Date: 1950-01-01T07:00:00+00:00
Keywords: liberty
Description: The Foundation for Economic Education The Freeman 1976

The Freeman 1976

Foundation for Economic Education
tt1(~ Freeman VOL. 26, NO.1. JANUARY 1976 Nho Wants to Be Self-Sufficient? Jean Hockman 3 It's not that easy to deny oneself the advantages of freedom to trade. fhe True Spirit of '76 Ja.ck Lacy 8 The enterprising men whose efforts accounted for the development of a nation. 'he BureaucraticIncubus Clarence B. Carson 10 If we demand government regulation and control of economic affairs, we must endure bureaucracy. he Classical Medicine JohnA. Davenport 21 The economics of Keynes gives way to Say's Law of Markets. Jemocracyin America-AChallengeto Free Men Robert G. Bearce 25 A review of Tocqueville for a renewed appreciation of our foundations of freedom. n IntangibleBicentennial-Monument Merryle Stanley Rukeyser 33 Why not dedicate our efforts to the dissipation of delusions? uess Who! Joan Wilke 37 Some questions about the advertising budget of this nation's biggest spender. dividual Responsibility Ridgway K. Foley, Jr. 42 True freedom cannot exist in the absence of individual responsibility.

lW Much Will Be Enough? James E. McAdoo 52 The problem of finding security when money fails to serve as a store of value. :oral Law and Freedom V. Orval Watts 56 The Golden Rule rests on the fact that humans need one another. oak Reviews: "The Love of Liberty" by Leonard E. Read "Rent Control: A PopularParadox" by various authors "Clear and Present Dangers" by M. Stanton Evans Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 58 the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591·723·0 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government.

Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in vited in any amount-$5.00 to $10,000-as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 10 for $2.50; 2'5 or more, 20 cents each. THE FREEMAN is available on microfilm from Xerox University Microfilms. Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per mission granted to reprint any article from this issue, with appropriate credit except "The Classical Medicine."

JEAN HOCKMAN A FEW YEARS AGO at a Foundation for Economic Education seminar, I listened s~mewhat skeptically to one of Leonard Read's lectures concerning our present degree of dependency on others for the nec essities of life. He stated that should! the market suddenly cease to deliver the accustomed goods, he would find it difficult if not im possible to provide even his own food. Well, I thought smugly, he might have a problem, but surely my husband and I could manage quite nicely. We live in a rural area and, though we were no longer actively raising our own food, we knew how and could do it again if necessary. Mrs. Hockman of Tacoma, Washington, is a housewife and freelance author with a bias to ward freedom. WhoWants to Be Self-Sufficient? But it wasn't until last spring, spurred by threats of food short ages, the "back to nature" propa ganda, and my own blurred mem ories of tasty home-grown vegeta bles, that I decided to plant a garden again after a 5-year re spite. Now I remember why the respite. Planting is the easy part.

The rest is a never-ending battle against weeds and bugs and na ture's capricious weather condi tions. Of course it has its rewards. The food is good - after you have chased every creepy crawly thing from its hiding place by a thorough washing. Finding a 1-inch cut worm reposing among the broccoli on your dinner plate is not among the rewards. It doesn't matter that he's been thoroughly washed and scalded and no longer crawling, it 3 4 THE FREEMAN January still tends to detract from your appetite. However, the bugs and weeds turned out to be minor irritations. My garden is modest in size, but I did plant it with the idea of pre serving for winter. Most things I planned to freeze. But there are some things I prefer to can. I had hunted up all my jars and rings. AIl I needed was the canning lids. I was aware of the shortage of lids last summer and so I began watching the shelves in the gro cery store from the time I planted the garden. I intended to stock up so I wouldn't be caught in case an other shortage developed. I rea soned, rather logically I thought, that the manufacturers had the whole of the past winter to make lids - certainly the simplest of canning supplies - and soon the shelves 'would be stocked.

Apparently they spent the whole winter making jars. Cases and cases of jars (complete with lids and rings)" appeared in every store. I bought a few, to supplement the jars I already had, and resumed my watch for lids. As the season wore on I began to grow increasingly' frustrated about the whole thing; There were still plenty of jars - but no lids sold separately. I didn't need jars, I just needed the silly lids. Fur thermore, I wasn't about to buy more jars just to get the ,lids. Nobody seemed to know why. Grocers shrugged and back ordered. There were rumors of stolen lids and black market opera tions. If I could have found a black market. source I would have patronized it promptly and with no misgivings - or so I thought. As it turned out, I stayed "legit" - more or 'less. I managed to get lids at two different grocery stores, but not from the shelves. In both cases I had to ask for them and they were prod uced fi~om un der the checkout stand or from a back room, discreetly pre-wrapped in plain brown bags. Even I didn't see them until I was "safely" to the car. And in both cases I felt like a smuggler, surreptitiously "getting away" with something.

All for the sake of a few dozen tin lids. The Importance of Trifles A number of things have "come home" to me as a result of this whole general experience. Leonard Read's comments on interdepend ency, in the market came ringing in like a homing pigeon. Generally speaking,. canning lids are a trifling commodity in the overall scheme of things. Little tin lids with a thin strip of rubber around the edge. Cost - 53¢ a doz en. Just a trifle. They've been around for many years; we're ac customed to seeing them on the 1976 WHO WANTS TO BE SELF-SUFFICIENT'? 5 grocer's shelves and in fact we ex pect to find them there when or if we want them. Yet, this common everyday item assumed monu mental importance to me and a good many others this past sum mer. Why all the fuss? Because with out them the home canner is stymied. The general rule of sub stitution in -a situation of market shortage· doesn't apply. There is no substitute fora new lid with new rubber that will ensure the all-important seal. And the fact is that I can't make a canning lid.

Hello there, Leonard Read - it took her a while but I think "she's got it." Self-sufficiency, without some dependence on the general market, is a myth. Even those out there homesteading and doing every thing, including grinding their own wheat, must rely on the mar ket - unless they are working with handmade tools and use no ma chinery, need no parts, tools, fuel, and the like. It is the "trifles" we tend to take for granted. My simplistic notion of self-sufficiency as being able to grow and preserve my own food was totally unrealistic. The first thing I did, before planting, was to go out and buy seed. My garden was dependent before the fact on the expertise of those who pro duce good, reliable seed. Self-Analysis I learned something about hu man nature too - my own. I was prepared, on principle, to pay more if necessary through a shady or "illegal" dealer in order to get what I needed rather than be coerced by the "legitimate" mar ket into buying something I didn't need. This was a conclusion based only partly on reasoned analysis, for it also involved a basic reac tion to being thwarted in meeting my purpose through customary channels. Yet, when I was able to purchase them in the open market but in an underthe-counter man ner, I felt sneaky and vaguely dishonest.

This was a new experience for me and a disturbing one. Not the black market, but certainly gray around the edges. And so I am obliged to revise my previously held notion that the black market is essentially the "free market." It may operate more freely according to supply and demand, but the element of risk and subversion is added to the cost - both in terms of dollars and self-respect. The free market is the open mar ket - open to competition in· both buying and selling. I don't know what's behind the canning lid shortage, or whether it is contrived or real. Since the truth seems to head the list of scarce commodities 6 THE FREEMAN January these days,we may never know the specifics. What we do know is that polit ical manipulation is the root cause of our prolonged economic diffi culties. And what \ve should know is that political manipulation is the practice of manipulating people. The more devious and underhand ed the political maneuvers become, the more devious and underhand ed must we, as individuals, become in order to live "within the sys tem."

Obviously the only truly self sufficient individual is the hermit who takes to the hills and Iives his primitive existence completely out of touch with society. As for the rest of us, we are not only dependent upon the market, we have a very real stake in it. Let those who wish to go "back to na ture" go. But let's think twice be fore we let them drag us along to the "simple" life they envision. Getting back to nature for a few days on a camping trip can be most rewarding and relaxing. But get ting back to indoor plumbing, the automatic washer and central heat ing is the real reward. Having survived a three-day power outage in the wake of a snowstorm last winter, I can testi fy to the unpleasant rigors of liv ing without the "luxuries of afflu ence" of which it has been said we are "overburdened." Nonsense. Overburdened is hauling wood from dawn to dark for a hungry fireplace which throws warmth a whole three feet into the living room, leaving the rest of the house - most notably the bathroom - at a temperature slightly above the snowy outdoor level.

I Could Do It - But Why? Now I've reasoned, as have oth ers, that it's not impossible to gen era te one's own power system through windmills and the like. But I still can't make a simple can ning lid. That one little item brought the whole picture into fo cus. We could no doubt resort to other methods of preserving food. But that's not the point. The point is: Why should we? Why give up the benefits of cen turies of human knowledge? Why wish for or search for alternate methods of primitive survival? It doesn't make sense. Does my husband want to spend his life chopping and hauling wood 'f Do I want to wash clothes in a stream on a rock? And what clothes? Where will they come from? Animal skins and hides, maybe. Or perhaps I should learn to spin and weave. Needless to say, I've taken the "cure" insofar as my visions of self-sufficiency are concerned. And in the process, I've learned what I should have known all along.

1976 WHO WANTS TO BE SELF-SUFFICIENT? 7 We always have choices in life. The question of whether capital ism will survive or not is still up in the air. Many of us who recog nize the problem are torn between the very sensible inclination to "save" ourselves, and the knowl edge that only those who do recog nize the problem can offer any real help in solving it. I've discovered that for me it's not an either/or proposition. The one is dependent upon the other, and with that my choice is clear. I have no desire to Iive a life of primitive subsistence, so why should I expend my energies in that direction? The things I ap preciate and enjoy, and the com forts I have always taken for grant ed, are to be found in civilization, within society, within the sophis ticated trade system so highly de veloped in America. With this real ization, I accept the fact that one can be independent and still be de pendent upon others, that self-re sponsibili ty does not imply .total self -sufficiency.

Whereas we can readily grasp the fact that capitalism offers us Trade independence and freedom of choice, the fact that it also creates grea tel' and greater dependency upon the skills and products of others is not so easily acknowledg ed. We tend to take it for granted, which is not the same thing as knowing which side your bread is buttered on. As though to drive the message all the way home, I got yet anoth er lesson midway through the writ ing of this. At the point where I mention the rule of substitution in the market, my typewriter sudden ly stopped short with a dreadful clanking sound from somewhere in side. Investigation revealed that it was beyond my ability to repair. In that one instant it became ut terly useless to me. What does a resourceful individ ual do when deprived of a needed commodity? One substitutes. I proceeded in longhand - ever mind ful, I would add, of the manufac turer of both ball-point pens and the needed paper.

The typewriter went to the re pairman, naturally - upon whose expertise I am dependent. I) IDEAS ON LIBERTY THERE IS NOTHING so useful to man in general, nor so beneficial to particular societies and individuals, as trade. This is the alma mater, at whose plentiful breast all mankind are nourished. HENRY FIELDING JACK LACY What has happened to the man who braved uncertainty, went out on his own, and, through native wit, devotion and duty, and single ness of purpose, somehow created business and industrial activity where none existed before? Where is the heroic figure of American folklore who was akin, perhaps, to Davy Crockett and other truly indigenous epic types stalwart independents who hewed forests, climbed over the tops of mountains, built new communities, rose from nothing to something, and did all the things American heroes must have done to build a great nation? He was the enterprising man.

Like him or not, he is still fascinat ing to. Americans. The reasons are Mr. Lacy is Executive Director of the Junction City-Geary County [Kansas] Economic Devel opment Commission. This article is here reprinted from the Fall 1975 issue of The Compass, published by Topeka Savings Association. 8 not hard to find. For one thing, the gTeat fortunes in America were built through entrepreneurial acti vity. America's social structure is a product of the milling efforts of thousands who came to these shores seeking their fortunes and hoping Lady Luck would beam on them. Those upon whom she smiled became great figures of power and .in many cases estab lished family dynasties persisting through many generations. But there is considerably more than this behind the allure of the entrepreneur. His values and acti vities have become a part of .. the character of America and inti mately related to our ideas of per sonal freedom, success, and, above all, individualism. He represented the rags to riches theme in its pur est sense, for he rose on his own by building a solid structure beneath him, not by social climbing. He got there by what he knew, not who 1976 THE TRUE SPIRIT OF '76 9 he knew. His resources were all inside, not outside.

The story of this man is a drama in which the protagonist challenged the established order and forged ahead toward the glow ing light called "success" using only native wit, ability, and hard work-with perhaps a bit of luck and Calvinistic fate thrown in for good measure. He was successul because he stuck to the simple and obvious American virtues. He built a better mousetrap or provided a better service and he did these things in the best way he knew. Today there is a connotation of manipulation, greed and avarice, and grasping acquisitiveness asso ciated with doing business for· a profit. We are taught that while it is true the entrepreneurial hero built railroads,. canals, communi-' ties, industries, and great systems of trade, there is also the implica tion that in the process he befouled nature, sullied valleys, denuded forests, muddied and contaminated the rivers and streams, scarred Mother Earth, and generally rav ished the natural order of things.

We are told Nature and God's creatures, including ordinary folk, all suffered at the hands of those who sought to impose their will on the natural order. Noone speaks on behalf of the enterprising man. No one says he was more constructive than destructive. Noone tells us it is more important to seek opportunity than to languish in security. Noone re minds us that each performance of the enterprising man . . . each new business ... is a renewal of the democratic notion that all men are born equal and .that the value of the individual to society does not depend upon family or social class~ No longer are we told that America is· the only place on earth where a man,· through his own efforts, can go out and achieve the status of success. The deeper traditions of our society, its history, myths and many of its heroic figures are fall ing into oblivion, buried beneath a plethora of politics that seeks to control, rule, regulate and restrict.

The symbolism expressed in the American image of the enterpris ing man is a. profound reflection on our national history and charac ter. We are a people who for nearly twelve generations went through the recurrent process. of imposing man's will and men-conceived structures on a wilderness of pri meval forests, rugged mountains, mighty rivers, unending plains, and waterless deserts. Though this resurgent effort at the moving edge of the frontier has long since ended, the spirit and the imagery must live on if free enterprise is to survive. It is the spirit of free dom that is truly the spirit of '76., The Bureaucratic Incubus CLARENCE B. CARSON The bureaucracy is like the weather: everyone talks about it, but nobody does anything about it. Presidents often complain upon taking office that the bureaucracy is so deeply entrenched that they can gain only a tenuous control over the government. Congressmen find that wrestling with bureau crats for their constituents occu pies a considerable portion of their time. Businessmen have to learn to thread their way through a maze of bureaus in order to do business. "Bureaucrat" is an epi thet to the general public: he reDr. Carson has written and taught extensively, specializing in American intellectual history.

His most recent book, The Rebirth of Liberty ( 1973), covers the· founding of the American Republic from 1760 to 1800. 10 quires a seemingly endless stream of paperwork - "red tape" - is by turn evasive, interminably slow, haughty, arbitrary, autocratic, and is surely an "oppressive hind rance to favorable action." Yet the Federal tribe of bureaucrats increases geometrically, joined by their state and local counterparts. There is an amazing array and variety of Federal bureaus. They range from the Bureau of Out door Recreation to Bureau of Ap prenticeship and Training to Office of Intergovernmental Affairs to Center for Disease Control. J list how many such bureaus there are is well-nigh impossible to deter mine. One reason for this is the variety of names by which they 1976 THE BUREAUCRATIC INCUBUS 11 are called: commissions, boards, bureaus, offices, divisions, centers, agencies, administrations, depart ments, and so on. For example, the Department of Commerce has Domestic and International Busi ness Administration, Bureau of Census, Economic Development Administration, Planning Divi sion, Technical Assistance Divi sion' Public Works Division, Busi ness Development Division, Tech nical Support Division, Equal Opportunity Division, Economic Development Representative, Na tional Oceanic and Atmospheric Administration, National Marine Fisheries Service, Office of Audits, and National Weather Service Forecast Office. How many of these would be called bureaus is a matter of classification.

States have their own panoply of institutes, commissions, boards, services, offices, divisions, and so on. For example, the Secretary of State of Georgia oversees such bureaus and agencies as: Admin istrative Procedure Division, Ar chives and History Department, Bank and Credit Union Charters, Corporations Division, Profession al Examining Boards (Board of Accountancy, Board of Architects Qualifications and Registration of, Board of Dental Examiners and Hygienists, State Board of Exam iners of Plumbing Contractors, Real Estate Commission, and so forth), St,ate Board of Registra tion for Used Motor Vehicle Parts Dealers-Motor Vehicle Disman tIers-Motor Vehicle Rebuilders, among many, many others. Activities and Rules Of the myriad activities of these numerous bureaus there is no end. In a recent column on Federal grants, James J. Kilpatrick noted that there are now some 975 as sistance programs administered by 52 agencies costing more than fifty billion dollars annually. His description of some of their activi ties deserves to be quoted: Each of the 975 assistance pro grams, it perhaps goes without say ing, has its own rules, regulations, application forms, and miscellaneous requirements. These periodically are promulgated, revised, amended, adopted, further amended, with drawn, codified, and readvertised in the Federal Register, a paper printed daily in the city of Washington in type designed to put your eyes out.

The Register, which includes a vast deal of other stuff, last year ran to 35,000 pages. On the matter of bureaucratic rulemaking, Representative Elliott H. Levitas of Georgia had these observations, among others, to make in support of a bill he was introducing to Congress: Time and time again, the principles embodied in good legislation are I02t 12 THE FREEMAN January by the time the unelected bureau cratic rulemakers publish their regu lations. The rules, which really are laws, are now being ground out at the rate of almost 6,000 per year as com pared to about 600 acts of Congress, in the same period. It is absolutely essential that Con gress regain control over this admin istrative lawmaking process, espe cially when the violation of these rules - many of which are unreason able and far beyond, or contrary to, the original purpose of Congress can result in a citizen's being fined or going to jail just as surely as if he had violated an act of Congress itself.

Hardly a day goes by that the newspapers do not report on the doings and misdoings of the. bu reaucracy, but what we find there is, of course, only the tip of the ice berg of bureaucratic activity. For example, recently church groups attempting to assist in aiding Viet namese refugees reported that their efforts were frequently tan gled in red tape. One head of a refugee. committee said: Three months ago we would call one official and he'd tell us one thing, then we'd call the man sitting at the next desk and he'd give us a different answer. Another report from the same meeting was from a factory own er who wanted to employ 35-40 refugees "but he couldn't get any body in the government to respond, even though he's been trying for three· months." Stories of the slowness and time consuming activities of bureauc racies abound. Here is a summary included in an account of efforts by the airlines to reduce bureau cratic regulation: Currently, airlines must go through a process that can last years to get a CAB decision before they can raise or lower their fares or begin to serve or stop serving certain airports.

Another horrendous example was reported recently in Atlanta con cerning the Metropolitan Area Rapid T ra n sit Authority (MARTA). For four years now, MARTA has been about to embark on the building of a rapid transit system for Atlanta with massive Federal aid. The newspaper re ports that MARTA "is about to embark on an $87,500 program to review its 'goals and objectives' and develop a system for monitor ing its progress." To all appear ances, it would not require a study to monitor progress; none is being made. Sympathetic Controllers A common complaint against the bureaucracy is that men appoint ed to regulate industries really favor the activities of the busi nesses rat'her than control them. Here is the report of such a rela tionship: 1976 THE BUREAUCRATIC INCUBUS 13 Federal officials responsible for the integrity of American grain ship ments have frequently yielded to in dustry pressures and ordered unj us tified upgrading of quality ratings for export shipnlents, according to government officials.

A pattern ... of actions by federal aides favoring the industry has emerged fronl interviews with a num ber of officials and fornler officials of the Grain Division of the Agriculture Department. There should be no doubt, then, that bureaus have gained and hold an ever-expanding sway over our lives. If anyone doubts this he need only to attempt to go into business, go out of business, make a prod uct, render a service, sell some thing, or engage in some activity regulated by government. Not only is the bureaucracy omnipresent but it is by way of becoming om nipotent in many areas. Ameri cans do indeed appear to be beset by some sort of incubus, an incu bus that weighs upon us, oppress es us, and hinders favorable ac tion. Earlier Criticisms Criticisms of the bureaucracy are hardly ne\v. More than forty years ago, Herbert Hoover had delineated the pathology of bu reaucracies about as thoroughly as needs to be· done. He perceived that, once created, bureaucracies tend to become self-perpetuating monstrosities, that they are fer tile sources of new programs, that their effect on industry is stultify ing, and that they are veritable propaganda machines. In· 1934, he said: Already a host of new governnlent bureaus and nearly two thousand conlmissions have been established with authority over every trade, and in nearly every town and village. We have witnessed this host of govern nlent agents out over the land ...

threatening the people and prosecut ing for a new host of crinles. They were, he said, leading us in to "the swamps of serfdom." The question - the vital ques tion - is what is to be done about this incubus which oppresses the people? Indeed, can anything be done about it? My suspicion is that nothing u:ill be done about it so long as we focus on bureaucracy as the villain of the piece, or at tribute our ills to bureaucrats. Such a focus leads us to think that the solution lies in reforn1ing the bureaucracy. There is no good reason to suppose that \ve could do this. Herbert Hoover spent a great deal of energ~r first and last on reforrning the bureaucracy b~' reorganizing the governnlent. He even served on a commission un der President Truman with that object in view. Yet, after all his \vords, all his studies, and all his 14 THE FREEMAN efforts, the bureaucracy was as deeply entrenched as ever, and there are none to testify to the positive results of his or anybody else's efforts to reform the bu reaucracy.

Possibly, a particular bureau crat could be reformed along the lines sought by industrious effort, much asa dog can be trained to stand on his hind feet. A bureau crat might be trained to be swift, decisive, responsible, judicious, sparing of paperwork, kindly, and fair. But there is no more reason to suppose that he would be emu lated throughout the service than that dogs in general would take to their hind feet once one of them had been taught to do so. Dogs stand on all four feet because .it is their nature to do so; bureau crats behave ~s they do because of the nature of the function they perform. 'lis Stem from Nature of Job The ills that we so often attrib ute to bureaus, bureaucrats, and bureaucracies do not arise from them. After all, a bureau is· only an organiz:ation patterned after any other by which men would act in concert to realize some common purpose. Any business, church, charity, or school is apt to be organized along similar lines. A bureaucrat is only a man, pretty much the same as the rest of us.

If you cut him, he will bleed. He may be goodnatured or crabbed, hard-working or a dawdler, a faithful husband or a philanderer, a churchgo_er or an agnostic, a clock-watcher or absorbed by his work. The ills that we attribute to bureaucracies really arise from the functions which some bureaus perform. Not all government agencies are castigated as bu reaucracies, nor all government workers as bureaucrats. The spe cies bureaucrat does not include nearly all of those who belong to the genus government employee. A soldier is not a bureaucrat, nor a postal carrier, nor a teacher, nor a judge, nor a policeman, nor even a member of Congress. Even some agencies that are called bureaus do not belong to the bureaucracy. For example, the Federal Bureau of Investigation (FBI) is not a part of the bureaucracy. Whether a government agency belongs to the bureaucracy or not can be de termined by the function it per forms. Those agencies whose func tion is primarily regulatory make up the bureaucracy; those who perform a service to the consumer or protect life, liberty, and prop erty do not.

For example, the Postal Service is not of the bureaucracy because it picks up and delivers mail, thereby serving consumers. (This 1976 THE BUREAUCRATIC INCUBUS 15 is not an argument for govern ment mail deli very, or provision of any other such service; there are good and sufficient reasons why government should not offer what are basically peaceful services, but they have little or nothing to do with bureaucracy.) By contrast, the Interstate Commerce Commis sion (ICC) does not serve con sumers by running trains or trucks; its function is regulatory, and it is bureaucratic. Armies, courts, and police protect life, lib erty, and property; they are not of the bureaucracy. The Federal Com munications Commission is regu latory and bureaucratic. Of course, regulatory agencies claim to protect life and property and would probably justify most of their activities on that ground. Whether they generally protect life and property is a good ques tion (if, under the guise of pro tecting property, they take away some of the rights of property, they are not protecting but invad ing it). Whether they are "neces sary and proper" to the protec tion of life and property is an even better question. But however these questions might be answered in a particular case or in general, the fact remains that regulatory agen cies are bureaucracies by the man ner of the performance of their function.

They do not, themselves, perform a service to the consumer or protect his life or property; they regulate others who are charged with performing the tasks in volved. For example, the ICC does not erect safety signals at railroad crossings; the railroads usually do this, though they' may have done so in a particular instance at the behest of the ICC. It is this regu latory character, this authority over those who do without respon sibility for doing it, this remove from the actual work that makes them bureaucracies, that makes them behave in just those ways that are castigated, and that makes them resistant to all efforts at reform. It is the nature of regu latory agencies to be the way they are. Inevitable Red Tape Let us review some of the charges against the bureaucracy and show by way of illustration that the conditions complained of follow from the nature of the activity. The most common complaint about bureaucracies is the red tape - paperwork - entailed in dealing with them. Anyone seeking the approval of a bureau for some project must submit great quanti ties of paperwork in support of his application. A regulated business must not only submit all this pa~ perwork in support of the original 16 THE FREEMAN January application but must supplement it periodically with, reports, affi davits, depositions, notarized statements, and other assorted proofs of compliance. How could it be otherwise? The only visible product of regulatory agencies is the paperwork they produce and require from others. If the regu latory .bureaucracy be conceived of as an industry, then each bureau is a paperwork factory. Everything the bureaucracy ·actually does is recorded on paper or by some other device.

'What bureaucracies do is issue rules,. hold hearings, have meet ings; send out blank forms which are returned completed, send out inspectors, and. so on. Rules must be in writing, hearings recorded, minutes kept of meetings, applica tions submitted on paper, docu ments of verbal decisions r.educed to writing, accounts kept, and so on, ad infinitum. Of course, any activity today is apt to be accom panied by considerable paperwork; the point about bureaucracies is that paperwork is what they pro duce and· collect. In theory, they provide protection, but they do not do the actual work of provid ing it. The Occupational Safety and Health Administration (OSHA) does not actually take safety and health measures within a plant; it requires the employer to do so. But could the .amountof paper work .not be reduced? If it. could be done, it· could only be· done by reducing the productivity of the burea ucracy. The only certain measure of the productivity of a bureau is the quantity of paper work it produces. To cut back is to reduce its function. A dog can be taught to stand on its hind legs, but it cannot catch rabbits in that position. A bureau. could be made to cut back on its paper work, but insofar as it did so it would be reducing the extent of its regulation. There is no end. to what needs to be reported in order to assure the effectiveness of reg ulation. The whole fabric connect ing the regulator with the regu lated is paperwork. One might as well expect printers to print with out using paper as expect bureauc racies to regulate without volumi nous paperwork.

No Way to Measure Efficiency The charge that bureaucracies are self-perpetuating and expan sive is true enough but somewhat off the mark. The bureaucrat is no more nor less interested in keep ing' his job than anyone else. Any department head usually has vari ous incentives for increasing the number of workers under him. The distinctive thing about regulatory agencies is that there is no handy way to measure the productivity 1976 THE BUREAUCRATIC, INCUBUS 17 of bureaucrats. The paperwork done and required can be meas ured, of course. But Congress is unlikely to find an argument for hiring more bureaucrats to pro duce more paperwork very per suasive. The only other thing burea uc racies do is to· provide protection, and the method is by prevention. Now there is no way to tot up the amount of something that did not happen. The Federal Aviation Agency cannot list the number of airplanes that did not crash. The Food and Drug Administration cannot count. the. number of peo ple not poisoned by foods and drugs ,. they did . not allow to be marketed. The problem of cost ac counting the work of regulatory bureaucracies is further aggra vated by the fact that the actual work of prevention is not even done by them. How many acci..: dents would have been prevented by the employer's safety measures if there had been no Occupational Safety and Health Administra tion? Or, to open the whole mat ter up, how many injuries that did occur. would have been pre vented if the employ~r .. had as sumed full responsibility for de termining how safe his plant was rather than relying on the favor able report of a government safety inspector? There is no way of knowing, then, how many bureaucrats there ought to· be, so the bureaucracy can continue to ex..

pand its numbers by scare tactics. Indecisive and Slow Bureaucracies are indecisive and slow, and they are often arbitrary and capricious. These two charges should be considered together, for they are like two sides of a single coin. The troublesome fact is that they can only become swift and decisive by becoming more arbi trary and capricious, or they can only become less arbitrary, if that is possible, by taking more time. The reason for this bind in which they are caught is not far to seek. Bureaucracies are called upon or take on the making of decisions which would have made Solomon in all his wisdom flee his throne. The CAB may take years to· de cide about authorizing a new flight because, to avoid the. appearance of arbitrariness, just about eveljY thing imaginable and all those !in volved need to be taken into con sideration. Studies must be made, hearings held, documents assem bled, and painful decisions reached.

What will be the impact on com peting airlines if a n~w flight be tween two cities is authorized? What will be the -effect on the air traffic patterns? Is.. the airline seeking to introduce the flight financially sound? Does the traffic between the cities warrant a new 18 THE FREEMAN January flight? Do the airports have the ground facilities to accommodate the additional airplanes and pas sengers? There is no end to the questions that ought to be an swered before a decision is reached. But even a bureau must eventu ally make a decision, and it will have to be to some extent arbi trary. Regulatory bureaus are irre sponsible in their behavior. This is not because they do not attend to their tasks or perform them faithfully. It is rather that as regulatory bodies they are not re sponsible for making the products they inspect or providing the ser vices they oversee. They are not responsible at law or in fact.

Whatever ills may result from their policies, they cannot be held responsible for them. They do not make the moneys that they spend - these come from taxpayers nor do they pay for the time and effort that men spend in comply ing with their requirements. In short, bureaucracies are irrespon sible by nature. Regulatory agencies impinge upon and reduce the liberties of those whom they regulate. Could they not be reformed so as to pre vent this? It is difficult to see how this could be accomplished. Every regulation proceeding from a bu reau to anyone else in society in volves a reduction of freedom of action of those to whom it applies. Since no regulation can be con ceived that would not reduce free dom of action, it goes without saying that regulatory bureaucra cies are an assault upon liberty. Hope for Reform America is afflicted by an in cubus, by a deep-seated and oppres sive hindrance to favorable action.

Is it a bureaucratic incubus? y,es, but only if we stick carefully to the original or first meaning of the word. An incubus, the diction ary says, is "an imaginary demon or evil spirit supposed to descend upon sleeping persons." That is a most apt description of the pre vailing attitude toward bureaus, bureaucrats, and bureaucracies. We stand back and hurl impreca tions at them, treating them as if they were the source of evils which beset us. Moreover, we are made impotent by our belief that we can somehow reform them. But bureaucracies are im,agina,ry demons; the real ills we face come from a deeper source. They come from our determination to have and commitment to government regulation of the economy. Bureauc racies are instruments in this reg ulation, instruments which are as they are because they are assigned the task of regulation. The bureaucratic incubus can be exorcised only by removing the 1976 THE BUREAUCRATIC INCUBUS 19 regulations. To be free of the in cubus we must free ourselves of the regulation. Bureaucracies can not be substantially reformed, but they can be abolished, which is what will happen when their reg ulatory function is taken away.

But, do we not need the pro tective functions provided for us by the regulatory agencies? To put it more directly, do we not need protection from maltreat ment by those who provide us with goods and services? Furthermore, is it not a proper function of gov ernment to police these and set a framework within which they may operate? These are good questions, but they are questions which can only receive the most general kind of answer here. It has been the burden of this article to show that bureaucracies are as they are be cause of the regulatory functions assigned them, to show that they are paperwork factories, self-per petuating and expansive, beyond fiscal accounting, painstakingly slow and indecisive, irresponsible, and destructive of liberty. It would take much more space to show how ineffective they are in performing their protective functions. Only a few observations may be offered.

Three Possible Courses of Action; All Wrong In general, regulatory bodies take three sorts of action. Either they permit what should be pro hibited, or prohibit what should be permitted, or permit what men should be permitted to do without any special authorization. A single example may illustrate all three of these actions. Suppose that the In terstate Commerce Commission authorizes one trucking company, and only one, to haul freight be tween two cities. By so doing, it establishes a monopoly which it would have better prohibited. Sec ondly, it prohibits all other car riers to haul freight to and from these cities when they should be permitted to do so. Thirdly, it per mits a company to operate in ways it should be able to do without permission. Most formal actions of regulatory bodies fall into one or more of these three categories. In short, regulatory bodies tend to be either useless or harmful.

Men do indeed need protection from fraud, deceit, failure to per form on contracts, poisons, tainted food, shoddy merchandise, and as sorted wrongs which may be done to them in the market. There are three time-tested ways to get this protection which do not require regulatory bureaucracies. They are: positive law, competition, and caveat emptor (let the buyer be ware) . If there is some substantive ill from which men need protection by government, it should be pro20 THE FREEMAN January hibited by law, with criminal pen alties provided for convicted vio lators. As for most of the matters with which regulatory bodies deal, the best solution is competition. In the final analysis, however, there is no substitute for the vvaririess of the buyer. Regulatory bodies have not and cannot relieve us 'of the necessity for exercising care in all our transactions. We must reward those who serve us well, refuse our custom to those who do not, and use whatever sanctions that are available to us against those who do not live up to their agreements. If we value our safety and health, we must keep a sharp lookout for potential dangers to them.

There is a choice to be made, I have been saying. We can be rid of the bureaucracies by removing the regulatory function. Or, we can persist in having the regula tion with the understanding that to do so entails all that we de plore in bureaucratic behavior. There is no indication that the bureaucracy can be reformed. There is much reason to beliE~ve, however, that the advantages that are supposed to follow from regu lation are illusory but that the dis advantages are very real and fol low from the method .used. The bureaucracy can be dispensed, with. To do so would be to remove the "oppressive hindrance to favorable action." I) IDEAS ON LIBERTY Regulation of American Business WHAT. WE'RE DOING is applying pointless regulatory brakes to business In many important ways when we should be trying to step on the gas. Weare surrounded by seemingly numberless regu lations of debatable need, uncertain effect, and arbitrary origin.

As for the element of public' consent to this process, the public hardly comprehends what is taking place. Here, perhaps, lies the greatest danger - the danger that indi vidual initiative will become swamped by government edict before enough people awake to the threat. In the words of John Stuart Mill, "A state which dwarfs its men, in order that they may be more docile instruments in its hands - even for beneficial purposes - will find that with small men no great thing can really be accomplished." JOHN E. SWEARINGEN, from an address, February 28, 1962 The ClassicalMedicine ~ JOHN A. DAVENPORT IT IS A FACT' of experience, no less than a law of optics, that in per ceiving an object everything de pends on the angle of vision. For over a quarter century now under the influence of the late John May nard Keynes, most economists have been looking at the pheno mena of employment and unem ployment from the angle or point of view of overall demand for goods and services, and have been em phasizing that where resources are unemployed the cure lies in pump ing up demand by easy credit, mon etary manipulation, and govern ment spending.

Yet the net result of this kind of analysis and this kind of pre scription has now proven to be, to A former editor of Barron's and of Fortune, Mr. Davenport is author of The U.S. Economy and a frequent lecturer on political economy. This article is reprinted by permission from Human Events of October 4, 1975. say the least, disappointing. Em phasis on so-called "aggregate de mand" has not resulted in that condition of full or at least high employment promised by the Em ployment Act of 1946. It has pro duced virulent worldwide infla tion, and in 1974-75 the worst of all worlds: - a high rate of infla tion with unemployment, or stag flation, which the Ford Adminis tration is now trying to cure by enormous Federal deficits of the kind which got us into trouble in the first place. In view of the re cord and the current disarray of the neo-Keynesians, it is time for a change - a change in our angle of vision.

In this context the most impor tant economist writing today is as suredly not Walter lIeller, the Louis XIV of so-called "fiscal stim ulus" (and apres moi le deluge), nor even the redoubtable Milton 21 22 THE FREEMAN January Friedman, the acknowledged dean of free enterprisers. He is rather a spry seventy-four-year-old Eng glishman by the name of William H. Hutt, now visiting professor at the University of Dallas and before that dean of the business school of the University of Capetown, who recently brought out a little-noticed book titled A Rehabilitation of Say's Law (Ohio University Press, Athens, Ohio 45701; 150 pages, $8.00) . Its bare-boned thesis is that the early French economist, Jean Bap tiste Say, was on the right track when he held that it is the supply of goods ,and services which in ef feet constitutes demand for goods and services. (It is the shoes which the shoemaker makes which gives him buying power for wheat in the form of bread which the farmer produces.) It follows from this proposition, known as Say's Law of Markets, that if economic activ ity slackens it is probably not due to lack of monetary stimulus but to the fact that producers, be they businessmen or workers, have mis priced their products. The remedy is not wild efforts to pump up de mand by government deficit spend ing, but to restore flexibility in the whole cost-price-profit struc ture.

Hutt came to this position as early as 1930 when he brought out his little classic, The Theory of Collective Bargaining, which warn ed that the great danger of this growing practice was that union pressures would price many work ers out of the market entirely into wholly unnecessary unemployment. He has since enlarged on this theme in such scholarly works as K eynesianism: Retrospect and Pros pect (1963) and in his monumen tal Strike Threat System (1973) which held that the coercive strike is in effect a form of social war fare and that the golden rule of labor relations should be simply that any man can go to work at any wage he chooses, no matter how low, as long as he feels the job off ered will better his condition. But Hutt is much more than a critic of present union practices, and his latest book on Say's Law shows it. It is, to borrow a phrase from the late Justice Holmes, a further gallop or canter of a de termined fighter for common sense in our economic thinking, as against the Keynesian orthodoxy which now holds so many of our economists and politicians in thrall.

Keynesian Ideas That orthodoxy, it should be re called, stems from Keynes' con tention that while production may well create its own demand in a primitive or barter economy, where goods are exchanged for 1976 THE CLASSICAL MEDICINE 23 goods, this nexus does not hold in a complex modern money economy where goods and work are sold and bought for 'Cash or credit. In such an economy, Keynes argued, earn ers of income may choose to squir rel it away in idle savings or cash balances instead of spending it on consumption or investment goods, thus breaking the normal ft.ow of production and distribution. From this initial attack on Say's Law of Markets, Keynes reared his im posing edifice of over-saving, un der-investment, and the need for government spending to fill the gap. Quite aside from its dubious re sults, this whole line of Keynesian reasoning today looks pretty shop worn. For what with government taxes and rampant inft.ation, it is hard to find a man in our society who saves much of anything in any meaningful sense of the "vord ; and meanwhile the world's obvious need is for more private capital formation, not less.

But Hutt does not rely on such historical and empirical evidence to turn economics right side up again. The mistake of Keynes and the neo-Keynesians is their over stress on the importance of money in final economic activity'. "Money," he writes, "is as incidental (and as important) as cash registers and cashiers in the demanding and supplying process." We need good cash registers and honest cashiers but they will never make a suc cessful business. Before men decide whether to spend, save or invest their money they must earn it, and earnings (and jobs) are dependent on supplying goods and services which other people want at prices and wages they can afford. It is the free ft.ow of production and supply which is critical for maintaining and increasing effective demand. Government's Limited Role Abstract as all this may sound, it nevertheless has enormous con sequences for public policy. Gov ernments, of course, have a duty to help provide the public with a reliable medium of exchange (and hopefully a store of value). But they fatally compromise this duty if, following Keynes, they come to believe that they can usher in per manent prosperity by manipulat ing the money supply to "cover up"

distortions in cost-price relation ships. "A forger," writes Hutt, "does not contribute to the source of demands." The "classic" func tion of government, ,on his view, is something quite different. It is to prevent pressure groups, be they business or labor, from building monopolies that will prevent prices and wages from "clearing the market." In the U.S. this means unravel24 THE FREEMAN January ing a whole skein of labor legisla tion which positively encourages unions to force wages above w'here the market would put them, thus causing the very unemployment which government officials say they want to cure. It also means cutting down on over-generous un employment and relief payments which make it more profitable for men and women to rely on govern ment largess than to seek job op portunities. A harsh doctrine? No doubt. But is it any harsher than the position in which we now find ourselves wherein the productive sector of the economy is increasingly taxed through inflation and the I.R.S. to support a growing pool of potentially productive citizens, many of whom now live in idleness and penury?

Hutt thinks not. The Keynesian revolution, he writes, was distin guished by its "political accept ability." Therein, of course, lies its danger. By contrast, classical economics, of which Say's Law of Markets is but one expression, never promised an easy way out. Its overriding objective, however, was in Adam Smith's phrase to provide "a plentiful subsistence for the people." That, too, is Hutt's objective, and in a world plagued by oil cartels, high prices, and un employment, the "classical medi cine" would seem to be precisely what is called for. , IDEAS ON LIBERTY The Mainspring of Human Progress EVERY LIVING THING must struggle for existence, and human be ings are no exception. Men and women survive on this Earth only because their energies constantly convert other forms of energy to satisfy human needs, and constantly attack the nonhuman ener gies that are dangerous to human existence. But-only an indi vidual human being can generate human energy. And - only an individual human being can control the energy he generates. The failure to understand these two simple and basic truths has, for over 6,000 years, stagnated human progress and kept the vast majority of people underfed, poorly clothed, embroiled in wars, and dying from famine and pestilence.

HENRY GRADY WEAVER DEMOCRACY in AMERICAROBERT G. BEARCE I passionately love Ii~erty, legality, the respect for nghts, but not democracy . .. Iiberty is my foremostpassion. Alexis de Tocqueville As THE UNITED STATES approaches its Bicentennial date of July 4, 1976, attention is focused upon the meaning of the War for Inde pendence and the DecLaration of Independence. The Bicentennial period should be a time when we re-examine the ideals upon which the United States was founded. Hopefully, we will gain a renewed appreciation for the political, eco nomic, moral, and spiritual foun dations of freedom. W,e can better understand our heritage of freedom by considerMr. Bearce is a freelance writer in Houston, Texas. ing what a Frenchman wrote about America during the first half of the 19th century. Often we can obtain an accurate view of our selves by listening to what others say about us. In the case of Alexis de Tocqueville, a foreign observer has given Americans a perceptive, prophetic analysis of freedom.

First published in 1835 and 1840, Tocqueville's Democracy in A merica speaks today with a mes sage that places our Bicentennial into sober perspective. America's·200th Anniversary is now being heralded with enthu siastic references to "democracy," "equality," and "liberty." Tocque ville had much to say about these ideals - ideals which have been distorted, corrupted, and debased by modern poli tical writers. When Alexis de Tocqueville journeyed to the United States in 1831, he had 25 26 THE FREEMAN January an official commission from the French government to study the prison system in America. His nine-month visit, however, was devoted to more than our pris ons. Tocqueville was a keen ob server. Traveling through the young nation, he had the oppor tuni ty to view free men and women working freely in a free society. As he wrote Democracy in A merica, he grasped the true na ture of freedom. He clearly under stood the meaning of "life, liberty, and the pursuit of happiness" men tioned in the Declaration of Inde pendence.

For Otder Under Law "The ReJolution of the United States," wrote Tocqueville, "was the result of a mature and reflect ing preference of freedom, and not of a vague or ill-defined craving for independence. It contracted no alliance with the turbulent pas sions of anarchy; but its course was marked, on the contrary, by a love of order and law." (p. 62) 1 Although he used the word "rev olution" to describe the American War for Independence, Tocqueville recognized that the Thirteen Co lonies had thoughtfully weighed 1 This and subsequent page references are from Tocqueville's Democracy in America, Mentor Book edition, edited by Richard D. Heffner (New York: The New American Library, 1956). their defiance of the British Crown. Men like Jefferson and Adams were not hot-headed demagogues shouting for the destruction of existing political and economic in stitutions. The patriots had been guided by a respect for traditional freedoms. The exercise of those freedoms had been in the process for some 150 years: "The English who emigrated ...

to found a democratic common wealth on the shores of the New World had all learned to take a part in public affairs in their moth er country; they were conversant with trial by jury; they were ac customed to liberty of speech and of the press, - to personal free dom, to the notion of rights and the practice of asserting them. They carried with them to America these free institutions and manly customs, and these institutions preserved them against the en croachments of the state." (p.296) When Tocqueville spoke about the "encroachments of the state," he also pointed to the obJect of those encroachments - the free in dividual. The War for Independ ence was fought to preserve the right of men and women to order their own lives. America was a land where individuals rejected the lure of government benevo lence: "The citizen of the United States is taught from infancy to rely up1976 DEMOCRACY IN AMERICA - A CHALLENGE TO FREE MEN 27 on his own exertions, in order to resist the evils and the difficulties of life; he looks upon the social au thori ty with an eye of mistrust and anxiety, and· he claims its assist ance only when he is unable to do without it." (p. 95) The early Americans were a tough breed. Along with personal freedom they accepted accountabil ity and responsibility for their lives. Tocqueville vividly describes the character of free men who made the most of their individual liberties: "In the United States, as soon as a man has acquired some education and pecuniary resources, he either endeavors to get rich by commerce or industry, or he buys land in the bush and turns pioneer. All that he asks of the state is, not to be dis turbed in his toil, and to be secure of his earnings." (p. 261) The Voluntary Way Individual initiative! Capital ism! Personal freedom! Private property! Individual responsibil ity! The free market! These were the principles and practices Toc, queville saw in America. He fur ther describes the superiority of individual endeavor as opposed to governmental action: "When a private individual medi tates an undertaking, however di rectly connected it may be with the welfare of society, he never thinks of soliciting the cooperation of the government; but he publishes his plan, offers to execute it, courts the assistance of other individuals, and struggles manfully against all ob stacles. Undoubtedly he is often less successful than the state might have been in his position; but in the end, the sum of these private undertakings far exceeds all that the government could have done."

(p. 70) Voluntary action and personal endeavor - and thus vibrant com petition - laid the foundation for America's prosperity. Government was not the benevolent bricklayer, handing out "free" bricks to the citizenry with instructions on how to work. No, the early Americans managed their own livelihood with out governmental interference. They believed in "rugged indi vid ualism," but they also knew the meaning of cooperation - "cooper ation" not coerced by government. "The most natural privilege of man," Tocqueville wrote, "next to the right of acting for himself, is that of combining his exertions with those of his fellow-creatures, and of acting in common with them. The right of association therefore appears fo me almost as inalienable in its nature as the right of personal liberty. No legis lator can attack it without impair ing the foundations of society." (p. 98) 28 THE FREEMAN January If the legislator and government al bureaucrat mind their proper business, free men wIll cooperate voluntarily in the release of vast amounts of energy and creativity: "Americans of all ages, all condi tions, and alI dispositions, con stantly form associations. They have not only commercial .and manufacturing companies, in which all take part, but associations of a thousand other kinds, - religious, moral, serious, futile, general or restricted, enormous or diminu tive. The Americans make associ ations to give entertainments, to found seminaries, to build inns, to construct churches, to diffuse books, to· send missionaries to the antipodes; they found in this man ner hospitals, prisons, and schools."

(p. 198) Forced Redistribution for Economic Stability Today w~are harassed by the socio-economic philosopher, the pol itician, and the statist. These men have no faith in the natural prog ress generated by free ·association and cQoperative effort. They insist that economic stability is a matter of forcibly redistributing the wealth. If the farmer has a tough time with one kind of failure or another, then grant him a subsidy. If a portion of the citizenry is judged "underprivileged" or "dis advantaged," bless it with special govermental handouts. Extended to its extreme, such governmental paternalism becomes an authori tarian system of confiscation-' taking from the producers and be stowing favors upon the non-pro ducers of society. "But it would be a simpler and less dangerous remedy," advised Tocqueville, "to grant no privilege to any, giving to all equal cultiva tion and equal independence, and leaving everyone to determine his own position. Natural inequality will soon make way for itself, and wealth will spontaneously pass in to the hands of the most capable."

(p. 161) In Democracy in America, Toc queville speaks of a "depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level, and reduces men to prefer equality in slavery to in equality with freedom." Tocque ville knew that there was a differ ence between the "equality" pro claimed by the Declaration of In dependence and that of the bloody French Revolution of 1789. One led to human dignity. The other de graded man. The Declaration stat ed that "all men are created equal" - equal in their right to personal freedom and independence. The French Revolution erected a des potic Terror under the slogan: "Liberty! Equality! Fraternity!" Tocqueville saw the grim kin197-6 DEMOCRACY IN AMERICA - A CHALLENGE TO FREE MEN 29 ship between tyranny and "equal ity" : "I believe that it is easier toes tablish an absolute and despotic government amongst a people in which the conditions of society are equal, than amongst any other; and I think that, if such a government were once established amongst such a people, it would not only oppress men, but would eventually strip each of them of several of the highest qualities of humanity. Des potism, therefore, appears to me peculiarly to be dreaded in demo cratic times." (p. 306) Dangerous Equality We are living today in "demo cratic times." Should not the ideals of "democracy" and "equality" be cherished, rather than feared? Con sider what happens when the no tion of. equali ty begins to replace a devotion to individual freedom: "As the conditions of men be come equal amongst a people, indi viduals seem of less, and society of greater importance; or rather, every citizen, being assimilated to all the rest, is lost in the crowd, and nothing stands conspicuous but the great and imposing image of the people at large. This naturally gives the men of democratic pe riods a lofty opinion of· the privi leges of society, and a very humble notion of the rights of individuals; they are ready to admit that the interests of the former· 'are every thing, and those of the latter noth ing.

"They are willing to acknowledge that the power which rep,resents the community has far more in formation and wisdom than any of the members of that community; and that it is the duty, as well as the right, of that power, to guide as well as govern each private citi zen." (p. 291) What is that "power which rep resents the community"? It lies in government - whether it be local, state, or federal. Held with in justified limits, a government can defend freedom by organizing national defense and by punishing domestic acts of fraud, coercion, malpractice, and crime. Beyond those responsibilities, government al authority paves the way towards regimentation and oppression. "I think, then," warned Tocque ville, "that the species of oppres sion by which democratic nations are menaced is unlike anything which ever before existed in the world: our contemporaries will find no prototype of it in their memories. I seek in vain for an ex pression which will accurately con vey the whole of the idea I have formed of it; the old words des potism and tyranny are inappro priate: the thing itself is new, and since I cannot name,; I must define it." (pp. 302-3) 30 THE FREEMAN January His definition is ominous. He de scribes the gradual and subtle reg imentation now threatening a citi zenry indifferent to freedom: "Above this race of men stands an immense and tutelary power, which takes upon itself alone to se cure .their gratifications, and to watch over their fate. That power is absolute, minute, regular, provi dent, and mild. It would be like the authority of a parent, if, like that authority, its object was to prepare men for manhood ; but it seeks, on the contrary, to keep them in per petual childhood: It is well content that the people should rejoice, pro vided they think of nothing but rejoicing.

"For their happiness such a gov ernment willingly labors, but it chooses to he the sole agent and the only arbiter of that happiness; it provides for their security, fore sees and supplies their necessities, facilitates their pleasures, man ages their principal .. concerns, di rects their.industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all.the trouble of liv ing?" (p. 303) Insight and Foresight Recall that Dem,ocracy in Amer icawas written in the first half of the 19th century. Tocqueville, though, had both insight and foresight. He understood ageless truths which affect human action - past, present, future. Unrestrained gov ernmental power leads to human degradation. "Thus," continues Tocqueville, "it every day renders the exercise of the free agency of man less use ful and less frequent; it circum scribes the will within a narrower range and gradually robs a man of all the uses of himself. The princi ple of equality has prepared men for these things; it has predisposed men to endure them, and often times to look on them as benefits.

"After having thus successively taken each member of the com munity in its powerful grasp, and fashioned him at will, the supreme power then extends itsarm over the whole community. It covers the surface of society with a net work of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters can not penetrate, to rise above the crowd. "The will of man is not shatter ed, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting: such a power does not destroy, but it prevents existence; it does not tyrannize, but it com presses, enervates, extinguishes, and stupefies a people, till each na tion is reduced to be nothing bet1976 DEMOCRACY IN AMERICA - A CHALLENGE TO FREE MEN 31 ter than a flock of timid and in dustrious animals, of which the government is the shepherd. "I have always thought that ser vitude of the regular, quiet and gentle kind which I have just de scribed might be combined more easily than is commonly believed with some of the outward forms of freedom, and that it might even es tablish itself under the wing of the sovereignty of the people." (pp.

303-4) The word "sovereignty" has an honest, sturdy ring to it. Regrett ably, "We, the People" has been corrupted. There is a misguided belief that the citizenry as a whole is supreme. The current trend is to emphasize "society" - not the individual-as being of ultimate importance. When individual free doms and rights are thus belittled, authoritarian rule gains more ground: "But it happens that, at the same period and amongst the same na tions in which men conceive a nat ural contempt for the rights of private persons, the rights of soci ety at large are naturally extend ed and consolidated: in other words, men become less attached to private rights just when it is most necessary to retain and de fend what little remains of them. "It is therefore most especially in the present democratic times that the true friends of the liberty and the greatness of man ought con stantly to be on the alert, to pre vent the power of government from lightly sacrificing the private rights of individuals to the gen eral execution of its designs. At such times, no citizen is so obscure tha tit is not very dangerous to allow him to be oppressed; no pri vate rights are so unimportant that they can be surrendered with impunity to the caprices of a gov ernment." (pp. 310-11) Spirit of Negligence Yet, as government continues to undermine personal freedom, in dividuals live complacently under the delusion that they are still blessed with liberty. The patriots of 1776 clearly recognized that their traditional freedoms were threatened by the British Crown.

The spirit of 'Seventy-Six was the spirit of vigilance. The spirit of today is that of negligenee. In Democra,cy in America, we see how there is an ever-present tendency for men to seek security and safe ty at the expense of freedom: "Our contemporaries are con stantly excited by two conflicting passions; they want to be led, and they wish to remain free: as they cannot destroy either the one or the other of these contrary pro pensities, they strive to satisfy them both at once. They devise a sole, tutelary, and all powerful form 32 THE FREEMAN Janua,ry of government, but elected by the people. They combine the principle of centralization and that of popu lar sovereignty; this .gives. them a respi te : they console themselves for being in tutelage by the reflec tion that they have chosen their own guardians. Every man allows himself to be put in leading strings, because he sees that it is not· a·· person or a. class of persons but the people at large, who hold the end of his chain.

"A great many persons at the present day are quite contented with this sort of compromise be tween administrative despotism and the sovereignty of the people; and they think they have done enough for the protection of in dividual' freedom when they have surrendered it to the power of the nation at large. This does not sat isfy me: the nature of him I am to obey signifies less to me than the fact of extorted obedience." (p. 304) Trust and Obey Obedience! Laws are passed, and they are meant .to be obeyed. Month by month Congress passes its legislative acts, erecting new bureaucracies . . . interfering further with individual lives ... imposing new restrictions upon the release of creative human en ergy. The EPA, CPSC, FE A, ICC, and so forth proclaim: "Weare the arms of Government. Trust and obey!" Tocqueville would have nothing to do with such blind faith in un limited governmental power and authority: "Unlimited power is in itself a bad and dangerous thing. Human beings are not competent to ex ercise it with discretion. God alone can be omnipotent, because his wisdom and his justice are always equal to his power. There is .no power· on earth so worthy of honor in itself, or clothed with rights so sacred, that I would admit its un controlled and all-predominant au thority. When I see that the right and the means of absolute com mand are conferred on any power whatever, be it called a people or a king, an aristocracy or a democ racy, a monarchy or a republic, I say there is the germ of tyranny, and I seek to live elsewhere, under other laws." (p. 115) The insights and prophetic ob servations of Alexis de Tocqueville stand between us and the Ameri can War for Independence. Look ing to the past, he wrote about our heritage of freedom. Looking to the.

future, he now warns us to protect that freedoms-the freedom to en joy the fruits of our labors ... the freedom to release our creative en ergies ... the freedom to accept full responsibility for our own lives. , A VAST QUANTITY of human energy will soon be expended to commem orate our bicentennial year. Per haps the most fitting monument would be intangible. In face of the seemingly insatiable appetite for gimmickry, it would be a ten-strike to go the other way and apply the surgeon's scalpel to prevailing fal lacies. Obviously there will be honest differences as to what to cut away, since one person's false notion is another fellow's credo. Recognizing the area of contro versy, I submit my own inventory of myths which could be profitably eliminated: 1. On the eXCISIon list, let's begin with the late Harry L. Hop kins' recipe for enduring political Mr. Rukeyser is well known as a business con sultant, lecturer an~ columnist.

success- "spend and spend, elect and elect." 2. The global intellectual error of equating the printing of more money with social gains is not peculiar to Americans. 3. Fuzzy thinking is caused by the 'blunder of assuming that the civic minded must choose between "liberalism" and "conservatism." Such rigidity overlooks the fact that the human animal as a bundle of contradictions may be an ad vanced thinker in new life styles, including open marriage, while being a stickler for fiscal integrity. In his essay on "The Spirit of Conservatism in the Light of His tory," James Harvey Robinson dis closed the utter inability of wish ful thinking .to make the world stand still. A common illusion is 33 34 THE FREEMAN January that conservatism is a basic in gredient for business success. Under modern technology, how ever, little in life is permanent except change. Business survival is heightened by innovation-not by looking backwards. The com petent executive fights obsoles cence.

4. One costly naivete is the assumption that government as a cornucopia has limitless resources. The scientific-minded know that even the strongest bridge has a limited capacity. 5. While government has the power to redistribute wealth, prog ress in living standards springs from the creativity which uses resources effectively and makes two blades of grass grow where but one grew before. 6. It's deemed a truism that costs make prices, but this is really only a half truth. Constructive pro ducers and distributors, instead of passively accepting expenses, are forever seeking to reduce costs through elimination of wasteful motions, through the introduction of better methods and complement ing the human muscle with increas ing quanti ties of mechanical energy. 7. As Charles Darwin revealed, some change is retrogressive. Thus it's a backward step to reject the principle that users (consumers) should pay the freight. The intro duction of subsidies, whereby part of the cost is borne by others, namely the taxpayers, weakens business discipline and narrows the ability of the customer to be the kingpin in determining what should be produced and in what quantities and style. The subsidy concept condones economic waste.

8. Economic theorists got us off the track in the past four decades by circulating the delusion that money manipulation by govern ment can replace thrift and ind us try in lifting levels of material we1l-being. This fallacy, especially in underdeveloped nations, makes it easier for men on horseback to seize power by promising the moon -only to deliver inflation and frus tration. 9. Another costly misconception is that we can preserve the U.S. constitutional system of checks and balances by supporting local gov ernment with Federal and state "aid." The system is corrupting, since local budgetmakers unrealis tically tend to look upon such "aid" as free windfall money. Former President Nixon damaged a con structive idea for revenue sharing by stipulating that Washington continue to collect the highly pro ducti ve taxes and then as Lady Bountiful make a gift of part of 1976 AN INTANGIBLE BICENTENNIAL MONUMENT 35 the proceeds to the states and the subdivisions. This approach furth er promotes centralization and weakens the independence of the states· and the localities, including the school districts. The Nixon method was wrong because of the axiom that he who pays the. piper calls the tune. It would have been better to have made a compact un der the constitution between the federal government and the states (includingthesubdivisions) where by a newly-created independent tax-collecting agency, representing all levels of government, would col lect the big-yielding taxes and then redistribute them without strings, in accordance with a previously agreed formula, to the various lev els of government.

10. Through endless repetition the erroneous notion has taken hold that government by fiat power can short-cut the road to progtess. By way of illustration, through legislation, court decisions and ad ministrative rulings the power of labor unions has been greatly strengthened since passage of the Wagner Act in 1935. But it is sheer illusion to assume that bigness in labor or in business enables institu tions to violate fundamental rules of human behavior. Thus during the current automobile recession the private unemployment compen sation schemes set up by Chrysler and General Motors under collec tive bargaining soon became ex hausted. No matter how strongly entrenched, no pressure group by contract can arbitrarily fix a date for the conquest of cancer! 11. A school of economic savants has proclaimed the bizarre doctrine that big, "monopolistic" corpora tions are· above the rules of the market place, and can administer prices and call the shots. If proof to the contrary were needed, little could have been more impressive than the weakness of the automo bile Big Three in recent months in the face of wilting demand. This is a reminder that a business enter prise is strong only when it offers goods and services of a price, style and quality that potential cus tomers are able and willing to buy.

12. With the global drift toward Marxism, it is illusory to equate increased intervention by govern ment in economic affairs with pro gressivism. Totalitarian excesses emphasize that freedom is indivi sible and that an open market, which gives the individual optimum free choice, is an essential ingre dient in the all-around adventure in human liberty. 13. The public is exploited by the myth that a political incumbent has a right to be reelected. Whenever an overpowering desire to retain 36 THE FREEMAN January office at any cost develops a con flict of interests among incum bents, the public good can be served by rotation in office. 14. The psychological disloca tions, incidental to stagflation, create a widespread misconception that the personalities in the great financial institutions know all the answers and that little folks should stay away in droves from the stock market. However, the scoreboard On Being Constructive of successful investment in this risk-oriented society shows that in times of economic maladjustment it is human even for the great to err, as changes in the valuation of institutional portfolios disclose.

If the bicentennial year can be dedicated to dissipating delusions, progress will be made toward achieving the future promise of American life! ~ IDEAS ON LIBERTY EVERY ONE of the proposed reforms has something to commend it, while the sincerity of the proponents makes one wish that they might succeed. The fact remains, however, that the reform invari ably rests its case on the goodwill, intelligence, and selflessness of men who, invested with the power to do so, will put the reform into operation. And the lesson of history is that power is never so used. Never. I am convinced, on the other hand, that all of the evils of which these honest people complain can be traced to the misuse of power, and am therefore inclined to distrust political power of any kind ... The only "constructive" idea that I can in all conscience advance, then, is that the individual put his trust in himself, not in power; that he seek to better his understanding and lift his values to a higher and still higher level; that he assume responsibility for his behavior and not shift his responsibility to committees, organi zations and, above all, a superpersonal State. Such reforms as are necessary will come of themselves when, or if, men act as intelli gent and responsible human beings. There cannot be a "good"

society until there are "good" men. FRANK CHODOROV JOAN WILKE GUESS WHO spends more on adver tising than AT&T and .Chrysler and Lever Bros. and General Elec tric and Gillette and Coca Cola. Guess who spends over tunce as much on advertising as Kodak, Du Pont, Kellogg's, Pillsbury, Grey hound and Volkswagen. Guess who spends over three times as much on advertising as Heinz, Schlitz, Mobil Oil, Toyota and American Motors. Guess who spends more on adver tising than Shell Oil, Scott Paper, Mazda, Delta Airlines, Eastern Airlines alnd American Airlines put together. You do. The U. S. Government is now the loth largest advertiser in the Unit ed States, spending $110 million of the taxpayers' money last year. Actually, that ranking is mis leading since the government has an advantage other advertisers don't have. It doesn't pay for radio and television time. That costly item is donated to the government free as a public service.

Just imagine how much they'd be spending if they had to buy their own broadcast time! You won't have to imagine it for long. They are now pushing for per mission to pay for their o\vn mes sages so they can pick .. better time slots. Miss Wilke is an advertising writer. 37 38 THE FREEMAN January While the rest of government was reportedly tailoring budgets in the past year, advertising ex penditures increased 10 %. What are they selling you may well ask. Well, uh - there's the Post Office. 'But they don't have any compe tition, you scream. Silly, you. Where' there's a bu reaucrat, there's a "vay. The Post Offieespent $8 million in 1974 and is currently spending $13 million a year. A $4 million campaign is bud geted to tell people to give for warding addresses when they move. The Post Office says it spends $300 million a year in avoid able forwarding labor costs. ,They must spend a lot of time staring blankly at those letters before re turning them' to the" senders or putting them in the Dead Letter bin.) Most recently it has been pro ducingtelevision spots for the pur pose of "promoting letter writing to increase the use of first class mai1."

This may seem strange to you, especially since the Post Office con tinually uses increased volume of mail as an excuse for inefficiency and the need for increasing postage rates. Thus we taxpayers are in the po sition of paying our money to persuade ourselves to write more let ters and thereby increase the mail load so the Post Office can charge us more for their expanded serv ices. Such is the absurdity that is in evitable when a government agency gets involved in marketable serv ices. And this campaigin will double the Post Office's ad expenditures to almost $30 million a year. All because postal authorities, with stunning buffoonery, want and ex pect people to use mail more fre quently at the 13¢ rate than they did at 10¢ ... even though use de clined greatly with the last rate increase. Or, m-aybe they don't reaLly ex pect it. The Postmaster General concurrently is requesting Con gress to double Post Office sub sidies to almost $2 billion a year for the next few years.

If the postal service were in the pri vate sector where it belongs, along with all other non-protection services, advertising would not be purchased out of deficits and in spite of losses. It would be paid out of the same costs that would trans form the service into a smooth-run ning, efficient and economical sys tem ... a condition which can be as sured only by competition in the private sector. And the taxpayer / consumer would not be spending 1976 GUESS WHO! 39 money to work against his own in terests. We taxpayers are spending another $16 million to tell ourselves to put out our matches, stay physi cally fit, get exercise, stop smoking, join car pools and so forth. We spend millions to tell people about the welfare they should be getting. People who don't need wel fare often don't know they're en titled to it anyway. So the 'taxpay er pays out of his own pocket to tell people to come and take his money whether they need it or not.

The bulk of government's adver tising budget is used for military recrui tmen t. The Army alone spent $35 mil Honon recruitment advertising in the last year. This may very well be the most invisible $35 million in the history of advertising. It strains the imagination to think of lhow so much advertising money could pos sibly be spent so unobtrusively. The cost breakdown in Ad Age (August 18, 1975) reveals $7lh million spent in magazines, about $1% million in outdoor and less than $1 million in newspaper sup plements. The other $25 million is not accounted for except in a rather miscellaneous way as direct mail, displays, transit posters and pro motional materials. And next y,ear's budget has been upped $5 million to $40 million. Where is the money going? One can only wonder. When the government spends money, there are not the restraints of profit/loss statements. We are not told how many were recruited - or what the goal is. We do kno'w, of course, that we already have servicemen populating countries all over the world.

If, as one branch says, they're "just looking for a few good men," the recruitment cost per man is astronomical. But tax money is like a mountain - it's just there. You can go to it any time and if you're a bureaucrat, it will even come to you. Some questions persist: What great need for recruitment advertising can there be when vir tua:lly an youngsters are exposed to recruitment through school ROTC programs? Why is so much advertising nec essary when the services all have big recruitment staffs? What better officer recruitment could there be than our military schools and the academies? If recruitment is so difficult why are appointments to the academies always in such demand? What other organization's bene fits are so well known as the mili tary's 20-year retirement, medical and dental care, clothing, housing, training, travel and the like?

40 THE FREEMAN January The Army is at least as well known as the Hershey Bar which spends no more than a whisper in advertising and for many decades found it unnecessary to advertise at all. If anyone has the temerity to in quire why the Army budget is be ing increased to $40 million for re cruitment at a time of unemploy ment when the Army should be more attractive than ever, the re sponse is that the Army doesn't want just anyone. It must compete with industry for high quality per sonnel. So, now it becomes clear. All this expense isn't the cost of a volunteer military as opposed to the draft. The draft was never so persnickety. We're simply paying the cost of another federal boondoggle. Judging by the budget, the Army must want to recruit the Chairman of General Motors. The taxpayer now finds himself in the position of paying money to hire people he can't get while turn ing down the most likely, willing candidates for military service.

Once again, his tax dollars are working in opposition to his best interests. These expenditures simply rep resent another form of the draft . . . another uncalled for drain on the creative sector. We are not only drawing millions of dollars out of the market coer cively through taxes ... money that would otherwise be used pro ductively. We are also drawing away skills - or attempting to. If we are paying these sums to lure high caliber people into non-cre ative, protective jobs, we are losing more than .money. Weare losing productive ability. By turning down the unemployed· we are pay ing to keep the less skilled in the market where they are contribut ing minimally or collecting unem ployment compensation, which we also pay. The military is trying to attract the least-suited for service while turning down the best-suited. Our tax dollars further compete with each other by pitting the serv ices against each other. In addition to the $40 million Army budget, the Navy spends $23 million, the Air Force, $16 million and the Ma rine Corps, $8 million. The Marines quite understandably support the idea of an umbrella campaign for all the major services. But while paying to bring people into the mil itary branches, we are also paying to keep them out.

The government is seeking to pay for radio and TV time in order to reach younger people, its prime prospects, without depending up on the free public service time availabilities. But at the same time, 1976 GUESS WHO! 41 the government is spending our tax money to tell these same young people to go to college - and at gov ernmen t expense. Unemployment compensation al so helps pay people to stay out of the military. All welfare programs are in competition with our mili tary recruitment programs. We are using our tax dollars to bid up the cost of protecting ourselves. The public and private sectors of the economy can never mix without the overlap being in many ways un just and disadvantageous to every body. It is absolutely right to have a volunteer military, but wasteful tax expenditures, unrealistic aims and unnecessary encroachment in the market are merely a more indi rect method of drafting resources from the creative sector.

These budgets are typical of the way in which bureaucrats enlarge their responsibilities via .ridicu lous expenditures and self-perpet uating waste. This is not what's needed for a volunteer military. It can only defeat the whole idea. The government should happily accept its public service status for broadcast time and should depend on voluntary help or its own per sonnel for any other publicity needs. It should not be bidding up prices in the market. The Advertising Council, through volunteer agencies, pre pares public service advertising for many causes, none of which is so important as the military pro tection of the country. Their help would probably be forthcoming if the agencies didn't have $110 mil lion in budgets waved at them. Even if volunteer aid. were not forthcoming, it is difficult to seethe need for recruitment advertising for services that have military academies, ROTC programs, infor mation officers, recruitment per sonnel and the Government Print ing Office at their disposal.

Whenever the government mixes in the private, creative sector of the economy we find we're fighting ourselves with our own dollars. All objectives become self-defeating. It happens when welfare com peteswith wages, when laws con trol prices and salaries, when sub sidies push up prices, when tariffs raise the cost of imports, when gov ernment-protected unions disrupt production, when government waste bids up prices of scarce ma terials and services - many ways. The mili tary, among others, could take a lesson from little Pogo who once uttered that immortal line, "We have met the enemy and he is us." ~ RIDGWAY K. FOLEY, JR. INDIVIDUAL RESPONSIBILITY refers to man's willingness and ability to unflinchingly and without excep tion abide the consequences of every human act and choice. Con sequence follows choice inexorably. We live in a world of causal connection, a universe governed by predictable responses and guided by natural law. The earth spins on its axis while rotating in a fixed pattern about a celestial orb, lead ing to the result of a rising sun in the East each morning. In like manner, human action affects hu man history: "bad money drives out good" and "men are less care ful with the liberties of others than with their own" state na tural retorts to human conduct.

Mr. Foley, a partner in Souther, Spaulding, Kinsey, Williamson & Schwabe, practices law in Portland, Oregon. 42 Man acts; this fact ineluctably attends the study of mankind. One can no more imagine a world de void of purposeful human action (given the existence of human beings) than one can conjure up a land unfettered by cause-and effect relationships or unblessed by a sun which arises in the East each day. But what constitutes human ac tion? Purely and simply, it alludes to that characteristic of personal conduct which we refer to as a choice between alternatives. Each individual confronts myriad po tential courses of conduct as he faces each appointed task. He - or someone on his behalf - must choose between those available routes to his goal. Man must choose; he cannot remain static and survive. Abdication of the 1976 INDIVIDUAL RESPONSIBILITY 43 power to choose represents as much a choice as any other course of conduct. Try as one might, man cannot avoid the awful responsi bility of that power which affects both his life and that of others.

The stark reality of the unyield ing necessity to choose and act sometimes obscures a salient point: the very power to choose and ability to affect consequences marks the difference between man and other creatures or inanimate objects. Man is man because he can knowingly choose and seek his own destiny within the constraints of his physical limitations. This special nature sets the human con dition apart from the animal world where the birds and beasts react instinctively but without rational purpose. A seal or dolphin may react to a maze or series of lights for a gourmet reward, but these mammals can never devise the sys tem nor comprehend the essential relationships which cause it to work with relative infallibility. A concomitant fact of human nature, whether termed universal truth, natural law, or reality, leads to the discussion of the concept of individual responsibility: man makes mistakes. Any objective ob server of human history and na ture recognizes that man neces sarily falls short of his aspirations.

The finest hitter in baseball lore achieved success approximately 36 % of the time; an accomplished musician manages a few "clinkers" in every performance; a proficient secretary snow-packs her typo graphkal errors. If such a low ra tio of success applies to those en deavors in which one exhibits con summate skill, how much greater the likelihood of mistake, confu sion or misdirection. in enterprises where the actor lacks mastery. In plain terms, man is a fallible, finite being prone to misj udge both means and ends and only dimly cognizant of the normative rules which govern the art of living. Man acts; by his very nature he chooses between alternatives; he errs. Addition of the ingredients analyzed yields the equation of in dividual responsibility: Each choice represents a moral impera tive: Individuals should endure the consequences of their actions, tol erating their mistakes as well as enjoying their successes. Respon sibility encompasses the attribute of accepting the results of human action without attempting to shunt these consequences unto the shoulders of other human beings.

The Essence of Personal Responsibility Two common rejoinders color the condition when human action produces untoward or unantici pated results. First, the actor seeks to diffuse his loss, or to avoid it entirely, by imposing the conse44 THE FREEMAN January quences of his choice upon other persons. Second, even when resist ing that temptation many individ uals display a selectivity in .ac ceptance of involvement; in other words, one may profess a belief in individual responsibility yet by his actions brook only a part of the output. So, we note a proclivity on the part of human beings to desire and revel in the choice-making power while circumventing the outcome of wielding that au thority. Remember the fundamental rule that action produces effect. Apostles of liberty glory in the freedom .of human action, the ability of a human being to choose between alternatives in as many instances as possible without ex ternal constraints. All too often, these same individuals ignore or avoid the necessary obverse to free action, the concept of individual responsibility for the results of that action.

Shifting the Responsibility Examples sometimes clarify a point. A may consider the oil in dustry profits excessive. To alle viate this situation, A secures in troduction and passage of a bill by Congress limiting oil producing enterprises to a return of. 6% upon their gross sales. Suchan action produces results, both ob vious and cloaked. One outfall will exist in higher energy prices to consumers by virtue of the thwart ing of investment capital and the disinclination of investors to incur substantial risks of loss for so slight a return. Existing com panies in the field will concentrate upon relatively safe explorations; production will decline while de mand remains constant or in creases; demand increases con comitantly with artificially-lowered prices to consumers; since a lower amount of the commodity appears for sale to an equal or larger num ber of consumers bidding for the goods, prices will increase as the market replies to consumer pres sure. If A truly believes in indi vidual responsibility for his ac tions, he will accept the market dictation of higher prices for en ergy products. However, if he per forms true to form of the mill run of the citizenry, A will rail at the result of his conduct and seek to shift the burden of those results to others by the imposition of wage and price controls. Price controls applied to the oil indus try will only serve to aggravate an already perilous situation: a limitation on the price charged (particularly in a period of rapid inflation) will further eliminate both investors and producers in the field, secure unnatural car telization of the industry, destroy capital formation and, if carried 1976 INDIVIDUAL RESPONSIBILITY 45 to the extreme, ,annihilate the creation of the goods. A's refusal to abide by the consequences of his choice will ultimately thrust the burden first upon the producers regulated and eventually upon all who use energy products.

favored Treatment Normally a follower of the free dom philosophy would not advo cate enactment of such obvious market intrusions as profit, wage or price controls; that kind of tomfoolery seems to be the exclu sive province of the misguided liberal who believes that state reg ulation supplies a ready and effec tive answer to all manner of hu man problems. Yet a freedom oriented individual may fall vic tim to similar if more subtle per suasions possessing the identical defect. For example, X dislikes his neighbor's use of the abutting property to grow begonias so he induces the county commission to adopt acomprehensi ve land .use plan which will prescribe permit ted uses and proscribe disfavored ones; yet when the neighbor com plains about X's use of his roof for a helioport, X secures a vari ance from the local planning board. Or Y, feeling charitable and concerned about the poor and the downtrodden, favors a program of food stamps to insure an adequate diet; yet, when the tax authorities assess the cost of welfare upon the creators of value, Y declines to pay his share and encourages the state to impose a staggered or graduated tax which will lay the burden unequally upon the popu lace so that Y defrays a lesser por tion of the cost.

Or Z, aware of the value of edu cation, may apply compulsory at tendance laws to unwilling learners yet refuse to accept the result of an expensive institution which in stills neither intellectual nor moral values in a large number of those in attendance. In· each instance propounded (and each situation merely repre sents a slight variation of a repe titious theme) ends which may receive the label "good" in the subjective value structure of many persons falter on the shoals of the means employed to reach those goals. In each instance, proponents of a subject seize power and em ploy aggressive means to compel others to comply with their dream, unaware that dreams· differ as much as human beings. In· each instance, the seeker sees his course of conduct produce disagreeable results which· he promptly reas signs to others by the use of duress and coercion. A wholly distinct situation par taking of the same evil occurs 46 THE FREEMAN January when B and Senter into a contract wherein S sells B goods on credit.

If B over-extends himself and mortgages his future, that repre sents his choice for which he should remain responsible. Yet in the current state of affairs, many purchasers and borrowers exhibit an increasingly cavalier attitude toward debt - the result of vol untary contractual relationships - and try to S'hift the burden to the lender or seller by means of default or to the consuming pub lic by means of moratoria and like restraints. Misuses of Power One must distinguish between two discrete misuses of power. The more readily apparent misapplica tion of force stems from the act of directing others to perform or to refrain from certain conduct: blue laws, usury rules, zoning or dinances all partake of this sin. The more hidden transgression lies in the use of law to disperse or avoid the risk of loss or the cost of a poor decision made with or without the aid of law. Govern mental payments to Penn Central and Lockheed, bankruptcy norms, and compulsory automobile insur ance reek of this offense.

Moreover, one should perceive that mankind does not restrict this particular propensity to the use of law or to the field of economic activity. Psychologists and psy chiatrists recognize the habit of many patients to layoff their prob lems upon others or to attribute misfortune to God, chance or the position of the stars, instead of their own poor choice. Almost everyone has seen a fellow who moans at his fate in this manner, imputing his fortuity to a con spiracy rather than the natural outgrowth of human action. At the core, the attribute forms a moral and personal problem. Freedom and responsibility truly represent two facets of the identi cal aspect of truth. Freedom pos tulates a belief that no person should initiate coercion against another, and that the use of force receives justification only to pro .. tect persons from loss of life, liberty and property caused by coercive or fraudulent means, and to adjudicate disputes which the parties cannot resolve on their own. Responsibility stands on the tenet that each citizen must ac cept the consequences of such un fettered human action without em ploying the law to ameliorate the results of his free choice. Arising from the same base, the two con cepts exhibit compatibility and an inherent relationship: A free man chooses and a responsible man ac cepts the results of his choice with out infringing upon the equivalent freedom of others.

1976 INDIVIDUAL RESPONSIBILITY 47 The Rationale for Responsibility Two separate lines of reasoning undergird the doctrine of individ ual responsibility outlined above, similar to the rationale supporting the concept of libertyJ First, recur to a pragmatic rea son: A man makes· better choices if he bears the ultimate responsi bility for his actions. He will tend to think through the problem, ap ply his best judgmental, experien tial and analytical tools, and reach the most reasoned result in har mony with his personal dynamic scale of preferences. Individual responsibility does not mean that man will not make mistakes; noth ing can entirely eliminate that problem, for to do so would amount to a reconstruction of human na ture. Individual responsibility does mean that men, singly and as a whole, will make fewer and less tragic mistakes and will more nearly reach their personal aspira tions.

Again, an example may prove instructive. History demonstrates that men adduce better choices for their largess if they maintain personal accountability for choos ing the objects of their charities. Almost all men betray the very human (natural) trait of sym pathy with those less blessed with 1 See Foley, Ridgway K., Jr., "A Ra tionale for Liberty", 23 Freeman 222-229 (April, 1973). material things. Pragmatically, both the giver and the recipient of gifts will receive a greater benefit if each remains wholly responsible for the donation than if some coercive intermediary in tervenes and designates not only donor and donee but also the amount, terms and conditions of the transfer. The prevalence of welfare abuses and the failure of the food stamp program lend poign ant testimony to this fact. Indi vidual initiative leaves the giver with a warm feeling of having helped another and the legatee with the pride which suffers no demeaning from the status of a public charge. Coerced gifting be queaths a residue of distaste on the part of each partici pan t, a claim of "right" by the receiver and a feeling of being oppressed by the donor. 2 Second, a distinct moral reason separately and wholly justifies the practice of individual responsi bility. Insofar as individual re sponsibility requires the actor to accept and live with the ramifica tions of his choice and not employ legal process to coercively shift the results to another person or group, justice and morality sup port the proposition. The san1e fundamental moral principle ap:! See Foley, Ridgway K., Jr., "Wel fare as a Right", 23 Freeman 663-671 (Nov., 1973).

48 THE FREEMAN January plies here as it does in any in stance where mankind rejects the suggestion that "rnight makes righL"3 Reduced to an a priori declaration, fundamel1talmorality condemns the initiation of force against another who persists only in minding his own business and going about his pursuits in a non aggressive way. Furthermore, a collateral propo sition of moral suasion justifies individual responsibility. even on those occasions when the actor seeks to divert the effects of his decision by nonjuraL means. If choice-making ability distin guishes mankind from other in.:. habitants, then it rationally fol lows that choice means nothing without a concomitant responsi bility for· that choice. If choosing descends into meaninglessness, then the ability to choose does not mark the actor ina different fash ion from other creatures. There fore, man must accept the effects of his causal action and cannot escape responsibility by importun ing, deception, disregard or any other means. Whether one posits the primacy of choice or deduces it from human nature or basic reality, the result remains identi cal.

In addition to the unassailable ~ See Foley, Ridg'way K., Jr., "You Can't Sell Freedom To a Starving Man" (Unpublished Manuscript). pragmatic and moral reasons dis cussed, a third support appears for many analysts. A believer in uni versal justice, whether based on religious or natural theory, must necessarily propound a belief in the essential orderliness of the universe.· Things . work in a repe titive pattern; cause-and-effect flow through the unseen mechan ism. Postulate an orderly nature of things and it requires but a small step to subsume a retribu~ tive form of justice where events finally come to rest at the feet of the doer: "As ye sow, so shall ye reap." Ultimately, those who con tribute to the fires of a raging inflation by their vote, by their deed,or by their theories· are bound to suffer the effect of the necessary cataclysm. Such a theory of natural justice necessarily im poses the normative rule that man cannot avoid the consequences of his acts ;he may defer the effect of bad choice A by a series of other poor decisions, but he will ulti mately pay the piper in regard to A.

The Misdeeds of Enterprise Responsibility One cannot adequately investi gate the doctrine of individual re sponsibility without a cursory ex amination of two related subjects: corporate and government respon sibility.

1976 INDIVIDUAL RESPONSIBILITY 49 Corporate responsibility relates to, the extent to whiC'h corporate enterprises bear an obligation for entrepreneurial action. By their very legal structure, corporations and limited partnerships render the investing entrepreneur only liable to a limited amount, gen erally the total of his investment or subscription. The justification for this special privilege rests in part upon the policy determination that venture capital cannot be pooled in sufficient amounts with out the protection of limited lia bility, .and· in part upon the con sensual or implied contractual basis that all who deal with such a business recognize, and. consent to, the limitation of liability. The former policy reason prob ably represents a historical fact although not a necessary one. One could achieve a similar limitation of liability by the judious use of insurance (written in an associa tion rather than in the corporate form) without the inconsistency bred into the law by corporate en terprise. The latter consensual rea son supplies a simplistic jllstifica tion which proceeds upon the as sumption that all men kno\v the law and assent thereto, an assump tion probably unjustified in this or any other state. Each year liter ally thousands of good faith credi tors receive naught for their goods, services, ideas or money when a. limited liability venture comes a cropper, while the princi pal owners of that enterprise re main insulated behind the corpor ate form, enjoying property pro tected from attachment for judg ment debts. In such a manner, the owners shift the effects of their actions to other persons and shirk individual responsibility.

Social Responsibility of Business Enterpr;s~ In other ways, corporations oc cupy a similar position to that of individual actors. Causal connec tion governs group acts as well as personal conduct. Shifting respon sibility and spreading of risk oc cupy considerable managerial time and effort. Postponement of con sequences, rather than total avoid ance, affects both the group and the person. Currently, some \vould advocate a concept of "social responsibility of business," implying that the business enterprise possesses some greater obligation to the commun ity beyond the sale of goods, serv ices and ideas. While such a notion merits separate treatment, suffice it to say that the sole business of business is business, to produce the best possible goods, services and ideas at the lowest possible cost and the greatest possible profit. Business enterprises owe no social responsibility outside of 50 THE FREEMAN January the common duty to refrain from the initiation of force and fraud and abiding by standard dispute settling rules.

Perhaps corporations do possess the tools to make better decisions and fewer mistakes within the perimeters of their actions. Cor porate managers and directors often own substantial expertise in their chosen field and devote a large portion of their time to anal ysis and solution of business prob lems. Often several individuals pool their efforts and talents to the answer of a particularly difficult problem and the making of a par ticularly trying choice. Yet, in final analysis, corporation deci sions are personal decisions rend ered by the individual officers and directors, and the resultant choices achieve no higher plane than the best that these finite men have to offer. The Miasma of Government Responsibility One manifestation of group re sponsibility affects both corporate and state enterprises in common, although more apparent at the lat ter level: the readiness of the in dividuals involved to evade or at tempt to shun individual responsi bility for enterprise acts. Devoid of its outer garb, this feature merely forms another facet of the individual tendency to decline acceptance for mistaken or mis guided choices.

Individuals acting in a corporate or state capacity owe precisely the same moral obligation for the con sequences of their enterprise ac tions as they do for personal con duct. One cannot repudiate respon sibility by the artifice or device of membership in the United States Army or United States Steel Cor poration. The law perverted per mits individuals to postpone effects of enterprise acts but human law cannot overcome and obviate the natural course of events. Ultimate responsibility remains and finally rests upon the back of the indi vidual decision-maker. Governmental servants and offi cials owe an even more stringent duty to make proper choices since they deal with the coercive powers of the state. It requires little in sight to recognize that one who seizes or utilizes power should do so fairly and under restraint lest that power be abused. The deci sion of otherwise insoluble disputes and the protection of life and lib erty from fraud and force repre sent an awesome task in any view; those chosen to perform these state functions must not only ac cept ultimate personal responsi bility for their activities but also exercise the highest degree of prudence a'nd foresight in handling the entrusted affairs of state.

1976 INDIVIDUAL RESPONSIBILITY 51 To the extent that the state ex ceeds the limits of its appropriate functions, the individual officials cannot escape their personal re sponsibility for their role in such action. Acceptance of the premise that restrictive state action amounts to immorality leads to the inevitable 'conclusion that the state servant bears the final obligation for that immoral conduct. After all, neither a corporation nor a government can act; artificial en tities perform only by means of individuals functioning in their stead. Both corporate and governmen tal enterprises tend to prove the natural law that one takes less care with the lives, liberties and properties of others than he does with his own. If Congressmen had to man machine guns, wars would end quickly. If Presidents had to pay the bills for housing and feed ing those unwilling to work, the budget would balance. If judges had to live next door to suspects on bail, less criminal relapse would mar the community. One can hard ly apply the term "responsible" to With You and Me governmental action where deficit spending in a year reaches $44, or $60, or $100 billions (depending on who provides the estimate), where the resulting inflation chips gaping holes in the buying power of the measure of exchange, and where taxes absorb 40% or more of the national product. Corporate officers at least often own a sub stantial interest in their enterprise and thus suffer the effects of their conduct in some regard; state offi cials normally achieve strict in sulation, if not immunity, from the consequences of their conduct since their state actions neces sarily harmonize with their own subjective values.

True fJ;eedom cannot exist in the absence of individual responsibil ity. Individual responsibility, whethe'r exercised on one's own behalf or in the employ of a volun tary or state organization, re quires the actor to accept the con sequences of his conduct without using juridical rules to shunt the natural effects unto another, un willing party. I) IDEAS ON LIBERTY FREEDOM RESTS, and always will, on individual responsibility, in dividual integrity, individual effort, individual courage, and indi vidual religious faith. It does not rest in Washington. It rests with you and me. ED LIPSCOMB JAMES E. McADOO of income their previous planning provided. It is a fair guess that very few of those who are now de pendent on the fruits of their early planning could have envisioned how little their money would buy. An income figure which might have seemed abundant twenty years ago might today be less than adequate.

A money income is almost essen tial in a modern economy. Dreams of happy self-sufficiency on a pic ture-postcard farm are dreams of the young and energetic. For al most everyone else, an income of money is the sine qua non of sur viva!. With enough money, it is generally believed, people can buy what they need. Such a premise, however, contains one fallacy, and one disquieting uncertainty. Mon ey cannot buy what is not producMr. McAdoo is an investment advisor residinF; in Nevada. HowMuch Will Be Enough. IN WHAT are turning out to be "the old days," a special kind of adver tisement appeared regularly in many magazines. It pictured an attractive, gray-haired couple, at tired in sports clothes, and smiling happily. The caption said, in effect, "I retired with $250 a month, for life". The clear implication was that, with the proper plan forpru dence and thrift, the reader could provide for a comfortable lifetime income.

As years went by, the $250 a month became $350, and then even higher. Obviously, the idea of a future income inadequate to meet future expenses has little appeal. If the ad is still being run today, it is doubtful that any monthly in come figure is mentioned at all. No one knows what it will cost to live for a month in 1985, or 1995. The price level, ten or twenty years hence, is anybody's guess. For many people, the future has arrived. Those who have retired from their working careers are now relying upon whatever sources 52 1976 HOW MUCH WILL BE ENOUGH? 53 ed and made available for ex change. And it is highly uncertain how much money will be "enough." While we may have a good grasp of current prices, no one can pre dict, with any degree of assurance, what prices will prevail even one year from now, much less ten' or twenty. Planning for a future income is seriously hampered by one crucial fault of our money: it is not a store of value. Despite the faith and the law which give the Dollar currency as a medium of exchange, the Dollar has shown a pronounc ed tendency to lose its purchasing power. Anyone who seriously con siders, and tries to plan for his needs for a future money income, must take that phenomenon into account.

There is little evidence to sug gest that the adequacy of future in come is a prominent concern of the majority of people. Those who think of it at all are subject to con tinuing reassurance that inflation will soon be controlled, and that prices will not rise at previous rates. Added to the hopes and promises of a more stable price level ahead are built-in programs for the production of future in come: Social Security, Pension Plans, and Retirement Programs. Further opportunities for future income lie in the individual's abil ity to save and invest: bank savings accounts, corporate stocks, life insurance programs, Govern ment bonds, real estate, and so forth. With careful planning, and reasonable thrift, an individual can provide for a future income in Dollars. But the nagging question remains: how many Dollars will be enough? The problem, whether or not we prepare for it, will arise for all those who live to see the future.

Inflation Eats the Principal It is an obvious, but shocking, fact that, with an inflation rate of 10%, the break-even point on a tax-free investment is a yield of 10% ! And even such a remarkable return on a municipal bond, for example, would not provide future income; it would only offset infla tion's 10% erosion of capital. Gh~en the same inflation rate, a person in the 50% tax bracket would require a yield of 20 % on a Government bond, just to stay even. If inflation rose to 15% he would need a 30 % return, and would still have no real income. While someone in the 50 % bracket may neither solicit nor merit public sympathy, the prob lem he faces is even more severe for those in lower tax brackets. The scissors-like effect of inflation and taxes inevitably destroys the adequacy of a money income. Plan ning for the future becomes a scramble to assure the largest pos54 THE FREEMAN January sible Dollar income, in the hope that that amount will prove to be enough.

Recognizing the problem, and seeking countermeasures, many people have tried to identify, and acquire, a store of value. They strive to convert capital and in come not currently essential for survival into some thing which will at least retain its value into the future. A list of things considered by some to be stores of value would include rare stamps, rare art works, rare porcelain pieces, rare firearms, rare books, rare coins, and rare metals. Yet, even those who have the means and the inclination to ac quire rare collectibles must do so with considerable reluctance. Aside from the downside risks involved, such "investments" have many drawbacks. A rare stamp, or paint ing, or book can never yield an in come. Nor can it, with any certain ty, appreciate in value. What is usually construed as appreciation is mostoften only the reflection of money's reduced purchasing pow er. While a calf or a lamb should appreciate in value as it matures, a rare coin or rare metal remains precisely what it always was.

Perhaps equally regrettable to some who seek the shelter of stores of value is the nonproductive de ployment of assets. A rare and valuable painting represents, to some, capital which might under more favorable circumstances be employed in enhancing the produc tivity of an expanding and success ful enterprise. The argument may not hold water, but the feeling may be there, nonetheless. Unfor tunately for the general welfare, those who have proven their abil ity to contribute to productivity through successful investment may be the very ones whose attention is diverted to an emphasis on stores of value. Inflation, coupled with taxation, diminishes the in centive to engage in customary forms of investment. One can only imagine with hor ror the devastating impact upon our entire economy if a substan tial number of traditional inves tors were to divert their assets in to what they considered superior stores of value. Yet, the ravages of inflation upon' the real return available through traditional forms of investment tend to direct atten tion to stores of value. Considera tions of future income are of in creasing urgency in a period of anticipated inflation. When no tra ditional form of investment can yield a real income after inflation and taxes, prudent people will look for a way to preserve capital. They will seek merely a store of value; some thing that will hopefully pro vide the equivalent of a future in come. ~ 1976 HOW MUCH WILL BE ENOUGH? 55 A Setter Store of Value Every citizen has a stake in se curing future income. The ques tion of how many Dollars will be needed to assure an adequate stand ard of living in the future is not one to be left for future consider ation; it is of vital importance now, when plans can be made, and when suitable action can be taken.

Hope, or even confidence, that "things will work out" are an un reliable hedge against an uncer tain future value of money. What are becoming, in a re stricted sense, popular forms of a store of value are largely beyond the experience, if not the means, of the public at large. Few people could distinguish between the gen uine and the counterfeit. What is sorely needed, by everyone who will require future income, is an ideal store of value, equally avail able to all. Fortunately, the crea tion of an ideal store of value is within the capabilities of an in formed and active electorate: a better money. Historically, money has served well as a store of value. Indeed, that characteristic has been an essen tial aspect of a good money. With disappointing regularity, however, governments have either caused or permitted money to be deprived of that characteristic. Through either debasement of coinage or inflation through legal tender paper currency or bank credit, money has periodically been divested of its in trinsic or representative value. The Dollar is presently in that condi tion.

For more than a generation, fashionable economic theory has held that a money devoid of intrin sic value is not only the equal of, but superior to money which serves as a store of value. Legal tender and credit are defended as being "more flexible," and free of the "tyranny" of precious metals. De spite these supposed "advantages", however, our money continues to lose its value. As history has shown so often in the past, an intrin sicallyworthless money not only reduces the adequacy of present income, but jeopardizes the reli abili ty of future income. Equally serious are the inescapable attend ant problems of social and politi cal discord. While it would be incautious to predict the economic future for this or any other country, it is safe to say that the future is, at best, uncertain. Past experience of others would strongly suggest that the best money is one which serves not only as a medium of exchange, but as a store of value. Those who are concerned about the adequacy of future income might best pre pare for that future by asking the Government to restore the val ue of money.

MORALLAW and FREEDOM Dr. Watts, author and lecturer, is Burrows T. Lundy Professor of the Philosophy of Business at Campbell College, North Carolina, and Di rector of Economic Education for Northwood Institute, with headquarters at Midland, Michi gan. His latest works, of which he is co-author and editor, are Free Markets or Famine and Politics vs. Prosperity (Midland, Michigan: Pendell Publishing Co., 1975). v. ORVAL WATTS NECESSARYAND BASIC in the Judeo-low the "Golden Rule." When we Christian Ethic is recognition of apply it in practice, we find it is the enduring nature of Moral Law. the unifying principle of those The essence of this moral law is commandments that refer to the summed up in the "Golden Rule," relations between the individual and it derives from the fact that and his fellows: "Thou shalt not humans need one another. steal," "Thou shalt not kill," and Without other human beings, we "Thou shalt not bear false wit cannot be born, cannot be reared, ness."

cannot prosper; and to have the.. Now, it should be clear that cooperation of other humans - to obedience to Moral Law means vol avoid the conflicts which would be untary cooperation and freedom. suicidal for humans-we must fol-If we don't steal, we leave other persons free to use their talents in peaceful cooperative ways to produce goods for their own use, for exchange, or for gifts to others, such as gifts to one's fam ily or heirs. Therefore, we have a state of individual freedom if we live by 56 1976 MORAL LAW AND FREEDOM 57 the "Ten Commandments." We have private property and number less associations for voluntary co operation. And humans develop as humans and make progress only>' in this condition of individual freedom and.···voluntary association estab lished by adherence to thes'e moral principles. Therefore, these moral principles are antecedent to and take precedence over all man-made laws and customs.

In other words, these enduring moral principles require of us re spect for the property rights of other people - that is, respect for their rights to control their own persons and for their rights to control those things which they obtain in voluntary cooperation, whether by gift, by voluntary ex change, or by the productive use of these things. Living by these principles re quires that we fulfill our contracts, that we speak the truth,and that we revere the laws of Life and Nature.The human need for this reverence appears in the first four of the "Ten Commandments." This voluntary cooperation and exchange are doubly productive of benefits in contrast to the one sided gain that anyone may get by coercion, as for example, burglary, by slavery, or by taxation. In vol untary cooperation, all partici pants must· benefit if the coopera tion is to continue, for, if it is vol l.1ntary, anyone may withdraw when he feels he' is not benefiting, when he feels that. the gains are distributed unjustly or going en tirely toone person or group at the expense of the time and en ergy of' others.

We should' note also that Iiving by the Golden Rule involves re spect for privacy - the right to be let alone and the right to choose one's associates. Coercion - the at tempt to compel people to associ ate with others - leads to conflict rather than to the attitudes and actions which are mutually bene ficial. Freedom established by the Moral Law of the Golden Rule and the Ten Commandments includes the 'moral right to withdraw from an unwelcome contact with other persons, as well as the right freely to cooperate in mutually beneficial ways. ~ IDEAS ON LIBERTY Killed by Corruption ALL who have ever written on government are unanimous, that among a people generally corrupt liberty cannot long exist. EDMOND BURKE A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE LOVE OF LIBERTY ~**** GOING AROUND ISRAEL on an ar chaeological junket, I encountered the word "hitnadvut." It means voluntarism as opposed to coer cion, and it connotes social power as opposed to State power. I hap pened during the same trip to be reading Leonard Read's new book, The Love of Liberty (The Founda tion for Economic Education, $5.00). What Leonard Read is all about is "hitnadvut."

Israel, of course, is surrounded by enemies, and in retaining a war footing it does not quibble about subordinating social power to State power when it is a matter of taxing and drafting to keep its 58 army in readiness. Since the na tion was formed in good part by Marxist ideologues who had grown up in eastern Europe during the period of pre-Bolshevik revolu tionary ferment, "hitnadvut" has had a pernicious tradition to over come. But it is interesting to note that the Israeli Founding Fathers who came trickling into late nine teenth and early twentieth century Palestine from the Jewish Pale of Settlement in Czarist Russia had to jettison all their ideas about an orthodox socialist economy in or der to get Galilee swampland to produce. Even though they were committed ideologically to social1976 THE LOVE OF LIBERTY 59 ism, the Israeli pioneers had to find a form of economic organiza tion that would be compatible with "hitnadvut."

The result was the kibbutz, or voluntary collective. I don't sup pose Leonard Read would fully ap prove of it. The kibbutz does not reward the gifted individual by paying him more than the yeoman laborer. But it conforms to the Read idea of "anything that's peaceful." Nobody is compelled either to join or to remain in a kibbutz. The kibbutz buys its land in the open market - its purchase of fallow acres, open to all comers under the prevailing Turkish law, were made in pure capitalistic and "hitnadvut" fashion. The rules of the kibbutz are made by democrat ic vote. Besides farming, the kib butz engages in everything from manufacturing to inn-keeping. It lives by competition with individ ual enterprise. It has even begun to hire labor from the outside. In short, it functions very much like an employee-owned corporation. It does not even ask the State to help provide Welfare for its elders.

They simply go on working after age 65 at jobs they are still able to do. So there is kibbutz social se curity without bringing in the strong-arm tactics of the State. So this is Israeli "socialism." I don't want to sound lyrical about it; I would not like to live on a kibbutz. But it was interesting to see that where Leonard Read's principles of voluntarism and "anything that's peaceful" are fol lowed, even a nominally collective way of life can flourish. Declining Self-Reliance It was good to be reading Leon ard Read while going about in a strange country. The various es says in The Love of Liberty took on added freshness simply because their principles could be tested by observation of new things. Israel, beginning in Marxist dogma, strains toward "hitnadvut" self reliance. This is a quality that is on the rise both inside the kibbutz and outside, where individuals start factories to make all sorts of useful objects out of olive wood.

In writing about America, which once produced so many Thomas Edisons and Samuel Morses, Leon ard Read has been forced to speak of the fall of self-reliance. It does not strike Mr. Read as mere hap penstance that the figures for those receiving food stamps almost exactly balance the number of "keepers" who work for federal, state and local governments. The total - it is 16,000,000 in either case, or a whopping 32,000,000 in all-live off the rest of us. Mr. Read notes that there are no more Edisons or Morses among the keepers than among the kept. And 60 THE FREEMAN January 32,000,000 nonproducers are giv ing the U.S. more and more the flavor of the drone society. If Mr. Read were prone to pes simism, his essay on "What We Can Learn from a Communist" would have him permanently in the dumps. Quoting Earl Browder, who headed the American Com munist Party for years, he men tions twenty-two specific examples of the development of socialism in the U.S. They range from govern ment debt financing to price con trols, and from the Employment Act of 1946 to government hous ing. Mr. Browder wrote that the single feature that the twenty-two iterns had in common was that they "express the growth of State capitalism." In substance if not in form, said Browder, State capital ism has progressed further in America than in Great Britain. As the Marxists define it, State capi talism is just another phrase for socialism.

The revealing 'word in many ·of Browder's twenty-two items is "guaranteed." 'Who,. asks Leonard Read, is the guarantor? It is the government, which backs its guar antees with "coercively collectiv ized collateral." Instead of panicking at Brow der's list, Leonard Read thanks God for the "mess that we are in." The "mess" is the. evidence that we have been doing things wrong. It sends up signals that are loud and clear. Sooner or later there will be action on these signals. Who Will Lead? Who will lead the way to neces sary change? Mr. Read thinks that appealing to the masses defeats itself. The masses fall easy prey to dicta tors. Name-calling doesn't help. It can be exhilarating to the pejorative verbalizer, but name calling only serves to get peoples' backs up. As the backs rise, the ears close. Heightened consciousness, says Leonard . Read, can't be sold. The way to convince others iS,first, to perfect one's own understanding, to become a member of Albert Nock's - and Isaiah's - saving Remnant. It is only when individ uals become advanced in self-re liance and personal creativity that they project a contagious image.

"Exemplarity," Mr..·Read calls it. He quotes Albert Schweitzer : "Ex ample is not the main thing in in fluencing others; it is the only thing." Exemplarity, of course, works in bad ways as well as in good. Consider the present-day rash of teachers' strikes in communities that have anti-strike laws for pub lic employees. The exemplarity here does not encourage students to believe in law and order, or "anything that's peaceful." The 1976 THE LOVE OF LIBERTY 61 bad example, however, adds to the "mess" that is the) evidence that weare doing things· wrong. If the teachers strike long enough, it will promote a grand efflorescence of private schools - "exemplarity" of the good sort. Leonard Read says that "the abundance we still enjoy is exclu sively the result of a leakage of free human energy." It was inter esting to· me that the Israelis have a word for such leakage. It is "le'histader," meaning "working around the rules." You· can't beat Leonard Read: he applies any where.

~ RENT CONTROL: A POPULAR PARADOX (The Fraser Institute, Vancouver, B.C., Canada, 1975) 212 pp., $3.95 Reviewed by Bettina Bien G1'eaves PEOPLE generally will buy more of a thing at a lower price than at a higher price. At the same time, owners will be less eager to sell at a lower price than at a higher price. Thus, a gap will alwaysap pear between the quantity of a thing people want to buy and the quantity its owners are willing to sell, if government uses force to keep the price doum. This theme is applied to housing in Rent Con trol: A Popular Paradox. The authors in this anthology describe the gap in the number of rental units sought and the num ber that appeared on the market when governments imposed ceil ings on rents: • In Vienna, Austria in the 1920's (1974 Nobel Economics prize win ner F. A. Hayek) • In Paris, France (French jour nalist Bertrand de J ouvenel) .. In the U. S. during World War II (Chicago professors Milton Fried man and George J. Stigler) • In the United Kingdom (British professors F. W. Paish and F. G.

Pennance) • In New York City· (Virginia pro fessor E. O. Olsen) • In Sweden (Swedish lecturer in economics Sven Rydenfelt) • The Institute's Chief Economist, Michael A. Walker, also contrib utes a couple of chapters about the situation in Canada. In each case, would-be tenants wanted to rent more space at bargain prices than owners of real estate offered on the market. Because of the nature of rental housing - it usually deteriorates grad ually - there is generaIIy some lag in the appearance of a housing shortage when government con trols rents. Yet rent controls are bound to have significant side ef fects in time - over and above a gap between supply and demand. Savers look for more lucrative in62 THE FREEMAN January vestments than rent-controlled housing; builders hesitate, or re fuse, to start new construction; tenants fortunate enough to be liv ing in bargain-priced housing units spread out to occupy more space than they otherwise would and refuse to move, even if new and/or better jobs open up else where; and additional housing units cannot be produced over night precisely where and when they are needed. Thus, rent con trols aggravate and prolong eco nomic rigidities and distortions.

There may be widespread agree ment among economists as to the inevitability of a housing shortage under rent controls. Yet ma'ny poli ticians still expect that rent con trols will gain them votes and help them stay in office if the number of happy tenants who enjoy rental bargains outnumber the disgrun tled landlords and dissatisfied would-be tenants for whom suit able housing is not available. Apparently there is renewed political pressure now for rent con trols in Canada (two Canadian provinces have already enacted them in some form). It was this agitation that induced The Fraser Institute to publish this worth while book on the subject. One need not endorse the Institute's scheme for income supplementa tion in hardship cases during de control to find the book helpful. The material should be useful to anyone trying to combat political. control of rents as well as to stu dents looking for examples of gov ernment intervention. The book il lustrates with historical evidence and statistics one of the economic truths stressed by the late Profes sor Ludwig von Mises, namely that government-imposed price ceilings, of which rent controls are one ex ample, produce effects which, from the point of view of the very per sons who advocated them, are even worse than the state of affairs they were trying to remedy.

Whenever enacted and enforced, rent controls have always exag gerated the shortage of rental housing - and they always will. ~ CLEAR AND PRESENT DAN GERS by M. Stanton Evans (New York: Harcourt Brace Jovanovich, 1975) 445 pp., $4.95. Reviewed by William, H. Peterson MR. EVANS, nationally syndicated columnist, chairman of the Ameri can Conservative Union and form er editor of the Indianapolis News, here attacks liberalism with a vengeance. He charges that liber alism has matters backward in its basic approaches, and because of this initial error it also reverses 1976 OTHER BOOKS 63 the fundamental facts of our eco nomic and political life. Hence, our countrY,under liberal guidance ever since the Great Depression, has been reeling from one catas trophe to another. Liberal answers to questions of poverty, pollution control, urban transit, public edu cation, health care, oil profits, na tional defense, and the like are counter-productive, or to put it less mildly, frequently outright disas ters.

Evans' research on liberalism is alone worth the price of admission. He notes, for example, the defini tion of "liberal" as propounded by former Senator Joseph Clark of Pennsylvania in 1953. "A Liberal is here defined as one who believes \in using the full force of govern ment for the advancement of so ~~ial, political and economic justice ~ t the municipal, state, national 3I,'nd international levels." Evans al~o quotes liberal economist Robert Theobald (an early cham pion of guaranteed annual income) who says, "we must recognize the fact that the society's needs may be more important than those of a single person" and "a strict insist ence on existing rights would lead to an intolerable situation for all." Mr. Evans derives his conserva tive stance from what he cans "the American design," from the first principles as laid down by the Founding Fathers. He stresses the idea of having a written in strument of authorization - a Con stitution. He stresses, too, the Founders' concept of, to use the Evans word, "antimajoritarian ism." The Messrs. Washington, J efferson, Madison, Franklin, et al believed in the ultimate authority of the people but they also believed in limits to what a majority in the legislature should be able to do.

Such a majority could be hostile to sound government and the rights of the individual. So Mr. Evans hails the Constitutional de sign of checks and balances, of the separation and subdivision of pow er so that no single branch of gov enment could exercise despotic au thority. Unfortunately, such authority has reared its ugly head time and time again. Mr. Evans notes, for example, how the Federal Com munications Commission has espe cially subjected broadcasters such as Dean' Clarence Manion and Rev. Carl McIntire, both spokesmen for the political right, to harsh "bal ancing" viewpoint requirements which has had the effect of caus ing some radio stations to drop the Manion and McIntire broadcasts. Ironically, the requirements were promulgated under the name of the "Fairness Doctrine." Similarly Mr. Evans takes the Interstate Commerce Commission to task for requiring railroads to 64 THE FREEMAN January acquire a certificate of convenience and necessity to build new track or otherwise enlarge services. The Civil Aeronautics Board is like wise criticized for all but wiping out real competition in air trans portationl Thus does Mr. Evans tear into liberal programs and notions, spelling out facts and cases in a gold-mine of a paperback. He con cludes: There is little likelihood that Amer ica can regain its vigor as a free so ciety, cure its economic ills, or correct its political disorders, if it continues to drift in metaphysical confusion.

We therefore end as we began, in the awareness that our political troubles arise from the deeper realms of ethics and religion. ~ THE INCREDIBLE BREAD MA CHINE FILM (World Research, Inc., Campus Studies InstituteDi vision, 11722 Sorrpnto Valley Road, San Diego, California 92121, 1975) 32 minutes, color, 16mm. Reviewed by Brian Summers THE CAMPUS STUDIES INSTITUTE has a bestselling libertarian paper back (100 ,000 the first year) in The Incredible Bread Machine. Now they have made a movie based on the book. The results are devastating. Here is a documented, fast-paced, all-out assault on statism. Scene: the state seizes an Amish farmer's horses for refusing to pay Social Security taxes. Scene : The . state lays siege to the home of a man who, rifle in hand, refuses to yield to eminent domain. Scene: The parking lot where the home. once stood. Scene : Narcotics agents break into a home, terrorize the occupants, smash the furniture, and discover they .are in the wrong house. Scene: Economist Murray Rothbard speaks of the wonders of government housing while seated before scenes of the government blowing up its own housing proj ects. And on and on.

The film makes effective use of dialogue.N 0 one preaches to the audience. Instead, young .adults rap about freedom, rights, social ism, and the market. The overall effect is to engender an interest in the freedom philosophy. The film is being distributed by the Campus Studies Institute. For classroom use, study guides are available. I the Freeman VOL. 26, NO.2· FEBRUARY 1976 ABicentennialQuestion: An Ascendant or Setting Sun? Clarence B. Carson 67 Can we bring back to life in America the vital principles underlying the Revolution? A Mineral Alert Paul L. Poirot 78 A growing "public sector" diminishes market opportunities to serve consumers. The Businessman and Free Enterprise Benja.min A. Rogge 81 Some suggested ways to help preserve a climate in which business may function. Why Reforming the ICC Is Not Enough William D. Burt 90 If justice and necessity are to prevail. transportation will be deregulated.

A Free Society Bernard H. Siegan 98 The awesome power of zoning authorities over human beings has no place in a free society. Robert Owen: The Woolly-Minded Cotton Spinner Melvin D. Barger 101 Caught in his own web of humanitarianism, messianism, and determinism. AcademicFreedom Joan Wilke 110 Not the squabbling inherent in politics but the alternatives open in the market. Socia.lizedHot Dogs? Private vs. governmental conduct of business affairs. Book Reviews: "Steel Titan: The Life of Charles M. Schwab" by Robert Hessen "The Highest Virtue" by Alan stang David J. Scholl 116 123 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

tile Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F RE EM A N is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and linlited government. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per mission granted to reprint any article from this issue, with appropriate credit, except "A Free Society."

CLARENCE B. CARSON A Bicentennial Question: An Ascendant or Setting Sun? As the Constitutional Convention at Philadelphia drew to a close in 1787, James Madison noted some concluding remarks by the elder statesman of the gathering, Ben jamin Franklin. His observations had to do with a sun painted 011 the back of the chair of the presiding officer. Franklin declared that Painters have found it difficult to di~tinguish in their art a rising from a setting sun. I have, said he, often and often in the course of the Session, and the vicissitudes of my hopes and fears as to its issue, looked at that behind the President without being able to tell whether it was ris ing or setting. But now at length I have the happiness to know that it is a rising and not a setting sun. Dr. Carson has written and taught extensively, specializing in American intellectual history. His· most recent book, The Rebirth of Liberty ( 1973), covers the founding of the American Republic from 1760 to 1800.

A painter of course, can distin guish between an ascendant and a setting sun. However, for those of us attempting to assess the state of the republic of the United States on the two hundredth anniversary of its founding, it is not easy to lo cate the position of our sun. The signs are mixed, and the sun is ob scured by a cover of clouds. There are many indications that these United States are in the as cendant. Certainly, the wealth of Americans is great as is attested to by their homes, their automobiles, their appliances, their weekend and vacation paraphernalia, and the food they consume. The great abun dance in the land can be viewed in the innumerable markets within easy access of almost any inhabi t ant of the country: the supermar kets with their array of food and drink, the department stores with 67 68 THE FREEMAN Februar'y their astonishing variety "of goods, the gleaming automobiles for sale in the lots, and the specialty stores which cater to almost every whim and taste. Public buildings are usu ally massive and nearly always in a good state of repair. Superhigh ways crisscross the land to link the people together, as do television networks, railroads, airlines, and two-lane highways which have long since become commonplace.· Engi neers manipulate tiny computers to set in motion giant construc tion equipment to build more still of what is wanted to dwell in, work in, look at, or use in some fashion.

A disinterested observer surveying this immense material achievement would surely be moved to declare that the American sun is in the as cendant. Nor should it be thought that the reaches of the mind and spirit have been neglected in the United States. Although it is not possible by alluding to outward signs to give any measure of the quality of what is provided, there is much to show that wealth and attention have been lavished upon intellec tual and spiritual matters. Of books, records, libraries, schools, colleges, universities, churches, seminaries, newspapers, maga zines, seminars, theaters, and audi toriums there are a plenitude. Clergymen, professors, musicians, writers, commentators, critics, evangelists, painters, architects, and lawyers abound. Missions of one sort or another to other parts of the world attest to some degree to the ascendancy of the United States. Not Clearly Marked But the signs are mixed, as I said; some point to ascendancy, others to descent, decline,· to a set ting sun. One such sign is the fiscal operations of our governments. De spi te the huge take in taxes, the debt of the United States govern ment, already grown astronomical, continues to mount. Our politicians do not have the courage to balance the budget, reduce expenses, or set aside funds for the retirement of the debt; indeed, few appear to reckon the debt as a problem. Many states and municipalities totter un der the heavy burden of bonded indebtedness. The huge debt, both public and private, is kept afloat largely by massive infusions of pa per money which results in a con tinuous deterioration of the value of the dollar.

Back of this mounting indebted ness accompanied by the decline in the value of the dollar is a related development which is its cause. It is the proliferating government programs of aid, subsidy, and wel fare. Most of these programs have started modestly and then begun to balloon in fairly short order. The 1976 A BICENTENNIAL QUESTION 69 Medicare program cost somewhat over $3 billion in 1967, its first full year. Advance estimates of the cost in 1975 are just under $14 billion. So it has been, in program after program. The advance commit ments of the Federal government have reached the point that it is difficult to conceive how the budget could be balanced, much less that the debt should be funded. It is not my intention, however, to enter .upon a lengthy recital of the assets and liabilities of either their government or~he American people. Whatever the merits of such assessments, they are regular ly made by the Bureau of the Bud get and wrestled with, however in effectively, by the President and Congress. And certainly, it is not to the purpose here to construct lists of American virtues and vices from which to draV\r conclusions about where we are headed. Those with a taste for American virtues and vices, particularly the vices, can find accounts aplenty, if the daily newspaper does not entirely dull the appetite for more.

Whether the American sun is in the ascendant or is setting cannot be determined by totting up what someone or other believes are our virtues and vices, entering them in separate columns, and dra'wing conclusions about which predomi nate. The question must be answer ed, if it can be-answered even tentatively, .in terms of deep-seated trends and where they aretending. Unbalanced budgets, deficit spend ing, and inflation are long-term trends, but back of them and lying at their roots are others which need to .be explored. Between Hope and Despair To discern these, it helps to re call what it was that led Franklin to conclude that the painting was of a rising sun. His remarks were prompted, of course, by the approv al which the Convention had given to their handiwork of the last sev eral months, the United States Constitution. If Franklin intended any effect from his words - and he probably did, for he was a skilled diplomat with many years of prac tice in calculating the effect of what he said with great care - it was to say to those who heard him to get on with the business of getting this Constitution ratified and put into operation.

But his words conveyed more than that. They summed up the al ternating hope and despair which he and others must have felt about developments in America in the pre ceding dozen years or so. Against great odds, odds lengthened by the ineffectiveness of their govern ments, they had achieved independ ence from Britain. Not only were they confronted all along the way by the danger of breaking up into 70 THE FREEMAN February factions and ,camps; but also, once victory was won, they were little nearer to achieving real unity. The Constitution promised a govern ment which could bring the states into union. The Constitution provided for more than an energetic govern ment which would bring about a United States, however; if it worked as intended, it would pro vide for Americans something rare, much sought after but seldom achieved. The United States Con stitution promised limited govern ment and free men. It promised to bind those who governed to the performance of their appointed tasks and thus to loose the energies of Americans to go about their con tructive activities. If it accom plished this, there should be little doubt that the American sun was rising.

How unlikely that this promise should be fulfilled is not sufficient ly appreciated. The story· of most governments in the course of 'Yhat we know of history is more sordid than not. It is the story of unleash ed power, of tyrants, of oligarchies, of Caesars, of arbitrary kings, of absolute monarchs, and of dicta tors. It is the story of the plunder ing of peoples by robber barons, of ubiquitous tax collectors eating out their substance, of contests for power erupting in assassinations, intrigues, rebellions, and wars. It has been all too often the story of rulers riding roughshod over the populace while they were oppressed and bound. Limitations on Power There have been, of course, gov ernments which provided greater measures of justice than this would suggest, rulers who were contained to allow considerable freedom for the people, and monarchs who were held in check by constitutions. But these latter 'have been rare enough to make the promise of limited gov ernment and free men something out of the ordinary if it could be fulfilled.

Perhaps "promise" is not the right word. The United States Con stitution does not just promise lim, ited government and free men; in fact, no such statement is to be found in the document. The Pre amble does state that one of its pur poses is "to secure the blessings of liberty to ourselves and our pos terity," but the body of the docu ment is taken up with arrange ments for the exercise of power, who should exercise it, and "what powers were to be exercised at all. From what the Founders produced we can deduce that they thought promises would be nothing more than rhetorical flourishes. The Con stitution at that point did not even contain a bill of rights. What they attempted to do was to build into 1976 A BICENTENNIAL QUESTION 71 the structure of the government the limitations which would free men. The main way they attempted to do this was by an intricate disper sion and balance of powers. The powers of government were dis persed among the three branches of the Federal government and be tween the Federal and state gov ernments. (Of course, the United States Constitution does not grant powers to the states, though it pro hibits them from exercising cer tainpowers; the powers of state governments derive from their own constitutions.) Three Branches The Constitution says, "All leg islative Powers herein granted shall be vested in a Congress of the United States .... " "The executive Power shall be vested in a Presi dent of the United States of Amer ica." "The Judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish." The main purpose of the separation, balance, and dis persion of power was not only, to prevent its concentration but also to limit its exercise; each branch and government might be expected to guard its own· powers and pre rogatives by preventing the growth in the powers of the others. The underlying idea was to invoke hu man nature in the continuous struggle to limit government.

Benjamin Franklin's prophecy of a rising sun was correct. Under the auspices of the new constitu tion, the United States did expand and grow. Americans, their ener gies loosed by it, did press on across the Appalachians, push their way to the Mississippi, surge across the great plains, pick their way through the Rockies, and es tablish themselves on the Pacific. Those who were at first denied the full benefits of liberty were in the course of time freed. Americans built on a scale hitherto unimag ined : they hacked their way through forests to make farms, built roads, canals, railroads, bridges, factories, and cities. The production of the United States became one of the wonders of the world to which others sought the secret. In time, they were so pro ductive that the Europe which had once succored them would turn to America for sustenance. The United States became a power among the powers of the world and wielded great influence in world affairs.

The rise of America followed upon the establishment of indi vidual liberty, upon allowing the individual scope for exercise of his abilities for the benefit of him self and others with whom he 72 THE FREEMAN February worked, traded, discoursed, played, and prayed. The pertinent Bicen tennial question is this: Do those same conditions still prevail in these United States? Is individual liberty still the keystone of the American government arch? George Washington could say with assurance in' his Farewell Address, "Interwoven as is the love of lib erty with every ligament of your hearts, no recommendation of mine is necessary to fortify or confirm the attachment." Would the state ment be true if it were made to day, and what does it portend if not? Now it is doubtful that the question of whether Americans love liberty today as they were said to do in 1797 could. be an swered directly. The individual in America is attached to many val ues, and we may hope that one of those values is liberty. T'he chances are good that if someone were to attempt to answer the question for today he would take a poll of a selected group of Americans. Those polled would· probably be asked to rank liberty with other values which would be named. The re sults might have some interest, but their reliability would be most doubtful. So much would depend upon how the questions were posed; what we would most likely get would tell us more about the pollsters than the polled.

At any rate, there is a much better way to get at what people believe. By their fruits you shall know them, Scripture says, and that is certainly much more to the point than what people say or think they believe. The thrust of political activity for a good many y·ears now has not been in the direction of maintaining or ex tending individual liberty. Rather, it has been in the direction of cen tralizing power in the Federal government, the empowering of groups, the imposing of controls, increases in taxes, and the political determina tion of more and more questions. A Tenuous Balance The semblance of a balance of power remains in the structure of our governments, but if the heav ens were as out of kilter as this "balance," the law of gravity would not suffice to keep the stars on an orderly course. In the first place, there is today a gross im balance between the powers of the Federal and the state govern ments. The sway of the Federal government is such that states de pend increasingly for revenues upon the government of the un ion, contrive their programs to fit the Federal formulas, and seek in creasing aid while clinging to the remnants of fiscal and legal inde pendence. The states are today 1976 A BICENTENNIAL QUESTION 73 little more than puppets, moving in whatever way they are manipu lated by the government in Wash ington.

In the second place, the balance within the Federal government among the branches has been greatly altered. There never was a perfect balance among the branches in the sense of each of them having equal power. The makers of the Constitution gave considerably more weight in deci sion making to the Congress than to the President or Supreme Court. (Within the Congress, how ever, the weight of· the House and the Senate was made about as nearly equal as might be.) Con gress was given the power not only to make the laws, appropriate money, and declare war, but also a share in appointive powers and authority to impeach and remove members of other branches as well as that of governing themselves. In the twentieth century, how ever, the weight has shifted away from Congress, if not technically then in actuality. From the early 1930's to the mid 1960's the pow ers of the President were vastly augmented. In effect, the Presi dent usually initiated legislation, conceived .programs for the gov ernment and administered them, conducted the increasing involve ment in world affairs - dispatched armies, disposed of foreign aid, and carried on extensive personal diplomacy with the leaders of other nations - and was every where understood to be at the apex of power in the United States.

Since the mid 1960's, however, indications are that the office of the presidency has declined in power and influence. It began dur ing the last years of the Johnson administration, continued through the Nixon years, may have been accelerated by the disgrace of Nixon, and has not abated with the coming of President Ford. The trend doe's not thus far signal a restoration of a balance of power, however. The executive branch continues to grow in numbers and powers accorded it; but it is the growth of a body while the head shrinks. Most likely, it was Nix on's inept wrestling to gain con trol over the executive branch which may now be beyond admin istering that was his undoing. The Supreme Court Meanwhile, the Supreme Court has assumed unprecedented powers in recent years. The Warren Court, as it came to be called, solidified this trend in the 1960's by its ac tivist decisions. Under the sway of a mass of decisions, the Fed eral courts became not only the final arbiter of the meaning of the Constitution but also the only 74 THE FREEMAN February arbiter. Congressmen are heard to say that we cannot know whether this or that measure is in keeping with the Constitution until there is a court ruling on the matter.

This is a serious abrogation of the duties of a Congressman and a contribution to the unbalancing of POw'ers. Congressmen are sworn to up hold and defend the Constitution. Their first line of defense of the Constitution is to enact no laws believed to be in conflict with its provisions. This is made more seri ous by the presumption of the courts in favor of the constitu tionality of acts of Congress signed into law by the President. Be that as it may, the Federal courts have assumed e.xtensive powers over American schools and unusual powers to determine the legal rules under which we live. There is·· yet another develop ment, however, which more seri ously effects the balance of power than, the others, if that is possible, and has changed the posture of our .government. It is the accele rated growth of the bureaucracy and its expansion into more and more areas of our lives. Some have referred to the bureaucracy as a fourth branch of the government.

T'he intent of the characterization may be good, but it fails adequate lyto describe the development. The bureaucracy is not just another branch of the government, it comes nearer to heing another govern ment. It is as if we now have over us the state, Federal, and bureau cratic government .. There is hy perbole in this way of looking at the matter, but not as much as might be supposed. Growth of Bureaucracy The separate bureaucratic gov ernment phenomenon is best ex emplified by the "independent" boards and commissions, such as, Federal Communications Commis sion, Civil Aeronautics Board, In terstate Commerce Commission, Equal Employment Opportunities Commission, National Labor Rela tions Board, and so on. They are called independent because they are creatures of Congress and do not fall under the administrative authority of the chief executive. They may he thought of as sep arate governments because they perform all three functions of gov ernment; they legislate, adminis ter, and enforce the laws which they devise. The constitutional separation of powers is abridged, and power is concentrated in single bodies.

These and other bureaus now produce 10 times as many rules or, more accurately, laws as does Con gress. This lawmaking power has become so obtrusive that there is now before Congress a bill to sus1976 A BICENTENNIAL QUESTION 75 pend the operation of some of the bureaucratic legislation until Con gress has had the opportunity to examine it. Congress, which has all the constitutional authority to legislate, would gain a veto power over bureaucratic acts - a notion sufficiently strange to provoke mirth if not tears. Bureaucratic control, however, is not a fit subject for mirthmak ing; it is serious, often dead seri ous. Bureaus now hold life and death powers over virtually all ac tivities in America. Whether one wishes to build a church, operate a printing press, produce a car, buy a house, buy and sell widgets, hire or fire, he finds one or more or many bureaucrats athwart his path. They license,certify, ap prove or disapprove, inspect, class ify, lay down rules, hold hearings, compile dossiers, make rulings, re strict, restrain, and confine. They are ubiquitous and omnipotent and often behave as if they were om niscient.

Judging by these developments, a reversal has been and is taking place. The constitutional principle was, as stated, a limited govern ment and free men. The trends ex amined show government being loosed and men being limited and confined. The concentration of power in the Federal government, the growth of the executive branch, the assertion of power by the Federal courts, and the proliferation of the bureaucracy have been a letting loose of government from its constitutional confinement. The one being confined by the sway of this power is the individual. What do these things portend for America? Is the sun in the ascendant or is it setting? At the rate things are going, the sun is setting for individual lib erty in America. There are those who claim that what is being reg ulated and controlled is only the economy. Such claims are entirely specious; the economy is an ab straction to which government controls cannot be applied. It is people who are regulated and con trolled. Moreover, it is not pos sible to regulate people in the eco nomic aspect of their lives and leave them otherwise free.

Economic Factors There is no aspect of our lives that is not hinged in some way to the economic. Everywhere that we are and everything that we do in volves the use of property; whether asleep or awake, whether eating or fasting, whether reading or looking at television, whether walking or riding, it is all upon or with property. Every transac tion we engage in, whether buying a newspaper or book, whether con tributing to the church or buying a house,. whether traveling to Eu76 THE FREEMAN February rope or visiting Colonial Williams burg, is economic in nature. In 'deed, there is no angle from which to control ourli ves that can begin to equal the economic. The spread of economic controls, or the con trol of business, as it is sometimes called, signals the decline of indi vidual liberty. Government control signals, too~ the setting of the sun for Amer ica. There is no knowing how long a people can survive ever-tighten ing controls. For a very long time, no doubt. But they do so at the ex pense of prosperity, of economic growth, of that vitality which makes for greatness of a people and a nation. Controls make it ever more difficult to adj ust to chang ing circumstances and conditions.

There is good reason to believe that the United States is already visibly suffering from the rigidity of an economy made so by bureau cratic controls. Repeated efforts to revive the economy by massive jolts of government power by in flatingfails in its object. It fails because the problem is not mone tary in origin, though the attempt to solve it in this way certainly aggravates the problem. The prob lem arises, in the main, from in flexibility, rigidity, and restric tions which stand in the way of making the needed adj ustments. The long wait for bureaucratic approval and inspection before changes can be made hampers businesses. We would probably have Alaskan oil today rather than at some date in' the future if en vironmentalistshad not intempe rately delayed the drilling and laying of pipelines. A people who will tolerate such interference with their lives can expect that their lives will become harder and harder.

Time to Reconsider The American sun may appear to be in the ascendant, but there is strong reason to believe that it has entered upon its descent. It is especially appropriate in' this Bi centennial season· to think back upon and ponder these things. Anyone who cares to know may rediscover those principles which reassured Franklin that he was looking upon a rising sun. Those who care to do so may review as well the histories of peoples who have not been so fortunate as to start their national careers on the foundation of great political prin ciples. When they have thus stud ied history, they may well wish to restore :those' principles to their former place. It will be no easy matter to do so. Governments are not easily in duced to relinquish the powers they have obtained and are used to exercising. Politicians and bureau crats do not relish yielding up their authority over our lives.

1976 A BICENTENNIAL QUESTION 77 Only a resolute populace deter mined to assert itself and claim its rights can prevail against them. Only those who have that love of liberty intertwined with every ligament of their hearts could be expected to make the effort. There is one 'hopeful thought. The rotation of' the earth on its axis which produces the rising and setting of the sun is a natural phenomenon, something we can only observe but notcontroI. The sun having risen, continues up ward to its. zenith, commences to descend, and must inevitably set. It is not so with-peoples and with nations. It is within their power to change the course, even to re verse it, to restore principles, to be revived and revitalized. When liberty gives way to fuIlfledged op pression it is most likely lost for a long time, but liberty threatened can be more readily recovered. It would be good indeed if we could use the occasion of our na tional Bicentennial not to pay trib ute to the dead but to rediscover and reinstitute those great prin ciples which characterized the American Revolution - principles which could be made to live again in America. ~ IDEAS ON LIBERTY My Freedom Depends on Yours IN ORDER for the highest ideas and ideals of nlankind to prevail generally, it seems obvious that a condition of peace and freedom is required-a' soci~ty wherein no person molests any other per son; a society wherein no person prevents any other person from developing his creative potentialities to the fullest extent of his understanding and ability.

This desirable state of affairs will not occur all at once. It will $row only as freedom is und~rstood and as faith in it is restored. If one person decides today to practice freedom, the evolutionary process in human relationships will move forward one more step. That is the only possible path to freedom - a peaceful change in thought and understanding and action among individual persons. Anyone can begin the practice of freedom whenever he chooses to do so. DEAN RUSSELL PAUL L. POIROT A MiNERALALERT HAVE WE WITHDRAWN so much land from mineral exploration and development as to seriously affect the long-term mineral position of our country? That is the key ques tion explored by Gary Bennethum and L. Courtland Lee, young pro fessionals in the Department of the Interior, in an article "Is Our Account Overdrawn?" in the Sep tember 1975 issue of the Mining "- Congress Journal. President of the American Min ing Congress, J . Allen Overton, Jr., introduces the article: Bit by bit, acre by acre, vast tracts of the public lands of the United States are being withdrawn from entry for mineral exploration. The various federal bureaus and agen cies have sharply accelerated this withdra wal process since 1968, with out coordination and without regard for the cumulative effect on future production of metals and nlinerals from domestic sources.

Unbelievable as it may seem, an area larger than that encompass78 ing 25 of the 27 states east of the Mississippi River is no longer acces sible even for rnineral exploration, not to 1nention developrnent for min ing. Much of this withdrawn land is in regions where mineral deposits of economic significance are most like ly to occur - in the western United States and Alaska especially. Lots of laws and governmental agencies are involved in this story but the essence of the situation is that of 824 million acres of public lands potentially available for min eralleasing, 24 per cent were with drawn as of 1968 and 73 per cent withdrawn as of 1974; and of 742 million acres of public lands sub ject to the Mining Law of 1872, 17 per cent had been withdrawn from possible use in 1968 and 67 per cent as of 1974. Much of the problem developed in Alaska over the Native Claims Settlement Act of 1971. But other significant with drawals have been made in the name of National Parks, Military 1976 A MINERAL ALERT 79 Claims, Wilderness Areas, Wild and Scenic Rivers, Fish and Wild life Refuges, Utility Corridors, and Primitive and Roadless Areas, among others.

Special interest groups have gained political power· to have lands set aside exclusively for their own purpose, thus predud ing any other possible use of such land - even if two or more pur poses might have been. served si multaneously. At any rate, mining interests are deeply concerned about this recent trend of land withdrawal from mineral explora tion and use. Lest this .be construed as spe cial pleading by mining interests, let us view the matter in broad perspective. Of the total land area of 2,264 million acres in the 50 states, approximately one-third is federally owned/controlled - and not quite half of the latter is in Alaska. Private owners may have personal problems or difficult de cisions about the sale or use of their propertY,but there is no public or general problem over mineral rights or withdrawals on privately-owned land. The problem arises in the public sector - on land not subject to market regu lation and control.

This is the old, old problem of the wasteful use of scarce re sources. under a system of owner ship in common; the ancient problem of chronic famine and starva tion that still plagues people dedi cated to socialism; the problem of overgrazing the commons in old England, and in the early days in New England where all produce went into a common storehouse for withdrawal by "each accord ing to his needs"; the problem that has. only been solved in com paratively modern times in those comparatively few places where the people have understood and respected the institutions of pri vate ownership, specialized pro· duction, and voluntary exchange in open competition. This is the problem that currently perturbs mining interests with respect to exploring and developing mineral deposits on government lands. But on those same government hold ings is the same problem with respect to grazing rights, water rights, timber rights or any other potential use the market might indicate.

Private owners of land and other scarce resources are free to waste them as they choose, of course, but always strictly at their own expense. If a private owner chooses to hold. a given area as a park or preserve or for some other limited use, the market demand for other potential uses makes that owner painfully aware of the opportunity costs he bears to sat isfy his particular purpose. And 80 THE FREEMAN February he may be tempted, even per suaded, to allow a small mine open ing or an oil drilling rig or pump or even some supervised timber harvesting· on his otherwise scenic preserve. It is to his selfish inter est to develop and use as econom ically as possible every scarce and marketable resource available on his property. There is every in centive for him to conserve rather than waste what he owns. Not so on "the commons" - on that third of the land area of the United States remaining under Federal ownership and control.

Not the bids and offers of poten tial buyers and sellers out only the numbers of voters favoring or deploring a given use have real meaning to the government official in charge of the land. To open such land to the highest bidder in the market place would be to bring it under private ownership - and that would diminish or even close out entirely the job of that gov ernment official. So his only incen tive is to continue the land in some politically palatable but econom ically wasteful use - some purpose that millions pretend to applaud though unwilling to support it with their own resources. Yet, when public officials dictate the disposition of scarce and valu able resources, the millions who applaud are nonetheless obliged sooner or later to foot the bill. And that bill is falling due far sooner than many had supposed next week, or next month (or was it yesterday?) for New York City.

The bill already has fallen· due and is being paid for government mismanagement of natural gas and petroleum prices, production, marketing, and wasteful consump tion. The bill has fallen due and is being paid in countless "down towns" laid waste in the name of zoning and rent control and pub lic housing and urban renewal and related objects of urban plan ning. And there will be additional bills to be paid for urban and rural land utilization schemes and regulations. Whenever scarce and valuable resources are taken out of private ownership and control - with drawn from the market - and thrown into "the commons" there is a cost and the taxpayer will be obliged to pay. So let us beware the plans and controls and with drawals we applaud, for most cer tainly we will pay for them. No one knows precisely what the price will be or how long before the bill falls due for the recently accelera ted withdra wal of a maj or part of the public domain from mineral exploration and use. But we should be grateful to Messrs.

Bennethum and Lee for the early warning. , The Businessman and Free Enterprise BENJAMIN A. ROGGE THE QUESTION before this house is not whether the survival of capi talism is in doubt (this is admi t ted). The question for us, as it was for Lenin at an earlier time, is What To Do? His concern was how best to hasten the collapse of capitalism; our concern is how to postpone or ward off that collapse. Frankly, I feel more at ease· as the.·diagnostician than as the ther apist. Cancer is still easier to iden ify than to cure, and so is over expanded government. Admittedly, diagnosis must usually precede therapy. After· a lengthy diagnos tic examination, the doctor looks up at the patient in some puzzleDr. Rogge is Distinguished Professor of Polit ical Economy of Wabash College. This article is from a speech of September 16, 1975 before the Indianapolis Rotary Club. ' ment and asks,. "Have you had this before?" To this the patient re plies, "Yes," and the doctor says, "Well, you've got it again." Quite obviously something more than this is needed. Proper therapy usually rests upon diagnosis of the specific problem, including some notion of how the patient got into his fix, whatever it might be.

I begin then with the question "What is our problem ?" In an earlier sentence,. I identified the problem as that of over-expanded government. This is not really correct for the purposes of ther apy. Over-expanded government is, in fact, but the most noticeable, objectively-evident symptom of our problem. Our problem is in the form of a set of ideas whose im81 82 THE FREEMAN February plementation calls for the use of force and government in that agen cy of society given a monopoly of the right to. use force. For 'so' long as those ideas are dominant in so ciety, Behemoth will continue to grow. Nor is it useful "for ' those who hold and espouse those ideas to publicly regret the associated growth; in ",government and all its instru'metltalities. 'Thus" Senator Edward Kennedy has said recent ly that "one of the greatest dan gers of government is bureauc racy," and Senator Gaylord Nelson has said that, "The federal bu reaucracy is just an impossible monstrosity." All weH and good but that growth in bureaucracy which tb,.ey so rightly lament is the necessary and inevitable outcome of the ideas that these two (and others) have so weIland so con vincingly espoused.

Man and Superman VVhat are these ideas, that pro duce bureaus as larvae do moths? They can be expressed in various ways, but their essence is to be found in the following related proposi tions : (1) There exist individuals and groups in society who know not only what is' best for them but what is best for others as well; and (2) This wisdom, when com bined with the coercive power of t.he state, produces "Ithe good society." An accurate verbalization of these ideas is to be found in the statement ofN ewton Minow, who said as chairman of the agency controlling television in this coun try, "VVhat is wrong with the tele vision industry in this country is that it is giving the viewers' what they (the viewers) want." Compare this, for example,' with these words from ",Adam Smith's W ealth of NatiQns : What is the species of domestic in dustry which his capital can employ, and of which the produce is likely to be of the greatest value, every indi vidual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him.

The statesman, who should attempt to direct private people in what man ner they ought to employ their capi tals, would not only load himself with a most unnecessary attention, but as sume an authority which could safely be trusted, not only to no single per son, but to no council or senate what ever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exer cise it. Some of you may ·see in other idea-systems (such as economic de terminism,or relativism or envy or what have you) the real source of our malignancy. God, my wife', my children and all of you know that I am fallible and perhaps "" I have chosen poorly in this case.

1976 THE BUSINESSMAN AND FREE ENTERPRISE 83 What· I am prepared to argue in a more strenuous way is my convic tion that our struggle is at the level of ideas· and not that of· men or institutions. In the words of the celebrated John Maynard Keynes: The ideas of economists and polit ical philosophers, both when th~y are right and when they are wrong, are more powerful than is generally :un derstood. Indeed, the· world .. is ruled by little else. Practical men, who be lieve themselves to be quite exempt from any intellectual influences, are usually the ,slaves of some defunct ~conomist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few·years back. My first point then is that we are involved ina wlarof ideas. My second is. that our target is not the masses but those men and women in .society . who deal in ideas and who shape. the thinking of the masses. In the words of one of the great idea men of this century, the late Ludwig von Mises: The masses, the hosts of· common men, do not conceive·any ideas, sound or unsound. They onlychoose between the ideologies developed by the intel lectual leaders of mankind. But their choice.· is final .and determines the course of events. If they prefer bad doctrines, .nothing can prevent dis aster.

My third point is that the ideas that finally count are those that relate to such fundamental ques tions as the nature· of man, his purpose here on earth and the moral character of human action. Arguments on the basis of eco nomic efficiency are not alone cap able of saving capitalism. According to Joseph Schum peter: ". . . it is an -error to be lieve that political attack [of cap italism] arises primarily from grievance and that it can be turned by justification. Political criticism cannot bernet by rational argu ment. Utilitarian reason is in any case weak as a prime· mover of group action.·· In no case is it a match for the extrarational deter minantsof conduct. The stock ex change isa poor substitute for the Holy Grail." Ideas Shape Society I have now enumerated my· as sumptions as to the nature of the task· in which we are involved. I have argued that we are really in volved in a struggle for the souls of men, that in that struggle· it is ideas that count and that the questions that are .relevant are largely ethical in nature. Moreover, I have argued that our target is not the masses but those who live by· the· spoken and written word and who thus largely ·shape opin ion in society.

If these assumptions be even 84 THE FREEMAN February roughly valid, what then is im plied as to the role of the business man in the fight to save capital ism? Before attempting an answer to that question, let me consider one that seems to precede it. Should the businessman as busi: nessman .even get involved in the struggle? A number of factors would seem to indicate a negative answer to that question. To begin with, the businessman is not typically hired by the stockholders to carryon programs of social reforms; he is hired to add to the net worth of the company. Admittedly the net worth of the company may be ad versely affected by particular acts of government, and the stockhold ers would surely approve of man agement action in opposition to those specific threats to profits for so long as the potential· gain exceeds the cost. At the same time, the company may often .. stand to gain through specific acts of gov ernment, including actions that work against the principles of cap italism. Is ita tariff against for eign steel producers? or· an export subsidy that would increase the demand for the company's prod ucts? or a government-enforced price or interest rate that adds to the profits of the company? How now the businessman? How can the President of the Mobil Oil Company bea convincing spokesman for free enterprise when his job seems to 'require that heop pose immediate decontrol of oil prices? How can the President of General Electric stand four-square for capitalism, yet support .export subsidies for many of the products sold by his firm?

The Businessman's Dilemma The fact is that there is hardly a businessman in this country who is not receiving favors from gov ernment in one way or another. The fact that this is true· of most other elements in the society, in cluding his critics in the ranks of the intellectuals, does not really change the nature of the business man's dilemma. His job may seem to require of him that he support specific government intervention in the economy of precisely the kind that, in· the fight for men's souls, he must condemn as gen eral practice. Knowledge of Kant's Categorical· Imperative - do .only that \vhich you would be willing to see done by all-may get you an A in a college course in philosophy but may get you fired if you at tempt to practice it as a business man. In other words, his very position may seem to require of the busi nessman that, in the struggle against government intervention, he be as often a part of the prob lem as of the solution. Moreover, 1976 THE BUSINESSMAN AND FREE ENTERPRISE 85 how can he face those he is at tempting to persuade to hold the capitalist faith when his own hands are so obviously unclean?

This is not a plea for the busi nessman to abjure all government assistance, even at the cost of dol lars and perhaps survival. With Adam Smith, I assume that busi nessmen (as all others) are rarely prompted by general benevolence. In· fact, with Adam Smith, I would urge us to "examine any proposal which comes from this order of men (the businessman) not only with the most scrupulous but with the most suspicious attention." A second reason for a possible negative answer to the question of whether the businessman should get into the fight to save capital ism is that he is usually an ama teur in the practice of the arts re quired by that struggle. The art required is not that of making or selling men's suits or aircraft mo tors; the art is that of the dealer in abstract ideas, including partic ularly systems of ethical judgment. Don't misunderstand me; it is not that the businessman is unintelli gent. I yield to no one in my re spect for the great practical and theoretical intelligence required for effective entrepreneurship. It is simply that his intelligence is not applied, day in and day out, to the kinds of questions and consid erations that are at the center of the argument. This is not his turf, nor is he usually adept at the word games played on it.

What I am saying in essence is that here, as in most of life, the prizes (in this case, the souls of men) will go largely to those who are specialists in the arts involved. Admittedly there are some such (I could name you a dozen or so) from the ranks of the business men, but their skills in the arena of ideas and words are not a prod uct of their business experience but of what they have done on their own initiative to improve their own understanding of the ideas involved here and their skills in communicating those ideas. Who Stands Most to Lose? Where then does this leave us? Can the typical businessman do nothing but deplore the growth of government and go on about his task - which may have been made easier in some ways and more dif ficult in other ways by that self same expansion of government in· volvement in economic life? I be lieve that the answer to that ques tion is "no" - but I have some real sympathy with those business men (and this will be the great majority) who by their inaction say "yes". After all, as Henry David Thoreau put it, "I came into this world, not chiefly to make this a good place to live in, but to live 86 THE FREEMAN February in it, be it good or bad." NOf, as I have argued elsewhere, isit the ad ministrator-businessman who has the· most to lose from the passing of .capitalism. Most of them will end up as administrators of so cialist enterprise~fif and when full socialism arrives. It is the masses who have the most to lose - and who also have the least under standing of that fact.

But for those of you who are in terested in doing something as business· and .professional people to counter the drift to collectivism, here is what I would suggest that might be both useful and consis tent with the profit-oriented role for which you draw your pay. (1) Work with your own st~ff members and employees. A work force that has some understand ing of the market· place'· and· of where its own goodies come from may (and it is·only a may) be a less troublesome, more effective force over· time. Any' number of such programs, of varying effec..; tiveness, are now' in operation and available for general use. (2) Work with the appropriate audiences in the communities where you· have ··operations .. Here again, there may be some pay-off in terms of' a better political en vironment in which to function. Again, there are a number of such programs now in operation. Anything more? Frankly, I .am not much impressed by the useful ness of business attempts to reach nation-wide audiences with free enterprise propaganda.

What else? The "else" is' what the businessman shouldn't do rather than what he should do. Moreover, it requires that thein dividuals involved must have done their own homework. In· fact, let me say right now that even the first two steps I have identified can' do more harm than good if the 'people s'electing and authorizing the operations have not themselves taken the time and effort to decide exactly what it is they believe and why. There is nothing about being a successful businessman (even a very' success ful businessman) that automatic ally endows one with an under standing of or an· attachment to the principles of freedom - a state ment I could support with· a hun dred examples, if time permitted. In fact, some of the great fortunes of America have been made by thosewho have learned how to use government intervention to their own advantage. Examine Your Principles, I cannot emphasize too strongly that the very first thing each of you who wishes tobea truly ef:"

fective part of this struggle must do is to do your own homework. This requires reading, thinking 197.6 THE BUSINESSMAN AND FREE ENTERPRISE 87 and,yes, writing. I challenge each of you to go home tonight and put down in brief form your guiding principles in life and their· appli cations.· in this area of the rela tionship of the in~lividual to his government. Yo~ . might also find it interesting to follow that with a list of those. things .which you andl or your company or grqup are now doing that are clear o~ possi bleviolations of those principles. Am I asking you to immediately cease all ideological. wrongdoing ? to cut yourself' off 'Completely from all areas of government involve ment? Were·. you to do so, there would be literally no way you could eat or move about. or keep warm or survive - such is the extent of government's involvement. in our lives. Each of you, in your pro fessional role must decide for your self the limits of your compromise with the apparent. demands of the moment.

Summational1d Concluding 'Suggestions (1) I am arguing that the first and indispensable step for any person who wishestobe a part of the effort: to save capitalism is a determination of precisely what he believes and why. This will usually involve, not just putting down the already-determined, but· active study, reflection and discussion. This· is your intellectual and philosophical armor and without it you are not only vulnerable but as likely to be .~ handicap as a help in the struggle as. well. (2) Try as best you can in this imperfect world to live by those principles. (3) In using your professional role or your company in the. strug gle, dQ only those things that seem consistent with the long-run in terests of those whose· money you are using. Remember, not all stock holders will wish to have their money used in this or' any other crusade. (4) If you wish to playa 'per sonal role, apart from your com pany or professional connection, then you' must dig even deeper into what you believe and why; you must know even more fully the arguments and values of those with whom you disagree; you must continually seek to improve your skill in expressing your' ideas and in demonstrating theerrors in contrary positions. My guess is that only a few 'of you will carry through to this level of participa tion - but it is not a numbers game anyway; it is. ag-ame in which' it is the quality of the few that finally counts.

(5) I spoke earlier of the things that you should not do, but didn't specify them. What are they?

88 THE FREEMAN February (a) Don't make a pest of yourself hy trying to force your free-enterprise ideas down the throat of every passerby - whether in your hom'e, your office or at the cocktail party. In the words of Leonard Read, founder and President of the Foundation for Economic Education, who has taught me everything I know on this and many other questions, "Go only where called - but do your damndest to get good enough to be called." (b) You may not be able to avoid involvement in depar tures from principle but at least don't lend your voice or your money to the support of those departures. You may have to pay into Social Secur ity or submit to a system of wage-price controls but you don't have to join committees or groups who support such programs. In a hundred different ways and forms, the American businessman is aiding and abetting the enemy by continuing his involvement in organizations and programs that are as likely to propose as to oppose extensions of government. Don't let this reciprocity game you peo ple of substance play with each other or your desire to be a good guy or what have you lead you to give your money or your name (and hence, by implication, your support) to activities or organiza tions that are working the other side of the freedom street.

To return to Thoreau: It is not a man's duty, as a matter of course, to devote himself to the eradication of any, even the most enormous wrong; he may still prop erly have other concerns to engage him; but it is his duty, at least, to wash his hands of it, and, if he gives it no longer thought, not to give it practically his support. Forgive me if I seem to blas pheme, but even your church and your college should be examined with some care before you bless them with your dollars and your support. You don't have to prove you are a nice, broad-minded guy by providing the devil with the coal for your burning. Again to be specific, you needn't insist that every professor on your old campus think exactly as you do but I believe it completely ap propriate for you to find out if the general idea system that you be lieve to be best is well and ably represented in the ranks of the faculty. I close this sermon with these words : Avoid anger, recrimina tions and personal attack. Those with whom you are angry are 1976 THE BUSINESSMAN AND FREE ENTERPRISE 89 probably (taken by and large) at least as filled with or as empty of virtue as you. Moreover, they are the very ones you might wish later to welcome as your allies.

Avoid panic and despair; be of good cheer. If you're workin.g in freedom's vineyard to the best of your ability, the rest is in the hands of a higher authority any way. If you can see no humor in what's going on (and even at times in your own behavior) you'll soon lose that sense of balance so important to effective and reasoned thought and action. Finally, take comfort in the thought that the cause of freedom can never be lost, precisely be cause it can never be won. Given man's nature, freedom will always be in jeopardy and the only ques tion that need concern each of us is if and how well we took our stand in its defense during that short period of time when we were potentially a part of the struggle. ~ IDEAS ON LIBERTY The Personal Practice of Freedom YOUR FRIENDS and acquaintances ~ay not always believe what you say, but none will question for one moment the fact that your personal conduct and consistent personal practices speak the truth as you see it. You cannot convince your neighbor by word of mouth that you are a believer in temperance if he sees you staggering around your house each Saturday night. You cannot convince him that you are in favor of government econ omy and then sign resolutions calling for federal funds with which to build your town a bathing beach or even a hospital.

You cannot convince him that you believe in economic freedom and independence for the individual and then ask that Wash ington underwrite your personal or business risks. The first step, then, is to make certain that we actually be lieve in this thing. We have got to want it enough to practice it personally. If not, the answer is already given as far as we are concerned. ED LIPSCOMB Why Reforming the ICC Is Not Enough WILLIAM D. BURT THE CHOICE confronting: us today is clear: either abolish the Inter state Commerce Commission, or accept the impending breakdown of transportation. We can have deregulation and a free market. We can, to a point, also endure nationalization with its army of featherbedderswhose pretenses at "service" will be a sad" joke on shippers and taxpayers alike. But regulated transportation the politically palatable middle ground - is nearing the end of the line. Like the canals before them, early railroads received substan tial government aid which caused Mr. Burt is a former legislative assistant to Congressman James F. Hastings, member of the House Subcommittee on Transportation and Commerce.

90 over-investment in facilities. When direct Federal support began to recede in the 1870's, a day of reck oning loomed which could not be forestalled despite the industry's hapless attempts at cartelization. Rather than permit the weakest carri~rs to face the music, Con gress in 1887 created the Inter sta te Commerce Commission to regulate competition and pricing. Initially confounded by the mul tifarious forms of rebating with which companies had circumvented private pooling, the Act to Regu late Commerce needed several "perfecting" amendments. How ever, with the passage of the Mann-Elkins Act in 1910, the ICC began policing its price-fixing sys tem with relative effectiveness. The Transportation Act of 1920 formalized the Fede'ral govern1976 WHY REFORMING THE ICC IS NOT ENOUGH 91 ment's commitment to railroading as a public cartel. All this merely encouraged ship" pers to avoid rail transport. Reg ulation or no, this was bound .to occur. Trucking, barges, pipelines, and air transport all developed to some degree as the market's an swer to .attempted rail monopoly.

For instance, railroads· tended to set rates low on competitive routes (despite cartels) while holding up rates to places .they served alone ; hence, the short-haul trucker. But the growth of such alternatives through the 1920's and '30's hard ly implied an efficient free-market reallocation of traffic" for govern ment still meddled with all trans-: portation. Overbuilt trackage, shielded pricing, and the headlong leap into building public roads, waterways, and airports combined to initiate an exaggerated. shift of business to the railroads' new com petitors. Despite such distortion, the grip of. the rail cartels was so loosened that Congress was persuaded to bring the newcomers under regu lation: trucks and buses iill 1935, and water carriers in 1940. This time, "fairness" and "equality" did not cloak the intent to cartel ize the competitors, and shipper groups almost unanimously op posed extending regulation. Shak en by the depression, trucking firms pleaded for it.

Today, exemptions mean that the' ICC· regulates. alIld sustains a cartel made up of one-tenth of barge traffic, one-third of trucking, and all of railroading. Airlines are similarly overseen by the Civil Aeronautics Board. Economists say that transportation policy amounts to an implicit tax of more than $10 billion a year .. This fig ure, derived mainly from the costs of idled resources and regulatory misallocation of traffic among transport modes, cannot begin to account for the awesome loss of opportunities. But the U.S. De partment of Transportation has found the case sufficiently convinc ing to press for regulatory re form: speeding up the ICC's rate making process, allowing. "zones of reasonableness" within' which rail roads and truckers may freely tinker with rates, and supervising , traffic associations (rate bureaus) to ensure that· these agents of the public c'artel do not act "anticom peti tively."

Instead of merely enumerating costs of regulation, a more logical approach would note these six ma jor features of regulation which have been the undoing of trans portation: Antitrust The major impetus for regula tory reform comes from those who would remodel transport regula92 THE FREEMAN February tion along the lines of antitrust policy. Envisioning "perfect com petition" - an economy where con sumers are so wooed by producers that all political complaints about "high prices" or "scarcity" have been stilled - they overlook. the certainty that antitrust policy will foster inefficiency by imposing ar tificial limits upon the size and functions of transport firms. Un reached economies of scale and pervasive misallocation of traffic to less able carriers can be the only result. Startling evidence of this has been unearthed recently in the case of trailer or container-on-flat car rail traffic, which., was once touted as the savior of transporta tion because it uses trucks for short-haul pickup and delivery of containers while availing itself of the rails' long-haul efficiency. "Pig gyback," as such shipments are called, now loses money for many railroads. Why? The idea is un tarnished; however, because rail roads are prevented from owning truck firms performing piggy back's "retail" services, and be cause the ICC requires railroads essentially to price their services "by the mile," incentives have been bent towards maximizing the per centage of each piggyback trip spent on the rails. Thus, low-vol ume piggyback and container ter minals have proliferated, suffocating the concept of efficient "whole sale" rail service. Antitrust guar antees such expensive mischief.

Egalitarianism In response to its recent critics, the ICC has returned to waving its most infamous bloody shirt: "unfair a:nd unequal treatment." That the would-be reformers have also bowed to this emotional ap peal is apparent in the fact that their proposals leave intact exten sive ICC powers compelling car riers to handle each other's equip ment "without prejudice," to co operate in any through route or inter-line rate "reasonably" pro posed by connecting carriers, and to peg freight charges to mileage ethe "long-haul/short-haul clause") so as not to favor shippers in any one location. But discrimination incurs no in justice. The only thing "binding" a customer to any product such as transportation is his continued judgment that, whatever its unde sirabilities, he is still better off buying it than not. In contrast, forcing carriers to sell their prod uct on terms other than their own is but slavery.

Ironically, price discrimination often benefits those who bewail it. For example, wherever several pro ducers of the same product who are located differently ship to the same destination, strict mileage 1976 WHY REFORMING THE ICC IS NOT ENOUGH 93 rates result in the nearest pro ducer's underselling all others. This, of course, reduces the num ber of comp.eting shippers, each of whom now bears a much higher proportion of the overall costs of the transportation company. On the other hand, reducing rates to more distant producers permits costs to be spread over many rather than few customers. This makes possible many kinds of transportation which could not be supported by Hnearest" shippers alone. Though discrimination si multaneously increases transport efficiency, and contributes to the pleni tude of goods "from all over" found in most marketplaces, it has occasioned such lasting envy among its imagined victims that its benefits seem permanently for gotten.

To the extent, then, that egali tarianism wastes transportation resources, it is responsible for the railroads' dismal return on invest ment. Despite the ICC, though, proscribed price discrimination often reappears as service discrim ination - by far a relatively inef ficient substitute. Consider the latest generation of "hy-cube" boxcars designed to han dle auto-parts. These emerged when railroads were prevented from cutting rates to the auto makers, or from bending ICC car service rules to assure GM and Ford a dependable supply of freight cars. By building the ca pacity of two older cars into one big new one, railroad managers cleverly improved their ability to assure car supply and do so at effectively discounted rates. How ever, costs were run up in ways that didn't show until later. When auto traffic slackens, hy-cube cars amount to little more than white elephants. As maintenance forces have discovered, the weight of the big cars crushes already-weak track structures. Adding insult to injury, hy-cubes are found to gen era te extreme lateral "waddling"

movements at slow speeds which figure in an increasing number of derailments. Common Carrier Obligations How would we fare if carriers weren't required to provide stable service for everybody? We'd be better off ... with more variety and improved transporta tion. Best 'Of all, most of us could quit footing the bill for those "dis advantaged" people who choose to do their business from relatively inaccessible corners of the world. The common carrier obligation, a queer but time-honored anomaly of common law requiring transport firms to serve all "reasonable" comers, underlies nearly every power of the ICC. It also accounts for the familiar behavior of trans94 THE FREEMAN February port employees toward· the public. As Clarence Carson observes, theirsis the enthusiasm of a serf. 1 Included in the category of "common carrier" ICC decisions are those governing railroad branchline abandonments, truck service to small communities, and the rail passenger-service discon-, tinuations of the 1960's. The CAB's requiring airlines to serve small airports is yet another ex ample. When carriers are required to serve all (or· when tax monies support Amtrak's passenger trains), unspirited, mediocre serv ice is "assured" to "disadvan taged" recipients at the expense of others. More importantly~ such re quirements abort better ideas by keeping their potential markets locked in the cold arms of the common carrier.

Railroads ran long-distance pas senger trains decades after it had become clear that such operations had been doomed· by union rules and government subsidy of inter state highways and airways. After Congress created Amtrak to per petuate the existing passenger train concept, the public agency shortly dropped over one hundred trains from its schedules. Such a quantum leap backwards for the 1 Clarence B. Carson, Throttling the. Railroa.ds (Irvington, New York: Foun dation for Economic Education, Inc., 19711, p. 44. common carrier triggered an en trepreneurial response which in corporated major technological in novation" today .lavishes . unheard of service on its patrons, and, for the first time in memory, runs full, happy trains. "Auto-Train" could never have been born had Amtrak or the railroads lived up to their common· carrier .obligation. Prohibitions agai,nst railroad branchline abandonments have forestalled another better idea: the independent feeder "shortline"

railroad which, without union rules and with personal attention to rural shippers,can make money out· of many previously uneconom ic branches. Similarly, it is evi dent that deregulation of trucking would encourage widespread entry of low-capital entrepreneurs into service-oriented pickup and deliv ery. Lastly, the experience with CAB-unregulated intrastate air carriers in the Southwest gives reason to expect that deregulation would not only increase the profit ability of national airlines concen trating on dense routes, but also increase travel between lightly populated points served by efficient small air carriers. All of this is the other side· of the coin: "common carriage" actu ally circumscribes the different means by which people may avail themselves of transportation. It does so by spreading the errone1976 WHY REFORMING THE ICC IS NOT ENOUGH 95 ous notion that most shippers will find it more advantageous to force their desires upon a common car rier.~ despite low probability of success~ than to pay their own way .. on the free market. Politi cally, this formula is dynamite, emphasizing emotional appeal and obscuring complex truths.

The Incentive to Proted To this point we have analyzed dogmas retained under "reformed" regulation which are, however, not essential to regulation per se. Even more pernicious are. the institu tional dynamics .of regulation. One of these is the ICC's histor ic (though hotly denied) .policy of holding one carrier's rates up to protect the traffic of another known as "umbrella ratemaking." Another means to the same end is the Commission's effort to sustain weak carriers at the expense of stronger competitors,· as when the Milwa ukee Road was given track age rights into Portland, Oregon and Louisville, Kentucky as condi tions for ICC approval of the Burl ington Northern and Louisville & Nashville/Monon Railroad merg ers. Such practices are rationalized in part by Congress' mandate in 1940 to "promote sound and eco nomic conditions" among regulat ed carriers. Despite a simultane ous directive (and another in 1958) to refrain from disturbing the "inherent advantages" of its subjects, the Commission has re peatedly seized upon the 1940 lan guage to excuse its sustaining weaker carriers by robbing strong er ones.

With good reason! All of the ICC's political incentives place a premium upon increasing the num ber of its constituents-at least as long as it can do so at the ex pense of strong carriers' finances or inelastic consumer demand. The excess capacity, lingering financial anemia, and. periodic bankruptcies can all.be blamed on "capitalism" or "mismanagement," and charged to the taxpayers eventually. Congress, too, would apparently prefer to "fly now and (let the other guy) pay later"; witness the current imbroglio over allowing the Lehigh Valley or Rock Island railroads to be abandoned. Um brella policy, then, is also conso nant with political shortsighted ness, and is therefore a permanent feature of economic regulation. The Threat of Intervention and Its Uses Recently, the ICC has stressed that only a small percentage of rates are suspended, and fewer still refused, because they are too low. Nonetheless, the cartel is alive and well. Inflation means that rate decreases take the form of rela96 THE FREEMAN February tively smaller rate increases . More over, most of the Commission's work· has already been done, for rates of various kinds do not go into effect until they have been ap proved by organizations of car riers known as "rate bureaus."

If confined to the innocuous data-gathering services they tout, rate bureaus' expenses would be minor. Instead, the approximately ninety rail, truck, and water traf fic associations each collect mil lions of dollars every year from member carriers, most of which is spent to maintain forces of potent legal and lobbyist talent used on behalf of cartel interests. Protests by well-funded and sophisticated rate bureaus routinely bring on ICC suspension of independent rate filings - what few there are and thus raise the probable costs of filing "cut rates." Combined with the ICC's casting railroads in the dual roles of competitors/co operators, the deterrent is usually sufficient to obviate any need for open Commission enforcement of cartel pricing. Indeed, rate bu reaus themselves seldom overtly request "minimum rate orders," so deep-rooted is their pervasive influence. As long as the power of suspen sion· and refusal over management decisions exists, there will be peo ple to exploit it and magnify its superficially minor impact. Amendments to the Interstate Commerce Act in 1948 assured "the free and unrestrained right to take inde pendent action" in filing rates.

Regulatory reform legislation would do no more than reaffirm this principle with similarly hol low words. The Destruction of Regulated Transport The recent remarkable upsurge in unregulated owner-serving "pri vate" trucking, "contract carriers" (trucking firms devoted to single customers), and illegal gypsy haul ers reminds us that the market is ever at work devising paths around government obstacles. Characteristically, regulation generates artificial monopoly gains in some economic sectors to dissi pate them elsewhere. Briefly, con sumers of the first product are trapped, enabling the regulators·to reap loot sufficient to support their beneficiaries. But the consumer victims rather quickly discover "next-best" substitutes for the regulated item. Though in trans portation the substitution process is made more difficult by immense . capital costs, even these will be overcome given enough incentive by cartel pricing.

Once this· occurs, three choices unfold to public policymakers: (1) extend regulation to the substi hItes, (2) initiate direct tax sub1976 WHY REFORMING THE ICC IS NOT ENOUGH 97 sidy of intended beneficiaries, or (3) give up the whole unsavory game. Again and again, Congress has chosen to extend· regulation most notably in 1935 when truck competition was beginning to dis lodge both the rail cartel and its rationale. Now, regulatory reform proposes permanent direct subsidy to railroads in the form of a "trust fund" financed by a tax on all (in cluding unregulated) carriers. Continuing diversion of business to unregulated carriers would like ly lead Congress to extend regu lation to them, also. One must question how long this can go on before the public recog nizes the dangers underlying con tinued regulation. Surely, many consumers will always find ways to avoid the regulatory cartel. Al ready we are seeing plant and inventory duplication to avoid trans port altogether - better known as economic Balkanization. As the gap keeps widening between orig inal free-market possibilities and remaining substitutes, however, we all become poorer. The only way the cartel can be made to work for its beneficiaries is by complete government control of the econ omy, at which point it should be evident just how much we have been impoverished.

But it will be too late then. Regulation's defenders claim that viable free-market transpor tation alternatives were never pos sible. But the truth is that gov ernment intervention put us on the path to where we are today. If jus tice and necessity are to prevail, transportation will be deregulated. Regulatory reform is not enough., IDEAS ON LIBERTY "Horse and Buggy" Principles THE IDEAS of our forefathers are now often called "horse and buggy" principles that might work in a frontier community but not in an industrial age of rapid transportation and communi cation. The fact remains, however, that it was those "horse and buggy" principles themselves that caused the development of the automobile and the countless other products and services that have made this earth a more pleasant place to live. Conversely, the worldwide situation that has been threatening for so many years to plunge us back into the barbat'ism of complete govern mental controls is due almost exclusively to a rejection of those principles and concepts - in all nations, including our own.

DEAN RUSSELL, "The Silent Partner"

BERNARD H. SIEGAN Society VOTERS in Jefferson County, Mis souri (pop. 110,000) have twice re jected zoning. In 1970, 56 % voted to terminate it and 58% voted in 1974 against establishing county zoning. I met some of these anti zoners recently. One man told me he began his campaign shortly after discharge from the army. He purchased about an acre of land in a rural area to build a home, but was denied a building permit because the parcel was too small to qualify under the zoning ordinance. He was ou traged since it was inconceivable to him Copyright 1975 Bernard H. Siegan Mr. Siegan is the author of Land Use Without Zoning and many ~rticles on the subject. He practiced law. for 20 years in Chicago before moving in 1973 to La Jolla, California where he is Distinguished Professor of Law at the Univ~rsity of San Diego Law School. 98 that anyone could possibly have been harmed by his proposed struc ture.

When. my learned friends hear this story, they generally react with a polite tolerance, a kind of in ward yawn: so what else is new? This attitude, regrettably, fore closes discussion and feeds on it self. We seem to have forgotten that basic liberties are at stake. Most people I meet appear to take it for granted that persons who own land have no inherent rights to do anything with it except what government will allow. That notion, however" is totally incon sistent with the ideals of a free so ciety in which people should be able to do as they please unless their acts clearly harm or interfere with the liberties of others.

1976 A FREE SOCIETY 99 That is the nature of freedom. The exercise of freedom is' mean ingful only when it involves unpop.;. ularactions or expressions. Obvi 0usly there is never a problem in engaging in conduct everyone ap.:. proves. But this infrequently oc curs inasmuch as people differ greatly in interests and desires. In a free society, consequently, free..; dam should only be limited when its exercise actually diminishes some one else's freedom; surely not when it is merely contrary to the will of a majority. By that standard, freedom in the use of property 'has vanished' in most of this country since those who control zoning do not have to justify it on any such grounds. In fact, there is little restraint on the zoners; often they can do as they please. Contrast this with treatment of the press. Unless they libel some one, that is, inflict serious and measurable damages, publishers are largely free of controls. Had the same individuals chosen a busi ness involving use and development of property, their freedom would have been severely curtailed. There is plainly a different standard op erative in the distribution of free doms. Yet liberty, we are told, is not supposed to be divisible.

