===== PAGE 1 ===== iDEAS ON LIBERTY FEBRUARY 1957 Welfare States at War . . . . . . . Hans\F. Sennholz 2 When Lincoln Wasa Boy . . . . . . Samuel. Peltengill 9 Our Mechanistic Age . . . . . . . ChorlesA. Lindbergh nN Philesophy through the Bars . . . . . F.A. Harper 14 Two Kinds of Inflation . . . . . . . Henry Hazlitt —_ _ 20 The Cost of Depreciating Money . . . . First National City Bank 22 Free Enterprise . . . . . . . . . C.D. Kemp 25 Scholarship and Intelligence . . . . . Ralph Bradford 26 The Use of Books . . . . . . . . Edmund A. Opitz 30 A Clergyman’s Security. . . . . . . Francis E. Mahoffy 35 if We Create @ Monster . . . . . . E.W.Dykes 39 Aid for Uncle Willie. . . . . . . . HughP.King 40 Official Abuse of the Taxing Power. . . H.E. Spitsbergen 42 The Plague We Spread. . . . . . . Indionapolis Star 46 Why Wages Rise: « 12. Riding the Waves of Business. . . F. A. Harper 48 A Reviewer's Notebook . . . . . . John Chamberlain 58 Other Books . . . . . . . . . 61 | THE FOUNDATION FOR ECONOMIC EDUCATION, INC. Irvingten-on-Hudson, New York ===== PAGE 2 ===== 9. From DEPENDENCY back again to bondage 4 1. The people go from CHAINS to spiritual faith & 2. From SPIRITUAL FAITH to 8. From APATHY to dependency How far along the way is America? courage 7. From COURAGE to comoiam too late to stop liberty the clock! a Pah 6. “oR rom SELFISHNESS to complacency LIBERTY to abundance 5. From ABUNDANCE to selfishness The Timken Roller Bearing Company Canton 6, Ohio ===== PAGE 3 ===== YOUR RAILROAD TICKET You still pay these ‘““temporary’’ wartime taxes During World War II, Congress freight charges on everything that levied special taxes on the passen- moves by public carriers such as ger fares and the freight charges railroads. paid to railroads and other forms of The reason for these “temporary” public for-hire transportation. One wartime taxes vanished long ago. reason for these special taxes was But they are still discouraging the to discourage the use of these trans- use of our public transportation portation facilities in wartime. systems. And by so doing, these The war ended more than ten taxes are weakening our public car- years ago but these taxes go on — riers — essential to peacetime com- and on. They still add an extra 10 merce and vital to national defense. per cent to the passenger fares you These discriminatory, burdensome pay, and they add 3 per cent to the taxes should be repealed — now! ASSOCIATION OF AMERICAN RAILROADS WASHINGTON, D. C. ===== PAGE 4 ===== HaNs F. SENNHOLZ PAPA) . nT - Perks ty NNHE NEW international crises leave little room for competitive sparked in the Middle East, and enterprise; and Britain is flounder- the constant danger of another ing between socialism and inter- world war, need not suprise the ventionism. In other words, there is student of contemporary interna- little capitalism, in the sense of tional relations and economic poli- competitive private enterprise, in cies. The ideology of socialism and any one of these countries. interventionism has swayed our Absence of individual freedom foreign relations, and the policies and free enterprise makes for eco- of Welfare States have destroyed nomic nationalism and interna- international peace and order. tional conflict. By fundamental na- While throwing the blame for the ture and objective, the Welfare present crises on the doorsteps of State controls private property and “capitalist colonialism,” the Wel- limits individual freedom in order fare States are battling each other. to distribute economic spoils and All parties involved in the Mideast privileges to pressure groups. The are either socialist or intervention- Welfare State is a favor state. ist nations. Israel is a large army Pressure groups of producers ex- camp crowded by people who are pect the government to increase given to socialist ideas; Egyptisan the prices of their products or interventionist country with a dic- services, with utter disregard for tator bent upon leading his nation the economic interests of the vast to socialism; France has a social- majority of their own countrymen ist government with controls that and of many foreign producers. In Dr. Sennholz, author of How Can Europe Survive?, is Professor of Economics at Grove City College, Pennsylvania. 2 RR ===== PAGE 5 ===== 1957 WELFARE STATES AT WAR 3 most cases of welfare legislation favor domestic producers to the the favored group’s foreign com- detriment of domestic consumers petition is either eliminated en- and South American producers. tirely or severely curtailed. This is These and similar acts have earned economic nationalism, the most im- us the hostility of our Central and portant source of international South American neighbors. Russia, conflict. of course, ably utilizes our trade restrictions for her own purchase policies. Her efficient propaganda Let us demonstrate how inter- then interprets our behavior as ventionist policies lead to economic capitalist imperialism, and her own nationalism with a few American as a token of communist friendship. " examples. In order to enhance the Similar acts of economic nation- price of sugar cane and beets pro- alism on the part of our federal duced by a few thousand American government include the recent farmers, the federal government tariff increases on Swiss watches, not only levies a highly protective the import restrictions on foreign sugar tariff, but also imposes dairy products, and many others. In severe import quotas. To afford our each instance we severely hurt domestic producers a temporary foreign producers in order to gain, we partially close our mar- “assist” our pressure groups. kets to Central American sugar. In other words, we cause domestic prices of sugar to rise and depress Of course, the other Western foreign prices, subsidizing our powers are guilty of similar poli- sugar farmers at the expense of cies of economic nationalism. The American consumers and Cuban United States, Britain, and France farmers. This is economic nation- embarked upon the welfare road alism. to international conflict after Im- Meanwhile, Soviet Russia takes perial Germany had shown the way. political and economic advantage of In the 1880’s the German govern- our shortsighted “welfare poli- ment imposed heavy social costs on cies.” She buys Cuban sugar at de- the German economy. The logical pressed prices, thus appearing as outcome would have been a loss of benefactor to our southern neigh- sales to foreign competition, with bors. German unemployment. To avoid In deference to our cattlemen, we these undesired effects, the govern- prohibit the importation of cheap ment created cartels. Behind high Argentine beef. That is to say, we walls of protective tariffs these or- Economic Nationalism Creates Conflict West Sets Bad Example ===== PAGE 6 ===== 4 THE FREEMAN February ganizations then charged monopoly came the guiding principle of Brit- prices on the domestic market and ish political action gave “home dumped excess supplies on foreign producers first protection, Com- markets at low prices... This was monwealth producers second pro- economic nationalism at its source. tection, and foreign producers none Germany has become the classi- at all.” Britain imposed substantial cal example of government omnipo- duties on most foreign foodstuffs tence in economic matters. There is and raw materials in order to grant scarcely any restriction on trade trade preferences to Common- that was not practiced and fully de- wealth producers. Consequently, veloped in Germany. The people in foreign sales in Great Britain de- underdeveloped areas, unaware of clined considerably. the meaning of individual liberty The Churchill government dur- and capitalism, have admired this ing World War II imposed a multi- seemingly omnipotent power of the plicity of restrictions from the German state and often have en- armory of socialism. The Labor deavored to imitate it. government then went on to nation- Britain’s economic nationalism alize the “means of exchange,” the dates back to World War I and coal mines, the gas and electricity especially to the Import Duties Act industries, the iron and steel indus- and Ottawa Agreements of 1932. tries. It vested in a Central Land The preferential principle that be- Board all development rights in THE ©" FEBRUARY 1957 » Vol. 7, No. 2 1 . ¢ “- Additional copies, postpaid to Kinds of Inflation,” “The Cost of : one address: Single copy; 50c; 3 Depreciating Money,” ‘Free - + for $1.00; 25 or more, 20c each. Enterprise,” and “The Plague Permission is hereby granted to We Spread.” anyone to feprim en article in Any article wi be supplied in ; whole or in part (providing cus- reprint form if thére are enoug ; A MONTHLY JOURNAL. tomary credit is given), except inquiries to justify the cost of i OF IDEAS ON LIBERTY “Qur Mechanistic Age,” ‘Two printing. ; . The Freeman is published monthly by the Foundation for ‘Economic. Education, Inc., Irvington- on- { Hudson, N. Y. Anyone may receive the journal regularly upon written" ‘request; an annual subscription- { -donation of $5.00 or more is a ‘suggestion—not a requirement. i. Accepted as controlled circulation publication at frvington, N. Y. with additional entry at New i = York, N.Y. Copyright 1957, The Foundation for Economic Education, Inc. Printed in U. S. A Fo ET TE oo . - ===== PAGE 7 ===== 1957 WELFARE STATES AT WAR 5 land. It did its utmost to eliminate signatures to international agree- rent, profit, and interest in order to ments? What if there were govern- employ the revenue for projects of ment charters and promises? He “national development.” In all these enjoys the backing of a popular acts of seizure of private property, majority. Does this not make him the Labor government showed no omnipotent? Does this not lift him hesitancy because of foreign in- above the restraints of moral and vestments. It seized them along ethical laws of human relations? with those of its own nationals. All Can the sovereign state of Egypt this meant economic harm to be bothered that the private prop- foreigners, who watched and erty it seizes happens to be the life learned the lesson in government line of British Commonwealth omnipotence. trade and controls the flow of Mideastern oil? What does it Underdeveloped Areas Follow Suit matter that the well-being of all Can it be surprising, therefore, Europe must deteriorate through that governments in underde- his nationalization of the Canal? veloped areas of the world finally What other sovereign state con- begin to imitate the West's own sidered foreign interests in the policies? Can we blame them for realization of its statist objectives? feeling free to do what they please Influenced by such ideas, Colonel provided they enjoy the backing of Nasser embarked upon his tragic their own popular majorities? In- policies of economic nationalism deed, they may have learned from and international conflict. us to seize and nationalize private The next move then was up to property and arbitrarily to tear up those whose property had been contracts, including their own seized. Among the victims, the gov- charters. ernments of France and Great Colonel Nasser is a thorough Britain decided to seize the Canal student of Western welfare statism by force, pending an international and economic nationalism. He de- conference to discuss the Canal’s sired revenue for a program of “na- internationalization. No party in- tional development.” Why should he volved wants to return the Canal not seize the Suez Canal Company, to its lawful owners. International- this private corporation on Egyp- ization and control by several gov-- tian soil? What does it matter that ernments, however, merely means his government was paid in full for collectivism and economic nation- the use of a desert strip before the alism on a supergovernmental Canal was built? What of Egyptian basis. ===== PAGE 8 ===== 6 THE FREEMAN" February What Course Freedom? ciplined and subjugated only The defender of private property through a full-scale war and sub- and competitive enterprise, observ- sequent occupation of its territory. ing such an insoluble conflict, is at To discipline a nation that refuses a loss regarding the question of to embrace the doctrines of free- guilt. Is he to sympathize with the dom and free enterprise is an end- culprit who started the conflict in less and hopeless task. order to finance various “welfare A citizen of a free country who policies”? Or is he to sympathize £0es abroad should know that he with the socialized victims who re- travels at his own risk. Crossing sort to force, which is evil, in order the border of his state and entering to alleviate the original evil? socialist or interventionist terri- In sharp contrast to the interna- tory is to leave law and order be- tional conflict between socialist hind. He risks transgressions by governments in this Mideastern the foreign state upon his life, affair is the peaceful coexistence of liberty, and property. A business- laissez-faire nations, which realize Man who invests his funds in col- the ideals of personal freedom of lectivist territory must consider choice, private ownership and con- the risks of expropriation, foreign trol of property, and peaceful ex- exchange control, confiscatory tax- change in a competitive market. 2tion, and many other “welfare” Under this concept, the sole func. measures. He is beyond the pro- tion of government is the protec- tection of his capitalist govern- tion of its own people from domes- ment. He is on his own. tic peacebreakers and from foreign aggressors. Such a government would wage war only to defend the lives and property of its own citi- zens. This means that it should not participate in foreign wars that grow out of economic nationalism. f,,. excels that of socialist or in- For such warfare only destroys and terventionist countries of similar does not protect life and property. gjze. And it is productive strength While an individual peace- that lends the position of leader- breaker can easily be punished and ship to a country in a world that is isolated in a penitentiary, a collec- always fighting or preparing to tivist nation conducting policies of fight. economic nationalism can be dis- But true leadership that exerts The Principles of World Leadership Despite curbs and checks on its power, and its inaction in a world of conflict, a government designed for freedom is a natural leader. The creative power of a free nation by ===== PAGE 9 ===== 1957 WELFARE STATES AT WAR 7 potent influence toward world peace government sanctions the nation- and prosperity springs from a far alistic policies of all other gov- more important source than ma- ernments. This is the principle that terial and military might. True crime becomes righteousness if a leadership grows out of impeccable previous crime has remained un- behavior and moral conduct. A punished. But this very assumption leading nation that lacks these pre- underlies many prevailing notions requisites can guide the world only concerning foreign affairs. to more chaos and conflict. Above all, such a nation must Things We Can Do refrain from any act of economic World leadership demands that nationalism. It must not harm any we should openly judge world other nation through “welfare” events and explain the fallacy of policies of its own. It must adhere every act of economic nationalism. to its own design for freedom. To If a foreign government contem- reprimand other nations for poli- plates or embarks upon economic cies of economic nationalism while aggression through “welfare” legis- waging economic war upon its own lation, we should call attention to neighbors would be hypocrisy and the inevitable harm inflicted upon sanctimony. other nations. We need not inter- Throughout most of the nine- vene forcibly, for nations cannot teenth century Great Britain was a be ‘coerced to peaceful coexistence. true world leader. Her famous Only a change in political and eco- open-door policy treated Britishers nomic outlook can bring this about. and foreigners alike. The Empire Naturally, we would sign no was a vast free-trade area in which treaty with a government that has the government merely undertook disregarded its own agreements to maintain peace, law, and order. and torn up its own charters. Nor Most civilized nations soon followed would we assist any government suit in removing their trade bar- that nationalizes private indus- riers and adopting the Empire tries, for then we would be helping standard of exchange, the gold to promote collectivism and ulti- standard. The British government mate destruction. There could be indeed led the world during the no point in our extending diplo- most peaceful century of human matic recognition to any govern- history. ment that indulges in economic A leading nation must also reject nationalism. the immoral principle that one act Finally, world leadership re- of economic nationalism by one quires that we constantly defend ===== PAGE 10 ===== 8 THE FREEMAN February the principles of individual liberty onstrate to the warring world that and free enterprise. At every op- individual liberty is the only dura- portunity we should call out to the ble foundation for peace and pros- world that only competitive private perity. enterprise can lead to peace and If our way is freedom, then other prosperity. We have a glorious nations on their disastrous roads history of individual freedom and may someday listen to reason and safety of property — the absence of follow us as all civilized nations nationalization and confiscation by followed Great Britain during the an omnipotent state. Our recent ex- nineteenth century. Law, order, cursions toward the Welfare State and peace may then return once endanger our record —and our- again to a battered world suffering selves. But if we will correct that from an absence of individual free- trend, then with pride we can dem- dom and free enterprise. eo eo eo DEAS © dooenny | Philosophies in Conflict THERE IS A SHARP DISTINCTION between liberalism and the fraudulent sub- stitute that passes for it today. Throughout history two basic philosophies of life have been in