himself. The writer Garry Wills called him “a virtuoso of resignations.” He gave up power not once but twice — at the end of the revolutionary war, when he resigned his military commission and returned to Mount Vernon, and again at the end of his second term as president, when he refused entreaties to seek a third term. In doing so, he set a standard for American presidents that lasted until the presidency of Franklin D. Roosevelt, whose taste for power was stronger than the 150 years of precedent set by Washington.

Washington was not only a model for future presidents, too rarely followed, but he also left behind some advice. He laid out America’s founding commitment not just to toleration but to equal rights for all citizens in a famous letter to the Jewish congregation in Newport, Rhode Island: “It is now no more that toleration is spoken of as if it were the indulgence of one class of people that another enjoyed the exercise of their inherent natural rights, for, happily, the Government of the United States, which gives to bigotry no sanction, to persecution no assistance, requires only that they who live under its protection should demean themselves as good citizens.”

In his Farewell Address, he laid a foundation for American foreign policy that we would do well to ponder today: “The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible.”

He knew that a president’s job is not to run the country, nor to make law, but rather to carry out the laws made by Congress. In the Farewell Address, he urged all of those entrusted with office “to confine themselves within their respective Constitutional spheres; avoiding in the exercise of the Powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create whatever the form of government, a real despotism.”

Washington was a farmer, a businessman, an enthusiast for commerce. As a man of the Enlightenment, he was deeply interested in scientific farming. His letters on running Mount Vernon are longer than his letters on running the government. (Of course, in 1795 more people worked at Mount Vernon than in the entire executive branch of the federal government.)

On February 22, the actual anniversary of George Washington’s birth, we should remember the man who led the war that created the nation and established the precedents that made it a republic.

Simon & Schuster has just published The Libertarian Reader: Classic & Contemporary Writings from Lao-Tzu to Milton Friedman, which I edited. Buy it now from any good bookseller!

Just look at some of the great thinkers included in The Libertarian Reader:

• Lao-Tzu
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• Mary Wollstonecraft
• Alexis de Tocqueville
• Frederic Bastiat
• John Stuart Mill
• Frederick Douglass
• Angelina Grimke
• Herbert Spencer
• Ludwig von Mises
• F. A. Hayek
• Ayn Rand
• Murray Rothbard
• Milton Friedman
• Robert Nozick
• Richard Epstein
• Mario Vargas Llosa

When the first edition was published in 1997, Laissez Faire Books called it “The most magnificent collection of libertarian writings ever published.” In this edition, Tom G. Palmer’s magisterial guide to “The Literature of Liberty” has been updated to include important libertarian books published in the 21st century. That essay alone is worth the price of the book!

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