Our social order has been in flux in recent years as more people who claim they have been denied them, obtain "equal" rights~ Personal freedom has been a critical issue of our times. Nevertheless, a' reverse course has been followed on the ownership of property. Rights of property owners have been steadily eroding due to greatly escalating zoning restrictions. Probably the strongest, support for property rights comes from the grass-roots. One can predict that in referendums affecting property in terests such as those on zoning, ur ban renewal or environmental re strictions, a majority of average and moderate income people are likely to vote against the position that restricts private property. While much of this can be ex plained on the basis of the harm such laws cause poorer people, these actions also stem from a belief in the right of the individual to own and use property. This feeling differs substantially from that held by some large de velopers who tend to view zoning as a game of politics and expedi ency. Their attitude reflects the pragmatic wisdom of our times that puts property rights on the block. Many small property own ers live in a less sophisticated world, and for them zoning is any thing but a game; it is more a tyranny of government.

A definition of tyranny found in the dictionary is "arbitrary or un restrained exercise of power."

100 THE FREEMAN Feb1"ua1"Y There is no more apt description of what occurs under zoning, where the rules are set and reset at the will or whim of the local council. When the zoners remove hundreds or thousands of dollars of value from property, the effect is com parable to a fine imposed against the owners in that amount - ex cept the latter have committed ab solutely no offense. However you refer to it, there is something terribly wrong when persons have to appear before local officials and plead for the opporLincoln on Power tunity to use their property as they deem best. It is a demeaning procedure. The owner must care fully consider how to speak, act, look, dress and whom to hire. Per haps it doesn't matter, but there is too much at stake for most to risk it. These officials are intended to be servants, not masters of people. Election or appointment to an of fice having zoning authority carries with it awesome power over other human beings. It has no place in a free society. ~ IDEAS ON LIBERTY TOWERING GENIUS disdains a beaten path. It seeks regions hitherto unexplored ... It thirsts and burns for distinction; and if possible, it will have it, whether at the expense of emancipat ing slaves or enslaving free men. Is it unreasonable, then, to expect that some man possessed of the loftiest genius, coupled with ambition sufficient to push it to its utmost stretch, will at some time spring up among us? ...

Distinction will be his paramount object, and although he would as wilHng"ly,perhaps more so, acquire it by doing good as harm; yet, that opportunity being past, and nothing left to be done in the way of building up, he would set boldly to the task of pulling duwn. When such an one does (spring up among us), it will require the people to be united with each other, attached to the govern ment and laws, and generally intelligent, to successfully frustrate his designs. From an address before the Young Men's Lyceum, Springfield, Illinois, January 27, 1837.

Robert Owen: MELVIN D. BARGER THE NEARBY WABASH RIVER have seemed symbolically reassur ing to Robert Owen on the day he arrived in Harmony, Indiana in late 1824 to launch the millennium. It had been on another river, the Clyde in Scotland, that Owen became rich and famous as the di rector of the New Lanark cotton spinning mills. Here at Harmony, on the Wabash, he was about to establish a community that would become a beacon for all mankind. For too long, in Owen's view, the world had been in bondage to the sins of individualism and self-in terest. He had a better way, a way of cooperation and sharing. New Mr. Barger is a corporate public relations ex ecutive and writer in Toledo, Ohio. The Woolly-Minded Spinner Harmony, the name he gave the village after purchasing it early in 1825, would direct the world·· to this new way by its successful ex ample. But as students of American history know, Owen's millennium never came. New Harmony was a colossal failure that consumed at least four-fifths of his fortune and destroyed his reputation as an as tute businessman. Far from prov ing that individualism and self interest could be eradicated, New Harmony revealed perverse and virulent forms of both traits.

Hailed as a new beginning in co operation, the community of 900 persons on the Wabash was char acterized by bickering and dissen101 102 THE FREEMAN February sion almost from the start. Estab lished as a new social order that would bring economic security, the village quickly fell behind· in crop production and ordinary mainte nance tasks were neglected. Pro claimed as the model for a system that would usher in a new era, Owen's village was copied only briefly by other communistic so cieties in America and was then abandoned. As a venture that was supposed to spark the millennium, New Harmony was a total failure. Oddly enough, however, the New Harmony debacle may have been the high point of Robert Owen's life, because it won him a place in American history and created a heightened interest in "Owenism," the brand of socialism he espoused. Unfortunately, neither Robert Ow en nor his followers. learned the lessons that New Harmony could have taught them, and much of the "democratic socialism" that is now practiced in the Western world reflects the same fuzzy thinking that destroyed Owen's model com munity. We are still paying for Owen's folly and for the failure to understand the contradictions of Owenism.

Why did the New Harmony venture fail? It certainly had everything going for it. The com munity was actually a going con cern with good buildings, culti tivated lands· and orchards, and a fair amount of livestock when Owen purchased it from a German religious sect called the Rappites. It could have had good leadership, because Owen was wealthy and had proved himself a capable man ager. The New Harmony move ment also had wide support in the new American nation, and Owen had even been given an audience with President-elect John Quincy Adams and the Secretary of the Treasury when he arrived in Washington. There was a kindly tolerance of new ideas, and if New Harmony had been a sound and workable system, the United States had both the political freedom· and the available land for thousands of such communal enterprises. Then or now, nothing in the fun damental American idea was op posed to the socialistic communi ties of the early 19th century, since they were voluntary arrange ments and used peaceful means. So why didn't New Harmony become - as Owen hoped it would - the seed colony of a new social order for the country and the world?

How Allocate Resources? The seed colony didn't repro duce because the problems that undermined New Harmony are essentially the same problems that bedevil every social democratic country in the world, including the present-day United States. Using 1976 ROBERT OWEN: THE WOOLLY-MINDED COTTON SPINNER 103 strictly voluntary, peaceful means, how do youohtain human coop eration ,and allocate resources in· a socialistic society?'· How do you convince the most productive work ers that they should keep on pro ducing when everybody, including the idler· and the incompetent, is rewarded equally? How do you. de cide what is to be produced? Or who ,. is to have what job ?'Who should do the saving to provide investment funds? How can you exchange··. goods and services ina fair. and equitable manner? These are tough,· common-sense ques tions, and they weren't answered satisfactorily at New Harmony. So far, the democratic socialists haven't really answered them either. Socialists are either forced to yield to the requirements of the marketplace, because of their love of freedom, .or· to move towards the totalitarianism of the Marxist Leninist camp, because of their blind love of socialism. Both ac tions are a tacit admission that democratic socialism doesn't work.

In Owen's case,he made no com promises with reality, since he was basically rigid in his outlook and was not capable of altering most of his views. Early in his adult life, he had developed a dis taste for individualism and compe tition, although he was in many ways a gifted individual who could easiIycompetewith others. He was also a man of deep humanitarian instincts, and he would have ab horred ,the brutal socialism 'of modern Russia and China. Be yond that, however, he was dog;. maticand single-minded. Macau lay regarded him as a "gentle bore" a'nd he was said not to have thought differently of a book .for having read it. In other words, Owen was in-some ways insensi tive .to the realities of human na ture and did not learn a great deal either from study or from experi ence. Yet he was an outstanding person of great ability, a high achiever in what would later be the Horatio Alger, Jr. tradition.

A Successful Businessman Owen was born in Newton, Wales on May· 14, 1771, and grew up under circumstances that seem severe by modern standards but were important in shaping his philosophy and life's goals. Unlike some advocates of social change Karl Marx, for example - Owen was a happy and successful man who had no personal reasons to resent the economic system of his day. Although he began his work ing career as an apprentice at age 10 without· pay for the first year, his abilities were such that he had become a manager of a cotton mill at age 18 and within two years was able to demand and obtain a responsible position at the then 104 THE FREEMAN February handsome salary of 300 pounds yearly. He soon became well known in the British cotton spin ning industry, and in 1799 he pur chased an interest in a group of mills at New Lanark, Scotland. He became world famous as a result of the success of his enlightened policies in running the New Lan ark mills.

Owen w'as born at the right time and landed in the right place for the kind of business success he was to enjoy. The mechaniza tion of the cotton spinning arts was in full swing in the late 18th century, and was presenting ex cellent commercial .opportunities for large profits and rapid growth. It was also an ideal opportunity for a person such as Owen who had considerable management skills but, at the outset, little capital. Owen's adult life can be divided into several periods of interest and activity. During his first 13 years at New Lanark, he was occupied with the problems of running the mills and bringing about improve ments in the educational system and working conditions for the people employed in the mill. As he became wealthier and acquired na tional prominence, he began to speak out on social conditions and was soon producing the first of many essays outlining the pro gram that eventually became ·known as Owenism. He was associated with the New Lanark mills until 1828, but long before that the promulgation of his social pro gram had become his chief inter est.

With the closing of the long Napoleonic w'ars in 1815 and a sudden dropoff in demand, England went through a depression. Alarmed because of widespread unemployment, a committee of nobles and other leaders sought advice from manufacturers on ways of dealing with the problem. Owen proposed the development of Villages of Cooperation - the self sustaining community idea that became the blueprint for New Harmony. New Harmony Owen thought that an ideal com munity such as a Village of Co operation would bring out the best in people and put an end to com petitiveness and other traits which he saw as social evils. He decided to prove this w'hen he purchased the Harmonie (I!armony) settle ment in 1825 from the Rappites. He renamed the community New Harmony and issued an open in vitation to persons who might choose to affiliate with the settle ment. But the venture was charac terized by friction and indecision from the start, and by 1828 Owen withdrew most of his support, though retaining title to the prop1976 ROBERT OWEN: THE WOOLLY-MINDED COTTON SPINNER 105 erty. His financial losses were so great that Mrs. Owen, who had not accompanied her husband to Amer ica, was forced to move out of their large mansion into smaller quarters.

Owen unsuccessfully attempted to persuade the Mexican govern ment to sponsor a community sim ilar to New Harmony. He then re turned to England and spent the rest of his life advocating social reforms. He was associated with another community venture in Englwnd, but like New Harmony, it was also shortlived. He experi mented with a Labour Exchange, a sort of tradesmen's cooperative to which individuals would· bring articles in exchange for notes in lieu of currency. The exchange soon failed. Owen also led a mas sive union movement in England in the 1830s, but this collapsed within a few months. For the re mainder of his life, Owen contin ued to publicize his social theories. But he had lost most of his in fluence by 1834. He spent his last five remaining years as a devotee of spiritualism, and believed him self to be in contact with famous persons who had passed on. At age 86, he wrote his autobiography, a book that is surprisingly lucid and carries important sections outlin ing the basic tenets of Owenism.

He died at 87. Robert Heilbroner described Owen as "a strange mixture of practicality and naivete, achieve ment and fiasco, common sense and madness." We are notaccus tomed to such "strange mixtures" most of the time. Actually, how ever, Owen's behavior was contra dictory only to those who lacked his view of matters, which he was to call "a new view of society." He always knew what he was doing and had supreme confidence in himself. He perceived a certain kind of role for himself and lived up to it. Guiding Principles Throughout his adult life, Owen was guided by three obsessive be liefs about himself and mankind which were to influence almost everything he did. Many of Ow en's actions will appear stupid and contradictory to the person who does not understand Owen's moti vations and attitudes. In fact, how ever, Owen was an unusually con sistent person. He almost always behaved in accordance with his fundamental beliefs. It was his consistency, in fact, that may have led to his· downfall on some oc casions.

What were the three guiding elements in Owen's life? First of all, he was committed to a form of humanitarianism, and was certain ly humane in his desire to seek a better life for all and to put an 106 THE FREEMAN February end to wretched social conditions and human suffering. He loved people, although in a way that some persons may have felt de meaning and patronizing .He was kindly and gentle,and it is virtu ally impossible to find an instance in which Owen exhibited spite, vindictiveness, jealousy, or greed. He had a friendly manner that others found attractive. His writ ing also had a warm, friendly tone, and his criticisms were usually carefully phrased when they in volved specific persons. The second guiding force in Owen's life was messianism and a belief in the· eventuality of an earthly millenni urn. Yet he was openly anti-religious. He saw him self in a messianic role with a personal responsibility for causing the .millennium (Le., a New Moral Order) to come to pass. Had Owen been merely a humanitarian with out a messianic. mission, he prob ably would have ended his days as the genial director of theN ew Lanark mills. But he was not con..; tent with relative progress. He was able to prove at New La!nark that considerate treatment of .. employ ees and a general interest in im: proving employees' well-being is also compatible with good busi ness.But such improvements were too slow for the transformation that he believed was needed. He wanted to take dramatic and effective action that would quickly transform the world and bring about the glorious millennium. It was this messianic mission.,.- and belief in millennialism -that took him from New Lanark to New Harmony.!

Determined by Environment The third guiding belief in Ow..: en's life was determinism. He was unqualifiedly deterministic, and seems to have been almost com pletely committed to the belief that individuals are shaped by their conditions and their environ ment. He gave some weight to heredity, but devoted most of his attention to conditions. He was openly critical of individualism and seemed to be unwilling to ad mit that certain persons were capable of rising above the condi tions .imposed on them· by society (even though he had!). Owen .was dogmatic in stating his .belief in the proposition that individuals are shaped by their environment. In the first essay in·· ANe,w 1 Frank Pridmore, an Owen biographer, wrote, "When· (Owen) published his New View of Society, he looked for the regen eration of the world fo begin on the mor row: throughout his long life that high vision, ever receding ashe advanced, was still before his eyes; and he died at the ag'e of eighty-seven happy in the belief that the millennium was even then knock ing at the door.'.' Podmore, Frank, Rob ert Owen, Augustus M. Kelley, Publish ers, New York, 1968 (a reprint of the 1906 book), page 124. .

1976 ROBERT OWEN: THE WOOLLY -'MINDED COTTON SPINNER 107 View of Society, Owen stated a fundamental principle which ex pressed his determinism ,and'also bec~me the rationale for many. of his, plans. This principle was re-' stated frequently in Owen's writ ingsand has been considered typ ically Owen ,by his biographers. The principle is: Any general character, from the best to the worst, from the most igno rant to the most enlightened, may be given to any community, even to the world at large, by -the application of proper means; which means are to a great extent at the command and un derthecontl'olof those who have in fluence in the affairs of n1en.2 Owen's determinism, like his messianism, also helped take him out of New ,Lanark and into a wider world of social 'action. Had he not been basically determinist in his outJook, he might have been able to see some of the pitfalls in his plans for, Villages of Coopera tion. As a practical businesslllan, Owen knew that successful ven tures require certain character traits and skills in management personnel and workers. If .l!e had applied' this same understanding to his proposals for ideal com munities, he would have admitted more freely that i the communal 2 Robert Owen, ANew View of Society, first· published 1813/14, Penguin Books, Baltimore; '1969, page 101.

ventures would require similar in dividual traits in order to succeed. Although Owen steadily lost power and influence in the social ist movement after 1834, 'he con tinued to travel and to lecture whenever he could find an audi ence. New stars were appearing in the -socialist constellation, among them Karl Marx and Friedrich Engels. Both paid homage to Owen as a man and a pioneer socialist, but neither· thought much of his utopian socialism and they thor oughly refuted his major ,tenets. The struggling labor movement also honored Owen in the breach. Owen approved of general strikes, but wanted them. carried out in a spirit of universal charity and philanthropy -an idea that never has' caught on with any major la bor union. Religion Rejected Owen also made a .colossal mis take' when he turned his back on organized religion "and even .at.:. tacked the church in am 1817 speech. This position cost him val uable allies, of course, but it also blinded him' to the important role of religion in shaping society. It was indeed ironic that a religious sect,the Rappites, had established Harmony and operated it as a suc cessful and prosperous community; but things quickly fell apart under Owen. Owen wanted the kind of 108 THE FREEMAN February sharing amd serving that groups such as the Rappites practiced, but he rejected the religious be liefs that held them together. As C. A. Burt, a resident of the fa mous Oneida Community, said with reference to New Harmony's failure: "There are only two ways of governing such an institution as a Community; it must be done either by law or by grace. Owen got a company together and abol ished law, but did not establish grace; and so, necessarily, failed."

To this day, socialistic communi ties survive only when they are held together by religious or na tionalistic feelings or are ruth lessly totalitarian. M'/sreading the Marlcet Perhaps Owen's greatest blun der, however, was in failing to un derstand the marketplace in which he had first accumulated his wealth and acquired prestige. De spite his success as a businessman, there is no evidence that Owen ever attributed his good fortune to the relative freedom of, the mar ketplace in Britain or· saw much social good in the mechanization of the cotton spinning industry. He did not seem to be interested in the kind of progress that occurs by increasing the productivity of the individual worker through the use of labor-saving machines. Dur ing Owen's lifetime, for example, his own cotton spinning industry had made low-priced clothing and fabrics available to the masses. The impact. of the cotton-spinning industry was so extensive that J.

A. Schumpeter asserted that Eng lish industrial history can (1787 1842) "be almost resolved into the history of.a single industry."3 The rapidly improving productivity of the cotton spinning industry ex emplified Adam Smith's argument that "the great multiplication of the productions of all the different arts, in consequence of the division of labour, ... occasions, in a well governed society, that universal opulence which extends itself to the lowest ranks of the people."4 It did not seem to occur to Owen that he and his fellow manufac turers, albeit for profit-seeking purposes, had performed a great social service in building an indus try that gave the majority of the people access to better clothing at lower prices. To Owen, cotton spinning machines had enslaved the worker and left him poorer than before. Adam Smith, study ing the same industry, would have concluded that the steady improve3 J. A. Schumpeter, Business Cycles, vol. 1 (1939), page 271 (referred to in Phyllis Deane's The First Industrial Rev olution, Cambridge University Press, England, 1965, page 84.) 4 Adam Smith, The Wealth of Nations, Gateway Edition, Henry Regnery Com pany, Chicago, printed in 1953, page 19.

1976 ROBERT OWEN: THE WOOLLY-MINDED COTTON SPINNER 109 ments in machinery would tend to benefit almost everybody and that the British standard of living could· be expected to rise with. ev ery increase in industrialization. Owen was unduly pessimistic about the future of mechanized in dustry, despite the fact that he had a major role in early stages of the industrial revolution. Utopian Socialism Replaced by Bolshevism By the time Owen died in 1858, his utopian socialism had been largely displaced by the fiery doc trines that eventually became mod ern Bolshevism. But democratic socialists still claim him as their true ancestor. Clement Atlee, the British Labour Party leader who engineered a great upset victory at the polls in 1945, was quick to point out that "socialist theory was developed by Robert Owen in Britain long before Karl Marx." Perhaps this comment reflects the hope that Owen's humanitarian ism will triumph over the harsh ness of Marx and the totalitarian ism of -Lenin and Stalin.

The unfortunate verdict of un folding events does not sustain this hope. The Owenism that failed at New Harmony did not die there; it has become the underly ing philosophy of today's British and American governments. If there are redeeming qualities in all this, it's that many democratic socialists share Owen's decency Ulnd humanitarianism. But they also share the woolly-mindedness and impracticality that sank his New Harmony enterprise and led to weakness and failure in Owen's other ventures. If it's the spirit of Robert Owen that pervades mod ern society, some of us might want to echo the words of an editorial ist of Owen's time: Robert Owen,·· a benevolent cotton spinner ... conceives that all human beings are so many plants which have been out of the earth for a few thou sand years, and require to be reset. He accordingly determines to dibble them in squares after a new fashion ... Everybody, I believe, is convinced of Mr. Owen's benevolence and that he proposes to do us much good. I ask him to let us alone, lest he do us much mischief.

Robert Owen - humanitarian, messiah, amd determinist - didn't want to let anybody alone. Today, we live with the mischief of his faulty philosophy. ~ ACADEMICFREEDOM JOAN WILKE JUST WHAT does "academic free ... dom" mean? Judging from the events of recent years, it means: (a) the students' rights to decide what they will learn (b) the faculty's rights to decide what they will teach and under what conditions (c) the institution's obligation to present all points of view (d) everyone's right to an education, through college (e) the right to the same education as someone else, regardless of apti tudes or economic means (f) the lowering or abandonment of standards of learning and ac complishment to make universal education possible and uniformly equal (g) anyone's right to disrupt the learning of others Miss Wilke is an advertising writer. 110 (h) everyone's right to learn on the other side of town (i) the right to appear at school in straggly hairstyles and sloppy dress (j) the right of boys and girls to 'share the same athletics and lock er rooms (k) government subsidies of educa tion based on race, sex and eco nomic status (I) all of the above Of course, the only reasonable answer ,can .be : "None of the above." These are just some of the preposterous claims masquerading today as academic freedom.

The only meaningful academic freedom is the basic right of an in stitution's board to determine all conditions of education in the school under its management. That's why real academic freedom 1976 ACADEMIC FREEDOM 111 will be unrealized until educational institutions are.· free of govern ment financing and control. If a board is sUPPo$ed to repre sent the interests of all the tax payers, the result must be chaos. How could it be otherwise? The public hody is. a hodgepodge of in terests, ideas and beliefs, all with a legitimate claim on a public sys tem. It is the tax base of education that gave one taxpayer the power to remove prayer from the schools. It was the tax base that justified bringing. prayer into the schools in the first place .. It is the tax base that justifies busing~. and also antibusing activities. And invit ing Communist speakers to cam puses. And protesting against Communist lecturers ...And teach ing sex in tne primary grades. And removing sex from primary class es. And fighting over·. textbooks.

And all the rest. This pushing and pulling at the school system. frustrates everyone and accomplishes nothing but dis ... ruption. All education requires a point of view as to content,. methods, direc tions, .and .the like. No point of view can be taken without offend ing someone. The nothingness that results from trying to accommo date all points of view could be called non-education. It's the essence of socialized education. It is the government control and en forcement of "equal opportunity" that has inevitably driven educa tion to its lowest, most ineffective level. That's education under the pub lic imperative. And what is the al ternative? What is the private im perative? With private funding, schools must deliver the kind of education parents want for. their children. How could schools avoid it? They would be individually. selected on the basis of their performance. If they didn't offer what enough par ents wanted, they would go out of business.

If schools were free to deter~ mine their own programs with an eye toward the market, everyone's freedom would be broadened by virtue of the choices that would become available. The academic freedom of the in stitution to chart its own course would establish the only possible realistic basis for the academic freedom of students: a variety of offerings to choose from. There would be schools with prayer and schools without. Some with athletic programs and some without. Some with coed athletics. Some allowing freaky dress. Others not. Some highly special ized.Some general. ,Some low. cost. Some expensive.

112 THE FREEMAN February All would prosper or fail on the basis of how they met the desires of the publi'c. Some things would be missing the fighti.ng, rioting, shouting, ar guing and disruption that takes place when one system is supposed to be all things to all people. This same academic freedom, the institution's right to provide the program it chooses, would also provide real academic freedom for teachers. There would be' a real market for different points of view and new methods. The teachers' creativity would be stimulated by the variety of approaches and edu cational programs available as well as the drive toward improvement supplied by competition. There would be no lifelong lock-in to a stale job - no stagnation or' iner tia rewarded with raises acquired by carrying a sign. Noone can say what forms true academic freedom would take and how it would develop and all that it would produce. But some things are certain. Unlike our present static system, improved forms of education would not only be pos sible, they would be assured. And correspondingly, the archaic and ineffective would disappear.

Does anyone remember why we have those summerlong vacations? There was a time when heat in the summer was a problem. And in some places, maybe the youngsters were needed to help in the fields. Now we have air conditioning. And most families don't raise their own produce. But we still have those long summer vacations often a problem for teenagers, a bore for youngsters, a trial for moms. Under a system of private edu cation, it is reasonable to assume that school facilities wouldn't re main unprofitably idle for months at a time. In some instances there might be a choice of terms~ on a rota tion basis. Or continuous terms with several shorter vacation pe riods during the year. Or the choice of going to school ye·ar round. Or the alternative of going to school part time or in adjust able periods to accommodate em ployment in the case of highschool and college students who want to work.

And the "free lunch" would be free at last. Instead of being paid for by the taxpayers, free lunches offered by a private school would be a competitive inducement to gain enrollment. It would only have promotional effect if the school's fees were competitive with those in comparable schools; so "free" in this case would take on some meaning. Total educational programs 1976 ACADEMIC FREEDOM 113 might be offered in this same free and easy competitive way. For ex ample, builders and developers in increasing numbers would likely include schooling in their master plans, in the same way that they now include recreational facilities in the price of .the home itself while keeping prices competitive. There was a time when a devel opment attracted buyers with just a swimming pooL Competitive pressures have led more and more builders to include recreation and in expanding ways. It is becoming more and more common to find in cluded such features as tennis courts, putting greens, barbecues, clubhouses, game rooms - even golf courses and lakes.

In appealing to families, prox imity to schools has always been a prime consideration for builders. Can anyone possibly believe such facilities wouldn't be provided if there were no public monopoly of education? Whenever competition comes in to play, extra services automati cally result. There would likely be programs to accommodate working mothers troubled by mid-afternoon dismis sals. There might be pre-school programs tied in with elementary school enrollments. Educational franchises could pop up faster than Jack-in-the-Boxes or McDonaldses - based on formulas that would make education more palatable, more fun, and more ef fective. It is likely that companies in established educational fields would offer systems using their materi als. An encyclopedia company or publisher would be in a good com petitive position for introducing educational programs. In spite of the fact that the gov ernment is currently hostile to companies providing related serv ices within an industry, calling it monopoly, great efficiencies can be offered by compani es already in a field, economies that are passed along to the consumer quite nat urally under competitive pres sures.

The only real and deleterious monopolies are those that are forced upon us by government sponsorship and protection - the monopoly of education being a prime example. A private system would offer schools appealing to different learning capacities as well as dif ferent economic levels. There would be good schools and pro grams for the handicapped and those needing special attention.; There would undoubtedly be schools for advanced stude·nts that would avoid the difficulties posed by "skipping" youngsters into ad114 THE FREEMAN February vanced age groups. We wouldn't be stifling the genius in our young Edisons as the uniformity of pub lic education has done in the past. Standards of accomplishment would be vitally significant be cause schools would have to de pend on their reputations and per formance for continued existence. We could expect to see more schools in connection with church: es - schools that are not econom ically feasible in competition with forcibly financed public schools.

Academic freedom would then be come a reality for certain religious sects that have been harassed for years by public educators in spite of the controversy over the sepa ration of church and state and the Constitutional guarantees of re ligious freedom. Those who see only illiteracy as the alternative to socialized (pub lic) education should remember that our early colleges, such as Princeton, Harvard and Yale, were all founded and funded by church initiative, not the government. It is also interesting to note re cent research by the University of Texas indicating some of the fail ures of our public efforts to edu cate everybody. Of the 10,000 adults tested, 20 per cent cannot read newspaper help wanted ads, 13 per cent can't address an en velopeproperly, 58 per cent can't extract the meaning from a simple paragraph, 30 per cent can't fig ure out airline schedules. One out of five were found to be function ally illiterate.

Socialized education, like allase. pects of socialism, is not anything so much as it is an emptiness, a void, an absence of expression and ideas. It is accepted because some where along the line we have made the mistake of defining free and responsible institutions as those which present all points of view. There never has been and never could be such a thing. "Equal Time" on T.V. and un biased reporting in the press are utopian concepts and noticeably nonexistent. Freedom of the press is the right of anyone to take a point of view in his ne"Tspaper and bear the responsibility for factual accuracy. It is the result ing existence of many newspapers that gives us the choice that makes freedom a reality. And academic freedom - what is it? (a) It is the right of people to get the kind of education they want from the choices available on the mar ket. As it is, there is no market at all.

(b) It is the right of teachers to teach what they choose, any way they like, as long as there is a market 1976 ACADEMIC FREEDOM 115 for their services. It is not a li cense for quackery and dema goguery at other people's ex pense. (c) It is the whole body of freedoms that depend on an institution's right to offer what it will, as long as it can survive in the mar ket place. (d) It is the freedom of choice only possible through privately fund ed institutions. (e) It is the variety of offerings that encourages differences, and the appreciation for individual dif ferences, on which the progress of civilization depends. (f) It is the only systen1 that can make learning as n1uch fun as it should be, because it is the only system that can meet individual needs. (g) It is the system that places edu cational responsibilities where they belong - with parents and students. (h) It is the system that produces people with direction and goals.

Not the kind of education that The Both-Sides Idea turns out people who think the absence of goals is a goal in it self. (i) It is the only system that can challenge young people of all capabilities and give then1 confi dence in accomplishment. (j) It is a system of prolife.rating choices . . . a system that can change and grow. (k) All of the above. (1) And more. Much, much more. An act of Congress can't pro vide academic freedom. Only pri vate competition can, with the in exorable pressures of competitive alternatives pushing toward im provement and perpetuating prog ress. Just two things keep the public system going. Financing by force, through taxation. And the willing ness of people to accept the social ist notion that there is no alterna tive. There is, of course. The alternative to nothing is everything. , IDEAS ON LIBERTY WHEN A PERSON voluntarily arranges for the presentation of socialistic ideas along with free market ideas, you may be sure of this: He hasn't completely repudiated socialism; he hasn't completely accepted the ideas of the free market and of govern ment restricted to the equal protection of the life, liberty, and honestly' acquired property of everyone.

HUGHSTON M. Me BArN Socialized HotDogs ?• DAVID J. SCHOLL COMPLEX ISSUES sometimes are clarified by simple experiences. An example occurred a few years back at a small, isolated California col lege. For servicing their odd-hour ap petites, the students long had de pended on a vending machine firm holding an exclusive franchise. And for years the students com plained that the products were stale and the machines "ate" their money, returning neither food nor coin. The vending machine com pany complained that the students repeatedly damaged their ma chines, causing exorbitant main tenance costs. The issue came to a head when the student government demanded that "something be done." The col lege administration and the ven dors mutually agreed to cancel their contract. The machjnes were removed, leaving the students with no on-campus source for snack items, just three weeks before finals. The nearest supply after 8 :00 p.m. was fifteen miles away by winding road, far from con venient to scholars spending late hours at their desks.

The student government began to discuss elaborate plans for a quick-food-service in a proposed student union building, but the im mediate need was not being met. Mr. Scholl is a businessman from Buffalo, Wy oming.

1976 SOCIALIZED. HOT DOGS? 117 Meanwhile, one of the students faced dropping out of school for lack of funds; and once again Mother Necessity bore the fruit of invention. Drawing on his experi ence behind snack bars du.ring summer vacations and football games, the young entrepreneur set up a makeshift stand near the ex isting student ·lounge. He served quality hot dogs, soft drinks, can dies, and other goodies - all at prices comparing favorably with those of the· distant short-order houses. The students had their snacks, at savings to them of time and money; and the young busi nessman was able to finish his education. But the outcome might have been different. Officers of the stu dent government, seeing the small private business succeed, quietly met with a Dean of the college, demanding that the hot dog· stand be turned over to them on behalf of "the students." They proclaimed it "immoral" for one student to profit from the needs of his fel lows; the profits should be used "forthe good of all."

The same leaders had offered no practical solution to the snack problem. They lacked experience in operating such a complex enter prise, lacked knowledge of sources of supplies and equipment, lacked the time and desire to operate the hot dog· stand· themselves, and were unlikely to find a manager and staff motivated to doa proper job. Fortunately, the Dean was both observant and practical. Declaring the. hot dog stand one of the best things to happen to the college within his recollection, he refused the demands of the student gov ernment officers, allowing the small business to succeed. Several Lessons Taught The hot dog stand and the pro posal to "socialize" it teach many lessons of broad applicability: 1. Through franchises, regula tions, and special privileges, gov ernment creates monopolies, there by reducing both service and prod uct· quality while preventing price competition. In our case the "gov ernment" was the college adminis tration which had allowed only the one vending firm to sell on campus, thus precluding a more satisfac tory means of supplying the stu den ts' needs.

2. When free to operate, individ ual initiative will analyze consumer needs and provide for them wit,h the most efficient use of resources. The student, seeking to fill his own desire for an education, recognized the opportunity to profitably serve others and did so with an initial investment of less than $50.

118 THE FREEMAN February The capital available to private businessmen is extremely limited. While a government enterprise can use its police power to coerce tax payers to finance it, private enter prise must convince potential in vestors that the expected return on their investment is satisfactory. The private firms, therefore, must allocate their limited resources in the most efficient and productive manner. 3. An exchange has indirect ob jecaves, the obtaining of values not obviously involved and seldom recognized by socialist planners. In the exchanges at the hot dog stand, the seller's immediate need was for money, which he accepted in trade for food which served the immediate need of the buyer. But the ultimate objective of each was his own education. Thus, "led by an invisible hand," each indirectly advanced his own and the educa tional wealth of the nation through specialization and trade. In a so cialist plan, as envisioned by the student officers, the hidden objec tives would have been overlooked.

Deprived of the opportunity to serve others' needs, the young busi nessman would have had to forgo his education, reducing not only his personal wealth but also that of the community for years to come. 4. Socialism means waste. Blind to the hidden objectives, socialists see only the direct exchange itself. This results in grandiose schemes requiring excessive resources for the "seen" need. In our situa tion, a minimal investment was required by the enterprising student, while the socialists proposed an elabor ate facility which would require high investment and a long time for completion. This is why socialist nations suffer such tremendous wastes and shortages. The well-known case of nail production in the USSR is a prime example. The planners called for so many tons of nails. The re sult - a small number of large, heavy nails, excellent for railroad spikes, but useless for building homes and furniture. The planners then called for a specified number of nails. That resulted in an im mense supply of small nails, which would have made good tie tacks with some modification.

The planners were too anxious about political prestige to see that nails are produced to enable mil lions of people to satisfy their in dividual desires. The nails them selves were so far removed from the true goals, and the goals were so personal and subjective, that it was impossible for a handful of isolated bureaucrats to properly determine their production. The free market acts to filter and 1976 SOCIALIZED HOT DOGS? 119 accumulate the billions of bits and pieces of dem~nd required in ful.,. filling millions of personal plans. Each individual seeks various re sources to serve his plans, but each requires a different combination of resources. The businessman does not need to kno\v what the plans are, or even what combina tion of resources is needed for any one proj ect. He only needs to ascertain and provide for the cumulative demand for the items in which he specializes. In this way, the free market makes it pos sible to cooperate while each of us seeks only to fulfill his own needs.

5. Each individual in a free ex cha,nge receives a profit,. the busi nessm,an's profit is made by reduc ing the consumer's cost. While the entrepreneur earned the money to finance his education, the other students also profited in the form of snacks to maintain their stam ina during long hours of study, and a saving of time which might have been spent traveling to the nearest short-order house. Thus the businessman made his profit by reducing the costs in time, money, and discomfort to his customers. Profit is not just the difference between price and costs in mone tary terms. It also means the alle viation of physical and psychologi cal uneasiness, the fulfilling of desires by effort which is less unpleasant than the consequences of not making the exertion. The businessman earns his profit by cooperating with his cus tomers in relieving their discom forts. Each individual could strive to satisfy all his own needs di 1'ectly and without cooperation with others; but he is unlikely in that way to fill any but his sim plest needs,. perhaps not even those. The specialization which de velops from the free exchange economy enables each person to maximize his profits - in every sense - while aiding others to do likewise.

Neither party to a free exchange would bother to make the trade unless he believed he benefited in some manner. If he can elsewhere obtain a greater value - conven ience, lower price, higher quality, more pleasant atmosphere, greater psychological pleasure - he will do business there. Only under com pulsion, such as theft or socialism, will an exchange normally result in a net loss in satisfaction to either of the participants. 6. Socialism encourages current consumption rather than invest ment and production. While the student businessman would have been prevented from completing college, the student government would likely have used the profits (if any) for short-term projects or 120 THE FREEMAN February consumption - a party, dance, ath letic uniforms, and the like. Such a result is almost inevi t able. Political office holders know their time in power is limited, so they naturally tend to seek imme diate and visible results, both to lengthen their stay in office and to show they have "accomplished something." The result of this pressure is to increase consump tion and expenditures and to over look the "unseen" potential value of saving and investment. People are made to feel prosperous while consuming their capital. Socialism has no means to determine the proper balance between consump tion and investment.

A distinction should be made between investment in a free mar ket and the quasi-investments in totalitarian societies. An invest ment, as we use the term, is the voluntary allocation of scarce re sources to the process of produc tion, based on an economic calcu lation of current costs and expect ed future returns. In Socialist soci eties, the allocation is compulsory and political, rather than volun tary and economic. The greater the degree of socialization, the more difficult the calculation of costs and returns. In the case of totalitarian socialism, the costs are ignored al together, even in terms of human suffering and life, in order to at tain an ideological goal and to further the political careers of the planners. Such socialist "invest ments" consume capital. Only in a free economy is there maximum incentive to create and invest capi tal to better serve consumers. 7. Socialism harms rather than helps the poor. The student officers were not pressed financially. Most of them were from prosperous families or had ample scholarships or loans. They had sufficient free time to be involved in student ac tivities. The entrepreneur lacked those advantages. In order to ob tain the education which hopefully would allow him to advance from a lower economic level, he sought funds through his own productive efforts.

When a socialist, fascist, com munist, or any totalitarian system is imposed, it freezes economic status. Social advancement comes by way of political influence rather than personal merit and effort. This is a major reason why many ,vealthy businessmen, especially those who inherited their wealth, oppose free enterprise and press for governrnent intervention. In a free economy they constantly face a challenge from less wealthy in dividuals and groups who are more highly motivated, skilled, or intel ligent. Political intervention allows those on top to nip any such chal lenge in the bud, regulating it out 1976 SOCIALIZED HOT DOGS? 121 of· existence while retaining their own positions. Freedom encourages self-im provement and advancement and thus benefits the poor. Socialism relegates the poor to a form of serfdom. 8. Socialism encourages base motives. While the reasons why the student officers sought to so cialize the hot dog stand were never mentioned publicly, and may not have been mentioned privately, two unpleasant possibilities ex isted.

The student businessman had opposed the election of those offi cers, and continued to oppose many of their policies in office. As a fur ther "insult," he offered an imme diate and successful solution to the snack problem, which they had been unable to do. Political revenge, envy, frustra tion, and face-saving are charac teristic of socialized economies. The purges in communist nations are simply an extreme example, and logical result, of these motives. While claiming to protect the peo ple from "saboteurs, profiteers, and greedy speculators," commu nists eliminate political rivals and establish scapegoats for their own failures. The intelligent and pro ductive are physically destroyed, or prevented by fear from taking the risks necessary for productive effort and economic advancement. The talented hide their abilities, so as not to be caught in the purges. The result is stagnation and decline to bare subsistence or even lower.

9. Socialism "produces" only when it expropriates the results of individual creativity. Freedom creates, socialism expropriates. The student government sought the use of other people's capital, time, talent, and effort to imple ment its proposal of a quick-food service in a new student union. When a more practical solution was found independently, they sought to confiscate the plan and its income. Russian officials recently ad mitted that while they have large petroleum reserves they lack the technology to extract oil efficiently from either the undeveloped areas or the currently producing wells. Their solution is to import the technology, materials, and supplies from economies more free than their own - their usual solution since seizing power over fifty years ago. There are recent proposals to establish a government-run oil company in the United States to act as a guideline for private firms. But few of those who make the proposal could distinguish a cracking tower from a storage 122 THE FREEMAN Febrruarry tank, let alone explain an octane rating and how it is produced. The socialist scheme would have to rely on the technology developed by "greedy" capitalists during the past century and extort from tax payers the funds to finance con struction and operation.

Noone can be compelled to think, create, and invent. Thought is not communal, but personal and individualistic. Compulsion is counter-productive in intellectual matters. With no hope of reward, but sure punishment for failure, an individual will not attempt to create. As a rule he seeks to maxi mize pleasure and minimize pain. Improvement has occurred in socialist societies when, contrary to their theories, rewards have been granted for individual merit and achievements. In free societies, those firms are most success ful which offer employees wide lati tude in achieving corporate goals, and which reward achievement most directly. Socialism contains the seeds of its own destruction. To the extent that it follows its theories, it causes a decline in thought - man's most basic tool of survival-and with it knowledge and production. A totally socialist world would be of short duration, collapsing into anarchy and feudalism. But it would inflict unimaginable suf fering.

So, let us learn the amazing eco nomic lesson of the hot dog stand. Neither a student government nor a cumbersome bureaucracy in Wash ington is a reasonable alternative to competitive private enterprise. f) IDEAS ON LIBERTY Economic Ends and Means THE PROPER AIM of economic life is an overall aim; the use of limited human and material resources in such a way as to serve nlost effectively the needs and desires of all the people. This aim tends to be achieved automatically in a regime of free markets where the people's needs and desires can express themselves in price offers to which producers are forced by economic necessity to conform. When political authority, even with the best of intentions, interferes with this self-regulating flow of goods and services, it sets up chains of cause and effect which it can neither foresee nor control except by constantly widening its authority. The final outcome is a regimented society fronl which all objective and valid guides to human effort have vanished, along with human freedom.

The Guaranty Survey. March 1956 A REVIEWER'S NOTEBOOK Steel FOR BETTER OR WORSE, the Amer ican system is built on adversary relationships. There is the well known antipathy between the press and government. There is also the adversary relationship between business and government. Curi 0usIy' the press, which is liber tarian when it comes to defending its rights unde~ the First Amend ment, crosses the line to side with government whenever there is a wave of skirmishes between Wash ington, D.C., and the productive forces of the country. You would think the libertarians of the media and the laissez faire partisans of business would sometimes combine in a common understanding, but they seldom do. J 0 H N C HAM B E R l A I N Every generation or so the liber tarian press guardians of the First Amendment choose to cooperate with the politicos in mounting an antibusiness crusade. They did so in the pre-World War I muck rake era. They did so again in the New Deal period, when FDR lashed at the "money-changers in the temple." Now they are enlisted under the banner of Ralph Nader in the third anticapitalist jihad of the century.

Each time the furore swells, the Marxians among us argue for gov ernment industrial takeovers, the so-called Progressives call for more regulation, and businessmen cower in their cellars. Then, for one reason or another (maybe it's 123 124 THE FREEMAN February a war and industrialists are sud denly needed), the fever passes. It's enough to make one believe in Eternal Recurrence.·· It· is the ebb and flow of adversary currents that provide the main story line for Robert Hessen's fascinating Steel Titan: the Life of Charles M. Schwab (Oxford, $14.95). Schwab, who was Andy Carnegie's fair-haired boy during the years of the spectacular development of the Carnegie Steel CompanY,was alternately a hero and a villain, depending on the public's percep tionof the need for steel in the ever-shifting life .of an often beleaguered republic. A Team Man Schwab was not an originator, he was a builder of integrated teams. His particular genius was in handling people and in: doing all the trouble-shooting jobs that were made necessary by the in transigent stands of more rigid men. He "supervised the super intendents" for Carnegie. He loved music, and played the organ for himself, and his natural ebullience recommended him to Carnegie for frequent promotions.

At the age of thirty-five he be· came President of the Carnegie Company. He didn't believe in unions, but he was a favorite of the men in the mills. After the big Homestead Strike of 1892, which had been mishandled by .Henry Clay Frick and Carnegie himself, Schwab lived inside the mill for four months to get things going again. He was a hero to Carnegie for "settling Homestead," and he was a great man to the workers for saving their jobs despite the enmity of Frick for any man who had listened to the siren call of the union organizer. The ability to conciliate did not save Charlie Schwab from the witchhunters who, in depression ridden years, sought their villains among the industrialists who were transforming America. Schwab, along with Carnegie, was a great competitor in a period when less gifted business organizers put their trust in pools,market-shar ing agreements, and price-fixing.

The Carnegie formula was to cut prices and expand productive ca pacity out of retained earnings whenever there was a period of business recession. Believing that profit is something that comes from cutting costs, Carnegie and Schwab kept the Carnegie Com pany lean and alive where other steel men were losing efficiency by trying to protect themselves by "gentlemen's agreements." Political Harassment In the Nineties Schwab was Carnegie's armor salesman. The government needed heavy plates 1976 STEEL TITAN 125 for its new navy. There was no scandal' at the time, and nobody could charge Andy Carnegie with promoting "imperialism" to sell his armor plate. In fact, Carnegie was so vociferous in his denuncia~ tionof President McKinley's deci sion to annex the Philippines that Schwab had to be sent to Wash ington to pacify President.;.maker Mark Hanna and the other prom inent McKinley Republicans.

More' than a decade later, when it appeared that the U.S. might be embroiled in the struggle that eventuated in World War I, Sen ators Robert LaF'ollette and Ben Tillman started up the cry of "militarism" and proceeded to at tack Schwab, for his armor sales of supposedly defective steel in the Nineties. It was an uncalled for piece of demagogy, particu-, larly as it related to "inferior" armor; as Schwab said of Car negie, the pacifistic Andy was in the business of selling steel, not his principles, and the steel was the best that could be had. Na turally, Carnegie wanted to make as much money out of his plate mill as the traffic with government would bear. The mill wasn't good for anything else. Throughout his later life, with U.S. Steel and with Bethlehem, Schwab was continually in hot water with the crusaders. He was accused, unjustly as it turned out, of engineering a shady ship-build ing combination. During World War I he ran the Emergency Fleet Corporation for Woodrow Wilson, performing prodigies that were unmatched until Bethlehem Steel turned out 1,100 ships in World War II. Toforestall any possibility of charges of conflict of interest, Schwab took no part in contracting for the government with Bethle hem in 1917 and 1918. This did not save him from being pilloried at a later date. And it was long' after Bethlehem had ceased to be a "Krupp," dependent of govern ment military orders, that Schwab had to endure the "merchants of death" agitation of the Nineteen Thirties.

Bethlehem Steel Bethlehem Steel was Schwab's own personal monument. He had bought control of the company when it was nothing very much as a sort of personal sideline while he headed the larger enterprise of the newly-formed U.S. Steel Cor poration. His rather flamboyant lifestyle got him into hot water in the strait-laeedsociety of the early Nineteen Hundreds. Carne gie himself turned on Schwab when stories of his gambling at Monte Carlo hit the headlines in America. Eventually Schwab was forced out of U.S. Steel. He at once threw 126 THE FREEMAN February all his energies into building Beth lehem - up to second position among the steel enterprises of a rapidly expanding country. Put ting his faith in the so-called "Bethlehem beam," a structural piece that could be produced as a unit where other skyscraper beams depended on costly riveting, Schwab was responsible for trans forming the skylines of New York City, Chicago and all the other metropolitan "downtowns" of America.

His life in the semi-retirement of the Nineteen Thirties was sad. He had outlived his friends, his family, and his early associates. He had been a soft touch with his money when it came to backing a score of small business enterprises for various friends and relatives, and Bethlehem Steel stock had such a fall.,off in the depression that, when the Schwab will was up for probate, it turned out that he had died a debtor. If he had lived to greet the war orders of 1940 and 1941, he would have died a millionaire. ~ THE HIGHEST VIRTUE, by Alan Stang (Western Islands, Belmont, Mass. 02178, 1974) 497 pp., $10.95. Reviewed by Bettina Bien Greaves RUSSIAN NOVELS often have many characters, complex plots and sev eral interlocking sub-plots. At times it may be difficult to recog nize the characters by their many different Russian names. But the effort may well be worthwhile, for a good Russian novel offers con siderable food for thought. Tol stoy's War and Peace, Dostoyev sky's The Brothers Karamazov, Pasternak's Dr. Zhivago, Ayn Rand's We, the Living - to name a few - all ask profound questions or offer some philosophical or psy chological insight. And so it is with Alan Stang's "Russian novel,"

The Highest Virtue. The story is laid in Russia from 1914 to 1920. The characters in the book develop as they cope with the problems of surviving during extremely turbulent times. They encounter a government that was becoming "more and more oppres sive, bigger, more and more total. Bureaucrats had multiplied like germs in a wound. And the infec tion had touched everything pri vate, seizing, regulating, compli cating, prying" (p. 138). Food and shelter were scarce. Inflation was rampant - 50,000 paper rubles for a newspaper. Tempers grew short.

1976 OTHER BOOKS 127 Thievery emerged as a way of life. Almost everyone was fearful of expressing a personal view lest he step on the toes of some powerful official or someone who might later become a powerful official and bear a grudge. The system destroyed everyone it touched - even the idealistic Peter Orloff, who had sought to overthrow the Tsar and who had robbed banks and thrown bombs for the Communists. Al though he maintained his idealism through many years of imprison ment, confident that the Revolu tion would solve all problems, he realized in time that "the so-called Revolution was beginning to 'de vour its own!'" The book illustrates how Com munism destroys all who endorse or acquiesce in its authority everyone from the idealistic Peter Orloff, the shifty opportunist and ne'er-do-well Fyodor Voronov, the factory owning Ivan Danilov who compromised his· capitalist princi ples by helping to finance early Communist ventures, to Ivan Dan ilov's son Stepan who concealed his capitalist origin and re surfaced as a prominent and pow erful Communist official. Only the star-crossed lovers, Maria Dani lova and Michael Voronov, who refused to submit to the Commu nists, retained their independent spirits and succeeded in overcom ing seemingly insurmountable obstacles to escape the system's destructive influence.

Author Stang isa citizen of this country but he understands the Communist system. He shows how it deceives t!hose who support it for idealistic reasons. He points out how wrong Communist theore ticians are in holding that indi viduals are simply products of their environment with no free will to make choices or to think for themselves. He shows why there will be no hope for anyone if the whole world goes Commun nist - there will then be no lands outside the Communist orbit to which the Marias and the Michaels may escape. He also describes how the worst always get to the top in a totalitarian. regime - .as econo mist F. A. Hayek pointed out in his famous Road to Serfdom. By the end of the.· book, the weak characters have been broken, the ambitious ones destroyed, the compromisers eliminated and· the idealistic ones disillusioned, leav ing only the most despicable char acters in control.

What is "the highest virtue," from which the book takes its name? On page 259, the author writes that after the Revolution, "cooperation" [submission or doc ile acceptance of the regime] will become "the highest virtue." How ever, that must have been written tongue in cheek. Judging from the 128 THE FREEMAN February tone of the book, "the highest virtue" must be offering resist ance to the Communists and re fusing to "cooperate," to buckle under or to compromise one iota with their regime. The Highest Virtue offers some thing for many readers. For those ~ho like novels, there is plot, tragedy and excitement. For per sons interested in the Russian Revolution, there are descriptions of life during that harrowing period when the economy was de teriorating. There are also graphic descriptions of the Russian labor camps. Judging from other books on the Revolution, the author has accurately described that period.

He has caught the flavor of the classical Russian novel and offers the reader ample food for thought. His book serves as a vivid re minder of what to expect if the capitalistic system goes under. I) HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 26, NO.3· MARCH 1976 Instea.d of Wh'at? Henry Hazlitt 131 Government can't give us anything without depriving us of something else. The Age of the Technicality Clarence B. Carson 138 The tyranny of the technicality will end when the legislation authorizing it is revoked. An Ancient Fable Retold Concerning the basics of an introductory course in economics. W. A. Paton 150 Threats to Freedom in Higher Education Charles M. Hepburn 155 Resort to coercion in place of self-responsibility is death to freedom and education. The Postal Monopoly Brian Summers 162 " ... the most outrageous tyranny ever imposed on a free people."

ANew Look at the Abolitionists The case against slavery - and for freedom -still stands. What the Bible Sa.ys About Big Government Prophets warned then and continue to warn us today. Book Reviews: "The Existential Pleasures of Engineering" by Samuel C. Florman "Race and Economics" by Thomas Sowell "Faith and Freedom" compiled by Mary Sennholz William Chadwick James C. Patrick 167 172 183 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies. postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per· mission granted to reprint any article from this issue, with appropriate credit.

INSTEAD OF WHAT HENRY HAZLITT Government can't give us anything without depriving us of something else. Take a recent news item almost at random: WASHINGTON - The De partment of Housing and Urban Development ... said today it would release $264 million over the next two years to help moderate-in come families buy housing. The program is designed to provide 250,000 new and re habilitated dwellings for families that earn $9,000 to $11,000 a year. Never mind the details. In our era such projects have become a routine activity of federal, state, and city governments. Politicians Henry Hazlitt, noted economist, author, editor, reviewer and columnist, is well known to readers of the New York Times, Wall Street Journal, The Freeman, National Review, Human Events and many others. Best known of his books are - The Conquest of Poverty, Economics in One Lesson, The Failure of the "New Economics,"

Man vs. the Welfare State, and What You Should Know About Inflation. promise these and a hundred other kinds of "benefits"· to the voters. The Congressmen who voted the appropriations for this housing, when they come to run for re election, will remind their con stituents who occupy the new housing: I got you this. I not only provided you with these dwellings at a rental or buying cost far below what you would have had to pay in the market, but in addition my vote gave employ ment to thousands of construction workers. The funds appropriated gave $264 million in increased pur chasing power to so-and-so many people. And so on. In fact, the politi cians' claims probably will be even more sweeping than this. The Sec retary of HUD who announced the foregoing project said her econ omists predicted it would stimu131 132 THE FREEMAN March late about $6.5 billion in construc tion ,activity and create 500,000 new jobs.

Too many voters have come to accept such claims. Yet they could deflate them all if they asked their supposed political benefactors a single question: Instead of wha,t? You say you got us such-and-such benefits. Maybe. But instead of what? What was the cost? What did we have to give up for these benefits? Inorder to give Paul's family $1,000 worth of "free" housing, you must have taken $1,000 more away from Peter's family in taxes. In fact, you must have taxed the Peters a good deal more than you turned over to the Pauls, because a lot of the money never got into con struction. It went (even disregard ing possible graft) into salaries for extra bureaucrats to administer the program. We may add the probability that a good deal of the money was taken from the Pauls themselves, and that they indirectly paid for at least part of their new housing. So, we have to ask, what would have happened if this $264 million had not been taxed away to pay for this ,government program?

The original earners would have kept it. They would have had it to spend on something they them selves wanted, instead of having the politicians force this expendi ture on them. Let us say (assuming the aver age division reported by government figures) that the taxpayers would have spent 92 per cent of this taxed-away income, and saved 8 per cent of it. This "saved" money would, of course, also have been spent, but on different things. It would have gone, for example, into savings banks; which in turn would' have lent it as mortgages to help build private housing, or invested it in bonds of industrial companies. The mO,ney would have been spent, in other words, to in crease the machinery and plant that would have further reduced costs and increased the nation's productive capacity. And the 92 per cent of the re tained personal income that was spent directly on consumption goods and services would have bought more . . . What? Food?

Overcoats? Refrigerators? Stereo sets? Housing? And in what pro portions? We just don't know. And we will never know. Because these things were not allowed to come into ex istence. This is the tremendous advan tage that politicians and their spending schemes - their housing programs, for example - enjoy in the minds of so many voters. The houses exist. They can be seen, they can be admired, they can be lived in. But the goods and ser vices (which would have included housing) that the taxpayers had 1976 INSTEAD OF WHAT? 133 to give up, so that this govern ment housing could be brought into existence, cannot be seen or felt because they have not come into existence. They have become merely hypothetical, merely so many might-have-beens, and there fore forgotten. If something like this is pointed out to the spending politicians, the more sophisticated among them (or their professional advisers) may come up with one or more answers.

They may say, for example, that the housing did not cost the tax payers anything because the money for it was not raised by taxes but borrowed in the market by selling bonds. This answer overlooks that the supply of rea] capital available for investment is strictly limited, and that the money borrowed for the govern ment housing project absorbed funds that might otherwise have gone, say, into a new private oil refinery or chemical plant. Again, they may argue, the money for the public housing proj ect came neither from taxation nor from borrowing, but was sim ply printed by the government. Of course, this argument is almost never made openly in such plain blunt terms; but it is an assump tion in the back of the spenders' minds. What is bought by inflation, it is thought, costs nobody anything. But when more money is printed, creating new demand, it lowers the value and purchasing power of every dollar already in existence, by raising prices.

Inflation, A Vicious Tax Inflation is, in fact, a form of taxation. It is a vicious form, be cause it does not fall on people in proportion to their income or wealth or in any other way that any reasonable person would con sider equitable. Its incidence de pends on the particular line in which each person happens to earn his living and on the particular form in which he happens to hold his assets. The inflation tax falls with particular weight on the non unionized (i.e., most of us) and on the aged. But in recent years the spenders have come forward with a new an swer, supplied to them by Lord Keynes, the late British economist, and his disciples. This is that new housing or any other government spending project really causes no body to have to give up anything, because it produces a net increase of goods and services that other wise would not have been produced at all. If the additional spending comes when there is heavy unem p10yment, they say, this means that there are unused resources of men, machines, and materials. The additional public spending puts 134 THE FREEMAN March them all to work, and is justified and necessary until it has brought "full employment."

It is true that it is possible to imagine circumstances under which this "Keynesian remedy" could temporarily work. If the previous unemployment has been caused by wage-rates or other costs that have been forced too high in relation to market selling prices, so that margins of profit have been wiped out, and if the government spending. is financed by inflation - that is, by the gov ernment issuing additional quan tities of money - then the spend ing may force up prices to the point where profit margins are re stored, and full employment and production can again take place. But this will prove at best a temporary solution. For the same inflation that raises prices will soon begin to raise wages and other costs just as much or more - especially as long as our laws continue to make unions so power ful that they can force these in creased wages on employers. And then there will once more be the same discoordination of wages and prices that caused the original un employment that the government spending was supposed to cure.

The basic error in the whole Keynesian theory is that it over looks the unworkable relations be tween particular prices and costs, between relative prices and wages, that have brought on the unem ployment that the Keynesians are seeking to cure. The Keynesians persist in the false assumption that the unemployment has been caused by something they call a "lack of effective demand" or a "shortage of purchasing power." And so their cure is always more government spending, bigger defi cits, more paper money - in brief, still more inflation. What Causes Unemployment? What the Keynesians have never done is to tackle or even notice the real cause of the unemployment they affect to deplore. This cause is practically always unworkable relations, maladjustment, and dis coordination in the wage-price sys tem. This discoordination is brought about by the very govern ment interventions in the market that most of the Keynesians are chronically recommending. Not a higher price "level," but only the free market, only the daily and delicate market adjustment of rel ative prices and wages, only prices and costs in workable equilibrium, can bring full employment. And it is precisely this equilibrium that government intervention persist ently prevents.

Our attention has up to now been focused on government con struction of or subsidies to hous1976 INSTEAD OF WHAT? 135 ing. But our basic question - In stead of whal?-applies to govern ment subsidies and handouts of every kind. These have become not only in this but in other coun tries much further along the road to socialism than ourselves - too numerous even to list. They in clude food stamps, school lunches, job training, rent supplem ... ;nts, "model cities," community action proj ects, legal services for the poor, and hundreds of other pro grams variously classified under such heads as social insurance, public aid, health and medical pro grams, veterans' programs, edu cation, and so on. Recently, Senator Edmund Mus kie of Maine, a long time "liberal," began to express his doubts : "We have a system of grants-in-aid," he said, "that has over 1,000 dif ferent programs, each with its own requirements, approach and mon ey. In the health field alone, there are 228 different federal programs.

There are 1,240 federal advisory boards, committees, commissions and councils." "Do we really ex pect a majority of Americans," he went on to ask, "to support na tional health insurance when esti mated costs range up to $100 bil lion a year?" Of each of these thousand pro grams we have to ask ourselves our basic question: Instead of what? For the money that is exacted from the taxpayers for each of these high-sounding programs means that each individual tax payer has that much less of his own earnings to spend on the par ticular goods or services that he himself would have chosen. No Net Gain Nothing is added by any of these government programs to the total of goods or employment. At best what happens is that the community gets employment or production in one direction instead of in another. In a free market people tend to get the particular mix of goods and services that each individually prefers. In a wel fare state they get the mix that the politicians and bureaucrats de cide is good for them.

Why are these political spend ing programs so popular? Partly because real costs are seldom con sidered. The assumption is almost invariably made by the spending politicians that the taxpayers do not really need the money that is taxed away from them to pay for some grandiose public project. If the taxpayers were allowed to keep this money to spend on the things they themselves preferred, it seems to be assumed, they would merely spend it on luxuries or trivialities. But even if the political spend ers do not make such an uncon136 THE FREEMAN March scious assumption, their imagina tion simply cannot encompass these costs. If they have spent the money for a great new housing project, the project when finished is big, visible, solid, perhaps im posing. But not only are the things that had to be given up by each family to pay for this public proj ect not there for anyone to see; by comparison they are individu ally so small that they hardly seem to weigh in the scale. The political imagination simply cannot add up to any perceivable total the mil lions of big and little sacrifices that millions of taxpaying fam ilies have had to make. When the kings of Egypt commanded the pyramids to be built to the greater glory of themselves or their fa thers, the toil, sweat and exhaus tion of the slaves or other sub jects who built them must have seemed utterly negligible in com parison with the spectacular re suIt.

All this is not to deny that there are some public works - such as streets and sidewalks and sewers that ·can be justified by their ne cessity. But the total of such proj ects can very easily be overdone. ".Dhe excuse that they are needed to provide "full employment" is never valid. Too many public proj ects today are social luxuries, if not sheer social waste. We must try to make sure in every case that the gain of producing them ex ceeds their real cost. We must al ways ask, in other words: I nstea.d of what? In pointing out earlier that nothing is added by most of these public projects and social pro grams to the total of goods,serv ice, or employment in the com munity, we have in fact under stated the case. These programs clearly reduce total production. Wasteful Use of Resources and Lost Opportunities First, they lead to overproduc tion and wasteful consumption of the commodity or service that is either given away or sold below its actual cost. When· people have Medicare, for example, and are of fered hospitalization, doctors' serv ices or medicines for a trivial cost or for nothing, they demand them far more often and for far longer periods than if they had had to pay the full market rate. This in creased demand drives up the mar ketprice of such medical services far beyond what it would other wise reach for all those who do not get part of this price paid for them by the medical subsidy. The end result is greatly to overpro duce the subsidized commodity or service - housing, medical care, or whatever - at the cost of under producing something else. Such programs, in other .words, lead 1976 INSTEAD OF WHAT? 137 both to wasteful consumntion and.

to lopsided production. In addition, these programs must lead in the long run to a substantial cut in overall produc tion. By taxing the productive to support the unproductive they diminish incentives at both ends of the economic scale. They lead people to become less efficient or to put forth less effort or to work fewer hours - either because they do not need to do more or because it no longer seems worth the trouble. The heavier taxes on corpora tions, especially, reduce new in vestment in plant and equipment and new employment below what they would otherwise have been. In sum, practically all these sub sidy measures, all these schemes to redistribute income or to force Peter to support Paul, are one eyed as well as shortsighted. They get their immediate appeal by fo cusing attention on the alleged needs of some particular group of intended beneficiaries. But the in evitable victims - those who are going to be asked to pay for the new handout in increased taxes (which directly or indirectly means almost everybody else) -are left out of account.

Only one-half of the problem has been seen. The cost of the pro posed solution has been overlooked. The vast majority of would-be social reformers think of the "cost" of something as simply its money cost; and they persistently under rate or dismiss even this because they think of money as something that can be turned out at will by a government printing press. But when economists talk of cost in the broader sense they mean what ever alternate opportunity must be forgone in order to produce the thing that is made. Everything we make, and everything we do, must be at such a cost. For every alleged benefit that the politicians confer upon us, they must neces sarily deprive us of something else. I have not raised here the polit ical and moral issue involved when governments extend and pervert their powers to expropriate part of the earnings of Peter to turn them over as a handout to Paul, or force both to "buy" something with their earnings quite different from what either would have bought of his own free will. But even if we put aside this basic issue, the next time the politicians offer us some alleged economic gift, let us at least ask them the question: Instead of what? ~ Reprints available in attractive pamphlet: 4 copies $1.00; 25 copies or more, 15 cents each.

The Age of the Technicality CLARENCE B. CARSON T. S. ELIOT said on one occasion that our civilization would end not with a bang but with a whimper. This was not so much a prediction or prophecy as it was a pithy commentary on a prom inent characteristic of our era. But if it be taken as prediction, there is something lacking in it. It does not tell us how the end is likely to come, does not fill in any of the details of the coming anemic apocalypse. There is now mount ing evidence, however, of how at least American civilization may end. It may come about in some such fashion as this. At some time in the not too dis tant future the American produc tive machinery could grind to a creaking halt, be still and remain Dr. Carson has written and taught extensively, specializing in American intellectual history. His most recent book, The Rebirth of Liberty (1973), covers the founding of the American Republic from 1760 to 1800.

1RH silent. There would be no farmers in the field, planting, tilling, or harvesting, no workers in the mills, mines, or factories, no clerks in the stores, service stations, or banks, no policemen on the beat, no ball players in the arenas, no soldiers at drill, nor anyone any where doing anything that could be described as productive. Where would they be? What would be occupying their time? How could this have happened? Let the answers to these ques tions wait a bit, and let us ex amine some clues as to what could bring about such a state of affairs. The following are excerpts from items which appeared on the pages of a single edition of a morning newspaper, the Atlanta Constitu tion, November 25, 1975. I tem One: A former secretary to Fulton County Commission Vice 1976 THE AGE OF THE TECHNICALITY 139 Chairman ... testified during a hear ing on the appeal of her firing Mon day that she had "intimate rela tions" with the commissioner.

The three-member Fulton County personnel board is expected to de cide Tuesday whether the secretary ... will be reinstated. Item Two: The DeKalb County school system has come into com pliance with federal law by no long er forcing married or pregnant stu dents to participate in a special edu cational program, a school adminis trator announced Monday .... That law, Title IX of the Educa tional Amendments of 1972, states that female students cannot be dis criminated against for any reason .... He also denied that a recent com plaint from the husband of a former Towers High School student caused the school system to hurry the pol icy change. "We had almost come to a con clusion," he said, when a man iden tified by school officials as Bill Mac Arthur received some publicity and threatened to file suit. MacArthur alleged his wife was being discrim inated against when she was forced to leave Towers and 'attend open campus.

Item Three: A group of determined Washington Redskins fans who are also lawyers filed a suit Monday against the National Football League stemming from the contro versial Mel Gray touchdown recep·· tion. The group is asking U. S. District Court Judge George L. Hart to is sue a temporary restraining order preventing any scheduling of play off games until the court makes a ruling on a controversial call that went against the Redskins in Wash ington's overtime loss to St. Louis two Sundays ago. According to one of the complain ants, George Morse, the suit asks Hart to either have the teams finish the game from the point just prior to the controversial St. Louis touch down pass, or to call the game "no contest" and figure precentage points in the standings as if it were a tie. Item Four (a quotation from a pris on warden) : "It seems like we never get a final conviction on anything any more. After all appeals are ex hausted arising out of the original trial, we go into the habeas corpus process all over again. I have an administrative assistant who is in court today. His job was set up to assist me, but he spends 95 per cent of his time in court on habeas corpus hearings .... "

Item Five: The Atlanta chapter of the American Institute of Archi tects (AlA) is peeved that Mayor Maynard Jackson has not replied in two weeks to its recommendations on minority participation in city architectural projects. In October Jackson requested for mation of an AlA liaison commit tee to make such recommendations, 140 THE FREEMAN Mar'ch chapter President M. Garland Rey nolds said Monday .... The AlA spent several weeks meeting with other groups in coming up with its recommendations, Rey nolds said. Reynolds' Nov. 10 letter to the mayor was prompted by Jackson's insistence earlier this year that mi norities be given a part of the con tract for architectural and engineer ing work for the planned expansion of Hartsfield International Airport. Item Six (involves promotions of po lice officers in the City of Atlanta, the oral examination used, the-Fra ternal Order of Police (FOP), and the Afro-American Patrolman's League.): Complaints against the new exam centered on the nebulous nature of the orals, which included 10 questions based on hypothetical situations. The judgment of good and bad answers was left to the interview boards. Both for sergeant and cap tain the boards were made up of two white and two black superior officers, plus an attorney .... A variety of attorneys was used, and most of them were black.

The issue of using more than one attorney on each board is part of the basis for a legal challenge of the new exam as that challenge is being pre pared for court filing by attorneys for the FOP. The-lawyers contend the city ordinance authorizing pro motional testing specifies that one lawyer be used, rather than a suc cession of lawyers, so that each can didate is interviewed by the same board. Item Seven: MARTA [Metropolitan Atlanta Rapid Transit Authority] is opposing an application before the Georgia Public Service Commission (PSC) to establish a van service in the metropolitan Atlanta area. The rapid transit authority op poses such service because it could increase competition in the lucrative charter bus market .... MARTA also objects to the appli cation . . . because under federal rapid transit funding laws, MARTA could be required to purchase the private company if the company could prove that MARTA's tax-sup ported transit operation competed unfairly.

Item Eight: Inmates who seized five guards as hostages and holed up in five cell blocks at a city prison on an islan"d in the East River released the three remaining hostages Monday on the promise they would not be prose cuted. The promise of amnesty so ang ered the guards at the Rikers Island jail that about 300 of them immedi ately stormed off the job. . . . Finally, a spokesman for mayor Abraham Beame said the guards agreed to go back to work when Beame promised to meet Tuesday afternoon with Harold Taylor, presi dent of the guards' Benevolent Asso ciation, on the matter. There were other items in the same paper that might have been quoted. One described a malprac tice suit in Augusta, Georgia 1976 THE AGE OF THE TECHNICALITY 141 which had been one of the longest in Georgia history. Another told how a local government budget was discarded hecause the respon sibility for preparing the budget had been shifted to another offi cial. But ,enough examples have been given to show a general trend, of sorts.

Common Characteristics There are some common threads running through all these inci dents. One is that they all involve government at one level or another and in one way or another. A sec ond is that all of them involve some sort of proceeding: a report of a liaison committee, a lawsuit, a habeas corpus hearing, a school board ruling, a Personnel Board investigation, an application be fore the Public Service Commis sion, and a conference between a mayor and a represen tati ve of prison guards. Above all, however, they all in volve one or more technicalities: whether a football player held a pass long enough for it to be a completion, the claim of a secre tary that she had "intimate rela tions" with a commissioner which led to her firing, opposition to a local van service because of the intricacies of a Federal rule, whether there should have been only one attorney sitting in on all the tests or several, the endless appeals made by those who have been convicted and sent to prison, whether married students should be sent to a special campus, and so on.

According to many who make such characterizations, we live in an age of technology. There is no gainsaying that this view has much to support it. If technology be understood to include the me chanical and electronic devices by which we sort, sift, stuff, open, move, inspect, light, heat, cool, start, stop, weigh, measure, pour, record, and perform the myriad acts which can be done in this fashion then our age is certainly in some respects a technological one. Such characterizations, of course, always vie with others which may he equally apt, such as, the age of steel, the age of elec tricity, the age of antibiotics, and so on. However appropriate any or all of these may be, we have moved unwittingly into a. new age, the Age of the Technicality. The signs abound that marie and more ruling bodies are spending more and more of their time and that of the citi zenry in applying these technicali ties to the warp and woof of our lives. It may not happen that way, but it looks as if it could. At some time in the future the whole adult population of the country and most of the children could be tied 142 THE FREEMAN March up in hearings, 'Consultations, con ferences, lawsuits, proceedings, and what not before courts, com missions, boards, bureaus, agen cies, and the like, brought by ten million whimperers based upon technicalities.

What is more likely, if the trend continues, is that more and more of the population will have more and more of their energies dis sipated in these undertakings to the point that the necessary useful work is no longer performed. The whimper with which American civilization may ,end will be that of the-one-too-many 'Complainants, the straw that breaks the camel's hack. At any rate, we are certainly in the 'midst of an age of technicali ties. Anyone who doubts this should examine the evidence around him with more care. As this piece was being written, the mail brought an 'excellent example of such technicalities, a "State ment of Fair Credit Billing Rights," as presented by Sears, Roebuck and Company. Since any one who has a credit card probably received one of these, it may be useful only to pres'ent excerpts 'and highlights from this wondrous set of instructions: The Federal Truth in Lending Act requires prompt correction of billing mistakes.

1. If you want to preserve your rights under the Act, here's what to do if you think your bill is wrong or if you need more information about an item on your bill: a. Do not write on the bill. On a separate sheet of paper write (you may telephone your inquiry but doing so will not preserve your rights under this law) the follow ing: i. Your name and account num ber. ii. A description of the error and an explanation (to the extent you can explain) why you be lieve it is an error .... iii. The dollar amount of the sus pected error. . . . b. Send your billing error notice to the address on your bill .... Mail it as soon as you can, but in any case, early enough to reach Sears within 60 days after the bill was mailed to you. 2. Sears must acknowledge all let ters pointing out possible errors within 30 days of receipt, unless we are able to correct your bill during that 30 days. Within 90 days after receiving your letter, we must either correct the error or explain why we believe the bill was correct ....

3. After we have been notified, neither Sears nor an attorney nor a collection agency may send you col lection letters or take other collec tion action with respect to the amount in dispute .... 4. If it is determined that Sears had made a mistake on your bill, you will not have to pay any FINANCE 1976 THE AGE OF THE TECHNICALITY 143 CHARGES on any disputed amount. If it turns out that we did not make an error, you may have to pay FI NANCE CHARGES on the amount in dispute .... 5. If our explanation does not satisfy you and you notify us in writing within 10 days that you still refuse to pay the disputed amount, we may report you to credit bureaus .... But Sears must also report that you think you do not owe the money, and we must let you know to whom such re ports were made. . . . 6. If Sears does hot follow these rules, we are not allowed to collect the first $50 of the disputed amount and FINANCE CHARGES, even if the bill turns Ollt to be correct ....

This monstrosity is a technicali tarian's (if I may coin a word) dream. It requires little imagina tion to guess the disputes that could arise over technicalities in volved in these rules. For exampl,e, which period would be running at any given time: the 10 days, 30 days, 60 days, or 90 days? Who decides whether an ,explanation is adequate, or whether the customer or the creditor has complied with all the rules? Do Sundays and holidays count? Suppose the cus tomer only ow'es $10 when the dis pute arises but that he subse quently charges $40 more. Sup pose the creditor has made a mis take, or has not followed the rules. What is the total amount to be allowed the custom,er under the $50 rule? The possibilities for con tentions are almost unlimited. Even a Philadelphia lawyer would be able to work his way through such a maze only with the greatest difficulty. The above is not an isolated in stance of government intrusion into our lives with intricate tech nicalities. Nor does it contain the most obtuse examples of detailed rules which have to be followed.

In fact, these rules are fairly sim ple compared with some that have been promulgated. In the last sev eral years the federal government has initiated technicalities with more comprehensive application than ever before. Several new agencies have been set up, each of which promulgates rules for virtually every private undertak ing in the country. The OSHA One of these is the Occupational Safety and Health Administration, authorized by act of Congress in late 1970. Its rules apply to vir tually all businesses "affecting" interstate commerce, which nowa days means nearly all of them. By June 17, 1974, its "Safety and Health Standards" ran to 326 triple-columned 81j2 x 11 pages in a tiny print that will assure eye strain to readers. A little examina tion of some of these "standards" will illustrate the lengths to 144 THE FREEMAN Ma,rch which they have gone in estab lishing technicalities.

Here are the rules for "Ladders, Fixed" as they appear in a hand book which abridges them for general industry: a. All fixed ladders shall be designed for a minimum concentrated live load of 200 pounds. b. All rungs shall have a minimum diameter of %- inch, if metal, or llh inches, if wood. They shall be a mini mum of 16 inches in clear length and be spaced uniformly no more than 12 inches apart. c. Metal ladders shall be painted or trea ted to resist corrosion or rusting when the location demands. d. Cages, wells, or ladder safety de vices for ladders affixed to towers, watertanks, or chimneys shall be provided on all ladders more than 20 feet long. Landing platforms shall be provided each 30 feet of length, ex cept where no cage is provided, land ing platforms shall be provided for every 20 feet of length. e. Tops of cages on fixed ladders shall extend 42 inches above top of landing, unless other acceptable pro tection is provided, and the bottom of the cage shall be not less than 7 feet nor more than 8 feet above the base of the ladder.

f. Side rails shall extend 3% feet above the landing. The following are some rules for trenching: (a) Banks more than 5 feet high shall be shored, laid back to a stable slope, or some other equivalent means of protection shall be provided where employees may be exposed to moving ground or cave-ins .... (b) Sides of trenches in unstable or soft material, 5 feet or more in depth, shall be shored, sheeted, braced, sloped, or otherwise support ed by means of sufficient strength to protect the employees working with them .... (c) Sides of trenches in hard or compact soil, including embank ments, shall be shored or otherwise supported when the trench is more than 5 feet in depth and 8 feet or more in length. In lieu of shoring! the sides of the trench above the 5 foot level may be sloped to preclude collapse, but shall not be steeper than a I-foot rise to each 1J2-foot hori zontal. When the outside diameter of a pipe is greater than 6 feet, a bench of 4-foot minimum shall be provided at the toe of the' sloped portion.

Civil penalties for the violation of these and other such rules can run to as much as $1,000 per day for failure to comply after a. cita tion has been issued. Criminal penalties can go as high as $20,000 fine and one, year in prison. An Equal Employment Oppor tun'ity Act was passed in 1972. It authorized an Equal Employment Opportunity Commission (EEOC) and prohibited discrimination on the basis of sex, color, religion, or national origin in their hiring practices by most employers of 15 1976 THE AGE OF THE TECHNICALITY 145 or more persons. The Commission focused upon promoting "affirma tive action," Le., discrimination in favor of minorities and the "gent ler" sex, and such things as adver tising and testing. Their regula tions on sex include some of their more tortured reasoning. For ex ample: (a) The Commission has deter mined that an employer's rule which forbids or restricts the employnlent of married women and which is not applicable to married men is a dis crimination based on sex prohibited by Title VII of the Civil Rights Act.

It does not seem to us relevant that the rule is not directed against all females, but only against married females, for so long as sex is a fac tor in the application of the rule, such application involves a discrim ination based on sex. (b ) It may be that under certain circumstances, such a rule could be justified within the meaning of Sec tion 703 (e) (1) of Title VII. We express no opinion on this question at this time except to point out that sex as a bona fide occupational quali fication nlust be justified in terms of the peculiar requirements of the particular job and not on the basis of a generaI principle such as the desirability of spreading work. What follows is the Commis sion's view of what can appear on a job application form as it may refer to sex: A pre-employment inquiry may ask "Male.. . .., Female "; or "Mr., Mrs., Miss," provided that the inquiry is made in good faith for a non-discriminatory purpose. Any pre-employment inquiry in connec tion with prospective employment which expresses directly or indirect ly any limitation, specification or dis crimination as to sex shall he unlaw ful unless based upon a bona fide oc cupational qualification.

About the only "bona fide occupa tional qualification" based on sex which the Commission has rec ognized is in acting, where a male or female is being portrayed. Environmental Protection The Environmental Protection Agency (EPA) was set up in 1970 following a great hullabaloo about the environment. Its goa.l is to establish and maintain harmony between man and his environment, a rather tall order even for a gov ernment agency. To this end, ac cording to an information sheet issued by it, "The Agency sets and maintains air and water pol lution standards, regulates the sale and use of pesticides, sets standards for noise and ambient radiation, develops techniques and procedures for solid waste man agenlent, studies toxic substances, conducts research, and demon strates new pollution control meth ods and teehnology." Since every 146 THE FREEMAN March act of man does, in some way, affect the environment, it is fairly safe to say that so long as it has the momentum behind it, this agency will spread its umbrella to cover more and more activities.

The Age of the Technicality, then, is upon us. Moderns have sometimes been amused by the tales of the intricate debates of scholars in the Late Middle Ages under the sway of scholasticism. But one wonders what a Duns Scotus (a medieval scholar whose name gave rise to the term "dunce" because of the meticulous ness of his analyses) would think of our efforts to determine whether or not the reference to sex in an application form was made in good faith or not, at what point the decibel emission from some machine contributed signifi cantly to noise pollution, what amount a bank over five feet should slope every lh-foot, and so on. Whether 10,000 angels could dance on the head of a pin might not have been a very good ques tion but whether 200,000,000 Americans can survive 10,000,000 regulations is. The Age of the Technicality has been fostered, no doubt, by a num ber of trends and developments. We have been bent during the Modern Era toward precise quantification and the development of tools and instruments for doing it. Technology has spawned techniques for turning problems into tech nicalities. The courts have wel comed an ever larger number of cases which hinge on technica1i ties. There are many interested parties - such as technicians, sci entists, lawyers, and bureaucrats - who benefit from the focus on technicalities. Above all, however, we have been thrust into the Age of the Technicality by the deter mination to use government to force us to do what some believe to be good and right. The result is the politicalization of life, and drastic decline in choice and free dom for the individual.

Forced to be Good? It is no part of the purpose of this article to enter into the question of whether any of the objects sought by the myriad rules and regulations are good and de sirable. There are many things it might be good for us to do. It might be good if each of us at tended church every Sunday. It might be good if we all had the same basic beliefs. It might be good if each of us had a balanced diet, exercised at regular intervals, and consumed only the blandest of food and drink. It does not follow, of course, that if or because it would be good we should then turn to gov ernment to force everyone to do 1976 THE AGE OF THE TECHNICALITY 147 any or all of these things. It does follow, however, that if we turn to government to make us do what is good and right we shall have complex laws, intricate rules and regulations, bounteous litigation. numerous hearings, expanding bu reaus, and lives entangled in more and more technicalities. It follows that more and more of our time and energy will be devoted to en forcing and complying with and contesting these technicalities.

There are deeper dimensions, as already implied, to these efforts to make people do good by law. When we are compelled to do good by government, no virtue at taches to our doing it; it is only expedient for us to comply with the law. Not only does this reduce the moral dimensions of our Iives but also compulsion breeds re sentment and resistance which produces a perverse pleasure in evasion and in sabotaging the effort. A breach occurs between the governors and the governed, a breach which can widen into a gulf. A finicky government invites the contempt of the citizenry. A populace whimpering over viola tions of technicalities invites the contempt of each for all. The min ute intrusions upon liberty tend to foster a contempt for life itself. Can one, after all, imagine George Washington a.nd his men suffering at Valley Forge in defense of our "Fair Credit Billing Rights"? If such had been their object, they might better have surrendered, retained the connec tion with England, and got the legislation a little sooner under the Labour government. The tyranny of technicalities is tyranny, but it is oh such petty tyranny that a man must grasp its whole impact before he sees it as worthy of his opposition.

Step by Step We have fallen under this tyranny of technicalities bit by bit and step by step, though in recent years the pace of their im position has increased rather rap idly. The method of those who have sought their imposition has been to focus upon some real or imagined problem, to propose its solution by way of some Federal program, to enact a law, and to set up some regulatory agency. At first, such agencies usually dealt with some particular busi ness: railroads, banks (the kind in whieh money is deposited), labor unions, and··trusts. Over the years, more and more institutions and activities have come under such regulation, and now omnibus agencies - such as, EPA, OSHA, and EEOC - are being created. Opposition to individual impo sitions has often been difficult to' mount; the stated object often had 148 THE FREEMAN March broad appeal, and it is often pre carious to oppose what is per ceived to be good. The result has been that we have come into the Age of the Technicality so gradu ally that it would be difficult to determine when we arrived.

It is fairly clear, however, that the Age of the Technicality can not be brought to an end either by opposing the creation of any more such agencies or by elimi nating the abuses in the existing ones. There are already enough agencies with sufficient impetus to entangle us interminably in tech nicalities. It is not the abuses which pose the greatest threat but the resolute carrying out of what has been authorized. The effective level of opposition fi nally is at the level of principle. Is Government the Right Tool? The development needs to be grasped whole, its impact on the economy and on our lives seen for what it is, and opposition made to the attempt to force us to be good by law. Any other approach falls into debates over such things as whether or not women should have equal pay for the same work as men. That must not be the is sue. The issue - regardless of rate of pay - is whether government is the proper instrument to impose it.

The issue may be brought into focus for us better if we imagine that the men who predominate in the legislature should decide that women should be paid, say, ten per cent less than men for the same work. But, it may be ob jected, that would be unjust. So it would, and so is a government decree that women should be paid the same. Government is in no po sition to determine the value of an employee; only an employer can do that, and justice requires that he pay an employee what he is worth to him. Those who are con cerned about government prevent ing pollution need to understand that they are also talking about government authodzing some lev el of pollution. Virtually all the technicalities with which we are embroiled have to do with the conditions under which that which is prohibited is allowed, or that which is allowed is prohibited. Protect the Individual to Do the Best He Can The Age of the Technicality is not, itself, the age of safety and health. It is the age of the endless hearings, debate, and litigation over the degree of safety, health, and whatever. The principle on which it can be foreclosed is that government should attend to its tasks of protecting us from wrong and leave to us the business of do ing good. When it does so, it will not need commissions, hoards, 1976 THE AGE OF THE TECHNICALITY 149 agencies, and bureaus to interpret and impose myriad rules and regulations. These exist to permit what the legislature knows it should not prohibit but can dis cover no principle by which it can be allowed within the framework of law. That is reason enough for government not to be involved.

The tyranny of the technicality will end when enough people realize that the legislation which has authorized it should be revoked. Until that happens, however, we should all hope that to some degree we live in an age of technology, for in the Age of ,the Technicality men will be increasingly too en tangled in technicalities to do any thing else much. Machines will have to do most of the work, if it is to be done. ~ AN ANCIENT FABLE RETOLD W. A. PATON REFERENCES to the proverb asso ciated with the fable I propose to relate are not especially rare, but I have been unable to find the old tale itself in print, anywhere. The story was told to me back in 1913, either by Professor Fred M. Taylor, my revered mentor in eco nomics, or Walton H. Hamilton, one of his corps of assistants in the basic course in principles. Since I'm reasonably sure that few - if any - of the present-day teachers of economics are familiar with the w. A. Paton is Professor Emeritus of Account ing and Economics, University of Michigan.

He is author (or co-author) of a score of books and many articles, largely in the field of ac counting. Since his retirement at Michigan, he has continued his writing and lecturing activ ities and has done part-time teaching at a doz en colleges and universities, in ten states. 150 version of the fable as I heard it, sixty-odd years ago, it may be permissible to retell it, particularly for the purpose of expressing the moral to be drawn and applying it to current conditions in our col lege and university classrooms. The Fable Way back in the heyday of the Persian Empire one of the ancient rulers developed a keen desire to learn more about economic activity in his far-flung realm. He knew that many kinds of farm products and other goods were transported for long distances to the capital and other central markets, but he realized that in his palace isola tion, surrounded and waited upon 1976 AN ANCIENT FABLE RETOLD 151 by a host of servants and retain ers, he was cut off from the proc esses of production and exchange and knew nothing about the under lying factors that stimulated and guided those engaged in these basic activities. He made inquiries among his generals and other offi cials with whom he had contacts, and even consulted leading astrol ogers and soothsayers, but found no one in these groups who could enlighten him. Carefully disguised, he attended some classes taught by professors of philosophy and re lated subjects, but to him their lectures were boring and confus ing. What he wanted was a down to-earth, common-sense outline of fundamentals, not a lot of mystic jargon.

Finally, discouraged and irri tated, he drafted a proclamation, and had it distributed in printed form throughout the empire, in which he promised a royal office, and one of his beautiful daughters in marriage, to the man who would provide him with a simple, under standable statement, in writing. (In those days it was unthinkable that any female would undertake such an assignment.) But the proclamation also specified that anyone making the attempt, and failing, in the emperor's judgment, would be promptly executed by beheading. Nine months passed, and then a teacher from the top school at the capital showed up with a two volume study which he had pre pared with great care, after much pondering and stargazing. The em peror scanned a page or two and then - in a fury - threw the books at the author and ordered him to the block forthwith. Perhaps the fact that he had listened, in dis guise, to two of this man's lec tures, had a bearing on his very speedy and unfavorable decision.

The summary execution of a leading scholar and teacher was not announced by the palace, but the news leaked out and naturally cast a chill ·over possible candi dates for royal honor and a prin cess to boot. Several years went by and the proclamation had been generally forgotten, and was no longer a rnatter of special concern to the ruler himself - although he may have been a bit disappointed that only one of the empire's pro fessors had lost his head. Then a wandering magician and juggler, from a far country, ran across a copy of the old proclamation in one of the provinces and some weeks later showed up at the palace, ask ing for an audience with the em peror. He said he had come to try his skill at providing the essence of economics in a brief and plain statement. He also admitted that he was well aware of the risk he was running. The audience was shortly 152 THE FREEMAN March gran ted, and after making a very graceful obeisance before the throne the mountebank handed the emperor a slip of paper on which he had written - translated into modern English - "There is no such thing as a free lunch". The ruler happened to be in a good mood. He read the statement a couple of times, started chuckling, and finally laughed heartily. He jumped down from his dais, lifted the kneeling visitor to his feet, ordered a purple robe for him, and in due course, and with appropri ate ceremony, made him governor of a province and saw to it that he was married to his youngest daughter.

The Moral More than nine words are needed .to lay even a preliminary foundation for the serious study of modern economic activity, but still the adage provided by the old fable points the way. In launching the introductory course in economics we should get down to earth, stress the underlying problems and diffi culties encountered by human beings, at any stage of develop ment, and regardless of social ar rangements and organization, in their efforts to "make a living" on this rugged planet. For this pur pose there is merit in giving some attention - at the onset - to the primitive situation, where the consumer is largely his own producer, and is brought face to face with requirements and limitations. And there are still groups in this world eking out an existence under very primitive conditions. Even the old Robinson Crusoe approach need not be disdained. What is needed is a primer of fifteen or twenty pages to sup plement the main textbook which starts out with the fundamental truism of economics : We can not consume what we do not produce, an adaptation of the message the mountebank brought to the em peror long ago, according to the fable - also nine words. This un deniable fact of economic life is particularly appropriate for Amer ican students, as it's quite obvious that no foreign nation is going to play Santa Claus to the United States. Overall, we must look after ourselves. The teacher at this stage might also mention the old saying among our farmers: The horse can't drink without water in the trough. The family-size farm is no longer a major economic institu tion, and the tractor has largely replaced the horse, but even the city boys and girls of these days will get the point, and have their interest aroused.

Of course this is only a bare start - the lesson for the first class session. But it pushes the door of understanding ajar. It 1976 AN ANCIENT FABLE RETOLD 153 brings to light the fact that pro duction is the primary economic process, on which consuming is totally dependent, and thus stresses the need for efficiency in productive methods and utiliza tions of available resources. It also raises a warning hand with re spect to the danger of becoming unduly preoccupied with the forci ble redistribution of output, with out regard to the possible unfavor able impact on the volume of out put, and resulting per-capita stan dard of living. Then the more difficult questions can be tackled. How do we define production and "economic" goods, in the light of the varying atti tudes and desires of consumers? Sooner or later the question of nonproductive activity must be faced up to. At an early stage at tention must be given to the prob lem of identifying the basic fac tors of production, including the role of the saver, the fund pro vider. Resort to the primitive situ ation may be helpful here, with· a return to this subject later in the course. With a foundation laid the examina tion of the modern ind us trial economy can begin, with its advanced technology, high degree of specialization, network of mar kets, complex of monetary and financial facilities, corporate and other institutional arrangements, with an end result in the form of an astonishing array of consumer commodities and services (includ ing durables).

Stifled by Socialism In trying to characterize the present system briefly, above, I didn't mention government. But in the serious study of the system I see no point in giving lip service to the idea that we still have a "free enterprise", "free-market" system, although this posture is popular in some circles. The plain fact is that we are living in a quasisocialistic economy. The proc esses of production and exchange are being carried on under the weight of a bewildering, overlap ping array of bureaucratic inter ferences and controls. I'm among those who .firmly believe that both historical and current experience demonstrates that the competitive free market is the most effective and equitable instrument that mankind has discovered as a means of allocating productive re sources and awarding shares in output. Assuming this position to be sound it still doesn't follow that today's teacher should close his eyes and those of his students to the conditions actually prevailing.

Quite the contrary. A clear under standing of the current situation, built on a background of recogni tionof fundamentals (as I'm rec ommending), is necessary to form154 THE FREEMAN Ma,rch ing an intelligent judgment on the crucial question: Where should we go from here? My observation is limited but I believe I am justified in suggest ing that the approach in teaching the introductory course in eco nomics often fails to include ade quate emphasis on elementary, fundamental considerations. As I see the situation today's teachers often plunge too quickly into the complexities of 'the present system. They are often unduly enamored with statistics of "gross national product" and other aggregates, and rely heavily on mathematical models. Many instructors are so cialistically inclined these days, to begin with, and their methods of teaching tend to reinforce this inclina tion. I'm not personally optimistic that there will be an early abate ment of the tide of sheer economic nonsense from which we are suf fering, or that our advance toward complete collectivism will soon be checked. But I would see a ray of hope if there were some modifica tion of the teaching of elementary economics, especially in the col leges and universities, in the direc tion I have tried to indicate. Our educators have a great impact on the minds of their students, and these young people will soon be running the show. ~ Reprints of this article available, 5 cents each.

Robbed for Their Own Benefit IDEAS ON LIBERTY EVER SINCE THE ADVENT of representative government placed the ultimate power to direct the administration of public affairs in the hands of the people, the primary instrument by which the few have managed to plunder the many has been the sophistry that persuades the victims that they are being robbed for their own benefit. The public has been despoiled of a great part of its wealth and has been induced to give up more and more of its freedom of choice because it is unable to detect the error in the delusive soph isms by which protectionist demagogues, national socialists, and proponents of government planning exploit its gullibility and its ignorance of economics. ARTHUR GODDARD, from the preface to Economic Sophisms by Bastiat.

Threats to Freedom in HigherEducation CHARLES M. HEPBURN THE DECLINE OF FREEDOM is the critical issue in higher education in America. This alarming trend has resulted from developments within colleges ,and universities as well ,as from failures in the pre coll~ge education of entering fresh men. The future state of the college teacher as an independent profes sional dedicated to free inquiry and free expression of ideas with in his competence has been brought into question more than ever dur ing the pas,t decade as 'a result of pressure from three important de velopments. The first of these is a dr.astic increase in direct interDr. Hepburn is Professor of History and Chair man, Division of Social Sciences at Wayne State College in Nebraska. ference by the federal government in both public and. private higher education; the second is the in creasing willingness of faculty members themselves to give up their freedom in order to organize to lobby and strike; and the third is the lack of responsibility of fac ulty and administrators in defend ing freedom on the campus against threats of force.

As a result of government inter vention, many institutions either because they have chosen to be a part of a federal program, or be cause they must comply with a federal regulation, or both, have found their free choice limited. They have been forced to offer particular courses in order to re ceive proferred funds, have had to 155 156 THE FREEMAN March engage in special research proj eets encouraged by W'Rshington, or have had to hire, on occasion, those whom they felt to be less qualified so that a federal agency would be satisfied. An this has been expensive; but, worse, it has hampered free ;choice in an are'a where freedom of choice is vital. In Defense of Liberty We who share in a college com munity must begin to turn away from such controls by being as completely fair as is humanly pos sible in all dealings with each other, while at the same time we must not 'allow government agen cies to use threats of force against us unjustly. We must, whenever possible, avoid federal funding which restricts our free choice in academic decisions. We all possess separate and unique viewpoints, desires, and backgrounds, but one thing that all faculty members should have in common is a love of libertY,and this most precious commodity is worth defending at all costs.

Next, a growing militancy of professors at many institutions is noticeable in their encouragement and expansion of the assumed sep aration of interest between mem bers of the faculty andadminis tration, a separation which is thought by many to be inherent in the nature of educational institutions. This militancy has now gone to the point where faculty mem bers in some colleges have formed labor organizations modeled on those of industry. Many of these militant instructors declare that they will now use the same meth ods of organized force, which have done so much to bring havoc and disruption to our economy, to deal with boards of trustees. If this movement succeeds, faculties will be regimented as never before. They will be told finally how many students they can teach, when they cam teach, what duties are those of faculty, and which those of "man agement" and so on. Let us heed the restrictions placed upon union workers, not by their managers, but by their unions. Few of us could live up to our personal pro fessional standards under such condi tions, and most of us never had such things in mind when we entered the profession. A brick layer lays to the specifications of an architect. He may want to lay more bricks per day than the un ion allows, but he can practice his skill to a reasonable degree within union requirements. A teacher, like the artist, the poet or the sculptor, is a creator and inno vator; he cannot bind himself to group controls.

Current faculty interest in col lective bargaining and unioniza tion may be blamed in part on the 1976 THREATS TO FREEDOM IN HIGHER EDUCATION 157 lack of support for salaries in higher education in both public and private' institutions when the economy showed a healthy expan sion during the fifties and sixties. Teachers in particular did not ben efit in relation to their peers in other professions. Everyone was for better education but rno one wanted to pay faculty. Yet resent ment over low salaries and meager fringe benefits cannot be the cen tral cause' of the new militancy. That higher education is an at tractive Icareer, particularly in academic areas, can be shown by the numbers of people wanting to enter college teaching in spite of the lack of jobs. Salaries, though low by comparison with other pro fessions, are acceptable to many. A better answer may be found in a new attitude toward teaching among younger members of the profession who sometimes seem less interested in service than in what they can obtain from it. They show little patience with the no tion that some years of active col lege teaching ought to precede senior status with its rank and privileges. This observation a,p plies only to a minority of young er faculty, but their voices are often he'ard advocating labor-style organization.

The third development in higher education whieh encroaches on free academic inquiry is the misinterpretation, by mistake or design, of the concept of academic free dom. We have been told recently by some of our colleagues that "academic freedom" covers such acts as being absent from class to lead demonstrations against the Viet Nam war, against the institu tion'sadministration, or in pro test of another faeulty member's dismissal. The protection of acade mic freedom became a rationale at one major university to justify, in a course on maj or American writers of the twentieth century, the sole study of Marx, Engels, and Mao Tse-tung; and it has been used to justify the acts of faculty members in organizing students and sympathetic colleagues to dis rupt the classes of teachers who disagreed with the minority on an issue and even to justify the use of force against those who opposed such action. In the face of claims like these, academic freedom, a worthy ideal whose achievement should be the goal of everyone in volved in higher education, has been condemned by the layman. If the ideal is to survive at all, those of us who be1ieve in it must come to its support; we must identify what we mean by it and denounce attempts by a few among us to hide behind its protections while destroying all it stands for by their behavior. If we lose freedom of thought and expression in our 158 THE FREEMAN March educational institutions, freedom in our society will wither and die.

Our failure in the past has been a failure of moral perception fol lowed by a failure of nerve. As fac ulty members we have refused to condemn attacks on freedom by our colleagues but rather have been content to ignore them, hop ing the administration would do the condemning so that we would not need to take a stand on an is sue that might prove controversial. Administrators, faced with situ ations demanding quick and decis·· ive action, instead of meeting their oblig,ations, have held com mittee meetings, formed study groups, or left for Washington on business. Loss of Public Confidence The result has been an immea surable loss of confidence on the part of the public for the institu tions which should be providing intellectual and moral leadership at a critical time in history. Uni versities must be places where freedom is supreme and this can only exist, as is true everywhere when each member of the commun ity, whether he be student or pres ident, respects the dignity and rights of every other member. It is imperative that those who have committed themselves to an insti tution through the acceptance of salary also commit themselves to the maintenance of order under which freedom, not license, can reign. There can be no freedom where there is no security against coercion and intimidation.

Freedom is further threatened by the decline in the level of com petence of students entering col lege. This year's College Board and Scholastic Aptitude scores show significant drops in both verbal and quantitative abilities. These new scores are the lates t records in a general decline in such scores over the past several years. No one seems to ~now whom to blame, and perhaps correctly so, because the fault belongs to all of us in some degree. Yet, anyone reading a set of freshman essays must realize that Americans can do better than they have been do ing in teaching fundamentals. When students enter college after twelve years of school and still write "sentences" without verbs and are unable to turn fractions into decimals or to understand basic vocabulary, then their time has been poorly used. Worse than that they are handicapped by being unprepared for life. The student who is terribly worried about the plight of Portugal can not write three coherent para gra phs to explain why.

It is true that the growing num ber of open admissions policies - a healthy development that win un1976 THREATS TO FREEDOM IN HIGHER EDUCATION 159 doubtedly rescue some potential talent otherwise overlooked - has encouraged many students to enter college today who might not have done so a generation ago. With open admissions we can expeet many more poorly prepa.red stu dents to come to college. Yet it al so seems apparent that the phe nomenon we are dealing with at the college level is only a symptom of a much larger and far more pressing issue in society at large: that is, the changing values of Americans. Among· other things, this has meant that with the lure of more activities that distract, study time has lost the high prior ity it once had. Parents frequently condemn public school teachers who ask for quality classroom per formance at the expense of student participation in some other func tion.

Emphasis on Ethics Many of us have come back to the idea that we need toemphasize ethics in education and that learn ing and ethical purpose go togeth er. Values not only need thoughtful consideration in the classroom, but we can do much towa1\I developing an awareness of values by the way we approach learning. We can de monstrate that when study is cor rectly pursued so that the student makes a subject his· own, the re sult is satisfaction of the soul and increased creativity; that a job done well is worth a great de-al no matter what the job is; that a mathematical principle mastered can be more satisfying than an evening at the movies; that a thought put to prose so that it ra diates the mind of the writer has its· own special reward which makes· the effort worthwhile; that a new word learned expands one's ideas countless times; that certain literary masterpieces last through the ages because they deal with eternal truths; and that any ad vance toward satisfactory answers to the essential question, "Who am I?" is what education is all about.

In short, I believe that the correct teaching of fundamentals pre sumes the ethics of free inquiry and mental discipline. By not in sisting from the beginning that students do the best that they can do, we have failed not only to help them master needed foundation skills, but we have encouraged them in the belief that any per formance is a;cceptable, and that so long as one's peers accept him, ethical considerations are of sec ondary importance. The thrill of learning in most cases has never been a part· of their Iives. We have encouraged the belief that continu ing efforts to understand are not important, that machines can work out problems, that telephones can substitute for writing letters, and 160 THE FREEMAN March that the experts can explain any thing beyond the rudimentary so that critical thinking is not neces slary for most people. It Finally Comes Down to Parental Responsibility Those of us in higher education must accept a degree of responsi bility for all this, although, of course, the final blame must lie with the majority of American parents who do not want their chil dren to be required to meet rea sonable standards of scholarship in grade and high schools, and who are willing to see the teachers of ,their children tuvned into tax supported baby sitters instead of highly prepared professionals. For our part we have too often dis missed the inadequacies of our college students by 'arguing that they should have le;arned funda mentals in high scho01 and that there are other things to be done now. Our students are allowed to go through college without learn ing to write or read well or to do simple mathem,atlcs. They receive diplomas but gain no real sense of accomplishment ; and, since they have not mastered the tools for acquiring knowledge and for think ing and self-expression, their col lege years have been of minimal value. Many of these same stu dents become teachers themselves and perpetuate the process.

The cycle can be reversed by an insistence upon mastery of the es sentials as a part of higher eduea tion. We should turn away no in quiring mind; but we should de velop in that mind the skills of or ganized thought. This will mean a great deal of work for all of us. It will mean long hours of grading exams, but this is the only way it can be done; and we can do it only when boards and legislatures un derstand the need to fund ade quate staffs for the job. Teaching is basically a person-to-person ac tivity depending for success upon the willingness of on.e caring per son to encourage another who wishes to 'learn, and this is true whether a. class is large or small. Na matter what the odds for suc cess, we must stop catering to the inadequacies of our students by shaping our readings, lectures, and discussions for ninth-grade abilities. We must expect them to read and write well; and if not, we must help them to learn to do so with the normal assignments.

One suggestion might be to assign less reading with the expectation that it be thoroughly absorbed. Careful sele,tion can provide suf ficient thought-provoking material for advanced students while not overwhelming those less capable. When we expect mastery of funda mentals in our colleges, we will be in a position to lead the grade 1976 THREATS TO FREEDOM IN HIGHER EDUCATION 161 schools and high schools and to show the public what is to be gained in terms of human values. Then we may expect. changes in the first twelve grade levels; and by then, hopefully, teachers from our colleges will be aware them selves of the loss in human crea tivity and personal liberty which accrues when millions of young men and women have not adquate ly developed mental discipline. Ignorance of the rudiments on the part of m'any college students The Frontier is Freedom may be classified ,as a loss of in dividual liberty on two counts: first, such students are dependent upon others and second, they may be easily led beeause they can not acquire and assimilate knowl edge. Today, more than ever be fore, free men must be able not only to identify the elements of freedom, they must be able to ex press them in terms of every as pect of daily life. Colleges should provide the greatest opportunity for this activity on all levels. , IDEAS ON LIBERTY CERTAINLY, the backwardness of many an underdeveloped nation today is related to the fact that the enterprising individual is stigmatized and ruined by his neighbors and the local officials. To have lived in some remote "native" village long enough to know how their social curbs on progress operate is to understand why the best laid plans of economic development schemes have a way of failing utterly. Without freedom to achieve and without a measure of security for life and property, aid is useless; and with freedom, it is unnecessary. Any enterprising investor is happy to put his money into a going concern and nothing succeeds like suc cess. But the rigidities of a managed economy stifle initiative and scare off venture capital, keeping the depressed area stagnant and backward. Only a rich country can afford the economic interven tions of socialism - and they can't afford it for long.

Freedom is not a luxury for a few wealthy nations, as many of our liberal pundits try to tell us, but a necessity for the poor and hungry as Erhard's Germany so eloquently demonstrated after her crushing defeat in World War II. EDWARD P. COLESON THE POSTAL MONOPOL~ BRIAN SUMMERS IN 1974 six children in New Jersey earned a few dollars by delivering Christmas cards for five cents each - half the United States Postal Service rate. They were breaking the law.1 In 1971 a private corporation, the Independent Postal System of America, offered to deliver Christ mas cards for five cents each three cents less than the U.S.P.S. rate. They were stopped by a court injunction. 2 In 1966 the CF&I Steel CorporMr. Summers is a member of the staff of The Foundation for Economic Education. 1 New York Times, December 20, 1974 (New Jersey Edition). 2 John Haldi, Postal Monopoly (Amer ican Enterprise Institute, Washington, D.C., 1974) pp. 16-17.

162 ation, frustrated by the quality of postal service between their Den ver headquarters and their plant in Pueblo, hired an armored-car service to deliver the mail. After five months of operation the ser vice was halted by the Denver Post Office, and "at the Post Office's suggestion" CF&I paid two thou sand dollars toward back postage. 3 These are examples of a monop oly at work. With a few minor ex ceptions, the United States Postal Service enjoys a legal monopoly in the delivery of letters. Under the Private Express Statutes, private letter carriers are subject to fines and/or imprisonment. Why should the U.S.P .S. hold a 3 Wall Street Journal, June 5, 1967.

1976 THE POSTAL MONOPOLY 163 legal monopoly? And, more to the point, why should the government be carrying mail at all? Let us examine some of the arguments put forward by defend ers of the monopoly. One argument is that the U.S.P.S. constitutes a "natural" monopoly. That is, it is contended, it would be impossible for competing private firms to pro vide efficient service. Thus, it is argued, we need a government-run monopoly. This a.rgument does not stand up in the light of history. In the past three hundred years, thou sands of private carriers have pro vided efficient postal service in England and America. Three such private carriers stand out in British history: Wil liam Dockwra, Charles Pavey, and Peter Williamson. 4 Each of these men was so efficient in providing postal service that the British General Post Office, after closing them down, adopted many of their methods. William Dockwra established his London Penny Post in April 1680. Within a few months he had four hundred post offices, and was making ten daily deliveries and four to twelve daily collec tions. Thus, it was possible to send a letter and receive an an4 Rockford Fresnel, "Postmen Against the State," Innovator, June 1966.

swer the same day. The 1946 edi tion of the Encyclopedia Britan nica reports: The staff employed in London by Dockwra considerably exceeded that employed by the post office in the whole kingdom. This truly remark able enterprise gave London a postal service which in some respects has never been equalled before or since. For some time Dockwra struggled with serious financial difficulties; but no sooner had the penny post begun to show a profit than the duke of York, on whom the post office rev enues were settled, asserted his mon opoly. Dockwra was condemned to pay damages and his undertaking was incorporated in the General Post Office; but the London penny post long survived its creator and was maintained until 1801. Charles Povey founded his Half Penny Carriage in October 1709, serving parts of London, West minster, and the borough of South wark. His rates were less than the General Post Office. After seven months of operation he was fined and put out of business.

Peter Williamson established his Edinburgh Penny Post in 1776. He was so successful that his wife and father-in-law soon set up a competing penny post. After sev enteen years his business was taken over by the General Post Office. Following the lead of these three men, private penny posts 164 THE FREEMAN March sprung up all over the British Isles. According to one source, by 1800 there were over two thou sand. 5 Today, due to the vigorous enforcement of the British postal monopoly, there are none. 'The American story is much the same. In the 19th century hundreds of private carriers suc cessfully competed with the Post Office Department. Due to the en forcement of the Private Express Statutes, none have survived. One of the earliest of these pos tal services was begun in 1835 by William F. Harnden of Boston. His success encouraged competi tion, and by 1843 Boston alone had at least twenty private postal operators, including Alvin Adams, father of the Adams Express Company.

Soon private post offices dotted the land. There were Hussey's Post and Boyd's City Express in New York City; Pomeroy's Letter Express in eastern New York State; the Letter Express Com pany in western New York State, Chicago, and Detroit; Hale and Company in New York, New Eng land, Philadelphia, and Baltimore; Lysander Sp"ooner's American Let ter Mail Company; Blood's New York Express (four deliveries and five collections daily); Wells and ;) Fresnel, Ibid. Company (la tel'" to become Wells Fargo) ; Yankee Jim's Loon Cr~ek Express; Randall and Jones Can yon City Express - one stamp cat alogue lists one hundred fifty pri vate carriers. In 1845 private car riers transported an estimated one-third of the nation's letters. 6 How efficient were the private carriers? Hunt's Merchant Maga zine reported: "Government en terprise is wholly unable, under its most advantageous promptings, to compare with private enter prise."7 Albert D. Richardson wrote that Wells-Fargo Express operations in the West "illustrate the superiority of private enter prise. Whenever the messengers run on the very steamer, or the same railway· carriage, with those of the United States mail, three fourths of the businessmen en trust them with their letters, which are invariably delivered in advance of government consign ments .... "8 Of course, these developments were noted in Washington. In 1844 Senator James F. Simmons of Rhode Island declared: "The fact is notorious that, . . . on the ex press routes, twenty letters are (j William C. Wooldridge, Uncle Sam, The Monopoly Man (Arlington House, New Rochelle, N.Y. 1970) pp. 11-31.

7 Frank Chodorov, The Myth of the Post Office (Regnery, Hinsdale, Ill., 1948) p. 14. 8 Wooldridge, p. 21.

1976 THE POSTAL MONOPOLY 165 sent outside the mail for the one that is carried by the mail."9 That same year Congressman John P. Hale of New Hampshire warned: "events are in progress of fatal tendency to the Post Office Depart ment; and its decay has com menced."lO The Philadelphia post master predicted that if the pri vate earriers "be not put down, they will ere long put down the Post Office Department."ll Unable to match the efficiency of the private carriers, the Post Office resorted to force. The Pri vate Express Statutes were strengthened in 1845. William C. Wooldridge reports: With a realistic appreciation of the underlying difficulties, the Senate Post Office Committee brought in a bill that would con1bine a drastic re duction in postage rates with stiffer restraints on private competition. Even then, however, the bill's sponsor recognized the government's congeni tal inability to compete successfully with the private expresses; he begged his colleagues "to keep in mind, what he had so repeatedly urged, that it was not by competition but by penal enactment" the private posts were to be destroyed. u Those private carriers that !) George L. Priest, "The History of the Postal Monopoly in the United States,"

Journal of Law & Econornics, April 1975, p.59. ]0 Priest, p. 61. 11 Wooldridge, p. 22. 12 Wooldridge, p. 23. weren't frightened from the mar ket were put out of business by criminal prosecution. The govern ment's postal monopoly was pre served, not by providing better service than the private carriers, but by threatening them with arrest. There is nothing "natural" about the postal monopoly. If the monopoly were "natural," the gov ernment wouldn't have to crush competi tion wi th threats and criminal indictments. A second argument used by the monopolists is that pri vate car riers wouldn't charge uniform rates. They would charge less for low-¥ost routes (such as across town) than for high-cost routes (such as across the continent). That sounds like a pretty fair system. People would pay for what they got. What we have now is across-town mailers being plun dered to subsidize across-continent mailers. What is so noble about that?

And we should remember the words of Hunt's Merchant Maga zine: "Government enterprise is wholly unable, under its most ad vantageous promptings, to com pare with private enterprise." Given a few years of free enter prise, all postage rates would prob ably be lower than they are now, including those now subsidized by 166 THE FREEMAN March the taxpayers. Of course, we will never know as long the U.S.P.S. has a monopoly. A third argument used by the monopolists is that private letters wouldn't be safe in the hands of private carriers. Private carriers might open the mail and read it. This is precisely what the pos tal monopoly has been doing for years: For 20 years the CIA routinely opened over 13,000 letters a year going to and from the U.S.S.R., and later extended this operation to in cludemail from North Vietnam, Cuba, and other (noncommunist) Latin American countries. Chief Postal Inspector William Cotter sys tematically lied about the existence of this operation until just this year.

Military counterintelligence groups routinely opened military mail, both within the U.S. and at overseas bases. The "flap and seal" operation was justified on the grounds of detecting spies, but according to columnist Jack Anderson, was used largely to spy on servicemen who had complained about the Vietnam War. The Sources of Invention In just the past two years, Inspec tor Cotter admits there have been 431 court orders for opening first class mail, and nearly 8600 approved mail covers [the recording of all return addresses on someone's incoming mail]. The latter have been at the behest of 41 Federal agencies, includ ing the IRS, the Drug Enforcement Agency, the Interstate Commerce Commission, and the Departments of Agriculture and Interior, as well as state and local police and prosecu tors.l 3 On July 13, 1855 the editor of Alta California, enraged by the prosecution of private carriers, declared: "The present Post Of fice system is the most outrageous tyranny ever imposed on a free people. It forbids us from send ing letters by such means of con veyance as we may prefer, without paying an odious and onerous tax to the government .... "14 Strong words. And still true. ~ 13 Robert Poole, Jr., "Getting Big Brother Out of the Mailbox," Reason November 1975, p. 54.

14 Wooldridge, p. 31. IDEAS ON L$ LIBERTY As CONTRASTED with the ideal ways of organizing effort in other fields, what is needed for maximizing the flow of ideas is plenty of overlapping, healthy duplication of efforts, lots of the so-called wastes of competition, and all the vigorous untidiness so foreign to the planners who like to be sure of the future. JOHN JEWKES WILLIAM CHADWICK I I HAVE LONG BEEN PUZZLED by the way my American History teach ers,and the textbooks they used, presented the Abolitionists - the men and women of the American antislavery movement - in a very friendly light. Now, most of these teachers were quite openly of the Left. It always struck me a bit odd that they who admired Chair man Mao should sing the praises of such ardent individualists as Thoreau. Their logic seemed to be: (a) the slaves were Negroes, (b) the Abolitionists were helping the slaves, (c) the Left helps Negroes through the "Civil Rights" move ment and Welfare-State programs; therefore, (d) the Abolitionists were of the Left. 1 Yet I, as a libMr. Chadwick is a freelance writer living in New York City.

II I ertarian and individualist, found myself closely identifying with the Abolitionists. I couldn't help thinking that their fight is our fight today, in different circum stances and with a new set of op pressors. The more I read their 1 The left-wing historian Howard Zinn, for example, has written a book about the Student Non-Violent Coordinating Com mittee called SNCC: The New Abolition ists (Boston: Beacon, 1964). See also Zinn's article, "Abolitionists, Freedom Riders, and the Tactics of Agitation," in Duberman, Martin (ed.), The Antislavery Vanguard (Princeton, N.J.: Princeton University Press, 1965), pp. 417-451. Even more objectionable is the title of one collection of Abolitionist writings: Forerunners of Black Power. To compare men like Garrison and Wendell Phillips with the likes of Stokely Carmichael and Eldridge Cleaver is a bit ludicrous. Bor mann, Ernest G. (ed.), Forerunners of Black Power (Englewood Cliffs, N.J.: Prentice Hall, 1971).

167 168 THE FREEMAN March writings and speeches the more I see, in the Abolitionists' rousing call to freedom, ideas that are as relevant in the fight against the tyranny of today's 'all-powerful State as they were in the struggle against yesterday's slaveholder. The Abolitionists saw them selves as the philosophical heirs of J efferson, Franklin, Paine and other intellectual leaders of the War for American Independence. They saw themselves as trying to fulfill the promise of 1776, and the Declaration of Independence's famous defense of the "inalienable rights . . . (of) life, liberty and the pursuit of happiness." The first major public address of Wil liam Lloyd Garrison, probably the most prominent of the Abolition ists, was given on the Fourth· of July and referred to the discrep ancy between the American creed, as contained in the Declaration, and the American practice of slav ery.2 In the first issue of his fam ous paper, The Libera,tor, Garrison again invoked the Declaration: "I determined at every hazard, to lift up the standard of emancipation ~ Speech reprinted in Frederickson, George M. (ed.), William Lloyd Garrison (Englewood Cliffs, N.J.: Prentice Han, 1968), p. 15, and in Garrison, Wendell Phillips and Francis Jackson Garrison, William Lloyd Garrison (New York: The Century Company, 1889), Vol. I, pp. 127 137.

in the eyes of the nation, within sight of Bunker Hill and the birth place of liberty."3 Angelina Grimke, the leading woman in the movement, likewise advocated the ideals of 1776, stat ing that Americans "must return to the good old doctrine of our forefathers" - the doctrine of every man's right to his own life, liberty and property.4 Similarly, the poet and Abolitionist John Greenleaf Whittier spoke of a time when "the practice of our people shall agree with" the ideals of the Declaration of .Independence. 5 In Opposition to Violence It is frequently noted that the Abolitionists, by and large, were religious people, who believed slav ery a sin; but this, while true, gives the impression that the re ligious Abolitionists opposed slav ery as an act of faith rather than on any clear ethical grounds. Ac tually, they called slavery sinful because they realized it was main tained by violence. This religious libertarianism can be seen in the writings of Stephen Symonds ;{ In Frederickson, p. 22.

4 Grimke, Angelina E., "Appeal to the Christian Women of the South" (no pub lisher given, 1837), p. 3. f) In Ruchames, Louis (ed.), The Aboli tionists: A Collection of their Writings (New York: G. P. Putnam's Sons, 1963), p.57.

1976 A NEW LOOK AT' THE ABOLITIONISTS 169 Foster (not the composer), who was, according to one historian, "called by some second in effect only to Garrison in the early years of the agitation for the abolition movement. "6 Foster catalogued the sins on which slavery was based: theift a man owns his own industry, and slavery steals that industry and puts it to work for another; adult ery - slave-owners violate the mar riage-contract of the slaves; man stealing - "God has given to every man an inalienable right to him self . . . and he who interferes with the free and unrestricted ex ercise of that right, who, not con tent with the proprietorship of his own body, claims the body of his neighbor, is a man-stealer;" piracy - the slave-trade, piracy legally and morally; and most im portant, murder - because the slave-owner "maintains his ascend ancy over his victims . . . only by the threat of extermination."7 One wishes that some of the religious socialists of today, using Christian principles as a basis for advocat ing the legally-sanctioned violence of statism, could be introduced to the religious libertarianism of Foster and his kind, who knew coercion when they saw it.

() Bormann, p. 105. 7 Foster, Stephen Symonds, "The Brotherhood of Thieves," in Bormann, pp. 110-112. Involved in Socialism John Thomas, in his article, "Antislavery and Utopia," points out that Jefferson Davis saw the abolitionists as socialists who were starting out with an attack on slave holding (which Davis con sidered a form of private prop erty) but would finish by attack ing all forms of private property. Thomas also points out that George Fitzhugh, the leading in tellectual apologist for slavery, said that many Abolitionists, be cause they were socialists, were embracing slavist ideas. 8 Because the ideas of Davis and Fitzhugh contain a germ of truth - quite a few Abolitionists were involved in socialism - modern students of Abolitionism may be led to believe that the standard view has been correct all along, that the Abolitionists and today's Welfare-Statist are both of the Left. But the chief mistake here is Davis' mistake, to believe that just because the Abolitionists re fused to recognize any right of one man to own another as prop erty, they were against all prop erty rights as such. Thus, the Abo litionists become typical liberal humanitarians seeking to put "hu man rights" above "property rights."

Yet, reading the speeches and 8 Thomas, John, "Antislavery and Utopia," in Duberman, pp. 243-244.

170 THE FREEMAN March writings of the Abolitionist main stream, one finds no bias against private property; they simply did not believe a human being can rightfully be another's property. It is today's advocate of the Wel fare State who treats human being~ as property - property of Big Brother, natural resources to be used for whatever purposes the government has in mind, driven by the whip of the government's police power. While it is true, as stated above, that many Abolitionists were so cialists, even the communitarians among them were libertarians, ad vocating socialism only on a vol untaristic basis. The fascist men tality of the modern statist would have been entirely foreign and abhorrent to them. Consider one of the most prominent among them, Stephen Pearl Andrews. An drews, a lawyer, was chased out of Houston, Texas, by a pro-sla v ery mob, and went to England, where he tried - with some sup port from John Quincy Adams to convince Lord Palmerston and Lord Aberdeen to lend money for the purchase (with the intent of emancipation) of the slaves in Texas. 9 9 Martin, James J .,Men Against the State (Colorado Springs: Ralph Myles Publisher, 1970), p.153; and Stern, Made leine B., The Pantarch (Austin: Univer sity of Texas Press, 1970), pp. 10, 12-13.

Andrews was influenced in be coming an anarchist by the ideas of Josiah Warren, the founder of an anarcho-communist settlement in New Harmony, Indiana; War renism was a combination of Robert Owen's Utopian socialism and native American individual ism. to Men like Andrews stead fastly held to the individual's right to freedom from coercion, and their communitarian experiments were strictly voluntaristic. One might refer to a man like Andrews as a left-wing anarchist but would have to call him a right-wing so cialist, using "right-wing" to mean respect for the rights of the individual. Warren had called his philosophy "Individual Sovereign ty," and Andrews made this phrase his motto. In his magnum opus, The Sci ence of Soc'iety - which is, at least in its first section, "The Sov ereignty of the Individual," a classic of libertarian thought Andrews comes out four-square for laissez-faire in economics: "Nothing short of absolute free trade. Democracy says to govern ment, Hands off! Let the Indi vid ual determine for himself when and where, and how he will buy and sell."ll Andrews' hope was that 10 Martin, pp. 26-55, passim.

11 Andrews, Stephen Pearl, The Science of Society (Boston: Sarah E. Holmes, Publisher, 1888), p. 18.

1976 A NEW LOOK AT THE ABOLITIONISTS 171 out of the workings of the free market, the kind of individualist socialism (sounds contradictory, doesn't it?) he wanted would na turally evolve; I do not share in this hope, but I respect Andrews' undil uted Iibertarianism. The Abolitionists, generally speaking the same laissez-faire language as we modern libertar ians, were a far cry from the so called "New Abolitionists" of to day's statist Left. We who recognize that "Massa" has changed his name to "Big Brother" should give them honor. I close with a passage from a letter written to William Lloyd Garrison by Theodore Weld, Gar rison's chief rival for leadership of the antislavery movement. In the letter, Weld states that he is unfamiliar with the exact philos ophy and aims of the New Eng land AntiSlavery Society (Gar rison's organization), but that: How Inflation Enslaves Us its expressive name is dear to my soul. From that I infer that the So ciety is based on that great bottom law of human right, that nothing but crime can forfeit liberty. That no condition of birth, no shade of color, no mere misfortune of circumstances, can annul that birthright charter, which God has bequeathed to every being upon whom he has st~unped his own image, by making him a free moral agent, and that he who robs his fellow man of this tramples upon right, subverts justice, outrages hu manity, unsettles the foundation of human safety, and sacrilegiously as sumes the prerogative of GOd.l~ To these words, we modern "Abolitionists" - the real "New Abolitionists" - can add a resound ing, "Amen!" , 1~ Weld to Garrison, .January 2, 1833, in Barnes, Gilbert H., and Dwight L. Du monds (eds.), Letters of Theodore Weld, Angelina Grimke Weld, and Sarah Gri1nke Weld, 1822-1844 (New York: D. Appleton Century Company, 1934), Vol. I, p. 98.

IDEAS ON LIBERTY WHEN A GREAT BODY of men are preaching the righteousness of the confiscation of property, the stability of the society is threatened, even though the method of confiscation be simply the depreciation of the currency for the benefit of the discontented poor. ANDREW C. MC LAUGHLIN, The Confederation & the Constitution, 1905 What theBible Says About Big Government JAMES C. PATRICK EVIDENCE IS MOUNTING that many government programs fail to ac complish all that their advocates had promised. After dipping for a while crime statistics are climbing again. Confidence in the institution of government has sagged. Some people wonder whether govern ment has bitten off more than it can chew. They suspect that Henry Hazlitt came close to the mark when he wrote, "The more things a government undertakes to do, the fewer things it can do com petently."! Mr. Patrick holds a Master of Divinity degree from Yale and has filled many lay offices as a churchman. Recently retired from chamber of commerce work, he now is an officer in a group of small-town banks in Illinois.

1 LIFE AND DEATH OF THE WEL FARE STATE; La Jolla, California: La J olIa Rancho Press, 1968; p. 52. 172 What do the Hebrew and Chris tian scriptures have to say on the subj ect of government If6wer and functions? News reports about clergymen's public statements and actions often reveal the men of the cloth on the side of big govern ment - favoring more handouts, more intervention, more regula tion. Does the Bible support that position? Or should the clergy take a closer look at what the scriptures disclose? Answers to these questions could be illumi nating. First, however, just what is government? Some of the thinkers who helped lift western civiliza tion into the modern era had pon dered the question deeply but it is doubtful that most people ever gave it a thought, either then or 1976 WHAT THE BIBLE SAYS ABOUT BIG GOVERNMENT 173 now. A look at what students of the subject have written should provide an answer.

The Essence of Big Government In a stark cemetery at Mans field, Missouri, stand two identical gravestones side by side, separated by about six feet of sad. Carved in large letters in the brown granite of one is the name Wilder, of the other, Lane. One marks the graves of Almanza James and Laura Ingalls Wilder, the second the grave of their daughter, Rose Wilder Lane. Almanza Wilder died in 1949 at the age of ninety-two. His wife lived till 1957 when she was ninety. Rose was almost eighty-two when she died in 1968. A mile east of Mansfield on a pleasant hillside rests the modest white frame house that Almanza Wilder built for Laura at the turn of the century, using building ma terials produced on the farm. Here Rose grew to womanhood and here in 1932 her mother began to write the "Little House" books that have charmed a generation of Ameri cans with their picture of pioneer life in the second half of the nine teenth century and have now been adapted for television. Drawing on a descriptive talent developed as a girl when she served as the eyes for her scarlet fever-blinded sister, Laura wrote the series of books in longhand on tablet paper, using both sides of the sheet to avoid waste and writing with a pencil.

Rose, too, became a writer and her best-known book, Let the Hur ricane Roar, is in part are-telling in fiction of the pioneer experi ences of her mother's family. But her most influential book is The Discovery of Freedom, published in 1943. It takes nothing from Rose Wilder Lane to point out that the book reflects viewpoints and at titudes that are evident in her mother's writing. The Discovery of Freedom was the inspiration for Henry Grady Weaver's The Mainspring of Hu man Progress, described by Leon ard Read, President of the Foun dation for Economic Education, as probably the best introduction to freedom ideas available in a single volume. Mainspring has multiplied the outreach and the influence of Rose Wilder Lane's thought. Today and for two generations there has been abroad in the land a naive faith in government as the solution to all problems - a belief in the ability of legislation to sat isfy any need. Events in the last decade, when that trust reached its zenith in the Great Society pro grams, have dealt several stinging blows to the faith but it had be come so deeply ingrained that it yields slowly to opposing evidence.

Weaver and Mrs. Lane did not share the popular belief. Instead 174 THE FREEMAN March they took a very different view which Rose Wilder Lane expressed in these words: "What they (men in government) have is the use of force - command of the police and the army. Government, The State, is always a use of force ..."2 And "Buck" Weaver wrote, "In the last analysis, and stripped of all the furbelows, government is nothing more than a legal monopoly of the use of physical force - by persons upon persons."3 What Authorities Say Although most Americans today seem never to have thought of it, this idea was not new. Numerous other writers, representing differ ing shades in the political spec trum, have expressed a similar view, both before and since Mrs. Lane and "Buck" Weaver wrote. "The civil law ... is the force of the commonwealth, engaged to protect the lives, liberties, and pos sessions of those who live accord ing to its laws, and has power to take away life, liberty, or goods from him who disobeys." (John Locke) "Government is not reason, it is not eloquence - it is force. Like fire it is a dangerous servant and 2 THE DISCOVERY OF FREEDOM; New York, N.Y.: Arno Press, 1972; p. 27.

3 THE MAINSPRING OF HUMAN PROGRESS; Irvington-on-Hudson, N.Y.: Foun.dation for Economic Education, 1953, p. 71. a fearful master ..." (George Washington) "Law is the common force or ganized to act as an obstacle to in justice." (Frederic Bastiat) ". . . penal sanction . . . is the essence of law ... " (John Stuart Mill) "The essential characteristic of all government, whatever its form, is authority .... Government, in its last analysis, is organized force." (Woodrow Wilson) "The state belongs to the sphere of coercion. It would be madness to renounce coercion, particularly in the epoch of the dictatorship of the proletariat." (Nikolai Lenin) "A government may be freely chosen, but it is still not all of us. It is some men vested with author ity over other men." And democ racy ". . . is a name for a particu lar set of conditions under which the right to coerce others is ac quired and held."4 (Charles Frankel) "The State is the party that al ways accompanies its proposals by coercion, and backs them by force."5 (Charles A. Reich) It should come as no surprise to students of the Bible that the scrip4 Charles Frankel, THE DEMO CRATIC PROSPECT; New York, N.Y.: Harper & Row, 1964; p. 136 and p. 30.

5 Charles A. Reich, THE GREENING OF AMERICA; New York, N.Y.: Ban tam Books, 1971; p. 350.

1976 WHAT THE BIBLE SAYS ABOUT BIG GOVERNMENT 175 turesanalyzed the ultimate nature of government much earlier than any of the Nriters cited. Christians sometimes wonder what Jesus had to say about the role of govern ment and theologians normally re ply that he said very Iittle on the subject. The principal relevant statement· recorded in the gospels is his response to a question as to whether it was proper to pay the head tax imposed by Rome. The tax amounted to about twenty-five cents a person and was regarded as a mark of servitude to Rome. In ancient times the authority of a ruler was symbolized by the circulation of his coinage and coins bearing the ruler's image were considered his property, in the final analysis. 6 When Jesus re quested that his questioners show him one of the coins used to pay the tax, a coin was brought and he asked, "Whose likeness and in scription is this?" They replied that it was Caesar's. Jesus then said, "Render therefore to Caesar the things that are Caesar's, and to God the things that are God's."

The account is told in Matthew 22 and in parallels in the gospel ac cording to Mark and according to Luke. While Jesus said little about the 6 THE ABINGDON BIBLE COM MENTARY; New York, N.Y., and Nash ville, Tenn.: Abingdon-Cokesbury Press, 1929; p. 988. power of government and what government should or should not do, two other New Testament writers came down solidly on the side of respect for the civil author ities and obedience to law. One of these was the Apostle Paul. Of Paul a respected New Testament scholar wrote a few years ago, "It is evident from many allusions in his writings, that the thought of Rome had strongly affected his imagination. He associated the great city with all that was most august in earthly power. He be lieved that it had been divinely ap pointed to maintain order and peace among the contending races."7 In his letter to the Romans, St. Paul offered the following admoni tion: "Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God."

Pay your taxes and give respect and honor to whom they are due, said Paul. Conduct yourself prop erly and you will have no reason to fear an official. "But if you do wrong, be afraid, for he does not bear the sword in vain."s 7 E. F. Scott, THE LITERATURE OF THE NEW TESTAMENT; New York, N. Y.: Columbia University Press, 1936; p.156. 8 Romans 13 :1-7. All scriptural quota tions are from the Revised Standard Ver sion of the Bible; New York, N.Y.: Thomas Nelson & Sons, 1952.

176 THE FREEMAN March And St. Peter wrote: Be subject for the Lord's sake to every human institution, whether it be to the emperor as supreme, or to governors as sent by him to punish those who do wrong and to praise those who do right. For it is God's will that by doing right you should put to silence the ignorance of fool ish men. Live as free men, yet with out using your freedom as a pretext for evil; but live as servants of God. Honor all men. Love the brotherhood. Fear God. Honor the en1peror.9 The statements are brief be cause the writers were not pri marily concerned for man's rela tion with the authorities but for his relation with God and his fel low man. But the statements are definite. And they provided the scriptural foundation for what some students have considered Martin Luther's exaggerated rev erence for the State. Luther's at titude supplied the philosophical substructure for the authoritarian character German governments have displayed more than once.

"When studied with any degree of thoroughness, the economic problem will be found to run into the political problem," wrote Irv ing Babbitt, "the political problem into the philosophical problem, and the philosophical problem itself to be almost indissolubly bound up at 9 I Peter 2: 13-17. last with the religious problem."lo In short, what we believe or do not believe about man and about God determines what kind of so ciety we will have and how our society will govern itself. While there is support for pay ing taxes, obedience to law, and respect for civil authority in the New Testament, no detailed anal ysis of the nature of government or the proper functions of govern ment is to be found there. There is, however, ample guidance for the individual conduct of govern ment officials. They are human be ings, so they will be fair, as all humans should be. They will deal justly with the people. Tax col lectors will not steal because no body should steal.

Another Biblical View In the Old Testament, the writer of the books of I Samuel and II Samuel draws a definite contrast between limited government and the all-powerful State. The writer of the two books drew on earlier sources, some of which probably went back as far as 1000 B.C. or earlier and all of which had been completed by about 600 B.C.l1 For 10 Quoted by Russell Kirk, THE CON SERV ATIVE MIND; Chicago, Ill.: Henry Regnery Company, 1960; p. 482. 11 Robert H. Pfeiffer, INTRODUC TION TO rrHE OLD TESTAMENT; New York, N.Y.: Harper & Brothers, 1941; pp.20-22.

1976 WHAT THE BIBLE SAYS ABOUT BIG GOVERNMENT 177 generations the Jewish people had been led by officials called Judges, of whom at least one, Deborah, was a woman. Best known of the judges to modern readers is Gid eon, because his name is carried by the organization recognized for its practice of distributing Bibles in hotels and motels. The judges combined civil, military, and re ligious functions in their office. They led the Jewish people in battle against their enemies, set tled questions of law, administered justice in disputes between indi viduals, and functioned as priests and prophets. To the enemies of Israel they often showed no quar ter and in some of their judicial decisions they may have been ar bitrary but their leadership of their own people was apparently rather mild. The writer of the book of Judges reports, in chapter 17 and again in his concluding verse, Judges 21 :25, "In those days there was no king in Israel; every man did what was right in his own eyes."

Gideon did not even 'want to be king. After he had led the men of Israel successfully against their enemies, they asked him to rule over them but he replied, "I will not rule over you, and my son will not rule over you; the Lord will rule over yoU."12 After the death of Gideon one of 12 Judges 8 :23. his sons, Abimelech, seized power briefly and killed all of his broth ers except one, the youngest, J 0 tham, who hid himself and es caped. When J otham was told what his brother had done, he related a parable, recorded in Judges 9, about the trees going forth to anoint a king over them selves.The olive tree, the fig tree, and the vine all declined to aban don their productive pursuits to become king, so the trees then turned to the bramble and the bramble accepted. The Worst on Top In The Road to Serfdom, Prof. Friedrich A. Hayek, for somewhat different reasons from those cited in J otham's parable, reached a conclusion that resembles the par able of the trees ·and the bramble.

Prof. Hayek describes how kakis tocracy arises in a chapter en titled, "Why the Worst Get on TOp."13 Samuel was the last of the series of prophet-judges. He adminis tered justice in his own city of Ramah, a few miles north of Jerusalem, and traveled a judicial circuit that took him annually to Bethel, Gilgal, and Mizpah. When senility approached, Samuel made his two sons judges but the scrip18 Friedrich A. Hayek, THE ROAD TO SERFDOM; Chicago, Ill.: The Uni versity of Chicago Press, 1944; Chapter x.

178 THE FREEMAN March ture records that they lacked their father's honorable character and "turned aside after gain . . . took bribes and perverted justice."14 The Jewish people were still en gaged in the prolonged effort to conquer the land they had occu pied. Recurring wars threa tened their security. Such enemies as the Philistines were better orga nized and better equipped than the people of Israel who retained their loose tribal structure and had not yet fully abandoned the nomadic life. So the elders of Israel came to Samuel with a request: "Behold, you .are old and your sons do not walk in your ways; now appoint for us a king to govern us like all the nations." The request displeased Samuel and he prayed to the Lord who admonished Samuel to heed their request, "for they have not re jected you, but they have rejected me.... " But Samuel was directed to tell them what it would be like to have a king. He did so in words recorded in I Samuel 8: These will be the ways of the king who will reign over you: He will take your sons and appoint them to his chariots and to be his horsemen, and to run before his chariots; and he will appoint for himself commanders of thousands and commanders of fifties, and some to plow his ground and to reap his harvest, and to make 14 I Samuel 7:15-8:5.

his implements of war and the equip ment of his chariots. He will take your daughters to be perfumers and cooks and bakers. He will take the best of your fields and vineyards and olive orchards and give them to his servants. He will take the tenth of your grain and of your vineyards and give it to his officers and to his ser vants. He will take your menservants and maidservants, and the best of your cattle and your asses, and put them' to his work. He will take the ten th of your flocks, and you shall be his slaves. And in that day you will cry out because of your king, whom you have chosen for yourselves .... The people refused to listen to Samuel, however, and insisted that they wanted a king to govern them and fight their battles. Their wishes prevailed. They got big government. The king who was selected was Saul, of the tribe of Benjamin. Many years before, when Moses explained to the people of Israel the law that he had delivered to them, he told them what kind of person to choose as king when the time came. His counsel is re corded in Deuteronomy 17: When you come to the land which the Lord your God gives you, and you possess it and dwell in it, and then say, "I will set a king over me, like all the nations that are round about me"; you may indeed set as king over you him whom the Lord your God will choose. One from among your breth1976 WHAT THE BIBLE SAYS ABOUT BIG GOVERNMENT 179 ren you shall set as king over you; you may not put a foreigner over you, who is not your brother. Only he must not multiply horses for himself or cause the people to return to Egypt in order to multiply horses, since the Lord has said to you, "You shall nev er return that way again." And he shall not multiply wives for himself lest his heart turn away; nor shall h~ greatly 111ultiply for hin1self silver and gold.

In a book based on his research at the Hoover Institution on War Revolution and Peace of Stanford University, Alvin Rabushka wrote "Governments take resources fro~ the public but use them to maxi mize their own welfare."15 Both Moses and Samuel recognized this propensity and warned about it. To modern taxpayers the tenth part of their grain and vineyards and flocks, that Samuel said the king would require, must appear mild indeed but in time the burden became onerous to the people. Samuel's prophecy that one day they would cry out because of their king was not realized immediately. Then, as now, persons with the vision to foretell the consequences of certain popular choices and ac tions could only tell what would occur as a result, not when it would occur. 15 Alvin Rabushka A THEORY OF RACIAL HARMONY: Columbia, S. C.: University of South Carolina Press, 1974; p. 93. David and Solomon ~avid succeeded Saul as king, unIted the people of Israel under his rule, defeated their enemies pushed the borders of his domai~ south to the Gulf of Aqaba, an arm of the Red Sea, and by treaty with vassals extended his control north and eastward to the Eu phrates River. 16 Thrusting aside an attempt of an older brother to become king, Solomon followed David, his fa ther, on the throne. His reign was marked by lavish construction pro grams and public works projects.

An extensive bureaucracy was es tablished to man the elaborate gov ernmental structure Solomon cre ated. Twelve administrative re gions were defined and each was to provide the taxes and other re sources to support the king and his government for one month of each year. Solomon took as one of his wives a daughter of the Egyptian Pharaoh and built her a luxurious residence. He also built a temple at Jerusalem to be the center of wor ship for the entire nation. He was described as having "wisdom and understanding beyond measure and largeness of mind like th~ sand on the seashore .... "17 At the same time, however, the scrip1G E. W. Heaton, SOLOMON'S NEW MEN; New York, N.Y.: Pica Press 1974; Chapter 2. ' 17 I Kings 4 :29.

180 THE FREEMAN March ture speaks repeatedly of Solo mon's use of forced labor and it tells of the hundreds of wives and concubines that he took. History casts doubt on the wisdom of a ruler who burdens his people with oppressive taxation and encumbers them with the upkeep of a sprawl ing bureaucracy and a parasitic court. Like the Roman Catholic popes of the fifteenth and sixteenth cen turies, Solomon mulcted the peo ple of the resources to build im posing structures and create works of art. 18 The popes left great paint ings and sculpture, as Solomon left a temple that stood for four cen turies, but the exactions of the popes brought schism to the Church and those of Solomon brought rebellion in the kingdom when his son, Rehoboam, succeed ed him. After the death of Solomon the people who assembled for the coro nation of Rehoboam came to the new king with a plea: "Your fa ther made our yoke heavy. Now therefore lighten the hard service of your father and his heavy yoke upon us, and we will serve you."

Rehoboam sent them away for three days while he consulted first with the elders who had advised 18 Irving Stone, THE AGONY AND THE ECSTASY; New York, N.Y.: Doubleday & Company, 1961 (Signet edi tion) . his father and then with his youth ful associates. In the end he re jected the counsel of the elders that he accede to the people's wishes. Instead he took the advice of his contemporaries and when the people returned for his answer, he told them, "My father made your yoke heavy, but I will add to your yoke; my father chastised you with whips, but I will chastise you with scorpions." Their appeal rejected, the people cried out, "To your tents, 0 Israel!" And the his torian records in I Kings 12, "So Israel has been in rehellion against the house of David to this day." The scriptures say that Saul and David and Solomon each reigned for forty years. So one hun dred twenty years passed, or ap proximately four generations, from the time when the people aban doned limited government until the time when their descendents did "cry out" because of the king they had chosen. By 600 B.C. or earlier the people of Israel had learned, however, that govern ment is indeed force - a dangerous servant and a fearful master.

The Role for Government If government is force, as the serious students of the subject have agreed, what kinds of things should government do? The an swer is obvious. Government should do those things that can be prop1976 WHAT THE BIBLE SAYS ABOUT BIG GOVERNMENT 181 erly done by the use of force. The question follows: What are the proper uses of force among· re sponsible adults? Nobody has answered that ques tion more clearly than the nine teenth century Frencnstatesman, Frederic Bastiat: "Every individ ual has the right to use force for lawful self-defense. It is for this reason that the col~ective force which is only the organized combi nation of the individual forces may lawfully be used for the same purpose; and it cannot be used legitimately for any other pur pose."19 Government, therefore, is to be used to defend, to protect, to pre vent violence, fraud, and other predatory acts. Other endeavors are to be left to the initiative and the choices of people acting volun tarily, either jointly or as individ uals. In short, government should do what the judges of Israel did.

Beyond that every man should do what is "right in his own eyes." Obviously that is not the direc tion Americans have been moving for the past two generations. In stead, as noted earlier, a naive faith that government can solve all problems has taken root and persists in spite of the repeated failures of government social pro19 Frederic Bastiat, THE LAW; Irv ington-on-Hudson, N.Y.: Founda~ion for Economic Education, 1956; p. 68. grams. But it makes no difference that large numbers hold a wrong view. Right is not determined by majority vote. As Anatole France stated, "If fifty million people say a foolish thing, it is still a foolish thing." And Supreme Court Jus tice George Sutherland said, "A foolish law does not become a wise law because it is approved by a great many people."20 Right, like truth, is usually discerned first by a minority, often in the beginning a minority of one. Everybody Is Responsible Everybody has a stake in pre venting the unprincipled members of society from committing acts of violence or fraud upon peaceful persons, and should help pay a part of the cost of the police and defense mechanism necessary to protect people in their peaceful pursuits. Government is society's mechanism for protecting and de fending; it properly collects taxes to pay for these services. But when it takes from some persons what belongs to them and gives it to other persons to whom it does not belong, government commits an act of plunder. One person who uses force or the threat of force to take from another what has been 20 Address as President of the Ameri can Bar Association, at the ABA annual meeting, Saratoga Springs, N.Y., Sept. 4, 1917.

182 THE FREEMAN March honestly earned or built or created, commits an immoral act and a crime. Two or more persons band ing together do not acquire any moral rights that they did not have as individuals. When govern ment provides benefits for one cit izen at the expense of another by doing what the citizen himself cannot do without committing a crime, it performs an act of plunder. 21 Not only is governmental plun der immoral, it reduces the general well-being of the people. It does so by taking away from some peo ple what they have produced but are not permitted to use. It re duces well-being by distributing to other people what they have not been required to produce. Both the producers and the receivers are thus deprived of incentive. And government reduces the general well-being by creating an unpro ductive administrative bureauc racy to do the taking away and the distributing. Society needs the productivity of all its able mem21 Bastiat, Gp. cit. p. 21.

The Lesson hers. Shifted to producing goods and services that can be exchanged in the marketplace, the legions :'of bureaucrats could add materially to human well-being. How is the situation to be cor rected that has been allowed to de velop? Rose Wilder Lane points the way: "The great English re form movement of the 19th cen tury consisted wholly in repealing laws."22 What is needed in the United States is to repeal laws, not to pass new ones. Repeal laws that vest some men with authority over other men. This is not to set the clock back, it is to set it right. 23 As Samuel warned the people of Israel when they chose big govern ment, various prophets have warned the people of America. Prophets can only tell what to ex pect, however, not when to expect it. More than a century of suffer ing passed before the people of Israel rose to throw off the yoke from their necks. ~ 22 Loc cit. p. 239.

23 Wilhelm Roepke, A HUMANE ECONOMY; Chicago, Ill.: Henry Reg nery Company, 1960; p. 88. IDEAS ON LIBERTY IN DECIDING whether or not to give power over you to your most trusted friend, imagine that his authority might eventually be held by your worst enemy. Then act accordingly; for although the friend may never misuse it, there's no way of telling who might inherit it from him. JAMES M. ROGERS, "Two Ways to Slavery"

A REVIEWER'S NOTEBOOK J 0 H N C HAM B E RLA IN The Existential Pleasures Of Engineering} I SAMUEL C. FLORMAN, author of the enigmatically titled The Exis tential Pleasures of Engineering CSt. Martin's Press, $7.95), is a construction engineer who hap pens to hold an M.A. in English literature from Columbia Univer si ty. The possessor of a most pleasing style, he moves comfort ably in two worlds of the imagina tion - or in the "two cultures," as the British novelist C. P. Sno,v would put it. Like any person of common sense he knows that the creative personality is the same whatever the means of expression the crea tor may use. As critic Lewis Mum ford once noted (before he went. off on his anti-technological ram page), the esthetic impulse in our so-called Gilded Age flowered just as importantly and effectively in the great suspension bridges de signed and built by Roebling as it did in the poems of Walt Whit man or the paintings of Whistler.

The good engineer works in a hu man dimension, to make life more civilized, more bearable, more 183 184 THE FREEMAN March pleasurable and, incidentally, bet ter able to yield the leisure for lit erature, sculpture or just plain fun and games. The engineer, in short, is just another artist. The trouble with the artist engineer, however, is that he has never bothered to explain himself. During the Golden Age of Engi neering, which lasted a full cen tury from 1850 to 1950, he didn't have to justify his existence. Peo ple took it for granted that it was good to rid the world of household drudgery by engineering every thing from washing machines to air conditioning. There was no question about the value of such things as the automobile, the air plane and the Panama Canal they speeded life and, simultane ously, left more time for living. The builders of the St. Gotthard Tunnel were eulogized in fiction by no less a person than the tor tured dramatist August Strind berg. In Kipling's verse "romance brought in the 5: 15," and Carl Sandburg lamented the loss of a discarded steel rail as "straight strength pitched into the slime of the ditch."

But even as engineers were placing men on the moon and un locking the secret of the atom, the tide turned against the engineer. A whole group of sociologists Jacques Ellul, Lewis Mumford, Charles Reich,. Theodore Roszakbegan to think of technology as a Frankenstein monster that had, somehow, taken over and was ruh ning the show by itself. The means had become an end. The environ mentalists and the ecologists, see ing only that cars have exhausts and that atomic fuel leaves a poi sonous waste, headed for the ex its. There was nothing left to do, they said, but return to a pre technological Nature. America must be "greened again." Our Debt to Technology With his knowledge of the past, Mr. Florman takes extensive issue with Ellul, Mumford, Reich and the rest of the anti-technologists. Mumford salutes the Middle Ages, when men presumably had com mon aims and built to the glory of God. But if the Middle Ages had anything over the Dark Ages, it was because technology had turned up such prosaic wonders as the horse collar, which enabled people to move goods from place to place over the rough roads between seas and rivers. Diets were sparse un til technology, in the form of the compass, enabled mariners to bring New World vegetables to Europe along with Aztec gold.

There should be no need to be labor the point: modern popula tions, brought into existence by the very fecundity of science and engineering, could not live with1976 THE EXISTENTIAL PLEASURES OF ENGINEERING 185 out fertilizers, new energy sources, and great ships to carry raw ma terials to points where they can be transformed into the means of sustenance for the millions. It is obvious that man sets his own ends, and uses technology to get where he wants to go. It is not the fault of the engineer when men move perversely to hurt each other, or to pursue power for the sake of domination. World War I came before the invention of the tank; World War II preceded the harnessing of the atom to destruc tive ends. It is the politician and the warrior who make wars. that require the jet engine and jungle defoliants, not the engineer, whose discoveries can be switched from use to use, depending on the mo tives and purposes of nontechnical men who often do not know the existential pleasures of building for the sake of enjoyment and peaceful trade.

Gloomy Forecasts So mixed up have we become that a Stanford University semi nar for freshmen in California can feature a speaker, anthropologist George Collier, who expatiates for the students on the losses atten dant upon modern technology, in cluding the loss of many tools and skills and "even the loss of hun dreds of species of cultivated plants." This remark about plant loss was apparently made with a perfectly straight face not far from the town of Santa Rosa, where Luther Burbank created new plant hybrids by the dozen, and in the very state that had turned a single navel orange branch, a mutation, into a great industry within the lifetime. of the navel's discoverer. At the same seminar a Professor James Gibbons .of the Stanford Department of Electrical Engi neering downgrades technology by saying that the most it can do for "us in solving the imminent catastrophe of world overpopula tion and insufficient resources is to delay that catastrophe by a few years." Professor Gibbons thinks we must all accept a reduction in the standard of living if we are to have any hope for the future.

Well, so· we must if our anti technologists, for the fancied sake of a few caribou who couldn't care less about the loss of a sliver of Arctic land, insist on holding up the building of a needed oil pipe line for seven years. So we must if the Sierra Club activists keep virtually uninhabited wastes in the Powder River area of Wyom ing and Montana from becoming the center of a coal mining indus try capable of giving us power that now comes at great expense from the Middle East. We fail not because our engi186 THE FREEMAN March neers have lost their skill but be cause the aims of men have sud denly become much smaller than they were in the Golden Fifties. The -engineer is perfectly capable of winning through to new vistas of plenty, and if there is pollution to be fought as a by-product, the engineer can take care of that in his stride once he gets the signal from the people. Maybe the intellectual climate is about to take a turn for the better.

Last year an English economist, Wilfred Beckerman, wrote his witty Two Oheers for the Affluent Society in which he proved the "ecosystem" could do little for man and beast unless there was an economic surplus to turn into wa ter purification and so forth. Now we have Mr. Florman's defense of the artist-engineer, a fit compan ion book to Two Cheers. Inciden tally, St. Martin's Press has pub lished both books, a sign of true sanity. ~ RACE AND ECONOMICS by Thomas Sowell (New York: David McKay and Company, 1975) 276 pp., $9.95. Reviewed by Allan C. Brownfeld IF ONE WERE TO SURVEY what has been written in the U.S. about the racial question during the past quarter century, he would be hard pressed to find a more eloquent and honest presentation than this book by professor Thomas Sowell, a black economist now on the fac ulty of the University of Califor nia at Los Angeles. It deserves wide readership - among mem bers of all races.

Dr. Sowell, a firm advocate of the free market, declares that "Race makes a difference in eco nomic transactions as in all other areas of life," but he denies that the black experience in America is radically different from that of other groups. Although blacks - arrived here during the colonial period, groups whic1h came later - such as the Irish and the Italians - have moved ahead faster. Some have identified race as the retarding factor, but this is a mistaken view, Dr. Sowell argues. It "is not the time . . . of arrival in America, but (1) the time of being freed from slavery, and (2) the time of movement from the rural south 1976 OTHER BOOKS 187 into a modern, industrial and com mercialeconomy . . . " Blacks "had to undergo two ma jor drastic transformations with in two or three generations. They had first to adjust to freedom and individual responsibility for feed ing, clothing and housing them selves. This adjustment had to be made in an economy and society devastated by war .... The sec ond great adjustment was to ur ban living - an experience which had proved shattering to E uro pean immigrants from similar ru ral backgrounds before them.

Most of today's black urban pop ulation has been in the city only two generations, and many of the poorest and most problem-ridden, less than that." The experiences of the Irish im migrant in the 19th century and the black urban dweller of the 20th are, argues Dr. Sowell, very similar. In 1888, William Dean Howells noted that "the settlement of an Irish family in one of our suburban neighborhoods" strikes a "mortal pang" in the old resi dents. Henry George applied the phrase "human garbage" to the immigrants of the 1800's and H. G. Wells doubted that they could be absorbed into society. Dr. Sowell writes that, "The Irish were prominent among the immigrant groups exhibiting the usual symptoms of social pathology among people at the bottom. They had very high rates of death from tuberculosis . . . as well as high rates of insanity, a disproportion ate number of widows and orphans and inmates of poor-houses, as well as very large overrepresenta tion among those arrested and im prisoned."

Of the several 19th century im migrant groups, the Jews ad vanced most quickly. The reason dates hack to their distant past - as did the corresponding failure of other groups to advance more quickly. He writes that, "In one important respect, medieval Jews were very fortunate in the partic ular form of occupational discrimi nation practiced against them. They were forbidden to engage in those occupations which were cen tral to feudalism - those involv ing the land . . . and were there fore forced into urban, commer cial and financial occupations, which would of course later turn out to be central to the modern cap italist economy." Thus, argues the author, blacks, Poles, Irish, Italians and other groups came from a rural and il literate past which had to be over come. Prejudice and discrimina tion was not, in reality, blind ha tred, but represented an aversion to the vast differences between these groups and the urban Amer ican population. As they acclimat188 THE FREEMAN March ed and succeeded, the prejudice largely ended.

The most successful non-white group was the Japanese. They met discrimination, and during World War II were interned by the U.S. Government. Yet, their economic advance continued. Neither they nor the even more successful Jews looked for government aid or as sistance. They simply educated themselves, acquired the skills nec essary to succeed, and made dra matic economic progress. Contrast ing the Japanese approach to that of today's liberal desire for gov ernmental intervention in the eco nomy, Dr. Sowell notes that, "Le gally, Japanese-Americans never received full restitution for their wartime losses .... The actual set tlement payments amounted to no more than ten cents on the dollar. The Japanese-Americans, however, did not put their emphasis on try ing to get justice, but rather on trying to get ahead. This they did." It is Dr. Sowell's conclusion that, "political power is not a necessary condition for economic advance. . . . The Irish were the most politically successful of American minorities. They domi natedpolitical life in a number of American cities by the middle of the 19th century. Yet . . . the bulk of Irish-Americans was still pre dominantly in unskilled and menial occupations in the last decade of the century.. .. Emphasis on promoting economic advancement has produced far more progress than attempts to redress past wrongs."

It is the author's .belief that liberal and interventionist pro grams - minimum wage laws, rent control, school busing - do more harm than good in assisting black Americans to advance economi... cally. Concerning the minimum wage he writes: ·"minimum wage laws are not passed for the pur pose of racial exclusion, but the actual economic--effects do not de pend upon the intentions of those who establish a situation. The net effect of any arrangement which sets the rate of pay above that required to attract the num ber of qualified workers needed is to make it cheaper to discriminate in deciding who not to hire." Sim ilarly, he writes, "Rent control re duces the cost of discrimination in housing, and enables ethnic bound aries to be maintained longer than otherwise." Welfare, in particular, has made many blacks wards of the state and has deadened the in centive needed to progress.

Of the so-called "experts" who have produced programs such as urban renewal - meant to help the poor, but proving counter-produc tive-Dr. Sowell asks for a healthy skepticism: "Everyone understands 1976 OTHER BOOKS 189 that when a representative of a soup company tells us that his product makes the best lunch, a healthy skepticism is in order.· But when a housing 'expert' unveils the latest plan to 'save the cities' or a member of the education lob by asks for expanded 'opportuni ties' for youth to consume his product at taxpayer expense, there is a tendency to regard them as wise men promoting the public interest." Every negative situation faced by blacks today, argues Dr. Sowell, was faced at an earlier time by other immigrant groups. The fu ture success of blacks, he believes, is to look carefully at the qualities which other groups developed to improve their condition: "Among the characteristics associated with success is a future orientation a belief in a pattern of behavior that sacrifices present comforts and enjoyments while preparing for future success."

Today's minorities, Dr. Sowell believes, are not really far behind the 19th century immigrant groups at similar stages of devel opment. The answer, he believes, lies within the groups themselves - not with the larger society. If government would simply stop meddling in such affairs and throwing up roadblocks - such as union shops which have notori ously kept blacks out of skilled crafts and license laws which re strict entry into many jobs-prog ress would be more rapid. Preju dice, the author argues, is not eliminated by carrying placards against it but by removing its causes. The small degree of blind racism which remained would be of little consequence. This book, hopefully, will be come a landmark in the literature of race relations and its relation ship to economic success. It is an eloquent plea for freedom and free enterprise from a black intellec tual about whom we will be hear ing a great deal in the future.

~ FAITH AND FREEDOM: A Bio graphical Sketch of a Great Ameri can, John Howard Pew compiled by Mary Sennholz. (Grove City, Pa., Grove City College, 1975) 179 pp. Avail able at $6.00 from The Foun dation for Economic Education, Irvington-on-Hudson, N. Y. 10533. Reviewed by Mark B. Spangler "We never plan anything. I think there's got to be more cen tral planning. . . . People may think badly of the idea simply be cause anything that smells of government and planning stinks. To me it makes sense."l Those are 1 Time, February 10, 1975, pp. 70-71.

190 THE FREEMAN March the words of Henry Ford II, and they express adequately the most significant change American so ciety has undergone over the course of this century. Govern ment has been sanctioned solver of all problems, particularly in the realm of economics. Today the popular search for economic well being is by way of special privi leges or money transfers from the government. Instructors and students enjoy the use of federal and state aid at schools. Urban renewal officials use federal grants to reconstruct communities. Failing industries petition for federal subsidies as do bankrupt cities. "Charity" has come to mean distributing food stamps, unemployment relief, old age care, health aid, and so on. If the government is not called upon to subsidize, then it is ex pected to control certain actions of individuals. The federal govern ment controls prices that are too high or too low; it regulates com petition that is too much or too little. By issuing licenses and per mits, the state decides who can enter an occupation and who can build what and where. Employers are told whom they can employ and under what conditions; new workers can be told to join a un ion. And so it goes today - utiliz ing government for the benefit of one at the expense of another's liberty or income. Unfortunately, the play does not end happily. His tory has seen such performances time and again and knows the out come.

Consider the following, in direct contrast to the present picture: To J. Howard Pew, every wanton restraint to individual liberty whether practiced by a dictator or a popular government, was a degree of tyranny. He opposed every form of government intervention with the creative activ ity of man. With heavy heart he watched the growth of government in Washington and saw its bureauc racy encroach upon the traditional freedoms of Americans. To him cen tral planning and control meant de nial of individual freedom to plan and control. Therefore in countless speeches, he pleaded the case for in dividual freedom and the private property order, which to him was "the great American Heritage." Who was .T. Howard Pew? He was an industrialist, researcher, developer, manager, and corporate president; he was an entrepre neur of the oil industry. His ca reer covered nearly three quar ters of this century and witnessed the transformation of a free so ciety into a highly controlled so ciety. He saw faith in free men discarded for faith in the state.

"A free economy is only possible when all people stand equal before the law. That is the principle laid 1976 OTHER BOOKS 191 down in our constitution .... But this principle has been violated time after time .... " was one way J. Howard Pew described the pres ent course of America. His actions and words endorsed freedom and free enterprise; he rejected the free society's only alternative, the centrally com manded society and economy. As an "economist" he saw the effi ciency of free markets; as a per son he saw the morality of indi vidual freedom. Mrs. Sennholz reports that Howard Pew was de fiant and recalcitrant to the au thorities of the world, but malle able to eternal principles. Faith and Freedom traces the applica tion of Mr. Pew's principles to the domains of education, economics, industry, charity, religion, the im portance of America's heritage, and the problems which America faces today.

How did Howard Pew approach the problem of serving consumer demands for higher education? He used the same cost-cutting, managerially-efficient approach that enables enterprises to bring all other goods and services to the masses. Certainly he never looked to government to subsidize his enterprise. Profitable enterprises plow the company's earnings back into the business to expand and to continue to serve consumers. Com prehending the economic importance of competition, Mr. Pew spoke against business using poli tics to restrict competitors: "We believe in competition for our selves .... We have never sought . . . a sheltered position. . . . If somebody else can serve the pub lic better in quality or price, he is entitled to the business." He wisely recognized that in a free market employers must com pete for labor's services; hence, he took a personal interest in his em ployees. Howard Pew initiated a stock purchase plan for his em ployees; and during the Great De pression he refused to make gen eral layoffs or wage reductions.

He understood how free market prices regulate an economy and direct its production; price con trols only restrain economic growth. Mrs. Sennholz has in cluded in the book one of his 1934 speeches relating the damaging repercussions that could have been brought upon the oil industry if at that time the government had imposed controls just on trans portation. He gives a clear de scription of the process by which federal controls snowball once ini· tiated. The major evil of our time is inflation, and Howard Pew knew that inflation is the expansion of the money supply by federal offi cials. It is such expansion which causes prices to rise in a general 192 THE FREEMAN March fashion, thus bringing instability to the economy and making calcu lation almost impossible. "War, pestilences, plagues, and catastro phes rarely bring about the fall of a nation; but inflation has been responsible for the downfall of many great empires of the past,"

he said. J. Howard Pew saw that gov ernment security is a fraud : "it has nothing excepting only that which it takes from the people. The key to security is production." The greatest economic charity to Mr. Pew was every productive ef fort that enables other individuals to become independent of alms. He thought the greatest danger to charity was the rise of compulsory benevolence by an omnipotent pro vider state. Above all, while volun tary activity strengthens social co~ operation, the coercive redistribu tion by the state generates conflict and breeds corruption .. Chari ty is a moral obligation that is compre hended in the· realms of religion and eduC'ation; charity is not forced giving. America's economy did not be come prosperous and strong by mere accident, nor has it deterio rated to its present state by pure chance. Ideologies shape and gov ern society. A faith in free men gave America its strength; a faith in the state has been undermining the foundation of America. How ard Pew put it this way: If you believe in freedom for the in dividual, you must be opposed to any encroachment of government on the rights of individuals. If you believe that everyone is entitled to the oppor tunity for an education, you cannot believe in government· control of that education. If you believe in a free market you cannot justify govern ment price controls. If these are your principles, they admit no compromise, for you cannot mix right with wrong any more than you can mix contamin ated water with pure water without having the whole water contaminated - and it makes no difference how little contaminated water there may be in the mixture.

Faith and Freedom is simple and straightforward; it is a com mon. sense expression of the ac tions and thoughts of an industrial genius defending freedom and free enterprise. , the Freeman VOL. 26, NO.4· APRIL 1976 The Losing Struggleto Save Private Enterprise Melvin D. Barger 19'5 A socialist society lacks the moral foundation upon which private enterprise must take its stand. MotherNature:Friend or Foe? The eternal struggle between nature and culture. Charles R. LaDow 202 The 1975 Nobel MemorialPrize in Economics: Some UncomfortableReflections Israel M. Kirzner 206 The problem of economic calculation still confounds socialist planners and some mathematicians. AnotherBicentennial:The Publicationof The Wealth of Nations How the pursuit of self-interest serves the general welfare. Clarence B. Carson 212 The Plot to Print aMasterpiece: Gulliver'sTravels Jack Markowitz 223 In 1976 we've still much to learn from the pen of Jonathan Swift in 1726.

The Right to Food E. C.Pasour,Jr. 229 Some hard questions for those who would claim or grant any such "right." The Problemsof HaltingEconomic Growth Dwight R. Lee and Robert F. MeNown 234 It's not all that easy to do without the market. How Much Competition? Brian Summers 242 Let everyone compete as he chooses; a fair field and no favor. Eat, Drink, Ta,lk .Francis E. Mahaffy 244 The sad saga of socialism in Ethiopia. Book Reviews: "Robespierre: The Voice of Virtue" by Otto J. Scott "Thinking About Crime" by James Q. Wilson "Property in a Humane Economy" edited by Samuel L. Blumenfeld Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 251 the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON·ON·HUDSON, N. Y. 10533 TEL: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic' Education Managing Editor THE F R E E MAN is published monthly by .. the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion. of private property, the free market, the profit and loss system, and limited government.

Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for. Economic Education, Inc. printed in U.S.A. Additional copies. postpaid: 3 for $1.00; 10 or more, 25 cents each. THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per· mission granted to reprint any article, from this issue, with appropriate credit.

Struggle PrivateEnterprise MELVIN D. BARGER IN THE PAST FEW YEARS, there have been several rescue efforts by prominent business executives to "save the private enterprise sys tem." It is becoming obvious to many business leaders that com" plete government control of the business system lies dead ahead unless something is done to change the present trend. Elisha Gray II, the highly respected former chief of Whirlpool Corporation, stated that in his opinion "the American elector'ate will largely dismantle the free-enterprise system in the next 10 years if we businessmen continue to stand mute." Other prominent executives have voiced similar fears. But what can be done to save private enterprise? If businessmen decide to' speak out and .. to act, Mr. Barger is a corporate public relations ex ecutive and writer in Toledo, Ohio. '. what should they be saying and doing? Is there any specific pro gr'am or organizational effort that will stem the tide of government interventionism that now threat ens almost every business activ ity? Is there anywhere a leader ship or set of ideas that will do the job that needs to be done?

Who has the answer? So far, nobody has effectively answered these questions. But one thing should be clear to anyone who has studied the growth of in terventionism in the past few years. Business leaders are not necessarily effective spokesmen for the private enterprise system. Most of them, not surprisingly, ex press themselves very well when talking about their own companies, products, and markets. Only a few have the ability to talk about the general problem .of intervention195 196 THE FREEMAN April ism without sounding naive or self-serving. The several current attempts to rescue private enter prise are well-intentioned, but it will be a major miracle if the rush toward government control is slowed, let alone stopped. There are a number of reasons why most business leaders tend to lose out when they try to defend private enterprise. Here are some of them: An Inconsistent Viewpoint - A surprisingly large number of busi ness leaders praise the free enter prise or private enterprise system, but seek out government protec tions and subsidies for their own businesses and industries. In so doing, they are accepting the prin ciple of interventionism. It is true that they have plausible explan~ tions for seeking and demanding favors from the government, and usually have community or share holder support in doing so. But it is impossible to be an advocate of subsidies for one's own business without destroying a part of the market system. It is 'also true that protectionist actions and subsidies breed more of the same. If one business or industry receives gov ernment favors, it is a signal for other businesses to seek the same kinds of supposed benefits. Busi nessmen who are already enjoying government benefits, but deplore the rush towards sta tism, are in effect say:ing that they like the government gravy train but want to exclude others from equal par ticipation with themselves.

There is also another type of in consistency expressed by the busi nessman who wants to see indus tries other than his own placed under strict regimentation. It's not unusual to hear an otherwise knowledgeable business executive inveigh against the alleged greed of oil companies or public utilities and declare, when tighter controls are placed on such organzations, "They brought it on themselves. I'm glad to see them get what's coming to them. I don't like gov ernment control, but in this case it wa.s their own fault. I hope they get it in the neck!" "Do We Deserve Freedom?" Somewhat like the "they-brought it-on-themselves" syndrome is the widespread belief among business men that they are being regi mented only because business has been dishonest or has performed poorly in meeting consumer and public needs. This is widely ac cepted, and some industries have launched seemingly worthy efforts to "drive the deadbe'ats and fast operators out of business." There seems to be a hope that if business will only perform "as it should,"

then the government will end its 1976 THE LOSING STRUGGLE TO SAVE PRIVATE ENTERPRISE 197 interventionisms and turn to other matters. Without defending bad business practices, one can easily predict that it's going to be almost impos sible for Americ·an business to per form much above its present levels, or at least so as to satisfy its critics. In every business, there are good reasons why things are done ,as they are and why certain limitations exist. Usually, most of these problems are associated with cost restrictions. A number of businesses and in dustries have attempted to explain their activities in public advertis ing. In some cases, this has back fired, and businessmen have been accused of trying to "whitewash the same old activities" without showing commendable improve ment or change. The critics always seem to be one step ahead of busi nessmen, and are always sure to have a new argum'ent or criticism when previous criticisms no longer apply or have been outmoded by change.