deadly conflict. One concept, the liberal concept, is based upon the belief in the importance of the individual soul and personality. It is based upon the theory that the state was made to serve man, not man to serve the state. The other concept, the authoritarian concept, assumes that man, the individual, is of no importance. It assumes that man, collectively, as represented by the state, the church, the labor union or some other col- lective aggregate, alone is important. One concept exalts man, the other debases him. TOW NER PHELAN, Liberalism Stands for Freedom To Choose for Himself IT MAY BE GREAT and glorious to fight and die for the world’s salvation, for the salvation of the United Nations, for the salvation of democracy and Christian civilization, but that is a privilege of each man, a privilege he has a right to choose for himself. It is not a duty which citizenship imposes. LOUIS ST. LAURENT, addressing the Canadian Parliament, 1942 ===== PAGE 11 ===== WHEN LINCOLN WAS A SAMUEL B. PETTENGILL AVE YOU ever been alone at night in pri- meval wilderness? There are not many places now where virgin timber stands untouched by ax or saw. One such place is Turkey Run State Park in Indiana. I was there one September. It told me something about Lincoln. I pass it on to you. Toward midnight I went in the woods alone far from sight or sound of the nearest human being. A huge harvest moon in a cloudless sky sent long pencils of light down through the foliage of the forest. The gigantic tulip trees and sycamores stood in a hush of attention as if listening for the remotest whisper from earth or sky. They reached almost as high as an eight-story building before sending off their lowest branches. The massive trunks, glistening in the moonlight, seemed like the columns of some temple of the Egyptians where men worshipped forty centuries ago. A curious sensation came over me. I felt my utter insignificance — the merest speck in space, and yet, with that feeling of littleness, another quite different. It seemed that I could reach up past that leafy ceiling to the quiet stars; that I could reach down through the cool earth to the roots of those titans of the forest as they sought and found the sap of their sustenance. The patience of the stars, the calmness of the sleeping earth, the massive strength of those mighty trees, the clean tang of the midnight air, — all these entered through some window I did not Mr. Pettengill, noted attorney and author, was formerly a congressman from Indiana. ===== PAGE 12 ===== 10 THE FREEMAN February know I had. I hope you have all felt panther with their glowing pine these things, if only once in a life- knots. Yes, and trees made for time. them crude chairs, tables, beds, And then, as I stood there, I ax-helves, ox-yokes, cradles, cof- thought of Lincoln when he was fins. Little Abe with a whipsaw a little boy in Indiana seven score helped fashion one of these pioneer years ago. It occurred to me, with coffins. In its embrace a pioneer a significance I had never realized, woman went “over Jordan.” that when he was a lad it was pri- Trees were friendly things. 'meval forest everywhere, not at “Such were a few of the many, Turkey - Run alone; that every many things the moon might have night when he was a little boy and told little Abe Lincoln, going on everywhere when he was alone in eight, on a winter night on Little the woods, he must have sensed Pigeon Creek, in the Buckhorn those same impalpable presences; Valley in Southern Indiana —a that what was to me an unforget- high quarter-moon with a white table hour was to him the constant shine of thin frost on the long companionship of all his impres- open spaces of the sky.” You will sionable years. find this in Carl Sandburg’s The friendliness of trees! We “Prairie Years.” have lost something in this age of And then I thought of how little brick and steel and concrete. Not schooling the world has said Lin- so in 1816. Trees made the flat coln had —little Abe and Sister boat that gave safe passage across Sally tramping hand in hand over the Ohio to little Abe and his sister rough trails to school — four miles Sarah, to his father and Nancy and back — eight miles a day. Not Hanks. Trees made the “half- much schooling there for two little faced” cabin — open on one side to children. the bleak weather — where they spent their first Indiana winter. But suddenly I felt less sorry for Trees fed the fire that gave them Abraham Lincoln. Everywhere he warmth and lighted the pages of went were the trees of the prime- the Bible. Trees made for them val forest—tulips, sycamores, oaks, their bed of leaves. Trees gave elms, maples, beeches, walnuts. them the sugar of the maples, the Everywhere that sense of peace, brown nuts of autumn. Trees drove that feeling of being close to God. out the mosquitoes with their And I knew then that the state- pungent log-fire smoke. Trees ment in the books that Lincoln had drove back the wolf and the little schooling was false, that he ===== PAGE 13 ===== 1957 WHEN LINCOLN WAS A BOY 11 was at school many and many an I understood better then the hour when the boy of today is saying of the pioneers: ‘The teacherless, learning the patience cowards never started and the and the strength and the tough- weak never arrived.” I understood ness and tenderness of trees, a les- the Rail Splitter better and Amer- son from the great Book of Life ica better in the big timber at that never needs revision. Turkey Run. eo OUR MECHANISTIC AGE HELPING vs-or maxing us HELPLESS? CHARLES A. LINDBERGH E DWELL in a smaller world, crease war. Now, at the end of the by the scale of clocks; we are first half century of engine-driven more vulnerable to our enemies, flight, we are confronted with the more accessible to our friends; we stark fact that the historical sig- tap previously distant sources of nificance of aircraft has been pri- supply. Science has revalued geo- marily military and destructive. graphical locations, increased the Our bombs have wiped out, in density of populations, and offered minutes, an inheritance of life and its rewards to new knowledges and labor which centuries created. trades. The houses we own, the Aviation is having its greatest meals we eat, the tensions we feel, effect on the force-influence of na- the skills we teach, differ from tions and factors of survival, while those of our forefathers in funda- diplomatic relationships are floun- mental ways. Ideals, wealth, and dering in a strange new frame- power are all in a state of flux. work of power, time, and space. When the art of flying was very With hindsight we see that our young, most of us thought that early enthusiasm over the dis- men on wings would soar over coveries of science and the con- mountains and oceans to bring quest of the air blinded us to nat- countries close together in peace- ural laws which govern the con- ful understanding. We assumed duct of men. that easy contact between peoples Man has always had a tendency would simplify diplomacy, and de- to complicate his life with techni- ===== PAGE 14 ===== 12 THE FREEMAN February cal knowledge and material de- muscles and the senses while it vices. Since the mechanistic age overactivates the brain. began, we have allowed ourselves Youth must specialize in tech- to become increasingly bound to a nical training. Daylight hours of regime required by its training adult years must be spent beside and encouraged by its products. machines, drafting boards, and Our scientific, economic, and desks. Here, we meet the basic military accomplishments are question of how deeply and how rooted in the human quality which long man can consecrate himself produces them. In the last analy- to his machines without losing the . sis, all of our knowledge, all of our human qualities essential even to action, all of our progress, suc- effective consecration. ceeds or fails according to its effect American aviation has accepted on the human body, mind, and the responsibility for material spirit. power. From the standpoint of short-term survival, the confidence placed in our science and industry Man is born with qualities of has been justified through the per- body, mind, and spirit. No system formance and the numbers of our can maintain the utmost power un- aircraft. But our very success in less it gives all his faculties free the field of material power silhou- play. Most of us remember when ettes problems of human power the requirements of living en- which confront us. War, strikes, forced a more balanced life. Not and political unrest have flamed on many years ago, the efficiency and . all our speed-compressed horizons. specialization demanded of us to- From the standpoint of long-term day were impossible. As a lawyer, survival, what is our regime of life my father harnessed a horse to doing to our people? carry on his business. As a young pilot, I unlashed my wings from fence posts and pulled through my During decades of industrial de- own propeller. But my father and velopment, western man has taken I knew the feel of rain and the himself for granted while he con- smell of ground, and there was centrated his attention on his ma- time for our thoughts to wander. terial creations. He now wakes When night came, our muscles put rather suddenly to find his security our brains to sleep. dependent on the machine organi- Now, modern standards require zation he has built, with his civil- an efficiency which immobilizes the ization threatened by its products. The Nature of Man Problems of Our Age ===== PAGE 15 ===== 1957 OUR MECHANISTIC AGE 13 He comes to the increasing realiza- overemphasizes short-term sur- tion that he has not kept inward vival detracts from the humanism pace with his outward actions. essential to long-term survival. This mid-century generation we We must remember that it was represent stands on amazing ac- not the outer grandeur of the complishments, but faces alarming Roman, but the inner simplicity of problems. We have wiped out a the Christian that lived on through city with a single bomb, but how the ages. can we use this fact to heighten I have stated a problem. You our civilization? We build aircraft have the right to ask for a solution. by the tens of thousands in our I believe the solution lies in each factories, but what will our fac- individual, through the standards tories build in the character of he holds; that it lies not in political their personnel — not only in our parties or radical movements, but generation, but in our children’s, in human values and gradual and their children’s? We tie all trends; not in a greater complica- countries close together, put each tion, but in a greater simplicity of doorstep on a universal ocean, but life. In other words, I believe that how are we to direct these accom- the solution lies within ourselves, plishments to improve the basic and that we can find it nowhere qualities of life? In emphasizing else. ‘ force, efficiency, and speed, are we But we must have more than an losing a humility, simplicity, and intellectual desire, filed away in tranquility without which we can- the archives of idea. It must enter not indefinitely hold our own, even the roots of our being until it in worldly competition? shapes our action instinctively as These are the problems of well as through the conscious human power, of long-term sur- mind, until we see the producer as vival upon earth. We have shown more important than his product, what man can make of science. and find it no sacrifice to renounce Now it is a question of what our material standards of success — scientific environment will make until we realize in our bones as of man, for an environment affects well as in our brains that the the form and thought of each new character of man still forms the generation. To date, the results essential core of a lasting civiliza- of science have been primarily ma- tion. * oo terialistic. We have measured suc- ————— } by ourselves. A materialism which ,ry 25, 1954. ===== PAGE 16 ===== Ubi Great works of literature have been written by men who used wisely their time in prison. F. A. HARPER HREE years ago, I received a Thereafter, he sent me his an- unique inquiry for some read- nual library reports regularly. ing materials. It came from the They reflected pride of accomplish- librarian of the Iowa State Peni- ment that would challenge the de- tentiary, a man serving sentence votion to responsibilities of most for a serious crime. : any librarian, anywhere. This man “Perhaps these men are at- obviously served his fellow pris- tracted by our claim to be working oners well, helping to further for the cause of liberty,” someone their education. They must miss punned. “Surely they have little him, now that he has been released interest in the philosophical sub- on parole. jects with which we deal.” Together with another prisoner, That judgment proved to be this man — in addition to his regu- wrong, as later evidence revealed. lar library duties — helped to de- After receiving the large supply velop and had patented a new type of FEE materials, the librarian of electric stylus for library work. read them all, including the books, As a bit of background with within a period of five weeks. Then which to compare prisoner read- he wrote, “As for me, the most in- ing, a recent survey revealed that teresting release is The America five out of every six college gradu- We Lost.” That is one by Mario ates had done no outside reading at Pei, Professor of Romance Lan- all of a serious nature during the guages at Columbia University. preceding few months. Those who The librarian continued, “We can read have a theoretical advan- could use all the releases you tage over those who can’t, but they would care to send us, and I'm will surely narrow that advantage sure they will have a big circula- with passing time if the ability is tion here.” not used. Hardly an adequate sub- Dr. Harper is a member of the staff of the Foundation for Economic Education. 14 ===== PAGE 17 ===== ~ 1957 PHILOSOPHY THROUGH THE BARS 15 stitute for good reading, someone has reminded us, are many of the programs on radio and TV. Prisoners Who Read As a sample of the educational work done by this library, note these figures for the year ending in May 1953: Number of books circulated 50,776 Number of magazine issues circulated ........................... 86,630 Number of persons (approximate average) .... 1,200 Circulation of books, average for the year: Books per person Fiction .......cooooovviiii 31.0 Nonfiction: Sociology ............. 1.6 Biography ............ 1.4 History ............ 1.4 Philosophy .......... 1.4 Travel .................. 1.2 Literature ............ 1.0 Useful Arts .......... 0.9 Religion ............... 0.7 Fine Arts .............. 0.6 Natural Science .. 0.5 General Works .... 0.3 Philology ............. 0.3 Total nonfiction .............. 11.3 Total o.oo 42.3 A book “circulated” is not neces- sarily read, of course. But even so, how many people do you know who can equal that record for apparent reading, other than perhaps a few college students with their as- signed readings? Note especially the average per person of one book a month of serious reading — soci- ology, biography, history, and the like. Prisoners Who Write “But,” someone will suggest, “why shouldn’t these men do lots of reading? They have plenty of time. The rest of us are too busy to read. For them it is important to have their minds as well as their muscles exercised, as an important form of therapy.” In a sense this is true. Their confinement surely offers a certain opportunity, if used to advantage. Many of these men are proving ° that much can be learned from books without going to college, and that they are learning far more, year for year, than a large propor- tion of college students do. And a year in college costs $1,750, more or less. Many of these men, I have dis- covered, are accomplished writers with highly talented minds. After all, we know that it takes no more than a moment’s violation of the code of societal discipline, and a brilliant mind may be put behind bars for years or the rest of his life. There he will be found, along with the less talented ‘habitual criminal.” We know, for instance, that ===== PAGE 18 ===== 16 THE FREEMAN February many great works of literature by the men there.! They do an ex- have been written by men who cellent journalistic job, editorially used wisely their time of confine- and otherwise. ment in prison. Among such works, Take the November 1956 issue, in whole or in part, are: for instance. In it you will find a quote from Franklin about truth St. Paul. Epistles and sincerity, an article by the John Huss, letters prison author, Tom Runyon, a re- Jeanne D’Arc, testimony at her Print of an item by the Reverend Socrates, Apology trial Norman Vincent Peale, and the Tommaso Campanella, The City of Warden’s regular page that is al- the Sun ways worth reading. There is an Walter Raleigh, History of the article on capital punishment, fol- World lowed by a touching illustrated Richard Lovelace, To Althea from gtory “The Presidio Presents the Prison ... , Last Mile” (to the gallows) which John Bunyan, The Pilgrim's .,40 with this classic: Progress William Penn, testimony at his trial I expect to pass through this world Daniel Defoe, A Hymn to the but once; any good thing therefore Pillory that I can do, or any kindness that Thomas Paine, To James Monroe I can show to any fellow-creature, William Lloyd Garrison, Freedom let me do it now; let me not defer or of the Mind neglect it, for I shall not pass this Dostoevsky, letters way again. Oscar Wilde, De Profundis STEPHEN GRELLET O. Henry, short stories } Then there is a thoughtful Mohandas K. Gandhi, ... His Own article by Bob Russell, “Freedom’s Story Not the Answer.” His theme is to Perhaps even more important the effect that if you were to give than a list of works actually writ- him his freedom tomorrow with- ten while in prison would be those out first orienting him to play his inspired by contemplation while so part in a free society better than confined, but written after release. when he went in, you are “doing me a wrong and society an in- A Journalistic Endeavor justice.” And then he would be The librarian of the Iowa State brought back one day. In pleading Penitentiary sent me a copy of for occupational training and The Presidio, the prison magazine Fort Madison, Iowa. $1.50 yearly, do- prepared and published monthly mestic. ===== PAGE 19 ===== 1957 PHILOSOPHY THROUGH THE BARS 17 therapy in social conduct, Russell not have too great a significance ex- makes the telling point that “men cept that during a lecture to a small who leave here after training in group, he announced he had recently our small radio shop do not return. accepted the post of institutional so- This is not just a coincidence. They ¢iologist in what is regarded as a do not return because they have progressively operated Midwestern found tabl to ea prison, in order to make a study of, ound an acceptable way to earn a 4 ¢ (lassify, each inmate, so as to living, and a new self-respect in , ,yje to help both the inmate and that ability. ... Insecurity cannot gociety, in any way he and his pro- survive in a being who knows he fession could. Always keeping in is equipped to do a job and do it mind, of course, three things: well. . . . Freedom is not the an- No. 1. Society is always right! swer if we are to leave here no As for the other two things he is better than the day we arrived.” always going to keep in mind, I'm afraid I'll never know, because when A Lesson for Our Time I heard what appeared to be an in- Further on in the magazine is telligent man, a college graduate to be found an article which richly With a degree in sociology . . . make repays the limited price of admis- the flat, unqualified statement that sion to the penwork of these men — society is always right—and realized “ ” . that this was the man to whom the Always by Pete Tenner. This job of assisting in the rehabilitation article seems worth quoting at h of fallen men was being entrusted— length. It is a notable piece of py afraid I blew sky high. . . . thinking about a philosophical I questioned him at length about disease of our time which widely his reasons for making such a re- afflicts those of us outside prison markable statement. But, no matter bars: how I tried, I was unable to elicit any ALWAYS departure from his original state- I heard a man make a statement Ment. Society is always right. recently that left me so shaken that I even tried suggesting that per- I had to force myself to stay away haps he meant society always had the from this typewriter long enough to right to set up specific rules, and be sure I had brought my emotions Punishments for the violation there- under control. . . . of, which, although injuring the indi- Who the man is, the one who made vidual, might serve to benefit society the statement, is of no real impor- as a whole. “No,” said the sociologi- tance. But what is important is the cal expert, “Society is right at all fact that he is a graduate of a fine times.” Midwestern college, and holder of a Time ran out and I relinquished degree in sociology. Even that might the floor,amazed and literally stunned ===== PAGE 20 ===== 18 THE FREEMAN February with the realization that in spite of manity that are still being talked of historical fact to the contrary, this in whispers? Just how can any de- man was sincere in his belief that cent thinking human claim that so- society is always right and therefore, ciety was right? ’ if he were to be consistent in his Shall we leave foreign lands for a logic, entirely immune to error! ... bit and skim but lightly over our own In 29, or 33 A. D. (depending on local society? Fine. We'll start with which Bible you read) Roman so- the “backbone” of American society, ciety, through its representative Pon- Massachusetts in the seventeenth tius Pilate, turned Jesus Christ over century. to his soldiers for them to do with Is there anyone reading this who Him as they would, because the chief would care to try to justify society priests and elders of Israel who were and its being right in its witch-hunts the spokesmen for the Jews (Jeru- at Salem? Or the burnings which fol- salem Society) demanded that he do lowed? You won’t without also justi- so (Matthew 27: 17-28). Was so- fying stupidity, superstition, and ciety so right then? maliciousness. . . . Through the centuries, even up until comparatively recent times, all If you'll look back through history Chinese society agreed that the kill- | , . you might agree with me that ing of the surplus of girl babies was society is nothing more nor less than right. Did that make it so? any large group of people, sometimes In or about 1914, Prussian society, good, sometimes bad, sometimes which at that time ruled all Ger- right, sometimes wrong, who follow, many, said, through their chief and ordinarily live by, laws which spokesman, Kaiser Wilhelm II, are written into the books by those “Might is Right.” Was that society persons who were the most eloquent, right? those persons who were most per- In 1923 there was conceived one suasive, and who, by that eloquence of the most vicious systems of gov- and persuasiveness, succeeded in get- ernment in history and through com- ting society to elect or appoint or placency of society Nazism was otherwise install them into office spawned. In 1933 then, when Ger- Whether it be King, President, Gov- man society welcomed Aryan Hitler ernor, Mayor, Congressman, Legisla- not only as their spokesman but as tor, County Supervisor, Judge, or their lawmaker as well, he decreed whatnot. that it was a patriotic duty to These are the men then, not so- slaughter the Jews right and left. ciety, who create the laws governing Who was it then but society, good, society, and society, being responsi- fine, irreproachable society, not local ble for the actions of these persons, outlaws, that went out and commit- must at all times be willing to accept ted offenses against God and hu- the blame for their evil as well as ===== PAGE 21 ===== 1957 PHILOSOPHY THROUGH THE BARS 19 praise for their good. Society is virtue of solitude put to good use therefore just as right, or wrong, no in study and contemplation. Out- more, nor less than those persons standing minds throughout all of who represent them! history seem to have indulged. If No degree from any college has 4}. ig not seek the solitude of a ever carried the guarantee that the mountaintop or the silence of a holder thereof would not have a dis- desert, leastwise they learned how torted view of the subject he was ’ ho ; taught — so — I would like to know tO synthesize those conditions in how any sociologist is going to hope Whatever their environs. Unless to arrive at a decent, honest ap- some of these fruits of solitude can praisal of a man’s character and to be garnered and mixed with the make an honest prognosis of the rush of affairs of material living, man’s case with the preconceived idea persons and the societies they that society is always right. . .. comprise will surely become lost in Don’t forget, the only perfect Law- tp, jjjygion that “society is always maker, the one Man in the history of right.” Must we learn this from the world Who was never wrong, the prisoners like Pete Tenner, who one Man Who gave us ALL good > laws and Who was always right in 2T® availing themselves of the op- His interpretation and judgment of Portunity forced upon them? If so, those laws, was crucified by that let's learn it and be grateful. same society you now say is always right. Even though outside prison walls, one often feels barred in by There you have it. A man be- a society he knows may not always hind prison bars is making valu- be right, as judged by the perspec- able use of his time while confined. tive of Eternal Truth. At such I believe he is serving all of us times, he has something in com- outside in suggesting that we stop mon with a prisoner. He may find deriding the idea that there are a welcome freedom from the any eternal principles. Otherwise strains of life in reading a good we shall find ourselves pursuing, book, and in the use of a pen to at a frantic pace, a futile attempt supplement and assist his think- to form a world while denying the ing. Whether or not the product is existence of any forms within ever published is not, in one sense, which to fit it. too important. It is what the proc- Perhaps those of us not behind ess seems to do for the writer that prison bars, of all ages and walks is important, adding to his peace of life, should try to rediscover the of mind and development. eo eo ===== PAGE 22 ===== TWO Kinds of Inflation I HENRY HAZLITT T IS reassuring that the Presi- prices go up, and finally you get to dent has expressed concern about a point where you simply can’t inflation. Unfortunately his re- keep things in order.” He ended marks reveal the same misunder- by expressing confidence that there standings that have led to the would develop “business and labor world-wide continuance of infla- leadership that is sufficiently wise tion. and farseeing to help solve this "He falsely distinguished between problem and keep it within “two types” of inflation. “One is bounds.” just cheapened money, deficit spending . . . and printing money Too Many Dollars . . that naturally brings rising It is, of course, highly "encour- prices because the money itself is aging that the President recog- cheaper.” This increase in money nizes the need for industry to earn supply is the real cause of infla- enough profits to make possible tion. more capital investment. This con- But the President went on to stantly increases productivity and describe what he thought was an- hence real wages. It is equally en- other type of inflation: “There are couraging to find him urging also the rising prices brought unions to refrain from excessive about by the efforts of all people wage demands. to gain a bigger portion of the re- The truth, however, is that there sults of our great productivity. Fi- is only one real type of inflation nally you get to the point ... and only one direct economic cause. where you cannot attract money, That cause is an increase in the capital investment money, that supply of money and credit. It is will build the factories that give the oversupply and the cheapening . . . 67 million people their jobs, of the monetary unit that raises because lying behind every job in prices. America is an investment of . . . This does not mean that wage $15,000 to $17,000. That money rises brought about by union pres- has got to be accumulated . . . If sure are irrelevant. They are often you raise prices . . . too rapidly in links in the full chain of inflation one area, say the labor area, then causes, though they are neither 20 ===== PAGE 23 ===== 1957 TWO KINDS OF INFLATION 21 necessary nor sufficient in them- up), then the only result of exces- selves to bring inflation. If unions sive wage rates would be unem- raise wage rates excessively, and ployment, and the only cure for the there is no increase in the money unemployment would be to reduce supply to make the payment of these wage rates back to an equi- these higher wages possible, the librium level. result will not be to bring infla- But hardly any present-day gov- tion but simply to bring unem- ernment has the political courage ployment. The chain of causation to take this step. Worse, most gov- is then: Higher wage rates— ernments, like our own, build up higher costs — higher prices— (through their own equivalents of lower sales — lower employment. the Taft-Hartley Act, the Norris- Who's Responsible? La Guardia Act, the Walsh-Healey Net unemployment can for a Act, and the minimum-wage law) long time be averted or postponed, a situation that encourages exces- however, by a sufficient increase in SiVé Wage-rate demands and makes the volume of credit. In this case it next to impossible for employ- the chain of causation is: Higher ers to refuse them. That is why in- wage rates — increased borrowing flation today is world-wide. from banks to meet larger payrolls Yet every government talks as — an increase of bank deposits as if inflation were an epidemic be- a result of this borrowing — conse- yond its own control. It piously quent increase of the money-and- asks labor, business, and consum- credit supply leading to still higher ers to exercise restraint — after it prices — still further demands for has itself removed the penalties wage increases, ete. for lack of restraint. As one can- It is precisely here that the re- did “full employment” zealot con- sponsibility of government for the fessed in The London Economist whole inflationary process becomes more than five years ago: “Infla- clear. If the government had the tion is nine-tenths of any practical courage to stop the increase in the ¢)) employment policy.” eo eo e money-and-credit supply (chiefly by allowing interest rates to g0 Newsweek, December 3, 1956. Such a Problem WHAT CAN YOU DO against the lunatic who is more intelligent than yourself, who gives your arguments a fair hearing, and then simply persists in his lunacy? GEORGE ORWELL, 1984 ===== PAGE 24 ===== The Cost of Depreciating Money By a continuing process of inflation, govern~ ments can confiscate; secretly and unobserved, an important part of the ‘wealth of their citizens. N GERMANY before the first repeated in a number of countries World War, 40 billion marks of in World War II. mortgage loans were outstanding Since World War II, slow-burn- —calculated to represent about one- ing inflation has been the order of sixth of the German national the day, afflicting almost the entire wealth. By 1923, when the mark world. This is due mainly to politi- had depreciated to a point where it cal pressures to sustain full em- took 42 billion of them to equal one ployment at constantly rising wage U.S. cent, these loans were prac- levels. One hears more and more tically worthless. In a word, infla- competent observers projecting tion gave away to debtors the this drift indefinitely into the wealth of creditors. It destroyed future, warning that “we are in a the provident middle classes, wiped long-term cycle of inflation” or out the pool.of loanable funds, and that “we shall experience a ris- erased every sensible reason for ing price level for the rest of our saving — for laying aside any por- lives.” There may be interruptions, tion of income for lending at in- we are told, and the average rate terest. Speculators in commodities, of rise in prices will be modest — land, and foreign currencies of- possibly no more than two or three fered fantastic rates of interest per cent a year. for borrowed funds, but little was Two or three per cent a year, on forthcoming. People, to beat rising the average, has seemed quite prices, spent their money as fast harmless to many political leaders as it came in. They had to, for sur- and economists. It does not seem vival. Thus ‘the paradox that the harmless to savers trying to ac- more money the government cumulate resources for retirement, printed the scarcer it became for education of their children, and would-be borrowers. family emergencies. They have The German experience with ex- been alerted to their perils by not- plosive inflation during and after ing how their past savings have World War 1 is not unique. It was depreciated in real value and by 22 ===== PAGE 25 ===== 1957 THE COST OF DEPRECIATING MONEY 23 the many predictions that the fu- The Point of No Return ture will hold more of the same. They want better returns, and gov- ernments, with greater or less re- luctance, have submitted to their i demands and let interest rates rise, Snows for 16 countries the depre- recognizing that a nation that sys- ciation of money since 1946 as tematically steals away the citi- measured by official cost of living zens’ savings is inviting an uncon- indexes. If the depreciation is con- . trollable holocaust of inflation. verted to an annual rate, com- Progressive inflation has been a world-wide phenomenon, as the following table suggests. The table RATES OF INTEREST AND DEPRECIATION OF MONEY Indexes of Annual Value of Rate of Rates Offered Money* Deprec. on Gov't. Bondst Country 1946 1956% (comp’d.) 1946 1956% Switzerland ................ 100 86 1.5% 3.10% 3.23% Germany ............. 100 72 3.2 n.a. 4.90 India ........................ 100 72 3.2 2.88 3.98 United States ............ 100 71 3.4 2.19 3.27 Venezuela ......... 100 70 3.5 n.a. 3.63 Netherlands ................ 100 67 4.0 2.99 4.10 Canada... 100 65 4.2 2.61 3.88 South Africa ........ 100 65 4.2 2.89 4.75 Sweden ..............ccc.oi. 100 65 4.3 3.01 3.74 United Kingdom .......... 1008 65 4.6 2.76% 4.86 New Zealand ............... 100 59 5.2 3.01 4.73 France ....................... 1007 58 6.5 4.261 5.48 Mexico .....oocooooiiiiiiil, 100 47 74 10.44 10.12 Australia... 100 46 7.5 3.24 5.04 Brazil .................... 100 26 12.7 n.a. 12.00 Chile ......................... 100 5 25.3 9.22 13.82 Note: depreciation computed from unrounded data. n.a. not available. *measured by rise in official cost of living or consumers’ price index. latest month available. texcept for mortgage bond yield in Germany, commercial paper in Venezuela and Mexico, and commercial bank loan rate in Brazil and Chile. §1947. 