===== PAGE 1 =====

IDEAS ON LIBERTY

OCTOBER 1961

Into Space and Beyond Criticism . . . Leonard E. Read 3
Potlatch, US.A. . . . . . . . . . Marceline Bradfield 13
The Urban Renewal Fallacy . . . . . John C. Sparks 17
Price Control Is People Contre! . . . . Dean Russell 25

The REA Through the Looking Glass . . First National City Bank 28

The Significant Role of Ludwig von Mises . Lawrence Fertig 32

Fiscal Vista . . . . . . . . . . H. P. B. Jenkins 39

The Inpert Situation . . . . . . . Neil M. Clark © 40

“You Can’t Turn Back the Clock!” . . . Clarence B. Carson 45

Value —A Moral Issue. . . . . . . Robert M. Stocking 52
Books:

The Two Baruchs. . . . . . . . . John Chamberlain 61

THE FOUNDATION
FOR ECONOMIC EDUCATION, INC.

Irvington-on-Hudson, New York



===== PAGE 2 =====

Artist's conception of joint fusion research program of the Texas Atomic Energy Research Foundation and General
Dynamics Corporation's General Atomic Division. The Foundation is composed of 11 investor-owned companies in Texas.

CAN MAN “PUT THE SUN IN A BOTTLE"?

Scientists are trying! They're working toward temperatures ONE HUNDRED
MILLION DEGREES HOT to develop a vast new supply of electric power for America

The process is called “nuclear fusion.” incredibly fierce heat and energy—like
It is an advanced way of releasing making the energy of hydrogen bombs
atomic energy for peacetime purposes. work for mankind. Electricity could
But it calls for creating temperatures then be produced from many common
much hotter than those inside the sun! things. (There is enough fusion en-

Naturally, such heat would melt ergy in a bucket of sea water to heat
any substance known. So scientists a home for a year.) This project is
associated with investor-owned elec- only one part of a nationwide research
tric light and power companies are and development program of. the in-
helping develop “bottles” composed vestor-owned companies. It can help
of lines of magnetic force. By means them produce all the extra electricity
of such “bottles,” they hope to control America will need.

Investor-Owned Electric Light and Power Companies | Nesp Aneeroa Bowel.

Company names on request through this magazine


===== PAGE 3 =====

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THE

TCEMAl A MONTHLY JOURNAL OF IDEAS ON LIBERTY

OCTOBER 1961 Vol. 11 No. 10

LEONARD E. READ President, Foundation for
Economic Education

. PAuL L. PoIROT Managing Editor

THE FREEMAN is published monthly by the
Foundation for Economic Education, Inc., a non-
political, nonprofit educational champion of private
property, the free market, the profit and loss system,
and limited government, founded in 1946, with offices
at Irvington-on-Hudson, New York. Any interested
person may receive its publications for the asking.
The costs of Foundation projects and services, in-
cluding THE FREEMAN, are met through volun-
tary donations. Total expenses average $12.00 a year
per person on the mailing list. Donations are invited
in any amount-$5.00 to $10,000 —as the means of
maintaining and extending the Foundation’s work.

Copyright, 1961, The Foundation for Economic Education, Inc. Printed
in U.S.A.

Additional copies, postpaid, to one address: Single copy, 50 cents;
3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole
or in part, providing customary credit is given, except ‘‘The Inpert
Situation,” and ‘'You Can’t Turn Back the Clock.”

FVE Any current article will be supplied in reprint form if there are enough
inquiries to justify the cost of the printing.


===== PAGE 5 =====

LEONARD E. READ

THERE MUST BE millions of Amer- alive to hear the reply! Yes, this
icans who are extremely skeptical fantastic business has undoubt-
about our participation in the race edly generated an enormous
to orbit men and balloons and elec- amount of skepticism.

tronic gadgets; who question the But where is the criticism?
wisdom of putting astronauts on Only now and then does someone
the moon; who see no sense in take a sly poke at political spend-
building unbelievably expensive ing gone cosmic. Why so much
apparatus to send messages into silent skepticism and so little
interstellar space to contact crea- overt criticism? To get at the an-
tures who may not even exist and, swer, turn back a quarter century
anyway, could not understand our to the New Deal.

message if they do — nor we their Created in 1935 by Executive
reply.! And, if all the fantasy Order was the WPA — the Works
turned out to be true, the ex- Progress Administration —a com-
change of messages would take so panion of NRA, AAA, CCC, FSA,
long that the sender would not be HOLC, and many other so-called
"1 It's probably true that millions of alphabetical agencies. Essentially,
persons, all through the ages, would have the WPA was a make-work pro-

scoffed at anything new and different gram, often referred to by its cri-
that might have come to their attention.

What is different about the point under tics as “boondoggling.” While

discussion is that it is not a privately de- there may have been few if any
veloped and financed project, but one . t £ th 1 d t
which those who least want it are none- 111Stances o € unemployed pu

theless compelled to finance. to work raking leaves across the

3


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4 THE FREEMAN October

road and back again, this is what The less you earn, the more you're
it amounted to in the eyes of given,
many citizens with a reputation The less you lead, the more you're

. i 1.3 : driven
. t ’
for straight thinking. The poin The more destroyed, the more they

is, these nostrums were roundly feed
and widely lampooned and ridi- po more you pay, the more they
culed, their fallacies widely under- need,

stood and exposed. One can catch The more you earn, the less you keep,
the spirit of criticism of the time And now I lay me down to sleep.
from a jingle by Ogden Nash, I pray the Lord my soul to take

One from One Leaves Two”: If some Soul Commission hasn’t got

Higgledy piggledy, my black hen, it before I wake.?

She lays eggs for gentlemen. While the principle of the gov-
Gentlemen come every day ernment boondoggle grew both in
To count what my black hen doth lay. racti and adherents. and
If perchance she lays too many, p ce an rye

They fine my hen a pretty penny; spawned millions upon millions of
If perchance she fails to lay, persons with a vested interest in
The gentlemen a bonus pay. its continuance, the prospect of its
overthrow was kept alive by the
liveliness of the criticism. Be it
noted, however, that lively and

Mumbledy pumbledy, my red cow,
She’s co-operating now.
At first she didn’t understand

That milk production must be effective criticism is possible only
planned; when there is general familiarity
She didn’t understand at first with the subject, which was the
She either had to plan or burst, case as long as the boondoggle re-
But now the Government reports mained earthbound.
She's giving pints instead of quarts. But put the boondoggle into or-
Fiddle de dee, my next-door bit, into outer space, and the
neighbors, problem is obscured. It is put out
They are giggling at their labors. of mind, outside the realm of com-
First they plant the tiny seed, mon sense and, thus, beyond effec-
Then they water, then they weed, tive criticism. Outer space is little

Then they hoe and prune and lop,
Then they raise a record crop,

Then they laugh their sides asunder, oye
And plow the whole kaboodle under. wholly unfamiliar matters? Re-

Abracadabra, thus we learn, 2 Reprinted by special permission of

The more you create, the less you the Saturday Evening Post. Copyright
earn. 1934 by the Curtis Publishing Company.

known, and who can qualify as
having worth-while opinions on


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1961 INTO SPACE AND BEYOND CRITICISM 5

gardless of the depth of one’s Since when does a person know
skepticism, there is a natural what he is talking about in fiscal
tendency not to criticize those ac- matters whose idea of ‘a reason-
tivities which involve abstruse able estimate” is such that he can
matters clearly beyond one’s ken. say, in effect, “Give or take 20
“Look who's talking!” is about all billion dollars”? Even one million
the nonexpert can expect to hear dollars is beyond the power of
from listeners and readers. Such most of us to conceive. And a
a discouraging prospect is enough thousand million ($1,000,000,000)
to silence anyone who is skeptical surely is incomprehensible to
of our space program. What, then, nearly all of us. Roughly $1 every
can a skeptic do? Well, he can ask minute, day and night, since the

questions, can’t he? birth of Christ! Or look at it this
} i way: Take an average-sized
A Fair Question American home (about 8,500

“What are these sorties into cubic feet), stuff every room as
space to cost?” This is a fair ques- tightly as possible with brand
tion for the novice to ask, simply new, crisp $1 bills.* There would
because there are no experts who be enough of the one billion dol-
might have a better right to ask lars left over to purchase 50,000
it. No one knows the cost, not such homes at $15,000 each! And
even the President of the United the difference between the low and
States! Nor the Director of the high of our government official's
Bureau of the Budget! Nor James ‘reasonable estimate” — 20 billion
E. Webb, Administrator, National dollars — would tightly stuff
Aeronautics and Space Adminis- twenty homes and have enough
tration! left over to purchase 1,000,000

To the question, “What will it more!
cost to put three men on the
moon?” —a pilot-plant project A Realistic Estimate?
now under way in the over-all Further, who ever heard of a
moon undertaking and one of governmental estimate that
many space projects our nation is turned out to be realistic? The
head-over-heels in — Mr. Webb re- record reveals that a substantial
plied, “The range of 20 to 40 bil- multiplier is always in order if we
lion dollars is a reasonable esti-

mate.” 1 It takes 264 newly printed bills to
_— make a stack one-inch thick. A vault con-

3 See U. S. News & World Report, taining 35,244 cubic feet is necessary to
July 3, 1961, p. 58. store only one billion such bills.


===== PAGE 8 =====

6 THE FREEMAN October

are to reckon ultimate costs from plied, “Certainly.” To the ques-
original bureaucratic guessti- tion, “In what way?’ he added
mates. And, we must ask, what is nothing to convince a lay skeptic.
the sense of three lunar inhabi- His explanation, like that of
tants if it is not subsequently to others, implies military advantage
locate on the moon another Cape but specifically we are left in the
Canaveral with its housing proj- dark.
ects (pressurized housing?) and Few people dare to criticize any
all of the other subsidiary para- project, no matter how wild, if it
phernalia? (An Associated Press carries the label “defense.” Fur-
release of August 2, 1961, refers ther, who among us can qualify as
to a government.study of “some a lunar, military expert? Do even
strange methods for sustaining the members of the Joint Chiefs
life in a still stranger environment of Staff know any more about
. including: insulated balloons conducting warfare from the
and caves or tunnels. ... protecting moon than any of us? Doubtless,
against solar radiation and the ex- they would be the first to confess
treme temperatures ranging from their incompetence in this respect.
250 degrees in daylight to 230 be- Mr. Webb sheds some light on the
low zero in darkness. Boring ma- subject when he admits it would
chinery for digging tunnels and take two and one-half to three
other equipment for building bases days for a rocket to travel from
is expected to be operated by re- the moon to the earth. Would not
mote control by a crew still within a modern atomic war with earth-
the space ship.”) Could the total launched missles be concluded be-
wealth of the United States any fore a moon rocket could reach
more than begin to finance such a our enemy?

moon dream? CLAIM: “To maintain its inter-
national prestige, the United
States must match or better its
competitor's efforts.”’s

Claims Examined

Let us now consider some of the

claims made for this orbital pro- i ) }
gram to which we as citizens are Who is qualified to diagnose “in-

being rapidly committed. 5 See U.S. News & World Report, July
3, 1961, p. 60.

CLAIM: Military advantage. 6 This and the following quotes, unless

In answer to the question, “Is otherwise specified, are taken from a

oye . brochure, SPACE Challenge and Prom-
there any military advantage in ise, issued by Aerospace Industries As-

going to the moon?” Mr. Webb re- sociation of America, Inc., 610 Shoreham


===== PAGE 9 =====

1961 INTO SPACE AND BEYOND CRITICISM 7

ternational prestige”? This is petency to criticize this interna-
pure collectivistic jargon. It has tional prestige claim? For who of
nothing to do with what a Swede us can qualify as an authority in
or a Dane or an Italian will think collective psychiatry?

of you or me or our compatriots op AyM. «Phis space weather sta-
considered individually, or how tion can give forecasters on earth
they will regard our ideals. It re- the complete information they

fers only to what the politicians 05 4 provide accurate weather
of other countries think of our information.”

own politicians. }

Has international prestige be- Who can criticize this? For who
come one of the new national is an expert meteorologist? Is
goals? Are we as a collectivity to there one? Strict attention to daily
seek prestige? — fame? — from Weather forecasts breeds doubt.
among men? What has become of Indeed, the meteorologists who
the idea that esteem is to be impress this layman are those who
sought from a Higher Source? know they know almost nothing
This notion of international pres- about the earthly and cosmic
tige sounds like what might be forces which determine weather.
expected from the godless state. ~~ Lhese forces, like the mystery of

Even if it be conceded that the Universe itself, are so com-
prestige is among our ultimate Plex that they may never be un-
goals, what competency has our raveled by man. One thing for cer-
bureaucracy demonstrated in this tain, it is not true that “a Space
respect? Since World War II, our Weather station can give fore-
political apparatus has spent well casters on earth the complete In-
over 100 billion dollars in foreign formation they need to provide ac-
loans, “Voice of America,” and the Curate weather predictions.” How-
like. When, in American history, €Ver sincere this inaccurate pre-
have so many foreign politicians diction, it offers the taxpayer little
thought so little of our own polit- assurance about the accuracy of
ical leaders as now? the predictions that are to grow

In any event, who has the com- out of it.