"Business Leaders Fail in a Po litical Environment." - Most of the attacks on business are threats only because they eventually end up as legislation ·and controls. In other words, consumerism and most of the other antibusiness movements feared by businessmen are really political movements. It is very doubtful, for example, that the writings and pronouncements of consumerists could harm a com pany's sales without government intervention at som'e point in the process. (It is true that Mr. Ralph Nader was credited with the de mise of the G.M. Corvair; how ever, this was an exceptional case and there is some belief that ordi nary market forces also helped destroy this automobile). But the game changes radically once the controversy moves to Washington. Here, businessmen are really fish out of water, de spite the publicity about lavish pay-outs to political c,ampaigns and other business involvement in politics. The businesman may try to obtain influence in Washington, but he is usually ill-suited to this role. For th~t matter, businessmen do not really function effectively when they move to Washington to serve as government officials. The business game and the politic,al game are two separate arenas of activity, and often the business man's drive and need to get things done turn out to be lia'bilities in his dealings with political repre sentatives.

The businessm,an is an expert in winning public acceptance of his own products, but he is far less skilled than the professional politician in personally winning the public's approval and support 198 THE FREEMAN April or in dealing with political peo ple. As an article in the Fall 1972 Harvard Business Review put it, "Most corporate executives . are accustomed to giving orders and having them carried out without question. The act of influencing politicians is °a mystery to the:m. . ~ . The unaccustomed necessity of cajoling and persuading a large number of strong-willed and di verse men can prove to be a time consuming. and humbling exer cise." But jf· the businessman is polit ically inept, the same cannot be said of his opponents. For the most par,t, consumerists and other business critics seem to have an almost natural instinct for .influ encing government. Either they know how to make their presence felt, or they have l'earned how to intimidate Congressmen and ap pointed officials. It is a political fact that a few well-organized groups of college students have been able to hitch-hike to Wash ington with nothing ·more than their· sleeping bags and some peti tions, and mak'e more of an impact than some of the na,tion's top corporations.

"Too Much Reliance on Ration al Arguments." - Again and again, businessmen have tried to defend the American business sys tem by demonstrating how well· it has performed when measured against almost any other system· in the world. There is still a persist ent belief among business,men that they have failed to tell this story well, and that this failure is the only reason that priva1te enterprise is now under such bitt'er attacks. Actually, theaccomplishmen ts of American business are well known to almost everybody. If faith in t'heeffectiveness of pri vate business and industry ever wavered, it was probably during the Fall of 1957 when itt appeared that the Soviet Union had sur passed the U.S. technologically by launching Sputnik; and this disen chantment lasted only briefly. If anything, American business has oversold its capability. Business men may appear bewildered and angry over the growing list of de m·ands that they solve every hu man problem, but corporations have long boasted of their achieve ments. It is not surprising that some misguided people now think that m'ajor corporations cando many other. jobs just as efficiently as they produced aut'Omaticdish washers and color television sets.

"Businessmen are Trapped in the Profit Argument." - One of the favorite topics for executive speeches is "the· importance of profits," although many of· these speeches are given before groups 1976 THE LOSING STRUGGLE TO SAVE PRIVATE ENTERPRISE 199 that already ,agree with the speaker. The business executive is understandably w·orried about profits, becaus'e his own perform ance is measured by his ability to produce .good earnings consist ently. He 'also knows that a busi ness can be undermined and de stroyed .by two or three years of losses. At the same time, it is only a firm's earnings that generate funds to expand business. Unfortunately, "importance of profit" speeches apparently do little more than reinforce critics' heliefs that businessmen put profits ahelad of everything else. The public continues to hold a number of false views about busi ness problems in spit'e of the fact that· business executives and busi ness organizations have been de fending the importance of profits in speeches up and down the land.

Perhaps all this emphasis makes it appear that the businessman in vented profits and is the only per son who really has an intereslt in maintaining profits. But this is not really true. The professional manager seeks profits out of nec essity, but he would often be just as pleased if his performance could be measured in some way other than by the earnings test.· Almost any business manager would often feel relieved. if he could prepare the type of annual report used by government agencies --. lots of generalities but no specifics that can show year-by-year gains or set backs. Everybody's Struggle The point of all this is not that business executives are always inept and hypocri tical in their struggles to save free enterprise. They are,. however, taking on a responsibility that should be shared by others, including the employees and customers. of busi ness firms. If the so-called free en terprise systetn is to be defended only by a few overworked business executives, then i.t is prohably al ready on the threshold of doom.

How much better it would be if large numbers of people began to understand that private property and the free market system must be defended on moral grounds. Study most interventions, and they soon turn out 'to be carefully dis guised schemes for the forcible transfer of resources from one group to another. This would be denounced as thievery if pressure groups went directly to certain other groups and seized the .funds and other property that :they are often. able to obtain by means of su'bsidies and laws giving them special privileges. But such actions have become part of the very fabric of· our economy, and almos t everybody has become dependent on subsidies and similar interven200 THE FREEMAN April tions in his own business. Hence, few people are able or willing to be critics of all interventions; most people, it turns out, criticize only ·the interventions that they consider to be improper or exces sive. Such arguments can never be very effective. Interventions of any kind are always shaped by political needs, and it is a useless exercise to criticize certain inteventions while upholding certain others.

What 'about the frequently heard statement that certain business groups "brought control on them selves?" The principle to be de fended here is that regulations and controls are actually prior re straints that do violence to per sonal freedom and to individual rights. It is just as wrong to im pose regulation on businesses, be cause of their alleged shortcom ings, as it would be to regulate newspapers because some of them print trash, or to control churches because some cults believe in handling snakes. At one time, the arrogant and high-handed ,attempts of govern ment bureaucrats to intervene i.n ordinary business activities would have been viewed as ,a threat to everybody's rights and property. Americans, many with hitter mem ories of oppressions under various European monarchies, were dis trustful of government power and seemed to have an intuitive grasp of the need for limited govern ment.

But this early and beneficial dis trust of government apparently gave way to a belief that cer tain businesses were so dominated by rogues and monopolists that only regulation could "protect" the public. Regulation of the railroads was followed by similar regula tions of all types of business, until now many organizations are con trolled by several government agencies that are often at odds with one another. In practice, gov ernment regulation is turning out to be a costly nightmare, and even the advocates of regulation will admit that it is usually bureau cratic and clumsy. But few people are willing to insist that regula tion is morally wrong and ought to be abolished. Instead, more arguments - particularly those by the businessman who must oper ate under regulation - really turn out to be ·attempts to force the reg ula.tors to be reasonable and effi cient. The Market Allows Free Choice The most serious error busi nessmen make in defending pri vate enterprise is in failing to demonstrate that free choice is possible only where there is a free market place. Here again, the case for the free market has a good moral foundation. The business1976 THE LOSING STRUGGLE TO SAVE PRIVATE ENTERPRISE 201 man, unless he is a monopolist by government edict or is engaging in fraud, can survive only if he can profitably produce the goods and services that the customer freely chooses in the market place.

The free choice of the customer is all-important. If the customer is not to have free choice in spend ing his money, then his claim to his own property has been diluted to a certain extent and at least some of his property has been transferred to others without his open consent. The customer would try to re sist attacks on his property by pickpockets and hold-up men; he rightly recognizes such actions as being dishonest and immoral, and he can usually count on others to uphold his right to resist such at tacks. But he has not seen that it is also immoral and fraudulent when his free choice to spend his money has been taken away by gov ernment action. He does not realLet the Market Function ize that governments are destroy ing his freedom and committing wrong acts when they silently con fiscate much of his income and establish rigid laws to govern how his remaining income shall be spent.

In today's world, it is virtually impossible to find a prominent business executive who is willing to state that private enterprise has a moral foundation that never can be established in a socialist society. We are surrounded by topsy-turvy thinking, and it is often the socialist - the interven tionist - who confidently believes that he has morality on his' side. Sadly, many businessmen often believe that the interventionist is on the right side too, but they still insist that they deserve a place in the sun because they are efficient or supply useful goods and ser vices, and employ people. Small wonder that the interventionist usually wins. , IDEAS ON LIBERTY COMPARE the accomplishments of the federal urban renewal program, guided by the visible hand of the urban experts, with the accomplishments of the plans of private individuals, guided by the invisible hand of the free market place. If this is what can be accomplished by a relatively free housing market, the rational course of action is to allow it to function, not to attack and fight it.

MARTIN ANDERSON, The Federal Bulldozer WHEN, in his theory of natural law, John Locke suggested that a man is entitled to such land as he can "redeem from the state of nature," our forefathers under stood what he meant. Each plot which they wished to farm had to be reclaimed from the piney woods, native brush, or bogs, filled with the hazards of wild beasts or hostile Indians. Even today, in tropical climes, the plan tation operator recognizes the jungle as an enemy, constantly poised to swallow up his fields, while its animals stand ready to destroy his crops. These people have known, as indeed farmers everywhere still know, that nature is an adversary· w,9rthy of conMr. LaDow, of San Diego, recently retired as a teacher of social studies in high school. 202 CHARLES R. LADow FriendorFoe? stant vigilance. That is reason enough to respect Jefferson's opin ion that representative govern ment is only safe when farmers hold a balance of power.

Now that over 70 per cent of our population live and work in cities, we are entertained with a different logic; or should we say propaganda? A TV ad warns us that "It's not nice to fool Mother Nature." Some of the most attrac tive programing, in that medium, narrated by its more popular and impelling voices, shows us the beauties of the wild while ex pounding upon the marvelous "bal ance of nature," into which man intrudes in a manner which we are led to believe is totally inex cusable. The raw realities of nature are 1976 MOTHER NATURE: FRIEND OR FOE? 203 now so remote to most of us that apparently the credibility of this message is not widely questioned. Having worn out our attention concerning the "War on Poverty," and lost the subject of the Viet nam War, those who presume to tailor public opinion have found a substitute in ecology. Voting rec ords in, and out of, our legisla tures indicate that they have had recent success.

DDT , which has saved millions of human lives and helped us to develop an agricultural production unprecedented in history, is banned - largely on 'circumstantial evidence - in favor of untried sub stitutes. Construction has been brought to a near standstill by the demands of new committees with "environmental" requirements. Dredging of harbors is endlessly delayed, when not prohibited, due to official concern over the "food chain" of wildlife - a concern so belated, in any case, as to be al most comical, if it were not tragic in its lack of proportion. The oceans still teem with life and most of the world's coastlines are still primitively pristine. Ameri cans simply prefer beef, lamb, and pork and are relatively careless of their own fisheries. Changing tastes by law isa wasteful task. But the most deadly impact of environmentalism has been upon the automobile industry, which is the hub of our entire industrial economy. This is not to suggest that nothing should be done about exhaust pollution; but it is to say that the matter has been ap proached with a celerity and lack of intelligence which boggles the understanding. There has been little recourse to Pericles' princi ple : "We think before we act."

The Situation Which Prevails Just what is the "balance of nature," anyway? It is nothing more than the situa tion which, pre vails in any given area at any given instant. An 'earthquake, vol canic eruption, tidal wave, flood, windstorm, rain, disease, or drought can drastically alter, or even eliminate it, at a moment's notice. Nor can we assume that the other animals are· more assiduous than we in maintaining a balance in nature. That most of them do not kill for fun is a matter of in dolence, or prudence, rather than wisdom or foresight. Killing is work and dangerous too. Left to themselves wild animals will also overgraze, or overkill, and run themselves out of food when their numbers grow too large. Lemmings are not the only ones to have practiced suicidal imbalance. Man is very likely the only animal with a wild enough imagination to see balance in the total scene. When we 'look at the fossil record 204 THE FREEMAN April and see how many species have vanished, what delusions of gran deur can drive us to dream that we can save "endangered species,"

other than in a zoo? One would think it unnecessary to point out that this effort is not intended to decry conservation or any efforts, reasonably pursued, to protect or improve the environ ment. However, the fashionable lunatic fringe of environmentalism has simply become a vehicle for further erosion of the free market, private property, and this best stand of human liberty on earth. Theirs is no eff'ort to deter us from lamentable wastefulness. It is an attempt to dominate our free so society - one more wedge of so cialism. Not content with punish ing our ill-doing, these illiberal extremists would "make us be good." This is not conservation. It is more like revolution - by brain washing. The study of nature is, of course, man's most pressing task, upon which ou~ survival depends. Nature includes all things, living, dead, or inanimate, including man himself. There is nothing else then, Ibut nature, to study; so let us not 'be accused of belittling such study or of being "unscientific."

The trouble is that too many scien tists are being unscientific,-in pre tending that things are not as they are, in order to further some hobby. Aesthetic pleasure is grand and everyone has the right, if not the duty, to luxuriate in his own particular Walden; but let us not institutionalize and politicize it into national madness. The "deli cate balance of nature" is as ephemeral as a sunset. Let us leave it at that and clarify our study of nature,as science, as one of a worthy antagonist which we must bend to rational use: a splendid and beautiful servant, but an unrelentingly destructive master. An Ancient Idea The elevation of Mother Nature to sainthood, of course, dates to the most ancient times. Nature male, female, or neuter - in the secular sense stands for all which is beyond our control and which eludes our total understanding. Awareness of this awesome ig norance, and ultimate helplessness, undoubtedly led to the develop ment of the primitive pantheistic religions. The anthropomorphic Greek and Roman religions grew into a secular humanism which was eventually made captive by Christianity in its Roman tri umph. Yet anyone who has read Fraser's Golden Bough can see how persistent pantheism and magic had been, and it is not at all surprising that it continues to surface in the Christian tradition.

1976 MOTHER NATURE: FRIEND OR FOE? / 205 The most noted devotee of nature worship in modern times was, of course, Jean Jacques Rousseau. In his Liberty - Book-of-the Month Club selection, for June, 1930 - Everett Dean Martin, wrote: "Rousseau made liberalism a gospel of universal emancipa tion by the simple process of trans ferring the hope of freedom from culture to nature. Man in the state of nature was not only free, he was wise and good. The laws of nature are rational and benevolent, and from their contemplation arise the loftiest moral sentiments ... Instinct and emotion, when not perverted by the artificial re straints of civilization, are voices of nature and guides to the good life. Hence in the struggle for lib erty the m,an of nature is set in opposition to the man of culture." How near does this characteri zation of Rousseau's attitude co incide with that of our current na ture-worshipping liberals? Our "natural instincts," untutored by such propaganda, would undoubt edly bid us to be suspicious, if not afraid, of nature. We very well know that the rattlesnake, water buffalo, tiger, or other beast which we view in safety on the television screen, 'could kill or rend us to pieces in a moment. The millions of people who have viewed the movie "Jaws" certainly do not ap pear to have reacted to the shark as a benign enforcer of the "bal ance of nature." That so many of us apparently accept the views of ecologists would seem to be an aberration rather than a "natural reaction."

The Concept Abused Understood in its original in tention, the term "Nature, or Na ture's God," is a harmless signal of our ignorance and insignifi cance in the extent of the universe, and the Great Unknown whom we variously recognize as God. It is a guarantee for modesty and against hubris. However, it could have been unfortunate that our eigh teenth-century mentors fastened upon the term "natural law" to underline their ethics. Had they called it "human law," or "cultural raw," it is just possible that they could have avoided its capture by our recent "scientific" pantheists. These late comers seem not only ready to do in our eighteenth-cen tury tradition of "natural law", but also seem willing to destroy our material accomplishments all in the name of a nature which never has existed as they see it and, at any rate, is irretrievably gone, as Rousseau's "noble sav age" sa.w it. ~ The 1975 Nobel Memorial Prize in Economics: Sotne Vncotnfortoble Reflections ISRAEL M. KIRZNER ON DECEMBER 10, 1975, at what the N ew York Times described as a glittering Stockholm ceremony, the Nobel Memorial Prize in Eco nomics was awarded jointly to Professor Leonid Vitalyevich Kan torovich, of the Moscow Institute of Economic Management, and to Professor Tjalling Clharles Koop mans of Yale University. Their prize was awarded for their con tributions to the theory of opti mum allocation of resources.

Now •concern with the "optimal allocation of resources" has been proclaimed in c'Ountless economic'S classrooms, and in innumerable economics textbooks, to he the Dr. Kirzner is professor of economics at New York University. He is the author of numerous articles and books, the latter including The Economic Point of View, Market Theory and the Price System, and, most recently, Compe tition and Entrepreneurship. 206 very essence of economics. Ever since Lionel (now Lord) Robbins in 1932 defined economic science in terms revolving around men's allocative decisions, economists have seen efficiency in resource allocation as central to their dis cipline. It might seem then that Professors Kantorovich and Koop mans have won their Nobel prize for contributions going to the very heart of their science. Nonetheless, it is necessary to point out that, paradoxical though it may seem, in a very important sense the 1975 Nobel Prize in Economics was awarded for work having only peripheral relevance to the central contributions of economic science.

What is of even ,greater concern, the interpretation placed by the Swedish Royal Academy on the contributions of the prize-winning 1976 THE 1975 NOBEL PRIZE IN ECONOMICS 207 scholars seems to involve implicit denial (if· not outright ignorance ) of these central contributions of economic science. These may seem surprising· assertions; the follow ing pages will attempt to provide the· necessary elucidation. It is to be hoped that, in point ing out these puzzling and dis turbing circum·stances, the writer will not be understood as seeking in any way to detract from the outstanding merit of the eminent men honored in Stockholm. Both of the laureates are brilliant schol ars and dedicated scientists; the quality of their work undoubtedly meets the very· highest standards of scientific excellence. Nonethe less, recognition of all this cannot absolve us from recognizing, at the same time, that unfortunate misunderstanding of the nature of the central problems of eco nomic science, which appears to surround the 1975 prize.

The matter might be stated briefly, hut far too superficially, in terms of a comment on the role of mathematics in economics. What both laureates -each of whom be gan his acad·emic career strictly as a mathematician l - have de voted their lives to, it mi.ght be 1 In fact Koopmans' footnote citation of Kantorovich's work refers to him as "the Russian mathematician", (T. J. Koopmans, Three Essays on The State of Economic Science, McGraw-Hill, 1957, p. 68n.) argued, is not, properly speaking, eoonomics at all, but rather a spe cial genre of applied mathematics. And, while questions of nomen clature might seem to be of only secondary importance, it in fact appears that, in the misunder standing of the character and sig nificance of these mathematical contributions, there lies embedded not merely semantic confusion, but also substantive unconcern with profoundly economic insights which have (at least up to the present) not proven amenable to mathematical formulation. This statement of the matter, however, while correct in itself, touches only on the surface of the issue.

One Technique-Many Uses A more t1horough discussion mlay begin by noting ,that in awarding the prize jointly to a Russian and a (Dutch-born) American, the Royal Academy was intent on more than merely recog nizing the international character of the scientific contributions they wished to honor . What it WHS evi dently intended to emphasize was that the techniques of optimal re source allocation contained in mod ern activity analysis are in prin ciple applicable alike to economic systems reflecting sharply· diver gent institutional patterns. As the N ew York Times (October 15, 1975) expressed it in the words 208 THE FREEMAN April of a distinguished colleague of Koopmans: "Activity analysis is used by economists and operations researchers to select the optimum production technique when several competing techniques are avail able, either at the level of the corporation, as in the Unit'ed States, or at the national level, as in the planned Communist econ omies of Eastern Europe . . . The indifference of these methods to the institutional arrangements of the economic system have per mitted a degree of communica tion and intellectual ex'change that could not otherwise have taken place."

This view sees economists as concerned with seeking techniques to solve resource allocation prob lems. These problems of securing optimum allocation of resources present themselves at a variety of levels. They present themselves, in capitalist societies, at the level of the firm; they present them selves similarly, in socialist socie ties, to the central planners. The techniques requir,ed to solve these allocation problems are, in prin ciple, common to these problems regardless of institutional context. In principle the mathematical techniques employed by activity analysts to assist corporate deci sion making in the West, are the very same t,echniques needed for efficient decision -making by central planners in the East. Eco nomic science is now visible, then, as consisting of a mathematics of decision making which transcends institutional differences: what is valid for capitalist firms is valid, in principle, for socialist societies.

Missing the Point Now, we must readily concede several important elements of va lidity to this view. The abstract character of managerial decision making is, given the sets of ends and means held res'pectively to be relevant, indeed the s,ame for all levels of decision making. More over, within a given ends-means framework, the problem facing the decision maker is indeed a mathe matical one. In this context the development of activity analysis, or operations research, has been and will continue to be of extra ordinary significance and useful ness. But it is a mistake to see this mathematics of optimal allo cation and decision making - enor mously valuable though it unques tionably is - as making up essen tially the intellectual contribution of economic science. And, perhaps even more important, the uncrit ical assumption that application of the techniques appropriate to securing resource-allocative effi ciency at the level of the firm, to the level of planning for a whole society, can achieve corresponding 1976 THE 1975 NOBEL PRIZE IN ECONOMICS 209 social "efficiency," - begs entirely those questions which are at the heart of economics.

When Lionel Robbins in 1932 defined economic science as con cerned with the implications of man's resource-allocative deci sions, he did not mean that the central task of economics is to provide techniques for efficient allocation. Nor, it should be em phasized, was he referring at all to the concept of the "social" allo cation of resources. (In fact the latter concept, while central to so many introductory textbooks and to so much work in theoretical welfare economics, is a highly du bious one.2 ) Robbins was simply defining economics as concerned with the social consequences of the circumstance that decision makers do in fact seek-each with in his own framework - to achieve efficiency. Economics, in this view, is concerned not at all with how to achieve individual or social effi ciency; but rather with the social forces generated impersonally by the interaction of numerous deci sion makers each of whom is seek ing to allocate his resources op timally. In assuming that the effi ciency which firms can achieve by operations analysis, can be achieved for "society" by the use 2 On this see J. M. Buchanan, "What Should Economists Do ?", Southern Eco nomic Journal, January 1964.

of similar techniques on the part of central planners, one is in fact ignoring the conclusions of Rob binsian economic science. The matter is of course vitally bound up with Mises' pioneering demon stration in 1920 of the necessary failure of socialist economic cal culation. The 'immediate issue was perhaps most clearly stated by Hayek many years later: What is the problem we wish to solve when we try to construct a ra tional economic order? On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of prefer ences, and if we command complete knowledge of available means, the problem which remains is purely one of logic .... This, however, is emphatically not the economic problem which society faces .... The peculiar character of the prob lem of a rational economic order is de termined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contra dictory knowledge which all the sepa rate individuals possess. The eco nomic problem of society is thus not merely a problem of how to allocate "given" resources - if "given" is tak en to mean given to a single mind which deliberately solves the problem set by these "data". It is rather a 210 THE FREEMAN April problem of how to secure the best use of resources known to any of the me'mbers of society, for ends whose relative importance only these indi viduals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to any one in its totality.3 Here, in this 1945 statement by one of the 1974 Nobel laureates in economics,- we have the definitive critique of the confusion we have seen to surround the award of the 1975 prizes.

The Knowledge Is Lacking To be able to discuss allocative decision making at all, it is neces sary to presume that the decision maker has knowledge of the sets of ends and means with respect to which efficient allocation is sought. But absence of such knowledge in centralized form is precisely what in fact constitutes, for Hayek, the economic problem facing society. To assume, therefore, that even the most powerful and sophisticat ed -of mathematical techniques can achieve for society the efficiency they can win for the firm, is to over look the essence of the eco nomic problem with which society must grapple. One of the achievements of the 3 F. A. Hayek, "The Use of Knowledge in Society", American Economic Review, September, 1945; reprinted in Individual ism and Economic Order, pp. 77£. market is that it generates imper sonal forces which govern the size of firms. Firms which are "too small" find themselves facing op portunities for profitable expan sion or merger. Firms which are "too large" find themselves at a disadvantage when facing the com petition of smaller, nimbler com petitors. What determines whether a firm is "too large" depends on many considerations. 4 Certainly one consideration of overriding importance has to do with the dif ficulty, in large organizations, of funneling the information neces sary for efficient central decision making, to those entrusted with the organization's management.

The market tends to limit the sizes of its decision_ making units to permit optimal deployment of planning techniques within these units, while harnessing the "in visible hand" of the market to achieve a tendency towards coor dination between these units. An this is very much at the center of economic science, - although it shares little indeed of the mathe matical character of the theory of resource allocation techniques. 4 See the classic paper by R. H. Coase, "The NatUre of the Firm", Economica, November, 1937; reprinted in G. J. Stig ler and K. Boulding, eds., Readings in Price Theory, Irwin, 1952. See also A. A. Alchian and H. Demsetz, "Production, In formation Costs, and Economic Organiza tion", American Economic Review, De cember, 1972.

1976 THE 1975 NOBEL PRIZE IN ECONOMICS 211 An Improper Assumption Simply to assume that society as a whole can be organized as a single firm, run as a centrally planned organization, and thus be able to employ the techniques of activity analysis, is to overlook what Hayek, at least, perceived, in effect, as the core concern of eco nomic science. To be sure, the emi nent scholars who pioneered in the development of mathematical al locative techniques 'are not, other points of possible vulnerability aside, to be criticized for assum ing entirely correctly that these techniques can be useful wherever allocative decisions are in a posi tion to be made. But we do have the obligation to point out that the economic problem facing soci ety concerns precisely those cir cumstances under which, in fact, allocative decisions are not in a position to be made. Economics has, ever since Mises, Economic Calculation had a very great deal to contrib ute on why such circumstances are inevitable; and ever since Adam Smith economics has had a great deal to say about how, under such circumstances, the economic problem faced by society comes to be solved. Those who understand the enormous social significance of economic science as it has de veloped over the past two cen turies, cannot therefore but be profoundly disturbed by the con tinued evidence that the core con tributions of the discipline have simply not been noticed by those in the best position to do so. The story of the 1975 Nobel Memorial Prize in Economics suggests in deed that the light shed by eco nomic science continues to fall on an as yet altogether incompletely illuminated intellectual landscape.

All these are indeed uncomfort able, but nonetheless apparently inescapable, reflections. , IDEAS ON LIBERTY THE EMPLOYMENT of the means of production can be controlled either by private owners or by the social apparatus of coercion and compulsion. In the first case there is a market, there are market prices for all factors of production, and economic calculation is possible. In the second case all these things are absent. It is vain to comfort oneself with the hope that the organs of the collective economy will be "omnipresent" and "omniscient." LUDWIG VON MISES, Human Action Adam Smith IT HAD NEVER OCCURRED to me that the key to understanding some of the crucial passages of the Decla ration of Independence could be discovered by reading The Wealth of Nations. I had long known, of course, that they were both pub lished in 1776: The Wealth of Nations in Mar,ch, the Declaration of Independence in July. The thought was in my mind, too, that there was something symbolic in the fact that these two great landmarks of liberty had come forth in the same year. It is comDr. Carson has written and taught extensively, specializing in American intellectual history.

His most recent book, The Rebirth 01 Liberty (1973), covers the founding of the American Republic from 1760 to 1800. 212 Another Bicentennial: Publicationof WEALTH OF NATIONS CLARENCE B. CARSON monly understood that the two documents were produced from a similar intellectual outlook, but knowledge of this had but little prepared me for what could be learned about the one by studying the other. The main difficulty in discern ing the meaning of the Declara tion of Independence is, for me at least, in the first few lines of the second paragraph. They are also the most quoted lines from the document. To wit: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, 1976 ANOTHER BICENTENNIAL 213 Liberty, and the pursuit of Happi ness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed."

Though there may be difficulty with some other passages, the most troublesome are these two: "that all men are created equal," and the right to "the pursuit of Happiness." Differences Abound In the most obvious senses, men are not created equal. They differ from one another in height, in weight, in strength, in native in telligence, in heredity, in ability, in upbringing, in interests, and in almost every other way that comes to mind. Indeed, these very dif ferences go to make up one of our most prized possessions, our indi viduality. Not only are we not the same, as some say, but also in our differences we are not equal. Some have talents for doing all sorts of things. Others can learn to do any thing only with the greatest diffi culty. Some 'are endowed with all the good graces, or so it seems. Others are very nearly graceless. There are those who claim that we are an equal in the sight of God. Whether this is so, or in what way it may be so, I do not know.

Those who say this usually say it as if it were obvious and offer no proof or evidences in support of it. Within the context of the Decla ration, it is sufficiently clear that what is meant is that men are en dowed by their Creator with an equality of rights. It is equally clear, when the matter is pursued logically and historically that for this to be instituted they must be equal before the law. What are these rights to which men are entitled? According to the Declaration, they are the right to "Life, Liberty, and the pursuit of Happiness." Life and liberty pose no great problem for explanation, but the same does not go for the pursuit of hatppiness. The com monly used phrase at the time was "property," but Jefferson substi tuted for it "pursuit of Happi ness," not because he doubted that property was a natural right but because he wished to say consid erably more than this. The mean ing of the phrase poses no great difficulty. If other words are needed, it means the right to seek one's own well-being. But what is the ground of such a right? How can seeking one's own well-being be justified? Would this not be contrary to the general welfare?

Would it not be that very selfish ness which has been so often con demned? On what basis does the equal right to do such a thing rest? The answers to these questions can be found in The We1aUh of 214 THE FREEMAN April Nations. They can be found else where in bits and pieces, but no where so comprehensively as in Adam Smith's major work. There is in the following quotations the key to understanding the basic passages of the Declaration: Every individual is continually ex erting himself to find out the most advantageous employment for what ever capit~l he can command. It is his own advantage, indeed, and not that of society, which he has in view. But the study of his own advantage natur ally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.! The following is more famous but not necessarily clearer: The produce of industry is what it adds to the subject or materials upon which it is employed. In proportion as the value of this produce is great or small, so will likewise be the profits of the employer. But it is only for the sake of profit that any man employ~ a capital in the support of industry; and he will always, therefore, en deavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quan tity either of money or of other goods.

But the annual revenue of every society is always precisely equal to the exchangeable value of the whole 1 Adam Smith, The Wealth of Nations Edwin Cannan, ed. (New Rochelle: Ar lington House, n. d.), II, 27. annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeav ours as much as he can both to em ploy his capital in the support of do mestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the an nual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the sup port of domestic to that of foreign in dustry, he intends only his own se curity; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this as in many other cases, led by an in~is ible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to pro mote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuad ing them from it. 2 The same principle which ap plies to trade and manufacture within a country applies to that among countries as well: 2 Ibid., pp. 29-30.

1976 ANOTHER BICENTENNIAL 215 ... The interest of a nation in its commercial relations to foreign na tions is, like that of a merchant with regard to the different people with whom he deals, to buy as cheap and to sell as dear as possible. But it will be most likely to buy cheap, when by the most perfect freedom of trade it encourages all nations to bring to it the goods which it has occasion to purchase; and, for the same reason, it will be most likely to sell dear, when its markets are thus filled with the greatest number of buyers. 3 There are many economic con cepts treated in Smith's magnum opus, some of them more or less original with him, but there is one overriding principle which occurs over and over again. It is this: when individuals are free to pur sue their own interests they will benefit not only themselves but the general public as well. Adam Smith did not discover, of course, that men are self-interested. That has surely been known as long as there has been a concept by which it could be thought. He may not have been the first to discover that there i s a nat u r aI harmony wrought by an invisible hand - the natural order? - from the multi tudinous acts of unconcerned and self-interested individuals, but he did give the principle the. most pointed application and spell out 3 Ibid., pp. 38-39.

the extent of its comprehensive ness. It is the crux of his lengthy and detailed argument for eco nomic liberty and free trade. There, too, lies the key to un derstanding some of the most mo mentous phrases of the Declara tion of Independence. In what way are all men created equal? There may be others, but there is cer tainly this one: Every man is, by nature, self-interested. The Found ers of the United States were apt to refer to it as self-love. Jesus made it the foundation point of his second most important com mandment: "Do unto others as you would they should do unto you." In short, He said, extend tha t care and love to others which you have for yourself. The Crea tor has implanted this self-inter estedness, or self-love, in us to in sure our survival and that of the race. Sell-Interest Is Normal Any man lacking the ability to discern his interest and the will to pursue it is unfitted to the office of a man. He would be unable to look after himself and would have to be taken over by others for his own good and the protection of others from him. This is not to say tha t men may not perform self less acts - acts of heroism, acts motivated by love untinctured by concern for self. It -is rather to say 216 THE FREEMAN April that self-interest is the rule - the norm - ,and selflessness the excep;.

tion. The opposite of self-interest is not,as is sometimes supposed, selflessness; it is self-destructive ness, a condition requiring re straint. All men are equal, then, in that all are self-interested. Self-interest as the ground, or one of the grounds, of equality, gains plausibility by the fact that one of the unalienable rights as serted is the right to "the pursuit of Happiness." This is the right to fulfill one's self, to seek one's own well-being, or to pursue one's own interest. There is no reasonable way to attach a different meaning to the phrase. The Declaration of Independence makes the right to pursue his self-interest a funda mental right of man. Within the framework of The Wealth of Na- ' Hons such a right is justified, for when men behave economically so as to advance their own interests the result is 'also to advance the good of people generally. It is not my position, of course, that Jefferson was influenced by The Wealth of Nations 'when he wrote the Declaration, or that there was some sort of interchange between the two men. There was none to my knowledge. It is rather that a comrnon set of assumptions was leading to similar conclusions, and that the two works illuminate one another.

Old Ideas Challenged The two works are closer re lated, however, than even this would suggest. Much of the body of Smith's two-volume work was devoted to a point-by-point refuta tion of the mercantile system and to the economic arguments for free trade. The American revolt fol lowed changes in British policy, changes in taxation which can be attributed to the infelicities of mercantilism. 4 Once the thrust of Smith's conclusions about mercan tilism were accepted, the Ameri can cause would have a virtually complete justification. The full significance of the views that all men have an equal right to the pursuit of their in terests and that when they exer cise this right it works to the pub lic benefit can only be appreciated in the context of what has usually been believed and done. To say that the ideas of Jefferson and Smith were radical may not ex pose their full scope. In fact, they laid under siege some of the most deeply rooted and persistent no tions that men have held.

No notion is more deeply rooted and persistent than the one that some ,class, order, or body of men is chosen, ordained, or especially equipped to decide what is good 4 See Clarence B. Carson, The Rebirth of Liberty (New Rochelle: Arlington House, 1973), pp. 65-76.

1976 ANOTHER BICENTENNIAL 217 for the rest of us. The generality of men are the sheep and they are the shepherds, as it were. How they have been chosen or selected has varied from time to time and place to place but such an elite has commonly occupied declision-mak ing roles throughout history. The Puritans of New England considered themselves chosen of God to rule over the people there. They not only excluded others from government but also laid down all sorts of economic restric tions. "Inns, mHls, and ferries were subject to control. Charges were limited by law, and the obli gations of such institutions were legislatively defined .... Effort~ were made to determine fair prices, fair wages, and reasonable profits."5 The most presumptuous effort to control the lives of people by an .elite occurred in colonial Georgia, however, immediately after its founding. Georgia was conceived as a char,itable undertaking and was placed under a Board of Trus tees who resided in England. "The Board will always do wha.t is right," the Trustees proclaimed in 1735, "and the people should have confidence in US."6 They proceeded 5 E. A. J. Johnson, American Economic Thought in the Seventeeth Century (New York: Russell and Russell 1961) p 17 6 Daniel J. Boorstin, The Arr:erica~s: T~e Colonial Experience (New York: Vmtage Books, 1958), p. 88.

to fasten upon the inhabitants reg ulations both strange and per verse: Not only did they encourage silk culture by a guaranteed inflated price and by bounties and prizes for the product delivered in England, but they even wrote into land-grants pro visions requiring each grantee, in order to validate his claim, to plant at least 50 white mulberry trees on every 50 acres; every grantee of 500 acres had to plant 2000 trees within twenty years. 7 In addition, they had many rules governing consumption and other kinds of production than that of silk. Many Regulators in England Old England had its own varie ties of elites to determine what was good for people in the cen turies before Adam Smith. It had an hereditary monarchy and ari stocracy' an established church w,ith its hierarchy, and other classes and orders who partici pated in laying down regulations. These, from time to time, laid down rules governing econom,ic re lations : controlling prices, control ling wages, granting monopolies, deciding who could sell what where, and to whom, restrictin~ the Iives and red ucing the Iiveli hood of the people.

7 Ibid., p. 83.

218 THE FREEMAN April One of the main difficulties with the notion that some know best what the rest of us should do ,is that those who govern are self interested, too. They deny to men the right to decide what is in their own best interest, but what they most frequently do is saddle every one with what is in the interest of a few. Smith did not neglect to point out that those who fastened the mercantile regulations on England did so to advance their own special interests. He said: ... The capricious ambitions of kings and ministers has not, during the present and the preceding cen tury, been more fatal to the repose of Europe than the impertinent jeal ousy of merchants and manufactur ers. . . . [T]he mean rapacity, the monopolizing spirit of merchants and manufacturers ... may very easily be prevented from disturbing any body but themselves. That it was the spirit of monopoly which originally both invented and propagated this doctrine [mercantil ism], cannot be doubted; and they who first taught it were by no lueans such fools as they who believed it. In every country it always is and must be the interest of the great body of people to buy whatever they want of those who sell it cheapest. The propo sition is so very manifest, that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the inter ested sophistry of merchants and manufactures confounded the com mon sense of mankind. 8 It might be nearer to the whole truth to say that mercantilism re sulted from a tacit alliance be tween monarch and merchants, each pursuing their own ends.

At any r,ate, Smith gave short shrift to the notion that there existed any person or group com petent to decide the economic good for the rest of us. On one facet of the m-atter, he wrote: The statesman, who should attempt to direct private people in what man ner they ought to employ their capi tals [sic], would not only load him self with a most unnecessary atten tion, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would no where be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. 9 Of the economy in general, he de clared: It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expence, either by sumptuary laws, or by prohibiting the importation of foreign luxuries.

8 Smith, op. cit., II, pp. 71-72. 9 Ibid., p. 30.

1976 ANOTHER BICENTENNIAL 219 They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expence, and they may safely trust private people with theirs. If their own ex travagance does not ruin the state, that of their subjects never will.l 0 Wha t Smith could say of the ways of kings and ministers can be said with equal justice about those who govern in republics. A Gainer and a Loser in Any Transaction? Another widely held notion is that in any given transaction there is someone who wins and some one who loses. How such a notion arises again and again is fairly easy to understand. In a transac tion a merchant may make a profit, a profit which may be thought of as the difference between what he paid for the item and what he sold it for. The buyer, on the other hand, may be unable to discern any profit which he has gained in the transaction. At least, he is un able to calculate it ;and enter it in his books. One profited from the transaction; the other did not.

There was a gainer and a loser, or so it may appear. An example may show how some people come to feel this way. A man buys an automobile for $2000, 10 Ibid., I, p. 371. say, and drives it for awhile. Be ing in need of money, he sells it to a used car dealer for $800. In a few days, he learns that the dealer has sold the car for $1100. The man may readily conclude from these facts that he paid too much for the car in the first place and sold it for too little in the second. At any rate, the amount of money which he had was diminished by the series of transactions, and that of the dealer increased. It may not be that the feeling that there is a loser in the trans action arises so much from the fact that one has clearly made a profit - though there are those who oppose profit-making in prin ciple and a great many more who oppose profit-making at their ex pense -as that transactions usu ally involve the trade of some com modity or service for money. If all transactions were in kind, both parties would no doubt believe that they were the gainers, and both would no doubt be right. But when money enters the picture, is used as a medi urn for the exchange, he who paid out the money may con clude that he has been a loser, par ticularly if he tries shortly to sell the commodity for the sum he paid for it. Indeed, a man may pay $1 for 5 pounds of apples, cpnsume the apples, become in, and feel cer tain that he is the los·er in the transaction.

220 THE FREEMAN April Balance of Trade This idea of a gainer and a loser has been given international and even universal application. The main route to this notion has been the conception that there is only a given quantity of a thing. Anyone who acquires more must then be depriving others of it. The best known instance of this line of thinking occurred when precious metals were used as money and thought of, by some, as wealth, or the only true wealth. Since there is only a certain quantity of these in nature, the nation which gains these does so at the expense of other nations. The mercantile no tion of "favorable" balance of trade was justified by the notion that a nation should ·attempt to in crease its holdings of precious metals. To do so, ,it ought to sell more to other nations than it bought, getting the difference in gold .and silver. But the belief that there is only a certain quantity of a thing has not been restricted to precious metals; it has been ex tended to other things as well. In our day, there are those who claim that if one man eats overmuch he is depriving others of needed food.

At any rate, over the centuries the notion that in transactions there is a gainer and loser, either potentially or actually, has bred a large portion of government regu lation, restriction, and intervention. It has led to laws promoting exports and discouraging imports, to the payment of bounties, to the imposing of tariffs, to price con trols, to wage controls, to quality controls, to prohibitions against sending gold out of a country, to the confiscation of "excess profits", to ,all sorts of laws for the protec tion of consumers. Each Party Gains Adam Smith did not spend much energy on the gainer-loser in transactions idea. He simply stated that where a trade had been freely effected it was assumed to be to the mutual advantage of the par ties. (The Austrian School has since buttressed this point with extensi ve theoretical demonstra tions.) He did go to some length to justify profits, rent, and inter est. Indeed, he held that men save and invest in order to make a profit, that the capital that results from this is the main way to pros perity, and that when men are free to compete prices and wages are regulated by it. He did ac knowledge that in trans'actions men frequently were unable to get the best possible price for what they were selling or buying. The source of this, however, was gov ernmen t restraints on commerce and on the entry of competitors to the field, not that some individual was taking unfair advantage. And, 1976 ANOTHER BICENTENNIAL 221 he devoted fulsome attention to the fallacies of mercantilism and the bullion. or monetary theory of wealth.

The Wealth 0 f Nations moves toward one conclusion, sometimes ponderously but always master fully - the individual and social beneficence of liberty: All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left per fectly free to pursue his own interest his own way, and to bring both his in dustry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the at tempting to perform which he must always be exposed to innumerable de lusions, and for the proper perform ance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the in dustry of private people; and of di recting it towards the employments most suitable to the interest of so ciety. According to the system of nat ural liberty, the sovereign has only three duties to attend to... : first, the duty of protecting the society from the violence and invasion of other in dependent societies; secondly, the duty of protecting ... every member of the society from the injustice or oppression of every other member of it ... ; and, thirdly, the duty of erecting and maintaining certain public works and certain public institu tions ... ,11 A Century of Gain For more than a century after 1776 the thrust tow,ard liberty gained sway in the world. The United States and England led the way in many respects. Trade re strictions among nations were either greatly reduced or removed.

In the course of the nineteenth century, serfdom and slavery, where they still existed, were gen erally abolished. The ideas that men have an equal right to pursue their interests and that when they do so the general public benefits gained hold and were buttressed by law in many lands. There was a great creative and productive surge within nations, and the na tions of the world were generally drawn together in a great trading network. Populations increased as rarely before, but the ever-larger numbers of people were more prosperous than ever. Wars still occurred, but wi,th one or two notable exceptions they were brief and limited affairs. By the turn into the twentieth century, though, there were al ready ominous signs that the tide was shifting against individual liberty. The defection of the in tellectuals was lalre'ady well under11 Ibid., II, p. 290.

222 THE FREEMAN April way. A spate of ideologies was gaining adherents, particularly socialistJc ideologies. The system that had produced abundance on a seale never before im'agined in the world was being ,attacked for not having made everyone affluent. Governments were beginning to impose new and old restraints on productive efforts. Nations were once again beginning to erect barriers against trade. New names and new ideas were supplanting those of the Founders Qf the United States and the classical economists: such names as Karl Marx, Friedrich Nietzsche, Nico lai Lenin, Benito Mussolini, and Joseph Stalin. In their wake has come the totalitarian state which threatens in varying degrees in dividual liberty in every corner of the world. As fate would have it, on the two hundredth anniversary of the Declar1ation of Independence and The Wealth of Nati,ons, the world is more in need of the ideas of liberty 'contained in them than it was in 1776. There is one appro priate way to 'celebrate the bicentennial of The We,alth of Nations; it is to read or re-read it. True, the sentences are long and com plex, and the periods are rounded, as it is described. The language is, much of it, from a bygone era.

But many of the ideas are as fresh ,and ,applicable today as when they were penned. Nor is the celebration of the publication of The Wealth of Na tions something for Scotland only, or for England, or even for the English-speaking countries. Adam Smith's great work was written by a Scotsman in English in the eighteenth century, but it belongs to the ages and to the whole world. He took economics out of its parochial framework where it was concerned only with the wealth of a single nation and made it a universal study, one which conceived an order in which the efforts of the individual bene fitted not only his own country but peoples everywhere that trade took place. So long as the love of liberty survives anywhere, sus tenance for it ,can be found in The Wealth of Nations. t) JACK MARKOWITZ Two HUNDRED AND FIFTY years ago, in 1726, a half century before the United States was born, Eng land's brightest literary men were playing midwife to a different sort of enduring political classic. Its author was one of the wittiest (which did not preserve him from being one of the angriest) ,ge niuses who ever lived: a priest of the Church of England who would have healed the world by making it laugh at itself. A quarter of a millennium has not dulled the bite of his salubrious masterpiece, Travels into Several Remote Na tions of the World.

Never heard of it? Yes you Mr. Markowitz is business editor of the Pitts bUTAh Post-Gazette. have. The supposed author, de scribed on the title page as "first a Surgeon, and then a Captain of several Ships," was a restless sailor called Lemuel Gulliver. The real author was a landlub ber with a deep-grooved habit of never putting his name on title pages. The sheltering tree that would become freedom of the press was in those days still a sprig. A "scandalmonger" could lose slices of his ears; and practically any thing Jonathan Swift ever wrote might have earned him bed in prison or a drubbing in some alley. He was that sort of writer. Damn ably contrary, to the wreck of his own ambitions. And Gulliver's Travels - the 223 224 THE FREEMAN April title bestowed by word of mouth - was his most contrary book. Un abridged, it reads as tough on the establishment as the Declaration of Independence, for which indeed it may hitve been a Iiterary an cestor. Three years after 'the book came out Swift received from an admirer in Philadelphia the honest frontier gift of a cured ham, and Gulliver undoubtedly was popular reading in the colonies when young shavers named Washington, Jefferson, and Adams were form ing their own tender notions of politics.

That anyone might charge Jona than Swift, Doctor of Divinity, with fomenting revolution would of course have scandalized him. He hated war, was profoundly loyal to governing institutions con sistent with law and liberty; but he detested those vices and ex cesses of power which eternally blight the happiness of men. In short, he was torn by the conflicts between freedom and a corrupted order that Americans would re solve ,a half century later in favor of revolution. Seeds of Bitterness Gulliver could only have come from a soul rich in grievances, and Swift started collecting his early in life. At his birth, one might say, in 1667. He came into this world seven months after his father left it. The elder Swift hav ing been employed as an estate manager in Ireland, the posthum ous son grew up in a land ener gized to lyricism by ancient feel ings of inj ury and alienation. He was educated, grudgingly, as he believed, by the bounty of rela tives. A'll his adult life he was sub ject to prostrating attacks of dizzi ness, deafness, and fears of insani ty, against which, in later years, he furiously exercised, walking or riding 'miles every day or, in bad weather, tramping the stairs of his house. Despising yet also crav ing wealth, he set out on two con tradictory careers: the church and the writing of satires.

His verses and essays in the Tatler and other papers of literary London made him one of the lumi naries of the dawn of modern journalism, though he was "fam ous" only to people in the know. A fashionable painting of the time, now in the London Portrait Gallery, shows him an alert, busi nesslike parson, elegantly wigged and double-chinned, looking up from his writing desk. "The most agreeable companion, the truest friend, and the greatest genius of the age," Joseph Addison called him. He had a prose style as lean, accurate, and keen for cutting as a scalpel. The bloated politics of his time begged for such a knife. It was his surgical journalism that 1976 THE PLOT TO PRINT A MASTERPIECE: GULLIVER'S TRAVELS 225 turned public opinion against a bleeding series of wars in France, tumbled from power the glamorous Duke of Marlborough, and helped effect the Peace of Utrecht in 1713. For this service a grateful crown awarded him the deanery of a cathedral. Not Wells, Salis bury or another of the influential English churches, but St. Patrick's in Dublin, separated merely by the breadth of England and the Irish Sea from a court that had enjoyed quite enough of his close scrutiny of public affairs.

So back to his native city he went, to the exile, in his own gentle phrase, of "a poisoned rat in a hole." Though he took up his cathedral duties with a surprising piety, in time the sheer flagrancy of the exploitation of Ireland goaded him to the risky old habit of anonymous pamphleteering. He became an underground hero to the Irish, whose plight, he once said, came down simply to this, almost a thumbnail of our own Declaration of 1776: "Freedom consists in a People being gov erned by Laws made with their own Consent, and Slavery in the contrary." In 1721 he suddenly announced in a letter that he was "writing a History of my Travells [giving] Account of Countryes hitherto un known." Not real travels, cer tainly. These would be voyages of the mind. The idea had popped up at some dinner of the Martin Scriblerus Club, a literary society to which Swift had belonged in his great London years. How for tunate for literature that he never got round to the proj ect till his bile had sufficiently ripened in failure and banishment.

The moody labor took four years. Then, triumphantly, in a letter of August 14, 1725: "I have finished my Travells ... They are admirable Things, and will won derfully mend the World." To Alexander Pope, a friend of Scriblerus days and by then Eng land's reigning poet, he confided that his aim was "to vex the world rather than divert it." But he was more entertaining than he knew. The artist in him kept the preacher under control, and his rage and wit, ,his suffering and indignation fused into a book that is one of the greatest ever written. Irresistible Adventures The Travels are, first of all, ir resistible adventures. They run along fantastic but temptingly believable trains of plot, loaded with a vast freight of critical observations, commentary, digs, jabs, slashes, and thrusts. Swift is the most tireless of satirists. His blade is always cutting, for ward and back, nicking the ob server as well as the observed.

226 THE FREEMAN April There is no safe place to stand against him. Gulliver - h umani ty' s "gullible traveler" keeps get ting marooned in fascinating coun tries. Lilliput: where the people are six inches tall but where in cessant faction, greed· and war seem the more deplorably vicious just for being so small. Then Brobdingnag, a land of giants, where Gulliver gets one pride killing lesson -after another in how small we are. The third voyage (past the point where many children's editions leave off) takes the traveler to a "flying island" where human intelligence, the one gift that might amend the chronic botch of history, utterly wastes itself upon worthless "projects" and idle aspirations. Finally, the ironic utopia of Houyhnhnms and Yahoos: civilization itself hope lessly lost to a brutalized human ity and taken up by a species more qualified, the horse. Like the best science fiction, it all comes off with precise, credible details and with what George Saintsbury called "the dexterous relief of the satirist's lash with the mere tickling of the humor ist." And the cream of the jest is that every queer country Gul liver visits is unmistakably 'one's own.

In March of 1726 S.wift took ship with his manuscript to Eng land. He was 58 now and wore what Dr. Johnson calls "a counte nance sour and severe, whic;h he seldom softened by any appear ance of gaiety." Yet he must have enjoyed that spring and summer 250 years ago as a guest ,at Pope's villa in Twickenham, near London. There were country excursions and dinners, long evenings spent over a· good bottle and good talk with old friends still near the cen ter of things: among others John Gay, author of The Beggar's Op era, and John Arbuthnot, who had been physician to Queen Anne. Selling the Manuscript The survivors of Martin Scrib lerus were well 'content with the "Travells" - and determined to bring it to 'market. Not only would they find Dean Swift a pub lisher but also wangle a fee for him, the first - and as it happened, the last - that the greatest satirist in the English language ever pock eted for a piece of writing.

Soon afterward Benj amin Motte, a printer in Fleet Street, received a letter from someone claiming the name Richard Symp son. He announced that as "man ager for my friend and cousin," a certain retired Captain Gulliver, he, Sympson, had been entrusted with the memoirs of marvellous voyages. "I know the author in tends the profit for the use of poor seamen," the letter said, "and 1976 THE PLOT TO PRINT A MASTERPIECE: GULLIVER'S TRAVELS 227 I am advised to say that two hun dred pounds is the least sum I will receive on his account." Motte was not duped. He was the successor to Swift's old pub lisher and he undoubtedly had been warned to expect the dean's "Travells" one day in some such melodramatic disguise. He only balked at a demand that within three days he "deliver a bankbill of two hundred pounds, wrapped up so ·as to make a parcel, to the hand from whence you receive this." He counter-offered payment six 'months after publication and won the point.

The manuscript probably was recopied to remove any trace of the real author's hand, and Swift departed for Ireland, home, church, and alibi. Then one September night a hackney coach stopped at the printer's door and a package of copy sheets changed hands in the dark. Motte never saw Cousin Sympson's face. About a month later - the date deserves remembrance: October 28, 1726 - the book went on sale. The Sales Continue The rest, it is fair to say, is history: a publishing history that shows no sign of ending, with some two dozen editions currently in print in English, scores of oth ers in languages around the globe, and Gulliver sailing off in translation each year on new voyages, viaggi, viajes, podroze, and rei,sen unnumbered. Happily the author had a glimpse of this im'mortality while alive. (He died 19 years later at age 77 in 1745, senile, modern scholars and medical experts now agree, rather than "mad," as his detractors long alleged.) The book's first printing sold in a week and "hath been the conversation of the whole town," John Gay wrote to Swift from London. "Gul liver is a happy man that at his age can write such a merry work,"

chimed in Dr. Arbuthnot, predict ing "as good a run" as that of Pilgrim's Progress. " 'Tis gen,;. erally said that you are the Au thor," slyly reported Gay, but "you are not much injur'd by [this] ... From the highest to the lowest it is universally read, from the Cabinet-Council to the Nursery." There was prophecy in that, too. By chopping so extensively that many people who think they have read Gulliver's Travels actually have read perhaps half of it, edi tors succeeded in hacking a "chil dren's classic" out of a work thought to be so politically loaded it required publication by secret plot. And it is still loaded. The essen tial political vision of the Rev. Dr. Swift has dated astonishingly lit228 THE FREEMAN April tle. To our Bicentennial celebra tions he would bring the sobering perspective that changes in gov ernmental form do not, for very long, improve the political beha vior of man himself. The whole cannot be a great deal more than the sum of its not terribly noble parts. Lilliputian meanness will lower the quality of public life under presidents as well as kings, in parliaments as easily as palaces.

A century in which the sheer amount of destruction, decadence and despotism actually perceived has outflown the farthest reach of Swiftian imagination can get a special shock of recognition out of Gulliver's ultimate judgment on mankind. Driven mad (but super shrewdly mad) by a society of humane animals and brutish hu mans, the traveler perceives that man is, after all, merely a design ing beast - "a sort of animals to whose share, by what accident he could not conj ecture, some small pittance of reason had fallen, whereof we made no other use than by its assistance to aggra vate our natural corruptions, and to acquire new ones which Nature had not given us." There, in a few words, is the human dilemma: as challenging in 1976 as it was in 1726. The men who plotted to print a masterpiece 250 years ago, like those others who plotted to found a nation 200 years ago, never meant to leave us perfectly comfortable with our selves as we are. t) IDEAS ON LIBERTY The Planners of Balnibarbi IN THESE COLLEGES the professors contrive new rules and methods of agriculture and building, and new instruments and tools for all trades and manufactures, whereby, as they under take, one man shall do the work of ten; a palace may be built in a week, of materials so durable as to last for ever without re pairing. All the fruits of the earth shall come to maturity at whatever season we think fit to choose, and increase an hundred fold more than they do at present, with innumerable other happy proposals. The only inconvenience is, that none of these projects are yet brought to perfection, and in the mean time, the whole country lies miserably waste, the houses in ruins, and the people without food or clothes. By all which, instead of being discour aged, they are fifty times more violently bent upon prosecuting their schemes, driven equally on by hope and despair ...

From Gulliver'l1 Travels, JONATHAN SWIFT The Right to Food E. C. PASOUR, JR. PEOPLE IN THE U.S. and through out the world now have a height ened awareness of the age-old problems of hunger and poverty. It has been estimated that 460 million people throughout the world today suffer from acute mal nutrition. At the same time, capac ity to produce food is at an all time high in the U.S. and through out the highly developed coun tries. Increasingly, questions are being raised about the apparent inj ustice of this coexistence of hunger and affluence. The movement to provide more food to hungry people throughout the world has increased significant ly since the early 1970's. The 1974 World Food Conference in Rome took what many regarded as an essential first step. The confer ence adopted an objective that Dr. Pasour is Professor of Economics at North Carolina State University at Raleigh.

within a decade no child will go to bed hungry and that no family need fear for its next day's bread. In the same spirit, a '''Right to Food" resolution was introduced in both houses of the U.S. Con gress in 1975. This resolution de clares that every person in the U.S. and throughout the world has the right 'to a nutritionally ade quate diet. The resolution has re ceived the official sanction of vari ous religious groups. Members of the Lutheran Church in America, for example, have been exhorted to contact their Representatives and Senators to "urge its passage." The concerned citizen cannot be oblivious to his neighbor's condi tion. The fact that a problem exists, however, does not imply that all possible solutions are either feasible or right. What should be the attitude of the mor ally sensi tive person toward this 229 230 THE FREEMAN April (or any other) "Right to Food" resolution? Do we, as individuals, have an obligation to support this legislation? More generally, what should be our stance toward world hunger problems? What can we as individuals do to alleviate the hunger problem facing half a bil lion people throughout the world?

The purpose of this paper is to analyze the "Right to Food" reso lution. In doing so, the legitimacy of the right to food by citizens in the U.S. and in other countries will be discussed. The distinction between public and private char ity will be stressed. Finally, limi tations of charity as a long-run solution to hunger and poverty will be described. The Concept Examined There can he no universal right to food. The concept of the right to food cannot be supported on either economic or moral grounds. First, consider the economic im plications of the right to food. The right to food basically involves the problem of income distribution. Food is man-produced. Proposals which assume a right to food (or income) by individuals within or outside the U.S. imply that there is no relationship between the in centives of food producers and food production. Many of the countries in which the hunger problem is most acute have attempted to ignore this relation ship.

The right to food is fundamen tally no different than a right to housing, clothing, and the like. Thus, there can be no economic bill of rights assuring everyone a specified level of "necessities," since dividing income differently will affect the output of goods and services and, consequently, the amount of income to divide. That is, the more equal the income dis tribution, the less enthusiasm there will be on the part of indi viduals to engage in wealth-pro ducing activities. Food and other goods must be produced before they can be dis tributed. This is just as true for a highly developed modern econ omy as it was for Robinson Cru soe. The absurdity of the concept of "Right to Food" is obvious in the case of a Crusoe economy. The same basic problem remains, how ever, for a modern economy. There is no way to legislate prosperity for all. The recent bankruptcy of New York City is a predictable outcome of an attitude by public officials which holds that "we will not be constrained by economics in car ing for our citizens." The mini mum wage provides another good example of attempting to increase incomes by ignoring economic principles. Increases in the mini1976 THE RIGHT TO FOOD 231 mum wage cannot be used as a device to insure a mInImum amount of income for all. Instead, the evidence in scores of examples has shown that the effect of an increase in the minimum wage is to eliminate jobs for marginal workers - not to increase their in come.

Though a policy which is not feasible from an economic stand point could hardly be moral, there are other moral objections to any universal right to food. Any right to a given level of food must be at someone else's expense. Granting individual A the right to food (or any other good) means that an obligation is simultaneously be ing imposed on person B to pro vide the food since food must be produced to be consumed. Any right for one individual which im poses an unchosen obligation on other individuals can hardly be regarded as a moral right. This point is closely related to the dis tinction between "public" and private charity. Public V5. Private Charity Charity by its very nature im plies a voluntary, freely chosen act. However, the "Right to Food" resolution involves not private charity but an involuntary gift of food (and income) from people who are not disposed to provide such aid. The "Right to Food"

resolution involves the use of the state's power to collect from in dividuals more than they are will ing to contribute privately. Any individual is now free to con tribute privately as much as he chooses for domestic and foreign relief agencies. The "Right to Food" resolution means, however, that individuals should be forced to contribute more to such work than they freely choose. Support of legislation to coerce individuals into performing or abstaining from particular actions is inconsistent with the Judaeo Christian concept of freedom. Blue Laws, prohibition, and anti-por nography provide other recent ex amples of legislation attempting to coerce individuals into particu lar modes of behavior. Freedom involves choice, not necessity, but means little if man is not free to choose - to choose good as well as evil. Thus, it is difficult to under stand why a religious imprimatur should be placed on legislation in tended to coerce individuals into supporting a particular activity.

Such legislation will inevitably restrict the individual's freedom of choice. The act of supporting legisla tion affecting income levels on moral grounds raises a host of questions - theoretical and prac tical. Numerous groups, some pre ponderantly low income (e.g., eld232 THE FREEMAN April erly) and some preponderantly high income (e.g., doctors and lawyers), use or attempt to use the power of the state to affect their incomes. What moral basis can one use to determine whether the income of a particular individ ual or group is too high or too low? The Aristotelian idea of a "just price," meaning anything other than the competitive market price, has long been discredited. The idea of a "just wage" deter mined administratively is just as spurious. The market provides only the objective basis for deter mining what the wage of a partic ular individual should be. In reality, the incomes of most groups are influenced by the po litical process. Decisions to in crease school teacher salaries or the level of social security bene fits for the elderly, for example, are made in the political arena and reflect the political power of their individual constituencies. How ever, we have no objective basis apart from market forces for determining the "just" level of income for these or any other groups.

The fact that individuals or groups have no moral basis for at tempting to coerce other individ uals into involuntary acts does not mean, of course, that the hunger problem is not worthy of our at tention as individuals. We cannot be oblivious to problems of hun ger and malnutrition within the U.S. or in less-developed countries. Private charity is an important activity and can often playa key role in alleviating distress. Un fortunately, the impulse for pri vate charity and the individual's concern for his fellow man is be ing reduced by the progressively larger role of "public charity." Right to food resolutions also have a pernicious effect in foster ing expectations which, aside from problems of economic scarcity, are incapable of being fulfilled. There is no way to assure everyone the right to a nutritionally adequate diet or to insure, as proposed at the Rome Conference, that "no human being's future and capaci ties will be stunted by nutrition."

Nutrition problems exist in all countries for persons at all income levels. All parents know that pro viding the proper food does not guarantee that a nutritious meal will be eaten. Interest in "Weight watchers" and other diet programs indicates that practical difficulties associated with eating properly (even when food is abundant) are not limited to children. Alternatives For most of the world's hungry people, however, the basic problem is to obtain enough food. The question is not whether the plight 1976 THE RIGHT TO FOOD 233 of hungry people should be allevi ated, but how. If the "Right to Food" resolution is not the prop er approach toward alleviating hunger, what should we as indi viduals do? There is certainly a key positive role for private char ity. Such aid can perform a valu able role in providing temporary relief in case of earthquakes, floods, and other disasters. Western "imperialism," lack of resources and weather are being used as scapegoats by many under developed countries to hide the effects of their own mismanage ment. The advantage of abundant resources can easily be negated by government policies (as in Jamai ca). On the other hand, Hong Kong, Singapore, South Korea and Taiwan demonstrate the fact that resource-poor areas can develop when economic incentives are pres ent. The fact that Russian farmers produce 25 percent of their food in private plots worked by farmers in their spare time provides addi tional evidence of the effect of economic incentives on output.

The only long-run solution to low income and hunger is to in crease the output of the people involved, since wages depend pri marily on the productivity of labor. For a given economic sys tem, the productivity of labor de pends on the amount of resources, including machinery and equipment available to work with. In creasing the ratio of capital to labor requires incentives to invest and produce. Yet, many of the underdeveloped countries fail to provide the climate for economic development, with an overt hostil ity toward a system of economic incentives. Attempts to avoid the "mis takes" of a market economy through comprehensive central planning in "Third World" coun tries are almost certain to impede economic development. There are no short cuts to economic develop ment or panaceas to solve low income and hunger problems. Cap ital formation requires time, and hasty decisions adversely affect ing investment by domestic and foreign investors can affect the lives of a country's inhabitants for decades to come. The short ages, "bottlenecks" in production, low emphasis on output of con sumer goods, and the like in Rus sia and other centrally directed economies are predictable results of relying on central control in stead of the market in organizing economic activity. The typical per son has little appreciation of the way in which the price system of a market economy provides in formation to market participants.

For example, the amount of infor mation required and number of decisions involved in getting a 234 THE FREEMAN April loaf of bread into a consumer's hands is staggering to contem plate. Though charity may alleviate some temporary distress problems, the only long-run answer to world hunger and low income lies funda mentally within the countries themselves. Neither private nor "puhlic" charity is an effective substitute for basic political and economic reforms. Good intentions are not enough. "Right to Food" resolutions, whether passed or not, are likely to have a harmful effect on development efforts, since they divert attention from the basic problem. If enacted, such resolu tions may also impede long-run development by enabling develop ing countries. to adopt policies which discourage capital forma tion both from within and by for eign investors. , DWIGHT R. LEE AND ROBERT F. McNoWN EconomicGrowth TheProblems of Halting ECONOMIC GROWTH is no longer a uni versally accepted goal of eco nomic policy. To be sure there are still plenty of defenders of eco nomic growth, but it has become Messrs. McNown and Lee are Assistant Pro fessors, Department of Economics, University of Colorado at Boulder.

This article is based on a chapter from a book by Professors Lee and McNown, to be published by Science Research Associates, In corporated in 1976. increasingly fashionable to criti cize continued growth as undesir able and unsustainable. The debate surrounding this issue has cen tered almost entirely on the ques tion of whether our resource base is adequate to support the de nlands of a growing economy. Without going into detail here, it is our judgment that historical evidence and economic analysis re1976 THE PROBLEMS OF HALTING ECONOMIC GROWTH 235 quire that this question be an swered with a resounding affirma tive. The purpose of this paper, how ever, is to address an important aspect of the growth versus no growth debate that has been largely neglected. There has been little discussion of the problems that would be encountered in ac tually formulating and implement ing a policy of zero economic growth. Despite the importance of these problems in assessing the de sirability of the no-growth posi tion, they have been brushed aside by those pushing for a halt to economic growth. According to E.

J. Mishan, one of the most articu late advocates of zero economic growth (in his words, a steady state economy) :1 The actual means whereby a steady-state economy is to be brought into being - the rationing of raw materials, the controls on technology, etc. - and the level of affluence to be sought are important subjects of discussion. But in the existing state of social awareness, they are per haps premature .... The aim of the ecologist and environmentalist is not a no-growth economy per se. It is to win acceptance by the public at large of a no-growth society. 1 E. J. Mishan, "Ills, Bads, and Disa menities: The Wages of Growth," in The No-Growth Society, eds. M. Olson and H. H. Landsberg, W. W. Norton and Com pany, 1973, pp. 81-82. Why Does Growth Occur? One may also say it is premature to feel an urgency to convince the public of the desirability of a pro posal until it has been fully thought through. Certainly a con sideration of the implementation and functioning of a zero-growth economy is crucial in assessing the overall desirability of such an economy.

In considering the question of how growth in the economy is to be halted, it is wise to ask why economic growth occurs in the first place. The motivating force behind our economic growth has always been the desjre of individ uals to improve the economic well being of themselves and their off spring. Government policy can help by creating a stable political environment, protecting property rights, and not destabilizing the economy with inappropriate mone tary and fiscal policy. But without individuals seeking to improve their lot by working, innovating, saving, and investing, economic growth would not take place. This means that achieving a no-growth society would require denying peo ple many of the opportunities and freedoms they now have to im prove their situation. The question of how this is to be accomplished poses problems that are crucial in assessing the merits and liabilities of a no-growth economy.

236 THE FREEMAN April Certain attributes are desirable in any economy, whether growing or not. One of the most important of these is that our resources be used as efficiently as possible to prod uce those goods and services most valued by consumers. Cer tainly this has to be considered an important attribute to those who feel that a dwindling resource base makes halting economic growth an imperative. Stopping economic growth clearly shouldn't mean hal ting technological improve ments that allow a given set of consumer desires to be satisfied with reduced demands on our re sources. If a no-growth policy re stricted this technological growth, it would frustrate the mechanism that has provided us with a grow ing usable resource base in the past and can continue to do so in the future. And as we are about to see, the implementation of a no growth policy is very likely to hamper technological advances. In so doing, such a policy would prob ably hasten the very problems its advocates claim it will postpone.

Market Allocation In a market economy the effi cient use of resources is accom plished primarily by private pro ducers responding to prices of productive inputs and outputs. Output prices provide information on consumer preferences, with the rela tive price of a good increasing in response to an increase in con sumer demand, which in turn moti vates producers to increase their production of the good. Prices of productive inputs reflect their value in their most produc tive employments in the economy. Therefore, with producers re sponding to these input prices in their attempt to produce as cheaply as possible, the cost of producing commodities is kept to a minimum, with substantial re wards going to those who can in novate more efficient ways of pro ducing. While the market mechan ism doesn't always work perfectly, it works better than any other mechanism yet .conceived. But without a large amount of freedom afforded to the individual to spend his money as he desires, and to allocate his productive re sources and talents as he sees fit, much of the advantage of the mar ket mechanism is negated. This brings us face to face with the problem of how zero economic growth can be achieved without obstructing the desirable alloca tion of our resources among com peting uses.

How Assure Constant Output? It 'may seem quite simple to de sign an effective policy imposing zero economic growth. The gov ernment could pass and enforce a 1976 THE PROBLEMS OF HALTING ECONOMIC GROWTH 237 law requiring the value of produc tion to remain constant from year to year . However, some problems come immediately to mind. First of all, what mechanism can the government use to insure that out put doesn't increase? One possi bility would be to place quotas on the quantity of each good to be produced. If this is done a major problem is that of determining which goods should be produced and in what combination. As previously discussed, a cru cial goal of any economy is that these decisions be made to con form to consumer preferences. These preferences vary widely from individual to individual and change unpredictably through time. It takes an extraordinary amount of information to keep the productive process responsive to these consumer preferences. It is optimistic indeed to hope that any government agency would be able to keep abreast of this information and maintain the desirable pro duction quota system. Optimism would require not only tremendous confidence in the governmen t' s ability to keep current on chang ing preferences, but also great faith in its ability to make deci sions independent of political pres sures.

Assume, for example, that con sumers began to sour on the auto mobile as the almost exclusive form of personal transportation and that millions of individuals decided that bicycles offered a more desirable alternative. With production decisions being made in response to market forces, we would find a reduction in auto pro duction as 'auto manufacturers found fewer people willing to buy their product at prices that cov ered their cost. On the other hand, with increasing numbers of peo ple willing to spend money on bicy cles, producers of bicycles would expand output in response to higher profits. Problems of Control It's hard to imagine this adjust ment occurring so smoothly if the decision of auto versus bicycle production was under the control of a government agency. Under these circumstances automobile manufacturers would find it to their advantage to invest heavily in lobbying against any reduction in their production quotas. They could come up with any number of "justifications" for maintaining high production levels for autos.

Of course, bicycle manufacturers could, and probably would, lobby for an increase in their production quotas; but being much smaller and less influential politically, they would have an uphill task getting their quota enlarged at the ex pense of the automobile quota. The 238 THE FREEMAN April bicycle man ufacturers certainly wouldn't get any help from the oil industry or the highway lobby, both of which would take an ac tive interest in the issue. Mean while, the consumer, who should be the important decision-maker, will hardly be heard from in the decision-making process. Extend our example of autos and bicycles to include razor blades, running shorts, motor boats, tennis balls, insect repellent, shoe repair services, dental repair, textbooks, soy beans, and the like, and it is clear that vesting gov ernment with the authority to de termine the allowable production of each concei vahle good and ser vice would be a frightfully clumsy and wasteful way to halt economic growth.

But there are further difficul ties involved in direct government control. Once the quota for a good has been established, decisions as to which producing units are to fill that quota would have to be made. Suppose, for example, that an individual developed a new technique for making sleeping bags, and as a result thought he could give consumers a better bag than was currently available and at a lower price. Operating under the market mechanism, this indi vidual could invest his money in manufacturing and promoting his sleeping bag. If his assessment of his bag wasn't consistent with that of the consumer, he would soon find it advantageous to direct his talents and money elsewhere. On the other hand, if consumers did find his sleeping bag preferable to existing bags, his production and revenue would expand while the production and revenue of his com petitors would fall. Eventually our innovator's techniques would be imitated and all producers would be producing better bags for less, much to the consumer's benefit.

The Consumer's Interest If a government agency rather than the market was responsible for deciding for each produc~ which firms could expand output and correspondingly which firms had to reduce output, it's doubtful if the interests of the consumer would be promoted. For practical purposes it would be impossible for a government agency to have the information on changing pro ductive techniques necessary to know, for each product, which firms should be expanding and which should be contracting. Not having this information, the agency would soon find itself rely ing' on the expertise of the exist ing firms in each industry in order to make its decision. Each firm in an industry would soon learn that in order to protect or enlarge its market share, it has to appeal to 1976 THE PROBLEMS OF HALTING ECONOMIC GROWTH 239 the judgment of the regulatory agency rather than that of the consumer. Technological improve ments and product innovations would be found less useful to the aggressive firm than its lobbying activities and influence with the right regulators. Unfortunately, this wouldn't create the type of environment that a new firm with an improved product or lower price will find very hospitable. Well established firms in the industry could be expected to use their in fluence to prevent such intruders from ever getting their product to market.

This is more than idle conj ec ture. We unfortunately have had plenty of experience with govern ment agencies regulating such things as market share and entry in many of our industries. For ex ample, since the Civil Aeronautics Board was established in 1938 to regulate our airline industry, not one new airline has been permitted to enter into long haul competition with the existing airlines. Another example comes from the Interstate Commerce Com mission (ICC), an agency of the federal government charged with regulating interstate ground transportation. In 1961, Southern Railroad had developed a grain carrying car that allowed them to cut their freight rates on grain by 60 percent and requested the ICC to permit this reduction. It was estimated that this innovation would save consumers millions of dollars annually. Yet the ICC, in sympathy with barge lines, truck ing firms, and other railroads, all of which competed with Southern Railroad, refused to allow the rate reduction Southern requested. It wasn't until 1965, after the case was nine times before lower fed eral courts and twice before the U.S. Supreme Court, that the ICC quit fighting the rate reduction and allowed it to go into effect. 2 Many other examples could be given indicating the tendency of agencies charged with regulating industries to completely lose sight of the consumer interest. But by now our point should be clear. At tempting to halt economic growth by controlling the permitted out put for each good and service would be inconsistent with the goal of using our resources as efficiently as possible to produce a combination of goods and services compatible with the preferences of consumers. The cost of halting economic growth in this way would be so high that only the most en thusiastic no-growth advocate would find it acceptable.

2 For a more complete discussion of this (;ase, see Louis M. Kohlmeier, Jr., The Regulators: Watchdog Agencies & The Public Interest, Harper & Row, 1969, pp. 121-128.

240 THE FREEMAN April Let Consumers Choose, But Limit Total Income Having a government agency decide on the combination of goods and services to be produced, isn't the only way zero economic growth could be imposed. Another possi bility is to let consumers spend their incomes as they see fit, but limi t the total income that can be earned in the economy. This would seem to have the advantage of al lowing consumers to decide what should be produced and encour aging producers to be innovative and efficient with their use of re sources. But, of course, we now have the problem of controlling in comes. And, unfortunately, for this approach, there is a strong relationship between how consum ers exercise their preferences for goods and services and how indi viduals earn their incomes. People earn their incomes by responding to the desires of con sumers, producing and perfecting those things on which consumers are most anxious to spend their money. As we have already pointed out, this provides the incentive for producers to use resources effi ciently and 'creatively in order to provide consumers with better products at lower prices. But peo ple get rich doing this, and in so doing they invariably enrich countless others by creating highly productive jobs and permitting consumers to obtain more with less effort.

So any attempt at controlling the incomes consumers have to spend will require strict controls or strong disincentives against creative responses to the wishes of consumers. This doesn't nec essarily mean that the government would have to apply direct restric tions on innovative behavior. A high enough tax on profits or in vestment returns could sufficiently discourage investment in capital and technological improvements to be consistent with a no-growth economy. But whatever the means, only by discouraging producers from responding to the consumers' desire for better products at less cost will it be possible to prevent incomes from increasing. It's hard to see, therefore, where this approach to controlling eco nomic growth has eliminated the disadvantage of direct controls on output. Both approaches will have the effect of insulating the actions of producers from the desires of consumers.

Reducing Income Mobility Attempting to control incomes and dampen investment presents another, but related, problem. The necessity of controlling innova tive responses to consumer prefer ences means controlling one of the most important sources of income 1976 THE PROBLEMS OF HALTING ECONOMIC GROWTH 241 mobility in the economy. Despite much ridicule of the Horatio Alger "myth" the evidence indicates a substantial amount of income mo bility in the U.S. from one genera tion to the next. 3 There are plenty of opportunities for the ambitious and capable individual to become wealthy even though born into poverty. Likewise, being born into wealth is no guarantee that an in dividual can remain both indolent and affluent for long. The primary source of this mobility is that those who are productive are re wa-rded while those who are un productive aren't. Attempts to con trol income would surely reduce income mobility in our society by hampering the mechanism that produces it. Restricting people's ability to develop more productive techniques or train for more pro ductive employment would restrict the means by which individuals have been able to improve their economic situation. It also re stricts the competition that forces those who have achieved economic success to either remain respon sive to consumer desires or move down the economic ladder. With perhaps a little cynicism, we note that no-growth advocates are sel3 See Peter M. Blau and O. D. Duncan, The American Occupational Structure, New York, Wiley, 1967.

dom positioned in the bottom half of the income distribution. Designing and enforcing a policy to halt economic growth would be a difficult task. If such a policy were actually imposed, many of the consequences would be un fortunate. It would reduce the in fluence that consumers have on the choice of what is to be produced. Coupled with that is the stifling influence the implementation of such a policy would have on moti vations to produce efficiently and creatively. We would also find a more regimented society, with far less chance for the relatively dis advantaged in society to improve their situation through ingenuity and hard work. The likely conse quence of this calcification of so ciety would be disruptive social unrest or the emergence of a caste system in 'which people knew their place and accepted it. If the advocates of eliminating economic growth feel we are faced with an imperative, they had bet ter come to grips with the serious problem of implementing their proposals. It is our judgment, how ever, that they have first failed to establish the imperative for a no growth policy, and secondly, have no positive proposals on how such an economy could be implemented without unfortunate consequences.

~ How much Competition BRIAN SUMMERS ONE OF THE ARGUMENTS used against free enterprise is that there is too much, competition, that the business world is "dog eat dog" and "cutthroat." An other argument used against free enterprise is that there is too little competition, that the busi ness world is dominated by mo nopolies and oligopolies. Oppo nents of liberty, it seems, believe in touching all bases. Is there too much competition? Is there too little? How much should there be? Let us answer these questions by examining the more basic question: What is the meaning of business competition? Unfortunately, many peop'le try to answer· this question by count ing noses. If a given industry has many firms, they call it "competi tive." If an industry has few Mr. Summers is a member of the staff of the Foundation for Economic Education. 242 firms, they call it "noncompeti tive." A Iittle reflection reveals the shortcomings of this criterion. It tells us the number of firms in an industry, but it doesn't tell us what they are doing. And if a nose count doesn't tell us what the firms are doing, it certainly doesn't tell us if they are com peting because competition, if it is to have any meaning, must refer to actions, not just the number of contestants.

What, then, is the meaning of business competition? Well, what do businessmen do? The answer, of course, is they try to earn profits. And the only way businessmen can earn profits is by cutting costs of production, since there is very little they can do about the selling prices of their products. To see this, first consider costs of production. The businessman 1976 HOW MUCH COMPETITION? 243 can choose from a wide variety of known production processes; he may even develop a new process. Clearly, there is much the busi nessman can do to try to cut his costs by making more efficient use of his men, rnaterials, and ma chines. Once his products are finished, however, there is little the busi nessman can do except· name an asking price and wait. If people buy his product, fine. If they don't - if they prefer. the. products of his competitors - he has little re course other than to lower his asking price, perhaps by offering rebates.

And who are his competitors? They are the manufacturers of identical products, similar prod ucts and, in fact, all the other producers who bid for the con sumer's dollar. Each businessman must also take into account the potential competitors who stand ready to enter his field the mo ment his profits start to look good. Thus, General Motors competes with Ford, Ch~ysler, American Motors, foreign auto makers, the manufacturers of motorcycles, bicycles, buses, trains, and airplanes, the potential manufacturers of these items, and everyone else who hopes to win the consumer's ap proval. The folly in attempting to count competitors is now apparent: In a. free market, all businessmen are competitors. Free market competition bene fits everyone. It encourages busi nessmen to introduce new prod ucts and make efficient use of resources. It yields profits to those who give consumers what they want and losses to those who don't.

Profits enable efficient producers to expand production, while losses stimulate inefficient producers to ward greater efficiency. Too much competition? That is like asking if there is too much efficiency and not enough waste. Too little competition? Only when government licenses, franchises, and other regulations prevent peo ple from entering a given field. How much competition should there be? Let all people be free to compete in a market economy, an economy that offers a fair field, with no privileges or favors available from the government. ~ IDEAS ON LIBERTY Ludwig von Mises 'rHERE IS in the market economy no other means of acqUIrIng and preserving wealth than by supplying the masses in the best and cheapest way with all the goods they ask for.

Eat, Drink, Talk FRANCIS E. MAHAFFY BACK IN 1961 I pointed out that instead of a time of progress and development for the great conti nent of Africa, the chains of a far deeper servitude than that of colonial rule were being forged with a "Made in Moscow" or a "Made in Peking" label attached. 1 For twenty-three years I have lived and worked in Eritrea, now a province of Ethiopia. I observed firsthand the changes in that land from the time shortly after the Italians were defeated, through the eleven years of British rule, The Rev. Mr. Mahaffy served for twenty-three years as a missionary of the Orthodox Presby terian Church in Ethiopia and is presently serving as a home mission pastor north of Chicago. 1 Essays on Liberty, Vol. IX, Irving ton-on-Hudson, N.Y.: The Foundation for Economic Education, 1962, p. 191. 244 ten years as a federated state of Ethiopia, and since 1962 as a province of Ethiopia.

One day while traveling back country I stopped in the last tea shop before entering forty miles of hot dusty desert. While I was lei surely drinking tea and eating a hard biscuit, a man engaged me in conversation and asked if I wanted to know the difference between the Italian colonial rule, the later British rule (from 1941 to 1'952) and the subsequent rule of Eritrea by Ethiopia. His graphic description of the three governments appeared to me to characterize the history not only of Eritrea but of much of Africa in recent decades as countries one by one have been freed from colo nial rule. Under the Italians, he 1976 EAT, DRINK, TALK 245 said, the people were commanded to bet, u'ub, maw-anishin which translated is, "Eat, drink, don't talk." Under the British it was mabetin, ma'ubin, wanish - "Don't eat, don't drink, talk." Now, under Ethiopian rule, it is mabetin, ma' ubin, maw'ani,shin - "Don't eat, don't drink, don't talk/' Under Italian rule which began toward the end of the last century the Italian immigrants built roads and a mountain railroad, planted tropical fruit orchards, raised cattle and poultry, opened small factories and garages, built houses and cities and greatly improved the economy. To be sure, later un der Mussolini's Fascist regime much wealth was poured into the country to support the ruthless at tack on Ethiopia in 1935. But whether for legitimate enterprise or the illegitimate business of mili tary conquest, under the Italians the people generally had enough to eat and drink, the economy was healthy, though there was little freedom of the people to express themselves.

When the British conquered Eri trea in 1941, they confiscated as war booty the large cement fac tory in Massaw'a and other indus tries. They had little interest in the economic development of the country as they were a temporary caretaker government. There was progress in improved civil service, education, and other areas, but little economic development. So many lacked enough to eat and drink; they suffered from econom ic depression. Under United Na tions pressures the British opened the land to the formation of polit ical parties. This new idea was received with so much enthusiasm that numerous pro-Ethiopian and pro-independ ence political parties formed, armed themselves and began three years (1949-1952) of intense polit ical activity. Among their purposes was to destroy the opposing polit ical bands, robbing to support themselves, with one party bent on the murder of Italians. Travel on the roads was only in armed con voy. One political band robbed us at gun point and then demanded a future payment of $45 (this was before the inflation of the 60's and 70's) on pain of death - a payment we refused to make. Three years later the bandit chief who set the price on my head was apprehended and hanged for multiple murders.

Union with Ethiopia The fruit of the freedom of speech was federation with and later union with Ethiopia (al though many contend that this did not represent the true feeling of the people). Union with Ethiopia did not improve the economic situ ation and it greatly diminished the 246 THE FREEMAN April freedom to talk. Political favorit ism and misrule by the Ethiopian ruling class who were not liked by the diverse tribes of the province of Eritrea led to growing discon tent. Some of the pro-:independence hands collaborated to form the Eritrea Liberation Front (ELF). They were strengthened when Russia, and later Communist China (with aid also from the neighbor ing Arab states) upgraded their arms, financed the military train ing of their leaders - and indoc trinated them in the ideology of Karl Marx. The ELF was increasingly com mitted to the communist philos ophy, and the same influence was quietly pervading the educated classes in Ethiopia proper. Haile Selassie, a powerful monarch and skillful diplomat, succeeded in pre venting overly-ambitious cabinet members, governors, and other high-ranking officials from secur ing too much power by frequently changing their positions or ap peasing them with gifts of land.

For many decades as a popular emperor he held the diverse ele ments in the country together. In the late 50's and 60's, against the counsel of some of his advis ers, His Imperial Maj esty made official visits to communist coun tries and invited teachers, tech nicians, doctors, and many .others from these lands to Ethiopia. Their influence, along with that of the professors of the new· Haile Selas sie University in Addis, began to spread through the country. Stu dents at the University, in the high schools, and even in the grades became increasingly com mitted to the ideology of Karl Marx. This influence was strong enough among some military lead ers to enable them to successfully overthrow the old regime, execute many of the former leaders, de pose the king, and establish a socialist Ethiopia. Like Uganda, Angola, Nigeria, and many other African countries, Ethiopia has found the road to the socialist utopia a path strewn with corpses. Nor has all the blood shed been the blood of those who preferred the old order and re sisted the advance of the socialist ideal. Five to ten thousand were reported killed last spring when the ELF beseiged Asmara, the capital of Eritrea, and the Ethi opian army defended it with tanks, guns, and planes. Far more civil iansapparently were killed than were members of the army or of the ELF'.

Civil War As is so often the case, two groups professing the same basic goals are engaged in a bloody battle. The ELF describes the socialist Ethiopian rulers as "Im1976 EAT, DRINK, TALK 247 perialists and Colonialists." With in the ELF. there have been, as is the case elsewhere, rival pro-China and pro-Russia groups. The pro China branch of the Peoples Lib eration Front (PLF) is reported to have suffered a serious defeat by the ELF some months back. In Ethiopia thousands of Chinese Communists have been invited in recent years to help implement the new socialist policy and to help the Ethiopian students educate the back-country illiterate people and to establish cooperatives on the land which has been taken and redistributed to the peasants. The official declaration of the economic policy of the new Ethi 0pia is pure socialism. Major in dustries and all banks and finan cial institutions have been nation alized. A few small businesses are to be left to private ownership though under strict government controls. Even some private schools and hospitals are to continue for a while under private control until the government is able to assume this responsibility. The official paper of socialist Ethiopia states: The basic cause of the economic exploitation of man by man is the pri vate ownership of the means of pro duction. The ownership of the major means of production by a small sec tion of the population in a situation where the vast majority of the popu lation has nothing but its own labour power leads to the exploitation of the many by the few and to a highly un even distribution of income. The elimination of exploitation through the public ownership and control of the major means of production is therefore one of the primary goals of Ethiopian Socialism.2 Ideals and Motives While it would be naive to be lieve that pure idealism and not the ruthless struggle for power is often the driving motive behind the leaders of the socialist move ment, yet it is the ideals that draw the multitudes to rally to its banners. The Ethiopian socialist paper states: ... the major and immediate eco nomic goal of Ethiopian Socialism cannot be but the elimination of pov erty through the development of the productive forces and the consequent expansion of production and the pre vention of exploitation of the Ethi opian people.3 A leader in the ELF in talking to Debbie Dortzbach, who was kid napped by them and held captive for twenty-six days, said to her, "We're fighting for peace and con tentment. When the ELF win our freedom, Eritreans will have peace and much more: education, health 2 Declaration of Economic Policy of Socialist Ethiopia, 1975, p. 4.

3 Ibid. p. 3.

248 THE FREEMAN April care, and productive farming. Then there will be freedom at its best."4 With the savagery of Ethiopian rule vivid in their minds, the peo ple of Eritrea generally have ral lied behind the ELF, making it extremely difficult for Ethiopia effectively to rule Eritrea even with a military victory. Socialism in Ethiopia, however, is really not a new idea. There has been a change in rulers, and the assets of some wealthy former rulers have been taken and their land given to the people; but there is little change in the idea that the State is the mother and care taker of the people. Some years ago I was arrested and underwent interrogation by officers in the Ethiopian army, the police, and finally by the Criminal Investigation. One of the charges against me (the only true one) was that I had given charity to some widows and orphans who were not approved by the State for private charity. I was repeat edly told that charity is the work of the State and if I wanted to help people, I must give my con tributions to the governing body to distribute. (In the U.S. one is not yet arrested for helping poor widows and orphans, but charity is popularly deemed to be the work 4 Karl and Debbie Dortzbach, Kid napped, Harper & Row, 1975, p. 118.

of the State and not of individuals, families, and voluntary institu tions.) Peace, economic progress, and freedom, the "Eat, drink, talk" of my friend in the teashop, is the goal of most people, even of multi tudes who profess adherence to socialist ideology. It is inevitable, however, that socialism in Africa or elsewhere is incapable of attain ing ,these goals. There are a num ber of reasons for this fact. Social ism is the rule of men and not of law. As the Ethiopian socialist paper puts it: The Government, because of its control of the commanding heights of the economy, can engage in a mean ingful and effective planning, mar shalling available resources and gen erating and directing popular partici pation to carry out the historic task of transforming Ethiopia from a land of poverty into one of prosperity. The Government can, because it co~trols the resources, direct all available resources, both physical and human. 5 Uncertainty Hinders Progress Where men gain control of their fellow men, even though their mo tives should be the highest, the resultant uncertainty makes plan ning, investment, and wise eco nomic decisions impossible. Under 5 Declaration of Economic Policy of Socialist Ethiopia, 1975, p. 3.

1976 EAT, DRINK, TALK 249 law which is known by all and en forced, the individual and entre preneur can plan for the future. Where the whim of the man in charge determines the profits at tainable by those from whom he is able to confiscate wealth which he deems excessive, the very mo tive for the planning and invest ment essential to progress and prosperity is eliminated. Social ism. can control the economy only by controlling the people. General Teferi Banti, the Premier of Ethi opia, said: Not only have the masses of farm ers efficientlyorganized themselves to carry out the revolution by wiping out reactionary forces and feudal landlords, but they have started to show their productive capacity by running collective farms. 6 Reactionaries, Le. non-socialists, must be wiped out. Recently the new government leaders executed without trial over sixty former leaders in Ethiopia, not all of whom were by any means "right wing reactionaries."

While there has been little sem blance of a free press in Ethiopia in the past, one of the fourteen activities reserved exclusively for the State is "Large-scale printing and publishing." It is the promise of socialists 6 Christian Anti-Communism Crusade, Aug. 1, 1975, p. 8. that under them you will be able to eat, drink, and talk. This prom ise of prosperity and freedom lures many people to its fold. Socialism cannot deliver what it promises and instead effects the most strin gent curb of freedom, thereby as suring economic distress. In place of the promised peace, there is war and conflict. Nor is this only be tween the opponents of socialism and the socialists. One of the char acteristics of socialism is internal conflict. The conflict between the Nazi socialists and Russia and be tween Communist China and Rus sia are examples of internal strife between those who follow the socialist ideology. The Red China Russian conflict has manifested itself among the followers of these rival leaders in Africa.

Socialism Breeds Conflict Because socialism is an irra tional system, it is bound to lead to inner conflicts. Karl Marx de nied rationality to his opponents, describing their thinking as that of the bourgeoisie determined by their economic environment. There is no reason why the thinking of the proletariat, likewise deter mined by the economic environ ment, should set the absolute stan dard by which to judge the think ing and rationality of another class, especially in a system which denies absolutes! The Marxists 250 THE FREEMAN April have adopted a system inimical to production, based on the distribu tion of what is already produced. It destroys the freedom that alone has led to progress, denies God and His law as the framework under which man - the creature - must labor, and replaces God with the State.· The omnipotent State has set itself a task impossible of ful fillment. Since the rule is by men, not law, blame for the failure is placed not on the system but on the men in· power; and so an in ternal power struggle ensues.

It is inevitable that socialism will destroy itself because it is a system designed for a world of unreality. It has survived this long largely hecause such capitalist countries as the United States have supported it with their largess. Left to itself, it would soon amass the evidence that it is nota viable system. As R. J. Rush doony well says: "There is no greater sign of hope today than our world crises: they witness to the collapse of the enemy's power and the impossibility of his world plan."7 It is time we left the socialist countries to destroy themselves or, hopefully, to realize that the fault lies in their irrational and im moral system and to turn again to freedom under God. Perhaps there is a strong enough remnant of people in Ethiopia to turn the nation onto the path of freedom after the socialists have reached the end of their rope. Let us also develop a remnant in our land strong enough to· turn us back to a rule of law,honest money, and freedom under God, lest we too contin ue down the disastrous path of full-blown so cialism. May we learn the lesson from the African teashop and practice the principles that will enable us to eat, drink, and talk.

7 R. J. Rushdoony, Chalcedon Report, August, 1975. f) IDEAS ON LIBERTY Majority Rule THE PRESCRIPTIONS in favor of liberty ought to be leveled against that quarter where the greatest danger lies, namelY,that which possesses the highest prerogative of power. But this is not found in either the Executive or Legislative Department of the Govern ment, but in the body of the people, operating by the majority against the minority. JAMES MADISON A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Robespierre: The Voice of Virtue OTTO J. SCOTT is an enviable man. He spends part of his writing life exploring the careers of self-start ing characters who act construc tively for their country while pleasing themselves as individuals. His The Creative Ordeal, published a year ago, was a thoroughly j us tified paean to the "wizards" of the Raytheon company, who re fined radar, a British invention, and produced it in sufficient vol ume to save England and to enable a crippled U.S. Navy to defeat Japan. Raytheon, with its M. 1. T.

scientists, was a prime example of Edmund Burke's "little platoon" in action in a situation that de pended on individual initiative even more than on coordinated wartime planning. The other part of Otto Scott's writing life is spent on dramatiz ing the evil effects of the Horrible Example. He is very much con cerned with the occasional propen sity of the human race to listen to fools. He plans biographies of King James I of England and President Woodrow Wilson, who, in his estimation, were strong men who just couldn't think straight. The Stuart dynasty never did learn how to govern England, and Woodrow Wilson's idea that the Seychelles Islands could be the equal of Britain or the U.S. in a world parliament has led to all the stupidities that Pat Moynihan has had to protest. But the biggest fools of all, in Scott's opinion, were the men who created the French Revolution. Scott has chos en the most despicable of all the French revolutionaries for his Robespierre: The Voice 01 Virtue (Mason and Lipscomb, $9.95).

The French Revolution, of course, was the antithesis of the American Revolution, even though Tom Paine and the Marquis de La fayette, who took part in both of them, failed to see it that way un til it was too late. The American 251 252 THE FREEMAN April Revolution was, actually, an armed struggle fought to defend the tra ditional claim of the colonists to the immemorial "rights of En glishmen."As such, it was a counter-revolution (the real rev olutionist being King George III, who sought to become a dic tator insofar as his American "subjects" were concerned). What Washington, John Adams, Thomas Jefferson and the rest established in America was a drastically lim ited government that provided for vetoes all over the lot. The small states could check the big states in the U.S. Senate; the big states could have their way in the House of Representatives. The President had his veto over both houses of Congress, and the Supreme Court could measure all new laws against the words of the Constitution.

Meanwhile the ninth and tenth amendments, with some help from the first, second and fifth, defined the inalienable rights of states and individuals. The French Revolution There was nothing like this in France. When King Louis the Six teenth called for convening the Estates-General for the first time in 174 years, he succumbed to the pamphleteers who demanded that the Commons should have as many votes as theelergy and nobility combined. This insured the creation of a "Nationa'l Assembly" that would be unchecked save by a royal veto. But Louis the Six teenth, an amiable, thoughtless man, was not one to fight for re tention of his veto rights. With the help of a few renegade 'nobles and clergymen, the new National Assembly quickly became a mono lith. Dominated by small-bore pro vincial lawyers such as Robes pierre, the "sea-green incorrupt ible" from Arras, the Assembly knew nothing about the require ments of production or the need for fiscal sanity. Excess was piled upon excess. The cities, faced with starvation, cou'ld not restrain a maddened populace. Bakers were taken out and hanged because they had run out of bread.

It wasn't long before the more "virtuous" revolutionaries such as R·obespierre were using their con trol of an unchecked majority in the National Assembly to get rid of "moderates." The Revolution, with its guillotine, began to "de vour its children." Danton went. Marat was assassinated in his bath by Charlotte Corday. Blood flowed everywhere. And then, one fine day, some of the more fright ened revolutionaries looked at Robespierre, with his endless pos turing about total virtue, and real ized that if they didn't get the "in corruptible" from Arras first he would soon he getting them. They 1976 ROBESPIERRE: THE VOICE OF VIRTUE 253 did what was necessary: Robes pierre was beheaded, and the stage was set for the military regime of Napoleon. Mr. Scott does not bother to philosophize; he lets the dramatic narrative, with all its grisly detail, convey its ... own lesson. Whether it all had to happen that way is a question. If Louis the Sixteenth had been a stronger man, and if his Queen, Marie Antoinette, had had the intelligence of some of the royal mistresses of earlier French monarchs, the Estates-General might have been reconstituted along English lines, with the nobles and the clergy occupying the position of the British House of Lords. Workable compromises might have put France, a rich country, on its feet again, with a budget more or less in balance and with taxes equitably levied.

Emphasis on Equality The French went wrong in 1789 because they made the fundamen tal mistake of equating freedom with equality. The only equality in the world is equal judgment in the sight of God. Men are not gods; they have no business trying to put each and every individual into the bed of an equalitarian Pro crustes. Burke said it all in his Reflec tions on the Revolution in France. We ought to suspend our judgment on the spirit of liberty, he said, until we see how it works out in action in a specific context. Burke refused to endorse the French Revolution on the basis of abstrac tions. He wanted to know how the "new liberty of France . . . had been combined with g'Overnment; with public force; with the disci pline and obedience of armies; with the collection of an effective and well-distributed revenue; with morality and religion; with the solidity of property; with peace and order; with civil and social manners." All these, he said, were good things, too.

The "new liberty" of France took no C'ognizance of the Burkean caveats. And so all the "good things" enumerated by Burke were sacrificed to a grand abstrac tion. Otto Scott's story makes some thing of Mirabeau's effort to write a new constitution for France based on the English system. This would have been in accord with Montesquieu's idea of checks and balances. But in the heady atmos phere of the time the National As sembly, as the voice of the "peo ple," did not propose yielding some of its powers to an upper chamber or to a royal veto. Years later John Calhoun of South Caro'lina, in his great Disquisition on Government, put his finger on the French mis take. Government must be limited 254 THE FREEMAN April or Equality, as defined by 51 per cent of the people, will murder the liberty of 49 per cent. Without vetoes democracy runs to tyranny. A good thought for our Bicenten nial.

~ THINKING ABOUT CRIME by James Wilson. New York: Basic Books, 1975, 231 pp. $10. Reviewed by Haven Bradford Gow JAMES WILSON, a Professor of Government at Harvard Univer sity, is concerned· about the fash ionable cant and nonsense that is revealed in our thinking about, and attempts to cope with, crime. For example: During the past dec ade legal scholars have been en gaged in an intense debate over the evidentiary rules governing search and seizure, police interro gations, and the taking of confes sions. Professor Wilson concedes that this debate has illuminated some interesting legal and philo sophical issues, but thinks. the de bate has a hollow ring when re called in the 'context of what ac tually happens in a police station house. Professor· Wilson has done the much-needed research ;,he finds that most persons arrested for such crimes as robbery and burg lary have been arrested under cir cumstances in which no confession is needed, no searches have to be conducted, and no . police interro gations are required. Most robbers and burglars are caught in the very act. Also, there often are wit nesses to testify or stolen property that can be identified; and most of those who are captured,far from desiring to ensure that they may remain silent behind constitution ally protected rights, want very much to talk so that they might lighten their sentences.

The Harvard University profes sor is also disturbed about the view that "Crime and drug addic tion can only be dealt with by at tacking their root causes." He re sponds that he has yet to see a "root cause," and that he has yet to encounter a government pro gram that has successfully at tacked it, at least with respect to those social problems that ema nate from human volition rather than technological malfunction. But more importantly, he finds that the demand for causal solu tions is really an excuse for de ferring action. Professor Wilson also explodes the popular myth that poverty causes crime. During the 1960's it became fashionable to contend that if weasa society were to re duce crime, we had to eliminate poverty, increase educational op portunities, eliminate bad housing, encourage community organiza1976 OTHER BOOKS 255 tion, and furnish counseling serv ices to troubled and delinquent youth. It was a confident assump tion of high-level Kennedy and Johnsonadministra tion officials that economic prosperity would lead to a sharp reduction of crime.

Thus an avalanche of programs aimed at the poor, young and de prived were developed and imple mented. But crime soared. Indeed, crime rose ata faster rate, and to high er levels than at any time .since the 1930's and, in some categories, to higher levels than any previous ly experienced in this country. The decade of the 1960's began with a sense of 'contentment and opti mism; but this sense of content ment· and optimism was shattered, not only by crime but by riots and war as well. To the contention that "Men steal because they are poor and de prived," Professor Wilson re~ sponds: "There is more crime in most poor neighborhoods than in most well-off ones, but even in poor communities most people do not steaL" Moreover, "crime rose the fastest in this country at a time when the number of persons living in poverty or squalor was declin ing." And to the popular assertion that the increase in crime results from population changes, the au thor replies: "Crime in our cities has increased far faster than the number of young people, or poor people, or black people, or jlist plain people who live in those cit ies. In short, objective conditions alone, whether demographic or economic, cannot account for the crime increases, though they no doubt contributed to it." Far more accurate to contend, as Professor Wilson does, that the increase of crime emanates from forces diffi cult to define and impossible to measure scientifically : namely, the destruction of community and our attitudes·, ideas and values.

Implicit in much of the fashion able misconception regarding crime and criminals, contends Pro fessor Wilson, are frequently naive and unacknowledged as sumptionsabout human nature. To contend that poverty causes a person to become a criminal is to assume that man does not possess free will, that he lacks the inher ent capacity to transcend his en vironment. To believe that human beings will become virtuous once they· have attained social and eco nomic success is to deny the com mon-sense recognition that wicked people exist. "Some persons will shun crime even if we. do nothing to deter them," observes the Har vard University professor, "while others will seek it out even if we do everything to reform them." Evil men and women exist; and nothing avails except to set these 256 THE FREEMAN April evil persons apart from innocent persons. "And many people, nei ther wicked nor innocent, but watchful, dissembling, or calculat ing of their opportunities," con cludes Professor Wilson in his clearly-written and well-argued work, "ponder our reaction to wickedness as a cue to what they might profitably do. We have tri fled with the wicked, made sport of the innocent, and encouraged the calculators. Justice suffers, and so do we all."

~ PROPERTY IN A HUMANE ECONOMY edited by Samuel L. Blumenfeld (LaSalle, IL: Open Court, 1974) 265 pages plus index, $10.00 hardcover, $3.50 softcover. Reviewed by Brian Summers THIS VOLUME consists of thirteen essays delivered at several sym posia sponsored by the Institute for Humane Studies. The contrib utors - F. A. Harper, Carl F. H. Henry, Leopold Kohr, James W. Wiggins, James A. Sadowsky, Murray N. Rothbard, Arthur Kemp, Louis M. Sp·adaro, Sylves ter Petro, Georrge 1. Mavrodes, Edwin G. Dolan, James M. Smith, Israel M. Kirzner - consider such questions as: What is the connection between property and freedom? Is private property theft? Can scarcity be eliminated by redistributing prop erty? Are property rights the cre ation of law? If God owns every thing, can people own anything? Can an individual·own himself? The authors represent a wide spectrum of professions, approach es, and points of view. They differ on many questions, including the precise definitions of ownership and prOpBrty. However, they unite in their belief that the institution of private property is crucial to a humane .society.

Property in a Humane Economy is being distributed by the Insti tute for Humane Studies, 1177 University Drive, Menlo Park, Calif. 94025. ~ the ' Freeman VOL. 26, NO.5· MAY 1976 EducationalVouchers: The Double Tax Gary North 259 Those who want independent schools must stand on principle against the voucher system. ANew Message I. On Choosing liberty Jackson Pemberton 276 Words of courage and counsel from the hearts of the Founding Fathers to their children in a troubled ~ation. Capital Consumption Hans F. Sennholz 282 In order to consume more, man must produce more unless he is prepared to eat into the capital that helps produce the goods. Socialism as a Family Enterprise Yale Jay lubkin 300 - with children too small and too immature to know better. The Business of Government ClarenceB. Carson 302 Putting the "general welfare" in context; justicevs. mercy. Book Reviews: "The Biggest Con: How the Government Is Fleecing You" by Irwin A. Schiff "America's Emerging Fascist Economy" by Charlotte Twight "One Nation Under God" by Rus Walton "The New American Ideology" by George C. Lodge Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

312 the Freeman A MONT,HLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591·7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per· mission granted to reprint any article from this issue, with appropriate credit except HA New Message."

EducationalVouchers: The l:re i}~ ~r{ ';i:~~~tl GARY NORTH All State education is a sort of dynamo machine for polarizing the popular mind; for turning and holding its lines of force in the direction supposed to be most effective for State purposes. Henry Adams The Education of Henry Adams (1907) WE ARE CONTINUALLY BOMBARDED by newspaper and magazine head lines informing us of the continu ing "crisis in education," which actually is a crisis in government operated education. Virtually all the available data reveal that the crisis is accelerating. Inner-city schools have hecome literal battle fields between rival gangs, between teachers and students, between ad ministrators and increasingly vo ciferous faculty unions, and most important, between outraged par ents and the whole system. Yet the crisis is in no way confined to inner-city schools. The suburban schools of the white middle class are burdened with the multiple plagues of student boredom, drug addiction, and rapidly increasing Dr. North is President of the Institute for Christian Economics.

alcoholism. A dozen years of fall ing scores on the college entrance examination reveal the steady na ture of the erosion, despite the acceleration of costs associated with the public schools. Educators cannot bring them selves to admit that the crisis is anything more than a temporary aberration-an aberration from the "normal" which itself was dead long hefore today's administrators were born. The theories multiply, the explanations proliferate, and the crisis gets worse. What the last decade has brought is an un derstanding on the part of the public and a minority of govern ment school employees (unten ured, generally) that there is no answer. Like the sinking ship which fi nally takes on too much water, the 259 260 THE FREEMAN May government education system is irretrievable. It will be useful in the future only as scrap. But what about those millions of students who will go through the system before it finally sinks? Will they too become useful only as scrap?

Parents are becoming aware of the discussion syndrome. The end less discussions in half-empty halls between a few parents and. local administrators have not altered anything. The teacher conferences, the administrator conferences, the PTA conferences, and all the other conferences have proved useful only for the cataloguing of the unsolved and increasingly unsolv able problems connected with gov ernment education. Solutions have not emerged from conferences or at least no solutions acceptable to parents, administrators, school boards, students, state legislators, and an angry group of levy-reject ing voters. If there are no solu tions, why pay higher taxes? This is the reasoning of the voters. The reasoning of the school adminis trators is different. They only want to discover a new source of tax money that will be acceptable to the voters, or better yet, that will not be subject to public elec tions at all.

The Root of the Crisis The problems of American pub lic education are the problems associated with any system of gov ernment-enforced, tax-supported coercive wealth redistribution: the system of financing conflicts with the expressly stated goals of the planning agencies. This conflct be tween the method of financing and the stated goals of education has been with us since the days of the Puritans of New England who set up compulsory education which was to be financed, in part, by money collected by the local prop erty tax assessor. There is no education apart from conformity of thought. One thing is true and another is not. Education requires indoctrination. But the conformity of thought which is basic to all education cre ates conflicts when parents of dif fering first principles are required either to finance a hostile educa tional system or to send their chil dren to it. The Puritans' solution was to enforce conformity by· ex pelling hostile families from the community. The modern bureau crat's solution is to force parents to finance an alternative school system as well as the government system, and then to take control of the private system later on.

Sidney E. Mead, in his impor tant book, The Lively Experiment: The Shaping of Christianity in America (1963), has argued per ceptively that the public school system is America's only estab1976 EDUCATIONALVOUCHERS: THE DOUBLE TAX 261 lished church. His point is well taken. Like all systems of estab lished worship, some people are forced to finance doctrines and principles that they do not agree with. They resent this fact, but instead of seeking for the separa tion of "church" and state, the modern parent only seeks to "re capture" the public education sys tem. So deeply rooted is the idea of the necessity of public-financed education that those who are be ing destroyed by the system - who are losing their children to the system - cannot bring themselves to abandon it on principle. If the moral answer of the free man to the socialist's policies of coercive wealth redistribution is "not yours to give," then the moral answer to those who would somehow take over the public school system is "not yours to recapture."

The religious nature of the con flict has been noted by R. J. Rush doany : "The state is [seen as] the order of liberty, and the school is the means whereby citizens are prepared for the good life. The state has become the saving insti tution, and the function of the school has been to proclaim a new gospel of salvation. Education in this -era is a messianic and uto pian movement, a facet of the Enlightenment hope of regenerat ing man in terms of the promises of science and that new social order to be achieved in the state."l Yet precisely because the new state religious establishment has become messianic, it has also be come the center of men's criticism. Education today occupies an equiv ocal position in contemporary life, functioning both as a scapegoat for every failure and as a catch-all for every hope and expectation of society. The schools and colleges are ,berated for extending their authority beyond the fundamentals of learning into a program which envelopes the whole child or the whole man, and, at the same time, are given additional re sponsibilities which can only extend their scope even further. Funda mental to this unhappy and contra dictory approach is a messianic ex pectation of education coupled with a messianic attitude on the part of edu cators. The attitude of people towards education is that it is a god that has failed and yet a god who can perhaps still be whipped into fulfilling his mission. 2 The decade which has just passed - one which began only a few months after these words were published - has brought a massive disillusionment concern ing education. Nevertheless, the public's faith in government-fi nanced and administered educa1 Rousas J. Rushdoony, The Jl!lessianic Character of American Education (Nut ley, New Jersey: Craig Press, 1963), p. 4.

2 Ibid., p. 6.

262 THE FREEMAN May tion still persists, at least to the extent that people think the sys tem can still be reformed, trans formed, or recaptured. The pluralism of American life is now, and always has been, in direct opposition to a philosophy of public education. Yet the irre concilable conflict between these two principles has never been faced by the vast bulk of our citi zens and virtually any of its edu cational theorists. The financing of a pluralistic culture must be voluntary, springing from the deeply felt needs of the various religious, intellectual, and cultural groups. Three centuries of conflict over the control, content, and financing of public education serve as a tes timony to the futility of combin ing a system of tax-financed schools with a pluralistic culture financed by free men. The system of education is elitist, as all pro fessional systems must be, but with taxation as its base, the sys tem is in conflict with democratic principles. It leads to a system of minority rule. Weber was quite correct when he argued that bu reaucracy is antidemocratic by nature; control is separated from those who bear the financial bur dens. 3 Tenure and civil service 3 Max Weber, "Bureaucracy," From Max Weber: Essays in Sociology, edited by H. H. Gerth and C. Wright Mills (New York: Oxford University Press, 1946).

protection assure that control and financing are kept separate. The Assumption of Neutrality An implicit schizophrenia under mines every system of public edu cation. On the one hand, a primary justification for the existence of government-financed education is that the nation needs citizens who are educated for the responsibil ities of democratic participation in the political processes. The schools are to' educate men in terms of the "ethics of democracy" or "democratic values" or just plain "patriotism." Schools must inculcate "values," although the more vague these are, the better for the administrators. On the other hand, in order to ward off criticism from various religious and ideological groups, public education is simultaneously defended as a system which incul cates no religious or ideological values whatsoever. Public educa tion is simply technical, making possible a better, more productive, and more profitable life for all of its students. The stated goals of democratic education and strictly vocational or technical training are in absolute opposition to each other. The first absolutely affirms the value-laden nature of public education, while the second abso lutely denies it.

The schizophrenia of public edu1976 EDUCATIONALVOUCHERS: THE DOUBLE TAX 263 cation can be seen in the doctrine of academic freedom. The doctrine was first developed by the profes sors employed by the Prussian uni versities that were the products of state financing. (Prussia invented the kindergarten and the graduate seminar, two of the least produc tive educational developments ,on record.) The universities were supposed to be extensions of the Prussian state, and they were un derstood as' such by everyone, but professors wanted to be exempted from any form of censorship or control by the agents of the state. Thus, they invented the idea of academic freedom - the freedom of inquiry belonging to any certified scholar in his area of expertise. He is to be entirely neutral, however; his instruction must be based only on facts. He must not indulge in propaganda. Yet, steadily, as the implications of epistemology have been recog nized, the idea that "facts" some how create a neutral world of scholarship has been abandoned.

The so-called sociology of knowl edge (sociology of prejudice) indi cates that men can investigate only a tiny fraction of the infinite number of facts, gleaning facts and assembling them in terms of a philosophical framework. Pre suppositions therefore influence interpretations, and interpreta tions are now recognized as ultimately reIigious in nature, i.e., they are accepted as unchallenge able first principles. While few students recognized this fact as recently as the early 1960's, the effects of the Vietnam war and the counter culture have reversed this. The students, and many of their professors, now acknowledge what has always been true: edu cation is not neutral. But if edu cation cannot be neutral, then the public school system's legal pillar - the assumption of neutrality is exposed as a false justification for the maintenance of an estab lished church and a tenured priest hood.

The Locus 01 Sovereignty The ultimate source of the edu cational crisis stems from an error in first principles. Once committed to this error, the public education system has floundered repeatedly. To locate the source of the error, men need only ask themselves a single question: Who is respon sible for the education of a child? The answers, of course, are varied: the parents, the church, the civil government, or a combination of the three. The conflicts in education are in fact conflicts over a much more fundamental issue: the locus of sovereignty, and hence, the locus of personal responsibili ty. The person or institution which pos264 THE FREEMAN May sesses sovereignty must be the one which takes on the responsibility. By affirming the legitimacy of tax supported education, voters have attempted to transfer their respon sibilities for the education of their children to another agency, the state. Yet at the same time, they affirm their own sovereignty over the content and structure of the educational system. That they have lost almost every battle in their war with tenured, state-supported educational bureaucrats, is the direct result of the public's ab dication of personal responsibility, family by family, for the educa tion of their children. The war was lost on the day that parents, as voters, decided to transfer the financial responsibilities of educat ing their own children to other members of the body politic. While Horace Mann can be regarded as the general who was victorious over private education in Massa chusetts, he was only conducting mopping-up operations. The end had been determined two centuries earlier when the Puritans of Mas sachusetts affirmed the principle of tax-supported education.

Any system of education must ultimately be the reflection of and prod uct of the philosophical prin ciples of those who finance the system. The decision about the fi nancing of any institution ines capably determines the shape and content of that institution. Mod ern men, being secular, now recog nize this fact when applied to the institution of the church. They see that a state-supported church is antithetical to the principle of freedom of conscience. They see, and religious zealots like Roger Williams see, that state-financed churches become the tools of the state which supplies the funds. But modern men do not see that this strict relationship between fi nancing and operations applies equally well to government school systems. Somehow, the relation ship is ad hoc; it works when churches are involved, but it is irrelevant in the field of public ed ucation. Like the established churchmen of two centuries ago, today's priests and parishioners of the public schools refuse to recognize the nature of their rela tionship to the state.

Who Pays? Do men finance their children's educations directly, through the personal financial sacrifice of the family unit? If so, then the fam ily is sovereign over education. The school is then merely an ex tension of the family. The family makes use of the efficiencies asso ciated with the division of labor. Parents hire professional educa tors to train their children, but those who are hired are. paid to 1976 EDUCATIONAL VOUCHERS: THE DOUBLE TAX 265 adapt their ed!1cational skills to the needs of the families that are financing the education. This can be done directly, through family controlled school boards, but it can also be accomplished through the indirect means of the market. The family hires the tutor, or the school, in the same way that it hires any other servant. The par ents are directly responsible for their children, and the selection of a school is an act of responsible stewardship. The family has not delegated the responsibility of ed ucating the children to anyone else. It controls the purse strings -the ultimate affirmation of earth ly sovereignty.

The more distant the source of the school's funds from the family, the less control the family has over the selection of the teachers and eguipment. If the church fi nances the education of its mem bers' children, then a layer of in stitutional bureaucracy is inter posed between parents and teach ers. This may be agreeable. to many parents, but if church mem bers other than the parents are expected to finance the school (as is the case in most instances), then they too have a legitimate right to determine school policies. By transferring some of the burdens of financing education to other church members, the family thereby relinquishes a portion of its sovereignty over the educators. The educators then serve someone other than the parents, or at least in addition to the parents: the deacons, the elders, the minister, the school committee, or whatever. By diluting sovereignty, the edu cational bureaucrats gain more autonomy, since they can playoff one church faction against another until everyone gives up and grants more autonomy to the administra tors.

The bureaucrats gain their greatest control in tax-supported systems. Sovereignty is so diluted at the level of the individual citi zen that the expertise of the pro fessional and tenured bureaucrats is overwhelmingly powerful. But their power .is not tied to a per sonal relationship with the chil dren (as it is with a parent), nor is it linked to a financial depend ence on the parents, nor is it even Hnked to a community of shared values, as in the case of a church school. Their power stems from the unwillingness of legisla tors to turn off the funds. And the legislators' unwillingness to inter fere stems from two primary facts of political life: 1) the experts have an aura of invincibility about them, plus tenure; 2) the voters still beHeve in the establishment of the public school church. It is easier to give speeches than to take action, so legislators give 266 THE FREEMAN May speeches. Most of them are re elected most of the time, so the policy pays off in the coin of the political realm: votes.

The crisis of education is there fore a crisis in the realm of val ues, with the values of the parents coming into conflict with the val ues, philosophies,and incompe tence of those in control of the tax-supported educational system. If the parents continue to capitu late to the philosophy of public ed ucation, then they will continue to be defeated in their attempts to gain the kind of education they want for their children. There is only one way that all parents can gain such satisfaction: they must pay for the education of their chil dren. They can earn the money or they can convince some third par ty to give them or their children the necessary funds on a voluntary basis, but the parents must pay. If they want to get what they pay for, they must pay directly, rather than paying through the coercive means of state taxation. Until men are willing to cut off the political funding of the estab lished church of America, they will see the educational crisis escalate.

The visible sign of sovereignty is the ability to pay for a service and the willingness to do so. Nothing short of this will suffice to solve the crisis in the schools, for the educational crisis is ultimately a conflict over sovereignty. He who pays with his own funds will win; he who continues to pay by voting cannot possibly win. Pseudo-market Schemes Professor Milton Friedman of the University of Chicago is one of the most technically proficient economists in America. As a de fender of the principle of market efficiency, he has been able to gain many adherents within the eco nomics profession. He has been especially successful inchalleng ing the inefficiencies of the Fed eral regulatory commissions. His most popular and widely read book, Capitalism and Freedom (1962), was a landmark of the 1960's, for it was popularly writ ten by a professional economist who had long before established his technical proficiency before his peers. Some of the policy recom mendations of the book, such as the abolition of occupationallicen sure by civil governments, have not been taken seriously by most economists .and certainly not by professionals who now hold occu pational licenses from the civiI government. Yet from the point of view of those who are convinced of the technical superiority of the free mar ket over governmental regulation, it is this kind of un compromising stand taken by Prof. Friedman which is most val1976 EDUCATIONAL VOUCHERS: THE DOUBLE TAX 267 uable in the defense of freedom, not to mention capitalism.

The problem that many free market advocates have with some of Prof. Friedman's policy recom menda tions is that too often he spends many pages in devising in genious schemes that would make government programs more effici ent and, Prof. Friedman fervently hopes, less burdensome to the tax payers, businessmen, and innocent citizens of the land. These policy recommendations have one feature in common: they are pseudo-mar ket devices. They would create a kind of shadow market - "almost a free market" - that could pro vide success indicators analogous to those provided by a truly free market. In doing so, he argues, these pseudo-market alterations would make government more responsive to the needs of citizens. Economic Calculation Back in 1920, Professor Ludwig von Mises wrote the most famous essay of his acaden1ic career, "Economic Calculation in a Social ist Commonwealth." Mises argued tha t the inescapable weakness of all systems of central planning is the inability of the planners to assess the actual value of any product or service in the economy.

Without freely fluctuating prices that are the product of the private ownership of both consumer and capital goods, there can be no means of imputing value accu rately by any of the p.articipants in the economy. What should any thing cost ? What is it worth? What should be given up to attain any particular goal? Without mar ket prices, meaning without open entry to markets by buyers and sellers, there can be only random guesses by the planning bodies. Randomness is not efficient, except on random occasions. Thus, con cluded Mises, the socialist com monwealth is of necessity ineffi cient. It cannot plan rationally. -So long as the monopoly character of the state-controlled markets con tinues, the planning authorities will remain blind to the true con ditions of supply and demand. 4 Understandably, Mises had no use for pseudo-market schemes of any kind. In fact, the most im portant (though ineffectual) reply to Mises from the socialist camp was made by Oskar Lange, and it consisted of a system of hypo thetical pseudo-market responses by central planners: artificial and arbi trary prices to be set by the planners, followed by adj ustments in the price system in order for planning agencies to stimulate the desired response from buyers and 4 Ludwig von Mises, "Economic Calcu lation in a Socialist Commonwealth"

(1920), in F. A. Hayek (ed.), Collectivi;t Economic Planning (London: Routledge & Regan Paul, 1935).

268 THE FREEMAN May producers. 5 The problem, as al ways, was the closed nature of the system. The planners could never be sure that they were not wasting resources in their attempt to at tain any goal. Those who set prices are sovereign, and in the case of the socialist commonwealth, the sovereign is economically blind. In short, the creation of a pseudo-market cannot guarantee increased government efficiency or increased economic power on the part of consumers. All that will be accomplished is the irrationali zation of the central economic plan by mixing it with non-socialist yet non-market elements. Lange's scheme was never adopted by the Polish planning agency he be longed to, nor have the Soviets adopted it. It is neither socialist nor market; it is only economically irrational. The Voucher Scheme Perhaps the most interesting of all of the pseudo-m,arket policy recommendations promoted by Prof. Friedman is his educational 5 Oskar Lange and Fred M. Taylor, On the Economic Theory of Socialism (New York: McGraw-Hill, [1938] 1956).

For a reply, see T. J. B. Hoff, Economic Calculation in the Socialist Society (Lon don: Hodge, 1949). Prof. Hayek's latest statement on the question of central economic planning appeared in The Morgan Guaranty Sur vey (Jan. 1976), and is available on re quest: 23 Wall St., New York, N.Y. 10015. voucher plan. Under such a school financing system, each family would receive one voucher for each school age child in the fam ily. The voucher would be redeem able in money upon presentation bya private school to the state or country government. Its value would be equal to the average per student cost of education in the district. (This figure, by the way, is seldom even calculated by school boards, for obvious political and public relations reasons, and when it is calculated, it virtually never includes such crucial items as the interest which the government might have earned had it sold off the school buildings and invested the money elsewhere, such as in the bank which would loan the purchase money to a local profit making school.) The parents could then send their students to a pub lic school or to a private school. If the cost of tuition were higher in the private school than the value of the voucher, the parents could make up the difference by paying more money.

The advantages of this scheme, argue the supporters of school vouchers, would be considerable. The parents gain back their lost sovereignty. They decide where the children will attend school. The public schools would be forced to compete for students, thereby increasing their efficiency. Private 1976 EDUCATIONAL VOUCHERS: THE DOUBLE TAX 269 , schools would spring up every where in response to the existence of vouchers. The diversity of edu cational opportunities would be fostered. The costs of administra tion would be very low. (One ad vocate back in 1962 - a respected libertarian philosopher - an nounced that it would only take a computer and four secretaries to run the whole system for the state of California. If this were true and it certainly is not true - it would insure the doom of the pro gram in the eyes of the most po tent group of special-interest pleaders in the sta te, the civiI service employees.) The state could establish specialty schools of all kinds to lure back parents and their vouchers. The authority of parents would be reestablished, and this would guarantee a truly progressive educational system.

There is no doubt that the logic of the voucher program is initially impressive. Parents would seem to have far more power in selecting educational alternatives under the voucher system. The below-market pricing monopoly of the state would be eliminated. The conform ity of bureaucratic education would be challenged by a new di versity. A new educational plural ism would be the creation of vouchers. It would save money and increase freedom. What more could we ask for? In any case, what more can we expect in an age of wealth redistribution? This is al w,ays the key argument in favor of the creation of pseudo-market schemes: no way exists to re-es tablish a truly free market, so this is the best we can hope for. The Locus of Sovereignty Revisited It all sounds so plausible. Yet it overlooks the fundamental prob lem of voucher-financed education. The question must still be asked: Where is the locus of sovereignty?

And the answer must still be the same: the civil government. The voucher program violates the most important principle of education: parents are responsible for the financing of their children's edu cation. He who is responsible is also legally sovereign,and vice versa. Operationally, the source of the funding determines the locus of sovereignty. The goal of all those who would defend market arrangements must be to deter mine the moral locus of sovereign ty in any particular circumstance, and then see to it that the sov ereign agent be made legally and econonlically responsible for the exercise of his power. By failing to demand that parents be the source of funding for their own children's education, the promot ers of the voucher scheme have ab dicated their responsibility in ex tending the principle of voluntar270 THE FREEMAN May ism and its -concomitant, personal responsib ility.

In the voucher system, the source of the funding is still the taxation system. The financing is based on the princip1e that it is legitimate to use political power in order to grant benefits to one group at the expense of the other. The principle of coercion is still dominant. The dominant principle, over time, will thwart the elements of voluntarism in any pseudo-mar ket scheme. The state is still the operational sovereign over educa tion, simply because the threat of violellce, whi-ch is the state's legal monopoly, is the source of the funds for education. There is no doubt that Prof. Friedman recognizes this fact, yet he does not emphasize it. He be Iieves that the technical alteration of the way in which coercively col lected taxes ,are redistributed can overcome the sovereignty of the state. He acknowledges that the authority of the parents in a voucher scheme cannot be abso lute. The state-financed "educa tional diversity" under a voucher system is a diversity operating within government~est.ablished guidelines. Money spent by the state can never be ona "no strings attached" basis. There is always more demand for government money than there is money avail able to meet the demand (unless the purchasing power of govern ment money falls to zero). Those legally responsible· for the distri bution of tax money must have legal guidelines, or else rampant waste and dishonesty will instant ly appear, and the treasury will be emptied overnight. 6 This is why statist education must be bureau cra.tic edueation, with 'guidelines imposed from above, since the money comes from the state. There is no escape from the rules of bureaucracy in a voucher system.

Friedman acknowledges this fact: Governments could require a mini mum level of schooling financed by giving parents vouchers redeemable for a specified maximum sum per child per year if spent on "approved" educational services. Parents would then be free to spend this sum and any additional sum they themselves provided on purchasing educational services from an "approved" institu tion of their own choice. 7 The key word, of course, is "ap proved." Why Prof. Friedman has chosen to put the word in quotes is not altogether clear. Does he mean "kind of approved"? Cer tainly, he is wise enough to know that when the state bureaucrats 6 Mises, Bureaucracy (New Rochelle, New York: Arlington House, [1944] 1969). 7 Milton Friedman, Capitalism and Ereedom (Chicago: University of Chi cago Press, 1962), p. 89.

1976 EDUCATIONAL VOUCHERS: THE DOUBLE TAX 271 approve or disapprove, they do not hide their actions in quotation marks. They simply decide. They decide in terms of criteria appro priate to the continued function ing of the statist educational bu reaucracy. As Prof. Friedman writes: "Any subsidy should be granted to individuals to be spent at institutions of their own choos ing, provided only that the school ing is of a kind that it is desired to subsidize."s Desired by whom to subsidize? The parents? Hard ly; they are the ones to be dic tated to, not dictated by. The par ents will be told where they can freely spend their vouchers, and they have to that degree lost their sovereignty. The state provides the funds through its monopoly of coercion; the state shall deter mine, coercively, how and where those funds are to be spent. Controlling the Alternatives What the decades-long erosion of the government school systems has provided is a long list of rea sons why it would be profitable for each family to remove its chil dren from the subsidized schools.

A small but growing minority of par·ents is doing just that. The state bureaucrats are legally pro hibited from providing religious schools, ideologically prohibited 8 Ibid., p. 99. from providing free market edu cation, and apparently unable to provide competent instruction. They see their task as insuring standards, which means insuring educational conformity. The rise of an independent school system, which is replacing the declining number of Roman Catholic paro chial schools, is a threat to public school administrators. They are as hostile to alternative educational programs as the postal system's administrators are to United Par cel Service or anyone else carrying first-class mail. Private school administrators in Indiana were recently imprisoned temporarily for having cooperated with parents who attempted to re move their son from the public school system against his will. Parents in Ohio have been threat ened with the removal of their children to foster homes if they persist in sending their children to unaccredited schools. This is warfare, not some simple debate over financing. Technical solutions are insufficient to solve problems of ideological and religious warfare.

What we are witnessing is a conflict over sovereignty. Who is responsible for the training of children, the state or the parents? The lines are being drawn far more sharply today than at any time in this nation's history. Pseu-' do-market schemes cannot solve 272 THE FREEMAN questions of ultimate sovereignty, or at least they cannot solve them for the benefit of free market in stitu tions. State schools rest on a whole series of erroneous assumptions. First, that the state is ultimately sovereign in the field of education -the pseudo-parent of every child. Second, that state schools can teach children totally neutral val ues - universally acceptable prin ciples that all education must pro vide. Third, that it is the moral as well as legal obligation of taxpay ers to finance the school system. Fourth, that the professional, ten ured, and civil-service-protected officials of the educational monop oly are the people best prepared to operate the educational system.

Buying Off the Competition The voucher system challenges directly only the last of these as sumptions, and then only super ficially. (After all, state schools will still be permitted to operate.) The voucher system necessarily re quires the licensing of schools. For those who favor bureaucratic licensing of alternative education al systems by the state bureau crats whose jobs are threatened byalternati ve educational sys tems, I can only recommend chap ter 9 of Prof. Friedman's Capital ism and Freedom - the chapter on occupational licensing. As private schools continue to replace the disintegrating govern ment schools at the primary and secondary levels, the state's edu cational bureaucrats will have to take decisive action to protect their monopoly. One way to ac complish this is to refuse to cer tify any more schools. (I am as suming that outright abolition will not be tolerated politically or in the courts.) This approach may work for a time, since parents are concerned about quality schools.

By some peculiar twist of logic, the parents of private school chil dren somehow believe that the state licensing boards are compe tent to certify educational per formance, despite the fact that the schools that they themselves op erate are anathema to the parents in question. Private school administrators, who come to parents in the name of a superior educational program, are equally hypnotized by the boards of certification. The most intelligent response is that made by Robert Thoburn, principal and owner of the profit-making and highly successful Fairfax Chris tian School of Fairfax, Virginia: "If the bureaucrats want me to certify their schools, they can come to me and I'll look over their programs. That's my view of cer tification." If the certification ploy does not 1976 EDUCATIONAL VOUCHERS: THE DOUBLE TAX 273 work, then the last hope of state educational bureaucrats is the voucher system. If parents con tinue to send their children to un certified schools, then the state must find a way to convince pri vate school administrators that they must register with the state and conform their programs .to state educational standards. The voucher system is the most logical means of achieving this goaL Vouchers will create a second, pseudo-free market school system, using "free" in both senses: inde pendent and without c-ost to the users. The state-operated schools will then compete with the state licensed schools. Almost no third alternative will be economically possible.

Taxed Again and Again Those parents who want their children out of the government-op erated schools (which their taxes support) will also be paying for the operation of voucher-support ed, state-licensed schools. These parents must turn down the first subsidy (free public education in a government school) , turn down a second subsidy (vouchers for gov ernment-licensed schools), and come up with after-tax income to finance their children's education in a truly independent school. This is assuming they can find such a school. To do so, they must locate other parents equally com mitted religiously and ideologi cally to the principle of independ ent education, and also financially able to put their preference into action. How many concerned par ents will do this? How many pri vate school administrators will be able to operate a school while de nying admittance to those who would pay with vouchers? How many of these schools with total commitment to private education will there be? I can ten you: very, very few.

Not until the blight so obvious in the government-operated schools has spread to the government-li censed voucher schools will par ents even consider bearing the second tax (vouchers) and find money to pay for an independent education. In short: vouchers are the most promising tool lor the suppression 01 independent private education now at the disposal of state educational bureaucrats. What will the price be? What may not have been clear to Prof. Friedman back in the early 1960's is clear to us now. We will have HEW guidelines operating in ev ery voucher-using school - equal opportunity policies, quota sys tems of every kind, teacher hiring and firing policies, racially and re ligiously mixed student bodies. There will be a whole army of Federal bureaucrats, not to men274 THE FREEMAN May tion state bureaucrats, policing every priv,ate school. The so-called private educational system will be swallowed up in a mountain of red tape. How much imagination does it take to see what is coming?

Isn't it sufficient to look at what our independent private colleges are now going through? Can you imagine the kinds of controls in store for schools that are set up to permit an escape hatch for the crumbling state educational mo nopoly - the most horrendous vis ible failure of socialism in Amer ica? The statist educators and poli ticians of Great Britain are call ing for the abolition of all inde pendent schools in Britain, not be cause they think the government schools will be improved, but be caus,e it is intolerable in a society guided by the politics of envy to let any class, any family, any re ligious group escape the blight of the socialist educational system. If the sons and daughters of the laboring class must suffer the ter rors of the government school sys tem, why should the sons and daughters of the rich be permitted to escape '? The logic is impeccable. After the Civil War we abolished the right of men to buy their way out of conscription by paying the government a fine sufficient to en list another man. This practice was" thought to be undemocratic.

The same will be true, I fear, for those who would escape conscrip tion into the public school system. Conclusion The state is not about to adopt pseudo-market schemes unless the bureaucrats believe that the adop tion of the scheme will remove competition from consistently in dependent private competitors. The state is not going to consider the latest pseudo-market proposal to come out of the graduate seminars of the pro-free market professors unless the scheme can be rewri t ten to enhance the sovereignty, power, and efficiency of those who would suppress the independence of private men. This should be the lesson of the age: statist ideo logues and their tenured hirelings do not commit suicide voluntarily. They do not abandon the ideology of the control economy simply be cause some new scheme promises to make the government benign or reduce the tax burden of the pub lic. Pseudo-market schemes, > pro moted in the name of the free market, are adopted by the ene mies of freedom for very specific purposes: to reduce the zones of freedom. Those who believe in in creasing all state sovereignty will adopt pseudo-market schemes only when they are convinced that the free market is too great a threat 1976 EDUCAT'IONAL VOUCHERS: THE DOUBLE TAX 275 to pure, uncompromising bureau cratic failure - the same reason why the Soviets allow semi-market pricing in a few restricted areas of the economy.

The state may adopt vouchers for education on an experimental basis, in order to test the scheme. If it does foster independent edu cation, vouchers will be scrapped. But they will not have to be scrapped. Vouchers may well be come a permanent fixture of our government education system. If so, it will be for a reason: the school voucher offers vast new powers of control over a vibrant and growing independent school system that threatens to undercut government schools. The great threat to freedom from school vouchers is that they strike at the heart of society: the family. As a pseudo-market de vice, they promise to be remark ably successful in destroying a tiny but im,portant pure free mar ket development. I am reminded of Lenin's dictum that if the com munists announced that all capi talists were to be hanged tomor row, the capitalists would trip over each other today trying to sell Lenin the rope. The profit system does not regard the origins of profits, at least short-run profits.

Men act to improve their positions in life. Private school administra- . tors and most of the private colleges have been eage.r to receive Federal aid; only a minority of a minority have held out against the lure of Federal money. (Their schools, it should be remembered, are very small and may grow smaller.) The lure of vouchers al most certainly will prove too great a temptation for thousands of our struggling little private schools. It may take another generation to recover from the defection of these schools, should that defec tion have an opportunity to mani fest itself. If vouchers are to be stopped, they will have to be stopped by parents who recognize the double taxation nature of the voucher scheme. Those who truly want in dependent schools and are willing to pay for them must not seek after vouchers, for vouchers are the very seal of doom for the in dependent school system. Pseudo market schemes generally lead to anti-market results. The opposi tion to vouchers must be made on principle and in opposition to the superficial logic of the pseudo market. He who is morally respon sible must pay. Abandon this prin ciple, and you abandon your sov ereignty as a free man. Good re sults stem from good principles.

Vouchers are an intellectual, mor al, and educational disaster. They will not work to expand the realm of freedom. , ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics, has a Masters de gree in business administration, has worked two years in Sweden, and now works as a professional systems analyst. He is a b~si nessman who is active in community and church affairs, is a free lance author, and is often called on to speak. He lives with his wife and children on a small farm just out side of Salt Lake City. All rights reserved. 276 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

L On Choosing Liberty Some historians have suggested that our nation is following a typi eal cycle vf formation, growth, influence, and decline. What we are seeing in our national crises then, is probably no more or less than the result of norma,z wear and tear, the natural consequence of life and time. But there arises 'here a la,rgely ignored yet terribly significant question of causes. Changes have been made, to the Constitution with the motivation to alleviate problems. So much is clear. But have. those changes created more troubles than they nwy have assuaged? As the machinery of government begins to break down, we hear that it is time to make further modifications or even to replace it. That c'Ould seem reasonable were we not c'onsidering one of the most amazing political machines in history. It would be the height of folly to incon siderately tamper with or lay aside the instrument of such extraordi nary human progress. Prudence suggests, rather, that (we seek counsel from the sources.

Although those men who framed our freedom are no more among us, there exists an extensive collection of their thoughts. It is the intent in this series of articles to draw upon those sources to show us a view of our political day as it would appear to the Founders. Listen, one is speaking ... I HAVE often been .filled with re gret that I and my fellows did not somehow make our position more clear, although I confess that I have been unable to discover any thing we might have done to make the true nature of our revolution plainer to you. We had no desire for revolution, and even less for an armed one. It was, simply stated, that King George offered us two very unhappy alternatives. It was our desire, and we spared no effort to manifest it, that we remain under the flag of England. We attempted every legal device to obtain relief from the arbitrary and abusive policies of the Crown, and at length resorted to some illegal ones too, before it became clear that we would receive no relief. We sought only to enjoy the natural rights of English sub jects, but the oppression of the King and Parliament forced us finally to raise our own flag and defend our liberty.

Some of your papers are as ir.277 278 THE FREEMAN May responsible in your day as some of ours were in our time, for you have been told, and by those who should have known better, that we were a "bunch of radicals, rebels, and extremists defying our estab lishment." There is but the small est shred of truth in that, for they neglect to remind you that we had enjoyed self-government with little interference from England for a century and a half (almost as long prior to my time as you are after it) before we were pressed to the wall and obliged to choose between tyranny and liberty. We wanted only to maintain that self government, not revolt against it, to re-'establish our rights, not to throw off a g'overnment just to prove some dubious principle. There was among us very little of that haughty defiance that marks your rebels. There was only a sad determination that we would have to exchange lives for liberty, and the joy 'of knowing that we had made the choice for which we would be proud whether we won or lost the approaching struggle.

You see, King George was the radical who set about to create havoc in our midst, but we re fused to submit. Radicals and ex tremists indeed! Here, here! You malign us ! We decided against our will (but according to our best judgment) to make a stand and regain our rights. Then we set our hand to the task ·of forming a gov ernment wherein it should have been very difficult for our condi tion to have been repeated. But alas, our fears for the wel fare of liberty in this nation were more founded in fact than we had ever wanted to admit, for your condition now is much too similar to ours then. We gave you a republic of states with sovereign powers in the necessary functions of govern men t and certain defined and lim ited powers granted to a small but effective federal government. But now that government is drawing authority and influence to itself at an alarming rate, and threatens, if allowed to continue unchecked, to even overshadow England's former abuse of the colonies. But there is a cause to all this.

The King used his prerogative to pamper and flatter his vanity by plundering our wealth and heaping unto himself the products of our labor. Some of your public servants, particularly in the last several decades, have rediscovered that ancient craft. Do you not see that they defraud you of your riches and gratify their own con ceits? They abuse the necessary power of taxation to take your wealth, then use it upon you to plan and regulate your economic, social, educational, and even your 1976 A NEW MESSAGE - ON CHOOSING LIBERTY 279 moral and religious life. These high-minded politicians fancy themselves wiser than you. They would transform our republic into an aristocracy! For our ruler, it was the most presumptuous vanity to think that because he was King he was judge and lawgiver, that his will had the weight of natural law. Your rulers today suffer under a similar but more subtle delusion. They have pollt their noses to the books (with all their high-flown and compli cated ways of describing the sim plest things) and studied law, sci ence, economics, sociology, statis tics, and the science of politics, yet they, with all that learning, have more than anything else learned the conceit to fancy them selves better prepared than you to govern your life.

And what is the source· of all their learning? They have not properly studied the rise and fall of nations, but prefer to teach one another their favorite new theories of governments and so-called so cial orders. New indeed! Those theories are old as the Theodosian Code of ancient Rome! We con sidered them unfit and with one mind rej ected them. They are all aged forms of oppression and pill age of the people by the aristoc racy. Beware of them! They have not comprehended the most fundamental of truths; that the essence of the republic we gave you (which they persist to call a democracy, a government we carefully shunned) was, that only the people have the right to gov ern the people; that whatsoever is more or less than this is either oppression on the one hand or anarchy on the other. They have lost faith in the ability of the peo ple to choose what is best for themselves. But what is more, they do not perceive that even if the people fail to choose the best, it is nonetheless far to be desired to be free and be wrong than to be a slave and be perfect.

Now stand back here with me, if you will, and view our nation as I see it. When the Constitution was first applied, a sense of order, uni ty, confidence, and peace came uvon the land that far surpassed our most eager expectations. It was sublime beyond our ability to describe. The new nation rose powerfully and maj estically; the eyes of the world were upon it. In a few decades that laughing stock of governments became the most compelling political mecca. It was the hand of Divine Providence made manifest to the great bless ing of the society of mankind. Now observe how, as the fun damental principles of the Consti tution were tampered with (by amendment and by what I must 280 THE FREEMAN Mary call judicial usurpation), the work ings of that carefully balanced engine of state began to falter. That faltering seemed to demand yet more change. And more rap idly and frequently the changes have come, and always they have brought you more troubles and only made matters worse. Can you see how, through the years your despair has grown in ratio with your alterations and violations of the Constitution? It is quite obvious from where I stand.

Though I desire it not, I am com pelled to chide you f.or this. We were careful to warn you, yet you heeded not. But I tell you, your shortsighted cures have caused your disease! Your learned men tell you more reforms are desperately needed now, and well they might, for in that they are correct. However, when you inquire of your politic ians as to where the source of your problems lies, they answer only what they themselves are wont to believe: "times have changed; things are different now; the world is smaller; things are a lot more complicated now" (they have seen to that!), and on and on. Ridiculous! A poor sham! But you must recognize that their al ternatives are few, for they know that it is either that times have c:Q.anged or that their wisdom is foolishness. Of course times have changed, but that is hardly relevant to the question. I will show you why. First, the Constitution was not based upon any particular eco nomic or social order (as some have claimed); we assiduously avoided that, for, you will recall, we had only recently fought a bloody and disC'ouraging war to secure our liberties, and we ear nestly desired that you, our chil dren, should be spared such a necessity whatever your social or economic system might become.

Nay, 'twas not that at all. The Constitution was built upon a painful recognition of the folly and mischievous nature of man: hence the checks and balances. Second, we recogni'zed that there are only two legitimate sources of the power to govern: the Creator and the people. When ever men have acknowledged any other power, they have submitted themselves to one form or another of tyranny. It is really quite that simple. N'ow you, my sons and my daughters, you stand in a middle ground having on the one hand the protections of the Constitution and the ability still to us,e it to reestablish government by the people, and on the other hand you have drifted at an ever-quickening pace back toward the oppression 1976 A NEW MESSAGE - ON CHOOSING LIBERTY 281 that we managed to throw off. You must awake and gather your strength. You have so long en joyed the peace and prosperity of your freedom that you have gone to sleep.

Up now, and clear your heads! The die is cast for you too. Your government is nearly out of your control. You too must submit or triumph. Thank God you will not be required to pay the price we paid if you will be about the busi ness of your government and not leave it to your over-eager learned men. If you will move carefully, intelligently, and without undue delay, you may effect the salva tion of what is still far and away the most legitimate government on the planet. Be aware however, that your .danger is more than considerable. If your government should gain the upper hand in your day with all its instantaneous communica tions, statistical projections, psy chological drugs, and computers with unfailing memories, it could put to naught the combined tyr annies of the centuries for control, not only of your property and the products of your labor, but of your very deeds and even your thoughts.

You must make your drive :for freedom, lest by default you allow the prevailing forces to propel you back down and return you Sons of Liberty to the dungeon from which we so recently redeemed you by the sacrifice of our fortunes and our lives. I will give you the counsel Moses gave our forefathers wherein he exhorted them to elect wise men of understanding whom they knew to be true. Seek out men of that nature! There are men among you with that requisite wisdom and integ rity to lead you back to the full freedom whence you have come; but of even greater significance, these men, when you find them, will lack the presumption to seek to be your protector and savior and to have the glory and honor of caring for your every need. These men will desire only to be free men, and to allow all men the op portunity to lift themselves (with the help of Divine Providence only) by their own diligence, even though that opportunity must also give them the equal chance to falter and fail. Yes, there is the substance of your choice and the essence of your challenge. And in that connection I will remind you that we gave you for the symbol of our nation, not a well-tended goose in a cage, but an eagle : free, unfettered, independent, and close to God. ~ Next: II. On Human Rights and Gov-crnment HANS F. SENNHOLZ GOVERNMENT SPENDING seems to be an all-purpose remedy for eco nomic and social ills, the key to important political ends. The world of scarcity with which man always has struggled is finally giv ing way to a fabulous world of fulfillment and plenty.

In the world of reality, every economic good must be produced by man and his capital in coop eration with nature. In order to consume more, man must produce more unless he is prepared to eat into the capital substance that is helping to produce the goods. Cap ital refers to the monetary net amount of all the productive assets of an enterprise, which may con sist of anything from cash to re ceivables, inventory, tools and Dr. Sennholz heads the Department of Eco nomics At Grove City College and is a noted writer and lecturer on monetary and economic affairs. 282 equipment, or even land and build ings. The amount of capital invested per head of the population basical ly determines the prod ucti vity of our labor, wage rates, and stan dards of living. We speak of a progressing economy when the per capita amount is increasing, which causes income to rise through an expansion of produc tion. And we speak of a contract ing economy when the amount of capital per person is shrinking, which reduces incomes and stan dards of living.

Every day we either accumulate capital through saving or reduce it through overconsumption. Busi nessmen either form capital through reinvestments of their earnings or dissipate it through losses or overconsumption. Every day total productive capital in the 1976 CAPITAL CONSUMPTION 283 U.S. either expands or contracts, which causes labor productivity to rise or fall, and incomes and living standards to move accordingly. The growing popularity of many government programs rests on the inability of the public to under stand the nature and importance of capital. The redistributive polI cies of the U.S. government have consumed productive capital on a massive scale. At first, these poli cies merely slowed down capital accumulation and improvement in the rates of production. But with the acceleration of government spending in recent years, it ap pears now that the U.S. has em barked 'upon net consumption of c(J)pital that was accumulated in the past. If this conclusion is cor rect, our redistributive policies have arrested further economic progress and now are reducing our wage rates and standards of living. Neither law nor regulation can prevent pernicious poverty if we choose to consume our capital substance.

We are today heirs and benefi ciaries of the capital that was formed by our forebears. We are better off than earlier generations of Americans because we are working with capital goods that they created and accumulated for us. But if, for any reason, our generation chooses to consume more than we produce, we must prepare for reduced living condi tions and all the social and polit ical consequences thereof. And our children must learn to face fur ther poverty and deprivation. The Taxing of Progress With the growing popularity of redistribution by political force, all levels of government have em barked upon specific policies of capital consumption. Their favo rite tool at first was taxation of the income and wealth of rich cap itaIists and entrepreneurs. From a modest beginning in 1913, the Federal income tax rose steadily from one per cent of per sonal incomes above $3,000, or $4,000 for married couples, plus surtaxes of 6 per cent on incomes of $500,000 or more, to a maxi mum personal income tax rate of 94 per cent in 1944. Corporate income taxes soared to 90 per cent of "excess profits." Simultane ously the Federal tax rates on larger estates rose to 77 per cent, on top of which the states may claim their shares. It is true that in recent years individual and cor porate income tax rates hav,e come down a little; but a variety of other taxes, from social security to state and local taxes, have taken even larger shares.

No matter what the motivation, this confiscation of the incom,e and wealth of millionaires must have 284 THE FREEMAN May certain economic and social con sequences. Corporate income may be distributed as dividends to owners or reinvested in business activity, that is, in capital goods that continue to render productive services. Expanding enterprises tend to reinvest most of their earnings in the business. Now, confiscatory taxation surely re duces the amount of revenue that can be reinvested in productive assets. And it curtails the divi dends paid to stockholders and thereby reduces the savings that are reinvested. Progressive income taxation has the same effects. Most successful businessmen with large incomes make large investments, that is, they convert income to productive capital which renders additional services. Confiscatory taxation ob viously curtails this creation of capital and thus prevents produc tion of goods and income. Labor productivity and living standards are debilitated as the taxing au thoritiesconsume this income.

Inheritance taxa tion to a large extent is an outright confiscation of productive capital. The wealth of a multimillionaire mainly con sists of business assets that are producing goods for millions of customers and giving employment to thousands of workers. What the wealthy person holds to consume, such as his housing and clothing, usually constitutes a tiny fraction of his total wealth. Confiscatory estate taxation is bound to fall preponderantly on his productive assets, which means that the tax ing authorities directly consume productive capital, and thus limit living standards and employment. And finally, the taxpayers are influenced by the fear of such tax rates. Instead of making more productive investments - the prof its of which are destined to be seized, or worse yet, the substance of 'which will some day be claimed by estate tax collectors - the indi vidual may prefer to consume and enjoy the wealth himself. Why strive and struggle if the fruits will be reaped by tax collectors?

Why preserve his capital for the benefit of politicians and their beneficiaries? Deficit Spending When the public demand for government services and benefits grows beyond the ability of busi ness and weal thy .taxpayers to pay, budgetary deficits become un avoidable. After all, the popularity of redistribution by political force tends to grow with every dollar of "free" service rendered. The clamor finally becomes so intense that, in order to be heard, every new call is presented as an "emer gency" that must be met immedi ately before all others. R,edistribu1976 CAPITAL CONSUMPTION 285 tive government then rushes from one emergency to another trying to meet the most noisy and polit ically potent demands. As no one wants to pay for the new expen ditures, least of all the benefi ciaries, the transfer administra tion is bound to suffer budgetary deficits. When a corporation suffers losses for long periods of time, it inevitably comes to the end of its capital substance and ceases to op erate. Any remaining assets will be distributed to its creditors.

While government deficits may not throw the government into bank ruptcy, they nevertheless have economic consequences. They des troy productive capital. Indeed, the deficits of the U.S. govern ment have consumed, and continue to consume, capital substance on a seale far greater than all losing enterpris'es combined. In the dec ade of the 1950's total U.S. gov ernment deficits amounted to a mere $17.7 billion. During the 1960's the total was $56.9 billion. Deficits during the first half of the 1970's soared to $71.4 billion, and, as if they were following an exponential curve, in fiscal 1976 alone are expected to exceed $74 billion. It is difficult to estimate the number of f'actories and stores that were not built, the tools and dies that were not cast, the jobs not created, the wages not paid, the food, clothing and shelter not produced on account of this mas sive consumption of capital. This generation of Americans and countless others to come will be poorer by the productive capacity that could have been, but was not created.

Of course, the beneficiarlies of the redistribution process may have enjoyed every moment of it. Among m'en lacking vision, to day's enjoyment is always more pleasurable than saving for to morrow. They may applaud the very favors and handouts that are destroying their jobs and the wages they could have earned, and costly emergency programs may be hailed as progress -though they yield the opposite. The bank or insurance company that is invest ing the people's savings in Trea sury bonds, notes, or bills may be enjoying "safety" for its invest ments. What is significant is the fact that it is channelling poten tially productive saving,s into the maelstrom of government con sumption. The returns it seeks from its investments will not come from new production but from taxes to be collected in the future. In dim awareness of the im portance of capital, some social spenders are quick to maintain that government spending is mere286 THE FREEMAN May ly another form of investing.

Therefor,e, they want government to "invest" in a greater society that is to be built by political force and redistribution of prop erty. Their judgment of what is most urgent and important is to prevail over that of all others. All such planners are would-be dictators. No matter what the ob jective, government expenditures always constitute economic costs that are borne by taxpayers, len ders, or inflation victims. Even when the government builds roads or canals, utility plants or air ports, the expenditures invariably flunk the tests of the market. De manded by voters, authorized by politicians, and administered by bureaucrats, public works consti tute huge malinvestments that waste scarce resources and con sume productive capital. Inflation Destroys Capital When the redistributive society has exhausted its favorite vic tims - wealthy taxpayers and lenders - it can be expected to resort to inflation as a desperate method of fund-raising. The infla tion then taps the savings of the middle class whose material wealth mainly consists of monetary assets and claims. It destroys the capital markets that provide the neces sary savings for the expansion and modernization of productive enterprises. And above all, it causes businessmen to overesti mate their earnings, overpay their taxes, and consume their fictitious profits.

When the purchasing power of money depreciates, all claims de preciate at the inflation rate. Cred itors los'e and debtors gain. Now the creditors - for instance, phy sicians, dentists, attorneys, busi ness executives, and all others holding savings bonds, life insur ance, pension funds, and the like - may, in spite of their inflation losses, endeavor to maintain the levels of consumption to which they have grown accustomed. The physician whose Keough fund has lost half or more of its purchasing power, will not sell his home or automobile or postpone his vaca tion because of his inflation losses. On the contrary, in reaction to his losses, he may save less and consume more because of the ap parent "futility" of saving. Or, he may want to hedge against further lossles by investing in dur able goods, which do not enhance the capital supply. On the other hand, the debtors who are gaining from the debt depreciation may immediately raise their consumption. The gov ernment whose real debt, let us say, is cut in half will surely in crease its spending. In fact, it may be tempted to add more debt 1976 CAPITAL CONSUMPTION 287 until its old level of real debt is restored. Most individuals t,end to react the same way. The house owner whose mortgage debt has diminished to insignificant month ly payments may buy new furni ture or appliances. His consump tion rises as his debt decreases.

Corporate Losses Corporations, which as a class are the largest debtor, lose most of their inflation gains to tax col lectors, labor unions, and their customers, all of whom are eager to boost their consumption. As prices rise taxes rise at progres sive rates. When corporate income doubles on account of the inflation, the multiplicity of corporate taxes will surely more than double. La bor unions will make massive de mands that are to compensate them for past losses and antici pated losses during the life of the contract. And finally, customers may reap inflation gains as corporations tend to pass their gains from debt depreciation on to their customers. After all, when a bank loan falls in value or a corporate bond loses in purchasing power, a corpora tion usually does not raise the prices it charges its customers. On the contrary, facing the com petition of many other enterprises reaping similar gains, the corpo ration may keep its own prices lower than it otherwise would.

This means that customers pay prices that do not fully cover the rising costs of capital. Only grad ually, when the inflation raises interest rates and corporations faee higher interest charges on new loans, do business costs rise and ultimately the prices of goods. Thus, corporate customers are reaping gains at the expense of corporate creditors, gains that may find their way into additional consumption. Only a small fraction of the capital lost by creditors may be retained as productive capital by the corporation. Capital Markets Disappear Inflation destroys the capital markets. Surely, there are always debtors eager to borrow money at "low" interest rate~, that is, at rates that do not fully compensate the lender for the anticipated in flation losses. But the number of credi tors willing to lend their funds at such rat.es tends to shrink with progressing inflation. Instead of suffering losses, the would-be lenders may prefer to consume their funds, or invest them in dur able goods that may rise in price rather than depreciate in purchas ing power.

Thus, the capital market tends to wane and economic expansion is checked for lack of capital. In fact, there may not even be enough 288 THE FREEMAN May capital to maintain the apparatus of production if business should fail to earn sufficient profits to re build and replace the capital goods that were used in the production process. In countries that are plagued by chronic inflation, as in Asia and South America, long-term capital markets have long ceased to exist. Consequently, new plants and en terprises requiring large invest ments of capital cannot be built, labor productivity cannot rise and living conditions are destined to remain at misery levels. Inflation makes economic calcu lation nearly impossible, which in variably causes businessmen to overestimate their earnings and overpay their taxes. Both account ing convention and tax legislation permi t businessmen to treat as costs only those costs of capital that were expended in the pas,t.

But economic action always aims at future provision of goods and services; the past is significant only as it provides the m'eans for future action. The fact that a cer tain item of capital equipment cost $1 million five years ago is irrele vant for business decisions if it costs $2 million today. If only $1 million were set aside for its re placement the production process cannot continue. But tax account ing only depreciates past capital costs and thus during inflation understates present costs and over states business earnings. Earnings Overestimated, Taxes Overpaid The overestimation of American corporate earnings in ree-ent years runs into tens of billions of dol lars. Capital intensive industries, especially, are badly air ected by this delusion, leading to massive capital consumption. To illustrate the point, let's take a chemical company with capital facilities of one billion dollars earning 20 per cent before taxes, but after taxes only 10 per cent or $100 million per year. If the facilities need to be replaced on the average of every five years, our company will depreciate $200 million per year.

Let us now assume that in a given year inflation raises the costs of the capital equipment by 25 per cent, which is a realistic assump tion today. Our company needs $250 million for replacements this year and every year thereafter. If capital goods prie-es continue to rise at the 25 per cent rate, it will need $312 million in the following year, $391 million in the year thereafter, $488 million in the fourth year,and $610 million in the fifth year - altogether $2.051 billion in five years. But in order to accumulate this amount for mere capital rep,lacement, in order to earn the extra billion dollars in 1976 CAPITAL CONSUMPTION 289 five years, its profits after taxes would have to rise by $200 million per year, that is, from $100 mil lion to $300 million, and its gross profits before taxes would have to soar from $200 million to $600 million. Only a 60 per cent gross return on capital could maintain its substance; anything less would lead to capital consumption.

Few companies are enj oying such profits today. Most business men are happy to earn their "nor mal profits" regardless of the ris ing costs of capital goods. They continue to calculate w,ith capital costs of the distant past and thus arri ve at earnings that are greatly overstated, and at overestimated tax liabilities that further reduce the meager returns. Only when specific replacements of capital goods are made, per haps with the help of loan capital, do present costs appear on the company ledg ers and depress the calculated earnings. F·ew capital-intensive enter prises today are earning returns that fully cover the higher costs of capital. This is why capital spending by American business is declining year after year. Even a Commerce Department survey ad mits that projected spending in 1976 won't keep pace with the rise in capital-goods costs. The spend ing projection suggests a decline in "real" spending of about 5 per cent, which fol1ows a decline of more than 10 per cent in 1975, the worst in 14 years. (Cf. The Wall Street Journal, Jan. 14, 1976, p. 3). The situation is even worse when we bear in mind that some of these capital expenditures are made by industries that cater to growing government consumption or are making mandated changes to meet the requirements of gov ernment regulations and controls.

Such capital spending surely does not increase the stock of capital goods that are producing economic goods and services. They actually consume capital and thus lower the productivity of labor. The businessman who, because of underdepreciation, overstates his earnings and overpays his taxes, may blithely consume his capital. After all, as goods prices rise he may allow himself to be impressed and deceived by his ris ing dollar profits and therefore in dulge himself with higher outlays for consumption. While he is en joying his "profits" he may actu ally be eating into his capital substance. The Business Cycle The boom and bust cycle, which is an inevitable consequence of in flation and credit expansion, is a powerful destroyer of capital. The administration that resorts to such· policies must be charged with 290 THE FREEMAN May the responsibility for this capital destruction. When the monetary authorities create new money and credit in order to stimulate economic ac tivity they set in motion a causal chain of ominous events. Let us say they, as lenders of last resort, are financing a $75 billion Federal deficit. They either acquire Trea sury obligations directly in ex change for newly created funds, or they extend new credits to banks who then purchase the Trea sury obligations.N 0 matter how it is done - directly or indirectly the Treasury comes into possession of newly created purchasing power that enables it to buy more com modities and services. It thus withdraws real goods from other members of society, from consum ers as well as buslinessmen. Every one who is not a recipient of the newly created deficit funds must now tighten his belt as govern ment is consuming a larger share of production.

When the monetary authorities engage in credit· expansion in or der to stimulate economic activity they destroy capital on a massive scale. The newly created funds, i.e. fiduciary credits, that are in jected into the banking system tend to disarrange the whole pro duction process. They lower in terest rates and thereby misguide business in all its investment decisions. After all, the market rate of interest is an important guide post for business, and an impor tant item of cost that determines the profitability of activity. Whether a time-consuming project can be embarked upon largely de pends on the rate of interest. false Signals When our monetary authorities inject fiduciary credits, interest rates tend to fall. That is, they falsely indicate the existence of savings that in reality were never made. Misguided by such low in terest rates, businessmen may be led to embark upon investments that later will be disastrous. After all, the real savings are not avail able for a new round of expansion and modernization; the guidepost has been misplaced. It causes busi ness to launch an economic boom amidst confusion and delusion.

Many expensive projects are un dertaken that later will prove to be costly malinvestments. The mistakes become visible as soon as the prices of the factors of production, which are business costs, soar on account of the boom while consumers' goods prices fail to keep pace with the former. Profit margins are squeezed or turned into losses - powerful re minders of the mistakes that were made. Businessmen may then be forced to abandon their expansion 1976 CAPITAL CONSUMPTION 291 proj ects for which there was no economic demand; many may fall into bankruptcy. Massive amounts of capital are written off - that is, are permanently lost. A society that indulges in such destructive policies must pay the price in the form of lower labor productivity, lower wage rates and a lower standard of living. Government Regulations It will never be possible to cal culate the economic costs of gov ernment regulations. A few are visible, but most are hidden in the dimension of economic action that never took place on account of the government interference. The or der that closes a factory may cost little in bureaucratic expense; even the capital losses to owners may be moderate. But the reduction in public well-being which the fac tory used to serve, the goods no longer produced, the wages no longer paid, the income no longer earned, the savings and invest ments that will never be made, these are incalculable real costs that may greatly surpass the visi ble losses.

Government intervention by law or decree may assume several forms: it may be directly prohibi tive or restrictive as it forcibly prevents economic production. It may weaken competition through licenses and franchises, or even create cartels and monopolies. It may impose additional costs on the production process. The U.S. En vironmental Agency, for instance, may want American industry to spend some $32 billion in order to reduce the occupational noise limit. And finally, the regulation may interfere with business manage ment and efficient application of land, labor, and capital. All such controls and regulations tend to reduce economic productivity, de press wage rates, and lower our standard of living. Capital is consumed when, for any reason, the capital goods ex pended in production are not re placed. If we consume more than we produce, we dissipate the pro ductive wealth accumulated in the past. Or, even if our consumption should stay. the same, but produc tion falls below our consumption levels, we are eating into our sub stance.

In the United States we are at tacking capital on both fronts: our political institutions are pressing continuously toward higher levels of consumption as most politicians are clamoring for ever greater government expenditures; and production is falling off because of costly government intervention. The Environmental Decade The 1970's are supposed to be the "environmental decade" - ten 292 THE FREEMAN Mwy years devoted to cleaning and mending our environment. The laws and regulatory actions of the 1970-1975 period alone are esti mated to cost industry some $300 billion in addition to the major costs the taxpayers will be forced to bear. All such costs are "unpro ductive," meaning that the ex penditures consume business cap ital without generating new production and income. Production costs per unit of output are not lowered, but raised, which causes real incomes to decline. F. C. aIds, senior editor of Power Engineer ing magazine, estimates that pres ent environmental protection la.ws are costing every American family $2,000 a year. (Pow'er Engineer ing, September 1975, p. 38 et seq.) If such costs merely were to reduce our incomes they would not de stroy capital substance. But the $300 billion which industry must spend is business capital that will never be used to produce economic goods.

According to a recent report of the U.S. Council on Environmental Quality, pollution control is a growth industry that has created roughly one million jobs during 1975. (Chicago Tribune, January 6, 1976, Section 2, p. 4) If this should be true, we cannot escape the conclusion that this new in dustry with one million workers is busily consuming the capital substance of the productive indus tries rendering economic services to consumers. It cannot be sur prising then that while the former is prosperous and growing, the latter industries are lingering in stagnation and recession. This is not to imply that en vironmental pollution is prefer able to clean air and water. On the contrary, let us favor full alloca tion of the total costs of property to its owners. As the undiminished benefits of an economic good should accrue to its owner, so should the costs be borne by him. But rather than rely on govern ment regulation and an army of bureaucrats, let us rely on the safeguards of contract and the jurisdiction by courts of law. And let us seek to reduce the sphere of public property which is the prin cipal source of environmental pollution.

Regulatory Agencies Government regulation dis sipates capital directly through im position of capital outlays,and in directly through restrictions of productivity that reduce income, saving, and investment. The Amer ican cartels are cogent examples of the latter. Through compulsory government licensing and rate making, government agents control the railroad industry, the motor carriers, water carriers, freight 1976 CAPITAL CONSUMPTION 293 forwarders, air carriers, power generation, and broadcasting. Fur thermore, government is manipu lating labor and management in order to achieve its political and economic objectives. The Na tional Labor Relations Act of 1935 and 1947, the Fair Labor Stand ards Act of 1938, the Employment Act of 1946, the Occupational Safety and Health Act of 1970, the Comprehensive Employment and Training Act of 1973, all are de signed to prevent the application of labor according to the efficiency dictates of the market. Extensive government control over agricul ture is preventing this important industry from working efficiently for its worldwide markets. And finally, the recent government takeover of energy production and distribution places all indus tries in serious jeopardy.

It is the very objective of such controls to interfere with efficient economic production. After all, if we equate profitable production for the market with economic effi ciency, then government interfer ence with this production must necessarily be ineffi'cien t and costly . It is costly to consumers who pay more for fewer goods, and to producers who may suffer losses in income and capital. A small reduction in business income· entails a large loss of capital. After all, it is the yield of capital that determines its market price; a $1 million reduction in income, for instance, may lower capital goods prices by $10 million. A reg ulation that completely idles a pro ductive enterprise completely de stroys its productive capital, or at least reduces it to the salvage value of its component parts. Labor Unions Capital can be formed only by saving, that is, a surplus of pro duction over consumption. An en terprise that enjoys an excess of proceeds over costs earns a sur plus, commonly called profit, some of which usually is plowed back into production. Profitable enter prises tend to grow; unprofitable ones must contract.

Labor unions owe their exist ence to the doctrines and notions of labor exploitation. They are pressure organizations of mem bers who are afraid to stand alone in the economic world of competi tion. Through strikes and threats of strikes they aim to achieve one basic objective: to improve the lot of their members through higher pay and benefits, or through lower output and less work. In every in tance, labor unions endeavor to raise the costs of production. Productive business capital is consumed in nearly every phase of union activity. A strike may severely drain the working capital 294 THE FREEMAN May of an enterprise. After all, most business expenses continue al though production is halted. Pro ducti ve property may be damaged or even destroyed. And when the strike is finally settled, the costs of labor usually rise substantially. The hourly pay of union members as well as their fringe benefits, such as paid holidays, vacations, health and dental care, pension funds, and the like frequently double labor costs in just a few years. For the average General Motors hourly employee in the United States, the so-called fringes now come to $4,500 a year. (Re marks by Thomas A. Murphy, Chairman of General Motors Cor poration before The Economic Club of New York, Nov. 12, 1975).

But this is not all. The work rules to which the company must submit under the new contract may prove to be even more costly as manage ment loses its abilty to manage labor efficiently. The seniority rule may prevent a more efficient younger worker from performing a task. The "bumping right" of a senior worker may even cause the younger man's dismissal. Manage ment must helplessly watch the replacement of its best workers by senior union workers, the substi tution of inefficient work rules for labor efficiency, or the application of unproductive methods and tools of production. And finally, the job discipline tends to suffer as union members may feel protected from managerial direction and super vision. The demands and tactics of mHi tant labor unions invariably re duce the expansion of profitable enterprises as business profits are turned into labor expenses rather than productive capital. Marginal enterprises that are burdened by new labor costs now suffer losses that dissipate business capital.