11948. ===== PAGE 26 ===== 24 THE FREEMAN February pounded, as the third column of enough in nominal value to keep the table shows, the saver has a up with the average rate of depre- measure of his point of no return ciation of the dollar only. if the in- — the annual rate of interest which terest were free of income tax. A he would have had to receive, and person in the 20 per cent income reinvest at compound interest, to tax bracket would have required a have the same amount of purchas- taxable interest rate of 4.3 per ing power now as he had in 1946. cent; in a 40 per cent bracket 5.7 Rates of interest available in per cent; in an 80 per cent bracket 1946 were artificially depressed by 17 per cent. And all this simply to “cheap money” policies in most hold even with the depreciation of countries, and did not give the the dollar and avoid actual loss. saver compensation for the depre- ciation in store for him. Switzer- A Sorry Chapter land, which offered 3.1 per cent on This has been a sorry chapter government bonds, was an excep- for the lender of money at inter- tion, and the fact that the conserv- est. Today’s higher rates help, but ative investor in Switzerland has they will still leave the saver fall- on the whole been better treated ing behind in the race unless the than elsewhere has something to price record of the next ten years do with the fact that interest rates is better than it has been over the in Switzerland today are the low: past ten. Of this there is promise, est in the world. for the rise in interest rates itself In most countries, the saver of is a reflection of a greater sense of ten years ago has suffered serious discretion by government central losses in purchasing power; rather banks and treasuries in creating more than the table would indicate money. Politicians who want lower since interest income is often sub- interest rates must get them the ject to taxation that waters down hard way — by curtailing govern- the rate and retards the working ment expenditures and income tax of compound interest. In the rates, stopping the upward price United States, for example, as- drift, and letting the loan capital sume a capital sum invested ten of the people grow. oe eo years ago at 3.4 per cent, with all ———M— interest reinvested at the same Nom the ee, Yor Dos rate. This sum would have grown ember 1956. ===== PAGE 27 ===== NA NR N NR Taian NF NE NR AM NN N X NS N Nat ANY NR AS NAN N NA N ANN Nea C. D. KEMP EOPLE often speak of “free enterprise” as a system with which they contrast other systems such as ‘“so- cialism” or “communism.” Free enterprise is not really a system at all. Unlike so- cialism or communism, no one ever sat down and thought it up and said: “Here is a way of running production and dis- tribution.” In its main essentials free enterprise just grew. Nobody invented it. And it grew as it did out of experience and be- cause it reflected deep-rooted human motives and objectives. In other words it has its roots in human nature. It is not a cut-and-dried way of doing things. It is changing all the time. But it does rest on two primary beliefs held by most people in the western world: 1) that people should be free to use their talents and their enterprise to improve the lot of themselves and their families. 2) that they are entitled to be rewarded in proportion to the value of the work they do and the enterprise they display. When governments say things like: “You must not produce that; you must produce this.” “We will compel you to save more and to spend less.” “We will tax and take away the great part of any extra earnings you may make as a result of your extra work, ability, or enterprise.” Then free enterprise is in danger. From the August-September 1956 issue of Facts, a publication of the Institute of Public Affairs, Victoria, Australia, of which Mr. Kemp is Director. EYE XE 0 25 ===== PAGE 28 ===== the word educate derives from the Latin e and ducere, meaning liter- ally to lead out or away from. The educational process, then, is not one of cramming the memory with dates, facts, figures, and literary allusions. The secret of getting educated is to use all such things as a means of leading one out from one’s self. The practical measure NTELLIGENCE, says Albert of an education is not how many Edward Wiggam, “appears to things a man knows, but what use be the thing that enables a man to he makes of the knowledge he has get along without an education. acquired. Education,” he adds, “appears to Another term that often mis- be the thing that enables a man to leads — or that is often used mis- get along without the use of his leadingly —is “scholarship.” A intelligence.” scholar, of course, is “a learned Like many clever epigrams, that person; one versed in any branch, one is only partly true. Intelligence or in many branches, of knowl- certainly helps a man to get along edge; a person of thorough literary without an education; but to be or scientific attainment; a savant.” educated does not necessarily mean But even in Webster’s, which I that he forsakes the use of his in- have just quoted, nothing is said telligence — imposing evidence to about intelligence being a neces- the contrary notwithstanding. Pos- sary part of scholarship. sibly Wiggam had been so unfor- tunate as to come into contact with Scholarly Anomalies a disproportionate number of edu- Perhaps, on the side of realism, cated fools, whom he did not suffer that is just as well; for a discon- gladly! certing number of scholars seem . Considerable confusion exists to honor intelligence more in the about the term “education.” What breach than the observance. A man does it mean to be educated? It is may be held in almost breathless elementary and perhaps trite, but awe because of his scholarship, yet still educational, to remember that perform acts or utter sentiments Mr. Bradford is a well-known writer and business organization official. 26 ===== PAGE 29 ===== 1957 SCHOLARSHIP AND INTELLIGENCE 27 which, to my meager intelligence, definition. But were they intelli- appear nonsensical. He may be pro- gent? Or at any rate, did they act foundly versed in the mathematics intelligently? of physical science, yet still allow Arrayed against them, it should his name to be associated with be added in fairness, were many movements so clearly inimical to equally reputable scholars. It is freedom that an intelligent sopho- certainly not the purpose of these more would see through their paragraphs to indict scholarship sham. A woman may be educated for all the world’s follies, but to to the level of supposed scholar- make the point that scholarship as ship; she may in fact be in demand such is not always and necessarily as a lecturer or as a contributor the hallmark of wisdom, or even of to magazines and newspapers, and intelligence. vet be the direct or oblique sup- porter of ideas and activities The Common Sense of Freedom whose phony benevolence would From all of the above it could be at once be seen through by that argued, I suppose, by those who same discerning undergraduate. are addicted to that brand of forensics, that my real definition of an unintelligent person would Much of the dangerous nonsense be one who does not agree with me. of the past twenty-five years has Such an attitude, of course, would come from the realm of scholar- be the depth of unintelligence on ship. It was an amiable professor— my part. There are other criteria. a real one — who peddled the idea For instance, surely it is now of a managed currency to political agreed by all people of intelligence leaders who were themselves well that freedom cannot be preserved educated. It was a scholarly play- by constantly extending the con- right who helped nurse to maturity trols exercised by government over the clumsy monster of Fabian individual citizens. Yet the de- socialism which has now all but mands for more and more govern- extinguished the flame of Britain. ment are nearly always supported It was an academically educated by an imposing array of scholars. politician who shrugged off the Surely it is now generally recog- accumulating billions of our public nized by people of ordinary “horse debt as unimportant because “we sense” that a nation’s currency owe it to ourselves.” Examples cannot be managed without a cor- could be multiplied. Such people responding management of the and many like them are scholars by lives of its people. Yet there is Professors of Socialism ===== PAGE 30 ===== 28 THE FREEMAN “February much scholarship behind the idea the term is currently used, it may of juggling the value of our money. be no more than what Webster's Scholarship that was held in high said of it — learning; proficiency repute supported the proposal that in one or more branches of knowl- was seriously advanced a few years edge. That it should be accom- ago to legislate that government panied always by intelligence is officials should raise or.lower taxes, highly desirable and generally not in response to the financial taken for granted; but alas, it needs of the government, but for ain’t necessarily so! Oliver the purpose of providing either Wendell Holmes, the elder, com- “easy” or ‘‘tight” money, in ac- plained many years ago that “the cordance with the fluctuations of world’s great men have not com- the economy — all without seeming monly been great scholars, nor its to reflect for a moment upon the great scholars great men.” And superhuman wisdom that would be long before Holmes became the required in the officials who were Autocrat of the Breakfast Table, to do the juggling! Again, it re- forthright old William Penn was quires no staggering intelligence, grumbling because there were “so surely, to understand that a na- many senseless scholars in the tional debt which is not reduced world.” will lead, as it has already begun to do, to a devalued currency, Wisdom to Understand which in turn will mean serious So what? Is this screed a plea loss if not bankruptcy for those for ignorance, or a mere invective who in good faith have worked and against scholarship? Heaven for- saved. Yet there is weighty schol- bid! The night of ignorance is arship behind the theory of a per- always around us, even as the manently unbalanced budget. One eternal darkness of space encom- of the most scholarly men of my passes planets that would be sunk acquaintance took me roundly to in midnight obscurity but for the task a few years ago in a spirited brave light of their mothering correspondence, because I had been suns. Life, health, happiness, prog- insisting that a nation, the same ress, every step upward and for- as an individual, could not con- ward, is a struggle for more light: tinue to spend more than it takes for knowledge gleaned from man’s in without eventually going bank- accumulated and recorded experi- rupt. Was he intelligent —or am ence. Scholarship is a part of I stupid? = = man’s evolution. What, then, is scholarship? As But the true end of all learning, ===== PAGE 31 ===== » 1957 SCHOLARSHIP AND INTELLIGENCE 29 of all scholarship, is not merely fear of the Lord, is the beginning to know, but to understand. The of wisdom. proper aim of every student, whether youth or graybeard, is not This little homily, I realize full just to be learned, but to be wise. well, is subject to a more or less And wisdom does not come from standard form of attack, like all scholarship as such, but from the suggestions that are in opposition application of intelligence to the to a current trend — namely: knowledge obtained, be it much or - What’s your alternative? Don’t little, utilitarian or recondite. One just be negative! For heaven's of the wisest men I ever knew was sake, be for something! All right: indifferently educated academi- This piece is for something. Here cally; but by the experiences of life is its positive program — in two and the exercise of native intelli- points: gence he had truly been “led out” Point One: All scholars should from himself. Perhaps that, after make an effort to be intelligent. all, is the secret of what is needed Point Two: All others are ~ the escape from the trammeling warned not to be hypnotized by curtains of Self which, like the the mere label of scholarship.e e e | IDEAS @ LOBIRLY The Liberal Arts AS PRESIDENT A. WHITNEY GRISWOLD of Yale defines the phrase, “the liberal arts” means the arts appropriate to a free man. These arts in ancient times were seven: grammar, rhetoric, logic, music, arithmetic, geometry, and astronomy. Their purpose was not to fill minds with factual knowledge. Their purpose was to train the mind. - “This is the purpose of the liberal arts,” says Dr. Griswold. “It "is not to turn out mechanics and businessmen for the workaday trades that we all follow when we graduate from college and start to earn a living. It is to season the timber before it is built into the ship; to prepare the apprentice before he becomes ap- prenticed; to give the engineer a humane conception of the society that he is supposed to be serving with his technological devices and practices; to give the lawyer historical and philo- sophical breadth; to give all of these enlightenment, taste, virtue, and imagination.” THOMAS DREIER, in The Vagabond, November 1956 ===== PAGE 32 ===== THE USE OF BOOKS EDMUND A. OPITZ OOKS are instruments of cul- ger for distractions and sensations ture and indispensable aids to in book form puts the catering pub- personal cultivation; but reading lisher’s head in a noose; his enter- may also be a substitute for think- prise, to the extent it serves this ing. It depends on what is read. public, ceases to be literary and And in our time things have con- becomes merely commercial. When spired to place obstacles in the this happens, the markets are path of the person who has the flooded by books which have no ex- capacity to use books cuse for being except as instruments of his that a vast public will own upgrading. buy them. In an en- In such a time and vironment of this place as eighteenth sort the individual century England, for ==- who has an innate example; literature gift for dealing with was produced by a ideas is in danger of relatively small num- having this divine ber of writers for the spark smothered by delectation of each the avalanche of other and of a not much greater trash disgorging off the presses. number of discriminating readers. Man is poorly equipped with The larger public was illiterate. sensibilities at birth. Such powers Thus the canons which then guided as he may develop in the course of the writing, publishing, and read- growing up are evoked by his en- ing of a book were, for the most vironment from latent and rudi- part, literary canons. But now, mentary capacities possessed as an however, things are different. In infant, a child, or an adolescent. this age of the many-too-many, Men differ in their native talent when everybody can read and for handling ideas, but even the nearly anybody can write, there is most gifted will fall far short of a deep and broad public. demand his potential unless he somehow for books which have no literary gets into an intellectually stimu- pretensions at all. The public hun- lating environment. Such an en- The Reverend Mr. Opitz is a member of the staff of the Foundation for Economic Education. 30 ===== PAGE 33 ===== 1957 THE USE vironment is inconceivable without books —the right books. But there’s the rub! How does one encounter the right books when each one has to be retrieved by wading through a sea of trash to get at it? Know the Literature The men of Dr. Samuel John- son’s circle could discourse with facility on the large questions of religion, art, literature, music, eco- nomics, and politics. It is incon- ceivable that a monumental work in any of these fields, or in a field that impinges on any of these, should be unknown to any member of the circle. Today, the reverse appears to hold true. Men make their reputations by the resolution with which they exclude any refer- ence to relevant but minority opin- ion. And this is especially true in the fields of economic and political theory. Here, for example, is a theolo- gian with one of the most pene- trating minds in his field in our time. He was already well-known by the mid-1930’s and a full pro- fessor in a graduate school of divinity. In 1935 he wrote a widely read book on ethics, constructing his theory within a social frame- work supplied by Marxian eco- nomic and political theory. In 1956 he is forced to say, “I was only dimly feeling my way in this book toward a realistic and valid Chris- OF BOOKS : 31 tian ethic. I disavowed some of my ideas and amended others in later works, which roughly represent my present position. I am not, therefore, able to defend, or inter- ested in defending, any position 1 took in An Interpretation of Chris- tian Ethics.” It takes a broad-gauged man to acknowledge his own error pub- licly, and all credit to a thinker for this. But the point is that in 1935, a man possessed of his intellectual gifts and standing so high in the academic world should disregard the abundant literature which, even by the thirties, had divested social- ism of all claim to intellectual merit. By 1935, Ludwig von Mises’ monumental Socialism had been available in German for thirteen years, and there were numerous books in English. When it is so hard to write a book for which one recants two decades later, and so easy not to write a book, what on earth persuades a man to indulge in such an effort? Political passion, probably. The intellectual creed of our time is that while speculative thought, or knowledge for its own sake, might have been all right for the quiet times in history, the thinker in these revolutionary times must seek to guide the forces of revolu- tion. In embracing this position the intellectual betrays himself, and abandons his indispensable ===== PAGE 34 ===== 32 THE FREEMAN : February leavening role in society. The aver- Libertarians, generally speak- age man is thus left without proper ing, have given themselves a pretty guidance and must rub along by fair grounding in basic economics. himself as best he can. Yet, if he Their trouble is a tendency to scrabbles around hard enough, he double back on themselves, to get can uncover contemporary works lost in self-contemplation and read of an intellectual stature to do nothing outside the narrow con- credit to any age. fines of their own orthodoxy. This is understandable, but not excus- able. It is to follow the line of least The characteristic intellectual of resistance. No man has thoroughly our time is above taking any inter- explored even his own orthodoxy est in economics. He is, apparently, who has not examined every facet as prudish in his grasp of how of it in the light of some heresy. economic goods are produced as To shield an orthodoxy behind a was the worst Victorian prig on sterile moat is not to protect it; it the subject of how babies are pro- is only to guarantee that it will die duced. Nevertheless, even our.in- pure. A body of thought must grow auspicious age has witnessed the or perish, and to grow it must