Edt CW hington. D.C. ATA. as it | CLAIM: “It is certainly within
uiaing, asnington, A ON , 4s 1L 18 vy eye

called, is a trade association whose mem- the realm of possibility that, once

bers are contractors to the government Man has mastered accurate fore-

for space hardware. An attempt is made casting, he may be able to do
in this attractive brochure to summarize, .

in simple terms, the arguments favoring something about changing the
the federal government's space program. weather.”


===== PAGE 10 =====

8 THE FREEMAN October

What man? Any private citi- rapid overseas message transmis-
zen? Indeed not! Who then? Ob- sion. In addition, they offer the
viously, a government man. If possibility of long-awaited inter-
government could control the national television.”
weather, what would be the nature In the U.S.A. at least, com-
of the control? Would not the con- munications — telephone, tele-
trol of weather follow the same graph, teletype, wireless, radio,
pattern as government’s control of TV — have been private undertak-
income: “. .. from each according ings, financed with private capital.
to ability, to each according to No one of the socialized systems
need?” That is, would not rain, of other countries remotely ap-
for instance, be shifted from proaches our own in the excellence
states with abundant moisture of its service. Yet, successful as
and poured on the thirsty states? our entrepreneurs have been, they
Socialized weather, no less! (short-sightedly, for certain)?
Heaven forbid! ~ see no point in criticizing experi-

According to bureaucratic ments in satellite communication
claims, government has now re- as long as the enormous expense is
lieved material insecurity. Acting met not from their own funds but
“on this wholly false assumption, from the daily bread of all the
bureaucrats are now suggesting people. Space research “for free”!

that they can guarantee against Remove from the critic's role
celestial uncertainty. What next, these people who know something
little men? about communications, elec-

No matter what the weather — tronics, and the like and who re-

rain, hail, sleet, snow, fog, heat, mains to raise questions? Only
cold, or whatever — we should give those of us with no more qualifi-
thanks for its unpredictable cation than skepticism!
variety. This is by way of express- If bouncing messages off satel-
ing gratitude that God, not the lites is to be “less expensive” than
government, is in command of it. cable transmission, as is claimed,
¢ 7 Private manufacturers face many
CLAIM One answer to the prob- dangers in becoming contractors to the
lem [justification of governmental government for space hardware. For ex-
. . ample, cost plus contracts, the payment
space exploration expenditures) of fantastic salaries for certain technical
appears to be the communication skills and other wasteful habits tend to
satellite. . . . Not only could they unfit the manufacturer for commercial
) th bl bl but al competition. The free market requires
solve € cable pro em, OUl ALSO that we keep lean, hard, and alert or get
offer less expensive and more out.


===== PAGE 11 =====

1961 INTO SPACE AND BEYOND CRITICISM 9

then, pray tell, why is this not as CLAIM: “There is also the navi-
appropriate a place for private gation satellite. Placed in a precise
capital as is transoceanic cable? orbit and equipped with a radio
Do not profits derive from cutting transmitter, it could provide posi-
costs?8 Or, is this only “less ex- tion reports of high accuracy for
pensive” after the taxpayers have ships and aircraft.”
orbited the satellites, that is, have
contributed all of the capital out-
lay? Conceivably, one of these
days, the political “public” will
claim communications to be its
business. That day will mark the
socialization [nationalization] of
this great American industry.
Why do the claimants make ref-
erence only to expensive trans-
oceanic cable? During the past
few weeks, I have been on the tele-
phone from Tokyo to Seattle and 5 ranted in spending billions of
from New York to Buenos Aires. yr individual incomes to improve
In each instance the conversation . this state of perfection? In-

was clear and it took less than deed, how is it possible to make
1/50th of a second for our voices precision more precise?

to reach each other. These talks
r : CLAIM: “World mapping is still

were via wireless, not over cable. Ih h
Would satellites be clearer or @7OMMeT area where space researc
can provide benefits.

quicker or cheaper? These mes-
sages would be by wireless, Few of us know anything about
wouldn't they? If the satellite cartography, so how can we com-
route is superior, why does not petently criticize mechanisms ex-
private enterprise pick up the ball pensively blasted into orbit to do
and the entire bill that goes with global charting? The proponents
it? The answer is crystal clear: add, “. . . large portions of the
The market at this time does not earth cannot be precisely charted

Most skeptics of government's
cosmic ventures know nothing of
navigation, thus, how can they
criticize this one, authoritatively?

During recent years I have trav-
eled more than a million miles by
air and in every instance the air-
craft flew directly to its destined
airport. Not lost for a moment,
even when the destination was
tiny Guam in the middle of the
vast Pacific! Is the government

warrant such a venture. for lack of an accurate starting
8 For an explanation of this see“From point. . . . A satellite can provide
Whence Come Profits” by John Chamber- the needed base line . . .” What

lain, and “Incompetent Employers” by
Francis Amasa Walker, THE FREEMAN, portions? The areas where people

October 1959. live appear to be well enough


===== PAGE 12 =====

10 THE FREEMAN October

charted. For what waste areas is ernment’s commitment to “full
all of this unbelievably expensive employment”? Doesn’t the space
precision needed? program merely put the WPA

n

CLAIM: “The main goal of space Ee jheor vont enlarged
research is knowledge.” Or, what about the contractors

This claim may be in error. who are gaining a vested interest
While it is next to impossible to jn the lush space hardware busi-
grade motivational influences, egg?
there are several influences that Or, finally, what about the
suggest themselves as more scientists and the technicians who
powerful than the quest for gre “having a ball,” who can in-
knowledge: dulge -their wildest fancies .with-

What about the folks high in out restraint, who can play Jules
the bureaucracy who believe that Verne and Buck Rogers in this
the American economy can best be  gky’s-the-limit game — and with-
run by the federal government?® ut having to give a moment's
+ Is there a quicker way to make thought as to where the money is
the transition from private enter- coming from?
prise to the omnipotent state than Now, let us concede the dubious
to take from individuals the choice assertion that. “the main goal of
as to how the fruits of their own research is knowledge.” Whose
labor shall be expended and to col- knowledge are these folks talking
lectivize these choices in the cen- ahout? Mine? Yours? The extent
tral government? What promises
to accomplish this faster than the
multibillion dollar space program?

to which it is yours or mine can
be accurately determined by how
much of our income we would

Or, what about the powerful yoluntarily contribute were these
political figures and the academi- projects on the open market. In
cians who believe that government my own case, there would be no
spending is the way to prosperity?

contribution at all, for many other
Or, what about the federal gov-

forms of knowledge have a higher

9 a panel of seven economists, in- call on my income than does space
cluding Professor John K. Galbraith of knowledge.
Harvard, stated: ‘We reject the notion :
that government governs best which gov- Obviously, there . are other
erns least. The federal government is our forms of knowledge that are im-
only instrument for guiding the eco- portant, but have no appeal to me

nomic destiny of the country.’ ”—From . .
First National City Bank Monthly personally. Each to his own bent.

Letter, August 1959, p. 90. We live by these varied specializa-


===== PAGE 13 =====

1961 INTO SPACE AND BEYOND CRITICISM 11

tions. But that form which I elect A Destructive Course
to pursue is mine to reap the bene- The boondoggle has been orbited
fit from and to pay for. This goes and is, as I have tried to demon-
equally for our space scientists strate, very close to being beyond
and technicians. If they say they effective criticism. Lacking criti-
cannot possibly gain the knowl- cism, there is no restraint against
edge to put three men on the moon astronomical government spending
without coercively taking the in- except the inability on the part of
come of those of us who have no our bureaucrats to spend faster
interest in such a venture, then I than now. To say the least, they
say leave the moon unpopulated. are hustling as best they can! In
If they say they are doing this for this course lies the destruction of
my own good, then I say they our economy and in its wake a gen-
aren't God and, therefore, they eral insecurity and an irreparable
know less than I when it comes to stunting of all useful knowledge.
determining my good. As I see it, only two areas re-
Forms of knowledge are infinite main for telling criticism: the
in -variation. But some forms moral and the economic. We are
should have a priority over other hopelessly lost in the area of
forms. One of the most important stratospheric debate and, if any
forms of knowledge is to know success is to attend our efforts, the
what the rights of others are. discussion must be brought back
Without this knowledge the other to earthy and familiar territory.
forms become dangerous. For Otherwise, the technicians and
nothing could be worse than a their sacred science will cancel out
society composed of Ph.D.’s, all of our voices with their highly spe-
whom are burglars or coercionists. cialized jargon.10
Better that such “tradesmen” "10 With tongue in cheek, Dr. Warren
know nothing than so much! Weaver writes: “Perhaps we should turn
The knowledge sought in the the world over to this superbreed. Per-

. haps they could, if properly supported,
space program is financed by co- really liberated, and put in charge—per-

ercion. It is a contradiction of the haps they could solve all problems of

} human relations, of economic stability,
moral law: Do not do unto others of international peace, and of the good

that which you would not have life. Perhaps they should design not only
them do unto you. It is a contra- the churches, but the creeds also. Perhaps

eg. . . the best music and the loveliest poetry
diction of the economic law: The , i. a short time, come out of a ma-

value of anything is what some- chine.” — From “The Imperfections of
one will offer you for it in willing Science,” Proceedings of the American

Philosophical Society for October 17,
exchange. 1960.


===== PAGE 14 =====

12 THE FREEMAN October

A Reasonable Point of Reference ing on these assumptions, they
Of course, no discussion such reason with consistency that no
as this can make sense unless we objective can logically be superim-
agree upon or at least have some posed on or stand in the way of the
understanding of each other's emergence of the individual hu-
premise, datum line, point of refer- man spirit; there should be no in-
ence, goal, objective. What are we hibition against the expansion of
anchored to as the purpose of the individual human conscious-
earthly existence? Is it lunar su- ness into as near a harmony as
premacy? International prestige? possible with Infinite Conscious-
Scientism? A collectivism more ness. Self-realization, that is, the
thorough than that which head- realization of those creative po-
quarters at the Kremlin? Ruler- tentialities peculiar to each per-
ship of the world? Gross national sonality, is the prime goal above
product? Political people con- which there can be no other.
trol 711 Or, what? Consistent with this individu-

Without question, one or more alistic philosophy of life is the be-
of the above must be among the lief that men are endowed by their
goals of those who are bent on Creator — not by the state or any
putting the boondoggle into orbit. collective — with the right to life,
At least, such projects are con- liberty, and the pursuit of happi-
sistent with goals of this sort.!? ness as each can find it. This is a

There are among us, however, spiritual concept. It is also politi-
those who believe in (1) the pri- cal because it denies the state as
macy and supremacy of an Infinite the endower of rights. And, too, it
Consciousness, (2) the expansibil- is economic for, if a person has a
ity of the individual conscious- right to life, it follows that he has
ness, and (3) the immortality of a right to sustain life, the suste-
the individual human spirit. Act- nance of life being the fruits of

one’s own labor.