And enterprises that were suffer ing losses even before the union extracted its coercive costs may be forced out of business. In each case, economic output is reduced and productive capital is con sumed. Capital Consumption Tends to Accelerate Every day, one's economic con dition either improves or deteri orates. It is unlikely that anyone's condition would remain unchanged, as income and consumption are in dependent continuous processes that rarely balance each other. Even if your savings and cash holdings should stay the same day after day, you probably are suffer ing a decline in living conditions as your consumers' goods, such as your car, refrigerator and shoes, are wearing out. The same is true with business. Every day a busi ness enterprise either accumulates 1976 CAPITAL CONSUMPTION 295 capital through saving, or reduces it through overconsumption. In a prosperous society with high rates of productivity and income, many people are in a position to save and invest. After the most impor tant needs are met, a part of in come is left for productive im provements. On the other hand, in a poor country it is more difficult to save and invest. In India, which reports a per capita income of $98 per year, it is more difficult to save $50 than in the U.S. where individual incomes average some $6,000. In fact, we can easily make Inore productive improvements, that is, spend more money on new factories, stores, machines and equipment, than the average Hindu is earning. This fact, to gether with the insti tutional handicaps that cause some coun tries to be so poor in the first place, explains why the difference in living standards between vari ous countries continues to widen.

As economic improvements may accelerate through ever higher rates of saving and investing, so' may we see an accelerating process of capital consumption and eco nomic decHne. No matter what our incomes may be, if we consume more than we produce we are eat ing into our productive substance. And once we consume capital while stubbornly clinging to old levels of consumption to which we have grown accustomed, we descend at ever faster rates. The stockholder who liquidates some stock in order to supplement his dividends for liv ing expenses faces lower income in the future. If, nevertheless, he maintains his living standard he will have to liquidate his holdings faster and faster until the last share is sold. Obviously he could halt his impoverishment at any time, or even restore his fortune, through suitable curtailment of his living expenses. Changing the Body Politic For a future-oriented, deter mined individual, it may be rela tively easy to readjust his con sumption to falling income. But for a society consisting of millions of voters who are bent on redistri bution and consumption through the political apparatus, this read justment may be rather difficult.

If the public is indifferent or unin formed about the significance of productive capital, the political pressures for government benefits and services may gro,w when in comes are falling. The very forces that are debilitating productive capital through overconsumption are likely to oppose any reduction in consumption. They may move heaven and earth to maintain their spending levels which, after all, com,e from "social benefits and services" to which they believe 296 THE FREEMAN May they are morally and politically en titled. Thus, the process of dissi pation once begun feeds on the public pressures for simple pr'eser vation of the economic way of life to which we have grown accus tomed. If declining productivity and incomes should finally cut into those benefits and services, the beneficia.ries may ris,e in anger a.bout the sudden "violation of their rights." There ,could be social disturbance and disruption of the production process, which would reduce output and income even further, which in turn would again aggravate the social situation - a vicious circle of frustration and decline!

But even without this particular social force of acceleration, we may consume productive capital at accelerating rates. Many people react to declining real incomes from employment by producing less. They may even blame their employers, those "greedy" and "ruthless" merchants and indus trialists, whom the demagogues will be quick to condemn for the decline. Absenteeism, slowdowns, work stoppages, featherbedding, and other restrictive work prac tices may grow worse. But lower output on account of lower labor efficiency raises labor costs and dissipates business capital. Only greater output through harder, more efficient work can arrest the decline. In Spite of It All Facing such powerful restraints on his creative energy, why does man not just surrender? Why does he struggle against all such odds to preserve his material well-being instead of consuming it in the pleasures of the moment? Why, in spite of this massive capital con sumption by our political institu tions, do we continue to enjoy a standard of living that is the envy of the world?

It cannot be the nature of man that continues to guide us to high incomes and relative prosperity. For the vast majority of human beings throughout history have lingered in abject proverty and suffering. It cannot be a racial characteristic of the whiteman, for he, too, has lived with hunger and misery throughou tmost of his history, and millions still do today. It cannot be the natural resources at our disposal, for countries that are poverty-stricken may be rich in such natural resources. The an swer must be sought in the moral antecedents to economic freedom and prosperity. Honesty, integrity, independence, self-reliance, respect for the rights of one's fellowmen and their property, the ethos of work and thrift, and genuine con cern ror tomorrow continue to live 1976 CAPITAL CONSUMPTION 297 in the hearts and minds of millions of people. The moral values that gave birth to our political and eco nomic order with its democratic institutions and the private prop erty system in production are still alive and continue to guide many Americans. Attacked and wounded, shackled and mutilated, their in dividual enterprise system con tinues to deliver more goods, affords higher incomes and better .living conditions than any other system now or ever before. And although many Americans no longer embrace its moral anteced ents, they are naturally cautious in eradicating all remnants of such a system. While enjoying its rich fruits, they may question its vari ous pillars, but are reluctant to bring them down all at once.

Thrift and Industry Bring Forth Economic Progress To avoid gradual inlpoverish ment, we must reverse this omi nous trend· toward the consump tion of our substance. If we seek to improve our working and living conditions and to give a better eco nomic life to our children and fu ture generations, we must save and build now. We must curtail our appetites for present enjoy ment and allocate a share of our earthly goods to production for the future. No matter what a man's motives for saving may be, he not only serves himself but also benefits society. Even the miser who saves more than other people deem ap propria te, clinging to his savings in growing cashholdings, renders a valuable social service. His act of saving allows a supply of goods that were produced to be available for further production activities. But most people who save part of their incomes ei ther deposit their savings in banks and other thrift institutions, or directly purchase more factors of production. In each case, saving may directly be turned into capital accumulation.

The farmer who builds a fence or barn or buys a tractor is creating capital that renders his labor more productive. The merchant who im proves his store or enlarges his in ventory is forming business capi tal. The oil company that builds a refinery or service station is creat ing capital goods that render hu man labor more productive. And the refinery worker who deposits his savings in his bank or credit union helps to create productive capital as some of their reserves are invested productively, yielding incomes on the investments. A.society that looks upon thrlift and frugality as social virtues, that believes with Benjamin Franklin "if you know how to spend less than you get, you have the philosopher's stone," such a 298 THE FREEMAN May society cannot escape the rich re wards that come from capital for mation. On the other hand, a so ciety whose habits are not thrifty will soon be poverty-stricken.

Our economic well-being depends on our ability to master the world of production which depends on our power of work. Man must work, which is as certain as life and death. In order to earn more, he must produce more. And he can always work more in order to pro duce more, which gives him the means to create the capital for ever higher productivity in the future. Work is not a curse; it is the only means to sustain and im prove human life. Work, hard work, and long hours of work are the parents of prosperity. The Blessings of Work A society that looks upon labor as a bleE?sing that brings happi ness and ennobles all those who labor, reaps rich rewards in eco nomic prosperity and progress. After all, .the greatest economic asset of any people is the determi nation and courage to work. On the other hand, a society that frowns upon work as a curse or man's device of exploitation is des tined to be poor and wretched. As the man who lives in constant fear of exploitation and does not work for the love of work, but only for money, is likely to be poor and dej ected, so is a society of such in dividuals likely to be plagued by poverty and torn by strife.

Man's thrift and industry yield rich fruits, even though his body politic indulges in profusene,ss and encourages idleness. In fact, when the political institutions embark upon the consumption of economic substance, it becomes all the more important for the individual to preserve his productive capital through greater thrift and indus try. And when the amount of cap ital invested per head of the popu lation begins to decline, with ever lower real wages and standards of living, the individual may en deavor to offset the social decline through rising personal produc tivity. Indeed, he may successfully swim against the stream as long as the current of decline does not surpass his own forward move ment. When individual thrift and in dustry decline, man's political in stitutions invariably reflect his changing aspirations. The govern ment of profuse and idle men in dulges in capital consumption and sanctions idleness. To reverse our ominous trend toward poverty and conflict, our political institutions must learn again to live within their present circumstances. For no society can he rich whose ex penditures exceed its means.

All present policies that con1976 CAPITAL CONSUMPTION 299 sume productive substance must be abandoned. Confiscatory taxes that prevent the formation of pro ductive capital must be repealed. The deficit spending that consumes the peoples' savings must be halted immediately. The infla tion that is destroying the life's savings of millions of thrifty Americans must be abhorred as a crime against economic well-being and social peace. The business cycle must be prevented through resort to sound and honest money. The countless government regulations that are impeding economic productivity and consuming business capital must be repealed and bureaucratic labor returned to productive em ployment. And finally, the legal immunities and privileges of labor unions must be abolished and labor disputes returned to the courts of law. In short, government must remove its numerous shackles on the creative energy of man. i IDEAS ON LIBERTY How to Attract Capital THERE IS NO REAL SHORTAGE of capital in the world, and I do not know of any major project which has been held up solely because of the lack of money. Capital is plentiful wherever it is "wanted and well treated." The real bottleneck in the development of the world is the shortage of human capital: people with the skill, training, and education intelligently to employ the world's re sources.

The facts are that when political freedom and free enterprise spread, markets increase, and that the expansion of markets is only prevented through political motivation. The interest ef Amer ican business in the expansion of a free enterprise system around the world as part of a free political system is based not only upon moral considerations, but on the hard fact that there is no market for consumer goods among slaves. The problem is not one of division whereby the static resources of a country will be reallo cated by some planner's program, but it is a problem of addition and multiplication whereby we must set our minds to increase the production forces and to broaden the areas of freedom and trade. WALTER B. WRISTON, May 1963 Socialism as a Family Enterprise YALE JAY LUBKIN DEFENDERSOF SOCIALISM often win debating points on "From each according to his ability; to each according to his need" by claim ing that the family works this way and that the nation is merely an extension of the family. Defend ers of Liberty often reply with the observation that the family is based on love, and the nation is not, and the two are not compar able. Certainly, to cite an extreme example, I would sacrifice much for my children, but nothing at all for an Angela Davis. For that matter, I w'ould not willingly sacri fice very much for anyone, includ ing the President, the Pope and the Editor.

The family analogy is, however, Dr. Lubkin is a consulting engineer in Israel. 300 much better than the critics of Socialism believe. In my family, after all, I am the one who deter mines what everyone's need is, and I am the one who determines what efforts are required of each of my seven children. I am a despot, in a very real sense. A benevolent des pot, to be sure, guided mainly by love, but a despot nonetheless. If David wants a sports car, I am the one who decides that he does not "need" it. If Judith wants to stay up an extra hour to watch televi sion, I am the one who decides that she does not "need" that. I decide that Sara has the ability to make her bed and help with the dishes, and that David has the ability to take care of irrigating the orange grove, and woe betide them if they do not perform ac1976 SOCIALISM AS A FAMILY ENTERPRISE 301 cording to my estimate of their ability.

As might be expected, there oc casionally is rebellion in the ranks, which gets more and more serious with age. Adam, at six, may com plain a little, and do his chores with much reluctance on occasion, unless I pay him with money that he can· spend as he pleases, but re bellion is a way of life for David at seventeen. While I may not feel that David is sufficiently mature and capable to cope with the world, David feels that he is, and my choice in the matter is either to let him or to lock him up. I can hardly fault David for his feelings, for they are exactly the same as mine. I resent being told by a Government flunky what I must plant and to whom I may sell it and for what price. I resent be ing forced to obtain the approval of numberless faceless function aries to do what I want to do, and to be prevented from doing it by whim or stupidity or spite. I re sent being liable to punishment for violation of any of thousands of regulations, most of which I have never even heard of and most of which I consider silly, oppressive, arbitrary or offensive. I resent having to pay taxes under threat of violence to support efforts which I disapprove and I resent having to reveal and explain to some clerk, with whom I normally would not even associate, the de tails of my affairs so that he may judge whether adequate funds have been extorted from me.

The comparison between Social ism and the family is better than the Socialist wants. The benevo lent despot can only function with subservience, with children too small and too immature to know better. When the children become adults, they will no longer submit, and insist on running their own lives as they see fit. What the Socialist really wants is not a family, but an Animal Farm. On a farm, the farmer de termines exactly what each animal needs, and that is what the animal gets. H·e may love his horse, but the horse does not get to eat all the oats he wants. He may love his dogs, but they do not get sirloin. The farmer also determines ex actly what each animal's ability is - and enforces his decision. If the farmer decides that a hen should lay 300 eggs a year, either she lays 300 eggs, or she goes to the stew pot. No appeal. When the steer is fat enough, off to the butcher, and when the horse can no longer pull his weight, off to the knacker.

In the Socialist's dream of a Socialist paradise, guess who will be the farmer. ~ The Business of Government CLARENCEB. CARSON IN JANUARY of the year of our Lord 1976, of the United States 200, and of the Constitution 187, President Gerald R. Ford proposed to Congress a budget for the fiscal year 1977. He proposed to spend $394 billion, to raise $351 billion in revenue, and to have a deficit for this coming year of $43 billion. Of the total to be spent, $177 billion is earmarked for what are called welfare programs. This amounts to just about 45% of the total budget. As of January 21, 1976, the national debt stood at $578 billion, and it had grown in a little over six months by the amount of $45 billion. The interest Dr. Carson has written and taught extensively, specializing in American intellectual history. His most recent book, The Rebirth of Liberty (1973), covers the founding of the American Republic from 1760 to 1800.

302 on the debt for fiscal year 1975 was $32.7 billion, and the esti mated interest for 1976 is $37.7 billion. The budget is composed of esti mates as to what a vast assort ment of government programs will cost in 1977. The programs range from school lunches for children to hospital care for veterans, from aid for fatherless children to sub sidies for the United States Post Office, from pay for soldiers in the Army to salaries for bureau crats in the Occupational Safety and Health Administration, and from support for research in ento mology to payments for dentures for retired people. There are several questions that should' be asked of every item in this immense budget. If asked and 1976 THE BUSINESS OF GOVERNMENT 303 answered with care, it is possible that the budget could be reduced to manageable dimensions. Here are some of them: • 1. Is the program for which the appropriation is being requested constitutional?

• 2. What level of government should pay for and administer any given program? Is the program local in character? Is it peculiar to the needs and interests of a par ticular locale or region? Are there variations throughout the country which would make a national pro gram disruptive? • 3. Can the program be expected to achieve its object? Has experi ence shown that programs of this kind work as they are supposed to? • 4. Who is the program expected to help? • 5. Can the United States gov ernment [taxpayers] afford the program? • 6. Is there some point at which the level of taxation establishes serfdom? • 7. In what direction does this or any similar program take us? Is it socialism? Is it premised on "From each according to his abil ity; to each according to his need" ? The answer to this question needs to be made in terms of the whole body of programs that are welfarist and interventionist in nature. A piecemeal examination of the programs will not provide the answer. The whole. body of leg islation needs to be seen in its tendency and direction.

These are questions that ought to be asked and answered for every item in the budget. The whole body of constitutional, legal, political, and economic thought ought to be brought to bear in answering them. They are mostly technical questions and, if they are answered, will probably be an swered by experts. But there is a question, or order of questions, which precedes all of the above. It is a question not to be propounded to experts only but to all Ameri cans in their capacity as citizens. It is a question not addressed pri marily to either theory or experi ence; yet one which everyone is supposed to be able to answer. The question is this: Is it right to authorize and spend money on this program? Some subordinate questions will throw this central question into relief. Of welfarist measures, we may ask: Is it right to take money from some portion 'of the popula tion and give it to others? Of reg ulatory measures, we may ask: Is it right to force people to do these things against their wills? Of def icit financing, we may ask: Is it 304 THE FREEMAN May right to go into debt to provide those goods for the presumed beneficiary? Of inflation, we may ask: Is it right to reduce the value of the money now in circulation by increasing the supply? Of the national debt, we may ask: Is it right to continue to expand and expand the debt with no provision for retiring it?

As strange as it may appear to some of us, there are many people who have, in effect, answered these questions in the affirmative. They have Inot, of course, usually phrased the issues this way. They have, instead, talked and presum ably thought in terms of the good they were supposed to be accom plishing with the spending. The moral questions they propounded would be phrased in some such fashion as this. Is it right that anyone in a wealthy country such as ours should have his needs un met? Is it right, they have asked, that this industry or that endeavor go unregulated in what they charge and the quality they offer? As for the debt, they have said, that is no great problem since we owe it to ourselves, and the more sophisticated bluntly recommend increasing the money supply to "spur the economy." But let us stay with the ques tions at the highest level, the level of what is right. To answer them, we need to remind ourselves what government is, and from that de duce what it may properly and rightly do. We need to keep in mind how government achieves whatever results it does. None of this tells us what is right, but we can apply our knowledge of right only with a clear view of the na ture of government.

Instrument of Force Government is that instrument which maintains itself by and is authorized to use force. It is not only authorized to use force but it also acts exclusively by the use of force. If there is no force en tailed~ an act ceases to be govern mental, even though someone in government performs it. 'In short, the sine qua non of government is its reliance upon and authority to use force. What functions are appropriate to government, then? To what ends may force be properly exer cised? The Founders of these United States made a general sum mation of these in the Preamble to the Constitution: to "establish justice, insure domestic tranquil ity, provide for the common de fense, promote the general wel fare, and secure the blessings of liberty to ourselves and our pos terity .... " It should be granted that there are many who can give assent to these general aims with out seeing in them any limitations 1976 THE BUSINESS OF GOVERNMENT 305 on government. This occurs, I suspect, because they do not gen erally think of them as inter twined but rather as separate and distinct functions. At any rate, let us examine a little closer into the proper Junctions of government as they are suggested by these statements.

The basic task of government is to keep the peace. Most of its functions are closely related to this job. Keeping the peace in volves, most fundamentally, pro tecting peaceful men from attacks upon them by aggressors and tres passers. These offenders may be individuals or groups, domestic or foreign. In any case, a government is providing for the common de fense and insuring domestic tran quility when it holds these at bay. Keeping the peace also involves dealing with those who have com mitted offenses, and settling dis putes that arise between individ ualsand groups. In this fashion, then, government can properly act to establish j ustice. It can be seen, too, that these are objects to which force is appropr~ate. Force can be used against aggressors and to compel obedience to the verdict of the court. The statement that government should promote the general wel fare appears to us to raise ques tions rather than to answer them.

This is so because we have been taught to misconstrue the phrase. We have been taught to believe that government may act to ad vance the well-being of some por tion of the population, perhaps at the expense of another, and that this is somehow for the general welfare. But that cannot be: The general welfare is the general wel fare, not the welfare of some part. The general welfare is the welfare of all, a welfare which no man or group of men can have more in terest in, nor less, than all others. To maintain peace in a society pro motes the general welfare - in the same fashion so does, to establish justice, to insure domestic tran quility, and to provide for the common defense. But, it may be obj ected, there are those who would disturb the peace. Just so, that is why we have government in the first place. But is the main tenance of peace in their interest? Of course it is. In the Public Interest There is another order of ser vices that a government may pro vide that can be said to be for the general welfare. They are those services of general use and benefit whose costs cannot be readily or equitably divided among users.

They consist of such things as fire protection, the providing of safety markers in waterways, the provid ing of information about -the 306 THE FREEMAN May weather, and such like. It is proper, also, that government and its instruments of force and for administering justice be supported with tax money. The keeping of the peace being for the general welfare, it must follow that all tho'se with means should contrib ute to it, whether they will or not. Government is the right instru ment, also, to secure the blessings of liberty to a people. It may see to it that peaceful men are not detained and that all such are per mitted to exercise their faculties without restraint, so long as they do not injure others and that they exercise them on their own facili ties or on those of others who have hired or invited them or in public places and at times appointed to the particular uses. Force, de fensive force, can be employed so as to prevent the strong from op pressing the weak or anyone from interfering with the liberty of another.

In the performance 'of the above functions, government is essential to social existence. It is, as the traditional phrase has it, ordained of God. For government to do those things for which it is ordained and established there should be no question of the rightness of it. The question of right arises over wel fare, interventionist, and fiscal policy. The answer lies in the crit ical area of justice and the contemporary confusion of justice and mercy. The Founders declared that one of the purposes of government was to establish justice. If that be accepted, the content of justice needs to be carefully examined. Qualities of Justice The most obvious thing we know about justice is that it is blind. Representations of justice show it blindfolded, and it is a matter of long-standing prescription that it should be. Justice - that ideal of it that has guided men in West ern Civilization - cannot see. It cannot see whether those who come before it are black or white, rich or poor, farmers or industrial workers, old or young, men whose hearts have generally been pure or are as black as the Ace of Spades. Justice is concerned with but one thing: To give each man his due. To put it in economic terms, justice is concerned with seeing that each man gets what is his. To this end, justice must at tend to the character (or nature) of acts and transactions, ignoring all else.

What is a man's due, or what is his? A man is due what has been promised him, and that is his which he has made for himself or has acquired from others by pur chase or gift. In determining any question of ownership, justice has been done when it has been de1976 THE BUSINESS OF GOVERNMENT 307 cided who made the object in ques tion and whose it is, otherwise, by transfer from the original owner, and restitution has been made. Justice, of course, has to do also with seeing to it that those who have committed offenses - crimes - against the public order are penalized. Justice here attempts to mete out punishment in accord with the gravity of the offense. Justice holds, roughly speaking, that he who does not work shall do without. He who does not earn his keep shall be deprived. Justice will not allow the excuse that a man was hungry, that his family was hungry, .that he had been ill, or that for any other reason he may appropriate the property of an other. True, men will say that before they Will let their families go hungry they will steal. That is no matter, so long as they know it is stealing, and so long as it is clear that if they are caught tak ing what is another's they may be justly punished. In the same man ner, justice requires that he who injures another in any fashion shall he made to pay. A people who attempt to establish justice have undertaken a formidable task.

Justice is blind; Mercy can see the helplessness of children, the plight of the aged, the ravages of disease, the suffering from depri vation, the discrimination because of color, the hard work that has not been rewarded with produce, the hard luck with which some are afflicted, the lame, the halt, and the blind. Mercy can distinguish between the deserving and unde serving of pity and of charity. The standard of Justice is desert; the standard of Mercy is need. Shall Government Dispense Mercy or Establish Justice? There is no doubt that many of us stand in need of mercy from time to time and place to place. But there is a question whether government is the proper body to dispense mercy. If it is the busi ness of government to establish justice, it cannot also be its task to be merciful. The two are in compatible. The question of whether justice or mercy shall be extended is an either-or proposi tion in particular instances. If government does justice, it must deny mercy; if it is merciful, it will tend to work injustice. This is so for government because force may be properly used to do justice, but mercy must be freely - not forcibly - offered else there will be injustice. Specifically, it is proper to use force to see that a man gets what is his. But mercy involves conveying upon a man that which is not his by right, that which he has not earned, that which is not his due, but which 308 THE FREEMAN May someone out of pity or charity wills that he shall have. For gov ernment to extend mercy in this manner means that it must take from someone \vho has and give to someone who had it not. In short, when government extends mercy it usually produces injustice.

Men of good will may agree that those who cannot help themselves are the proper objects of concern of those who can. It is the part of charity to render aid to such in their need. However, it does not follow that government is the proper instrument to provide such aid. Government aid is derived from taxes, and these are taken involuntarily from the taxpayers. Mercy is properly the prero gative of moral individuals, many of whom have ever shown themselves willing to help those in need when they have been left free to do so. The questions posed at the outset of this discussion reduce them selves to one question: Do men have a right to what they possess as property? Let us pose them again with this question in mind. Is it right to take' money from some portion of the population and give it to others? If men have a right to what they have produced, it is not, for if it can be taken from them to give to others they had no right to it in the first place.

Is it right to force people to do these things (by regulation to use their efforts and property in ways they do not choose) against their wills? If what a producer or ex changer has is his by right, then it is his to do with as he sees fit, so long as he does no demonstrable injury to others. Is it right to reduce the value of the money now in circulation by increasing the supply? If there is a right to money, there is a concomitant right to it without having its value arbitrarily reduced. If not, there is no right to money, for its whole value may be reduced to naught by government action. Is it right to continue to expand and expand the debt with no provision for retiring it? This is a complicated question, for the main means of raising the money is by way of increasing the money supply. There are two prongs to the answer. One is that it is not right for government to take away from property by in creasing the money supply. The other is that the future holdings of property are reduced in value by the amount of them that must be taken away to pay the interest and the debt.

James Madison answered the questions this way in 1792: Government is instituted to pro tect property of every sort. . . . This being the end of government, that alone is a just government which im partially secures to every man, what ever is his own.

1976 THE BUSINESS OF GOVERNMENT 309 Even though property is the key, it is necessary to discuss these matters in the context of the proper role or business of govern ment. This is so because govern ment - any government - costs money to operate. These costs be come, of necessity, a charge against property. If government is "insti tuted to protect prop erty," as James Madison said, it must necessarily follow that its costs must be kept down to a nominal level in order to perform its function. However, when gov ernment begins taking property for anything other than its pro tective function it becomes an invader of property rather than a protector of it. Rather than a pro tector of right it becomes itself a wrongdoer. The extent of government ac tivity today is new, but the tend ency of government to become wrongdoer is old. These questions of right were also answered, and answered vigorously at the time of its formation and the early years of the Republic. Americans experienced the wrongdoing of government depreciating the pa per money by printing more and more of it during the War for In dependence. Josiah Quincy wrote to· George Washington: I am firmly of the opinion, and think it entirely defensible that there never was a paper pound, a paper dollar, or a paper promise of any kind, that ever yet obtained a gen eral currency, but by force or fraud, generally by both. That the army has been grossly cheated; that creditors have been infamously defrauded; that the widows and fatherless have been oppressively wronged and beg gared; that the gray hairs of the aged and innocent, for want of their just dues have gone down with sor row to their graves, in consequence of our disgraceful depreciated paper currency .... 1 On the matter of public credit and indebtedness, George Wash ington had this to say in his Fare well Address: As a very important source of strength and security, cherish public credit. One method of preserving it is to .use it as sparingly as possible, avoiding occasions of expense . . . ; avoiding likewise the accumulation of debt, not only hy shunning occa sions of expense, but by vigorous ex ertions in the time of peace to dis charge the debts which unavoidable wars have occasioned, not ungener ously throwing upon posterity the burthen which we ourselves ought to bear .... 2 Thomas Jefferson, in his own inimitable way, put the business 1 Arthur S. Bolles, The Financial His story of the United States, I (New York: D. Appleton, 1896, 4th ed.), p. 208.

2 Henry S. Commager, ed., Documents of American History, I (New York: Appleton-Century-Crofts, 1963), 173.

310 THE FREEMAN Ma.y of government clearly and suc cinctly in his First Inaugural Address: ... Still one thing more, fellow citizens - a wise and frugal Govern-' ment, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and im provement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good gov ernment .... 3 Martin Van Buren stated simi lar principles, though in some greater detail: All communities are apt to look to government for too much. Even in our own country, where its powers and duties are so strictly limited, we are prone to do so.... But this ought not to be. The framers of our excel lent Constitution and the people who approved it with calm and sagacious deliberation acted at the time on a sounder principle. They wi$ely judged that the less government interferes with private pursuits the better for the general prosperity. It is not its legitimate object to make men rich or to repair by direct grants of money or legislation in favor of particular pursuits, losses not incurred in the public service. This would be sub stantially to use the property of some for the benefit of others. But its real duty - that duty the performance of 3 Ibid., p. 188.

which makes a good government the most precious of human blessings is to enact and enforce a systEfm of general laws commensurate with, but not exceeding, the objects of its estab lishment, and to leave every citizen and every interest to reap under its benign protection the rewards of vir tue, industry, and prudence. 4 As thing$ have been going in these United States, it is not dif ficult to make some predictions about the budget for 1977. It is most unlikely that spending will be kept within the extensive bounds of $394.2 billion. There are all those programs already authorized which cost more and more each year. Then, Congress is apt to tack on yet more programs which will add to the expense of government. Already, predictions have been made that the deficit will not be kept to $43.1 billion but may well continue to balloon at the current rate. There are many indications that the spenders still have the momen tum behind them. Even if they did not at this moment, authori zations made in times past carry their own momentum. And, re gardlessof the feeling in the Con gress, the vast Federal bureauc racy stands ready with its public ity apparatus to continue present 4 Henry S. Commager, ed., Living I deas in America (New York: Harper and Bros., 1951), pp. 323-24.

1976 THE BUSINESS OF GOVERNMENT 311 programs and present justifica tions for new spending. It will not do to try to stop at the present level; it is necessary to begin to remove programs already estab lished in order to stem the tide of rising expenditures. 'There is, I suspect, only one level of looking at the matter at which there is any hope of re versal and a return to a modicum of fiscal sanity. It is at the level of what is right. So long as there is general acceptance of taxing, inflating, borrowing, and spending what the government does not have upon welfare, subsidies, and regulation, these things will con tinue. So long as people generally believe that it is right to take from some and give to others, that government should regulate and control business, that deficit financing is right and proper, that it is all right to reduce the value of the money in circulation by increasing the amount of it, and the debt does not have to be re paid, just as long these things will continue.

When and if it is understood that it is wrong for government to act in this way, then, and only then, is it likely that we will re verse our direction. Then, too, ar guments about the constitution ality of programs, results of past programs, and so forth, will be come powerful adjuncts in support of right. , IDEAS ON LIBERTY Providential Agency No PEOPLE can be bound to acknowledge and adore the Invisible Hand which conducts the affairs of men more than those of the United States. Every step by which they have advanced to the character of an independent nation seems to have been distin guished by some token of providential agency; and in the impor tant revolution just accomplished in the system of their united government the tranquil deliberations and voluntary consent of so many distinct communities from which the event has resulted can not be compared with the means by which most governments have been established without some return of pious gratitude, along with an humble anticipation of the future blessings w1hich the past seems to presage.

GEORGE WASHINGTON, First Inaugural Address, 1789 A REVIEWER'S NOTEBOOK THE BIGGEST CON: JOHN CHAMBERLAIN How the Government Is Fleecing You THE GREAT VIRTUE of Irwin A. Schiff's The Biggest Con: How the Government Is Fleecing You (Arlington House, $9.95), is, as I have already suggested in a fore word to the book, the author's ability to put it all together to show how the "critical mass" of five trillion - yes, five trillion - in government debt must end either in repudiation or a ruinous infla tion. This is tough medicine, and no politician is going to swallow it immediately, particularly in an election year. But Mr. Schiff is in exorable - he simply adds things together to show how a lot of wel farist measures which looked good 312 individually have combined to de stroy the possibility of paying off the whole in honorable and non inflated coin. To begin, we don't have money any more; we have what Mr. Schiff calls unmoney. Neither the Trea sury nor the Federal Reserve sys tem recognizes a duty to redeem any note or government bond in anything more than successive issues of new LO.D.'s. What the government chooses to call its na tional debt is bad enough; when Mr. Schiff was writing it camoe to some $540 billion (the June 30, 1975, figure). But this is just the tip of the iceberg. When you add 1976 THE BIGGEST CON 313 in the Social Security payments that the government is obligated to make good out of future income Cit has already squandered the pay ments of the past forty years by its refusal to fund the debt in any thing more than LO.D.'s), some $2.1 trillion more must be raised, according to a government admis sion made in a footnote. (Does anyone really believe that we can tax at that rate even in annual in crements without breaking the middle class as inflation adds more trillions to the $2.1 trillion as of 19751) Aside from Social Security, the government has other obligations reckoned in the trillions. There are annuities, student loan guaran tees (an incredible $1.9 billion), crop guarantees, veterans' benefits, and so on. The big figures and the little figures combine in a total debt (funded, unfunded and con tingent) of $4.3 trillion. It will be $5 trillion, including the "regular"

debt, as admitted by Congress and Jerry Ford, before the year has ended. The Uneconomists There is a lot more to Mr. Schiff's book than a recital of our overwhelming debt problems. Hav ing coined the term unmoney, Mr. Schiff goes on to speak of our un economists. (The Keynesians, of course.) We do have a few legitimate economists - Mr. Schiff is high in his praise for Henry Haz Htt, Hayek, the late Ludwig von Mises, and he voices a limited ap proval of Milton Friedman and the Chicago School. The discussion of the uneconomists is hilarious. There is a Schiff Index of Infla tionary Generators, SIIG-l, SIIG-2 and so on to SIIG-17. Mr. Schiff got tired of the uneconomists' penchant for redundancy, for there is actually no difference between SIIG-l ("ease credit") and SIIG-4 ("expand credit") or even SIIG-6 ("ease monetary controls"). He recommends SIIGomastics as a game for the whole family (just tune in on Heller and Galbraith, or read the latest financial story in the news weeklies).

Especially brilliant is Mr. Schiff's demolition of GNP, or the Gross National Product, which can \vith equal logic be called Gross National Cost. Mr. Schiff finds it ridiculous that all dollar payment figures to individuals and corpor ations should be accepted withou t question as "wealth." Suppose, he says, a tidal wave were to demolish the Florida coast from Miami to Boca Raton. Let's say the cost of the destruction comes to $2 billion. It should be subtracted from the GNP, but it isn't. On the other hand, the cost of cleaning up the debris - say it's $300 million would be added into GNP. Does it 314 THE FREEMAN Ma.y make sense that disasters such as tidal waves can be figured as wealth-creating when people step in to sort out useless junk, at the taxpayers' expense? The stupidities of GNP are end less. A healthy person adds noth ing to GNP, but sick people do. The sicker the population is, the greater will be the percentage of GNP spent on medical treatment.

The GNP of wheat at $2 a bushel can be less than the GNP at $3 a bushel. The more wheat we have, the poorer in GNP terms we are likely to be. Since food is real wealth, this makes no sense. Abundance has the tendency, says Mr. Schiff, to develop lower GNP figures than scarcity. The unions and the politicians, with their insistence on a mini mum wage law, have created a ghetto problem and a teenage problem. Blacks without skills can't get jobs, for if employers were to pay them the official hourly minimum marginal companies would soon go broke. The mini mum wage makes it impossible for the U.S. to have a good apprentice system. We will pay dearly for this one fine day when we wake up to the fact that we have no young tool and die workers. Citizens Under Compulsion I would like, since I can't phrase it better, to quote the penultimate paragraph of my introduction to Mr. Schiff's "blockbuster" of a book. "In a grand peroration," I wrote, "Mr. Schiff accuses our Federal government of compelling citizens to participate in a chain letter (social security) ; of illegally shifting wealth through inflation; of hiding the" true extent of the National Debt; of saddling a lower standard of living on people by the destructive burdens it imposes; and of using the Federal Reserve to force what amounts to counter feit money on the banks. The citi zen is required to swear to things on his tax return that no two peo ple can interpret the same way.

We are, so Mr. Schiff suggests, contributing to our own destruc tion by paying taxes to a govern ment that engages in so many un lawful and criminal activities that it makes the Mafia look lily-white by comparison. This poses a nice question for the taxpayer: if you cooperate with a thief, doesn't that make yourself the perpetra tor of an unlawful act?" Strangely enough, Mr. Schiff remains an optimist. Does he really believe we will change our Social Security law to put it on a welfare test basis when Ronald Reagan can't even talk about providing for alternative voluntary old-age in surance? As Milt Gross used to say, "Dun't esk."

1976 OTHER BOOKS 315 ~ AMERICA'S EMERGING F AS CIST ECONOMY by Charlotte Twight. (New Rochelle, N. Y.: Ar lington House, 1975), 314 pages, $12.95. Reviewed by Hans Sennholz TOTALITARIAN REGIMES, whether they are fascist or communist, en tail an extreme centralization of power from which no individual can hide. Private property in pro duction, which is the characteristic ofa capitalist order, is replaced by public property that is man aged by an 'omnipotent, omnipres ent state. Communism and' fas cism are sister systems that spring from identical intellectual 3J}d moral roots, and apply similar methods and policies to achieve their objectives. And yet, in spite of their closely related basic natures, the cham pions of both endeavor to empha size the differences. "Weare dia metrically opposed to fascism" say the communists, and "We a~e the bulwark against communism" proclaim the fascists. In reality, ~s twins, they are jealous rivals who at every opportunity confront each other. Their wars are fratricidal wars waged without mercy or com passion.

Although in philosophy, moral ity, and in objectives they are identical twins, they differ in two characteristics that make them distinguishable. Communism seeks to poison the hearts and minds of an peoples and races. It aims to conquer the world with its poison ous potion. Fascism is a national disease that tends to infect na tional states. Italian Fascism was singularly Italian, German Nazism was basically German, as Ameri can Fascism is contagious to Americans only. This limitation in the base of fascism tends to make communism the more dangerous disease to which all of mankind may succumb. The two als'o differ in the legal form in which they exert central control over the means of prod uc tion. The communists assume out right ownership through law or constitution. The fascists content themselves with governmnt con trols over productive property. They do not legally expropriate the individual owners, believing that government controls are m'ore ef ficient than direct bureaucratic management. Capitalism, the an tithesis of both, is the private property order in which individ ual owners have the sole power to use their economic goods.

Charlotte Twight's Am,er'ica's Emerging Fa,sci'st Economy is a brilliant analysis of the economic policies that are turning the U.S. into a fascist state. As an attorney and a member of the Washington State Bar Ass'ociation, Mrs.

316 THE FREEMAN May Twight presents a formidable in dictment against numerous U.S. statutes and judicial decisions that are building a fascist foundation for the modern American system. Her analysis of government con-: trol over money and banking,· for instance, is incisive and C'onvinc ing as she reveals the objectives of such control as well as its many ominous consequences. The same can be said about her discussion of the American cartels, govern ment control over product quality, the growth of the President's eco nomic power, government domin ion over labor, agriculture, for eign trade, and the government takeover of the energy industry and many American railroads. And. yet, her admirable work is seriously flawed by her economic limitations that involve her in had ambiguities and awkward conclu sions. Her inability to distinguish between the' economic and juristic C'oncepts of property leads her to associate fascism and capitalism.

She actually concludes that collec tivism "may adopt socialism, com munism, or capitalism as its nomi nal economic form." (p. 15) Ac cording to Twight, "Fascism is unique among C'ollectivist systems in selecting capitalism as its nomi nal economic mate, but capitalism is turned inside out in this un likely union." (p. 16) Or, "fascism espouses capitalism except where its totalitarian political hierarchy dictates otherwise." (p. 17) And although she concludes that fas cism embraces "a bogus capital ism" she defines, in a large-print section heading, fascism's philo sophic core as capitalistic collec tivism. Her eyes are glued on the legal concept of property and the legal title to property, which is totally irrelevant for the economic point of view. It matters only who has the power to use an economic good - the government or the individ ual. Fascism, like communism, gives government total control over the means of production. The fact that some people may hold on to a legal document, a deed, while they are hurrying to obey govern ment owners, may be interesting psychologically, but does not change the economic consequences of government control.

Charlotte Twight's "capitalistic collecti vism" can be likened to such illogical concepts as "religious atheism," "evil morality," or "pa ternal motherhood." But while she succumbs to such ambiguities she does great harm to capitalism, her very own system. Today capital ism is accused of nearly every vice of which the human heart is cap able - to exploit and gouge, rob and steal, impoverish and starve, deceive and prostitute, and on and on. And now comes Mrs. Twight 1976 OTHER BOOKS 317 telling us that capitalism can be mated to fascism. As attorney for the defense of capitalism, she is losing her case. ~ ONE NATION UNDER GOD by Rus Walton (Third Century Pub lishers, Washington, D.C., 1975) 311 pp., $3.95 Reviewed by Robert Wren IN A COMPILATION of facts, figures, quotes and succinct statements, journalist Rus Walton has pre sented us with an excellent ac count of the religious dimension of the American Republic. He dis cusses such subje'cts as limitation of government, freedom, taxes, the familY,education, abortion, the "Equal Rights" Amendment, eco nomics, charity and inflation.

Mr. Walton argues that the United States was founded as a Republic, not a Democracy. He points out that if we would retain the freedom responsible for our great prosperity, we must return to the limited government philos ophy of our Founders. And he adds, "Freedom is not simply a matter of rights, it is also a mat ter of responsibilities." Mr. Walton correctly defines in flation as an increase in the sup ply of money and sets forth the correctives: limit government, cut spending, balance the budget. Opposing the common human istic thinking of today, Mr. Wal ton convincingly redirects us to Biblical and God-oriented solutions for today's problems. He confronts us with a choice: "One nation un der God or one supers,tate under Caesar." An excellent source of ammunition against Socialism~ Communism, atheism and the Wel fare State! ~ THE NEW AMERICAN IDEOL OGY by George C. Lodge (New York City: Alfred A. Knopf, 1975) 350 pp., $12.50.

Reviewed by Melvin D. Barger MANY LIBERTARIANS insist that America's "mixed economy" is an unstable hodgepodge, a sort of halfway house on the road to the Total State and the extinction of personal liberty. A number of pol iticians and corporate executives disagree, believing that the mix ture of government intervention and private business brings the best of both worlds and provides immunity from further socialism. Unfortunately for proponents of the latter viewpoint, the mixed economy has tilted increasingly to ward more government interven tion, inviting the question: "Where 318 THE FREEMAN May win it all end and what's in store for us 1" In this disturbing new book, Harvard Business School profes sor George C. Lodge obligingly supplies an answer, but libertari answon't like it. He outlines an "ideology" for the brave new world that America is in the process of becoming. Although he carefully avoids categorizing the new sys tem, it obviously has a thick clus ter of socialist roots·and borrows freely from collectivist thinkers, including sociologist Karl Mann heim. The form of the tit'le and the tone of the book also recall Galbraith's T·he New Industrial State, although the author parts company with Galbraith's social ism on certain points.

Lodge,a member of the distin guished Boston family, argues that we are in a painful transition phase in our. social, political, and economic relationships. .We are abandoning the traditional Ameri can ideology associated with John Locke, and developing a new one that has already taken root: in dividualism is giving way to a system ca'lled communitarianism; property rights are yielding to rights of community membership; competition to satisfy consumer desires is losing ground to "plan~ ning for community needs"; the idea of the limited state is being replaced by the state as the planner; and scientific specialization must be succeeded by a holistic organization of knowledge. Lodge apparently believes that the Lockean notion of individual ism was a wrong path even for eighteenth century America, let alone the present modern state. He calls it an aberration on at least two occasions and also a "blip."

He is clearly more sympathetic to ward Rousseau's communitarian idea of the General Will, which would be accomplished by "bring ing all particular wills into con formity with it" and with virtue being defined as "nothing more than this C'onformity of the par ticular wills with the General Will." Lodge defines individualism as the atomistic notion that a com munity is no more than the sum of the individuals in it, with fulfill ment an essentially lonely struggle in what amounts to a wilderness where the fit survive - and where, if you do not survive, you are somehow unfit. Individualism is related to equality, or "equal op portunity," and the idea of con tract that ties individuals together as buyers and sellers. Individual ism, he explains, has evolved into interest group pluralism as the preferred means of directing soci ety (unions, trade associations, special interest groups, etc.) .

Communitarianism, on the other 1976 OTHER BOOKS 319 hand, is a system that makes the community more than the sum of its individuals. People get their fulfillment through participating in communitarian activities, through identifying with their community; consensus, rather than contract, is the unifying element. Lodge claims that both corporations and unions have eroded the old idea of indi vidualism and induced the new communitarianism though still clinging to the Lockean ideology. Lodge's best example of a com munitarian society is Japan; he carefully avoids comment on Great Britain. But what if individuals do not want to find fulfillment in this com munitarian wave of the future? Lodge's answer seems to be that "we have to re-educate American youth to the fact that individual fulfillment comes about as the re sult of participating in an organic social process." Opponents, of course, would call this blatant in doctrina tion and would also note that there are vast differences be tween voluntary and compulsory communitarianism. Lodge evident ly likes the compulsory kind,be cause he intends to have the com munitarian way imp'osed on us by closing off other options. For ex ample, community needs should take precedence over consumers' desires as a means of alloca ti'ng goods and services, property rights are to be further diluted in favor of group membership rights (and virtually eliminated in the case of the corporation), and the state is to become the national planner; in deed, the international planner if all goes well.

Why are we having such diffi culty reaching Lodge's earthly mil lennium? The hang-up, for Lodge, is John Locke and his archaic ide ology. Almost everybody who is involved in American business and government suffers to some degree from the old Lockean ideas about individualism, property rights, the Protestant ethic, the danger of Big Government, and so on. Lodge believes that even uni on leaders and liberal politicians such as Sen ator George McGovern are handi capped by this "ideological schizo phrenia." The book is obviously addressed, however, to the executives and managers of America's troubled corporations. Acting both as re porter and advocate, Lodge is tell ing them that the old order of their cherished beliefs is dying, and they can help bury it. The corporation, deriving its authority and legitimacy from the old Lock ean ideology, is in limbo and now needs a new basis for its legiti macy. The message is clear; In order to 'make the transition to the new system as painless as possible, corporations should seek legi ti320 THE FREEMAN Mwy macy in the new ideology by be coming willing handmaidens of the state, with the latter always as the senior partner. There is an implicit warning that terms for the corporation may become less favorable if it delays in seeking this new legitimation. Nor is there any way to avoid these conditions, since the new ideology is already in motion and cannot be reversed.

The corporation can save itself and some of its managers can save their jobs and salaries - by inden turing the organization to the new system and to the state as planner. To his" credit, Lodge describes with great accuracy the present difficulties of the large C'orpora tion and its pow,erlessness in cop ing with the pressures around it. It's to his discredit, however, that he fails to identify the "mixed economy" syndrome as a likely cause of the corporation's, and the nation's woes. In addition, he com pletely ignores the role of the Lockean idea in advancing human freedom, human dignity, and, yes, human rights. Far from repudiat ing Locke, as he does, we should be studying our abandoned road and discovering where we took a wrong turning. We should also give the profes sor a failing grade for his hope less naivete in believing that his total state will not develop into the totali tarian state. Here and there, he admits of such dangers, but nowhere does he offer mechanisms and ideas that can effectively keep the state from becoming an op pressor. Least of all does he ex plain who the planners will be or say whose plans will prevail in the new super-state. If experience is any guide, the coercive power of the state will almost certainly be used arbitrarily once it has been consolidated by the new American ideology.

The book is reviewed for liber tarian readers because it is, in effect, a statist manifesto that is likely to have considerable influ ence in the business community. Its appearance at this troubled time is another reminder, if we needed it, that the world is full of well-meaning and sometimes gift ed individuals who always seem to know the best way to manage and control other people. I) tile Freeman VOL. 26, NO.6· JUNE 1976 Why "TeacherPower" Ha.d to Happen Melvin D. Barger 323 It was built into a system of compulsory education, and must fall of its own excesses. ANew Message II. On Human Rights and Government Ja·ckson Pemberton 332 Words of courage and counsel from the hearts of the Founding Fathers to their children in a troubled nation. There Ought Not to bea·Law Clarence B. Carson 340 The more government attempts to reform us the more it spreads injustices inherent in the exercise of force .

.Adam Smith and the InvisibleHand Edmund A. Opitz 356 In 1776 Adam Smith provided a rational~ for freedom of economic action. In Pursuit of Happiness An integral part of the property right to life and liberty. Ridgway K. Foley, Jr. 365 Book Reviews: "Individual Freedom: Selected Works of William H. Hutt" edited by Svetozar Pejovich and David Klingaman "Human Rights and Human liberties" by Tibor Machan "The Conditions of Freedom" by Harry Jaffa "Conceived in Liberty" (volumes I and II) by Murray N. Rothbard Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding. 377 the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON·HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government.

Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each. THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per· mission granted to reprint any article from this issue, with appropriate credit except "A New Message."

MELVIN D. BARGER Why Teacher Power Had to Happen A CLOUD that was once the size of a man's hand has now grown to become a stormy presence engulf ing public education throughout the United $ta tes. This new presence is "teacher power," the political strength of the public teachers' unions and their allied organizations. John Ryor, president of the National Education Association, calls "teacher power" a term that has grown from a "wistful cliche to an unchallengeable reality" and insists that its uses must include making teachers the "foremost political power in the nation" and seeing to it that teachers "are no longer blocked out of educational Mr. Barger is a corporate public relations ex ecutive and writer in Toledo, Ohio. decision making."! Two years ago, one of Ryor's predecessors, Dr. Helen Wise, listed as an NEA goal the election of a "veto-proof Con gress" as far as education bills are concerned. 2 Other teachers' organization leaders are saying similar things. Meanwhile, state legislators and Congressmen are beginning to feel the heat of teacher power as. wielded by the NEA and its rival organization, the American Federa tion of Teachers.

The initial effects of teacher power are noticeable increases in 1 John Ryor, "The Uses of Teacher Power," Today's Education, November _December, 1975, p. 5. 2 Reported by Frank Kane in the To ledo Blade, December 16, 1973. 323 324 THE FREEMAN June strikes and other exhibitions of teachers' militancy and political strength. 3 Further down the road, however, it's likely that teachers' organizations will completely dom inate public education, even to the extent of shaping all curricula and calling the shots on the acceptance or repudiation of any specific edu cational philosophy. As in any po litical controversy, this develop ment is seen as "good" by teachers and their allies and called "bad" by many others. However it's regarded, "teacher power" is not an isolated develop ment. It was really something that "had to happen" as a result of our system of public education and government interventions in pri vate union-management relation ships. The surprising thing is not that teachers have finally begun to exercise political power; rather, it is that it took them so long.

From now on, however, the mes sage is indeed clear: teacher power is Mr. Ryor's unchallengeable real ity, and coping with this newly discovered power is bound to be come an awesome problem in al most every community. To some people, the exercise of teacher power will be viewed as 3 See Paul Friggens, "Teachers on the March," Reader's Digest, February, 1976, pp. 112-115. In the 1974 elections, 229 of 282 teacher-assisted candidates won in the House of Representatives; in the Senate, 21 of 28. proof that teachers are being greedy-and non-professional and "don't have the interest of the children at heart." But teachers, now a well-organized pressure group, be1ieve that they have fallen behind other groups and that "professionalism" has been a ploy to keep them from organiz ing. They are also careful to say that all of their actions, including strikes that close schools,are for the benefit of the children. A few teachers may feel qualms about this new militancy, but more of them are beginning to act and think like union members.

Why did this "have to happen?" Why couldn't teachers - and other public employees for that matter - be content with the traditional privileges and status of their spe cial kind of employment? Why did they have to launch a bid for power that now looms as a revolu tionary movement that may com pletely change the schools? There are several reasons why teachers are acquiring so much new muscle. Most of these reasons are rooted in our compulsory sys tem of public education. Public schools, largely with general ap proval and consent, use several forms of compulsion that tend to "stack the deck" in favor of the producer group (Le., the teachers) at the expense of the consumers (the taxpaying public, parents, 1976 WHY "TEACHER POWER" HAD TO HAPPEN 325 etc.). Compulsory education, har nessed with the compulsory prac tices of the labor union movement, gives teachers far more bargain ing power than the typical craft or industrial union has in dealing with private employers. We must assume that teachers' organiza tions will take full advantage of the weapons given to them by the public educational system. At this point, it's difficult to see how rea sonable checks can be made on their future demands. Here are some of the elements of teacher power that will have to be re examined in the years ahead: 1) Compulsory taxpayers' sup port of public schools. The public school has long been a cherished American institution that has been considered to be operated in the public interest. For one thing, it has been generally accepted that a democratic form of government requires citizens to be literate and fairly knowledgeable, and that large numbers of people would be denied education if there were no public schools. Therefore, pub lic education has been the respon sibility of the community, and has usually been supported by the property tax.

This system had its drawbacks, and .was always a potential threat to individual liberties. However, it also had a number of checks and balances that kept it from becom ing tyrannical and wrecking local budgets. For one thing, property owners voted in school millage elections, and were always likely to express their approval (or dis approval) of their schools in this way. At the same time, local school boards could control the schools to a certain 'extent, and local voters usually had direct access to board members. This wasn't always fair - indeed, it was often viewed as oppressive by school teachers - but it did serve to maintain a certain balance between community atti tudes and the policies of schools. Parents could still feel that the schools were acting as their sur rogates in the classroom. This worked reasonably well, and most older persons will remember that their own parents and teachers possessed similar values and atti tudes. Each reinforced the author ity of the other, and if you were punished in school, there was a good chance that you might re ceive further punishment at home.

Meanwhile, the school was also expected to perform in "deliver ing" education. Much is said to deplore the fact that many Amer icans once attended school only through the eighth grade, but the fact is that such students then possessed reading and writing skills at that level. It is now com mon knowledge that a high school 326 THE FREEMAN June diploma is no longer proof that one necessarily has a high school level education. But there was always a hidden weakness in the local tax-sup ported public school system. This weakness was in its susceptibility to takeover. In order to wrest con trol away from the community, it was only necessary to change the support base from 'local to state and Federal. Taxpayers lose voice in school matters when state and Federal boards take charge. Vot ing on local school millages, on the other hand, still retains some of the aspects of the marketplace, even though it is admittedly a some what unsatisfactory governmental program. But effective citizen con trol is lost when the schools are controlled or directed from state and Federal offices.When that hap pens, the only way to make indi vidual views known is to organize as a pressure group, and this is too difficult and time-consuming for most parents.

The system is then ready for teacher control, since teachers are already organized as a pressure group and know what they want. Their leaders are well aware of the additional leverage they have in working with state and Federal officials rather than local systems, so they have been the leading ad vocates of increased state and Fed eral support of schools. Not' only does this give them additional funds to bargain for, it also in creases their own control of the school systems and effectively neu tralizes the power of parents and local boards. 2) Compulsory attendance. Another weapon of the teachers' unions is that students are forced to attend schools in most states until they reach certain ages. Again, this compulsion has always been viewed as "good" by most Americans. The fear is always ex pressed that without compulsory education many children will grow up illiterate. We are apparently supposed to believe that any num ber of future Albert Einsteins and Jonas Salks would be deprived of ordinary reading and writing skills if we did not have compul sory school attendance laws.

'The fact is, of course, that few parents would neglect their chil dren's education ,even if attend ing were not compulsory. Some of them still have to resort to pri vate education, such as tutoring, in order to help their children over serious learning difficulties. Also, compulsory attendance may even hamper the educational proc ess, since it brings in students who do not benefit from the teach ing and often disrupt classrooms to such an extent that other stu dents are shortchanged. Compul1976 WHY "TEACHER POWER" HAD TO HAPPEN 327 sory attendance has been vastly oversold as an instrument to ad vance general educational levels, and some knowledgeable people are beginning to challenge it. But it's not likely that teachers' unions will ever seriously oppose compulsory attendance. It is one of the things that contributes to "teacher power." 3) Teacher education and cer tification. You have to be against God and motherhood to oppose the idea of graduate education and intensive certification of teachers, because these programs are sup posed to be proof of greater com petence and professional skill. This drive for increased education for teachers created a huge network of expensive teacher-training courses across the country, and it has made the "teaching certifi cate" a condition of employment in many systems.

The rationale for all this train ing is that individuals become bet ter teachers if they possess grad uate degrees and teaching certifi cates. But one way to learn about the value of these academic cre dentials is to find out what teach ers themselves think of education degrees and courses. In many uni versities, the graduate education degree is considered much easier to obtain than other types of de grees, and required courses for teachers are jokingly referred to (by teachers) as "monuey courses" or "Mickey Mouse courses." Upon examination, the system of grad uate teacher training actually turns out to be an elaborate de vice for raising teachers' pay lev- . els and for excluding others from the' teaching field. By raising educational and cer tification requirements for teach ers, the unions have been given a form of licensing power. We can also predict that teachers' or ganiza tions will soon begin taking steps to limit the 'number of per sons who can enroll in teacher ed ucation programs. Another device they are likely to use in controlling entry to the field is to reduce the opportunities for student teachers to obtain the classroom experience that is necessary for preliminary acceptance. In this case, teachers would be borrowing a tactic from the craft unions, which arbitrarily limit the number of apprentices who are permitted to work.

4) Education as a "right." We should not overlook the influence of the various rights movements in giving teachers more power over the educational system. In recent years, the idea has sur faced that every individual has a right to an education, with society (Le., government) being obliged to furnish it. Like many of the 328 THE FREEMAN June new "rights," this one has great potential for harm and can impose backbreaking burdens on the na tion. Such .rights, like the so called "right to welfare," really are nrivileges or "pseudo-rights" that contain a number of deadly booby traps. Nevertheless, the idea that the individual has a right .to an educ'ation has gone largely unchallenged, and probably will get further acceptance before it falls into disrepute. .For teachers, the "right to an education" philosophy means end less opportunities to build up their empires and to increase the bud get in every school. We will hear teachers m'aking the claim tha t children are being robbed of their right to an education because of large classroom sizes, ·lack of teaching aids, aging school build ings, or lack of special teacher training. We may also see the day when every student, regardless of qualifications or motivations, will be entitled to public education through college. This has 'already become the philosophy in New York City, where the "free" City College has been forced to accept hundreds of near-illiterate stu dents. This may appear to be a farcical and self-defeating action to outsiders, but one must never forget that such a practice has the effect of creating many teach ing jobs.

5) Compulsory unionism. Finally, the teachers' organiza tions and other public workers' unions owe much of their muscle to uniods in the private sector, which established the precedent for the new militancy and tactics of teachers. Craft and industrial unions acquired unusual power more than 40 years ago with the passage of the Wagner Act, which forced employers to bargain with them and enabled labor organiza tions to force employees to join unions or pay dues into them. In one stroke,· this legislation wiped out a number of natural checks and balances in labor-management relationships and gave unions the power to demand wages and ben efits at above-market levels. The unions were successful in convincing the public that most of their gains were at the expense of employers and could somehow be squeezed out of profits; thus, strikes were always repres·ented as being against certain compa nies and not agains,t the public.

The unions were also able to con vince non-unioniz·ed workers that they, too, were indirectly benefit ing from various labor settle ments, despite the fact that union activity had the ·effect of raising prices and increasing the numbers of workers who were competing for non-unionized employment (hence forcing wages down in that 1976 WHY "TEACHER POWER" HAD TO HAPPEN 329 unorganized part of the economy) . Apparently few people, includ ing leading economists, reali~,ed that if every worker belonged to a militant union, the resullt could only be a high 'level of unemploy ment, because it would be impos sible to give everybody the same pay and benefits of workers in highly skilled trades or in capital intensive industries such as steel and automobiles. Union leaders did nothing to explain such facts, since it has been in their interest to increase their membership in every possible way and to present their mission as a struggle to force management to share swollen profits with the workers.

Meanwhile, teachers and other public employees began to feel that unionized employees in the private sector were moving far ahead of them in pay and benefits. There has been a tradition that public employees should not be permitted to strike, but it is ob vious that such laws are not likely to be enforced by vote-conscious public officials. The rapid build up of Government activity in ev.,. ery field has created vast armies of public employees with common interests and considerable polit ical power. The same rationale that is used to justify strikes in the private sector can also be used to justify strikes of teachers and other public employees. Other union mem bers, though perhaps personally disturbed when their own teachers and garbage collectors go on strike, cannot really oppose such strikes in principle without undermining their own position. The leaders of craft and industrial unions are in a similar bind; they need the po litical support of public employees' unions and must therefore defend the right of public employees to strike.

So it is unrealistic to believe that specia'l laws can be passed or ,enforced to make teachers and other public employees moderate their demands. The unionization of these groups was really a log ical extension hoth of union growth and of the expansion of govern ment into so many fields. True, it will prove to be somewhat more difficult for public employees to present their case, since they are not bargaining with a private em ployer who can be accused of mak ing "unconscionable profits." But with these unions acquiring con siderable political power, they don't have to be overly concerned about such matters. Where Will It End? With so many forms of compul sion working in their favor, teach ers will undoubtedly attain Mr. Ryor's goal of becoming the fore most political power iIi the nation.

330 THE FREEMAN June There are few countervailing forc es that might prevent them from reaching this goal. Most of the efforts to launch private schools and other movements in competi tion with the governmental educa tional effort are spotty and are not likely to offer suitable alterna tives to the existing system. Teacher power is indeed an un challengeable reality, largely be cause power has been placed in the hands of teachers' 'organizations and there's nothing around that can challenge it. Some libertarians have long realized that the 'educa tional system was headed in this direction. Writing more than 12 years ago, Leonard Read noted that the teachers were in a good position to seize control of public education: The government educational effort is a political apparatus and behaves accordingly. The indifference of voters invites special interests to assume command. For instance, if teachers adequately organize, they can easily control the government school system and supplant the voters as the responsibility-authority foun tainhead. 'The deputies, the superin tendents, the Board of Education, and the voters become the teachers' aides, so to speak, helping primarily as taxpayers. 4 4 Leonard E. Read, writing on "Aca demic Freedom," in Essays on Liberty, Vol. X, (Irvington, N.Y., Foundation for Economic Education, Inc., 1963), p, 370.

This does not mean, however, that we are about to enter a long night of dictatorship at the hands of teaching professionals. Teacher power is bound to create its own excesses, and the same compulsions tha t give teachers so much lever age in controlling the educational system are dangerous weaknesses in their program. Some libertar ians have always feared that teacher control of the governmen tal educational system will bring brainwashing and total thought control. The more probable result is that the abuses of teacher pow er will also tend to discredit gov ernment education. As the system comes to be more completely the fiefdom of teachers, the problem of winning public support and co operation is bound to become acute. We can also be certain that teachers will be unable to deliver the kind of results that are prom ised in all their shrill rhetoric about the quality education that is supposed to come about when teachers receive more pay and ben efits. Public schools are bedeviled by many problems that are not likely to dissolve no matter how much power teachers possess. We can even predict that teacher pressure to increase expenditures for public schools will tend to demonstrate the limitations of gov ernment education. Teachers will either be forced to re-examine 1976 WHY "TEACHER POWER" HAD TO HAPPEN 331 their programs or to falsify the results of teaching. In fact, a form of the latter practice is seen in the current policy of issuing diplomas to poorly-,educated students.

Still another reaction to teacher power will be the growing disen chantment of 'liberal intellectuals who have heretofore favored pub lic education. These intellectuals, despite a certain naivete about hu man nature, believe that educa tional standards should be high and many of them are becoming critical of public schools and ex cessive egalitarianism in educa tion. This disenchantment is likely to result in more criticism 'of pub lic education from unexpected and influential quarters. Meanwhile, there is certain to be a small but lively market for private education of all kinds in the years ahead, unless compulsion is used to stamp it out. Private education is still a'live and well everywhere in the United States. The parochial schools and exclu sive private schools are only part of it. There are also thousands of students receiving instruction from tutors, private classes, business schools, trade schools, privately supported colleges, foundations, correspondence schools, self-im provement courses, apprenticeships ... well, you name it. And there's still a great deal of respect for the grand education that a person can obtain simply through his own reading and conversations with others. Teachers will probably seize enough power to dominate the governmental educational ap paratus and the formal schooling program. They are not likely to control the education of people who want to think for thelnselves.

Given the conditions of our times, teacher power had to happen-but_ its use and abuse is likely to be a sound education for all of us. " IDEAS ON LIBERTY Education in America EDUCATION in America has become a reflection of the insistence that education be a function' of government, cost free to partici pating students, fully financed at taxpayer expense. What origi nated as local schooling, supported by taxation in the immediate community, (and therefore somewhat responsive to local and parental wishes) has inexorably moved toward bureaucratic big ness - the fate of all publicly funded projects. GEORGE CHARLES ROCHE III ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics, has a Masters de gree in business administration, has worked two years in Sweden, and now works·· as a professional systems analyst. He is a busi nessman who is active in community and church affairs, is a free lance author, and is often called on to speak. He lives with his wife and children on a small farm just out side of Salt Lake City.

All rights reserved. 332 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

IL On Human Rights and Government This continues a series of articles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. WE HAD TWO ALTERNATIVES: to yield to arbitrary regulations, un reasonable taxation, and meddling in matters that rightly appertain to one's private life; or, to resist. At the outset, our resistance amounted to petitions, emissaries, and other appropriate measures; but those efforts only solicited greater oppression instead of the relief we sought. Finally, in alarm for the safety of our most funda mental rights, and resolved by King George's declaration that we must submit or conquer, we went to war. Your condition is similar to ours; in some regards better, in others worse. You can employ your Constitutional prerogatives to rec tify the abuses of your govern ment; but, on the other hand, you do not recognize the full import of the encroachments being made, upon your rights. Human rights \vas a subject we were wont to dis cuss, and it contributed the princi, pal motive in our fight for liberty.

The desire 'of my heart, in your regard, is to give you a, full com prehension and a forceful convic tion of both the type and source of your natural rights, for that would animate, empOVler, and guide you in your response to the growing intrusions of your government. In consequence of that wish I invite you to the fol1owing discussion. Please bear with me, for I mean to be brief but refuse to be super ficial. First, consider a stone. Does it have the right to occupy a part of the earth? What then of a poplar tree: has it the right to push aside the stone, to mine the ground for its sustenance, and to inhabit its portion of the world? Then reflect 333 334 THE FREEMAN June upon the beaver. Has it not the right to harvest the poplar and construct a home for itself and offspring? What is the source of the obvious rights of these things? They are inherent and intrinsic in their very beings. Their rights are not some attachment or append age, but an integral part of their very existence, placed there by a wise Providence in the instant of their creation. So it is that man, in like fashion, is endowed by his Creator with certain unalienable rights: the divine rights of man.

Please observe how the rights of the poplar superseded those of the stone, and the beaver's rights were greater than the tree's; so man in fringes upon the rights of them all for his own purposes, all of which is in harmony with the order of creation. Similarly, man is subject to the rights and powers of the Almighty, his Creator. Therefore, the entire essence of the matter of men and governments is revealed in the question: which is greater, the creator or the created? It seems so simple, does it not? Yet that is the crux of the struggle for freedom in all ages; and you should remember that anyone who vvould put government above man seeks to invert the order of crea tion and is in rebellion against his Creator. Let us not cloak the matter of human rights in any mantle of mysticism: they do not arise from some philosophical argument, or inscrutable religious dogma; they are as real as the powers from which they spring! Whit precisely is a right? It is the authority or prerogative to use an inherent power or capacity. All creatures come into existence with certain powers and the necessary author ity to employ them; or, to what use is a power if there be no right to exercise it?

Like the 'stone, the poplar, and the beaver,man is created with his characteristic abilities. He is con ceived to think, feel, act, and influ ence people and things about him; and if he have those faculties, he must also have the right to use them. Any other condition denies him the exercise of those attributes which make him what he is, and transforms him into some lower order of creation. He is endowed by his Creator with powers to build and to destroy, and the right to use those powers according to his own free will. But, if every man is to have free and equal use of his inherent abili ties (which is what we meant by "created equal") , then the one man must be restrained from intruding upon the rights of the other; for, if one man be given the right to trample the rights of another, then the first has power over the very 1976 A NEW MESSAGE - ON HUMAN RIGHTS AND GOVERNMENT 335 soul of the second, to prevent him the free development of his poten tial. It is precisely at this point that the requirement for good gov ernment arises; to insure that men will be restrained from abusing their powers by inflicting their own will upon their neighbors.

You will notice that government has no rights to give to man, but can only operate in the negative role of prevention and punishment, to discourage man from the wrong ful employment of the powers and rights he already possesses. But more than that, notice that when those who direct the government (whether its officers or the citizens who elect them) take upon them selves the supposed authority to use the force of government upon other citizens to wrongfully in fringe upon their rights, then gov ernment is made to operate in di rect opposition to its only legiti mate purpose for existence: then there is oppression. To whatever degree men use government to im pose their will upon their fellows, to that degree are they tyrants. You have allowed yourselves to be taught the concept that govern ment is a creature in its own right ; that it has its own inherent rights and powers. That is common non sense! Government is nothing without officers to run it and citi zens to respect it. Strictly speaking, there are no good or bad gov ernments (some are more wisely organized than others), but only good and bad men. If your govern ment has run afoul, it is not. the fault of your government, for you will find it very difficult to dis.:.

cover ways to improve your Con stitution in its ability to prevent government officials from misus ing their authority. Nay, the error is not in the Constitution, it is in those who have abused the public trust in violation of the Constitu tion, and it is in those who have allowed them to continue in that abuse. You will do well to ponder these thoughts carefully in your minds and hearts, for upon these concepts rises the plan of government which has given greater protection to the divine rights and powers of man than any other in all history. If you fail to understand these things, you will not understand your Constitution, and if you do not unders tand your Consti tu tion, you will not be able to keep it. Now go back with me a moment and notice that the foremost at tribute of the rights of the stone, the poplar, and the beaver was their right to property; and what is more, if that right be denied them, they would he unable to ful fill the purpose of their existence.

The stone would have no place, the 336 THE FREEMAN June' tree no nourishment, and the bea verno hope. Likewise man, in con sequence of his existence, has the right to earn, own, and control pro perty of all types. To deny him that divine right is to destroy his op portunity to realize the fulfillment of his being and to p1ace hIm low er in the order of creation than the stones beneath his feet! An impos sible concept ?Then beware of those who seek to direct you in the use of your property! Now consider the rights of two men in relation to each other. Can one have more rights than another by virtue of his being? We might as well ask if the one has a greater right to attain fulfillment or to pursue happiness (as we were wont to say) than the other. No, not among men; they are created equal in all their rights. As soon as we allow the one more right than another, so soon do we de clare that the one should be mas ter and the other servant. Neither can any man appoint himself ruler over another without casting him self as the embodiment of oppres sion.

And finally, consider two men acting in concert. Do they, by rea son of their number and associa tion have any greater right than either of them alone? No. They may form alliances, plot, and plan, but strive as they may, they can not conjure up any greater rights than they possessed before they were organized. The reason for this is not difficult to ascertain: societies, alliances, and govern ments are only abstractions, con veniences of. thought and speech, and have no real, tangible exist ence in and of themselves. They are but words representing inter relationships established among men through the exercise of their individual powers. If a society or government had a palpable being of .itself, it too would contain its own intrinsic source of rights; but all such are merely groups of purposes, rules, actions, and persons, only the last of which possesses tangible being and its attendant rights. There fore, no organization, regardless of the exalted or base nature of its goals, can correctly exercise any rights greater than those of its creator, man.

Listen well my children, for it is ignorance of this principle which has allowed you to sleep while your government gained so much control of your lives, and by the same token, it is by the reestab lishment of this precept· that you will extract yourselves from its grip. Were men governed by angels, there would be no need for govern ments administered by men; but the natural man is everywhere his 1976 A NEW MESSAGE - ON HUMAN RIGHTS AND GOVERNMENT 337 o\vn enemy and full of mischief, which necessitates an organization able to protect the inherent rights of its members from the abuse of their fellows. Thus men delegate a portion of their rights to govern ments in order to protect all their rights. Good government must de rive its powers from the consent of the governed, for as surely as it steps beyond that authority, so surely does it partake of the whole spirit and intent of tyranny.

Therefore, government must be restricted to those activities which anyone of its citizens might right fully pursue; for if the individual have not the right,how shall the government obtain it save by creat ing some supposed right out of nothing? Thus the difficulty in framing a good government lies in this: that it first must be given the power to restrain its citizens from violating the rights of their fellows, and at the same time the citizens must be able to control their government lest it gain the upper hand. The purposes for which good men create govern ments are to protect their lives and rights frop1 domestic and foreign dangers, and to assure them the peace and liberty in which they may reach for the heights of their noblest dreams. We wittingly formed a limited federal government, a necessary instrument of national security, and the people consented to endow it with authority by ratification of the Constitution. It would be dis appointing enough if your govern ment were now only huge, clumsy, and misused by ambitious men; but it has manufactured rights out of thin air .,artd now imposes itself upon you under the pretense of as sumed powers. There is one of your greatest dangers. You must regain control of that usurpative monster ere it swallows all your rights, for when it has accom plished that it will have consumed the purpose of your lives also.

I perceive that you do not fully comprehend that your government has presumed to create rights unto itself, and thereby violated yours; consequently I shall make that the topic of a future discussion. For the purposes of this treatise, I vvish to turn your attention to the magnificent and satisfying re wards which may obtain in a truly free society. Let me give you a glimpse of the vision that ani mated us during our discourage ments and led us victorious through the perils of our revolu tion. One of our troubles was the be,.. lief held by some of our country men in the divine right of kings; although, the only difficulty with that doctrine was that it was limit ed to the person of the' monarch, 338 THE FREEMAN June whereas in truth, every man ought. to recognize his divine right and obligation to correctly and justly administer the affairs of his own kingdom. Every human being has a king dom, a province which consists of all the persons and things for which he is responsible. Those wi thin his province have likewise their individual realms of domin ion; the child has his possessions and household chores; the parents have their children, the home, and their livelihood; the local alderman has his ward; and so on: and every man, as both king' and sub ject, must respect the rights of his charges to their lives, liberty, property, and happiness. By ad ministering with equity, charity, and humility, he may attract to himself other persons and things which would be pleased to place themselves under his influence. It is a heavenly order wherein each is allowed the free exercise of his rights and talents, and each is re sponsible and accountable for his own conduct. Clearly, there is the system where all can develop their character and talents to the fullest.

There is the key to noble human progress. It is especially necessary for you to understand the relationship between parent and child, as you have some difficulty in that matter. As man is the creation of, and in subjection to the Almighty, so ought children, partially the crea tion of their parents, be in like subjection to them until they are of age. The Almighty does not force his will upon you, but gives you coun sel and love, and holds you account able for your actions ; let parents regard their children in like fash ion. Your children have been taught to rebel against your au thority and to claim immunity to the laws to which they have not assented. Has the Creator asked our assent in respect to His laws? A child has neither the discipline nor the wisdom to live without the law or to assist in its formation; but a child, for the sake of order in society and its own pfotection, is obliged to obey the law, for that is in harmony with the order of creation and the plan of a free so ciety.

In such a society, each man is free to pursue those occupations to which he is best suited and which w,ill bring him the greatest satis factions (within the law). The in dolent poor are allowed to continue in the state they have chosen, and the misfortunate poor and the aged come by their condition with hon or. The rich who are wise enough to share their plenty have no cause to rebel at the thought of trans ferring some of their excess to 1976 A NEW MESSAGE - ON HUMAN RIGHTS AND GOVERNMENT 339 those who lack, and find in the at tempt the personal rewards of compassion and charity. Thus can man lift himself and those about him. For one man to lift another, both must be free; all else is mas tery and servitude, a polarity which ever tends to evil. Now consider the full measure and meaning of true liberty, that sublime state we envisioned as we framed the Constitution, and the dream that lifted America to a higher plane than any nation has achieved before or since. Only in a society where each individual is allowed the free exercise of his rights and faculties and is held responsible for his actions, can he have complete opportunity to ap proach the realization of the full capacity of his being, and fulfull the purpose of his existence. And what is that purpose? Nature an swers all around that as sand is made to stone, and poplar seed to poplar tree, and young beaver to adult engineer; so man, the child of God, should strive to use all rightful means to draw to himself wisdom and noble influence, so that he may, as much as possible, bless all in his province through love, counsel, and liberty. That was our vision. Now it is yours. ~ Next: III. On The Constitution IDEAS ON LIBERTY Magna Charta OUR WRITER •••tells us that formerly the right of taxation was in the King only. I should have been glad if he had pointed us to that time. We know that kings - even English kings - have lost their crowns and their heads for assuming such a right.

'Tis true this strange claim has occasioned much contention, and it always will as long as the people understand "the great charter of nature upon which Magna Charta itself is founded, - No man can take another's property from him without his consent. This is .the law of nature; and a violation of it is the same thing, whether it be done by one man who is called a king, or by five hundred of another denomination ... SAMUEL ADAMS, Boston Gazette, JAN. 9, 1769 There Ought "'OIG to be a Law CLARENCE B. CARSON PREMIER GEORGES CLEMENC~AU of France is supposed to have re marked, probably out of exaspera tion, about Woodrow Wilson's peace settlement proposals after World War I: "That man Wilson has fourteen points when God Al mighty had only ten." Clemen ceau~ssentiments probably have been shared by generations of stu dents who have had the. onerous task of memorizing or trying to remember Wilson's Fourteen Points. It must be admitted, how ever, that by comparison with the multiplicity of laws, regulations, restrictions, prescriptions, court orders, and what not that AmerDr. Carson has written and taught extensively, specializing in American intellectual history.

His most recent book, The Rebirth of Liberty (1973), covers the founding of the American Republic from 1760 to 1800. 340 icans live under today Wilson's points were brevityl and concise ness itself. Americans live under municipal ordinances or rules set forth by county commissioners, under a vast assortment of state laws and regulations, and .under the assertive umbrella of Federal laws and administrative rule mak ing bodies. A few years ago, a student came to me after class to ask what he had to do in order to go into busi ness. The student was a man, pos sibly in his thirties, for it was an evening class, and the question was not an academic one. He and another man were thinking of forming a partnership to magu facture components for something or other. Truthfully, I did not know the answer to his question, 1976 THERE OUGHT NOT TO BE A LAW 341 but I tried to be helpful by sug gesting what came to my mind.

They would need a license, I said, and then they could - well - just go into business. My innocence and ignorance were exceeded only by my audaci ty in attempting to answer such a ques,tion. What they needed, of course, was a lawyer, or a battery of them, a Certified Public Ac countant, a number of political friends in· high and low places, an inordinate amount of audacity and tenacity, and a considerable bank roB. In that state, they would need to register the name of the com pany and, if it was made up, ad vertise it as a fictitious name in the newspapers. Their location would need to be checked for com pliance with zoning ordinances and pollution controls. The fire department would need to inspect the building and its contents. A bookkeeping sy~tem would have to be set up that would satisfy the various tax collectors. If patents were involved, they would need to be researched, applications made, or whatever. But why go on, for who could really say all that ought to be done before going into busi ness?

Social Reform For a good many years now America has been more or less under the sway of the notion that society should be reconstructed, controlled, and directed by govern ment. There are many sources of this notion, but there is no bebter way to get to it quickly than in the writings of two fledgling re-. formers of the early twentieth century, Walter Lippmann and Walter Weyl. Lippmann sa.id, "We can no longer treat life as some thing that has trickled down to ,us. We have to deal with it deliber ately, devise its social organiza tion, alter its tools, formulate its method, educate and control it."l W·eyl described how it was to be done: "To accomplish these ends the democracy will rely upon the trade-union, the association of consumers, and other indus!trial agencies. It will, above all, rely upon the state."2 That, of course, has been what w'as done, rely upon government, for that was his meaning.

r:(his notion has now been im plemented in hundreds, or thou sands, of ways. Acts have been passed by legislatures, court or ders issued, administra1tive rules promulgated, and vast bureaucra cies created with the object of con trolling the behavior of Ameri cans. Massive efforts have been 1 Walter Lippmann, Drift and Mastery (Englewood Cliffs: Prentice-Hall, 1961), p.70. 2 Walter E. Weyl, The New Democracy (New York: Macmillan, 1912), p. 297. Emphasis added.

" 342 THE FREEMAN June made to break up what were called monopolies, to take over and con trol the money supply, to regulate the operation of businesses, to train the young in the new "social ity," to renovate the cities, to sup plement the income of farmers, to subsidize businesses, to license, prescribe the training for, and adopt behavioral policies for occu pations and professions, to sup port labor union organization, to change our behavior by spot an nouncements on radio and tele vision, to oversee some of the me dia of communication, to regulate transportation, to integrate the races, to provide "free" goods and services (of the kind they "should" want and use) to indigents, to the young, to the aged, and to who ever might be in need. The state the government - has been relied upon to pass laws that are won drous and awesome in their va riety and detail with the purport ed object of achieving the good society.

One might suppose - one from another planet, that is - that all these boons from the state would have inspired in the citizenry such gratitude toward government that they would hasten to obey its will and hold in utmost contempt any who were truculent toward its powers. Not so, however, for law lessness is rampant, and contempt for those who govern appears to he at a precarious level. The number of criminal prosecutions and civil suits is growing. The newspapers say that what they label as "white collar crime" is increasing more rapidly than any other. There is widespread opinion, informed and uninformed, that the number of people caught and prosecuted is only the exposed tip of the iceberg of lawlessness. It is common to hear someone say, particularly when a politician is charged with some violation of the law, that what separates him from most of the rest is that he got caught. The number of police men on the New York City force increased from a bit over 18,000 in 1950 to just under 31,000 in 1972, in Philadelphia from 4,889 to 8,183, in Chicago from 6,961 to 13,125, and in Los Angeles from 4,124 to 7,083. Some resistance to the law is open, as in rioting, ob struction of the police, and flout ing of the law, but most of it is more or less covert. The more government attempts to do by law the less it achieves by way of compliance.

Support for the Law There are many reasons why it is a mistake to rely upon govern ment to ,direct and control social development, but there are two that are directly tied to law and la,v enforcement. One is that for 1976 THERE OUGHT NOT TO BE A LAW 343 a law to succeed in its object it must be widely accepted and gen erally complied with voluntarily. Violations need to be exceptional, and even then it is desirable when the criminal knows· or accepts the fact that what he did was wrong. (It may be that law enforcement can succeed by continual terroris tic tactics, but American reform ers, at least, have usually eschewed such methods.) Reformers may have accepted this notion in the ory, but in practice they have sought to give their reforms the color of law whether or not there was a consensus behind them. They have used presidential de crees when Congress or the states would not act. They have made changes by simple act of maj ori ties in Congress rather than get ting constitutional amendments.

Supreme· Court decisions have been used to do what Congress would not. Administrative bodies with only a tincture of popular support have put into effect a vast assortment of rules and regula tions, often in defiance of restric tions written into law by Congress. They have proclaimed that court decisions were "the law of the land," when court decisions were only the law of the case. In short, reformers have frequently, if not regularly, ignored the requirement that laws to be effecltive need gen era,l and, at some point in their background, consensual accept ance. It is not enough that some body be found which will proclaim them to be law; whatever is prom ulgated must be generally accepted as such. Problem of Enforcement The other fatal error arises out of the failure to understand or focus attention on what is involved in the enforcement of a law that does not have general acceptance, or, for that matter, the enforcement of any law (enforcement implying that there are violators). Law can be thought of in terms that make it noble and majestic. It can be visualized as a classic statue of Justice, blindfolded, on a pedestal, with balanced scales held in the hand. It can be thought of as what is going on· when nine Supreme Court justices assemble within marbled splendor to contemplate some ease. There are elegant phrases by which we attempt to express our respect for law: "A government of laws and not of me'll," "The rule of law," or even just plain "law and order." Prob ably, no one ever put the case for law in more exalted terms than did Thomas Paine when he declared that Americans should let the world know, "so far as we apprpve of monarchy, that in America the law is king. For as in absolute governments the king is law, so in 344 THE FREEMAN June free countries the law ought to be king; and there ought to be no other."3 Nor should what follows be interpreted so as to detract from the importance of rule by law.

But there is a face of the law which rarely if ever excites ad miration or beautifully phrased ac colades; it is law enforcement or, to be more precise, what takes place as law is being enforced. There is good and sufficient reason for this. The enforcement of the law is a squalid, sordid, some times violent, often brutal, frus trating, discouraging, and brutal izing undertaking. Much of the work of doing it is by the tough est, least sensitive, and more vio lently disposed of those among us. It is enforced against a motley throng composed of petty thieves, cheaters, losers, violent and dis enchanted people, and some who do not differ noticeably from the rest of us. We often think of law enforcement as being what the police alone do, but in fact it in cludes also the whole process from investigation through the last day of incarceration. In e1arlier times, most phases of law enforcement took place in pub hlic, some portion of them, at least.

3 Thomas Paine, Common Sense and Other Political Writings, Nelson F. Ad kins, ed. (New York: Liberal Arts Press, 1953) , p. 32. Hangings were once public spec tacles. When corporal or other forms of summary punishment were widely used, the public wit nessed much of it. Until very re cently, some states used convicts for grass cutting and other kinds of clean-up work along highways. Nowadays, however, the public rarely gets more than a glimpse at what goes on in enforcement, sees someone stopped on the highways, may view a trial (but few do, and only a few can), or see prisoners being transferred from one p1ace to another. Laws Proliferate when Enforcement Is Hidden The practice of passing laws to achieve all sorts of purposes has increased in almost direct propor tion with the decline of public contact with the grisly aspects of enforcement. It is easy enough to pass laws, or accept its being done, for all sorts of things if we can succeed in averting our gaze from what is entailed in enforcement.

Those who say that reliance upon government is reliance upon force are right, of course, but it is not simply a reliance upon nice, clean, hygienic force, it is. reliance also upon distempered, petty, mean, and brutalizing force. A book has lately come to hand v{hich makes these points author itatively and in appropriate detail.

1976 THERE OUGHT NOT TO BE A LAW 345 The book 4 was written by Judge Lois G. Forer of the Court of Corn man Pleas in Philadelphia. The Court of Common Pleas in Penn sylvania is at the same level as district courts, superior courts, and circuit courts in most other states. That is, it is the court of origination for the trial of most criminal cases and many civiI suits. The judge in such a court is the fulcrum of those pressures which arise in law enforcement. The court is, to use another figure of speech, the main sieve to which most of those accused of some vio lation of the law must come. Those who go through the holes of the sieves, which is most of them, are either placed on probation or go to prison. Those who do not are set free. No Time for Reform Whether hers is a court of j us tice or inj ustice Judge Forer does not, indeed, as she describes it, cannot, know. She is too busy.

There are too m'any cases. There is too much that there simply is not time to find out. She is inun da,ted with cases, and back of those are many, many more that should have had an earlier hearing. On a typical day in court, she had three extradition cases, four applications for bail: one accused of rape, a 4 The Death of the Law (New York: David McKay, 1975). fourteen year old accused of the murder of a child in a street rum ble, a heroin addict who killed three strangers, and a middle-aged man accused of sodomy, a petition for a second psychiatric examina tion bya lawyer for his client, an applica tion for a'll extension of an extradition warrant, and, as she summarizes, "The parade of ac cused muggers, robbers and thieves continues."5 Each day, it seems, is its own slice of hell for this sensitive judge. She says: At the end of a day in which as a judge I have taken actions affecting for good or ill the lives of perhaps fifteen or twenty litigants and their families, I am drained ....

Was Cottle really guilty? I will never know. Fred made bail. Will he attack someone tonight or tomorrow? One reads the morning paper with apprehension. It is safer for the judge to keep them all locked up [the ac cused, that is, not the newspapers]. There will be an outcry over the one prisoner released who commits a sub sequent offense. Who will know or care about the scores of possibly in nocent prisoners held in jail? Here is a description from an other source of how harried a courtroom may be. In this in stance, it is a court located in Brooklyn and is a division of the New York City Criminal Court: 5 Ibid.; p. 92.

346 THE FREEMAN June Pleas were taken. Decisions were made on whether the accused should be held for grand jury action. Bail was set. There were some brief trials. Probation reports were heard. Sen tences were imposed. The courtroom was crowded, with constant flow and eddy of patrolmen, detectives, law yers, courtroom attendants, district attorney's men, complainants, people freshly arrested, and people brought in from jail. ... The entrance to the courtroom was a pair of swinging doors, and they banged back and forth like a corner saloon on Saturday night. Among the constitutional guar anties being violated was that of pub lic trial. The public was there all right, but it could not witness the trial; the noise made what was going on at the bench inaudible to all but the participants. The woodwork was scarred. The plaster was peeling. It was a huge and grimy bargain base ment of the law ....

... The judge worked on his feet, pacing back and forth and handing out justice right and left, probably with what was, under the circum stances, a good deal of accuracy. But· the circumstances were wretched, and they made real justice impossible .... 6 But it) IS not only by harried j udges i~ dingy courtrooms amid a cacophony of sounds that inj us tice takes place. Judge Forer main tains that the whole sys'tem of ad ministration of justice is ringed 6 Charles Rembar, The End of Obscen ity (New York: Random House, 1968), pp.213-14. about and shot through with in justice. It begins with the police man, sheriff, patrolman, detective, or however. the law enforcement officer may be styled. The police man, Judge Forer points out, "acts as spy, militia, judge and jurY,"7 to which might be added, accuser, prosecutor, defender, and execu tioner. He can, and probably must, frequently look the other way when some crime is being com mi tted, adj udging it to be too petty to bother with, too difficult to prove, or for whatever reason or unreason may lead him to ignore it. Or, he may, because of his mood or the pressures of a quota system or because his shoes hurt his feet or he had a quarrel with his wife, bring in everyone he suspects of wrongdoing, mak ing for unevenness, hence inj us tice. He is equipped with gun, blackjack or nightstick, and hand cuffs, and may use whatever force is deemed necessary to apprehend and subdue miscreants. Summary jus'tice is sometimes dealt out by fist, by stick, by boot, or by gun.

All of this he may do, of course, in the line of duty. But let us stick as close as may be to the norm. Ordinarily, the law enforcement process gets un derway with an arrest. No vio lence may ever occur in a particu7 Forer, op. cit., p~ 180.

1976 THERE OUGHT NOT TO BE A LAW 347 lar case, but from that point until the accused is finally set free com pulsion is at work. The arresting officer may have seen the offense, may suspect one has been com mitted, may be acting on informa tion provided by someone else, or may be serving a warrant issued by a court. In any case, a halt, and, for those unaccustomed to it, a drama'tic halt, is brought to normal life. The accused is sepa rated from family and friends, taken away from job or position and whatever else sustains him in dignity and self-esteem, brought bound, as it may be, to be searched, interrogated, photo graphed, fingerprinted, and locked up in jail. He has become an alien, to at least some degree, from society, and is surrounded by the paraphernalia of shame. Everyone knows, of course, that a man is innocent until proved guilty, that a presumption of in nocence, as it were, shields him from punishment and disgrace.

What everyone knows, however, is in this instance simply not true. The presumption of innocence is a venerable and noble concept of Anglo-American jurisprudence, ad mirable and correctly highly val ued. But everyone, and especially anyone contemplating getting a law passed, needs to understand that it is a concept with only a most limi,ted application. The punishment of a man who has been arrested has already begun, wheth er he is guilty or innocent. There is only one time and one place in the whole extensive process of law enforcement where a presumption of innocence is supposed to prevail according to our law, and that is during the trial in a courtroom after the accused has pleaded his innocence. At all other times and places there is a presumption of guilt, most likely, and it probably could not be otherwise. Whatever Happened to the Presumption of Innocence? It needs to be understood, too, that most of those who come into the toils of the law never receive the benefit of a presumption of innocence. The arresting officer almost certainly believes him to be guilty. It is much easier for him to assume guilt. If he aS8um.ed innocence (to get a,way from the ter'minology of the law, which speaks of presumption) it would mean that he was taking away the Uberty of an inn6cent man, that he was doing something unjust and even probahly illegal. Jailers and all those who have to do with holding people in custody need to believe them guilty for like rea sons.

Little enough is known about what takes place in ~nterrogation, but it is safe to assume that if an 348 THE FREEMAN June arrest has preceded interrogation the interrogator is likely to as sume that the accused is guilty. Certainly, any interrogatio'n pro ceeding under any but the most respectful and polite circumstances will have an underlying assump tion. Quite often, the accused will be asked questions which place on him the burden of proving that he is innocent. Guilt is implied by any pressure which the interroga tion applies. The judge who sets bail cannot assume innocence at that point, for if he were innocent it would be improper to re'quire any hail for him to be ,loosed. The most extensive injustice arising from. this tacit assumption of guilt oc curs, however,for those who can not make bail. They are then held in jail, ordinarily, until a trial is held. Judge Forer speaks of six to eight months in jail prior to trial as if it were commonplace.

Circuit Court Judge Richard Kelly testified in this fashion about some of the inj us,tices of lengthy incarceration prior to trial before a committee of the United States House of Representatives. He did not assume that the jailed person might have been innocent, which may have been revealing or only indicated that his testimony was pointed in a particular direction because the committee was investi gating prison conditions. He said: Most of the people that go to jail are poor .... They are young, fre quently they have wives and children, and if you put them in jail and you keep them there for 4 or 5 months while you are processing their case, the refrigerator is repossessed, they lose their car, they may lose their wife .... And when you finally turn that man loose ... it would be a hope less situation for a str<?ng person, and it is just completely hopeless for a weak person. 8 Of conditions in j ail, he noted: So there is a lot that can be done in that area about expediting the cases, because a lot of tragedy takes place in these county jails. It does in my circuit. There are sexual assaults and other types of physical assaults.

There is nothing in the way of recre ation or relief for these people .... 9 When a grand jury is brought into play prior to the trial, there may be a modicum of presumption of innocence, hut it is only a modi cum. The members of the grand jury hear only one side of the evi dence, that presented by the prose cutor, and he may present only so much as he judges to be most ben eficial in making his case. The grand jury is called on only to 8 Hearings Before the Select Commit tee on Crime House of Representatives, I (Washington: U. S. Government Print ing Office, 1972), 251. 9 Ibid., p. 239.

1976 THERE OUGHT NOT TO BE A LAW 349 determine whether, or not there is sufficient evidence against the ac cused to warrant a trial; it deter mines neither guilt nor innocence. Most criminal cases are never tried. Judge Forer says: Few defendants are able to survive, financially and emotionally to utilize all the procedures which due process mandates. If any appreciable number of persons did exercise all these rights, refused to plead guilty and demanded a trial, the entire system of criminal justice would grind to a halt. Approximately 80 to 85 per cent of all accused persons plead guilty to some charge and avoid tria1. 10 But this by no means includes all who are accused of a crime who are never tried. Some are judged mentally incompetent or are other wise unable to defend themselves and are not tried. Many, many oth ers avoid trial by forfeiting fines, paying off their accuser and get ting the charges dropped, or skip ping bail. Indeed, the prosecutor may decide not to prosecute at some stage after arrest but be fore trial, and the charges will be dropped. For all these people, no presumption of innocence may have been brought to bear in any significant way.

But, it may be objected, if one has forfeited bail, paid off his ac cuser, skipped bail, or pleaded 10 Forer, Ope cit., p. 120. guilty, he must have been guilty indeed. It does not follow, though in the eyes of the law it may be the only possible conclusion. Trials are costly, and the outcome is al ways uncertain. Even those who plead guilty may be innocent of the crime they plead guilty to, or of any crime for that matter. Guilty pleas frequently result from plea bargaining. The accused agrees to plead guilty to a lesser charge, and he may hope or have been told that he will receive a suspended sentence or fine rather than the extended prison sentence that awaits him if he is tried and found guilty. It takes no great amount of sophistication to under stand that a guilty plea is a favor to the prosecutor, probably to the judge, and enahles the court to get on with its business. To insist up on a trial is to court the wrath of these powerful officials. Would they not be expected to "throw the book at" a'nyone' so obstinate?

Would it not be better to please the prosecutor and plead guilty when a man has trouble enough already? In any case, all plea bar gaining entails great likelihood of inj ustice. If the man is guilty as accused but let off on a lesser charge, he has not been punished as the .Jaw requires. If he was in nocent, whatever penalty he re ceived would be too much. There are many areas that need 350 THE FREEMAN June investigation by those who would rely on the state to reconstruct society, but there is one area that is absolutely essential. It is the arena in which law enforcement is completed. It is prison. Those who are convicted of a ·crime in America today are usually pun ished in one or more of three ways: by fine, by being placed on probation, or by imprisonment. Imprisonment is the ultimate re sort to force that is normally sanc tioned in the United States today. The reliance upon government is ultimately reliance upon prisons, for all who resist significantly the decrees of government may be im prisoned.

The Stigma of Prison Prisons are notorious places, and those who have served time in them have a stigma attached to them. The tales of horror that may be heard from them during any in vestigation are such that it would be appropriate that the benedic tion which judges have ordinarily said for those sentenced to execu tion should be extended to those sent to prison as well. It might go something like this: "You are sen tenced to x number of years in prison. May God have mercy on your soul." There is no need here to recount the horrors, for they involve everything from having to eat dog food (as punishment) to beatings to sexual assault to soli tary confinement to denial of med ical care. Imprisonment begins with in dignities, such as the search of the genital area for contraband, and ends by release with some or many rights curtailed. In between lies loss of liberty, subjection to the commands of others, economic deprivation, deprivation of normal sex, separation from society, and many experiences which are bru talizing in tendency. The use of force unredeemed by love and af fection or noble purpose is bru talizing both on those who wield it and those on whom it is exercised.

There is a consensus that both the guards and guarded are so affected in prison. Imprisonment may not be un just, but there are many injustices entailed in it today. The greatest injustice is one that is rarely, if ever, mentioned. It is the deep divisions that exist over the pur pose of imprisonment, divisions that are found among voters, among legislators, among police men, among judges, among lawy ers, among wardens and guards and that afflict the prisoners them selves. Is the purpose of imprisonment to punish? If so, does the im prisonment constitute punishment enough or should it be added to by incivilities and deprivations not 1976 THERE OUGHT NOT TO BE A LAW 351 inherent to prison? Is it the pur pose of imprisonment to remove dangerous persons from among us? If so, minimum security pri sons are probably a sad joke, and who has certified them safe when they are let loose? Is the purpose to rehabilitate the prisoners?

Now all these may be proper purposes of imprisonment, but if injustice is to be avoided they need to be arranged in a hierarchy to which we can generally subscribe. It is unjust to have one judge pun ishing and another rehabilitating, one parole officer removing danger ous persons and another punish ing' all for the same or like of fenses. It is a noble purpose to re form evil men, but the state is committed to justice, and when it embarks on reform it commits in justice after inj ustice. How this occurs is told over and over by prisoners. Probably, the most common complaint of prison ers is the inequity in sentencing. Here is testimony on the point by a prisoner at Attica in New York: So, what happens? You come to Attica, and then you figure you will get a cellblock with somebody else who has the same crime as you, maybe, and he maybe gets 3 years and I get maybe 20. I get 10, somebody else gets 5. This disparity in sentencing. Cer tainly some remedy has to be found for the disparity in sentencing of the same identical crime.

Down from my cellblock there's a young lad about 25 years old, mar ried, with two children, smoking marihuana cigarettes .... That man got 7 years ... for smoking or deliv ering some marihuana to an under cover policeman in Jamestown, and he got 7 years for that crime, and the next guy to him got 3 years for first degree manslaughter. The original charge was murder, and he got 3 years.!! Whether the facts were as claimed in this case really does not matter here. They are recited only for im pact. Everyone associated with law enforcement today will admit that the differences in sentencing exist and are common. They are the re sult, mainly, of differences over the purpose of prison. A man might reform himself or be re;. formed in prison if he thinks he is justly there, but he is unlikely to do so if he is consumed by re sentment over the injustice of the sentence in the first place.

There are those who believe that one or another or aIle aspects of law enforcement can and should be reformed. The movement for . prison reform in America is almost as old as the general system of imprisonment is alive and active today. There have been some re cent efforts at modifying the bail bond-jailing system for dealing with persons accused of commit11 Hearings, op. cit., II, 497.

352 THE FREEMAN June ting some crime. Large expendi tures of money are being made to "upgrade" policemen. There is considerable talk and writing about speedier trials. Meanwhile however, court dockets gro~ longer, many prisons are more crowded than earlier, and most people accused of crime go through the same unsavory processes as bef.ore. A Harsh Process This brief excursion into the nether world of law enforcement has not been made, of course, for the purpose of proposing reforms. It has been rather to show that it is a nether world, which it has al ways been so far as the present writer is aware of any history of it. So far as· prison reform goes, reformers succeeded some while back in proscribing corporal pun ishment in prison. Yet, examples still occur of quite brutal physical treatment. The following is from an affidavit by a prisoner at Attica: Officer Burns then moved behind me and struck me on the left side of my head. I was then attacked by sev eral of the officers who grabbed me by the throat, threw me down to the floor, and proceeded to kick me in the head, chest, and testicles. A stick was then jammed under my arm, and my arm was completely twisted around .

. . . I was then dragged down the floor, pulled by the manacles which were on my wrists and kicked as th~se officers threw me into a cell.l 2 The trouble with prisons, some one has observed, is the character of the inmates. It might be added that part of the trouble with them may be attributed to the actions of the guards and other personnel. But there is an underlying trouble with all of law enforcement, a trou ble which makes it belong to the nether world whatever success may attend particular reforms which can be conceived. The trouble arises from the use of force, a word which is surely not accidentally embedded in law enforcement. It is the presence of force which makes it necessary to arrest and confine people accused of crimes, or have them post bond to secure their presence in court. It is the power of the court to take life, liberty, and property which makes me'n dread to come before it and requires drastic measures to assure their presence, even vvhen these measures necessarily are pro ductive of injustices. The fear of these things naturally enough re sults in lying, evasion, and hiding out, and such truth as is ever ob tained much of it will come by an assumption of guilt.

If men are to be held against their will, there are some inescap12 Ibid., 491-92 .

1976 THERE OUGHT NOT TO BE A LAW 353 able accompaniments: strict rules, punishments for violators, and in dignities. Jails require jailers, pri sons require guards, ·and force is in some ineradicable degree brutal. Prisons do not stay reformed; policemen tend to behave as they always have, and crime and pun ishment retain their seedy, un savory, and oft times grisly char acter. Because, well, because the use of force is man's lowest form of activity. Even so, law enforcement can have a high purpose. Government is necessary, and that is just an other way of saying that there must be a body charged with the exclusive power of exercising force within its jurisdiction. Those who enforce the law need the respect, awe, and even sympathy of the citizenry. Theirs is a difficult, dan gerous, and often demoralizing ac tivity which inescapably involves some injustices. The high purpose of law enforcement is to minimize the use of force in society. To that end, it must establish the best ap proximation of justice possible, given its inherent limits.

Restrict Government to Defensive Force Only What this means can now be put simply and directly. If government is to minimize the use of force, it must not be the originator of force. Government must restrict itself to the defensive use of force. The origin of government's exer cise of force is the law. The laws must be restricted to defense against force arising from indi viduals and groups. We cannot rely upon government to transform so ciety, to reform it, remake it, or whatever. When we do, govern ment becomes the originator of force,and, instead of minimizing force it spreads it and makes it endemic. "Social justice," as it has been called, cannot be achieved by government because the more it attempts to do the more it spreads injustices inherent in the exercise of force. Reformers might well wish to make prison more attrac tive, for the thrust of the general reform effort is to confine all of us within strict rules, provide pun ishments for violators, and heap indignities upon us.

There used to be a newspaper cartoon entitled "There ought to be a law." It dealt, as I recall, with those annoyances and aggra vations which we encounter in our daily rounds. Probably, it was meant to be humorous, though it would make a good study to review the cartoons to see if many of the sug gestions have not been made into law today. In any case, the monu mental task confronting us today can best be described in the op posite way: "There ought not to be a law." Many of the ills afflict354 THE FREEMAN June ing law enforcement today - the huge number of arrests, the crowded jails, the lengthy wait be f.ore trial or disposition of cases, the crowded prisons, the .lawless ness and loss of respect for the law - are directly attributable to the plethora of laws on the books. Solutions Other than Laws That there ought not to be a law against many things is the appro priateconclusion that Judge Forer has drawn from her survey of the state of the law today. She says, in part, . . . The overuse of law and legal methods has failed to solve the prob lems. Instead it has resulted in an endemic contempt for all law....

Equal justice under law is, I be lieve, a goal worth pursuing. It can be achieved only if the legal structure is simplified and made accessible to all people, if the courts are limited to the resolution of conflicts and dis putes within their capacity to decide, and if the aim of justice to treat simi !arly situated individuals equally is adhered to. The law should abandon its efforts to restructure the economic and social order and modify behavior of individuals. The limited aim of se curing equal justice is a difficult and taxing goal to attain. It is a task suf ficient for any single institution .... Equal justice cannot be even dimly approximated if law is utilized in an effort to provide all or a major part of the correctives, changes and controIs required by our complex and diverse society.13 If one may venture to supple ment so eloquent a plea, its direc tion is this: Wherever possible, means should be sought to resolve conflicts, inhibit offenses, and deal with problems without recourse to law. Law should be the last resort, and then only on matters with which it can deal. The law is not suited, for example, to settling labor disputes, to running busi nesses, to laying down rules for schools, or thousands of other things. All the time spent on cases in which courts are not really com petent is time taken away from those who must look to the courts for justice.

There ought not to be a law, then. There ought not to be a law to govern matters which have their own natural order, as in economics. There ought not to be a law when other organizations or agen cies can deal more effectively with the issues involved. There ought not to be a law in which government originates the force. There ought not to be laws with stiff penalties for petty offenses. There ought not to be laws at tempting to reconstruct society. 13 Forer, Ope cit., pp. 335-36. Empha sis added.

1976 THERE OUGHT NOT TO BE A LAW 355 There ought not to be a law fix ing interest rates on loans. There ought not to be a law pre scribing box sizes for corn flakes. There ought not to be a law com pelling school attendance. There ought not to be a law re quiring employers to pay women the same as men or men the same as women for equal work. There ought not to be an anti trust law. There ought not to be a mini mum wage law. There ought not to be a law prescribing the distance between rungs on ladders. There ought not to be a law com pelling the bussing of children to distant schools. There ought not to be a law com pelling "contributions" to social security. There ought not to be a law re stricting the amount of political con tributions. There ought not to be a law re quiring the use of metal pipes for , plumbing. There ought not to be a law .... ~ IDEAS ON LIBEHTY Majority Approval LIBERALISM realizes that the rulers, who are always a minority, cannot lastingly remain in officeif not supported by the consent of the majority of those ruled. Whatever the system of government may be, the foundation upon which it is built and rests is always the opinion of those ruled that to obey and to be loyal to this gov ernment better serves their own interests than insurrection and the establishment of another regime. The majority has the power to do away with an unpopular government and uses this power whenever it becomes convinced that its own welfare requires it.

In the long run there is no such thing as an unpopular govern ment. Civil war and revolution are the means by which the discontented majorities overthrow rulers and methods of govern ment which do not suit them. For the sake of domestic peace liberalism aims at democratic government. Democracy is there fore not a revolutionary institution. On the contrary, it is the very means of preventing revolutions and civil wars. It provides a method for the peaceful adjustment of government to the will of the majority. When the men in office and their policies no longer please the majority of the nation, they will - in the next election - be eliminated and replaced by other men espousing different policies. LUDWIG VON MISES, Human Action Adam Smith O-~o ~e Invisi EDMUND A. OPITZ nd WE CELEBRATE in 1976 the bicen tennial of two significant events, the signing of the American Dec laration of Independence, and the publication of The Wealth of Na tions by Adam Smith.

Smith had made a name for himself with an earlier volume en titled Theory of the Moral Senti ments, published in 1759, but he is now remembered mainly for his Wealth of Nations, on which he labored for ten years. T he Wealth of Nations sold briskly in the American colonies, some 2,500 copies within five years of publiThe Reverend Mr. Opitz is a member of the staff of the Foundation for Economic Educa tion, a seminar lecturer, and author of the book, Religion and Capitalism: A11ies Not En emies. This article is from a lecture of February 17, 1976, at the Taft School, Watertown, Connecticut. 356 cation, even though our people were at war. This is a remarkable fact, for there were only three million people living on these shores two centuries ago, and about one-third of these were Loy alists. In England, as in the col onies, there were two opposed po litical factions-Whigs and Tories.

The Tories favored the King and the old regime; the Whigs worked to increase freedom in society. Adam Smith was a Whig; the men we call Founding Fathers were Whigs. There was a Whig faction in the British Parliament and many Englishmen were bound to the American cause by strong in tellectual and emotional ties. Adam Smith's book was warmly received here, not only because it was a great work of literature, but 1976 ADAM SMITH AND THE INVISIBLE HAND 357 also because it provided a philo sophical justification for individ ual freedom in the areas of manu facture and trade. The colonies, of course, were largely agricultural; bu t of necessity there were also artisans of all sorts. There had to be carpenters and cabinet makers, bricklayers and blacksmiths, weav ers and tailors, gunsmiths and bootmakers. These colonial manu facturers and farmers had been practicing economic freedom all along; simply because the Crown was too busy with other matters to interfere seriously. There were numerous laws designed to regu late trade, but the laws were diffi cult to enforce, and so they were ignored.

Mercantilism The nations of Europe at this time embraced a theory of eco nomic organization called "Mer cantilism." Mercantilism was based upon the idea of national rivalry, and each nation sought to get the better of other nations by export ing merchandise in exchange for gold and silver. The goal of Mer cantilism was the enhancement of national prestige by accumulating the precious metals, but the goal was not nearly so significant as the means employed to reach it. Mer cantilism was the planned economy par excellence; the nation was trussed up in a. strait jacket of regulations just about as severe as the controls imposed today upon the people of Russia or China. The modern authoritarian state, of course, has more efficient methods of surveillance and control than did the governments of the seven teenth and eighteenth centuries, bu t the basic idea is similar. Take the theory of Mercantil ism and boil it down. What do you get? You get political control over what you eat. Now, if someone holds the power of decision over you as to whether you eat or starve, he's acquired considerable leverage over every aspect of your life; you do not bite the hand that feeds you! If someone controls your livelihood, you do his bidding, or people start talking about you in .the past tense!

Mercantilism, in short, is the prototype of today's totalitarian state, where government - by con trolling the economy - 'exerts a commanding influence over people in every sector of their lives. The major theme of The Wealth of Nations has to do with the in teraction between government and the economic order. The theory of Mercantilism held that govern ment must control and manage the economy, else production would be chaotic and the right people would not be properly rewarded. Present day collectivists ·concur; they want a national plan which taxes away 358 THE FREEMAN June about 40 per cent of the peoples' earnings in order to redistribute these billions of tax. dollars to po litically selected individuals and groups. Questions of Political Power The actions of the redistributive state - call it the welfare state if you prefer -are political actions. From ancient times to the present, every poIi tical theorist - except the Classical Liberals - tried to frame answers for three questions.

The first question was: Who shall wield power? Whether the structure took the form of a mon archy backed by divine right or a democracy based on the so-called will of the majority, it was essen tial that power be wielded by the small group thought most fit to exercise rule. The ruler's job is to program our lives toward the achievement of national goals. But it was never power simply for power's sake; it was political power for the sake of the economic advantage power bestows. So the second question is: For whose benefit shall this power be wielded? The court at Versailles is a good example of what I mean. The French nobles favored by royalty lived rather well, although they'd rather be caught dead than working. In virtue of their priv ileged position in the political structure, they got something for nothing. I daresay that each of you can think of parallel instances operating today, even in our own country. Now, when someone in a society gets something for nothing through political channels, there are others in that society who are forced to accept nothing for some thing! And the third question, of course, is: At whose expense shall this power be wielded? Somebody must be sacrificed.

Let me repeat these three ques tions, for they provide an apt key to many political puzzles: Who shan wield .power? For whose benefit? At whose expense? One might put this in a formula: Votes and taxes for all; subsidies and privileges for us, our friends, and whoever else happens at the mo ment to pack a lot of political clout. The American system was to be based upon a different idea. It took seriously the ideas of God, the moral order, and the rights of persons. It discarded the notion of using government to arbitrarily disadvantage a selected segment of society, and instead embraced the ideal of equality before the law. Government, in this scheme, func tioned somewhat like an umpire on the baseball field. The umpire does not write the rules for base ball; these have emerged and been inscribed in rule books over the years and they lay down the norms . as to how the game shall be played.

1976 ADAM SMITH AND THE INVISIBLE HAND 359 If any person is on the field it is to be presumed that he has freely chosen to be there, and in his thoughtful moments he knows that the game cannot go on unless there is an impartial arbiter on the field to interpret and enforce last-resort decisions - such as ball or strike, safe or out at first. Government, similarily, enforces the previously agreed upon rules. This' is the political theory of Classical Liberalism, and it marks a radical departure from all other political theories. It declared that the end of government is justice between persons, and maximum liberty for everyone in society. "Justice is the end of govern ment," wrote Madison in the 51st Federalist Paper,. "it is the end of civil society." Government Is Force The point to be stressed is that the essential nature of govern ment - its license to resort to force at some point - is not changed by merely altering the warrant under ,which government acts. Divine right or popular sovereignty - it makes no difference to this point: Government is as government does.

Governmental action is what it is, no matter what sanction might be offered to justify what it does. The nature of goverment remains the same even though its sponsor ship be changed from monarchial power to majority rule. Govern ment always acts with power; in the last resort government uses force to back up its decrees. The government of a society is its police power, and the nature of government remains the same, even when office holders are elected by a vote of the people. And when the police power - government - is limited to keeping the peace of the community by curbing those who disturb the peace - criminals then there is maximum liberty for peaceful citizens. "The history of liberty," wrote Woodrow Wilson in 1912, "is the history of the limitations placed upon governmental power." The 18th century Whigs achieved a limited, monarchy in England, and a constitutional republic for the thirteen colonies. This was a vic tory for freedom over tyranny.

Such battles, however, do not stay won, and in our time many people have lost their freedom. Twentieth century political des potism is much more extensive and severe than the monarchial rule of Smith's day, which is why The Wealth 0 f Nations is still a rele vant book. Smith demonstrated that a country does not need an overall national plan enforced upon people in order to achieve social harmony. This is not to say that a peaceful, orderly society comes about by accident, or as the result 360 THE FREEMAN June of doing nothing. Certain require ments must be met if people are to live at peace with their neigh bors. It is required, first of all, that there be widespread obedience to the moral commandments which forbid murder, theft, misrepresen tation, and covetousness. The sec ond requirement is for a legal sys tem which secures equal justice be fore the law for every person. When these moral and legal re quirements are met, then the peo ple will be led into a system of social cooperation under the divi sion of labor "as if by an invisible hand."

Adam Smith liked this metaphor of "an invisible hand" and used it in Theory of the Moral Sentiments as well as in The Wealth of Na tions. Every person, Smith writes, employs his time, his talents, his capital, so as to direct "industry that its produce may be of the greatest value .... He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an in visible hand to promote an end which was no part of his inten tions." Smith concludes this pas sage by adding, sardonically, "I have never known much good done by those who affected to trade for the public good." What is Adam Smith telling us? He is saying that if we operate ~:thin the proper moral and legal framework, employing our God given talents to the limit of our powers, then we will find individ ual fulfillment directly and get the good society as an unexpected bonus.

Equality, Liberty, Justice The Wealth of Nations is gen erally regarded as a work on eco nomics, but Smith did not think of himself as an economist. Smith was a professor of Moral Philos ophy at the University of Glasgow, where he lectured on ethics, rhe toric, jurisprudence, and political economy. Ask Adam Smith for a thumbnail description of the sys tem of political economy he be lieved in, and he'd reply that he advocated "the liberal plan of equality, liberty and justice." These three virtues together characterize the free society, and in fact they are but three facets ofa single truth. Equality, as the term is used in the Declaration of Independence, and here by Adam Smith, means the abolition of priv ilege - one law for all men alike because all men are one in their essential humanity. Because all people are created equal, it is 1976 ADAM SMITH AND THE INVISIBLE HAND 361 wrong for government to play fav orites and bestow advantages on some at the expense of others. The goal is "equal and exact justice for all men, of whatever state or per suasion" - to quote from Jeffer son's First Inaugural. Justice is equality before the law, and this describes a society where each per son may freely pursue his own goals, provided he does not in fringe the equal right of all the others to pursue theirs.

You're all familiar with the di vision of society into a public sec tor and a private sector; call the former the governmental, coercive sector, if you prefer, and the latter the voluntary sector. When the governmental sector expands, the voluntary sector contracts, and vice versa. The efforts of the old fashioned Whigs and the Classical Liberals were directed toward the goal of a government limited to maintaining the peace of the com munity and assuring justice and fair play among people - the um pire role in society. This expanded the voluntary sector and gave us the ideals of freedom of speech, freedom of the press, and religious liberty. And in 1776, Adam Smith provided a rationale for freedom of economic action. One of the large questions which every society has to face and re solve is: How shall the economic rewards be allocated? Food, Clothing, shelter - as well as things like automobiles, television sets, refri gerators, concerts, and trips to Europe - are in limited supply.

How shall we "divvy up" the avail able quantity of these goods? Who gets what? We know how it was under the old regime: those who wielded political power used it for the eco nomic advantage of themselves and their friends, at the expense of those who lacked political power. There were Haves and Have-nots, and the Haves obtained their wealth by seizing it. But when men are free, eco nomic rewards are parceled out in a different manner. The free so ciety allocates rewards in the mar ket place; the Haves get that way by pleasing the customers, at which game some are more suc cessful than others. Consumer Choice Everyone of us in a free so ciety is rewarded in the market place by his. peers, according to the value willing buyers attach to the goods and services he offers for exchange. This marketplace assessment is made by consumers who are ignorant, venal, biased, stupid; in short, by people very much like us !This does seem to be a clumsy way of deciding how much or how little of this world's goods shall· be put at this or that 362 THE FREEMAN June man's disposal, and so people of every age look for an alternative.

There is an alternative, and it runs something like. this: People are too dumb to know what is good for them, and they fall easy vic tims of Madison Avenue. There fore, let's invite the wise and good to come down from Olympus to sit as a council among men, and we'll appear before them one by one, to be judged on personal merit and rewarded accordingly. Then we'll be assured that those who make a million really deserve it, and those who are paupers belong at that level; and we'll all be contented and happy. What lunacy! The gen uinely wise and good would not accept such a role, and I quote the words of the highest authority de clining it: "Who made me a judge over you?" The Alternative Is Worse The marketplace decision that this man shall earn twenty-five thousand, this one ten, and so on, is not, of course, marked by su pernal wisdom; no one claims this. But it is infinitely better than the alternatlve, which is to recast con sumers into voters, who will elect a body of politicians, who will ap point bureaucrats, who will "divvy up" the wealth by governmental legerdemain. This mad scheme backs away from the imperfect and crashes into the impossible!

There are no perfect arrangements in human affairs, but the fairest distribution of material rewards attainable by imperfect men is to let a man's customers decide how much he should earn; this method will distribute economic goods un equally, but nevertheless equitably. Parenthetically, it should be un derstood that the market does not measure the true worth of a man or a woman. If it did, we would have to rate all who make a lot of money as superior beings - rock music stars, producers of porno films, publishers of dirty books, television commentators, authors of best sellers - and they're not superior. To the contrary! But such people constitute only a tiny sector of the free economy, and they are a very small price to pay for the blessings of liberty we en joy. In a free society, those who earn more than the national average are entitled to enjoy their posses sions, for they've gained them in a system of voluntary exchange; the well-being the Haves enjoy is matched by the well-being they have bestowed upon other people as these other people measure it.

There is genuine reciprocity in the free society. But opponents of the market are blind to its built-in mutuality. The Left, therefore, will make a determined effort to instill a guilty conscience in every1976 ADAM SMITH AND THE INVISIBLE HAND 363 one who lives above the poverty level. They use Karl Marx's ex ploitation theory which alleges that the man who works for wages produces, over and above his wage, a "surplus value" which is gar nisheed by his employer. To be em ployed - they tell us - is to be ex ploited, and the whole capitalist class should feel guilty for deny ing the working class its due! IISurp/us Va/uel/ Exposed This naive and vicious notion was demolished even while Marx still lived, by the economist, Bohm Bawerk - founder of the Austrian School. Bohm-Bawerk did it again in a second book, in 1896, with the result that the exploitation theory is not now promoted even by Communist theoreticians. But the "surplus value" idea does in tensify feelings of envy and guilt, so it is still useful as propaganda.

The free economy sounds pretty good in theory, you might say, but what does it do for the poor? Well, it takes most of them out of that category! A free people becomes a properous people. To the extent that the free economy has been allowed to operate in a nation, in like measure has the free economy elevated more people further out of poverty, faster, than any other system. It is easy to see wh;V this is so. Poverty is a lack of certain things. A man is poor whose supply of food, clothing, and shelter are meager; he has only· one shabby suit, his diet is macaroni and cheese, and he lives in a sparsely furnished room. A man moves out of poverty only as he acquires bet ter clothes, a more varied diet, and then expands into an apartment or a house. People are well off or less well off according as they com mand more or less of the things which are manufactured or grown. This is axi omatic, and it follows that poverty is overcome by in creased productivity and in no other way. America is the world's most properous nation because America has been the most pro ductive nation; we have more wealth because we produce more wealth.

Who has the biggest stake in the free economy? Who has most to lose if the free economy lapses into the planned state? Not the rich; the poor! The corporate ex ecutive type; the shrewd, ener getic, hard-driving, far-seeing, imaginative, nimble, smart, tough executive will make a bundle under any system. In Russia he'd be a commissar. It's the not so smart, not so energetic, not so imagina tive, plodder type who has the big gest stake in the free society. This description fits most of us, and there is a place for us in the free society, where we are rewarded 364 THE FREEMAN June quite handsomely. We'd be serfs, or worse, in most other societies - if we survived liquidation! ~ When people are free, there i~ no guarantee that they'll use their freedom wisely. Freedom of speech does not assure witty conversation, eloquent preaching, or lofty utter ance. Most talk, as a matter of fact, is banal and shallow and gos sipy; but no one on this account suggests we put a political ban on free speech. We have freedom of the press, with the result that we are knee deep in triviality and gar bage. But we support freedom of the press anyway, knowing that a governmentally controlled press would be far worse. Freedom of religion opens the door to all kinds of weird cults, as well as to exotic brands of superstition and magic; but no one advocates that we repeal the First Amendment and set up an American National Church!

That is what freedom is all about - putting up with things we don't like, and living with a lot of people we can barely stand! We must support the processes of free dom even when we cannot endorse everyone of the products of free dom. And that goes for freedom of economic. enterprise as well as Adam Smith advised 200 years ago. Now, neither the free economy nor its business sector can guar antee to every person full realiza tion of his potential talents; this is a matter for individual decision. All the free society can promise is maximum and equal opportunity and this is all the guarantee we need. ~ RIDGWAY K. FOLEY, JR. THE DECLARATION OF INDEPEND ENCE affirms that each individual human· being, by his essential na ture, possesses certain fundamen tal or "inalienable" rights includ ing, in Thomas Jefferson's haunt ing phrase, the right to "life, lib erty and the pursuit of happi ness."i One readily can perceive and contemplate the personal right to live a life in a nonaggressive manner, free from external inter ference >'\oor "man-concocted re..

straints".2 Although it requires greater effort to defend human liberty, the· abstract concept of a human actor unfettered by other persons in seeking his particular destiny can be assimilated by most thinkers. The third part of the trilogy -the· pursuit of happiness - poses the greatest conceptual Mr. Foley, a partner in Souther, Spaulding, Kinsey, Williamson & Schwabe, practices law in Portland, Oregon. problems, yet analysis reveals it to inhabit an equally fundamental and interrelated station with the first two parts of the trinity. In deed, as. this essay explores the issue, the "pursuit of happiness" serves to illuminate the basic meaning of freedom. In many a Iitany of personal rights, one observes the triumvi rate of "life, liberty and prop erty" .3 Surely, the concept of "property rights" ranks among the foremost of misunderstood and maligned tenets. Does "property" in this sense equate with the "pur suit of happiness"? Correctly un derstood, the term "pursuit of happiness" explains the full mean ing of property rig1hts.

Property A part of the confusion and am bivalence normally attendant upon a study of property rights evolves from the failure to realize that the 365 366 THE FREEMAN June phrase contains two words, and that meaning must attach to both "property" and "rights" in ord,er to clarify the speaker/writer's postulate. Traditionally, we attribute to property a definition related to things, corporeal or incorporeal objects ,existing in the real world: (1) land (real property), or (2) livestock/ goods (personal proper ty). Yet, such a simplistic defini tion unduly limits adequate com prehension of the nature of man, his rights and his liberties. Prop erty describes objects, to he sure, but property rights concern the re lationship of an individual to things in the universe. Property itself possesses no rights: can one really impute rights to a home stead, or a blossom, or an auto mobile? By definition, a right con sists of a pre-eminent claim of one human being to a certain state of affairs in contrast to other human beings; thus, nonhuman objects cannot possess rights by the very terms employed. 4 The Concept of Property Rights presupposes a concept of value. 5 Value refers to a subJective indi vidual internal scale of preferences between alternatives. Human ac tion forms a fundamental reality: man acts; he chooses between al ternatives;6 he rests his choices upon (a) his perception of reality and (b) his subjective value judgments or individual scale of pref erences. James Madison, a diminu tive man with a magnificent in sight, touched upon this thought shortly after the birth of the Re public: This term [property], in its partic ular application, means "that domin ion which one man claims and exer cises over the external things of the world, in exclusion of every other in dividual."

In its larger and juster meaning, it embraces everything to which a man may attach a value and have a right, and which leaves to everyone else the like advantage. In the former sense, a man's land, or merchandise, or money, is called his property. In the latter sense, a man has a property in his opinions and the free communication of them. 7 Thus myopia produces a view of property as visible things in the outside world; truth reveals prop erty inherent in ideas, concepts and things of the mind. The laws concerning copyright, trademarks, and trade names rest upon this tacit knowledge. Property Rights Once we understand the breadth and scope of property, it remains imperative to examine the other half of the equation, the concept of property rights. To merely state that property 1976 IN PURSUIT OF HAPPINESS 367 rights refer to the relationship of an individual to a res or an idea vis-a-vis other human actors offers scant insight into· the salient na ture of the doctrine under exami nation. Incisive inquiry demands evaluation of the depth and sweep of the relationship. Generations of law students learned to visualize rights in property as a bundle of sticks, with each succeeding con veyance, transfer or limitation de pleting the original bundle by one or more branches. A California Superior Court judge aptly point ed out the two broad aspects of property rights when he noted the attributes of dominion and exclu sions• A mighty skinny package of limbs remains if one's dominion over an automobile, a book, or some acreage does not countenance the legalexc1usion of other men from its bounds and borders. Like wise, the transitory "right" to ex clude one or more individuals from a given object means little if the party performing the exclusion possesses no personal right to en joyment of the thing in question.

In the broad sense, property rights refer to the legally-sanctioned power of an individual to possess, use, own and exclusively enjoy the res or idea under discussion. 9 Rights represent absolute power to seek an end. The concept of rights cannot tolerate an erosion without destruction of the concept per see In this sense" rights which flow from nature, or the universal truth, or reality, must be perceived as absolute. A right which exists in fantasy, or ephemerally, or at the whim of some other actor, does not deserve the appellation. Consider these strict normative statements in the ambience of property rights. Suppose A owns Blackacre: we commonly announce that he possesses a property right therein. The meaning: A can ex clude all trespassers from Black acre; he can employ it to grow crops or to feed cattle; he can allow it to deteriorate into wrack and ruin, if that be his pleasure; he can open it to the world, or he can bar all others and live in the splendid seclusion of a hermit.

Suppose, however, Blackacre ex ists 'in Jefferson, a state which en gages a planner and embarks upon the device of land-use control and zoning. In so doing, Jefferson (the collective force of mankind as sembled in Jefferson) restricts the permissible uses to which A may put Blackacre. It becomes a con tradiction in terms to speak of A's property rights in Blackacre: A's "rights," now mere illusions, de pend upon the whimsey of others. 10 One might urge, quite reason ably, that restriction of a single aspect of one's rights in property leaves the remainder unsullied: in the foregoing example, Jefferson's 368 THE FREEMAN June zoning ordinance might merely prohibit A from raising sugar beets on his land or from con structing an edifice more than three stories high; all other sticks in A's bundle of rights regarding Blackacre would remain extant. This argument ignores two inter related factors: (a) the concept of fundamentals and (b) the idea of precedent. If property repre sents a right, it must remain un trammeled, secure in its entirety, else it fails to meet the definition of "right". The concept, as well as the definition, represent a funda mental, inalterable principle and, as the late Dr. F. A. Harper made manifest, fundamental principles can be breached but not compro mised. ll Again, contemplate the effect of pr'ecedent, the human tendency to look over one's shoulder and to pattern current conduct upon past action. Our land-use example serves us well in this endeavor, for land-use planning, commenced as simple "agreeable" zoning ordi nances overtly designed to "keep out harmful and obnoxious indus tries", developed into a hydra headed monster encompassing comprehensive plans which detail and manage the every individual action of a community, county, state or region. Refer to A and his Blackacre; if we grant Jefferson the power to take a single twig from A's bundle of rights, we set a dangerous intellectual and prac tical precedent for future incur sions into private rights; each sub sequent norm, grandly cast in elo quent language, designed to pro mote some hallucination labeled "public interest", and calculated to further the aims and ambitions of greedy, avaricious men holding power, feeds upon each past inva sion asa justification for further destruction of human rights.

The Dimension of Property Rights Unbounded Dominion The ahsolute nature of property rights discloses the salient truth that the individual human actor should possess unbounded domin ion and exclusive control over property which he owns. Correct comprehension of this hypothesis compels consideration of three re lated issues which should serve to illuminate the basic precept. First, some analysts suggest a rule resembling the following: each individual should enjoy a right to life, liberty and property without restriction save that he grant an equal, reciprocal right to every other human being and not employ his property in an aggres sive or deceitful manner. Properly understood, this explanation reit erates the former statement. The mere fact that one uses his prop erty as a fraudulent or aggressive 1976 IN PURSUIT OF HAPPINESS 369 implem,ent does not necessarily destroy his relation to that prop erty. Property does not defraud or maim : human actors do. Hope fully, civilization ha,s advanced be yond Anglo-Saxon times of the "bot" and "wergelt" where injured persons wre'aked vengeance upon dumb beasts and inanimate ob jectswhich "caused" ha:r;m. If an individual fires a pistol and in jures another, the proper remedy lies not in destroying the gun man's relationship to his weapon or the pistol itself, but rather in restricting his liberty as a means of societal protection and individ ual restitution. True, some sys tems of justice employ fines and penalties as a means of accom plishing retributive 'ends, thus forcibly altering human relation ships to property; in this sense alone, the second definition may modify the former.

Second, the rule must be under stood as containing an implied caveat that normative regulations pertain to living human actors, in the main. L.egal philosophers have endured a long struggle over the issue of whether, and to what ex tent, a decedent mayor should control the distribution of prop erty. Statutes of Mortmain, the rule against perpetuities, and re straints upon testamentary aliena tion all express the human interest of removing the dead hand (Mortmain) from property which the survivors believe should belong to, and serve, the living. Testators, donors, . and their counsel have proved similarly artful in circum venting some, if not all, of these restrictions by use of trusts, char itable gifts, nonprofit corporations, foundations and other artificial entities which extend beyond the normal human life span. Propo nents of freedom should opt for the maximum donative liberty to possessors of property and should decry attempts to impair the transmittal of goods and ideas ac cording to the owner's quirks and values.

Third, the concept of property must envision contractual freedom upon the part of the living posses sor wholly consonant with the rec ognized power of the testator to bequeath or transfer possessions on his demise. The postulate of un fettered dominion and unqualified authority to exclude others neces sarily demands recognition of the guaranty to every man that he may give, sell, transfer, maintain, keep or destroy his property as he sees fit so long as he does not thereby harm another person en joying a concomitant right. The free society, in final analysis, rests upon the cornerstone of contract, the voluntary and unimpeded transfer and holding of ideas, goods and services. 12 370 THE FREEMAN June The Meaning of Property Property represents created val ue. Meaninglessness mars any ref erence to "property" possessing no value to any individua1. Each hu man being ,evaluates tangible and intangible things upon his scale of preferences and acquires that up on which he places a subjective priority. Two attributes particu larly distinguish man from other inhabitants of the earth: (1) the concept of moral choice, and (2) his power to create and assess value in objects.

Material things evince no prop erty value apart from their rela tionship to one or more men. One cannot meaningfully say that a tree in a pre-human epoch pos sessed a value, or that some later resident of the earth enj oyed a property right in its now-nonex istent trunk, bark or roots. OJ} ex isted in one form or another under the Arabian desert from pre-Cam brian times,' yet it took on signifi cance only with the advent of the modern industrial culture; prior to that event, man did not seek it; subsequent to that occasion, man (or some men) accorded it a place of value in the scheme of things. Yet man's ability to assess value - to evaluate or judge the worth of things or concepts - cannot be divorced from his correlative at tribute, the creation of value. Oil in Saudi Arabia represents no real value to a citizen of Nebraska or Norway without the application of human effort and ingenuity to ex tract, refine, transport, and de liver a usable and useful product to one who wishes to exchange something he has acquired or cre ated for the product. Application of human abilities creates the val ue attached to property.

Man can acquire property by two discrete and disparate means: (1) he can create it directly by his own efforts, or indirectly by creat ing something of value to another person and trading with the other, or (2) he can annex it by coercive and agressive means. In simple language, man procures property rights by creative or by aggressive effort. No matter the mode of ac quisition, property must be cre ated by someone and valued by someone in order to fit the defini tion. Indivisible Rights: Life, Liberty and Property The draftsmen of the Declara tion of Independence and the United States Constitution, like their philosophical predecessors such as John Locke, proclaimed the triumvirate of natural human rights - to life, liberty, and prop erty - as if they formed three dis continuous virtues separated by both conceptual and actual bar riers. In fact and in essence, the 1976 IN PURSUIT OF' HAPPINESS 371 "natural rights" of life, liberty and property present different as pects of the same facade, as though one viewed the identical building from three different angles.

Recur to fundamentals. Every individual possesses a right to live his life unmolested by others so long as he works no force or fraud upon his neighbors, a right to chart his destiny by the particular stars he perceives. 13 Grant this premise and the corollaries dis cussed in this tract fall naturally and inevitably in place. From this fundamental axiom derives the right of each individual to free action, to liberty, since one cannot seek his own subjective ends if other men plot constraints which reduce or eliminate the full sweep of the actor's choice or pre-deter mine his ends. 14 Life mea!ns life lived to its fullest, given the per son's nature and ahility, untar nished by the forceful actions of others. Living without liberty of fers a poor excuse for :life. In like manner, the same fundamental premise begets a right in each man to retain or transfer, on his own terms, that which he creates or produces, "property rights" in the argot, since no one can be mean ingfully free to live his life in quest of his goals if he 'cannot em ploy, enjoy, barter, donate or dev astate that which he has created.

One must not tolerate any limitation on this basiic postulate uu der the guise of state interest or public purpose, else the errors of miscomprehension of fundamentals and undesirable precedent, noted hefore, will 'ineluctably sully the integrity of the solemn doctrine. An advocate might disdain ,the power-nee-right to destroy created value, urging that the "world de serves a masterpiece" or some such tomfoolery. Neither the world at large nor any human being there in can morally stake a claim to that which another has produced. Recall the subjective nature of value and ask whether one could morally condemn Enrico Fermi if he had destroyed his notes and re fused to disclose his findings which led to nuclear detonation: would "the world" be better served with or without his research? The right to property necessarily includes the right to use and dispose of those goods, services a!nd ideas as the possessor sees fit.

This identity of rights under scores the fallacy inherent in the phrase that "human rights deserve a transcendent station when com pared to property rights". Human rights are property rights, and property rights are human rights. 15 All other rights hecome worthless if the state or some in dividual or group of men possess an uncontrollable and pre-emptive power over the property of the 372 THE FREEMAN June owner .16 Property rights mean the rights of a human actor to domin ion and exclusive control over ideas or objects vis-a-v'isother men and women: no more fundamental "human" right exists than the right to use and control things and thoughts so as to manage one's life and follow one's star. Freedom of speech appears spurious where the government prohibits private ownership of all placards, sound trucks, and meeting hans; freedom of press deteriorates into an emp ty semantic exercise where the state monopolizes newsprint and printing presses; anti-loitering laws can nullify a proclaimed free- .

dom of association. 17 Edmund Opitz has put the matter precisely ~ and succinctly from a slightly dif ferent perspective: Despotism does not merely seek to control the external conduct of men; it knows that men may conform ex ternally even while swallowing the revulsion that seethes beneath the surface. Despotism, therefore, must seek to control men's ideas and their thoughts. Once this is accomplished, then each inner-directed man will control his own conduct willy-nilly in accord with the planner's blueprint.l 8 Property control thus wends its inevitable tracks to thought con trol, and thence to personal con trol. Civil liberty and a right to life cannot exist, then, in the absence of an unabridged right to prop erty, for one cannot be truly rec ognized as the skipper of his own Hfe when he must exist at the whim and caprice of others. 19 Yet another facet of the truth of. in divisibility remains to be explored: the necessary interrelationship of human freedom between several individuals. In a word, my free dom depends on yours, and my property rights exist only so long as yours remain inviolate. 20 The invasion of a person's property, for whatever professed reason, de stroys the fundamental inviolabil ity of property generally and af fords a pragmatic precedent for future coercive action.

Dean Russell aptly sums up the case for the indivisibility of lib erty: Freedom is based on ownership. If it is possible for a person to own laI;ld and machines and buildings, it is also possible for him to have freedom of press, speech, and religion. But if it is impossible for a person to buy and sell land and other resources, then it is also impossible for him to have peaceful access to any effective means of disagreeing with the decision of his government. Thus my contention is that, in the final analysis, human free dom stands or falls with the market" economy of private ownership of the means of production and distribu tion.21 1976 IN PURSUIT OF HAPPINESS 373 And Nobel Prize winner, Fried rich A. von Hayek, adds a salient postscript: What our generation has forgotten is that the system of private property is the most important guaranty of freedom, not only for those who own property, but scarcely less for those who do not. 22 The Pursuit 01 Happiness Return now to the resonant Jef fersonian phrase - the pursuit of happiness - and observe how neat ly it fits with the philosophy of freedom and individual property rights discussed.

Ask first: What is happiness? No universal response obtains save in the form of tautology, and with good reason, for happiness de pends solely upon the subjective values of each unique human crea ture. For one it may be lolling on the gentle beaches, for another working on a composition, for a third praising God, for yet an other basking in the ownership of material things. Each person cre ates his own happiness or melan choly according to his character and that ever-present internal scale of preferences and choices between alterna tives. Property may afford the means of achieving hap piness, just as it may constitute the condition itself. Note secondarily, the intentional employment of the term "pursuit". Noone can, or should attempt to, guarantee a happy issue out of the afflictions of this world. Cor relative with man's frailties and finite nature lies the undeniable realization that things do go wrong, that plans come a cropper, that friendships go awry. Law, properly utilized in accordance with the philosophy of freedom, can only guarantee man the liberty to seek happiness, whatever his goals, so long as he does not trample upon the equivalent rights of others.

Accordingly, the phrase "life, liberty and the pursuit of happi ness" truly affords mankind the opportunity to live each solitary life apart from the external bars and restraints imposed by other men, to create and distribute value in the manner and mode which harmonizes with the crea tive tal ents and purposes, and to pursue those values which carry meaning to the unique being holding the particular concept of worth. Thus, the multifaceted language revolves about a single truth: Man lives better and more nearly achieves his potential if other men leave him unhindered. When Worlds Col/ide It remains to discuss the har mony of human values and to con sider the adj ustment of conflicts 374 THE FREEMAN June resulting from competing human drives. Initially, the collision of rights is more apparent than rea1.23 Proper analysis normally defines away the problem. 24 Consider the current miasma of land-use con trol. The advocates envision plan ning and zoning as a means to secure a pleasant environment for the citizenry, away from dust and fumes and ugly edifices. Such a reasonable desire, until viewed under the microscope of rigorous analysis. Remember the salient and valid proposition that property values, like all values, are subjec tive: what is good or beautiful or desirable depends wholly upon the intricacies of the individual per ceiver. If each of us conjured up the form of the perfect "lot" and committed our concepts accurately to paper, ,a comparison would re veal no concatenation of forms: each one of us would provide a dif ferent perception of the idea. 25 Application of these fundamen tals to the present question of land-use planning reveals that each and every 'instance of land-use planning and zoning, no matter how phrased, devolves to one sim ple proposition: one or more peo ple who do not own specific land enjoy control of the political ap paratus which can be employed to require other people to use (or not to use) thejr earned value (land, in this instance) in some manner not desired by the owners. In short, one person or group imposes their subjective values of appro priate land use upon other persons possessjng differing subjective values. One man's green belt amounts to another man's eyesore.

Behind the pretty mask of "public interest" may lurk pure, unfet tered dictatorship. As to the ulti mate justification - "public inter est" - the public has no "interest"; groups of individuals have inter ests. The platitude of "public inter est" merely cloa.ks the reali ty of forceful deprivation of rights by those enjoying political power against those lacking such regency. Favor the Individual Sjmply stated, where a man's rights are threatened, especially by government action, this country should strike the halance in favor of individual control of 'individual action according to individual values. In the further instance where an immediate solution to conflict does not seem readily apparent, disputes may be adjudicated in ac cordance with principles of free dom and sans irrational depriva tion of property. The solution rests with the ,amazing elasticity of the common law, that ancient device of putting seemingly insolvable interpersonal rifts to an impartial 1976 IN PURSUIT OF HAPPINESS 375 judge and community jury for de eision. In the - past, the common law ofttimes resided upon basic common sense occasionally flavored with statist aberrations. The pas sage of time has accentuated the latter ingredient.

A free society demands a rec ognized mechanism for decision making as well ,as an -accepted body of rules for finally conclud ing squabbles. Men committed to freedom can simply design both institutional character and narra tive content by reflecting upon the definition, pr·ocesses and issues of liberty. The law of riparian rights or prior appropriation, aptly mod ified to reflect the fundamentals of freedom, can safely, swiftly and securely protect an abutting owner from one who pollutes a stream, just as the ancient rules of tres pass and nuisance, garbed in mod ern dress, can ev.aluate and settle altercations between adjoining property owners when, for ex ample, noise, fumes, particulates or soot waft from Blackacre to Whi teacre. 26 Respect for free choice and ad herence to the concept that each man should be accorded the right to live his life unrepressed by other men or their external ham strings so long as he does not initiate aggression or fraud against another must undergird any system of common law.

Achievement of such a-structure w-iIllay the foundation for the pur suit of happiness envisioned by the founding fathers. I • FOOTNOTES. 1 Declaration of Independence of the United States of America. ~ lowe recurrent gratitude to Leonard Read for this succinct, penetrating and happy phrase. See Read, Leonard E., "Justice versus Social Justice", Who's Listening? (The Foundation for Eco nomic Education, Inc., Irvington-on Hudson, New York 1973) 93, et seq. ;~ E.g~, Constitution of the United States, Amendments V, XIV. -l: Poirot, Paul L., "Property Rights and Human Rights", 2 Essays on Liberty 79 (1954). See Bayes, William W., "What is Property?" 20 Freeman (No.7) 392, 394 (,July 1970). G See Foley, Ridgway K., Jr., "The Concept of Value in Ethics and Eco nomics", 25 Freeman (No.2) 115-123 (February 1975). G See Foley, Ridgway K., Jr., "Choice or Chains", 2.4 Freeman (No.4) 199-204 (April 1974).

7 Madison, James, IV Works of Madi son 478-480 (March 27, 1792); reprinted in 22 Freeman (No.4) 248-250 (April 1971). See also Bayes, Note 4, op. cit.; at 347. 8 Palmer, William J., "Prophets, Jur ists, and Property", 17 Freeman (No.2) 92, 100 (February 1967). !) Bayes, Note 4, op. cit., 20 Freeman at 393. 10 Palmer, Note 8, op. cit., 17 Freeman at 95. 11 Harper, F. A., "Morals and Lib erty", 21 Freeman (No.7) 426,430 (July 1971) . 12 The doctrine and theory of contrac tual rights and obligations in a free so ciety deserves separate and thoughtful analysis, beyond the scope of this trea tise. 1i{ A more ample development of this 376 THE FREEMAN June theme appears in Foley, Ridgway K., Jr., "A Libertarian Looks at Life" (unpub lished manuscript). 14 See Foley, Ridgway K., Jr., "The Rationale for Liberty", 23 Freeman (No. 4) 222-229 (April 1973). 15 A thorough explanation of this truth, and a clear exposition of the hu man rights/property rights false dichot omy, appears in Rothbard, Murray N., "Human Rights are Property Rights", 6 Essays on Liberty 315 (Foundation For Economic Education, Inc., Irvington-on Hudson, New York 1959); Poirot, Paul L., "Property Rights and Human ,Rights", supra, 2 Essays on Liberty 79 (Founda tion for Economic Education, Inc., Irv ington-on-Hudson, New York 1954); Rothbard, Murray N., For a New Liberty (The Macmillan Company, New York, 1973) 43-46.

16 Palmer, Note 8, op. cit. p. 101; Home v. Los Angeles County Flood Control Dis trict, 25 Cal2d 384, 153 P2d 950 (1944). 17 For more detailed excursions into these subjects, see, e.g., Summers, Brian, "Economics and the Press", 23 Freeman (No.9) 564-565 (Sept. 1973); Barger, Melvin D., "Let the People Own the Airwaves", 10 Essays on Liberty 283 (Foundation for Economic Education, Inc., 1963); Russell, Dean, "Freedom of the Press", 12 Essays on Liberty. 404 (Foundation for Economic Education, Inc., 1965) . 18 Opitz, Edmund A., "Some Thoughts on Censorship", 16 Freeman (No.6) 56, 57 (June 1966). 19 Palmer, Note 8, op. cit. p. 95. :!O See Foley, Ridgway K., Jr., "The Texture of Society" (unpublished manu script); see also Bayes, Note 4, op. cit. at 398-400. 21 Russell, Note 17, op. cit. at 490. See also, Russell, Dean, "Freedom Follows the Free Market" 10 Essays on Liberty 198, 200-201 (Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y. 1963) and Russell, Dean, "Basis of Liberty", 12 Freeman (No.7) 9 (July 1962).

22 Hayek, Friedrich A. von, The Road to Serfdom (University of Chicago Press, Chicago 1964) 103-104. Of course, cor rectly viewed, no one\exists without prop erty, for each of us possesses his own mind and creates his own value, however sligh t in the eyes of others. ~3 For a full discussion, see Foley, Ridgway K., Jr., "The Chimera of Rights in Collusion" (unpublished manuscript). 24 See Rothbard, For a New Liberty, note 15, op. cit. . 25 Rogge, Benjamin A., "No New Urban Jerusalem," 3 Imprimis (No.9) 1 (September 1974). 26 I do not propose to lengthen this essay unduly by development of this topic which, after all, deserves definitive_ and separate treatment. I have viewed one of several aspects of the question in the essay cited at Note 23, op. cit. IDEAS ON $ LIBERTY The Guaranteed Life WHATEVER the motives behind a government-dominated economy, it can have but one result, a loss of individual liberty in thought, speech and action. A guaranteed life is not free.

A free man has a value to himself and perhaps to his time; a ward of the state is useless to himself - useful only as so many foot-pounds of energy serving those who manage to set themselves above him. The guaranteed life turns out to be not only not free - it's not safe. MAXWELL ANDERSON A REVIEWER'S NOTEBOOK W. H. HUTT is a paradox. He is a man of extremely clear vision, but he is a most difficult writer. His Individual Freedom, which con sists of selected es,says edited by Svetozar Pejovich and David Klingaman (Greenwood Press, Westport, Connecticut, $15.95) , presents the case for classical lib eralism in an unchallengeable way: the parts all fall into place to make for a most consistent whole. But it is a struggle to deal with such ob servations as "the :entrenchment of the non-discriminatory princi ple would undoubtedly precipitate an enormous disinvestment of the capital invested in what' the au thors call 'organization aimed at securing differential gains by po litical means'." What he i,s saying is that if governments were to stop favoring special interests, money would flow into areas that JOHN CHAMBERLAIN FREEDOM would be the most productive for society as a whole. It is all clear enough, but you have to work at translating technical language, sometimes for pages on end.

The reader's reward for persist ence, however, is great. What one gets in these ,essays is a view of political economy that shows how we have gone wrong by departing from the old Adam Smith idea that government should limit itself to the defense of the realm (a mil itary force to guard borders, a police force to handle internal law breakers), a court system to pro vide justice, and the making of non-discriminatory rules under which private entrepreneurs can coordinate the economy. Add a con cern for public health (the indi vidual has a right to protection against disease spread by the un concern of others) and you just 377 378 THE FREEMAN June about have the case for a free so ciety dominated by consumer sov ereignty. As theedi tors of the,se essays point out, Hutt is skeptical of the idea that the government is a group of' people who can be en tirely disciplined by the ballot box.

People are selfish and shortsight ed, and they will vote themselves special discriminatory privileges if they can find a way to do it. So it is axiomatic that there must be constitutional checks on special in terest groups and their log-rolling political representatives. Hutt would outlaw any form of special interest legislation except for aid to the poor and disabled. But he would not extend the vote to any body who gets special aid from government. The poor and dis abled, if they have the right to legislate on their own behalf, can become a pressure group as fear some as any. On Being Realistic Such an uncompromising devo tion to pure classical liberalism is not considered "realistic" in this day and age. It was Hutt's lack of "realism" that caused him to be come persona non grata in the "apartheid" society of South Af rica. But when Hutt says that South Africa's problems cannot be surmounted peacefully by any thing other than a return to the classic liberalism of Locke, Hume, Tocqueville and Hayek, he is so ob ~iously right that the "realists"

should stand ashamed. Hutt realizes that history is a ragged process, and that State-pro tected miscarriages of justice can not be corrected overnight. Ana lyzing what went wrong in South Africa, Hutt says the perpetuation of race discrimination has been due to the use of State power and trade union collusion to preserve the status quo in the interests of an enfranchised white proletariat. The trade union leaders have in sisted on a double standard of wages, with the color bar being in voked to keep blacks, "Cape Col oureds" (Le., mestizos) and Indi ans from entering-dosed shop trade unions that have maintained their right to the better-paying occupations. Obviously, a big majority of the South African whites believe that if there were a greater equality of social and economic status in the "beloved country," it would lead to a demand for the political equality of "one man, one vote." The im mediate granting of universal suf frage would, so Hutt concedes, be a disaster. It would quickly degen erate to a condition of "one man, one vote, once." The black party, dominated by the strongest tribes, would quickly dispossess the whites, send the Indians packing to Asia 1976 INDIVIDUAL FREEDOM 379 or to England, and put the Cape Coloureds on a most uncomf ort able sort of probation.

A Weighted Franchise What Hutt suggests is that the repeal of economic and social apartheid should be coupled with the transitional requirement of a "weighted franchise" to reassure minorities that their property rights would be respected. There would be' "an equal right to .qual ify for the vote" by passing edu cational tests and by acquiring enough property to become respon sible taxpayers. An Upper House would be entrusted with the veto and power. The eventual member ship of the Upper House \vould be designed to bring about gradual equality of representation for each of the four South African racial groups as such. As an added reassurance, Hutt would have the President of his classically liberal Republic chosen from the judiciary, preferably by the judiciary. A Constitution would, in Jefferson's phrase, bind both the President and the legisla ture by the "chains" of its classi cal liberal provisions. The police force and the army would be re sponsible to the President.

The Case of Rhodesia In Rhodesia there has been an actual attempt to apply Hutt's ideas of the "weighted franchise" and orderly progress toward a non discriminatory society that would guarantee the continuing right of a rancher to his acres, and the right of mine owners to sell their chrome ore or whatever at unco erced market prices. But the sanc tions imposed on Rhodesia, says Hutt, have crushed the "pure non racial democracy there." On paper, the so-called Whitehead Constitu tion for Rhodesia "had created· the nearest example to a pure 'J. S. Mill democracy' that has existed anywhere since the 1870s." But with Cubans now acting as Marx ist Hessians along the borders of Rhodesia, the chances for a "weighted franchise" orderly trans ition in that country are extremely dubious. In all probability it will end in a "one man, one vote, once" Idi Amin type of horror, and then it will be South Africa's turn to face the Marxist wolves as people in the "civilized" nations of west ern Europe and America sancti moniously avert their gaze.

The more purely economic es says in this Hutt collection all stress the virtue of price flexibil ity affecting the various factors of production, including labor. Hutt concedes that it has been a polit ical impossibility to restore wage flexibility as long as Keynesian governments were dominated by trade union labor parties. The 380 THE FREEMAN June Webbs in England were privately convinced that the British trade union hierarchy was manipulated by "pigs," but they never dared say so in public. Well, "pigs" can't run things forever when an econ omy is drying up. Hutt, who has never had the influence he de serves, may be looking forward to a better tomorrow when the "pigs" wake up to the reality that the feed in the· trough is entirely de pendent on the willingness of en terprisers to renew it. Individual Freedom: Selected Works of William H. Hutt may be ordered at $15.95 from The Foundation for Economic Edu cation, Inc., Irvington-on-Hud son, New York 10533.

~ HUMAN RIGHTS AND HUMAN LIBERTIES by Tibor R. Machan (Chicago: Nelson-Hall, 1975) 279 pp., $11.95. Reviewed by Anne Wortham ENTAILEDin man's very nature are his rights, argues Dr. Machan, and the nature of these rights requires liberty for their exercise. But al though he possesses rights and re quires freedom, man has not always known how to justify these rights and defend freedom. Machan points out that most people, even in the "free" world, do not know what freedom is. This is certainly true in the semi-free United States where we, "the Peo ple," have a long history of volun tarily voting for restrictions on our freedom. We have seen alleged defenders of huma'n liberty advo cateevery manner of political solu tion, from structuring society to effect the greater good for the greatest number, to manipulating the differences among people to effect "the good of the least for tunate."

With so many suggestions be fore us on how to organize the hu man community according to what is morally good for people, we need to know what our rights are and why they are so crucial to us as individuals and to the community we have established. However, it is not enough to know what we mean by human rights; we must put them into practice in the course of our daily lives. They must assume the utmost impor tance to us - personally. It is im portant not only to be a morally virtuous person but also to find political solutions that make moral life possible for everyone. Machan's basic maxim runs as follows: "Each and every person ought to have the maximum free dom of choice and action in the pursuit of his own aspirations, in the conduct of his life."

1976 OTHER BOOKS 381 But even after accepting the principle that everyone ought to live in maximum liberty, Machan tells us, "Weare far from being able to identify what this would amount to in concrete circum stances." His next level of defense is to show "that each person could be free to choose and act in the conduct of his own life without obviating the same freedom for others." At this stage of his argu ment Machan introduces a corol lary principle, which is that "each person ought to be free to acquire things in nature" - the right to property. Thence, he provides a moral defense of property and the free economic system, capitalism, while answering the critics in the process. Finally, .in support of property rights, he concludes with a state ment that is truly radical in these days of the ever-expanding welfare sta te and the spreading cancer of the anticapitalistic mentality: "Ac quiring valuables is good." This is a simple observation but few peo ple 'understand it, contemporary political theorists deny it, and many hard-working, taxpaying Americans continue to apologize for it.

While Dr. Machan criticizes the existing state of affairs, he does not demand - nor does his theory require - a basic change inhuman nature; a change in thinking is required to provide moral guidelines for our private affairs and com munity life. The fault of the hu man community is not the human condition - Le., human nature - it is a lack of understanding of what the human condition is, what the human community can be and ought to be. Machan's doctrine of rights is no utopian exercise. He addresses his inquiry and his criticism to "the potential excellence of indi vidual human beings" - as they exist, without omniscience, with fallibility, capable of virtues as well as vices. "A community of ful ly rational, absolutely just, honest, productive human beings - all of whom could not falter from con stant virtue - is not one for which our legal system should be design ed! That cannot even serve as a model, since the laws of such a sys tem could not adequately deal with the plain fact of evil."

Machan, _addressing this work to the "educated layman/' chose not to write it in the parlance of his profession. As a professor of philosophy, he continually delivers' technical papers on the most com plex philosophical questions before professional thinkers in the U.S. and abroad. Indeed, it is to his credit that he is able to expound the most crucial principles of man's existence in the simple and straightforward eloquence of un382 THE FREEMAN June ambiguous language laced with common sense and 0 hj ecti vity. Nevertheless, this material can not be casually absorbed; one must think about what he is reading. And in so doing, he will find Hu man Rights and Human Lib erties a challenging experience, some times difficult, but always reward ing. ~ THE CONDITIONS OF FREE DOM by Harry Jaffa. (Baltimore: Johns HopJdns University Press, 1975) 280 pp., $12.50. Reviewed by Haven Bradford Gow "What is equality?" is a question of enduring interest and impor tance. Professor Jaffa attempts to formulate an answer in his latest work, T'he Conditions of Freedom, a collection of probing essays.

Any inquiry into the meaning of equality must include an ex amination of the Declaration of Independence, Professor J affa be lieves. The Declaration begins with an appeal to "the laws of Nature and of Nature's God," and main tains that the proposition "All men are created equal" is a self-evident truth. Furthermore, all men are endowed by their Creator with certain inalienable rights, among them "Life, liberty, and the pur suit of Happiness." In seeking to understand and explain what the Declaration means by equality, Jaffa employs the method advocated by his men tor, the late Leo Strauss: no one should criticize a work until he has come to appreciate and under stand the author's intention and perspective, and exactly what he is trying to communicate. If one wants to understand what the Founders of our nation meant by equality, one must scrutinize the Declaration of Independence until its key concepts, terms and phrases stand clear.

Throughout his discussion of the Declaration ProfessorJ affa displays erudition, razor-like logic, and linguistic precision. Let us consider, for example, how he deals with the troublesome expres sions, "self-evident truth" and "all men are created equal." A logical truth is a proposition in conformi ty with reality; it is a verbal state ment that corresponds to some thing that exists outside the mind. A truth that is self-evident, writes Jaffa, is "one which is evident to anyone who grasps the terms of a proposition in which the truth is expressed." The truth "things equal to the same thing are equal to each other" is self-evident to any person who comprehends the meaning of "same" and "other." Noone, comprehending these terms, can fail simultaneously to understand the meaning of "equal." What the Founding Fathers 1976 OTHER BOOKS 383 meant by equality, observes Pro fessor Jaffa, is this: All men share a common human nature, an as sertion that depends upon the pri or recognition of nature in general, of which human nature forms an important part. The assertion that all men are created equal means that all persons are the same in some respect; it does not mean that all men are identical, or equal ly talented, wise, prudent, intel ligent or virtuous; rather, it means that all persons possess the inher ent capacity to reason, to engage in propositional speech, to com prehend symbols, and to make free choices. Being created equal im plies the inalienable rights stressed in the Declaration and from these rights corresponding obligations may be deduced.

According to Professor Jaffa, we seek to understand man and his rights, not merely by compre hending what he is, but also by understanding what he is not. Man is neither a beast nor the God referred to by the Signers of the Declaration. The God referred to by the Signers is a Being Who carries to absolute perfection the partially existing perfections ob servable in human beings - such as reason, justice, mercy and char ity - without the corresponding imperfections. Persons formulate the idea of such a perfect being, not merely to comprehend this Supreme Being, but also to under stand the 'limits of their own hu manity. Since men are neither beasts nor gods, they should not play God with other men, nor should they treat other men as beasts. This proposition is, as Professor Jaffa points out, "the elementary ground, not only of political, but of moral obligation." In short, "the source of the just powers of government lies in the proposition that all men are ·created equal."

~ CONCEIVED IN LIBERTY, by Murray N. Rothbard (Arlington House, 165 Huguenot Street, New Rochelle, New York 10801, 1975) Vol. 1, 518 pp., $15; Vol. 2, 277 pp. $12.95. Reviewed by Brian Summers THESE are the first two volumes of a projected five-volume history of the American people from the first English settlements to the Consti tution. The first covers to 1710. The second covers 1710-1760. There are several features that distinguish these volumes and rec ommend them to the reader. First, Murray Rothbard is one of the few historians who understand economic theory. Throughout his narrative he uses economics to explain the antisocial nature of statist ,interventions such as wage and price controls, mercantilism, 384 THE FREEMAN June monopoly privileges, and inflation. Although Rothbard does a fine job in furnishing the reader with eco nomic theory, it is best to ap proach these volumes -- or any other history - with an under standing on at least the level of Henry Hazlitt's Economics in One Lesson. Without an understanding of economics, no one has the tools to analyze history.

Another feature distinguishing these volumes is the unabashed radical libertarianism of Dr. Roth bard. Focusing on the age-old con flict between human liberty and governmental coercion, he has no sympathy for imperialism, feudal ism, slavery, conscription, censor ship, or religious persecution. Al though the narration is at times flavored with. emotion, the anal yses of episodes such ,as the Salem witchhunt, Bacon's Rebellion, the Zenger trial, and the Georgia ex periment are never dull and often enlightening. Of the two volumes, this review er preferred the second. At times, the first volume bogged down in intricate details of colonial poli tics. Also, the index to the first volume is inadequate. Happily, these flaws do not appear in the second volume. In net balance, the first two vol umes of Conceived in Liberty are exciting, enlightening works. This reviewer eagerly awaits the third volume, covering the period 1760 1775, scheduled for publication in June 1976. ~ HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-aN-HUDSON, NEW YORK 10533 tt1e Freeman VOL. 26,_ NO.7· JULY 1976 Unemployment,Unions and Inflation:Of Causation and Necessity SylvesterPetro 387 Why unions must cause inflation if they are to survive in present form under existing policies and laws.

No Eggs, No Omelet Everythingthat is consumed must be produced by somebody. Tom Elkins 403 AReal Con Job Robert G. Anderson 404 When job-creation becomes more important than production to serve consumers, our lives are threatened. ANew MessageIII. On The Constitution Jackson Pemberton 408 Words of courage and counsel from the hearts of the Founding Fathers to their children in a troubled nation. There Is an American Idea The manifold blessings of freedom, for the common man. HerbertV. Prochnow 419 What Is Economy? Clarence B. Carson 423 Economy concernshow we live in a world much subject to political influences. Private Coinage in America Brian Summers 436 Some examples of private coinage in the United States, before it was outlawed in 1864. Book Reviews: 441 "The ConservativeIntellectual MovementSince 1945" by George H. Nash "Simple & Direct: A Rhetoric for Writers" by Jacques Barzun "Free Markets or Famine" and "Politics versus Prosperity" by V. Orval Watts "The Economic Point of View" by Israel M. Kirzner Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON·ON·HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE F R E E MAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Per mission granted to reprint any article from this issue, with appropriate credit except "Unemployment, Unions. and Inflation" and "A New Message."

UNEMPLOYMENT, UNIONS and INFLATION: of causation and necessity SYLVESTER PETRO AT A MEETING of the Mont Pelerin Society a few years ago, a con troversy arose over the inflation ary role, if any, of unions. Among the celebrated free-market econ omists present, all members of the Society founded by Friedrich Dr. Petro is Professor of Law, Wake Forest University and is the Director of the Wake Forest Institute for Labor Policy Ana lysis. This article is presented here, by permission, from a paper de livered March 20, 1976, at Arden House in Harriman, New York, at the· Fourth Annual Conference of The Committee for Monetary Re search and Education, Inc., P.O. Box 1630, Greenwich, Connecti cut 06830. The theme of the 3-day , conference was "The Many Alleged Causes of Inflation." Hayek shortly after World War II, Milton Friedman led a group which contended that since infla tion is strictly a monetary phen omenon, and since unions do not control the money or credit supply, there can be no sense in accusing the union leaders of bringing about inflation, no matter what other sins they might be guilty of.

Lawrence Fertig took the other side, with an assist from the Eng lish economists present, who pointed out that unions, especially in England, are considerably more than merely worker-representa tives in disputes with employers, and that they have a great deal of influence one way or another, di rectly or indirectly, over themon etary policies of government. 387 388 THE FREEMAN July I contend here that Mr. Fertig and the Englishmen were correct - in fact far more correct than they themselves believed. I will show that unions not only can bring about inflation, but that they absolutely must do so in order to survive in the present context of policy and law, at least in the United States, if not every where in the western world. The Role of Unions Weare hearing a great deal these days from such union lead ers as George Meany and Leonard Woodcock of the vicious inhuman ity of current monetary and fiscal policy, which, according to them, is dooming millions of Americans to the sterile lives which mass un employment creates. These men and hosts of other union leaders and supporting politicians and in tellectuals blame "greedy" busi nessmen for inflation and an "in sensitive" administration and Fed eral Reserve Board for unemploy ment. Everybody is to blame, it' seems, but the unions. In my opin ion there is no hope of a solution of the unemployment-inflation problem till ruling opinion under stands that it is brought about largely by our labor policies and the power and the predicament they have created-for the big unions.

Admittedly, unions alone cannot cause inflation, and if unions disbanded, inflation might still oc cur. Nevertheless, I will show that right here and now - current na tional labor policy being what it is - unions are driven by the instinct of self-preservation to join with other forces to bring about infla tion and that, moreover, they rank today among the most powerful and pervasive of all the inflation ary agencies in the country. In a different setting, some other impulse may take over the infla tionary role that circum stance, policy, and law presently assign to unions. For so long as we have fiat money and legal-tender laws we shall have inflation. Poli ticians and bureaucrats, in office or aspiring, will never be able to resist the temptations extended by the exciting possibilities inherent in what amounts to a license to en gage in counterfeiting. Who could? But while another agency may in another time provide the im petus - or flick the inflationary switch - unions at present fill the role. They constitute the pre-emi nent political pressure group in the country, and all their pres sures coalesce to produce condi tions in which the inflationary measures so congenial to power hungry bureaucrats and dema gogic politicians become politi cally propitious if not mandatory.

1976 UNEMPLOYMENT, UNIONS AND INFLATION 389 I. Inflation Defined in Search fa I' Its Causes Certain aspects of the contro versy concerning unions and inflation trace to unnecessary ter minological difficulties and to con fusion over the causation question. Some define "inflation" as a gen eral increase in price levels, others as any increase in the money sup ply, whether or not such an in crease results in generally higher prices. Let us call the first usage "price-inflationism" and the sec ond "money-inflationism." In this paper I adopt the "mon ey-inflationist" definition, and I do so because it advances and clari fies analysis - a plenty good rea son for preferring one definition over another - while the price-in flationist usage fails to do so, or to do so as well. Thus a price-in flationist is likely to believe that he has exhausted inquiry when he discovers (if he ever does) that a necessary precondition to a rise in the general level of prices is an increase in the quantity of money (in the broad sense) greater than the concurrent increase in pro ductivity. He is likely to announce that bhe cause of inflation has been located and that the cure lies simply in keeping the money ma chine from cranking out exces sive increases in the money supply.

There is a fine and perhaps even appealing technical rigor to the analysis, but it is nevertheless seriously deficient, and if one adopts the money-inflationist defi nition, this deficiency appears im mediately. Whereas the price-in flationist may say that inflation is caused by an abnormal increase in the money supply, the money-infla tionist says that inflation ig an abnormal increase in the money supply. Thus, whereas the price inflationist's causal search ends quickly, the money-inflationist's only begins with his definition. The price-inflationist stops thinking when he concludes that abnormal increases in the money supply cause prices to rise ge,nerally. The money-inflationist, on the contrary, is compelled to begin thinking at the point where the price-inflation ist stops. The money-inflationist must ask himself: what is it that induces a nation to want - or even merely to accept - a policy of deliberately tampering with the quantity and hence the objective exchange value of money (in the broad sense which includes all fiduciary media) ?

Surely the laws against counter feiting bespeak a general under standing among the citizenry of the seriousness of counterfeiting as a species of theft. Consider the comments of Tom Buell, the Tory counterfeiter, in Kenneth Roberts' novel, Oliver Wiswell, written about the Revolutionary War from 390 THE FREEMAN July the point of view of American loyalists. Completely contemptu ous of the rebels and of the mob rule and demagogy favored by maJny of them, Buell sneered at the near-worthlessness of their fiat currency and considered the do~ lar bills he produced on his own press in every significant respect as good as those which Congress forced people to accept as legal tender. Said Buell of the Contin ental forty-dollar bill: That's all it's worth now.... That's all it'll ever be worth, after a few more people find out what it's worth, meaning nothing. My forty-dollar bills are just as good as Congress' forty-dollar bills, neither me nor Congress having anything to make 'em good with, so I got just as much right to issue 'em as Congress has.

The rebels called themselves a gov ernment, didn't they, even though you and I and a million other Ameri cans didn't want 'em to do it, and knew they hadn't any business to? All right: I'm a government, too, Oliver! I'm the government of New India, up on Passamaquoddy Bay! This money of mine, it's the legal currency of New India, and I raised it by taxing myself. If I was a pri vate individual, I'd be more careful; but being as I'm a government, I'm privileged to make a God-damned fool of myself in any way I choose, especially by spending a lot more money than I've got or ever will have, and promising to do things that I ain't got a chance of doing. Neither politicians, nor bureau crats, nor citizens are about to accept Buell's position and allow free printing of dollar bills. While that much is obvious, its implica,.. tions and the questions they raise are not. Why do we all approve of the laws prohibiting counterfeit ing while the vast majority of Americans - including distin guished economists - continue to approve the activities of the Fed eral Reserve Board, even though, from the point of view of economic law, there is no difference between an increase in the monetary sup ply brought about by discreet counterfeiting and one brought about by the Federal Reserve Board. (I would go further and say there is no difference from the point of view of sound law, either, but that is another subject.) flicking the Switch The explanation lies in a set of facts from an examination of which the inflationary character of our current unionism clearly emerges. Before we go into detail, however, it seems useful to say something about causation for the benefit of those who believe that only the activities of the legal monetary authority - the Federal Reserve System and its satellite banks - can cause inflation.

If, when I flick the switch, the light goes on, is it not meaningful 1976 UNEMPLOYMENT, UNIONS. AND INFLATION 391 and, in a certain sense at least, correct to say that I have caused the light to go on? I have not been the sole and sufficient cause; there have been many others: the architect, the building-contractor, the electrician, the scientists who learned something about the nat ural forces which we call electri cal, the natural forces themselves, and on and on to the impenetra ble and inexplicable mystery which the ancients called the un moved mover. Yet it remains true that I have been the specific cause in the par ticular case. .For despite their significance and the indispens able character of their contribu tions, the other elements in the causal chain did not produce the result; but for my willed and deliberate action the light would not have come on. I, therefore, have been the cause that matters; they, rela tive to me, have been only the conditions within which my causal impulse has been operative.

In the same way, unions are among the causes that matter in producing inflation. To repeat, if we were to abandon fiat-money policies, unions could not bring about inflation; but then nothing else could, either - except rein statement of the fiat-money sys tem. In the kind of fiat-money system we have, the Federal Reserve Board, the printers it em ploys, the paper manufacturers, and the other means by which it transmits its money-and-credit increasing policies-they all oc cupy the same position that the architects, electricians, natural laws, and so forth occupy in the production of light when the switch is flicked. Let us call them conditions in which causes may be operative, rather than causes themselves. The term "cause" we shall re serve for teleological agents - per sons who bring about certain re sults because those results are congruent with or necessary to their purposes.