be appearance of works on economics fertilized by the deliberate prac- that take their place with the tice of exposing it to ideas which classics in the field. Mises’ massive raise the blood pressure. What Human Action is one of these; could be healthier, in the long run, Carl Snyder’s Capitalism the Cre- than for the libertarian who feels ator is another. If so many of the he has his case well in hand to intellectuals of our time were not expose it for a few months to the as immune as they appear to be to mordant irony of Joseph Schum- the basic facts of economics, the peter’s Capitalism, Socialism and political insanities that bedevil us Democracy? This might be one would shrink to man size. The bulk way to separate the men from the of our present political trouble boys; there are others. stems from sheer, willful ignorance of the rules governing the produc- A Broader Perspective tion, distribution, and consumption Those who feel that all the irri- of material goods. In no field is tation they want comes to them in ignorance a self-curing disease; in the course of a normal day might economics, perhaps, least of all. not like the idea of deliberately There is no cure but the self-im- rubbing themselves the wrong way. posed discipline of hard study. Indeed, the wiser course may be to Neglect of Economics ===== PAGE 35 ===== 1957 THE USE OF BOOKS 33 start working with the general eign language, so far as the un- premises one already uses and then initiated is concerned. His first im- deliberately push them out so as pulse is to push them aside with an to lengthen the perimeter of his impatient gesture. A morsel which frame of reference. Government is delights the gourmet’s educated doing what it shouldn’t do, the palate may repel the man who libertarian contends. Very well, knows only mashed potatoes and but why this misplaced faith in vanilla ice cream. For example, political action at this particular open up C. D. Broad’s The Mind juncture in human affairs? There and Its Place in Nature. This is a is no better constructive analysis book, Aldous Huxley has said, of the present predicament than “which for subtlety and exhaus- Wilhelm Roepke’s The Social Crisis tiveness of analysis and limpid of Our Time. An even broader per- clarity of exposition takes rank spective of the problem of man among the masterpieces of modern upon the earth is to be gained from philosophical literature.” So speaks two books by Gerald Heard, one the connoisseur. But one needs a old and one new: The Third Moral- fairly comprehensive acquaintance ity and The Human Venture. These with the landscape and terminol- books will stretch the mind out to- ogy of philosophy before tackling ward its potential horizons. such a book as this. For the man who wants to walk in on the ground floor and get his Having gone thus far, one can orientation in philosophy, there is no longer postpone a real facing up no book to equal C. E. M. Joad’s to the problems which constitute Guide to Philosophy. Although the traditional issues of philoso- Joad did not achieve top rank, even phy, such as, What is the universe among modern philosophers, he is like? What is the place of man in far and away the most lucid of the it? How do we obtain knowledge? tribe. Nevertheless, even this book What is good? These are some of will keep the mind on tiptoes as it the most complex questions a man provides a guided tour through the can ask. Their very abstractness major problems and systems of is forbidding to some minds whose philosophy. With this in hand, one bent lies in a different direction. may go on to Joad’s Matter, Life Nevertheless, these questions must and Value, a long and comprehen- be wrestled with. But the books sive exposition of Joad’s own sys- which wrestle most successfully tem which endeavors not to slight might as well be written in a for- any facet of this universe —either Crucial Questions ===== PAGE 36 ===== 34 THE FREEMAN February the world of material nature, the when even the master himself took domain of life and mind, or the a score of volumes without ex- realm of value. hausting his subject. But even if Ethical questions occupy a prom- the conclusions of a philosopher inent place in libertarian discus- could be summarized in a few sen- sions of economics and politics, but tences, which is dubious, the more the implications of the ethical important thing is the processes premises are seldom explored. They of thought by which the man are thoroughly investigated from reached his conclusions. It is only every angle in a modern classic, by long exposure to these processes The Faith of a Moralist by A. E. that the mind of the average man Taylor of Edinburgh. This huge is enlivened, his habitual outlook work will amply repay the hard and attitudes reoriented, his work it requires. It is a wise book, thought disciplined, his stance cor- ~ beautifully written, completely free rected. These are processes of of technical jargon. Taylor, inci- growth; there is no substitute for dentally, is one of the few moral- them, and growth takes time. ists who has acquainted himself When a man undertakes a well-. with the subjective evaluation considered program of study, he theory which plays so important a grows in knowledge and under- role in free market economics, and standing. But in addition, the pro- who understands that this theory gram pays him an extra dividend — does not necessarily commit the his life takes on new meanings. He believer to a denial of the proposi- can say, with Matthew Arnold, tion that values have objective “One must, I think, be struck more reality. and more the longer one lives, to find how much in our present soci- ety a man’s life of each day de- We live in an age of digests, pends for its solidity and value popularizations, and simplified ver- upon whether he reads during that sions. There are people who want day, and far more still on what Plato explained in a paragraph, he reads during it.” ooo Processes of Growth Wouldn't want you to miss THE FREEDOM SCHOOL— enrollment applications now being accepted. Write: THE FREEDOM SCHOOL, BOX 165, COLORADO SPRINGS, COLORADO ===== PAGE 37 ===== EDITOR'S NOTE: In a transmittal note, the Reverend Mr. Mahaffy, who has served since 1945 as a missionary of the Orthodox Presbyterian Church in Eritrea, East Africa, explains that his views about social security have grown out of a long correspondence with a group of ministers. “Most of us have been trained in theology,” he says, “but have given very little thought to the relationship of God's law to the Welfare State. It is my conviction that only as ministers realize that these problems are basically questions of Christian morals, will they give enthusiastic leadership to help guard our God-given freedoms. I have written this article in the form of an Open Letter to Fellow Clergymen in the hope that it will contribute to that end.” A Clergyman’s Security FRANCIS E. MAHAFFY standing, social security is bound to be a poor invest- ment. Other forms of in- social security scheme will vestment bring far better have to decide whether or : returns from the simple not to enter it. The decision once fact that the money is being used made is irrevocable. Most of our creatively and realizes a profit. The parishioners have no choice. They taxes paid to the government as are forced by law to enter the plan. social security taxes, on the other Ministers who have not yet entered hand, are currently spent and not the plan have until April to decide invested profitably. Economists, whether or not they will partici- however, can demonstrate the fi- pate. Clergymen near retirement nancial unsoundness of social se- age will probably gain financially curity as an investment far better by entering. Others with large than I can.! families feel that social security To clergymen whose field is the- provides good insurance for their ology and not economics, the ques- wives and children — an insurance tion arises as to whether there are that they may not be able to afford any other criteria by which we otherwise on their small salaries. can decide whether or not to enter It seems evident that from the ——— standpoint of sound economics, ap- ‘See Paul L. Poirot's booklet, Social pearances of getting something for Security. Irvington-on-Hudson, N. Y,, . . Foundation for Economic Education, nothing to the contrary notwith- Inc. Single copy on request. Y next April those of us who have not al- ready entered the federal 35 ===== PAGE 38 ===== 36 , THE FREEMAN February this plan. Is the matter in any way lence made for a greater equality related to morals? Is it related in in our status. But even so, did that any way to the laws of God? If justify their act? All of us would the issues involved are moral ones, agree that it did not. But is there then we, as clergymen, ought to be any difference from the point of able not only to decide for our- view of morality, in the govern- selves but also to give leadership ment, under the cloak of legisla- to others who look to us for guid- tion, forcing its citizens to pay so- ance in the realm of morals. cial security taxes in order to help In the brief compass of this provide for the aged? Is this act letter I can touch upon only a few of coercion on the part of the gov- of the ways in which the social ernment any less a violation of the security scheme violates the moral command of God than the above law of God. The moral law of God act of the bandits? is succinctly summarized in the The government through its so- Ten Commandments. The Chris- cial security legislation uses force tian belief is that disobedience to as a means to its ends. Can coer- these commands of God constitutes cion on the part of the govern- sin. ment except for the purpose of re- . straining evil ever be countenanced “Thou Shalt Not Kill" by the Christian citizen as in ac- One of the Commandments in cord with God’s law? Compulsory God’s moral law states, “Thou taxation by the government for shalt not kill.” Are we not agreed any other reason than to obtain that this command forbids not only funds for the proper function of overt acts of murder but all coer- government cannot be sanctioned cion and violence except for the as in accord with the moral law. restraint of evil? I once had the The government also through unhappy experience of being this legislation uses compulsion to robbed by a group of armed retire people at the age of sixty- bandits. When argument failed five. It would be hard for the most and the gun of one of the bandits enthusiastic advocate of the Wel- was waved at my head amidst fare State to justify such compul- threats to myself and family, I met sion as in any way in accord with their demands and parted with the the moral law of God. The pro- little money I had on hand. These hibitions of the moral law as it particular bandits were probably relates to man’s relationship with men of less material possessions man gives the individual freedom Rk than myself and their act of vio- except to harm or do evil to others. ===== PAGE 39 ===== 1957 A CLERGYMAN'’S SECURITY 37 Coercion to retire at a certain age lic funds than the individual does and compulsion to support so- with his own money. called “charity” schemes of gov- The government under the social ernment are quite opposed to the security legislation assumes finan- command that forbids the use of cial obligations for those retired force except to restrain evil. over sixty-five years of age. The funds collected for this purpose “Thou Shalt Not Steal” fall far short of the amount the Another one of God’s commands government is obligated to pay. in the moral law reads, “Thou The government, however, can and shalt not steal.” Stealing is in vio- does meet its obligations by its lation of the moral law whether monetary policies that inflate the done by a bandit with a gun or by currency. So while actually paying the State under the cloak of leg- the number of dollars promised, islation. Stealing is no less theft the real value of the dollars is so if the money is used for benevolent reduced that the recipient receives purposes than if it is used for evil far less than he had reason to ex- purposes. The social security tax pect from the promise of the gov- is a way of taking money from one ernment. Can this in any way be taxpayer in order to give it to an- justified on the basis of God’s other person or group. It is the command, “Thou shalt not steal”? robbing of Peter to pay Paul. Our Lord gives us a fuller ap- ‘Honor Thy Parents” plication of this Commandment in Another one of God’s commands His parable of the talents (Mat- in the moral law reads, “Honor thy thew 25:14-30). Here Jesus father and thy mother that thy teaches thrift and a wise use of days may be long upon the land money. It is a sin for one to waste, which the Lord thy God giveth destroy, or not to make good use of thee.” One can hardly properly his material possessions. The law fulfill this command by turning of God, however, is just as manda- over the care of his aged parents tory for the State as for the in- to the State. There is none of the dividual. The taxes collected for warmth of filial love and devotion social security are being currently in government “charity.” Charity spent by the government rather according to God’s Word is always than invested to bring a profitable voluntary. Children are to care for return. This is certainly poor their parents as an act of love and stewardship. The State has no gratitude to them. The New Testa- more right to be careless with pub- ment teaches that the Church ===== PAGE 40 ===== 38 THE FREEMAN February through its deacons is to care for of material need. There is no such those otherwise neglected. No- thing as charity by force. where in the Bible is charity : looked upon as a work of the State. To turn this work over to the State The whole question of social se- is to deny to individuals and the curity is in its very roots a moral Church their God-given responsi- one. The choice which faces us as bility and privilege to care for the clergymen ought not to be a diffi- needy. cult one to make. We are leaders A notion prevalent today even in spiritual matters. Christian among clergymen is that since in- morality relates to every phase of dividuals are not as charitable as man’s life and also to the State. they should be, the State must by Do we not forfeit our right to taxation and schemes of ‘‘charity’” speak on matters of morals if, make up for this lack. History re- when given the freedom of choice futes the notion that “charity” of in a matter that involves obedi- the State ever leads to anything ence to the laws of God, we choose but injustice and tyranny. Give to disobey God for some hoped-for the State the power to administer material reward or for some other “charity” by force and you have reason? Let our voices be heard taken the heart out of charity. clearly against all sin, be it the sin Even worse than that, you are say- of individuals directly or of indi- ing that the State is not subject to viduals through their elected rep- the law of God as individuals are. resentatives in government. As for Charity is certainly a Christian me, I feel that I must set an ex- obligation. However, the obliga- ample of respect for the law of tion that men have to their elders God by choosing to stay out of and others is one of love, respect, this government scheme that is op- and voluntary assistance in times posed to God's law. oo The Morality of Social Security | 15600 ©w aopopuy | Security SECURITY! The keenest desire of those alive today! They ask for it from society and its plans. But the self-styled realists of this age have proved themselves incapable of giving it because they wish to put themselves in place of the Creator and make them- selves arbiters of the plan of creation. POPE PIUS XII, Christmas message, 1956 ===== PAGE 41 ===== IF WE (Create A MONSTER E. W. DYKES When we help to create a mon- ster, we should not be surprised when the monster tries to gobble us up. Unfortunately, regardless of the outcome of the issue in Cali- fornia, the monster will eventually get us. His appetite is insatiable. Our only out is to destroy the RCHITECTS have had other oppor- monster. tunities to forestall such hap- Now, lest I be misunderstood, penings but have muffed them. I re- there will always be some govern- call not too long ago an urgent ment requiring some government request for each of us to ask our building. But a government congressmen to restore or add limited in its functions to police more funds to federal aid to hospi- action and little more would have tals. One of the American Institute precious little building to do — cer- of Architects conventions sup- tainly not enough to worry the pro- ported public housing. Many archi- fession. tectural publications, including In the light of recent develop- our A. I. A. Monthly Memo, while ments, one can hardly assert that they have not openly urged appro- the trend indicates any such re- priations for this or that federal trenchment by the bureaucracy. or state building program, have And, of course, there will be none appeared to be very distressed so long as the citizens demand the when the funds were not made things which create the monster. available. In some cases all sorts In this, architects must play their of gyrations have had to be per- part like all citizens. We must formed to get a reasonable con- learn that these things are all tract from government on build- cut from the same cloth. If we ing programs which it undertakes. urge federal or state aid to hous- To sum up, the general feeling has ing, hospitals, and schools we can been, “We don’t care who builds expect, in the long run, that gov- it or where the money comes from, ernment officials will take over just so they use private architects architectural planning as well as on terms suitable to us.” This is these other fields we urge them to shortsightedness. usurp. eo 0 The California Council of Architects recently called for help in their bat- tle against state architectural bu- reaus. Mr. Dykes, an architect from Canton, Ohio, responded to the re- quest as follows: 39 ===== PAGE 42 ===== difficulty.” But things seemed to go from bad to worse because, try as he would, Willie “just couldn’t seem to get the hang of this accounting stuff.” Soon he was in : bankruptcy again, which : might have spelled the FOR UNCLE WILLIE endof Willie's enterprise and shop- keeping career. But a wealthy rela- HuGcH P. KING tive died and the legacy solved the problem for two years, during NCLE WILLIE passed on the which Willie carried on the busi- other day — grand old guy. In ness in his usual grand style. his youth, he quickly worked up to The day came when he couldn’t top machinist in the railroad shops borrow enough to get out of the where he earned and saved quite a hole. When the proceedings were sum. He retired at 55 to go into over, poor Uncle Willie hadn’t a the hardware business. “Always dime to his name. wanted a business of my own,” he But Willie was still a master used to say. machinist. He could do anything Willie was one of the best-liked with metal. The feats he per- businessmen in town — ‘‘always formed time and again amazed good for a touch” for any worth- even the topmost professionals. while cause. He participated in al- “It can’t be fixed” was like waving most every fund-raising drive that a red flag before Uncle Willie. came along; he was a “pillar of the He’d take up that challenge and community.” nearly always prove it wrong. Unfortunately, however, Willie When finally convinced that he never mastered the intricacies of couldn’t make a go of the hardware accounting, bookkeeping, and pur- business or any other because of chasing. Big bargain sales were his inability at figures, he went his specialty. And his prices were back to his old trade. fantastically low. Before long, Emory Johnson hired him for Willie was bankrupt. his machine shop. He'd always His many good friends promptly liked Willie — same as the rest of bailed him out of this “temporary us. But he couldn’t have expected Mr. King is an economist with the Chamber of Commerce of the United States. 