11 For an excellent explanation of why The economic precept that con-
price and other economic controls are Sistently fits this way of life is
nothing but people control, see “Price willing exchange as distinguished
Control Is People Control” by Dean Rus- ayy
sell, p. 25 of this issue, from unwilling exchange — the

12 For the most flagrant attempt to market value of any good or serv-
present collectivistic goals for this coun- ice being what men will willingly
try, see Goals for Americans, being a exchange for said good or service.
Report of the President’s Commission on . . . . .
National Goals. Prentice Hall, Inc., 1960. This theory is incompatible with
372 pp. the coercive practice of taking the


===== PAGE 15 =====

1961 INTO SPACE AND BEYOND CRITICISM 13

fruits of one’s labor to satisfy ration of Independence; if we will
someone else’s compassionate in- reread Madison’s account of our
stincts or someone else’s interpre- Constitutional Convention; and if
tation of what is for one’s own we will again peruse The Federal-
good or for someone else’s joyous ist Papers, we will observe that
flights into space.!’> A moment’s the whole case for America was
reflection will reveal that willing built around the rights of the in-
exchange is the application of the dividual, in short, justice. Among
Golden Rule to economic affairs. men pursuing such an end, the

If we will take note of the ideas American miracle followed as a
issuing from American pulpits consequence. Attention to moral
prior to the writing of the Decla- principles brought economic bless-
TS This is not to deny but to assert that ings in its wake. Inattention to

government's role is to perform the de- Moral principles must bring eco-
fensive function. Government, however, nomic disaster.

cannot be defender and predator at once. .
For the author’s ideas as to how much We won our case in those days

and why government should be limited, With the moral argument. It ap-
see Government: An Ideal Concept. Irv- pears more than likely that we
ington, N. Y.: Foundation for Economic ] ith th
Education, Inc., 149 pp. $1.50 paper; Can Save our case only wi €

$2.00 cloth. moral argument. @®

&
Potlatch:

CUSTOMS OF EXOTIC PEOPLES often group who hold them quite natural.
strike us as strange. Imbued as we This frequently results in our
are with our own culture, it is dif- standing off uncomprehendingly
ficult for us to visualize the signif- and wondering to ourselves, “Now,
icance of foreign practices to the why on earth would anyone want
- to do a thing like that?”

Marceline Bradfield, Registered Nurse, As an illustration, let us ex-

housewife, mother of three children, landlady,

and small investor, also finds time to pursue amine a ceremony of the Tlingit
graduate studies in Cultural Geography at . n .
Los Angeles State College. and Kwakiutl Indians, which was

MARCELINE BRADFIELD



===== PAGE 16 =====

14 THE FREEMAN October

called the potlatch. The aborig- piles of blankets were burned one
inals of the Pacific Northwest at a time. Pelt after pelt of furs
were a hunting-gathering group was added to the flames. Vast
united by linguistic similarity and sheaves of cedar bark were rend-
clanship relations. They fished for ered to ashes. Stack upon stack of
salmon each spring, drying the copper shields was shattered to the
catch to last till next season. Game ground. The only recourse open to
animals were plentiful, and life was the vanquished guests was to re-
not an uninterrupted battle for turn the invitation and outdo the
survival. Indeed, there remained giving and the destruction by the
time for blanket-weaving, fur- former host.
dressing, carving, and the making It does not require much thought
of copper shields in surplus quan- to realize that, considering the
tities. One might suppose that the bounty of nature was a rather fixed
Kwakiutls and Tlingits would have quantity, someone was bound to
used this surplus wealth to create bankrupt his entire clan sooner or
more wealth or leisure for them- later, and, unable to give away
selves by trading with neighbor- more, go down in utter degrada-
ing tribes. However, such was not tion.
the case. They created the abun- “Now, why on earth would any-
dance merely to destroy it or give one want to do a thing like that?”
it away!

The key to the Kwakiutl-Tling- World-wide Give-away
it culture was prestige and social Let us substitute more familiar
position. The clans expended great terminology and techniques for
amounts of time and energy in a- Kwakiutl-Tlingit, and re-examine
massing stores of wealth and food. the description:
Rivalry between clans and heads A ceremony of the Americans is
of clans was acute. At a certain ap- called the give-away. The inhabi-
pointed time a chief would invite tants of the U. S. A. are a
another head of a clan to a pot- highly-developed industrial so-
latch. For a chief to refuse the in- ciety united by linguistic similar-
vitation would have meant ridicule ity and broad cultural ties. Both
and loss of rank. The host present- industry and agriculture are
ed the guests, the entire visiting highly productive, so that life is
clan, with great gifts of food and not an uninterrupted battle for
goods to humiliate them — the survival. Indeed, there remains
more extravagant the gifts, the time for production of farm pro-
more mordant the shame. Huge duce, consumer goods, and luxury


===== PAGE 17 =====

1961 POTLATCH, U.S.A. 15

items in surplus quantities. One added to the decay. Vast sheaves
might suppose that the Americans of banknotes are poured down bot-
would use this surplus wealth to tomless abysses of foreign aid.
create more wealth and leisure for Stack upon stack of foreign loans
themselves by trading with neigh- is allowed to lapse. The Eurasian
boring nations. Such is, in part, group gives the appearance of
the case, but they also create the lavishing its aid upon the under-
abundance merely to destroy it or developed clan, too. Actually, the
give it away! Soviets never really release their
The key to the American cul- presents, but hold strings to them,
ture is prestige and social posi- concealed or unconcealed. More-
tion. The nation expends great over, the Eastern clan has not
amounts of time and energy in been so well blessed by a propi-
amassing stores of wealth and tious combination of geographic,
food. Rivalry between America demographic, and historical fac-
and its allies on the one hand, and tors as to have superabundant
a Sino-Soviet group of allies on goods and food. They do not,
the other, is acute. At various therefore, practice destruction of
times a chief of state from still the fruits of their own labor. On
another group of nations, known the contrary, they are concerned
as underdeveloped nations, figura- with increasing the wealth of
tively invites both rival groups their own economic system.

to a give-away. For either to re- When one give-away is com-
fuse the invitation would mean pleted (though there really is no
ridicule and loss of rank. one give-away — only an unending

The difference between potlatch series), the “guests” do not re-
and give-away now becomes ap- turn the invitations to the “host.”
parent: the “host” now becomes They have only to progress down
the recipient, while the “guests” a revolving list of prospective
each vie for the honor of present- ‘hosts,” each time each “guest”
ing him with the most extrava- trying to outprestige the other by
gant gifts. The Western clan pre- winning favor from the ‘host”
sents the “host” with great gifts and humiliation for the rival. It
of food, money, and goods to hu- never seems to dawn on the West-
miliate the Eurasian clan —the ern clan that their give-away
more lavish the gift, the more often backfires, winning favor for
mordant the shame. Huge piles of the rival and humiliation for the
grain are allowed to rot one at a “host.” For, although the re-
time. Ton after ton of butter is cipient himself requested aid, he


===== PAGE 18 =====

16 THE FREEMAN October

suffers excruciating embarrass- smoke. Their greatness came from
ment from having accepted the ability to accumulate wealth.
charity. Nothing wears so thin, so Any renowned empire — Inca,
fast, as gratitude chafed by pride. Egyptian, or Roman — became
Thus, the American clan, intend- great by gathering up — hoarding,
ing to encourage friendship with if you will — wealth. This fact was
the underdeveloped nations, suc- not lost upon our forefathers.
ceeds merely in creating enmity. They fought and struggled and
It does not require much saved painstakingly for wealth.
thought to realize that, consider- And they built up a great nation.
ing the bounty of economics is a Nor has this theory been lost
rather fixed quantity, one chief is upon the leaders of the Soviet
bound to bankrupt his entire clan Union and Communist China.
sooner or later, and, unable to give They, too, are only fully aware
away more, go down in utter deg- that they must amass capital
radation — especially when the goods before they can reach and
rival chief is holding out half the surpass us. That is the reason
deck up his sleeve in the game. they keep tight rein on their “for-
“Now, why on earth would any- eign aid,” and why they encourage
one want to do a thing like that?’ our big give-aways. They hope we
‘ will pass them — going in the

Greatness Through Abundance wrong direction!
The Tlingits and Kwakiutls
would understand: the man who It is frequently next to impos-

makes beggars of himself and all sible to detach ourselves from our
his people is the greatest chief of own culture long enough to evalu-
all. The validity of this cultural ate it objectively. But comparison
concept is proven by the great re- of our theories and practices with
nown which these Indians those of others can serve to clarify
achieved. Hardly anyone outside persistently foggy perspectives.
of academic anthropology has ever Or is it still obscure that we are
heard of them! abandoning our former ideals of

The great nations of history did greatness through abundance, and
not succeed to that greatness by embracing the ridiculous practice
distributing their wealth or char- of winning greatness by losing
ring it to clouds of dust and everything? @®


===== PAGE 19 =====

Downtown owners and
merchants ignore the
verdict of the market
place when they advocate

me JRBAN

JOHN C. SPARKS

WHEN A WOMAN picks up her will probably pick stores accessi-
shopping bag and heads for her ble by public transportation. Ease
favorite shopping area, she sets of access, walking distance, pub-
into motion an integral part of a lic transportation, and automobile
very technical economic machine, traffic routes are important fac-
the free market place. For the tors to any shopper. Other con-
next hour or two she will make siderations include comparative
numerous economic decisions. She prices, her budget, attractiveness
will select the stores in which she of the store and products, the
will shop; she will select the prod- quality of service, friendliness of
ucts she will buy; she will show clerks, and a host of other points,
preference for one brand over an- some of which may be more aptly
other. It is quite possible that an classified as whims. Nevertheless,
item she seeks will not be quite to each selection she makes, to buy
her satisfaction, and she will not or not to buy, is an economic de-
buy. One can speculate as to the cision affecting manufacturers,
many factors that influence her gistributors, retailers, adver-

decisions. If she has no car, she {isers realtors — the list of busi-

Mr. Sparks is a businessman serving as Presi- nesses is almost endless.

dent of the Canton, Ohio, Chamber of Com-
merce when this article was written. Persons, who are free to do so,

17


===== PAGE 20 =====

18 THE FREEMAN October

daily make innumerable separate The product or service popular
decisions involving exchanges of twenty years ago may no longer
wealth. These exchanges we de- be in demand today. All kinds of
scribe as the operation of the free property face the hazard of
market place. Their effect on the changed values in the eyes of the
progress of mankind is tremen- buying public. Investors fre-
dous. Selectivity has revealed a quently spread their investments
preference for the electric vacuum to hedge against those which may
sweeper to the old hand-push car- decline in value. An owner of a
pet sweeper; selectivity has out- new home in an expanding suburb
moded the buggy whip; it has rel- may well wonder about the value
egated the candle to a decoration of his investment thirty years
rather than its former use as a later. Owners of commercial real
chief method of lighting. Selec- estate are constantly seeking in-
tivity results in a continuing up- formation to enable them to make
ward pressure toward improved decisions consistent with the
values of quality and service, un- movement of real estate values up
less artificially prevented or re- and down. A modern commercial
stricted by force of government. building located strategically will
As consumers, we benefit from normally command a higher rental
the results of selectivity; it's fun than an oldet building in a less
to buy an automatic washer strategic location, although an
rather than the old washboard ultramodern building located
and tub. It’s a pleasure to stop poorly may command less rent
at a convenient and luxurious than an older building with a good
roadside motel after a hot day of location. Considerations are many
driving rather than battle down- in the market place and — if not
town traffic trying to find a hotel. influenced by governmental inter-
Through such selectivity, those vention — will very accurately re-
who provide the more desirable flect the sum total of the economic
products and services are re- decisions of everyone.’
warded. But the manufacturers of
the carpet sweepers, buggy whips, How To Retard Progress
candles, washboards, and the Unfortunately for mankind,
owners of downtown hotels may however, intervention by govern-
not fully share the delight of the ment is brought into play all too
consumers because their own busi- frequently. The results range
nesses may fail or be adversely af- from the humorous to the tragic,
fected by these changes. from the awkward to the 'gro-


===== PAGE 21 =====

1961 THE URBAN RENEWAL FALLACY 19

tesque —and in every instance The Urban Renewal Program
progress is pushed backward. Since A new kind of socialistic inno-
every interventionist action is vation has come into being within
based upon enforcement of the recent years called “urban re-
unnatural, it is not surprising that newal,” which is now threatening
the consequences are undesirable. to lull local governments and civic-
For example, governmental minded citizens into embracing
price support of a farm product, economic fallacy and corruption
intended to prevent the price from rather than standing for natural
falling when the supply is abun- economic laws and moral princi-
dant, will bring about a greater ples.
supply than ever before — just the The federal laws on urban re-
opposite of the intent. On the newal enable a city government to
other hand, a ceiling price in- seize private homes and private
tended to enable more people to business properties for the pur-
buy a certain product at a lower pose of fulfilling the public good
price, will drive that product out as determined by the political
of production — and fewer rather planners. Urban renewal is not
than more will have the oppor- necessarily slum clearance al-
tunity to buy it. Skilled trades- though parts of the planning pro-
men, encountering stiffened com- gram may include removal of some
petition, will frequently use gov- “blighted” residential areas. Ur-
ernment to license (and restrict) ban renewal is the redesign of
entry of newcomers into their a whole section of a city by its
field. But if wages rise in that planners (aided with ideas and
field, consumers and other less re- finances from Washington), in-
stricted enterprisers often find a cluding removal of buildings not
way to eliminate or by-pass the in harmony with the master plan.
licensed trade — and the licensed Following the acceptance of the
and “protected” tradesmen are plan by the local and federal poli-
threatened by obsolescence, rather ticians, private property is aec-
than achieving greater security. quired through the use of eminent
Every interventionist or socialis- domain, and either rebuilt or torn
tic law works that way: rent con- down. The condition of the prop-
trol, price and wage controls, sub- erty does not determine whether
sidies to farmers or industries — or not it can be razed. Perfectly
name it, and analyze it, and find good buildings in compliance with
the same bizarre and unpleasant sanitation and safety require-
results. ments may be condemned and re-