Who Activates the Presses? In an inquiry of the present nature, this is the only kind of causal analysis which makes any sense. We are not concerned par ticularly to discover laws of na ture or of economics; we don't care about printing technology. What we want to do, if possible, is to eliminate inflation because it threatens the survival of so ciety; and in order to eliminate it we know that we must fix re sponsibility with precision among the human actors involved - simply because that is the only area susceptible to the kind of corrective available to us. For ex ample we should find the prob392 THE FREEMAN July lem insoluble if, by some perver sity, nature inflicted upon every commodity which we adopted as a medium of exchange the same disease of uncontrollable prolif eration which afflicts fiat money. Instead of stopping with the Federal Reserve Board and its quasi-counterfei ting capacities, then, we must ask: who or what turns the Federal Reserve Board on? When we have answered that question we shall have fixed re sponsibility for the inflation we are suffering now.

The ultimate cause - the prime luover - is, speaking comprehen si vely, the desire to have a boom ing economy, in which there are high wages, high profits, and no unemployment, combined with the belief that poverty and unemploy ment must be combatted by easy money, or by deficit spending which amounts· to the same thing. * * * * * To sum up the discussion thus far: in the fiat-money system now operative in the United States, in creases in the money supply may be the immediate "material cause" of inflation, but the ultimate causes lie in those agencies whose activities bring about states of affairs which prevailing opinion believes can be cured only or best by inflationary increases .in the money supply. II. Enter, the Unions Unions fit into this scheme of things as the actors who do and must bring about the conditions which, in the current state of opinion, can be cured only by easy money. As the chief (though by no means unique) producers and pro moters of industrial and financial stagnation and hence of unemploy ment and misery and poverty; as the most tireless advocates of trade-restrictionism and govern mental-expansionism, especially by way -of deficit-spending; and final ly, as the most powerful, arrogant, alnd aggressive political force in the country - our trade unions are easily entitled to be called the pre eminent teleological agents of the inflation now loose in the country.

For their prime directive, the chief purpose of their actions their own survival and aggrandize ment - forces them to hit the in flationary switches constantly. In a more sensible frame of labor law and labor policy, unions would have no more power to bring about inflation than any .other private agency; but as matters now stand, they are forced by their determin ation to survive as the benefici aries of extensive special privilege to bring about states of affairs which produce inflationary in creases in the money supply more or less directly. In order to make the analysis 1976 UNEMPLOYMENT, UNIONS AND INFLATION 393 reasonably complete and convinc ing, I must establish (1) that unions have the power to hring about the conditions which current opinion is determined to remedy by inflationary measures, and (2) that in the current structure of law and policy unions must create those conditions, if they wish to survive. When these things are established we shall understand (3) why unions as political agen cies engage in inflationary activi ties and promote inflationary poli cies.

Compulsory Collective Bargaining· Taken all in all, the current structure of labor law and labor policy is a vast and infernally com plex machine for eliminating all competition in labor markets by promoting compulsory and monop olistic collective bargaining. The ultimate objectives are variously stated - to produce "industrial peace," to eliminate "commerce impairing strikes," to equalize bar gaining power between powerful employers and powerless employ ees, or, by "taking wages out of competition," to get for workers higher wages and better working conditions than they are able to get by individual bargaining on free labor markets. This is not the place for a de tailed description of the many ways in which prevailing law and policy create in unions the power to secure for their members wages and other labor returns higher than those which would prevail in free labor markets. A brief ac count of two of the most signifi cant features will have to suffice as illustrations.

The first and in my opinion the most significant source of monop olistic union power derives from the virtually universal failure of governments in the United States to prevent unionists from violently excluding competitive workers. A great deal of nonsense is heard on this subject. It has been fashion able, for example, to say that "la bor violence" is now a thing of the past, and that such violence as ex isted in the past was mainly the doing of vicious anti-union em ployers. Both assertions are sheer fabrications. There is at least as much vio lence going on now in labor rela tions as there ever has been, may be more - and this in spite of the fact that relatively few employers, having learned the sad lessons of the past, dare come to a confron tation by operating plants during strikes. If they do, you can· win money betting that there will be violent attempts by the strikers to keep the plants from operating.

And in the past, exactly as now, the aggressors have always been the strikers and their union lead394 THE FREEMAN July ers. Consider the fate of the "lib eral," pro-union, pro-collective bargaining Washington Post in its recent dispute with its printers. Such occasional employer vio lence as has existed has always been in the nature of self-defense, a fact which emerges from even the many biased histories of labor violence, if closely read. For the authors of such works are really saying that employers are in the wrong when they "provoke" union violelnce by rejecting demands for a "living wage," or when they hire private police to protect their plants against violent strike ag gression. Employers would be guilty of the aggressive kinds of violence common to unions only if they went forward violently to compel strikers to return to work. This they have never done, and have never even been accused of doing.

Monopolistic Wages Strike violence produces monop olistic wage structures-wage rates higher than would otherwise pre vail-by denying competitive work ers access to the labor markets in question. It analyzes out as no dif ferent from any other exclusive franchise or monopoly grant. The same is true of the other basic and equally destructive special privi lege that unions possess - this one granted them by contemporary labor relations legislation: exclusive representative status. If a union ga.ins the support of a majority of employees in an appropriate bar gaining unit, that union becomes the exclusive bargaining represent ative of all employees in the unit, no matter how small and contrived the majority may be, no matter how egregiously the NLRB may rig the election, no matter how outrageously the bargaining unit may be gerrymandered. As exclusive bargaining repre sentative, the union is, so long as it retains such status (an impor tant qualification, as we shall see) , what may be called an intra-unit monopolist. It is the only agency tha t the employer may legally d'eal with over wages, hours, and other terms and conditions of employ ment. The employer may not even discuss with dissident employees in the unit any subject which comes wi thin the legally manda tory bargaining range.

If the collective bargaining comes to a bona-fide "impasse" (a literally indefinable condition) the employer is privileged technically to .offer directly to the employees the same wages and other terms and conditions which the union has rejected, but if he departs from them at all he is certain to be held guilty of an unfair practice and ordered to resume bargaining with the union. Probably other more or 1976 UNEMPLOYMENT, UNIONS AND INFLATION 395 less serious penalties will be im posed. If he is guilty of no unfair prac tice during or after the impasse, he is privileged to lock out the unionists, and they are privileged to strike. However, if there is a strike, and if the employer at tempts to keep the business going during the strike by offering strik er-replacements terms of employ ment which the union has rejected, in 99 cases out of a hundred there will be vandalism and violence which the police will in more cases than not be either unwilling or unable to prevent or control.

Of the numerous cases I have read about or observed first hand, I can say with confidence that in not a single one has a resisted strike been free of violence and in timidation, overt or covert. By necessary inference, the terms and cond"itions of employment negoti ated under the r,egime of the ex clusive representation principle, complemented by the virtual legit imization of union violence in bar gaining impasses, must therefore be regarded as containing a mo nopoly premium. Labor costs under such a system must be higher than they would be in freely competi tive labor markets. Collective bargaining must not only produce a monopoly premi urn in the form of labor returns high er than those which would have been forthcoming from individual bargaining. Much more important ly, from the point of view of the union leadership, the existing un ion members must be convinced that they have made such a monop oly gain. Otherwise they will leave the union, and the union leader ship would, by virtue of the laws which gave it to them, lose their sta tus and power.

Leaders Must Convince Members Concerning Monopoly Gains We reach here a critical point. If they wish to retain power, un ion leaders must convince their members that they have been the beneficiaries of monopoly gains. But such gai,ns carry with them as an inseparable cost that which is implicit in every significant mo nopoly: namely, a reduction in the production which would have oc curred but for the monopoly condi tion. The necessary consequence of monopolistic labor returns is rela tive unemployment. The cost of compulsory, m01nopolistic collective bargaining is continuous and pro gressive unemployment. No union leader can stop with one monopoly gain. His members are not content to continue paying dues forever on the strength of one large increase in the past. Each union member is always asking of his leadership: "What have you done for me lately?"

396 THE FREEMAN July Hence union leaders under cur rent labor law and policy are driv en to a never-·ending career of mo nopolistic wage-setting. This is an other way of saying that they are doomed eternally to use every poli t ical, economic, and physical mea sure available which will tend to (a) produce as many employment opportuni ties for their members as possible and (b) to eliminate as many contenders for those employ ment opportunities as possible. Like all monopolists, unions must be interested equally in the shape of their demand and supply curves. Besides their vital interest in eliminating as much competitive labor as possible and expanding job opportunities to the greatest possible extent for their own mem bers, union leaders are driven by one more unremitting goad: they must keep alive the destructive myths and superstitions upon which class-warfare thrives. If the union leaders for one mo ment admitted to their members the obvious truth that employers and employees are bound together by the strongest bonds of mutual and reciprocal self-interest known to mankind - perhaps exceeding even the family bond - the party would be over as far as the union leaders were concerned. They might continue to exist in certain special cases, but as founts of the kind of glory, power, opulence, and influence which they now enjoy, they would be ciphers.

Once employees learned tha t they have deeper and more perma nent common interests with their employers than they do with their union leaders" unions as we now know them would be no more. Hence, the third of the ineluctable necessities which account for the inflationary activities of unions is the necessity to discredit and to undercut the business community and to deride the rights and privi leges indispensable to the survival of the enterprise system. III. Political Action of Unions Having now examined the im peratives at work in the quest among labor leaders for survival and power, let us observe the union leaders in political action. For in doing so we shall be able to double check the analysis thus far. If we find that their political activities fall dominantly in the categories of (1) elimination of competitive labor, (2) creation of as many jobs as possible, useless or not, for their own members, and (3) advance ment of measures designed to de bilitate the enterprise system, we can be fairly confident that we have been correct. Furthermore, if we find that all their activities add up to conditions in which infla tionary measures are made politi cally irresistible, then we can be 1976 UNEMPLOYMENT, UNIONS AND INFLATION 397 sure that we have been correct on that score, too.

A standard economic analysis holds that unions cannot be re sponsible for inflation because if they push labor costs and hence prices above market levels in the sectors where they have monopoly power, the ensuing unemployment, owing to labor mobility, tends to push wages and hence prices down in the competitive sectors. Thus no general increase in wages and prices (and no "inflation" as that term is often defined) occurs. As Albert Rees pu~ it, unionism "alters the wage structure in a way that impedes the growth of employment in sectors of the econ omy where productivity and in come are naturally high and that leaves too much labor in low income sectors of the economy." All right as far as it goes, the analysis does not go far enough. The economics are sound, but the more significant political analysis is nonexistent. Unions are not con tent to let the unhampered market take care of the unemployment they have created. They are not content to do so because they can not afford to do so. Experience and common-sense economics have taught them that their positions are fatally threatened whenever and wherever they leave labor mar kets free.

Unions cannot afford to have vast numbers of unemployed over hanging the labor market, even if they are able to erect impenetra ble monopolistic walls around the sectors of the labor market that they wish to control. The free en terprise system is too flexible, too resilient, too adaptable, too mobile. If they leave freedom anywhere, the stultified, monopolized areas will soon die, as the textile indus try has died in New England only to emerge more productive than ever in the still nonunion South. The only way they can retain their monopolies, the union leaders have found, is by destroying these char acteristics of the system, and hence the system itself. Never take the anti-communist, anti-fascist protestations of the union leaders and their economic advisers and apologists seriously. Th.y may not know what kind of a system they are building, but disinterested ob servation should certainly be able to see how their efforts, inten tionally or not, are destroying the enterprise system.

Eliminate Competition Unions are preoccupied first and foremost to eliminate entirely from all labor markets any com petition that would endanger their monopoly positions. This motiva tion explains the overwhelming energies they expend in promoting laws forbidding child labor and 398 THE FREEMAN July fixing mInIm urn wages high enough to reduce white teenage labor and virtually to nullify black teenage labor. It also explains the otherwise inexplicable union pres sure for welfare payments so high that they create a permanent corps of unemployed. And there is no need to say much here about union efforts to eliminate competition from imports, for these are a way to eliminate competition from for eign workers, just as high mini~ mum-wage laws eliminate competi tion from marginal domestic work ers. Everyone should be able to think of other· such competi tion excluding political pressures by unions.

What has to be grasped· here is that if unions do not in one way or another either exclude people entirely from labor markets or bribe them to quit looking: for work, the enterprise system is bound to put them to work, pro vided the private sector is allowed to retain some of the capital it creates. One might think that unions would find it desirable to promote all political measures de signed to provide ever-increasing private-sector employment : reduc tion of corporate taxes, elimina tion of capital-gains taxes, allow ance of realistic accounting, re moval of nonsensical and debilitat ing regulatory schemes, and so ou. The only possible reason for their thus far successful opposition to such obviously beneficial policies is that they cannot afford to either let the enterprise system run loose or admit that capitalists and en trepreneurs are by far the best if not indeed the only members of society who can be called uniquely consumer-servants. If they allowed the enterprise system to run loose, it would soon seal them off, leaving them in little pockets of scar tissue, and the action would move to the areas in which they lacked monopoly power.

In fact, something like that is going on right now. In spite of our determined efforts over the last generation to 'destroy the enter prise system, it is still producing and, closer to our purpose, it is simply going around the unions. Consider companies such as I.B.M. with no unions at all; G.E., no more than half-unionized; the con struction industry, where unions are losing ground day by day; the printing industry, likewise. Con sider also the flight of the textile industry to the nonunion South, already mentioned. Consider finally that even in the representation elections often rigged by the Na tional Labor Relations Board in favor of unions, year after year at least one-half of the votes, and usually more, are against union representation. Yes, indeed, union leaders, like 1976 UNEMPLOYMENT, UNIONS AND INFLATION 399 all legally sheltered monopolists, have much to fear from the un hampered market economy.

Preserve Jobs for Members Besides the necessity of ousting as much competitive labor as pos sible, unions are faced with the need of preserving as many jobs f or their own members as they can. If they do not, they cannot hope to keep the power-base so vital to the political influence and the eco nomic affluence which they cherish. This inexorable drive also must be channeled along destructive ways. Their class-warfare anticapital ism and their promises of labor re turns higher than those produced by competitive labor markets pre vent them from encouraging the growth of employment in construc tive and productive ways. So how do they direct their awesome poli tical influence? While innumerable examples of destructi ve poli tical action by unions are available, let us focus attention on only two of their most recent endeavors. The first is the common-situs picketing bill. Read ily available facts demonstrate that the unions spent enormous sums in the form of political con tributions to get the bill passed.

Its obvious purpose was to pre serve as many jobs as possible for unionized construction workers jobs which the unions themselves had helped to destroy directly by the monopolistic wage structures in construction that they have created and indirectly by the many measures they have supported which have contributed to the gen eral debility of the economy. Persons unfamiliar with the field might find it hard to believe that unions should be interested in pushing a bill which, but for the President's veto, was bound in the long run to hurt rather than help the construction industry. The ex planation is simple. The unions are not interested in the health of the construction industry - or for that matter any other industry; despite their protestations, they are not interested in full employ ment. They are interested only in such employment as strengthens or preserves their power base. And that is why they pushed so hard for the common-situs picketing bill. It would have reduced private construction employment, but, and this is the only thing the union leadership cared about, it would have reinforced their monopolistic control of such employment as re mained. And they would resort to further political action to soak up the unemployment attendant upon the situs picketing bill.

The six-billion-dollar pu blic works bill, also passed overwhelm ingly by a union-dominated Con gress but vetoed, provides an ex400 THE FREEMAN July ample of the way in which unions thus act to soak up by political means the unemployment they play a critical role in creating by the exercise of legislatively granted monopoly powers. There can be no doubt about the fact that the unions were the most powerful and persistent lobbyists for this mea sure, for again available records attest to the influence they ex erted. And again there can be no question but that the unions pushed for this bill because it promised to relieve some of· the unemployment among union mem bers that the unions have them selves created. Promote Inflationt'Jry Measures The six-billion-dollar public works bill is extremely significant to our present inquiry. Besides showing how unions are compelled somehow to compensate for the un employment they create, if they are to preserve their power base, it shows also how the unions are compelled to compensate by infla tionary measures, not by measures which would at once combat infla tion and contribute to the health of the economy.

Observe the political trap. On the one hand, unions cannot pos sibly push for measures which would encourage the growth of private capital without exposing the myth by which they survivethe myth, that is, that workers and employers are natural an tagonists, that the "trickle-down" theory of universal prosperity is a cruel hoax. On the other hand, they cannot push for public-works and other governmental spending pro grams financed only by taxation, because in order to keep their bam boozled members, already over taxed as they are, they must resist higher taxation of the "middle class," and they know that the rich, no matter what union dema gogues say on the subject, are al ready taxed to the limit. Albert Shanker, president of the American Federation of Teachers, documented this point in a recent ne'ws release in which he expressed "strong support" for a bill in Con gress which would provide emer gency aid to local school districts facing severe budget crises l • Everybody knows that the teach ers' unions are mainly responsible for the budgetary crises of the schools. Everybody also knows that local taxation has ahout reached the limit and that everywhere lo cal communities are voting down bond referenda designed to pro duce public-school financing. In these conditions, Shanker had no alternative but to support legisla tion which would provide federal1 American Federation of Teachers, News Release, Feb. 3, 1976.

1976 UNEMPLOYMENT, UNIONS AND INFLATION 401 government financing of the local public-rschool deficits. And where is the federal govern ment to get the funds with which to finance all the unemployment which the unions are compelled to create if they wish to retain power? Let us review the ground we have covered, adopting the point of view of a union leader who is naturally concerned to pre serve the economic and political powers which have accrued to him: • a. He has a monopoly position from which he derives satisfying economic affluence and heady polit ical influence. • b. This monopoly position abso lutely depends upon a conviction among the workers he represents that they derive greater returns from collective bargaining than they would from individual bar gaining. • c. Such a conviction can be pre served only by persuading work ers (i) that employers and free labor markets are their natural antagonists and (ii) that militant unionism is the only possible means of achieving higher than market wages.

• d. Higher-than-market wages cannot possibly be gained without creating significant unemployment. • e. The workers unemployed by monopolistic wage structures can not be left· free to overhang the market, for if they are it will be impossible for unions to produce monopolistic wage settlements. In short, the union leaders must strive endlessly to immobilize the competitive or potentially competi tive workers, and they must do this by governmental subsidies and proscriptions, not by measures which encourage the growth of private capital. • f. Thus unions must push end lessly for minimum wage laws, tariffs, ever-increasing unemploy ment compensation, high and early pensions, profligate welfare pro grams, and all other conceivable devices for keeping potentially competi tive workers out of labor markets. • g. At the same time, they must find' some way to maximize the em ployment of the number of mem bers they need in order to preserve a credible economic and political power base.

• h. Since state, local, and federal tax sources are now for an prac tical purposes exhausted, only one source of funding remains: fed eral ' deficit-spending financed by inflationary increases in the money supply.

402 THE FREEMAN July IV. A Case in Point: The Humphrey Hawkins Bill I believe I have made my point: unions not only do but must cause inflation; indeed, in the current structure of labor law and policy they are absolutely constrained to do so if they wish to survi ve. It will be useful, I believe, to conclude with a discussion of a union-backed measure which ties the unions even more closely to the inflationary process. I refer to the Humphrey-Hawkins Full Employ ment Bill. A recent story in The New. York Times about this bill shows how it provides us with a perfect paradigm. The Times 2 said that: Representatives of three centers of influence in the Democratic Party the A.F.L.-C.I.O., the Congressional Black Caucus, and Senator Hubert H. Humphrey of Minnesota - have been quietly negotiating for weeks in an effort to draft legislation that would commit the Government to create a. job for everyone who wants to work.

The obvious purpose of the bill, as it seems to me, is to rid the unions forever of any fear that they will be held responsible for the unemployment they create. An equally obvious purpose, though not yet completely worked out, is to eliminate any possibility that 2 New York Times, p. 1, Feb. 16, 1976. the Federal Reserve Board will ever pursue deflationary policies, or even merely anti-inflationary policies. As The Times story has it, the bill: would augment the Employment Act of 1946 ... by requiring the President to propose and Congress to pass, each year, specific numerical goals for em ployment, economic growth, and changes in the price level ... The subjects to be covered by the annual economic policy resolution would include the monetary policy to be followed by the Federal Reserve System. There you have it. The Federal Reserve Board has been called an engine of inflation. Because of union sponsorship of the Hum phrey-Hawkins Bill, The Times story suggests that there is no hope of getting the A.F.L.-C.I.O.

"to agree to any provisions . . . that appear to be imposing re strictions on the ability of unions to seek higher wages for their members." So if the Federal Re serve Board is an engine of infla tion, we know who the engineer will be. And this should put an end to debate over the causation issue. One of the more repugnant fea tures of these unlovely· times is that the union leaders who have succeeded in selling so many intel lectuals a bill of goods are in their petty pursuit of affluence and influ1976 UNEMPLOYMENT, UNIONS AND INFLATION 403 ence getting away with measures which not only abuse simple work ingmen but also are likely to de stroy the economy. A particularly ugly touch is added to this repul sive picture by the cooperation of the Black Congressional Caucus. There can be no doubt that the big monopolistic unions have been the worst enemy that American blacks as a whole have had since 1865. If the Humphrey-Hawkins Bill is passed and enforced, the condition of American blacks is likely to be even worse than it was before 1865. 'They are likely to become permanent wards of the State, and it won't make things any better that we'll all be in the same posi tion. ~ Reprints available: 3 for $1.00; 10 copies or more, 20 cents each.

No Eggs~ No Omelet IDEAS ON LIBERTY IN ORDER for me to eat an omelet, some chickens have to lay some eggs. If there are no eggs, there can be no omelet ... and I might have to be satisfied with cereal. That might hurt my feelings, but that can't be helped. Sooner or later, reality has a way of assert ing itself. In our complex economic system, it frequently happens later ... but it happens, nonetheless. Those who claim that they have a right to be nonproductive because others are nonproduc tive, too, are ignoring the basic fact that everything that is con sumed must be produced by somebody. And anything that ex pands the number of nonproducers, or the amount they consume, puts an extra burden on the producers. It can't be any other way. From an editorial of April 5, 1976, by TOM ELKINS, Manager, KNUI Radio, Kahului, Hawaii ROBERT G. ANDERSON "Consumption is the sole end and purpose of all production."

Adam Smith pretty well said it all with that statement two hundred years ago in The W ealth of N a tions. Unfortunately, .this basic eco nomic truth has been all but lost in today's world. The public press and political rhetoric today focus attention on creating employment. The plight of the unemployed and the presumed· inability to obtain employment have become the over whelming concerns of our society. This concentration upon job creation has tended to conceal the ultimate end toward which a job is directed. Full employment has become an end in itse:Jf and society is assumed to have attained its final goal if all are employed. The Mr. Anderson is Executive Secretary and Direc tor of Seminars of The Foundation for Eco nomic Education. 404 prevailing economic wisdom holds that the purpose of production is to create jobs; but, in reality, we prod uce in order to enj oy the fruits of production.

While it may indeed be true that work can build character and is valuable for that purpose, this does not negate the economic ne cessity that the job be productive. In a free society, as Adam Smith observed, we produce in order that we may consume. Job creation, which generates greater produc tion grows out of the desire for greater consumption. The pursuit of full employment as a political goal is in total con flict with the ideal of a society of free individuals. The political goal of "job creation" not only involves the use of force, but will assure a waste of scarce resources by mas sive misallocation within the labor market.

1976 A REAL CON JOB 405 In a free society the desire to consume more will generate pro ductive work. The creation of "jobs" by political action, however, will hamper productive effort by siphoning scarce resources away from the Inarket into the public sector. In an unhampered market so ciety all individuals seeking pro ductive jobs can find employment. With unrestricted competition among employers, and a freely ad justing wage rate, there would be employment for all who wished it. Each individual, guided by his own self-interest, would maximize his productve work in an effort to achieve his goal of greater con sumption. The jobs so created are the basic means by which individ uals acting voluntarily and peace fully can attain a higher level of consumption. Tragically, our society today does not enjoy the benefits of such freedom in the economic sector. Government intervention over many years has generated massive distortion and permanent unem ployment wi thin large sectors of the labor market. Union cartels, protected by various laws, effec tively exclude competing labor; minimum wage laws bar low-pro ductivity workers; welfare legis lation encourages people not to work; and government-generated inflation in the pursuit of "full em ployment" creates inevitable eco nomic recessions. These forces, and many others, have established a continuing corps of unemployed, or worse yet, the so-called "unem ployables."

Rather than examine the poli tical causes of unemployment, and the resulting loss of consumption generated by such unemployment, all political attention is focused on unemployment itself. Again, it is a case of government attacking the adyerse effects of its earlier ac tions rather than ceasing the in terferences that have caused the problem. Ironically, the remedy continues to center on the effect rather than the cause of govern ment-created unemployment. The problem thus is being aggravated by such attempts to solve it. The political answer seems so simple: The way to eliminate ~n employment is to make the state "an employer of last resort." After all, socialist societies have no un employment problem. The socialist system assures every individual a "j ob." Why not borrow another of the socialist "virtues" in order to "solve" one of our major economic dilemmas? But that is to lose sight of the problem: We do not seek jobs for their own. sake; the end we seek is improved consumption. Unless work will generate greater produc406 THE FREEMAN July tion of those goods individuals wish to consume, it is wasted effort and should be avoided. Work is a great consumer of resources, (we wear out) and employment is beneficial only if it yields a return greater than the value of the re sources expended.

The failure to understand this economic truth has led to such policies as "featherbedding," shortened hours of work, restric tive work rules, attacks on auto mation, and the like. The false belief that there exists only a given quantity of work, and that more jobs can be created only by dividing this work among more people, has led to the adoption of such programs. In reality, there can never be a shortage of work. As long as in dividuals possess wants, the de mand for their fulfillment will al ways be present. The employment of labor is a never-ending race to satisfy more and more of man's wants. The creation of jobs is a natural consequence of the insati able human desire to attain an ever higher level of material well being - and there is no other way that can be achieved. This improvement in well-being depends upon more productive work. The objective of every job is "to get more goods out of the woods in a shorter period of time!" This is the only way man has ever been able to improve his material circumstances. In a free market society it is the combining of labor with capital (better tools) in a social division of labor that has brought about this result.

Labor, employing an ever-increas ing quantity of capital, generates a higher and higher productivity, with its ultimate benefit in a higher level of consumption for the worker. Abandonment of these economic facts of life in favor of job crea tion by the state can lead only to a decline in prosperity. Job creation demands economic resources to sustain such employment. As long as the productivity 0!l the job ex ceeds the resources consumed in employment, a growth in pros perity is assured. A freely func tioning market, guided by con sumer-directed signals of profit and loss will employ productive resources most efficently. Without such market direction, the return from labor devoted to a job can never be known. Government, as the "em.plryer of last resort," has no resources of its own to create jobs. All too often overlooked is the fact that "gov ernment funds" are a figment of political rhetoric. Governments do not create the resources they con sume, but redistribute instead the resources of others. Before govern1976 A REAL CON JOB 407 ments can provide resources to anyone, they must first withdraw such resources from private own ership and control - tax them away from someone.

The notion that government can be "an employer of last resort" denies this truth by implying that government possesses in itself the resources for job creation. What in fact must occur, if government is to be an employer, is an even greater growth in the political re distributive process in our society. More victims must be plundered of their resources in order to sup port an ever-growing throng of government wards. The resources surrendered by productive individuals to sustain the government's role as "an em ployer of last resort" impoverishes even further the productive citi zen. These lost resources, which would have been privately chan neled back into the market through increased consumption or produc tive savings, are instead trans ferred to the new corps of gov ernment beneficiaries. The poIitical transfer of these resources does indeed create jobs in the government sector. What it does not create is an improvement in the economic well-being of the citizenry. In fact, it creates pre cisely the opposite effect.

The ever-increasing burden of government on the private pro ductive sector discourages future productive effort. The government seizure of private resources pre vents the employment of these same resources in a job-creating market role. The further impover ishment of productive individuals retards even further the market's ability to increase productive em ployment. Future productivity and well-being suffer from the lost re sources that are redistributed by government to its new job corps. If the new government job corps could generate greater productiv ity than is consumed in resources, there would be no reason for its creation. The market much earlier ,,,ould have created such jobs, since it would have 'been in the self-interest of all to have done so. To use government as "an em ployer of last resort" js an open admission that job productivity must be less than the resources consumed in such employment.

When the goal of government is to become the "employer of last resort," when consumption is no longer the sole end of production, when the job becomes an end in it self rather than a means to an end, then the prosperity of the so ciety will surely be adversely af fected. What we get will not be grea tel'" abundance through the creation of productive real jobs but instead a real con job! ~ ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics, has a Masters de gree in business administration, has worked two years in Sweden, and now works as a professional systems analyst. He is a busi nessman who is active in community and church affairs, is a free lance author, and is often called on to speak. He lives with his wife and children on a small farm just out side of Salt Lake City. All rights reserved. 408 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

IlL On The Constitution This continues a series of articles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. THERE ARE THOSE among you who heap fault upon your heads, and declare you derelict for your shal low knowledge of the basis and workings of your government. While it is true that you evidence a dangerous lack of understanding of those most significant princi ples of your own prosperity and political security, yet I shall not judge you, for I know not but that I myself might have had the same fault had I been born in your day. Had we enj oyed the peace and wealth you have now even in all your troubles, we may have slum bered as well as you. Then too, our condition was such that our choices were painfully clear; when we re ceived the report that King George· had said, "The die is cast, the colonies must submit or triumph", we recognized that as a clear dec lara tion of war.

In your day, those who would draw honor and power to them selves have confused your minds with conflicting reports, inconsistent principles, and deliberate de ception; all of which imbues you wi th a feeling of hopelessness and indifference. Nay, while I must ad mit your apathy, yet there is cause for it; which makes a declaration of guilt an uncertain pronounce ment. One matter is clear however: should you remain in your present condition; filled with discontent and disdain for your government, yet surrounded by the information and facilities needed to reform and restore it; and then go on about your lives with a half hearted hope that things will some how improve; then another time will reveal your guilt, and it will be said that you, with a little work could have discovered the tech nique of restoring a good, old gov ernment to its former brilliance, but you were too lazy to have the honor.

You have much reason to be dis couraged, even frightened; but you have more to be confident. You are 410 THE FREEMAN July surrounded by troubles and prob lems, but your most crucial illness is the easiest to curet and while it is virtually hidden from you, I see it before I recognize any other. You are ignorant! You know neither the source nor the substance of your rights, but you know they are being violated. You do not know the proper bounds of your government's oper ation, but you know it has gone beyond them. You do not know the foundation of a stable currency, but you know yours is floating out of your hands. You do not know the rules of free enterprise, but you know your businesses are be ing crippled. You do not know the correct principles of foreign trade and alliances, but you know you have been made the fool in your foreign affairs. You do not know the Constitution, but you know that when it was followed dili gently, it rewarded you abundantly with peace and prosperity.

Yes, you are ignorant, and while it is understandable, yet the day of reasonable excuse is gone, for you are aware of your danger. It is the nature and extent of your trouble and the way out of it that still escapes you; but you will find to your delight, that only a little effort is required to rid yourselves of the in effects of that deficiency which now dampens your spirits and clouds your minds. Only a little effort for such wonderful re wards! How a tiny lamp dis'pels a great darkness! There is a feeling generally among you that the workings of government are extremely compli cated and the guidance of it must be left to those who are well edu cated in the science of politics. That is a consequence of the vanity of those who would like you to worship their poEtical wis dom, for they love to impress you with their vast intelligence, yet if they were but half so wise as they pretend, you would have no need to hear from me. The full truth of the matter is that the ba,sic princi ples of liberty and free· enterprise are simple; but these political pre tenders have manipulated them so much, that they, more than any thing else, have confused the issues, bewildered themselves, and entangled an of you in their short sighted expediency programs.

We knew, even as you do today, what it was that we did not want in our government. We had had our fill and more of oppression on the one hand and anarchy on the other. The Almighty had thus trained us in the evils of both ex tremes through our experience with the tyranny of the Crown and the turmoil of the Articles of Con federation. Oh, those· were dark days! The colonies had struggled as partners 1976 A NEW MESSAGE-ON THE CONSTITUTION 411 and a real ,sense of unity had emerged from our common effort to secure our liberty, but in· a few short years we were writing to one another in the discouraged tones of forlorn patriots, who had dis covered to their dismay and alarm that the nation was not at all pre pared for its new freedom and that too little government was as de spairing an evil as too much. In those .dismal days between the routing of the British and the launching of the ConsUtution, amidst a disastrous inflation and frightening civil turmoil, some of us assembled in Philadelphia in convention. As we were only get ting under way, one of the dele gates said that measures to alle viate existing conditions and repairs to current laws would be more acceptable to the people than any thoroughgoing actions. At that, the President of the Conven tion, Mr. Washington, arose and declared earnestly, "If, to please the people, we offer what we our selves disapprove, how can we afterward defend our work? Let us raise a standard to which the wise and the honest can repair; the event is in the hand of God." Thus he crystallized our desire to build a new government upon liberty and strength, and sent us on the long, toilsome task of creating a new national-charter.

We determined to form a gov ernment which would at once be able to discharge its necessary functions, but which, even under the hands of ambitious and self seeking men, would be virtually unable to encroach upon the native rights of the citizens. That we were successful is ..evidenced by the fact that it has required nearly a century for men of precisely that stamp to twist and violate that Constitution to bring you to your present condition of rising alarm. But I find still deeper satisfaction in the knowledge that in spite of the awesome control now wielded by your government, yet you have in the Constitution all the tools you require to bring it carefully down to its proper size and func tion, for that was one of our goals. We sought for a golden mean be tween anarchy and oppression, for contrivances which would give government its requisite authority, yet place fixed and end uring bounds upon the activities that men would seek to have it perform for their own selfish benefit.

It was toward that objective we strove in the miserable heat of the summer of 1786. For more than a month we expounded upon one principle after another with some contention and seeming little prog ress. Then,· near the end of June, in the midst of a hotly contended issue, our eldest statesman made a 412 THE FREEMAN July speech which both shamed and in spired us. Mr. Franklin sai d, "The small progress we have made after four or five weeks is, me thinks a mel ancholy proof of the imperfections of Human understanding. We in deed seem to feel our own want of political wisdom, since we have been running about in search of it in this situation, groping as it were in the dark to find political truth. How has it happened sir, tha t we have not hitherto once thought of humbly applying to the Father of Light to illuminate our understanding? I have lived, sir, a long time, and the longer I live, the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a spar row cannot fall to the ground with out His notice, is it probable that an empire can rise without His aid ?"

Mr. Franklin proposed that a reverend be retained as chaplain for the Convention, but his mo tion could not pass as we had no funds. Nevertheless, the occasion served to bring us up short, and to cause us to recognize and to re member our dependence upon the Almighty. Had He not guided and inspired our generals? Was it not He who answered our prayers with the hurricane which demolished the French fleet in Boston harbor bef ore the war had even begun? Had not every step by which we had advanced been distinguished by some token of providential agency? How soon we forget! From the day of Mr. Franklin's observation forward, we were led to an understanding of the mech anisms necessary to the preserva tion of liberty under the effective but limited federal p~an. In order to thwart the designs of self-seek ing men, we set up three branches of government, each equal in power but separate in authority and function, and each with cer tain limited but effective sanctions upon the other two.

We reserved most of the powers of government to the states, thus dividing those powers and placing them as close as possible to the inspection and control of the peo ple, for history had abundantly shown that centralization of power and tyranny were but different titles for the same monster. There was no question but that the plan was somewhat inefficient. We de sired that, for we were well aware that the most efficient government is despotism. The deficiencies of decentralized government (which are not so extensive as your Tories would have you believe) is but a small price for the people to pay for control of their government. It has been reported among you that we founded your government 1976 A NEW MESSAGE-ON THE CONSTITUTION 413 upon the emergencies of our day, and that our work was the con clusion of manifold compromises. While it is true that each of us brought our personal objectives and opinions to the Convention, we found that we agreed that most of those goals were not only worthy but necessary· to the security of the nation.

There was great unity in our purpose; our compromise was be tween too much and too little gov ernment. The lengthy delibera tions were not the result of dis unity, but a meticulous searching for correct principles among gov ernments from the most ancient to our own time. When we had fin ished our work a wonderful feeling of harmony and peace came over us; we knew we had been instru ments in bringing a miracle into being. Another head which deserves at tention is the story that "the Con stitution was designed for an eighteenth century agrarian so ciety." That is a myth I now take pleasure to debunk! The Constitution is based on three timeless truths. First, it is founded on the fact that it is nec essary in a society, that the citizen must either control himself by his own moral self-discipline, or he must be restrained so that he can not abuse his freedom. Second, it is the nature of man to seek rec ognition, then influence, and then power in his relationships to his fellows. Third, it is the nature of man to work untiringly for himself when he is confident in the useful ness of his effort. Those are the footings of the Constitution and there is nothing there that is either eighteenth century oragra rian! To say that we designed the national charter for an agricul tural economy is to display a pal pable desire to deceive (or a pro found ignorance), for you will notice that those who promulgate that fable would replace constitu tional principles with laws which would give them great authority over you. Thus do their words re veal their motives.

Nay, we founded the Constitu tion upon an exquisite recognition of one great decisive reality; hu man nature: a recognition of the dual disposition of man: his pro pensity for good and his capacity for evil. Our first and foremost consideration was to place· the forces of human nature in a frame work which would cause those forces to lift man, to protect and release his conscience, his will, his talents, and his noble desires, and at the same time would discourage and punish him in his vices. That this mechanism was successful is written in the glories of your his tory. I do not claim perfection for 414 THE FREEMAN July it, but I will justly assert that it is the most nearly perfect system for the elevation of man that has ever existed among governments.l But let me explain those t1?-ree footings of the Constitution a little more, for now we are at the very basis of good government.

First, it was abundantly clear to us th~f the time should come when the citizens would turn from morality and good religion, they would also turn from freedom; for if man is to be free, he must con.. trol himself lest his society cir cumscribe his freedom to protect itself from his abuse. It was there fore our desire that religion should be thgroughly protected and even encouraged. That does not mean that we wanted any particular re ligious philosophy to have the' ad vantage over another, but that the citizens' rights to complete liberty 1 This mechanism is rather like a ratchet and pawl wherein upward move ment is completely free and downward movement is stopped by the pawl. The Constitution has thus resulted in the citizens lifting their society to unprece dented heights. Your upward progress ha& lately been seriously impeded, how ever, by the stifling effects of too much govern men t (which discourages personal initiative in the citizens) ,and by the "liberation" of the baseness of man which even now is disengaging the pawl and allowing your civilization to slide, nearly unhindered, back down to the meanness and anarchy which resembles the uncultured, uneducated, and undisci plined tribes of primitive societies.

of private and public belief and practice should in no way be in fringed; for if those rights be trammeled by government, then it establishes the state philosophy of irreligion, which must signal the beginning of the demoralization of the people and the accompanying loss of liberty. I shall discuss this matter in greater detail when we examine the Bill of Rights; It will suffice to say here that we in tended, through careful protection of religion, to secure the only en during basis for freedom: indi vidual morality and self-control. Secondly, We set up the plan of government so that its powers were restricted, .separated, and dispersed throughout the states in order to defeat the tendency of men to consolidate power and or dain themselves rulers over the people. Then we applied the checks and balances to set each branch of government as a watchman over the other two, and gave each cer tain prerogatives so as to place the ambition of self-aggrandizing men in opposition to the ambition of other similar men. Thus we placed human nature in control of human nature, and gave· the states and the people the final de termination, by ballot, of which men would be allowed to bring their natures into the government.

Finally, we recognized that man is most inclined to produce an 1976 A NEW MESSAGE-ON THE CONSTITUTION 415 abundance when his property rights are held inviolate. Man, by nature, will strive with great en ergy and innovation to improve himself, his circumstances, and his relationship to his neighbors, so long as he has confidence that he will be allowed to enjoy the fruits of his 1abors. But as soon as he loses that assurance, so soon will he begin to do as Iittle as may scarcely suffice him. Our study of history testified that excessive tax ation and regulation, an infringe ment of property rights, was ever the cause of slackening produc tivity, while the freest economies were the greatest source of plenty. There you have founding princi ples of the most successful govern ment on the records of civiliza tions, and they, in turn, are based upon that most crucial reality: human nature. That is the ground work of the Republic; but in spite of all our careful effort, we knew that it was not sufficient to merely launch the ship of state correctly, it needed to be tended by an alert, informed, and jealous citizenry.

But history, like nature, travels in cycles; both freedom and oppres sion contain the seeds of their own destruction. Our success has brought the security which put you to sleep. Now, basking in the dimming brilliance of the lights of liberty, you have been neither vigilant nor informed, and only recently have you begun to r~a1ize the correct ness of your rising jealousy for your rights. Let those feelings of jealousy well up within you and cause you to alert yourselves to your true condition. Your executives have taken upon themselves to form foreign alIi- . ances and make domestic regula tions without proper authority. They have violated your most fun damental law. Your judiciary has ignored the amending process and altered the meaning and intent of the Constitution they ·were sworn to defend. They have betrayed your most fundamental law. Your congress has been watchful, yet not of the encroachments of the other two· branches, but for oppor tunity to gain influence by pur chasing your favor with your own money. They have ignored your most fundamental law. And you you seek for a remedy while it stares you in the face! You have lost the vision of your most funda mental law. Let me show you.

You call the national charter "the Constitution of the United States," and that simple phrase contains both the totality of your plight and the seeds of your salva tion; for in those six words you reveal your feeling that both you and your law are subject to your government. You are not the slave 416 THE FREEMAN July of government at all, but because you think so, you may as well be! Nay! The Constitution is your servant and the master of your government. It is not the Consti tution of the United States, it is the Constitution of the people, and for the United States! It is not only the law by which you are gov erned, it is the law by which you may govern your government! It is not the law by which high handed poli ticians may impose their collective will upon you, it is for you to impose it upon them! It does not belong to the govern ment, it belongs to you! It is yours! .It is yours to enforce upon your government. It is yours to read to those self-wise do-gooders; and if you will hold it high in your hand, they will quail and flee be fore it like the cowardly knaves they are, while those who are your true friends will rejoice in your new commitment. And so may you divide the government goats from the statesmen sheep; but beware of the cunning deceit of those who pretend to serve you while they betray your trust. Civil govern ment has always suffered the in trusions of self-seeking men, and while they may not always be de tected, they· may at least be con trolled. And .that is part of the miracle of the Constitution.

Yes, you bear a multiplicity of problems: usurpations, alterations, violations, centralizations, plun dering of the rich, corruption of the poor, inequities in the courts, irresponsible economic policies, dis astrous foreign stratagems, and on and on. It is overwhelming, be wildering, and discouraging; a dis ease seeming beyond remedy . It is clear that the individual citizen has no hope of discovering all the er rors, to ,say nothing of forming and applying corrections. What can one man do? Ah! There are miracles in the Constitution! There is wisdom in the Republic! It is not necessary that you understand all the in tricacies of your regulatory agen cies, your welfare bureaucracies, and all the legal vagaries. Only four things are required of you, and although each of them de mands deliberate effort, they are easily within your reach and cru cial to your political salvation: • 1) See that you are a blessing to your society; furnish your own livelihood; associate only with that which is noble and uplifting; obey the law; give your government no excuse to make new laws or to in fringe your rights.

• 2) Study the Constitution un til you know its fundamentals in the spirit we intended; we. were careful to an extreme, you will not be disappointed. • 3) Seek out and elect wise, 1976 A NEW MESSAGE-ON THE CONSTITUTION 417 successful, honest, and most of all, humble men for officers; your sys tem fails you because your politi cians seek office, but the offices are yours to fill; therefore, you must seek out the men you desire to serve you. • 4) Watch your public servants, encourage them, counsel them, see tha t they understand the Consti tution and keep the oath of their offices; when they show themselves approved, honor and trust them; above all, be charitable with them especially now while tqeir burden is heavy. Only a part of them de serve your disdain. You have every reason to take heart. The basics of good govern ment are not difficult at all. We managed to acquire them in our day, and although we were the most educated men of our time, our knowledge was vastly inferior to yours (we only looked on the moon). Once you have gotten a comprehension of the fundamen tals of free government, you will have a standard to which you may hold any of the proposals of your day and ascertain whether you ought to support or oppose them.

So simple it is! Have faith; act; and you will soon behold the mira cle! Can you see that the Constitu tion we formed by the light of the divine lamps of liberty can save both you and itself? Is that not a miracle? It is a magnificent thing, our ship of state; but you must tend the rudder and mend the sails. There are voices in the land even now which expand upon the vices of your government in order to defame the Constitution. The words go forth from those who fancy themselves worthy to rule you that you must drastically change it or even replace it if you are to survive the crises of your time. With what will you replace it? Our nation is still far and away the freest under heaven. Have you forgotten the source of so great a liberty? To whom will you turn for an improvement upon the inspiration of Almighty God? Do you know your own history? When the government was held within its proper bounds by the chains of the Constitution our na tion was the fulfillment of the vi sion of liberty that dwelt in the hearts of freedom-loving people in every quarter of the globe. Will you now continue your course from such freedom back to op pression? Will you cast aside that instrument which has given greater liberty to the hearts and hands of more of the children of God than any combination of times and governments you may please to conceive? A supreme act of folly at best; and a fall into the pits of 418 THE FREEMAN July despotism at worst! Nay! Away with that!

The nation has already come from under the hands of a tyran nical aristocracy into the light of liberty, and now drifts again into the clouds of oppression. Then lis ten together! Let the cry go up! Restore the Constitution! Restore the free exercise of the rights of the people! Reverse the drift! Put down again the anchor of liberty and fasten to it the ship of state by the chains of· the Consti tu tion ! Let every man learn his duty and perform it with diligence! Is there a cause more just, a goal more worthy, a need more dear, or a pastime more sweet than this; to bind up the wounds of the national charter, to reassert the natural rights of man, and to secure the blessings of liberty to yourselves and your posterity? You - my Sons of Liberty; ponder it in your hearts, speak of it in your gatherings, and pttay for it in your secret chambers! Let the cry go forth throughout the land and echo across a world groaning and starving under the crush of tyrants: restore the rights of man!

Oh hear the voice of your Fa thers! Rise up my people and lift up your heads! Com.e out of dark ness into the rightful day of YOUl' glory. Secure and cherish the lib erty wherewith we made you free! You are free; for we declared you free and bought your liberty with our blood! f) Next: IV. On The Bill of Rights IDEAS ON LIBERTY Endllring Principles OUT OF THE WEB of conflicts and contests of those years emerge the principles of liberty. They are, we may believe, enduring principles, not something invented by a generation of outstand ing men. Indeed, the principles of liberty could probably be redis covered by any man who would put his mind to the matter for long enough. But that is not necessary; they have long since been clearly discerned and written out. What distinguishes the Founders is that they were able to incorporate them into the fundamental laws of the land. CLARENCE CARSON, from the book, The Rebirth of Liberty See inside front cover of this issue.

There Is As THE WORLD HUMS with the ris ing clamor of confusing opinion and propaganda, ever more posi tively' skillfully, dominantly pre sented, it is imperative that you and I understand clearly the sig nificance of ourcitiz,enship and the American idea upon which it is firmly based. For there is an American idea. It came with the Pilgrim Fa thers and the William Tells of many races, who found homes here. It took as its emblem the free dom of the eagle and the inde pendence of the pioneer. It overleapt the hurdles that had blocked human progress in many other lands for centuries. It blew through the sordid run ways of outworn civilizations with the cleanness of mountain winds. It amazed the world with the Dr. Prochnow is former President of the First National Bank of Chicago and Deputy Under Secretary of State. Author of numerous books and articles, he also has spoken at hundreds of meetings in the United States and abroad.

HERBERT V. PROCHNOW rich outpourings of its untram meled spirit. It made men cry: "Give me lib erty or give me death." It dedicated itself in strength, humility, and tolerance, to the care of the needy and sick in this land and in all others. It brought forth a beneficent down pouring of free thought, free speech, a free press, and a free pulpit. It proclaimed the dignity of la bor and the right to the profits of personal effort. It erected the little white church and synagogue in 250,000 com munities. It created a nation of men with free bodies, free minds, free opin ions, and free souls. It brought forth in only 200 years, the greatest wealth and the highest standard of living any peo ple in history have ever known. That is the American idea. History is the story of man's struggle for liberty. Perhaps we need that reminder more than any 419 420 THE FREEMAN July other today. We need to be remind ed that there has always been a struggle for liberty. In whatever period of history you may muse, the battle for liberty - political, economic, physical, intellectual, artistic, moral - is going on. Upon a free body, a free mind, free opin ions, and a free soul have hinged most of man's achievements. Only with the reasonable attainment of freedom has man been able to reach after the finer and gentler things, the motifs and objectives of life, and the final objective truth.

"We hold these truths to be self evident," reads the Declaration of Independence, "... that all men are created equal. "... that they are endowed by their Creator with certain inalien able rights, "... that among these are lif.e, liberty, and the pursuit of happi ness." Here are the great privileges of American citizenship - a free, in dependent citizen's stake in the nation. These are his equality, and his inalienable right to life, lib erty, and the pursuit of happiness. And these are dearly bought privileges that have come down through the decades. Far back in the 1770's man was literally earn ing his bread by the sweat of his brow. Working hours were double those of today. The wilderness had to he tamed with the bare hands, and its forests grubbed out by the roots. Almost everyone was poor. Hunger and storm were more puni tive then than our imagination can picture. Malaria, smallpox, and all the tyranny of the bacterial world were still enthroned. The business cycle was as restless then as now.

But those early citizens placed in dependence, liberty, equality at the top of the list of the privileges of citizenship, and in the balance they placed their lives, fortunes, and honor. Equally as important as the privileges of citizenship are the hard-won rights and weapons by which life, family, and property are defended. There are the priv ileges not only of equality before the courts, free speech, and a free press, but also the privilege to con vert time and ability into earnings honestly won in fair competition by giving value received-the right to have and to hold these earnings in any proper form, free from pi racy of any kind. The right to as semble peaceably and petition the government for the redress of grievances. The right of habeas corpus. The sanctity of family and home. The freedom to worship as conscience, and conscience alone, dictates. The right to vote regard less of race, color, or sex. These are great privileges which have 1976 THERE IS AN AMERICAN IDEA 421 become so habitual that they are often overlooked. But nothing else is more precious.

No country up to the settlement of America ever conceived of the privileges of citizenship in the gen erous measure we have come to know them here. The idea that in dividual liberty is an inalienable right of every human being had barely come to sunrise. The ener gies of all n1ankind, for all the cen turies, were occupied with the stern realities of political despo tism. The privileges were invari ably enjoyed by the favored few. With the colonization of America came a new note - a new citizen ship in the world - the beginning of freedom, with all its manifold blessings, for the common man. Out of the dream of liberty have come seemingly exhaustless privi leges - equal rights to justice within the law, freedom of the pulpit, a beneficent downpouring of free thought, free speech, and a free press. But the continuance of these pri vileges of citizenship is predi cat.ed upon the discharge by each of us of definite responsibilities.

Make no mistake about that. The men who laid the foundations of America had no thought in their minds that the priceless privileges of citizenship could be earned and retained except through the val iant discharge of the responsibHities associated with that citizen ship. Men have had to struggle and to die to gain the liberty which is the bulwark of American citizenship, and they have had to be on guard to retain what they have won. If a citizen demands wise gov ernment, he must recognize that wise government is the product of an intelligent citizenry, and noth ing else. If a citizen demands that crime be in the cell and not in the saddle, he must support honest law en forcement without any personal reservations whatsoever. If a citizen demands unfair ad vantages for his industry, union, or geographical section, he must remember that the price of class and sectional selfishness is national destruction.

If a citizen demands sound fiscal policies, he must realize that every dollar which a government expends must eventually he repaid by the toil of its citizens in the creation of wealth. If a citizen demands that his country protect him, he must co operate unselfishly in giving his time and money to maintain the institutions which afford that pro tection. If a citizen demands freedom of worship for himself, he must be tolerant of all creeds. If a citizen demands freedom of 422 THE FREEMAN July speech, he must not encourage its suppression in those who disagree with him, nor must he use it ma liciously to destroy the govern mental and other institutional framework of freedom. If a citizen demands a paternal istic government to assume re sponsibilities which he himself. rightfully should discharge, he must not forget that a nation's strength comes largely from each citizen standing on his own feet, and that the paths of benevolent despotism and personal decadence lead eventually to the destruction of the privileges of free citizens.

If a citizen demands of his fel low citizens that they work in creasingly for a great nation by developing communities in which men may have pride, let him as a citizen, grateful for the privileges which are his, dedicate himse]f in a spirit of humility to those re sponsibilities. When the viewpoint that the privileges of citizenship are in separable from its responsibilities begins to prevail everywhere in America, the unreal days that have harassed this generation may be forgotten, and time may become enriched beyond our present vi sion. Then America may continue in the future, as in the past, to be come increasingly the land of our pride. It will excel in the detail and in the sum of those essentials which measure a nation's true greatness. It may set time's far thest sea-mark in freedom for the individual. It may explore new frontiers in the achievement of quick and genuine justice; it may reach new breadths of opportunity, take new strides in the intelligence and farsightedness with which its citizens, fully aware of their priv ileges and responsibilities, blend self-interest and community inter.:.

est. It may reduce burdensome and costly complications of govern ment, attain new records in the present distribution of the desir able things of life, and in the fu ture protection of the resources of nature and knowledge as a heri tage to posterity. If, as citizens, we but take these as our objectives, all this can be - and shall be - our America. Then with an appreciation over the world of what American citi zenship implies, there will be cre ated an epic opportunity for Amer ica in strength, humility, and tol erance to be of worldwide service. The road America has pioneered may then become a broad highway for the swifter advancement of the peoples of less fortunate nations. This is the vision for us and our children's children. This is Ameri can citizenship - thankful for its privileges - faithful to its respon sibilities. ~ CLARENCE B. CARSON THE DRAMATIZAT10N of the early years of Helen Keller brings to our attention in a memorable way what a marvelous thing it is to be able to use words to communicate with others. Miss Keller was deaf and blind almost from birth. Whether she would ever he able to speak was a secondary question at first, for there was no known technique for even making her aware of the existence of words. The play cen ters around the struggle of her teacher to break through this bar rier to communication. There is Dr. Carson has written and taught extensively, specializing in Amercian intellectual history.

His most recent book, The Rebirth of Liberty: The Founding of the American Republic 1760 180C is now available in a 350-page attractive Bicentennial paperback @ $3.00 from The Foundation for Economic Education, Irvington on-Hudson, N.Y. 10533. an electric moment in the play when Helen recognizes and pro nounces her first word. It is the moment toward which the concen tra ted energie.s of the actors, and the audience, have been bent. On reflection, we realize what a boon to us is this ability to use words. Unfortunately, words can not only he used to communicate clear ly and directly but also to distort, obscure, obfuscate, and confuse whatever the subject may be. Sometimes our failure to com municate is the result of loose and sloppy use of the language. At other times, however, the chan nels of communication get clogged because words are cut loose from their original meanings and wan der around in new surroundings.

When this happens, whatever is 423 424 THE FREEMAN July communicated may be quite dif ferent from what it appears to be. Something like this has hap pened in our use of "economy" and of terms related to and derived from it. The result is distortion of the language, the breakdown of communication, and something much more serious: extension of the power of government and cur tailment of liberty. The distor tions are produced mainly by the use of modifiers of "economy" and "economics," modifiers which wrench the root words away from their meanings and put them in alien contexts. For example, many textbooks today divide their discussion be tween "macro-economics" and "micro-economics." Micro-econom ics deals with economics at the level of the individual or firm. Macro-economics is supposed to deal with economy at the level of nations. Macro-economics deals in terms of such indices as gross na tional product, national income, employment and unemployment figures, wholesale price index, and so forth. These and other such in dices are supposed to tell us how well "the economy" is performing.

Then, "economy" itself is modi fied in a great variety of ways. We speak of a free economy, a planned economy, a controlled economy, a capitalist economy, a socialist economy, and of a mixed economy. We talk about "the" economy, and sometimes "an" economy. There are supposedly national econo mies: an Am.erican economy, a German economy, a Japanese econ omy, and a Russian economy, to m.ention a few. "Economy" is also referred to figuratively, in language drawn from macro-economics, no doubt. Thus, there is talk of stimulating the economy, of a depressed econ omy, of prosperity, of heating up the economy and of cooling it off. Our literature is full of analyses, ranging from brief columns in newspapers to lengthy scholarly tomes in libraries, using such phraseology . "Helper" Words The basic reason for adding modifiers to words is to gain pre cision in usage and to clarify the meaning. Modifiers are sometimes referred to as "helper" words in the lower grades in schoo1. They can only help, however, when the meaning of the word is clear in the first place. For example, we can say round hibbett, flat hibbett, 8quare hibbett, rectangular hib bett, oblong hibbett and modify it in whatever way we choose; yet, if we did not know what a hibbett was when we began we would know Iittle more when we had finished modifying it. The same goes for a word like economy.

1976 WHAT IS ECONOMY? 425 There is great likelihood, too, that if the word does not have some fixed meaning the adding of modi fiers will lead those who use it to suppose that there is substance to what they have brought into being by their modifiers. Is there sub stance to macro-economics, to planned economy, .to American economy, to stimulating the econ omy, to an economy? There may well be; people use these terms and phrases as if they were talkJing about something, but the way to find out is to strip away the modifiers and explore the concept itself. What, then, is economy? Not, be it noted, what is an economy, the economy, or economy modified in any way. Simply, what is econ omy? Before that is clear all modi fications are obstructions to un derstanding. Economy, says one dictionary, is "thrifty management, frugality in the expenditure or consumption of money, materials, etc." Another says that it is "The management, regulation, and government of a household;· especially, the manage men t of the pecuniary concerns of a household. . . . A frugal and judicious use of money, etc.; that management which expends money to advantage and incurs no waste .... " The meaning of econ omy may be further clarified by the definition of "economical," a word derived from it. "Economical implies prudent planning in the dispositon of resources so as to avoid unnecessary waste or ex pense." To "economize" is "to man age economically; use sparingly or frugally." A more formal defini tion would be: Economy is the careful and frugal use of land, labor, and capital (e. g., resources, energy and ingenuity, and produc tive devices) so as to realize the greatest return of goods and ser vice,s from them.

Man's Wants Exceed His Means The necessity for economy arises from the nature of man and the conditions of life on planet Earth. Man's wants are such that there is no way they can be completely filled by goods and service,s. His wan ts are limited only by his imagination, which is another way of saying that they are infinite. But the means of supplying them are certainly limited, limited by the available resources, limited be cause the supply of energy and ingenuity is limited, limited be cause prod ucti ve devices are in short supply. Man's wants are in finite; the means of supplying them are scarce. Economy is the means for supplying the most pressing wants by careful hus bandry in the employment of the elements that go into providing for them.

426 THE FREEMAN July There are only ,a very Iimi ted number of ways by which man can supply his wants for goods or services. He must either provide them for himself (in the manner of a Robinson Crusoe) or acquire them from others. He can acquire them from others by exchange (which includes gifts) or force (which includes fraud). But the use of force cannot be fitted into the definition of economy because there is no relation between the land, labor, and capital employed in thievery and the goods and ser vices acquired. Furthermore, the victim of force or fraud is left without incentive to repeat the performance. It must seem to him that his productive effort and re sources were wasted, that he might better devote them to de fense or counterforce. Such a course is a departure from the concept of economy. In fact, then, there are only two economical ways to acquire goods and services: by production and trade.

The practice of economy is nor mal for man. He is inc1ined to be economical, to spend as Iittle as he can to gain as much of what he wants as he can. To these ends, he saves, conserves, invents, and de vises all sorts of ways to increase his supply of goods and services more efficiently. It is true that men are sometimes wasteful and destructive, but if this is anything more than a temporary aberration, they will be found to be incom petent to engage in production and trade. The normal bent to economy prod uces the array of modes and devices which constitute an econ omy in any locale. The Nature of An Economy It is correct, then, to refer to an economy. An economy consists of the interaction among all the means by which goods and services are provided and traded at any time and place. It consists of the specialization of 'labor, financial in stitutions, assembly lines, fac tories, mines, labor saving devices, markets and whatever goes into the production and distribution of goods. It could embrace the whole world, or it could be, as it some times has been, restricted to a small isolated community of peo ple who have no relations with the rest of the world.

Most other commonly used mod ifications are, however, superflu ous, dubious, or erroneous. It is difficult to see, for example, how you could have a mixed economy. On the face of it, a mixed econ omy wou;}d be one in which some resources are frugally employed and others wastefully, or some thing of the sort. Such a condition could exist, but the wasteful use of resources would not be economy at all. It would be something else.

1976 WHAT IS ECONOMY? 427 Actually, those who speak of mixed economies are referring to situations where government owns or controls some of the means of production / and distribution of goods and the remainder are pri vately owned and controlled. That is mixed ownership, not a mixed eeonomy. Nor does it make much sense to refer to a depressed econom,y. Un doubtedly, an economy can be dis rupted, with all sorts of untoward consequences. The people, afflicted by these dis,ruptions, can be de pressed, sometimes deeply and for quite a whHe. In a figurative sense, of course, an economy could be depressed, that is, contracted, or not expanding. But that would only signify that it had become eco nomical for men to employ their capital in other ways than expand ing production. The focus of at tention, in that cas'e, would need to be on the cause of this rather than upon economy. The depres sant is much more w'Orthy of at tention than is the depressed. If a man's chest is depressed bec'ause a log is lying on it, the indicated action is to remove the log, not to pump up his chest. Talk of de pressed economies has set the stage for pressing down on the log and pumping up the chest, so to speak.

There are a considerable number of ways of ta;}king about the economy which propose to deal with it as if it were a thing. There is talk of adjusting the economy, of heating it up, cooling it off, stim ulating it, and so forth. Although these are clearly figurative uses, they are not made correct by being of this character. An economy is not a thing. It is not 'analogous to a man, say, or a machine. What economy is may be made to stand out by a little dis,cussion of the close analogy between man and his machines and comparing them with economy. Of Man and Machines There are striking similarities between man and the machines he creates, the automobile, say. Man has a circulation system; he takes in food, water, and 'air. The auto mobile has a system which utilizes fuel, water, and air. Man has an elimination system; the automo bile has an exhaust system. Man ~,as a heart which acts to pump 5fluids throughout the body; the automobile has gasoline and water pumps and an air intake system.

Man gets sick; the automobile breaks down. Man can have sur gery performed on him; the auto mobile Gan have parts replaced. Man dies; the automobile wears out. Both man and the automobile can heat up, cool off, 'have check ups, have things adjusted, so to speak, and benefit from outside 428 THE FREEMAN July intervention of experts. Economy has none of these things nor does any of these things. It is simply the means by which man efficiently supplies his wants. It has no work ing parts nor organs, can neither wear out nor benefit from surgery. It follows, then, that if there is even a modicum of meaning to all this talk it is derived from som,e thing other than economy. There is something other, of course. That something other is government and its moral and ethicaa underpin nings. The stage "has already been partially set for the discussion of the role of government. It has been noted that the use of force is not economical. Force is anathema to economy, it should be added.

The practice of economy is nor mal for man. It enables him to survive and sometimes prosper in a world where he must earn his living by the sweat of his brow. He makes progress by devising tech niques and tools which reduce the amount of sweat necessary to pro ducing a given amount. But there is a nether side to all of this. Man, or at least, some men, are not above concocting schemes whereby they can live off the labor of others by using force or fraud. Force is not economical, but it can be appEed so as to make it quite profitable to the user. It is to pre vent, punish, and reduce the amount of force being used that governments legitimately exist. To that end, governments attempt to monopolize the· use of force in their jurisdictions. Government is necessary, then, to the practice of economy as well as to safety and security in all 'other aspects of life. Government Shifts the Problem The existence of government does not, of course, solve the prob lem force poses for economy. So far as government is effective in preventing private thievery, it shifts the problem to a different plane. The contest - and it is a contin ual one - then becomes one of who shall control government and how government shaH be used.

There is the possibility, nay, the strong probability, that those who control the government will use its force to appropriate the goods produced by others so that they may live in ease and with little labor. If moral and ethical pres sures work against this,. we may expect ever more subtle justifica tions for doing what is proscribed. At any rate, every actual econ omy is, so to speak, a political economy. It is economy as it can be practiced within the govern mental framework that prevails. At the least, government wi11 affect economy by taxation and spending. At the most, government may involve itself in virtually every aspect of economic activity.

1976 WHAT IS ECONOMY? 429 There is now before us a partial explanation for the use of language that on the face 'of it is mystify ing. It does make a kind of sense to refer to an Am~erican economy, or French economy, or British economy, or economy modified by whatever nation, is under discus sion. Such terms 'could mean econ omy as it can be practiced given the governmental fram,ework in that nation. Even so, the termin ology is misleading and places the emphasis on the wrong thing. Economy does not differ from place to place - it is everywhere the same, though products and techniques may differ - the dif ference is in the government. We have only a partial explanation as yet, however; a fuBer explanation requires probing deeper. The probe takes us directly into the domain of economics. Economics is an analytical and theoretical science. One of the rea sons is already before us. The sub ject matter of economics - econ omy - does not exist outside the framework of government, which alters, distorts, and rearranges it.

It is las if a chemist knew water only as it exists in such compounds as milk, and had to abstract it in theory only. There is another rea son, one that has nothing to do with government. Economy cannot be experienced through the senses. What we see is human action, as Ludwig von Mises so aptly named his masterpiece on economics, hu man action prompted by inner mo tives which elude all efforts at ob jectification. Economy can be de duced from the human action but only at the level of theory which admi ts that the heart has reasons of its own. The Glory, Illusion and Shame The glory, the illusion, and the shame of economics stem from its theoretical character. The glory is the precise, harmonious, and elab orate structures that can be and have been made to explain econ omy. The illusion is that all this could actually be, if - if there were no government, if there were no private property, if there were no capitalists, or whatever. The shame of economics is that it is possible to contrive an sorts of theories and contend for their rightness against all others.

More important for the matter at hand, the study of economics probably has little or no practical value so far as the practice of economy is concerned. There is ev ery reason to believe that man is economical by nature and inclina tion. Economics is no more written to induce people to be economical than books on astronomy are writ ten to persuade the stars to stay in their orbits. True, economics might be studied just as astron430 THE FREEMAN July omy is, for the pleasure derived from the contemplation of har monious ·arrangements. It might be, possibly som,etimes is, but it is inherently less interesting than astronomy. One can, after an, see the stars, even see them much more closely by the use of a tele scope. But the most powerful mi croscope will not enable us to see economy. Nor is there any good reason to suppose tha,t it requires any considerable theoretical back ground in order to pr'actice econ omy. Some of the most effective practitioners of economy known to the present writer have been devoid of such learning.

Economics is about economy, on the surface and usually, but its purpose and importance lies else where. It is about economy but its object is political. True, an eco nomics that would be academic would be possi hIe and may have been written on occasion, but it would be something out of the ordinary. Many schools of eco nomics have arisen over the years, but they all tend to fall into one or the other of two categories: they either explain why govern ment should not intervene in the economy or why it should. They do not even have to say they are doing this to do it, but they some times do. What is written will have an implicit political policy. That this has be·en the ease can be shown by a brief examination of the his,tory of economic thought. It can be brief because economics is a late com·er as a field of study or academic discipline. There is little enough on the subject be fore the seventeenth century. In the seventeenth and early eigh teenth eentury a sort of pseudo science of economics took shape.

The theory that was advanced is now known as mercantilism. It consisted of a melange of argu ments about how a monarch might enrich himself and augment the power ,and wealth of the nation by the aggressive use of government power. It was what today is called macro-economics, if it was eco nomics at all. Adam Smith's Introduction to Micro-Economics Adam Smith's Wealth of Na tions was written most pointedly to refute mercantilist theories. He advanced a natural law-natural or der explanation of economy and held that government intervention was detrimental and disruptive of economic activity. Though the title suggests that he was discussing wealth at the national. level, he w;as in fact expounding mainly what is today caned micro-econom ics. To put it more precisely, he maintained that the best way to enhance the wealth of a nation, of all nations, for that matter, was 1976 WHAT IS ECONOMY? 431 for each individual to pursue his own interest, undisturbed by the political authorities. In support of his position, Smith advanced some important economic theorie;g and appealed to the historical record in support of them. But the thrust of his argument was political, toward the removal of political obstruc tions to economic practices.

Classical economics grew out of Smith's work. Economics took on its abstract character and began to be a theoretical science. It was not long, however, before some of the strfl,ins in c:Iassical economics were being removed from their context and being made into argu ments for government interven tion and even r,evolution. Karl Marx even employed economic analy,sis to posit a scientific ex planation of the revolutions to come in the future. Reformism got new life with the publication of Henry George's Progress and Pov erty. Many economists turned more and more to finding what were supposed to be flaws in economy which would need to be corrected by government action. In the twentieth century, this reformist bent is frequently ascribed to the works of John Maynard Keynes, but in fact Keynes did not invent intervention nor 'even the notion of using fiscal policy and monetary measures asa means of interven tion, though he did provide a ponderous gloss for them in his mas s,ive work.

Austrian School Contributions Meanwhile, however, the Aus trian school of economics had emerged. The main effort of this school has been to refute socialist theories, particularly Marxist, and to plug what they took to be holes in classical economics occasioned by the fact that it did not take sufficiently into account the sub jective character of decision mak ing. Economics had become an increasingly complex, controvert ed, and abstract, even abstruse, subjeet. Something else had happened, too. As economics took shape as a discipline in the nineteenth cen tury, it was called polit,ical econ omy. The great advantage of this name wa,s that it correctly identi fied what was at issue in the study, namely, the place and role of gov ernment in the economy. Even so, a successful movement occurred to call the discipline economics. Whether those who succeeded in doing this hoped to divorce it from its political orientation or to re move the onus of calling attention to it does not much matter. The fact is that economics is as polit ically oriented as political economy ever was. Moreover, the attempt to keep politics out of sight or be neath the surface has resulted in 432 THE FREEMAN July misnaming what is really being discussed. Thus, all these modifiers of economy are used which do not refer to economy at all but to the political context within which peo ple live.

There is no such thing as a macro-economy, then. Macro-eco nomics is a subterfuge of those who are talking about government, not economy, who are advancing government regulation, control, and planning beneath the cover of statistics. Their formulations gross national product, national income, figures on employment, and such like - are simply aggre gates to influence political policy. Nor is there any such thing as micro-economics. Economy is the same for any unit, whether that unit be an individual or an organi zation. Economics i'8 a theoretical study of the workings of economy. Once it proceeds beyond theory into the actual world at any time and place, it ceases to be economics and becomes political economy. That is, it becomes a study of econ omy as it can be practiced in a given political situation. It be comes, then, not a study of econ omy, as such, but a study of the effects of government action.

It is of critical importance that this be "!1nderstood. So long as in terventionists can succeed in using the words as they are being used today, they succeed in drawing our attention away from the real subject and focusing on an imagi nary and illusive one. They take our eyes away from government, too, and turn them on the business community. By so doing, they make it appear that the economy is somehow at fault for whatever is wrong, and that government must come to the rescue. If, for example, unemployment is announced as be ing at nine per cent, then the trouble is supposed to be with the economy. But if we keep clearly in mind what economy is - the care ful and frugal use of land, labor, and capital so as to realize the greatest return of goods and serv ices - it win be clear that the fault does not and cannot lie with economy. Economy can only result in providing the most goods and services that are most urgently wanted. The fault must lie with government, then, either in its failure to protect property, or in its interventionist measures, or both.

"Corrective" Interventions By focusing attention on the economy, interventionists justify and initiate a host of "corrective" measures. They attempt to use government as if it were chief surgeon or master mechanic to the economy. Much as the physician prescribes drugs, injections, sur gery, the wearing of corrective 1976 WHAT IS ECONOMY? 433 braces, changes in diet, the alter ing of habits, or whatever, much as the mechanic advises the in stallation ofa new muffler, the re placement of the water pump, a tune-up for the ignition system, the tightening of the fanbelt, the flushing of the radiator, or what not, just so, the interventionists propose deficit spending, the low ering of the Federal Reserve dis count rate, subsidies for housing, a new road program to stimulate the economy, a tax bonus, regula tion of industry, consumer protec tion measures, and so on, and on, and on. Indeed, interventionists trea t the economy as if it were a terminally ill patient requiring every sort of conceivable remedy just to keep it going. In point of fact, economy can no more need adjustments than does the multi plication table. It no more needs stimulating than does the solar system. How well economy is func tioning can no more be determined by statistics than the performance of a man's heart can be deter mined by weighing the amount of blood being pumped through it. By misnaming what they are talking about, interventionists create an illusion that they are ministering to economy when they are really using force on people.

Given the terminology that is now in use, people pose questions such as these: "How is the economy doing?" "Is the economy im proving or getting worse?" "How long win it be before the economy is prosperous again?" An appro priate answer might go something like thi,s: Economy is as well as could be expected., all things considered. In fact., economy is perfect. People everywhere are practicing it in their affairs. Businesses are pro ducing as much as they can as in expensi,vely as they can. Producers are moving their supplies to the points of greatest demand. Land., labor., and capital are being effi ciently employed to provide a vast array of goods at the best prices possible. Workers are set to work on those projects which our in formation tells us are most likely to yield the results that people want. Economy., then., is doing well. The trouble is with govern ment. Government inhibits., pro hibits., obstructs., alters., and inter venes in all our efforts at econ omy. It confiscates a considerable amount of what can be produced to pay its own workers or to re distribute it as it sees fit. It inter feres with prices so as to make it difficult to know what should be produced. It even makes it eco nomical for some individuals to act in ways that are harmful to economy in general. Economy is well., but government is in bad shape.

434 THE FREEMAN July The Proper Questions There are questions, then, that can be asked which will yield an swers about the state of the econ omy. They are not, however, ques tions about economy; they are questions about the government. They can be posed in such ways as the following. How open is the market to all comers? What laws, rules, regulations, and restrictions hamper entry to the market? How readily can a drug be introduced, a construction project be begun, a new factory opened, or changes be made in a product? Can prices change to reflect changing condi tions, or are they fixed by govern ment decree or made difficult to alter by government involvement? Can wages be determined by mu tual agreement between employer and employee? What portion of the fruits of his labor, his earn ings, can a man keep? How pri vate is property? Must it,s use de pend upon the approval of a host of government agencies? What portion of the cost of production goes into providing evidence of compliance with government regu lations? Does government subsi dize some operations and penalize others? Are there privileged groups and organizations who are enabled by government to evade some of the requirement,s of econ omy? The answers to these and like questions tell us what we need to know about the state of the economy.

Statistics are even useful once we are clear what it is they can tell us. They cannot tell us how efficiently economy is operating. They can ten us ,something about the impact of government on the economy. For example, when Eng land, in the early nineteenth cen tury, struck away its restrictions on trade, it began a dramatic move toward economic ascendancy in the world. When it began once again to impose restraints ever more vig orously in the twentieth century, it began its precipitate decline. Statistics give precision to these result,s of government policy. Econ omy waiS the same in England as anywhere else, but government policy changed. The Means of Communication Language is indeed a marvelous contrivance. It enables us to ex press ourselves, to communicate with others, to be social beings. But if words are not used with care and kept to commonly accept ed meanings which bear a close relation to accepted reality, the channels of communication are clogged and words become clang ing symbols to divide us from one another and sever our ties with society. Those very words which it is so· difficult for anyone deaf and blind to grasp become instruments 1976 WHAT IS ECONOMY? 435 for deafening and blinding us to reality.

Language is aliso, however, sub tle and tenacious, resistant to change and unavailable to be shaped just as we might desire. It holds its cour,se or responds to needs in ways that analYlsis fails to divulge. It mayweU' be that the present writer has proscribed us ages which have good and suffi cient reason for being there. It was not my purpose, however, so much to alter the way we talk about economy as to get us to talk Freedom and Morality about government when that is the subject we should have in mind. Economy does not stand in need of much public attention; govern ment requires a great deal more than we might suppose it should just to keep it in its place. It may be redundant to refer to a free economy, for can economy be any thing but free, but limited gov ernment is a nece,ssary condition for free men, and the practice of economy by free men is the neces sary condition for prosperity. f) IDEAS ON LIBERTY IT SEEMS TO ME one of the great merits of a free society that ma terial reward is not dependent on whether the majority of our fellows like or esteem us personally. This means that, so long as we keep within the accepted rules, moral pressure can be brought on us only through the esteem of those whom we ourselves respect and not through the allocation of material reward by a social authority. It is of the essence of a free society that we should be materially rewarded not for doing what others order us to do, but for giving them what they want. Our conduct ought certainly to be guided by our desire for their esteem. But we are free be cause the success of our daily efforts does not depend on whether particular people like us, or our principles, or our religion, or our manners, and because we can decide whether the material reward others are prepared to pay for our services makes it worthwhile for us to render them.

F. A. HAYEK. "The Moral Elenwnt in Free Enterpri.'w"

Private Coinage AMERICAhas never had a free mar ket in money. From 1933 to 1975, Americans could not legally own gold. Since 1933, contracts pay able in gold or indexed to the price of gold have been illegal, although the restored right to own gold may soon lead to new legal challenges. Since 1864, the private coining of money has been illegal. And since colonial days, we have had legal tender laws designed to force the acceptance of coins and bills mint ed by the government. Despite the absence of a com pletely free market, there. have been times when Americans have privately minted money, and buy ers and sellers have willingly used this money. Let us survey the hisMr. Summers is a member of the staff of The Foundation for Economic Education. 436 in America BRIAN SUMMERS tory of American private coinage, for this history lends support to the practicality of free market money, with private minters sup plying the monetary needs of the market, and the government pro tecting people from fraud and coercion.

One of the first private coiners was John Higley, a blacksmith in GranbY,Connecticut, who minted copper coins in 1737 and 1739. Higley let the market determine the value of his coins, on which he imprinted "I am good copper /Val ue me as you please." Noone was forced to accept Higley's coins, in contrast with our federal govern ment's policy of printing on its pa per money, "This note is legal ten der for all debts, public and pri vate."

1976 PRIVATE COINAGE IN AMERICA 437 The eminent numismatist Edgar H.Adams attested to the quality of Higley's coins: "In fact so pure was the metal contained in these pieces that they were much sought by goldsmiths of the period for the purposes of alloy, and the coins seem to have been in pretty gen eral use until 1792, the time of the opening of the United States mint."l Both Silver and Gold Silver was also coined by private minters. In 1783 1. Chalmers of Annapolis, Maryland minted silver shillings, sixpences, and three pences that were described by Hen ry Chapman as "very creditable."2 But the favorite metal of private minters was gold. Joseph Coffin reports on the first pri vately coined gold: "During this period of our history (1830 1861) many private gold coins were struck in various sections of the United States. The first of such gold coins was issued in 1830 by Templeton Reid, an assayerat the gold mines of Lumpkin County, Georgia, the same county in which the Dahlonega mint [a Federal mint] was located. The Templeton Reid coins were issued in three l_,o'Edgar H. A'dams, "Higley Coppers 'Granby Coinage,'" The Numismatist, August 1908.

2 Henry Chapman, "The Colonial Coins Prior to July 4, 1776," The Numis matist, February 1948. denominations ($2.50, $5, and $10) at Reid's private mint. The gold was of the best quality, and later many of the coins were melted be cause they were worth more as' bullion than the face value of the coins."3 Templeton Reid successfully competed with the Dahlonega Fed eral mint. Another mintmaster who thrived in the face of Federal competition was Christopher Becht ler of RutherfordtOtll, North Caro lina. Bechtler, his sons, and nephew arrived in Rutherfordton in 1830, having emigrated from the Grand Duchy of Baden. From 1831 to 1847 they coined gold in three de nominations ($1, $2.50, $5) de spite competition from the nearby Federal mint established in 1837 in Charlotte. Clarence Griffin reports on the public's acceptance of the Bechtler coins which, like all privately mint ed coins, were not legal tender: "Bechtler coins were accepted and passed at face value in all of west ern North Carolina, South Caro lina, western Tennessee, Kentucky and portions of Virginia. One of the country's oldest citizens once told the writer that he was 16 years old before he ever saw any other coin than the Bechtlers. The 3 Joseph Coffin, The Complete Book of Coin Collecting (Coward, McCann & Geoghegan, New York, 1973) p. 108.

438 THE FREEMAN July coins filled a long-felt need for specie and continued to circulate long after the discontinuance of the mint in 1847. At the outbreak of the War between the States the new Confederacy began issuing currency, but did not put out any specie. Bechtler coins, especially in this locality, were carefully hoarded, and many contracts and agreements of the sixties specified Bechtlergold coins as a considera tion rather than the Confederate States currency or the scant sup ply of Federal specie. "Despite the fact that these coins bore no device emblematic of a national character, or any of ficial guaranty of their purity, they were unhesitatingly accepted by all. In the proper sense of the word they were only 'tokens' and when offered at the government mints were worth less than the face value, as the government de ducted the seigniorage and assay fees for reminting. Yet these coins were passed over the counters of the stores, where they received the same consideration as if they were made by the United States Govern ment. They were carried by trad ers into Kentucky and South Caro lina, and many homeseekers going westward during the great immi gration period of 1850-1870 car ried their Bechtler coins with them.

Many circulated more freely than did government specie, and it has not been so many years since the local banks accepted them at face value. "Today Bechtler coins sell at enormous prices. Numismatists quote them from $5 to $100 and more."4 Honesty the Best Policy G. W. Featherstonhaugh, who visited Bechtler in 1837, gave the following account of his visit: "Christopher Bechtler's maxim was that honesty was the best pol icy and that maxim appeared to govern his conduct. I was never so pleased with observing transac tions of business as those I saw at his house during the time I was there. Several country people came with rough gold to be left for coin age. He weighed it before them and entered it in his book, where there was marginal room for not ing the subsequent assay. To oth ers he delivered the coin he had struck. The most perfect confidence prevailed between them, and the transactions were conducted with quite as much simplicity as those at a country grist mill, where the miller deducts the toll for the grist he has manufactured."5 Christopher Bechtler coined over three million dollars in gold. But his operation was dwarfed by the 4 Clarence Griffin, "The Story of the Bechtler Gold Coinage," The Numismatist, September 1929.· .

l) Ibid.

1976 PRIVATE COINAGE IN AMERICA 439 private mints that sprang up after the discovery of gold in California in 1848. At least 15 private mints coined gold in California during 1849-1855. The bullion content of some of these coins was less than their face value, so these coins were rejected by the market and soon passed out of circulation. However, the coins of Moffat & Co., Kellogg & Co., and Wass, Mol itor & Co. enjoyed the confidence of the community and were readi ly accepted. The January 8, 1852 issue of the San Francisco Herald contains the following comments on the Wass, Molitor & Co. mint: "The very serious inconveniences to which the people of California have been subjected through the want of a [Federal] mint, and the stream of unwieldy slugs that have issued from the United States Assay Of fice have imperatively called/for an increase of small coin. The well known and highly respectable firm of Wass, Molitor & Co. have come forward in this emergency, and are now issuing a coin of the value of $5 to supply the necessities of trade.

"The mechanical execution of the coin issued by these gentlemen certainly reflects the highest cred it upon their skill. It is a beautiful specimen of art, far superior in finish to anything of the kind ever gotten up in California. "But the most important point to the public is its fineness and weight, as upon these two qualities combined must depend its value. In this particular it will be found highly satisfactory, and at once secure the confidence of the com munity. It has a uniform standard of .880, and contains no other al loy than that of silver, which is found naturally combined with gold. The weight of each of the $5 pieces, which are the only ones at present issued, is 131.9 grains. "The standard fineness of the United States Five Dollar piece is .900, weight 127 grains. It is there fore 20/1000 finer than Wass,. Molitor & Co.'s pieces, but this is more than counterbalanced by the latter's being 4.9 grains heavier, so that the new Five Dollar gold piece is in reality worth five dol lars and four cents, a sufficient ex cess to pay the expense of recoin age at the United States Mint without cost to the depositor.

"The reason Messrs. Wass, Moli tor & Co. have adopted the stan dard of .880 is because this is about the average fineness of Cali fornia gold, and further because the cost of refining California gold to the United States standard is exceedingly heavy, and the neces sary chemicals cannot be obtained in this country. But it will be re membered that the difference is more than made up by the in440 THE FREEMAN July creased weight of 4.9 grains, which everyone can try for him self on a pair of scales. These coins will be redeemed on ·presentation in funds received at the Custom House and banks. The high reputa tion for honor and integrity en joyed by Count Wass and his as sociates in this enterprise is an ad ditional guaranty that every rep resentation made by them will be strictly complied with. The public will be glad tohave a coin in which they can feel confidence, and which can't depreciate in their hands.

The leading bankers, too, sustain and encourage this issue, and will receive it on deposit."G The End of an Era One of the last private mints was Clark, Gruber & Co. Carl Wat ner writes: "Between 1860 and 1862 the firm of Clark, Gruber & Co. was engaged in the manufac ture of their· own coins from their mint in the city of Denver. Here G Edgar H. Adams, Private Gold Coin age of California (Edgar H. Adams, Brooklyn, N.Y., 1913) pp. 79-80. again, the demand for a circulat ing medium was satisfied by pri vate means before the government was able to act. The Clark, Gruber coins were of high quality and al ways either met or exceeded the gold bullion value of similar Unit ed States coins. In a period of less than two years this firm minted approximately three million dol lars' worth of coin. Their mint promised to outdo the govern ment's own production, and to get rid of them, <the government bought them out in 1863 for $25, 000."7 In 1864 the private COInIng of money was banned by an Act of Congress. Today the prohibition against private coinage, the doubt ful legality of gold contracts, and legal tender laws assure the fed eral government a legal monopoly over money, and prevent buyers and sellers from freely choosing mutually acceptable media of ex change. , 7 Carl Watner, "California Gold: 1849 65," Reason, January 1976, pp. 27-28.

IDEAS ON LIBERTY Universal Money FOR SOME 2500 YEARS small pieces of gold and silver, called coins, constituted universal money. It survived two millennia in spite of countless attempts by hosts of governments to manipulate it or replace it with their own media. From the book, Gold Is Money edited by HANS F. SENNHOLZ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Conservative Intellectual Movement Since 1945 IT TOOK FIFTY YEARS for the Fa bian Society to conquer Britain for socialism. In the beginning .the Fabian Society was a tiny debat ing forum for George Bernard Shaw, not yet a famous play wright, and Sidney and Beatrice Webb, who preached something called "the inevitability of grad ualism." This peculiarly British slow-motion approach to socialism stirred Lenin, then living in exile in Switzerland, to sardonic laugh ter. "A good man fallen among Fabians," he remarked o~ George Bernard Shaw.

In America, Frank Chodorov didn't laugh. Frank, a devoted fol lower of Albert Jay Nock, used to drop into the office of the Freeman magazine back in 1950. When he wasn't talking about N ock's Our Enemy, the State, Frank's favorite topic was Fabian "gradualism," which he proposed to turn against the socialists. He regarded our Freeman as one beginning liber tarian gradualist rivulet. He had had his own little magazine, analy sis (spelled with a small "a"), but that wasn't enough. He proposed setting up an Intercollegiate So ciety of Individualists to battle the swarming collectivists for the con trol of the American campus. Looking about him for a presi dent for his fledgling lSI, Frank fastened upon a young Yale grad uate named William Buckley, who had been reading analysis and who had asked me, as a Freeman editor and fellow Yale alumnus, to write an introQ,uction to his remarkably precocious God and Man at Yale.

Meanwhile, as Frank looked about for more gradualist rivulets, Leon ard Read had already started The Foundation for Economic Educa441 442 THE FREEMAN July tion and some forty American and European scholars, led by Fried rich Hayek of The Road to Serf dom fame, had met in the Swiss Alps to form The Mont Pelerin Society. Chodorov, the fighting optimist, surveyed the whole scene with a satisfaction that few of us could feel at the time. Individualist gradualism, he was convinced, could take the play away from the modern "liberals," who then dom inated practically every newspa per, magazine, university and pub lishing company in America. Chodorov died a long time ago. Had he lived, even he might be astounded by the success of liber tarian and conservative gradual ism in America since he first be gan talking about using the Fa bian formula against the Fabians. The whole magnificent success story has been set down in vibrant detail by George H. Nash, a young Harvard Ph.D., in a teeming book, The Conservative Intellectual Movement in America Since 1945 (Basic Books, $20). Nash would have pleased Chodorov down to the ground, for he has Chodorov's own feeling that it is the movement of ideas, not the posturing of the poli ticians' that determines the out come of events in the real world.

With an incredible patience Nash has picked up virtually everyone of the rivulets that Chodorov used to talk about. In his careful con struction, which combines the chronological approach with a skillful use of flash-backs, Nash shows how the rivulets have com bined to form a rushing river that, at the moment of his book's pub lication, promises great changes at the polls. It will probably take a few more years for the anti Fabian gradualism extolled by Chodorov to beat back the social ists, but no reader of Nash's book can legitimately doubt that the anti-Fabian gradualists are going to win. For an Effective Coalition What did it take to make a really effective movement that could unite the von Mises Austrian school economists, the Chodorov anti-Statists, the Russell Kirk anti ideology Burkean. conservatives, the anti-Communists, the believers in a Christianized West, the de fenders of the "higher law," and the pragmatic "neo-conservatives"

such as Irving Kristol who have seen that collectivist panaceas just don't work? How, with such poten tially "fissionable" material, could there ever have been a fusion? Mr. Nash has two theories to explain a remarkable phenomenon. The first theory owes much to Ben jamin Franklin, who, in the days when Americans were defying King George III, said we must all 1976 THE CONSERVATivE INTELLECTUAL MOVEMENT SINCE 1945 443 hang together or we'll all hang separately. The drive of the Com munists to take over the world, by a combination of internal subver sion and external power threats, creates a fear that acts as a strong cement for conservatives and lib ertarians of all shades of belief. But fusion would never have be come articulate if it hadn't been for the remarkable personality of Frank Meyer, an ex-Communist who died as a convert to the Cath olic faith. Nash has correctly perceived that Frank Meyer, from his "Prin ciples and Heresies" pulpit in Bill Buckley's National Review, worked miracles of persuasion on many a doubter that libertarians and Bur kean traditionalists, agnostics and Christian believers, classical econ omists and ex-Communists with little grounding in economics, could ever get together. Frank, with his belief that the end of gov ernment is the protection of indi vidual liberty, did not contest the idea that the end of man at liberty is the pursuit of virtue. He con vinced many of us that the choice between good and evil is meaning less if it is not the product of free will. So he brought libertarians and traditionalists to accept the idea that government must be lim ited, and the economic system must be set free, in order to provide a setting where men could freely promote their own ideas of virtue without being coerced into a mean ingless official morality by Big Brother.

Long Live the Differences Nash clearly perceives that to define conservatism in dogmatic terms would be to kill it. There is no definition that could put a blan ket cov.er over James Burnham, the anatomist of "liberal" suicide and student of geopolitical reality, and Murray Rothbard, who thinks· questions of foreign policy are to tally negligible. It is enough that conservatives and libertarians of all shades of thought agree in dis trusting the "social engineering" approach to changing the social or der. It is enough that the followers of Ludwig von Mises and Fried rich Hayek, some of whom prefer to .call themselves Whigs or old fashioned liberals, and the neo conservatives of the Kristol "pub lic interest" school, who are still Deweyan "instrumentalists" at heart, can share a preference for a free economy for their own dif ferent reasons. Nash goes fully into controver sies that had conservatives deeply· divided at times. There was the McCarthy controversy, for exam ple. There was the argument over the "natural rights" conception of freedom versus virtue and duty.

The names connected with the ar444 THE FREEMAN July guments are legion, but Nash man ages to do justice to practically ev eryone in the movement, from Walter Berns and Brent Bozell and Willmoore Kendall on the "virtue duty" side of the argument to' Mil ton Friedman, whose interests are largely secular and who would use what Henry Hazlitt thinks of as "tinkering" devices to make gov ernment interference in education and the marketplace more respon sible to pluralistic preferences. The personalities blend neatly into the flow of the narrative. Practically anybody who was connected in any way with the conservative revival will say, on finishing Nash's book, that "all of this I saw, and part of this I was." There are, however, a couple of omissions. Nash ignores Rose Wilder Lane, whose The Discovery of Freedom must have had as much effect in turning socialists into libertarians as Albert Jay Nock. Among the early antiCom munists he forgets Benjamin Stol berg and John Dos Passos, who were still very much on the scene in the Fifties. But it would be fly specking to hold a few omissions against George Nash. He has car ried off a Gargantuan enterprise with a flourish and aplomb that have never once disturbed his magnificently precise sense of order.

~ SIMPLE & DIRECT: A Rhetoric for Writers by Jacques Barzun (New York, Harper & Row, 1975) 205 pp., $10.00. Re'viewed by Edmund A. Opitz ANYONE can learn to write decent prose; good writers are made, not born. Some, obviously, have a greater natural aptitude than others, but even the immensely gifted Jacques Barzun has to re write. The elegant prose we admire in his books did not flow from his pen in that form, as he reveals here. A page of the first draft of this book is rep rod uced: words crossed out, new words inserted, a phrase deleted, a sentence added. Additional corrections, we are told, were made in two successive type scripts and in the galleys. Obvi ously, most of us are lazy, and so we can ourselves into believing that good writers are born with a silver pen in hand. The truth is that good writers work twice as hard as mediocre writers and more intelligently. It is helpful, I under stand, to be a genius!

You're no genius, let us say, but you are normally endowed and your LQ. is over a hundred. Will hard work make a writer of you? No, only hard work of the right kind, work appropriate to the end you have in mind. Your goal is to write prose which is "reasonably clear and straightforward," and this 1976 OTHER BOOKS 445 means that you must become "self conscious and analytical about words." The correct word should be used in a proper context (con sult the dictionary!); the meta phor should be apt; syntax, rhy thm, and diction should suit the occasion; the tone should be right. "I want to lay it down as an axiom," Barzun writes, "that the best tone is the tone called plain, unaffected, unadorned. It does not talk down or jazz up; it assumes the equality of all readers likely to approach the given subject; it informs or argues without apol ogizing forits task; it does not try to dazzle or cajole the indifferent; it takes no posture of coziness or sophistication. It is the most diffi cult of all tones, and also the most adaptable. When you can write plain you can trust yourself in special effects."

Simple & Direct is witty and amusing. Barzun has culled some gorgeous specimens of bad prose from his wide reading, and in some cases adds a comment. He quotes a writer who has not thought about his imagery: "The air was clear and cool but not cold and its fresh ness was like wine in the nostrils." To which Barzun rejoins: "It's bad enough to inhale smoke!" But Simple & Direct is also an exer cise book, and the reader who wants to get full benefit from it should go through it with pen and pad. In the major divisions of the book he'll learn about Diction, Linking, Tone and Tune, Meaning, Composition, and Revision; and he'll be sensitized to the major sins against the canons. Next, he'll work his way through the exer cises, emerging at the far end with a pretty fair notion of what it takes to be a writer. The book also contains half-a dozen brief essays as examples of good writing. To which I'd like to add some suggestions, beginning with the books of Jacques Barzun himself. Fifteen titles are in print, an armful of books which surely represents one of the major intel lectual and literary accomplish ments of our time - and a model of good writing as well.

And of course there's Albert Jay Nock, acknowledged as a master prose stylist even by those who re ject his opinions. Nock is so quot able that there's a temptation to shirk the chore of saying it in your own way. Resist this 'temptation, for Nock's manner of saying things is his own. But any reader who stays with him will have his own thinking whetted, and the in fluence of Nock's way with words will subtly invade the deep layers of his mind. This, of course, is the virtue of great works of literature. I once asked the nature writer, Henry Beston, how he came by his beautiful style. "I steeped myself 446 THE FREEMAN July in the King James Version of the Bible," he replied. The splendor of Elizabethan English came to full flower in this "noblest monument of English prose." Well, now, you've worked your way through Simple & Direct, giv ing yourself a two-semester course in WriUng and Composition. You know how to say it, and you begin to have an inkling of what you want to say. This latter now needs attention. Having something to say requires a well-nourished mind.

The mind must be continuously re stocked by observation, conversa tion, and reading which, taken to gether, constitute research. Re search is hard work, but there's a right way to go about it, and it's set forth in a book crammed with fascinating pieces of information, The Modern Researcher, by Bar zun and Graff. The upshot is that anyone who puts his mind to it can write, but there are easier things to do, like swimming the English Channel! .~ FREE MARKETS OR FAMINE (318 pp.) (revised edition) and POLITICS VERSUS PROSPER ITY (358 pp.) by Dr. V. Orval Watts, co-author and editor, and 21 other distinguished scholars. (Pendell Publishing Co., P.O. Box 1666, Midland, Michigan 48640), $9.00 each. Reviewed by Howard E. Kershner DR. WATTS is Burrows T. Lundy Professor of The Philosophy of Business, Campbell College, North Carolina, and Director of Eco nomic Education for Northwood Institute. He obtained his doctor ate in Economics and History at Harvard University and has a long and distinguished career as a teacher of economics at Wellesley, Carleton, Claremont, Pepperdine, and Northwood.

The first edition of Free Mar kets or Famine was tops, and the revised edition is even better. Nine chapters are by the master him self. Among the authors of one. or more of the other chapters are the renowned Austrian school econo mist Ludwig von Mises, Hans F. Sennholz, Edward P. Coleson, Syl vester Petro, Dean Russell and Murray N. Rothbard. The book proves the thesis that the only time an economy of abun dance has appeared in the world was after the coming of the free market economy. The authors do 1976 OTHER BOOKS 447 not specifically say it, but this re viewer maintains that the moral principles succinctly stated in the Ten Commandments were essential to the success of the market econ omy as taught by Adam Smith and others of the classical school. Smith wrote at a time when these principles were believed and largely practiced by Western soci ety. Without them, it is doubtful if the free market economy ever would have developed its marvel ous capacity to produce abun dantly.

Famine and hard times were common before the coming of the free market, and this reviewer, at least, believes that they will return if and when the free market and its Judeo-Christian religious input no longer determine the conduct and loyalty of a majority of the people. This book ought to be read by all who want to understand the science of economics. Likewise the companion volumeP'olitics vs. Prosperity. Dr. Watts writes three chapters for this book. Most of the co-authors of Free Markets or Famine, and a number of other distinguished scholars and writers, have also written one or more 'chapters for it. This book also has a strong moral emphasis. Certain imperfections and evils appear from time to time in a free society, but these are soon corrected by obsolescence, an increasingly rapid factor of change, the inability of sons to wield the accumulated power of their fathers, and the growth of moral perception and consciousness.

Those who propose to cure the defects of free enterprise by state intervention, up to and including the authoritarian state, do not reckon with the fact that when evil people are clothed with power they have a much greater capacity to injure their fellows. In a free economy; change is rapid. But, in a state-managed economy, it is al most impossible short of bloody revolution. Social ills stem from freedom denied, and the only remedy is an expansion of genuine liberty. ~ THE ECONOMIC POINT OF VIEW by Israel M. Kirzner (D. Van Nostrand, 1960; Sheed & Ward, 6700 Squibb Road, Mission, Kansas 66202, 1976) 216 pages plus index, $4.95 softcover. This book also is available from The Foundation for Economic Educa tion, Irvington-on-Hudson, N.Y. 10533. Reviewed by Brian Summers AT A TIME when mathematical economists are frantically juggling reams of statistics, wondering why the 'Consumer Price Index and Un employment Index don't come out right, Israel Kirzner reminds us 448 THE FREEMAN July that economics is properly viewed as a science of human action, with statistics useful only as history.

Although Dr. Kirzner writes on an abstract level, his analysis has profound policy implications. Con sider, for example, the problem of inflation. The government in creases the quantity of money, and people react. Among the conse quences are redistributions of wealth, phantom profits, capital consumption, malinvestments, bus iness failures, unemployment, and almost incidentally, a rising Con sumer Price Index. Mathematical economists, un.fortunately, tend to ignore how people react to in creases in the quantity of money, and viewing the economy as a mechanism, concentrate on manip ulating the Consumer Price Index. In 1971-1974 the manipulations took the form of price controls. That price controls are people con trols, that people react to controls over their lives, and that these re actions have economic consequences (such as shortages), were largely ignored by the mathematical econ omists.

The Economic ,Point of View is not for beginners. It is a scholarly history of the development of eco nomic thought which will be best understood by those familiar with Austrian economics, particularly the economics of Professor Kirz ner's teacher, Ludwig von Mises. For those willing to accept the challenge of a profound analysis of the science of economics and the history of economic thought, this brilliant work has much to offer.I HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 26, NO.8· AUGUST 1976 U.S. Defense and the Multinational Corporation William H. Peterson 451 The MNCis an importantforce for world developmentand for world peace. Rights Are Freedoms, Not Powers Oscar W. Cooley 464 Our rights are freedoms to seek and establish, if we can, the good ways of life. Where the Monetarists Go Wrong Henry Hazlitt 468 The problem is not to devisea political formulato regulatethe stock of money but to take such control out of the hands of politicians.

American Money: Past, Present and Future Charles E. Weber 479 The rapid monetary expansion of the past 15 years can be curbed if there is a iNill. Work and Liberty Clarence B. Carson 485 The modern disparagementof the "work ethic" is a.campaignagainst indiyidualgrowth and fulfillment-a campaign against civilization and. liberty. In Defense of Apathy Thomas W. Hazlett 495 "Mind Your Own Business" is a proper political slogan for free men in a free land. A New MessageIV. Comments on The Bill of Rights Jackson Pemberton 498 Words of courage and counsel from the heartsof the FoundingFathersto theirchildrenin a troubled nation. Book Reviews: 506 "Plain Talk" edited by Isaac Don Levine' "A Gang of Pecksniffs" by H.L. Mencken "No Land Is an Island: Individual Rights and GovernmentControl of Land Use" by various authors "Other People's Property" by Bernard H. Siegan Anyone wishing to communicatewith authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON. N. Y 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publica tions for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are in vi ted in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation. for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Permission granted to reprint any article from this issue. with appropriate credit except "Where the Monetarists Go Wrong" and "A New Message:' WILLIAM H. PETERSON I DRAW MY SERMON from the gospel according to Ludwig von Mises in his Human Action (1949) in which it is written: "Capitalism is a scheme for peaceful nations:' and according to Alexis de Tocqueville in his Democracy in America (1835) in which it is written: There are at the present time two great nations in the world which seem to tend toward the same end, although they started from different points; I allude to the Russians and the Americans .... All other nations seem to have reached their natural limits, and only to be charged with the maintenance of their power; but these are still in the act of growth: all the others are stopped or continue to advance with extreme difficulty; these are proceeding with ease and with celerity along a path to which the Dr. Peterson is Burrows T. Lundy Professor of the Philosophy of Business at Campbell College, North Carolina.

This paper is taken from remarks at Boise State University. Boise. Idaho. March 27, 1976. human eye can assign no term. The American struggles against the natural obstacles which oppose him; the adver sahes of the Russian are men; the former combats the wilderness and savage life; the latter, civilization with all its weapons· and its arts: the con quests of the one are therefore gained by the plowshare; those of the other, by the sword. The Anglo-American relies upon personal interest to accomplish his ends, and gives free scope to the unguided exertions and common sense of the citizens; the Russian centers all the authority of society in a single arm: the principal instrument of the former is freedom; of the latter, servitude. Their starting-point is different and their courses are not the same; yet each of them seems to be marked out by the will of Heaven to sway the destinies of half the globe.

Talk about prescience, talk about a grand theme for a paper - this play on the economic underpinning of war and peace is it. 451 452 THE FREEMAN August Let's explore, then, two timely issues raised by this gospel ac cording to Mises and. Tocqueville. The first is economic. It relates to efficiency and productivity and hence to world prosperity. It is the question of free trade in goods, technology and capital vs. govern ment interventionism in general and protectionism in particular particularly as protectionism im pinges on the m ultinational cor poration. The second yet closely related issue is more political and ties more directly into overall U.S. defense strategy. It stems from the old axiom that troops move when goods stop crossing borders. It relates to the mutual national advantages that flow from free trade in goods and capital-advantages which greatly contribute to relaxation of political and military tensions. IBM catches this idea beautifully in its motto: "World Peace Through World Trade."

Voluntarism ys. Controls As is clear by now, I put a lot of stock in the old-fashioned ideas of private property, free enterprise, sanctity of contract, and limited government. I also put a lot of stock in the idea that government, how ever necessary for order in society, is, in the final analysis, organized force. Try not paying your taxes and you'll see what I mean. Multinational corporations, on the other hand, are strictly voluntary organizations. Nobody is twisting your arm to buy a Chevy, a Mazda, 10 gallons of Shell, a Sony color TV or any other product from the MNC's. But were not such ideas the bequest of our Founding Fathers? Sad to relate' in this bicentennial year, this bequest has run afoul of government interventionism. By way of definition, interventionism is the market-meddling and privacy invading methods of the so-called middle-way, welfare-state, mixed economies of North America, Western Europe and Japan.

These economies - need I remind you? - come replete with double digit inflation, massive unemploy ment, mind-boggling taxes, much social friction and lots of nosy bureaucrats, themselves full of con tradictory and self-defeating rules and regulations. Such messy repercussions are even more evident in the Third World. And now the MNC's are really catching hell, thanks in part to the bribery problem which I will treat in a moment. With the over whelming support of Third World countries, the United Nations General Assembly has just passed a so-called Charter of Economic Rights and Duties of States. The Charter says that if a nation nationalize an MNC, any differ1976 u.s. DEFENSE AND THE MULTINATIONAL CORPORATION 453 ences on compensation shall be reconciled "under domestic law of the nationalizing country" and "by its tribunals." Rather one-sided, don't you think? Similarly, a "Code of Conduct"

proposed by the Organization for Economic Cooperation and Develop ment would put tight restraints on MNC's, but, strangely, not on gov ernment-owned, corporations or pri vate national firms. In addition, the GECD Code would require MNC's to reveal confidential commercial and financial data on their operations and taxes, country by country - a revelation hardly conducive to a climate of investment. Here at home the MNC's are fending off a push to remove their present right to defer income taxes on foreign earnings until they are repatriated. Since no foreign coun tries tax overseas earnings until remitted home, American com panies would be at quite a disadvan tage with their foreign competitors. Moreover, our MNC's have found it necessary to persuade, so far suc cessfully, the House Ways and Means Committee not to terminate their present foreign tax credit, which allows them to deduct foreign income taxes from their U.S. tax liability. If the foreign tax credit were eliminated, U.S. MNC's would be subjected to double taxation, wi th the effective tax bite on foreign profits of U.S. firms' increasing from 48 percent to about 73 percent. Such a blow, I submit, would gravely set back world developmentand world peace.

All these attacks and harass ments against the MNC's serve to undermine our basic defense on geopolitical strategy of harmonious relations among all countries. All of which divert our attention from the strict rule of life that to consume we must first produce. Why, then, do we Americans harass our prime pro ducers, the MNC's, and at the same time devote so much attention to foreign aid and domestic welfare programs which me_rely shift shrinking purchasing power from one group to another? Aid Programs B·ackfire I believe history demonstrates that foreign aid and domestic welfare usually boomerang against their intended beneficiaries; setting back economic development abroad and causing social friction at home. I· believe we of the West, so critical of the Third World, meri t the admonition of the gospel according to Matthew: "Thou hypocrites, first cast the beam out of thine own eye."

All of which robs the will ~and ability-behind national defense. In the U.S., for example, domestic spending by government has out stripped defense spending. Defense spending fell from 14.3 percent of GNP in 1952 to 7.2 .percent in 1972.

454 THE FREEMAN August Meanwhile, domestic spending, including welfare programs, climbed from 12.2 percent of GNP in 1952 to 25.7 percent in 1972. All with those adverse repercussions I mentioned earlier. Indeed, in this light, I have a book manuscript in preparation which has as its central postulate: Every government intervention into peaceful private activity tends to make things worse rather than better. The hero of the book is the Consumer-the Forgotten Man in our society, despite the so-called Consumer Movement. He gets the short end of the stick from interven tionism. He is the one who has to pay the bill for all the economic inefficiency and political instability wrought by the interventionists. He is the one who in the end has to pay all the wages, taxes, energy costs, interest payments of the MNC's and all the other costs of doing business in general. Inel uding the manifold inefficiencies wrought by interven tionism. Verily, there is no such thing as a free lunch.

But in a free society the Con sumer is also the Boss. He is in charge. The .entrepreneurs may think that they control production, that they are at the helm and steer the ship. Now listen to Mises on the entrepreneurs: A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain's orders. The captain is the consumer. Neither the entrepreneurs nor the farmers nor the capitalists deter mine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him. So if you hear me defend the multinational corporation against buttinsky government officials, please don't think of me as a mouthpiece for the global com panies. In a sense, I don't give a hang about these companies; my concern is with the Forgotten Man.

I believe his prime shield against the slings and arrows of life is free enterprise, global or otherwise. I don't believe in the "open political warfare" -to use the phrase of Jac ques Maisonrouge, chairman of the IBM World Trade Corporation-that has characterized relations between the nation-states and the MNC's in recent years and months. Defense Strategy Enough of philosophy. We'll come back to the multinational corpora tion. For now let us explore a bit further our second issue on the geopolitics of U.S. defense strategy. Ponder: The major industrial economies of the West, inel uding 1976 U.S. DEFENSE AND THE MULTINATIONAL CORPORATION 455 Japan, are long on capital and technology; the Third World is long on materials and manpower. Trade and investment, international har mony and good will, should flow between the two great areas. The Third World should leap ahead. Or, as the President's Materials Policy (Paley) Commission observed way back in 1951: The less developed countries have the materials. The industrial na~ions have the capital and the technical and man agement skills. These facts suggest the possibility of a new era of advancement for the world, which is dazzling in its promise.

But apparently the Third World just didn't get around to reading the Paley Report. For the report had no sooner been issued when a wave of expropriations and nationaliza tions enveloped foreign investments in the developing countries around the globe. In 1951, for example, Iran seized the assets of the Anglo-Iranian Oil Company. In 1952 the United Nations approved UN Resolution 626 which asserted the sovereign rights of the developing countries but somehow fell short of noting the rights of the hardly dispensable foreign investors who had poured investment funds into those very same countries. Also in 1952 Bolivia nationalized foreign-owned tin mines. In 1953 Guatemala took over 250,000 acres of banana lands from the United Fruit Company, offering some $600,000 in Guatemala bonds as compensation for the property which had cost the company about $25 million. In 1956 Egypt took over the physical assets of the Uni versal Company of the Maritime Suez Canal, precipitating an immediate war with Britain, France and Israel.

Nationalizations, expropriations and wars have accelerated in the 1960's and 1970's. A recent UN study notes that nationalizations by the developing nations have doubled from an average of 45 a year during the 1960's to an average of 93 a year so far in the 1970's. So I pause for some reflection and ask, How did the Paley Commission "promise" come to be broken? In raising this question, I call attention to a raft of success stories in the Third World-Brazil, South Korea, Taiwan, Hong Kong, Malaysia, Thailand, Singapore, the Philippines and the Ivory Coast, to name the ones that come to mind. So I think it is plain that the Third World, if it does not go overboard on interventionism, is not somehow doomed to poverty and stagnation. The Exploitation Theory Still the Third WorJd answers the question by rattling the saber and charging the West with exploi ta tion-the old Marxist idea of capital exploiting labor, the bourgeoisie oppressing the 456 THE FREEMAN August proletariat, the rich grinding down the poor.

Here, for example, is Mexico's President Luis Echeverria before the UN General Assembly baldly accusing the rich industrialized nations of ignoring the needs of the poor developing countries, adding: To postulate that the traffic of merchan dise and products should be confined only to the industrial islands of affluence would not only lead in the short and medium term to an explosion in the Third World, but also to urban violence and suicide in the very nations that believe it possible to isolate themselves. But how unreal can such a postulation be? Maybe President Echeverria hasn't been checking Mexico's highways and byways recen tly for signs of massi ve multinational corporate investment to the extent of billions of dollars and at least hundreds of thousands of jobs. I think of such MNC's, virtually all on a joint venture basis with Mexican partners, as Sears, Wool worth's, Walgreen's, Procter & Gamble, Kellogg's, ~J. Walter Thompson, Pepsico, Ford, Volkswageri, General Motors, Sony, Panasonic, Eastman Kodak, Honeywell, Motorola, Texas Instru men ts, General Foods, General Mills, Miles Laboratories, Du Pont, Firestone, Goodyear, Cummins Engine, Philips' Lamp, Sunbeam, and scores more.

Just to detail the vast effort of Sears in Mexico in developing splen did retailing services and local sup porting manufacturing industries to the tune of thousands upon thousands of jobs would involve more time than I can spare at the moment. Suffice to say, Sears and a host of other MNC's have worked mightily to develop Mexico. The Mexican consumer knows this, even if President Echevertia doesn't. Even stronger on the exploitation line has been General Idi Amin, ruler of Uganda and president of the forty-six member Organization of African Unity. He calls on the General Assembly to expel Israel from the UN and bring about "the extinction of Israel as a state." He goes on to blacken U.S. MNC's as Zionist, saying: The United States of America has been colonized by the Zionists who hold all the tools of development and power. They own virtually all the banking institutions, the major manufacturing and processing industries and the major means of communication; and they have so infiltrated the CIA that they are posing a great threat to nations and people which may be opposed to the atrocious Zionist movement. They have turned the CIA into a murder squad to eliminate any form of just resistance anywhere in the world.

Plainly, animosity and vitupera tion pepper communications be t ween the West and the Third World. Plainly, developing or host 1976 U.S. DEFENSE AND THE MULTINATIONAL CORPORATION 457 countries are loading still more restrictions on the MNC's and hence on the consumer everywhere, and especially on their own Forgot ten Men. Restrictions on Trade Listen to a list of such restric tions compiled by Professor Jack N. Behrman, a specialist on in terna tional trade and investment at the University of North Carolina: (a) Foreign investment should not dis place nationally-owned investment of a similar sort. (bl Foreign investment should be com plementary to nationally-owned investment, supporting the development of the latter. (c) Foreign-owned affiliates should not be wholly-owned by the foreigner, but a majority of shares should be held by local nationals. (d) Extractive investments should occur only in unexploited areas of the host economy.

(el Maximum effort should be made to export from the foreign-owned affiliate. (f) Preferences should be given to the hiring of local personnel, and minority groups should not be dis criminated against. (g) Local technicians should be trained and put in high-level posi tions. (h) Support should be given for local technical and educational centers. (i) Imports of materials and semi finished goods for processing by the affiliates should be reduced to a minimum. (j) The foreign investor should make a maximum contribution to the balance of payments of the host country. (k) The foreign investor or licensor should not employ restrictive busi ness practices (some twenty or more specific practices are prohibited) . 0) Foreign in vestors should not acquire existing companies in the host country. (m) The foreign investor should reduce local borrowing to a minim urn. (n) The foreign investor should not attempt to avoid or evade taxes in the host country.

(0) The foreign investor should seek to reinvest a maximum percentage of earnings in the host country. However reasonable any of these restrictions may sound in today's interventionistic world, almost everyone is still a restriction-an intervention and hence a possible bar to investment. Thus do "host" countries come to frighten away good jobs for their workers and benefits for their consumers. Good work! These fine efforts to gum up multinational trade and investment get a marvelous assist from the UN General Assembly, which just over whelmingly passed the aforemen tioned Charter of Economic Rights and Duties of States. The Charter has been scrutinized by the U.S. Council of the International Cham ber of Commerce. Says the Council: 458 THE FREEMAN August This Charter, among other things, encourages nationalization of foreign property and the likely substitution of state corporations for foreign-owned pri vate enterprise. It sets forth the notion of reparations for alleged colonial or neo-colonial coercions of the past. ...

The Charter endorses expropriation without compensation. It rejects inter national adjudication of economic dis putes be(ween a host government and a foreign investor. And much more, in effect the overwhelming majority of UN members voted to apply their own doctrines to the detriment of the United States and the industrialized West, even though such an unbalanced attitude seems likely to jeopardize their own objectives for economic growth. But imagine a smart Third World country switching off the Third World Blues, actually courting the multinational corporations and advertising in Fortune, The Wall Street Journal, The New York Times and The Washington Post as follows: Attention: Yankee traders, Western banks. Japanese firms, European companies. Consider Lower Slobovia as your invest ment haven. Low wages. High prod uctivity. Encouragement of the work ethic. Profit repatriation. Low taxes.

Private property and sanctity of con tract completely respected. Guarantees against nationalization and expropria tion, with adjudication pledged by the World Court in the Hague and with indemnity funds pledged in Switzerland. Can anybody doubt how quickly Lower Slobovia would rocket upward in a "take-off," how invest ment money would flood the coun try, how Lower Slobovians would flock to work, how they would soon build up their country and turn out goods and services at an ever faster pace, how Lower Slobovia would shine as the brightest star in the Third World? This is not to say the MNC's would simply touch Lower Slobovia with a wand and, presto, Cinderella is transformed into a beautiful prin cess. The MNC's can be quite a catalyst but in the end it is the Lower Slobovians themselves-and Third Worlders generally - who must establish the will and the way to develop. And that way is, in a phrase, free trade and all that goes with it, including that delightful phrase of Adam Smith on private incentives, the Invisible Hand.

Never underestimate these latent incentives ready to spring forth in the Third World with a pool of local savings, a pool of willing workers and, perhaps most surprising of all, a pool of native entrepreneurs'. Listen, for example, to Sir W. Arthur Lewis, the West Indian ex Princeton professor who is one of the world's outstanding economists. He has found no lack of enterprise in the Third World nor of-and these are his words: willingness to exploit opportunities. The will to do business and make money 1976 U.S. DEFENSE AND THE MULTINATIONAL CORPORATION 459 shows up in the hordes of traders; and in the rapidity with which small entrepreneurs take up small business opportunities as soon as the oppor tunities are opened up-motor transport, cinemas, building and con traeting, small flour mills, printers, softdrinks - there is no shortage of small business types in underdeveloped coun tries. The shortage is of men who can build and run a large modern factory or mine or ship.

But the Third World, as we noted, is given to back biting the m ultina tional corporations, to cutting off its own nose to spite its face. Ludwig von Mises has commented how many poor countries of the world have avoided modern capitalism at their peril. He wrote: What they need most is entrepreneurs and capitalists. As their own foolish policies have deprived these nations of the further enjoyment of the assistance imported foreign capital hitherto gave them, they must embark upon domestic capital accumulation. They must go through all the stages through which the evolution of Western industrialism had to pass. They must start with comparatively low wage rates and long hours of work. But, deluded by the doctrines prevailing in present-day Western Europe and North America, their statesmen think that they can proceed in a different way. They encourage labor-union pressure, and allege~ prolabor legislation. Their inter ventionist radicalism nips in the bud all attempts to create domestic industries.

Their stubborn dogmatism spells the doom of the Indian and Chinese coolies, the Mexican peons, and millions of other peoples, desperately struggling on the verge of starvation. Hear, hear. Professor Mises deserves applause for calling atten tion to the "doctrines prevailing in present-day Europe and North America." In 1975, for example, well after the d~bacle of wage-price con~ troIs in America from 1971 to 1974, and after a similar history of failure of "incomes policies" in Britain and elsewhere, Canada, Norway and Iran slapped on wage-price controls, justifying the observation of San tayana that those who don't kno~ history are condemned to repeat it. Washington Intervenes The government in Washington itself is none too pure in the applica tion of the wisdom of Adam Smith and David Ricardo. Recently, for example, at the behest of the United Automobile Workers, Washington took investigative action against foreign cars selling in the United States at prices below those charged in their home mar kets. So, through the deliciously named International Trade Com mission, Washington looks into U AW complaints that Datsuns, Toyotas, Fiats, Volkswagens and the like have been dumped on American shores in violation of the Anti Dumping Act of 1921.

But our Forgotten Man never 460 THE FREEMAN August complains about dumping, about prices being "too low." He is simply, well, forgotten. As he is when the United States insists on American made ships manned by U.S. citizens for its coastal shipping. Similarly with U.S. quotas on woolen, cotton and synthetic textiles imported from abroad. Or with brand-new quotas now being worked out with Europe, Canada and Japan for an ann~al quota of 146,000 tons of foreign specialty steels. Or with U.S. restrictions on the importation of brooms and sugar. And until the energy crisis, with now-repealed quotas against foreign oil (likely gi ving a lesson on restrictionism to the Organization of Petroleum Exporting Countries). And now Senators Humphrey and J avits p\lsh for "national economic plan ning" -a marvelous object lesson for the Third World and yet another pot-hole in the road to world peace. As luck would have it, Western Europe, Japan and other enlightened countries also have their peccadilloes in violation of free trade and international amity.

Sweden, for example, is sour on foreign dairy products, oils, fats, grains, meat, apples, electrical equipment and animal feeds ... Norway frowns on imports of electrical equipment and dairy products ... Italy erects barriers against foreign cigarettes, refrigerators, electric transmission towers, ski lifts and wire mesh ... France battles against foreign mov ies, cars, oil products, electrical goods, and wine from Italy ... Canada fights its consumers by restricting imports of foreign grain, canned goods and American whiskey ... A'ustralia protects its dairy farmers. by allowing its Forgotten Man to consume margarine only if it is colored pink. Retaliatory Measures So who is exploiting whom? No wonder the MNC is having a hard time. No wonder peace is having a hard time. Protectionism and retaliation seem to be the basic ground rules for world commerce and inadvertently for world friction.

The hypocritical West charges OPEC with exploitation. OPEC returns the charge. The Third World charges that the MNC's exploit their economies. The AFL-CIO similarly charges that the MNC's exploit American labor, mainly by shifting manufacturing to such places as Mexico, Korea and Taiwan. According to the AFL-CIO some 500,000 U.S. jobs were so exported in just the second half of the 1960's. But Western MNC's frequently had no choice but to move produc tion abroad, either because of fore closed protected foreign markets or because of domestic markets being threatened by sharp foreign com1976 U.S. DEFENSE AND THE MULTINATIONAL CORPORATION 461 petitors. As Reginald H. Jones, chairman of General Electric put it: "As the last company in the U.S. to give up the manufacture of radios, we know exactly how tough the foreign competition has been." Also, while it is true the U.S. economy has given up jobs involved in production of such things as radios, bicycles and shoes, the fact is that we have thereby gained jobs for our export industries, including computers, jet planes and agricultural products.

Indeed, I agree with the Com merce Department study by Professor Robert S. Stobaugh of the Harvard Business School that on balance overseas operations of U.S. MNC's have increased domestic employment by some 700,000 jobs as well as increasing a net inflow of some $7 billion a year in the nation's balance of payments. But all the talk on jobs gained and lost through trade still misses the point. That point was well set forth by David Ricardo in h~s law of comparative advantage. And that advantage belongs to the truly exploited character in the drama of the MNC's under fire, our old friend, the Forgotten Man - the Consumer. Smith a Consumer Advocate in The Wealth of Nations Recall that Adam Smith was a consumer advocate long before that phrase became the fashion. He saw the consumer as the key beneficiary in his laissez-faire system. This was the master oversight of the mercan tilists, the in terventionists of George Ill's day. As Smith observed: Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consump tion, as the ultimate end and object of all industry and commerce.

In short,_ the law of supply and demand and the law of comparative advantage have yet to be repealed. The MNC is the prime vehicle for the implementation of these laws, and hence the benefactor of the developing world. But note the snide intellectual treatment of MNC's in Global Reach (1974) by Richard J. Barnet and Ronald E. Mtiller and The Sovereign State of ITT (1973) by Anthony Sampson. Mr. Sampson's title and ~dea may have been inspired by a book pub lished in 1971 by a Harvard Busi ness School profess~r. The' book: Sovereignty at Bay. The author: Ray mond Vernon. Professor Vernon holds that "sovereign states are feeling naked." He maintains that the MNC's vast financial reserves, 462 THE FREEMAN August huge size, and extensive technology push the nation-states into a feeling of frustration and possible aggres sion, certainly against the MNC's. Intellectuals Barnet and Muller contend that "the structural transformation of the world economy through the globalization of Big Business is undermining the power of the nation-state to main tain economic and political stability within its territory:' Accordingly the authors seek the long arm of the law to maintain social justice. In their seeking, they are aided and abetted by the boiling bribery problem.

I agree that on occasion business men have tricked, bribed and other wise committed nefarious acts against the peoples and govern ments of the Third World. I say fie on such businessmen but note that they constitute but a.. minority, some black sheep whose presence, like germs, can rarely be 100 per cent eradicated. I· deplore such vermin, yet believe that by and large business comes under the cleansing action of com peti tion and the long -run principle of Cicero: "Whatever is profitable must also be honest, and whatever is honest must also be profitable:' Moreover, I agree with former Assistant Treasury Secretary Mur ray Weideubaum, now an economist at Washington University in St. Louis, that most of the bribery is rooted in intervention. And how! Dispensers of government-repeat, government-favors, whether an investment license, access to foreign exchange, a government contI'act, an airline route, or whatever, frequently get to surrep titiously auction their favors to the highest bidders. Also, often the more apt word is not bribery but extortion.

In other words, were there no interven tion, there would be no favors and hence no opportunity to extort or encourage bribes. To rid Latin America, the Middle East, Asia and Africa of "payola" via moralistic condemnation, via elaborate codes of ethics, via confes sions of mea culpa, is an idle dream. These lands are rooted in genera tions of interventionism. Wipe out interven tion, and then - and only then-will you wipe out bribery. Ponder again: One hundred years ago the economic disparity between the West and what would have been the Third World countries was even greater than the disparity today. One hundred years ago, you see, the world was at peace. One hundred years ago, the world lived under free trade, the gold standard, and rela tively free migration of peoples. The nineteenth century, relatively speaking, was a peaceful century; the twentieth century, so far, has been a century of total war and cold war.

1976 U.S. DEFENSE AND THE MULTINATIONAL CORPORATION 463 The Rise of the State The difference lies in the shifted role of the state. Then it was limited; now it is unlimited. Then it was laissez-faire; now it is interven tionistic. As Mises noted in his Human Action: Under laissez faire peaceful coexistence of a multitude of sovereign nations is possible. Under government control of business it is impossible. The tragic error of President Wilson was that he ignored this essential point. Modern total war has nothing in common with the limited war of the old dynasties. It is a war against trade and migration barriers, a war of the comparatively overpopulated countries against the comparatively underpopulated. It is a war to abolish those institutions which prevent the emergence of a tendency toward an equalization of wage rates all over the world. It is a war of the farmers tilling poor soil against those govern ments which bar them from access to much more fertile soil lying fallow. It is, in short, a war of wage earners and farmers who describe themselves as underprivileged "have-nots" against the wage earners and farmers of other nations whom they consider privileged "haves."

Evidence of interventionism and aggressi ve nationalism leading to war or near-war is, sadly, easy to come by these days. Some 12,000 Soviet-equipped Cuban troops have just helped successfully wage "a war of liberation" in Angola. Anoth er communist-angeled state, Mozambique, is now menacing Rhodesia. Even tiny nations get to tweak Western noses. The other day, for example, Panama's ruler, General Omar Torrijos, said his country "will have to resort to the violent stage" if peaceful efforts to recover the Canal Zone from the U.S. fail. The violent stage? Ay, that's the rub ... It is useless to ban the Bomb. What we must ban is the ideology of war, which means the ideology of government omnipotence, of aggressive nationalism, of interven tion run riot. We must, I think, rediscover the gospel according to Tocqueville and Mises. We must return to the philosophy of laissez faire and the market economy. We must see the wisdom of Daniel Patrick Moynihan's observation that the MNC is a shining example of the "enormous recent achievements" in international relations, that "com bining modern management with liberal trade policies, it is arguably the most creative international institution of the twentieth cen tury:' I agree. The multinational cor poration is far and away the greatest force for world development and, as implied by IBM, for world peace.

Meanwhile, let's remember Toc queville's point on the Russian sword and keep our powder dry. ~ OSCAR W. COOLEY Rights Are Freedoms, Not Powers THE WORD "RIGHT," used as a noun, means, my dictionary tells me, a "just, or lawful claim." Claim on what? On whatever I want and can lawfully have. I have a right to life, that is, a just claim on life. I have a right to liberty, a, just claim to be free. I have a right to property, a just claim on land, goods, or other wealth. My right is not life, liberty, prop erty, but rather my proper and just claim upon these things. The dis tinction is important. It was under stood by our revolutionary forefathers but is widely misun derstood today. The misunderstanding lies in identifying the right with that Mr. Cooley IS Associate Professor of Economics Emeritus. Ohio Northern University. Ada. Ohio. 464 which one has a right to, that is, a claim upon. Thus, people say, "Everyone has a right to an ade quate diet;' when they mean that everyone can properly take an ade quate diet out of the common larder, by taxing or by voting his group a public subsidy. The fact is that no one can properly do this.

Jefferson, who asserted in the Declaration that all men have "cer tain unalienable rights," would have been disturbed if told that the government must provide food, clothing, and shelter to everyone because to have these is their right. One has a right to seek an adequate diet but not to compel his fellowmen to give it to him. "Unalienable" describes that which cannot be alienated or sepa rated from. An unalienable right is a natural right with which people 1976 RIG HTS ARE FREEDOMS, NOT POWERS 465 are born and which cannot be taken away. The opportunity to seek life, liber ty and happiness is what Jefferson presumably was thinking of. When he listed life as one of the unaliena ble rights, he was thinking of the right to seek life and seek it more abundantly. He knew full well that life, liberty and happiness cannot be guaranteed to everybody, or indeed to anybody. We do not live in that kind of world. But we are born seekers, and no one can rightfully forbid our search.

The rights that are specified in the first ten amendments of the Constitution are freedoms, or oppor tunities. They are not achieve ments. For example, to grant religious freedom, as does the first amendment, does not make people religious! Rather, it forbids others (Congress) to interfere with people in practicing the religion of their choice. Likewise, speech, press, assembly, and petition are not prescribed. The amendment simply makes them available to people to practice with out interference. These fundamental rights, which Patrick Henry, George Mason, and others insisted must be added to the Constitution, are negative in that they specify certain opportunities which government must not deny or tamper with but which must be left open to the people. All true rights are of this nature. They are freedoms from interference. They state what people shall not be pre vented from doing. The jurist, Thomas McIntire Cooley, saw a right as "that which the law secures to its possessor by requiring others to respect it and to abstain from its violation."

Underlying all other rights is the right to own property. This is a "just or lawful claim" on land, man-made wealth, or labor potential. Why must people have such a claim? They must have it if they are to use and control these things in such a way as to produce a Iivelihood. The right to life would be of little value if it were not accompanied by the right to exploit the material environment in a way to sustain life. This is the property right. James Wilson, member of the Continental Congress and a signer of the Declaration of Independence, said: "The right of private property is founded in the nature of men and things ... Exclusive property multiplies the produce of the earth. Who would cultivate the soil and sow the grain if he had no special in terest in the harvest? Who would rear and tend the flocks and herds if they could be taken from him by anyone who should come to demand them? ... What belongs to no one is wasted by everyone. What belongs 466 THE FREEMAN August to one man in particular is the object of his economy and care.

Exclusive property prevents dis order and promotes peace." Again, the right of property cer tainly does not mean that one can rightfully take the property of others against their will. It merely means that people can seek prop erty, produce it, buy it, inherit it, and that no one, neither their neighbors nor their government, shall forbid them or shall abridge the right. We hear much talk of the right to a job. This does not mean that society (the government) must pro vide a job for every worker. It means ,that anyone may offer his services in the labor market, looking for a job, seekingto qualify, and deciding for himself whether or not to accept a job offer. ' This right, too, is based on the property idea. One's labor potential is his own personal property, and he is free to use it, sell it, improve it, or even waste it. If forbidden to do so, as by the government under a minimum wage law, or by a union taking advantage of special pri vileges granted by labor laws, he has lost a fundamental human right.

The government of the city of Detroi t has made a rule that all policemen hired by the city must reside'within the city's limits. Some policemen are contesting this, hold ing that they have a right to live where they please. They do. But the city also has a right to choose its employees. As an employer, it has a property right in the money it pays the policemen as wages. It can specify any qualifica tions it wishes in those to whom it pays these wages. The applicant who does not approve the qualifica tions is free to apply elsewhere. To force any employer to hire some particular worker is to abridge that employer's right of property. A "Coalition of Independent Col lege and University Students" has been formed to lobby for increased F~deral aid for students. "We believe," says Robert Kaplan, its head, "that no student should be denied the choice of a particular college or university solely for financial reasons." This appears to mean that every student should have the right to go to Harvard, the government paying his tuition.

Here again we encounter the assumption that a right is not a mere freedom to do a certain thing but is the privil~ge of compelling others to implement the doing of it. If this were true, a right would not be a freedom but a power. The Coalition wants not merely freedom of the student to apply to the college of his choice, which he already has, but power to force 1976 RIGHTS ARE FREEDOMS, NOT POWERS 467 others to pay the student's cost of going to such college. Farmers sometimes aver that they have a right to receive prices that yield cost of production plus a profit. No one has a right to get any particular price for a product. What he has a right to is freedom to sell for whatever the market will pay, to search for a better market, to store and sell later if he wishes, to quit producing one crop and to produce another. Employment, education, health, The Right to Be Wrong security-each, we are told is the "right" of every American. This is considered the unanswerable argu ment, the clincher that will tell the lawmaker how he must vote.

It would have been ridiculous for the Pilgrims, just landed on Cape Cod, to assert these desirable things as their rights. In fact, their rights were exactly the same as ours. Theirs were freedoms to seek and to establish, if they could, these good ways of life. And so are ours. I IDEAS ON LIBERTY THE RIGHT TO BE WRONG in matters of religious belief must be accorded, otherwise we produce hypocrites instead of persons with an enlightened belief that is fully their own. If the truth be mighty and God all powerful, His children need not fear that disaster will follow freedom of thought. FRANCOIS D~~ FENELON. Archbishop ofCambrai U651-1715) The Pursuit of Happiness LET THESE TRUTHS be indelibly impressed on our minds-that we cannot be happy without being free-that we cannot be free without being secure in our property - that we cannot be secure in our property if without our consent others may as by right take it away .

.JOHN DICKINSON. Letters from a Farmer in Pennsylvania to the Inhabitants of the British Colonies (1768) Where the Monetarists GoWrong HENRY HAZLITT IRVING FISHER ~~~~;it IN THE LAST DECADE OR TWO there has grown up in this country, prin cipally under the leadership of Professor Mil ton Friedman, a school calling itself the Monetarists. The leaders sometimes sum up their doctrine in the phrase: "Money matters;' and even sometimes in the phrase: "Money matters most." They believe" broadly speaking, that the "level" of prices of com modities and services tends to vary directly and proportionately with the outstanding quantity of money and credit-that if the quantity of money (comprehensively defined) is Henry Hazlitt. noted economist. author, editor, reviewer and columnist, is well known to readers of the New York Times, Newsweek, The Freeman, Barron's, Human Events and many others. Best known of his books are Economics in One Lesson, The Failure of the "New Economics," The Founda tions of Morality, and What You Should Know About Inflation.

468 increased 10 per cent, the prices of commodities will increase 10 per cent; that if the quantity of money is doubled, prices will double, and so on. (This of course is on the assump tion that the quantity of goods remains unchanged. If this is in creased also, the rise in prices due to a greater supply of money will be corresponding ly less.) This is called the Quantity Theo ry of Money. It is not new, but very old. It has been traced by some economic historians as far back as the French economist Jean Bodin in 1566, and by others to the Italian Davanzati in 1588. In its modern form it was most elaborately pre sented by the American Irving Fisher in The Purchasinf{' Power of Money (1911) and in later books. The monetarists have added some refinements to this theory, but prin1976 WHERE THE MONETARISTSGO WRONG 469 ci pally they have devoted them selves to giving it detailed statis tical support, and drawing much differen t concl usions than did Fisher himself regarding an appro priate monetary policy.

When Fisher began writing, the gold standard was still dominant in practice. He proposed to keep it, but with a radical modification. He would have varied its gold content according to the variations of an official price index, so that the dollar should represent, instead of a constant quantity of gold, a con stant quantity of purchasing power. Milton Friedman rejects the gold standard altogether. He would sub stitute for it a law prescribing a precise quantitative issuance of irredeemable paper money: "My choice at the moment would be a legislated rule instructing the monetary authority to achieve a specified rate of growth in the stock of money. For this purpose, 1 would define the stock of money as includ ing currency outside commercial banks plus all deposits of commer cial banks. I would specify that the Reserve System shall see to it· that the total stock of money so defined rises month by month, and indeed, . so far as possible, day by day, at an annual rate of X per cent, where X is some number between 3 and 5. The precise definition of money adopted, or the precise rate of growth chosen, makes far less difference than the definite choice of a particular definition and a particular rate of growth."l It is with considerable reluctance that I criticize the monetarists, because, though I consider their proposed monetary policy unfeasi ble' they are after all much more nearly right in their assumptions and prescriptions than the majority of present academic economists. The simplistic form of the quantity theory of money that they hold is not tenable; but they are over whelmingly right in insisting on how much "money matters;' and they are right in insisting that in most circumstances, and over the long run, it is the quantity of money that is most influential in determin ing the purchasing power of the monetary unit. Other things being equal, the more dollars that are issued, the smaller becomes the value of each individual dollar. So at the moment the monetarists are more effective opponents of further inflation than the great bulk of politicians and even putative economists who still fail to recog nize this basic truth.

I must add that I also regret that '1 take issue on this important ques tion with Milton Friedman, with most of whose great contributions to economics, and especially to the 1 Capitalism and Freedom (University of Chicago Press, 1962), p. 54.

470 THE FREEMAN August defense of the free market, I have long been in full and admiring agreemen t. I hope that no reader of this article will get the impression that I fail to appreciate the extent to which Dr. Friedman's lucidity, persuasi veness and penetration have put us all in his debt. Let us begin by examining what is wrong with "the" quantity theory of money-which might rather be called the strict or mechanical quantity theory of money. It rests on greatly oversimplified assump tions. As formulated by Davanzati in 1588, the total existing stock of money must always buy the total existing stock of goods - no more, no less. So if you double the stock of money, and the supply of goods remains the same, you must double the average level of prices. Each monetary unit must then buy only half as much as before. As formu lated by its modern exponents, the assumptions underlying the strict quantity theory of money are not much advanced from this. As "money is only wanted to buy goods and services;' they argue, this pro portional relationship must hold.

But this is not what happens ..The truth in the quantity theory is that changes in the quantity of money are a very import ant factor in deter mining the exchange-value of a given unit of money. This is merely to say that what is true of other goods is true of money also. The market value of money, like the market value of goods in general, is determined by supply and demand. But it is determined at all times by subjective valuations,' and not by purely objective, quantitative, or mechanical relationships. Three Stages of Inflation In a typical inflation we may roughly distinguish three stages. In the first stage prices do not rise nearly as fast as the quantity of money is being increased. For one thing, if there has been some slack in the economy, purchases made wi th the new money may mainly stimulate increased production. (This is the point so em phasized and overemphasized by Keynes. It can happen, however, only' in the early stages of an inflation, and only in special circumstances.) Apart from this possible early stimulative effect of an inflation, most people at first do not realize that an inflation of the currency has taken place. Some prices have risen, but many people, comparing them with the prices to which they have become accustomed, assume that these new prices are too high, and will soon fall back to "normal." They hold off buying, and increase their cash holdings. As a result, prices do not at first rise as much as the quantity of money has been in creased.

If the inflation is slow and has 1976 WHERE THE MONETARISTSGO WRONG 471 occasional stops, prices tend to catch up with the rate of increase in the money supply, and for· a while there may be a result much like what the strict quantity theory of money would predict, in which prices tend to rise roughly in pro portion to the increase in the money stock: But if the inflation (meaning the increase in the quantity of money) continues, and particularly if it accelerates, people begin to fear tha_t it is a deliberate governmental policy, that it will go on indefinitely, and that prices will continue to soar. So they hasten to spend their money while it still has some value-i.e., before prices rise still further. The result is that prices begin to rise far faster than the quantity of money has been increased, and finally far faster than it even can be increased. So we have the paradoxical result that, in a hyperinflation, when the government is grinding out new currency units at an astronomical rate, prices rise so fast that the existing quantity of money is not sufficient for the volume of transac tions, and we have mounting comp laints of a "scarcity" of money.2 In 2 See, e.g., on the French assignats, Andrew Dickson White, Fiat Monev Inflation in France (Irvington-on-Hudson, New York: Foundation for Economic Education, 1959), p. 8:3 and passim. and on the German inflation of 192:3, Costantino Bresciani-Turroni, The Economics of Inflation (London: George Allen & Unwin, 19:31), pp. 80-1.

the final stage of the German infla tion of 1923, for example, the entire stock of paper money, though with a stamped value billions of times higher, had a gold exchange-value of only one-sixtieth of what it had before the inflation started. Of course the paper mark finally became utterly valueless, as had the French assignats in 1796 and the American Continental currency in 1781. It is for this reason that all inflation must finally have a stop. But the point I am stressing here is that the strict quantity theory of money is not true (though it may a ppear to be true under certain circumstances and for limited periods). So far a~ quantity is con cerned, it is the expected future quantity of money, rather than the immediately existing quantity, that determines the exchange value of the monetary unit. Quality Affects Value The value of money, however, is determined not merely by its quan tity-even its expected future quan tity-but also by its quality. Cur rency issued by a shaky govern ment' for example, will not have as much value, other things being equal, as currency issued by a strong "legitimate" government of long standing.

In recent years we have witnessed much more familiar illustrations of 472 THE FREEMAN August the effect of qualitative deteriora tion in the monetary unit. Scores of nations have repeatedly announced "devaluations" of their currency. Prices have begun to rise in those countries the very next day, before there has been any chance to increase the quantity of money any further. Still more striking is what has happened when nations on a gold standard have announced their abandonment of it. The United States went off the gold standard in March of 1933. By 1934, the average of wholesale prices had increased 14 per cent over 1933, and by 1937,31 per cent. The U.S. formally aban doned gold convertibility again in August, 1971. Wholesale prices had actually fallen by 2 per cent from August of the year before; but by August of the year later they in creased by 4.35 per cent. With all gold discipline removed, wholesale prices rose more than 13 per cent between 1972 and 1973, and more than 34 per cent between 1972 and 1974.

One of the most striking ill ustra tions of the importance of the quality of the currency occurred in the Philippines at the late stage of World War II. The forces under General Douglas MacArthur had effected a landing at Leyte in the last week of October, 1944. From then on, they achieved an almost uninterrupted series of successes. A wild "inflation" broke out in the capital city of Manila. In November and December, 1944, prices in Manila rose to dizzy heights. Why? There was no increase in the money stock. But the inhabitants knew that as soon as the American forces were completely successful their Japanese-issued pesos would be worthless. So they hastened to get rid of them for whatever real goods they could get.: 3 Quantity Theory of Money What has helped to keep the strict mathematical quantity theo ry of money alive, in spite of experiences of the kind just cited, is the famous Irving Fisher equation: MV = PT. In this M stands for the quantity of mon~y, V for its "velocity of circulation," P for "the average price level" of goods and services, and T for the "volume of trade;' or the quantity of goods and services against which money is exchanged.

So when the quantity of money remains unchanged, for example, and prices start to soar (or any similar discrepancy occurs) the quantity theorists are not at all disconcerted. They are provided in advance with an easy alibi: the "velocity of circulation" of money :31 have never seen a reference to this striking event in an,v textbook on money. See e.g., The N('/lJ York Times .Jan. :30, 1945.

1976 WHERE THE MONETARISTS GO WRONG 473 must have changed enough to account for the apparent discrepan cy. True, this requires them some times to assume some remarkable things. I pointed out a few pages back that in the final stage of the German inflation of 1919-1923 the entire stock of paper money had a gold value only one-sixtieth that of the far smaller nominal money stock before the inflation began. This would require us to assume that the average "velocity of cir culation" had increased in the meanwhile sixty times. This is not possible. The <!oncept of the "velocity of circulation" of money, as held by the quantity theorists and embodied in the Fisherine equation MV = PT, is quite fallacious. Strictly speaking, money does not "circulate": it is exchanged against goods. When the turnover of money increases, the turnover of goods increases corres pondingly. (We have here an illustration of how the use of mathematical sym boIs may mislead an economist even in an elementary application. If MV = PT, and you double V, then it seems to follow that 2 MV = 2 PT, and that this can be read as mean ing that doubling V can double ~ But if we spell out the equation as M x V =P x T, it can be seen that M x 2V does not necessarily equal 2P x T, but more likely P x 2T. In fact, the equation MV = PT does not mean what Irving Fisher and his disciples thought it meant. They considered MV the "money side" of the equa tion and PT the "goods side:' But as Benjamin M. Anderson, Jr. long ago pointed out in a shrewd analysis,4 "Both sides of the equation are money sides ... The equation asserts merely that what is paid is equal to what is received.") Velocity of Circulation Geographical Variations There are no reliable statistics on the "velocity of circulation" of hand-to-hand currency.5 But we do have figures on the annual rate of turnover of demand bank deposits.

As bank deposits in the United States cover about eight-ninths of the media of payment, these figures are an important index. What is most striking, when we examine these figures, is first of all the wide discrepancy that we find between the rate of turnover of demand deposits in the big cities, 4 The Value of Money (New York: Richard R. Smith. 1917 and 1936). p. 161. 5 Milton Friedman and Anna Jacobson Sch wartz. in their Monetary History of the United . States: 1867-1960 (Princeton University Press. 1963). do offer annual estimates and tables of "velocity of money" based on worksheets of Simon Kuznets made for another study. But they define this velocity as "the ratio of money income to the stock of money." This hardly makes it a transactions velocity. Moreover. they appear to attach very little commodity-price determining importance to it: "Velocity is a relatively stable magnitude that has declined secularly as real income has risen." (p. 34\.

474 THE FREEMAN August especially New York, and the rate that we find in 226 other reporting centers. In December, 1975, the average annual rate of turnover of demand deposits in these 226 small centers was 71.8. In six large cities outside of New York it was 118.7. When we come to New York City itself, the rate was 351.8. This does not mean that people in New York were furiously spending their money at nearly five times the rate of people in the small centers. (We must always remember that each individual can spend his dollar income only once,) The difference is accounted for mainly by two factors. The big corporations have their headquarters or keep their banking accounts in the big cities, and these accounts are much more active than those of individuals. And New York City especially, with its stock exchanges and commodity exchanges, is the great c~nter of speculation in the United States.

Though the velocity of circulation of money (mainly in the form of bank deposits) increases with spec ulation, speculation itself does not indefini tely increase. In order for speculation to increase, willingness to part with commodities must increase just as fast as eagerness to buy them. It is rapidly changing ideas of commodity values-not only differences of opinion between buyer and seller, but changing opin ions on the part of individual speculators - that are necessary to increase the volume of speculation. The value of a commodity, a stock, or a house does not change in any predictable relationship to the num ber of times it changes hands. Nor does the value of a dollar. When 100 shares of a stock are sold, their value is not thereby necessarily depressed, because the shares are also bought. Every sale implies a purchase, and every purchase a sale. When a man buys a commodity, he "sells" money; but the seller of the commodity "buys" money. There is no necessary connection whatever between changes in the "velocity of circulation" of money and changes in the "level" of commodity prices.

"Velocity of money" is merely a resultant of a complex of other factors, and not itself a cause of any important change whatever. 6 Price Levels and Indexing Still another fallacy into which many quantity theorists (and not they alone) are apt to fall is the concept of a price "level:' This is the partly unconscious assumption that when prices rise during an inflation they rise uniformly-so that when the official consumer price index 6 I have treated this subject at greater length in an essay, "Velocity of Circulation," in Money. the Market and the State: Economic Essays in honor of.James Muir Waller. edited by N. A. Beadles and L. A. Drewry (University of Georgia Press, 1968.) 1976 WHERE THE MONETARISTS GO WRONG 475 has risen over a given period by, say, 10 per cent, all prices in that period have risen just about 10 per cent. This assumption is never made explicitly, otherwise it would be much easier to correct. But it is latent jn the discussions of most journalists and politicians. It therefore leads them greatly to underestimate the harm done by inflation. For the greater part of that harm is precisely that different people's prices, wage-rates and income go up so unevenly and at different rates. This not only means great windfalls for some and tra gedies for others, but it distorts and disrupts economic relationships. It unbalances, reduces, and misdirects production. It leads to unemploy ment and to malemployment. And attempts to correct this through such schemes as "indexing" only tend to increase the harm.

r do not mean to s,uggest that all those who call themselves monetarists make this unconscious assumption that an inflation involves this uniform rise of prices. But we may distinguish two schools of monetarism. The first would prescri be a monthly or annual increase in the stock of money just sufficient, in their judgment, to keep prices stable. The second school (which the first might dis miss as mere inflationists) wants a continuous increase in the stock of money sufficient to raise prices steadily by a "small" amount-2 or 3 per cent a year. These are the advocates of a "creeping" inflation. The late Professor Sumner H. Slichter of Harvard was the most prominent of 'these. He thought that a planned price rise of 2 or 3 per cent a year would be about right. He forgot that even if the government could hold an inflationary price rise to a rate of only 2 per cent a year it would mean an erosion of the purchasing power of the dollar by about one-half in each generation.

And it would not produce the results that Slichter expected of it. For inflation is always a swindle. It cannot be candidly and openly planned. People everywhere will take compensatory actions. If a price rise of 2 per cent a year is announced as the official goal, len ders will immediately add 2 per cent to the interest rate they would otherwise have asked, union leaders will add 2 per cent to the wage increase they would otherwise have demanded, and so around the circle. Not only will the "creeping" infla tion begin to race, but its effect on production and employment will be disruptive rather than stimulative. But our concern here is not with the advocates of creeping inflation (in the sense of creeping price rises, at no matter how Iowan annual rate) but with the monetarists strictly so called-that is, with 476 THE FREEMAN August those who recommend instructing government monetary authorities to increase the monetary stock every year only enough to keep prices from falling . What increase do the monetarists think sufficient to accomplish their purpose?

Problems of Determining How Much Inflation Is Enough Let us return to the prescriptions of the acknowledged leader of the school, Professor Milton Friedman. We have seen that, in 1962, in his Capitalism and Freedom, he recom mended that the Federal Reserve authorities be instructed to increase the total stock of money (including "all deposits of commer cial banks") at an annual rate of .somewhere between 3 and 5 per cent. But three years later, in a memorandum prepared for a consul tant's meeting with th~ Board of Governors of the Federal Reserve Board on Oct. 7, 1965, we find him recommending "as the new target a rate close to the top of the desirable range of 4 to 6 per cent for M-2" (currency plus demand and time deposits). 7 Still later, in 1969, we find him scaling down this rate considerably, though wi th misgi vings and vacillations: "A policy fairly close to the opti7 Repri n ted in Dollars and Deficits (Englewood Cliffs, N.,J.: Prentice-HalL 1968), p. 152.

mum would probably be to hold the absolute quantity of money con stant. .. However, this policy, too, seems to me too drastic to be desirable in the near future al though it might very well serve as a long-term objective." He then discusses the relative advan tages of a 1 per cent and of a 2 per cent rate, and then goes on: "I do not want to gloss over the real contradiction between these two policies, between what for simplicity I shall call the 5 per cent and the 2 per cent rules. There are two reasons for this contradiction. One is that the 5 per cent rule was constructed with an eye primarily to short-run considerations, whereas the 2 per cent rule puts more emphasis on long-run consid erations. The more basic reason is that I had not worked out in full the analysis presented in this paper when I came out for the 5 per cent rule. I simply took it for granted, in line with a long tradition and a near-consensus in the profession, that a stable level of prices of final products was a desirable policy objective. Had I been fully aware then of the analysis of this paper, I suspect that I would have come out for the 2 per cent rule ...

"Either a 5 per cent rule or a 2 per cent rule would be far superior to the monetary policy we have actual ly followed. The gain from shifting to the 5 per cent rule would, I 1976 WHERE THE MONETARISTS GO WRONG 477 believe, dwarf the further gain from going to the 2 per cent rule, even though that gain may well be sub stantial enough to be worth pursu ing. Hence I shall continue to sup port the 5 per cent rule as an intermediate objective greatly superior to the present practice."8 One hardly knows whether to twit Dr. Friedman for tergiversation or praise him for remarkable candor. But his hesitations, as I hope to show, really point to the inherent difficulties in the monetarists' pro posals. I made a distinction earlier be tween the monetarists strictly so called and the "creeping infla tionists." This distinction applies to the intent of their recommended policies rather than to the result.

The intent of the monetarists is not to keep raising the price "level" but simply to keep it from falling, i.e., simply to keep it "stable." But it is impossible to know in advance pre cisely what uniform rate of money supply increase would in fact do this. The monetarists are right in assuming that in a prospering economy, if the stock of money were not increased, there would probably be a mild long-run tendency for prices to decline. But they are wrong in assuming that this would necessarily threaten employment or 8 The Optimum Quantity of Money (Chicago: Aldine Publishing Co., 1969), pp. 46-48. production. For in a free and flexible economy prices would be falling because productivity was increas ing, that is, because' costs of produc tion were falling. There would be no necessary reduction in real profit margins. The American economy has often been prosperous in the past over periods when prices were declining. Though money wage rates may not increase in such periods, their purchasing power does increase. So there is no need to keep increasing the stock of money to prevent prices from declining. A fixed arbitrary annual increase in the money stock "to keep prices stable" could easily lead to a "creep ing inflation" of prices.

A Political Football But this brings us to what I consider the fatal flaw in the monetarist prescriptions. If the leader of the school cannot make up his own mind regarding what the most desirable rate of monetary increase should be, what does he expect to happen when the decision is put in the hands of the politi cians? We do not need to allow our fancies to roam very far. We already know the answer from what has been happening in the United States since we left the gold stan dard 43 years ago-and from what has been happening, for that matter, in nearly every country in the world 478 THE FREEMAN August since the gold standard was aban doned. The decision. regarding the national money-supply has already been in the hands of the politicians everywhere. And this situation has led practically everywhere to con tin uous and usually accelerating inflation. Dr. Friedman would take the deci sion out of the discretion of appointed monetary authorities and make it a "legislative rule." But what rate would a popularly-elected legislature set? We may be sure that it would pick a "safe" rate of monetary expansion - at least 6 per cent a year to begin with-to make sure that there would be no depres sion or unemployment. But at the first feeble sign of unemployment or "recession" - brought about by excessive union wage demands or any other of a score of factors politicians seeking election or re election would demand that the legislative monetary-increase rule be raised to 8 per cent, 10 per cent, or whatever rate the political scramble for office might suggest.

The prescribed rate would become a political football. The tendency nearly always would be for the highest bidder to win. For the belief in inflation as the master sol ution of every economic problem is not new in this generation. Throughout recorded history it has always been latent. It did not need the Keyne sian rationalization. Whenever there has been depression and unemployment it has always been popularly blamed on or identified with "not enough money." In 1776, in his Wealth of Nations, Adam Smith was pointing out that "No complaint is more common than that of a scarcity of money." The fatal flaw in the monetarist prescription, in brief, is that it postulates that-money should con sist of irredeemable paper notes and that the final power of determining how many of these are issued should be placed in the hands of the government-that is, in the hands of the politicians in office. The assumption that these politicians could be trusted to act responsibly, particularly for any prolonged period, seems incredibly naive. The real problem today is the opposite of what the monetarists suggest. It is how to get the arbitrary power over the stock of money out of the hands of the government, out of the hands of the politicians.

The sQlution to that problem can not be offered in a few lines. The present writer has attempted to deal with it in his article, "The Search for an Ideal Money," in The Freeman of November, 1975. ~ American Money: Past, Present and Future CHARLESE. WEBER DURINGTHIS YEAR the third century of American independence will have begun ().nd it is therefore appropri ate to reflect on an important aspect of American life, the monetary system which has been so closely tied up with the successes and failures of the United States during the first two centuries of its exis tence. Prior to 1776 the money circulat ing in the colonies consisted largely of silver and gold struck in Spanish mints, especially those in Mexico City and Lima, as well as other coins struck in various countries, such as England, France and the Netherlands. Foreign coins were of such great importance to the comDr. Weber earne(f his Ph.D. from the University of Cincinnati in 1954. He has taught in universities in Ohio.

Missouri. Louisiana and Oklahoma. Presently a member of the Faculty of Letters of the. University of Tulsa. he is the author of numerous articles on literature. history and monetary questions. merce of the United States that Congress continued to recognize their status as legal tender down to 1857. During the years immediately before the Revolution various col onies issued paper money and dur ing the first years after the Declara tio~ of Independence the states issued large quantities of paper money which rapidly deteriorated in value. The disillusionment with this paper money and a recognition of the chaos which it had caused are reflected in Article I, Section 10 of the Constitution: "No state shall .... make any Thing but gold and silver Coin a Tender in Payment of Debts." In defense of this provision, J ames Madison (The Federalist Papers, No. 10) speaks of "A rage for paper money, for an abolition of debts, for an equal division of prop479 480 THE FREEMAN August erty, or for any other improper or wicked project ...." In No. 44 he continues in the same vein: " ....

the pestilent effects of paper money on the necessary confidence be tween man and man, on the neces sary confidence in the public coun cils, on the industry and morals of the people, and on the character of republican government ...." By 1792 the first United States mint was established in Philadelphia, but its production was at first quite modest. The first regular production in 1793 con sisted of cents and half cents, fol lowed in 1794 with a very modest introduction of dollars and half dollars struck on the same stan dards as the Spanish denominations of eight and four reales. (Whence the colloquial designation of "two bit's" for quarter dollar, etc.) Al though the weight of the dollar was immediately of Spanish origin, its designation was of German origin (from Taler). The first five and ten dollar gold pieces were struck in 1795 and the first dimes, quarters and quarter eagles (21/2 dollar gold pieces) in 1796. If the production of the United States mint at Philadelphia during its first few years seems quite modest, we must bear in mind that this modest outflow of money was just begin ning to displace and supplement the large quantities of Spanish and other coins in circulation.

This reliable silver and gold money, both foreign and domestic, was the basis of a sound economic expansion during the first decades of the nineteenth century. Notes were issued by private banks, espe cially during the 1850s, but this unreliable money seems to have been of little importance in spite of the beautiful engraving work often to be found on it. The federal government abstained from issuing paper money until the Civil War. After this dire period the issuing of paper money was continued by the federal government, but most of it consisted of notes which were simp ly certificates for gold and silver payable on demand. Meanwhile, a large production of gold and silver coinage continued to provide the basis of the sound economic growth of the United States. A considerable quantity of silver trade dollars (for foreign trade, especially in the Orient) with a weight of 420 grains (27.20 grams) was struck between 1873 and 1878, while particularly large quantities of dollars with a weight of 412 112 grains were struck for domestic use during 1878-1904 and 1921-1928. Even far more signifi cant was the huge production of gold coinage, which totaled over 4,500,000,000 dollars by 1933, a sum of reliable coinage of the pre cious metal unprecedented in the history of the world. About three1976 AMERICAN MONEY: PAST, PRESENT AND FUTURE 481 Rhode Island note for three pounds dated 1786.

1786 Rhode Island Note-Number issued: 10,000. Signed by Elijah Cobb, Job Comstock and Samuel Allen. Size: 70 x 105 millimeters. During and after the Revolutionary War great quantities ofpaper money were issued not only by the United States, but also by individual states. This particular issue totaled 100,000 pounds in notes of twelve different denominations. These notes were numbered and signed by hand. The wording on the note, "This bill is equal to sixty shillings in Lawful Silver Money, and shall be received in all Payments within this State . ... ," is especially significant because this legal tender provision was to be enforced b.y courts without jury trial. This provision, in turn, resulted in the famous decision in the case of Trevett vs. Weeden, which established the rif{ht of a United States citizen to trial by jury.

482 THE FREEMAN August fourths of this gold coinage was in the form of double eagles ($20 gold pieces) struck, beginning with 1850, with a weight of 516 grains (33.436 grams) and a fineness of 900/1000. Beginning in 1933 one step after the other removed us from the monetary traditions established with wisdom by our forefathers in the eighteenth century, traditions which had had a wholesome effect on the development of the American character and which had provided a sound basis for economic develop ment. The huge gold coinage was demonetized in 1933 and the domestic monetary use of gold was prohibited. These measures were im patiently undertaken on the assumption that the resultant possibility of monetary expansion would cure an economic crisis pre vailing at the time, but their short range effects were probably nil and their long-range effects seem to have been distinctly negative. Even after 1933, however, the gold backing of the dollar continued until that watershed Sunday, August 15, 1971, by virtue of the fact that a huge gold reserve existed that supported the value of the dollar in a very real way by being available to foreign governments with dollar assets. On August 15, 1971, this last remaining connec tion between the United States gold reserve (by this time depleted to less than half its maximal size) and the dollar was finally severed by President Nixon. In the meantime, the expansion of currency had been so great that the price of silver in terms of paper money had increased to such an extent that the huge amoun t of silver coins in circulation was beginning to. be hoarded. In 1965 the first copper dimes and quarters appeared as a sad substi tute for the 900/1000 silver coins which had been struck with nearly the same weights for seventeen decades. In the same year the fine ness of the half dollar was reduced from 900/1000 to 400/1000 and in 1971 the first half dollars entirely without silver appeared. The silver certificates (bi ue s~aI notes) remaining in circulation were repudiated in 1969.

Less obvious to the average citizen than these visible changes in the coinage and paper money was the huge and insidious increase in currency that was taking place, especially beginning after 1961. Ac cording to data recently furnished by Secretary of the Treasury William E. Simon, the currency in circulation (including that held by commercial banks) increased from $7,848 million on June 30, 1940, to $73,833 million on June 30, 1974. When we plot out the annual increases during this period we obtain the following revealing graph: 1976 Billions 80 60 40 20 AMERICAN MONEY: PAST, PRESENT AND FUTURE MONEY IN CIRCULATION OUTSIDE TREASURY AND FEDERAL RESERVE BANKS as of JUNE 30,1940-1974 483 o 1940 1950 1960 1970 The failure of paper money and copper-nickel tokens as a reliable store of value is vividly demon strated by this simple graph. Each horizon tal unit represents one thou sand million dollars in circulation, including those held by commercial banks, on June 30 each year from 1940 to 1974. Wholesale prices rose from a base of 100 in 1967 to approximately 168 in 1974, an increase almost exactly propor tional to the amount of money in circulation as given above. The real ly frightening aspect of this curve is its almost smoothly exponential shape beginning especially after 1961, indicating the cynically planned nature of the inflation which has been debilitating the 484 THE FREEMAN August American private economy and unjustly expropriating the real value of monetary savings of individual citizens. Note that the period 1946 to 1960 was one of relatively modest monetary expan sion and also one of relatively little unemployment on the whole. This refutes the nonsense so frequently heard nowadays that we are faced wi th a choice between inflation and high rates of unemployment. The shape of the curve since 1961 is also a bone-chilling indication of the probable future decline of the purchasing power of individual dol lars.

The motivations for the great expansion of currency, especially during the last fifteen years, are by no means difficult to understand. They are tied in with the com plex ities of a tax structure which includes a sharply graduated income tax, as well as taxes on "capital gains" and "interest," even when such putative capital gains and interest represent no income whatsoever in real terms. By its deliberate expansion of the money supply (inflation) the government takes an ever-increasing percentage of the earnings of its citizens in taxes. These motivations also exp lain the doctrinaire abhorrence which officials of the Treasury Department now have for the monetary use of the precious metals, both domestically and internationally. Unless foresighted, unselfishly courageous political forces gain the power to put a stop to the trend shown on the graph, monetary chaos and its usual concomitants, economic and social deterioration, will almost certainly be our fate during our third century as a national state. To visualize our own future if present trends are not stopped we need only recall the tragic developments in Germany, France, Russia, China, Hungary and Chile (just to mention a few examples) when the amounts of their currencies in circulation shot up into astronomical figures.

Dreary as this picture of our future might seem, there is one note of optimism on which we can end. The rapid monetary expansion of the last 15 years, which now threatens to evolve in to a hyper inflation, has resulted in a decline of purchasing power, inj ustice to the holders of paper money and bonds, economic dislocations and other evils. However, this monetary expansion and its results have not been a catastrophe of nature or ap. act of God, but rather simply human action. What human action has brought about, human action can also rectify if the will to the action exists. I) CLARENCEB.CARSON HERE IS SOMETHING that is puzzling to adults. A small child can bound about, running from here to there, never appearing to tire. Yet, set the same child the task of walking from one place to another, and before he has taken a dozen steps, he is apt to look up at a parent to announce, "I'm tired. Carry me." If the parent does not comply, the child is likely to beseech, whine, cry, and may even conduct a sit-down strike. It does not make sense to the parent; the child is just being contrary. How could a few steps tire a child who is forever exerting himself much more strenuously, and for longer periods of time?

Dr. Carson has written and taught extensively, specializing in American inlellectual history. His most recent book, The Rebirth of Liberty: The Founding of the American Republic 1760-1800 is now available in a 350-page attractive Bicenten nial paperback at $3.00 from The Foundation for Economic Education, Irvington-on-Hudson, N.Y. 10533. ,.'Qnd liberty The child may be contrary, but he is not just being contrary in refus ing to walk. It is too common a happening to be accounted for in that way A more plausible explana tion is that it does tire a small child to walk. It does not tire him to run, especially if he is going nowhere in particular, but it tires him to walk. An adult, by contrast, tires rather quickly if he tries to run but can walk with relative ease. It is no new discovery that small children are different from adults, but how different and in what ways may be insufficiently pondered. There is a clue in some of these for the connec tion between work and liberty.

Before looking into this connec tion, however, there is another and related matter that needs attention. Adults watching children at play often say something like this: "If I only had as much energy as a child, I could really accomplish something 485 486 THE FREEMAN August with it." Do children really have more energy than adults? Probably not, taking one with another, though the age of the adult would make a difference. There is, of course, no way to measure the potential energy in any person. What is known is that adults can and do sometimes expend a tremen dous amount of energy. Take, for example, a woodcutter, someone who is accustomed to chopping with an axe. He can do so all day long, with only a brief respite here and there. The chances are good that no small child actually expends any thing like that much energy in the course of a day. The small child appears to have so much energy because his energy is largely undirected, unconcen trated, and randomly exerted. He has not yet entered into the economy of energy arena. So long as he is at play-what is called in school nowa days "free play'" -he has all the energy he needs and wants. When he "runs down," he can quit playing and sleep; there is no playing left undone, nor any energy scarcity to concern him. To the small child, there is an almost absolute distinc tion between work and play. When he is heal thy, he has boundless energy for play, but he tires and gives up quickly when assigned tasks-work-which must be com pleted, even walking from one place to another. The reason is now before us. Once the child is assigned a task that must be completed, the task becomes work, and the child enters the realm of economy where energy is scarce, must be conserved and directed.

Why is it easier for a small child to run than to walk? Because run ning belongs to the world of play, to the realm of boundless energy where there is no need to conserve or concentrate it. Walking belongs to the adult world of work where energy is scarce. To go from child's play to work is to go from something like paradise to purgatory, to go from a bounty of energy to a scar city of energy. It is understandable, then, if the child resists the transi tion and even revolts when he is pressed to do it. Organized Play There is, of course, an intermedi ate realm between the play world of the small child and the workaday world. It is that of organized play, of games and contests. Actually, organized play has all the charac teristics of work, save one. In organized play, there is a definite task to be completed, a time limit, and participants must concentrate and conserve their energy. In base ball, for example, the task is to score more runs than the opposing team, in a set number of innings, and energy must be concentrated on the various tasks, such as hitting, as 1976 WORK AND LIBERTY 487 well as conserved for certain moments in the game. The one difference between organized play and work is this: the task to be completed in play is arbitrary. By contrast, the task to be completed in work is integral to and grows out of what is being done. For example, the woodcutter chops the tree into logs that will fit into the fireplace.

Thoug h the lengths may vary with in certain tolerances, there is noth ing arbitrary about what he is doing if the wood is to be burned in his house in order to give off heat. Organized play has two frequent ly interrelated purposes. One is to provide children with a relatively painless transition from free play to economy and work. The other is to provide entertaillmen t and recrea tion for participants and spectators. The first is probably much more im portan t than the second, for the transition involved is one from the primitive level of the lower' animals into the civilized world of man. The penchant for play man shares with other animals; work is one of the most important of the distinctions between him and them. It flows, of course, from his power to reason - to see connections that are not, necessarily direct and to engage in a series of purposive acts to provide for his well-being.

Work has now been under attack for some time. Nowadays, it is most commonly opposed as the "work ethic:' The term "workaholic" has even been coined to describe a malady supposedly afflicting those who are "addicted" to work. But "work ethic" is only the latest in a line of terms used to stigmatize those who believed in the honor and dignity of work. It was called the Protestant ethic and also the Puritan ethic, though not everyone who used these terms attached a stigma to them. It appears, though, that those· who refer to work ethic usually do so in a disparaging way. Work Under Attack The assault upon work is by no means confined to intellectuals, as the above might suggest. Many efforts have been and are being made to place obstacles in the way of those who would work. Labor unions have sought for years, often with success, to reduce both hours of work and the amount produced by each worker. In a strike, they attempt to stop all work within a plant and prevent those who would work from going in. It may be objected that theirs is not opposi tion to work itself but to the condi tions of work under an employer or in an industry. That may be the intent behind it, but the method is to stop work. By indirection, they may well damage employers, but the impact on work and would-be workers is direct and immediate.