40 ===== PAGE 43 ===== 1957 AID FOR UNCLE WILLIE 41 much to come of it, for Willie was think all those well-meaning people nearly 60. Within a month or two, who helped me get started again however, Johnson landed a big would have done me a big favor if contract, and Willie was put in they hadn’t. Know what I'mean?” charge of all machine shop opera- I did. And I got to thinking that tions. Shortly, he was earning maybe the same thing is true of enough to sport the fanciest car in our foreign aid and many of our town. domestic ‘‘welfare” programs as Every once in awhile, I'd drop in was true with Uncle Willie. Maybe for a chat with Uncle Willie. we're just the well-meaning peo- “You know,” he said, “all my life ple who are keeping some totter- I wanted a business of my own, but ing governments in power, or when I actually got into it, it just keeping some personal failures didn’t work out the way I thought from making necessary adjust- it would. There were just so many ments. Maybe everyone would be a things I'd never considered. Now lot better off if we let things take I wouldn’t want this to get around their natural course. Maybe one of — lots of mighty fine folks would the big problems is our misguided ~ feel hurt — but you know, when I generosity. Know what I mean? went bankrupt that first time, I oo 0 | ovens @60 LIBEETY | A Personal Responsibility THE PROPONENTS of social control by the state collide as directly with the teachings of Christ as would two trains running toward each other upon the same track. Jesus was so uncompromising in his insistence that responsibility. be placed upon the individual for both his personal life and for his attitude toward others that Jesus never suggested an institution of any kind that could take the place of such individual responsibility. Nor did He ever mention an institution or a power to which an individual could transfer such responsibility, either by acquiescence, force or plunder. Nevertheless, this fatal temptation — the temptation to believe that functions which are spiritual can be transferred to the secular state because it possesses the necessary force and power to “get things done’ — continues to confront both religious and social effort. RUSSELL J. CLINCHY, Charity: Biblical and Political ===== PAGE 44 ===== ABUSE OF THE TAXING POWER The office seeker tends to encourage voters to make demands which will enhance his power. H. E. SPITSBERGEN ISASTER always overtakes thority to spend tax money to a government engaged in busi- person who is covered with so ness adventures or in taxation many privileges, advantages, and plans to eradicate economic hard- immunities violates all the im- ships. portant moral and legal rules on That is so because of the rela- which society depends. Society can- tionship of the government offi- not survive when such rules are cial to the tax money. He repre- disregarded. sents sovereignty and therefore is The government official is well not financially responsible for his aware of the rules. He enforces mistakes. The King can do no them most vigorously against wrong. He obtains the tax money bankers, insurance companies, by compulsion. He is in a strategic trust companies, corporations, position to spend such money for brokers, and guardians. In his his own political, financial, and “war” to prevent fraud by private social advantage. concerns he often imposes restric- By abuse of majority rule he tions on them which make it im- can dissipate the funds of the effi- possible to use the funds to the cient, thrifty, and honest. He can owner’s advantage. block investigation under cover of In tax disputes he is most un- “public necessity” and ‘military fair. He seizes the tax money be- secrecy.” He cannot be sued with- fore he comes to the court-—a out his consent and, when sued, court presided may avoid judgment by declaring over by a that the court is without jurisdic- judge paid tion, on grounds of public policy. and appointed There is no way to make him fi- by the govern- nancially responsible. ment and, Obviously, to grant wide au- therefore, in an awkward position Mr. Spitsbergen, keen student of constitutional theory and practice, is the author of “Liberals” and the Constitution. 42 ===== PAGE 45 ===== 1957 OFFICIAL ABUSE OF THE TAXING POWER 43 to resist its policies. A taxpayer’s Not Unfair Criticism chance for recovery is therefore at What has been said is not unfair the minimum. criticism of integrity or intelli- The money in the hands of a gence. It recognizes the weakness government official constitutes a of human beings, implied in every most sacred trust. Nevertheless, lock, ring, contract, charter, and without the consent of the tax- constitution, as well as in the prac- payer, it is invested in dubious un- tice of honest men binding them- dertakings without regard to the selves with contracts, and of usual rules of what is moral or judges refusing to sit on cases in legal. Such a concept of a trust which they have a personal in- relationship is not one of integrity, terest. nor is it sound business. Unforeseeable consequences make it impracticable to hold a government official financially re- The government official is in a sponsible. He could not pay for the strategic position. Undue influ- damage caused by a court decision ence, difficult to uncover, arises uprooting long-established cus- from his authority to grant and toms, or for ill-advised legislation, deny. He does not have to ask, or a misdirected war. Moreover, promise, or even suggest favors. he would be afraid to act under Favors will be pressed upon him such circumstances. Generally, over his protest. Moreover, his therefore, even though the action self-interest will make him astute be the high-water mark of blunder, in representing undue influence as false pride, or deceit, financial lia- heroic action to save the nation, or bility does not arise in his case. even the world. His immunity from liability is, of He can readily reap benefits course, the basis for restricting his from wasteful programs. Office, authority to the limited areas spec- security, and prestige may be ified in the Constitution. gained by giving friends financial Power and responsibility must . help. They, in turn, will make not be separated, and the one fi- themselves believe that what they nancially responsible must dictate demand is absolutely necessary to policy. That is the basis for the promote public welfare. Human Constitution’s mandate to limit the beings do not withstand such taxing power, in order that tax temptation. It breaks the strongest money could be utilized only for character, even in the area of re- the usual functions of government. ligion. The disregarded mandate proves Undue Influence ===== PAGE 46 ===== 44 THE FREEMAN February that the forefathers underesti- follows such a course to collapse mated the craftiness of the human and revolution. mind in search of power. Limitations on Majority Rule Ballot Not a Check on Corruption The government bases the tax Under the universal ballot the policy for its welfare-state laws voting majority is often made up on the implied consent of the gov- - of the frustrated, the desperate, erned — majority rule. But a ma- the disappointed, the hungry, the jority has no moral right to au- ignorant, the misinformed, the thorize the government to tax greedy, the lazy, and the unscru- (compel) a minority, or an indi- pulous, plus that great number of vidual, to support others. Such voters who depend on government procedure binds the taxpayer to for jobs, contracts, pensions, edu- the obligation that everyone shall cation, food, and shelter. Such have what is needed — an impossi- voters, in connection with spend- ble task. That idea is the philoso- ing tax money for welfare pur- phy of communism and totalitari- poses, should not be expected to anism. It ushers in permanent des- exercise sound judgment. titution for those promised help. Constitutional provisions re- War, a temporary status, pre- stricted voting to the selection of sumably gives government au- representatives who were supposed thority to compel the citizen to sur- to make decisions. Even the judg- render his property and life. But ment of the representative was when such authority is used to dis- not trusted. The Constitution gives solve economic hardships, the pre- him a short term of office and, in rogative becomes a permanent one. addition, binds him by an oath to Then everything the citizen has is abide by and defend a plan of gov- constantly at the government’s ernment which greatly curtails his command. There will be neither taxing authority. time nor area in which he could be But all these curbs have been considered a free man. That abro- bypassed by misuse of the uni- gates the inalienable rights pro- versal ballot. An office seeker de- claimed by the Declaration of In- pends on votes. He, therefore, dependence and protected by the grants what a majority demands. Constitution. To exchange such He does more. He skillfully en- rights for a government’s promise courages the voter to make de- of security is to bargain for mands which will enhance his. slavery. The government has no power. The record shows that he way to keep its promise. ===== PAGE 47 ===== 1957 OFFICIAL ABUSE OF THE TAXING POWER 45 Doctrine of Inalienable Rights the government cannot by ma- The doctrine of inalienable jority rule, or in any other manner, rights stressed property owner- even in the name of “public wel- ship. Such ownership, in its vari- fare,” modify it — compel citizens ous phases, is the only way to avoid to be dependent on government for dependence on government for their bread and butter, or compel food and shelter. To be so beholden them to guarantee that to another. is the most degrading form of When the Constitution was rati- slavery. It brings the individual fied, the citizens did not contem- into subjection to unlimited power plate a tax program which could administered by a human being. force them to become philanthro- The citizen, therefore, is as- pists or give government officials sumed to have rights which he authority to invest or spend tax cannot surrender and which the money as they now do. government cannot seize. They are the basis of his independence. Nevertheless, in the name of What i8 most disturbing is the majority rule, the government great number of businessmen, seized these rights. To redeem the clergymen, educators, judges, world from poverty, it pledged the statesmen, and economists who, in taxpayer to support the destitute. their zeal for a Welfare State, fol- Under that government-imposed low the totalitarian or communist pledge, the inalienable right of concept of implicit faith in gov- security through property owner- ernment — government based on ship is practically set aside. It de- the judgment of one man, or a nies the citizen the inalienable group of men. But no such faith in right to be independent of govern- others! The Most Disturbing Aspect ment for his food and shelter — to Today men worship the Golden be secure through property owner- Calf of government by man. The ship. original commandments of good If such is an inalienable right, government have been discarded. | mune ®0 BOBERUY A Pure Democracy DEMOCRACIES have ever been spectacles of turbulence and con- tention; have ever been found incompatible with personal se- curity or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. JAMES MADISON, The Federalist, No. 10 ===== PAGE 48 ===== / mean something, however, that American dollars have been pour- T H E ing into the British Isles to “shore up” the British economy ever since P L AG U E World War II — and Britain has grown progressively weaker. Not \vV/ E sO many years ago, a little thing like the “Suez war” would scarcely have been noticed in the British ex- S P R E A D chequer. Evidently, permitting the British government to make in- direct withholding levies on the OCTORS have come around to wages of American workers has the idea that often the best not cured what ails our friends. way to heal an injury is to get the The thing we have overlooked patient on his own two feet under is that national strength creates his own power and let nature do wealth in any country, but in no the job. American foreign policy country can outside wealth create planners ought to take a good look national strength. Qur foreign aid at the theory. Coddling the patient dollars have shielded weakness un- certainly hasn’t worked out for til the weakness has become al- them. most permanent in many countries. Great Britain has just wangled We kept picking up the tabs for a $1,300,000,000 loan from the In- socialistic experiments in Great ternational Monetary Fund, which Britain. We paid the bills for Brit- gets most of its capital from the ish preparedness while the Brit- United States. Also, the British ish, not needing to worry about are about to get $81,600,000 more where the money was coming from, from Uncle Sam in interest they went about nationalizing indus- won’t have to pay on wartime tries, providing cradle-to-grave loans. All this is supposed to help “social security” and generally pull Britain out of a very real eco- moving toward collectivism. We nomic disaster brought on by the never gave them a chance to get a Anglo-French adventure in Egypt. good look at the results. Our dol- No one in his right senses wants lars made it seem that everything to see Britain collapse. Whatever was just dandy. must be done to bring our tradi- It was the same, and it is still tional Allies back to national the same, in more than a score of strength should be done. It should other countries. Fatheaded leaders bo 46 ===== PAGE 49 ===== 1957 THE PLAGUE WE SPREAD 47 have taken their peoples far down their economy is the strongest in the withering road of socialism, Europe. That, too, ought to mean and the people can’t see the failure something. of their systems because they are What it means is that the rotten propped up by American dollars. systems of Europe will continue to They can’t see their own economic breed economic and social disease disease because its symptoms are until the peoples of Europe can get hidden behind an American check- a clear look at their own weak- book. nesses. They will never do it un- Germany’s complete recovery til American dollars quit making from what seemed like total de- unworkable systems look as struction in World War II is no though they're working. It’s long accident. The Germans had their past time to put the patient on his fill of socialistic measures under feet, so he may know that only his Hitler. When he was gone, they own strength will cure him. set to work on the capitalistic pat- Uncle Sam’s continued hand- tern, with private initiative and outs to smugly bedridden nations enterprise as their themes. They can only mean complete paralysis had the biggest job of reconstruc- ijn the end. oo 0 tion to do, and because it was so enormous, they chose the most ef- Editorial from the Indianapolis Star, ficient way to do the job. Today December 15, 1956. iwals © GIDaRTY | But Is It Help? LET IT BE BORNE IN MIND that the worthy are to be helped, and the unworthy are to be cured. Let it also be recollected that the worthy poor almost never beg, and that out of every thousand beggars infesting the streets and visiting the houses of cities, probably not more than one is a proper subject for alms. All this may sound very harsh to those good souls who say to themselves that, having the comforts of life, it would be wicked in them to refuse a dime to a brother man who is in want, and who also say that it were better to help nine unworthy than suffer one worthy to go unhelped. But is it “help”? The gist of the question lies there. If a man prefer begging to work, and you keep him from work and at begging, are you “helping” that man? Are you not injuring that man and the whole community? CHARLES F. DEEMS, “Street-Begging’’ From The North American Review, January 1883 ===== PAGE 50 ===== WHY WAGES RISE: In the previous article, the problem a labor surplus —‘“unemployment.” of pricing one’s work was discussed. The number of jobs available 1s It was shown that wages are a price, highly responsive to wage changes. subject to all the influences and char- Apparently a rise of wages by only acteristics that affect any other price. one per cent above the free market Price has an important function to level causes as much as 8 per cent perform. It equates the wanting of unemployment. things with the supplying of things. In this, the final article in this The two are in balance only at the series, our economic experiences of free market price. Any other price, the past in the United States will be either higher or lower, causes a sur- reviewed. In the light of these wage plus or a shortage; it reduces trade; principles, what has been our experi- it penalizes economic welfare. And if ence in pricing work in the market the price of work is too high, it causes place for jobs? mmAmA ict ae mmm A Ream en ummm tm cm ham mmm An AAA sommes mm Ae mmm nm HEN one first thinks about look at an entire economy like a the price for work as having a nation and not to one little spot, three-times power over employ- like only one job. He must look at ment, it may seem hard to believe. the entire market of jobs available Looking at only one job, it would at the different prices. seem to be filled or not filled com- That is what students of the pletely. So what does it mean to subject, like Douglas and Pigou, say that a rise in the wage rate have done for us in their studies. by one per cent causes a 3 per cent Both of these authorities found layoff of workers? But for the that each one per cent higher country as a whole it works out wage, from the point of a free that way. New jobs of all sorts are market wage, will disemploy 3 per found when wages go down. But cent or more of the workers.! when wages go up beyond the free ___ market point, some jobs close down Technically, this is an elasticity of de- completely and others close down mand for labor of —3.0, or a little more. part of the time. For reference sources, see “Why Wages : Rise: 11. Pricing an Hour of Work,” The To see how this works, one must precman, January 1957. p. 19. 