===== PAGE 22 =====

20 THE FREEMAN October

moved if the property does not champions of freedom, it encour-
fit into the scheme of the planners. ages financial bankruptcy, it opens
After the land is cleared, it is local communities to federal con-
sold to private investors who trol, and it accomplishes all of
agree to use it according to these undesirable results through
the specifications of the master bribery of the local citizen with
plan.! The federal government his own money. The federal urban
picks up from two-thirds to three- renewal device has the further
fourths of the difference in the claim to infamy in that its sup-
cost of buying the properties and porters ignore completely the na-
the ultimate receipts from the sale tural law of economics — the selec-
of the land. This expense, borne {tivity of the market place!
partially by the local community Each person selects certain
(25 per cent to 33%; per cent) and things in preference to other
the balance by the federal govern- things — including where to live,
ment, represents the bulk of the where to work, where to attend
extremely wasteful cost of the church, where to send children to
federal Urban Renewal Program. school, and where to shop. At one
time most families chose to live in
Selectivity Denied the city. Undoubtedly, they were
This program should be rejected influenced by the lack of adequate
by every high-principled citizen private transportation and time
of each city of our country on the required to travel to the city from
basis that it is morally wrong. the neighboring countryside or
Unfortunately, the temptation to village. However, recent popula-
avail oneself of the funds of tion figures reveal what we all
others, behind the mask of legal have observed to be true: the city
respectability, has been too strong dwellers have been rapidly emi-
for many communities to resist. grating to the suburbs and coun-
Thus, the urban-renewal federal tryside. More people now prefer
grant scheme is growing rapidly to live outside the city — more
in popularity. Like other federal open space, improved automobiles,
grants-in-aid schemes, it under- whatever the reasons — and they
mines self-reliance, it corrupts individually have made the choice
normally-sound individualistic to do so. This is a choice having
—— many economic effects on many
1 A Supreme Court decision of Novem- segments of the lives and busi-
ber 1954 declared constitutional the pro- . .
cedure of government condemning pri- nesses of those left behind in the
vate property for other than public use. downtown section of the city.


===== PAGE 23 =====

1961 THE URBAN RENEWAL FALLACY 21

The Downtown Merchant's Challenge shoes, washboards, and candles
Downtown retail stores find also have lost position.

they are no longer selected as “the This does not mean that the
places” to shop by as many people downtown merchant must surren-
as before, and it’s not too difficult der without a struggle; he may
to understand why this change in adjust, as did those producers of
preference has occurred. Attrac- years ago who intelligently
tive modern shopping centers in changed their manufacturing
the outlying areas of the city are equipment from high-button shoes
more easily accessible to the sub- to the new styles in demand by
urbanite. Many are beautifully de- the “fickle” public. In recent years,
signed and landscaped. Promo- not all cotton textile manufac-
tions by shopping center mer- turers stood by and cried while
chants often cause shopping to producers of synthetic fibers made
take on a gala festive air. Parking huge inroads on their sales vol-
is plentiful, and, most importantly, umes. Those who intelligently met
provided and paid for by the pri- the challenge of the ever-changing
vate owners of these centers. Pri- market place developed new cot-
marily due to location, these pri- ton-fiber treatments to compete in
vate-enterprising merchants are the wash-and-wear merchandise
more attractive to the consumer field.

than their downtown counter- “The market makes people rich
parts. As almost every successful or poor, determines who shall run
private businessman can attest, the big plants and who shall scrub
success in business comes from the floors, fixes how many people
efficiently providing a product or shall work in the copper mines
service and making it available and how many in the symphony
where it attracts a sufficient num- orchestras. None of these deci-
ber of customers to bring about sions is made once and for all;
a profit. The successful retailer they are revocable every day. The
must cause customers to select his selective process never stops. It
place of business. If his location goes on adjusting the social appa-
renders his store second choice or ratus of production to the changes
worse in the customer’s evalua- in demand and supply. It reviews
tion, when he was once first, then again and again its previous deci-
he must recognize that economic sions and forces everybody to sub-
selection has caused him to lose mit to a new examination of his
his “front-running” position just case. There is no security and no
as surely as buggies, high button such thing as a right to preserve


===== PAGE 24 =====

22 THE FREEMAN October

any position acquired in the uation, and attempts to “bring
past.’”’2 back” either a downtown commer-

Consumers are coldly logical in cial or residential area by artifi-
their selection of where to shop cial aid rather than natural selec-
to fit their convenience and wants, tion may prove quite costly, espe-
and the entrepreneur who sees the cially to owners of downtown
opportunity and fills the demand property.

wins the day. But no business If the possibilities of return for
“victory” is forever — even for risk taking are good, investment
downtown merchants. funds will be available from those

The decision cannot be ignored who are willing to take a chance.
— the consumer has already made On the other hand, it is unlikely
his choice today just as he made that voluntary investments in an
a different choice yesterday — and uneconomical situation will be
the outlying and suburban mer- readily forthcoming. Those who
chants are relegating the old con- seek federal urban-renewal aid
ventional congested downtown undoubtedly recognize that volun-
shopping district into second tary investment will not be avail-
place. Door-to-door bakery routes able for such downtown renewal.
have encountered the same stiff And, of course, no merchants are
competition from shopping cen- being restrained from remodeling
ters. It is surprising that no one or relocating, nor are they prevent-
has proposed federal aid to bakery ed from providing customer park-

routes! ing facilities. They are willing,
however, to take advantage of im-
The Consumer Still Rules proper, but legal, means to force

It is not the purpose of this persons who do not choose to in-
article to recommend solutions to vest, to contribute without re-
the downtown property owners. course in order to bail out the
Instead, it is to call attention to skidding downtown businesses.
the fact that a new mode of sub- Among those persons forced to
urban and outlying multi-residen- contribute via the tax route to
tial and shopping-area living has downtown redevelopment are the
come into its own. The consumer very outlying and suburban mer-
has spoken. Burying one’s head in chants who are gaining first place
the sand does not change the sit- in the consumer’s heart. Further-
"2 Mises, Ludwig von. Human Action. more, the consumer hi mgelf, hav.
New Haven: Yale University Press, NE elected to patronize the sub-
1949. p. 308. urban merchant, must also con-


===== PAGE 25 =====

1961 THE URBAN RENEWAL FALLACY 23

tribute via taxes to the downtown on land formerly occupied by
merchant and help subsidize him slums or dilapidated apartments
because that merchant, in effect, change the minds of those who
has continued to market in a prefer to live “farther out.” Ex-
“high-button shoes” manner and perience has already shown that

location, many of the investors in new resi-

dential apartments erected on ur-
The Crux of the Matter ban-renewal land are regretting
Still Lies in the Market Place the day they ignored the decision

It is tempting to downtown of the market place and risked
owners to proclaim noble objec- their savings on such uneconom-
tives to justify their request for ical endeavors.
federal aid. They wish to preserve In a series of articles for the
the so-called “core” of the city. Cleveland Plain Dealer, Eugene
They hope to increase tax values Segal reported on residential
of the “main” business section and apartments built there in 1957 and
surrounding area as promised by since under the federal Urban
the planners. They become loqua- Renewal Program: “The occu-
cious on behalf of civic pride. Little pancy rate is too low for the proj-
or no mention is made of the fact ects to pay their own way. Most of
that the chief objective in the them are delinquent in mortgage
minds of the downtown owners and or tax payments. The owners are
merchants is a subsidy from funds losing money. The projects have
taken from others. nothing that will persuade inves-

When buggy whips were on the tors to build more. These are de-
decline as the automobile industry tails you would not want showing
began to grow, the innovation of when you are promoting urban
pearl handles on buggy whips renewal.” The author went on to
(even if subsidized by govern- quote one of the owners, “We don’t
ment) would have done nothing to spend enough on maintenance. We
rescue the industry headed for ob- can’t because the money is not
solescence by the choices being coming in. If we don’t spend more,
registered in the market place. this will become a slum again.”
Neither will subsidized rejuvena- Furthermore, the promise of in-
tion of downtown commercial and creased tax values on the “re-
business property change the newed” land is almost certainly
choice of the consumer. Nor will Ts Semal Eugene. “Housing Renewal
apartments, town houses, and other Crisis.” Cleveland Plain Dealer. April 30,
residential buildings constructed May 1 and 2, 1961.


===== PAGE 26 =====

24 THE FREEMAN October

not an attraction to potential in- with their own funds and prop-
vestors. erty, no general harm is done. But
City officials in Wink, Texas, when civic leaders and city officials
are hoping businessmen in its combine to encourage waste of the
downtown area will use the money funds of others through the fed-
(federal funds) they receive to eral Urban Renewal Program,
put up new stores in place of those harm is heaped upon all, including
which will be torn down. It is the subsidized merchants and the
recognized, however, that such hopeful real estate developers.
hope will not likely become reality The subsidized merchants are giv-
for “a dozen main street buildings en a palliative that will lull them
are ramshackle frame structures into false security. The unsuspect-
already deserted by their owners ing developers will flirt with busi-
for lack of business.”t In this case ness failure as people reconfirm
the difficulty of changing economic their preferences to reside some-
selectivity stems from declining where other than downtown or
reserves of oil in the vicinity. At near the “heart of the city.”
one time, Wink had more than
twelve times its population today. Communities that ignore the
Then it was a boomtown. verdict of the free market place,
There are many who make wrong and attempt to repeal the indi-
decisions every day, and if such de- vidual decisions and judgment of
cisions are made by individuals consumers and investors, are
—_— bound to reap ill results. No bene-
! “Small Towns Scramble To Get fit will derive from embracing the
Slum Removal Aid from Uncle Sam,” ere
Wall Street Journal. July 3, 1961 (Em. fallacy of political urban renewal.
phasis added). @®

THE OTHER DAY we were reading Walt Whitman’s Leaves of
Grass again and were struck by the timeless quality of a short
poem he wrote “To the States.” It seems to express one of those
eternal truths about government and tyranny. And while we
watch the Federal government reaching out to seize or assume
more and more power over the states to destroy their independ-
ence, it might be worth repeating:
“To the states, or any one of them, or any city of the states,
resist much, obey little,
Once unquestioning obedience, once fully enslaved,
Once fully enslaved, no nation, state, city of this earth, ever
afterward resumes its liberty.”
From the Indianapolis Star, July 13, 1961


===== PAGE 27 =====

PERHAPS you recall the fable of the
scorpion who asked the beaver to
carry him across a lake. The beaver
declined the request with this de-
duction: “If I let you get on my
back, you'll sting me and paralyze
me and cause me to drown.”

But the scorpion out-deduced
him with this rejoinder: “I can’t
swim. Thus if I sting you while
we are in the lake, I'll drown too.
Obviously I wouldn’t do anything
to cause that.”

The beaver could find no fault in
that logic. So, being a kind-hearted
fellow, he invited the scorpion
aboard and set out across the lake.
Right in the middle of it, the scor-
pion stung the beaver and para-
lyzed him.

Dr. Russell is Professor of Economics at Rock-
ford College and Chairman of the Department
of Economics and Business Administration.
This article is from his weekly editorial col-

umn in the Sunday edition of the Rockford
{Illinois] Morning Star, July 23, 1961,

» Price Control Is
a People Control

or, REMEMBER THE BEAVER

DEAN RUSSELL

As they sank together to the bot-
tom of the water, the beaver re-
proachfully pointed out to the scor-
pion that both of them would now
drown. “Why did you sting me?”
he asked.