Governments, too, have joined in 488 THE FREEMAN August the assault on work. Child labor laws prevent the employment of young people in many undertak ings. Wages and hours laws either limit hours of work or penalize the employer for overtime work. More, government taxes those who work penalizes them, so to speak-and rewards many of those who do not. The most extensive instance of this is found in the Social Security program: those who work are taxed to provide benefits for those who have retired or are not very gainful ly employed. (Again, the theory holds that the worker is taxed to pay for his own retirement, but-the practice is as stated aboveJ It also is done in welfare and related pro grams. Education as a Barrier Governments are frequently carrying out a delaying action against work with their sponsorship of formal education. Compulsory attendance in schools is the coun terpart to the child labor laws, a taci t opposition to work. Govern ment support of higher education has greatly extended the period of unproductive activity for many peo ple. This is not to deny the many values of formal education, but it is to point up some of the dangers of it.

In many respects, formal educa tion belongs in the category of games .and contests rather than work. Many of the obstacles put in the way of graduation are not arbitrary, but they have a similar artificiality to those in organized play. The student productivity is devised and artificial, bearing no immediate relation to providing goods and services. The student does not bear an integral immediate relation to society; too long a period in school, cut off from productive relationships with people, breeds opposition to society. The tree that does not bear fruit is cut down. The perpetual student, perpetually unfruitful, is under an implied threat of a similar fate. Probably, to maintain his own self-esteem he withdraws his esteem from society, may revolt against it, or just hold it in contempt. To make matters worse, Pro gressive Education attempted to sever the connections which have al ways been fragile of schooling with later life and the workaday world. Childhood, they said, has its own purposes and ends; it is not a prelude to adulthood but something worthwhile and fulfilling in its own right. The tendency of such theories when they are applied is to make schooling an end in itself. The effect of this is to make school into only a game or contest, not a game which is a transition to the workaday world but one which is both artificial and arbitrary. Social pro motion, which is well-nigh univer sally practiced today, illustrates 1976 WORK AND LIBERTY 489 this theory in practice. Social pro motion incarnates the values of children - homogenei ty, mainly and ignores the value of disciplined preparation for later life.

Progress or Regress? This campaign against work is described as being progressive by its proponents. Every reduction in hours of labor is progress, they have said. To prohibit child labor was described as progressive. Education which was not primarily prepara tion for a life's work was specifically called Progressive Education. Pro gress toward what, however, has never been made clear. Progress toward a time when men would no longer labor? Progress toward ever lasting leisure and perpetual "free play" time? But that-would not be progress, if there were a possibility that it could occur, which there is not. That would be retrogression, retrogression to the level of small children, to irresponsibility, to an absence of economy of time and energy, to some phantom golden age of perpetual childhood. Perhaps, the most devastating thing about this campaign against work is the attitudes and habits it inculcates. It tends to make work distasteful, something to be avoided, something to contend over even as children bicker about the tasks assigned to them. It misconstrues the role of work in life and civilization. It treats work as if it were an arbitrarily contrived cultural convention rather than what it almost surely is: at the very core of adulthood and meaningful life.

Samuel Smiles was on the mark when he wrote the following: Work is one of the best educators of practical character. It evokes and disciplines obedience, self-control, attention, application, and per severance; giving a man deftness and skill in his special calling, and aptitude and dexterity in dealing with the affairs of ordinary life. Work is the law of our being-the living principle that carries men and nations onward. The greater number of men have to work with their hands. as a matter of necessity, in order to live, but all must work in one way or another, if they would enjoy life as it ought to be enjoyed. Labor may be a burden and a chastisement. but it is also an honor and a glory. Without it nothing can be accomplished. All that is great in man comes through work, and civilization is its product. Were labor abolished, the race of Adam were at once stricken by moral death. 1 Much could and should be said about the virtue, value, benefits, and ennobling character of work, but there is one particular connec1 Samuel Smiles, Character (New York: Harper and Brothers, 1872), p. 97.

490 THE FREEMAN August tion which merits special notice. It is the connection between work and liberty. It has been generally recog nized that work is necessary; some, even many, have proclaimed it good, and everyman knows that it is good in moments of achievement, at least. That it might be integrally tied up with individual liberty, how ever, has not been much examined. The Release of Energy The most elemental connection between work and liberty is the liberating role of work in the release of energy. We may not ordinarily think of finding a way of releasing energy as being a problem. If not, it is probably because we are accustomed to think of the conser vation of energy as a problem. But conserving energy is only impor tant because we have something useful and worthwhile to use it on. Releasing it is more basic, if not more im port an t. Man is, by nature and normally, a bundle of energy, energy seeking an outlet, energy which must be exerted else it will dissipate and we will deteriorate. Work is the only way that energy can be construc tively liberated. Child's play releases the energy, but not con structively. Organized play releases energy, but the purpose is artificial and arbitrary. Child's play is natural; games are cultural; work is truly liberating and civilizing. The first two release energy, but man at work employs energy to liberate himself. Energy is in control of the small child, so to speak, when he is at play. Man is in control of energy when he is at work. This control over energy is both the deepest meaning of freedom and the means by which man' exercises his liberty.

There is, of course, a much more obvious connection between work and liberty. Work is the means by which we get our livelihood. Saint Paul declared "that if any would not work, neiher should he eat." He thereby not only called attention to the connection between work and eating but also laid it down as a rule that all who were able should work. He had just explained why in an earlier passage (II Thessalonians 3:8): "Neither did we eat any man's bread for nought; but wrought with labour and travail night and day, that we might not be chargeable to any of you:' "Chargeable" is the key term, here and it may be sufficiently rendered as "dependen t" or a "burden." Work Affords Independence Work is the way to individual independence. Those who do not work, if they eat, are dependent on those who do work. They are a burden. To be compelled to work to support those who do not is in some degree slavery, the degree being dependent on the extent of the labor 1976 WORK AND LIBERTY 491 so compelled. It is well noting, too, that neither the slave nor the master is free, in the full sense of the word. The master is "chargea ble" to the slave for his livelihood and material well-being. He is bound, also, in a system of armed might which maintains the slavery and in servility to the political masters of the armed force. This is true whether slavery is thought of as something which once existed in the South, or in Rome l or Greece, or as that which exists anywhere and any time that some portion of the population is compelled to support the rest. Welfare recipients in our day sometimes adopt the posture of slave masters, demanding their benefits and organizing to enforce their will.

In short, for liberty to exist fully, those who can must work. If they do not, those who do the work lose some portion or all of their liberty. And, those who do not work subsist in a dependence which is demeaning, and they experience only an illusory freedom. Idleness Leads to Mischief There is yet another essential connection between work and liber ty. It has long been observed that only those who have a large mea sure of self-discipline are ready for liberty. What this means, in the main, though not entirely, is that only those who are work-oriented are ready for liberty. The reason for this may be best approached negatively. There are three ways by which man may release energy: in play, by constructive acts, and by destructive acts. Man at work is not usually a threat to anyone. A man committed to his work-work oriented-can hardly be a threat to anyone. Anger cannot survive embroilment with work, for then the mind and energies are so focused in constructive use that there is nothing left over for destruction.

It is not so with the idle. They are 'subject to and are often bent toward destructive acts. John Wesley put the matter this way: Do you labour to get your own living, abhorring idleness as you abhor hell-fire? The devil tempts other men; but an idle man tempts the devil. An idle man '8 brain is the devil's shop, where he is continually working mischief'!. This mischief, whatever its source, is often a threat to property, to peaceful men, and to the well-being of society. Work not only keeps people busy and out of mischief, but it is also a major source of discipline from within by which an individual con trols himself whether he is at work 2 Herbert Welch. comp., 8eleetions ('rom the Writinfi{s of ,Jrjhn Wesley (New York: Methodist Book Concern, 1918), pp, :308-09.

492 THE FREEMAN August or whatever. Those who do not have self-discipline must be disciplined from without. When those who lack self-discipline become numerous they must be held in check· by government. The use of this exter nal force promotes the expansion of governmental power in ways that curtail the liberty of all. Govern ment-imposed discipline tends to get extended over everyone to the detriment of individual liberty. Nothing so aggravates the problem of governance as widespread idle ness. Christian Influence There is much evidence in history to support the view that there is a close connection between work and liberty. More pointedly, there is much evidence in history that points to a close connection between the work ethic and individual liber ty. As Catholic Christianity spread in the early Christian era, slavery declined and virtually disappeared. The Protestant and Catholic Re formations of the sixteenth century either fostered the demise of serfdom or many of the vestiges of it, and presag~d an assault on slav ery around the world. The connec tions here are not far to seek.

Christian teachings dignify labor; they make it something not to be avoided or placed on slaves but worthy of everyman. The Protestant ethic, as it has been called, added another dimension. It made every useful work into a calling, added a dimension of nobility to it, even. Slavery is not only an abuse of the slave but also a degradation of work, and, by implication, of those who work. As respect for work spread, so did respect for the individual, and, in the wake of these, protections of individual liberty. The protections of liberty came, mainly, by way of containment and curtailment of the power of the state. This is not to say, of course, that individual liberty was simply a product of a work ethic. It is rather to affirm that the two have gone hand in hand and that there appears to be an essential connection between them. There is further historical evi dence to support this view. As the vigor of religious belief has declined in the last century, belief in the nobility of work has gone with it.

Supplanting these has been a hedonistic emphasis upon leisure and play. Almost simultaneously, individual liberty has been increasingly circumscribed and cur tailed and government power vastly expanded. Idleness and Crime Here is another kind of evidence. As the campaign against work has gained hold in the United States, crime has increased, and continues to increase. It has long been the 1976 WORK AND LIBERTY 493 claim of reformers that crime is the product of a bad environment such as develops where there are poor living conditions. This is to look at the matter only most superficially. Actually, both poor living condi tions and crime· are the result, mainly, of idleness. Much of the crime in the United States is com m itted by young people, in their teens and twenties. Commonly, those who commit the crimes crimes of violence and destruc tion-are unemployed or only occa sionally employed. Lacking a work ethic, they are often devoid of all ethics. They have often known noth ing of the liberation of work and quite often lose all liberty through being jailed or imprisoned.

How Much Work? A disclaimer is now in order. This writer does not profess to know how much, or how long, or with what intensity people should work. He does not know at what age children should shift from free play to organized play or from organized play to work. He does not know at what age each child should enter school or at what age he should leave. How much men should work and how much of their time be devoted to recreation is not known to him. Whether a man should work four, or six, or eight, or ten hours per day eludes his powers of discern ment. That work is good, that play can be refreshing, that schooling can be helpful in learning, to these things he can attest. What is reasonably certain is that neither government nor any other organization or group knows how much or how long anyone should do these things. Government has no more business setting hours of labor than establishing the number of hours we should sleep. Government has no more business deciding at what age children should enter or leave school than determining in what month a child should be toilet trained. Government has no more business sponsoring idleness than compelling people to work. By the first it burdens taxpayers and encourages licentiousness; by the second it imposes slavery.

Individuals differ as ,much from one another in the amount of time they can and will work as they do in the amount of time they can and will sleep, probably even more. Some men can work long hours fruitfully and with no discernible ill effects. Others cannot or do not wish to work long at highly disciplined labor. Some jobs require intensive concentration and are best done for short periods of tIme; others can be routinely performed for much longer periods. Some children gain fulfillment from much schooling, others from very little. Many youths wish they could go to work at an earlier age, and there is no good 494 THE FREEMAN August reason why they should not. These are matters best left to the deci sions of individuals (or the adults responsible) and worked out in co operation with whoever else may be involved. Work is normal for man, but there are no norms for how much each of us shall do.

Shortage of Jobs? There is something else that should not be left on the table, as the saying goes. The. labor union campaign against work, wh.ich has produced much of the legislation limiting work, has not been grounded upon some supposed dis taste for work. It is premised, rather, on the notion that there is a short age of work. This notion has even been provided with a theoretical explanation and given the name of technological unemployment. The theory is that the use of tools and machinery replaces workers and thus reduces the amount of work to be done. Obviously, tools and machinery are often used to accomplish much more than could be done by a much larger work force performing by Peregrine Worsthorne hand. It does not follow, however, that there is less work to be done. Everyman knows, if he only thinks about his own undone tasks, that there is more work to be done than is ever likely to get done. This is so because there is no end to the way human wants may be satisfied by the performance of work. People do have preferences, however, as to what work most needs doing, and they limit the amount they will spend to get something done. Some things they will pay much to get done; for other things they will pay much less. Technology does not produce unemployment; if wages are too high the result is unemploy ment. There is no shortage of work, but there is always a scarcity of means to employ workers.

The effect of the campaign against work, whatever its theoreti cal justification, is about the same. It is a campaign against civiliza tion. It is a campaign against the growth and fulfillment of individuals. It is a campaign against discipline and order within society. And, it is a campaign against individual liberty. f) IDEAS ON LIBERTY 'THAT THE INDEPENDENT and creative should be made to feel guilty, as if they were the parasites, with the dependent and the passive lauded as the salt of the earth-such a reversal of values is the mark of a society with a death wish. From a recenbuticle in Harper's Magazine In Defenseof Apathy THOMAS W. HAZLETT WE HEAR MUCH these days of the virtue of "in volvemen t." Honored are the "activists" who so boldly and humanely watch out for their fellow man. "Community-minded;' "civic awareness:' and "socially con scious;' are true-blue banners, the merit badges of the 100 per cent Twen tieth· Cen tury solid citizen.

The cry for involvement is most frequently raised on the campus. Second-semester freshmen, in fran tic search for the passionate days of relevance and revolution of such recent memory, ask: Where is the involvement? Where is the commu nity action? Where are the people who really care? Mr. Hazlett is a partner is a los Angeles public relations firm and a freelance writer. Wake up people! Get in volved! Whip that Apathy! Make a better world! Organize your Community! Change your Nation! Reform the World! On the contrary! Maligned and persecuted, apa thy - in the social sense of the word-is possibly the noblest of civic virtues. The ability to mind your own business, to let others do their thing, and to concentrate your efforts on your own life, are the discerning characteristics of a well adjusted and competent human being. When contemporary critics look about, they are terrified to witness the 1976 college student living his life privately, concentrating on his course of study and more worried 495 496 THE FREEMAN August about the job that lies ahead than about the political shenanigans that so absorb the press. What is so apathetic - in a broader sense of the word-about caring for your own life and respecting the other fellow to run his? Is this the "apathy" that shocks and bedevils the "activists"

of our age? Indeed it is. For the prevailing sen timen ts of "enlightened Ameri cana" operate on entirely different premises than the rational predilec tions of honest and civilized men. Those premises build from the frightening cliche: "We are our brother's keeper." Getting "involved" does not simply entail involvement per se: What the vogue defini tion reflects specifically is involvement in the affairs of others-of the school, community, society. The hip activism is little more than an excuse for running the lives of others, hence the pathological attachment with politics. The concept of people being con tent to attend to their own self in terests has predictably little appeal to the "activist" mentality. Pri vate people, pursuing personal goals and enjoyments, offer a staunch defense against the per vasive moralizing of the meddling intruders. The approach of the lat ter is entirely paternalistic and operates under the assumption that since we are our brother's keeper, there must be somebody who cares enough'to do the keeping. Somehow, that entity is always th~. state, which makes it a difficult family relationship to break off.

Undoubtedly, Henry David Thoreau was on the rig h t path when he said: "If I knew for a certainty that a man was coming to my house wi th the conscious design of doing me good, I should run for my life." Your life is your own, yours to succeed or to fail with, yours to live as you decide. Your obligation is to yourself: to the only person whose life does in fact depend on you. It will, in reality, be your actions that make your life what it is. Why feel guilty about making the best you can of your own efforts-and why not allow others the same chance? Let "Mind Your Own Business" be the political slogan of free men in a free land. Do not take lightly the social non involvement of today's college stu dents. They are busy-with their own business. If that business should be foreign to your own aspirations, appreciate the diversity among individuals and welcome the opportunity to express it. And above all else, keep a heal thy distance from the champion of mindless social involvement. In all probabil ity, there is ~ sound reason behind his decision to forget his own life and to attempt to rule everyone else's. ~ TIME to READ THERE IS an old story of the man who read Gibbon's Decline and Fall of the Roman Empire in the intervals of waiting for his wife to dress for dinner.

From Management Briefs, published by Rogers, Slade & Hill, Manage ment Consultants of New York City, come these ten ways to use those otherwise-wasted quarter-hours. 1. Talk less (and watch less the TV programs unworthy of your maturity. Watch more, if you please, the good ones; fewer of the poor ones). 2. Carry a book in your bag (your brief case, your topcoat pocket). 3. Put a book under your pillow at night; if you can't sleep, read. 4. Wake up 15 minutes earlier every morning, and read. 5. Keep 4book handy to pick up (at home, when waiting for the dinner; at the o4ce for waits between engagements, or for long-distance 'phone calls tp come through). I I i 6. Have tt book ready when meeting unpunctual people (or waiting for meetings to get under way). 7 Take along your own book when going to the dentist or doctor (or an appointment with the man who may keep you waiting 15 to 45 minutes in his anteroom), Why read their old magazines?

8. Keep an unread book in your car in case of traffic jams or a wait for repairs (or a wait for your wife to do her shopping). 9. Never go on a journey in a public conveyance without a book. 10. Remember that a book in the hand is worth two in the bookcase (and a good current magazine in hand is worth three in the wastebasket).

ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics. has a Masters degree in business administration. has worked two years in Sweden. and now works as a professional systems anralyst. He is a businessman who is active in community and church affairs. is a free lance author. and is often called on to speak. He lives with his wife and children on a small farm just outside of Salt Lake City. All rights reserved. 498 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

IJ[ Commentson The Bill ofRights This continues a series of articles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. How IS IT that a man loses his rights? There are at least three ways; but each is a result of his own choice. First, he may agree to give them up, and if he has his wits about him, he.will do that in such a way as to protect them in the process. Second, he may be deprived of them by force; which only means that he may be caused to suffer some unpleasant consequence when he attempts to use them. And third, the most subtle and effective of all, he may, by listening to the false promises of license, apply his rights and powers to evil occupations and form himself into such a creature of ignorance, bad habit, and even depravity, that he becomes incapa ble of the use of his most precious and most fragile faculties. Such is the dulling effect, for example, of petty thievery upon the finer senses of.justice and propriety.

Throughout history men have lost the use of their unalienable rights by one or another error. But when an entire nation has moved itself from liberty toward oppression, as you are doing now, it has always been through a slackening of the public scruples; for the carelessness neces sary to participation in the human vices extends both to the abuses of government officials and the vigi lance of the people. Officials, drunken wi th au thori ty and schemes of glory, run amuck; while the people, filled with the indifference born of selfish pleasures, fall asleep. Self-government is an oppor tunity which must be cherished by every citizen, and if the time should come that you cease to govern yoursel ves, first in your own individual lives and thereafter in your political institutions, then you 499 500 THE FREEMAN August will be governed by others; for selfish and glory-hungry men have ever lurked about the political waterholes of civilization like cun ning wolves awaiting the unwary prey they are only too eager to _consume in order to fill up their vanity and satisfy their lust for the regard and property of their fellows.

It is precisely here that we see the requirement for the protection of the moral conscience; so let me turn your attention to the First Amend ment. Freedom of Religion You will notice that we placed freedom of conscience at the head of our list of rights, for we knew that if a man could not freely exercise his conscience he could not develop it fully. And a man without conscience is a man without honor. Likewise with the nation. And what is more, when the citizens fail to conduct themselves with probity, their gov ernment is required to increase its regulation of their lives; a shift of power from the people to their governors; a step from liberty toward oppression; a change eager ly assisted by ambitious politicians. Contrary to what you have lately been told, it was our intent in the First Amendment to not only pro tect, but also to promote religion among the people. Not that the government should foster any par ticular religious philosophy (such as atheism or irreligion as it does in your schools), but that it should not discourage the development of morality and religious ethics, nor give one philosophy art advantage over another. Hence we denied the government the power to interfere in religion or to direct, control, or tax it in any way. We drew a line between them which ought not to be crossed. But that was to fortify religion, not to inhibit it! It was to protect the people from political in terference in the free exercise of conscience, not to prevent the development of a moral or religious sense.

To interpret the First Amend ment so as to place government in opposi tion to religious expression in private or in public is to place government in control of religion to the extent that it can advance the philosophy of nonreligion, which is in direct contradiction to the spirit of that amendment. Furthermore, it sets a free government in conflict wi th its own destiny, for if it should succeed in demoralizing the citizens, it will have also succeeded in its own destruction. Our desire in this first clause of the First Amendment was to estab lish and protect the only enduring basis of liberty: individual self discipline through individual rec titude. We knew that, as with enterprise and art, the most effec tual way th~ government could 1976 A NEW MESSAGE-COMMENTS ON THE BILL OF RIGHTS 501 promote religion was to remain out of it entirely. There are voices in the land now which attempt to twist the meaning of that law and seek to thwart all religions based upon a recognition of God. They do this because they know, and you must remember, that any human expression which con veys belief in a Divine Creator is also a statement of the inherent worth of man, while a denial of God is a positive affirmation that man is only a well-developed beast, and may be justly reared, trained, and used as is fitting any animal. Have not millions been slaughtered under that Godless philosophy? You watched it in Russia for a half century.

The man who will soberly reflect upon the question will soon discover that all justification for government arises in the mischievous nature of the citizen. If each one behaved justly toward others the need for civil government would vanish. There would be need for neither police nor armed forces. The poor and unfortunate would be cared for through the feelings of charity which would be released in the hearts of their fellow citizens whose just attitudes would have prepared them to share their concern and their property. In such an ideal society each man would have com plete liberty, but only because he had first made himself worthy of it by his own careful respect for the rights of others. Is it not toward that goal that you would strive if you only knew how to attain it? It is for this purpose that I have come to you: to help you find the path and give you the confidence to set upon it.

If that is your desire, then you ill ust realize that nearly all the problems and crises of the nation have their origins in the hearts and minds of individual men, and spring from their separate but common vices. Strictly speaking, there are no social, economic, or political problems, for the conditions descri bed in those terms are not created by society, or economics, or politics. They are, in the final analysis, created by people - the result of decisions contrived in the darkness of selfish ambition. or deceit. You may consider any problem of the common weal th, and you will discover that only a small portion is the product of circums tance aside from the human frailties. And if the difficulties arise from the people, then they are not fundamentally political or sociaL but moral and ethical, and there is no government institution which can solve them. The entire nation, save a few wise men, labors under the delusion that government can make you a great country, and the result of that error is the consuming of a near third of 502 THE FREEMAN August your labor and goods in bureaus and programs which can neither com prehend nor correct the true basis of your troubles. Good government is necessary to a great nation, but it is far from sufficient.

Nay, the victories which give a nation true dignity are not won in the halls of bureaus, or in the chambers of the law, nor yet upon the battlefields of war. The struggle for national honor is fought daily in the secret heart of each citizen. It is there, indeed, that the nation's deci sion between liberty and license is cast; it is in the heat of the fires of individual human feeling and intellect that the soul of society is forged, for the history of the com monwealth is first conceived and written in the hearts of its citizens. I realize that all this philosophi cal exposition may dismay you a bit; yet I did not come to tickle your ears, but to enlighten your minds and lift your vision. I have deliberately led you to this point that I might more fully impress upon your minds the decisive import of that first clause: "Con gress shall make no law respecting an establishment of religion, or prohibi ting the free exercise thereof;' for we founded our govern ment upon a profound awareness of the virtues and vices of human nature. The Constitution was de signed for a moral and religious people, but no government can protect a dishonorable people from the just rewards of collapse and ruin.

Our full intent was to aSSl.+reeach citizen the liberty of religious thought, expression, and practice in public and in private. The spiritual side of man's nature must be pro tected so he may freely discover the principles by which he will order his life. If he is not thus free,his morality is stunted and neither law nor· popular disdain will suffice to restrain his abuse. Although the government may protect the people from political oppression, only the people can protect themselves from spiritual degeneracy; and while the former may not lead to the latter the latter has always brought the former. The best the government can do for the preservation of liber ty is to stay out of religion, and the best the people can do is to stay in it. Freedom of Speech Now I would direct your consid eration to the fO,Bowing point: freedom of speech requires an untrammeled liberty; for as a man must be able to steal, until he has done it once, so he must be free to speak un til he has shown himself an instrument of deception. That is to say, it is altogether appropriate to punish that person who has abused his liberty by deceit or slander; it is quite another matter to seek to regulate him ere he makes his 1976 A NEW MESSAGE-COMMENTS ON THE BILL OF RIGHTS 503 utterance. In the first instance there is both reason and justice, while in the last there is a prior and therefore prejudicial encroachment upon the rights of the speaker.

Furthermore, such regulations are ever subject to political manipula tion; and that is precisely the nature of your so-called .Fairness Doctrine which effectively (albeit indirectly) muzzles many a man who might have awakened you sooner to the true basis of your political troubles. There are also those among you who seek to shield themselves, by an appeal to the First Amendment, in order to publish the most subtle and ruinous fraud. They, by implica tion (for the falsehood would never gain public acceptance were it pre sen ted directly), broadcast to a world of unsuspecting minds that immorality and even perversion are normal and necessary to the full "liberation" of mankind. But they are not normal, except to a base and morbid few, nor are they ever benefi cent to the individual or his society. And what is more, they are totally foreign to the nobler side of man's nature and have always been accom panied by a return to bondage-first in a darkened and distracted mind, then in the disruption of the home, and finally in the corruption of all that is good.

If a man willfully injures the character of another he may be justly punished for libel. What then if a man publishes matter which injures the character of the entire human family by depicting man as a beast? Or if he publicly promotes the deception that there is no sin between "consenting (conspiring) adults"? Should he not be held to answer for his abuse of his freedom? With'your society already in alarm for its safety in the face of rising crimes of personal and intimate violence, it would be foolish indeed to tolerate those who, for profit, spread private vice in public view. Would you allow training schools to be established throughout the land where thousands would be taught the techniques and advan tages of crime? Then how long will you permit the public display of material which teaches the degenerative crimes of moral aban don? You have only two choices: to stand and watch while they poison you and your hapless children and bring thousands into the slavery of obscene sel fishness, or to enforce good local laws ("ConRress shall make no law ... abridging the freedom of speech, or of the press") and restrain those who would cor rupt the public virtue. You savor neither alternative, and in that you are right, but that is all you have.

You will either stem the tide of pollution or drown therein, for the laws of human nature are as consis504 THE FREEMAN August tent and immutable as those of physical nature: obedience to them will bring social and technological progress, but the unbridled fire will ever consume. The Right to Bear Arms The primary cause for our affir mation of the right bf the people to keep and bear arms was our concern for military powei that the armed forces might need immediate and widespread assistance in repelling an aggressor, or that the citizens might find it necessary to defend themsel ves from oppression by their own military. We desired that every man have the right to arms.l But there is another considera tion which is based on a fundamen tal right and requires a little elaboration since you are in debate upon the issue. If a man find himself or his property in peril of plant or animal, he has a manifest right to defend what is his. If he be in jeopardy of another man, he retains the same right. There can be no alternative to this principle without opening the door to all manner of legally pro tected pIunder and personal assault.

1 Author's note: There is a general misun derstanding that the militia mentioned in the Second Amendment refers to the National Guard or the armed forces. The correct mean ing in this context is "the armed citizenry." The United States' Code, Chapter XIII, Sec tion 311, defines the militia as all able-bodied males of 17 years' age. The law must either sustain this right or else it shields the criminal, for it will either tend to protect the one or the other, there being little middle ground. To protect the bad man is to encourage his ravages. Most of the laws proposed in Congress are unenforcible upon the criminal, and worse, they are oppressive upon the citizen who is purportedly thus protected. If you wish to put an end to the wrongful use of arms, it is only necessary to make that use ill-advised; for out laws reason also, and when the risk becomes too great, they will cease. If the beweaponed rascal were aware, for example, that the penalty was at least thirty years' imprison ment without possibility of lenien cy, what would be the effect? An extreme penalty, it may be thought, but it is perhaps no more unreason able than the over-careful protec tion of the offender now required by your judicial system.

If a man shows disregard for the life of another, then justice demands an appropriate restriction upon his rights, otherwise equal protection under the law and the public safety must suffer. The Second Amendment was also our statement of the right of the people to forcibly revolt when that horrible prospect is the only course by which they may reassert their unalienable rights. The powers of government are delegated to it from 1976 A NEW MESSAGE-COMMENTS ON THE BILL OF RIGHTS 505 the people, and when a government becomes altogether inimical to their rights and wholly independent of their will, they necessarily have the right for themselves and the duty to their posterity to revolt; to remove despots from power and reestablish liberty. Reason, history, and the most recent European oppressions amply testify of the inability of the people t9 throw off a government which has gained con trol of their personal arms. They have been defenselessly driven, slain, and imprisoned within their own lands and homes. You may be profoundly grateful that you still have sufficient control of your gov ernment to return to a fullness of freedom without armed revolution.

You know not how grateful. I shall finally comment upon the last amendment in the Bill of Rights, for it is, in respect to its comprehension, the most significant because we summarized in it the essence of human rights and gov ernment and placed them in proper relationship one to another. We simply restated that fundamental principle of the rights of free men: that in the United States the federal government possesses only those powers delegated to it by the Constitution; that there are certain powers which the several States may not exercise; and all other powers whatsoever are retained by the individuai citizens. For frequency of violation this Article is unsur passed, and you will find, when you have restored the Constitution to its proper role, that the relentless dis regard for this principle has brought you most of the dismay and perplexity which now afflicts you. Now, you have noted, no doubt, that I have spoken mainly of the moral and religious aspects of your liberties. That is not because I have grown more religious with age, but because you have grown less. Liber ty has always brought the blessings of abundance, and abundance has al ways tended to pride and a haughty disrespect for basic moral principles. If you will consider it carefully, you will see that you stand now at the crux of the nation's life: you may continue into the growing indifference of opu 1ence and squander this Bill of Rights, or you may rise above the affluence of freedom and keep both your liberty and your wealth. You must stretch your capacities for noble character, catch the vision of a higher order of life, put yourselves in careful harmony with sound ethi cal doctrine, and lead a saddened but hopeful world into the fuller freedom of personal dignity. That is the true destiny of the nation. That is the dream I feel glowing in your hearts. Then believe in that dream, follow it, and work to make it real!

I Next V. On the General Welfare A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN IN HIS MONUMENTALHISTORY of the conservative intellectual movement in America since 1945, George Nash makes two references to a little magazine called Plain Talk, which was edited by Isaac Don Levine from 1946 to 1950. Since he had such a vast tapestry to weave, Mr. Nash could hardly have done better by Mr. Levine without unbalancing his chronicle. He does say that Plain Talk modulated, so to speak, into The Freeman. The Freeman, in turn became the seed pod of many phases of the conservative efflorescence. So Don Levine gets the credit for being the Honorable Ancestor of the movement, which Fabian-style, is providing the coming alternative to the collectivist "liberalism" that must be routed if individual freedom and creativity are to pre vail throughout the West. Plain Talk was a Cold War pub lication, devoted mainly to combat506 ting the encroachments of Stalin ism both on the domestic and world scenes. It had to struggle for atten tion in a postwar America that· had grown tired of foreign commi tmen ts and lax about accepting the possibility that "it could happen here:' The illusion, that somehow the victors in World War II-the U.S., Britain and the Soviet Union-could fashion an enduring world peace with the aid of the United Nations, maintained its incredible persistence in spite of Red encroachments all the way from Czechoslovakia to Manchuria and North Korea. Our State Depart ment, though it was formally com mitted to support the Truman Doctrine (which saved Greece and Turkey), was riddled with people who wanted us to desert an old ally, Chiang Kai-shek's Kuomintang, in China. The wish here proved father to the reality: as Alfred Kohlberg, 1976 PLAIN TALK 507 the merchant "angel" who sup ported Plain Talk, wrote, "a large part of the arms shipped to China under lend-lease before V-J Day and more than half the ammunition were destroyed by the American Army before delivery to the Chinese ... Not a single firearm, from revolver to cannon, has been permitted to be shipped to the Chinese Government since V-J Day."

With Kohlberg's help, Don Levine launched Plain Talk at the critical time when the Communists were developing the world's most fear some Fifth Column as their answer to the temporary U.S. monopoly of the atom bomb. He found scores of well-informed writers to attack the problem of exposing the machina tions of Red infiltrators. Many of the articles they turned out from 1946 to 1950 have now been reprinted in Plain Talk: An Anthology from the Leading Anti Communist Magazine of the-40s, edited by Mr. Levine (Arlington House, $12.95). A Contemporary Ring As might be expected at a time when we have suddenly been reminded by Solzheni tsyn that the Comm unist leopard has not changed its spots, practically every article in this anthology has a deeply contemporary ring. Mr. Levine tells us the reason: "if you substitute the name of Brezhnev;' he writes, "for that of his master Stalin; of Kissinger for that of General Marshall; of President Ford for that of James R Byrnes; and if 'the Molotovs and Vishinskys' be replaced with 'the Gromykos and Suslovs';' the scene today is exactly parallel to what it was thirty years ago. Then it was, as a Ralph de Toledano article says, "Stalin's hand in the Panama Canal"; today it is Castro's hand in the agitation to get us out of the Canal Zone.

Thirty years ago Communism threatened to overrun Asia; today, as Angola proves, it is Africa that is under the gun. The truth is that the Cold War merely went undergound for a while. Detente was always an illu sion, something that was fostered by Khrushchev and his successors as an insurance policy designed to protect the Communist gains in eastern Europe while Marxist wars of "liberation" were being pushed to completion throughout the old col onial world. Don Levine's biggest coup was an article called" 'Gulag' -Slavery, Inc." He wrote it back in the middle forties from data that had been brought out of the Soviet Union by Polish soldiers who had been released from prison camps by Stalin to compose the Polish army in-exile that fought so valiantly at Monte Cassino in Italy. Along with the article, which explains that 508 THE FREEMAN August "Gulag" is the acronym for Russian words meaning Office of Penal Labor Camps, went a terrifying map of scores of penal colonies scattered, archipelago-fashion, from the White Sea in Europe to Kamchatka on the far Pacific side of Siberia.

Thus Levine anticipated Solzhenit syn by thirty years. Everyone knows what "Gulag archipelago" means now: Solzhenit syn has put it firmly in the western vocabulary. But Levine got there first, as the inclusion of his article and map in the anthology reminds us. Other coups reprinted in the an thology include Eugene Lyons's pioneer expose of the Katyn Forest massacre by Stalin's NKVD of the flower of the Polish officer corps. Fourteen thousand Polish officers, taken when Stalin and Hitler con nived to carve up Poland, simply disappeared fr;om the face' of the earth. Many of them were unearthed from shallow graves by the Nazis after Hitler had invaded Russia. The Soviets tried to prove the Nazis had done the killing, but the evidence, from dates in diaries taken from the corpses, points clear ly to the Communists as the mass murderers. The Positive Case for Freedom To those who might argue that it is nonsense to think of an anti Communist magazine as a progeni tor of the conservative movement in America, there is a good answer in section seven of Mr. Levine's an thology, called "On Freedom and Its Enemies." Here the positive exposition of what Leonard Read calls the "freedom philosophy"

t~kes over. We have Ludwig von Mises's "The Philosophy of the Pseudo-Progressives," a notable analysis of Marxian, Veblenian and Keynesian misrepresentations of the capitalist position, which Mises defends as the appropriate expres sion of free "human action." We have Edna Lonigan's strong defense of the American conception of democracy (the right of the individual to the fruits of his "per formance") as against the French conception, which means "control of some citizens by others, whenever the majority wishes." We have Ayn Rand's "Screen Guide for Americans," a warning against Hollywood codes that belittle the American enterpriser. We have Henry Ha'zlitt's analysis of the defects of ou'r political primary system, a system that runs counter to the sound basic principle that the office should seek the man. The point is that Levine, as an editor, knew what he was for as well as what he was against. He used to describe himself as a "mutualist;' meaning that he was a believer in voluntary as against compulsory cooperation. "Mutualism;' in the Russia where Levine was born, 1976 P LAIN TALK 509 derived from Kropotkin, the philosophical anarchist. In America it means free association, a wider conception which Levine has hear tily embraced.

~ A GANG OF PECKSNIFFS by H.L. Mencken (New Rochelle, New York: Arlington House, 1975) 206 pages, $8.95. Reviewed by Edmund A. Opitz SOME WRITERS live serene on the slopes of Mount Olympus, immune to the pas~ions that agitate their fellows. Goethe comes to mind, a man whose monumental detach ment may be gauged by his response to a young friend with a painfully swollen jaw: "You have a toothache? Live in the All:' It was otherwise with Mencken. Henry never even looked at Olym pus in public, except when he wrote about music. Music, Beethoven's works in particular, evoked the only religious emotions Mencken ever manifested, and his writings on this subject are those of a true believer. His friend, Louis Cheslock, deserves our gratitude for making them available in book form. In almost everything else Mencken played the role of provocateur; he disturbed the peace of the over-complacent America of the 1920's and shakes us a bit even today.

Mencken was a critic of our culture, and a critic counters, allow ing his themes to be chosen for him. Mencken was set off by the imbecilities of politicians, the stupidities of businessmen, the idiocies of churchmen, the chican ery of lawyers, the quackery of doctors, the ignorance of academi cians' and-in the volume under review-by the canting hypocrisy of the fourth estate. (How one would love to see Mencken in his prime turned loose on television!) The follies and stupidities of the A~erican "booboisie" during the twenties were made to order for a man of Mencken's talents, and he assaulted them with more gusto than pinpoint accuracy. Criticism, he wrote to a friend, "must be done boldly, and, in order to get a crowd, a bi t cruelly:' The culture's crassness, its sentimentality, its religion of progress and Babbittry, its hubris, were lampooned, caricatured, ridiculed, and hacked to pieces. But once his opponent was unhorsed, Mencken never drove in for the kill; more than likely the fallen foe was helped back into the saddle.

There was a private side, quite different from the public image Mencken cultivated. A fine book by Mrs. Mencken's friend, Sara Mayfield, The Constant Circle, reveals Mencken as gentle, thoughtful, gallant, and somewhat shy. As an editor, he was a never510 THE FREEMAN August failing source of help to promising young writers. When the occasion warranted, he would ladle out avun cular advice to aspiring authors to steer clear of wine, women and song. His own work load went beyond the Puritan ethic, but he was never too busy to answer pestering letters from admirers, gravely and by return mail. He was delightful company, as his friend Albert Jay Nock relates: "There is no better companion in the world than Henry; I admire him, and have the warmest affection for him. I was impressed afresh by his superb character-immensely able, unselfconscious, sincere, erudi te~ simplehearted, kindly, ge~erous, really a noble fellow if eve~ there was one in the world."

With the passing of "the era of wonderful nonsense" went many of the kinds of targets Mencken needed. He despised the New Deal, of course, but how do you burlesque a burlesque? The only memorable thing to come out of this period was his celebrated polemic, "Three Years of Dr. Roosevelt." So Mencken in the thirties returned to his scholarly exertions in the field of philology, and in 1936 Knopf pub lished the enlarged and rewritten fourth edition of The American Language, to be followed by two more volumes containing additional material. Mencken's New Dictionary of Quotations appeared in 1946. These projects, and a few others, occupied Mencken's mind during the dismal forties. It was not a happy time for him. He regarded World War II as further evidence of mass insanity plus poltroonery in high places; the U.N. was "that monumental obscenity." He was per suaded to cover the 1948 presiden tial sweepstakes and that gave him a lift, for he regarded democracy as the most amusing form of govern ment, and the three candidates of that year were choice ~pecimens all.

And then, in November, 1948 came the stroke, and this most gifted stylist of our time, this virtuoso with words was crippled in both speech and writing. He bore his fate with a kind of gallows cheerfulness; the inner man never surrendered till Death fetched him in 1956. Mencken had a lifelong love affair with his job as a newspaperman, and we have, in A Gang of Pecksniffs, a collection of his articles on the press. Only one has appeared before in book form, so this excellent volume will appeal to every Mencken buff, but also to a wider audience interested in an assess ment of contemporary journalism by its ablest practitioner. The com piler is an editorial writer on Mencken's old paper, and has con tributed a knowledgeable thirty page introduction and added a half dozen photographs of HLM at work.

1976 OTHER BOOKS 511 ~NO LAND IS AN ISLAND: Individual Rights and Government Control of Land Use by various authors. (Institute for Contem porary Studies, 260 California Street, Suite 811, San Francisco, California 94111, 1975) 221 pp., paperbound, $4.45; discount price postpaid for multiples of 50 books 'in cartons, $3.00 per copy. Reviewed by Brian Summers THIS BOOK is a collection of fourteen essays, most of them critical of the political drive to regulate land use. The arguments against govern ment control of land are well covered. Several au thors, par ticularly W. Philip Gramm and Robert B. Ekelund, Jr., offer economic theory. Others, such as Bernard H. Siegan, John McClaug hry, and Connie Cheney, present case studies. Siegan considers the case of Houston, a booming city with no zoning. McClaughry gives a blow-by-blow account of the strug gle over land use in Vermont, com plete with political power plays and skulduggery. Connie Cheney con centrates on the victims of land use regulation, the forgotten people who find their futures zoned away by the government. Some of the authors, such as M. Bruce Johnson, take a more general approach, weaving together economics, case studies, and common sense.

Several contributors raise a par ticularly disturbing point: Land use regulation is often directed against the poor. The most blatant example is zoning. Zoning is often designed not to keep trees, grass, and squir rels in, but to keep poor people out. To give the reader an idea of the arguments being put forward by proponen ts of regulation, the book includes an essay by a leading advocate of Federal land use legisla tion. The only flaw in the book is that several contributors seem intent on making government regulations work better, rather than relying on the free market. But, on balance, it is a fine book with much ammuni tion for those preparing to do battle with the proponents of land use regulation. ~OTHER PEOPLE'S PROPERTY by Bernard H. Siegan (Lexington Books, D.C. Heath and Company, 125 Spring St., Lexington, Massachusetts 02173, 1976) 147 pp. $13.50. Reviewed by Paul L. Poirot THOSE WHO have followed Professor Siegan'~ several short articles in recent issues of THE FREEMAN will recognize that the focus of his 512 THE FREEMAN August book is on the use of land, to the conclusion that: "Government regulation of land use should be minimized, and we should rely instead largely on the restraints inherent in individual freedom and competition to control the use of land."

John Chamberlain said of Mr. Siegan's Land Use Without Zoning (Lexington Books, 1972) that it "will stand as a landmark for the rest of our century:' But, he added, "it needs translation into a less complicated idiom if it is to have the maximum effect." And that is pre cisely what Bernard Siegan has been doing in his newspaper and journal articles since 1972, simplifying and popularizing the case against government planning and zoning and land use regulation and the case for private ownership and control of any scarce and valu able resource, especially land. Those columns and articles, written for the layman, are organized and col lected in Other People's Property in a way that should be most helpful to anyone seeking maxim urn use and enjoyment of his own property. As Distinguished Professor of Law at the University of San Diego School of Law, Mr. Siegan teaches courses in land use and law-and economics. He is without peer in his understanding of the seen and the unseen consequences of the land use controls which increasingly plague town and country, in the USA and throughout the world. We welcome his leadership forward in freedom.

~ HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 Freeman VOL. 26, NO.9· SEPTEMBER 1976 Built-In Pressures to Inflation Clarence B. Carson 515 A look at some of the major political pressures and suggested ways to stop them. A New MessageV. On the General Welfare Jackson Pemberton 526 Words of courage and counsel from the heartsof the FoundingFathersto theirchildrenin a troubled nation. Why Public Libraries? Steven J. Schneider 534 Some hard questionsfor studentsof liberty who think taxes are too high. Land Use and Capital Harry Lee Smith 541 Private ownershipof land and competitivecapitalism can feed the world. The Planned Economy in Georgia: 1732-1752 Brian Summers 549 Governmentplanning and regulationwas as disastrousthen as it is today. What Determines the Value of Money? Henry Hazlitt 553 A critical analysis of the "equation of exchange" and the "velocity of circulation" in relation to inflation.

Behavioral Law Joan Marie Leonard 561 Let governmenttry to keep us free from the destructivenessof others-not the ruler of our behavior. Two Concepts of Liberty J. B. Kizer 568 A review of Isaiah Berlin's distinction between "negative" and "positive" liberty. Book Reviews: 571 "Chile: The Balanced View" by Francisco Orrego Vicuna "Laura: The Life of Laura Ingalls Wilder" by Donald Zochert Anyone wishing to communicatewith authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAULL. POIROT President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publica tions for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of main taining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Permission granted to reprint any article from this issue, with appropriate credit except "A New Message;' "Why Public Libraries?" and "What Determines the Value of Money?".

/ BUILT-IN \ Pressuresto Inflation· CLARENCE B. CARSON ALL THE OBLIGATIONS of the United States government, both actual and potential, stand today as pressures toward inflation. They are like a vast sea lapping at, thrusting against, and threatening to crash through the defenses built against it by a succession of casually thrown up dikes. Indeed, the momentum lies with inflation, and the pressures mount with each new obligation undertaken and every old obligation that comes to maturity. Inflation is used in two somewhat distinct ways today. It is used by some economic thinkers to refer to the increase of the money supply. Dr. Carson -has wrHten and taught extensively, specializing in American intellectual history. His most recent book. The Rebirth of Liberty: The Founding of the American Republic 1760-1800 is now available in a 350-page attractive Bicenten nial paperback at $3.00 from The Foundation for Economic Education, Irvington-on-Hudson. N.Y.

10533. Popularly, it is used to refer to general rises in prices. If it be understood that the increase of the money supply is the cause of the general price rise, much of the objection to the second usage is removed. Not all of it, however. There would still be an unmeasura ble phenomenon with no name and no way to identify it if inflation could apply only to general rises in prices. The reason is this: It is possible to have increases in the money supply accompanied by no general price increases. Indeed, it is conceivable that over some period of time increases in the money supply might be accompanied by a slight decline in prices. There may be a variety of reasons for such effects. The additional money might have gone into savings. There may have been productivity increases which 515 516 THE FREEMAN September offset the increases in the money supply. (In which case, prices would have fallen, or fallen more than they did, had the money supply not been increased,) In any case, if inflation refers only to increases in prices, it will only be noted when prices actually increase. More important ly, if inflation refers only to price increases, it may be, and frequently is, separated from its basic cause increases of the money supply by government. For these reasons, in flation is used here to refer to increases in the money supply.

A Form of Taxation The effect of inflation, whether it resul ts in a measurable increase in prices or not, is that it levies a tax on all who have money or have it owed to them. It reduces the value of the currency, and the amount of that reduction is used by govern ment to pay its bills. In the United States today, the government inf lates by monetizing debt, its own debt directly and other debt more indirectly. The only limits to the money supply are arbitrary reserve requirements on banks and chang ing debt limits set by Congress. These are the thin and flexible dikes holding back the onrushing sea of inflation. What are these pressures to infla tion? The most obvious one, of course, is the national debt. It has now reached or passed $600 billion. The debt presses us toward inflation in two ways. One is by way of paying the interest on it. The annual interest on the debt is now in the $30-40 billion rate, and has lately been rising more rapidly in propor tion than the national debt. The interest must be paid from taxes or by inflation. An even stronger pres sure to inflation is the continual refinancing of portions of the debt.

The debt is not being retired but it is being con tin ually paid off and renewed as bonds and other securities mature or are cashed by their holders. This is inflationary to the extent that the refinancing is by way of monetizing the debt. In a similar fashion, any growth in the debt is likely to be inflationary. But the national debt is only the best known and most obvious obligation of the United States gov ernment. It is actually only the exposed tip of the iceberg of obliga tions. Among these, the obligations under Social Security may be the next best well known. From time to time, calculations are made as to the extent of Social Security obligations. None of these need detain us, however, for they are only proj ections based on current payments, commitments, and longevity expec tations. Since cost-of-living adjust ments are now made regularly, Con gress periodically adds new benefits, and the number covered is expanded, there is no way to calcu1976 BUILT-IN PRESSURES TO INFLATION 517 late the amount of the obligation.

Suffice it to say, the obligation is immense and the amount of it rapidly rising. Social Security Deficits Social Security is already begin ning to exercise inflationary pres sure. For most of its history it did not do so. Income. into the program exceeded the payments out of it. A "fund" was being built up. More specifically, Social Security pay ments were helping to finance the national debt. Now, however, that has changed. Social Security is pay ing out more than it is taking in. The difference is being made up by the sale of government securities. For the time being, the result will not necessarily be any net increase in the debt, but it will bring on inflation to the extent that the debt is refinanced by monetizing it. This inflationary pressure will mount to the extent that the gap between intake and outgo widens. When and if the "fund" is exhausted, the pressure may be expected to be revealed, at least in part, in increases in the national debt.

One of the most direct, though least known, pressures to inflation is government obligations contracted by serving as guaran tor of mortgages. The best known of these guaran tees are the VA and FHA guarantees. The United States gov ernment guarantees up to 20 per cent of VA loans, a guarantee which enables veterans to buy houses with no down payment, if they can other wise meet the requirements of a lender. The FHA insures loans on which the house buyer may make as little as a 5 per cent down payment. There are a considerable variety of other government guarantee. pro grams in real estate, but enough has been told to show the principle of guarantee underlying and mak ing the government obligations. Such guaran tees as these tilt government toward inflationary policies. It is generally claimed that VA and FHA loans have been suc cessful in that losses have been small. There is not much mystery as to why this should have been so.

lm.practical programs have been saved from their predictable conse quences by long-term inflation. It has worked in two ways to do this. One is that wages have generally risen over the years, making it easier for the mortgagor to make his payments. The other is that any house tolerably well taken care of over the last twenty or thirty years has appreciated in dollar value, other things being equal. This has meant that the owner could usually sell it for more than was owed on it, however much that might be, or, if foreclosure did take place, the amount of the mortgaged indebted ness would probably be recovered. The real guarantor of the 518 THE FREEMAN September mortgages, then, has usually been inflation. It might be supposed that the government obligations on mortgages are limited to the extent of the guaran tees. This is only superficially the case, however. Gov ernment obligations extend to cover a large portion of the mortgaged indebtedness in the United States.

They do so because the Federal government guarantees most of the deposits in banks and savings institutions by the Federal Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation. In turn, mortgages constitute a large por tion of the assets of banks and savings institutions. It is reason able to suppose, then, that if govern ments had to payoff depositors and savers they would, in effect, be making good on these loans. Con tinuing inflation enables banks to operate with relatively small reserves, particularly when the very mode of inflation is the monetizing of debt. Government Guarantees The total obligations of the United States government include both formal and tacit or informal obligations. The government under wri tes more kinds of undertakings than the present writer knows or could describe if he did. A vast assortment of projects proceed on the basis of such underwritten guarantees. Beyond these, the gov ernment has thus far shown a willingness to shore up any failing business, city, or government. The loans to Lockheed, the aid to eastern railroads, the subsidizing of AMTRAK, illustrate the govern ment's role in business. The recent bailing out of New York City shows the possibilities of government action in the area of local govern ment.

How can the federal government act as guarantor for and come to the rescue of all these people and institutions? Is it because the federal government is so well man aged and has so many resources upon which to call? Not basically. The federal government's finances have been no better managed, if anything they have been worse managed, than Lockheed or Penn Central or New York City. It is sometimes alleged that the federal government is an efficient taxer and has a much better base for taxes than state or local governments. This mayor may not be true, in theory, but in fact for many years running now it has spent more than it has taken in by way of taxes. In short, the claim if correct is none theless irrelevant. The difference between the federal government and these private businesses and other governments lies in the power to inflate, the power to increase the 1976 BUILT-IN PRESSURES TO INFLATION 519 money supply by monetizing its debt. The vast obligations of the federal government are "secured"

by the debt itself. These obligations are the potential of mounting waves which could destroy our money sup ply even as they wiped out the indebtedness. Political Pressures There are other pressures to infla tion than those that arise directly from obligations of the government. They are what may be called politi cal pressures. Some of these pres sures evince themselves in the desire of politicians to spend while avoiding the onus of taxing to get the money, or all of it. There is a multiplier effect to this kind of government spending, though not in the sense in which some economists use the word. By raising less by taxes than is spent, by making up the difference with fiat, Le., printing press, money, the gov ernment puts more into circulation than it takes out. The initial impact of this additional money, if it is not entirely discounted, is to spur investment and all sorts of risk taking. An aura of prosperity quite often accompanies the spurts of new money. In the long run, whatever time it takes for the untoward effects of inflation to take place, the aura of prosperity dissipates as prices rise, wages lag, and malin vestments induced by false signals sent into the market produce their inevitable crop of failures. The long runs grow shorter and shorter, too, with successive spurts of inflation, for people come more and more to expect that the aura of prosperity is only an aura. The stock market, for example, can remain bearish through a whole series of spurts of inflation.

There are, then, two rather direct political pressures to inflation. One is for politicians to be able to spend and avoid the responsibility for new taxes. The other is to create the aura of prosperity at crucial times. Presiden ts have come to depend on this inflation-induced aura of prosperity in th~ months just before a presidential election. If the Presi dent is a candidate himself, he will press to do it in his own behalf. If not, he .may be expected to try to do it on behalf of his party. It might be supposed that the members of Con gress of the party out of power would want to thwart this effort, butit does not follow. Their re election may be dependent also upon the appearance of prosperity. It may well be that the greatest danger of a runaway inflation arises from the political necessity for prosperity in an election year when it is coupled with mounting popular resistance to accept the false sig nals sent into the market by infla tion. The pressure is there to pour more and more money into circula520 THE FREEMAN September tion to achieve the desired result.

This tide of inflation could knock sufficient holes in the dikes to allow the whole sea of claims on govern ment to sweep through and destroy the money. Hikes in Minimum Wage Congress and the President reap political gains in yet another way that depen:ds on inflation. They periodically raise the minimum wage, increase the pay of govern ment employees, give raises to those on pensions, such as retired military personnel, and so forth. Not only is inflation sometimes named as the reason for these increases but it also makes them possible. Without the inflation, there would not be these rounds of increases which members of Congress particularly call atten tion to in order to claim credit from some of their constituents. Labor unions contribute consid erably to the pressure for inflation. To keep its following, the union finds it expedient to demand and get higher wages in each successive con tract. Union officers seek also to maintain and even increase union membership because their salaries depend upon the number paying andarriount of the dues and the effecti veness of the union is tied to its financial resources in a variety of ways.

These two goals - perennial money wage increases and stable or increasing union membership-are incompatible in the short run and impossible in the long run, except under one condition, a regular and con tin uing expansion of the money supply. All. other means of accomplishing this are strictly limited in their application, and self-defeating when employed over an extended pe'riod of time. (Indeed, inflation is self-defeating also, .but not so obviously or directly.) For example, it is often alleged that wages could be increased by giving workers a larger proportion of. the gross income of a company. But this could not con tin ue year after year indefinitely, for there is only 100 per cent, and eventually wages would take all the income. Long before that occurred, however, the com pany would have been driven out of business, and union membership reduced by the number dis employed. For an industry as a whole, the process would be less dramatic. The price of the product or service would be increased to cover the higher wage costs or machines would replace workers. In any case, the number of workers, i.e., union members, would decline.

Another device that allegedly could result in money wage increases would be increased productivity. But overall increases in prod uctivity will not result in money wage increases, in the absence of an increase in the money supply; the 1976 BUILT-IN PRESSURES TO INFLATION 521 result, given competition, will be a reduction in prices of product or service. Lower prices would increase the real wages of workmen, but unions could hardly claim credit for the increase, since money wages would remain the same, or might even decline. In sum, unions depend on infla tion for their growth, and, with some few possible exceptions, even their survival. The periods of dra matic union growth - World War I, the 1930's, World War II and after have been periods of inflation. The only extended period of continued large scale union membership in our history has been one of a continued and long-term increase of the money supply, namely from the 1930's to the present.

A Fearsome Burden of Debt There are, then, a host of pres sures toward continued and mount ing inflation. Some estimate that the total' obligations of the govern ment now amount to something like $5 trillion. If that figure was correct yesterday, it has probably already been surpassed now, and will con tinue to grow larger if the govern ment persists in contracting more and more obligations. The obliga tions of the government are such that if all of them had to be met that could only be done by such a massive inflation that the value of our money would be destroyed. Not only that, but if the government had to payoff on all that it has under written, it would surely become receiver for the banks, savings and loan associations, many industries, and a considerable portion of the homes and landed estates in the country. These "guarantees" are backed by debt; they are potential massive pressures to inflation, and the present means for meeting the obligations is the monetizing of debt.

There should be no doubt, then, that the government is on a course that if followed will destroy the money, may result in government's becoming receiver for increasingly large amounts of property, and will almost inevitably lead to loss of faith in the government. Someone looking at this from another planet or an enemy country might view all this with equanimity, or even with glee. After all, they might say, the government has made its bed, let it lie in it. Those of us who live in the country, who would not know where to go to nnd better circumstance if we would, must perforce view the matter differently. The government may have made the bed, but all of us are going to lie in it. If there is some way to avert the collision between money supply and obligations, some way to reverse our course without, say, ruinous deflation, we would wish to find it. There are some things that should 522 THE FREEMAN be done. They should be done be cause they are in the right direction and because they offer some prospect of working. It needs to be clear, however, that in offering them the present writer is steering as clear of detailed monetary theory as he can. He is not going to say what should back our money, how much reserves banks should have against deposits, who should issue the cur rency, or any other of' hundreds of questions that could be raised. His predilection is to have as many of these questions answered in the market as possible, but even that is put aside somewhat here in order to stick as close as possible to some general principle. The reasons for these limitations should become apparent in what follows.

No Drastic Changes Whatever the remedy for the situation there may be, there is one thing it should not be. It should not be drastic. Whatever is done will affect established institutions, con tracts, wages, prices, and a whole complex of delicate relationships. The least direct and. immediate effect there is on any of these the better. Nor should the action taken excite unnecessary fears about the possible consequences. For these reasons, only so much should be done as produces the desired change of direction. Two things only need to be done. They are interrelated in that the first will almost. certainly lead to the second. The first is to stabilize the money supply. A stable money supply need not be and probably could not be a static money supply. It only means that the pressures to the increase of it be counterba lanced by pressures to decrease it. This is what is meant by or produces stability in any thing. The second is to build in pressures toward fiscal responsibility by the government (and individuals, and companies, and banks, too), toward the reduc tion of debt, toward balanced budgets, toward .reduction of gov ernment -obligations, and toward the disentanglement of government from the economy.

Some have apparently hoped that political pressures could be built up to counterbalance the thrusts to inflation ..This hope probably under lies at least some of the effort to inform the public that government's increasing of the money supply is at the root of inflation or what is causing it. It is a forlorn hope. If everyone in the country, including small children, knew that inflation is the increase of the money supply and that government is the villain of the piece, my guess is that the political pressures would not be significantly altered. The reason is not far to seek. The only ones hurt by inflation are all of us, though admit tedly some are hurt worse than 1976 BUILT-IN PRESSURES TO INFLATION 523 others, at least in the intermediate stages of it. Hence, the resistance to inflation is vague, general and diffuse, apt to be relegated to the realm of hankerings for a good five cent cigar. By contrast, the benefits of inflation are particular, immedi ate, and accrue to those in the seats of power, Le., politicians. All of us wish that the prices others charge would be stable or even decline, but each of us wants even more to get more for what we sell. Inflation feeds on the lure that we can do this, though it is almost entirely an illusion.

Remove Monetary Powers There is little likelihood, then, that political pressures can ever be built up that will counter the built in tilt toward inflation. This is just another way of saying that govern ment cannot be trusted with the power to manage the money supply. That is not surprising, after all. No one of us could be trusted with such power. If one of us is multiplied by 500, or 5,000, he does not thereby become more trustworthy, though he .. may well become more devious. Give any man, or group of men, control of the money supply, couple it with the possibility that he can benefit by increasing it, and the question becomes not whether he will do it but when. Each of us has enough "Apres moi, Ie deluge" not to be deterred from acts simply because they will have some dire consequence in the uncertain future. What needs to be done, then, is to divest the federal government of its power to increase or decrease the money supply. The expansible and contractible portion of the money supply today consists of the out standing currency plus demand de posi ts in banks less the reserves held against the deposits. The money supply can be increased by increasing debts, both those of the federal government and private debts. The government manipulates this or controls it by setting reserve requirements for banks and by the sale or buying of securities by the Federal Reserve banks. Since there is no real limit to indebtedness, the only limit to the money supply is the reserve requirement, but it can be lowered virtually at will. Our money is money by the decree of the government-fiat money-, sepa rated from this only by the backing it receives from the debt.

Two changes in the system would set up major and probably sufficient counter pressures to inflation. They are changes of a character that most people would hardly notice. One would be to prohi bi t the monetizing of debt, both public and pri vate. It should never have been permitted in the first place. Debt is no security for anything, least of all money. It is fraudulent to pass off as 524 THE FREEMAN September money what is secured only by debt. The most effective way to accomplish this prohibition would be by constitutional amendment. Reserve Requirements The second change would be in the reserve requirements. There are, it has been noted, two ways-that money is created: by printing cur rency and by creating demand de posits in banks. If debt could not be monetized, there might still be a way for government to manipulate the money by altering reserve requirements. The device involved is called fractional reserve banking.

Two varieties of fractional reserve have been practiced historically. One is the reserve against the currency. When currency was back ed by and convertible into gold, banks of issue usually had a reserve in gold against their outstanding currency, a reserve which was only some portion of the total-a "frac tion" of it. This practice of having fractional reserves against the cur rency has been continued, though today it means little by way of restraint. The other kind of frac tional reserve is the reserves in cash which a commercial bank holds against deposits. Both varieties of fractional reserve can be and are used to increase the money supply. There is nothing wrong, per se, wi th operating on fractional reserve. It is an old and reasonably honorable practice. Banks are not the only institutions which keep on hand only a fraction of the amount needed to payoff all their obliga tions, if they should have to do so all at once. So do savings institutions, insurance companies, furniture stores, appliance dealers, and com panies of every sort and description.

Hardly an individual could be found who h~s the cash on hand to meet his forthcoming obligations. He expects to pay them out of income as they come due, keeping on hand only sufficient cash for emergencies, if he is prudent. Banks do likewise, though admittedly much of their "income" consists of deposits by their customers. At any rate, fractional reserve in general is not at issue here. What is properly at issue is any fractional reserve held against the money supply. There is no excuse for a fractional reserve against the money supply. Money should be backed by a 100 per cent reserve of what is used to back it. Anything less is fraudulent and should be punished the same as any other fraud. Any reserve of less than 100 per cent amounts to a false claim as to the character of the money issued. Currency, then, should be backed by 100 per cent reserves against it. If those reserves cannot be debt, they must consist of some sort of assets, assets whose value could be determined in the market 1976 BUILT-IN PRESSURES TO INFLATION 525 place and which, if they had to be produced, would equal in value the currency issued against them.

Bank deposi ts can be held in check and limited by requiring that there be in reserve against them either cash or collateral in the amount of 100 per cent or better. The effect of this should be that banks could only create a deposit on an unsecured loan-debt-by increasing their cash reserves in an amount equal to it. This would not prevent some fluctuation in the money supply, but it would create pressures to hold the supply in check. How would government service its debt if it could not do so by monetizing it? It could do so in the same way other organizations and individuals service theirs, namely, by borrowing from willing lenders who will lend on unsecured notes or by putting up sufficient collateral to secure the loans. Since banks would have little inducement to grant unsecured loans, such loans as gov ernment could obtain without secu rity would be uninflationary. If gov ernment put up collateral, such as national forests, this could result in some increase of the money supply, but there would be inherent limits . to and checks upon it.

In short, if government could not monetize the debt or manipulate the reserve requirements, the coun ter pressures to inflation would be developed. Government would either have to raise the moneys it spent by taxes or by divesting itself of its assets. The pressure would be on to reduce the debt. The pressure would be on to reduce obligations. Government would have very little incentive to increase its obligations and strong motives to reduce them. Every pressure to inflation, both public and private, would be matched or counterbalanced by pressures to reduce and payoff debts. There is no reason why these two changes should be strongly inflationary or deflationary. All the money in circulatipn could remain there, provided only that backing were found for it. All debts and obligations would stand as they had been, counterbalanced only by a pressure to reduce and pay them off. Government would no longer con trol the money supply; it would, instead, be held in check by it. ~ IDEAS ON LIBERTY First National City Bank Letter IF PEOPLE want easier taxes they can have them, but they will have to pay the price of forbearing to urge more spending programs on a federal government already overburdened with debt and responsibilities.

ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics. has a Masters degree in business administration. has worked two years in Sweden. and now works as a professional systems analyst. He is a businessman who is active in community and church affairs. is a free lance author. and is often'called on to speak. He lives with his wife and children on a small farm just outside of Salt Lake City. All rights reserved. 526 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

v. On The General Welfare This continues a series of articles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. You may have had occasion to observe, in the course of pondering the troubles of your times, that nearly all of your political abuses come from your federal government, and that most of these problems have come to you under the happy title of the general welfare. In this discussion I wish to remind you of the provisions we made for the general welfare, and more espe cially to remind you of the provi sions we did not make for your individual welfare, when we gave you the Constitution. You must forgive me if I expound a moment upon some fundamental attributes of law; for it is ignorance of these which, more than any other single thing, has allowed you to be led from your pleasant past to your present trouble.

If all men were perfect in their moral behavior, acting with fair ness, benevolence, and in considera tion of the rights and liberties of their fellows, then all human government would be just so much unnecessary baggage, and would have been dropped along the road of human progress long since, for in that divine state man would have made the law an integral part of his head and his heart. Every man would see to his own life, that he made no trespass upon his fellows, and that he was only a blessing to them, and hence to himself also. Such is clearly not the case, at least not yet; and therein arises the necessity of law. Law was not formed to give man his rights; on the contrary, it is because men have rights that law was conceived: to protect those rights from the encroachments of others. This is easily seen if one considers a single human being alone on the planet. Immediately, all the books of law in the world become useful only for convenient stools and warm fires.

He has no use for a system which is designed to protect him from some thing which does not exist, nor 527 528 THE FREEMAN September could the law in any way enhance his talents, his freedom, or his security. The law we gave you in the Constitution was to protect you from the abuses of your neighbors and your government; it was for your general welfare (or for the welfare of the people in general, as you would say) to protect you from the abuse of any person or power which might attempt to force you to act against your will, or to restrain you from the righteous use of your liberty. It was also to prevent your government from enacting laws which would benefit some part of society at the expense of the remainder, which is what it must do in order to promote the welfare of individuals. For, when a government can promote the economic status of the individual, it uses that power to build itself into an aristocracy. The aristocracy thus formed uses law to impose its will upon the people through burdensome taxes, arbi trary regulation of private affairs, and control of all types of private property. It uses the substance of the people to maintain its power over them, as in public financing of private political campaigns. This is a pattern as old as human govern ments, repeated a thousand times in history.

The intent of these illustrations is to show you clearly, so that you may understand without confusion or doubt, that law is a negative instrument. It can do nothing of itself: It produces nothing; indeed it is a consumer. Its only posi tive value lies in its ability to restrain other negative influences. You may fill your head, your books, and the air with glowing words of the vir tues of law, but you can never deny that after all is said, law is only negative force. The-law can protect, restrain, and punish. It cannot create anything nor bring to pass any posi tive condi tion. It is possible for law to protect man from dishonesty, but impossi ble for it to make men honest. It is possible to restrain violations of property, but impossible for it to create property of any kind. It is possible to protect a man's security, but impossible to give him security. It is possible to minimize injustice, but impossible to create justice. It is possi ble to restrain man from exploiting his neighbor, but impossible to make him charitable.

It is possible to punish unrighteous ness, but impossible to make men righteous. Thus it is with all the positive states of man. The law, a negative instrument, cannot create them, it. can only attempt to prevent their opposites. Honesty, equity, justice, opportunity, and charity must spring" from the love of one man for his neighbor, or there is none. And 1976 A NEW MESSAGE-ON THE GENERAL WELFARE 529 furthermore, when the attempt is made to obtain these high human virtues from any other source, only confusing counterfeits result. You now find such all around in your bureaucratic programs which bum ble along under the deceptive titles of welfare, equal opportunity, social security, income security, and the like. The reason they fail their noble objectives is that they are founded upon false principles. But it is not difficult to understand how you came to this perplexing state of affairs.

During those glorious years fol lowing ratification, we made full use of our great freedoms; those who applied the human virtues most diligently were rewarded most bounteously. Honesty, fairness, toil, intelligence, wisdom, thrift, and sacrifice attracted people, property, and satisfaction to all their practi tioners; and the law protected the rights and property of all. This protection by the law gave men confidence to muster all their best efforts and virtues, and to apply their God-given powers with vigor, for they were assured of the oppor tunity of enjoying the fruits of their labors. The law was so effective in helping the citizens to generate these happy conditions (by prevent ing their opposites) that they were eventually persuaded that the law was the source of their happiness, whereas it was they who had cre ated it, and the law had only pro tected it. There, alas, was the turn ing point.

Thinking that the law was the source of their blessings, men asked the law to give them other blessings such as equal opportunity, employ ment security, and so on; all with the false hope that they could enjoy liberty, equality, and security by the passage of laws through the Con gress. Only now are you beginning to fully realize that the security the law can give is found in the absence of freedom, and the economic equality the law can give is in the absence of the incentives of produc tion. But there is still another and more fundamental reason for the failure of the law to provide you with these wanted gifts, for the problem is not only that the law is strictly a negative operator, but also that the Congress has sought by law to endow the government with pre rogatives which it cannot rightly possess. The government has been given powers which even individual citizens do not have, and has been made to thus infringe upon the rights it was designed to protect.

Let me explain. Suppose, for the moment, that you possess three horses while I have but one. I have no right to take one of yours, since your abundance is likely the result of your labor and 530 THE FREEMAN September frugality, while my deficiency is the result of my study of the clouds over my dooryard. Lacking the right to steal your horse, I might approach the local magistrate and grant him the authority to transfer one of your horses to me. What authority? I have no such right, and yearn as I might for that power, the prerogative is clearly not mine to give. Then suppose the officer took it upon himself to give your horse to me with neither my request nor your consent. Whence is his authority to appoint himself an agent to steal your property and break the law he was commissioned to enforce? He has even less authority (if that were possible) than before, for he would violate the rights of both of us: your right to your property and mine to my inde pendence.

Now, should you have excess and I have actual need, We might both be blessed by your generosity; but to force you to give me your property can only cause you to revolt and me to shrink. Nay, only you have the right to your property; and connive, plan, and commission as I may, if I obtain your horse by any initiative but your own, you have been robbed. Thus your government has presumed to create rights unto itself, by which it takes from one and gives to another under· the ill-formed principle of coercive charity. Indeed, it fs difficult to imagine concepts more selfcon tradictory than those of charity by force, or equity by theft; or to find in all history a system more subtly destructive of the human spirit. It would be better if your govern ment saw only to the welfare of the genuinely misfortunate; but alas, it has long since outdone that activity and now plunders the property of the intelligent, the frugal, the diligent, and yes, the fortunate, and doles i t out to the lazy, the spendthrift, the foolish, and yes, the unfortunate. How will you build prosperi ty by punishing the prosperous? How will you encourage production by destroying the ambition of the producer? By heavy overlapping taxes and unwar ranted meddling regulations your government has sh~ckled the worker, and then if that did not suffice to put an end to his labor, it has tempted him to the deceit of pretended idleness by offering a good living in exchange for an artificial unemployment.

If it is prosperity for all you desire, then every man must find it to his advantage to be industrious. To be industrious he must be an eager worker, and he will not be eager without cause. History has manifest abundantly that the freedom to earn, own, and control material goods is the most compell ing cause to ever provoke the human 1976 A NEW MESSAGE-ON THE GENERAL WELFARE 531 spirit to its highest potential of productivity. Was it not manifest most clearly in your own history? The records of nations overflow with the failures of welfare states, and you see even now in your own society the warning signs of an economy overburdened by the natural extravagance of welfarisms. But there is more than just the material aspect of this question: the very spirit of man is in jeopardy. The rich should be filled with com passion and concern for the poor, and the poor ought to be humble and gracious when they receive assistance; but the plan of your politicians who purchase the votes of the poor have taught them to be haughty and defiant in their demands for the bread of the rich, and your rich have learned to resent and despise the poor. Thus your people are under the same misguided principle of false charity that has destroyed nations before you; for when the rich have been pillaged to the limit of their patience, and the poor are fully ripened in their lust for the just reward of labor, then is your nation but a breath away from the ravages of civil war, where it will be brother against brother, and family against family, and city against city; where production will cease and prosperity become a dream. This thing must be stopped before it is allowed to run full course and consume you!

"But;' exclaim your self-styled social saviors, "it is not fair for one to be rich and another poor, espe cially when he came by his poverty honestly, through misfortune and not by any lack of diligence." Shall you make the poor more honest by giving them the fruits of their neighbors' toil? Will you raise the poor by injury to their self-esteem and independence? And why will you fine the rich because of the poor? And what is more, where will you obtain the right to do either? You who are the producers, if you will go to battle now and regain the rightful control of your property, you may leave your weapons behind and have the matter settled in a short time. But then, when you have unburdened yourselves of the indo len t poor, you will do well to remem ber the misfortunate poor, for it was partly your lack of com passion which gave the socialists excuse to plunder your goods in the first place. If you will share your prosperity with the aged and the unfortunate by humility and gra ciousness, you may bless both your selves and them.

You who think you are poor, but are drunk with the wine of idle affluence, you have been wronged perhaps more than your unwilling patrons, for you have been dis honored, demeaned, and addicted. Your well-to-do friends have mostly 532 THE FREEMAN September an angry com plain t, but you likely suffer from damage to your very character. But there is a happy side to your condition, for although your disease is the more serious, it is the sooner remedied. All you need do is stop accepting the unearned gifts of a too-patronizing government. That exercise may prove inconvenient for a time, but the sooner you set about it the sooner you may trade idle entertainments for the deeper satisfactions of building your own life through the exercise of your own strengths. Some of you, when your unearned income ceases, will be tempted to behave unseemly, to create a vigor ous uproar, to claim it unfair and an infringement upon your rights, for you have enjoyed the dole so long you feel you have a right to it. You will feel alarmed because you have lost confidence in your ability to provide for yourself. You will feel angry because you will have to work to care for your needs. You will find it difficult to thank those who have sustained you during your depen dence upon their labor, and you will feel moved to destroy the property which was given you. Such is the depth of the dam~ge done you by the so-called blessings of equal opportunity and welfare. You must exert all your energy to act with the restrain t and the graciousness which befits a human being, and shun the temptation to demand a continuation of your free-loading and to thus grovel before your patrons as miserable beggars.

I wish you well, both of you, in your struggle to free yourselves; you must not faint nor fail; it is a cause every whit as significant as ours was. Be careful to put down the desire to obtain what seems to be your share of the public booty, remembering that the government can give you nothing without first taking it from you and keeping a portion for itself. Be aware that you must disman tIe a bureaucracy which was the favorite child of its creators, and you will not be allowed to succeed without opposition, but be also assured that your victory will be worth far above its price. It is a strange and sad contradic tion that our nation now displays; for on the one hand you have learned to carefully discover and obey the laws of physical nature which let you put men on your moon, but the laws of human nature which have been known for cen turies you cease not to violate. You lift your rockets by strict obedience to natural law; if you will be equally strict in your observance of the laws of -human conduct, you may do the same for man. There is no other way.

Man will never reach full develop ment of his potential until he learns to place the same faith in the divine 1976 A NEW MESSAGE-ON THE GENERAL WELFARE 533 laws of right living as he places in the equally divine laws of physics. This is not a matter to be lightly laid aside with a false hope that your national character will soon improve without your best effort! Nay; hear me! You are in the path that has taken many nations· down to destruction. No one can deny it! It is written in your histories. Oh that I had the power to awaken you to a full realization of your condition, and to enlighten your minds to a full understanding of ~hese crucial principles! But it is you, my Sons of Liberty, who must arise and throw off the drugs of false Campaign Promises security, learn wisdom of history, and apply it in your lives. Let each man begin with himself, to re establish the due honors of personal integrity, and to provide for himself and his own; then let him do his duty to his posterity to protect the divine rights of man by reasserting the principles of the Constitution! They came to you through the inspiration of the Almighty, the Author of liberty. He will inspire you again in its restoration when you seek His guidance with humility and single ness of heart. I) Next: VI. On Political Philosophy IDEAS ON LIBERTY WE ACT as if the State can feed us when we are hungry, heal us when we are ill, raise wages and lower prices at the same time, educate our children without costs, give us electricity by passing laws, and improve the game of baseball with regulations. We need just pass a law and then stand back and be overwhelmed with all the goodness of life.

Let's try to be sensible for awhile. It is the differe~ces in people that make possible our progress. The object in education is to develop your own special abilities to their utmost, not to conform. We as individuals have rights that the majority cannot take away from us. It is time we used our common sense. Hard work, not legislation, makes production. Production, not regulation, makes prosperity. The legislature cannot amend the laws of economics anymore than it can the law of gravity. RAE C. HEIPLE, II STEVEN J. SCHNEIDER E :::J Q) cuc Q) .c ::i c .s 111 om MOST LIBRARIANS, as well as the people who use public libraries, consider it a proper function of government to provide library ser vices free of charge. Public libraries had their beginnings just when the idea of educating the masses through public education became popular. In 1850, the city of Boston proposed the use of public funds to establish a library. In the forefront of this move was George Ticknor, a respected member of the Boston aristocracy.

Ticknor believed in the library's potential as a means of restraining the Mr. Schneider recently obtained his Master's degree in Library and Information Science from St. Johns University. He is a member of the State Committee of the Free libertarian Party of New York. 534 "dangerous classes" and inhibiting the chances of unscrupulous politicians who would lead the ignorant astray, which explains his insistence that the library be as popular in appeal as possible. 1 However, the ignorant do not use public libraries and, to this day, still elect politicians of dubious qualifications. The public library movement grew at a steady pace with the aid of Andrew Carnegie's program to dis pose of his surplus wealth by provid ing free public library buildings to communities which would stock them with books and maintain them in perpetuity with tax funds. There was a notable effort on the part of enterprising communities to secure Carnegie library buildings.

Nearly 2,000 such structures were made possible in this way.2 1976 WHY PUBLIC LIBRARIES? 535 During 30 years after 1865 the Car negie gifts ran their course, and the free public library became an object of pride throughout the land. It was distinctly an American institution. 3 The argument in favor of public libraries is that they provide a place to obtain information and recrea tional reading that the users cannot afford on their own. The taxpayers underwri te the costs. The "Public Library" which we are to consider is established by state laws, is supported by local taxation or voluntary gifts, is managed as a public trust, and every citizen of the city or town which maintains it has an equal share in its privileges of reference and circulation. 4 But is there any public library which serves the entire public which pays for its upkeep? A study was made in 1950 of the users of public libraries. It found that: Most of the book reading is done by a small minority of the people. More than half the adults of the library live within a mile of a public library yet only one fifth of them visited a public library during the year preceding this survey, and only a tenth averaged as much as a visit a month. 5 A 1975 Gallup survey of adult use ofthe public library came to similar conclusions.

. . . only a substantial minority of Ameri can adults makes regular use of the public library ... The better educated, white collar and professional classes and the young use the public library more than their opposites. Book lending ser vices are seen as the most common function of the public library.6 Public libraries, like other public services, were established by well meaning citizens who assumed that the "public" wanted these services and were willing to pay taxes to support them. But there are those who disagree. Writing in Library Journal, Michael Harris questions the notion that the public library was established in answer to public demand: It is commonly believed that the origins of the public library movement testify to the power of popular democracy in this country. And yet, everyone knows that historically only a very small portion of the eligible users have ever crossed the threshold of a public library. 7 The First, in 1833 Peters borough, New. Hampshire was the first town to pass a public library law in 1833. In 1849 New Hampshire passed the first statewide act providing for the es tablishment of public libraries. Up until 1833 the only linraries in existence were private university libraries, church libraries, society and subscription libraries, and mer cantile and mechanics libraries .

The users of these libraries were students, the clergy and their parishioners, clerks and appren tices, and those people who were 536 THE FREEMAN September in terested enough in furthering their education to join a subscrip tion or society library. Prior to 1850, public tax supported libraries as we know them today were nearly nonexistent. The nearest approx imation were the subscription and social libraries which were voluntary associa tions of individuals for the purpose of buying books to be jointly owned by all those who belonged. 8 In the introduction to the 1876 report the Bureau of Education acknowledges the importance of the private libraries in existence. It will, of course, be understood that no attempt has been made to collect information respecting private libraries. While a multitude of these libraries exist, thousands of which are of great value, some rivaling in completeness, in special departments of knowledge, even the collections of leading public libr aries, it would be impracticable, if otherwise expedient, for the general government to gather and present rea sonably complete and satisfactory infor mation respecting them. 9 The 1870 census attempted this task, and although acknowledging that its figures were not complete, estimated that of 163,353 libraries containing 44,539, 184 volumes 107,673 were private libraries con taining 25,571,503 volumes.I° Had public libraries not materi alized, I do not doubt that private libraries would have been able to handle all the needs of their users.

All in all by 1850, 1064 libraries had been established in New England alone. In the services they gave, these institu tions f<;>llowed modern library practice; they bought the books their members wanted, allowed them to be circulated for a, month or so, and instituted fines for violation of the rules. In their later development they branched out into special libraries for mercantile clerks, mechanics, children, ladies, lyceum audiences, farmers, factory workers, law yers, and music lovers. This was a library system of a sort, and it is probable that almost every serious reader could get access to what books were in his community. 11 Many of these libraries went rout of business for various reasons. Some were forced to close because, due to low literacy rates and few leisure hours, there was a limit to the clientele they could attract, and could not afford to stay open. Others, after 1850, could not afford to compete with tax-supported libr aries and were absorbed into the public library system. However, while they existed, they fulfilled the services their users required of them. Why then public libraries?

Public Libraries in Trouble Today the public libraries are in a crisis. The 1960's, in which funds were liberally handed out for all kinds of library projects, have been replaced by the 1970's, in which many municipalities are on the edge of bankrul?tcy. All across the 1976 WHY PUBLIC LIBRARIES? 537 u.s. the taxpayer has had enough. The taxpayers are resisting higher taxes at a time when inflation is increasing the cost of government services. All agencies of govern ment are competing for the same money, and libraries are on the bottom of the agency totem pole. Although everyone is taxed to sup port the library, only a small percen tage use it regularly. Unlike the schools, the libraries have no law that com pels people to use their services. Library budgets are being slashed, personnel fired, and branches closed. Librarians, trying to negotiate the labyrinth of gov ernment to lobby for more tax money, are finding the whole pro cess frustrating and tedious.

Marilyn Gell describes the process in Library Journal. In seeking funding for a cooperative library project, for instance, it is neces sary not only to obtain a consensus from the libraries involved, but agency approval as well. The process can some times take several months, involve several policy committees composed of pumerous politicians, and can be an exhausting experience. 12 And no matter how valid the argu ments for your project, or how well they are documented, who you know is usually more irnportant than what you know; this is how things get done in the political arena. "Access to those individuals who interpret policy is valuable indeed:'13 As an example of the irrationality of government policy, the following appeared in aNew York Daily News editorial: City Hall geniuses have an Alice in Wonderland explanation for a decision to close three existing libraries while proceeding with construction of five new ones.

Their argument is that the actions are unrelated; capital funds are available for building new facilities, while the padlocking of already-operating libr aries is dictated by lack of expense budget money for staffing. But once the projected new branches are completed they will have to be manned. And if the city can't find the money to run the libraries now, where will it get the dough to operate five others later on? Or shouldn't we expect our officials to look ahead? 14 A Shortsighted View As evidenced by the state of the economy today, we see that govern ment officials do not look beyond the short range effects of their actions, that is, beyond the next election. Any business that tried to operate along these lines would find itself quickly bankrupt. The only thing that keeps local governments from going out of business is their sup posedly unlimited source of funds: taxes. But the climate is changing, the money reservoir is beginning to 538 THE FREEMAN September dry up. If librarians will look to the future they must realize that they cannot continue depending on gov ernment funds. What is the alterna tive?

Assuming no public libraries, where will people go to obtain reading matter for entertainment and information? Since 1850 there has been a revolution in the print ing industry. Due to higher literacy, and more leisure time, and a large class of people willing and able to buy books, there is a market for hundreds of thousands of books in inexpensive editions. Back then, books were few and far between, expensive to produce and purchase. Nowadays people do not have to be wealthy to have their own personal library. The paperback reprint industry has brought many books within everyone's reach. For more expensive hardcover books, the needs of readers can be taken care of by rental libraries. Some bookstores now have rental libraries as part of their operation. Without public libr aries, bookstores and other service type businesses would fill the vacuum for providing recreational reading. Some libraries now produce cable TV programs. It is possible to reverse this trend and have cable TV companies operating libraries as a service to their subscribers, with the subscribers and the library being in the same relationship as an on -line terminal user to acorn puter.

The reference services of public libraries can be converted to profit making information services. With the rise of computerized on-line data services which charge their users for the information they pro vide, this is already becoming a reality. Today the demand for cur rent information has mushroomed and only computers will be able to handle the increased traffic. On-line terminals are becoming a familiar part of a library's reference depart ment. Public libraries cannot afford to provide these services without charging their users for them. The Economics of Fact-Finding Information is valuable and scarce. In a world of ever-increasing dependence on information it is unrealistic, therefore, to insist on providing such a good free to all comers. Eugene Garfield, chairman of the Information Industry Association, testifying before the National Commission on Library and Information Science, said: User based charges must inevitably prevail. .. inform ation is the result of economic effort and its costs must be borne by someone. The depression type psychology that dominated library training cultivated the concept that library service should be free ... any thing you get for nothing is of question able value. Charge, and your service is better appreciated ... The existence of an already large information industry 1976 WHY PUBLIC LIBRARIES? 539 supports the assertion that the buyer of information is prepared to pay for those services he learns to respect. 15 There are many private libraries already in existence to meet the needs of scholarly researchers. The Henry E. Huntington Library in California was established as a free public research library open to qualified scholars for investigation and reference use and supported entirely by an initial endowment by Henry Huntington plus grants and gifts by others over the years.

Another example is the Henry Clay Folger Shakespeare Library in Washington, D.C., housing a collec tion of the social and intellectual history of England from the inven tion of printing to about 1700, open to all scholars who have a serious problem requiring use of the materi als. Add to these the numerous private college and university libraries housing special collections of use to the researcher, from the small col lege with a history of its community to Harvard University,which rivals in size the national libraries of Great Britain and France. One library of special note is the Boston Athenaeum, founded in Boston in 1807 by selling shares in the library as well as annual and lifetime subscriptions. In 1853 it successfully fought off a move to incorporate it into the Boston Pub lic Library and today is still an important private institution. In 1907 the Athenaeum celebrated its centennial.

Throughout all its various changes, the Athenaeum has represented what was best in Boston. The "golden age" of New England literature grew with it and ever within its walls. Its traditions are a part of life, and are passed on from father to son. Because its ideals have been high the Athenaeum has appealed to men who lead as well as those who follow. And with their continued support success in the future seems assured.16 There are also special libraries for all types of non-fiction materials provided by various corporations and trade associations which will provide answers to questions asked of them and will open their libraries to people doing research on their special subjects. Improved Service Private libraries would be more responsi ve to the needs of their users. Instead of being open during the day only, as is now the case in many libraries, these libraries would be open when the users needed them, nights and weekends, and early in the morning. As was the case in the early 1800's, special libraries would develop to serve the needs of special classes of users. A children's library run by librarians specializing in children's librarian ship; a local fiction society catering to the wants of its members; there 540 THE FREEMAN September are many possibilities. People are so used to depending on the govern ment to get things done they forget how to do things for themselves.

Now is the time to start consid ering an alternative to public libr aries. A first step is to have public libraries· charge .fees for their ser vices. The next step is to offer the libraries. for sale, preferably intact, after passing a law that prevents the use of government funds for the establishment or maintenance of libraries. The next time a proposal for increased property taxes is put forth in your community to pay for li orary services, ask yourself if we really need public libraries. I) - FOOTNOTES 1 Barris, Michael, "The Purpose of the American Public' Library, A Revisionist Inter pretation of History," Library Journal. 98:2510. Sept. 15, 1974. 2 Lester, Robert M., "The Carnegie Cor poration and the Library Renaissance in the South," Wilson Library Bulletin. 31:255-9, Nov. 1956. 3 Ibid. Herbert Spencer 4 U.S. Bureau of Education, Public Libr aries in the U.S.; 1876 Report. Government Printing Office. 1876. p. 147.

5 Campbell, Angus and Metner, Charles A., Public Use of the Library; and other sources of information. University of Michigan Press. Ann Arbor, Michigan, 1950. p. 1. 6 Eberhart, W. Lyle, "A Closer Look: Gallup Survey of American Adults Assesses the Role of Libraries in America," American Libraries. 7:206. April 1976. 7 Harris. Michael, op. cit.. p. 2509. 8 Harris, Michael, ed., Reader in Ameri can Library History. NCR Microcard, Washington, D.C., 1971, p. 45. 9 U.S. Bureau of Education, op. cit.. p. xvii. 10 US. Census of Population and Social Statistics. 18'70. p. 472. 473. 11 Gareau, Oliver, The Public Library in the Political Process, Columbia University Press. N.Y. 1949, p. 16. 12 Gell. Marilyn. "The Politics of Cooper ation," Library Journal. 98:3230, Nov. 1973. 13 Ibid., p. 3229. 14 "Two Different Worlds," New. York Daily News, Oct. 17. 1974, p. 61. 15 "I1A Urges User Fees For Libraries in NCLIS Testimony," Am~rican Libraries. 4:335, June 1973.

16 The Athenaeum Centenary: The inf luence and history of the Boston Athenaeum 1807-1907. by the staff of the Boston Athenaeum, Gregg Press, Boston, 1972, reprint of 1907 ed., p. 56. IDEAS ON LIBERTY THE MORE NUMEROUS public instrumentalities become, the more is there generated in citizens the notion that everything is to be done for them, and nothing by them. Every generation is made less familiar with the attainment of desired ends by individual actions or private agencies; until, eventually, governmental agencies come to be thought of as the only available agencies.

HARRY LEE SMlTH HISTORICALLY the ownership of land has been vested in the ruling classes. Often the monarch himself owned all the land. Public (collec tive or governmental) ownership is a primitive institution commencing with tribalism and persisting throug h the feudalism of the middle ages. Only during the past two centuries has private ownership of land found wide acceptance. But even today, a third of the world lives under communism which adheres to the archaic concept of public lands. In addition, there is considerable socialistic pressure in the free world to extend public control over all land use. In the United States today about 60 per cent of the land is privately owned. During the nineteenth cen tury it was national policy to transfer as much land as possible to the private sector. Now the process is reversing. Mr. Smith is a businessman in California. The importance of the institution of private property to well-being and even· to survival bears further analysis.

When Columl1us discovered America the natives did not have the wheel, the plough, horses, livestock, or the concept of private land ownership. The extremely inefficient hunting society of the North Ameri<?an Indian required 'about ten square miles of land to support one Indian. Marion Clawson, the author of America's Land & Its Uses, and the former director of the Bureau of Land Management, makes this com ment: "Given their technology, the Indians had probably reached the numbers that represented the carrying capacity of the.land. All of the area of the present United States that was habitable at all was occupied by some tribe or tribes; there were no empty lands." But today we have plenty of empty lands despite an increase of 541 542 THE FREEMAN September population from possibly 300,000 Indians to over 215,000,000 Ameri cans. Furthermore, the Indian exis tence was precarious and marginal; either drought or a severe winter could produce famine.

Sixteenth-century England also considered itself to be overpopu lated for an agricultural society. This produced the incentive to seek colonies overseas, especially in North America. Agricultural Use of Land Agricultural land can support about 250 times as many people as land used for hunting. So to make the land support additional num bers, our early settlers cleared the land for agricultural use. Today, the three big uses of land are for crops, forests, and grazing. Together they account for 89 per cent of the total. To~ay's farmer uses 23 per cent of the land area of the United States for crops. He no longer provides all of the inputs as did the pioneer, but buys about 70 per cent of his needs in the form of fertilizer, feed, ma chinery' fuel, and water. This requires capital. He produces 2 1/2 times the total output of farmers of only 60 years ago, with one-third the man-hours and one-half the cultivated land.

This agricultural efficiency is unique in history, with the result that the United States is the bestfed nation on earth and leads the world in agricultural exports. Our present forest lands comprise 32 per cent of the total land area. About two-third~ of this is composed of small unproductive stands which someday might be consolidated and exploited. Growth of new lumber outpaces new cutting by 1.6 to 1, and this ratio has been increasing steadily since the 1920's. Due to the use of other building materials, total lumber consumption has hard ly changed since World War I. Also, lumber companies are just getting started on forestation techniques similar to those which have revolu tionized farming during the past 60 years. With sufficient capital input, there is no danger of running out of lumber. The biggest agricultural use of land is for grazing-34 per cent of the total. This is also the least productive use of farm land. With more and more cattle being raised on farm feed lots, a good deal of this grazing land remains unused open space.

Finally, 10 per cent of the land has miscellaneous uses, some of them quite important. They include lands for transportation, recreation, water storage, mining, and defense. How Cities Serve the People This leaves only one per cent, which is the area occupied by all of our cities. Actually, cities of over 1976 LAND USE AND CAPITAL 543 25,000 inhabitants occupy only one half of one per cent of all land. Never has land been used more efficiently than that. The secret of making land sup port more and more people is the application of technology and capital-the dichotomy proposed by Adam Smith. They seem. to grow together. But of the two, capital is by far the more important. While agricultural technology is freely available to the poorer nations of the world, they cannot avail them selves of this knowledge due to lack of capital. It was the advent of political freedom for the individual which induced agricultural efficiency. This required fewer farmers. The dis placed farmers went to the cities where they produced capital which further enhanced agricultural prod uctivity. Today, in a very real sense, our food is produced in the cities.

The United States is 73 per cent urbanized; but California, which is 87 per cent urban, leads the nation in agricultural output. Agricultural land should yield to urbanization, since the cities pro vide the capital which is the touchstone of massive food produc tion. During the past 60 years, as a consequence of agricultural effi ciency, half of our cropland has been retired but is available for food production if needed. We need have no fear of running out of food due to the paving over of agricultural land. The application of capital to land not only produces abundant food. It also has generated an ever-increas ing quantity of energy which acti vates mechanical servants in our homes and industries. And the com bined uses of capital and land yield more and more raw materials, either conventional or synthetic. Some Wasteful Practices As we added millions of immigrants to the carrying capa city of the land of the United States over the past 500 years, the avail able capital was not sufficient to keep the land in prime health. Some cropland was over-ploughed, some forest land was over-cut, some graz ing land was overgrazed. Capital in the form of deep-well pumps, seed, and fertilizer can cure such ills. But despite the relative scarcity of capital, the land proved to be any thing but "fragile" and supported its burden remarkably well.

The abusive or wasteful use of land seemed to bottom.in the 1920's and there has been an improving trend since then. With 73 per cent of our population living on one per cen t of the land, open space has increased. We have set aside mil lions Df acres for nothing but recrea tional use. This is in contrast to the American Indian who, technically speaking, had no. spare open space. He dedicated all of his labor and 544 THE FREEMAN September capital (which was the land) to survival. Another thing that happened in the 1920's was that land use stop ped changing. Except for taking certain crop and grazing lands out of production, overall land use maps of 50 ye~rs ago look very much like those of today. Also, despite con tinuing urbanization, the propor tion of the population living in major cities of over 250,000 has not changed in 50 years. Our urban growth has been mainly in subur ban satellite cities. But this "urban sprawl" has used but a fraction of one per cent of the land.

How Cities Develop The value of urban land is 1 1/2 times the value of all other lands combined, even though urban land is but one per cent of the total. This is an indication of the value we place on capital-producing land compared to any other use. Further more, the carrying capacity of urban land is incredibly high. Cities can carry densities as high as 600,000 persons per square mile. This might be compared to 25 per sons carried on a square mile of typical farmland. If 600,000 persons were placed on a one-sQuare-mile island covered with asphalt, they would obviously perish. Giving them food would not be a long range solution. Also, massive education on wealth-producing techniques would, of itself, not save them. Even massive grants of capital would probably be politically dissipated. Only the gra dual building up of lines of transportation, communication, energy generation, and industrial production over time would allow for a thriving community. Such is the case of Hong Kong. Such is the miraculous power of private capital.

The poorer nations of the world benefited little from the industrial revolution except in one regard: medical knowledge developed in the West has reduced their death rate. The resultant swollen population must be kept alive by increasing t,he carrying capacity of the land. This requires financing. Obviously there is 'a precarious balance between urban and rural life. If the capital-producing ability 'of the Uni ted States were destroyed, the land could barely support a third of our present population as pastoral inhabitants. The rest would perish. This is exactly what happened in April of 1975 when the Cambodian communists drove the inhabitants of Phnom Penh and other cities out into the jungles and fields. Many of them have perished. Stalin did the same thing when he disbanded Rus sian farm communities in the 1930's to enforce collective farming. Millions perished on the Russian steppes.

1976 LAND USE AND CAPITAL 545 Cities Under Attack In a similar but less extreme vein, our American cities are under attack. There are master planners who have suggested that our cities be entirely rebuilt, at enormous cost. Such land use planners often put the priorities of the upper middle class above those of the less fortunate members of society. For instance, despite an energy crisis, planners would allow esthetics to take precedence over heated homes in the matter of coal strip mining. Also, despite high lumber prices, the priorities of hunters and cam pers are considered more important than cheap housing in the matter of efficient clear cutting on forest land. And invariably, planners believe that urbanization should yield to farm land which, as we have seen, is detrimental to massive food production. Over the generations, planners often reverse themselves. In the past, city governments have ruined all private urban transit systems by prohibiting needed fare increases.

Now city planners urge the spend ing of billions in tax funds for public mass transit systems. In the past, the federal government has fostered the growth of suburbs through FIlA financing of new homes and by building freeways. Now planners propose the spending of billions in tax funds for urban renewal. Since taxation is a prime enemy of capital formation, the process is not only painful but destructive. No society in history has ever developed such a rich, heal thy, and comfortable life as that of the American urban dweller. Yet critics of city life can only see urban sprawl, congestion, decay, poverty, pollution, smog, crime, and social injustice. This attitude pervades the thinking of most city planners. They are not interested in the wealth-creating function of cities. For them, cosmetic improvement takes precedence over business vitality, employment, growth, and economic well-being. Planners take up valuable central city space for government buildings, parks, and green belts. They often oppose such innovations as industrial parks, con dominium complexes, mobile home parks, and shopping centers, all of which are developments of the past 40 years and none of which were foreseen by city planners.

What makes modern govern ments tend to be hostile toward capitalistic cities? Among other things, the modern city is a machine for the creation of private capital. It is the manifesta tion of, and the vehicle for, the emancipation of peasants who for merly lived in rural squalor. It has elevated millions of urbanites into the heady realm of material well· being formerly enjoyed only by the 546 THE FREEMAN September ruling classes. The process has pro duced a vast economic hierarchy. Many intellectuals look on the capitalist businessman with the same contempt that the nobility formerly held for the peasant, since now the peasants have committed the unforgivable sin of becoming rich. Urban Development, Up from Serfdom If we look for a moment at the history of cities, we find that urban life has been the exception rather than the rule. Historians have dis torted the past by writing mainly about the tiny but powerful ruling classes which tended to live in cities-hence the word "urbane:' Most cities of the past were political cities, buH t for the protection and pleasure of the monarch and his court. Such cities produced nothing and tended to be an economic blight on the surrounding countryside.

They existed by taxing the peasants who lived outside the city's walls. Most of our ancestors were such peasants, and our present middle class population consists of emanci pated peasants. In fact, most of our ancestors were serfs, bound to the soil by the ruling classes. This kept the masses out of the cities and retarded upward social mobility, technological pro gress, and capital formation. Such things had to await the political freedoms put into practice during the eighteenth century. In the fifth century BC, the Roman dictator Cincinnatus was asked about the secret of his success as a ruler. He took his interrogator into a nearby wheatfield and with his sickle proceeded to lop off the tops of wheat stalks which had the temerity to grow taller than the average. So have rulers generally tended to lop off the heads of individuals whose success has threatened their power, wealth, or social prestige. This reactionary policy of egalitarianism for the masses is fundamental to com munist and socialist doctrine.

"Hubris" is the word the Greeks gave to the urge to rule the lives of others. It is hubris which has moti vated the Stalins and the intellec tual planners of the West to play with people's lives and fortunes as though they were pawns on a chess board. This arrogance deludes those with political power into believing that they can mold a city more effectively than can the economic forces of the market place. The city of Houston has no zoning ordinances. The economic forces which have shaped Houston have been thoroughly analyzed by Ber nard Siegan in his excellent book Land Use Without Zoning. In dis cussing land use maps of various cities with city planners, Siegan found that, when looking at 1976 LAND USE AND CAPITAL 547 Houston land use maps, the experts were not aware that they were examining an unplanned city. The most effective force in shap ing a city is Adam Smith's Invisible Hand. It is the same Invisible Hand which has produced open space where none existed before, which has created arable land when required, and which has made the land produce in abundance. In the case of cities, some unexpected by products have been the magnifi cence of the Manhattan skyline, the quaintness of New Orleans' Latin Quarter, and the vitality of down town Houston. For those who see beauty in vitality, all capitalist cities are beautiful.

The city planners of Phnom'Penh effectively accomplished their pur pose of eliminating the hated mid dle class. But the American city planner, while striking at the "greedy" middle-class builder or developer, harms the poor man most of all. During the past 20 years total housing costs and expenses have risen 303 per cent while disposable income rose only 183 per cent. Real estate taxes have soared 341 per cent. This has all been brought about by government intervention in the market place, including cost ly delays, increased public service costs, competing with private industry for capital funds which induce high interest rates, and land rationing through zoning. Controlled growth in cities has the same effect as controlled growth in any other sector of the economy. By discouraging production, economic goods, including land, be come scarce and prices rise. A Gor ollary to the law of supply and demand provides that when prices rise the first person to be deprived of goods and services is the poor man.

Increased costs curtail the eman cipation of the peasants. The Importance of Capital for Economic Growth There is no force more likely to produce mass starvation among the peasants of the world than the prejudice of Third World leaders against private capital formation. On the other hand, in the United States we need have no fear what soever of famine at the present time. By historical and Third World standards, hunger and poverty have practically been eliminated. The fluid which has made this possible is private capital. Marion Clawson has this to say regarding our fortunate situation. "There seems little rea son for concern about the nation's ability to feed itself. By increasing agricultural output and by shifting to more cereals and less meat in the national diet, the country can feed 10, or 20, or even more times its present population. .. The ultimate food productive capacity is so far above the present level that there is 548 THE FREEMAN September nothing to be gained from trying to estimate just how large it is."

This statement claims that, given enough capital and economic incen tive, the land area of the United States could feed the entire present population of the earth. Of course, China, Russia, and India each could also feed many times their own populations. But to do so would require a shift to laissez faire capitalism -a condition not likely to be accepted by any of the existing governments; certainly not by the communists or socialists. As Albert Jay Nock has repeatedly warned - the deadliest enemy of the free and self-sufficient individual is the State. Socialist misuse of capital is in sharp contrast to its efficient use under free enterprise. Russia was the leading exporter of food before the revolution, but today cannot feed herself. In desperation the Soviets have allotted 31 per cent of available capital to agriculture in contrast to only 4 per cent in the United States. But the Soviet farmer remains only one-tenth as productive as the American farmer, due to lack of proper incentives.

Since all individuals on earth have different and ever-changing priorities, the coercively imposed priorities of governments and plan ners can only act against the interests of individuals. Govern ments tend to oppose or dissipate capital formation by controlling economic activity and by redistributing income. As we have seen, this can have serious conse quences for the carrying capacity of the land, resulting in starvation in the marginal economies. Intellectual planners and environmentalists picture them selves as guardian angels, protect ing the land against ravage by irresponsible entrepreneurs bent on profit. But instead of building a beautiful paradise, their coercive methods might, in the long run, produce the primitive hell of Cam bodia. As was said by the seven teenth-century philosopher Blaise Pascal: "Man is neither angel nor brute, and the unfortunate thing is that he who would act the angel acts the brute." f) •BIBLIOGRAPHY· Population and History by E.A.

Wrigley, McGraw-Hill. America's Land and Its Uses by Marion Clawson, Johns Hopkins Press. The Myth or OverPopulation by Rousas Rushdoony, Craig Press. The Unheavenly City by Edward C. Banfield, Little, Brown and Com pany. World Cities by Peter IIall, McGraw Hill. Land Use Without Zoning by Ber nard Siegan, Lexington Books, D.C. Heath.

BRIAN SUMMERS The PlannedEconomy in Georgia: 1732-1752 THOSE who are ignorant of history often make the same mistakes that plagued their forebears. A case in point is government economic plan ning.....:.the planned economy. Today the planned economy is touted as a brilliant new idea, while history books are filled with the unfortu nate results of previous planned economies. The American colonial period offers several classic examples. The first British settlements, James town and Plymouth, were founded on collectivist principles, with the settlers being clothed and fed out of common stores. Since workers re ceived the same rations as idlers, little work was done, and famine killed half the early settlers. Only after the common stores were abanMr. Summers is a member of the staff of The Foundation for Economic Education. doned, and the colonists were free to engage in private enterprise, did Jamestown and Plymouth prosper.

The founding of Georgia offers another example of the unfortunate resul ts of government economic planning, no matter how well-inten tioned the planners may be. In 1732 James Oglethorpe and his partners recei ved a charter from King George II to found Georgia as a haven for debtors and victims of religious persecution, with the trust providing the settlers' passage and supplies for one year. The colony was also to serve as a military buffer between the British in South Carolina and the Spanish in Florida; military duty was required of each settler. The first colonists, led by Oglethorpe, landed in early 1733 and founded the city of Savan nah. 549 550 THE FREEMAN September As so often happens, Oglethorpe and his fellow trustees tried to achieve their humanitarian goals through economic regulations. Land use regulations limited individual holdings to 500 acres, with each family receiving a grant of 50 acres.

Parcels could not be divided, sold, rented, traded, mortgaged, or willed; they could be inherited only by a son willing to work the land. Otherwise, parcels reverted to the trustees. The unfortunate result of these regulations was that each colonist was shackled to his parcel, without hope of obtaining mortgage capital, and with little incentive to im prove or even maintain his land, especially if he didn't have a son. When the citizens-of Hampstead, in 1738, complained that they had been assigned infertile pine barren, their petition was considered in Oglethorpe's London home: "He said he knew the land at Hampstead perfectly well, and it was indeed most of it pine barren, but with pains might be ren~ered very fruitful as other pine land had been rendered by others; that if these people were humoured in this, there would not be a man in the Colony but would desire to remove to better land, who yet have at present no thoughts of it. That the disorder this would occasion in the Coiony is unexpressible. That we ought to consider that if these men were allowed to remove to a new land, they would expect a new allowance of provision for a year, which we are not in a condition to give, and the same would be expected by others." 1 The combined policies of welfar ism, collectivism, and land use regulation stifled the settlers' initiative. Captain Pury reported to the trustees on his return from Georgia in 1733: "There being many lazy fellows in the number, and others not able to work, those who work stoutly think it unreason able the others should enjoy the fruits of their labor, and when the land is cleared, have an equal share and chance when lots are cast for determining each person's divi sion:'2 Land use control was only one thread of a web of regulation. The "Rules for the year 1735" are a good example of the trustees' penchant for detailed planning: "The Trustees intend this year to layout a county, and build a new town in Georgia.

"They will give to such persons as they send upon the charity, To every man, a watch-coat; a musket and bayonet; a hatchet; a hammer; a handsaw; a shod shovel or spade; a broad hoe; a narrow hoe; a gimlet; a drawing knife; an iron pot, and a 1 Daniel J. Boorstin, The Americans: The Colonial Experience (Vintage Books, New York, 1964) pp. 89-90. 2 Ibid., p. 90.

1976 THE PLANNED ECONOMY IN GEORGIA: 1732-1752 551 pair of pot-hooks; a frying pan; and a public grindstone to each ward or village. Each working man will have for his maintenance in the colony for one year (to be delivered in such proportions, and at such ,times as the Trust shall think proper) 312 lbs. of beef or pork; 104 lbs. of rice; 104 lbs. of Indian corn or peas; 104 lbs. of flour; 1 pint of strong beer a day to a man when he works and not otherwise; 52 quarts of molasses for brewing beer; 161bs. of cheese; 12 lbs. of butter; 8 oz. of spice; 12 lbs. of sugar; 4 gallons of vinegar; 24 lbs. of salt; 12 quarts of lamp oil, and 1 lb. spun cotton; 12 lbs. of soap;'3 In case anyone doubted the wisdom of these plans, the trustees unanimously declared in July 1735: "The Board will always do what is right, and the people should have confidence in us;'4 The man in charge of doling out provisions, Thomas Causton, had almost life and death power over the settlers. As the trustees' agent he promptly announced that the col onists "had neither lands, rights or possessions; that the trustees gave and that the trustees could freely take away;'5 Naturally, the pres sures on Causton and his oppor tunities for personal gain were enor mous, and he was soon accused of 3 Ibid., p. 87.

4 Ibid., p. 88. 5 Ibid., p. 87. James Oglethorpe bribery, profiteering, and short rationing. The regulations even extended into the moral realm. In 1735 the Board declared that "no Rum, Bran dies, Spirits, or Strong Waters" could be imported, that such liquor be destroyed, and that the sale of liquor was illegal. The prohibition on rum imports< crippled trade with the West Indies, a leading source of rum and an important market for Georgia Iumber. Perhaps the most fantastic of the trustees' plans was the cultivation of silk. The trustees tried to encourage silk production with a guaranteed minimum price and 552 THE FREEMAN September bounties for silk delivered in Eng land. In addition, each settler was required to plant at least 50 white mulberry trees (the silkworms' main diet) on every 50 acres; set tlers with 500 acres had to plant at least 2,000 trees. When the trustees finally permitted a representative assembly in 1751, no one could become a representative who did not have at least 100 white mulberry trees on every 50 acres; no one could become a deputy who did not pro duce at least 15 pounds of silk on every 50 acres and who did not have at least one female member of his family instructing others in silk reeling.

The main flaw int.his scheme was that the silkworms didn't like Georgia and proved it by dying in droves. In May 1742 alone nearly half the silkworms in Savannah died. The production of silk limped along until the American Revolu tion, when the silk factory was converted into a ballroom. Gradually, under intense presssure from the colonists, the trustees abandoned their plans. In 1738 they permitted daughters to inherit land; in 1739 they allowed settlers to will their parcels; in 1740 they permitted leases; in 1741 the maximum holding was in creased from 500 to 2,000 acres; in 1742 prohibition was repealed. Finally, in 1752, a year before their 21-year charter was to expire, the trustees returned the charter to the Crown. But the damage had been done. It was estimated in 1740 that as many as five-sixths of the settlers had fled the colony. "The poor inhabitants of Georgia:' one settler lamented, "are scattered over the face of the earth; her plantations a wild; her towns a desert; her villages in rubbish; her improvements a by-word, and her liberties a jest; an object of pity to friends, and of insult, contempt and ridicule to enemies:'6 The end of economic planning brought prosperity to Georgia. By 1775, the population had increased eight-fold compared with 1752; imports had increased eig ht-fold and exports thirty-four- fold com pared with 1753. 7 There are two lessons to be learned from the Georgia planned economy. First, government economic planning, no matter how well-intentioned, is not a new idea, but has been tried and proved a disaster. Second, the Georgia set tlers voted with their feet by escap ing to neighboring colonies, much as our forebears escaped European dictatorship and our contempor aries escape the taxes and regula tions of New York City. If the entire United States becomes a planned economy, where will the victims go?

---6Ibid.~-p, 95, , 7 Encyclopedia Britannica (1906 ed,), Vol. X, p,394, What Determines the Value of Money? HENRY HAZLITT WE CANNOT FULLY UNDERSTAND the present American and world infla tions, and the consequences to which they are likely to lead, unless we fully understand the causes that determine the purchasing power of money. Perhaps the greatest obsta cle to this understanding today is the continued prevalence of an old but false theory. The strict quantity theory of money and its "equation of exchange" have dominated and dis torted the thinking of even some of the most respected monetary economists. A striking illustration Henry Hazlitt, noted economist, author, editor, reviewer and columnist, is well known to readers of the New York Times, Newsweek, The Freeman, Barron's, Human Events and many others. Best known of his books are Economics in One Lesson, The Failure of the "New Economics," The Founda tions of Morality, and What You Should Know About Inflation.

is Bresciani-Turroni's discussion in his otherwise admirable history and analysis of the German hyperinfla tion of 1920 to 1923-The Economics of Inflation (1937). Bresciani-Turroni treats the equation of exchange as an inescapable axiom. In his version it is not MV = PT, but "MV = pIa + p2b + p3c ... where M is the quantity of money issued, V the velocity of circulation, a, b, c, ... the quantities of goods exchanged and pI, p2, p3 ... the respective prices:' When he finds that in the late stages of the German inflation (and in the late stages of practically all other hyperinflations) prices of goods did not rise in proportion to the increase in the quantity of money but at a far faster rate, he assumes that this must have been that it could only have been-be553 554 THE FREEMAN September cause the "velocity of circulation" increased sufficiently to account for the discrepancy. His method of arriving at the supposed increase in the velocity of circulation is as follows. He first assigns the presumed velocity of circulation of money in Germany in 1913 an arbitrary base rate of 1. He then com pares, for each year or month after the inflation began, the number of times the German money stock was increased with the num ber of times that wholesale or retail prices increased. He then divides the price increase by the money stock increase, and assumes that the quotient must represent the increase in the velocity of circula tion.

For example, at the end of 1922 the currency circulation of Ger many was 213 times greater than in 1913. Wholesale prices were 1,475 times greater. The cost of Iiving was 685 times greater. Therefore, he concludes, in 1922 the velocity of circulation in wholesale trade must have increased 6.92 times and in retail trade 3.21 times. He applies the same formula to each year from 1914 through 1918, and then to every month of the five years from October 1918 to October 1923. His derived velocity rate begins to go up rapidly from August, 1922. For the last month on his table, October, 1923, he gives the veloci ty of money in retail trade as 10.43 times greater than in 1913 and in wholesale trade as 17.79 times greater. These velocity figures, in my opin ion, are absurd and impossible. There are several ways of showing why they must be. We Only Spend Ours Once Let us begin with the truism, so astonishingly overlooked, that each man or family can only spend its own income once. This means that in a society with a given economic organization and division of labor the annual velocity of circulation from year to year cannot change very much.

Bresciani-Turroni nowhere men tions this. He thinks he can explain the huge increases in velocity of circulation that he assumes took place from month to month. He refers, for example, to the fact that some salaried employees received their pay only once every three months. Suppose, then, at the height of the inflation, instead of spending their quarterly pay checks over each quarte~ they spent the entire amount in the first few days after the checks were received? Would not this explain the in creased money velocity? There are several things wrong with such an explanation. First, those who were paid quarterly in the Germany of the early 1920's must have been a very small portion 1976 WHAT DETERMINES THE VALUE OF MONEY? 555 of the population. Second, it would not be easy to buy three months' supplies of everything in the first day or two. A three-months' family food supply, for example, could not be stored at home or kept fresh there. And if most of these quarter ly payments or attempted expen di ture.s fell on the same day, merchants would simply not have the goods in stock to sell.

Third, even if this kind of speed up happened, it would not lead to a quarterly increase-in velocity of circulation or even much of a monthly increase. If a man spends his whole 91-days' income on the first day, he has nothing to spend on any of the next 90 days. The average quarterly rate of spending does not change. So if, at the height of the inflation, every family in Germany was paid daily, and spent the whole of each day's income on the day it was received, then it spent one 365th of it every day instead of one 52nd of it every week. The monthly rate did not change much. The Money Goes for Goods But there is still another and much more fundamental reason why Bresciani-Turroni's velocity-of money conclusions are unaccepta ble. The very phrase, "velocity of circulation;' embodies a false con cept. Money does not literally "cir culate:' This is a metaphor. Money is exchanged for goods and services.

It is hardly possible to spend money without, by the same action, buying goods. (The borrowing or repayment of money loans constitutes a rela tively small part of the total transfer of money, and - so long as it does not increase or decrease the outstanding money stock-does not necessarily have much effect on the exchange-value of the money unit.) Therefore it is hardly possible to speed up the "velocity of circula tion" of money without speeding up to an approximately equal extent the velocity of circulation of goods. And if one does this (as Bresciani Turroni himself admits) the exchange-value of the money unit is not there by depressed. But in fact the sale of goods cannot be increased for any prolonged period beyond a very limited amount. (By a "prolonged period" I refer to anything beyond a couple of monthsJ This is true for the simple reason that the volume of goods for sale just cannot be increased by much in a short time.

Bresciani-Turroni's tables show the average velocity of circulation of money to have increased, in the first nine months of 1923, to an average of 8.25 times that of 1913. But this would practically have to mean that the quantity of goods sold in those nine months-and therefore, in effect, the quantity of goods pro duced in those nine months-must have been 8.25 times as great as the 556 THE FREEMAN September quantity produced in the corres ponding nine months of 1913. This is not only incredible on its face; it is known to have been untrue of the German year 1923. For by Bresciani-Turroni's own account, production was dis organized by the inflation in 1923, and fell substantially. Eager Buyers and Sellers There is still a further factor that the assumption of a hugely in creased velocity of money in a hyperinflation overlooks. In order for such an increase to occur, it is not merely necessary that the holders of money should be eager to get rid of it as quickly as possible, but that the sellers of goods should be correspondingly ready to part with their goods for money. But Bresciani -Turroni himself tells us: "The risk of transactions effected by payment in paper marks became so great in the summer of 1923 that many producers and merchants preferred not to sell at all, rather than accept in exchange a money subject to rapid depreciation" (p.

174). It is instructive to notice that Bresciani-Turroni in the end dis trusts his own figures and his own explanation. He carries his own calculations only up to October, 1923, when, as we have seen, he estimates that the average velocity of circulation of money must have been some 14 times as great as in 1913. But he tells us (p. 174) that "In August 1923 the value of the paper money in circulation amounted on some days to scarcely 80 million gold marks" (compared with 6,000 million in 1913). But on his own basis of calculation, as presented in his annual and month ly tables, this would require us to assume that on these days velocity of circulation must have been 75 times as great as the 1913 rates. Moreover, he also tells us that "On November 15th (l923)-on the eve of the cessation of the discount of Treasury bills by the Reichsbank based 0U the official value of the gold mark (six hundred billion paper marks), the total value of the notes of the Reichsbank in circula tion was 154.7 million gold marks.

But based on the exchange rate of the paper mark in New York the total val ue was as low as 97.4 million gold marks." So, based on the official value of the gold mark, Bresciani-Turroni would have had to conclude that the velocity of circulation must have increased about 39 times over 1913, and based on the paper mark exchange rate in New York, 62 times over 1913. He draws no such conclusion and cites neither figure. Instead, he completely shifts his explanation of the decline in value of the paper mark. He then decides that "the 1976 WHAT DETERMINES THE VALUE OF MONEY? 557 increase in the velocity of circula tion ... does not completely explain the very great reduction of the total real value of the paper money" "(po 173), "for the place of the paper mark was taken by foreign exchange" (p. 174) and the return of metallic money to circulation. The "Cash Holdings" Approach I should like to add here that I not only regard an increase in the "velocity of circulation" as a totally false explanation of a ;more rapid rise in prices than in the quantity of outstanding money in a hyperinfla tion, but that I consider an alterna tive explanation adopted by a num ber of economists-the "cash hold ings" or "cash balance approach" as also quite inadequate, especially in certain formulations.

Some economists formulate the "cash holdings" approach as fol lows: At the beginning of an infla tion, prices generally do not rise as fast as the quantity of money is increased, because people think that prices have risen to unsustainable levels and will soon fall back to "normal:' They hold off many pur chases and add to their "cash hold ings." This in itself keeps prices from rising as much as the quantity of money has been increased. But when people finally come to fear that the inflation is going to be prolonged, and that the rise of prices may go on indefinitely, they begin to buy in advance. They pull down their "cash holdings:' It is this action that increases the rate at which prices begin to rise. There are two major defects in this explanation. One is that, even if otherwise correct, it would account only for a relatively small change in prices compared with the rate of monetary increase. Suppose people normally kept as an average cash balance the equivalent of 10 per cent of their annual incomes-or roughly enough to spend over the next 36 days. If, in an inflation, they were willing to let their cash balances fall even to zero, this would only add some 10 or 11 per cent to the total "active" money stock. It could not account for the almost incredible fall in the purchasing power of the monetary unit, when compared even with the increase in the money stock, that does occur in a hyperinflation.

The other major defect in the "cash holdings" approach is that, no matter how much or often individuals decide to spend, the average cash holdings of all individuals in the country cannot be reduced! If a country has a popula tion of approximately 200 million, and the total money supply is $700 billion (counting currency in the hands of the public, plus both demand and time bank deposits), then the average cash holding of each individual must be $3,500. The 558 THE FREEMAN September money must always be held by someone. What Peter spends, Paul receives. If half the people in the coun try, by increasing their spend ing' reduce their cash holdings by an average of $1,000 each, the other half must increase their cash hold ings by the same average amount. The Subjective Value of Money What, then, is the basic explana tion for the value of money, and for changes in that value? It is the same as the explanation for the value of anything else. It is the subjective valuation that each of us puts on it. The objective purchasing power or exchange val ue of the monetary unit is derived from the composite of these subjective valuations. It is not, how ever, merely a physical or ari thmeti cal composite of these individual subjective valuations. Individual val uations are themselves greatly ·influenced by what each of us finds to be the market or "social" value.

Just as hydrogen and oxygen may combine to form a substance water-that seems to bear little resemblance to either, so the social or market valuation of money as well as other things is akin to a sort of chemical rather than ari thmeti cal combination of individual valua tions. All valuation begins in the minds of individuals. We are accustomed to saying that market value is determined by supply and demand, and this is true of money as of other commodities. But we should be care ful not to interpret either "supply" or "demand" in purely physical terms, but rather in psychological terms. "Demand" rises when people want something more.than they did before. It falls when they want it less. "Supply" is moreoften thought of in a purely physical sense; but as an economic term it also refers to psychic factors. It may vary with price. At a higher price producers may make more of a commodity, or be ready to offer more of the exist ing stock for sale.

A Mathematical Delusion When it comes· to money, economists have been too prone to explain value in purely physical or mathematic terms. Hence the strange vogue of the rigid propor tional quantity theory of money, of the algebraic "equation of exchange;' and of the alleged deter mining role played by the "velocity of circulation" of money. What is overlooked is that the "equation of exchange" is a mathematical delusion. It is not an equation, as imagined, with money on the left side and goods on the right. There is no meaningful way in which all goods and services can be added to each other except in terms of their money prices. There is no meaningful way, for example, 1976 WHAT DETERMINES THE VALUE OF MONEY? 559 in which a pound of gold watches, a dozen square yards of cotton, a 10 room house, and a ton of sand can be added together except in terms of their individual prices in money.

What we are adding is the amount of money required to buy them. Therefore the product of the equa tion of exchange, on each side, is a sum of money. These sums are equal because they are identical. The equation merely asserts that what is paid is equal to what is received. Neither the quantity theory nor the equation of exchange contain any proof of causation. 1 And the number of times that a unit of money changes hands has no necessary connection with the "level" of prices. Confuses Cause and Effect What is called the "cash balance" approach is less fallacious than the mechanical quantity theory of money. It does contain an element of truth, but in some formulations it confuses cause and effect. It is true that when people think that the value of money is going to rise - in other words, when they think com modity prices are going to decline they tend to spend less money immediately. And when they think the value of money is going to fall1 For an elaboration of this analysis, see Benjamin M. Anderson, Jr., The Value of Money (New York: Richard R. Smith, 1917, 1936) Chap. XIII.

that is, that commodity prices are going to rise - they tend to spend more money immediately. But the "cash balance" approach puts too much emphasis on a physical act and too little on the subjective change of valuation that prompts the act. The value of money does not decline because people try to speed up their spending; they speed up their spending because they think the purchasing power of their money is going to decline. We can understand this better if we consider the purchase and sale of shares on the stock exchange. Sup pose during a day's session Ameri can Steel publishes an unexpectedly favorable quarterly earnings report, that 10,000 shares are traded in, and that the price rises from 30 to 40. The price has not risen because M, N, and 0 have bought 10,000 shares from A, B, and C. After all, as many shares have been sold as bought. The price rises because both buyers and sellers now estimate the value of American Steel shares higher than they did before. Sup pose, again, that National Motors closes at 35 on Monday, that after the close the directors unexpectedly fail to declare the regular dividend, and that the stock opens Tuesday morning at 25. This sort of thing happens frequently. There have been meanwhile no sales on which to blame the decline. The stock has fallen in price simply because both 560 THE FREEMAN September buyers and sellers now put a lower estimate on it. This is precisely what happens with the value of money. It is changes in value esti mates that count, not changes in cash balances.

And this is the explanation why, in the late stages of a hyperinfla tion, prices start to soar far faster than the supply of money is in creased and even far faster than it can be increased. Nearly everybody is convinced that the inflation is Welfarism and Inflation going to go on; that the printing of paper money will be more and more accelerated; that prices will rise at a faster and faster rate. They want to exchange their money for almost anything else they can get. But finally, holders of. goods refuse to accept that money on any terms. Thus, every inflation must even tually either be ended by govern ment or it must "self-destruct" but not until after it has done untold harm. , IDEAS ON $ LIBERTY EVEN THE NOBLEST politicians and civil servants can no longer be expected to resist the public clamor for social benefits and welfare. The political pressure that is brought to bear on democratic governments is rooted in the popular ideology of government welfare and economic redistribution. It inevitably leads to a large number of spending programs that place heavy burdens on the public treasury. Bv popular demand, weak administrations seeking to prolong their power embark upon massive spending and inflating in order to build a "new society" or provide a "better deal:' The people are convinced that government spending can give them full employment, prosperity, and economic growth. When the results fall far short of expectations, new programs are demanded and more government spending is initiated. When social and economic conditions grow even worse, the disappointments breed more radicalism, cynicism, nihilism, and above all, bitter social and economic conflict. And all along, the enormous increase of taxes, chronic budget deficits and rampant inflation.

HANS F. SENNHOLZ, Inflation. or Gold Standard?

BEHAVIORAL LAW JOAN MARIE LEONARD BEHAVIORAL LAW is the legal justification for the concentration camp. Any tyranny in its early stages or milder forms is still the same tyran ny. Once accepted in principle, it can be carried to extremes with little contention. The idea has al ready been accepted. Embryos have a way of growing. The first behavioral law is the ruination of all law, justifying and giving impetus to all succeeding injustices. Behavioral law is that body of laws that prescribes, controls or inhibits behavior that is in itself nonaggressive, but deemed unac ceptable by governmental powers. It is thus distinguished from those laws we have duly constituted to Miss Leonard is a freelance writer. protect ourselves-our individual selves and possessions-from pre datory, aggressive actions. Behavioral laws are mechanistic - materialistic. They treat people as manipulative dum mies who can and will (always the inherent threat) be shaped by exter nal forces, forces outside them selves.

This body of law is sometimes described as "paternalistic:' But what father supports his children through their lifetimes with money taken from all the other families in the neighborhood? It is sometimes referred to as Big Brotherliness, which rather appro priately suggests raising Cain. It is sometimes called "playing God" with people's lives, but to the contrary, it effectively denies the choices provided by Creation 561 562 THE FREEMAN September through which we can freely fashion ourselves as individuals. We come equipped to fully experience life, not avoid it. We see, hear, taste, smell, feel, think, learn and choose-all with results in various gradations of good and bad in our own judgment. We don't come guaranteed safe, clean, smart, good or comfortable. We stumble. We fall. We bleed. We ache. We blister. We know both tears and laughter, aver sion and attraction, ease and dis ease. We hurt as well as help our selves-and others. We give off pollutants. We're slippery when wet.

In brief, our little packages of stuff would never have passed govern ment standards. Under the present legal regalia, it's something of a wonder that we're allowed to be born. But once we are, behavioral law takes over. Self-Reliance Abandoned Our laws reveal us to be a society whose members call themselves free but turn everywhere for relief from being their self-controlled, experiencing, developing selves. The effect is the stifling of life, the blockage of progress, the numbing of the individual consciousness each man's capacity for the self directed creation of himself and his world. Life that is circumscribed by laws is life that has been taken away. The only world that's completely clean and safe would be one that's uninhabited-and that seems to be where today's legalistic thinking would lead us. Without any ram page of regulation, however, the populous world of today became far cleaner, safer, healthier, and more comfortable than the cold, dank, sooty, plague-ridden, garbage strewn centuries that befouled our pre-industrial American era.

And it is only through living that we will find ways to make it a still cleaner, safer, more comfortable world-living that is progressively in tensified through the willing exchanges of energy in an uncon trolled market. We never stopped eating because of messy kitchens. We developed indoor plumbing, hot water, mops, sponges, soaps, cleansers, cleaners, uncloggers, pol~hes, scouring pads, waxes, ventilating fans, self-clean ing units, prepared foods, refrigera tion, freezers, automatic ranges, stick-free pans, electrical ap pliances, food keepers, automatic dishwashers, compactors, garbage disposals, insect killers, air fresheners, washable paints and papers, modern floor coverings, plastics, impervious counter sur faces, treated wood, paper disposa bles' and all the rest. All through choice in the market, not through force by law. On the other hand, the effort to forcibly alter behavior often has a 1976 BEHAVIORAL LAW 563 reverse effect to which we seeming ly remain as unconscious as we are to the multiplied, magnified benefi ts of willing exchange in the market.

In the current safety mania, a playground staircase was thor oughly enclosed by vertical bars. The children simply ignored the stairway to nowhere (some bureau crat's idea of fun) and gleefully climbed the perilously steep fort like safety barrier, demonstrating the danger and futility in most behavioral restrictions. Outside the school, traffic is slowed to 15 miles an hour as the children learn the world will slow down for their care less amblings, dangerously dulling their consciousness of danger on the street and the constant need of alertness. How often our aims at providing safety result in hazards, just as our in ten tions to provide security increase insecurity; our aims at employment end in unemployment; our goal of prosperity results in impoverishment; our "control" of crime stimulates criminal activity; the goal of education evolves into a system of disruption and enforced opinion; environmental goals lead to the abandonment or neglect of those advances that have elevated us above the filth, drudgery, and disease of yesterday.

How often? As often as we turn to forces outside of self-responsibility for solutions to problems of every day living. In all cases, as with that dangerous safety, barrier, we are actually contriving extraneous, artificial conditions for ourselves to fail in. Conflicting Claims Behavioral law is a system of legislated desires, all superimposed on each other and in natural, inevitable conflict. It is the process of creating conflict which previous ly didn't exist and then using that fictitious, invented disharmony as the basis for extending govern mental powers. Justice, instead of hanging in stable, impartial balance, is weighted first one way, then another, as the law favors first one group and then another. Such is the perpetual motion of the socialist machine, marking time, accomplishing nothing but injustice, defeating first the pur pose of one group, then another every action self-defeating.

Union members who force higher wages not only artificially increase their own cost of living, but subsid ize the foreign competition they complain about, pushing the price for the product of their labor out of market range. While clamoring for more jobs for the poor and handicapped, we estab lish laws that make it economically unsound and unfeasible for those with lesser skills to be employed.

564 THE FREEMAN September Behavioral laws not only fail to help the poor, they create the poor. They don't just make it difficult to help the handicapped, they reduce able people to the ranks of the disabled. In a free market, handicaps disap pear. Call it a miracle-an open market makes handicapped people able. It employs those who would not be employed under govern mental wage standards. It invites all effort into the area of prof itability. An unregulated market, in fact, would give us cause to ask our selves-who are the handicapped who are the blind-who are the mentally retarded? We are all hand icapped in some ways-blind to different things-mentally unaware in different areas. Incompleteness is the human condition-and the passage to all possibility. Through an open market, all of us see by using the sight of others. They show us what they see by what they do. The unrestrained market attacks the blindness of everyone. It brings into visibility and use things that weren't there before. It extends our minds and abilities through the minds and abilities of others. It created the world we all live in.

To stop people from doing things is to create blindness and handicaps for everyone. Every effort to control the market is such a handicap. In reducing the strength of others, we reduce our strength. If we let people do things, we can and will improve our own vision, understanding, and capability to shape the world from our own individual worlds. The Power of the Market Through the market and to the degree that it is unregulated, we draw power from each other. That is the strength of America - past, present and future-the power of the American idea. Vision, intelligence, and capability multip lied again and again by the efforts of people freely doing what they do best. Open competition assures the most efficient effort is that which most fully succeeds. All are advanc ing each other while effecting the material, intellectual and spiritual uplift of the whole world. But whenever one imposes his will on the behavior of another, he is the blind leading the blind. The one is blind to his lack of ability-the other to his capability. As we have lost consciousness of our own blind spots, handicaps, and weaknesses, we begin to live with bigger and bigger lies, all stemming from the falseness of believing change can come from sources outside of our selves. We are so convinced our betterment can be externally regu lated, we depend on pills and psy chiatrists for distributing peace of mind and sue our doctors if we get a sneeze.

1976 BEHAVIORAL LAW 565 Our behavioral approach to law has filled our prisons to overflowing with those who have committed no aggressive act toward anyone, including those who want to set their own price on their own ser vices. Instead of stopping real crime, we create crimes and encourage criminals, establishing underworld networks with legally protected monopolies on traffic in behavior we officially disapprove (drugs, gambling, prostitution, and so on). Behavioral laws thus protect and enrich criminal actions while arresting, penalizing, and punish ing disapproved behavior. By tending to make everyone guilty of something, behavioral laws effectively make no one guilty of anything - the dangerous are turned loose, the peaceable incar cerated. We have lost consciousness of the fact that the only justifica tion for detention is the protection of society from violence, not punish ment, rehabilitation, education, recreation or reform.

To what extent have we lost consciousness of what the law should be and do and allowed it to control our behavior? The State now decides whether and when to dis connect your respirator. It can take away your children if it considers you unfit as a parent. It bring.s criminal charges against you for not sending your children to its schools. You go to the government for permission to marry, to work, to start a business, to drive a car, to build a house. The governrnent dic tates the standards for your housing down to the number of electrical outlets on every wall. It establishes the rate you have to be capable of earning before you can get a job, and how much of your earnings you can keep. It regulates, indirectly when not directly, the price of every chop in your refrigerator, every can on your shelf. It decides what television stations you can watch, what radio stations you can listen to.

It slaps you in the budget for your smoking or drinking, decides what toys your children will be allowed to play with, what medicines you can take, what doctors you can see, what medical services you can have. While outlawing drugs on one hand, it can force drugs upon you when it deems it advisable. It can commit you t(') a men tal hospital and authorize disposition of your prop erty. It requires detailed reports on all your business and personal affairs. It expects the average citizen to understand and comply with tax forms no two lawyers can agree on and that appear to be written by a tribe of drunken chimpanzees cavorting over an acre of broken typewriter keys. It pries into your expenditures for 566 THE FREEMAN September food, clothing , shelter, travel, investments, contributions, insurance, medical bills, repairs, operating costs - all to decide how unequal your tax rate should be in a country that is said to believe in equality before the law, each treated alike.

It takes your money to use for the welfare of others. It can send your sons, brothers, and fathers off to wars they're not allowed to win. But now, if you can believe the newspapers, we're going to draw the line and say "No, you can't do that. It's an invasion of privacy?' And what is it that we finally consider an intrusion of private rights: The official use of electronic devices in the apprehension of criminals. It would be spectacularly amus ing if it weren't so tragic. But the alternati ve to behavioral law is life itself. Life proceeding in all its ways. Seeking in all directions. Advancing through as many visions of living as there are people whose peaceable actions are unrestrained. Limitation of Government Restoring government to its original role of restraining only violence and preserving the peace is probably as simple and as difficult as reserving judgment in regard to the behavior of others.

If we would relax our grip on certainties, we wouldn't be living with so many lies in the form of laws. Every judgment we make forms a boundary around our con sciousness unless held lightly and easily released in the light of expanding awareness. A law is just an opinion that becomes a wall and is as hard to remove. One way to release our hold on certainties is to consider the differ ences in individual perceptions of the same event. One person goes to a ballet and enjoys a m~sical experience. A football coach attends and sees a new backfield formation choreographed before his eyes. One scientist throws up his hands in despair at the failure of an experi ment while another discovers in the unexpected result a new material or process-a new truth. There are many worlds in one. We share in all these worlds as we allow for the flowering of individual per ception and consciousness. The many worlds of our existence are all virtually undiscovered. Everyone is a world in himself.

If one person resolved upon a wage he was entitled to in his opinion, and tried to force an em ployer to hire him at that wage and under his conditions, he would be considered demented. When such is the privilege granted large groups of workers under the law, the gov ernment is deranged. Governmen t grows ou t of attitudes, and the only attitudes each of us has to work with are his 1976 BEHAVIORAL LAW 567 own. Work on the attitudes of others and you're back in the behavioral boat, advancing behaviorism as a way of life. If your own behavior is extended into law, on what basis will you object to it? The world is as large, flexible, expandable and full of truth as all of our individual perceptions extend it. Or it is as constricted, solid, dead, and falsified as the perceptions of the blind, misguided few who would forcibly adjust it to their own limited vision. Emerson said if we could see and feel all the things around us, we'd be so squashed we couldn't move. He suggests different levels of life around us, but even on one level, there are an infinite number of worlds of perception - as many as there are individuals doing their own thinking. All of these worlds ,are open to us when government keeps us free from the destructive ness of others, not the least of which is the infliction of behavioral opin ion. ~ IDEAS ON LIBERTY Liberty-A Reward to Be Earned IT FOLLOWS, from what has been stated, that it is a great and dangerous error to suppose that all people are equally entitled to liberty. It is a reward to be earned, not a blessing to be gratuitously lavished on all alike; -a reward reserved for the intelligent, the patriotic, the virtuous and deserving;-and not a boon to be bestowed on a people too ignorant, degraded and vicious, to be capable either of appreciating or of enjoying it. Nor is it any disparagement to liberty, that such is, and ought to be the case. On the contrary its greatest praise,-its proudest distinction is, that an all-wise Providence has reserved it, as the noblest and highest reward for the development of our faculties, moral and intellectual. A reward more appropriate than liberty could riot be conferred on the deserving;-nor a punishment inflicted on the undeserving more just, than to be subject to lawless and despotic rule.

This dispensation seems to be the result of some fixed law; -and every effort to disturb or defeat it, by attempting to elevate a people in the scale of liberty, above the point to which they are entitled to rise, must ever prove abortive, and end in disappointment. JOHN C. CALHOUN, A Disquisition on Government + + + 2 + + + + + CONCEPTS OF LIBERTY J.B. KIZER + + ISAIAH BERLIN, in his Two Concepts of Liberty, discusses a question which is central to most arguments between libertarians and socialists - between "voluntarists" and "coercionists:' The question is, what do we mean by freedom? Berlin points out that socialists accept a definition of freedom which he calls positive liberty, while liber tarians assert that freedom is really negative liberty. Now positive liber ty is the "freedom to" have such things as employment, respect, and the like. Negative, liberty is "freedom from" restraint. Positive liberty is equivalent to what liber tarians might refer to as power, that is libertarians believe a given man is' free to earn a million dollars per year even though it may not be in Mr. Kizer is a psychologist and business consul tant in Portsmouth, Ohio.

568 his power to do so, simply because he cannot provide the services required. But, as Berlin points out, the deceptively phrased "positive liber ty" has some nasty consequences. One of them is that since positive liberty is unrelated to freedom as we usually understand it, then being "liberated" (and we often find this usage of the word in current libera tion movements) is being fot:ced to do something against our will be cause someone else thinks it is good. This encourages confusion in the discussion of freedom. To call nega tive liberty "freedom" and positive liberty "power" is to make a dis crimination which is fundamental. To call them both liberty, as coer cionists often do when it suits their argument, leads to confusion. For example, if legislators believe 1976 TWO CONCEPTS OF LIBERTY 569 that men ought to be taught only by those with a Ph.D., then they might pass a law that only Ph.D:s be allowed to teach. The coercionists would not consider this a limitation on people's freedom to choose their teachers because those who accept the concept of positive liberty feel that some men may act irrationally and, therefore, must be coerced to be "free;' meaning by that to do what they should do, which is always choose a Ph.D. for a teacher.

Now most people can see this conception of liberty stands totally opposed to the common sense notion of freedom. Why, then, do some philosophers hold this position? Berlin explains this. He says that it is an extension of the so-called mechanico-rationalist approach to life. Stimulated by the success of scientists or natural philosophers in finding the laws of the universe in the 17th and 18th centuries, the social philosophers of that age began to believe that they could find the social laws by which men must rationally act, the social "system of the world" which would correspond to the Newtonian Principia (sub titled The System of the World). This led to the belief that those who do not accept their system must be coerced into accepting it, as it is the "rational" social system. Libertarians, those who accept the Berlin concept of "negative liberty;' know, though, that human values may not all be compatible and, in principle, may not be capa ble· of being harmoniously realized in one way of life. That is, people are inherently different so they may, for their happiness, need and demand a different lifestyle from the majority of their neighbors. Thus the liber tarian is, of necessity, a pluralist.

He tolerates different communities with laws of entirely different types. He knows that one cannot homogen ize the differences among men or among the differing environments in which man finds himself. Conver sely, the coercionist is, of necessity, a social monist and will not tolerate social differences. It is interesting that the liber tarians and conservatives, the social pluralists, are the ones who are likely to encourage social experiment by all'lwing community differences which might actually lead to progress in the under standing of the relations among men. It is the monists, on the other hand, who constantly proclaim themselves in favor of progress and sometimes (as Marx did) proclaim that their social system is scien tific; these are the most anti-pro gressive and anti-scientific in the sense that they oppose any social experiment which might lead to real progress. Libertarians realize that there is 570 THE FREEMAN September no perfect sociai system. There never will be a final answer as to how everyone should behave and, because of this realization, they refuse to coerce others to hold to their beliefs.

The only unfortunate aspect of Berlin's analysis, and in this Berlin is merely following tradition, is that libertarians have again lost the semantic battle of connotation as they did when the socialists usurped the word "liberal?' "Posi tive liberty;' which is actually coer cion, sounds so much better than "negative liberty;' which is really freedom. This minor cavil does not detract from the outstanding conA uthors of Values tribution to the philosophical mean ing of freedom which Berlin makes. Since individual differences among people demand pluralism if real freedom (Berlin's negative liberty) is to be achieved, it is interesting to note the foresight of the founding fathers. One of the essen tial ideas behind the founding of this country was that it was to be a federal republic, that is, a nation in which the individual govern mental units of the federation agree concerning the general principles of government but retain the right to enact the laws of their choosing, insofar as the details of govern mental action are concerned. , IDEAS ON LIBERTY FOR IF THE ESSENCE OF MEN is that they are autonomous beings-authors of values, of ends in themselves, the ultimate authority of which consists precisely in the fact that they are willed freely-then nothing is worse than to treat them as if they were not autonomous, but natural objects, played on by causal influences, creatures at the mercy of external stimuli, whose choices can be manipulated by their rulers, whether by threats of force or offers of rewards.

ISAIAH BERLIN A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN CHILE: .The Balanced View LONG before the Marxist Salvador Allende took over Chile as a minority President in 1970, Chilean economists were studying on an exchange program at the Univer sity of Chicago. So, when Professor Mil ton Friedman visited Chile last year - the second year of the mili ary junta that succeeded the depos ition of Allende, who had tried to impose socialism on his country by shifty extra -legal means - he had a ready audience. Friedman's advice to the j unta was to use "shock treatmen t" to overcome the infla tion' which had been running at 700 per cent. He urged the generals to get their government out of the business of spending money that had to be extorted from the people either by taxes or inflation. Fried man's three lectures, published in Spanish, are a popular staple in the local bookstores. But the "Chicago school" had had the ears of the junta government before Friedman had arrived per sonally on the scene. So pervasive have been the free market theories of Frank Knight, Henry Simon and 571 572 THE FREEMAN September Milton Friedman in Chile that economists in general are referred to in fashionable Santiago circles as "Chicago boys." Some of the economists (those who have studied in the U.S. at Columbia or Harvard) resist the term. Whether they went to Chicago or M.1.T., however, they all acknowledg~ that the Chilean economy under Allende's Statism had been acorn plete disaster.

Comm unists, since the deposition and death of Allende, have been assiduous in their attempt to make a martyr out of him. The myth goes that General Pinochet, the head of the Chilean army, and his junta colleagues from the navy, the air force and the carbineros, or national police, snuffed out a promising experimen t in trying to take a peaceful road to socialism. There was to be a "revolution within the form" of democracy. Allende, so the Communists will tell you, was on his way toward success without interfering with freedom of the press or the right of pluralistic interests to support their own views in the give-and-take of parliamen tary battle. The truth, as a remarkable book called Chile: The Balanced View, edited by Francisco Orrego Vicuna (University of Chile Institute of International Studies, Santiago, PO. Box 14187, Section 21) makes plain, is that Allende dug his own grave. Chile: The Balanced View is not the work of partisans. Published in both Spanish and English, it consists largely of articles by such respected U.S. and British scholars and journalists as Robert Moss of the London Economist, Paul Sig mund of Princeton University, Edward Glab of the University of Texas, William Ratliff of the Stan ford Hoover Institution, James Theberge of Georgetown University and Markos J. Mamalakis of the University of Wisconsin.

A Radical Plan What happened in Chile was the inevitable consequence of Allende's attempt to ruin the middle classes as a prelude to bringing off a radical socialist golpe. When he assumed power Allende had a foreign exchange balance in the Treasury. With this balance as his cushion, Allende decided he had time to bU,ild an absolute majority (he had been elected in a parliamentary run-off after achieving a thirty-five per cent popular vote) by subsidiz ing consumption throughout a wide stratum of the people who would be called "shirtless ones" in the neighboring Argentine. By arbitrarily defining any company that had $500,000 capitalization as a "monopoly;' Allende moved boldly to take over practically the whole of Chilean industry. He wiped out unemployment by loading the payrolls of banks and steel com1976 CHILE: THE BALANCED VIEW 573 panies and the expropriated mining sector. Wages were raised without regard to productivity. Anaconda and Kennecott, which had been mining copper on a partnership basis with the previous Chilean governments, were told to skedad dle. They would get no money for their property.

The Christian Democratic gov ernment of President Eduardo Frei had already started a land "reform" before Allende took power. It hadlnot been a success. But Allende made things much worse by putting peas ants into collectives and failing to provide them with such mundane things as guidance, fertilizer, seed and machinery. Once the plantings that had been done under Frei had been exhausted, Chile had little locally grown food. In 1973, the last Allende year, Chile had to import $600,000,000 in grain, meat and other food from abroad. Wild Inflation With the payrolls loaded with uneconomic employees at high wages, with the copper miners tak ing it easy, and with queues lengthening at th.e markets, Allende found himself in the middle of a rip-roaring inflation. He had told Regis Debray, the French fol lower of the guerrilla Che Guevara, that his commi tmen t to a "peace ful" revolution was merely tactical, and he had said he was not "President of all the Chileans." His obvious duplicity had caused the Christian Democrats, Chile's big center party, to desert the coalition that had put him in power. When the truckers, most of them small businessmen who owned one or two trucks, struck to forestall their incorporation into a state-owned agency, it really paralyzed the coun try.

Allende had brought the army in to his government, giving ita taste of power. When he refused to punish those responsible for a mutiny of left-wing lower-rank naval officers, and when the news seeped out that the Castroite radi cals to the left of Allende's own Popular Unity socialists were about to use their illegal arms caches for a Communist takeover, General Pinochet of the Army, General Leigh of the Air Force, and their opposite numbers in the Navy and the Police, decided that it would be suicidal to let the "democratic" charade go on. The importance of the articles by Robert Moss, Paul Sigmund and the rest in Chile: The Balanced View is that they conclusively demonstrate the widespread unpopularity of Allende's misnamed Popular Unity government. The courts and the parliamen t had already declared that Allende's tactical moves were illegal. But there was no way of coming to grips by peaceful 574 THE FREEMAN September democratic means with the situa tion when Allende chose to dis regard his own courts and legislature.

Since Allende Chile: The Balanced View needs a sequel to bring things up to date. Dnlike the Peruvian generals who want to run their own economy on "planned" lines, the Chilean junta is doing its best to turn things back to individual owners. The Finance Minister, Jorge Cauas, who studied under Arthur Burns at Columbia University, is letting "Chicago boy" thinking dominate much that he is doing. The land seized in the Frei and Allende "reforms" is being sold, in middle-sized chunks, to farmers who are willing to work it. The result has been an agricultural turn-around. Chile now has a surplus of foodstuffs that are being put into processed forms for export. The only food that Chile now imports is grain. With an expenda ble margin of wines, leather goods and other "non-traditional" exports, Chile's international trade in actual goods and services is now in balance. The inflation is still high. (Cauas says it runs at 200 per cent,) The reason for this is that the govern ment's Spartan decision to pay such foreign creditors as Anaconda, Ken necott and other mining companies in full for their nationalized properties forces the treasury to print pesos to buy foreign exchange from the Chilean exporters. The paper pesos become internal purchasing power. This monetary basis for the inflation will disappear when the foreign debt has been reduced to manageable proportions.

Cauas doesn't think this day is too far distant. His ideal-which would not wholly please a Chicago economist, not to mention an anarcho-capitalist-is to reduce government participation in the economy to twenty-five per cent, mainly accounted for by the national copper mines and State banking. This is not economic orthodoxy on the Vienna school model. But it is better than the sixty-seven per cent "public-sector" domination that had been saddled on the country by Allende. The reason why the Communists carryon so unrelentingly about Chile is obvious: they resent any proof that the free market really works.

1976 OTHER BOOKS 575 ~LAURA: THE LIFE OF LAURA INGALLS WILDER by Donald Zochert. (Chicago: Henry Regnery Company, 1976) 260 pp., $8.95. Reviewed by Bettina Bien Greaves rHE ORIGINAL EIGHT autobiographi cal novels in Laura Ingalls Wilder's Little House series were written primarily for· children, ages 8-14. They appeared first between 1932 and 1943.1 Since then, two, going on three, generations of young people have enjoyed these tales of pioneer ing in the middle west. Boys and girls have laughed at Laura's escapades as a youngster, wept at the tragedies and misfortunes that befell her and her family and rejoiced at her love affair and her marriage to the dashing young Almanzo Wilder. The books have also pleased parents who appreciate their old-fashioned homespun philosophy. Woven throughout all the volumes is the idea that it is "best to be honest and truthful, to 1 A ninth volume, published since Mrs.

Wilder's death, is now included in the "Little House" series. They are all available, in both cloth and paperback editions, from Harper and Row. The titles of the nine volumes are: (1) Little House in the BiR *)Ods. (2) Little House on the Prairie. (3) Farmer Boy. (4) On the Banks of Plum Creek. (5) By the Shores of Silver Lake, (6) The LonR Winter. (7) Little Town on the Prairie. (8) These Happy Golden Years. and (9) The First Four Years. These books have also inspired a TV dramatization, the "Little House on the Prairie" series, produced by, and starring, Michael Landon. make the most of what we have, to be happy with simple pleasures and to be cheerful and have courage when things go wrong:' Laura had plenty of opportunity to learn "that life is not always kind, or nice;' for in the raw western territory where she and her family pioneered some thing was always going wrong. Hardships, disappointments and death were no strangers. Laura came to realize that an important part of growing up came in accept ing disappointments and tragedies without whimpering.

Most readers of the Little House books have become Laura. Ingalls Wilder fans. They truly like the tomboy she portrayed herself to have been. They admire the courage she showed when things went wrong. As a result, many readers have wanted to distinguish the truth in these volumes from the fiction. They have wondered what Laura was really like, whether she really did have all the experiences she described. Many have even traveled to Pepin (Wisconsin), Inde pendence (Kansas), Walnut Grove (Minnesota) and DeSmet (South Dakota), looking for traces of the little houses where she lived. Some of Laura's fans have been almost as persistent as those of Sherlock Holmes. Laura's fans-past, present and future-will be glad, therefore, to know of the new biography about her.

576 THE FREEMAN September Mr. Zochert has done a remarka ble amount of research. He studied Laura's original handwritten notes and manuscripts. He compared available first drafts with the final texts of published books to discover how much they had been edited. He traced clues to be found among her papers, to learn about the people Laura described in her books. He visited the places where she had lived, studied town records and cen sus reports to trace her friends and acquaintances and to learn their real names and destinies. Thus this biography is fully documented and researched. Yet it is smoothly and simply told and reads easily, like one of Laura's own stories. Appendices gi ve the chronology of events in Laura's life, the history of the Little House books and information on how to locate the sites of the little houses themselves. Only the farm house in Mansfield (Missouri), where Laura and Almanzo moved in 1894, still stands-open in season to the public. The locations of the other "Little Houses" are now marked by historical plaques.

Laura's biography reveals, even more vividly than do her children's books, the hardships of pioneering. Biographer Zochert reports on the very discouraging "lost year," edited out of the Little House series, when the Ingalls family, driven from their home on PIurn Creek by plagues of grasshoppers two years in a row, retreated eastward and worked at various town jobs. The major part of this biography deals wi th the years Laura herself wrote about in her children's stories. How ever, the biographer goes beyond those early years. He carries her life, beyond her first four eventful years of marriage to Aimanzo, to their move to Missouri 2 and their long life together on their farm and apple orchard. Donald Zochert's biography is a worthy tribute to Laura Ingalls Wilder and the many other sturdy pioneers who settled and helped to ci vilize the vast open spaces of our middle west. Anyone who has read the Little House series will be fascinated. Readers who meet Laura here for the first time will undoub tedly want to read the Little House series themselves and to introduce these children's books to their favorite young people. , 2 Described in On the Way Home. published by Harper and Row in 1962. with an introduc tion by Laura's daughter. Rose Wilder Lane.

the Freeman VOL. 26, NO. 10 · OCTOBER 1976 Our Forty-Year Inflation Henry Hazlitt 579 The enormous increase in the American money stock is a potential time bomb. Fiat and the Founding Fathers Elgin Groseclose 585 Declaring paper to be legal tender sets a course for monetary and economic disaster. How Many Servants Can You Afford? Bertel M. Sparks 591 Let's keep the market open to anyone who wishes to serve himself by serving others. A New MessageVI. On Political Philosophy Jackson Pemberton 604 Words of courageand counsel from the heartsof the FoundingFathersto theirchildrenin a troubled nation. A Bicentennial Prayer Praise and appeal for guidance to the Author of Liberty. Mary Sennholz 612 The Power to Tax Is the Power to Destroy Clarence B. Carson 61 3 Reasons why the functionsand the spendingand taxing powers of governmentought to be limited. Death and Taxes-A Review Mark Spangler 626 Dr. Hans Sennholz studies the economic and social impact of estate and gift taxes.

A Heartening Message from Youth John A. Davenport 631 Nine young authors bolstercapitalismwith a comprehensiveand comprehensiblemoral philosophy. Book Reviews: 636 "HerbertHoover: Presidentof the United States"by Edgar Eugene Robinsonand Vaughn Bornet "Philip Mazzei: Jefferson's'ZealousWhig'" by Sister MargheritaMarchione Anyone wishing to communicatewith authors may send first-class mail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. POIROT President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publica tions for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of main taining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Permission granted to reprint any article from this issue, with appropriate credit except "Our Forty-Year Inflation" and "A New Message:' HENRY HAZLITT A CASUAL READER of the newspapers and of our weekly periodicals might be excused for getting the impres sion that our American inflation is something that suddenly broke out in the last two or three years. Indeed, most of the editors of these periodicals seem themselves to have # that impression. When told that our inflation has been going on for some forty years, their response is usually one of incredulity. A large number of them do recog nize that our inflation is at least Henry Hazlitt, noted economist, author, editor, reviewer and columnist, is well known to readers of the New York Times, Newsweek, The Freeman, Barron's, Human Events and many others. Best known of his books are Economics in One Lesson, The Failure of the "New Economics," The Founda tions of Morality, and What You Should Know About Inflation.

nine or ten years old. They could hardly help doing so, because the official figures issued each month of wholesale and consumer prices are stated as a percentage of prices in 1967. Thus the consumer price index for June of 1976 was 170.l. That was 0.5 per cent higher than in the preceding month and 5.9 per cent higher than in June of the year before. This means that consumer prices were 70 per cent higher than in 1967, a shocking increase for a nine-year period. The annual increases in consumer prices ranged from 3.38 per cent between 1971 and 1972 to more than 11 per cent between 1973 and 1974. The overall tendency for the period was for an accelerating rate. The purchasing power of the dollar at the end of the 579 580 THE FREEMAN October Chart A '76'75'74'73'72'71'70 INDEX OF CONSUMER PRICES (1967=100) '69'68 160 I-----+---+---..------r------r----.---__+--~-____i 120 I-----+----+-----+-~~--+-----+100 liIIII!!!:==----L __--l-__-I--_--L. __--l.---;-_...L.-_---L __---L..-_-----J 1967 140 ~--+---+----+__-__+--__+_--+_--'-__+--_+_-____i 180 Table A Purchasing Power Money Stock Consumer of the Year (M2) Price Index Consumer Dollar 1967 100.0 100.0 100.0 1968 108.9 104.2 96.0 1969 116.2 109.8 91.1 1970 121.0 116.3 86.0 1971 135.0 121.2 82.5 1972 149.3 125.3 79.8 1973 163.6 133.1 75.1 1974 177.4 147.7 67.6 1975 191.0 161.2 62.0 1976 218.7e 173.ge 57.5e e Estimated from data through June.

1976 OUR FORTY-YEAR INFLATION 581 period was equivalent to only about 57 cents compared with just nine years before. Starting in 1933 But the inflation may be dated from as early as 1933. It was in March of that year that the United States went off the gold standard. And it was in January of 1934 that the new irredeemable dollar was devalued to 59.06 per cent of the weight in gold into which it had previously been convertible. By 1934, the average of wholesale prices had increased 14 per cent over 1933; and by 1937, 31 per cent. But consumer prices in 1933 were almost 25 per cent below those of 1929. Nearly everybody at the time wanted to see them restored toward that level. So it may be regarded as unfair to begin our inflationary count with that year. Yet even when we turn to a table beginning in 1940, we find that consumer prices as of 1976 are 314 per cent higher than then, and that the 1976 dollar has a purchasing power of only 24 cen ts com pared with the 1940 dol lar.

These results are presented herewith for each year in two tables and three charts. I am indebted to the American Institute for Economic Research at Great Bar rington, Massachusetts for compil ing the tables and drawing the charts at my request. The figures tell their own graphic story, but there are one or two details that deserve special notice. In the thirty-six-year period the nation's money stock has increased about thirteen times, yet consumer prices have increased only a little more than four times. Even in the last nine of those years the money stock increased 119 per cent and consumer prices only 74 per cent. This is not what the crude quantity theory of money would have pre dicted, but there are three broad explanations: Measurement Is Arbitrary First, measuring the increase in the stock of money and credit is to some extent an arbitrary procedure. Some monetary economists prefer to measure it in terms of what is called M-l. This is the amount of currency outside the banks plus demand deposits of commercial banks. The accompanying tables measure the money stock in terms of M-2, which is the amount of currency outside the banks plus both the demand and time deposits of commercial banks. M-1, in other words, measures merely the more active media of purchase, while M-2 includes some of the less active. I have used it because most individuals and corporations who hold time deposits tend to think of them as ready cash when they are considering what purchases they 582 THE FREEMAN Chart B October INDEX OF CONSUMER PRICES (1940=100) ~ ( J / V ~~ ~ / r / 500 400 300 200 100 1940 '45 '50 '55 '60 '65 '70 '75 '80 can afford to make in the immediate or near future. But in recent years time deposits have grown at a much faster rate than demand deposits.

So if one uses M-2 as one's measur ing stick, one gets a much faster rate of increase in the monetary stock than by using M-l. (The latter has increased only eight times since 1940.) Rising Productivity Second, one very importan t rea son why prices have not gone up as fast as the monetary stock is that both overall production and produc tion per capita have risen steadily almost year by year. With the con stant increase in capital invest ment-in the number, quality, and efficiency of machines - both overall productivity and productivity per worker have risen, which means that real costs of production have gone down. Delayed Reactions The third explanation has to do with subjective reactions to increases in the money stock. Sta1976 OUR FORTY-YEAR INFLATION Chart C 583 r\ PURCHASING POWER OF THE CONSUMER DOLLAR "(1940=100) ~ 1\ \ "'-'-~-...-.. ~ ~ '""~ \ 1\ 100 90 80 70 60 50 40 30 20 1940 '45 '50 '55 '60 '65 '70 '75 '80 tistical comparisons in numerous countries and inflations have shown that, when an inflation is in its early stages, or has been com paratively mild, prices tend not to rise as fast as the money stock is increased. The fundamental reason is that most p,eople regard the inflation as an accidental or unplan ned occurrence not likely to be continued or repeated. When an inflation is continued or acceler ated, however, this opinion can change, and change suddenly and dramatically. The resul t is that prices start to rise much faster than the stock of money is increased.

The great danger today is that what has been happening from 1939 to 1976-to prices as compared with the rate of money issue - may have given a false sense of security to our official monetary managers as well as to most commentators in the press. The enormous increase in the American money stock over the past thirty-five to forty years must be regarded as a potential time bomb. It is too late for continued compla cency.

584 THE FREEMAN October Table B Purchasing Power Money Stock Consumer of the Year (M2) Price Index Consumer Dollar 1940 100.0 100.0 100.0 1941 113.2 105.1 95.1 1942 128.9 116.4 85.9 1943 162.9 123.6 80.9 1944 193.5 125.6 79.6 1945 229.4 128.5 77.8 1946 251.3 139.3 71.7 1947 264.5 159.4 62.7 1948 268.3 171.7 58.2 1949 267.2 170.1 58.8 1950 273.2 171.7 58.2 1951 283.3 185.5 53.9 1952 298.7 189.5 52.7 1953 310.1 191.0 52.4 1954 321.0 191.8 52.1 1955 332.8 191.2 52.3 1956 338.6 194.1 51.5 1957 347.5 200.8 49.8 1958 364.3 206.4 48.5 1959 381.3 207.6 48.2 1960 385.1 211.3 47.3 1961 405.3 213.5 46.8 1962 428.7 216.0 46.3 1963 456.4 218.6 45.7 1964 485.0 221.5 45.1 1965 523.9 225.2 44.4 1966 564.6 231.8 43.1 1967 607.9 238.3 42.0 1968 662.2 248.4 40.3 1969 706.3 261.7 38.2 1970 735.4 277.3 36.1 1971 820.8 288.9 34.6 1972 907.4 298.6 33.5 1973 994.8 317.2 31.6 1974 1,078.5 352.5 28.4 1975 1,160.9 384.2 26.0 1976 1,329.2e 414.3e 24.1e e Estimated from data through June.

ELGIN GROSECLOSE TWEN TY FOUR SHiLLIN GS AU&~ lB. 1775. Fiat and the Founding Fathers A Massachusetts treasury note of 1775 IN THIS BICENTENNIAL YEAR, it is paradoxical that with all the reverence being addressed to the Consti tution by the courts, Con gress, and presidential aspirants, no one has come forward to challenge the Constitutionality of our money system. The importance of such a re examination is emphasized by a recent Yankelovich survey re porting that the issue of greatest concern among voters was inflation (53 per cent). Inflation is obviously a problem which has eluded the skill of our money managers, work ing under prevailing monetary theory, and has defied the edicts of Congress to resolve. Elgin Groseclose, head of Groseclose, Williams & Associates, financial and investment consultants of Washington, D.C., serves also as executive director of the Institute for Monetary Research, Inc~e is author of Money and Man (1934), the 4th edition of which, with revisions and additions by the author, has just been published by the Univer sity of Oklahoma Press.

On August 17, 1787, the Con stitutional Convention, sitting as a Committee of the Whole, discussed a draft article defining the powers of Congress under the projected new Consti tution. A portion of the draft read, "Congress shall have power ... to coin money, emit bills of credit, regulate the value thereof .. :' Gouverneur Morris, delegate from Pennsylvania, highly regarded as a financier, an associate of Robert Morris, who had been largely responsible for the successful financing of the Revolution, rose to propose an amendment. The amend ment' as James Madison recorded in his Notes on the Constitutional Con vention, the principal record of the proceedings, was to strike the words "emit bills of credit." In 1787 language, bills of credit were syn onymous with paper money. "In no country of Europe;' a delegate noted, "is paper money legal tender, but only gold and silver 585 586 THE FREEMAN October coin;' He had no need to recall the flagrant paper money emissions of the first Continental Congress, which by 1781 had totaled an esti mated $200 million, an enormous sum for the times, and which had fallen to a discount of 99 per cent before Robert Morris stopped their emission.

There was little debate. The offending language was removed by almost unanimous vote. It was clearly the intention of the framers of the Constitution that paper should not be allowed as legal tender in the new Union. To rein force this conviction, the Conven tion enacted a provision forbidding the member states of the Union to emit paper money (bills of credit) or to declare as legal tender anything but gold and silver coin. In 1831, Albert Gallatin, who had served Jefferson and Madison as Secretary of the Treasury (1801 1814) declared that "it necessarily follows that nothing but gold and sil ver coin can be made legal tender;' and Daniel Webster in a speech in the Senate, in 1836, proc laimed, "Most unquestionably there is no legal tender, and there can be no legal tender in this country but gold and silver .. :' While the idea was already being debated that the supply of money should correspond to the needs of trade and some political economists argued that sovereign states could declare their paper money legal tender, the framers of the Consti tu tion held to the view that money should consist of something sub stantial, and that if paper were issued as an expedient it should always be representative of, and redeemable in, coin.

From this accepted principle, built into the foundation of the American political system, modern practice has so far diverged that money today consists of neither gold nor silver coin, but only a degraded alloy together with a vast amount of paper money irredeema ble in any metal. John Law, the Scottish financier who became Comptroller General of France, in a disastrous experiment tried to make paper money represen tati ve of the weal th of France. What circulates today as money is not evidence of wealth but paradoxically the very opposi te, the absence of wealth, that is to say, debt, which is no more than a pious hope for later possession of wealth. "Freeing up the Money Supply" How did this revolution occur? During the Civil War Congress, as a war measure, authorized the issuance of circulating notes de clared to be legal tender. The action was stoutly debated and, while it was eventually approved by the Supreme Court, the principle con tinued to govern that paper money, 1976 FIAT AND THE FO-UNUING FATHERS 587 unless fully redeemable in lawful money, that is gold or silver coin, was allowable only as a recourse of national emergency. It was not until the Federal Reserve Act in 1913 that the view became authoritative that circulating notes could be issued against evidences of debt.

Until 1934 such notes could be regarded, in a sense, as representa ti ve of metal, since they were redeemable in gold, but thereafter irredeemable by U.S. citizens, and they were never full legal tender until 1965. After 1971, they became completely inconvertible in metal. At present the circulating media of this country consist of some $9 billion in degraded coin and $77 billion of Federal Reserve notes, plus a small amount of other notes. Source of Inflation The consequences of this revolu tion will be discussed later. For a moment let us look at the intellec tual atmosphere in which it was nurtured. As a consequence of a sudden collapse of credit in 1907, leading to what has been called a money panic, the Federal Reserve System came into being with the object of adjusting the supply of money to finance the seasonal trade of a then mainly agricultural economy. This limited concept of "flexible currency" was soon expanded under the necessities of World War I when the Federal Reserve notes and credit were used to finance the government.

In 1923, the Federal Reserve man agers concluded that the System's power should be used in the interest of a stable price level, under the theory that as the production of goods rises the money supply must also rise at comparable rate to provide business with the means of paymen t. The theory flew in the face of the fact that a prime purpose of technology is to make goods more abundant, and presumably cheaper in order to be more widely dis tributed. It also overlooked the fact that the technology of money was being improved, through banking and credit procedures, so that a given supply of money could serve a greater volume of transactions. Nevertheless, the theory became a justification for a steady expan sion of the money supply, some economists advocating a regular, mathematical rise in the money supply regardless of the rate of physical growth. So embedded, in fact, has the idea become that both the Democratic presidential candi date Gov. Carter and such a conser vative Republican as Secretary of the Treasury William Simon, have indicated that they regard a mone tary inflation of three per cent annually as normal.

The use of debt money created by the Federal Reserve was further expanded by the Employment Act of 588 THE FREEMAN October 1946, by which the Federal govern ment assumed responsibility for pro viding employment opportunities for all. Purchasing Power Theory of Money In discharging its responsibilities under the Employment Act of 1946, the managers of the System under took a still deeper intrusion of Federal authority into management of the economy. ;Heretofore money had been considered to consist only of the official circulating media. The System now undertook to redefine money not in terms of its substance but of its attributes. Money was purchasing power, and since bank deposits were a form of purchasing power, the System now began to treat money as the sum of the circulation plus demand deposits. This purchasing power was called M1 to distinguish it from the official circulation, known as M. The Federal Reserve is able to infl uence the amount of such purchasing power by its authority over the reserves which member banks of the System must carry.

