Hans F. Sennholz, “The Economy: Does Anyone Really Want Reform?” (1968)

Sennholz’s essay asks whether economic reform, especially saving the dollar from inflation, can be produced by electoral hope alone. Reform requires a public willing to bear the losses that reform reveals: recession, unemployment, falling asset prices, lower government spending, and a confrontation with union power. The title’s question is therefore literal: people may want “reform” in rhetoric, but Sennholz asks whether they want its consequences.

He begins by deflating the optimism of national elections. Campaigns create “new hope,” but democratic outcomes leave most aspirations frustrated because even majorities contain conflicting aims and minorities are disregarded.

"disappointment is the favorite companion of hope."

The deeper point is that policy follows opinion. Laws cannot outrun the habits, sentiments, and economic beliefs of the public; they express them.

"Laws and policies are but the outward manifestation of popular ideas"

Invoking Gustave Le Bon, Sennholz frames reform as a social and moral problem before it is a technical one. Sudden institutional change is futile if the underlying character of a people remains unchanged.

"nothing is more fatal to a people than the mania for great reforms"

The essay then turns to its central case: dollar stabilization. Sennholz imagines an administration that balances the budget, cuts spending, and orders the Federal Reserve to stop credit expansion. Such a policy would not bring painless order. Years of inflation have produced “malinvestments and maladjustments,” so the end of easy money would expose unsound enterprises, raise interest rates, depress bond and stock prices, and make many operations unprofitable. In ordinary language, stabilization would mean recession.

"Are the American people prepared to endure a recession in order to save the dollar?"

This question drives the essay’s structure. To save the currency, government must refuse the usual anti-recession response: renewed spending, deficits, and inflation. Recovery must come through reduced public expenditure, lower taxes without deficit finance, and business cost-cutting. Sennholz’s core conceptual move is to define monetary reform not as a central-bank adjustment but as a political willingness to let prior errors be liquidated.

He then connects sound money to labor-market reform. Monetary stabilization, he argues, would end the inflationary environment in which unions can push nominal wages upward while rising prices conceal the effects. If wages remain rigid under legally privileged union power, unionized business becomes unprofitable and unemployment concentrates in organized sectors.

"Monetary stabilization means price stabilization, which is a fatal enemy of labor unions."

For Sennholz, therefore, currency reform requires abolition of the legal immunities granted to unions by New Deal institutions, especially the National Labor Relations Board. Otherwise, stabilization would produce chronic stagnation rather than adjustment. His prescription is compressed in the demand to

"restore the market in labor."

The conclusion returns from economics to political will. Sennholz doubts that any administration, Republican or otherwise, would persist once recession appeared. The public would demand action, and “action” would mean the old policy of spending and inflation. The decisive obstacle is not ignorance of policy mechanics but the absence of ideological preparation.

"there is little public support for federal “inactivity”"

The essay’s relevance lies in its refusal to separate reform from its transition costs. Sennholz argues that inflation survives because it masks the damage caused by earlier inflation and because voters prefer concealment to correction. His final implication is that, in 1968 America, many wanted the language of reform, but few wanted the recession, wage flexibility, and governmental restraint that real reform would require.