“I couldn’t help it,” tearfully re-
plied the scorpion. “It’s my na-
ture.”

Fables, of course, contain a mor-
al that can be applied to human
affairs, This one pertains to sev-
eral of our current problems. For
example, the nature of price con-
trols is people control. A quart of
milk or an aspirin obviously is not
concerned about the price tag it
carries. Prices are of concern only
to human beings. And the only
thing that can be controlled by
government in this process of min-
imum and maximum prices is peo-
ple.

The nature of the operation is

25


===== PAGE 28 =====

26 THE FREEMAN October

this: Persons who exercise the pol- you stop and think about it, no gov-
ice powers of government use those ernment ‘can ever really support a
powers to control the people who price. Prices don’t give a hang
produce milk, distribute milk, and about supports; it’s not their na-
buy milk. The price of drugs is ture. The nature of all govern-
never controlled by government; mental schemes to “support prices”
the controls apply only to the per- is this: Some people who control
sons who produce, sell, and use the the police powers of government
drugs. When the government en- use them to take money from other
forces a minimum wage, it is per- people who have earned it, and to
sons, not things, that the officials give it to still other people who
watch and control. have not earned it. That's all it is.
The person who favors rent con- Calling it by another name cannot
trol wants the police powers used change its nature, for better or for
to control individuals who own worse.
houses for rent, and families who
wish to live in such houses. Purely Why Not Come Out with It?

and simply, he favors controlling Why do persons object to com-
people and forcing them to do what ing right out with it and saying,
he wants them to do. “Of course I'm in favor of people

But when such a person is flushed control. I don’t need you to tell me
out from behind his euphemistic that it’s only people, not inanimate
and comfortable word-shield, he objects or ideas, that can be con-
is usually honestly astounded that trolled. But don’t forget that I am
anyone could possibly believe that doing it for their own good. In var-
he favors people control. Try it ious of these vital economic areas,
sometime. You will invariably get I am convinced that I know what
a response somewhat as follows: is best for them and for us all.”
“I am opposed to controlling peo- While I would disagree with that
ple. In fact, I support all sorts of candid person, I could still admire
organizations and causes to give him after a fashion. At least he
people more freedom. True enough, would have the courage of his con-
I do believe that the government victions. For example, Robin Hood
should control certain prices for was a robber in every sense of the
the benefit of all; but control peo- word, but at least he had more per-
ple — never! Now stop spouting sonal courage than do the despic-
this nonsense about people control. able characters who sneak up on
There is a limit to my patience.” their victims and sand-bag them

And so it goes. Actually, when from behind.


===== PAGE 29 =====

1961 PRICE CONTROL IS PEOPLE CONTROL 27

It's the Nature of the Beast sonal effort. Also, we are usually
Perhaps the reason for our pref- promised that somebody else will
erence for the euphemistic “price have to pay the cost.
controls,” rather than the realistic The next time you hear a politi-
“people controls,” lies deep in our cian or a neighbor advocating price
own natures. All of us seem in- supports or rent control or some
stinctively to want to help our fel- similar subsidy, ask him why he
lowmen. But we observe that there favors people control, and forcing
are so many of them who want other peaceful persons to do what
help of various sorts, and that our he wants them to do, and taking
own personal resources are so lim- money from people who have
ited. But by voting to have the gov- earned it and giving it to others
ernment do it, we can satisify both who haven’t.
our charitable instincts and our At that point, however, you had
sense of fair play. Also, that easy better duck. For the nature of the
procedure has several other fringe ambitious politician and the well-
benefits. When we vote to help intentioned do-gooder is to con-
others, we are thereby fulfilling sider only the “fine objectives” of
our patriotic duty as good citizens their plans and to ignore complete-
to participate in the affairs of gov- ly the shoddy means used to enforce
ernment. In addition, this proce- them. They won’t appreciate your
dure doesn’t require much per- calling this to their attention. @®

The Stimulus of Necessity

DANIEL FROHMAN once made an offer to George Bernard Shaw
to come to America, guaranteeing him an annual salary, with the
proviso that he should write one play a year for his theatrical
company, and retain for himself the profits of any other work.
To this the astute playwright replied, characteristically,
that the offer of such a financial certainty would so overwhelm
him that he would lose his inspiration. He preferred to work
in England, for less money, but under the stimulus of necessity.

Submitted by P. K. THOMAJAN


===== PAGE 30 =====

°

~ - "tl Ne Sots |

: .
ke
«! ) $C -

IN Through the Looking Glass, tive Association in a full-page ad-
Alice discovered that words can vertisement given nationwide cir-
be rather slippery things: culation. The ad pictures the sky-
“When I use a word,” Humpty rocketing growth of rural electric
Dumpty said in rather a scornful Systems as an outstanding example
tone, “it means just what I choose it of “free enterprise.” It asserts
to mean-—neither more nor less.” that “434 million people own rural
w (The question is. ’ said Alice, electrics —more than any other
different. things.” make words mean  y,,siness,” more than A. T. & T.’s
) 1,900,000 shareholders, General

Some readers recently were as Motors’ 746,803, and Standard Oil
startled as Alice on seeing how ,f New Jersey's 526,610.

familiar words were used by the

. . The thousand or so rural elec-
National Rural Electric Coopera-

tric systems under discussion are
From the Monthly Letter of the First National “nonprofit groups — usually co-

City Bank of New York, August 1961. .
Illustration: A. Devaney, Inc., N. Y. } operatives.” They have a lot of

28


===== PAGE 31 =====

1961 "THE REA THROUGH THE LOOKING GLASS 29

shareholders. Unlike corporations ficiaries important enough to men-
organized for profit, they typically tion. The REA, included in a chap-
require a membership fee —the ter on “Agricultural Subsidy
purchase of one share —as a con- Programs,” is described as extend-
dition for providing service; thus, ing loans to cover the full cost of
4%; million is more genuinely de- constructing power lines and other
scriptive of the aggregate number facilities:
of customers than of the spread of
ownership. The shares are of little The Rural Electrification Admin-
investment value for they pay no istration makes loans for the pur-
dividends per se. The “profit” for Pose of financing electric systems
the shareholder lies in access to 2nd telephone service to rural areas.
power below its true cost. The co- By such loans it has made possible
. the extension of electric power and
operatives spare themselves from

. b . Ii telephone service to many farms at
Income taxes by avoiding realiza- an earlier date and at lower cost

tion of profits in the ordinary, legal than would otherwise have been pos-
sense. Further, the Rural Electri- sible. In the field of rural electrifica-
fication Administration, supported tion, which the REA has under-
out of the Federal Treasury, gives taken since 1935, the REA makes
them a pipeline to the taxes paid loans to qualified borrowers, with
by everybody else, including their Preference to nonprofit and coopera-
competitors. The NRECA is too tive associations and to public bodies.
modest in toting up the number Loans cover the full cost of con.
of owners of the “rural electrics”: structing powerlines and other facil-

ht ities to serve persons in rural areas
a hundred million taxpayers have who are without central station elec-
investments in them, involuntary ric service. They bear 2 per cent in-
and unprofitable but nevertheless. terest and are repaid over a maxi-

real. mum period of 35 years. . ..

Free Enterprise? The report gave an estimate

Last year the Congressional of REA loans less repayments as
Joint Economic Committee pub- of June 30, 1961: $4.4 billion
lished a report on “Subsidy and loans for electric service and be-
Subsidylike Programs of the U. yond $700 million for telephones.
S. Government.” This document The total rises every year and
does not develop a picture of the will continue to do so as the co-
electric cooperatives as ‘free en- operatives expand outside farm
terprise.” It does not find the cap- areas, take on commercial and in-
ital contributions of the bene- dustrial customers, build generat-


===== PAGE 32 =====

30 THE FREEMAN . October

- ing capacity, and extend telephone reasonable costs.” On this formula
services. Against these aggre- the REA would be charging up-
gates of $4 to $5 billion, the wards of 4 per cent. That is what
“ownership” represented in mem. the Treasury would have to pay to-
bership fees of beneficiaries—at day on long-term bond issues.

$5 or so apiece—is a drop in the Mr. Eisenhower's plan drew a
bucket. It takes care of less than barrage of criticism and was never
one per cent of the total invest- adopted. Yet the principle he set
ment. out seems reasonable:

Interest Rate Subsidy Ideally, in a federally sponsored

It is true that the cooperatives 2nd financed undertaking, it should
pay interest on borrowed money. ©P¢ Possible for the government to
But there is a continuing subsidy step progressively aside as they

. reach the stage of self-sufficiency
in the fact that the REA lends at which enables them to move forward

2 per cent while the Treasury has ypder their own sound management,
to pay an average of 3 per cent on ownership, and financing.
the public debt. In the original
Rural Electrification Act of 1936, Consolidated income statements
the intent of Congress was that of investor-owned electric power
“all such loans ...shall bear inter- companies and REA cooperatives
est at a rate equal to the average make it possible to figure the sub-
rate of interest payable by the sidy elements. The cooperatives pay
United States of America on its 3 per cent of their revenues in
obligations, having a maturity of taxes instead of 24 per cent for the
ten or more years ....” In 1944, private utilities and 2 per cent on
when the Treasury was paying an borrowed money instead of 43% to
average of 1.93 per cent on the pub- 5 per cent. In 1959, when their op-
lic debt, the Congress fixed the erating revenues were $618 mil-
REA lending rate at 2 per cent. lion, the REA cooperatives would
In his budget message of Janu- have needed $164 million more rev-
ary 1959, President Eisenhower enues to raise their tax payments
proposed that: “The present stat- to the private utility average, and
utory interest rate of 2 per cent for perhaps $50 million besides if they
loans made by the Rural Electri- had been required to meet the mar-
fication Administration be replaced ket on money costs. In other words,
by a rate which will cover the cur- the cooperatives might have had
rent cost to the Treasury of equiv- to raise their rates around 35 per
alent-term borrowing and other cent.


===== PAGE 33 =====

1961 THE REA THROUGH THE LOOKING GLASS 31

The flourishing development of “rural electrics” are common de-
the rural electric systems raises the pendents or subsidiaries, It is, in-
question whether they are not now deed, a topsy-turvy world when the
strong and enterprising enough to REA systerfii gets identified as
take their places as full-fledged, private enterprise.
dues-paying members of the cor- Pretty soon, as Humpty Dumpty
porate society. Through subsidies might have been moved to mention,
and tax exemptions, we create pow- we may begin calling the private
erful incentives for the establish- utilities public enterprises. After
ment and growth of nonprofit or- all, they are public utilities, serving
ganizations. But the hard fact is everybody in the whole land. And
that the vast federal government they do turn the greater part of
machinery demands a huge flow of their profits over to the govern-
taxable income and profits. It would ment.

grind to a halt, or fling itself apart Rich people, meanwhile, can

in wild inflation, if we all went come to be known as public serv-

cooperative. ants. After all, they do spend most
of their time working for the gov-

“Living Backwards’ ernment.

The ad treats the 434 million as

participants in one single business Maybe we're suffering from the

and says that “a finer example of effects of “living backwards.” As

private enterprise . . . would be the White Queen once told Alice,

hard to find.” The business in ques- “It always makes one a little giddy

tion must be the REA of which the at first.” @®

THE PART that government can constructively play in promoting
the growth process is strictly limited but the part it can play in
preventing growth is virtually unlimited. It can too easily impair
or destroy the growth mechanism. It can regulate or compel the
performance of prescribed acts; but it cannot by command render
people enterprising and creative in the development of the tools,
products, and markets that spell progress. Their money can be
taken in taxes and spent by political prescription, but if spent on
projects which they could but would not themselves voluntarily
undertake, then this must impede rather than speed true eco-

nomic growth.
Annual Report 1960, United States Steel Corporation


===== PAGE 34 =====

Photo by J. D. Hammond

DR. LUDWIG VON MISES


===== PAGE 35 =====

(

THE SIGNIFICANT ROLE OF

Ludwig von Mises

LAWRENCE FERTIG

ONE DAY several years ago I at-
tended a dinner party at the home
of a friend who is a knowledgeable
defender of private capitalism and
one of the best-known anti-Com-
munists in the United States. This
man had been a Socialist a genera-
tion ago. Also attending this party
was Dr. Mises. Toward the end of
the evening our host described how
Mises had changed his life. It
seems that he had come upon
Mises’ Socialism one evening and
sat up all night to read it. He was
completely shaken by this experi-
ence, he said, and from that point
on he re-evaluated his socialist con-
cepts and finally repudiated them.
He described in glowing terms the
impact of Mises’ Socialism upon
his maturing mind, and he attrib-
uted the complete change of his
intellectual life to the power and
logic of Mises’ concepts.