It now became apparent that there were other forms of purchas ing power besides that represented by circulating notes and coin and demand deposits, and to extend its authority over the economy the System developed the concept of M2 consisting of circulating media and demand deposits CM1) plus savings bank deposits, since a savings bank deposi t can obviously be converted on notice to purchasing power by means of a· withdrawal or transfer to a checking account. The Insubstantiality of Money What is universal about all these forms of money-M, M1 ' M2-is that they are forms of debt rather than substance. Bank deposits rep resent the bank's liabilities to de positors, secured in turn by various liabilities of others. to the banks, plus a minute amount of physical assets. The liabilities consist of loan obligations of bank customers and investments, which in turn consist principally of debt instruments, that is, corporate bonds and U.S.

Treasury obligations, and deposits at the Federal Reserve Bank, which in turn are obligations of that institution. The bank may also hold a small amount of physical assets, consisting of bank premises and furnishings, and real estate acquired in liquidation of foreclosed loans, and in course of sale. The bank may also hold a small amount of cash, but this cash, consisting of Federal Reserve notes and coin is again in form of obligation, unless coin is considered a physical asset to the extent of the market value of the metal contained. The consequences of this transferring the concept of money from substance to purchasing power 1976 FIAT AND THE FOUNDING FATHERS 589 is to enter an uncharted realm of theory, in which the power of gov ernment to intervene in individual affairs is open to unlimited expan sion. The idea of a government of limited or delegated powers disap pears. Thus, the question of the extent to which credit cards are a form of money now engages the attention of the System managers, since credi t l cards are a form of purchasing power.

But there are other forms more elusive. Thus, if A, a grocer, gives his doctor a note of hand for services rendered, the note represents purchasing power in that A thereby acquired services without equiva lent goods or services in payment. If the doctor in turn returns the note to A in payment of merchandise, he has used purchasing power that has escaped the statistics of the Federal Reserve. In short, any good or ser vice that has exchange value is a form of purchasing power, and to put all this purchasing power under the control of the Federal Reserve is to give that agency a control or in fluence over the livelihood acti vities of the country, the extent of which is yet to be tested. The Consequences of the New Money We may now examine briefly the consequences of this departure from the monetary views of the Founding Fathers. In only 15 years, 19601975, the Federal Reserve notes in circulation more than doubled, from $271/2 billion to $77 billion, and coin in circulation from $2112 billion to $9 billion. In the same interval the purchasing power fostered by the System in the form of demand deposits, so-called M1 ' increased from $141 billion to $295 billion.

The flooding of the country with such an immense amount of new purchasing power had its inevitable effect on prices, with the index for consumer commodities doubling from 88 to 167. The virus of inflation, feeding on the lush growth of paper money, was not limited to this country, but has become a worldwide plague, a dis ease carried by the V.S. dollar and the American doctrine of central banking into every corner of the planet. Utilizing a device first de veloped and approved by the Genoa Conference of 1922, that the debts of a rich country could be counted as the assets of a poor, impecunious governments set up central banks with power to issue notes against V.S. Treasury obligations. Since the Federal Reserve notes and deposits were until 1971 redeemable in gold, such obligations were treated as the equivalent of gold. Regrettably, the practice prove.d its own undoing. At the end of World War II the V.S. Treasury held about $25 billion in gold (at $35 an ounce), but V.S. fiscal recklessness, 590 THE FREEMAN October inordinate foreign aid expenditures, and excessive credit issues domestically, led the shrewder foreign governments to convert some of their U.S. Treasury debt into gold, until by 1968 the U.S.

stock had diminished to less than $11 billion Cat $35 an ounce). The accelerating weakness of the dollar in the succeeding years required the Treasury to put restraints on the outflow, and in 1971 redem ption ceased altogether. The consequence has been a world -wide currency debacle with exchanges unstable and great banks in bankruptcy from foreign exchange losses. Consequences - Mathematical and Moral Space does not permi t an examination of the economic and social consequences of continued inflation of prices from the issue of fiat purchasing power, and they are too evident in the mounting unrest and dissatisfaction with the politi cal system to require description. It is 'necessary only to add that the unwillingness of governmen ts to deal decisively with inflation is a James Madison IDEAS ON leading cause of the disintegration of U.S.-European political influence in world affairs. The reason for this political impo tence lies at a deeper level than the economy. It goes profoundly to the realm of morals. Money is rightly called the life blood of commerce.

When the blood is corrupt the whole body is diseased. There is an essen tial corruption and moral debility in a monetary system that permits a government to spend and distribute largess obtained without taxation, by a process so simple as a book keeping entry or the operation of a printing press, thereby to create purchasing power that enters the market in competition with purchasing power gained through the efforts of human labor and ingenuity. Alexander del Mar quotes Antoninus Augustus: "Money had more to do with the distemper of the Roman empire than the Huns or the Vandals;' and the system of fiat money into which this country has fallen, in violation of the Constitu tion, may be the distemper to which this country may soon succumb. ~ LIBERTY THAT IS NOT A JUST GOVERNMENT, nor is property secure under it, where the property which a man has in his personal safety and personal liberty is violated by arbitrary seizures of one class of citizens for the service of the rest.

How Many Servants Can You Aflord? HERTELM. SPARKS THE TITLE for this paper began as, "How Many Servants Do You Want?" As that question was put to a few people chosen at random, a rather uniform pattern of responses began to appear. Almost everyone who was asked replied that he would like to have all the servants he could get, all he could afford, or other words substantially to that effect. No effort was made to assure' the selection of a scientifically accurate sample, nor is there any claim that the answers received are characteristic of the population as a whole. But regardless of how those points are resolved, it does appear a bit useless to consider the number of servants one might like to have Bertel M. Sparks is Professor of law at Duke University School of Law, Durham,North Carolina. without giving thought to the costs and conditions upon which the ser vants might be obtained. It was with that in mind that the titie was changed to, "How Many Servants Can You Afford?" By putting the question in that form, it is intended to call for some consideration to the alternatives to having servants as well as an evaluation of the reasons justifying the choice concerning the number of servants a particular person might find desirable or ap propriate for his situation.

For the purpose of this discussion, a servant might be a slave who is being held in bondage against his will, an employee who is working under a .freely negotiated contract with his employer, a business .partner sharing reciprocal rights and obligations with another, a sup591 592 THE FREEMAN October plier who is furnishing merchandise at a price the customer is willing to pay, or a party to anyone of numerous other economic relations that human beings might enter into. Serving Each Other It should be. noted that in each of these relationships the party being served is also providing some kind of service to the servant. The General Motors Corporation is serving the customer when it sells him an automobile; the customer is serving General Motors when he pays the price. Business partners are serving each other when they join together to pursue a joint venture. An em ployee is serving the employer by the service he performs; the em ployer is serving the employee when he pays the wages. Even the slave who is being compelled to work against his will is being served by the master when the master pro vides the slave with food, clothing, and shelter. Thus it is that every master is also a servant and every servant is also a master. It is a reciprocal relationship in which nobody is getting anything for nothing, and nobody is giving up anything without getting some thing in return.

But ever since Adam and Eve partook of the forbidden fruit in the Garden of Eden, the human animal has had a tendency to search for ways of obtaining something for nothing. It is an effort to get all the services possible while giving as little as possible. It is the impulse to say, "Yes, I want all the servants I can get-provided they don't cost anything:' And while some particu lar human beings might successful ly deny that they have any such impulse, the fact remains that it is present in the vast majority of us. And that impulse, that desire to get something for nothing, becomes an effective tool in the hands of the political interventionist. It enables one who is an interventionist or statist candidate to win votes by promising to supply the. things the voter wants. He promises tariff laws that will relieve the businessman from the burden of foreign competi tion, higher wages to the laborer, financial security for the elderly, lower rent for tenants, urban renewal funds for the cities, higher subsidies for the farmers, food . stamps and rent subsidies for the lower income groups, and guaran teed education and ideal medical care for everybody. The voter's attention is so much centered upon the apparent attractiveness of the things being promised that he tends to forget that the office seeker making the promise~ doesn't have any of these things to give. Neither will he have any of them after he gets into office. The only way the office holder can obtain any of the 1976 HOW MANY SERVANTS CAN YOU AFFORD? 593 iterns promised is to seize the earn ings of one special interest group and distribute those earnings to another such group.

Promises and Payments But the things promised, at least some of them, do show up in the hands of the promisees; and the promisees continue to give their votes to the candidate making the biggest promises. One candidate promises to get sufficient Federal funds for urban transportation to maintain the artificially low-priced -subway ride in New York City. Another promises sufficient funds to guaran tee Kansas wheat farmers more income for less wheat than the open market is willing to give. Both candidates win. They meet in the cloak "room on Capitol Hill, confess their sins to each other, and each one pledges to help the other deliver on his promise. As the farmer collects the higher price for his wheat and the New Yorker enjoys his subsidized subway ride, each of them takes pride in the fine represen tati ve he has in Washington. As the farmer and the subway rider see it, each representa tive has just demonstrated that free servants are available, and that the honest citizen can get something for nothing - if he will vote for the right candidate. The New Yorker fails to see that his own taxes have been increased in order to pay the Kansas farmer to cut down on his wheat production so the farmer can get a higher price for what he sells; so the New Yorker will have to pay a higher price for his bread. In like manner, the farmer doesn't seem to realize that his taxes have been increased in order to subsidize the urban transportation system, so the city dweller can enjoy a higher standard of living while lowering his own level of production; so the farmer will have. the dubious pri vilege of paying higher prices for the tools and machinery he has to buy. The farmer and the subway rider are expropriating each other's productive capacity and paying a handsome royalty to an unruly bureaucracy for the pri vilege of doing it. In the market place that would be called plundering; in the poli tical arena it is known as social progress.

The wheat farmers and the sub way riders are not the only special interest -groups in our society. There are numerous others and they are all competing for attention. The skillful politician is the one who succeeds in identifying the special interest group or groups that can be used to put together a winning margin in his constituency. And for this purpose, the group need not be a majority or anything even close to a majority. Throughout most of the political history of the United States we have 594 THE FREEMAN October had two major political parties, the voters being in approximately equal division between them. A shift of only a few percentage points is usually enough to win an election. If anyone candidate can avoid upsetting that balance and at the same time find some special interest group to whom he can make enough promises to win an almost unanimous support from that group, he can usually be assured of election even though the special interest group is comparatively small. Once that politician is in office, he is in a position to use the powers of government to pIunder other citizens for the special advan tage of his particular group. The immediate temptation of the com peting politician is to seek the votes of some other special interest groups by promising his brand of special privileges to them.

Competing for Favors As the competition for votes increases, each candidate finds it necessary to broaden his base. He must make more promises to more people. As these promises are fulfilled, .more and more people find it advantageous to lower their own level of production so they can qualify for larger appropriations from the public till. Direct pay rnents to farmers for producing less is an example of this. So are rent subsidies and food stamps for the lower income groups and govern ment loans or grants to failing businesses. The loan or grant to a failing business falls within this category because in its essence it is a financial reward for being an unproductive enterprise. At the other end of the scale some of the less-skilled members of society learn that it is more profitable to them to cease production altogether and rely upon the relief rolls for everything. As this contest between candi dates is accelerated and each candi date makes more and more promises to more and more people, society tends to become fragmented into competing groups. In such an atmosphere there is a tendency to neglect the basic rights, especially the right to equal protection, which the American Consti tution guaran tees to every human 'being simply because he or she is a human being.

Emphasis is shifted away from the rights of individuals and toward the supposed rights of competing groups where each group is repre sen ting a particular special interest of some kind. The individual tends to be ignored or else he becomes swallowed up in the melee of orato ry about the rights of farmers, the rights of business, the rights of women, the rights of teachers, the rights of minority races, the rights of the elderly, the rights of the young, and so on without end.

1976 HOW MANY SERVANTS CAN YOU AFFORD? 595 Justifying Failure As each of the competing groups tries to justify its claim to financial assistance from the government, it bases that claim on its own failure to meet minimum production stan dards. The failure might have been the result of poor management by the failing party or it might have been the result of a natural disaster or other unforeseen event beyond the con trol of the indi vid ual or individuals concerned. But regard less of the reason, the economic expectations of some special interest group have not been met, and the government is called upon to supply the shortage. That is to say, the government is called upon to supply some "free" services. Unfortunately, the government has nothing to give to any special group except what it expropriates through taxation or otherwise from some other group. The contest becomes a contest between producers and non producers with the government aligned on the side of the non producers. This result has nothing to do with whether government officials are honest or dishonest, wise or stupid. They are mere agents administering a system which the citizens, acting in their capacity as voters, have demanded.

It is a system that includes in its own mechanism the seeds of its own destruction. The marginal producer, whether he is a laborer or a manag er, cannot avoid seeing the advan tages of allowing himself to fall below the survival line, cease his contributions to those who are still farther below, and qualify for a claim upon his government, and through his government upon his more successful competitors, for his own support. And each individual or Qusiness enterprise that takes that step will automatically draw the producer who is only slightly higher on the economic scale just a little closer to that same survival line. Eventually all are pulled below it and are faced with the necessity of beginning over again without any prosperous neighbors upon whom they can call for help and without any backlog of capital they can use as a starting point. How many servants can you afford? Not many, if the servants are government agents offering their services "free:' Their cost is too high. Being a system based upon rewards to nonproducers and penalties for producers, the system's ultimate end is the destruction of both rival groups and itself as well. Servants who are voted into their jobs upon their promises to give something for nothing are too expensive in a world of scarce resources. That which "free" servants give to one must be seized from another. And since the method of seizure is such that it 596 THE FREEMAN October tends to discourage production, there are fewer and fewer goods available to be seized.

The Exchange Economy But if human existence is to be maintained in any form other than in its most primitive state, there must be servants. There must be some form of sharing of benefi ts and burdens. If each individual must retreat to a state of nature and procure his own food, shelter, and other provisions with his own hands, he will be lucky to find time to rear his young, to say nothing of accumulating any of what are now referred to as the ameni ties of civilization. This is true regardless of the skills or a bili ties the individual citizen might possess. His economic development cannot advance very far unless there is some sharing of responsibilities, some division of labor. Our hypothetical citizen of that primitive society might be an espe cially skilled shoemaker. He might even be the best shoemaker of his generation. But if he has to raise his own vegetables, catch his own game,make all his own clothing, and do all the other things that are going to be done toward his own preservation, he will have very little time left for shoemaking.

If he happens to have a neighbor whose talents lie in the direction of the hunt and the catching of game, the two of them might work out an arrangement whereby one is to procure and supply the skins while the other makes the shoes. As each neighbor pursues the particular trade for which his skills and inclinations are best adapted, each one of them will be able to have better shoes with less effort. They might even divide the meat that accumulates as a by-product of their shoe business and improve their eating habits. The division of labor will have begun and each of the two participants will have discovered that he is better off than he was before. Each one is a servant of the other and each one is being served by the other. It is a willing exchange that is serving to enhance the material well-being of both parties to the transaction. Just when and how that development occurred is lost to antiquity. But that it or some similar development did occur at some time appears to be a virtual certainty. And as soon as that step was taken, the idea that a trade which results in a gain to one party is necessarily a loss to the other was exploded and a new industrial era was born. Both the shoemaker and the hunter benefited from their trading with each other. Each one gave up a commodity of which he was in long supply, and each one received an item of which he was in short supply. The balance of trade was maintained.

1976 HOW MANY SERVANTS CAN YOU AFFORD? 597 But before such an exchange economy could operate very satisfactorily, a few other conditions had to be met. The shoemaker needed some assurance that his store of skins could be protected while they were waiting to be manufactured into shoes, and that his store of shoes could be protected after they had been made and while they were waiting for trade. He also needed some assurance that his contracts would be honored and that he would be able to walk around 'outside his shop without being mur dered or exposed to other kinds of physical violence. To meet this need, governments were established whose function it was to prevent murder, stealing, and other forms of violence, as well as to restrain deceit, perjury, the break ing of contracts, and similar forms of antisocial behavior. To enable the government to carry out these func tions, it was given the exclusive right to use force upon other human beings. The government became a kind of organized self-defense through which the citizens man aged to shield themselves from the necessity of providing their own individual self-defense.

A Considered Risk In delegating the exclusive right to use force to the government, humanity took a dangerous step. It was dangerous because it clothed government with the power to use its newly acquired force to impose tyranny, or even slavery, upon its citizens. And when such a power is present in any people anywhere, there is also present a risk that the power might be exercised. While the risk involved in delegating that kind of power to any government is always high, the value of having a government clothed with such a power is also high so long as the government can be confined to it.s proper function of keeping the peace, protecting private property, and enforcing contracts that have been voluntarily entered into. Humanity chose to assume the risk. With the protection afforded by an apparently responsible govern- . men t, the shoemaker and the hunter were ready to continue their convenient trading arrangement with confidence in spite of the high risk burden they were carrying. It can well be imagined that such an ingenious pair of fellows as these soon located a third neighbor who preferred the growing of fruits and vegetables to either catching game or making shoes. A three-way arrangement was worked out to the mutual advantage of all three par ticipants. As each member of the trio pursued his own chosen occupa tion, the three of them were able to enjoy better shoes and more meat and vegetables with less effort than was possible as long as each one was 598 THE FREEMAN October left to the elementary pursuit of all his own needs. There was more time to think, to plan, and to make better tools which resulted in still further improvements in the standard of living for all participants.

The Economy Develops As soon as the advantages of this limited division of labor were felt, other entrepreneurs began to follow the example set by the three hypothetical industrial pioneers. Other special ties were developed. Each newcomer who entered the field soon learned that there was only one way by which he could gain anything from the arrangemen t. That way was to produce something , that somebody else wanted and offer that item in exchange for some thing sought by the offerer. No one was offering goods or services "free:' It was a voluntary, exchange economy that presented a drastic contrast to the hostile economy of our present era in which each busi ness or occupational group is calling upon government to apply force to compel other producers to share their wealth with the disgruntled party without regard to whether the disgruntled party has anything to offer in exchange. As the trading camm uni ty . expanded, the three original entrepreneurs were probably amazed at their own success. As the shoemaker's skills became more refined, he found himself making more shoes than could possibly be worn by himself, his family, and his immediate associates. His produc tion was improving in both quantity and quality. By using the excess shoes in trade, he was able to procure his groceries, his trousers, his home, and even his medical care.

Other artisans had entered the toolmaking business and were offer ing to supply the shoemaker with a new and improved line of tools in exchange for some of his shoes. More advanced specialization was on its way. The shoemaker soon found that it was more profitable for him to completely abandon all work except shoemaking. Other things he needed were being offered to him in exchange for his efficiently pro duced, high quality shoes. Each artisan, farmer, laborer, manager, or whatever soon learned that when he devoted his attentions to the particular trade that was most adaptable to his particular interests and abilities, he could maintain a higher standard of effi ciency than was otherwise possible. With each one concentrating on the thing he did best, the aggregate productivity was elevated. With each member of the community free to trade his surplus commodities for other commodities of which he was in short supply, each one was in a position to elevate' his personal standard of living for the mutual 1976 HOW MANY SERVANTS CAN YOU AFFORD? 599 benefi t of all. To say that each one was acting as a servant of someone else and each one was being served by someone else would be a gross understatement. The truth is that each one was being served by numerous others, not all of whom could ever be identified; and each one was serving an equally large and equally undefinable group who were out there somewhere and who were unknown to the party or par ties rendering the service.

Spreading Competition Have another look at the shoe maker. It is obvious that he is being served by the suppliers of raw mate rials, food, clothing, and other com modities that are being traded directly for shoes. But is that all? What about the would-be suppliers who would like to trade their goods for shoes but haven't succeeded in doing so? Their problem seems to be that there is a limit to the amount of food the shoemaker can eat or the number of pairs of trousers he can wear. A competing supplier tries to offer a better quality of goods for the quantity of shoes he wants or else he offers a larger quantity of goods of the same quality the shoe maker is accustomed to receiving. Whether the new competi tor will succeed in his efforts can never be known un til after he has tried. But even if he never makes a sale, he is likely to become one of those hidden or unknown servants of the shoe maker. His presence in the market place with his attempt to make a sale is likely to put sufficient pres sure on the old suppliers to cause them to improve their own offerings.

The shoemaker is likely to get better food and better trousers even though he continues to trade with the same suppliers. The competitor who failed as a trader will have succeeded in bringing about that indirect result. Unwittingly, he became the shoemaker's servant in a way he had not anticipated. As the trading comm uni ty expanded and competition became a more significant factor to be reckoned with, other forces were at work all along the line. Other toolmakers were competing for an opportunity to get their shoes by furnishing the shoemaker with more and better tools for his trade. Since the shoemaker was free to obtain his tools wherever he wished, he tended to do business with the artisan who could give him the best service at the lowest possible cost. The result was that he soon had a vast array of servants competing with each other to determine who could provide the best tools at the lowest cost to the shoemaker.

As better tools at lower cost became available, the shoemaker's cost of production declined. He was faced with the choice of either lowering the price of his shoes or 600 THE FREEMAN October else leaving the door open for a competitor who might acquire the more efficient tools and place a competing line of shoes on the market at a price designed to under sell the original producer. Whichever route was taken, the resulting advantage was to the people who wore shoes. Now whose servan ts were all those competing toolmakers, some of whom actually supplied tools to the shoemaker and some of whom didn't? They were at least the servants of all people who wore shoes. The fact is that the services of the toolmakers extended well beyond t~e wearers of shoes. As the cost of shoes declined, the wearers of shoes were left with more resources to devote toward improvements in the production of food, clothing, hous ing, education, recreation, or whatever else they happened to desire. The toolmakers were ser vants of all these people.

But what happened to the toolmakers who failed to sell any thing to the shoemakers? There was no set pattern. Some of them discovered that they were unsuited for the toolmaking trade. They entered other occupations. Most of them probably made only minor adj ustmen ts in their designs and made tools for the clothesmakers, the farmers, the hunters, the tan ners of hides, or anyone else who might have been in need of tools or machinery. Their competition with other toolmakers taught them the art" of adaptability. Result: The Free Market What emerged was a system of cooperation through competition. It was the free market. It was a system in which there was no possibility of gain for anyone with out his offering some good or service that others wanted. It was a system where a gain was guaranteed for everyone who did make such an offering. Free trade means the absence of coercion. And in the absence of coercion, no one is likely to consciously give up the goods or services under "his control unless he intends to make a gift or else he gives up the good or service he has in order to get something he wants more. There can be no exchange unless each party to the transaction receives something which he sub jectively values more than he values the things he gives. Each party is necessarily the servant of the other. And as long as individual choices are left unhindered in the market place, trade necessarily remains in balance. Shortages are avoided. No computer has yet been invented that is capable of keeping an economy in such perfect har mony as is accomplished auto matically in an unhindered market.

Thus far all our discussion of the developing market system has been 1976 HOW MANY SERVANTS CAN YOU AFFORD? 601 approached in terms of a barter exchange. Emphasis has been upon the exchange of goods a trader has but wants less for the things he does not have but wants more. No doubt that is the way it all began. But industrial progress cannot advance very far on the economic scale until there is a medium of exchange. Some of the transactions already described would probably not have taken place had there not been a medium of exchange to assist the transaction. A farmer who was specializing in potatoes might have found that the shoemaker was already supplied with potatoes and therefore not interested in giving up a pair of shoes for any quantity of that com modity. The farmer might have traded his potatoes for some other commodi ty, maybe corn, tobacco, whiskey, a precious metal, or some other. item, that was comparatively imperishable and had a fairly uniform value throughout 'the com munity. He then traded that com modity, or a portion of it, to the shoemaker for a pair of shoes. The shoemaker might or might not have been interested in consuming the corn, tobacco, or whatever the medium was, but he had confidence that it would be acceptable in trade for merchandise he did want. He had discovered a commodity that was convenient as a medium for facilitating an indirect exchange and also convenient as a store of value for future use.

The story of just how a medium of exchange was developed and how it operates is a fascinating one, but it is sufficient for present purposes to say that it did come and that an industrial economy was developed. After several generations and many transitional steps, the lonely shoe maker became the Amalgamated International Shoe Company and the toolmaker became the Consoli dated Machine and Foundry Cor poration. Both companies were sur rounded by other industrial giants of comparable magnitude. Each enterprise was out seeking the greatest gain possible for itself. In such a world as that, how many servants can you afford? How many are already available? Look and see! Johnny's Servants Have a look at a man named Johnny who is an individual in a remote section of the United States in the 20th century. He does not own any stock in any corporation, has only a grade school education, and is employed as an unskilled laborer in a small textile plant which, with its 65 employees, is the only industrial enterprise within 50 miles of where Johnny lives. How many servants can Johnny afford?

It has already been observed that in the government-regulated economy where government is in 602 THE FREEMAN October the business of seIzIng from the producers to reward nonproducers, servants are pretty expensive and pretty self-destructive. This is espe cially true of a fellow like Johnny who still has enough pride to con tinue to work, even at what are probably comparatively low wages. He prefers even that to accepting government aid. By continuing to work, he is paying taxes to support some of his nonworking neighbors who have already given up the struggle. What would be Johnny's chances in a free market? How many ser van ts could an insignificant fellow like him afford in that setting? How many servants is the mar~et provid ing him already? First of all, the textile company is serving him by furnishing him a job. Needless to say, Johnny is also serving the textile company by furnishing his labor. That's the way it is in the free market; everyone who is receiving service is also giving service.

It is in the economic interest of the textile company to get as much work as possible from Johnny while paying him as little as possible. But even in that isolated community there are limits to how low the wages can be reduced. The lower limits are not controlled by the textile cornpany either. About 125 Iuiles away there is an automobile asselnbly plant that is in need of vvorkers and is paying aJ)Ol.lt twice the wage scale being offered by the textile company. Johnny likes his home and doesn't want to move to the larger city, but he can go there if he chooses to do so. The automobile company is serving Johnny by keeping his wages as high as they are even if Johnny never sees the inside of the assemb ly plant. Johnny can continue to live with dignity in his home town. Johnny gets his shoes from the local retail store which gets them from the Amalgamated Interna tional Shoe Company. As an individual, Johnny is not very important to Amalgamated. He is only one customer. But if Amalga mated raises its prices or fails to give satisfactory service, there are at least a half-dozen other shoe companies watching for an oppor tunity to sell shoes to Johnny. The only way anyone of them can make a sale to Johnny is by offering him a better shoe at a lower price than Amalgamated is offering. And if anyone of them is able to make Johnny a better offer, Johnny will grab it; and so will a lot of other Johnnies who are out there some where. When that happens, Amalgamated will be in a difficulty it would prefer not to face.

Although Johnny as an individual customer might not be inlportant to Amalganlated, Johnny pIus all the other ~J ohnnies, Inost of whorn are unknown to each other, 1976 HOW MANY SERVANTS CAN YOU AFFORD? 603 constitute the real market Amalga mated will have to satisfy if it remains in business. The result is that Johnny has the services of all the competing shoe companies who are competing with each other for better ways to make shoes for John ny at a lower price. In their efforts to get business for themselves, they are helping to keep prices down and quality up at Amalgamated. What has been said about John ny's job and his shoes is true of his groceries, his automobile, his clothing, and all other goods and services for which he has any desire. The whole world is striving to give him more of the things he wants at lower prices than he is now paying. They are not striving toward that end because of any moral goodness they might have nor because of any special love they have for Johnny.

They are striving to please him because that is their only route to their own economic survival. Coercion or Freedom? How many servants can you afford? If all depends upon whether you live in a coercive, regulated economy or in a place where the free market is permitted. In the coercive economy where production is penalized and nonproduction is rewarded, your servants are quite expensi Vf~ and in diminishing supp· ly. By their very nature, all of them will eventually disappear because the group receiving the rewards will necessarily outlast the producing group from whom the rewards are being seized. On the other hand, the free mar ket is characterized by an absence of coercion in the economic field. Without coercion there is no way for anyone to enhance his own material well-being except by offering for sale a good or service at a price someone else is willing to pay. Since the only way to improve one's own well-being is by offering better ser vice, the only competition possible is a competition for excellence.

Since it is com peti tion for excel lence in service to each other, it is a competition that is synonymous with cooperation. When the individual takes an honest view of his personal well being, he is likely to find that in so far as the free market prevails, the whole world is competing for the privilege of serving him better. At that point the question is not, "How many servants can he afford?" The question is, "How many servants can he afford to be without?" How long can he afford to allow the coercive power of his governnlent to continue to set roadblocks in the way of the servants otherwise avail able to him? @ ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics. has a Masters degree in business administration has worked two years in Sweden. and now works as a professional systems andlyst He IS a businessman who is active in community and church affairs. is a free lance author and is often called on to speak He lives with his wife and children on a small farm just outside of Salt Lake City All rights reserved 604 Words of courageand coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

VI. On Political Philosophy This continues a series of articles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. ONE OF THE DILEMMAS of the Con ven tion was the need to grant the government authority sufficient to insure domestic tranquility and yet give the people enough control of the government to protect their rights. The solution to the difficulty lay in a careful balance between anarchy (where there is complete freedom but none of the controls required for the safety of rights) and despotism (where there is com plete control and no rights). The establishment of that balance is the victory of the Con stitution, and its maintenance is the desire of every thoughtful and upright citizen. The people are unified upon this point, but only a few recognize the depth and import of our religious declaration of that political philosophy which secured our liberty; that "all men are cre ated equal, that they are endowed by their Creator with certain una lienable rights, that among these are life, liberty, and the pursuit of happiness:' You have been told that religious and political philosophies are two distinct matters. This misconcep tion, disguised as separation of church and state, is being used to impose a religion upon you unawares because it comes as a political philosophy and by political means. But in a world without objective proofs of any man's faith, one doctrine is as much a religion as another. In this discussion I wish to clarify the irresolvable conflict be tween the. founding philosophy of the government which we gave you, and that which is coming to being under the careful planning of those so eager to govern.

Freedom of conscience requires that government never dictate the doctrine or the practice of religion, but a government devoid of moral principle is a wanton, capricious, and consuming monster. Therefore, separation of church and state is a necessity while separation of religion and politics is a pattern for destruction. It is a narrow distinc605 606 THE FREEMAN October tion with broad implications, for a poli tical philosophy always springs from some concept of man. If we accept the current pro paganda that under freedom t>f religion, government must not infer anything about man which might be considered religious, then we might as well say that man is nothing. It is philosophical paralysis, for we have said that we must not consider the nature of man while we fashion his government. With that sort of absurdity we can form ships without bottoms, policies without principles, and govern ments suited to the ambitions of aristocracy.

Or, if we place our confidence in the theory that man is only a smart ape (a fact for some, an opinion for others, and a hoax to the rest), we have said that there is nothing sacred about man or his rights. This is a basic tenet of the religion of Humanism, the modern version of the ancient fraud that "might makes right:' for it postulates that the capacities of the human body and the size of its brain is the justification for man's dominion of the earth. A pattern for tyranny; for while it purports to liberate man frOlTI the supposed "shackles" of Christianity, it declares that the authority to ruJe is established by the superiorii .\" of the intellect. ThuB lIuruanim:n lays the founda·, tion for a politjcal philosophy which, for all its beautiful phrases of freedom and fulfillment, gives the scepter of power to the most subtle, ruthless, and despicable. It is the antithesis of all you call good, and a frustration of the noble destiny of man.

If man is monkey, or less, there is no anchor for his politics, and al though we may say that the good of society shall determine right and wrong, who shall say what is good for society? Furthermore, since there is no final Judge, who is to care? There are no absolutes; all is a mass of relative expediencies. Decei t becomes the servant of the poli tician, treachery is his gain, and conspiracy is the king of all. Such are the consequences of the Humanist priestcraft published under the dubious title of "freedom from religion:' And Humanism is but the modern name for the doctrines of Communism, whose adherents, as we should expect, surpass all others in their massive crimes of extortion, murder, and unrelenting tyranny. Clearly, we are considering more than a mere philosophical question: it is also a question of morality, for under one system definite crimes derive from irrefutable rights, while under the others all is uncertain and subject to the wavering opin ions of those who decide what is 1976 A NEW MESSAGE-ON POLITICAL PHILOSOPHY 607 of your day will happily continue to impose their answers upon you.

They will draw you a picture of a "great people liberated from the blindness of faith in a dead god, free to do whatsoever may be their fancy [so long as it is in harmony with social responsibility], and blessed with equality [of an enforced unifor mity]." They proclaim man the center of the universe, the being superior to all others, and then in the midst of that unmitigated pom posi ty they declare the grand con tradiction that man is but a compli cated physical mechanism reacting to its world, and that free will is superstition! What profound and abysmal folly! Th~ir religion employs all the lovely words of progress, intelligence, equality and liberty, but denies the source of them all. Freedom without free will? Their sophistry confounds their reason! "consonant with social progress:' Life, death, and all activities be tween are fair game for the hunters of power. And what is worse, as they impose their religion many suc cumb to the temptation to abandon fixed moral principle, and the resul ting erosion of personal integrity justifies increased oppres sion. Thus we see that the struggle for morality is the very substance of liberty. They are inseparable.

But the godless philosophies have an alternative, and it is not without actual glory; for if we affirm that man is a creation of the Almighty, a child to the Father of Lights, there is suddenly a great equality among men, there are sacred rights, a reverence for life and a respect for death, a striving for dignity and a yearning for excellence. With those ennobling principles come restraints upon government and upon the behavior of a man toward his neighbor: an uplifting frame-I would rather turn your atten work securing the rights of man. . tion to more pleasant subjects, but It is not surprising after thou-so many have believed its flattering sands of years and as many govern-phrases and not seen the conflict ments, that a consideration of with their own better opinion that I political philosophy should finally feel it necessary to say a bit more. be couched as the most fundamen - There are doubtless many reasons tal questions that can enter the for the confusion of the adherents to human mind: Is there a God? Who these philosophies, but surely one of is man? You must answer, and your them is their disdain for the tradi·· answers must find expression in the tional code of personal conduct.

control of your government, for if They have the prUH;.!.ples you refuse the self-appointed gods of a (~hHrac:t:l::r B-g 608 THE FREEMAN October instead of guides, and long to give their feelings greater freedom (which is to say they wish to put their minds in greater submission to their passions). They find humility too humiliating, rules too binding, and faith too demeaning. They seem to require a foolish sort of independence, and like a runaway youth they flee the standards of strength and happiness. But I am too harsh, for most of those who promote these defective doctrines only parrot the soothing tones of their like-opinioned friends, and have not the mind to root out the basis of the sophistries they delight to cast in the changing lights of their endless books. 1 I shall not condemn them all, for I cannot know their hearts; moreover, the evil fruits of their theories are condemnation enough.

But in those books you may find the methods they have used to rationalize their misconceptions. M:any of their arguments are based upon great abstractions by which they leave the world of reality and discover intriguing theories about things which do not exist. I will give you e:.Jamples. First, they accuse institutions for the errors of people.· There is much 1 I trust you are aware that your federal government has created and widely published these demoralizing books as school texts for pupils of all ages. said of the failings of the home and family, and of free enterprise and the Constitution. They say that those instruments of the nation's success can no longer cope with its problems. Has the home failed, or have parents left the commitment they made when they married and invited children to share their house? Has free enterprise faltered, or have people circumscribed the liberty required for its proficiency?

Has the Constitution slipped, or have politicians abandoned its ordained function? Is the error with the institutions or with the people? And to illustrate my point I ask: If a man violate a law, is the proper remedy a repeal of the law? They have left reality and called good evil. Second, they transfer the rights and powers of individuals to their society and use the mistaken con cept to place the citizen in subjec tion to his society. But society is only an abstraction and has no self existence, and can therefore possess no rights or p<?wers except by delegation or usurpation~ To base political principles upon so-called "rights of society" is to attribute an intrinsic reality to society and to leap from firm reason into a mystic ism which leads to oppression. We con tended with the belief in the divine right of kings, the false notion that the one is superior to the others. Now they advance the 1976 A NEW MESSAGE-ON POLITICAL PHILOSOPHY 609 more subtle pretext that the others are sovereign above the one. Both are false, for human rights are individual rights and that is the beginning and the end of the mat ter.

Now I must say a few words regarding philosophies which are near relatives with Humanism and rampant in your world. These are Socialism and Communism. You must be aware that they are based upon the same political philosophy, the chief difference being that the latter is the ruthless and murderous ou tgrowth of the former - the natural result of the aristocracy obtaining control of all life and property. And the Communists openly declare Socialism as the bridge to their "utopia;' The leaders of these philosophies seek power and their disciples have not learned the lessons of history. In their eagerness for universal prosperity they have ignored the basic facts of human nature, for they suppose that if man is placed in a "great society" he will as if by magic become a great being. Butif you will ask them to produce one instance of the correctness of their theory you and they will both be edified by the lack of example in all human existence.

I am well aware that you do not enjoy my putting Socialism and Communism together, for you have been instructed that there is a difference, but for each difference you will find more similarities. They are both founded upon the principle of usurpation which gives the state power to withdraw the rights of man and thus places government in a higher order of creation than its creator. They both place an ar istocracy over the people. They vio late property rights and destroy personal initiative by controlling one's property against his will. Thus they both lower the economic well being of the citizen, for if initiative be curtailed so is production. A government may promise but only people can produce. You have been remiss to ignore the parallels of these philosophies. All Socialism wants to become Com munism is a successful despot. Humanism, Socialism, and Com munism all propose that for man to be truly free, he must be freed from the mundane toils of life, free to forget the "creature needs;' and free to realize his highest spiritual potentials for charity and human progress: that the proper role of government is to thus "liberate"

man. But although the words make a happy sound in your ears, these principles are self-negating. Man requires the difficulties of earning his bread in the sweat of his brow as a school of experience to teach him wisdom in the affairs of 610 THE FREEMAN October his physical life before he can begin to comprehend the principles of his spiritual life; the lower order being after the pattern of the higher. For, as the majestic poplar has its roots in the muck, so man, to reach the' heights of his divine potential, must build his life upon the dirt and toil of physical and mental struggle. , Any system which denies him that opportunity to attend the ele mentary schools of life, by withhold ing the challenges .of his physical welfare, thrusts him into a uni ver sity of life where he is inadequate and must fail. Without the wisdom born of success in the tern poral affairs of life, how shall man even begin to contend with the less obvious but more profound challenges of character?

Nay, if you wish to lift man, you must allow him to live in the truth, and not place him in an artificial society where his needs are supplied by government. He must live in the real world where only work pro duces, only toil brings blessings, and only true character brings secu rity. He must be free to lift himself and to serve his needy neighbor by his own charity. Is it not a universal observation that great men are, with but few if any exceptions, the product of toil and adversity; the greatest seeming to come through the severest tests? Leisure begets no honor; and honest work begets no fools. But if a man has not learned to work, he has not learned to give. If a man has not learned to give, he has not learned nobleness. If he has not learned nobleness, no laws can adequately restrain his abuses. Therein lie the keys to the destiny of man. They may be turned to his honor or his hurt, to his desire or his destruction.

There is also the true cause of your rising crime and perversion, There is the cause of your slacken ing productivity. There is the source of your sliding morality, your dec lining arts and your silly music. I see that you must struggle somewhat to comprehend all these things. Let me encourage you; the more you struggle in your minds the less you will strive in your streets. Now some will call me an alarmist, but I make no excuse. Have I not seen the tyranny of a government grown proud on the stolen rights and riches of the people? Do I not see the same again; crowding and smothering your liberty and your enterprise? If I am an alarmist so be it! I am constrained to speak the truth in your ears. The political philosophy of the nation is at stake, and it is for you to decide who you are and which philosophy you will require for your governmen t. If men derive their rights from the Creator then their rights are 1976 A NEW MESSAGE-ON POLITICAL PHILOSOPHY 611 inherent and must be kept invio late, but if you accept their source in any other instrumentality, their very existence is in jeopardy and any man of eager hand and lazy character may trample upon them wi thou t remorse for himself or rebuke from you. It is in the nature of the issue that either the one philosophy or the other will gain the upper hand. Each generation, and How We Lose Freedom perhaps especially yours must answer Mr. Jefferson's question: "Can the liberties of a nation be thought secure when we have re moved their only firm basis, a con viction in the minds of the people that these liberties are the gift of God?" , Next: VII. On Amendment XVII IDEAS ON LIBERTY FEW OF us seem to want to keep government out of our personal affairs and responsibilities. Many of us seem to favor various types of government-guaranteed and compulsory "security." We say that we want personal freedom, but we demand government housing, govern ment price controls, government-guaranteed jobs and wages. We boast that we are responsible persons, but we vote for candidates who promise us special privileges, government pensions, government subsidies, and government electricity.

Such schemes are directly contrary to the spirit of the Bill of Rights. Our heritage is being lost more through weakness than through deliberate design. The Bill of Rights still shines in all its splendor, but many of us are looking in another direction. Many of us are drifting back to that old concept of government that our forefathers feared and rejected. Many of us are now looking to government for security. Many of us are no longer willing to accept individual responsibility for our own welfare. Yet personal freedom cannot exist without individual responsibility. DEAN I{ llSSELL. "Thp Bill of Bights"

CHIEF JUSTICE JOHN MARSHALL was at his axiomatic best in the Supreme Court opinion set forth in McCulloch v. Maryland. He pro pounded several interesting and profound axioms in that decision. The strange thing about these axioms is that they have been per mitted to remain in the limited context in which he found use for them rather than being given general application. This is strange because axioms are, by nature, universal in extent and everywhere applicable, if they are true. Moreover, these axioms have been giyen added weight in the United Dr. Carson has written and taught extensively, specializing in American intellectual history. His most recent book, The Rebirth of Liberty: The Founding of the American Republic 1760-1800 is now available in a 350-page attractive Bicenten nial paperback at $3.00 from the Foundation for Economic Education, Irvington-on-Hudson, N.Y. 10533. CLARENCEB. CARSON States by being embedded in and used to buttress a unanimous Supreme Court decision which still stands.

The axioms in question are stated and appealed to in several ways in the course of the opinion. The most direct statement of them is con tained in the following clauses: "That the power to tax involves the power to destroy; that the power to destroy may defeat and render use less the power to create ... :' The implications of the axioms had al ready been laid down a few sen tences earlier: These are, 1. That a power to create implies a power to preserve. 2. That a power to destroy, if wielded by a different hand, is hostile to, and incompatible with, these powers to create and preserve. 3. That where this repugnancy exists, that authority which is supreme must control, not yield to that over which it is·supreme .... 613 614 THE FREEMAN October Before proceeding to the broader application of these principles, or axioms, it is in order first to explain the context within which they were employed by Chief Justice Marshall. The Court had before ita case arising out of a law passed by a state. In 1818, the Maryland legislature had enacted a statute levying a tax on all bank notes issued in Maryland by banks not chartered by the state. A branch of the Bank of the United States, a bank incorporated under the laws of the United States, was located in BaLtimore. A man named McCulloch, cashier at the bank, refused to pay the tax on bank notes (currency) issued. The case came to the Supreme Court in 1819.

Two issues were taken up and decided by the Court. The first need not much concern us here. Suffice it to say that it involved the question of whether the United States gov· ernment was authorized by the Constitution to create such a cor poration and that the Court, fol lowing the reasoning which Alex ander Hamil ton had originally used to justify the chartering of a United States bank, held that it was. The other issue was the one which called forth the above axioms in resolving it. The issue was this: Could a state tax an instruluent of the United States government created in pur suance of constitutionally permissi ble objects? The Court held, in as absolute terms as could be em ployed, that no state could tax an instrument of the United States government. Chief Justice Marshall did not, then, restrict himself in writing the opinion to the simple question of whether or not Maryland could tax bank notes issued by the United States Bank. Instead, he explored the whole question of the taxation of any creation of the United States government by any state. Some of this exploration is both interesting and relevant to the even broader issues to be taken up in this article.

Before quoting further from the decision, however, something else needs to be got out of the way. Universal Application? It is my contention that the axioms and principles set forth in support of this decision, if correct, apply to all taxation. That is, the power to tax anyone by any govern ment involves the power to destroy and that this power of government by taxation to destroy can defeat and render useless the power of individuals to create and preserve what they have created. Superficial ly, the conclusion-that the states could not tax the Federal govern ment at all-appears either to rule out all taxation by governments or not to apply to governrnents in relation to individuals. It is tempting, of course, to apply 1976 THE POWER TO TAX IS THE POWER TO DESTROY 615 the conclusion literally and rule out all taxation, but it is a temptation that should be resisted. The case for taxation by governments is almost, if not quite, as good as the case for government itself. In theory, gov ernments might be supported by voluntary contributions. In prac tice, however, the voluntariness of the contributions would always be suspect. Government relies on coer cion to carry out its edicts, and there should be no doubt that if it depended on "voluntary" support it would extend its protection mainly, or only, to its benefactors. Moreover, it is unlikely that the power of government could ever be restrained from such confiscations as would enable it to meet its bills.

Justice requires that all who can should pay for government. Taxa tion is probably the only means of achieving this result, or approx imating it. In any case, the neces sity for taxation is so universally accepted that it should be presumed to be the correct approach in the absence of conclusive proof to the contrary. It does not follow, however, that Marshall's strictures about the power to tax do not apply to govern ments in their relations to individuals. Not only are they applicable, but they apply even more emphatically as between gov ernments and individuals than be tween stutes and tlH~ Federal government. If the power of a state to tax the Federal government could destroy the instrumentality taxed, how much more readily could gov ernment taxation destroy relatively helpless individuals? There is noth ing in logic to prevent the applica tion of the axioms to individuals as well.

On close examination, it comes out that Chief Justice Marshall did not base the absolute prohibition of state taxation of instruments of the Federal government on the axioms he adduced in McCulloch v. Mary land. Instead, he based the prohibi tion on the relationship between state governments and the Federal government, a relationship which lacks the proper limits on the power to be exercised. It had apparently been argued that the Court should have confidence that the state would not abuse the power of taxa tion. Marshall rejected this line of reasoning: ... But all inconsistencies are to be reconciled by the magic of the word CONFIDENCE. Taxation, it is said, does not necessarily and unavoidably destroy. To carry it to the excess of destruction would be an abuse, to presume which would banish that confidence which is essential to all government. But is this a case of confidence? Would the people of anyone State trust those of another with a power to control the most insignificant operations of their State government? We know they would not.

Why, then, should we suppose that the 616 THE FREEMAN i October people of anyone State should be willing to trust those of another with a power to control the operations of a government to which they have confided their most important and most valuable interests? In the legislature of the Union alone, are all represented. The legislature of the Union alone, therefore, can be trusted by the people with the power of controlling measures which concern all, in the confidence that it will not be abused. This, then, is not a case of confidence, and we must consider it as it really is. Marshall proceeds to point out that if a state can tax one operation of the Federal government, it may tax any of them. If the States may tax one instrument employed by the government in the execution of its powers, they may tax any and every other instrument. They may tax the mail ; they may tax the mint; they may tax patent rights; they may tax the papers of the custom-house; they may tax judicial process; they may tax all the means employed by the government, to an excess which would defeat the ends of government ....

Granted that if states could tax one instrument they could tax others. Perhaps, too, such taxation could be used to defeat the ends of govern ment. Strangely, however, Marshall goes on to argue that the Federal government could tax instruments of the states, and that power, so far as his argument had advanced, could be used to destroy the states or their instrumentalities. The dif ference, he said, is this: The people of all the states have created the general government, and have con ferred upon it the general power of taxation. The people of all the States, and the States themselves, are repre sented in Congress, and, by their repre sen tatives exercise this power. When they tax the chartered institutions of the States, they tax their constituents; and these taxes must be uniform. But when a State taxes the operations of the government of the United States, it acts upon institutions created, not by their own constituents, but by people over whom they claim no controL ...

The crux of Marshall's argument for prohibiting state taxation of the Federal government, then, was that state taxation lacked the proper base and limits. A part of the people could, at least in theory, be taxing the whole people. If states could levy taxes on the Federal govern ment, there would be no require ment of uniformity. One state might, for example, levy a 5 per cent tax on notes of the United States Bank, another 10 per cent, another 50 per cent, and so on. An Outgrowth of the System The reason for the absolute prohibition of such taxation was accidental, not essential. That is, it did not arise from the nature of government or of taxation but from peculiar, hence, accidental, features of the federal system of govern ment. The Court's decision in this case, of course, was concerned with 1976 THE POWER TO TAX IS THE POWER TO DESTROY 617 ruling upon acts occurring within this system, and constitutional historians have usually held that Marshall was concerned with asserting the supremacy of the United States government. Be that as it may, it is not my purpose here to enter upon the question of the merits of the decision or of the particular arguments advanced in support of it. These have been brought up only to show that the absolute prohibitions against the taxation involved arose from peculiar arrangements and not from the axioms which were earlier cited. In short, they were brought up in order to get them out of the way so as to give the axioms the examination they warrant and sug gest their implications.

The only reason for not applying the axioms - "That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create" -to government taxation of individuals, then, would be that they are not valid. It is not difficult to test their validity as axioms. It involves only determining whether in the nature of things they are necessarily true. Clearly enough, the power to tax does involve the power to destroy. The power to tax entails the power to take up to 100 per cent of the income from any undertaking . No undertaking, no matter how well it is financed, can survive indefinitely if all its income is drained away in taxes. Hence, any and every human undertaking, short of breathing, can be destroyed by taxation. Counterproductive Taxation If any human undertaking can be wiped out by taxation, it follows that taxation may "defeat and render useless the power to create."

There would be no purpose in begin ning undertakings if they were certain to be destroyed by taxation. The chances are good that man's ingenuity would not be completely stifled by such government action, butit would surely be rendered largely useless. The axioms are shown to be valid by this line of reasoning, but, unhappily, they are thereby made very nearly irrelevant. One hundred per cent taxation would dry up all sources of revenue; hence, such a level of taxatibn would be coun terproductive, as the contemporary phrase has it. Or, the government would have to proceed by the enslavement of some portion or all of the population. The evil would then be slavery, though slavery is essentially nothing more nor less than 100 per cent taxation. While the enslavement implications are not entirely irrelevant, they do tend to place anything less than 100 per cent outside the frame of the axioms.

618 THE FREEMAN October But does the validity of the axioms depend on carrying the argument to its logical conclusion? John Marshall did not hinge his use of them on some potential extremity. He did not even explore much the question of the degree of the taxation. He was very careful to exclude the whole question of abuse, for if he had admitted its relevance he would have been drawn in a quite different direction. In point of fact, he put in his axioms to serve as a foundation and then proceeded to cover them with his edifice of Federal supremacy. Even so, if the axioms have the validity he ascribed to them, they should be valid in the absence of abuses. All Taxes Affect Creativity It is my contention that the axioms are valid regardless of the degree of the taxation. The power to tax involves the power to destroy whether the degree is some fraction of one per cent or 100 per cent. It is possible to demonstrate this by marginal theory. The marginal theory as ita pplies to degree of taxation can be stated this way: Any level of taxation will make some undertakings unprofitable or sub marginal. In practice, any increase in taxes will drive some people out of business, prevent them from going into business, or make it difficult or impossible for them to sustain themselves by whatever they are doing. The point is of such crucial importance that it should be fleshed out with some details.

This principle of marginality applies to anyone who attempts to produce, provide, purvey, sell, or transport any good or service; it applies to farmers, manufacturers, storekeepers', teachers, artists, industrial workers, or whoever, but the effects may be most clearly seen in business enterprise. The power to preserve what has been created is essential to all constructive human undertakings. Taxation impinges on that power and at the margins always is threatening and destroy ing undertakings. What happens to business enterprises dramatizes the general principle. In the first place, taxation affects when and whether a business enterprise is begun. To go into. business requires a greater or lesser amount of capital, depending on its size and requirements. To gather the capital, savings must be accumulated. Probably the form of taxation with the most devastating effects on saving is inflation. Gov ernment, by increasing money supp ly, reduces the value of money being accumulated as savings. Indeed, the propensity to save is discouraged by inflation, and the propensity to spend is encouraged.

The progressi ve income tax is another deterrent to capital accumulation. The tax is often 1976 THE POWER TO TAX IS THE POWER TO DESTROY 619 talked about as if it were devised to take from the "haves:' It should be better understood, however, as tak ing from those who are "getting:' or trying to accumulate savings. A graduated income tax does not, per se, tax wealth that has been accumulated in earlier times; rath er, it taxes current income. It bears particularly hard on potential new enterprisers. Capital Formation Inhibited Social Security payments greatly inhibit capital accumulation. Individuals are forced to pay into the "fund;' yet all that is paid into it is, in effect, forfeit. It cannot be drawn out for investmen t. It cannot be used as security for loans. No creative use may be made of all the money that goes into Social Secu rity. Whether it will be available in old age may be questionable, but that it is generally unavailable at any other age is beyond doubt.

Even so, anyone who has man aged to accumulate or borrow or persuade others to invest enough to go into business has just begun his difficul ties with taxation. The man who enters business discovers all too soon, if he did not know it already, that he has a Senior Partner-government. More pre cisely, he has a committee of Senior Partners, composed of Federal, state, county, and, depending upon the locale, township and municipal authorities. Once he opens his doors, these Partners join the firm, so to speak, expecting him to per form special services for which they do not pay, having the first go at any profi ts that he makes, and besetting him with various costly require ments. In the first place, the Senior Partners require the businessman to be a tax collector. Though he has not been a candidate for the posi tion' though it may be alien to his nature to do such things, though the citizenry have not elected him to the post, a tax collector he is most apt to be. If he is a storekeeper or otherwise sells to consunlers, there are a variety of taxes he is supposed to collect. Both the state and local governments may impose sales taxes which he has to collect. The Federal government imposes excise taxes which he has to collect on certain items. If h~ employs other people, he has to deduct income taxes from their paycheck. Under most conditions, he must collect the Social Security tax by way of payroll deductions. Some areas have employment taxes which he may have to collect.

In addition to the taxes which he collects from others, the business man has taxes to pay on his own account. He must pay the fees connected with whatever licenses are required. He has to pay income taxes, if he has sufficient income, to 620 THE FREEMAN October the Federal government, and, perhaps, to other governmental divisions. Merchandise of all sorts carries with it an array of hidden taxes. If the governmentally prescribed minimum wage is in fact above what the market wage would be, the difference between the two is a tax. The recordkeeping that must be done in order to account for all taxes which he collects and provides the basis for his own payment of taxes amounts to a tax also. Records must be kept of all taxes collected, of the gross and net income of the firm, of all expenses of operation, of goods in stock and of equipment purchased, sold, and discarded. Occasionally newspapers carry stories of the failure of some com pany. Usually, it is some large corporation, such as the Penn Central Railroad. Most business failures, however, are noted only in local papers, if at all, and many of them go unremarked. A study a few years ago found that approximately one-third of all new businesses do not last a year, and about half of those that do are unable to make it through the second year.

There is no way of knowing how many of these failures are directly attributable to taxation. Some of them would no doubt have failed had there been no taxes to pay, none to collect, and no records to keep. But it is safe to say that taxes were a contributing factor in every failure and a determinative one in many, for taxation adds to the cost of doing business. Businesses Abandoned That the power to tax is the power to destroy can actually be viewed, then. All that is necessary to do so is to drive down almost any road. The empty stores, the abandoned filling stations, the factory no longer in operation, the rusting rails on the spur from the main track, the fad ing signs on: the premises, are mute evidence of the destructiveness of taxation. They are the relics of someone's dream and hope. But these visible remains do not tell the whole story of the destruction wrought by taxation. That would have to include all those undertak ings that might have been, but were not, were not because inflation and progressive taxation prevented the necessary amount of saving, were not because the cost of the under taking was made prohibitive at the outset by the necessary recordkeep ing, were not because failure in one undertaking forestalled expansion into other fields.

The power to tax, then, is the power to destroy. It is not just the power to destroy if states may tax the Federal government. It is not just the power to destroy if the Federal government may tax the states. It is not just the power to 1976 THE POWER TO TAX IS THE POWER TO DESTROY 621 destroy if the degree is great and abusive. It is destructive wherever it falls and in whatever degree the levy may be. The courts have never seen fit to extend to the rest of us .the protec tion from this destruction that they have given to the Federal govern ment. It is unlikely that they ever will. Nor is it in the least probable that any other means will ever be used to give us absolute protection from the destructiveness of taxa tion. As already indicated, the case for taxation is strong and probably conclusive. And, if there is taxation, it will have the effect of destroying some marginal undertakings. There is no way around it, if the reasoning and evidence adduced thus far are correct. What application, then, can be made of the principle that the power to tax is the power to destroy?

We can no more deduce the proper course of action from the axiom that the power to tax is the power to destroy than could Chief Justice Marshall in the case before him. The axiom is valid, but it provides no specific guidelines as to what course to follow. To find this, it is necessary to turn to the purpose of taxation. In turn, the purpose of taxation depends upon the purpose of government. The purpose of gov ernment is to keep the peace. The mode by which government properly does this is to use whatever force may be required to restrain and inhibit disturbers of the peace and effect just settlements among dis putants who cannot otherwise reconcile their differences. The pur pose of taxation is to raise the money necessary to achieve the ends of government. The Need for Government The maintaining of the peace by government is necessary to con structive creative efforts and preserving what is thereby pro duced. In short, government pro vides a necessary service by its efforts at maintaining the peace.

The cost of that service is a proper charge against those producing and providing goods and services. They are the prime beneficiaries of it and may be expected to bear most or all of the cost. If a business cannot survive its proportionate share of the cost of this protection, it might be better thought of as a victim of its own ineffectiveness rather than of taxation. The power to tax is not only the power to destroy, then, but also a corollary of the power of government to preserve by protect ing life, liberty, and property. Nonetheless, the power to tax is an awesome power to destroy. Like fire and water, when it is tamed, confined, and limited, it, serves a useful and beneficent purpose. But uncontrolled and unlimited taxa tion is like a wildfire or ram paging river out of its banks, destroying 622 THE FREEMAN October whatever is in its path. Chief Justice Marshall noted in his deci sion in McCulloch u. Maryland that taxation by the Federal government was limited by the uniformity requirement. So it was, until the 16th Amendment was adopted in 1913. This Amendment removed the most important of the restraints imposed by the Constitution, or so it has been interpreted by the courts.

Almost sim ul taneously, Congress set up the Federal Reserve System and has given it increasing power over the money supply. The destruc tive power of taxation was let loose, and when it is combined with the taxing power of all other govern ment units it makes it increasingly difficult to create or to preserve a worthwhile portion of what has been created. Two kinds of taxation are so potentially destructive and unjust that they should be absolutely prohibited. One of these is taxation by way of inflation, Le., by increas ing the money supply. The power to tax by inflating is the power to destroy the value of the money. Nor is it a potential power only; every increase of the money supply by monetizing the debt-the prevail ing mode of inflation - destroys the val ue of money in existence to some degree. Inflation is an unjust tax. It penalizes savers and creditors, for the val ue of the new money is subtracted from the value of money in hand or loaned out. Moreover, taxation by inflation is unreason able, for both saving and lending are legal, honorable, and sanctioned as good by the highest authorities. No sound reason can be adduced for penalizing them.

The second kind of taxation that should be prohibited is the gradu ated or progressive income tax. The graduated income tax destroys incentive to produce and provide goods and services. It attacks sav ing and investment in just those places where they could be most readily accomplished. It is unjust because it penalizes higher earn ings' earnings which in the absence of proof to the contrary are evidence of greater service by individuals and corporations. Both taxation by inflation and by the graduated income tax lead to a vast amount of wasted energy by citizens in order to preserve what they have created. Not wasted in that they may not be successful in doing so. Not wasted, either, in that they may not be able to use effec tively what they have preserved. But wasted because it is energy that could have been spent on con~ structive undertakings. By impos ing these taxes, government shifts from primarily aiding the citizen in keeping what is his to confiscating it from him. Much of the citizen's effort, and that of numerous law yers, tax experts, and investment 1976 THE POWER TO TAX IS THE POWER TO DESTROY 623 counselors, is devoted to finding ways to avoid paying the taxes or losing what they have by inflation.

How much better off Americans would be today if this vast amount of energy could be devoted to pro ductive and creative efforts! Such taxation, too, tends to destroy the rapport between the governors and the governed. Confiscatory govern ment becomes an adversary to be outwitted, not a benefactor to be aided and cherished. At any rate, taxation must be circumscribed and limited else it will "defeat and render useless the power to create:' By what principle should it be limited? There is a principle embedded in our system which provides inherent limits to all taxation. It is so basic to our politi cal institutions that it should govern every legislator, every execu tive' and every judge. It precedes all our constitutions, aU our laws, and all our political institutions. It brought them into existence; it sustains them; without it they are a nullity. It is nothing more nor less than this: All governments in the United States derive their just powers from the consent of the governed. This means, if it has its full meaning, that the people are superior to the government. That which creates is necessarily superior to what it creates. The government of the United States was created by the people. They are the superior; the governments are the inferior. Taxation by govern ments' then, is levied by inferiors upon superiors.

The Superior Authority What rule governs the relation of the inferior power to the superior power? To answer this question, we can turn again to Chief .Justice Marshall. In a section already quoted, he declared that "a power to destroy, if wielded by a different hand, is hostile to, and incompatible with, these powers to create and preserve;' and that when this situa tion exists the "authority which is supreme must control." It would be easy to obscure this point, in fact it is regularly done by many political theorists, by having it refer to the mechanisms by which the people control the governments in the United States. It needs to be clear, however, that what we are talking about here is not government at all. The mechanisms by which people control the governments, when and if they do, are really mechanisms of the government-the inferior power here. What is at issue here is the power of creating, producing and providing goods and services and the supreme authority which must control the disposal of them.

Who is the rightful supreme authority over what has been cre ated, produced, or provided? It is he who created, produced, or provided 624 THE FREEMAN October it. The people brought into being the governments; hence, the people are the supreme authority over them. But "the people" did not bring into being the economic goods and services which are at issue in taxation. These are brought into being by individuals, either by themselves or in cooperation with others. The supreme authority over these creations belongs to those who brought them into being, neither the people collecti vely, nor their political arm, the government. And, the "authority which is supreme must control:' The principle which inherently limits taxes in the United States is now before us, needing only to be stated. It is this: Taxes must be limited to a degree that will not di vest the owner of control over his creations, productions, or provi sions. They are his by right, and only so much of them may be taken as is necessary to protect him in his ownership of them. If the govern ment, either by taxation or any other device, come~ into control it is the control of the superior by the inferior.

There are certain corollary princi pIes which should control taxation and help to keep it within proper limits. e1. All taxes should be uniform. Whether levied upon income, wealth, or spending-e.g., sales taxes-a uniform rate should apply in each particular case. This is not only the just approach to taxation but also it removes the lure of redistribution by which many peo ple approve graduated taxes. e2. Taxes should be tied as closely as possible to the object for which the money is to be spent. The payment of a toll for the use of a road will illustrate the principle, though it is not always possible to link the taxation as closely as that to its purpose. e 3. Taxes should never be levied for any purpose other than raising revenue. If they are imposed for controlling, regulating or prohibit ing something, taxes become not only destructive in character but also in intent, and are an abuse of governmental power.

e4. Government spending should be limi ted to that necessary to maintaining the peace and provid ing those services to which the use of force is necessary and proper. All limitation of government action is a limit on spending, hence upon taxation, and those who seek precise limits would do well to concentrate their efforts on placing these on government action. Principles only serve as limita tions, of course, if they are believed and adhered to by people. There are helpful guidelines, however, to those who have in mind the limiting of governmen t. Government, if it is to be limited, must be limited by 1976 THE POWER TO TAX IS THE POWER TO DESTROY 625 prohibitions on it and by the weight of public opinion and the ballot. A Congressman once gained a considerable reputation by asking this question after each spending proposal came before the House: "But where is the money to come from to pay for it?" It was, and is, a good question. The axiom that the power to tax is the power to destroy suggests an additional question.

Namely, "Who and what is to be destroyed by the taxes to pay for it?" What businesses will fail be cause of the increased taxation? What services can no longer be offered because of the increased taxation? Whose property is to be confiscated to pay for it? How much of savings are to be subtly seized by the inflation? How many jobs will not be provided because there was no investment to pay for the tools to put men to work productively? What creative energies will be diverted or unreleased because of the taxes to pay for it? There is no end of laudable objects for which money might be spent. Even children, especially children, are fertile sources of all sorts of spending proposals. In our day, every interest group in the country probably has on its agenda a goodly number of proposals for government spending. Certainly, politicians and bureaucrats bring forth an endless array of notions for spending taxpayers' money. There are so many goodies to be had if only government would unloose the purse strings and spend, and spend.

Children are so prolific with their spending proposals because their eyes are only on the goodies to be attained, not on the labor, hardship, and even deprivation on which their unwise spending would depend. Many politicians today treat the American people as if they were children, pointing them con tin ually to the goodies to be provided and remaining silent about the price to be paid. They spend and spend to elect and elect, as aNew Deal politician was reported to have said. They do something else at the same time: They tax and tax to destroy and destroy. Do they intend the destruction? It hardly matters, for the power to tax is the power to destroy, and there can be no govern ment spending without the taxes to pay for it. Thomas Jefferson once said that what was wanted was "a wise and frugal Government, which ... shall not take from the mouth of labor the bread it has earned:' Apropos the axioms announced in Chief Justice Marshall's decision, it is in order to add: "a wise and frugal government which will destroy as little as possible by the taxes it imposes." t) MARKSPANGLER THE IDEA that economic well-being can be created by eliminating means of production is an economic absurdity. The destruction of facto ries, shops, warehouses, equipment, tools - in short, ca pi tal goods benefits no one. To practice such policies would send man back to struggling for bare subsistence. In view of such obvious consequences, no one could logically advocate policies of capital consumption but rather would encourage capital accumulation. Unfortunately, logic does not always prevail; every day taxation destroys existing capital and reduces economic well-being.

Dr. Hans Sennholz, in Death and Mr. Spangler of Milton, Pennsylvania, is a student at Grove City College, with special interest in the Department of Economics headed by Dr. Senn holz. 626 Taxes, demonstrates this impact of taxation and examines especially the results of death duties. The original role of the federal government was limited to protect ing life and property from violence and aggression. Tax laws aimed simply at raising revenue for that purpose. But, as Dr. Sennholz says, "The new America that took shape in our century is a reformatory for man and society. Government has become a powerful agency of reform and redistribution .... Our present tax structure openly aims at greater equalization of income and wealth through tax rate progression:' His discussion of estate tax history clearly illustrates this transforma tion. The first Federal death duty began with a maximum rate of one1976 DEATH AND TAXES-A REVIEW 627 half per cent and lasted between 1797 and 1802 to aid in financing the national debt and the defense program. An estate tax was also used during the emergencies of the Civil War and the Spanish-Ameri can War, and the maximum rate was five per cent. However, in 1916 the death duty came to stay, taxing estates at a maximum rate of ten per cent. This maximum rate has been increased on occasion and pres ently stands at seventy-seven per cent. Yet, this rate hardly provides enough funds to operate the federal government for half a week. Cer tainly the objective of estate taxa tion is no longer to raise revenue but to redistribute wealth. In the name of social and economic equality, income and wealth are taxed at steeply progressive rates.

Dr. Sennholz concludes that pro gressi ve estate and income taxes do not achieve their purpose but actually "aggravate the economic inequality" they are supposed to alleviate. In other words, the gov ernment's endeavors to eliminate economic inequality have only made matters worse. To support his con clusion, he points to the nature of wealth and income in a market economy. Insofar as the market is allowed to operate, income and wealth are derived only by produc ing goods and services for con sumers. The greatest income accrues to the most efficient producers, who then can acquire addi tional capital assets and expand operations, income, and wealth. Their estates consist mainly of capital employed in economic pro duction. "A millionaire's fortune does not consist of idle luxuries, but of factories, machines, and equip ment that produce for the people, give employment, and yield wages:' By increasing the flow of goods and services, the efficient enterpriser raises the real income of other members of society. In addi tion, he accumulates capital which in turn increases labor productivity.

The fundamental determinant of labor productivity is the amount of capital ,that a worker uses. As capital per worker increases, his productivity and income increase. To have the most efficient producer manage capital and provide for its formation is in the direct interest of all workers. Any act which destroys and consumes capital must necessarily reduce the productivity and wages of workers. 1 Inasmuch as the income and capital acquired through production make up the fortunes of successful enterprisers, progressi ve taxation penalizes the most competent pro ducers and amounts to a tax on efficiency and production. Professor Sennholz warns that progressi ve 1 See also Dr. Sennholz's "Capital Consump tion;' The Freeman, May, 1976, pp. 282-299.

628 THE FREEMAN October income taxes, by aiming to expropriate increasing profits, actually restrain three important economic activities. A portion of profits is "manag erial remuneration," which is earned by a proprietor or partner. "That part of a businessman's income which is earned through his own labor is a kind of wage or salary, and as such totally unrelated to economic profits:' A second com ponen t of profits is ordinary interest, which is a return on capital. People value their pres ent cash more highly than a claim to future cash in the same amount. Consequently, to induce a cashholder to forgo present con sumption and convert his cash into capital which will return his invest ment only in the future, a premium must be paid. No interest payment means no capital. The third and remaining part of profits is pure or economic profit. By trying to an ticipate changing economic conditions and adapting production accordingly, enterprisers either suffer losses or earn profits.

These profits (or losses) result from the risk associated with the uncer tainty of the future. Whenever these economic profits are denied, no enterpriser will assume the risk of trying to adapt to future condi tions; economic progress ceases. Progressi ve taxation of income penalizes the most efficient managemen t, the accum ulation of capital, and the ability of en terprisers to meet fu ture economic needs. Means of produc tion are employed less effectively, the supply of capital dissipates, and the economy stagnates. A society which supports progressive tax rates is doing away with its most productive activities. Is that any way to run an economy? The SO-page paperbacked book, Death and Taxes, was published in 1976 by The Heritage Founda tion, 513 C Street, N.E., Washington, D.C. 20002. Copies also are available at $3.00 each fronl: The Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y.

10533. Supporters of progressive taxa tion may concede the uneconomical nature of progressive income taxes, yet may advocate progressive estate taxation: graduated death duties cannot harm a deceased person or penalize the heirs, who benefit no matter how much they inherit. Such shallow analysis avoids all economic issues. Hans Sennholz devotes most of Death and Taxes to showing that progressive estate taxes beget the same economic destruction as do progressive income taxes. "The creator of a taxable estate gives thought and effort to the 1976 DEATH AND TAXES-A REVIEW 629 impact of the levy that may greatly impair his life's work, ... and may make adj ustmen ts in his actions while he is still alive:' A progressive death tax may push a person with exceptional productivity into early retirement. He may prefer leisure to work, because the additions to his estate will be taxed at increasing rates. Society loses the proficient producer. Moreover, "death-tax con siderations cause him to be con sumption-oriented. Many estate owners are tempted to con vert their productive assets that yield income into consumptive assets for their own enjoyment:' The estate tax payer does not increase his capital assets but consumes his substance before the tax collector can get it.

Graduated estate taxes retard capital formation and thereby prod uctivity and wages. Furthermore, the estate tax's "potential victims cannot be expected to stand by when their economic accomplish ments are to be seized and dis tributed:' The affected estate owner will direct his energies to tax avoidance instead of productive management. When the estate owner finally passes on, the estate taxes result in pure capital consumption. Because the bulk of an estate formed under a free market is in productive assets, an estate tax is foremost a levy on capital. "Death duties do not immediately and visibly destroy such capital equipment as steel mills, railroads, or refineries. But they force the heirs or owners to sell all or part of the taxed estate in order to raise the cash needed for the tax payment. This cash is liquid capital that is consumed by govern ment visibly and noisily." Clearly, estate taxes do consume capital and oppress its efficient management, and must necessarily reduce .labor productivity, wages, and living standards.

Recall that government's purpose in imposing progressive estate and in-eome taxes is to reduce economic inequality. Death and Taxes shows these policies have the entirely opposite effect: "Taxes imposed on the rich are taxes on economic production. They consume the very capital that creates jobs.... To advocate higher taxes on the rich, most of whom are highly productive businessmen and investors, is to expropriate the very means of capital investment that afford jobs and better living conditions for the poor.... This is why, contrary to popular belief, progressive death duties do not diminish economic inequality; they are powerful instru ments for creating it. ... With every dollar of net (capital) consumption the worker's productivity must de cline, as must his wages and Iiving conditions .... The rich man, how ever, may manage through talent, industry, or thrift to 630 THE FREEMAN October preserve ... comfortable living con ditions:' The government has only nourished what it has set out to erase.

Death and Taxes clearly exemplifies one of the important lessons of the late Professor Ludwig von Mises: "Interference with the market. .. may in the short run attain ends aimed at by the govern ment. But in the long run such measures always result in a state of affairs which-from the viewpoint of the governmen t - is more unsatisfactory than the previous state they were intended to altee'2 Such measures disregard economic laws. Progressive estate and income taxation disregards the economic principle which Dr. Sennholz states as, "Economic and social inequality is inversely related to economic prod uctivity, income, and wealth. Ine quality tends to grow with declin ing labor productivity; it tends to diminish with rising labor prod uctivity:' As if graduated taxes were not damaging enough, government compounds their results by promot ing inflation-expanding the money supply. As Professor Sennholz exp lains, inflation causes prices to rise and expropriates purchasing power from moneyholders. Inflation redistributes wealth and income, 2 Ludwig von Mises, Bureaucracy (New Rochelle: Arlington House, 1969), p. 84.

consumes capital, and pushes tax payers into higher and higher brackets. Death and Taxes concludes with a particularly enlightening chapter. Hans Sennholz has analyzed recent estate tax alternatives and reform proposals. This reading dispels all wonder as to why progressive estate and income taxes flourish. The pro posals of the various individuals and organizations amount to little more than new methods or details of expropriating the estates. Many pre sentations are merely pleas for exemptions, privileges, and favored treatment. The alternatives dis regard economic principles. No men tion was made of the economic ruin caused by estate taxation. Moreover, no proponent even questioned the morality of the government's taxing the life's work of one person more heavily than another. What moral right does the government have in confiscating any part of a decedent's estate? A fight for tax relief based on political favoritism only advances the redistributive society, which uses estate taxes for its ends. The question of estate taxes, indeed any taxes, must rest on economic and moral principles. Death and Taxes exposes the futility of the estate tax. Dr. Sennholz has presented economic and moral principles which call for the summary aboli tion of estate taxation. ~ A Heartening JOHN A. DAVENPORT EVER SINCE Lewis Franklin Powell, Jr., now a Justice of the Supreme Court, wrote his famous memoran dum on the dangers in which the private enterprise system finds i tself~ businessmen and their acolytes have been bestirring them selves to improve their public image. As public opinion polls still show, however, these efforts have not been overly successful. And as Irv ing Kristol has pointed out, one has the uneasy feeling that while defen ders of enterprise have been win ning the battles they have bit by bit been losing the war. One reason offered by Kristol is that champions of capitalism have all too often tended to think in terms of ·economic efficiency, whereas modA former editor of Barron's and Fortune, Mr.

Davenport Is author of The U.S. Economy and a frequent lecturer on political economy. "'Message from Youth ern and younger critics of capital ism have pitched their attack on its political and ethical defects. Capitalism, in short, still lacks a comprehensive and comprehensible moral philosophy. In this situation it is news, and good news of the first order, that there is a rising generation of young academic thinkers who understand that capitalism is something more than an "incredible bread machine;' important as that is, and who have the wit and learning to articulate a deeper faith. Confirmation of this new and immensely hopeful development is to be found in a slim volume of essays titled Free Enterprise-An Imperative, published in 1975,1 As 1 Available at $2.00 from the Herbert Hoover Presidential Library Association, Box 359, West Branch, Iowa 52358. 631 632 THE FREEMAN October might be expected, the book re ceived little notice from the Liberal press, but it should be on the desk of every businessman who has been suffering under the barbs of his Galbraithian, Naderite, and Marx ist critics. For it contains the work of nine young authors who have obviously taken the measures of the detractors of the free market, and have in their different ways shown that capitalism, whatever its defects, does have philosophic cre dentials of the first order.

A Vulnerable Doctrine In explicating these credentials it is noteworthy that only one of the young essayists relies heavily on the venerable but highly vulnerable doctrine of Utilitarianism as devel oped by Jeremy Bentham and other neo-classical economists. For it is precisely the association of capital ism with utility and material pro gress which has turned off a whole generation of youth from perceiving the free market's deeper contribu tion to our civilization. Its basic contribution is that it promotes and buttresses freedom or personal self determination, which as pointed out by Verna Harrison, a student of philosophy and theology at The University of Oxford, "is a precondi tion for any morality whatever:' This is true from the point of view of orthodox Christianity, which allows man to choose between good and evil, or from a Kantian perspec tive which makes the free will central to its ethical system.

In viewing freedom both as a val ue in itself, and as a precondition of realizing other ends and values, the essayists are careful to guard against claiming too much or too little for capitalism. As Alan Stock man, a twenty-five-year-old gradu ate of Ohio State University, puts it: "No economic system can auto matically guarantee a good society lmeaning that individuals will necessarily choose the right ends]' but some may have effects on peo ple's values and behaviors which make the achievement of a desira ble society more difficult:' Where government owns the means of production or "plans" all economic activity, it is obvious that freedom is constricted, and that coercion by the state flourishes. By contrast the market system of economy expands the options of man, the consumer, and man, the bread-winner and producer, since in effect each has a role in voting· as to what shall be produced and in what quantities-a vote that is denied under any system of collectivism.

Similarly, private ownership of the means of production, and the sanctity of private property, rein force, and indeed are the precondi tions of the maintenance of higher political liberties, including freedom of the press and freedom of 1976 A HEARTENING MESSAGE FROM YOUTH 633 inquiry. This does not insure that all of man's choices will be good. The point is that without freedom of choice, and the diminution so far as possible of coercion, the good can never be realized. The second test of an economic system is how far it engenders order and social collaboration, and here the detractors of capitalism have obviously sought to confuse dis course. The doctrine of laissez faire is equated to dog-eat-dog or to just plain chaos, whereas the fact is that by definition the market requires collaboration. As pointed out by most of the essayists, it is impossi ble to earn a living in a market economy without producing in the form of goods or work something which another person wants. Seller and buyer are thus bound together in a collaborative effort as are workers who, each seeking his own reward, collaborate in the output of a farm or factory. This is the underlying wisdom of Adam Smith's doctrine of the "invisible hand" which leads man "to promote an end which was no part of his intention:' but which may be of benefit to society as a whole.

The Wisdom of the Market The doctrine, much vilified in our day by the critics of enterprise, is in fact highly relevant precisely be cause the modern world is so com plex' and because the knowledge of anyone man is by definition limited. The socialist planner assumes that the government bu reaucrat is not only omnipotent but omniscient. In fact such omniscience does not exist. Indeed a third and potent argument for the enterprise system lies precisely in recognition of this fact. As Roger Michener, a young instructor at The University of Chicago, puts it: "It is because every individual knows so little, and, in particular, because we know hardly ever who knows best, that we trust to independent and competi tive efforts for the emergence of what we shall want when we see it:' So the market econ0ply is grounded in certain facts and requirements of human nature itself. But is it a just system? Here the argument is more complicated precisely because such an economy distributes its rewards and emolu men ts not according to the needs or merits of individual workers but according to the needs and require ments of consumers and employers who bid directly or indirectly for the worker's services. The wages paid to a ditch digger are relatively low because the potential supply of ditch diggers is large, whereas demand for this kind of work may be relatively small. The reward of a doctor or lawyer is high because there are relatively few men of such specialized training in relation to demand.

634 THE FREEMAN October Granted that the law of supply and demand leads to increased and efficient production and use of avail able resources, does this really create a fair and a just distribution of income and satisfactions in the body politic? Or, as Marxians claim, does it lead to the exploitation of the masses by the classes - the men and women of superior ability? It is the merit of the young essayists of this symposium that they do not attempt to shove this oldest question of philosophy and ethics under the rug but to meet it head on. In the process, as might be expected, they come up with different answers. Equality and Justice Justice, according to Plato, is the "giving to each man his due:' Tak ing off from this definition of justice, essayist Karl Keating points out that the just society will al ways be in opposition to an egalitarian society since men are obviously endowed by nature (and inheritance) with widely different capacities. "Enforced equality;' he wri tes, "means a violation of the dignity of men, for when we try to enforce something that is incapable of fruition, we necessarily violate nature and do violerice to ourselves:' Having disposed of egalitarianism, he then argues that capitalism pro duces justice because it takes account of man's true nature and condition since it allows each man to use his talents and his property as he sees fit and hence "allows him to follow his own inclinations in attempting to become a more humane man:' Others in the symposium are not quite so sure of the justness of the market's decisions. John H. Beck, who holds degrees in both economics and mathematics, em phasizes that income distribution in a market economy mayor may not accord with merit and skills, and that in some cases entrepreneurial profits may come from just plain luck. Still, he shrewdly points out that incomes are the resultant of prices. Prices in their turn are the essential means of communication between consumer and producer as to what is wanted and what should be produced. If we tamper with the price system we shall be left with out guide or rudder as to how production and hence incomes should flow.

In a brilliant essay, David Kelley, assistan t professor of philosophy at Vassar College, carries this essen tiality of the market one step further in examining Marx's famous proposal of "from each ac cording to his ability, to each ac cording to his need." For how does the Marxian really determine need? In posing this question Kelley points out that in his early writings at least Marx made the egregious 1976 A HEARTENING MESSAGE FROM YOUTH 635 mistake of completely separating the "spiritual value" of work from the hard business of earning a living by producing what other peo ple want. On this assumption, man works or should work only to satisfy his inner ego or Self. But, writes Kelley, this injunction really boils down to the mindless injunction of "Do your own thing" - the battle cry, it should be noted, of the New Left as it emerged in America in the late sixties. Such subjectivism will not do. Critical to man's happi ness is "a sense of self-esteem;' and one source of self-esteem lies pre cisely in entering into the produc tive process of a society. (Note the difference in attitude of a boy who gets his first job as compared to one who remains unemployed or only works for fun!) Sums up Kelley: "The best way to alienate man would be to force him to live in a perfect communist society, where he can have no idea whose efforts are holding him in existence, while he tries vainly to express a self he has had no way of acquiring :' This is a difficult thought but nevertheless a profound one which makes hash of those who deride the market system as inhumane on grounds that it disregards the high er nature of man. The truth of the matter is that while the market profi t economy may not render per fect justice, however such justice be defined, it comes closer than any al ternati ve system for allowing men to be just in their dealings with one another. It cannot, as noted in the beginning, produce good men, but it can by fostering freedom allow men to be good. And in an imperfect world, that is quite an accomplish ment.

It is also quite an accomplish ment that the young authors, whose writings are here under review, have been able to see through the pre tenses of those who would write off capitalism as a defunct economic system in favor of leading us into some Utopia of their own choosing. The best in this case, as in many others, is the enemy of the good. The distinction of Free Enterprise-An Imperative is that its authors have winnowed the chaff from the wheat in our political thinking, that in stressing the vir tues of capitalism they have not neglected its shortcomings, and that they have in one small volume brought philosophy to bear in its ultimate defense. What more can one want of serious academics? What more can one want of the coming generation? (!) A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Herbert Hoover: Presidento[the UnitedStates THE DEMOCRATS, not content with defeating Herbert Hoover in 1932, campaigned more or less successful ly against him for a generation.

Well, as Chesterton once said, any stigma will do to beat a dogma. Hoover, through the "smear" cam paign instituted by Charles Michelson, the publicity director for a victory-hungry Democratic National Committee, had been iden tified in the public mind with what was then being trumpeted as the outmoded doctrine of Rugged Individualism, which made him Mr. Dogma personified. But if Hoover had not been a handy devil to beat about the ears (or horns), the "liberals" would have found someone else. The point is that the counter-dogma of Let-the State-Do-It was riding high. The Fabian campaign to put collectiv ism over on a one-~ite-at-a-time basis had done its work in the schools and the opinion magazines (The Nation, the New Republic), and, in the post-1929 atmosphere, no 636 proponent of classical liberalism could have stayed for long in the White House. Indeed, no less a person than Murray Rothbard, a shrewd analyst, has indicated that Herbert Hoover himself was so well aware of the power of the Fabian drift that he was intimidated by it. In his uncompromising way Rothbard has condemned Hoover for "anticipat ing" the New Deal. Hoover created the Farm Board to help circumvent the workings of the free market in agriculture. He also allowed the Reconstruction Finance Corpora tion to come into being. I remember Isabel Paterson's response to the creation of the RFC. "If J. R Morgan can have his dole," she said, "then nobody can keep the voters out of the trough. What's fair for one is fair for all:' And so it turned out after March of 1933. But Hoover, even though he had temporized with his own basic philosophy as the social pressures mounted, fought a rather gallant 1976 HERBERT HOOVER: PRESIDENT OF THE UNITED STATES 637 battle to save a traditional America.

Edgar Eugene Robinson and Vaughn Bornet, in a comprehensive accoun t of a sing Ie four-year White House term, Herbert Hoover: Presi dent of the United States (Hoover Institution Press, Stanford Univer sity, $12.95), present a purposeful individual doing the best he could under a snowballing succession of terrifying handicaps. This is a most lucid book, though its very fairness makes it unexcit ing. Hoover took office in 1929 with some clear-cut ideas of what a Presiden t should do. He wan ted to take the tariff out of politics. He wan ted to keep the government out of business. At the same time he proposed to be a Teddy Roosevelt conservationist in handling the wealth in the public domain. He hoped that farmers could be brought to solve their own problems with the help, but not the subsidy, of the government. And he had ideas of international cooperation that were calculated to keep the peace with out running the risk of entra pmen t through ill-considered economic embargoes or "sanctions:' A Party Divided Hoover believed in party govern ment' but the joker in the deck was that Republican "unity" was a mirage even in the Coolidge years.

The western insurgents -"sons of the wild jackass" -were always ready to follow Fighting Bob La Follette of Wisconsin or George Norris of Nebraska off the reserva tion. Hoover, a Californian, should have been able to get along with the westerners, but Senator Borah of Idaho had stereotyped Hoover as an "easterner" at heart. This was a travesty, for Hoover did not agree with the Pennsylvania Grundys on the tariff. And Hoover was sym pathetic with Borah's rural Ameri ca when it came to supporting Prohibition as long as it was the law of the land. Where Hoover disagreed with the Norrises and the Borahs was on the subject of compromising rural individualism by invoking State subsidies of all kinds. Hoover was willing to dam a river (as part of the public domain), but he was against using the State to market electric power. And he wanted no truck with export debentures to help farmers get rid of surplus crops.

In 1931 Hoover wrote to a friend that "if you could sit in the middle of the Government and see the tools with which we have to work and the disasters which confront us at all times in the use of these tools, you would not want us to extend the area of government but rather to keep the government as nearly as we can in its greatest function-the safeguarding of human rights." These were brave words. In 1931 they seemed anachronistic to a 638 THE FREEMAN October growing majority, and nothing that Hoover could do had the slightest effect on the political impasse that followed the mid-term 1930 elec tions. The Democrats had a majority in the House of Repre sentatives. In the Senate, the Re publicans still had a margin - but the sons of the wild jackass might just as well have been Democrats. From Bad to Worse Everything broke badly for Hoover. To get his theory of a "flexible" tariff considered he felt he had to temporize with the high Smoot-Hawley rates, which meant that flexibility would have to start from impossible peaks. He could have vetoed the final Smoot-Hawley, or "Grundy;' tariff bill, as hundreds of economists urged him to do. But he thought the times required a settlement of the issue. Robinson and Bornet let him off charitably by remarking that "henceforth, tariff policy was numbed by economic uncertainty and would inevitably come to be blamed for contributing to that uncertainty."

The tariff, which encouraged the world drift to economic nationalism, was a premonition of things to come. Hoover was right when he saw things getting better in the U.S. But after the stormy local American financial waters had been calmed by his declaration of an international debt moratorium, things kept breaking badly abroad. The "postwar" period ended when the Japanese invaded Manchuria. In spi te of everything, the economic indices in the Summer of 1932 foretold the breaking of depression. But the voters, bemused by a dreadful three years, couldn't catch up with reality in time for November of 1932. They wanted a diff eren t man with a more prag matic way of doing things, and they found him in Franklin D. Roosevelt. The joker here is that FDR found such Hoover-created or Hoover tolerated mechanisms as the Farm Board and the RFC made to his hand. In All Fairness In being fair to Hoover as a Presiden t, Robinson and Bornet are playing fair with the present.

Hoover's central philosophy is no longer the laughable thing it was when John Dewey was proclaiming that "President Hoover's constant appeal to self-reliance, enterprise, private initiative, is simply puerile; it is a voice from the grave in which human hopes and happiness are buried." Today, with inflation stran gling a dozen economies around the world, it is the constant appeal t9 socialism that is burying our hopes and happiness. So, Hoover is justified when our presen t Secretary of the Treasury William E. Simon says, in a notable 1976 HERBERT HOOVER: PRESIDENT OF THE UNITED STATES 639 essay contributed to a book titled The Ethical Basis of Economic Freedom (American Viewpoint, Chapel Hill, N.C., $12.50), that our home-grown enemies of a free society "have never asked them sel ves why a country like the Soviet Union, with some of the largest, richest tracts of grainland in the world, but with a government owned-and-run agricultural system, cannot even feed its own people without turning to American far mers who own their own land, make their own economic decisions, and feed not only their own people, but millions of others as well."

Incidentally, Mr. Simon echoes Herbert Hoover when he says that a successful free enterprise requires a sound ethical base. Simon has a lovely quotation from Benjamin Franklin: "If the rascals knew the advantages of virtue, they would become honest men out of rascality." This would have pleased the Hoover who, in 1931, spoke of "the wrongs and cruel ties that take place through greed and selfish ness." After forty years of government promoted greed and selfishness that has outdone any recorded capitalistic iniquity, we are ready for Hoover's ideas of an ethical free market. It is good that Robinson and Bornet have brought the thirty first President of the U.S. out of limbo. ~PHILIP MAZZEI: -Jefferson:s "Zealous Whig" by Sister Margherita Marchione. (New York: American Institute of Italian Studies. 1975. H East 69th St., New York City 10021) 352 pp., $9.95 cloth, $5.95 paper. Reviewed by Haven Bradford Gow.

ONE OF THE UNSUNG HEROI~S of the American Revolution was Philip Mazzei, whose writings provided moral and intellectual sustenance to the colonists in their struggle for independence. Mazzei was born in Italy in 1730, received a degree in surgery, but decided to move to London, where he organized a firm devoted to the importation of cheese, wine, and olive oil. Here he met Thomas Adams and Benjamin Franklin, who pleaded with him to come to America. Mazzei headed for Virginia in 1773, and it was in Virginia that Mazzei, during 1774-1775, one year before the publication of Thomas Paine's Common Sense. wrote a series of newspaper articles under the pseudonym "Furioso" for The Virginia Gazette. "All men are by nature equally free and indepen dent;' wrote Mazzei. "Such equality is necessary in order to create a free government. All men must be equal to each other in natural law." Like Jefferson, Mazzei was an ardent admirer of the French "philosophes," and shared their com mitment to equality. He was a fitm 640 THE FREEMAN October advocate of the belief that every citizen has an equal right to the benefits and honors of his society, and should not be depri ved of these benefits and privileges except for some crime. '1'0 deprive a citizen of his equal right to the privileges and honors of his society, contends Mazzei, is "an obvious injustice"

that should "horrify anyone con vinced that all men are born equally free and independent." Here he makes the pernicious and common error of confusing "born" and "cre ated." According to Mazzei, the Declara tion was based on the "great truth" that "all men are born equally free and independent"; but Mazzei's contention, it seems to me, is wide of the mark. For the Declaration does not say that "all men are born equally free and independent"; it affirms that "all men are created equal, that they are endowed by their Creator with certain unaliena ble rights, among these are Life, Liberty and the pursuit of Happi ness." One hesitates to criticize so well-intentioned a person as Mazzei, but one would like to ask him what he means by "equality" and by "equally"? What does he mean by "free and independent"? Are men "equally free and indepen dent" because they share a common nature? Or because they are "equal in the eyes of God"? And it is obviously untrue to say of people li ving under a dictator that they are all "born equally free and indepen dent."

Mazzei worked to eliminate every barrier that might prevent any person from participating fully in the life of his society. He opposed slavery, championed the rights of women, and contended against those who would limit voting to the rich. He argued, for example, that we often find good parents, who though owning no property, have acquired, through hard work and self-sacrifice, the means of educat ing their children, thus making them capable of holding leadership roles in society. Would it not be unjust, asks Mazzei, to deprive such persons of the right to vote? Would it not be unjust to exclude such persons from leadership positions in society? Indeed, observes Mazzei, riches and property often "dazzle and hide defects in those who possess them, while poverty encum bers him whose extraordinary merit is not publicized." America is deeply indebted to the intellectual contributions made by men of other nations, one of whom was Philip Mazzei, whose life and work is worthy of further study.

Sister Margherita Marchione deserves thanks for bringing to our attention an unsung hero of the young Republic. f) tt1e Freeman VOL. 26, NO. 11 • NOVEMBER 1976 Reflections on Amusement ParksAmong Other Closed Systems Clarence B. Carson 643 The customerstands and waits when the market is not allowed to functioneffectively. A New MessageVII. On Amendment XVII Jackson Pemberton 654 Words of courageand counselfrom the heartsof the FoundingFathersto theirchildrenin a troubled nation. The Proper Role of Government Ezra Taft Benson 661 Any attempt through government interventionto redistributethe material rewards of labor can only result in the eventual destructionof the productivebase of society. The Birth of an Idea Charles ~ Kettering 669 How radio emerged from an idea going back to 600 B.C. Is Our Economic Future Limited? Warren T. Brookes 671 An answerto doomsdaythinking-for it is ideas, not materials,that determineprogress.

The Demand for Instant Utopia A response to critics of capitalism. Henry Hazlitt 680 Ideologies and the World Struggle Lee G. Madland 684 The burning issue is between capitalismand statism, regardlessof the label given the system of governmentintervention. The Spirit of '46 Edward Coleson 690 History reminds us that constructivechange is possible at a time of economic and politicalturmoil. Book Reviews: 698 "PunishingCriminals: Concerninga Very Old and Painful Question" by Ernest van den Haag "In Our Time" by Eric Hoffer Anyone wishing to communicatewith"'authors may send first-classmail in care of THE FREEMAN for forwarding.

the Freeman A MONTHLY JOURNAL OF IDEA.S ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAULL. POIROT President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publica tions for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Ihc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles, available as reprints at cost; state quantity desired. Permission granted to reprint any article from this issue, with appropriate credit except "A New Message:' "The Birth of an Idea:' and "Is Our Economic Future Limited?"

CLARENCEB.CARSON Reflections on ~J~~:=;!~~m.J""~:...-.. AMUSEMENT PARKS Among Other ClosedSystems IT BAFFLES ME why anyone but children too small to go unattended, and for whom there would be no potential escorts, could be per suaded to submit themselves to the indignities of an amusement park. I, for one, do not like heights, do not like to be raised to them on some creaking chain or cable, to be plum meted downward, sideways, or upside down. I do not care to defy the laws of gravity, be spun around at sickening speeds, or be drenched by showers of water in some device propelled through artificially cre ated streams. Spook houses don't spook me, though I do fear for my Dr. Carson has written and taught extensively, specializing in American intellectual history. His most recent book, The Rebirth of Liberty: The Founding of the American Republic 1760-1800 is now available in a 350-page attractive Bicenten nial paperback at $3.00 from The Foundation for Economic Education, Irvington-an-Hudson, ~Y.

10533. wallet as I pass through dark places with strangers all about. Indian manikins in contrived jungles have extremely limited possibilities for thrilling me. These thoughts were prompted by a recent visit to one of the more expensive and extensive of such amusement parks in the land, accompanied by my wife with both of us in tow to our two impatient youngsters. My sour reaction may have been the result, in part, of the peculiar circumstances. We were so lacking in foresight as to time our visit for a Saturday in July, a day on which it appeared that all 215,000, 000 Americans and an undisclosed number of foreigners decided to turn up at the same park. I didn't count them, but if some were not there, they could hardly have been missed. 643 644 THE FREEMAN November It was hot and humid. We sweltered, dried out, parched, and dehydrated. The presence of water in various sorts of streams offered no relief, for it would have been unmeet to drink it, and we were not permi tted to swim in it. Whichever way we decided to go, great throngs were headed the other way, throngs which we had to find a way to go through. Even so, they arrived at whatever ride or exhibit we were going to and were able to take their place in line ahead of us.

My thoughts should be read in yet another context, too. Life began at Forty for me a while back. My idea of amusemen t in July is to sit in a lounge chair under a shade tree and watch the sun go down. Moreover, I greatly admire the venturesome entrepreneurs who conceived this mercifully unnamed project and the speculators who had the foresight to invest in it. Nor have I anything but compassion for the intrepid "visi tors" to the park who labored so hard to get their· money's worth once they had got there. If there are any adults anywhere who enjoy such experiences, I would appreci ate hearing from them, since I am even now setting aside a fund to pay someone to take my children the next time their clamor to go reaches an irresistible pitch. However, "All things work togeth er for good to them that love the Lord;' as the Apostle Paul said, and this experience did lead to some reflections which I would like to share. After pondering the day, I focused upon several aspects of the park which were particularly irritating. One was ··the ·long waits in lines before we could take the rides or get into the exhibits. These waits often lasted considerably longer than the rides or the trips through the exhibits. A related ir:r:itant was that if you liked the ride and wanted to go again, it was necessary to go back to the end of the line in order to do so. Another was their penchant for measuring the children to determine if they would be able to go on the rides. One of my children was a little too tall for some of them and was excluded from pleasures which the smaller child could enj oy. Then, there was the universal irri tan t of such places: the high prices of candy, food, and drink, particularly drink.

We paid fifty cents for slightly more than a thimbleful of some sort of frui t drink. A Closed System These irritants can be attributed to one or both of two aspects of the organization of this amusement park: it is a closed system, and price is not used in allocating many of the goods. The closed system is fre quently used to raise prices by eliminating competition. Most of us are familiar with its use when 1976 REFLECTIONS ON AMUSEMENT PARKS 645 access to alternative sources is not available or is deliberately shut out. Most stadiums, parks, and other places where ball games are played are more or less closed systems. Refreshments are usually higher than in the open market, and the prices charged at concessions are regulated. The same generally applies to fairs, circuses, and many other special events. Almost any kind of public transport - trains, boats, airplanes - constitutes a potential closed system, though competition has thus far been so vigorous among airlines that they have rarely taken advantage of the possibilities.

The operators of the amusement park in question have apparently deliberately devised a closed system. The park is at some dis tance from any alternate sources of refreshment. This has been made irrelevant, however, by the admis sion practices. The entrances and exits are by way of turnstiles. The entrance fee is $7.50 per person, and includes the cost of all rides and exhibits. Once inside, the only way to reach alternate sources of refreshments would be to make an exit from the park. To get back in, it would be necessary to pay the fee again. No rain checks are given. This tends to make the park a closed system. Most of the irritants can be attributed directly to these admission policies. Once the price of admission has been paid, the rides and exhibits are "free:' A kind of contest then develops between the "visitors" and the operators of the park. The visitors attempt to avail themselves of as many of the attrac tions as possible, to get as much for their money as possible, to make the price of admission a bargain, if that is possible. This helps to explain the waiting.

True, I visited the park at the height of the season, and on a Saturday, but there was evidence that lines are common and usual, except at the ticket windows in front of the entrance. Most rides and exhibits can only be reached by threading one's way through a maze of elongated "stalls." These mazes are used to confine the waiting lines to relatively small areas and keep them from interfering with the flow of traffic generally, among other things. Waiting Is the Price What has happened can be readily explained in economic terms. Inside the park, prices are not used to allot these rides and exhi bits to the customers. The result is a "short age" of rides and exhibits and a "surplus" of "customers:' Waiting in line becomes a means of paying for the "free" rides and exhibits. It also becomes an effective means of reducing the amount of goods one is 646 THE FREEMAN November likely to acquire by paying the general price ofadmission. For most people, at some point, another long wait in line outweighs any antici pated thrill or pleasure. They may not be sated with rides and exhibits, but they are with waiting in line.

Have the operators of the park deliberately contrived it so that it works out this way? Undoubtedly. I have been to a number of carnivals and the like, where admission is paid to each attraction separately and individually. At these, one can ordinarily purchase as many tickets as he wants, and repeat the ride, or whatever, as long as his tickets last. It is not necessary to get out or off and stand in line again. Moreover, the "free" ride accounts for the eligibility requirements for the children's rides. I have never seen children measured to determine if they were the right size when tickets for individual attractions were purchased. There are many advantages to any purveyor of goods of having a closed system. It reduces greatly the effort that needs to be put into selling. In the case of the above amusement park, once the admis sion ticket has been sold, no more tickets need· be sold. It reduces competition. The attractions do not have to compete with one another for customers; the customers com pete to get into the attractions. The burden is shifted in significant ways from the seller to the buyer. From pushing his goods and wares, the seller can turn his attention to regulating the conditions in which his goods and services can be attained. In short, the seller can shift from attracting to regulating.

The advantages to the seller are considerable. The advantages to the buyer are largely illusory or nonex istent. And, thereby hangs a tale. Aspects of Monopoly There are closed systems and closed systems. Every merchant attempts to create at least a miniature closed system. He seeks to establish an environment that will induce people to trade with him and not with someone else. He may give trading stamps, offer prizes, give guarantees and warranties, or distinguish his goods and services in whatever ways he can from others. Ordinarily, these miniature closed systems are of no particular interest or concern. If entry to the market is free, they are simply experienced as competition among purveyors of goods. The greater the effort put into establishing a closed system, the more vigorous the com petition is likely to be. Even so, the buyer should beware. What is here being called a closed system is what is ordinarily referred to as monopoly. The advantage of the phrase, "closed system;' is that it refers to that aspect of monopoly 1976 REFLECTIONS ON AMUSEMENT PARKS 647 which is disadvantageous to the consumer. Much of the discussion of and action against monopoly has been confused and misguided, con fused because monopoly is a generic term which can only be specialized to refer to its harmful aspects by ignoring its basic meaning, and misguided because it aims at effects rather than causes.

There are aspects of monopoly which are essential to freedom and to the free market. Monopoly is the exclusive right to sell. Though it may not be immediately apparent, all ownership of anything con stitutes a monopoly, at least all private ownership. The exclusive right to sell one's services is a monopoly of them. It is also a most vital aspect of freedom. Property in real estate or chattels is a monopoly. The right to have such monopolies is vital and essential to freedom. There is another aspect of monopoly, too. Every effort to improve goods or services by any vendor has as its tacit aim becom ing the only seller in the market. Every enterprising entrepreneur is a potential monopolist, then. But the face that his effort bares ordinarily is competition. The tacit aim is monopoly, but the visible result in a free market is competi tion. Any general assault on monopoly, such as that of the Sher man Antitrust Act, becomes in effect an assault upon quality goods and services and upon effective competition.

Monopoly is not the villain of the piece, then, but that aspect of it that is here called a closed system is. A closed system is one which shuts off alternative sources of goods, services, employment, land, or whatever. "Alternative" is the key word. It is of no untoward consequence that I am the only seller of my services, of this particu lar apple, of that particular knife, of a given house and lot, or whatever, so long as there are alternati ve sources of similar goods and ser vices. When we are cut off from alternatives, it is then that we experience the notorious conse quences that have been improperly attributed to monopoly in general. The closed system produces high prices, low quality, shortages, surpluses, busybody regulations, and a hundred other unwanted results. Buyers Keep System Open Each of us is inclined - more deep ly than weare apt to suppose-to want and to seek a closed system within which to operate. It would free us of the necessity to compete.

It would enable us to order people around rather than having to appeal to them and attract them. Think how effectively we could plan our lives if we only had a closed system! The ideal position would be 648 THE FREEMAN November similar to that of, say, a Federal judge: appointment for life, a jurisdiction from which others were ~xcl uded, the power to com pel "customers" to use our service, and the authority to punish those who disobeyed our orders. This is the motive power behind the thrusts toward building· closed systems. The buyer must beware, as I have said, if he wishes to avoid the tangles of a closed system. Indeed, it is the awareness of buyers that turns the thrust of merchants to make closed systems into competi tion. The fear of large corporations and other such conglomerates in the latter part of the nineteenth and in the early twentieth century arose from a sound instinct. The instinct was that a large business operating over extensi ve terri tory had the potentiality for erecting a closed system. So it does, but there is a coun terweig ht to it in the open market. Other entrepreneurs can and do enter the market on a similar scale to put at naught the efforts of those who appear about to succeed in establishing a closed system. In short, customers are a match for the makers of closed systems in a free market. Customers may indeed tolerate some degrees of closed systems, but they will limit the extent and sway of them.

Closed systems are a threat in direct proportion to the duration of their hold and extent of their sway and in, inverse ratio to the ease with which the hold can be broken and the sway be limited. If one can refuse the good or service, walk out, turn off, or quit without drastic consequences, the system is not really closed and poses no great threat. The. buyer should beware in the market place, then, beware not only of the price and quality of what he buys but also of the extent to which he entangles himself in some system. But there is an arena where he needs to beware much more thah in the market. place. It is the arena of the epitome of closed systems, the closed system to top all closed systems - the State. Note, I say "the State," not government, is the epi tome of closed systems. The Power of the State The State is that area, any area, ruled over by a single independent power. The State is an abstraction, but the area is quite real. It is the nature of the State to be an absolutely closed system, to h~ve boundaries which outsiders may not cross to enter and insiders may not cross to get out. The existence of the State consists entirely of these boundaries which are usually invisi ble and are largely imaginary. The more firmly the boundaries inhibit entry or exit, the more nearly the State approaches the realization of its "stateness:' To put it another 1976 REFLECTIONS ON AMUSEMENT PARKS 649 way, the State becomes a visible reality, as much as any abstraction can, when its boundaries are marked with high walls or barbed wire fences and the openings guarded by cannons and machine guns. The amusement park, with which this essay began, is, of course, a miniature state, but only a tem poraryone.

Government exercises power over the people within a state. Govern men t determines the extent to which the State is a closed system. We have no choice as to whether or not we will reside in a state. We have no choice as to whether or not we will have a government. We can choose what kind of government we have and how extensive and restric tive it will be. It is in these choices that the buyer must beware. By nature, the State is a closed system. By nature, whatever government regulates or controls it tends to make of that area a closed system. Government is not a closed system, but its method of operation makes it force out alternatives. The necessity for government is to maintain the peace within the State. It is interesting and encouraging that so long as it does this task well, and is restricted to this task, it opens rather than closes the system. Freedom can only be exercised effectively where life and property are reasonably secure.

Liberty is broadened to the extent that men are not greatly threatened by murder, theft, fraud, and con spiracies against them. The free market is a phenomenon of the security of life. and property. Nor does a government which maintains the peace, and is restricted to that, produce the infelici ties associated with a closed system. There is no crush of people willing and waiting to have govern ment exercise its powers upon them. No lines form to get arrested. Men presen t themsel ves before courts under the threat of dire conse quences if they do not. The number seeking to be imprisoned is surely infinitesimal, if there is any such number. Prudent men avoid occa sions of contact with governmen t which may bring them to the unfavorable attention of those who enforce the law. Government in the Market In short, the basic task of govern ment is such that there is no market for the activities which it engages in. In the performance of its basic task, government offers nothing for sale in the market and so far as it makes purchases in the market may do so in a non-governmental way, that is, without the use of force.

All this changes when govern ment becomes an active factor in the market. Then, the movement is toward a hampered market and a closed system. Government can be650 THE FREEMAN November come an active factor in the market in two ways: it can offer goods and services in the market or it can regulate and control those who do. In either case, it makes entry to the market more difficult and reduces the number ofalternative sources of goods and services. Let us deal first with government as a provider of goods and services. Let it be noted that there are no free goods. There are no free rides, even in an amusement park. There are no free lunches. There is no free medi cal care. There are no free schools. A sound instinct tells us that when a salesman in the market tells us that he is going to give us something absolutely free, we had best beware. At the least, he is trying to break down our sales resistance to something else by making us feel obligated to him.

Quite likely, he may be going to give us something whose use is going to depend on something he has for sale. It is a "come on;' we say, and we have learned to be wary' of these. It is even more important that we beware of "free" goods offered by government, for they carry with them a lot of hidden costs. "Free Goods" Become "Rights" If goods were free, they would cease to' be goods. This is an economic fact. But the psychologi cal and political dimensions need to be explored a little further. We say with confidence that there are no free rides or free lunches. Our meaning is· clear to us: we mean that they have to be paid for by somebody, somewhere, at some time. True enough, and a most important tru tho But it is also true that a situation can be created where rides become "free;' so far as any direct charge for them is concerned, and lunches can be and are given away. It has been little noticed, but there is a tendency· for these free items to become something other than or different from goods. Free lunches or free rides become not so much goods to be sought as rights to be asserted. If my impression was correct, many people in the amuse ment park were not being amused; they were asserting their rights to the rides and exhibits. Certainly, it is this that leads to the legalistic approach of establishing eligibility requirements for certain of the rides.

Much more importantly, welfare payments, food stamps, and such like, are now commonly referred to as rights. There are now welfare recipients who bend every effort to get everything that is coming to them. They are not the only ones. School systems frequently employ a person whose task is to discover government aid programs and make sure that the system receives them. "Free" goods have become rights, and there are people determined to 1976 REFLECTIONS ON AMUSEMENT PARKS 651 have all that is coming to them whether they need, want, or can use them or not. Some ~'free goods" cease to be thought of as goods at all by reci pients; they become "bads:' This is so for many of the children in "free" schools much of the time and for most children some of the time. In fact, governments do not simply offer schools in the mar ket but compel attendance at some school. The government determines what is "good;' not the child or even his parents. In consequence, some schools take on the aspect of part time prisons with armed guards and some of the other paraphernalia of compulsion.

Alternatives Reduced The schools, too, are a good exam pIe of how government in the mar ket reduces alternatives and tends to close the system. Government not only compels school attendance but also prohibits the young from work ing in many employments until they reach a certain age. They have very few alternati ves to going to school even if they were not com pelled to do so. Most states have lengthy prescriptions for what must be taught in any acceptable school, public or private. The result is severe limitation of what is appro priate to education. Moreover, the Federal courts, Congress, and HEW have in significant ways federalized the schools with regulations, prescriptions, and rulings. The direction is toward a standard school for all America. The Post Office is an even better example of closing the system when government offers a service. The government long ago eliminated all competitors in delivering :first class mail. It behaves in a fashion which is typical of monopolies. It contin ually raises prices, reduces service, and regulates the cu~tomers.More and more of the services once per formed by clerks are now performed by the patrons.

How customers are regulated can be illustrated by a homely example. The local post office which I use often has fairly long lines. Post offices are not the only places where lines form, of course; they form at banks, checkout counters of grocery stores, and other places. There is a difference, however, as I discovered. In private establishments, customers often shift from line to line in the hope of getting service sooner. Indeed, it is not uncommon in grocery stores, when another checkout counter is opened, for the clerk to beckon to those at the end of the line to come and be served. Not so, in this post office. I was near the end of the line one day when I observed that another window had been opened. I moved toward it, as I probably would have done in the grocery store. I was ordered back 652 THE FREEMAN November into line by an officious clerk, who thereafter took the people one at a time who were nearest to the originally open window. The post office has since roped off an area to assure that everyone stays in a single line. It may be that they will shortly install a maze of stalls through which the patrons must proceed.

It is debatable, I suppose, whether in strict justice a new ly opened counter should be used to serve those nearest to the original counter before which the line had formed or the newest comers to the line. I have observed, however that when the customers are free, those about to be waited on will stay in the original line while those furthest back are most likely to shift to the new line. The clerks at the grocery store attempt to keep the lines short and see to it that everyone's wait is as brief as possi ble. The grocery clerks are attuned to service. The line in this post office has been politicized. Everyone is going to have as long a wait as anyone else, if possible, regardless of race, creed, color, religion, age, infirmity, or what not. The grocery clerk beckons; the postal clerk orders. The grocery store competes in the open market; the Post Office operates as a closed system.

Examples are abundant of how government acting in the market tends to close the system. If all that come to mind were reported this would become a book instead of an article. Suffice it to say, then, that wherever government intervenes in the market it tends to reduce alter natives. When government franchises, licenses, regulates, prescribes, inspects, sets standards, or in whatever manner intervenes in the market it reduces alternatives. When it offers goods or services in the market it tends to eliminate all competitors. Its activities produce surpluses, shortages, and imba lances. It turns its power on its "customers" to make them conform to its rules and winnows them through sets of eligibility require ments. The more government acts on the market in these ways the more hampered it becomes, the less open, and the more nearly closed. The thrust toward intervention in our day is socialistic, and the end result is the closed system.

State VB. Market It is common in our day for economists to speak of the market in terms of the "public sector" and "private sector:' These phrases have never struck me as particularly apt, and I have always avoided the use of them. For one thing, they smack of jargon which it is usually well to avoid. But there is a much more import ant reason than this. They do not fully describe what is involved 1976 REFLECTIONS ON AMUSEMENT PARKS 653 nor do they reveal the character of the actions they purport to bring to our attention. Much better distinc tions are available, but they need a little introduction. Man lives out his life within the orbit of two great abstractions. One is the State. The other is the Mar ket. The State, as already indicated, -is the epitome of the closed system. By nature, it is a barrier, confining those within its boundaries and shutting others out: restricting, limiting, and inhibiting all activity.

The Market, on the other hand, is by nature open and free. The consumer welcomes all to the market, seeking as he does to buy the highest quality he can discover for the lowest price. He can do this best· if all who have goods or services are available to him in the market. Any appearances to the contrary, the Market is the arena of the buyer or consumer. The seller is there at the consumer's behest and is tolerated only so long as he pleases. Government is the instrument of force which determines whether and to what extent the State or the Market holds sway. If the Market is to prevail, the government main tains the peace and allows freedom for it to unfold and helps to remove the barriers to its expansion. If the government throws its weight behind the State, it acts to inhibit the Market and increase the bar riers. The more government inter venes in the market the more it increases the power of the State.

The "public sector" is, in reality, Statism. The "private sector" is none other than Freedom. The issue is not between the "public sector" and the "private sector:' It is be tween Statism and Freedom. The end toward which Statism moves is the totalitarian state with its massive barriers at the frontiers to prevent entry or exit of peoples and goods. Its appropriate symbols are the Berlin Wall and the fugitive shot down as he tries to escape. Amusement pf:lrks do not matter much. I can take them or leave them. Hopefully, my children will grow up and can do likewise one day. In any case, life is long and visits to them are brief, and you can leave any time you wish. It is not so with the State. To move from ODe state to another is a great inconvenience, is costly, and frequently requires the mastery of another language and the adoption of another way of life. Moreover, the likelihood today is that Statism will be as prevalent, or more so, in the new state as in the old. Better to focus on government, limit its functions, beware the siren song of the State, and recover the freedom of the Market. , ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics. has a Masters degree in business administration. has worked two years in Sweden. and now works as a professional systems analyst. He is a businessman who is active in community and church affairs. is a free lance author. and is often-called on to speak. He lives with his wife and children on a small farm just outside of Salt Lake City.

All rights reserved. 654 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

VH. On Amendmentxvn This continues a series of articles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. WHEN WE MET in convention in Philadelphia that summer of 1787, our new land was in the throes of civil turmoil and economic emergency. Mobs had driven .the Congress from the city, court houses in Massachusetts had. been fired upon, inflation had wasted ninety eight cents of our dollar, general disorder and dismay reigned in the cities and hearts of the people .. Our urgent intent was to assuage those ills, and neither our feelings nor our view of our troubles was so different' from a hundred similar gatherings assembled in history by the press of political problems. At first we were largely unaware of the far-reaching consequence of the seemingly natural events of the Convention.

While most of us saw only the grave conditions around us, there were a few great ones who saw in those troubles the seeds of a· better and more enduring system. But faintly did we sense the full stature of the giants who sat among us; those few whose wisdom pierced the gathering gloom and f~stened upon the vision of a liberty wherein the powers of the. people would balance the powers of government, and the frailties of human government would be balanced against them selves, and the written Constitution would fix and protect them all. By the persistent consideration of conflicting but equally worthy objectives we worked our way to a new understanding and a balancing of those objectives which loosed the powers and enterprise of the citizens while it protected them in their rights and gave them control of their protector. The resulting Constitution was an instrument of somewhat delicate but well-guarded balances, a framework which has proved its worth in the nation's unparalleled successes.

655 656 THE FREEMAN November You may think I. too frequently remind you of that, but I have seen your ignorance and am resolved that you shall learn well the sing Ie most obvious fact of your two cen turies: tha.t the balances of the Constitution specifically and the goodness of the people generally are the towering columns which raised you to your present glory. My children - be careful lest the relent less drumming of the philosophy of "something for nothing" bring you down like the walls of ancient Jericho, for. now it jars both pillars and the nation shudders in the din. The Constitution has been called the result of many compromises but I prefer to call them balances. We balanced anarchy against oppres sion, nationalism against federal ism, and the branches of govern ment against each other. Each of these balances is supported by others, and all of them are neces sary to the proper function of your government. But some -of them have been badly· disturbed or altogether removed, and you now feel the consequences.

One of those most critical to the welfare of the nation was reached in the design of the bicameral Con gress. We preferred the advantages of democracy but declined to suffer its errors. We desired to protect our states and our local governments and minorities among the people from the oppression of strict popu lar rule; that defect being clearly discernible in the cracks that wrecked the foundations of the ancient Greek nations. On the other hand, we wanted no part of Plato's republic with its established, tyran nical aristocracy. But between those extremes we founded a Congress which was at once a direct repre sentative of the people (the House) and a direct advocate for the States (the Senate). It is an obvious principle that the greater the facility with which the people may control their govern ment, the less it will be allowed to oppress them (except when the poli tical ignorance of the electorate permits politicians to successfully espouse impossible programs).

Likewise, the closer the government function operates to the public, the easier their control thereof. These considerations lead naturally to a universal principle of good administration: each problem . should be treated at the lowest possible level. Thus school books should be selected by the teachers and parents· of the pupHs who use them, fence lines should be the concern of the county surveyor, laws prohibiting crimes of all types are the correct domain of the State, and national security must be attended by the United States. It is an interesting exercise in what you call political .science to write oneself a 1976 A NEW MESSAGE-AMENDMENT XVII 657 list of those operations which can not be performed by the States or lower agencies, and which must therefore be handled by the Union. I heartily encourage you to attempt it! Some have thought that our jealousy for the sovereignty of our States was an emotional national ism, and there. is some truth there, but we were also concerned to keep the execution of the powers of government as close to the populace as possible. International concerns want to be administered by the United States. An assurance of equal justice and the protection of rights are also proper questions for the Union, as are provisions to prevent the States from economic chicaneries against their sisters.

But all other powers were reserved to the States and their inhabita:p.ts. We adopted that plan not so much in fear for the sovereignty of our States, but because that supremacy is actually a reflection of its source which reposes in the individual citizen. In order to safeguard all his rights, each person delegates a por tion of them to his State. The Constitution provided that most of those powers should remain there and they came to be known as States' rights although their origin continues in the citizen. The nature of that source requires devices to shield them from the constant threat of encroachment by the more comprehensive federal government. We noted with concern that the universal nature of legislatures is to legislate too much, and that unless some opposing force were supplied, the United States Congress would eventually infringe every State pre rogative until the rights of the people vested in the States were consumed. We talked much of the need for Senators to preserve the sovereignty of their States -because they were the best defenders of the rights the people had already lost to their States' governments. Hence, Senators were elected by the State legislature, were to answer to the State, and were to represent the interests of the State in the Con gress. Amendment XVII destroyed that balance and the Senate became another House.

There is a point of possible con ten tion .in this discussion, for one might correctly ask: If States' rights are really the delegated rights of the people, then is it not clear that the people can best see to their own interests by electing their Senators directly as they do now? Ah, there is also a need· to balance political principle with the realities of human nature. It would be well enough if each citizen understood that States' rights are people rights (which they do not) and if they could remember to apply the fact to 658 THE FREEMAN November each political decision (which they cannot). But once those rights are granted the States and new genera tions come and go scarcely ques tioning the authority exercised over them, it is natural that the people will little concern themselves with the finely decisive lines of human rights. The men of the State Legislatures sense more keenly the problems of the State than do the public. This relative ignorance (which arises from no lack of diligence but from the effect of a different occupation) practically disqualifies the ordinary citizen from the task of choosing a Senator who can properly represent his State. The people are more likely attracted by policies which, al though they seem fraught with blessings, contain the seeds of the loss of their independence.

Far wiser to treat the rights of the citizens delegated to their States as they are usually perceived and more conveniently described, as States' rights, and to place officers in such positions as to foster a natural jealousy for. those rights. Because your Senators are elec·ted by the people, their desire is to please the people, an operation belonging to the Representatives. If Senators were elected by the State's legislature, as they ought to be, their natural impulse would be to please the members of that body, and what would please them most is that the Senator learn and respond to the ·needs and rights of the State as a political entity. This technique allows the Senators to forget the origin of the rights they nonethe less anxiously guard, for, as deputies of the State, they feel directly that responsibility and instinctively position themselves in defense of the power they represent.

You have witnessed an increasing intrusion of the federal government upon the States, and a usurpation of those powers which properly belong to and ought to be administered by the States. You have .even seen Federal bureaus present ultimatums to State legislatures. Such arrogance surely. indicates a serious disease, and although you are generally aware of the malady, you have not perceived its cause. What? Do you think a Federal bureaucrat could dictate law to a State legislature if that State were correctly repre sen ted in the Congress? Can you hear the words of a true .State Senator on such a topic? Would there not then be a sweet commo tion in the Senate? I know you can sense the virtue of the principle! But who is now the protector of the sovereignty of the States? Where now are those guards? Who is the advocate in the federalcoun cil for the rights the people entrusted to the States? Who car1976 A NEW MESSAGE-AMENDMENT XVII 659 ries the charge to keep the govern ment of the United States from swallowing her own members? The States formed the Union to serve their mutual needs and cast thetn sel ves under her· wings for their common defense. Now the creature has turned on her creators, the servant upon her masters; and all because the carefully set balances of the Constitution were thrown awry by the Seventeenth Amend ment!

And whence your concern that the laws of one State are not the same as another? Who shall write the law for a State if not her own citizens? Anything less is tyranny. You have nearly forgotten the vision of the United States. Had wisdom decreed that this land should be one state, we should have named it the Consolidated State, or a similar singular noun, but that was not our intent. And while you followed our plan you prospered, but since you put .the States out of Congress they have lost their only defense, their powers have been usurped and centralized and you have steadily forfeited the freedom we gave you. Your experiment has verified our wisdom. Nay, the United States were not meant to function as a single nation, except in relation to states outside her boundaries, but rather as a federalization of sovereign nations bound together in only the most essential ways and otherwise free and independent. You recoil somewhat at the concept, yet I have not come to dissolve the Union, but to restore it by returning the strength to her members. You are offended because you have lost the understanding of our work. We wanted the nations in the federa tion small so as to keep the exercise of the powers of government close to their only legitimate source, the people. You have come to see the States as convenient subdivisions for the administration of the central government and not at all as the protectors of your sacred rights.

Can you see what has been done? A portion of your rights were dele gated to your States. The federal government, having no opposition from the States in its Congress, has nearly absorbed all those rights and now inflicts your own authority upon you and against your will. That your grievances derive almost exclusively from your federal gov ernment should teach you the truth of these principles. Our day and our times required much careful thought and action, which, thoug h incon venien t, were necessary to the establishment of an enduring system of human liber ty. Your day and your times are too m~ch like ours. You too must put selfishness and immediacy behind 660 THE FREEMAN November you. You too must listen and strive for the visions of your wise ones, and they are among you for every battle has its conqueror. The full destiny of the nation and the high est use of the Constitution have only begun to appear. Never before has the world been so dark or so hungry for the sweet fruits of freedom. But how will you hold aloft the light of liberty while the ship of state lists under the unbalanced load of a federal government unchecked by the sovereign States?

And how shall you bear abroad those fruits in a ship so out of trim? What is to be done? Restore the balance! Put the guardians of the rights of the States back in Con gress! Stay the growing intrusions of the federal government! Reverse the trend and let the rights flow Home Rule back to their proper place. Repeal th~ amendment and begin the restoration of the Constitution! Consider the effect! With the Senate restored to its correct authority, many of the reforms you seek would begin to be effected as a natural consequence of the composi tion of the Senate and in. a manner slow enough to insure that some other portion of the political ma chinery would not be thrown awry. And all that in concert with the restoration of the rights. of the people vested in the several States. The· principle points its own goal and pleads its own case while the rising indignation of the people provides the power for its attain ment. Is it not a matter worthy of your most sober deliberation? I) Next: VIII. On the Destiny of Liberty IDEAS ON LIBERTY To BRING about government by oligarchy masquerading as democracy it is fundamentally essential that practically all authority and control be centralized in our national government, the individual sovereignty of our states must first be destroyed ...

We are safe from the danger of any such departure from the principles upon which .this country was founded j~st so long as the individual home rule of the states is scrupulously preserved and fought for whenever they seem in danger. Thus it will be seen that this home rule is a most important thing-a most vital thing if we are to continue along the course on which we have so far progressed with such unprecedented success. FRANKLIN D. ROOSEVELT, March 2,1930 From '~n Address on State Rights" while Governor of New York.

The PROPER Role of Government EZRA TAFT BENSON DURING this historic celebration of our nation's Bicentennial, it seems appropriate to say something about the principles, functions, and role of government which these Founding Fathers established. I am humbly grateful to God for the blessings we all enjoy as ci tizens of these great U ni ted States of America. I am grateful for our Founding Fathers who were raised up with the courage to give their lives, with the unselfishness to give their fortunes, and~ the vision to pledge their sacred honor in order to establish a new kind of govern ment of their own choosing where men might be free. I am additionalMr. Benson, former Secretary of Agriculture, has long been active in agricultural affairs and on behalf of The Church of Jesus Christ of Latter Day Saints, which he now serves as President of the Council of Twelve. This article is from an address of June 26, 1976 at a meeting of the National Association of Counties Officials.

ly grateful that these Founding Fathers had the faith and humility to accept the divine inspiration so necessary in setting forth the Con stitution as the foundation for their new Republic. Men are often asked to express an opinion on a myriad of government proposals and projects. All too often, answers seem to be based not upon solid principles, but upon the popularity of the specific govern ment program in question. Seldom are men willing. to oppose a popular program - especi~lly if they seek public office. Such an approach to vital politi cal questions of the day can only lead to public confusion and legisla tive chaos. Decisions of this nature should be based upon and measured against certain basic principles re garding the proper role of govern ment. If principles are correct, then they can be applied to any specific 661 662 THE FREEMAN November proposal with confidence. Unlike the political opportunist, the true statesman values principle above popularity and works to create popularity for those political princi ples which are wise and just. How much this country needs men with a mandate higher than the ballot box!

It is generally agreed that the most important single function of government is' to secure the rights and freedoms of individual citizens. But what are those rights? And what is their source? Until these questions are answered, there is little likelihood that we can correct ly determine how government can best secure them. Origin of Rights Let us first consider the origin of those freedoms we have come to know as human rights. Rights are either God-given as part of the di vine plan, or they are gran ted by government as part of the political plan. Reason, necessity, tradition, and religious convictions all lead me to accept the divine origin of these rights. If we accept the prem ise that human rights are granted by government, then we must be willing to accept the corollary that they can be denied by government. I support the doctrine of separa tion of church and state as tradi tionally interpreted to prohibit the establishment of an official national religion. But this does not mean that we should divorce government from any formal recognition of God.

To do so strikes a potentially fatal blow at the concept of the divine origin of our rights and unlocks the door for an easy entry of future tyranny. If Americans should ever come to believe that their rights and freedoms are instituted among men by politicians and bureaucrats, then they will no longer carry the proud inheritance of their forefathers, but will grovel before their masters seeking favors and dispensations, a throwback to the feudal system of the Dark Ages. Since God created man with cer tain inalienable rights and man, in, turn, created government to help secure and safeguard those rights, it follows that man is superior to the creature which he created. Man is superior to government and should remain master over it, not the other way around. Even the nonbeliever can appreciate the logic of this relationshi p. A government is nothing more or less than a relatively small group of citizens who have been hired, in a sense, by the rest of us to perform certain functions and discharge cer tain responsibilities which have been authorized. The government itself has no innate power or pri vilege to do anything. Its only source of authority and power is from the people who created it.

1976 THE PROPER ROLE OF GOVERNMENT 663 Keep in mind that the people who have created their government can give to that government only such powers as they themselves have. They cannot give that which they do not possess. In a primitive state, there is no doubt· that each man would be justified in using force, if necessary, to defend himself against physical harm, against theft of the fruits of his labor, and against enslavement by another. Indeed, the early pioneers found that a great deal of their time and energy was being spent defending themsel ves, their property, and their liberty. For man to prosper, he cannot afford to spend his time constantly guarding his family, his fields, and his property against attack and theft. When he joins together with his neighbors and hires a sheriff, government is born. The individual citizens delegate to the sheriff their unquestionable right to protect themselves. The sheriff now does for them only that which they had a right to do for themselves - nothing more.

From Whence This Claim? But suppose pioneer "I(' wants another horse for his wagon. He doesn't have the money to buy one, but since pioneer "B" has an extra horse, he decides that he is entitled to share in his neig hbor' s good fortune. Is he entitled to take his neighbor's horse? Obviously not! If his neighbor wishes to give it or lend it, that is another question. But so long as pioneer "B" wishes to keep his property, pioneer "A" has no just claim to it. If "I(' has no proper power to take "B's" property, can he delegate any such power to the sheriff? No. Even if everyone in the community desires that "B" give his extra horse to "A," they have no right individually or collectively to force him to do it. They cannot delegate a power they themselves do not have. The proper function of govern ment is limited only to those spheres of activity within which the individual citizen has the right to act. By deriving its just powers from the governed, government becomes primarily a mechanism for defense against bodily harm, theft, and involuntary servitude. It cannot claim the power to redistribute the weal th or force reI uctan t citizens to perform acts of charity against their will. Government is created by man. No man can delegate a power that he does not possess. The creature cannot exceed the creator.

In general terms, therefore, the proper role of government includes such defensive activities as main taining national military and local police forces for protection against loss of life, loss of property, and loss of liberty at the hands of either foreign despots or domestic crimi664 THE FREEMAN November nals. It also includes those powers necessarily incidental to the protec tive function. We should recognize that govern ment is no plaything. It is an instrument of force; and unless our conscience is clear· that we would not hesitate to put a man to death, put him in jail, or forcibly deprive him of his property for failing to obey a given law, we should oppose that law. The Constitution of the United States, an inspired document, is a solemn agreement between the citizens of this nation that every officer of government is under a sacred duty to obey. Local Control Preferable The Constitution provides that the great bulk of the ·legi timate activities of government are to be carried out at the state or local level. This is the only way in which the principle of self-government can be made effective. The smallest. or lowest level that can possibly under take the task is the one that should do so. The smaller the governmental unit and the closer it is to the people, the easier it is to guide it, to correct it, to keep it solvent, and to keep our freedom. Remember that the people of the states of this Republic created the federal govern ment. The federal government did not create the states.

A category of governmen t acti vity that not only requires the closest scrutiny but that also poses a grave danger to our continued freedom is the activity not within the proper sphere of government. No one has the authority to grant such powers as welfare programs, schemes for redistributing the wealth, and activities that coerce people into acting in accordance with a prescribed code of social planning. There is one simple test. Do I as an individual have a right to use force upon my neighbor to accomplish this goal? If I do, then I may delegate that power to my government to exercise it in my behalf. If I do not have that right, I cannot delegate it. If we permit government to manufacture its own authority,· and to create self-proclaimed powers not delegated to it by the people, then the creature exceeds the creator and becomes master. Who is to say, "this far, but no farther?" What clear principle will stay the hand of government from reaching farther and farther into our daily lives?

Grover Cleveland said that "though the people support the government, the government should not support the people:' An Instrument of Plunder Once government steps over this clear line between the protective or negative role into the aggressive role of redistributing the wealth 1976 THE PROPER ROLE OF GOVERNMENT 665 through taxation and providing so called "benefits" for some of its citizens, it becomes a means for legalized plunder. It becomes a lever of unlimited power that is the sought-after prize of unscrupulous individuals and pressure groups, each seeking to control the machine to fatten his own pockets or to benefit his favorite charity, all with the other fellow's money, of course. Each class or special interest group competes with the others to throw the lever of governmental power in its favor, or at least to immunize itself against the effects of a pre vious thrust. Labor gets a minimum wage. Agriculture gets a price sup port. Some consumers demand price controls. In the end, no one is much further ahead, and everyone suffers the burdens of a gigantic bureaucracy and a loss of pers.onal freedom. With each group out to get its share of the spoils, such govern ments historically have mushroomed into total welfare states. Once the process begins, once the principles of the protective function of government give way to the aggressive or redistributive function, then forces are set in motion that drive the nation toward totali tarianism.

It Can Happen Here You say, "It can't happen here;' I have just returned from Great Brit ain, that na~ion which has provided the free world with a tradition of freedom and democratic rights, stemming from the Magna Carta and coming down through other import ant historical documents and statements by famous Englishmen. Yet Eng land today is losing her freedom and democracy. She has become a giant welfare state. Today government spending in Great Brit~ ain amounts to sixty per cent of her national income. This has led the renowned University of Chicago economist, Dr. Milton Friedman, to forecast: "I fear very much that within the next five years the odds are at least fifty-fifty that. British freedom and democracy as we have seen it will be destroyed;' Recogniz ing the past record of the British people for stamina. and courage, I am hopeful-even confident-that they will disprove this prediction. I hope and pray they will meet the serious challenges facing them.

The lesson of New York City should tell us that this same thing can happen here-to us-now. New York City is no longer governed by its elected officials. It is governed by a committee of overseers appointed by the State of New York. New York City has partially lost its freedom! When will we learn the lesson that fiscal irresponsibility leads to a loss of self-government? A recent study by the Ford Motor Company economists showed that there are more people being sup666 THE FREEMAN November ported by taxes in the United States (80,655,000) than there are people working in the private sector of the economy to pay the taxes (71,650, 000). Among. those living on your tax dollars, according to the Ford study, were those on welfare and retire ment programs, government em ployees, military personnel on active duty, and the disabled and unemployed. "A new American majority is being created," the study states, "who are exploiting the fact for their own political and professional purposes:' Such was a major factor in the fall of Rome.

To pay for this and other benefici aries of your tax dollar, almost one third of the average income goes for taxes for the operation of gqvern ment at one level or another. Put another way, you now work from January 1 to April 28 to pay for your federal, state, and local taxes. Downgrading the Individual According to Marxist doctrine, a human being is primarily an economic creature. His material well-being is all-important; his pri vacy and his freedom are secondary. The Soviet constitution reflects this philosophy in its emphasis on secu rity; food, clothing, housing, medi cal care - the same things that might be considered ina jail. The basic concept is that the govern ment has full responsibility for the welfare of the people and, in order to discharge that responsibility, must assume con trol of all their activities. It is significant that in actuality the Russian people have few of the rights supposedly "guaran teed" to them in their con stitution' while the American peo ple have them in abundance even though they are not guaranteed.

The reason is that material gain and economic prosperity and secu rity simply cannot be guaranteed by any government. They are the result and reward of hard work and industrious production. Unless the people bake one loaf of bread for each citizen, the govetnmen t cannot guarantee that each will have one loaf to eat. Constitutions can be written, laws can be passed, and imperial decrees can be issued, but unless the bread is produced, it can never be distributed. Why America Has Prospered Why then do Americans bake more bread, manufacture more shoes, and assemble more TV sets than Rus sians do? They do so precisely be cause our government does not guarantee these things. If it did, there would be so many accompany ing taxes, controls, regulations, and political manipulations that the pro ductive genius that is America's would soon be reduced to the floun dering level of waste and inefficiency now found behind the Iron Curtain.

1976 THE PROPER ROLE OF GOVERNMENT 667 God has prospered this land! Though the United States has only about six per cent of the world population and seven per cent of the land area, our gross· national prod uct is about forty per cent of the world total. The principles behind this prosperity can be reduced to a rather simple formula: 1. Economic security for all is impossible without widespread abundance. 2. Abundance is impossible with out industrious and efficient produc tion. 3. Such production is impossible without energetic, willing, and eager labor. 4. This is not possible without incentive. 5. Of all forms of incentive-the freedom to attain a reward for one's labors is the most sustaining for most people. Sometimes called the profi t motive, it is simply the right to plan and to earn and to· enj oy the fruits of your labor. 6. This profit motive diminishes as government controls, regulations, and taxes increase to deny the fruits of success to those who pro duce.

7. Therefore, any attempt through government intervention to redistribute the material rewards of labor can only result in the eventual destruction of the productive base of society, without which real abun dance and security for more than the ruling elite is quite impossible. A Heartless Approach This may sound: heartless and insensitive to the needs of those less fortunate individuals who are found in any society, no matter how aff luent. "What about the lame, the sick, and the destitute?" is an often-voiced question. Most other countries have attempted to use the power of government to meet this need. Yet in every case, the improve ment has been marginal at best and has, in the long run, created more misery, more poverty, and certainly less freedom than when government first stepped in. As Henry Grady Weaver wrote: "Most of the major ills of the world have been caused by well-meaning people who ignored the principle of individual freedom, except as applie<i to themselves, and who were obsessed with fanatical zeal to improve the lot of mankind-in -the mass through some pet formula of their own ... The harm done by ordinary criminals, murderers, gangsters, and thieves is negligible in comparison with the agony inflicted upon human beings by the professional 'do-gooders,' who attempt to set themselves up as gods on earth and who would 668 THE FREEMAN November ruthlessly force their views on all others-with the abiding assurance that the end justifies the means:' (The Mainspring of Human Pro gress.) America was built on the princi pIes of self-reliance, the profit motive, individual action, and voluntary charity. It was built by those who believed that the surest helping hand was at the end of their own sleeves. These forefathers of ours shared one thing in common an unshakable faith in God and a fai th in themselves.

It was heartening for me to see recently a testimony of the ,princi ples of faith in God and individual ini tiati ve in action. As you know, the eastern sector of Idaho was devastated by the Teton Dam flood. Immediately, government relief agencies were dispatched to the area. Government officials, veterans to the scenes of national disasters, were amazed at the reactions of these people to this seeming tra gedy. Though victims of property loss, they are not victims of despair, despondency, and defeat. They col lectively met in their Church meet ings and thanked God for their lives, then they organized them sel ves and rolled up theiT sleeves and went to work. Even though welfare assistance and government food stamps were made available, these victims, by and large, chose the route of self-reliance. Because of this, they will emerge from this catastrophe stronger and more faithful. I have great faith in America and its people. This is a choice land. If we live and work so as to enjoy the approval of a Divine Providen~e, we will endure as a nation. Without God's help, we cannot long endure.

Today we face a crisis situation in our beloved Republic. There is first of all a spiritual crisis among our people. In our quest for material things, we have forgotten God. There is a crisis for competent, honest, and moral leadershi p in government at all levels. There is an economic and political crisis, where our basic freedoms stand in jeopar dy because of a departure from fundamental principles. We .must return to these basic principles if our free Republic is to survive. Yes, in the words of Thomas Paine, "These are the times that try men's souls. The summer soldier and the sunshine patriot will in this crisis, shrink from the service of his country, but he that stands it now, deserves the love and thanks of man and woman:' That was said on December 23, 1776. Now, 200 years later, Paine's words are even more apropos to our situation. The days ahead are sobering and challenging and will require the faith, prayers, loyalty, courage, and moral integrity of every American citizen. , ( pThe Birth ~~ ;mmr a of an Idea • CHARLES F. KETTERING THIS AFTERNOON, in every part of the country, people are listening to this great orchestra. Radio can car ry this music to any place in the world.

How long has it taken man to do this? The -records show we have be~n developing the elemen ts of radio for about a hundred years. But, if we made a more careful study, we would find the thing really started in the year 600 B.C.-more than 2,500 years ago. It really started as a thought-a very weak, vague idea. In the year 600 B.C., a Greek philosopher, Thales of Miletus, found that by rubbing amber he produced a force that would pick up straws. Two Reprinted by permission of The Kettering Archives, General Motors Research Laboratories, General Motors Technical Center, Warren, Michigan. thousand two hundred years later, Sir William Gilbert, Queen Elizabeth's physician, did a little more thinking and experimenting wi th the idea and called the phenomenon electricity. Sixty years later, von Guericke, a German, built a machine to generate static electricity. One hundred years later, Benjamin Franklin identified posi tive and negative electricity and proved lightning and electricity were the same thing. In 1820, Oersted, a Dane, proved that electricity would produce magnet ism. And about the same time, Faraday did some experimenting and discovered the principles of the electric motor.

Now, here is what happened. After. Faraday, came Morse and Bell, who used the idea. as a means of communication-the telegraph 669 670 THE FREEMAN November and the telephone. Edison made the idea glow and lit up the world. Marconi and deForest went Morse and Bell one better and laid the foundation for radio. But here is the point-for over 2,500 years, that electrical thought had been growing. It had been carefully cultivated and expanded by a few straight-thinking men-a Greek, an Englishman, a German, a Dane, an American and an Italian. Often these men were working at the same time, unknown to each other. And this small, capparently unim port ant idea in the year 600 B.C. has grown until it has literally changed the face of the earth and the habits of its people. Here is an interesting thing about intangible ideas like this one. Once they occur, they are indestruc tible. Wars, plagues and persecu tions may drive them out of sight for a while but they always spring back again-perhaps in another man's brain, perhaps in some other part of the world, to be cultivated and enlarged. And I c~nnot feel but sometime there will be another mentality similar to Schubert's that will catch the same theme that he had, and write the finishing part of that great symphony.

There have been only a few thou sand of these thought cultivators in the history of the world. It has been said that except for about 1,500 of these cthinkers living in the last 3,000 years, we might still be living in caves. Now, somebody might say that if these people are as rare as all that there isn't much that can be done about it. We'll just have to wait until one happens to come along. But that isn't true. We can develop thinkers just as we can educate people in other lines. If no one practiced playing the violin, there wouldn't be any great violinists. Through practice, we can develop this ability to think. Along wi th these original thinkers, we have millions who are afflicted with mental laziness those who are satisfied. They are the easy thinkers. When a new thought is given them, they find it much easier to agree than to question it. And that is dangerous, especially if the idea is a bad one.

We are fighting the world's greatest war because millions of people were sold one of· these bad ideas. But I am still in hope that we can some day put as much energy into the development of good, con structive ideas as we are now putting into the fighting of a bad one. And speaking of good, constructive ideas, we might still go back to 600 B.C. and find out why the amber picked up the straws. We don't know that yet. If we did, I believe we could open up new fields that might be quite as important as the electric light, the telephone or the radio. ~ WARREN T. BROOKES IS OUR ECONOMIC FUTURE LIMITED? An economic has been regularly as imminent for centuries. an almost continuous seen'ung decline in our resources, it has not come no limit to the greatest we!ann"'l)rOaUIClniQ and asset of _ ....._1.... _ ........... Krl0'''''''110'N. ONE of the more persistent argu ments of our time is the doomsday prophecy that America's economic future is limited and that, in Gover nor Jerry Brown's words, "We must lower our expectations:' The basic premise of this scenario 'is that America became rich in the first place because of our rich mate rial resources, particularly oil; and, now that our oil seems to be run ning out, it is time for Americans· to' begin scaling down their economic growth.

More than a call for conservation, this new economic "doomsdaying" tells us that we must begin to "rethink our whole lifestyle;' and to damp down the fires of our high Mr. Brookes writes regularly for the Boston Herald American and contributes a column, "A Taxpayer Speaks," to the Boston Sunday Herald Advertiser. This article has been reprinted by permission from the Sunday Herald Advertiser of July 18, 1976. powered economy - to accept a more ascetic way of life. A ,fundamental part of this argument is strong pressure for more central govern ment planning and control over our economic resources and decisions and new "bureaucratic structures" to help us "rethink our lifestyles:' These ideas were well summed up in a recent special section dealing with the Energy Crisis prepared by the editors of The Christian Science Monitor. (June 28, 1976) In their words, "The United States' dominant position in the world today is largely due to the historical fact that the potential of oil as a cheap energy source was realized during the nation's industrially formative years and the country has been blessed with large domestic reserves:' With these reserves now seeming 671 672 THE FREEMAN November to decline, the Monitor goes on to purport that, "Americans, as a peo ple, rethink many of their national and personal priorities. It is clear that the consumptive lifestyle which has developed in the U.S. in the last quarter century cannot continue indefinitely;' In short, we are told that Ameri cans must begin to scale down their standard of material livelihood and hold down our economic growth - because our material resources are "limited."

With all due respect to the editors of the Monitor, it is difficult to accept what has become "the poli tics of, poverty" and the "economics of limitation;' Not only do·such concepts grate sharply with America's basic mental posture as the· land of unlimited individual opportunity, but they do not square with historical or economic reality. If, for example, America'sposi tion of economic power and vast distribution of wealth were solely the result of our "vast material resources;' how can we explain the extraordinary economic backward ness of Russia, sitting on even more natural resources than ours? Why The Unused Resources? Why is it, for example, that Russia, with greater agricultural potential even than ours, must now import our wheat? Why is it that Brazil, with some of the richest natural resources in the world, has a standard of living only one-eighth of ours? If our natural resources really were the primary source of our wealth, why is it that native American Indians lived in such abject poverty, frequently in hunger and starvation, sitting on plains that now feed the world? And, why did some early farmers in our great plains grow rich, while their neighbors with the same land fail?

The answer is, of course, wealth is only partly dependent on material resources. It is much more depen dent on the knowledge and ideas that put those material resources to work. In this respect, the greatest source of our energy is not oil but ideas, not the ground, but the mind. Certainly the oil, which we now regard as so precious, was utterly worthless to the American Indians who did not even know it was there-and only a little more valu able to the white men who first discovered it, but had few uses for it. What gave oil its value was the creative genius and resulting tech nology of those who found ways to use it, to make it serve us, to increase our freedom, our mobility? our standard of Iiving, and our economic comfort and well-being. Similarly, uranium was utterly unknown and therefore worthless until Einstein, working alone, and removed from material considera tions or economic necessity, com1976 IS OUR ECONOMIC FUTURE LIMITED? 673 prehended the nature of the materi al universe, and thus released us from bondage to old and limi ted ideas of energy. We can, of course, only imagine what new, untapped resources are still waiting to be discovered and developed.

The Creative Imagination Clearly, the primary reason for America's great wealth today is not its physical assets, but the political, economic, and spiritual freedom which released the greatest source of wealth and energy of all-the individual mind, the creative imagination and the ability to com prehend and to master the material universe around us. Or, as the great scientist philosopher, R. Buckminster Fuller, says, "Wealth is the product of the progressive mastery of matter by mind." He further refines this definition by telling us that "Wealth is our organized ability to cope· effecti vely with the environ ment:' (Operating Manual for Space ship Earth, Pocket Books, 1970) In short, Fuller rejects the notion that wealth is primarily the result of material resources, and says that it is due primarily to our "metaphysical ability" to cope with these resources. He says, in effect, that the greatest source of energy is mind, not matter.

Fuller's fundamental thesis is that both the capitalist and socialist ideologies are wrong be cause they continue to approach the material world from the standpoint of limitation-of "not enough to go around;' of thinking that matter itself is wealth, that material energy is the only energy. The result of this, he says, is that the world has too long been dominated by the "pirate mentality;' the race for control by nations and en terprises over specific and seemingly finite material resources-a constant "Malthusian Darwin-you-or-me-to-the-death struggle;' all on the assumption that some kind of "economic Armageddon" was just always around the corner. The fact is, Fuller says, this "Armageddon" or doomsday, which has regularly been predicted as "imminent" for centuries, has not come because it does not have to. Why? Because there is no limit to the greatest wealth-producing and energy-abundant asset of mankind- "know-how," or what Fuller calls the "metaphysical com ponent" of wealth. This, according to Fuller, explains why, in this century alone, "we have gone from less than one percent of humanity being able to survive in any impor tan t kind of health and comfort to 44 percent of humanity surviving at a standard of Iiving unexperienced or undreamed of before:' What makes this "utterly 674 THE FREEMAN November unpredicted success" so meaningful to Professor Fuller is that it hap pened "without being consciously and specifically attempted by any government or business." More importan t, it. happened despite an almost con tin uous seeming decline in our material resources. The rea son for this, Fuller says, is that the discoveries of Einstein and subse- • quent physical scientists have released us from the primitive idea that our "universe is running down:' or that our energy "is run ning out:' Indeed, Fuller says, the result of the work of Einstein and those who have followed him is to prove that "energy can neither be exhausted, nor originated. Energy is finite and infinitely conserved." To the layman, it means that even as we seem to use up one form of energy, it is turning into another. The only thing limi t ing our ability to find or develop the energy we need is our technological competence. In other words, while material energy is always con served, mental energy is unlimited, and as yet largely untapped!

The Metaphysical Part of Wealth Has to Grow The significance of this is that while the physical or energy part of our wealth can never be depleted, the metaphysical or "know-how" part of our wealth can only increase. Thus, our wealth has to grow. Even when we make mistakes we learn more, and the more we learn, the more we understand, and the weal thier we get! The reason for this, Fuller .says, is that we are always being taught by the metaphysical process how to do more with less. This process, which Fuller calls "synergy:' is nothing more than a restatement of the old postulate that "the whole is greater than the sum of its parts:' that a whole idea is more valuable and powerful than its individual components. Man is obviously more than $2.70 worth of chemicals. A computer is clearly more than a few hundred pounds of metal, plastic and wire. A car is more than 4000 pound.s of metal, rubber, and plastic.

Synergy, in sum, is the descrip tion of the process by which ideas transform otherwise useless matter into valuable products, or services. The wealth is produced, not by the matter but by the ideas that transform it. The extension of what Fuller calls this "synergistic pro cess" is that as the idea of any product becomes better understood, the less matter is needed,· and the more real wealth or value is created. Thus, today a small desk-sized computercan do more than it took a whole room full of wire, metal and parts to accomplish 30 years ago. A tiny, three-ounce hand calcula tor can do more than a 60-pound 1976 IS OUR ECONOMIC FUTURE LIMITED? 675 desk -machine did 30 years ago, and with much less energy. Thirty years ago, in its infancy, television was a tiny screen in a huge box. Today it is a large screen with a much smaller box of longer lasting parts. Forty years ago, the average radio was a big three-foot box with a separate speaker and a small sound.

Today it is a three-inch rectangular cube; held in the palm of your hand with enough volume to make dogs scream in terror, and using much less energy. Twenty-five years ago, it took 15 pounds of feed and 14 weeks to raise a three-pound frying chicken. Today it takes five pounds of feed and seven weeks to raise the same bird for market. Examples like these are endless. The inevitable evolutionary trend of most material invention is to start out using a lot of matter to create a product - and gradually, as the idea and the technology get refined that is, as the "metaphysical know how grows;' that we use less matter, and get a bigger, better result - we do more with less. The promise of synergy is that as we increase our "metaphysical capital;' our know-how, our under standing of the world around us, our economic wealth can only grow, it can never decline. Or, as Fuller puts it, "The physical constituent of our weal th - energy - cannot decrease, and the metaphysical constituent know-how - can only increase. This is to say that every time we use our wealth it increases:' Every time we get a better idea of anything our economy and wealth grow. The plain fact is we have not yet begun to tap the enormous potential of the mind, and therefore have not yet probed the greatest source of energy and wealth.

Tying Material Resources in Bureaucratic Red Tape The danger Fuller sees is that we will fall back into the trap of "pirate poli tics;' and begin to restrict our economic progress by hoarding our material resources, tying them up in bureaucratic structure and-red tape, and by limiting Qur greatest wealth-producing asset -our indi vidual men tal capacities through the "heavy hand" of bureaucracy, limitation, and human accounting. Fuller warns, "Because our wealth is continually multiply ing in vast degree unbeknownst and unacknowledged formally by human society, our economic accounting systems are still unrealistically identifying wealth as matter ... :' Such an approach not only leads to hoarding and to impoverishment, but it also leads to the establish ment of the very bureaucratic struc tures, con troIs and regulations that will stifle the economic and tech676 THE FREEMAN November nological progress of which we are truly capable.

It seems clear that a nation which can put a man on the moon can, through the same "metaphysical process;' the. same .devotion to the mastery of material limitations, break down the presently assumed limitations on our material energy resources - ei ther by discovering whole new reserves of current fuels, or breaking ground into entirely new sources of energy not even now understood, or both. The only impediment to our doing this is a fearful or limited concept about the real source of our wealth, a lack of faith in our ability as free men and institutions to find what we need. Fuller reminds us that every time mankind has been threatened by a real immediate need, we have been able, through the "metaphysical process" to meet that need, usually in ways wholly unpredictable. One of the best examples of this was in World War II, when Japan cut America completely off from raw rubber. A Massachusetts man, Bradley Dewey, Sr., formed a team of private researchers and, within two years, came up with synthetic rub ber, completely obviating the need for natural rubber resources.

In more recent times, the decline in uranium prompted the develop ment of the "breeder-reactor" which produces new fuel faster than it uses up old! Many scientists now predict that it will become one of the main sources of electric power in the future. Recently, we have learned that vast new undiscovered oil fields exist in Mexico-potentially larger than anything yet discovered in any coun try except Saudi Arabia. And most experts agree that the reserves under the Continental Shelf are too large to be estimated accurately. In Detroit, a former General Motors executive has developed an engine that can turn water into combustible fuel, and in California, work on fuel cells promises whole new areas of energy development as yet untapped. No one yet knows the full poten Hal of solar energy, or of geothermal energy, or even of nuc lear fission, since all these fields are f still relatively early in their development.

Our Untapped Potential The point is, our economic future is· not tied to the physical assets we now know about-but to the vast untapped potential of creative thinking -of the "metaphysical process" which will not only show us whole new reserves and new poten tial fuels, but will also show us how to extend their value - to do even more, with even less-to increase our wealth without depleting our planet. There is, however, a serious poten1976 IS OUR ECONOMIC FUTURE LIMITED? 677 tial roadblock to the unfoldment of this creative "metaphysical" pro cess. Throughout history, the enemy of creative ideas has always been organized bureaucratic structure the committee that designs a camel instead of a horse, the red-tape and organizational charts that keep ideas from coming to fruition, the government agency that throttles small business, or new product development. This explains why free nations like the U.S. have grown rich, while totali tarian nations like Russia with equally great physical resources have stayed relatively poor. The free society turns loose its metaphysical energies - the totali tarian societies throttle theirs.

Today, unfortunately, the devastating combination of big gov ernment, big labor, and big business is beginning to inhibit our own nation's metaphysical energies and creative resources. Structure is now beginning to "swallow up" ideas. Individual potential is being throt tled by collective processes. This is why so many large cor porations have discovered that to remain vital and growing, they have had to decentralize, or to merge with the small companies where creative thinking still goes on. In short, they have had to turn more and more to small groups of individuals to regenerate their entrepreneurial drive and spirit, remembering that every big corporation was once small and grew big only because of the breadth and energy of the thinking of individuals. Gro~hin Massachusetts Nowhere is this more evident than in Massachusetts, which is full of companies, big and small, that have arisen from the fertile imagination, energy, and technical skills of individuals.

In Cambridge, Polaroid now employs over 12,000 people, largely because of the creative genius of one man, Edwin Land, whose inventions have brought economic progress and jobs to our state, and satisfying products to hundreds of millions of people around the world. He has done this by transforming relatively low-cost metal, paper, chemicals and plastics into tremendously valuable and useful photographic products, through the genius of his ideas. That economic potential of Polaroid is not limited by material resources. It is limited only by the breadth of Land's vision and the technological genius of those who run his com pany and develop its products. So, too, Digital Equipment Cor poration, another of Massachusetts' largest employers, has grown to its present size because its founders learned how to turn metal, wire, plastics, and glass into complex and valuable computers, whose 678 THE FREEMAN November $100,OOO-plus price tags have very little to do with their raw physical content but have everything to do with their "metaphysical quotient;' that is, the ideas that made them possible.

So it is with so many of this state's and the nation's "growth ind:ustries" which depend more and more on sophisticated technology, and less and less on raw physical resources. Clearly, our wealth in the future, even more than in the past, will come from individuals, not from the ground; from the untapped poten tial of thinking, not from the obvious reservoirs of present fuels; from men tal energy not physical. In this respect, the current situa tion in Massachusetts is instruc tive. In spite of our present prob lems, it is well to remember that this is still one of the wealthiest per capita states in the nation. It is weal thy not because of our physical resources, but in spite of our apparent lack of them. It is wealthy because the state is, still, unusually blessed with a large "metaphysical base" of creative, inventive, tech nologically-advanced thinkers and vast "metaphysical assets;' such as universities and research institu tions.

Unfortunately, we are busy paralyzing this economic potential today because the heavy and expen sive hand of government taxation and bureaucratic red-tape is driving out the very indi vid uals who can give us real economic progress. This is particularly true of the dynamic small companies which have the potential to be great tomorrow. And, yet, like the nation, we complain that our economic picture is deteriorating because of a lack of physical resources; our future is limited "because we don't have enough oil:' In this respect, we are a little like the small chick inside the egg, bleating because its food has run out, but afraid to break out of the shell of limited thinking into a new and seemingly dangerous world where we live by our mental resources rather than immediate physical assets. As Professor Fuller puts it, "My own picture of humanity today finds us just about to step out from amongst the pieces of our just seconds-ago broken eggshell. Our innocen t trial and error, sustaining nutriment is exhausted. We are faced with an entirely new relation shi p to the universe.

"We· are going to have to spread our wings of intellect and fly, or perish; that is, we must dare imm'ediately to fly by the generalized principle governing the universe, and not by the ground rules of yesterday's superstitious and erroneously conditioned reflex es:' 1976 IS OUR ECONOMIC FUTURE LIMITED? 679 Massachusetts, today, is in a unique position to throw off our "superstitious and erroneously con ditioned reflexes;' to show the rest of the nation that our economic progress is not limited by yester day's lost resources, but is as large as tomorrow's vision. We have an abundance of the most vital energy resource known to mankind - the metaphysical capital of enlightened thinkers. They are involved in the exploration of yet undiscovered technologies and resources for the nation's future, in all fields from solar energy to the laser beam, from cybernetics to synthetics. The nation and the world desper ately need these "metaphysical resources" and will pay for them handsomely.

The problem is: will our politi cians and their overweening govern ment drive them away to friendlier regions? Or, will they "tie them up" in some impossible new bureau cratic structures under the meaning less label of "Economic Development Agencies"? The same questions can be asked of the national government, as well. Should we, ~s the Monitor '8 editors propose, organize new government agencies from the standpoint of limitation, and, in the process, freeze the metaphysical potential of our free society? Or, will we have faith in free individuals and free institutions to bring us the resources we need for our future? We would do well to remember that, throughout history, mankind has worried about some form of limitation, some lack of material resource. Primitive tribes and peo ple perished not because there were no resources, but because there was not enough know-how and too much fear and superstition. Remem bering this, we should refuse to be taken in by the "politics of limita tion and despair" and refuse to adopt the kind of bureaucratic enterprises and governmental structures that will only limit us more.

We can not possibly now know where our energy for the next cen tury may come from-any more than Malthusian thinkers of the 19th century knew how we could possibly feed the billions of people we now do feed. But, we do know that, so long as there is the freedom for individuals to develop the "metaphysical" know-how of mankind, our wealth can only increase, and our eC0nomycan only grow. The only way this economic pro gress can ever be stopped is by destroying freedom - and by throt tling the "metaphysical process" in the mire of well-meaning bureau cratic planners and politicians who are still dealing in the "pirate theories" of "not enough to go around." ~ The Demand for Instant HENRY HAZLITT UTOPIA THE OTHER DAY I received a letter from a correspondent previously unknown to me, which began by saying how much he had learned from and agreed with some of my books. But then he went on to say that a large number of questions were bothering him that my books had failed to answer. There followed a long list.

The writer declared that he re jec.ted socialism, and implied that he admired free enterprise. But all of his ostensible questions revealed that he had in fact accepted most of the socialist criticisms of the free enterprise system. The noted author of Economics in One Lesson here applies that lesson to some of the fallacies of socialism. 680 I answered his letter politely and briefly. But it was so typical of many I receive, and so typical of much thinking and writing in the daily press, that I felt tempted to expand my answer and make it more explicit, even at the cost of being a little less polite. If I had done this, my answer would have run somewhat as fol lows: Dear Sir: I very much appreciate your kind remarks about some of my books and articles, and your expressed agreement with them, but I am surprised by how easily infl uenced you seem to be by so many of the current anticapitalist cri ticisms. Most of these are carp ing or groundless, but they are 1976 THE DEMAND FOR INSTANT UTOPIA 681 endlessly repeated. Let's take up some of your objections in the order in which you state them: • 1. You charge that in large areas competition has in fact disap peared, and you give a number of supposed illustrations. Now com petition has never been, is not now, and will never be "perfect."

Economists cannot even agree with each other regarding what "perfect competition" would be like if it existed. The most frequent outcome of really vigorous competition, for example, is for the winners to put the losers out of business. You complain that there are now only four automobile companies in America. Actually, in the com paratively short history of the motor industry there have been scores of companies and makes remember the Haynes, Duryea, Pierce-Arrow, Packard, Peerless, HUG:son, Stutz, Studebaker, Nash, Willys,Maxwell, Essex, Edsel? that lost out in the quality, price, 'or sales com peti tion. Only two com panies' if they really compete with each other, can provide sufficiently effective competition. In politics, most people even prefer only a two party competition. • 2. You complain about the inability of the consumer to assess the quality of many a commodity or service. Again, let me point out that consumers never have been, and never will be, perfectly able to assess the quality of a given com modity or service until after they have bought and used it. Even after that they may only know how good or bad the particular exam pIe is that they bought or used.

• 3. You talk of the inability of the consumer to obtain the goods or services he may want. Of course not every consumer will be able to obtain at all times the exact product or service he may want, but under even our present "impure" private competitive system he obtains far more of what he wants than he can, or ever could, under a socialist system. The American consumer, in fact, has a greater range of choice than he or anyone else has ever previously, obtained in history. One has only to think of today's average supermarket. • 4. You talk of "the recent rediscovery of limi tations in resources such as energy, raw mate rials, food, etc:' There have always been and will always be such limita tions. If there were no shortages, nobody would be· able to sell any thing at a price. Everything would be free as air and water are today. (What we pay for in water is chiefly the cost of bringing it from some where else into the home. Air, too, can have a price when it has to be purified or brought under pressure 682 THE FREEMAN November into a mine,) The greater the short age of anything, the higher its price. Increasing population, of course, tends to increase relati ve shortages. But increasing competi tion, new capital investment, and technological. advance, still work to relieve shortages and to reduce the real cost of hundreds of com modities.

• 5. You talk about "planned obsolescence" as if it were an estab lished .fact. It is mainly if not entirely a myth. If one automobile company planned a car that would break down in a few years, it would soon find itself out of business. If the Big Four American motor com panies secretly agreed to make cars that fell apart in a given time, consumer dissatisfaction and foreign competition would soon put all four of them out of business. What is called "planned obsoles cence" by anticapitalist critics is something radically different. It is in fact vigorous competition, con stantly introducing real improve ments, that makes a consumer dis satisfied with his old car and more eager to buy a new one. The Ford Company kept building the Model-T for many years to avoid precisely what you call "planned obsoles cence"; but competition forced it to change its ways. A socialist govern ment would have continued endless ly to turn out Model-T's-after the private industry it had taken over had developed them. It is odd how the anticapitalists talk of free enterprise's greatest virtues as if they were great evils.

.6. Competition leads industry to do exactly the opposite of what its critics charge it with doing. Over the years the tire industry has made continuous improvements in its product. Tires now last for incredib ly more miles than they once did. Again and again firms in the indus try have feared that this increased mileage would not only reduce sales but drive them out of business. But the individual tire manufacturer had no choice. Competition forced him to keep improving and improv ing. It is only a government-owned, socialized industry that could afford to keep its tires constantly unimproved. It is no coincidence that the industry that has improved least in this country in the last half century is the postal service. Whatever improvement it has had has consisted in making use of the inventions of private industry. • 7. You attach to your letter a list of seventeen "innovations which are all possible with present tech nology-but have not been made:' Let me point out that we do not have to wait for the existing big com panies to make any of them. Any body with moderate capital is free 1976 THE DEMAND FOR INSTANT UTOPIA 683 to start making them if there really would be a sufficient demand for them, and if they could be made and sold at a cost that yielded a profit.

• 8. You express fears about the future world population. You say that if it continued to increase at the present rate, "the average population density over all land areas of the world, including Antarctica, would in the year 2350-only 375 years hence-be the same as that of Manhattan during a working day now." Without check ing on that or other calculations you make, let me point out that the situation you envisage is simply impossible. Thomas Malthus noticed nearly 200 years ago that there had been a tendency of population to increase faster than the means of subsistence. But this would tend to bring a near-starva tion that would in time bring the population growth to a halt. Modern society is increasingly aware of this, Herbert Spencer and increasingly taking steps to keep the population down to avoid such a consequence. Contraception is more and more widely practiced. A recent story in The New York Times states that fewer people in Germany are having children, and that the birth rate there has already fallen even below the death rate.

* * * Nearly all the criticisms of free enterprise in your letter are very fashionable at the present moment. As they are answered, new criti cisms will be made. Partly this is the result of a healthy human desire for constant betterment, for a con stant approach toward perfection. But partly, also, it is the result of chronic socialist thinking which overlooks the enormous, progress that capitalism has already made possible, and demands that every body else produce an instant Utopia framed in accordance with the cri tics' own dream world. ~ IDEAS ON LIBERTY THE MORE NUMEROUS public instrumentalities become, the more is there generated in citizens the notion that everything is to be done for them, and nothing by them. Every generation is made less familiar with the attainment of desired ends by individual actions or private agencies; until, eventually, governmental agencies come to be thought of as the only available agencies.

Ideologies and the World Struggle LEEG. MAD LAND OUR WORLD, few would deny, is in the throes of a major political crisis, a result of a clash of basic and opposing political-economic ideologies. To denote these ideologies and systems in ordinary speech we casually throw around standard political and economic terms such as capitalism, socialism, communism, fascism, "left," and "right" with all the self-assurance and confidence of one to whom the meanings of the words he uses are elementary and obvious. In any event, these terms bring an immediate picture to the minds of most of us, followed by a definite Dr. Madland, currently "between jobs" as professor of geography, finds time to free lance on matters of political economy which long have intrigued him. 684 mental reaction based on that image. For example, we think of socialism and communism as· "left ist" systems or philosophies, while capitalism and fascism are com monly characterized as "rightist."

Some influential 'Nriters and opin ion makers go so far as to imply that fascism <including Naziism) is simply an extreme form of capital ism, or at least an outgrowth of it. Avowed socialists and communists, of course, find this view very con genial to their beliefs and do every thing they can to encourage it, if indeed they did not originate it. As a result, the very word "capitalism" has acquired a sort of vague disrepute in America and the other countries of the West-coun tries which, it is generally acknowl1976 IDEOLOGIES AND THE WORLD STRUGGLE 685 edged, owe much of their progress and prosperity since before the Industrial Revolution to the ascen dancy of capitalism, with its emphasis on the autonomy and worth of the individual human being. In any case, capitalism is today a word almost unused in polite society except in a derisive sense, to the point that even most defenders of Western values hesi tate to use it in describing their ideals of free enterprise and freedom of thought.

Capitalism as a system is thus commonly thought of as decadent or at least passe, and the idea is prevalent that the alternatives to it lie in one of two presumably differen t directions :either fascism on the so-called "right," or socialism or communism on the "left:' It is clear that of these alternatives socialism -communism has gained the upper hand today, with the horrors of Hitler' sNaziism still relatively fresh in people's minds <although those who favor commun ism conveniently ignore the at least equal horrors committed in its name). And anyway,· fascism was defeated in World War II, wasn't it? Are Fascism and Communism at Opposite Poles? How valid are these popular ideas? Do communism and fascism really represent opposite poles, with socialism being· either an intermediate stage on the road to com munism or a less extreme product of leftist thinking which can be stop ped short of communism and thus avoid its excesses? Certainly this is the impression unmistakably given by most segments of the American mass media, and such ideas are prevalent abroad as well. And where does capitalism fit in? Or, more concretely, where do we in America and other Western countries fit into the world political spectrum, and, even more im port an t, in which direction are we heading?

In answering these questions, let us take the currently unusual step of defining our terms, using the most concise and to-the-point dic tionary definitions available. This basic approach is warranted by the fact that these terms have been so consistently misused by well-mean ing people unaware of their true implications. Al~o, a little reflection on them should make it clear to any thinking person on which side of the spectrum each of these poli tical economic systems lies, and thus help put them into a true perspec tive. It should then be clear that the issue being discussed here is far more than a matter of semantics or a debate over words, but a basic question involving the very lives of people and nations.- the answer to which the future and even survival of Western civilization, and for that matter all civilization, may depend.