48 ===== PAGE 51 ===== 1957 WHY WAGES RISE 49 Wages and Total Income So my income for the year de- Even a child knows that the clines as wages rise above the free higher his wage the more will be market point, for the simple rea- his income — except that it isn’t so. son that the work I lose more than This would be true only if one offsets the gain in rate per hour. could keep his job at the higher For instance, in the rise from wage. If it were true that I could $2.00 to $2.20 there is a loss of keep my job anyway, then an in- 450 hours of work at $2.00 ($900 finite wage would seem to be the loss); this exceeds the gain of 20 ideal. The trouble is, however, that cents an hour on the 1,350 hours jobs are lost three times as fast as ($270 gain). So the net loss is wages are raised. $630 for the year. This being true, the highest in- come is found at full employment. Experience with Unemployment Let us now assume that I change How has this idea worked out in my wage and take the changing actual experience? employment at my own job. As I One cannot know the actual free raise wages above the free market market wage for a nation, of point, I do not lose my job com- course.There are innumerable jobs pletely; but I will have to take my and innumerable skills. There is share of the loss of work that really a free market wage for each comes from an excessive wage. As person, and therefore millions of my wage goes up, my job will have free market wage rates for differ- to be shortened more and more, by ent persons and different jobs. the proportion Douglas and Pigou Perhaps the best way to see how found to apply. wage rates compare with the free If we assume that I work 1,800 market rate is to measure the sur- hours in a year at $2.00 an hour, Plus of labor unsold in the labor this is the way my income would market. In other words, despite all work out: the faults in such a statistic and all the perplexing problems of ar- Approximate Yearl . pprozima earty riving at a figure, the number of Wage rate hours of work income . - persons unemployed is probably $2.00% . ... 1,300 $3,600 1 "Lt reflect { ” 2.20 © 1,350 9,970 ‘the Dest reflection of excessive 2.40 ooo 1,044 2,506 Wage rates. 260 8928 2.153 During the first three decades 280... ....... 666 1,865 of this century, unemployment sel- 3.00 540 1,620 dom was more than a few per cent *The free market wage of the numbers at work (see ===== PAGE 52 ===== 50 THE FREEMAN February UNEMPLOYMENT As Percentage of Employed Persons PER CENT PER CENT 40 T —T T 1 T T I T- T 1 40 UNEMPLOYMENT —_— ~ 20 — 10 FULL EMPLOYMENT -10 1 i 1 1 1 1 Ld 1 L --10 1900 1910 1920 1930 1940 1950 SHARES OF NATIONAL INCOME* PER CENT 7 \ LOSS ] — PER CENT 100 CORPORATE ._ - 100 . _ PROFITS TNT ~~ »N OTHER INCOME 60} Er A A | EMPLOYEE EE Co Ca COMPENSATION CL : 0 a Y) | SE | 4 MERE 1. | 10 1900 1910 1920 1930 1940 1950 SOURCE: United States Department of Commerce; The Economic Almanac, National Industrial Conference Board; Economic Report of the President, January 1956. *The earlier series was discontinued in 1929, and replaced with the new series of the National Income Supplement, Survey of Current Business. ===== PAGE 53 ===== 1957 WHY WAGES RISE 51 chart). It was usually no more wages found confirmation in the than those persons moving from tragic experience of the 1930's. It job to job, or temporarily out of also shows that those who play work for some reason other than with wage rates at the bargaining lack of an available job. The year tables are toying with dynamite, 1920 was one clear exception, at not only as it endangers the work- the time of the postwar collapse er’s job but also his yearly income. in prices. Nor has there been more It is clear, too, that those who than the so-called normal unem- play politically with wage controls ployment during the years since are also playing with dynamite. World War II. In both these peri- The bitter experience of the thir- ods, then, wages were apparently ties illustrates their chronic tend- in line with the free market al- ency to play their hand upside most constantly. If they got out of down, to the disadvantage of the line, adjustment was so rapid that presumed beneficiaries. Believing unemployment never became a sus- that nobody could want his in- tained problem to any extent or come reduced, they use their power for long. to the full to prevent wage rates From 1930 to 1941, on the other from dropping. And the “buying hand, unemployment rose to a power” theory comes to their as-. tremendous height — to as much as sistance at such times, by which it one-third of the number employed, is argued that incomes must be at the peak in 1933. This indicates kept up if consumers are to be en- that there was a serious over- abled to buy back the things they pricing of wage rates during the have produced. 1930s. But keeping income up is not Wages need not be far out of the same as keeping wages up, as line on a percentage basis to cause we have seen. Incomes move down even that degree of unemployment, as wages move up from the free however. On the basis of the three- market point. to-one leverage, for instance, a wage rate only about 10 per cent too high could have caused that What happens, then, under con- much unemployment. ditions like those of the early thirties? At the outset, for reasons we shall bypass here by merely It is clear from this evidence saying that the trouble begins that the conclusions of Douglas with “monetary causes,” the money and Pigou as to the elasticity of supply starts to shrink. This causes Why Depressions Disrupt The Danger of Controlled Wages ===== PAGE 54 ===== 52 THE FREEMAN February prices to decline, because less Politicians and business execu- money leads to less price. If ab- tives also arrive on the stage at solutely every form of price were about this time to lend their to drop by the same amount, no “help.” They also try to hold wages serious harm would be done. up. This is precisely the wrong Everything would then retain the thing to do. It merely makes mat- same relationship as before to ters worse, like doing something everything else, and business would to maintain the blood pressure of go on about as usual except for the a person with high blood pressure. task of changing price tags on All in all, “help” at such times things, and such as that. is dangerous. Controlling wages But prices do not all decline by amounts to threatening the life of the same amount. Our concern here the patient, who would quickly re- is with wages, which fail to drop cover as he always has done in the along with other things. Since they past when left to resolve his own comprise three-fourths of total problems — if he is free to continue personal incomes, the serious ef- to work at the best price a free fect of excessive wages becomes market will offer him. extremely great on the economy as a whole. Profits and Unemployment Wages are to a considerable ex- In his surplus value theory, Karl tent under future contract. Even Marx maintained that profits in- without a contract, wage reduc- fringed on the welfare of the tions are resisted strongly, even worker and should be reduced to though with lower prices the lower zero.? The conflict between this wage would buy as much as before. theory and the truth, as shown by A wage that is supported at its experience, is revealed by the chart former level when other prices are on unemployment and shares of declining is the same as a wage the national income. increase when other prices are re- In two of these years the sur- maining the same. And so in a de- plus value objective was attained, pression like that of the thirties, so far as corporate profits are con- supporting wages at their old level cerned. And in those years the puts them above the free market number of persons unemployed level, just as if they had been rose to a third of the number em- pushed upward arbitrarily when ployed. This was a high price to prices were stable. The result is pay for an extra wage rate of 10 unemployment - three-to-one un- 2See “Why Wages Rise: 3. Dividing the employment. Pie,” The Freeman, May 1956. pp. 27-32. ===== PAGE 55 ===== 1957 WHY WAGES RISE 53 per cent — or whatever the figure soning sounds impressive, because was —as an average for those the increasing complexity of our fortunate enough to have work. economy is perplexing to anyone The price was especially high for who tries to see it all at once. But those without work. is it a fact? The agreement between changes The chart showing instability of in profits and changes in employ- business indicates this to be untrue ment is not exact, of course. But over the history of the nation. But the similarity in a general way is first a word of explanation about clear. It definitely disproves the the design of the chart. surplus value theory. Not only is The base line of zero indicates a the theory wrong, it is precisely point of no deviations of business upside down — at least when wage from the upward trend of increas- rates are pressing profits toward ing output — more people and more total disappearance, as in the productivity, over the years. Zero 1930’s. represents unwavering stability, with business running smoothly along the trend of its growth. The notion persists that busi- The percentages above zero, ness swings upward and downward rising vertically up the scale, rep- with more or less regularity, and resent increasing instability of that this is inherent or inevitable business. These are the percent- under private enterprise. It is also ages by which business fluctuated believed that these swings have around the trend — either above or been getting worse and worse as below the trend, with both con- we have proceeded into a complex sidered to be unstable by this economy since the industrial revo- measure. lution. A completely stable business This latter notion is a favorite would, then, run along the zero argument of persons bent on so- line. At 2 per cent there would be cializing this nation, especially indicated fluctuations in business those of political inclination. They with a divergence from the trend say that as our economy becomes averaging 2 per cent. And at 4 per more complex — more integrated, cent, twice the average divergence Sweeps of the Business Cycle more urbanized, more specialized — of the 2 per cent point. And on up more and more of it must pass the scale. from personal ownership and con- From 1795 to 1928 the average trol and be brought under the instability was 7 per cént. This wing of the government. The rea- means that for the entire period a ===== PAGE 56 ===== 54 THE FREEMAN February INSTABILITY OF BUSINESS Moving Average of Variants from Trend (0—=No Deviations from Trend) PER CENT PER CENT 25 : {25 200 ) —20 15) —15 — 5 ol 12 ¢ 1 t 1 _& + 1 & % ¥ 1 1 fp 2-3 Jo 1800 1850 1900 1950 SOURCE: Derived from the monthly figures on business activity, The Cleveland Trust Company. best guess of the level of business lets, but these were quickly cor- in any month would be 7 per cent rected — short-lived, in almost all away from the trend, either above instances. If anything, business the trend or below it. over this century and one-third was becoming more stable rather than less stable; this was certainly In general, over the period there true up to the middle nineteenth was no distinct increase in the in- century. And except for the effects stability of business. There were ~ of World War I, there was no recurrent depressions and boom- evidence of an increasing insta- The Myth of Instability ===== PAGE 57 ===== 1957 WHY WAGES RISE 55 bility of business even up to the rather than what to do at such depression of the 1930's. times. Then came the Great Depres- = Business will undoubtedly con- sion. A break in the line was made tinue to fluctuate in some degree in in 1929 because of the violent the future, controls or no controls. change in stability before and We can expect that. The problem after that date, making it seem is to adjust as quickly as possible wise to treat the data as two to these changes in conditions, to separate series. whatever extent they are beyond Instability of business since our ability to foresee and to pre- 1929, and continuing even up to vent. the present, is something unprec- edented in our history. This insta- Cycles Not All Bad bility of the last quarter century Not all fluctuations in business certainly cannot be called, cor- are undesirable, to be prevented if rectly, a continuation of any long- possible. Take housebuilding, for time upward trend in business instance. I have built only one fluctuations under our increasing house in my life; and had I con- industrialization of the past cen- tinued to live there, I should prob- tury. It is something distinct and ably never want to build another. suddenly new in our economy —a The building of it took about half degree of instability above any- a year. The result was about as thing we have ever before known intense fluctuation in my building in this country. activity as you could imagine — an It is necessary, then, to conclude intense activity for six months, that the argument about the in- preceded and followed by building creasing instability of business is activity at zero so far as I was a creation of the imagination or concerned. I had only one cycle in of socialistic invention. Being un- my building, and then it was all true, it is certainly not a reason over. for more and more controls over Were a business statistician to our business affairs. As has been study my economic affairs, he pointed out, controls seem to have would find my housebuilding to done precisely the wrong thing. be tragically unstable. Suppose he They have unstabilized business then teamed up with some politi- “and caused unemployment rather cian bent on stabilizing business than stabilizing it. It would seem for the general welfare. How that the controllers know what not would he be able to do it? He would to do and put it into practice — have to determine in advance the ===== PAGE 58 ===== 56 THE FREEMAN February probable length of time I would when building employees and want a house — say fifty years — available materials were ready for and then force me to build one- the job to be done? Or should some fiftieth of my house in each of persons this year be forced to those years. That is the only way build houses they do not want, just stability in my housebuilding because the statistic is declining? could be accomplished. This sort of business fluctuation runs all through our daily lives. There is a violent fluctuation, for But being human, I am con- instance, in the harvest of straw- cerned with my own general wel- berries at different times during fare, too. As one among supposedly the year. Should we grow enough free people exercising economic strawberries in greenhouses so as choices, I don’t want to stabilize to stabilize that part of our econ- my housebuilding. There comes a omy throughout the year? day when 1 finally decide that I Sales of toys and Christmas want a house and can afford to decorations are quite unstable, too. build one. I get some help and go Should we make people buy them ahead with the job as quickly as I equally throughout the year, so as can; then it is done. I don’t want to stabilize production? to be forced to build the house be- Weddings and the sale of affil- fore I want it, and I don’t want iated goods and services are to be forced to build another one highly unstable during the year, later that I don’t want — merely and over the years. And so are the to stabilize some statistic. sales of baby carriages. Should we And you, I dare say, feel the stabilize all these month by month same about building your house. and year by year? How? And so does everyone else. If as a consequence fewer people want to build houses this year My own conclusion is that we than last year, what is wrong with should not worry about all such that? The statistic for the nation fluctuations in business at all. We is unequal, to be sure, as between should worry only about those fluc- the two years. What is to be done tuations which are due to prohibi- about that? Should some people tions on the rights of each person have been prevented last year from to work at a job of his choice — building houses that they wanted either for himself or for an em- The Human Factor Remove the Prohibitions to build, that they had money ployer who wants his labor —at a |. saved with which to build, and wage mutually satisfactory be- ===== PAGE 59 ===== 1957 " WHY WAGES RISE 57 tween them. We should worry only want to. Wages would then be as about prohibitions on the spending high and would rise as rapidly as of his income for what he wants is possible. Leisure, to the extent most, among things offered by one can afford it and wants it, others who have produced them would then be chosen as each per- from their own labors. son so desires. These conditions If we do this, business fluctua- would give the maximum of wel- tions will be reduced to whatever fare possible for us to attain at fluctuation people want — not being any time. It would be as near a forced to build houses when they utopia as can be hoped for in eco- don’t want them, or being forced nomic affairs this side of Heaven. to get married when they don’t oe oo Qh lage DR. HARPER'S series of articles Y — is now available as a book of 124 pages, — concluded in this issue of The Freeman including tables, charts, and a comprehensive index, all in large clear type. See next page for John Chamberlain’s review of the book in which everyone has an interest, Why Wages Rise. Single copy, $1.50; 10 for $10.00; prices for other quantities on request. THRE TWELVE CHAPTERS ARE: 1. Labor Unions 7. Contracting for Progress 2. Productivity 8. The Cost of Being Governed 3. Dividing the Pie 9. Losing Wages Through Fringe Benefits 4. Tools To Harness Energy 10. Leisure and the Better Life 5. Doing What You Can Do Best 11. Pricing an Hour of Work 6. The Lubricant for Exchange 12. Riding the Waves of Business The Foundation for Economic Education, Irvington-on-Hudson, N.Y. ===== PAGE 60 ===== _————— A REVIEWER'S NOTEBOOK = — John Chamberlain £7 ty 7 r yd = ee ’ HE NEWS in F. A. Harper's the tools. Without dividends — or lucid Why Wages Rise (Foun- rewards for saving — nobody would dation for Economic Education, bother to put his money into tools. 