Mr. Fertig is economic columnist for the New
York World-Telegram and Sun and other
Scripps-Howard newspapers. He is author of
the forthcoming book, Prosperity through
Freedom.

How many minds have been sim-
ilarly influenced it is not possible
to say. But there is no question
that the clarity and vigor of Mises’
thinking has had a powerful in-
fluence on our times. For he is a
scholar’s scholar. The force of his
ideas has been multiplied by the
many able young economists he has
trained and influenced. They have
gone forth into public service and
the academic world to spread the
gospel of the free market and free-
dom.

It is not given to many people
to have such influence. While it is
true that the world in the last gen-
eration has moved appreciably
toward the collectivist state, it is
depressing to think how much fur-
ther we might have gone had there
not stood a valiant guard to lead
at least. some intellectuals in the
direction of the free society. And
foremost of this small but valiant
group who, despite great odds,
have continued to mold the think-

33


===== PAGE 36 =====

34 THE FREEMAN October

ing of many intellectuals in the ways in which they themselves are

Western world undoubtedly is often not aware. The fact that his

Ludwig von Mises. following is not legion is, of course,
In his prophetic essay published disturbing to those who are fight-

in 1949, Friedrich Hayek defined ing for individual freedom. But it |

the intellectual in a very interest- is well to remember that the lead-

ing way. “The term intellectuals,” ers in the battle for free enterprise

he said, “does not at once convey and freedom would not be so effec- j

a true picture of the large class to tive if they had not been inspired |

which we refer, and the fact that and taught by Mises. For they

we have no better name by which to speak his ideas even though they

describe what we have called the modify and popularize his con-

second-hand dealers in ideas is not cepts.

the least of the reasons why their

power is not better understood... Champion of the Free Market

What qualifies him (the intellec- Mises’ monumental work, Hu-

tual) for his job is the wide range man Action, is a case in point. Cer-

of subjects on which he can readily tainly it is not widely read — in

talk and write, and a position or terms of a popular best seller; nev-

habits through which he becomes ertheless, it daily influences the

acquainted with new ideas sooner minds of countless students, writ-

than those to whom he addresses ers, and teachers. When this book

himself.” was published in 1949, I devoted a
This is a succinet and quite accu- column to reviewing it for the

rate description of intellectuals — public.

“second-hand dealers in ideas.” In “It is about time,” I said, “that

other words, they are not the sem- some truly great advocate of lib-
inal thinkers, nor are they usually eral capitalism re-stated for our
great scholars, but they are people time the case of the free market
in various walks of life who latch and the sovereignty of the consum-
on to important ideas of famous er, as opposed to the philosophy of
scholars and retail those ideas to government intervention and the
the circle in which they are influ- sovereignty of the bureaucrat.

ential, large or small. Among the “But there is need for a much
teachers, journalists, authors, and more comprehensive work which
others with whom I am acquainted, would give intellectuals of tradi-
I can testify that Mises is the kind tional liberal persuasion a foun-
of original thinker who molds the tainhead for their gospel — the kind
concepts of many intellectuals in of inspiration and argument sup-



===== PAGE 37 =====

1961 THE SIGNIFICANT ROLE OF LUDWIG VON MISES 35

plied to the opposing school by such of action and change. This may
writers as Karl Marx, Thorstein be a book for scholars but it will
Veblen, and John Maynard Keynes. undoubtedly have a profound ef-
The need for such a work has been fect upon public opinion.”

filled by Ludwig von Mises, one of

the world’s truly great economists. A Man of Influence

His book is entitled Human Action, In the long run Human Action,
which indicates the scope of his Socialism, The Theory of Money
thinking. and Credit, and Mises’ other great

“Economic man as such is pure books continue to affect the minds
fiction. Man is a whole being and of men and thus — even if imper-
all his actions and choices are in- ceptibly — to have their effects up-
terrelated. A definitive work of on events. But in judging Mises’
economics, therefore, can well be influence, one should not under-
called Human Action. estimate the power of his person.

“The planned economy is Dr. His personality is unique, as those
Mises’ target. He says, ‘The al- who have listened to him well
ternative is not plan or no plan. The know. His seminar at New York
question is: whose plan? Should University is a rallying point for
each member of society plan for the faithful of the libertarian
himself or should a benevolent gov- cause who want to engage in seri-
ernment alone plan for them all?’ ous study. Mises’ ability to clarify
And Mises is not afraid to use the an abstruse subject is truly re-
words laissez-faire. ‘Laissez-faire,” markable. His lectures are not on-
he says, ‘means let each individual ly scholarly, but lively, ‘which is
choose how he individually wants an unusual combination. Another
to cooperate in the social division very important function which
of labor — let the consumer deter- Mises performs is that of consul-
mine what the entrepreneurs tant and guide to those of us who
should produce.’ are engaged in the daily battle.

“The interventionist is always As an economic journalist whose
looking for stability. To bring function it is to interpret and
about this impossible state he comment upon ideas and events
must force the public into a rigid which are shaping the world of
economic mold of his own making. our time, I can bear witness to
As a traditional liberal Dr. Mises’ this.
objective is a flexible economic It is essential and inspiring for
system, which is the only kind of us to have ready access to that
system that can exist in a world inexhaustible mine of lore, philoso-



===== PAGE 38 =====

36 THE FREEMAN October

phy, and theory — the mind of nomic proposal. These principles
Ludwig Mises. His comments up- permit the writer who is a stu-
on some passing event, or upon a dent of Mises to view with a clear
problem of national significance, and discerning eye every new uto- |
" never seem to follow the beaten pian proposal for improving the
path. Always he brings to bear world. Thus he can avoid falling
upon a subject a wealth of histor- into the many traps which are hid-

ical information and an insight den in the new schemes.
that is the very heart of wisdom. I will mention here only one of
To those of us who write upon many such proposals which seem
economic and political subjects his to be gaining ground not only in
suggestions and counsel — which the United States but in Britain
always seem to be available with- and other countries as well. It is
out limit — are invaluable. the theory that when an individual
It is Mises’ function to state acts, he must ponder not only his
the truth about the market econ- own self-interest but the public in-
omy without quibble and with- terest as well. He must go about
out qualification. Many authors his business with two hats, so to
who write for a more popular field speak. He is supposed to wear one
may, on occasion, find it advisable hat when he acts as a private in-
~ 77" to qualify a blunt truth, or to ex- dividual who decides what is best
press their ideas with tenderness for himself. He is supposed to re-
“for the inconsistencies, illogic, move this particular hat and put
and foibles of their audience. But on another one when he acts as a
not Mises. He states his principles self-appointed public functionary,
~ "7 in “¢léar-cut fashion without re- deciding what is best for the coun-
~~ gard-for anything but the truth it- try and for humanity. Apparently
self as he sees it. This is of high he is to wear each hat successive-
importance in guiding those who ly, never permitting his own self-
“need some star by which to set interest to interfere with the

_ their compass. course of action which he finally
decides to be in the public in-

~~ A Guiding light to terest.

=.= - Clear-cut Thinking According to this theory, when

If one is guided by the prin- a producer of goods sets his price

© ciples of the market economy as he must decide not only what is
expounded by Mises, there is no good for him but what is good for
_~-excuse for fuzziness in thinking everybody else. When a labor union
. about the validity of any new eco- leader approaches the employer he



===== PAGE 39 =====

1961 THE SIGNIFICANT ROLE OF LUDWIG VON MISES 37

must frequently say, “I can get vantage of all the inflationary
ten cents an hour more for my money which is lying around.
| men, but it is not in the public in- A similar proposal was made by
terest to take it.” When an inves- Henry C. Wallich of Yale Univer-
tor decides what to do with his sity, in a letter to the New York
money he must think not only of Times. He suggests that wage in-
interest rates and dividends but creases be limited by consensus
also of what is in the national to 2 per cent a year. He identified
interest. this figure as the long-range his-
This is the new philosophy torical rate of productivity gain.
which is gaining ground here and It may be asked why Dr. Wallich
abroad. It is unworkable, it runs is searching around for a new
contrary to human nature, it dis- formula to supplant the result
torts market factors, and it is which the market would give.
completely utopian. Its only rea- Plainly the answer is that labor
son for existence is the attempt union power is so great that tem-
to relieve government from the porarily it can get any wage rate
evil effects of bad laws which dis- it insists upon. But this uneco-
turb the market. nomic wage rate eventually is the
In Britain, the London Econom- cause of recession and unemploy-
ist recently recommended that the ment, and at that point political
Treasury publish a statistic con- pressure causes the federal govern-
cerning “the amount of wage in- ment to inflate the money supply
creases that would be likely to top- and to create deficits which are
ple the economy off-course . .. If financed by the banking system.
these estimates were published,” The way to cure this situation is to
said the Economist, “and if they re-establish market conditions, not
found their way into the head- to impose some rigid formula

lines . . . public pressure against which will make bad matters
inflation could be built up at just worse.
the right time.” The editorial then But perhaps the most curious

goes on to say that the Treasury suggestion of all was recently
should publish “the safe permis- made by an economist who is con-
sable limit for increases in wage sidered rather conservative in
rates.” Thus the government cre- some quarters. He is David Rock-
ates inflation of the money supply efeller, President of the Chase
in the first place and then tries to Manhattan Bank, one of the larg-
regiment the economy so that no est in the United States. When
individual or group would take ad- there was a great outflow of



===== PAGE 40 =====

38 THE FREEMAN October

American dollars in the latter part States to the importance of curb-
of 1960 and the beginning of ing its inflationary policies. When
1961, Mr. Rockefeller suggested public policy becomes even slightly
that American corporations hold- anti-inflationary, investors retain
ing large funds for investment their funds in the United States
should not seek the highest return and do not seek to place them
for their funds in international abroad. This pressure upon the
markets. He said, “It would seem government for some restraint up-
wise and responsible —in a time on inflation is certainly beneficial
such as the recent past, when the to the public. Yet in this particular
national interest clearly is in- instance it was asserted that the
volved — to exercise restraints in individual knew very well that it
responding to a differential in was in the public interest not to
foreign interest rates, particularly send his money abroad.
when the gains are incidental to
a company’s main business, and The lesson to be learned in all
loom relatively small on the in- these cases is the lesson that Mises
come statement. Here, as in so has devoted his life to teaching.
many areas, the business com- There is no substitute for the free
munity has an opportunity, even market. What is “right” and what
an obligation, to lead the nation is “wrong” is to be determined
in a rational pattern of behavior, by each individual, weighing his
consistent with our growing role decisions in a climate of freedom.
in the world.” The world does not seem to have
But in all of the cases cited learned this lesson well. But con-
above did not Mr. Rockefeller, cepts and intellectual trends do
Professor Wallich, and the Editor change over a long period of time.
of the London Economist really There is no reason why the pres-
beg the question? Did they not as- ent trend toward collectivism may
sume that they really knew what not be altered in another genera-
is in the public interest? In the tion. In this event there will un-
case of investing funds, one might doubtedly be many monuments
well assert that the outflow of dedicated to the unswerving de-
dollars seeking higher interest re- fender of the market system
turns in other countries is def- whose scholarship, wisdom, cour-
initely in the public interest, and age, and integrity have been such
not against it. It is the exodus of a shining example for more than
dollars which alerts the United half a century. ®


===== PAGE 41 =====

When neon lights began to flash
Around the city square,

Old Kasper pulled the curtains tight
And settled in his chair,

While Peterkin and Wilhelmine

Turned on the metaphoric screen.

They saw a monster come and stand
Upon the Senate floor,

And one of far more dreadful mien
Outside the open door;

While other monsters bigger still

Were coming slowly up the hill.

“Now tell us what those monsters are!”
The little children cried.

“They’re coming Federal Deficits,”
Old Kaspar soon replied.

“The one inside the Chamber here

Will work throughout the current year

“What sort of work,” asked Wilhelmine,"
“Can such a monster do?”

“They’re skilled at stealing widows’ mites
And clipping coinage, too.

They're trained to work by fraud or stealth

At confiscating private wealth.”

“Do folks approve of work like that?”
Cried little Peterkin.