686 THE FREEMAN November With this in mind let us first define capitalism along with a less used but equally significant con trasting term, statism. capitalism: An economic system characterized by private or cor porate ownership of capital goods, by investments that are determined by private decision rather than by state control, and by prices, production, and the distribution of goods that are determined mainly by competi tion in a free·market. 1 stati sm: Concen tration of economic controIs and planning in the hands of a highly centralized government. 1 The principle or policy of con centrating extensive economic, political, and related controls in the state at the cost of individual liberty. 2 Note that the above two terms are direct opposites. Capitalism, with its reliance on private decision unguided by government decrees, and statism, with it reliance on government authority in all spheres, are in the long run totally incompatible with each other. While statism as a term is not so widely used as the other terms being dis cussed here, it is nevertheless prob1 Webster's New Collegiate Dictionary, 1974.

2 The Random House Dictionary (unabridged), 1973. ably the best word available to describe the political-economic pole opposite capitalism, and ultimately the only alternative to it. Capital ism, with its emphasis on individual liberty, rests on a philosophic base of individualism-while statism, with its denial of individual rights and its vesting of effective control in a collective entity, the state, rests on a philosophic base of collectiv ism. Thus, insofar as the political terms "right" and "left" have any concrete meaning, capitalism repre sents the political right; statism the political left. Let us now turn our attention to the three "ism's" most discussed today, all of which have gained control of major nations in recent times, and at least two of which are con tin uing to extend their area of overt control. socialism: Theory or system of social organization by which the means of production and dis tribution are owned collectively and controlled through the gov ernment. 3 communism: A system by which the means of production and distribution are owned and man aged by the government, and the goods produced are shared by all citizens. 3 3 Thorndike-Barnhart, Comprehensive Desk Dictionary, 1967.

1976 IDEOLOGIES AND THE WORLD STRUGGLE 687 fascism: Any system of govern ment in which property is pri vately owned, but all industry and business is regulated by a strong national government. 3 Note the close similarity in the meanings of the above three terms. All of these systems rely on govern ment force to accomplish their ends, and deny individual rights when ever they conflict with those ends. as determined by the collective-that is, by the state. Thus, all three are simply forms of statism, and politically represent the far left. One should not be misled by the nominal private "ownership" allowed by fascism, since ownership without control is a sham, a con tradiction in terms. (That many people have been so misled, however, is shown by the common but un thinking designation of fascism as "rightist:') Fascism and com munism, far from being opposites, are both direct outgrowths of socialist thought and socialist doctrine. They not only share the same collectivist roots but amount to the same thing in actual practice.

It is no coincidence that Hitier's program for Germany was officially known .as National Socialism, the Nazi party platform being clearly socialist in both form and content. Yes, it is true that fascists, socialists, and communists have often been bitter enemies, even to the point of bloodshed and warfare between them. But the special hatred they reserve for each other, sometimes superficially interrupted by temporary alliances, more resem bles the rivalry of greedy brothers fighting over a large inheritance than that of parties disagreeing over basic principles. They share the same basic principle: the collec tivist notion that the preferences of the mass, exercising control through the state, supersede the rights of the individual. In practice, this leads to only one thing: totalitarian dictatorship, exercised by the individual or small .group most adept at manipulating crowd passions and not hesitating to use force against any who refuse to cooperate.

A Deliberate Deception Statists of all denominations have spread the falsehood that the only alternative to fascism lies in the "opposite" direction represented by socialism-communism, in an attempt to stee'r public opinion in their direction through. fear and hatred of the other. In this they have to a considerable degree succeeded. And since fascism, at least;' is no longer fashionable in today's world, the main beneficiaries of this notion have been the socialists and com munists who have managed to bring huge segments of the Western pub lic around to this view, including 688 THE FREEMAN November many political scientists and economists who should know better. Thus a· deliberately fostered misap prehension of words has, through reaction, helped tilt the scales toward a particular style of· collec tivism which, no less than the style reacted against, stands opposed to the most fundamental human values of Western civilization.

Between socialism and commun ism, it is clearly the more militant communism which is making greater gains today, more through force than persuasion-but the point here is that in the end it makes little difference which of the collectivist creeds may come out on top. If any of them do, the loser will be human freedom and human dig nity, the right of an individual to live his own life in peace without fear of suppression of his abilities and desires and the regulation of his actions by an all-powerful state. In the words of former Bri tish Labourite Ivor Thomas: "From the point of view of fundamental human liberties there is little to choose between communism, social ism, and national socialism. They are all examples of the collectivist or totalitarian state .... In its essen tials not only is completed socialism the same as communism but it hardly differs from fascism?'4 4 Quoted by F. A. Hayek in the foreword to the American edition of his classic, The Road to Serfdom.

Almost forgotten in the melee of leftist ideologies is the fact that the real alternative, the true opposite of them all, the political-economic system in which the individual is sovereign and the role of govern ment is specifically limited to the protection of its citizens from fraud, force and violence, which gives free scope to the common sense of the people and provides a climate of liberty and incentive for construc tive social change, is capitalism. Under any true capitalistic system the watchword is liberty, and man-individual man-is given his rightful place at the center of his universe, rather than being an indistinguispable speck in a uniform and controlled crowd. In a system based on individual liberty the main task of government is to insure that it remain so, guarding against state intervention into economic affairs in the knowledge that. the worst type of economic power is state power, and that the most dangerous and uncontrollable form of monopoly is state monopoly!

While the key nation in the Western world, the United States, still describes itself as a nation of "free enterprise," in reality the American system today is a mixture of elements of freedom and statist controls, the latter having been introduced with increasing frequen cy in recent decades. It is a v()latile mixture of elements fundamentally 1976 IDEOLOGIES AND THE WORLD STRUGGLE 689 incompatible with each other, which sooner or later must result in the victory of one side or the other. The currently popular political term "middle of the road" in this sense describes a state of continual inter nal warfare, ideological turmoil, and intellectual confusion. The same kind of mixture, in varying degrees, is present in all Western countries, which largely explains the West's lack of moral courage to vigorously oppose the spread of com munism. America today is at the center of the struggle between capitalism and statism, and in her present mixed economy the statist ingre dients are becoming more and more conspicuous. The important ques tion is not whether this statist trend happens to be more par ticularly towards socialism, com munism or fascism (though ele ments of each are present), or towards another collectivist "ism"

yet to be named - since they all lead to the same end. The vital question is whether we shall continue in the direction we have been traveling which leads to tyranny and slavery, or turn around and move in 'the opposite direction which leads to freedom and dignity. One thing is sure: we cannot stand still, as defenders of the status quo would have us believe. Let uS,pausing only long enough to regain our bearings, choose the way of freedom while we still have the choice, and resolutely proceed in that direction with a clear view of the road ahead. , IDEAS ON 46 LIBERTY A Fundamental Antagonism Is IT'1{ FACT of no significance that robbing the government is everywhere regarded as a crime of less magnitude than robbing an individual, or even a corporation? ... What lies behind all this, I believe, is a deep sense of the fundamental antagonism between the government and the people it governs. It is apprehended, not as a committee of citizens chosen to carryon the communal business of the whole population, but as a separate and autonomous corporation, mainly devoted to exploiting the population for the benefit of its own members ... When a private citizen is robbed, a worthy man is deprived of the fruits of his industry and thrift; when the government is robbed, the worst that happens is that certain rogues and loafers have less money to play with than they had before. The notion that they have earned that money is never entertained; to most sensible men it would seem ludicrous.

H. L. MENCKEN, A Mencken Chrestomathy EDWARD COLESON No, this isn't a misprint, a Bicen tennial article that got the wrong label. There have been other spirits besides the "Spirit of '76"; the familiar German word "Zeitgeist" bears witness to this fact. Let us consider two greatly differing eras which were tied to '46-1846 and 1946. In 1846 the free enterprise princi ples enunciated by Adam Smith in The Wealth of Nations, published in 1776, were finally, and with a mig hty flourish, being put into practice in Victorian England. In 1946 the "Welfare State" became official in America, the "Land of the Free and the Home of the Brave;' Both events fit the spiri t of their age too, as we shall soon discover. It is hard to imagine a greater contrast than the thinking and Dr. Coleson is Professor of Social Science at Spring Arbor College in Michigan. 690 political activities of 1846 as against those of 1946. Both develop ments were characteristic of their time, .and both were the result of a long historical process. In 1846, with the "Repeal of the Corn Laws"

and the subsequent change to free trade in the next few years, the freedom philosophy worked itself out to the consummation foreshadowed in The Wealth of Nations. With the passage of the Employment Act of 1946, Congress committed the federal government to the "continuing policy and responsibility" of maintaining "maxim um employment, production and purchasing power;' fulfilling an ancient socialist dream. In 1846 the "invisible hand" was in charge; in 1946 Big Brother had taken over. One of the most misunderstood aspects of history is what Lord Keynes called "the gradual 1976 THE SPIRIT OF '46 691 encroachment of ideas:'l. In 1846 the "academic scribbler of a few years back;' to quote Keynes again, was Adam Smith. "Ideas have con sequences," as the late Richard Weaver warned us a few years ago, but they are time bombs; it takes -many years for the results to be come apparent. Probably, in this case, free enterprise would have been tried much sooner if it had not been for the French Revolution which merged into the Napoleonic Wars. We tend to forget that Europe was at war from the Fall of the Bastille in 1789 to Waterloo in 1815, more than a quarter century of strife which even became global not continuous warfare but too close to it. Then followed a tragic post war depression. No doubt, this long series of misfortunes delayed a num ber of reforms, including the com ing of free enterprise and free trade.

Fallacies and Famine We fail to understand the back ground of nineteenth century Brit ish laissez-faire economics. Genera tions of Socialist propagandists have told us that a few greedy capitalists ganged up on the rest of us with the coming of the Industrial Revolution and reduced us to mis ery and want. Actually, the history of mankind has been punctuated with many famines and they were 1 John Maynard Keynes, The General Theo ry of Employment, Interest and Money, p. 383. perhaps as frequent in the West as among "the teeming millions of Asia" more recently. It is hard for us to comprehend such poverty. In the England of two centuries ago a bushel of wheat cost a common laborer five days' paY,2 and the situation was going to get worse before it got better. During the difficult days of the Napoleonic Wars the price of grain would more than double. 3 Just keeping food on the table was a major undertaking for ordinary folks.

Now part of this was inevitable, given the primitive state of the technology of the time. But it is interesting to note what Parliament did in this time of national emergency: they met, studied the question with care, and voted to raise the duty on foreign grain still higher. Even faced with disaster, they still clung to the old mercan tilist notion that keeping things scarce and expensive is economic wisdom. Needless to say, the tariffs on imported foodstuffs, known to the English as. the Corn Laws, took on the stigma one might expect in a hungry nation. But since the land lords ran the country, nothing much was done about the problem for a long time. Now the Corn Laws were not the 2 John Chamberlain, The Roots of Capital ism, p. 123. 3 Robert L. Heilbroner, The Worldly Philosophers, p. 79.

692 THE FREEMAN November only interference with the market which led to widespread suffering in those days of war and depression before and after 1800. Another tragic interven tion by government was no doubt made with much better intentions, if with no better results. After all, the Corn Laws sound like selfish legislation foisted off on a helpless public by a power ful pressure group. But this other intervention was an attempt to play Good Samaritan. This disastrous blunder was another Poor Law, the Speenhamland system inaugurated in 1795 under the stress of the Reign of Terror in France, just across the Channel. Sensible Englishmen of the ruling class felt that they needed to placate the poor lest they rise in wrath and set up the guillotine in London just as their neighbors had done in Paris. This new British strategy in the war on poverty was a wage supple ment plan geared to provide a minimum standard of subsistence for everyone, no matter how poor.

For instance, if a worker could make half a living, the government would make up the difference; if he earned nothing he was supported by welfare, as we would say. In the beginning, as Karl Polanyi tells us, "No measure was ever more universally populae'4 The results ~ere exactly what one would have 4 Karl Polanyi, The Great Transformation, pp.77-85. expected. If a laborer got his living whether he worked or not, why work? Polanyi, though a socialist who might be expected to approve :poor Laws, is severely critical of this one: "In the long run the result was ghastly." Self-respecting laborers were literally driven on welfare by the logic of the system, and were pauperized thereby. It was a calamity for rich and poor alike a national disaster. Yet, neither Corn Laws nor Poor Laws were "Acts of God"; both were· man-made, the consequence of bad economics driv ing out the good, an example of Gresham's Law operating in the realm of ideas. It would not be worth mentioning these-ancient blunders if we were not making essentially the same mistakes today.

Unscrambling the Omelet Although a multitude of people believe today that welfare has be come an impossible burden and that government intervention in the economy is strangling business and has become a luxury we can no longer afford, few believe we can do anything about it. They meekly concede that these are arrange ments we simply have to learn to live with. Yet, Englishmen in the early decades of the last century corrected tragic blunders much like our own. In 1820, with the war and post war depression behind them, Lon1976 THE SPIRIT OF '46 693 don merchants and manufacturers petitioned Parliament urging that restrictions on trade be repealed. The same year a similar group from Edinburgh protested also. A com mittee of the House of Commons investigated the situation and re ported "that no less than 1100 restricti ve laws were in force, regulating trade in various ways ...." The committee urged their repeal. "The doctrines of Adam Smith were at last beginning to be carried out;'5 Actually, of course, Pitt had started to do this back before the French Revolution but the Napo leonic Wars spoiled everything and made a new attempt necessary a generation later. It would take still another generation to achieve this purpose. The repeal of the Speenhamland Poor Law came in the meantime. Eventually, the Brit ish also dramatically reduced income taxes as well as duties on imports. They had accomplished what we do not even consider possi ble. Let us briefly examine how they performed these miracles.

The first of the victories was the Poor Law Reform of 1834. This was certainly a reaction to welfare abuses of nearly four decades, and it may be fair to allow that the pen dulum swung too far the opposite direction, as critics from then until 5 Vernon A. Mund, Open Markets, pp. 91-92. now have insisted. According to Polanyi, "Never perhaps in all mod ern history has a more ruthless act of social reform been perpetr ated ... :' G.D.H. Cole and Raymond Postgate,6 distinguished Fabian Socialists, think that "after a brief interval of acute misery" agricultural laborers were actually better off, but that in the industrial areas it was an unmitigated dis aster, particularly because its intro duction coincided with another depression. Herbert Spencer tells quite a different story. He describes how his uncle, charged with the task of enforcing the New Poor Law in his parish, found that "Those who had hitherto loitered at the corners of the streets, or at the doors of the beer-shops, had something else to do, and one after another they obtained employment ... ;'7 The poor rates (welfare costs) for that area dropped from seven hundred pounds a year to a mere two hundred "while the condi tion of the parish was greatly improved;' It is well to remember that poor relief was not abolished but was made available only to those who simply could not support themselves, which was quite a contrast to the previous period of very lax standards.

6 G.D.H. Cole and Raymond Postgate, The British Common People, p. 278. 7 Herbert Spencer, The Man Versus the State, pp.·84-85.

694 THE FREEMAN November A Lesson for America Since an unresolved welfare problem - "bread and circuses" contributed much to the decline and fall of the Roman Empire, the Bri tish experience, even if marred wi th some needless suffering, should be of interest. We in the United States are getting to the point where we will have to do something ..Whether we decide to abolish our outmoded welfare system or it collapses under its own weight, we will need to find alterna ti ves to public assistance. Our minimum wage laws, excessive wage rates, and the exclusive admission policies of nearly every trade and profession so limit the labor market that there are not the job openings there could and should be. In the name of humanity and fair play, both the "haves" and "have nots" in our society will need to make adjustments to resolve our present problem. It is true that a lot of loafers will have to relearn "the work ethic;' and those who are affluent must learn to keep open the door of opportunity for other p~ople.

We need a revival of simple honesty, of personal responsibility, of consid eration for others and of a sense of fair play. A proper social concern need not lead to socialism. The next great British breakthrough for freedom was the Repeal of the Corn Laws in 1846. Just as England was beginning to adjust to the opportunities and responsibilities involved in the new labor situation (demand and supply in the market place rather than a pauperizing paternalism), an enthusiastic group of free traders organized the Anti-Corn Law League. Since I have long been interested in this theme and have covered several aspects of the sub ject in previous articles in the Freeman,8 I shall briefly summarize the accomplishments of the League. After a spirited campaign which seemed to have reached the entire English population, the Corn Laws were repealed in 1846 during the administration of Prime Minister Robert Peel. This was only the beginning. Having disposed of the hated grain tariffs, the "bread tax"

as it was called, they then went on to abolish the remaining import duties. Quoting Cole and Postgate again, "By 1860 Gladstone had com pleted Peel's work and Free Trade was ... in full operation:'9 Economy in Government Now William E. Gladstone was also a distinguished statesman in his own right. If Gladstone was Mr. Conservati ve, as has often been 8 The Freeman, November, 1971 "Economics and Ethics," pp. 646-660; June 1972 "When Men Appeal from Tyranny to God;' pp. 323 335; October, 1973 "Capitalism and Morality;' pp. 625-633. 9 Cole and Postgate, op. cit., p. 336.

1976 THE SPIRIT OF '46 695 observed, he was also the embodi ment of economy-in-government. Under his leadership the administration found ways to reduce expenditures and also cut taxes. This was in addition to the less obvious, but no less real, saving to the average Englishman because of the abolition of import duties. With growing prosperity and a dec lining governmen t budget, Gladstone even managed to reduce the income tax from five percent to two percent over a five-year period.l O Queen Victoria's govern ment was well on the way to becom ing the "simple, frugal affair" that Thomas Jefferson once said a gov ernment should be. And one should not forget that England was then a great nation, not a pioneer settle ment on the frontier. Evidently genuine tax reductions are a possibility, not a Utopian dream. One final remark should be made about Victorian statesmen before we move on to the modern period.

Whether we are speaking of Sir Edwin Chadwick who engineered the New Poor Law that put multitudes off the dole after 1834, or that devout Quaker John Bright who derived from his Bible the principles of economics that led to the Repeal of the Corn Laws in 1846, or that penny-pinching Chan cellor of the Exchequer and later 10 Walter L. Arnstein, Britain, Yesterday and Today, p. 114. Prime Minister William E. Gladstone who regarded his politi cal career as a Christian calling, we find in them and so many others of that era the same moral earnest ness. In an age when many people took their Bibles very seriously this ethical approach to public policy was convincing. This may seem quain t to a generation of pragmatists in today's world, mostly concerned with pleasure and profit. The Victorian practice of operating on principle and their habit of viewing issues in terms of right and wrong, led to a directness and simplicity which is not characteristic of our age of relativism. We tend rather to institute some expensive and com plicated arrangement that is intended to please everybody but can accomplish nothing. The con trast between Victorian politics and our present variety is startling, as we shall now discover.

The Economic Consequences of Socialism If free enterprise, free trade, limited government and gold were in vogue back in 1846, they were hardly in fashion in 1946, here or elsewhere. Sir Winston Churchill's conservative administration, which had come to power in Eng land's darkest hour early in World War II, was replaced by the Labor Party's socialist government in 1945, even 696 THE FREEMAN November before the guns stopped booming in the Far East. In America there was a deep concern that peace would mean a return to widespread unemploy men t and poverty which had plagued us from the Crash of '29 until war had brought a prosperity of sorts. During the Depression we had become accustomed to massive government interventions in the economy and what seemed like large budgets for what one might call welfare schemes for everyone, from big business to the poor on relief. Many ordinary Americans back then were afraid the govern ment would go bankrupt. Even Mr.

Roosevelt had campaigned for the presidency on an economy platform in 1932, accusing President Hoover of reckless extravagance in the early years of the Depression. When war came, budgets beyond our wildest dreams brought victory, jobs for everyone and a boom we could not have imagined a decade earlier. Why not let the government con tin ue to keep us all prosperous? If we didn't go as far as the British, at least we were not returning to traditionallaisse~-faire economics. The consequences of our postwar urge for security and continuing prosperity was what Paul Samuelson called the "momentous Employment Act of 1946," 11 11 Paul A. Samuelson, Economics, second edition, p. 418. approved by both parties and, dedi cated to the task of preventing another tragedy like the Great Depression, then still a recent and traumatic memory. The law pro vided that the Presiden t should have a Council of Economic Advisers who should watch Dusiness trends and keep the President and Congress informed, .so that future disasters could be avoided. If we fell into a recession, as economic slow downs were now called, the govern ment would simply stimulate busi ness by easy money and increased spending. This, of course, was just another chapter of the New Deal, reinforced by the "Keynesian Revolution" which followed 'the pub lication of The General Theory in 1936.

For years, it seems, ordinary folks had a great deal of faith in the system whether they understood it or not, and felt that at last the government was capable of keeping us all prosperous. As the saying went, "Depressions have been abolished by popular vote?' That faith, it now appears, has been shattered by the recent severe reces sion, by widespread unemployment, by national budgets that are out of control and inflation which threatens to get out of control. One of the serious aspects of this loss of confidence in the Keynesian system, the welfare state, is a lack of general agreement as to where we 1976 THE SPIRIT OF '46 697 go from here. At least, the Prodigal Son, who had "wasted his sub stance" and then woke up in the pig pen, knew his way home. 12 Where Do We Go From Here? Fortunately, the solution to our problems is not that difficult, once we clear our minds and recover our sanity. When Lenin tried to install the Marxist system in Russia after the October Revolution of 1917, the collapse was complete and millions starved. (Stalin later bludgeoned the Soviet Union into the com munist mold, but the attempt cost even greater casualties.) By con trast' when Ludwig Erhard abolished rationing and controIs in Germany on that historic Sunday in June back in 1948, the "German Economic Miracle" rather spon taneously followed. That war-torn nation was in a state in '48 that would make our Great Depression look like prosperity, but freedom proved to be the key to recovery. One is reminded of Adam Smith's classic remark, published in 1776: All systems either of preference or of restraint, therefore, being thus com12 Luke 15: 11-32.

pletely taken away, the obvious and simple system of natural liberty estab lishes itself of its own accord .... 13 It is true that Germany had to suffer total defeat in a total war before she discovered this secret, but the English found freedom and prosperity in 1846 by using their heads and consulting their cons ciences .. May we be able to rediscover our heritage without going through the dark valley the Germans did. If we would become once again the nation that our Fathers intended us to be in. 1776, we need to remember the words of America's great English friend, Edmund Burke, during our days of Revolution: Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites ... society cannot exist unless a controlling power upon will and appetite be placed somewhere, and the less of it there is within, the more there is without. It is ordained in the eternal constitution of things that men of intemperate minds cannot be free. Their passions forge their fetters. , 13 Adam Smith, The Wealth ofNations (Mod ern Library Edition), p. 651.

IDEAS ON LIBERTY Maxwell Anderson LIFE is infinitely less important than freedom ... Those who are not willing to sacrifice their lives for their liberty have never been worth saving.

A REVIEWER'S NOTEBOOK ERNEST VAN DEN HAAG'S Punishing Criminals: Concerning a Very Old and Painful Question (Basic Books, $11.50) is a wonderfully hard headed book. Its hard-headedness is of a most enlightened sort: it is devastatingly critical of the latter day disciples of Rousseau, who still insist that "society" rather than "original sin" is always to blame for the criminal actions of an individual, but it does not complete ly reject the argument that some crimes are "socially determined:' And it is skeptical about statistics that purport to prove one thing or another about the efficacy of punishments. Its sense of paradox keeps it rigorously honest, which is unsatisfactory to those who insist 698 JOHN CHAMBERLAIN Punishing Criminals on categorical answers to all perplexing questions. Despite its tentativeness, however, Punishing Criminals leaves one with no doubt that "men must act;' even though there must be considerable guess work when it comes to the predic tive value of one's decisions.

The big headline question of the day is, of course, the desirability of reimposing the death penalty for premeditated murder. Professor van den Haag approaches this thorny matter with a most commendable impartiality. Aside from the moral considerations of justice, the main argument for capital punishment is that it is more effective as a deter rent than such an alternative as life imprisonment. Dr. van den Haag 1976 PUNISHING CRIMINALS 699 admits the fragmentary nature of statistical research bearing on the question of deterrence, but he cites Professor Isaac Ehrlich's "simultaneous equation regression model" to show, in Ehrlich's words, that "an additional execution per year ... may have resulted on the average in seven or eight fewer murders:' Personally, I put my own trust in logic more than in simultaneous equations. Since Dr. van den Haag says "it remains to be seen if further research will support or refute" the Isaac Ehrlich mathematical demonstration, I rather guess that logic is van den Haag's preference, too.

Logic tells us that if killers are hanged or electrocu ted, they will not be around to commit further crimes. Without the possibility of a death penalty, anyone threatened with a life term for hijacking a plane or kidnaping a child or shoot ing a man in the course of armed robbery would have no reason for refraining from murdering a third person (a policeman or an informer) in order to make a getaway. Dr. van den Haag quotes the instance of two case-hardened prison inmates, jailed presumably for life, who stabbed the warden and his deputy to death with mess-hall knives. Since one can only be imprisoned for a lifetime once, the prisoners had nothing to lose. A Risk Either Way The case for or against the death penalty as a deterrent rests on a preference for one of two risks. If capital punishment does not increase deterrence, we lose the life of an executed convict without sav ing anyone else. But if the death penalty does add deterrence, and we refrain from pronouncing it, we run the chance of losing the lives of victims who might run foul of murderers in the future.

Dr. van den Haag, who is always willing to look at both sides of a question, admits that there can be miscarriages of justice. Capital punishment is irrevocable, and if a man is hanged he won't be there to take terrestrial advantage of new evidence proving his innocence. The logical case for the death penalty must rest on the presumption that despite an occasional miscarriage of justice, more innocent lives will be saved than lost by invoking it. Dr.· van den Haag marshals the arguments against the death penalty in a perfectly fair way. But, even in the middle of the chapter called "Arguments Against," he can't resist interjecting that "the murder rate in the U.S.-always a multiple of that in Western Europe and Japan-has risen terrifyingly in the last decades." So what are we to conclude? We turn back to van den Haag's previous chapter on "Argumen ts For" in which he 700 THE FREEMAN November observes that "life becomes cheaper as we become kinder to those who wantonly take it." Latter-day "liberals" who prate about the "sanctity of life" can't get around this paradox. Oddly enough, many of the people who reject capital punishment on humanitarian grounds have no prejudice against abortion or, in some cases, against euthanasia.

How Much Deterrent? As a libertarian who could not possibly face incarceration for a lifetime without contemplating suicide, I would be prepared to argue that the prospect of life imprisonment is enough of a deter rent in itself. But the trouble, as Dr. van den Haag says, is that, "as a sentence, 'life' today means not life but some years of it:' Murderers are frequently released, for one reason or another, before they have com pleted their "mandatory" prison sentences. And the modern convict, no matter what his crime, "is enter tained by TV" and has access to social workers who may obtain suffi cient freedom for him to commit additional crimes. Dr. van den Haag does not go deeply into questions of ethos. He is just as willing as anybody to admit that crimes are, in many instances, "socially co~ditioned:' But his live ly sense of paradox impels him to turn this argument against the followers of Rousseau. The idea of deterrence, if it becomes part of the expectations of a community, can be part of a "general determinism:' If a criminal can't help· what he is doing, other members of society are equally "determined" in punishing culprits who menace their rights.

Says van den Haag, "deterministic views of all kinds are entirely con sistent with theories of deterrence, which actually require a causal (though not necessarily 'deter ministic') view of human behavior:' A Presumption of Responsibility The truth is that a free society must rest on the presumption that men are moral agents who are responsible, despite their genes or their "social conditioning;' for what they do. Morality has no relevance if all things are fated by environ ment on the one hand, or by heredity on the other. Some poor people commit crimes; some don't. Some rich people are responsible; some aren't. Responsible people can only act on the theory that crimi nals must be incapacitated if society, in general, is to live in peace. Unfortunately, the Rousseauists among us have made it more and more difficult to incapacitate thieves and cheaters and murderers. Much of van den Haag's book is concerned with ways of speeding justice, keeping potential 1976 PUNISHING CRIMINALS 701 "recidivists" under control, and pre venting juveniles from becoming hardened adult criminals. He has ideas about utilizing fines as punishment. Why not, he suggests, state fines "in days or years of earnings." This would mean the rich would suffer commensurately with the poor when convicted of a crime carrying less than a prison sen tence.

As a final word to the Rousseauists, Dr. van den Haag remarks that if "somehow bad social institutions always seem to corrupt naturally good men;' none has ever satisfactorily explained "why naturally good men create bad institutions, and by what means revol utionaries manage to remain uncorrupted so as to lead us into the millennium:' The possibility is rare ly considered that "naturally bad men corrupt good institutions:' Knowing human nature, van den Haag says we can only reduce, not eliminate, crime. The task is not to dream up a social order that can do without punishment but, rather, to make the punishment it uses more just and effective. ~IN OUR TIME by Eric Hoffer. (New York: Harper and Row, Pub lishers, 1976) 114 pp., $7.95. Reviewed by Allan C. Brownfeld WHEN his first book, The True Believer, was published in 1951, Eric Hoffer was unknown. Readers recognized, however, that a powerful and original talent had made its appearance and were astonished to learn that Hoffer was a common laborer who had been virtually blind in childhood, who had recovered his eyesight, and who had educated himself entirely by his own efforts.

In The True Believer and the many books which have followed, Eric Hoffer has been an eloquent spokes man for individualism, freedom, and free enterprise. Part of his view is that when individualism dies, tyranny becomes possible and, often, probable. He wrote that, "Faith in a holy cause is to a considerable extent a substitute for lost faith in ourselves ... A man is likely to mind his own business when it is worth minding. When it is not, he takes his mind off his own meaning less affairs by minding other people's business .... In run ning away from ourselves we either fall on our neighbor's shoulder or fly at his throat:' Now, Eric Hoffer has presented us wi thanother volume of his 702 THE FREEMAN November thoughts on the state of the Ameri can society and the prospects for the future of freedom. In Our Time is filled with astute observations and insights and represents the ap proach we have come to expect from Eric Hoffer-one which always begins with a healthy dose of com mon sense.

The free enterprise system has produced great material abundance in the United States but, in the very heig h t of this accom plishmen t, faith in the market economy and in freedom itself seems to be diminish ing. Society, in many respects, appears to be in a state of dissolu tion. "Up to now;' Hoffer writes,. "in free societies social discipline has been a by-product of scarcity, and the turbulent 1960s have shown us that the most urgent need of an afRuent society is a new source of discipline .... It was a shock to a materialist civilization to discover that the most important facts about a human entity are its illusions, its fictions, its unfounded convictions. A society without illusions is with out vigor and withou t order and continuity. It took a triumphant technology to demonstrate that 'things which are not are mightier than things that are:" Part of the reason for the collapse of val ues and standards in our afRuent society, Hoffer believes, is the abandonment of its proper role by the middle class. He notes that, "... when the middle class is no longer immersed in a struggle with nature, when it has solved the problems of production ... it be comes unsure of its footing and seems to have nowhere to go. Its values, based· on scarcity, begin to disintegrate and it no longer feels itself in possession of the true and only view possible for sensible peo ple. The middle class is unprepared and unequipped to lead people to Eden, and it cannot find a substi tute for the social automatism induced by unfulfilled needs and fear of want:' While some have argued that "money is the root of all evil;' Eric Hoffer challenges such a view. He states, instead, that, " ... the passage from the nineteenth to the twentieth century saw a shift from a preoc.cupation with money to a preoccupation with power. ... It is part of the sickness of our time that money has lost its magic power.

What ails societies at present is not that everybody wants as much money as possible but that every body wants to do as little as possi ble. We used to wonder how in the nineteenth century it was possible for so few to have so much at the expense of the many. Now the wonder is that so many get so much at the. expense of the few?' Contrasting free enterprise and collectivism, Hoffer declares that, "Capitalism can produce abun1976 OTHER BOOKS 703 dance. It gives full scope to the energies of the individual, and is an optimal milieu for people who can hel p themselves and want to be left alone ... Communism cannot create abundance, and it cannot release a copious flow of spon taneous energies. It ,cannot utilize the energies of enterprising people who are at their best when left to themsel ves:' The dilemma of capitalism at the present time, he writes, is that it has succeeded too well: "Capital ism's disconcerting predicament is that it gets in trouble when it achieves abundance. Capitalist society is strained to the breaking poin t not, as Marx predicted, by ever-increasing misery, but by aff luence. Once scarcity has been eliminated, ca pi talism does not know how to induce people to work.

Moreover, the· erosion of the pre capitalist authorities of family, church and school leaves capitalism helpless in the face of social anarchy:' The American welfare system paying people to do nothing - could learn a lesson, Hoffer points out, from the experience of the Soviet collective farm system and the incredible productivity of the pri vate plots which farmers are per mitted to work. He writes that, "an America that has been spending billions on unsuccessful poverty pro grams would do well to send delegations to Soviet Russia to learn from the lesser peasants how to turn millions of chronically poor Ameri cans into enterprising human beings:' The intellectuals dislike capital ism, he writes, not because it is inequitable but· because they are not in charge: "Where the trader is in power, the scribe is usually kept out of the management of affairs, but is given a free hand in the cultural field. By frustrating the scribe's craving for commanding action, the trader draws upon him self the scribe's scorn, but he also releases the scribe's creative powers.

I t was not a mere accident that the Hebrew prophets, the Ionian philosophers, Zoroaster, Confucius and Buddha made their appearance at a time when the trader was ascendant .... Where the scribe is in power, the trader is regulated and regimented off the face of the earth. In scribe-dominatedComm unist countries the legitimate trader has been liquidated:' Unfortunately, the intellectuals who bid for power by attacking the system of free enterprise and the moral values of the majority, are skilled in the use of language and the communication arts. "The ad versary intellectual;' Hoffer writes, "savors power not by building or wrecking but by discomfiting and denigrating, and by rubbing the noses of the majority in dirt:' 704 THE FREEMAN November There is much more in this volume than its length would indi cate. Eric Hoffer is an eloquent defender of freedom and free enterprise. He has been a gold miner, migratory field worker, and longshoreman. He is also a scholar.

Noone can read his words without being dramatically affected by them. f) HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $2.50 each ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 26, NO. 12 · DECEMBER 1976 Cartels: Conspiracies in Restraint of Trade Brian Summers 707 Government-createdcartels control large segments of the American economy. A New MessageVIII. On The Destiny of Liberty Jackson Pemberton 712 Words of courage and counsel from the heartsof the FoundingFathersto theirchildrenin a troubled nation. Lessons of the German Inflation Henry Hazlitt 71 8 The demoralizationthat the debasementof the currency left in its wake played a major role in bringing Hitler to power. Faith of Our Fathers Clarence B. Carson 732 Concerningthe vital role of the faith of our fathers in the founding of the United States. You Can't Sell Freedom to a Starving Man Ridgway K. Foley, Jr. 739 But the truth is that for untold centuries before the discoveryof freedom, men starved.

The Free Market and the "Tyranny of Wealth" David Osterfeld 749 The monopolies in the Progressiveperiod: a market or governmentaldevelopment? Book Reviews: 757 "Essays on Hayek" edited by Fritz Machlup Index for 1976 761 Anyone wishing to communicatewith authors may send first-class mail in care of THE FREEMAN for forwarding.

tt1e Freeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY IRVINGTON-ON-HUDSON, N. Y. 10533 TEL: (914) 591-7230 LEONARD E. READ PAUL L. PorROT President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit, educational champion of private property, the free market, the profit and loss system, and limited government. Any interested person may receive its publica tions for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total ex penses average $15.00 a year per person on the mailing list. Donations are invited in any amount as the means of maintaining and extending the Foundation's work. Copyright, 1976. The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid: 3 for $1.00; 10 or more, 25 cents each.

THE FREEMAN is available on microfilm from Xerox University Microfilms, Ann Arbor, Michigan 48106. Some articles available as reprints at cost; state quantity desired. Permission granted to reprint any article from this issue, with appropriate credit except "A New Message" and "Lessons of the German Inflation."

CARTELS: Conspiracies in Restraint of Trade BRIAN SUMMERS AFTER LOSING MONEY for 17 straight years, in 1976 California orange grower Jacques Giddens finally sent a bumper crop to market. He was immediately hauled into court, charged with shipping. too many oranges. Giddens had exceeded a mar keting quota set by the Navel Orange Administration Committee and enforced by the federal govern ment. When Giddens exceeded his quota-less than 66 per cent of his crop-he was breaking the law. "Right now I've got 13 acres of unpicked oranges sitting out there;' Giddens said, "but I won't get anything for them because they're beginning to freeze. I can't pick them because I've already filled my quota, and there's no way to store Mr. Summers is a member of the staff of the Foundation for Economic Education. oranges except leave them on the trees. In three more weeks they'll be junk. "The law is crazy. I'm growing perfectly good food in a hungry world and throwing it away so some fat cats in Los Angeles can make a housewife pay more for her oranges in the supermarket." I Jacques Giddens has to throw away perfectly good oranges be cause the orange industry is con trolled by a cartel of merchandisers who act as middlemen between the farmer and the supermarket. The cartel decides how many oranges will be shipped to the fresh fruit market, and the federal government enforces the cartel's quotas.

Cartels - conspiracies to limit 1 "Orange Grower Hits Waste of Food in Quota System," Los Angeles Times, April 25, 1976. 707 708 THE FREEMAN December competition in order to charge monopoly prices-control large por tions of the American economy. Before considering further exam pIes, let us see how cartels are formed. In a free market, it is extremely difficul t to form an effective cartel one that restricts competition to the point that the participants gain more from selling at monopoly prices than they would from selling more goods at competitive (lower) prices. The difficulties are: 1. Competition from substitute goods and services. A cartel that restricted the output of, say, aluminum would find its customers turning to steel, brass, plastics, and other substitutes. The losses of sales to these substitute products could more than offset the cartel's monopoly gains. 2. Agreeing on a monopoly price.

Higher prices are more advan tageous to high-cost, low-output firms than to low-cost, high-output firms. Deciding on a single monopo ly price might not be easy. 3. Cheating. A cartel member who secretly lowers his price - say by kickbacks-can reap large gains throug h increased sales. In addi tion' a cartel member can try to undercut the other members by altering his product's quality or improving his credit, delivery, trial, or refund procedures. 4. Competitors who refuse to join the cartel. A producer who doesn't join can undersell the cartel, grow in size, and thus take more and more customers away from the cartel. 5. Potential competitors. The cartel's monopoly gains will attract new competitors who may refuse to join the cartel, and proceed to undersell its members. These are some of the obstacles to forming an effective cartel in a free marketa market in which the government's powers are limited to protecting people from fraud and coercion. In a free market, a cartel has no legal means to force pro ducers to join the cartel and to charge the cartel's monopoly price.

A cartel can impose its will on producers only when the govern ment fails to protect producers from the cartel or, even worse, when the government itself enforces the cartel's edicts. The latter is the case in the United States today. The dairy industry is an example of governmen t~created cartels. When private attempts to cartelize the industry fell apart in the early 1930's, the government stepped in, as described by Michael McMenamin: Faced with the free market's reasser tion of competition in the face of private attempts to cartelize the raw milk industry, the Fed~ral government resorted to direct intervention, i.e., the L 1976 CARTELS: CONSPIRACIES IN RESTRAINT OF TRADE 709 policy of government coercion to direct a market in a manner different from that dictated by supply and demand. First under the Agricultural Adjustment Act of 1933, and subsequently under the Agriculture Marketing Agreement Act of 1937, the Federal government moved to "stabilize" prices in fluid milk mar kets throughout the country .... In prac tice, what the government created was the framework for establishing local and regional milk cartels.

McMenamin concludes that "gov ernmen t price fixing, combined with monopoly power, has raised the price of a gallon of milk some 20 cents higher than if competitive condi tions prevailed." 2 The peanut cartel is another example. Since 1940 the cultivation of peanuts has been restricted by the federal government to 1.6 mil lion acres. To further restrict sup plies-and thus drive up prices peanuts are subject to strict import controls. To make the cartel air tight, the federal government guarantees a minimum support price. In 1975 this price was $394.50 a ton, about $150 a ton over the world price. This artificially high price encourages intensivecultiva tion of the allotted 1.6 million acres, resulting in a waste of resources (such as fertilizers) and a surplus of peanuts. In 1975 the government bought some 600,000 tons of 2 Michael McMenamin, "Milk, Money and Monopoly;' Reason, March 1976.

peanuts-about a third the nation's crop-at the $394.50 support price. Every year the peanut cartel costs the American public hundreds of millions of dollars in terms of taxes, higher prices, and the misuse of land, labor, and capita1. 3 Jacques Giddens can't sell all his oranges because the orange cartel's quotas are converted into mar keting orders by the U.S. Depart ment of Agriculture and enforced by the Justice Department. There are, in fact, 109 Federal marketing orders in effect in 25 states for fruits, vegetables, nuts, and dairy products. In 1972, for example, growers left 14,000 tons of cherries to rot in orchards because of a Federal marketing order. The trucking industry is also controlled by cartels. Brooks Jackson and Evans Witt describe how these cartels collude with the In terstate Commerce Commission: The ICC tells truckers precisely what kinds of goods they can carry, precisely what highways they can use and what they can charge.

The ICC also limits competition by denying thousands of applications each year by truckers desiring to offer new services. The major trucking firms band to gether in "rate bureaus" that decide what to charge for hauling. These car tels, exempt from antitrust prosecution, 3 Wall Street Journal, June 3, 1976.

710 THE FREEMAN December then challenge any attempts to have lower rates approved by the ICC. This keeps shipping prices higher than they could be. An Agriculture Department study found that shipping rates for frozen fruits and vegetables dropped 18 per cent when the courts ruled those prod ucts exempt from ICC oversight. Anoth er Agriculture study showed rates for dressed poultry plummeted 33 per cent when ICC regulation was lifted. 4 The waste wrought by ICC regulations is enormous: For example, a Department of Transportation study discovered that a big manufacturer of building materials in New Jersey ships three truckloads of goods a week from its main plant to Tampa, Florida. The trucks make the return trip empty. This company has a subsidiary in sou thern Florida that sends three truckloads of goods a week to eastern Pennsylvania. But the subsidiary's trucks make the return trip south empty-because the ICC will not let a subsidiary's trucks carry goods for the parent company or vice versa.

The DOT study, which did not name the firm, concluded that this one com pany could save 360,000 miles of useless travel and 90,000 gallons of fuel a year just by running trucks in a circuit from New Jersey to Tampa to southern Florida to eastern Pennsylvania. 5 According to a report co-authored 4 "Washington's Reach: Inflated Prices, Waste, Delay-Americans Paying for Regula tion," El Cajon Californian, March 17, 1976. 5 Ibid. by Robert Fellmeth and members of the Ralph Nader research staff, regulated truckers travel empty an estimated 30 per cent of their miles-three times the percentage for unregulated truckers. Empty trucks, ICC-mandated roundabout rou tes, and artificially high rates cost the American public tens of millions of gallons of fuel and bil lions of dollars every year. 6 The airline cartel is also costing the public immense sums of money. It is about the same distance from Chicago to Minneapolis as it is from Los Angeles to San Francisco, yet the air fare from Chicago to Min neapolis is almost twice as much.

Why? The California route is intrastate and thus exempt from Civil Aeronautics Board regulation. The CAB, created in 1938, assigned all interstate routes to a cartel of 16 airlines. Six of the original carriers have since disappeared, but the CAB has assigned all their routes to the ten surviving members. Not a single new carrier has been permit ted to operate on these routes. 7 Jackson and Witt report: The Civil Aeronautics Board refused to allow a British firm, Laker Airways, to fly regular New York-to-London flights for $270 round trip. Existing 6 Mark Frazier, "Highway Robbery-Via the ICC," Reader's Digest, January 1975. 7 James Nathan Miller, "Government Air line Regulations-Needless Risk at High Rates;' Reader's Digest, June 1975.

1976 CARTELS: CONSPIRACIES IN RESTRAINT OF TRADE 711 airlines fly the same route for $626 for a roundtrip economy-class ticket. 8 Government-created cartels con trollarge segments of the American economy. And their influence will extend if the advocates of National Economic Planning have their way. Consider this statement from the Initiative Committee for National Economic Planning (The Case for Planning). The Planning Office "would indicate the number of cars, the number of generators, and the quantity of frozen foods we are 8 "Regulators Have Stranglehold on Lives," El Cajon Californian, March 15, 1976. likely to require in, say, five years, and it would try to induce the relevant industries to act accordingI "y. Thus, under National Economic Planning, the government would "induce" the production of a given number of automobiles and other products. The only way to produce a given number of automobiles (no more, no less) is to assign quotas to the producers and exclude all poten tial producers from the market.

That is, the only way to meet the goals of National Economic Plan ning is for the government to create even more cartels. ~ IDEAS ON LIBERTY The Chimera of Monopoly WITH and because of the growth of capitalism, competition has in our day become intense and swift and sure beyond all previous human experience. What do we mean by competition? We ought to mean the ready movement of the factors of production - labor or productive instruments - toward those employments in which prices are exceptionally high and profits large. That is, competition is substan tially "mobility." Two things are necessary for this mobility: (a) knowledge, among persons outs{de of the high-priced employment, that it is profitable; (b) the possibility of increasing the use of capital and productive energy in employments whose superior attractiveness has become known. In both respects the tendency of recent industrial evolution has been toward making competition more prompt.

Al\IHHOSE PAHE WINSTON, from an article in Atlantic Month(): November 1924.

ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics. has a Masters degree in business administration. has worked two years in Sweden. and now works as a professional systems analyst. He is a businessman who is active in community and church affairs. is a free lance author. and is often'called on to speak. He lives with his wife and children on a small farm just outside of Salt lake City. All rights reserved. 712 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.

vm. On the Destiny of Liberty This concludes a series of ar.ticles in which the author draws upon the extensive collection of the thoughts of the Founding Fathers and lets them speak to us relative to the problems we face in the United States today. THE CREATOR endowed man with the power to perceive and to understand his world, the ability and the will to act upon it, and the liberty to choose his actions. His discernment and freedom stretches from the center of his secret heart to the outermost stars of his celestial world, and his decisions determine his destiny. Man is a mighty being, capable of unthinkable feats, and that wondrous capacity coupled as it is with freedom of his will, favors him with the most awesome poten tialities. A man may, by learning and energy, make himself a god or a devil, to build or to destroy, to experience exquisite joys or per verted pleasures. The choice is left to each to decide from which cup he shall drink. To make the wise choice is to make him more powerful and more free, for that places him in harmony with the laws of all N'ature and releases his capacity to create, which together provide an enduring happiness; but to make the choice elicited by the sirens of pleasure and pride is to bind him down with the chaiI?-s of enslaving habit, an afflicted mind, and a weakened body.

Thus he reaps the just reward of the use of his libert y. Ever;y man bears in his breast a spark struck from the soul of Almighty God, and in that spark glows the light of love and liberty. Every man yearns to be good and to be great, to be a blessing to all within the circle of his society; yet there are those who, intoxicated with the lust for power and wealth, turn from that divine inheritance for the corrupt pleasure of control over their fellows, and gain by their loss. Thus has the vanity of kings and despots devoured the lives of their poor subjects, and thus began 713 714 THE FREEMAN December the King of England to feed upon our toils and treasures. We repulsed his intrusions and gave you the Constitution to protect you from such, for we knew the history of man to be overflowing with the tyranny of bad governments. In our day the tyrant came to us in open defiance of our rights, with hostility and violence, with sword and cannon. Through tears, prayer, and blood we threw him off and drove him out.

Now he is among you again, but not in open war upon your houses and lands, but in subtle disguise, bearing gifts of free money, free food, free houses, and free security; trading them to you in the name of equality, rights, and liberty: offer ing the goods he took from you by heavy taxes and a deliberate infla tion. With flattering words he cod dles your vanity, legalizes your selfishness,· and leads you through a political mirage into his fool's paradise where he has appointed himself the Grand Regulator. Yet, your greatest danger lies in none of those things, but in your failure to recognize the pattern he follows, for it is ancient; what he cannot accom plish by force and violence he will attempt by lure and deceit. You are now engaged in a mighty conflict; a contest between freedom and "free-loading;' between liberty and license, and between government by the people and government by the government: a struggle test ing whether you can stand tall enough amidst the turmoil to see above the trappings of your proud affluence and catch the vision of your own sons of liberty a hundred years hence, moving as free beings in a world where free men can labor and draw to themselves a portion of this world's blessings and work and live in the safety and liberty of their own self-discipline; or whether your appeti te and passion for the tran sitory pleasures of your opulence will propel you on into the enslaving security of the oppressive govern ment you are allowing to grow up around you as an angry bramble about the feet of the last free people on the planet.

But for all this, you must be careful to understand me, for I have not come to discourage you or to prepare the grave of liberty, but to warn and encourage you to be about the work which is to be done before all mankind may enjoy the fullness of the rights with which the Creator endowed them. For the perfection of human governments was conceived in this nation and has been carried in its womb these many years, and you now enter into the time of the last travail before it is brought forth to all the world; a time in which conspiring men seek to destroy it that they might own the glory and riches of the world for themselves.

1976 A NEW MESSAGE-ON THE DESTINY OF LIBERTY 715 I have come to you in humility, and I speak from my heart. I have raised the cry of freedom and the alarm of oppression in your minds. Do not be troubled that I think your lot is destruction, <:>r that you will not awake in time to save your sel ves. Nay, not that, for I know you, and I know you will act in time. The cause of my great concern is my love for my children and the know ledge that the slower you act the more you will pay for your liberty: a lesson we learned in fear. Contrary to your many doubts, it is not inevitable that you must go down. Was it inevitable that we should have won our struggle for freedom? Nay, 'twas the natural consequence of the pouring out of our purses and our blood, and the intervention of D'ivine Providence in the affairs of His children. You may act in the same faith, with the same' courage, with the same deter mination, and with the same assurance of the same glorious result.

And I am consoled, for even now the nation is stirring, the desire for liberty wells up in the nation's bosom, and the cry of freedom whispers in its mind. Nay, I have no fear for your destiny, but I fear the price you may pay for it if you hesitate another decade. I challenge you to set a noble cause: to set your face, your hand, and your heart to the restoration of the Constitution. If you harbor any doubt as to the correctness or worthiness of that aim, then search for a better goal until you are convinced. Study my words, for I have brought you the fundamentals of good government and laid them before you in earnestness and simplicity. The,n set about to apply those principles; first in your own lives, then in your towns and cities, then your counties and states. Thus you will gain by experience the wisdom necessary to fully restore the most effective protector of human rights, and the most skilled artisan of noble human progress ever given to man for his general government.

More than any other institute of governments, the Constitution has guided the virtue of man, dis couraged his baseness, and given full release to the productive capaci ty of his talents and energies. When you have restored those three func tions to your government, you will have set the stage for the fulfull ment of the manifest destiny of the nation. You will have displayed the proper example before the world, you will have gone back into an era of social and technical progress far beyond your fondest dreams, and thus you will be em powered by wealth and wisdom to instruct a jealous planet in the way of true progress.

716 THE FREEMAN December But you live in a day when selfishness is glorified, benevolence belittled, and the government en throned as the patriarchal source of all blessings, the healer of all wounds, the savior of society, a singular entity to which one prays for his share of his neighbor's goods. And there are many who promote the deception, unwittingly moved by a lazy conscience and a selfish habit. And all are partakers in the del usion; all are tainted by the hypocrisy of public distribution of private production. Those who seek to rule you pro mise to make you happy by captur ing you in their private utopia; and while their desires may sometimes be honorable, their theory is dross; and while they know it unjust for one to thrust his will upon another or to revel in the fruits of another's toil, yet they refuse to confess the immorality of their politics. Yet, notwithstanding their false theo ries, they will succeed in your cap ture if you allow them to spoil Y9U with promises of wealth wi thou t labor and security without honor.

You stand now as at the wye of time. Your mind feels the two alter natives before-you; you may trade your respect and your freedom for a shortlived security and sell your children to the aristocracy, or you may work and strive for liberty with h,onor. In your heart you know the right, while the comforts of govern ment welfare and the narcotic of a lazy morality woo you to careless ness in the choice. How long my children will you halt between? For decades you have stood, hoping you might be spared the price of liberty, hoping all would be well with you while the ambi tious and the vain have framed the laws to enforce your happiness. Now as their work nears completion, the urgency of their success strikes fear in your hearts while their soft promises urge you to sleep. How long will you halt between? How high must the cost of freedom ascend ere you appreciate its worth and determin~ to pay its price? Can you not perceive that we once made the self-same error: Must each gen eration stumble in the same road?

Must the cycles of history ever turn full round? Nay my children! Not so! This time you may break the ancient pattern, for this is the first time and the last time the cycles in the nations have all been brought together in step and in time, for now the whole world lies in bondage, save a few. But the seeds of liberty germinate quickly under the tyrant's heel, and the embers of freedom glow brightest in the dark winds of oppression. Now those seeds grow and those embers glow, and the people of the earth peer out of darkness and look for your light!

1976 A NEW MESSAGE-ON THE DESTINY OF LIBERTY 717 Now you, being free, may lead yoursel ves and them also into the full light of liberty. Oh America! America! May the Almighty look upon you with the tenderness of a loving Father. May you look to Him with the faith of a chosen child. If you will reach for Him, He will touch you. If you will serve Him, He will lift you up. Can you hear my voice? This is the message I have come to deliver: I challenge you, each and everyone of you to listen to the humility of your own heart, for it will guide you back to the glorious liberty which is your rightful inheritance if you will but qualify yourself by obedience to the voice of your own conscience. If you The Day's Demand will listen and follow, the light of libetty will shine again in your face, and the nation will shine forth in a world darkened by the tyranny of despots and evil politicians. Rise up my people ! Take your proper place in the progress of freedom!

If you will be faithful to your own hearts and the blood of your fathers, you may have the pri vileg of being the political saviors of the world, not by coercion or conspiracy but by example and pr~cept. That is your challenge and your duty, your opportunity and your blessing. And that is the true destiny of liberty. I know it; and there is not one of you who doe's not in his own heart know it also. Then-my Sons of Liberty be true to it! Farewell! ~ IDEAS ON LIBERTY God give us men! A time like this demands Strong minds, great hearts, true faith, and ready hands; Men whom the lust of office does not kill; Men whom the spoils of office cannot buy; Men who possess opinions and a will; Men who have honor; men who will not lie; Men who can stand before a demagogue And damn his treacherous flatteries without winking; Tall men, sun-crowned, who live above the fog In public duty and in private thinking; For while the rabble, with their thumb-worn creeds, Their large profession and their little deeds"

Mingle in selfish strife, lo! Freedom weeps, Wrong rules the land, and waiting Justice sleeps. JOSIAH G. HOLLAND HENRY HAZLITT WE LEARN from extreme cases, in economic life as in medicine. A moderate inflation, that has been going on for only a short time, may seem like a great boon. It appears to increase incomes, and to stimulate trade and employment. Politicians find it profitable to advocate more of it-not under that name, of course, but under the name of "expansion ary" or "lull employment" policies. It is regarded as politically suicidal to suggest that it be brought to a halt. Politicians promise to "fight" inflation; but by that they almost never mean slashing government expenditures, balancing the budget, and halting the money-printing Henry Hazlitt, noted economist, author, editor, reviewer and columnist, is well known to readers of the New York Times, Newsweek, The Freeman, Barron's, Human Events and many others. Best known of his books are Economics. in One Lesson, The Failure of the "New Economics," The Founda tions of Morality, and What You should Know About Inflation 718 presses. They mean denouncing the big corporations and other sellers for raising their prices. They mean imposing price and rent controls.

When the inflation is sufficiently severe and prolonged, however, when it becomes what is called a hyperinflation, people begin at last to recognize it as the catastrophe it really is. There have been scores of hyperinflations in history - in ancient Rome under Diocletian, in the American colonies under the Continen tal Congress in 1781, in the French Revolution from 1790 to 1796, and after World War I in Austria, Hungary, Poland, and Russia, not to mention in three or four Latin American countries today. But the most spectacular hyperinflation in history, and also the one for which we have the most adequate statistics, occurred in Ger many in the years from 1919 to the 1976 LESSONS OF THE GERMAN INFLATION 719 end of 1923. That episode repays the most careful study for the light it throws on what happens when an inflation is allowed to run its full course. Like every individual infla tion, it had causes or features peculiar to itself-the Treaty of Versailles, with the very heavy reparation payments it laid upon Germany, the occupation of the Ruhr by Allied troops in early 1923, and other developments. But we can ignore these and concentrate on the features that the German hyperinflation shared with other hyperinflations.

Convertibility Suspended At the outbreak of World War I on July 31, 1914-the German Reichsbank took the first step by suspending the conversion of its notes into gold. Between July 24 and August 7 the bank increased its paper note issue by 2 billion marks. By November 15, 1923, the day the inflation was officially ended, it had . issued the incredible sum of 92.8 quintillion (92,800,000,000,000, 000,000) paper marks. A few days later (on November 20) a new cur rency, the rentenmark, was issued. The old marks were made converti ble into it at a rate of a trillion to one. It is instructive to follow in some detail how all this came about, and in what stages. By October 1918, the last full month of World War I, the quantity of paper marks had been increased fourfold over what it was in the pre war year 1913, yet prices in Ger many had increased only 139 per cent. Even by October 1919, when the paper money circulation had increased sevenfold over that of 1913, prices had not quite increased sixfold. But by January 1920 this relationship was reversed: money in circulation had increased 8.4 times and the wholesale price index 12.6 times. By November 1921 circula tion had increased 18 times and wholesale prices 34 times. By November 1922 circulation had in creased 127 times and wholesale prices 1,154 times, and by Novem ber 1923 circulation had increased 245 billion times and prices 1,380 billion times.

These figures discredit the crude or rigid quantity theory of money, according to which prices increase in proportion to the increase in the stock of money-whether the money consists of gold and con verti ble notes or merely of irredeemable paper. And what happened in Germany is typical of what happens in every hyperinflation. In what we may call Stage One, prices do not increase nearly as much as the increase in the paper money circulation. This is because the man in the street is hardly aware that the money supply is being increased. He still has 720 THE FREEMAN December confidence in the money and in the pre-existing price level. He may even postpone some intended pur chases because prices seem to him abnormally high, and he still hopes that they will soon fall back to their old levels. Later Stages of Inflation Then the inflation moves into what we may call Stage Two, when people become aware that the money stock has increased, and is still increasing. Prices then go up approximately as much as the quan tity of money is increased. This is the result assumed by the rigid quantity th,eory of money. But Stage Two, in fact, may last only for a short time. People begin to assume that the government is going to keep increasing the issuance of paper money indefinite ly, and even at an accelerating rate.

They lose all trust in it. The result is Stage Three, when prices begin to increase far faster than the govern ment increases, or even than it can increase, the stock of money. (This result follows not because of any proportionate increase in the "velocity of circulation" of money, but simply because the value that people put upon the monetary unit falls faster than the issuance increases. See my article, "What Determines the Value of Money?" in The Freeman of September, 1976,) But throughout the German inflation there was almost no pre dictable correspondence between the rate of issuance of new paper marks, the rise in internal prices, and the rise in the dollar-exchange rate. Suppose, for example, we assign an index number of 100 to currency circulation, internal prices, and the dollar rate in Octo ber 1918. By February 1920 circula tion stood at 203.9, internal prices at 506.3, and the dollar rate at 1,503.2. One result was that prices of imported goods then reached an index number of 1,898.5.

But from February 1920 to May 1921 the relationship of these rates of change was reversed. On the basis of an index nurn ber of 100 for all of these quantities in February 1920, circulation in May 1921 had increased to 150.1, but internal prices had risen to only 104.6, and the dollar exchange rate had actual ly fallen to 62.8. The cost of im ported goods had dropped to an index number of 37.5. . Between May 1921 and July 1922 the previous tendencies were once more resumed. On the basis of an index number of 100 for May 1921, the circulation in July 1922 was 248.6, internal prices were 734.6, and the dollar rate 792.2. Again, between July 1922 and June 1923 these tendencies con tin ued, though at enormously in creased rates. With an index num ber of 100 for July 1922, circulation 19'76 LESSONS OF THE GERMAN INFLATION 721 in June 1923 stood at 8,557, inter nal prices at 18,194, and the dollar rate at 22,301. The prices of im ported 'goods had increased to 22,486.

The amazing divergence between these index numbers gives some idea of the disequilibrium and dis organization that the inflation caused in German economic life. There was a depression of real wages practically throughout the inflation, and a great diminution in the real prices of industrial shares. How It Happened How did the German hyperinfla tion get started? And why was it continued to this fantastic extent? Itsorigin is hardly obscure. To pay for the tremendous expen ditures called for by a total war, the German government, like others, found it both economically and politically far easier to print money than to raise adequate taxes. In the period from 1914 to October 1923, taxes covered only about 15 per cent of expenditures. In the last ten days of October 1923, ordinary taxes were covering less than 1 per cent of expenses. What was the government's own rationalization for its policies? The thinking of the leaders had become incredibly corrupted. They inverted cause and effect. They even denied that there was any inflation .. They blamed the depreciation of the mark on the adverse balance of payments. It was the rise of prices that had made it necessary to increase the money supply so that people would have enough money to pay for goods. One of their most respected monetary economists, Karl Helfferich, held to this rationalization to the end: "The increase of the circulation has not preceded the rise of prices and the depreciation of the exchange, but it followed slowly and at great distance. The circulation increased from May 1921 to the end of January 1923 by 23 times; it is not possible that this increase had caused the rise in the prices of imported goods and of the dollar, which in that period increased by 344 times:'1 Of course such reasoning was eagerly embraced by Germany's politicians. In the late stages of the inflation, when prices rose far faster than new money could even be printed, the continuation and even the acceleration of inflation seemed unavoidable. The violent rise of prices caused an intense demand for more money to pay the prices. The quantity of money was not suffi cient for the volume of transactions.

Panic seized manufacturers and business firms. They were not able to fulfill their contracts. The rise of prices kept racing ahead of the 1 Das Geld (sixth edition, Leipzig, 1923.> 722 THE FREEMAN December volume of money. The thirty paper mills of the government, pIus its well-equipped printing plants, plus a hundred private printing presses, could not turn out the money fast enough. The situation was desper ate. On October 25, 1923 the Reichsbank issued a statement that during the day it had been able to print only 120,000 trillion paper marks, but the demand for the day had been for a quintillion. One reason for the despair that seized the Germans was their con viction that the inflation was caused principally by the repara tions burden imposed by the Treaty of Versailles. This of course played a role, but far from the major one. The reparations paymen ts did not accoun t for more than a third of the total discrepancy between expen diture and income in the German budget in the whole four financial years 1920 through 1923.

A False Prosperity In the early stages of the inflation German internal prices rose more than the mark fell in the foreign exchange market. But for the greater part of the inflation period-in fact, up to September 1923-the external value of the mark fell much below its internal value. This meant that foreign goods became enormously expensive for Germans while German goods became great bargains for foreigners. As a result German exports were greatly stimulated, and so was acti vity and employmen t in many German industries. But this was I ater recognized as a false prosperity. Germany was in effect selling its production abroad much below real costs and paying extor tionate prices for what it had to buy from abroad. In the last months of the German inflation, beginning in the summer of 1923, internal prices spurted forward and reached the level of world prices, even allowing for the incredibly depreciated exchange.

The exchange rate of the paper mark, calculated in gold marks, was 1,523,809 on August 28, 1923. It was 28,809,524 on September 25, 15,476,190,475 on October 30, and was "stablized" finally at 1,000, 000,000,000 gold marks on Novem ber 20. One change that brought about these astronomical figures is that merchants had finally decided to price their goods in gold. They fixed their prices in paper marks ac cording to the exchange rate. Wages and salaries also began to be "indexed;' based on the official cost of-living figures. Methods were even devised for basing wages not only on the existing depreciation but on the probable future depreciation of the mark. Finally, with the mark depreciat ing every hour, more and more 1976 LESSONS OF THE GERMAN INFLATION 723 Germans began to deal with each other in foreign currencies, pr~n cipally in dollars. Placing The Blame Viewed in retrospect, one of the most disheartening things about the inflation is that no matter how appalling its consequences became, they failed to educate the German monetary economists, or cause them to re-examine their previous sophisms. The very fact that the paper marks began to depreciate faster than they were printed (be cause everybody feared sdll further inflation) led these economists to argue that there was no monetary or credit inflation in Germany at all! They admitted that the stamped value of the paper money issued was enormous, but the "real"

value-that is, the gold value ac cording to the exchange rate - was far lower than the total money circulating in Germany before the war. This argument was expounded by Karl Helfferich in official testimony in June 1923. In the summer of 1922 Professor Julius Wolf wrote: "In proportion to the need, less money circulates in Germany now than before the war. This statement may cause surprise, but it is correct. The circulation is now 15-20 times that of pre-war days, while prices have risen 40-50 times:' Another economist, Karl Elster, in his book on the German mark, declared: "However enormous maybe the apparen t rise in the circulation in 1922, actually the figures show a decline"! Of course all of the bureaucrats and politicians responsible for the inflation tried to put the blame for the soaring prices of everything from eggs to the dollar on to a special class of selfish and wicked people called the "speculators" forgetting that everybody who buys or sells and tries to anticipate fulure prices is unavoidably a speculator.

Effect on Production There is today still an almost uni versal belief that inflation stim ulates trade, employment, and pro duction. For the greater part of the German inflation, most business men believed this to be true. The depreciation of the mark stimulated their exports. In February and March of 1922, when the dollar was rising, business seemed to reach a maximum of activity. The Berliner Tageblatt wrote in March of the Leipzig Fair: "It is no longer simply a zeal for acquiring, or even a rage: it is a madness." In the summer of 1922 unemployment practically dis appeared. In 1920 and 1921, on the other hand, every improvement in the mark had been followed by an increase of unemployment. The real effect of the inflation, 724 THE FREEMAN December however, was peculiarly complex. There were violent alternations of prosperity and depression, feverish activity and disorganization. Yet there were certain dominant ten dencies. Inflation directed produc-, tion, trade, and employment into different channels than they had previously taken. Production was less efficient. This was partly the result of· the inflation itself, and partly of the deterioration and destruction of German plant and equipment during the war. In 1922 (the year of greatest economic expansion after the war) total pro duction seems to have reached no more than 70 to 80 per cent of the level of 1913. There was a sharp' decline in farm output.

High prices imposed "forced sav ing" on most of the German popula tion. High paper profit margins combined with tax considerations led German manufacturers to increase their investment in new plant and equipment. (Later much of this new investment proved to be almost worthless,) There was a great decline in labor efficiency. Part of this was the result of malnutrition brought about by high food prices. Bresciani-Turroni tells us: "In the acutest phase of the inflation Germany offered the gro tesque, and at the same time tragie, spectacle of a people which, rather than produce food, clothes, shoes, and milk for its own babies, was exhausting its energies in the manufacture of machines or the building of factories:' There was a great increase in unproductive work. As a result of changing prices and increased spec ulation, the number of middlemen increased continually. By 1923 the number of banks had multiplied fourfold over 1914. Speculation expanded pathologically. When prices were increasing a hundred fold, a thousandfold, a millionfold, far more people had to be employed to make calculations, and such calculations also took up far more time of old employees an'd of buyers.

With prices racing ahead, the will to work declined. The production of coal in the Ruhr, which in 1913 had been 928 kilograms per miner, had decreased in 1922 to 585 kilograms. The "dollar rate" was the theme of all discussions. Chaotic Business Conditions Inefficient and unproductive firms were no longer eliminated. In 1913 there had been, on the average, 815 bankruptcies a month. They had decreased to 13 in August 1923, to 9 in September, to 15 in October, and to 8 in November. The accelerative depreciation of the paper mark kept wiping out everybody's real debt. The con tin uous and violent oscillations in the value of money made it all but impossible for manu facturers and merchants to know 1976 LESSONS OF THE GERMAN INFLATION 725 what their prices and costs of pro duction would be even a few months ahead. Production became a gam ble. Instead of concentrating on improving their product or holding down costs, businessmen speculated in goods and the dollar.

Money savings (e. g., in savings bank deposits) practically ceased. The novelist Thomas Mann has left us a description of the typical experience of a consumer in the late stages of the inflation: "For instance, you might drop in at the tobacconist's for a cigar. Alarmed by the price, you'd rush to a competitor, find that his price was still higher, and race back to the first shop, which may have doubled or tripled its price in the meantime. There was no help for it, you had to dig into your pocketbook and take out a huge bundle of millions,. or even billions, depending on the date:'2 But this doesn't mean that the shopkeepers were enj oying an economic paradise. On the contrary, in the final months of the inflation, business became demoralized. On the morning of November 1, 1923, for exam pIe, retail traders fixed their prices on the basis of a dollar exchange rate of 130 billion paper marks. By afternoon the dollar rate had risen to 320 billion. The paper 2 Lecture in 1942, published in Encounter, 1975.

money that shopkeepers had re cei ved in the morning had lost 60 per cent of its value! In October and November, in fact, prices became so high that few could pay them. Sales almost stop ped. The great shops were deserted. The farmers would not sell their products for a money of vanishing value. Unemployment soared. From a figure of 3.5 per cent in July, 1923, it rose to 9.9 per cent in September, 19.1 per cent in October, 23.4 per cent in November and 28.2 per cent in December. In addition, for these last four months more than 40 per cent of union members were em ployed only part time. The ability of politicians to profit from manufacturing more inflation had come to an end. Effect on Foreign Trade Because the paper mark usually fell faster and further on the foreign exchange market than German in ternal prices rose, German goods became a bargain for foreigners, and German exports were stimu lated. But the extent of their increase was greatly overestimated at the time. The relationship be tween the dollar rate and the inter nal price rise was undependable.

When the mark improved on the foreign exchange market, exports fell off sharply. Germans in many trades viewed any improvement of the mark with alarm. The main 726 THE FREEMAN December long run effect of the inflation was to bring about a continuous instability of both imports and exports. Moreover, the two were tied together. German industry largely worked with foreign raw materials; it had to import in order to export. Germany did not "flood the world wit1h its exports." It could not increase production fast enough. Its industrial output in 1921 and 1922, in spite of the appearance of feverish activity, was appreciably lower than in 1913. As I have noted before, because of price and foreign exchange distortions, Germany was in effect giving away part of its output. But this loss had one notable offset. In the earlier stages of the inflation, foreigners could not resist the idea that the depreciated Ger man mark was a tremendous bargain. They bought huge quan ti ties. One German economist calculated that they probably lost seven-eights of their money, or about 5 billion gold marks, "a sum triple that paid by Germany in foreign exchange on accoun t of reparations."

The Effect on Securities Those who have lived only in comparatively moderate inflations will find it hard to believe how poor a "hedge" the holding of shares in private companies provided in the German hyperinflation. The only meaningful way of measuring the fluctuation of German stock prices is as a percentage of changes in their gold (or dollar) value, or as a percentage of German wholesale prices. In terms of the latter, and on the basis of 1913 = 100, stocks were selling at an average of 35.8 in December 1918, 15.8 in December 1919, 19.1 in December 1920, 21 in December 1921, 6.1 in December 1922, and 21.3 in December 1923. This lack of responsi veness is accounted for by several factors. Soaring costs in terms of paper marks forced companies continually to offer new shares to raise capital, with the result that what was being priced in the market was contin ually "diluted" shares. Mounting commodity prices, and speculation in more responsive "hedges" like the dollar, absorbed so large a pro portion of the money supply that not much was left to invest in securities. Companies paid very low dividends. According to one com pilation, 120 typical companies in 1922 paid out dividends equal, on the average, to only one-quarter of 1 per cent of the prices of the shares.

The nominal profits of the com panies were frequently high, but there seemed no point in holding them for distribution because they would lose so much of their purchas ing power in the period between the time they were earned and the day the stockholder got them. They 1976 LESSONS OF THE GERMAN INFLATION 727 were therefore ploughed back into the business. But people desperately wanted a return, and they could make short-term loans at huge nominal rates of interest. (Rig h interest rates, also, meant low capitalized values.) Moreover, investors rightly suspected that there was something wrong with the nominal net profits that the companies were showing. Most firms were still. making com pletely inadequate depreciation and replacement allowances, or showing unreal profits on inventories. Many companies that thought they were distributing profits were actually distributing part of their capital and operating at a loss. Finally, over each company hung an "invisible mortgage" -its potential taxes to enable the government to meet the reparations burden. And over the whole market hung, in addition, the fear of Bolshevism.

Yet it must not be concluded that stocks were at all stages a poor hedge against inflation. True, the average of stock prices (in gold value on the basis of 1913 = 100) fell from 69.3 in October 1918 to 8.5 in February 1920. But most of those who bought at this level made not only immense paper profits but real profits for the next two years. By the autumn of 1921 speculation on the German Bourse reached feverish levels: "Today there is no one;' wrote one financial newspaper, " from lift-boy, typist, and small land lord to the wealthy lady in high society-who does not speculate in industrial securities." But in 1922 the situation dra matically changed again. When the paper index is converted into gold (or into the exchange rate for the dollar) it fell in October of that year to only 2.72, the lowest level since 1914. The paper prices of a selected number of shares had increased 89 times over 1914, but wholesale prices had increased 945 times and the dollar 1,525 times.

After October 1922, once again, the price of shares rapidly began to catch up, and for the next year not only reflected changes in the dollar exchange rate, but greatly sur passed them. The index number in gold (1913 = 100) rose to 16.0 in July 1923, 22.6 in September, 28.5 in October, and 39.4 in November. When the inflation was over, in December 1923, it was 26.9. But this meant that shares ended up at only about a fourth of their gold value in 1913. The movement of share prices contributed heavily to the profound changes in the distribution of wealth brought about in the infla tion years. Interest Rates In an inflation, lenders who wish to protect themselves against the probable further fall in the purchas728 THE FREEMAN December ing power of money by the time their principal is repaid, are forced to add a "price premium" to the normal interest rate. This elemen tary precaution was ignored for years by the German Reichsbank.

From the early days of the war until June 1922 its official discount rate remained unchanged at 5 per cent. It was raised to 6 per cent in July, to 7 per cent in August, 8 per cent in September, 10 per cent in November, 12 per cent in January 1923, 18 per cent in April, 30 per cent in August, and 90 per cent in September. But even the highest of these rates did nothing to deter borrowing by debtors who expected to payoff in enormously depreciated marks. The result was that the Reichsbank's policy kindled an enormous credit inflation, based on commercial bills, on top of the enormous government inflation based on Treasury bills. After Sep tember 1923, a bank or private individual had to pay at a rate of 900 per cent per annum for a loan from the Reichsbank. But even this was no deterrent. At the beginning of November 1923 the market rate for "call money" rose as high as 30 per cent per day-equivalent to more than 10,000 per cent on an annual basis.

The Monetary Reform There is not space here for an adequate summary of the redistribution of wealth, the pro found social upheaval, and the moral chaos brought about by the German inflation. I must reserve them for separate treatment, and move on to discuss the monetary reform that ended the inflation. On October 15, 1923, a decree was published establishing a new cur rency, the rentenmark, to be issued beginning November 15. On Novem ber 20 the value of the old paper mark was "stabilized" at the rate of 4,200 billion marks for a dollar, or one trillion old paper marks for a rentenmark or gold mark. The infla tion came to a sudden halt. The result was called "the mira cle of the rentenmark." Indeed, many economists find it difficult to this day to explain exactly why the rentenmark held its value. It was ostensibly a mortgage on the entire industrial and agricultural resources of the coun try. It was provided that 500 rentenmarks could be converted into a bond having a nominal value of 500 gold marks. But neither the renten marks nor the bond were actually made convertible into gold.

Moreover, the old paper marks continued to be issued at a fantastic rate. On November 16 their circula tion amounted to 93 quintillions; it soared to 496 quintillions on December 31, and continued to rise throug h July of the following year. Bresciani -Turroni is inclined to 1976 LESSONS OF THE GERMAN INFLATION 729 attribute the "miracle" of the ren tenmark to the desperate need for cash (more and, more people had stopped accepting paper marks) , and to the word "wertbestandig 1 ' (constant value) printed on the new money. The public, he thinks, "allowed itself to be hypnotized" by that word. There is a more convincing explanation. Though paper marks continued to be issued against com mercial bills, from November 16 on the discounting of Tre.asury bills. by the Reichsbank was stopped. This meant that at least no more paper money was being issued on behalf of the government to finance its defi cits. In addition, the Reichsbank intervened in the foreign exchange market. In effect it pegged the rentenmark at 4.2 to the dollar and the old marks at 4.2 trillion to the dollar. Germany was now on a dollar exchange standard!

The Stabilization Crisis The effect was dramatic. In the last months of the inflation the German economy was demoralized. Trade was coming to a standstill, many people were starving in the towns, factories closed. As we have seen, unemployment in the trade unions, which had been 6.3 per cent in August, rose to 9.9 per cent in September, 19.1 per cent in October, 23.4 per cent in November, and 28.2 per cent in December. (The inflation technically came to an end in mid November, but its disorganizing effects did not,) But after that, confidence quickly revived, and trade, production, and employment with it. Bresciani -Turroni and other wri ters refer to the "stabilization crisis" that follows an inflation which has been brought to a halt. But after a hyperinflation has passed beyond a certain point, any so-called "stabilization crisis" is comparatively mild. This is because the inflation itself has brought about so much economic dis organization. When it is said that unemployment rose after the mark stabilization, the statement is true at best only as applied to one or two months. Bresciani-Turroni's month by-month tables of unemployment end in December 1923. Here is what happened in the nine months from October 1923 through June 1924: 3 October 1923 534,360 November 1923 954,664 December 1923 1,473,688 January 1924 1,533,495 February 1924 1,439,780 March 1924 1,167,785 April 1924 694,559 May 1924 571,783 June 1924 401,958 3 The figures do not include part-time workers or employees in public emergency projects, but only unemployed workers eligible for unemployment compensation. I am indebted to Prof. Gunther SchmOlders for supplying them.

730 THE FREEMAN December Thus by June of 1924 unemploy ment had returned to a normal figure. There was a real stabilization crisis, but it showed itself in a different way. One of the things that happens in an inflation, and espe cially in a hyperinflation, is that labor is employed in different direc tions than the normal ones, and when the inflation is over, this abnormal demand disappears. Dur ing an inflation labor is drawn into luxury lines-furs, perfumes, jewe lry, expensive hotels, nightclubs and many essentials are com parati vely neglected. In Germany labor went particularly into fixed capital, into the erection of new plant, and into the overexpansion of industries making "instrumental" goods. And then, suddenly, as one industrialist bluntly put it, many of these factories were found to be "nothing but rubbish." In many cases it was soon found to be a mistake even to keep them closed down in the hope of reopening later.

The mere cost of maintenance was excessive. It was cheaper to, demolish them. In brief, when the inflation ended, the distortions and illusions to which it had given rise came to an end with it. Parts of the economy had been overdeveloped at the expense of the rest. The inflation had produced a great lowering of real wages. In the first months of 1924 a big increase took place in the average incomes of individual workers as well as in employment. The index of real incomes rose from 68.1 in January 1924 to 124 in June 1928. Thisled to a great increase in the demand for consumption goods, and to a corresponding fall in the production of capital or instrumen tal goods. There was suddenly recognized to have been a great overproduction of coal, iron and steel. Unemployment set in in these industries. But once again, careful attention was paid to production costs, and there was a return to labor efficiency.

There was apparently a great shortage of working capital, if we judge by interest rates. In April and May of 1924 the rate for monthly loans rose in Berlin to a level equivalent to 72 per cent a year. But a large part of this reflected con tinuing distrust of the stability of the new currency. At the same time loans in foreign currencies were only 16 per cent. And in October 1924, for example, when rates for loans in marks had fallen to 13 per cent, loans in foreign currencies were down to 7.2 per cent. It would be difficult to sum up the whole German inflation episode bet ter than Bresciani -Turroni himself did in the concluding paragraph of his great book on the subject: "At first inflation stimulated pro duction because of the divergence 1976 LESSONS OF THE GERMAN INFLATION 731 between the internal and external values of the mark, but later it exercised an increasingly disadvan tageous influence, disorganizing and limiting production. It annihi lated thrift; it made reform of the national budget impossible for years; it obstructed the solution of the Reparations question; it destroyed incalculable moral and intellectual values. It provoked a serious revolution in social classes, a few people accumulating wealth and forming a class of usurpers of national property, whilst millions of individuals were thrown into pover ty. It was a distressing preoccupa tion and constant torment of innumerable families; it poisoned the German people by spreading among all classes the spiri t of speculation and by diverting them from proper and regular work, and it was the cause of incessant politi cal and moral disturbance. It is indeed easy enough to understand why the record of the sad years 1919-23 always weighs like a nightmare on the German people:' These lines were first published in 1931. There is only one thing to add.

The demoraliza,tion that the debase ment of the currency left in its wake played a major role in bring ing Adolf Hitler into power in 1933. Author's Note-For most of the statistics and some of the other information in this article 1. am indebted to two books: chiefly to The Economics of Inflation, by Cost an tino Bresciani -Turroni (London: George Allen & Unwin, 1937), and partly to Exchange, Prices, and Pro duction in HyperInflation: Germany, 1920-1923, by Frank D. Graham (Princeton University Press, 1930, and New York: Russell & Russell, 1967). These authors in turn derived most of their statistics from official sources. IJ IDEAS ON L$ LIBERTY Hans R Sennholz IT IS RARELY UNDERSTOOD that inflation generates a vast redistribution process. It shifts wealth and income from the pockets of creditors to those of debtors. It reduces the standards of living of people with fixed incomes, in particular, the aged and handicapped. And it diminishes the value of savings bonds and savings accounts, mortgages and life insurance policies, pensions and other savings. It causes the economic instabilities of the trade cycle. And, above all, the losses which inflation inflicts on millions of people breed a political and economic radicalism that tends to destroy our private property order.

CLARENCE B.CARSON HISTORY, it has been said, is a seamless cloth. The thought is apt. You cannot eli p a thread within it and attempt to extricate it without uri'raveling the whole. There have been efforts to tell the history of the United States with the role of religion either excised from it or altered ,within it. One ,common"al .. tenition occurs in those textbooks which claim that the Pilgrims' and Puritans came to America for freedom of religion. They did not. They came in order to be able to practice their religion. The difference is by no means mere ly a quibble. Freedom of religion, as Dr. Carson has wrilten and taught extensively, specializing in American intellectual history. His most recent book, The Rebirth of .Liberty: The Founding of the American Republic 1760-1800 is now available in a 350-page attractive Bicenten nial paperback at $3.00 from the Foundation for Economic Education, Irvington-on-Hudson, N.Y.

10533. 732 it is now understood;' is a secular concept. It is probablD':evenmore highly valued by thoseyvho have no religious faith than by active be lievers. To be able to practic~ one's faith is only ofvalue to.himwho has a faith to practice. It is a sacred, not a secular, value. The Puritans at the time of settlement·,,-e6uld' no more conceive of the .desirahility -of freedom of religion than .r:l'reasury officials today can conceive of/the desirability of freedorti of counter feiting. My point is that books on American history often ei ther secularize religious values, treat them as alien, or leave them out of account. Yet, without these religious foundations there could have been no United States as it was and is. There is no knowing American history without grasping its underpinnings in Judeo-Chris1976 FAITH OF OUR FATHERS 733 tian faith. America as it was and is cannot even be ~successfully imag ined without the thread of faith woven into the cloth of history.

Biblically Based and Christian Settlement of America American history cannot be imagined without the powerful evocati ve phrases of the King James Version of the Bible, or without the story of our origins in Genesis: In the beginning God created the heavens and the earth. The earth was without form, and void; and darkness was on· the ;'face of the deep. And the Spirit of Gqd moved upon the face of the waters .. Genesis 1: 1-2. 0r, with<:?ut the account of man's place in the creation: And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over all the earth, and over every creeping thing that creepeth upon the earth. So God created man in his own image, in the image of God created he him; male and female created he them. Genesis f· 26-27. -The fundamental character of all proper law is' revealed in the Ten Commandments. Though two of them do command appropriate af firmative action, the remainder are prohibitive in nature. They are brief, concise, and are readily under stood. A United States without the Ten Commandments in its back ground would have been a United States without transcendent law upon which. to build: 1. Thou shalt have no other gods before me.

2. Thou shalt not make unto thee any graven image. 3. ,Thou shalt not take the name of the Lord thy God in vain. 4. Remember the sabbath day, to keep it holy. 5. Honour thy father and thy mother. 6. Thou shalt not kIll. 7,. Thou shalt not commit adultery. 8. Thou shalt not steal. 9. Thou shalt not bear false witness against thy neighbor. 10. Thou shalt not covet. Excerpted and numbered from Exodus 20: 3-17. Most of those who settled in the New World were Christian, nominally or devoutly as the case might be. Their attitude toward life had been winnowed through and condi tioned by the Christian perspective. This meant many things, but one of its meanings is never to be ignored by the historian: That good ultimately triumphs over evil, that life is not necessarily tragic but that it is potentially triumphant when it is in accord with God's wilL America without the assurance of this Revelation could not have been as it has been: 734 THE FREEMAN December In the beginning was the Word, and the Word was with God, and the Word was God. He was in the beginning with God; all things were made through him, and without him was not anything made that was made. In him was life, and the life was the light of men. The light shines in the darkness, and the darkness has not overcome it.

John 1: 1-5 (RSV) This assurance comes through in the beautiful promises of the Beatitudes: Blessed are the poor in spirit, for theirs is the kingdom of heaven. Blessed are those who mourn, for they shall be comforted. Blessed are the meek, for they shall inherit the earth. Blessed are those who hunger and thirst for righteousness, for they shall be satisfied. Blessed are the merciful, for they shall obtain mercy. Blessed are the pure in heart, for they shall see God. Blessed are the peacemakers, for they shall· be called the sons of God. Blessed are those who are persecuted for righteousness' sake, for theirs is the kingdom of heaven. Blessed are you when men revile you and persecute you and utter all kinds of evil against you falsely on my account. Rejoice and be glad, for your reward is great in heaven, for so men persecuted the prophets who were before you. Matthew 5: 3-11 (RSV) Roman Catholicism The Christian religion was for a thousand years of its history repre sen ted primarily by the Roman Catholic Church. Within that fold many doctrines were shaped and many great preachers and teachers held forth. While the Catholic Church was suspect to some of the Founders of the United States, it is nonetheless the case that ~he Faith of Our Fathers found· many of its underpinnings in that faith. Here is a statement from the monastic ideal of the Middle Ages: This treasure, then, namely Christ, our God and Lord, who was made for us as both redeemer and reward, He Him self both the promiser and the prize, who is both the lif~ of man and the eternity of the angels-this, I say, store away with diligent care in the recesses of your heart. On Him cast the anxiety of any care whatsoever. In Him delight through the discourse of zealous prayer. In Him refresh yourself by the nightly feasts of holy meditation. Let Him be your food, and your clothing no less. If it should happen that you lack anything of exter nal convenience, do not be uncertain, do not despair of His true promise in which He said "Seek ye first the kingdom of God, and all things shall be added unto you ... :' Peter Damiani (Eleventh Century) Protestant Reformation Even more, however, is the United States inconceivable without the Protestant Reformation. Most of 1976 FAITH OF OUR FATHERS 735 the colonies were settled by one or more offshoots of this movement.

The emphasis upon I;'eason, Scrip ture, and decision by the in di vidual-hallmarks of the Re formation-was never more dra matically stated than by Martin Luther at the Diet of Worms in his refusal to recant: Since your Majesty and your lordships ask for a simple reply, I shall give you one without horns and without teeth; unless I am convinced by the evidence of Scriptures or by plain reason. " I am bound by the Scriptures I have cited and my conscience is captive to the Word of God. I cannot and will not recant anything, for it is neither safe nor right to go against conscience. I can do no other. Martin Luther (Diet of Worms, 1521) The tendency in Protestant lands, however, was to have one estab lished church. Those who did not want such an establishment, or wanted a different one, were often persecuted in their home lands. Some of these sought refuge in' America. The Pilgrims were the first of such English groups to do so.

The character of the faith of one of their leaders, William Bradford, comes through in this selection from his writing: What cotdd now sustain them but the Spiri t of God and His grace? May not and ought not the children of these fathers rightly say: "Our fathers were Englishmen which came over this great ocean, and were ready to perish in this wilderness; but they cried unto the Lord, and He heard their voice and looked on their adversity;' etc. "Let them therefore praise the Lord because he is good: and His mercies endure forever." Yea, let them which have been redeemed of the Lord, shew how He hath delivered them from the hand of the oppressor. When they wandered in the desert wilderness out of the way, and found no city to dwell in, both hungry and thirsty, their soul was overwhelmed in them. Let them confess before the Lord his lovingkind ness and His wonderful works before the sons of men.

William Bradford, Of Plymouth Plantation. The Great Awakening, At the outs.et, many of those who settled in the New World were di vided from one another by religious differences. The fact that most of them were Protestant served at first more to divide than to unite them. Over the years, doctrinal antipathies moderated. Perhaps the single most important of the moderating influences was the Great Awakening. In the middle of the eighteenth century a great revival spread through the colonies. Though it did provoke some divi sions within denominations, its ten dency was to shift the emphasis from points of doctrille to the experience of con version and a spiritual attitude toward life. Denominations con tin ued to 736 THE FREEMAN December proliferate but their differences became more a matter of modes of organization and( tastes as to ritual than of dogma and doctrine. The Great Awakening provided a widely shared evangelistic base for Protes tant Christianity. The tenor of this evangelism appears in this excerpt from a sermon by Jonathan Edwards: I invite you now to a better portion.

There are better things provided for the sinful miserable children of men. There is a surer comfort and .more durable peace: comfort that you may enjoy in a state of safety and on a sure foundation: a peace and rest that you may enjoy with reason and with your eyes wide open; having' all your sins forgiven ... ; being taken into God's family and made his children; and having good evidence that your names were written on the heart of Christ before the world was made .... J ona than Edwards The God of Creation In the great documents of the American Revolution there is often an explicit reliance upon natural law and an implicit underlying dependence on the inheri ted religious faith. The God of nature and the God revealed in Scripture was the same God. There were, however, differences in the interpre tation of Scripture, differences which did not extend to the natural law. Hence, the appeal in the Declaration of Independence was to the God of Creation: When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them .with another, and to assume among the Powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness .... Declaration of Independence, 1776 The practice of having a written constitution is American in origin. It was grounded in their British heritage and colonial experience, but it was particularly informed by their Christian and Protestant religion. The Founders were people . of the Book, the Bible, the recorded word. As Protestants mainly, they attached an unusually high impor tance to Scripture and to its careful exposition. It was, to them, the highest authority. The United States Constitution became for them, out of this tradition, the highest authority' within the coun try. It was written, precise, and was to be carefully interpreted and observed.

1976 FAITH OF OUR FATHERS 737 A Subtle Parallel One part of the Constitution has been especially revered over the years. It is the first ten amend ments, commonly called the Bill of Rights. Some of its antecedents are generally understood to be the Mag na Carta and the English Bill of Rights. But its most profound anteceden t is usually ignored. It is more difficult than it may at first appear to imagine that the First Ten Amendments have played the role they have without the prior posi tion of the Ten Commandments in the Judeo-Christian religion. It is not just that each of them numbers ten, though they do. It is considera bly more. They are similar in form. The Ten Commandments usually begin with "Thou shalt noe' The First Ten Amendments are equally prohibitive in their language: "Con gress shall make no law ... , No Soldier shall ... , shall not be vio lated ... , Excessive bail shall not be required ... ;' and so forth. More, the Ten Commandments forbid indi viduals to do acts that would be harmful to anyone. The First Ten Amendments forpid· government to do acts arbitrarily detrimental to our life, liberty, and property. The Ten Commandments proceed from our Maker to us. The First Ten Amendmen ts proceed from the makers of government to it. Can it be doubted that they draw subtle force from the parallel?

The Faith of Hamilton The Founding Fathers were not particularly renowned for their piety. But the springs of religious faith often ran deep within them, to break forth only on extraordinary occasions. So it was with Alexander Hamilton. It was his fate to meet his death in a duel with Aaron Burr. Perhaps "fate" is the wrong word; he took a course which exposed him to such a death if Burr so chose. Hamilton believed that dueling was wrong and knew that it was against the law. Yet, when challenged he felt that he must participate. The last note to his wife written on the night before the duel contained these thoughts, among others: ... The scruples of a Christian have determined me to expose my own life to any extent, rather than subject myself to the guilt of taking the life of another. This much increases my hazards, and redoubles my pangs for you. But you had rather I should die innocent than live guilty. Heaven can preserve me, and I humbly hope will; but, in the contrary event, I charge you to remember that you are a Christian. God's will be done!

The will of a merciful God m list be good .... On the day of the duel both Hamilton and Burr raised their pistols to the ready position on command. Burr then aimed and fireddirec tly at Hamilton. Hamilton fired into the air, as he had said he would do. Hamilton died 738 THE FREEMAN December from the wounds inflicted on him. It is difficult to imagine America without men devoted to principles founded upon their faith. Washington's Farewell N or should we imagine an America withou t the guidance of Washington's Farewell Address. Nor would that address have been the same without its references to religious underpinnings: Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports. In vain would that man claim the tribute of patriotism who should labor to subvert these great pillars of human happiness-these firmest props of the duties of men and citizens. The mere politician, equally with the pious man, ought to respect and cherish them.

A volume would not trace all their connections with private and public felicity. Let it simply be asked, Where is the security for property, for reputation, for life, if the sense of religious obliga tion desert the oaths which are instru ments of investigation in courts of justice? And let us with caution indulge the supposition that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar ,structure, reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle. George Washington, Farewell Address But, then, the United States of America could. hardly be conceived without the Faith of 01J.r Fathers. , IDEAS O~ LIBERTY Sacred Rights of Mankind THE SACRED RIGHTS of mankind are not to be rummaged for among old parchments or musty records. They are written as with a sunbeam, in the whole volume of human nature, by the hand of Divinity itself, and can never be erased or obs~ured by human power. This is what is called the law of nature, which being coeval with mankind and dictated by God ,himself, is, of course, superior in obligation to any other. No human laws are of any validity if contrary to this. It is binding over all the globe, in all countries, and at all times.

ALEXANDERHAMILTON YOU CAN'T SELL FREEDOM TOA STARVING MAN RIDGWAY K. FOLEY, JR. Mr. Foley, a partner in Souther, Spaulding, Kinsey, Williamson & Schwabe, practices law in Portland, Oregon. OF ALL THE CLICHES denigrating liberty, the most pernicious consists of the comment, designed in any of its varying forms to terminate the conversation entirely, that "your ideals and ideas may be laudable, but you can't talk liberty to a man with an empty belly or whose children want for food and clothing." This essay proposes to in vestigate the validity of that response. * * * * Freedom consists of the absence of organized, coercive restraint against individual human action.! It is indivisible in two respects: (1) restraint in one aspect of life affects creative action in other categories; (2) restraint of one member of society adversely affects all other men. Consider the first postulate. One cannot enjoy meaningful liberty of association or freedom of speech while suffering under economic or poli tical bondage. Freedom of speech or press offers an illusory value if the potential speaker or writer cannot purchase air time on radio or television, or a soap box, or newsprin t from the governmen tally controlled factory, or a sound truck, 1 For a detailed discussion see Foley, Ridg way K., ,Jr., "Individual Liberty and the Rule of Law," 21 Freeman'357-378 (June 1971), 7 Will. L.J. 396-418 (Dec. 1971l, and Foley, Ridgway K., Jr., "A Rationale For Liberty," 23 Freeman 222-229 (April 1973).

739 740 THE FREEMAN December either because of restrictive regulatory laws preventing free entry into the market, or by virtue of discriminatory norms against producers by means of economic controls, or because of debasement by means of state monopoly of the medium of exchange. The right to vote means little if the government apparatus counts results for but a single candidate, or if the state limi ts the access to the polling booth or ballot box by enactment and enforcement of civil and crimi nal penalties. Recur to the second proposItion. Simply put, my freedom depends on yours. Deprivat~on of the rights of the slave affects the master in several discrete ,ways: • First,the predatorfuustexpend a portion of his creative energy in the destructive pursuit ,of con straining his fief. Absent coercion, he could devote his entire energy resources to creative endeavors. Wars provide an apt 'example' of squandered creativity: Witness the millions of barrels of oil (which could have heated homes and pro pelled automobiles) wasted in recent violence .

• Second, looters lose the chance to thrive upon the created value which the slave, if free, would pro duce and trade for other goods, services and ideas. The material well-being of any society depends upon the aggregate of creative output from each member, the profi ciency of each individual producer, and the velocity of exchange (a factor of the voluntary channels of communication). Slaves produce only the amount necessary to main tain life in a barely acceptable station and to avoid or reduce pain; • Third, masters lose quali tative ly, since the quality of output diminishes with the introduction of compulsion. A coercive society enjoys fewer goods, begrudging ser vices and less exciting ideas and: cuI ture than a free society. • Fourth, and -perhaps most, saliently, a slave state loses moral force as well as material largess, .:a. subject discussed hereafter; . . We may define liberty, then, 'in Leonard Read's felicit6us phnlse/ as the absence of man-concoct"ed> ,'..

restraints upon creatiye human action. 2 At the ideal, each 'man .. should be entitled to manage his own life and to seek his own destiny as he sees fit, so long as he observes the equal and reciprocal ,freedom deserved by every other man. Such a concept limits the role of the state the official restraining force imposed upon society-to preven tion of aggression and coercive set tlement of disputes by rules of common justice. 2 Read, Leonard E., "Justice versus' Social ,Justice," Who's Listening? (The Foundation for Economic Education. Inc., Irvington-on Hudson, New York, 1973) 93 et seq.

1976 YOU CAN'T SELL FREEDOM TO A STARVING MAN 741 The Morality of Theft Observation of the· passing scene reveals many instances of looting and theft. One unschooled in the philosophy of freedom might immediately conclude that such a statemen t refers to the rapid increase in violent or deceitful crimes such as forgery, robbery, burg lary, obtaining money by false pretenses, and shoplifting penalized by the several state or national governments. In fact, I refer to the unpenalized, officially-sanctioned, state-favored instances of theft which appear in guises too numerous to mention. Every occa sion when the state takes property from an unwilling donor and gives 'it to some other individual -affords .an example of legalized plunder. Food stamps, subsidies to Penn Cen tral and Lockheed Aircraft, social security,.inflation, mandatory automobile insurance, civ,il tort rules which "diffuse" risks by imposing liability wiihout fault the list is truly endless, limi ted only by the:'ingenuity of men abusing power conferred upon them by the political system. Appellations of "transfer payments," "negative income taxation," "redistributive liability;' and the like cannot cloak the true nature of the..act: Theft.

Why decry the concept of theft, if performed by the pure of heart for a commendable purpose? After all, most proponents of these many and varied legislative or judicial enact men ts seek grand. and deserving goals of preventing hunger, illness, and alienation or providing "neces sary" goods and services. Few of them, despite their arrogance and pre~ilection to power, really exemplify consummate evil. The answer to the moral question lies in contemplation of ends and means. Few men of virtue and good will dispute the ideal of dispelling poverty, illness and loneliness, or of providing everyone with food for thought and body. Most observers agree upon goals - they diverge :upon the means lei the end. Those imbued with the freedom philoso phy -recognize .that the end pre exists in th~ .means,3 that filthy means will defile innocent and praiseworthy ends. Theft deserves disdain because it conflicts with fundamental morality, with the right to life, and with the precept of justice. A semi nal nioral rule commands treatment of individual human beings as ends, not as means - as persons of worth, not as objects to be molded. The thief treats the victim as a means to his own ends. The legally-protected thief performs a greater iniquity for he refuses to acknowledge the moral opprobri urn necessarily attached to 3 See Read, Leonard E., "The Bloom Pre Exists in the Seed," Let Freedom Reign (The Foundation for Economic Education, Inc., Irvington-on-Hudson, New York, 1969) 78-86.

742 THE FREEMAN December his crime; he treats the victim as unworthy to manage his own affairs. Again, theft contradicts the con cept of a human being's right to live his life in accordance with the dictates of his conscience. Property consists of the value which man creates by the application of his being and his talents to natural resources; it can only be viewed rationally as an extension of a life. One lives by creating; one dies by stagnating. Thus, deprivation of property amounts t<? a partial tak ing of human life. Moreover, the act of thievery devastates the funda mental precept of justice: Respect for free individual choice. 4 Approval of the power to forcibly or deceitful ly deprive another of a part of his life necessarily contradicts a respect for the human right to choose be tween alternatives. In essence, comprehension of the moral questions associated with theft devolves to an inquiry: Why doesn't might make right? Theft, after all, can only be accomplished by the application of stealth and trickery or by employment of per sonal or political force. The fact and the scale of legally-sanctioned plunder renders this inquiry no mere philosopher's debating point.

It is all too real and affects each of us in striking and p~rsonal fashion. 4 Foley, Ridgway K., Jr., "In Quest of Justice;' 24 Freeman 301-310 (May 1974l. Immanuel Kant 5 provided some insight into the moral question of whether "might makes right" when he suggested the "silver rule" as a measuring rod: Individuals should shun actions which they would not will as universal rules of conduct. Few rational beings would volun tarily choose to live in a world governed by force, without moral constrain t of any kind. Chaos necessarily reigns; personal plan ning becomes impossible; life termi nates early and after an unpleasant duration. Such conditions would forestall even rudimentary exchange or growth of capital, relegating mankind to the cave and the forests from which it so recently and hesitatingly emerged. Merely imagining a world where theft, or rape, or murder occurred on a daily basis wi thou t official reprisal registers shock on the minds of most human beings. Such conduct would invite retaliation in the form of blood feuds, vigilante justice or civil war.

One could refute the contention that "might makes right" on three bases,6 anyone of which would 5 Kant, lmman uel, Fundamental Principles of the Metaphysic of Morals (The Liberal Arts Press, New York, 1949) 2l. 6 Obviously, this essay does not purport to deal with the questions of why might does not make right or with the nature and scope of an alternative postulate for mankind in great detail. Such an undertaking requires more extensive development than is requisite for the topic under discussion; 1976 YOU CAN'T SELL FREEDOM TO A STARVING MAN 743 serve as sufficient justification for a contrary rule. • First, experience dispels any necessary correlation between force and propriety. Recorded history imparts example after example of the use of violence to accomplish improper goals-propriety mea sured by the subjective values of those deprived of life, liberty or property. The neighborhood bully may be stronger than you, but that doesn't mean he possesses any greater native intelligence, charm, wit, cultural accomplishments or other attributes more or less univer sally desirable. Indeed, the contrary is more often true: The bully, be he individual, corporate or national in scope, often possesses a low, mean and not particularly endearing character.

• Second, a related pragmatic reason flows from the Kantian silver rule: Force and power tend to breed more aggression, and man can not exist as well (or at all) spiritually or materially in a chaotic world regu 1arly visited by coercion. Might makes-right just plain fails to work as well as the alternati ve. A better material and spiritual life with happier men and more abundant goods and services flows from co operation, not coercion. • Third, common morality, denoted as natural law, the theory of natural rights, Christianity, rationality, or some other similar phrase suggests that men should not treat other men inhumanely. All three reasons interrelate, but the third or moral concept differs from its siblings in one important respect: It constitutes an appeal to faith rather than provable, empiri cal fact. However, this feature does not deprive the tenet of validity. History manifests a growing recog nition that each individual human being possesses inalienable natural rights merely because of his humanity, and that no other individual should trespass upon such rights in the absence of prior personal aggression. If this precept be relegated to the status of a mere value judgment, it certainly has gained ascendency in recent years although it still falls far short of universal acceptance. Since theft of pri vate property in vol ves the deprivation of an extension of one's life-our essential humanity derives in part from the value we create-theft violates the principle of common morality or natural rights.

Therefore, one can say with the confidence undergirded by logic and natural law that theft in general constitutes an immoral act because might does not make right and power tends to deprive men of a portion of their life. It remains to consider whether theft can ever be justified under any circumstances.

744 THE FREEMAN December The admonition, "you can't sell freedom to a starving man," posses ses two root assumptions denying the universality of the normative rule that theft constitutes immorality. If freedom varies, directly or inversely, with the visceral satisfactions of the human being, it follows that (1) hungry people need not abide by rules of common morality while productive people must follow such rules and, (2) freedom can not provide the precondition necessary to prevent want and poverty. Neither assump tioncan withstand rigorous analysis. The Universality of Moral Conduct No accepted ethical or religious code exempts starving men from adherence to established or accepted standards except if that code be based upon the doctrine of might-makes-right. The Marxian tenet "from each according to his ability, to each according to his need" presupposes a social agency which will forcibly compel transfer from "producers" to "needy;' as well as perform the concomitant func tion of determining "ability" and "requirement." Every other system dependent upon transfer payments or social redistribution of income relies upon force. Only these systems justify the use of violence by hungry, ill-clothed, or other "needy" folk in order to satisfy their wants. Contrast the known axiological precepts handed down throug h history: Do the J udeo Christian heritage, the Islamic tra dition, Hindu teachings or the like differentiate between producers and consumers insofar as their norma tive conduct is concerned? Merely to state the question elicits a nega ti ve r.esponse.

One should not confuse the asser tion that the poor as well as the producer should obey the same rules with the question of whether the creator of goods, services, and ideas should share his abundance with others less fortunate on an individual and voluntary basis. The two concepts, while related, state two entirely different principles: (1) all men regardless of status should respect the lives, liberties, proper ties, choices, and subjective values of all other individuals who do not commit aggression; (2) one blessed wi th a surfeit of material or spiritual goods should share with less fortunate individuals on a mutually-satisfying vol un tary basis. A violation of the first axiom deserves human reprisal to revenge the breach, protect others similarly situated, and deter like conduct. No human sanction should attend a violation of the second axiom be cause no human being possesses the right, the insight, or the ability to enforce their ethical norm since the norm itself depends upon subjective 1976 YOU CAN'T SELL FREEDOM TO A STARVING MAN 745 views of the Eternal Truth of the Universe.

Unjustifiable Intervention In essence, the suggestion that hungry men can not appreciate liberty results from a confusion of these two separate postulates. Similarly, most justification of gov ernment intervention into private li ves stems from a perversion of these two distinct rules, each touch ing a specific aspect of human action. The canard that an ill-fed individual can not comprehend freedom springs from a belief that it is proper to in vade or destroy the human rights of others in order to secure a "good" end, such as the prevention of poverty or ill health. In simple words, one should not destroy another's right to choose except where that actor would not willingly select the course of action which would lead to sharing with others whom the party possessing power perceives as appropriate beneficiaries. This commingling of the two moral precepts renders each of them nugatory. The first axiom suffers because the exception guts the entire meaning. The second axiom falls because voluntarism be comes coercion and thus obviates the entire concept. A sense of wrongdoing clouds the whole trans action, leaving producer-victim, the transferring power, and poor reci pient-beneficiary each with a pervasive recognition of evil inherent in their affair which does not accord with moral law.

In like manner, the belief that moral rules need not be universally applied partakes of the corruption of the two separate axioms: You can't sell freedom to a starving man because he is first justified in invad ing the rights of others in order to satisfy his wants because they ethically should assist him. Several reasons, each sufficient alone, support the proposition that moral conduct applies universally. • First, separate treatment betrays the' egalitarian ideal, the subject of so much current prattle. Yet it is in this precise context that equality deserves meaning, for true juristic equality means equality before the law-equal rights, equal responsibili ties . • Second, relative morality, on whatever basis, necessarily results in disillusionment, bitterness, hatred, envy, and other unlovely human attributes: In short, such a dichotomy will bring the sinister side of human nature to the fore.

The taker will take even when· the justification disappears, coming to believe that taking constitutes a personal right; the victim will resent this invasion of his life and fight back in many and myriad ways including the use of force and cun ning, the production of shoddy goods, or a transfer to the taker 746 THE FREEMAN December class. Power and violence naturally tend to breed similar offspring. • Third, definition of terms ren ders application of the distinction impractical if not impossible. Who shall define "prod uction" and "need" (or who "starves"), and how shall these terms be defined? Star vation and need vary by the minute; they represent highly subjective decisions, for almost every individual "needs" something he does not possess, given a world full of insatiable subjective wants and blessed with limited resources. Acceptance of a dual standard dependent upon hunger pangs would reduce morality to an ephemeral and transitory discipline subject to endless debate and a chaotic result: Victims who honest ly believe that they fall within the taker class will take umbrage; they may even fight back, leading to unending aggression.

Thus, common sense makes manifest that moral rules must apply in an evenhanded manner. Starving men possess no right to invade the persons or property of others, nor are they justified or exempt from ethical rules preclud ing such action. Freedom attaches equally to all men: It includes the freedom to fail as well as succeed. Life's losers cannot vent their spleen on those who are more suc cessful' and thereby receive moral approval. Freedom Dispels Want One who claims that "you can't sell freedom to a starving man" really means "freedom is all right in its place, but these people are starv ing and they will receive sustenance only if I coerce you into giving them food." This proposition fails on two counts. • First, the near-universal accep tance of the second axiom (the obligation to share) and mankind's natural empathy for fellow human beings in trouble virtually guaran tees that no one shall starve in a free society. Strangely enough, the acceptance of the second axiom and man's sympathetic response become heightened the more open society becomes; statism and compulsion cultivate ugliness, alienation and a lack of camaraderie. The guarantee against starvation does not insure against want of material things; mankind will always experience unfulfilled desires, given his nature of a being possessing insatiable wants in a world of limited resources .

• Second, the statement seems to contend that a free society cannot produce and distribute those goods, services, and ideas required to alleviate starvation. The converse is true. A free market, operating with out restraints upon human creative output, produces a greater abun dance of material value than any other method known to mankind 1976 YOU CAN'T SELL FREEDOM TO A STARVING MAN 747 because the free market or volun tary exchange system accords with the basic nature of man. The mar ket reflects the competing subjec tive values of each member of society and thus more nearly approximates the sum of all those desires. This assertion of the material productiveness of the market does not rest merely upon unproved theo ry; it gains support from empirical and historical fact. The freer the culture, the better clothed, fed and housed its citizens. The rapid improvements in the standard of li ving of all Americans during the nation's first century derived from the relative freedom of the citizenry.

Compare the average life span in medieval England (5 years) with that of the present day United States (70 years) and one immediately perceives that we heard relatively little about the "starving man" in history because he died so young. Few of the weal thy in merrie olde England lived as well as the average high school dropout today. Stripped to its essence, the cliche "you can't sell freedom to a starving man" exemplifies a brazen demand by the one uttering the response that he be accorded the power to impose his will upon unwilling human beings-all in the good name of the elimination of poverty. Logic, common sense, empirical fact, and history demonstrate that just the contrary effect will take place, that coercion results in fewer individuals enjoying fewer goals which they subjectively value. The Curse of Gradualism One can interpret the phrase under discussion in yet another manner. It could mean that a hun gry man will not listen to, or understand, the esoteric discussion of liberty and will voluntarily choose an aggressive society to alleviate his suffering. Thus, runs the argument, someone in power must appease the voracious masses before educating them to the vir tues of liberty.

Insofar as the question depicts a communication problem, believers in liberty must hone their tools of expression to fit every need. Rela tive freedom helped restore conflict ravaged West Germany after the Second World War; the Germans, hungry as they were, accepted the ideas and responsibilities of freedom from Mr. Erhard. The con cept of freedom and its relation to prosperity bear retelling because all of us need constant reminders, but conveyance of the idea to everyone, hungry or not, does not present difficult, let alone insolvable, prob lems. Insofar as the inquiry poses a question of consistency, libertarians must remain steadfast against the 748 THE FREEMAN December importunings of gradualism which would betray the ideal by imposing coercive tactics as a means of filling stomachs "temporarily."7 The "tem porary" in this situation tends to become ingrained and immutable, .misleading the unknowing into the assumption that coercion (1) has always been there and (2) is neces sary to accomplish the end. The 7 Read. Leonard E., "Right Now!", Notes From FEE (Foundation for Economic Educa tion, Inc., Irivington-on-Hudson, New York) May 1975 discusses the problems inherent in gradualism.

Lost Liberty result: An inefficient and uneconomic United States Postal Service which has never been able to compete with private enterprise save for its monopolistic protec tions, which constantly raises rates and reduces the quality of service, and which has incurred budget deficits almost every year for the past two centuries. It requires little imagination to appreciate the results if "feeding starving men" were left to the tender mercies of compulsive bureaucracy: The nation would perish within five years! ~ IDEAS ON LIBERTY THOSE WHO CONTEND in this day that the government of the United States owes a living to any citizen, or group of citizens, are forfeiting their own liberty and that of their fellowmen to a grasping government which can and will make beggars of men otherwise able to care for themselves and naturally inclined to be charitable toward others. Much of the apparent need for governmental aid today is strictly a product of too much government, not the other way around. When government forcibly deprives productive men of a third or more of their earnings, as it does now in this country, it has seriously reduced their opportunity to care for either the aged or the youthful unproductive,members of their own families. The cure for this situation lies in less government - not more; in greater individual opportunity - not less.

PAUL L. POlROT. The Pension Idea The Free Market (}\\o we "Tyrannyof Wealth" DAVIDOSTERFELD LIBERTARIANS believe that the substitution of a completely laissez faire economic system for the politi cal system of government interven tion would largely eliminate the problem of power in society. While government claims a monopoly on the use of force in society, the market is nothing more than the nexus of exchanges. Since no exchange can occur unless all par ties can mutually agree to the condi tions, vol un tarism is the requisite of an exchange economy; the market, therefore, is character ized by the absence of power rela tionships. The credibility of libertarianism, however, has been consistently dam aged by its alleged naivete regard ing the problem of monopolies. The absence of a governmentally imposed antitrust policy, runs the popular argumen t, would -permit Mr. Osterfeld is an Instructor in Political Science at the University of Cincinnati.

either voluntary cartelization or "cut throat" competition which, in turn, would result in the emergence of a few giant corporations able to use their monopolistic positions to tyrannize over society. The libertarian response to this critical qu~stion is that, provided they are voluntary, mergers, price fixing agreements, cartelizations, and the like, do not harm the consumer. On the contrary, like all voluntary actions on the market, they help to find the most value productive point for the allocation of resources; so, they are posi ti vely beneficial from the point of view of maximizing the satisfaction of all members of society. Assume, for example, that firms A, Band C find that by merging they can increase their profits by restricting produc tion. The "restriction" of production means, of course, that some of the factors of production will now become idle. But so long as there is 749 750 THE FREEMAN Dec(!mber price flexibility, as there will always be on the free market, resources cannot long remain idle; and their employment in other areas will' expand production in those areas.

But if this is so then production has not, in fact, been restricted at all. What has occurred was a shifting of factors from one area to another. But the merger would take place only if the merger participants believed that it would increase their profits. Since the market correlates profits and consumer satisfaction, the merger will-provided the ex pectations of the merger partici ~ pants are correct-actually increase consumer satisfaction. That is, while physical output will have remained about the same, the value of that output, from the standpoint of the consumers, has been aug mented. It is further argued that the larger the firm in relation to the size of its market, the more limited it is in its ability to calculate and therefore the more susceptible it is to losses that would precl ude further expansion. Since a monopo ly or cartel eliminates the market in the area of its operations, it has no economic signals to guide it in allocating its resources or making investment decisions. Since this means that the decisions of the monopoly would be economically arbitrary, and therefore inefficient, it would suffer severe losses. There is, in other words, no economic difference between a monopoly and a socialist economy and both would collapse for the same reason: the absence of economic calculation.

Consequently, the libertarian be lieves that the size of the firm is limited by the limits of calculability and denies that the market confers any power on any firm, regardless of size, to exploit the consumer or victimize society. The popular fear of the "tyranny of wealth" under the free market is therefore seen as an illusion.! Monopolies and the Progressive Period The period between the Civil War and World War I was a period of massi ve business consolidation and is commonly cited as proof that the unregulated market results in powerful monopolies and concentra tions of great wealth. This view has, perhaps, received its most uncompromising statement in the writings of Fritz Redlich, who con tends that in the late 1860's, while "the belief in laissez-faire was de clining in Europe ... the American businessmen became adherents to that creed without any reservations whatsoever:' Business has a "dis~ tinctly negative attitude toward government" and the latter half of the nineteenth century was a period of unrestrained laissez faire. In the resulting brutal competitive strug1976 THE FREE MARKET AND THE "TYRANNY OF WEALTH" 751 gles only the fittest survived, and by the 1880's the economy was domi nated by a "generation of Robber Barons" with monopolistic control over nearly all markets.

According to Redlich, "The check which competition had exerted before, disappeared ... while gov ernment as a regulator, had not entered the scene as yet:' Conse quently, the "~obber Barons;' "lack ing a sense of social and national responsibility," were able to set high prices for their merchandise and low wages for their employees. "Only in reaction to the increasing power of business leaders, underprivileged -strata in America, such as were farmers at the time and labor, forced first the states and later the national government to assume pro tective functions:' The result was the· emergence of such regulations of business as the Interstate Com merce Commission, the Sherman Antitrust Act, and the Food and Drug Administration, among a host of others. 2 This interpretation has been called into serious question by recent historical investigations. In terestingly enough, the primary fig ure in this reinterpretation has been the prominent New Left historian, Gabriel Kolko. Far from laissez fa ire , contends Kolko, the interwar period was characterized by massive government intervention and regulation of the economy.

Kolko points out that the prevailing belief that American industry was monopolized and centralized to the extent that it was able to free itself from the dictates of the market was an "illusion:' The reverse was true. As the economy expanded in the post-Ci viI War period, businessmen found themselves unable to control their own markets. Competition, far from dying out, was increasing. This view is supported by the following empirical evidence supplied pri marily by Kolko: • 1. Steel. Between 1901 and 1911 prices charged by U.S. Steel fell by an average of 11 per cent. Yet, its percentage of the nation's steel production declined pre cipitously from 61.6 per cent in 1901 to 39.9 per cent by 1920. Even at the height of U.S. Steel's "mar ket domination" its competitors flourished. By 1911 there were over 80 firms in direct com peti tion with U.S. Steel and producing over 60 per cent of all iron and steel products sold in the Uni ted States. 3 • 2. Oil. Between 1880 and 1895 Standard Oil did maintain a high (85%) share of the market. But it could do this only because it reduced prices from 9.12 cents per gallon of refined oil in 1880 to 5.91 cents by 1897. Despite this, Standard's com peti tors increased from 37 indepen den t refineries in the United States in 1899 to 147 by 1911, and Stan dard's share of the market declined 752 THE FREEMAN December noticeably during this period. This was prior to the Supreme Court decision on May 15, 1911 ordering the dissolution of the "monopoly."4 • 3. Agricultural Implements.

Between 1903 and 1911 Interna tional Harvester's share of the binder market declined from 96 per cent to 87 per cent; its share of the mower market declined from 91 per cent to 75 per cent; its share of the harvester market from 85 per cent in 1902 to 80 per cent in 1911 and 64 per cent in 1918. While the number of manufacturers of agri cuI tural implemen ts declined slightly over this period, there were still 640 in the United States in 1909. Moreover, this decline was reversed in 1915 when the auto manufacturers began diversifying into tractors. 5 • 4. Communications. A.T. & T. had a complete monopoly between its foundation in 1877 and 1894. This, however, was based on its control of crucial patents, which lapsed in 1894. By 1895 there were 27 companies in com peti tion with A.T. & T.; by 1902 this number had risen to 9,100 and by 1907 to 22,000. A.T. & T.'s control of the market declined to 50 per cent by 1907 (3.1 million telephones controlled by A.T. & T.; 3.0 million controlled by the independents). The effect was to force A.T. & T.'s subsidiaries, such as Bell, to lower their rates. In 1895 Bell received $88 of revenue per station. By 1914 it had fallen to $41. 6 • 5. Copper. Monopolistic control was never in question in the copper industry. The combined production of the nation's four largest pro ducers of copper declined from 76 per cent of the market in 1890 to 39 per cent in 1920.7 • 6. Meat Packing. The three largest meat packers' share of the market declined from a combined total of 35 per cent in 1905 to only 22 per cent by 1909, while the number of competitors rose from 1,080 in 1899 to 1,641 in 1909. 8 • 7. Automobile. The absence of monopolistic control in the automobile industry is indicated by the turnover of companies in the top ten. Between 1903 and 1924 there were 180 companies in the business of making and selling automobiles .

Of the ten leading producers in 1903, only one was still in the top ten by 1924. 9 Clearly, monopolistic control was not present during this period and competition was actually increas ing, not declining. But competition was the last thing that owners of these giant corporations desired. Since their firms were already domi nant in their respective industries, competition could only hurt them. Hence, they desired to "rationalize" the economy, i.e., to preserve the status quo and therefore their own socio-economic positions. To insu1976 THE FREE MARKET AND THE "TYRANNY OF WEALTH" 753 late themselves from their competi tion, price-fixing agreements and divisions of the markets were negotiated, but quickly broke down in every case. "Voluntary agree ments among corporations in the Jorm of pools and agreements of every kind usually failed," says Kolko. "Consolidations and mergers were the next logical step, and also failed:'10 Th~ extent of the failure of the merger movement is vividly demon strated in the study by the former Harvard economist A.S. Dewing.

Dewing studied 35 industrial con solidations which were chosen at random from those mergers taking place .no later than 1903 and in existence for ten years. Dewing arrived at two significant conclu sions. First, the average aggregate earnings of the separate competing firms in the ten years prior to merger were a fifth greater than the average earnings of the consoli dated firms in the ten years follow ing the merger. Second, in only four of the 35 cases did the earnings during the first year after consoli dation equal or exceed the expected returns of the promoters. And yet, as Dewing notes, "The earnings of the first year after consolidation were greater-by a little less than a tenth (7%) -than the earnings of the tenth year." 11 As the attempts at voluntary control of competition failed disastrously, "it became apparent to many important businessmen;' says Kolko, "that only the national gov ernmen t could rationalize the econ 0my." Thus, he con tin ues, "crucial big business support could be found for every major federal regulatory movemen t .... Progressivism was not the triumph of small business over the trusts ... but the victory of big businesses in achieving the rationalization of the economy that only the federal government could provide:' 12 The following are some of the areas receiving big business support: • 1. Interstate Commerce Act.

Prior to the inception of the Inter state Commerce Commission the railroads had attempted to main tain high rate levels by means of price-fixing agreements. These were constantly being undercut, however, and resulted in price wars between railroads. Consequently, in the 17 years prior to the ICC, railroad rates declined from an average of $19 per 1,000 ton-miles to $8.50. The main impact of the ICC was to eliminate undercutting by establishing mini mum rates and compelling compli ance. Price competition was elimi nated. Due largely to deflationary conditions during the 1890's rates continued to decline slightly (from $8.50 per ton-mile to $7.80). The decline was effectively slowed, however, by the existence of the ICC, and after that period rates began a 754 THE FREEMAN December sharp increase. Thus Kolko com ments that "the railroads were the leading advocates of increased gov ernment regulation after 1887."13 • 2. The Department of Com merce Act. Numerous businesses and financial organizations, includ ing the House of Morgan, had long been pushing for the establishment of a Department of Commerce which would establish comprehen si ve federal legislation which not only would take precedence over the varied and often contradictory state legislation but could also be used to cQntrol competition. Thus, "Agita tion for a Department of Commerce had been carried on by business organizations throughout the 1890's."14 • 3. The Meat Inspection Act of 1 906. The European export market was vital to the major American meat packers. In the 1880's Euro pean nations began to ban American meat imports allegedly for health reasons, which was no doubt at least partially true; but the influence of the European meat packers who were losing business to American importers also played a part. "And since the six largest packers slaughtered and sold less than 50 per cent of the cattle, and could not regulate the health condi tions of the industry, government inspection was their only means of breaking down European barriers to the growth of American exports."

The major packers also felt that strict regulation would serve to "bring the small packers under control." Thus, "it was the large meat packers who were at the forefront of the reform move ment."15 • 4. The Pure Food and Drug Act of 1 906. Many of the larger food companies felt that their inter ests were being damaged by unscrupulous competitors selling cheap products and that federal regulation of food not only would end such practices but could be used to discriminate against their com petitors as well. Thus, business support for federal regulation of food began as early as the 1880's, and received the endorsement of the National Association of Manufac turers, the Creamery Butter Makers' Association, the Retail Gro cers' Association, and the American Baking Powder Association, to name just a few. "The food reform movement was essentially sup ported by the food industry itself ...." 16 • 5. The Federal Reserve Act of 1 91 3. "The bankers were the only significant group concerned with banking reform after 1897, and their problems and needs were the primary cause and motive behind the Act. For the Federal Reserve Act was the result of a movement led by bankers seeking rationalization, and hoping to offset the 1976 THE FREE MARKET AND THE "TYRANNY OF WEALTH" 755 decen tralization of banking toward small banks and state banks. The expansion and domination of bank ing by big city bankers was possible only with the aid of the federal government, and although the Act solved many of the problems of the small bankers, it held out the pro mise of reversing those larger ten dencies within the banking system running against the big bankers."

The final version of the bill, it should be noted, bore a clear resemblance to the earlier Aldrich Bill which had been drafted by such big city bankers as Paul Warburg.l 7 • 6. The Federal Trade Com mission Act of 1914. This act was supported by every major business group in the nation with the excep tion of N AM, which remained neutral. Business felt that a Federal Trade Commission could do the same thing for general business as the Federal Reserve did for the big bankers and the ICC did for the transportation industry, i.e., stabil ize business by eliminating or reducing competition. The FTC was invested with the power to outlaw "unfair methods of competition;' but it was left up to the Board to determine what such' practices were. This meant that the Board could, and was, used against small businesses that might be tempted to cut prices. In an interesting speech, Edward Hurley, who assumed the head of the FTC in 1916, remarked that "In my position on the Federal Trade Commission I am there as a businessman ... and I think that the businessmen of the country will bear me out when I say that I try to work wholly in the interest of busi ness:'18 In short, the corporate elite found themselves unable to control their markets in the expanding economy of the interwar years. Since such efforts as voluntary price-fixing and consolidations failed to insulate them from the rigors of the market, their only recourse lay in the imposi tion of compulsory regulation through the aegis of the govern ment.

Conclusion The Kolko thesis is significant for, as a member of the New Left, Kolko certainly cannot be accused of being an apologist for the free market. Yet, his analysis persuasively indi cates that the Progressive period, which is so often cited as "proof" that the unregulated market would result in a "tyranny of wealth," demonstrates just the opposite. Far from the market leading to monopolies, the Kolko analysis clearly demonstrates that it was precisely the market that effe'c tively and continuously thwarted the monopolistic schemes of the corporate elite. It was in response to the failure of their attempts at voluntary control of the market 756 THE FREEMAN December that the corporate elite turned to the state for the control of competi tion through compulsory regula tion. Thus, the Progressive period was certainly characterized by monopolistic control of many mar kets, but it is of crucial importance to realize that the source of these monopolies lay not in the market but in the government restrictions on the market. As Kolko pungently remarks elsewhere, "political power in our society after the Civil War responded to power and influence in the hands of businessmen, who have often had more leverage over politi cal ... than over business affairs and they were quick to use it to solve business problems:'19 This, of course, is precisely in conformity with the libertarian theory of monopoly. The· specter of the market leading to the "tyranny of wealth" is clearly an illusion. The only effective antimonopoly policy lay not in government controls but in the unregulated market. ~ -FOOTNOTES1 On the libertarian theory of monopoly see, in particular, Murray Rothbard, Man, Economy and State (Los Angeles: Nash, 1970); Murray Rothbard, Power and Market (Menlo Park, Ca.: Institute For Humane Studies, 1970); and D.T.

Armentano, The Myths of Antitrust (New Rochelle: Arlington House, 1972). 2 Fritz Redlich, "The Robber Barons: Crea tive or Destructive," The Robber Barons, Saints or Sinners?, ed. Thomas Brewer (New York: Holt, Rinehart and Winston, 1970), pp. 88-100. Also see Richard Hofstadter, Social Darwinism in American Thought (New York: Beacon Press, 1944); Richard Hofstadter, The Age of Reform and Harvey Buncke, A Primer on American Economic History (New York: Ran dom House, 1969), pp. 117-18. This view is advanced in most history and political science texts. See, for example, William Ebenstein, et al., American Democracy in World Perspective (New York: Harper and Row, 1973), pp. 388-89; J ames Burns and Jack Pelatson, Government by the People (Englewood Cliffs: Prentice-Hall, 1966>, pp. 620-22; and John Garraty, The American Nation (New York: Harper and Row, 1966), pp. 58-59 and 648. 3 Gabriel Kolko, The Triumph of Conservat ism (Chicago: Quadrangle Books, 1967), p. 37.

Also see Armentano, pp. 102-05. 4 Ibid., pp. 40-41; and Armentano, pp.77-79. 5 Kolko, pp. 46-47. 6 Ibid., pp. 47-49. 7 Ibid., pp. 50-51. 8 Ibid., pp. 52-53. 9 Ibid., p. 43. 10 Ibid., p. 56. For a detailed analysis of why these failed see Armentano, Chapter 7, "Price Fixing in Theory and Practice;' pp. 132-63. 11 A.S. Dewing, "A Statistical Test of the Success of Consolidations;' Quarterly Journal of Economics (1921), pp. 84-101. 12 Kolko, pp. 283-84. 13/bid., p. 59. Much of this information is also drawn from Yale Brozen, "Is Government the Source of Monopoly?;' The Intercollegiate Review (Winter, 1968-69), pp. 71-72. 14 Kolko, p. 69. 15 Ibid., pp. 98-108. 16 Ibid., pp. 108-110. 17 Ibid., pp. 194-95 and 243. 18 Ibid., pp. 267-75. 19 Gabriel Kolko, "Power and Capitalism in 20th Century America;' Liberation (December, 1970), pp. 21-26.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Essays on Hayek SUDDENLY, conservative-or tradi tionalliberal-economics is becom ing a fashion. In 1974 the invariab ly fashionable Nobel Prize commit tee bestowed one of its awards on Friedrich Hayek for work done a couple of generations ago. Now the same committee has honored a second conservative or true liberal, Milton Friedman, for work on mone tary policy theory that was first elaborated in 1958. It's better late than never, even though one must be permitted the ironical reflection that if the Nobel people-and those who follow them-had waked up to the importance of Hayek and Fried man on time we might have been spared much of the damage wroug h t by the Keynesians in recen t decades all through the we'stern world. Another irony is that the greater importance of Hayek and of Fried man derives from their transcendence of economics as such. When the Mont Pelerin Society decided to honor Hayek at a special regional meeting at Hillsdale College in Hillsdale, Michigan, in the Summer of 1975, technical economics occupied just about one-seventh of the time alloted to a discussion of the Hayek contribution. Fritz Machlup, who has put together the Hillsdale proceedings in a book, Essays on Hayek (New York Univer sity Press, cloth, $10.00; Hillsdale College Press, paperback, $2.00) covered Hayek's work on such things as the theory of economic fluctuations and the theory of economic planning in masterly fashion. But, as Milton Friedman poin ts out in his foreword to the book, Hayek's economics has been secondary in importance to his "inf luence in strengthening the moral and intellectual support for a free society:' 757 758 THE FREEMAN December The primary importance of Hayek's moral and intellectual inf I uence comes through in this vol ume in many ways. George Roche, the President of Hillsdale College, says, patly, that "economic science is not enough:' So he hails Hayek for realizing that the failures of collectivism, which strike at men's stomachs, "strike even more directly at men's souls." Arthur Shenfield speaks of the importance of Hayek's The Pure Theory of Capital, but what sets him tingling is Hayek's work on "scientism;' defined as "the uncritical applica tion of the methods, or the supposed methods, of the natural sciences to problems for which they are not apt:' Ronald Max Hart well's essay recognizes that Hayek "is an economic and political theorist rather than an historian;' but, as he says, "most of Hayek's writing since the publication of The Road to Serfdom in 1944 has been at least partly concerned with history." So the Hartwell accolade is bestowed on Hayek for his exposure of the impostures of Marx, Engels, the Hammonds, Tawney, the Webbs and Harold Laski for misrepresenting the history of early industrialism as a catalogue of horrors.

There were, indeed, horrors in Manchesterian England, but most of them were hangovers from the twenty-year period in which the British had to defer the building of houses to give the making of ships and guns a first priority in order to defeat Napoleon. A Failure of Leadership Bill Buckley, in his essay, takes off from Hayek's "nontechnical writ ings" to chastise American capitalists for their failure to react to the warnings in Hayek's The Road to Serfdom. As Irving Kristol has said, the intellectual fight against socialism has been won, but "the stunning paradox" is that the socialists don't seem to know it. They go on winning the battle in parliaments that vote consistently for inflationary budgets that are making capitalism more and more inoperable. "The entrepreneurial class," says Buckley, "can only change its image by taking lusty joy from its achievements:' But where is this joy? It was not apparent in a scene that Bill Buckley finds "symbolic of the triumphs of demagogic terror over prod ucti ve enterprise: Senator Scoop Jackson, sitting high in his committee chair, addressing the twelve top officials of the oil and gas industry meekly astride their stools at the bar of justice, publicly chastising them on their obscene profits." How bracing it would have been, says Buckley, if "as one man they had risen to their feet early in the tirade and walked out, leaving 1976 ESSAYS ON HAYEK 759 the Senator lecturing only the television cameras, which of course he was primarily addressing;' In their respective essays Gott fried Dietze and Shirley Robin Let win come to the nub of Hayek's greatest importance, which is his recognition that economics, as Lud wig von Mises has put it, is part of a larger science of choice. Choice, of course, implies at least an "as if"

acceptance of free will, and it can only function well in a society whose basic conventions and law keep men from invading each others' rights. Knowing that freedom, to be real in a practicable sense, requires a universally respected framework of moral cer tainties, Hayek, ever since The Road to Serfdom, has been devoting most of his time to determining what he calls "the constitution of liberty." Law and Liberty A tolerable society demands a subtle blend of order and spon taneity. Naturally the order which Hayek extols must be that of the "Rechtsstaat" which limits its legislation to the affirmation of ancient verities. The "good law" may, in the course of time, "develop in very undesirable directions" that require correction by "deliberate legislation." But when parliaments depart from the "corrective" func tion to indulge in arbitrary restrictions that limit the inventiveness of human beings, we all suffer.

Hayek prefers to be called an Old Whig. There must be "equality before the law:' but that is where the case for egalitarianism stops. To think of equality as a matter of leveling entails robbing one man of the fruits of his work to support another. When societies embrace this type of Robin Hood egalitarian ism the law becomes a most uncer tain entity. What follows is the destruction of liberty. The monstrous injustice of the Robin Hood approach is that it deprives the poor of all the advantages they would otherwise get from both the spontaneous and the trained inven tions and discoveries of more able men. In what is perhaps the most challenging essay in the book Shirley Letwin makes a subtle dis tinction between the "spontaneous order" and what she calls the "fan tasy of 'laissez faire;" The spon taneous order of the market place is "not a mechanical process given by nature." It consists, as Hayek keeps reminding us in one fashion or another, "of men buying and selling, in vesting and managing under special historical conditions .. , these have to be set by us, in accordance with our purposes and our conceptions of how we can best achieve them. One of Hayek's greatest contributions to the de760 THE FREEMAN December fense of liberty is his repeated assertion that belief in the free market and competition, far from absolving us of having to think of legal arrangements, obliges us to do so more carefully:' The art of mak ing good social arrangements con sists in "attending with meticulous deliberation to some things while letting others arrange themselves:' To take some of the mystery out of it, it might be said that laissez faire is fine when it is practiced within the scope of the Ten Com mandments. That is what "Old Whiggism" was about. It is all that Adam Smith, who was no anarchist, intended. Hayek pays his tribute to the "Old Whig" mind when he notes, as Shirley Letwin says, that England "was famed for its individualism and liberty;' and yet was disposed to conform in all externals to common usage rather than to go chasing after the developmen t of "original per sonalities." The acceptance of "customary morals" was repudiated in the Bloomsbury of John Maynard Keynes, who as a young man "claimed to be our own judge in our own case:' To keep clear of the Bloomsbury mistake requires a "precarious balance." Hayek, says Shirley Let win, has "provided the mode!:"

HANDSOME BLUE LEATHERlEX FREEMAN BINDERS $3.00 ORDER FROM: THE FOUNDATION FOR ECONOMIC EDUCATION IRVINGTON-aN-HUDSON, NEW YORK 10533 Index THE FREEMAN - Volume 26, January-December1976 Prepared by BETTINA BIEN GREAVES of the Foundation staff NOTE: In page references, the number preceding the colon designates the month, those follow ing refer to pages. All articles have at least three entries-author, subject, and title-except in a few cases when title clearly indicates subject matter. Books reviewed are listed on page 767 .. A ABOLITIONISTS, new look at (Chadwick) 3:167-171 ACADEMIC freedom Academic freedom (Wilke) 2:110-115 Threats to freedom in higher education (Hepburn) 3:155-161 ADVERTISING Guess who! (Wilke) 1:37-41 AFRICA Eat, drink, talk (Mahaffy) 4:244-250 AGE of the technicality (Carson) 3: 138-149 AGRICULTURE Cartels (Summers) 12:707-711 Land use and capital (Smith) 9:541-548 Right to food (Pasour) 4:229-234 AMERICAN idea ... (Prochnow) 7:419-422 AMERICAN money: past, present and future (Weber) 8:479-484 AMUSEMENT parks, reflections on (Carson) 11:643 653 ANCIENT fable retold (Paton) 3: 150-154 ANDERSON, Robert G.

Real con job, A. 7:404-407 ANOTHER bicentennial: publication of The wealth or nations (Carson) 4:212-222 APATHY, in defense of (T. W. Hazlett) 8:495-496 B BARGER, Melvin D. Losing struggle to save private enterprise, The. 4:195-201 Robert Owen: the woolly-minded cotton spinner. 2:101-109 Why teacher power had to happen. 6:323-331 See also Book reviews (Lodge) BEARCE, Robert G. Democracy in America-a challenge to free men. 1:25-32 BEHAVIORAL law (Leonard) 9:561-567 BENSON, Ezra Taft Proper role of government, The. 11:661-668 BICENTENNIAL, U.S. See U.S. Constitution; U.S. History BICENTENNIAL prayer (M. Sennholz) 10:612 BICENTENNIAL question, an ascendant or setting sun? (Carson) 2:67-77 BIRTH of an idea (Kettering) 11:669-670 BOOKS/literature Time to read (Rogers, Slade & Hill) 8:497 Why public libraries? (Schneider) 9:534-540 BROOKES, Warren T. Is our economic future limited? 11:671-679 BROWNFELD, Allan C. See Book reviews <Hoffer; Sowell) BUILT-IN pressures to inflation (Carson) 9:515-525 BUREAUCRATIC incubus (Carson) 1:10-20 BURT, William D.

Why reforming the ICC is not enough. 2:90-97 BUSINESS of government (Carson) 5:302-311 BUSINESSMAN and free enterprise (Rogge) 2:81-89 c CAPITAL consumption (H. F Sennholz) 5:282-299 CAPITALISM Ideologies and the world struggle (Madland) 11:684-689 Land use and capital (Smith) 9:541-548 CARSON, Clarence B. Age of the technicality, The. 3: 138-149 Another bicentennial: the publication of The wealth ofnations. 4:212-222 Bicentennial question, A: an ascendant or setting sun? 2:67-77 Built-in pressures to inflation. 9:515-525 Bureaucratic incubus, The. 1: 10-20 Business of government, The. 5:302-311 Faith of our fathers. 12:732-738 Power to tax is the power to destroy, The. 10:613-625 Reflections on amusement parks - among other closed systems. 11: 643-653 There ought not to be a law. 6:340-355 What is economy? 7:423-435 Work and liberty. 8:485-494 CARTELS (Summers) 12:707-711 CHADWICK, William New look at the Abolitionists, A. 3:167-171 CHAMBERLAIN, John. See Book reviews CLASSICAL medicine (Davenport) 1:21-24 COLESON, Edward Spirit of "46;' The. 11 :690-697 COMMUNISM/socialism/Marxism Eat, drink, talk (Mahaffy) 4:244-250 Ideologies and the world struggle (Madland) 11:684-689 761 762 THE FREEMAN December COMPETITION Demand for instant utopia (Hazlitt) 11:680-683 Free market and the tyranny of wealth (Osterfeld) 12:749-756 How many servants can you afford? (Sparks) 10:591-603 How much competition? (Summers) 4:242-243 COMPULSION/coercion Individual responsibility (Foley) 1:42-51 There ought not to be a law (Carson) 6:340-355 You can't sell freedom to a starving man (Foley) 12:739-748 CON job (Anderson) 7:404-407 CONSUMER sovereignty Behavioral law (Leonard) 9:561-567 Problems of halting economic growth (Lee and McNownl4:234-241 COOLEY, Oscar W.

Rights are freedoms, not powers. 8:464-467 o DAVENPORT, John A. See Book reviews (Henry; Hutt) DEATH and taxes: a review (Spangler) 10:626-630 DEMAND for instant utopia (HazlittJ 11:680-683 DEMOCRACY in America, challenge to free men (Bearce) 1:25-32 E EAT, drink, talk (Mahaffy) 4:244-250 ECONOMIC production/development. See Free enterprise ECONOMICS, 1975 Nobel prize, some uncomfortable reflections (Kirzner) 4:206-211 ECONOMY, what is it? (Carson) 7:423-435 EDUCATION, private vs. governmental Academic freedom (Wilke) 2: 110-115 Educational vouchers (North) 5:259-275 Socialized hot dogs? (SchoW 2: 116-122 Threats to freedom in higher education (Hepburn) 3: 155-161 Why teacher power had to happen (Barger) 6:323 331 Work and liberty (Carson) 8:485-494 EDUCATIONAL vouchers (North) 5:259-275 ELKINS, Tom No eggs, no omelet. 7:403 ENERGY sources Birth of an idea (Kettering) 11 :669-670 Is our economic future limited? (Brookes) 11:671 679 ENVIRONMENTAL controls Age of the technicality (Carson) 3:138-149 Mother nature: friend or foe? (LaDow) 4:202-205 See also Land use F FAITH of our fathers (Carson) 12:732-738 FAMILY responsibility/welfare Educational vouchers (North) 5:259-275 Socialism as a family enterprise (Lubkin) 5:300 301 FEDERAL Reserve System Fiat and the founding fathers (Groseclose) 10:585 590 FISHER, Irving - ideas of Where the monetarists go wrong (Hazlitt) 8:468 478 FOLEY, Ridgway K., Jr.

In pursuit of hap piriess. 6:365-376 Individual responsibility. 1:42-51 You can't sell freedom to a starving man. 12:739 748 FRANKLIN, Benjamin - ideas of Bicentennial question, ascendant or setting sun? (Carson) 2:67-77 FREE enterprise, free market Adam Smith and the invisible hand (Opitz) 6:356 364 How many servants can you afford? (Sparks) 10:591-603 Reflections on amusement parks (Carson) 11:643 653 Right to food (Pasour) 4:229-234 FREE market and the tyranny of wealth (Osterfeld) 12:749-756 FREE society (Siegan) 2:98-100 FREEDOM/liberty Behavioral law (Leonard) 9:561-567 Individual responsibility (Foley) 1:42-51 Moral law and freedom (Watts) 1:56-57 You can't sell freedom to a starving man (Foley) 12:739-748 FRIEDMAN, Milton - ideas of Educational vouchers (North) 5:259-275 Where the monetarists go wrong (Hazlitt) 8:468 478 FULLER, Buckminster - ideas of Is our economic future limited? (Brookes) 11:671 679 G GEORGIA (1732-1752), planning in (Summers) 9:549-552 GERMAN inflation (1923) Lessons of the German inflation (HazlittJ 12:718 730 What determines the value of money? (Hazlitt) 9:553-560 GOVERNMENT, limited - role of Adam Smith and the invisible hand (Opitz) 6:356 364 Business of government (Carson) 5:302-311 1976 INDEX 763 How many servants can you afford? (Sparks) 10:591-603 Power to tax is power to destroy (Carson) 10:613625 Proper role of government (Benson) 11:661-668 There ()light notto be a law (Carson) 6:340-355 What the Bible says about big government (Patrick) 3:172-182 See also Pem berton GOVERNMENT censorship/propaganda Guess who! (Wilke) 1:37-41 Postal monopoly (Summers) 3: 162-166 GOVERNMENT controls/regulation Age of the technicality (Carson) 3: 138-149 Behavioral law (Leonard) 9:561-567 Bicentennial question, ascendant or setting sun?

(Carson) 2:67-77 Bureaucratic incubus (Carson) 1: 10-20 Cartels (Summers) 12:707-711 Free market and the tyranny of wealth (Osterfeld) 12:749-756 Is our economic future limited? (Brookes) 11:671 679 Losing struggle to save private enterprise (Barger) 4:195-201 Problems of halting economic growth (Lee & McNown) 4:234-241 Why reforming the ICC is not enough (Burt) 2:90 97 GOVERNMENT ownership/enterprises Instead of what? (HazlittJ 3: 131-137 Mineral alert (Poirot) 2:78-80 Reflections on amusement parks (Carson) 11:643 653 GOVERNMENT spending Built-in pressures to inflation (Carson) 9:515-525 Capital consumption (H. F. Sennholz) 5:282-299 Instead of what? (Hazlitt) 3: 131-137 Real con job (Anderson) 7:404-407 GOW, Haven Bradford. See Book reviews (Jaffa; Marchione; Wilson) GREAVES, Bettina Bien. See Book reviews (Hayek; Stang; ZochertJ GROSECLOSE, Elgin Fiat and the founding fathers. 10:585-590 GUESS who! (Wilke) 1:37-41 GULLIVER'S travels, the plot to print (Markowitz) 4:223-228 H HAZLETT, Thomas W.

In defense of apathy. 8:495-496 HAZLITT, Henry Demand for instant utopia, The. 11:680-683 Instead of what? 3: 131-137 Lessons of the German inflation. 12:718-730 Our forty-year inflation. 10:579-584 What determines the value of money? 9:553-560 Where the monetarists go wrong. 8:468-478 HEARTENING message from youth (Davenport) 10:631-635 HEPBURN, Charles M. Threats to freedom in higher education. 3: 155-161 HOCKMAN, Jean Who wants to be self-sufficient? 1:3-7 HOW many servants can you afford? (Sparks) 10:591 603 HOW much competition? (Summers) 4:242-243 HOW much will be enough? (McAdoo) 1:52-55 IDEAS/ideologies, importance of Businessman and free enterprise (Rogge) 2:81-89 Demand for instant utopia (HazlittJ 11:680-683 Free market and the tyranny of wealth (Osterfeld) 12:749-756 Ideologies and the world struggle (Madland) 11:684-689 Intangible bicentennial monument (Rukeyser) 1:33-36 Losing struggle to save private enterprise (Barger) 4:195-201 ID EAS/in ven tionslinnovations Birth of an idea (Kettering) 11 :669-670 Is our economic future limited? (Brookes) 11:671679 IN defense of apathy (T. W. Hazlett! 8:495-496 IN pursuit of happiness (Foley) 6:365-376 IN DIVID U AL ambi tion/ini tia ti vel action Capital consumption m. F Sennholzl 5:282-299 Democracy in America (Bearce) 1:25-32 Is our economic future limited? (Brookes) 11:671679 Socialized hot dogs? (SchoW 2: 116-122 True spirit of '76 (Lacy) 1:8-9 Work and liberty (Carsonl 8:485-494 INDIVIDUAL responsibility (Foley) 1:42-51 INDIVIDUAL rights/freedom In defense of apathy (T. W. Hazlett) 8:495-496 In pursuit of happiness (Foley) 6:365-376 Proper role of government (Benson I 11:661-668 Rights are freedoms, not powers (Cooley) 8:464-467 You can't sell freedom to a starving man (Foley) 12:739-748 See also Pemberton "INDUSTRIAL Revolution"

Robert Owen, woolly-minded cotton spinner (Barger) 2: 101-109 Spirit of "46" (Coleson) 11:690-697 INFLATION. See Money INSTEAD of what? mazlittJ 3: 131-137 INTANGIBLE bicentennial monument (Rukeyser) 1:33-36 764 THE FREEMAN December INTERSTATE Commerce Commission Why reforming the ICC is not enough murt) 2:90 97 IS our economic future limited? (Brookes) 11 :671-679 J JUSTICE, judiciary system Age of the technicality (Carson) 3: 138-149 Business of government (Carson) 5:302-311 In pursuit of happiness (Foley) 6:365-376 There ought notto be a law (Carson) 6:340-355 K KERSHNER, Howard E. See Book"reviews (Watts) KETTERING, Charles F. Birth of an idea, The. 11 :669-670 KIRZNER, Israel M. 1975 Nobel memorial prize in economics, The: some uncomfortable reflections. 4:206-211 KIZER, J. B. See Book reviews (Berlin) L LABOR/unions/wages/employment Built-in pressures to inflation (Carson) 9:515-525 Real con job (Anderson) 7:404-407 Unemployment, unions and inflation (Petro) 7:387403 Why teacher power had to happen (Barger) 6:323 331 LACY, Jack True spirit of '76, The. 1:8-9 LaDOW, Charles R.

Mother nature: friend or foe? 4:202-205 LAND use Free society (Siegan) 2:98-100 Land use and capital (Smith) 9:541-548 Mineral alert (Poirot) 2: 78-80 LEE, Dwight R. and McNown, Robert F. Problems of halting economic growth, The. 4:234 241 LEONARD, Joan Marie Behavioral law. 9:561-567 LIBRARIES, why public? (Schneider) 9:534-540 LESSONS of the German inflation (Hazlitt) 12:718 730 LOSING struggle to save private enterprise (Barger) 4:195-201 LUBKIN, Yale Jay Socialism as a family enterprise. 5:300-301 M MADLAND, Lee G. Ideologies and the world struggle.ll:684-689 MAHAFFY, Francis E. Eat, drink, talk. 4:244-250 MARKOWITZ, Jack Plot to print a masterpiece, The: Gulliver's travels. 4:223-228 McADOO, James E. How much will be enough? 1:52-55 lVlcNOWN, Robert F., Co-author. See Lee MERCANTIliSM Adam Smith and the invisible hand (Opitz) 6:356 364 Another bicentennial, publication of The wealth oj' nations (Carson) 4:212-222 METHODOLOGY, libertarian Businessman and free enterprise (Rogge) 2:81-89 MINERAL alert (Poirotl 2:78-80 MISES, Ludwig von - ideas of Educational vouchers (North) 5:259-275 MONETARISTS, where they go wrong (Hazlittl 8:468-478 MONEY and inflation American money: past, present and future (Weber) 8:479-484 Built-in pressures to inflation (Carson) 9:515-525 Capital consumption (H. F. Sennholz) 5:282-299 Fiat and the founding fathers (Groseclose) 10:585590 How much will be enough? (McAdoo) 1:52-55 Instead of what? (Hazlitt) 3:131-137 Lessons of the German inflation (Hazlitt) 12:718730 ' Our forty-year inflation (Hazlitt) 10:579-584 Private coinage in America (Summers) 7:436-440 Unemployment, unions and inflation (Petro) 7:387403 What determines the value of money? (Hazlitt) 9:553-560 Where the monetarists go wrong (Hazlitt) 8:468 478 MONOPOLY, monopoly price/gain Cartels (Summers) 12:707-711 Free market and the tyranny of wealth, (Osterfeld) 12:749-756 Reflections on amusement parks (Carson) 11:648 653 Unemployment, unions and inflation (Petro) 7:387403 MONOPOLY, postal (Summers) 3:162-166 MORAL law and freedom (Watts) 1:56-57 MOTHER nature: friend or foe? (LaDow) 4:202-205 MULTINATIONAL corporation, U.S. defense and (Peterson) 8:451-463 N NATIONAL Education Association Why teacher power had to happen (Barger) 6:323 331 NATURE, Mother: friend or foe? (LaDow) 4:202-205 1976 INDEX 765 NEW look at the Abolitionists (Chadwick) 3: 167-171 NEW message. See Pemberton NO eggs, no omelet (Elkins) 7:403 NOBEL memorial prize (1975) in economics, some uncomfortable reflections (Kirzner) 4:206-211 NORTH,Gary Educational vouchers: the double tax. 5:259-275 o OCCUPATlONAL Safety & Health Administration (OSHA) Age of the technicality (Carson) 3: 138-149 OPITZ, Edmund A.

Adam Smith and the invisible hand. 6:356-364 See also Book reviews (Barzun; Mencken) OSTERFELD, David Free market and the tyranny of wealth, The. 12:749-756 OUR forty-year inflation mazliW 10:579-584 OWEN, Robert, woolly-minded cotton spinner (Barger) 2:101-109 p PASOUR, E. C., Jr. Right to food, The. 4:229-234 PATON, W.A. Ancient fable retold, An. 3: 150-154 PATRICK, James C. What the Bible says about big government. 3: 172 182 PEMBERTON, Jackson New message. A. 8 installments: 1. On choosing liberty. 5:276-281 2. On human rights and government. 6:332-339 3. On the Constitution. 7:408-418 4. Comments on the Bill of Rights. 8:498-505 5. On the general welfare. 9:526-533 6. On political philosophy. 10:604-611 7. On Amendment XVII. 11:654-660 8. On the destiny of liberty. 12:712-717 PETERSON, William H. U.S. defense and the multinational corporation. 8:451-463 See also Book reviews (Evans) PETRO, Sylvester Unemployment, unions and inflation: of causation and necessity. 7:387-403 PLANNED economy in Georgia, 1732-1752.

(Summers) 9:549-552 PLOT to print a masterpiece, Gulliver's travels (Markowitz) 4:223-228 POIROT, Paul L. Mineral alert, A. 2:78-80 POLlTlC~AL pressure groups Built-in pressures to inflation (Carson) 9:515-525 Unemployment. unions and inflation <Petro) 7:387 403 POPULATION shifts Demand for instant utopia (Hazlitt) 11 :680-683 Land use and capital <Smith) 9:541-548 Problems of halting economic growth. (Lee & McNown) 4:234-241 POSTAL monopoly (Summers) 3: 162-166 POST office Guess who! <Wilke) 1:37-41 Reflections on amusement parks <Carson) 11:643 653 POWER to tax is power to destroy (Carson) 10:613-625 PRICES/pricing Cartels (Summers) 12:707-711 Educational vouchers (North) 5:259-275 Problems of halting economic growth (Lee & McNown) 4:234-241 Reflections on amusement parks <Carson) 11:643 653 Right to food (Pasour) 4:229-234 PRIVATE coinage in America (Summers) 7:436-440 PRIVATE property, ownership and use Free society (Siegan) 2:98-100 In pursuit of happiness (Foley) 6:365-376 Land use and capital (Smith) 9:541-548 PROBLEMS of halting economic growth <Lee & McNown) 4:234-241 PROCHNOW, Herbert V.

There is an American idea. 7:419-422 PROPER role of government (Benson) 11:661-668 R REAL con job (Anderson) 7:404-407 REFLECTIONS on amusement parks (Carson) 11:643-653 RELIG ION /morality/ethics Bicentennial prayer (M. Sennholz) 10:612 Faith of our fathers (Carson) 12:732-738 Moral law and freedom (Watts) 1:56-57 Proper role of government (Benson) 11:661-668 What the Bible says about big government (Patrick) 3: 172-182 Work and liberty (Carson) 8:485-494 You can't sell freedom to a starving man (Foley) 12:739-748 See also Pem berton RIGHT to food (Pasour) 4:229-234 RIGHTS are freedoms, not powers (Cooley) 8:464-467 ROBERT Owen, woolly-minded cotton spinner (Barger) 2: 101-109 ROGERS, Slade & Hill's Management Briefs Time to read. 8:497 766 THE FREEMAN December ROGGE, Benjamin A. Businessman and free enterprise, The. 2:81-89 RUKEYSER, Merryle Stanley Intangible bicentennial monument, An. 1: 33-36 5 SAVINGS and investment Capital consumption (H. F. Sennholz) 5:282-299 How much will be enough? (McAdoo) 1:52-55 Land use and capital (Smith) 9:541-548 SCHNEIDER, Steven J.

Why public libraries? 9:534-540 SCHOLL, David J. Socialized hot dogs? 2: 116-122 SECURITY, government-guaranteed Behavioral law (Leonard) 9:561-567 Built-in pressures to inflation (Carson) 9:515-525 Rights are freedoms, not powers (Cooley) 8:464-467 SELF-RELIANCE Proper role of government (Benson) 11:661-668 Who wants to be self-sufficient? (Hockman) 1:3-7 Work and liberty (Carson) 8:485-494 SENNHOLZ, Hans F. Capital consumption. 5:282-299 See also Book reviews (Twight) SENNHOLZ, Mary Bicentennial prayer, A. 10:612 SERVANTS, how many can you afford? (Sparks) 10:591-603 SHORT story, parable Ancient fable retold (Paton) 3: 150-154 SIEGAN, Bernard H. Free society, A. 2:98-100 SLAVERY New look at the Abolitionists (Chadwick) 3: 167-171 You can't sell freedom to a starving man (Foley) 12:739-748 SMITH, Adam - ideas of Adam Smith and the invisible hand (Opitz) 6:356 364 Another bicentennial: publication of The wealth of nations (Carson) 4:212-222 SMITH, Harry Lee Land use and capital 9:541-548 SOCIAL/political reform In defense of apathy (T. W. Hazlett! 8:495-496 Instead of what? mazlitt! 3: 131-137 Robert Owen, woolly-minded cotton spinner (Barger) 2: 101-109 Spirit of "46" (Coleson) 11:690-697 SOCIALISM as a family enterprise (Lubkin) 5:300 301 SOCIALIZED hot dogs? (SchoW 2: 116-122 SPANGLER, Mark. See Book reviews (H. F. Sennholz; M. Sennholz) SPARKS, Bertel M.

How many servants can you afford? 10:591-603 SPIRIT of "46" (Coleson) 11:690-697 SUMMERS, Brian Cartels: conspiracies in restraint of trade. 12: 707 711 How much competition? 4:242-243 Planned economy in Georgia, The: 1732-1752. 9:549-552 Postal monopoly, The. 3: 162-166 Private coinage in America 7:436-440 See also Book reviews (Blumenfeld; Campus Studies Institute; Kirzner; Institute for Contemporary Studies; Rothbard) T TAXATION, effects of Capital consumption (H. F. Sennholz) 5:282-299 Educational vouchers: the double tax (North) 5:259-275 Power to tax is the power to destroy (Carson) 10:613-625 TEACHER power, why it had to happen (Barger) 6:323-331 TECHNICALITY, age of (Carson) 3: 138-149 THERE is an American idea (Prochnow) 7:419-422 THERE ought notto be a law (Carson) 6:340-355 THIRD world. See Undeveloped countries THREATS to freedom in higher education (Hepburn) 3:155-161 TIME to read (Rogers, Slade & Hill's Management Briefs) 8:497 TOCQUEVILLE, Alexis de - ideas of Democracy in America (Bearce) 1:25-32 TRADE, international U.S. defense and the multinational corporation (Peterson) 8:451-463 TRANSPORTATION, government and Cartels (Summers) 12:707-711 Why reforming the ICC is not enough (Burt) 2:90 97 TRUE spirit of '76 (Lacy) 1:8-9 TWO concepts of liberty (Kizer) 9:568-570 u UNDEVELOPED countries Eat, drink, talk (Mahaffy) 4:244-250 Right tofood (Pasour) 4:229-234 U.s. defense and the multinational corporation (Peterson) 8:451-463 1976 INDEX 767 UNEMPLOYMENT, unions and inflation (Petro) 7:387-403 U.S. CONSTITUTION American money: past, present and future (Weber) 8:479-484 Bicentennial question, ascendant or setting sun?

(Carson) 2:67-77 Business of government (Carson) 5:302-311 Faith of our fathers (Carson) 12:732-738 Power to tax is power to destroy (Carson) 10:613 625 Proper role of government (Benson) 11:661-668 See also Pemberton U.S. DEFENSE and the multinational corporation (Peterson) 8:451-463 U.s. HISTORY Another bicentennial: publication of The wealth of nations (Carson) 4:212-222 Democracy in America, challenge to free men (Bearce) 1: 25-32 Land use and capital (Smith) 9:541-548 New look at the Abolitionists (Chadwick) 3:167-171 Planned economy in Georgia, 1732-1752 (Summers) 9:549-552 UTOPIA, demand for instant (HazlittJ 11:680-683 UTOPIAN socialism Robert Owen, woolly-minded cotton spinner (Barger) 2: 101-109 w WATTS, V. Orval Moral law and freedom. 1:56-57 WEBER, Charles E. American money: past, present and future. 8:479 484 WHAT determines the value of money? (Hazlitt) 9:553-560 WHAT is economy? (Carson) 7:423-435 WHAT the Bible says about big government (Patrick) 3:172-182 WHERE the monetarists go wrong (Hazlitt) 8:468478 WHO wants to be self-sufficient? (Hockman) 1:3-7 WHY public libraries? (Schneider) 9:534-540 WHY reforming the ICC is not enough (Burt) 2:90-97 WHY teacher power had to happen (Barger) 6:323-331 WILKE, Joan Academic freedom. 2: 110-115 Guess who! 1:37-41 WORK and liberty (Carson) 8:485-494 WORTHAM, Anne. See Book reviews (Machan) WREN, Robert. See Book reviews (Walton) y YOU can't sell freedom to a starving man (Foley) 12:739-748 BOOK REVIEWS (Reviewer's name in parentheses) BARZUN, Jacques. Simple & direct: a rhetoric for writers (Opitz) 7:444-446 BERLIN, Isaiah. Two concepts ofliberty (Kizer) 9:568-570 BLUMENFELD, Samuel L., ed. Property in a humane economy (Summers) 4:256 BORNET, Vaughn. See Robinson CAMPUS Studies Institute. The incredible bread machine film (Summers) 1:64 CHESLOCK, Louis, compiler. See Mencken EVANS, M. Stanton. Clear and present dangers (Peterson) 1:62-64 FLORMAN, Samuel C. The existential pleasures of engineering (Chamberlain) 3: 183-186 HAYEK, F. A. and others. Rent control: a popular paradox (Greaves) 1:61-62 HENRY, John M., ed. Free enterprise ... an imperative (Davenport) 10:631-635 HESSEN, Robert. Steel titan: the life of Charles M.

Schwab (Chamberlain) 2:123-126 HOFFER, Eric. In our time (Brownfeld) 11:701-704 HUTT, W. H.lndividual freedom (Chamberlain) 6:377-380 _____ . A rehabilitation of Say's Law (Davenport) 1:21-24 INSTITUTE for Contemporary Studies. No land is an island: individual rights and government control of land use (Summers) 8:511 JAFFA, Harry. The conditions of freedom (Gow) 6:382-383 KIRZNER, Israel M. The economic point of view (Summers) 7:447-448 768 THE FREEMAN ! Decembf LEVINE, Isaac Don, ed. Plain talk: an anthology from the leading anti-communist magazine of the 40s (Chamberlain) 8:506-509 LODGE, George C. The new American ideology (Barger) 5: 317 -320 MACHAN, Tibor R. Human rights and human liberties (Wortham) 6:380-382 MACHLUP, Fritz, ed. Essays on Hayek (Chamberlain) 12:757-760 MARCHIONE, Sister Margherita. Philip Mazzei: Jefferson's "zealous Whig" (Gow) 10:639-640 MENCKEN, H. L. A gang of peck sniffs. Compo by Louis Cheslock (Opitz) 8:509-510 NASH, George H. The conservative intellectual movement in America since 1945 (Chamberlain) 7:441-444 READ, Leonard E. The love of liberty (Chamberlain) 1:58-61 ROBINSON, Edgar Eugene and Bornet, Vaughn.

Herbert Hoover: President ofthe United States (Chamberlain) 10:636-639 ROTHBARD, Murray N. Conceived in liberty Vols. 1 & 2 (Summers) 6:383-384 SCHIFF, Irwin A. The biggest con: how the government is fleecing you (Chamberlain) 5:312 314 SCOTT, OttoJ. Robespierre: the voice of virtue (Chamberlain) 4:251-254 SENNHOLZ, Hans. Death and taxes (Spangler) 10:626-630 SENNHOLZ, Mary. Faith and freedom: a biographical sketch of a great American, J. Howard Pew (Spangler) 3: 189-192 SIEGAN, Bernard H. Other people's property (Poirot) 8:511-512 SOWELL, Thomas. Race and economics (Brownfeld) 3:186-189 STANG, Alan. The highest virtue (Greaves) 12: 126. TWIGHT, Charlotte. America's emerging fascist economy (H.F. Sennholz) 5:315-317 VAN DEN HAAG, Ernest. Punishing criminals: concerning a very old and painful question (Chamberlain) 11: 698-70-:' VICUNA, Francisco Orrego. Chile: the balanced view (Chamberlain) 9:571-574 WALTON, Rus. One nation under God (Wren) 5:317 WATTS, V. Orval, ed. Free markets or famine and Politics versus prosperity (Kershner) 7:446-447 WILSON, James Q. Thinking about crime (Cow) 4:254-256 ZOCHERT, Donald. Laura: the life of Laura Ingalls Wilder (Greaves) 9:575-576

About this edition

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Title: The Freeman 1976

Author: Foundation for Economic Education

First published: 1950

Series: The Freeman, volume 26

Source file: The Freeman 1976.pdf

Source page: https://freecapitalists.org/books/the-freeman-1976/

Converted: 2026-08-09 by The Liberty Archive (freecapitalists.org), converter v6

Table of Contents

The Freeman 1976

- Who Wants to Be Self-Sufficient? J. Hockman
- The True Spirit of '76; J. Lacy
- The Bureaucratic Incubus; C. Carson
- The Classical Medicine; J. Davenport
- Democracy in America; R. Bearce

- An Intangible Bicentennial Monument; M. Rukeyser

- Guess Who? J. Wilke
- Individual Responsibility; R. Foley, Jr.
- How Much Will Be Enough; J. McAdoo
- Moral Law and Freedom; V. O. Watts
- Book Reviews

February

- A Bicentennial Question; C. Carson

- A Mineral Alert; P. L. Poirot

- The Businesman and Free Enterprise; B. Rogge

- Why Reforming the ICC is Not Enough; W. Burt

- A Free Society; B. Siegan
- The Woolly-Minded Cotton Spinner; M. Barger
- Academic Freedom; J. Wilke
- Socialiazed Hot Dogs; D. Scholl
- Book Reviews

March

- Instead of What? H. Hazlitt
- The Age of the Technicality; C. Carson
- An Ancient Fable Retold; W. A. Paton

- Threats to Freedom in Higher Education; C. Hepburn

- The Postal Monopoly; B. Summers

- A New Look at the Abolitionists; W. Chadwick

- What the Bible Says About Big Government; J. Patrick

- Book Reviews

April

- The Losing Struggle to Save Private Enterprise; M. Barger

- Mother Nature; C.LaDow

- The 1975 Nobel Memorial Prize in Economics; I. Kirzner

- The Publication of the Wealth of Nationsl C. Carson

- The Plot to Print a Masterpiece; J. Markowitz

- The Right to Food; E. C. Pasour, Jr.

- The Problems of Halting Economic Growth; D. Lee and R. McNown

- How Much Competition; B. Summers
- Eat, Drink, Talk; F. Mahaffy
- Book Reviews

May

- Education Vouchers; G. North
- A New Message; J. Pemberton
- Capital Consumption; H. Sennholz
- Socialism as a Family Enterprise; Y. Lubkin
- The Business of Government; C. Carson
- Book Reviews

June

- Why Teacher Power Had to Happen; M. Barger
- A New Message; J. Pemberton
- There Out NOT to be a Law; C. Carson
- Adam Smith and the Invisible Hand; E. Opitz
- In Pursuit of Happiness; R. Foley, Jr.
- Book Reviews

July

- Unemployment, Unions, and Inflation; S. Petro

- A Real Con Job; R. Anderson
- A New Message; J. Pemberton
- There Is an American Idea; H. Prochnow
- What is Economy? C. Carson
- Private Coinage in America; B. Summers
- Book Reviews

August

- US Defense and the Multinatial Corporation; W. Peterson

- Rights are Freedoms; O. Cooley
- Where the Monetarists Go Wrong; H. Hazlitt
- American Money; C. Weber
- Work and Liberty; C. Carson
- In Defense of Apathy; T. Hazlett
- A New Message; J. Pemberton
- Book Reviews

September

- Built-In Pressures to Inflation; C. Carson
- A New Message; J. Pemberton
- Why Public Libraries? S. Schneider
- Land Use and Capital; H. L. Smith
- The Planned Economy in Georgia; B. Summers

- What Determines the Value of Money; H. Hazlitt

- Behavioral Law; J. M. Leonard
- Concepts of Liberty; J. B. Kizer
- Book Reviews

October

- Our Forty Year Inflation; H. Hazlitt

- Fiat and the Founding Fathers; E. Groseclose

- How Many Servants Can you Afford? B. M. Sparks

- A New Message; J. Pemberton

- The Power to Tax is the Power to Destroy; C. Carson

- Death and Taxes; M. Spangler

- A Heartening Message from Youth; J. Davenport

- Book Reviews

November

- Reflections on Amusement Parks; C. Carson
- A New Message; J. Pemberton
- The Proper Role of Government; E. T. Benson
- The Birth of an Idea; C. Kettering
- Is Our Economic Future Limited? W. Brookes
- The Demand for Instand Utopia? H. Hazlitt

- Ideologies and the World Struggle; L. Madland

- The Spirit of '46; E. Coleson

- Book Reviews

December

- Cartels; B. Summers
- A New Message; J. Pemberton
- Lessons of the German Inflation; H. Hazlitt
- Faith of Our Fathers; C. Carson

- You Can't Sell Freedom to a Starving Man; R. Foley, Jr.

- The Free Market; D. Osterfeld

- Book Reviews

Index
Book Reviews
About this edition