124 pp., $1.50, paper) is that we've That would leave the worker at all been had. Virtually every class, the mercy of a low-grade economic group, and individual in America system, and there wouldn't be has been listening to bad advice much coming out of it to pay him and following false leaders. The re- his wages. sult is that, prosperous though we Dr. Harper, in some marvelously are, we are nowhere near as pros- clear prose, rams home his basic perous as we might be. theory of wages, and there is no The bad advice is that the way gainsaying him. First, he proves to get ahead is to work less for his points with logic. Then, for the more money. Though individuals benefit of those who may suspect a may obviously better themselves trick in logical discourse, he proves by forcing this prescription on his points all over again by a use somebody, it can’t work for the of comparative statistics. totality of all of us. The reason is that wages are paid out of produc- tion, and it is obviously impossible Do you believe, for example, for an economic system to pay out that unions have caused wages to more than it can produce. If every- rise? If this were true, the real body were to work less, there wage should have risen hardly at would inevitably be less to go all in the period stretching from around. the Civil War to 1900. During this Well, then, so the unconvinced half century, union membership worker might say, let wages rise was negligible. The fact is, how- at the expense of dividends. But ever, that during this period real this doesn’t work out either. For wages (pay measured in terms of the truth is that it is tools that actual purchasing power) doubled. make the worker’s productivity — They continued to rise with amaz- and it takes dividends to create ing consistency during the next Unions and Wages 58 ===== PAGE 61 ===== 1957 A REVIEWER'S NOTEBOOK 59 half century, both in times of in- union contracts. Sometimes these tense union activity and in times work out well for individual work- when unions were having hard ers, but the point is that they are sledding. Looking at his charts, a form of wage increase that Dr. Harper comes up with a sage doesn’t go uniformly to every observation: “The evidence would worker. The man who doesn’t get be that rising wages cause union sick, or who quits his job before membership to rise, not vice retirement age, is gypped out of versa.” If this suggestion is true, some money he would have re- then the labor leaders of America ceived if the “fringe benefit” had have been getting a free ride. They actually been a general pay rise. have been taking credit for some- Thus what is one man’s “fringe thing that has been as inexorable benefit” is likely to be another as the rising of the sun, and have man’s “fringe detriment.” been singing out like so many chanticleers. Unemployment But if wages have risen inex- There is also the possibility that orably during the past century chanticleer, by singing real loud, with the fivefold increase in the may bluff the employer into pay- individual’s hourly economic out- , ing an uneconomic wage. Dr. put, it might be argued that the Harper proves that if the price of chanticleer pretensions of the labor is set too high, unemploy- union leaders are harmless. ment must be the inevitable re- Chanticleer’s singing has no effect sult. Simply because Dr. Harper's on the sun either way, so why not charts are so clear on the point, I let him enjoy himself? would doubt very much that chanti- i } cleer has actually succeeded in Fringe Benefits” bluffing many employers in the The trouble is, says Dr. Harper, past century. (If large unions are that the labor chanticleer, unlike a consequence of high wages, they the rooster of fable, is in a posi- can’t also be the cause.) But where tion to exact tribute. He hasn’t unions have kept wages from fall- been able to stop productivity ing in bad times to the point from rising —at least, not yet. where it would be economically But, just to make himself seem in- profitable to employ everybody, dispensable, he has cooked up the they have undoubtedly helped to idea of “fringe benefits.” He has prolong depressions. And when written all sorts of insurance and wage rates remain stickily high in medical and pension gadgets into depressed periods, they provoke ===== PAGE 62 ===== 60 THE FREEMAN February monetary inflation as a means of of course, footing the bill for it. getting prices into profitable align- Dr. Harper has assembled some in- ment with the wage scale. teresting statistics on this point. Another reason why the labor Before the Civil War, he says, the chanticleer is not as harmless as cost of being governed took three the rooster of fable is that his minutes out of every hour of work. cocky crowing misleads people Today, the cost has risen to nine- about the role of the investor. teen minutes out of every hour. Chanticleer insists that the incre- During the past half century ment from increased hourly pro- alone the cost of government has ductivity should go to his men. taken almost half — or 48 per cent But, as Dr. Harper says, it is — of the increased productive ca- “teamwork between those who pacity of an hour of work. If tool save and those who use the tools” users and tool owners had only that is the “reason for our high been permitted to share that 48 and rising wage rates.” The intel- per cent, think how much richer ligent labor leader would endeavor we would all be! to make it clear to his followers It may be argued that the gov- that to attack savings and invest- ernment spends for us what we ment is tantamount to saying that might otherwise be spending for the worker has no interest in in- ourselves, but this is another case creasing the efficiency of the tools of the “fringe benefit” turning in- at his disposal. But chanticleer to a “fringe detriment” for those rarely goes out of his way to who don’t fancy the government's praise the investor. choice of what constitutes a bene- Instead, chanticleer is often to fit to the individual. be heard singing a siren song that if dividends to private investors Wages Are a P rice aren’t sufficient to bring new tools Dr. Harper is careful to say that into being, then the government he doesn’t consider ‘labor’ — can step in and create the tools. meaning the worker — to be a com- But government can hardly create modity. Nevertheless, what the the tools out of nothing; it would worker sells in the market place have to tax everybody to get is subject to economic laws. Work- enough to make up for the defi- ers taken as a totality can’t sell ciencies of the private investor. their skills and muscle for more The trust which chanticleer re- than is produced. And the man poses in government has been en- who saves money to invest in tools dorsed by his followers, who are, must be cut in on the produce of ===== PAGE 63 ===== 1957 OTHER BOOKS 61 the system or he will go on strike, nomics and gets down to first prin- to the ultimate detriment of labor. ciples. If it has a shortcoming, it Because “wages are a price,” is in its failure to discuss the con- they should be allowed to find their nection between uneconomic wages level in a free market. Says Dr. and the spread of automation. By Harper, “There is a point of keeping the wage price too high in equality at the free market price periods of falling profits, unions where the supply of labor and must be agents in forcing the pace the demand for labor find a bal- of investment in labor-saving ma- ance.” Any attempt to force the chinery. Dr. Harper has not as- price above the market must sessed the role of the uneconomic create a surplus of labor; con- wage in bringing into being a type versely, any attempt to depress of machinery that enables a manu- the price below the market must facturer to get by with fewer men. create a shortage. One would like to see the implica- All in all, Dr. Harper has writ- tions of this explored by a mind as ten a most persuasive book. It is lucid as that of Dr. Harper. good because it eschews the gabble Reprints of this. review available: of fashionably “difficult” eco- 19 copies for $1.00; 100 copies for $6.00. t= Involuntary Participation in sor of Economics at Harvard, Unionism. traces the growth of compulsory By Philip D. Bradley. Washington: uniomsm . In large measure to American Enterprise Associa- union-initiated complaints against tion, Inc. 47 pp. $1.00. free riders. The argument runs that unions obtain economic bene- “Involuntary participation in un- fits, that members and nonmem- ionism” is a polite way of refer- bers alike enjoy these alleged ring to the closed shop. And Dr. benefits, and that nonmembers Bradley politely asks how come ought to be made to share the the closed shop has gained such costs of acquiring them. These wide acceptance under the Wagner propositions have seemed so per- Act, inasmuch as Senator Wagner suasive that the general public as himself had testified that “the well as legislators and judges have terms of the bill do not compel or come to believe them. even encourage a man to join any The trouble, concludes Dr. Brad- union.” ley after scholarly examination of Dr. Bradley, formerly a profes- the facts, is that unions have ===== PAGE 64 ===== 62 THE FREEMAN February neither raised the general level of for its members “above that which real wages in the United States would have prevailed in the nor increased labor’s share in the Union’s absence.” In the case of national income. The economic the Photo Engraver’s Union, high benefits presumably obtained by wages were maintained through- unions are primarily attributable out the depression. But for a time to other causes. Much of what only 16 per cent of the members union leaders claim to have gained were fully employed, and their from the companies has actually earnings were subject to a 20 per been taken out of what otherwise cent union assessment to help would have been in the worker’s those deprived of employment by pay envelope. These facts and con- the arbitrary wage level. clusions are well supported by the All told, the argument for the independent studies undertaken closed shop as a curb on “free and reported by Dr. F. A. Harper riders” is simply another attempt in the FREEMAN series of articles at totalitarianism. And this well- on “Why Wages Rise.” documented exposé deserves the In some detail, Dr. Bradley ex- thoughtful attention of all who amines various union claims to prefer a free society. have raised the level of real wages PAUL L. POIROT Any book reviewed in this Book Section (or any other current book) supplied by return NOW and FOREVER mail. You pay only the bookstore price. We pay the postage anywhere in the world. A ROMANY tiled room is so Catalogue on request. THE BOOKMAILER, Box 101, New York 16 expressive of rich quality and and good taste you will al- ways be proud of your selec: tion. And, it is wear proof— A BINDER for itwill neverneed replacement. Your beautiful ceramic walls your FREEMAN will be stain proof, fade Holds 12 issues; $2.25 postpaid proof and flame proof. No Also available, a 15-blade binder con- other surface is.as easy to taining the 12 issues of The Freeman keep sparkling clean. for 1956 and 3 issues of Ideas on A complete range of colors Liberty, plus index. $6.25 postpaid to meet every desire. FOUNDATION FOR ECONOMIC EDUCATION UNITED STATES CERAMIC TILE CO. Irvington-on-Hudson New York Canton, Ohio ===== PAGE 65 ===== Jt ae A on NT FEAST A Be TE EN PRIVATE ENTERPRISE © 5 Fatah ENG TRE Ruin S24 SRE REN THER, TR EET mr NL FL PEE prc: 4 PE VS. st Hand Ni Gtr SRSA frit ele Tab an 7 Baa BE be Ho AE gt, he ie Bray +, I AER Aen IS pr If the government were to set up 1.2billiondollars. And thisdoesn’t a business in your community—a include the unreported losses filling station, drugstore, or res- assumed by other Government taurant, for instance—and sold agencies for the parcel-post sys- merchandise at a loss which came tem, estimated at $43 million out of local taxpayers’ pockets, annually. surely, anyone would say that Who pays this bill? The tax- local tradespeople. Yet, this is for the privileged few who use exactly the sort of competition parcel post for commercial ship- the government hasset up against ping—completely counter to the privately owned transportation original concept that parcel post carriers, which include local cart- pay its own way. age firms, motor carriers and Anyone who values the prin- rail express. ciples of freeenterprise, and wishes The government is not only in to know more about unfair gov- the freight business through the ernment competition with private parcel-post system, but is in a business, should send for a free business losing millions of dollars copy of ‘The Truth About Parcel every year. From 1926-1955, re- Post’... a story which will inter- ported 4th class mail (parcel post) est every thoughtful American losses have totalled more than taxpayer. For a free copy of an informative booklet, “The Truth About Parcel Post,” address The Public Relations Division Lo S p <<’ RAILWAY EXPRESS AGENCY, INC. 4 LWy 219 East 42nd Street. New York 17, N. Y. A PRIVATE ENTERPRISE IN THE PUBLIC SERVICE ===== PAGE 66 ===== COAST FEDERAL SAVINGS Offers Savings Investors ® MAXIMUM RETURN on your investment with SAFETY, through progressive, yet conservative management — plus insurance on each account. ® AVAILABILITY of funds when needed due to high liquidity position. ® LEGAL INVESTMENT for trust funds. ® PROMPTNESS in all transactions assured by use of Air Mail. (We pay postage both ways). ® RESOURCES over $225 million, RESERVES over $21 million. ® VARIETY of accounts, Individual, Joint, Trust and Corporation. “LET'S GET ACQUAINTED” — Write today for this booklet and financial statement, to: COAST FEDERAL SAVINGS, DEPARTMENT H, 9th AND HILL LOS ANGELES 14, CALIF. Member Federal Home Loan Bank—Federal Savings and Loan Insurance Corp. “const FEDERAL SAVINGS JOE CRAIL, PRESIDENT ===== PAGE 67 ===== Mountains move over “EH steel digs in! Billions of cubic yards ef earth and stone must be moved to make way for modern buildings, highways, tunnels, railroads, airports, and dams. This takes an army of bulldozers, dump trucks, power shovels, drag lines, loaders, graders, and scrapers. These products of the Earth Moving Equipment Industry prepare the way for nearly every type of construction. The newer models feature multiple attachments for single units, greater reaches, stur- dier steel components, and improved power. Only steels with unusual resistance to impact and abrasion are rugged enough to stand the punishment these machines must take. J&L steels meet the specifications of this progressive industry. Jones & Laughlin STEEL CORPORATION: PITTSBURGH STEEL ===== PAGE 68 ===== FROM A LIBERTARIAN’S LIBRARY F REE TRADE is such a simple solution for so many of the world’s ills. It doesn’t require endless hours of debate in the United Nations, or the International Labor Organization, or the Food and Agri- culture Organization, or any other world-wide debating society. It requires only that one nation see the light and remove its re- strictions. The results will be immediate and widespread. It isn’t necessary for all nations to agree jointly and simul- taneously to remove restrictions. If only one nation does it, some good is accomplished — both for itself and for its customers. A great nation, such as the United States, could do it and thus set an example for others to follow. It would not be meddling in the affairs of other nations; it would merely be looking after the best interests of its own citizens. And instead of being resentful, other nations would be eternally grateful. A selection from The Tariff Idea by W. M. Curtiss. The Foundation for Economic Education, Irvington-on-Hudson, N. Y. 80 pp. 50 cents.