“Old-fashioned people,” Kaspar sighed,
“Would call it deadly sin;

But Planners say there’s nothing wrong

In ways that keep the nation strong.”

“In days gone by,” said Kaspar then,
“We cherished private wealth,
In days before we learned the key
To economic health —
Before we saw Liquidity Traps
Or heard about Production Gaps.”
H. P. B. JENKINS
Economist, Fayetteville, Arkansas

39


===== PAGE 42 =====

The Inpert Situation

NEIL M. CLARK

THIS IS A CALL FOR INPERTS. a measuring cup, and in two
In a brief editorial in The Satur- minutes had proved that the ex-
day Evening Post some time ago I  pert’s answer was 10 per cent off.
outlined the inpert situation, An inpert named John Dunlop,
pointing out that we have just a Scottish veterinarian, devised
about all the experts we can use in a pneumatic tire for his son's
this country, but there is a serious bicycle. Experts saw nothing in
shortage of inperts. the idea for years and wrote
An inpert, unlike an expert, lengthy articles in engineering
hasn’t been tamed and trained and journals explaining why the pneu-
taught how it must be done. matic tire wouldn't work. Then
In the editorial I recalled the another inpert who didn’t know
young engineering expert Thomas any better put the things on his
Edison once hired, whose first as- bicycle and out-raced the world’s
signment was to determine the champion.
cubic content of a light bulb. After One serious fact about inperts
hours of careful measurement and is the difficulty of turning them
calculation he proudly presented out in large quantities. It’s easy to
an answer. But Edison shook his train an expert. But an inpert sort
head. Knocking a tiny hole in the of grows.
end of the bulb, the inventor filled This wild colt, the inpert, har-
it with water, poured the water in boring ideas that no tailor has
} cut to size for him, unawed by
tine ee Magasine. The dogmatic “authority” from what-
Saturday Evening Post, Nation's Business, and ever source, whether persons in

many other magazines. This article, and one

to follow next month on inperts as workers in high position, social taboo, acad-
an industrial society, are from a book man- N
uscript that has grown out of Mr. Clark's emy, or learned book; untrained,
editorial in The Saturday Evening Post of ip 2 ys .
December 26, 195 if “training” means rote learning

40


===== PAGE 43 =====

1961 THE INPERT SITUATION 41

and unquestioning acceptance of first into an era of explosive
what others already “know”; ir- change. But there are conflicting
reverent, if “reverence” means views as to where change is taking
kowtowing to self-appointed us, and what the future holds for
stuffed shirts; unpatriotic, if the common human being. Famil-
“patriotism” means placing one’s iar guides used in the past by
business, town, state, or nation prophets tend to be less useful
selfishly ahead of mankind — the now. Two schools of thought, at
inpert seems certain to hold a good opposite poles, have emerged.
betting hand in the poker game of

progress from now on. The indi- A Centrally-Directed Society

vidual with a view of his own is The theory most widely ex-
coming back or coming into favor. ploited since we have gained
The dynamism of many ideas knowledge of what is called the
which the world has not yet had frightening population explosion,
the nerve to try, or perhaps hasn’t and of how to crack the atom and
had the brains to think of, will invade space, has been enunciated
come not from quietly “obedient” in books such as Orwell's 198; and
banner-following hordes of face- Huxley's Brave New World Re-
less organization men in gray wisited: namely, that we are in-
flannel suits, even if they have evitably moving away from indi-
Ph.D. degrees. Believable reports vidual freedom and toward a
from Russia indicate they will not robot-like form of existence in a
come from a society predominantly centrally-directed society, where
occupied with industrial expan- minds are conditioned by so-called
sion, but requiring the bureau- leaders using thought-control
cratic scrutiny of all ideas through methods and even subtle chemicals,
four stages right up to the Central and the mass of individuals will
Committee of the Communist increasingly come under the guid-
Party. The creative ideas will ance of an oligarchy of trained and
come, rather, from free-roving, willful brains. Somebody — some-
far-roaming minds that weigh body else — will call the shots for
evidence fearlessly, accept fron- most of us, it’s said: “experts.”

tiers as gates to be crashed, and Perhaps this is a natural way to
dwell in communities where gates figure, since something of the sort
can be crashed with impunity. has happened so often in the past.

Probably no one needs to be re- Time after time, from the days of
minded at this late date that the shamans and devil priests till al-
world in our day has moved head most yesterday, a few who felt


===== PAGE 44 =====

42 THE FREEMAN October

sure they had seen the light and are to have the progress hoped for,
had been shown the right way, seem to be just too big, too com-
seized the public platform, as- plex, the goals too diverse, for any
sumed authority, held the floor process limited to the activities of
against all comers, and demanded a few and guided by them with
general submission to their views. authority.

Insofar as they were able, they The emergent theory fighting
made sure their way prevailed. for acceptance and winning it, is
Time and again such leadership, that the hope for continued pro-
however vigorous at first, has had gress lies not in submerging the
hardening of the arteries, has lost alert individual, the poor dumb in-
itself in the jungle of dogmas, has pert, but in making it increasingly
faltered, failed, been rebelled possible for him to be his own
against at last by a few bold ones, leader in an orderly world in which

and overthrown. he has a proper shot at making the
rules. Full realization is certainly
The Role of Leadership a long way off. But the logic of

Freedom for common human history indicates that this is the
beings to think and act as they de- trend the world has been slowly
cide for themselves, so long as they taking, and the way which offers
do not injure others, has ap- most hope for a greater society, a
proached at a very halting and un- society which can operate at in-
certain pace down through the cen- creasingly higher levels because
turies; but it seems to some to be the majority of individuals com-
fully proved by now that no one posing it are higher-level folks.
brain or gathering of brains, how- Leaders there will always be.
ever brilliant, is adequate for the But the function of leadership in
great job of moving society and the future, it appears, may be
civilization steadily forward to im- subtly different. Leaders may
proved and attainable goals. rather be looked upon as counse-
Efforts in the past to impose fixed lors, guides, standard-bearers
procedures and pre-planned goals whose opinions are offered and
of progress have been futile, self- sought tentatively, their words
defeating, and in the end tragic. It being recognized as opinions and
seems certain that they will be so not as “last words” on the subject:
whenever they are tried in the opinions gained by contemplation,
future — as they certainly will be experience, trial, failure and suc-
tried again and again and again. cess, and worthy of careful con-
The jobs to be done today, if we sideration. But such leaders them-


===== PAGE 45 =====

1961 THE INPERT SITUATION 43

selves, at the best, will be content age-long bonds at low performance
to say: levels, can accomplish more mira-
“This is the light I have had. It cles than releasing the energy in
may help toward your light. You atoms. An eminent philosopher
decide.” and teacher, Professor Raphael
The day of the leader who as- Demos of Harvard University, has
sumed authority, and used force pointed out that the opportunity
if necessary to bend others to his to form one’s own personality “is
way of thinking and doing, is of the greatest gift that society can
the past or passing: provided, that provide to a human being.” It may
is, we are truly moving into an also be the greatest attribute that
age of genuine progress. Authori- society can encourage for its own
tarianism in any field, “expertism” improvement.
of an earlier stamp, end-of-the-
roadism (meaning, “We have dis- Sources of Invention
covered truth once and for all and Inventiveness breeds progress
this is it!”), has always been the and, like gold, is where you find
severest brake on progress. The it. It is not the exclusive preroga-
way of the future leader will be tive of a chosen few who have re-
to concern himself less with doing ceived special training. No teach-
things for people and more with ers, we shall see, have yet come
doing those things which enable up with a sure method for creat-
people to do things for themselves. ing creativeness in human brains.
It may be hard for many of us, Training may do something to
accustomed as we are to accepting bring out the knack —may do
the say-so of “big brains,” to re- much. But the faculty occurs
ceive the fact that not groups, but widely and often turns out to be
individuals, sometimes very hum- strongest and least inhibited in
ble individuals, originate change quite unexpected places. Only too
and progress; that any great new often, however, it is bashfully
idea occurs first of all in just one modest, unsure of its welcome, un-
human brain; that innovation at willing to speak up. Unless given
the outset is strictly an individual encouragement, it may hide its
product and that the number of light and mutter to itself in
brains capable of creativity is not corners.
limited in number but is vastly A civilization which throughout
greater than has been commonly history has been largely dedicated
thought; and that the release of to traditional ways of doing
latent human creativity from its things, and has been allergic to


===== PAGE 46 =====

44 THE FREEMAN October

change, was slow to recognize and toward individual creators, whence
value any bright ideas that com- cometh all improvement.

mon human beings might have, This can probably come about
and usually was not kind to the in- only slowly and with pain and dif-
dividual inventor. The man who ficulty. But as it comes, it will
invented the wheel was probably spread and find its way into every
not regarded as a benefactor by sector of our lives and thinking.
people who knew him: more likely, A characteristic of a better tomor-
he was kicked out of the clan as row is that the individual will
a red radical. Anyone who did an make up his own mind. He will not
accustomed thing in an unaccus- tolerate having it made up for
tomed way was likely to be con- him by anyone in authority,
sidered a “queer,” a social heretic whether in government, labora-
and misfit, a disturber-of-things- tory, school, church, or place of
as-they-comfortably-were, to be work. The result will not be an-
laughed at if he were not too archy, as might be imagined, but
troublesome, to be shunned and the spread of enlightenment by
ridiculed by sensible people, and means of the increasing numbers
if, like Galileo, he proved a threat of people having light, determined
to established scientific thought, or to be themselves in all departments
like Servetus, a threat to theo- of their lives, not robots and not
crats, he must be made to recant facsimiles. Progress and enlight-
or be burned at the stake. The enment can be speeded immeas-
attitude is still with us far too urably.

much, although now that the It is my conviction that the self-
world, by and large, is coming to propelled thinking inpert who
accept rapid change as inevitable doesn’t swallow all he hears and
and desirable, it surely is high reads, even if I say it, affords the
time for the emergence of a new future its brightest promise, quan-
and more favorable attitude titatively and qualitatively. @®

IF THE MATTER is important and you are sure of your ground,
never fear to be in the minority. The world turns aside to let
any man pass who knows where he is going.


===== PAGE 47 =====

A myth examined:

e THEE CLOCK

CLARENCE B. CARSON

PLATFORMS or programs which is of no value in judging the
acknowledge an indebtedness to soundness of present ideas and
the ideals, principles, or social programs?
structures and experiences of the Naturally, if a person is un-
past are likely to evoke the pro- aware that his own beliefs are of
test: “You can’t turn back the mythological character, he will
clock!” The “conservative” sup- think that propositions derived
porters of such policies are de- from his beliefs are facts. Those
clared impractical. who declare that you cannot re-
Charles Rolo, in a recent review store conditions or revive ideas
in Atlantic, refers to “brainless from the past are doing just that.
reactionaries who pine, fruitless- They assume that history (the
ly, for a return to old-fashioned, past) proves the futility of look-
laissez-faire capitalism.” Clinton ing back — that successful
Rossiter, in a letter to Time, de- changes result from acceptance of,
nies the rubric Conservative to and adjustment to, existing condi-
Barry Goldwater because of his tions. But does the historical rec-
“refusal to accept social and eco- ord itself warrant such assump-
nomic changes that have been tions? Did Charlemagne accept
firmly established in the Ameri- the existing chaos and disorder in
can way of life, his announced in- Western Europe and make the nec-
tention of rolling back the course essary adjustments to it, or did he
of history to (at the very latest) attempt to restore order and se-
1930. ..."” curity by looking back to the
Is it fact or myth that the past model of Rome? Did the Italian
Dr. Carson is Associate Professor of History Renaissance result from an ac-
at Jacksonville State College in Alabama. ceptance of a then decadent me-

45


===== PAGE 48 =====

46 THE FREEMAN October

dieval culture, or was it spurred sociated with the intellectual de-
by an attempt to reincarnate the velopment known as the Enlight-
best of Greece and Rome? Does enment. At this stage, it con-
Mozart's thrilling music indicate sisted mainly of the belief that
a simple adjustment to Newton’s man was coming to know the
“New Cosmology,” or were both world in which he lived and that
Newton’s ideas and Mozart's mu- this new knowledge would enable
sic informed by the classical ideas him to control the world or to live
of order, proportion, harmony, a richer life within it. Thus, the
and regularity? There is no ade- idea of progress was initially the
quate way to answer these ques- notion that man can come to know
tions without exposing the flimsy his nature, the nature of the uni-
and unsubstantial historical basis verse, and the laws of nature, and
for the belief that looking back- to make progress by utilizing this

ward has no value. knowledge.
But when this idea of progress
The Myth of Progress was infused with Darwinian con-

The view that the past cannot cepts, it acquired a whole new
be recovered with profit rests up- cargo of meanings and overtones.
on the most extensive myth It acquired a host of metaphysical
created in the modern era. The assumptions which were implicit
origin of most myths is obscure; in the generalizations propagated
not so this one. It came into being by the early evolutionists: namely,
in an era when men prided them- that the whole universe is in a
selves upon their enlightened constant state of evolution, that
awareness of their assumptions. everything which exists is a re-
As a myth, the view that a return sult of an evolution, that all life
to the past is retrogressive can has evolved and is subject to such
be traced directly to the evolu- laws as may govern evolution, that
tionary theories stemming from the basic law governing life is a
Darwinism. Dealing with the contest with other life for the
myth simply as an idea, it is the means to maintain life, that in the
idea of progress. The idea of contestthefittest survive and prog-
progress, however, was not so ress takes place. Progress became
heavily freighted with assump- something which takes place auto-
tions before its infusion with matically, whether man will or no.
Darwinism. It came to the fore in By the strange logic of the spread
the seventeenth and eighteenth of ideas, the “laws” of evolution
centuries and is particularly as- were extended to social organiza-


===== PAGE 49 =====

1961 “YOU CAN’T TURN BACK THE CLOCK” 47

tions, institutions, and ideas; they was faster, safer, more efficient,
too evolved. The latest was the saved labor, provided more goods,
best by virtue of its existence; it extended freedom, and made life
was the fittest because it had sur- more certain.
vived.

When it had taken on all this Unconscious Change
cargo, the idea of progress had As the myth gained adherents,
become a myth. It was universal philosophy and reason yielded up
in its application and comprehen- their role in human affairs.
sive in its coverage. No matter Change is not the result of con-
that it was the creation of intel- scious thought; it is inevitable,
lectuals, it entered into the lore of driven by subterranean or cosmic
the people. Evidence was available forces: the Unknown of Spencer,
on every hand to support the the contest for the available goods
myth, just as the myth itself in which the fittest survive of
served to move men along lines of Darwin, the interplay of heredity
development consonant with it. and environment of Julian Hux-
The evidence appeared to indicate ley, the adjustments which attend
that man was the latest in the technological innovations of Marx,
chain of evolution and obviously the energy made available by the
the best. Was he not the most com- sublimation of sex. As William
plex, the most adaptable, the Graham Sumner said, “The things
highest of the animals? Were not which will change it [the stream
. the material conditions of man- of time or history] are the great
kind improving as evidenced by discoveries and inventions, the
better roads, swifter means of new reactions inside the social
transportation and communica- organism, and the changes in the
tion, greater production and wider earth itself on account of changes
distribution of goods? With new in the cosmical forces.”
developments in medicine, dread With the intellectuals embrac-
diseases were controlled, and the ing a view which pronounced them
average life span was extended. superior to their predecessors, the
In the nineteenth century, insti- myth was spared subjection to
tutions were “perfected” which logical analysis or exposure of its
protected the liberty of the indi- metaphysical assumptions. Why,
vidual, and histories were written for example, did each change con-
showing the evolution of freedom stitute improvement or progress?
through the centuries. The latest By what criterion is a speed of
was obviously the best in that it 200 miles per hour preferable to


===== PAGE 50 =====

48 THE FREEMAN October

one of 100 miles per hour? By To return to anything in the past
what criterion is machine produc- would be devolution, if it were
tion superior to skilled hand pro- even possible.
duction? It is possible, of course,
to name criteria in terms of which Looking Backward
these changes would be progress. The above is an outline of the
But the criteria would not be myth: the belief that the latest is
based upon the evidence but upon the best, that the past is irre-
assumptions or beliefs as to what trievable, that progress is inevita-
is desirable. In other words, the ble, and that you can’t turn back
criteria would rest upon the a the clock. It is my belief that we
priori and metaphysical assump- usually read the historical record
tions about the purpose of life through the distorted lens ground
held by the men who maintained to the specifications of the myth.
them, In other words, we see history
The myth acted also to inhibit from the perspective of the myth,
certain kinds of historical study. and read into it evidence to sup-
Here is a paradox. Evolution made port the assumptions. The view
the study of everything basically that man, institutions, societies,
historical — the study of its ev- and beliefs follow evolutionary
olution or development. But it al- patterns is based upon a priori as-
so made historical study almost sumptions which derive from ev-
purely academic, as that word is idence built up from a study of
now understood. Any study prob- inanimate objects, plants, and an-
ing into the past must be dealing imals. The truth of these assump-
with dead fossils, for all that was tions can best be tested by doubt-
good still survives since the fittest ing their validity.
always survives. Of course, ideas Certainly, Western men prior
are rarely carried to such an ex- to. the eighteenth century have
treme, and they are seldom if ever been much more inclined to look
realized. So, under the impetus of back to the past for guidance and
evolution the study of history has direction than to accept the latest
flourished. But it is a history with as the best. Most peoples have had
only an academic raison d'etre, their lives founded in the customs
only for its entertainment value. and traditions of the past. They
It is the study of the past upon have thought of any change as a
which the present stands, but it harbinger of chaos and disintegra-
is disjoined by the myth from hav~- tion. It would be much better to
ing much to do with the future. continue with that which had been


===== PAGE 51 =====

1961 “YOU CAN'T TURN BACK THE CLOCK” 49

tested and found workable than these earlier myths were more
to venture into the unknown. When nearly true than current ones,
men have had rights and privi- though they may have been. My
leges, they have been founded in point is that other men have rev-
past grants and ideas. To have ered the past as profoundly as we
been fashioned of old was long reject it. Since they did so, their
believed by men to be an argu- actions provide historical evidence
ment in favor of a thing. as to the viability of restoring
Looking backward to the past, something from the past. What I
attempting to revive something would like to do here is simply to
from the past, revering the aged rescue historical evidence from the
was based on assumptions which limbo into which it has been cast
had mythological bases frequently, by the believers in the myth of
just as does the current rejection progress.
of the past. Many peoples have be-
lieved in the myth of a Golden Age
in the past. This myth may refer to The possibility of turning to the
the profound belief in the Fall of past with profit should not be con-
Man, the lost harmony with God or fused with attempts to restore the
with the universe, the great age of past in toto. It is not necessary to
the Greek city-states, the Pax Ro- show that the Roman Empire was
mana, or any other past condition. restored in facsimile in the Middle
To Christians, the yearning to Ages to demonstrate that the at-
restore the past was supported by tempt to do so had salutary results.
the desire to restore the lost har- Roman law was not restored in its
mony between God and man. Men pristine purity in Western Europe
in the Middle Ages looked back- in the twelfth and thirteenth cen-
ward to the Incarnation of Christ turies, but its revival brought rea-
by which the means for the resto- son to many judicial proceedings
ration of harmony was made avail- and gave impetus to legal thought.
able. They looked back to the age Sir Thomas More did not divide
of the Apostles and the Fathers England into city-states, but he and
when the word was fresher and his fellow humanists did succeed
purer, not yet so corrupted by the in making the Greek language and
passage of time. The Protestant re- literature a part of the intellectual
formers, for the most part, wished equipment of educated English-
to return to the purity of primitive men, Perhaps the Protestant re-
Christianity. formers did not restore primitive
Ido not intend here to argue that Christianity, but in attempting

An Age of Transition


===== PAGE 52 =====

50 THE FREEMAN October

to do so they did revitalize Chris- that anything but disintegration
tianity and make it a live and will come? To return once more to
relevant religion for millions for history purged of the myth of prog-
centuries. Who would deny that ress, the new has come when men
when thinkers of Medieval Europe have been caught up in new vi-
turned backward to Aristotle that sions, new enthusiasms, when they
intellectual life received new vig- have been revived and restored.
or? The United States was hardly More often than not, it seems to
envisioned as a Roman city-state, me, this has been spurred by a re-
but she was styled a republic, her turn in some way to the past.
upper legislative house was called

the Senate, and she adopted a con- Sources of Solutions

stitution in the manner of Rome. There are numerous questions
Were all of the above “brainless” today that should be referred to
efforts to turn back the clock? the past in the hope of finding an-

It does not follow, of course, that swers. For example: Have the lib-
every attempt to restore something erties of men been protected by
from the past is commendable or concentration of power in govern-
that all experiments with the new ments, or by the limitation upon
are misguided. I am attempting to and separation of power? Has the
redress an imbalance in emphasis, vitality of a people been enhanced
an imbalance maintained by the by governmental assistance, or by
support of a modern myth. Histori- leaving them on their own to look
cally, once we ignore the myth, after their own needs? Does desir-
looking backward has been a very able change result from the activi-
fruitful pastime. It. has been the ties of disciplined men, or is it the
source of periodic renascences of result of blind chance? Or let us
the Christian era, Far from being turn to the past in another way:
“brainless,” it may be the only sen- Have some men in earlier times
sible alternative to deterioration held nobler ideals than men do to-
and chaos at this time. It is a com- day? Have more gracious manners
monplace today that we live in an been promulgated prior to those of
age of transition. An age of transi- Amy Vanderbilt? Have more
tion to what? Here the prophets worthy purposes of life been enun-
become vague and suggest that we ciated in earlier times? Is Chris-
cannot know, we shall just have to tianity dead, or does its revival de-
wait and see. Is there really any pend upon a new vision of ancient
reason to suppose that if we sit pas- meanings?
sively waiting for what may come I am not suggesting that the an-


===== PAGE 53 =====

1961 “YOU CAN'T TURN BACK THE CLOCK” 51

swers to these questions are simple toward children or women. Rule
or easily discovered. What I am by law rather than by men could
saying is that some of the answers be restored without returning capi-
may be found in the past, that these tal punishment for stealing a pig.
are vital questions, and that there It is true that freedom and re-
is no reason why we should not sponsibility cannot be restored
turn to the past as one of the without exposing men to incon-
sources of solutions. We do have veniences and possible suffering.
much more reason for doubting Vitality cannot be restored to mod-
that the latest is the best than did ern life without reviving an aware-
men in the nineteenth century. The ness of perilous choices which con-
life span has been extended but the front us each moment. Reason can-
continuation of life itself has been not be restored to public delibera-
thrown into doubt by the develop- tions without subordinating human
ment of nuclear weapons, The lat- passions and desires to it. Rescuing
est political institutions are totali- the living value of the past will not
tarian states, hardly refuges of enable us to build utopia. It will
freedom. Concentration camps, mil- broaden immensely our experience
itary dictatorships, juvenile de- and widen the range of our choices,
linquency, and huge military ex- as well as heighten our awareness
penditures are endemic twentieth of the possibility of choice.

century developments. The myth Looking backward can be an ex-
of progress now inhibits thought hilirating and rewarding experi-
and action, whatever its role in ence. There are whole mental

earlier times. worlds of wisdom available to us
once we view man’s past achieve-
Keep the Living Values ments, failures, and aspirations

The myth will not be easily ex- creatively. There are live wires, to
orcised. Those under its sway have borrow a phrase from William
a whole arsenal of arguments that James, running through the whole
I have not touched. They hold up course of history. We neglect the
as spectors past brutalities and values of the past to our impover-
cruelties which would be returned ishment; we plunge into the fu-
when anything from the past is re- ture unguided by the past at our
stored. But is there evidence that peril. With so many riches from
an attempt to restore any one thing our own American past, we ought
will result in restoring everything? not to be inhibited from using
Authority might be restored to the them by the myth that you can’t
home without restoring brutality turn back the clock. &


===== PAGE 54 =====

a moral issue

ROBERT M. STOCKING

ONE THING we “Westerners” pride of the law of supply and demand
ourselves on is our system of de- and therefore have become sympa-
termining value, particularly eco- thetic to socialism.
nomic value. It is, we believe, the According to socialist views, the
fairest, truest, most accurate sys- labor theory of value determines
tem ever devised, based as it is on the true economic worth of all
the law of supply and demand. goods, except of course, those
Some philosophers, however, feel which are socially unnecessary.
that value determined in the free Simply stated, the theory holds
market is morally delinquent! In that the true value of all merchan-
fact, they believe the law of supply dise (or service) is the labor in-
and demand to be the basis of a corporated in its production.
vast swindle through which the Market value, on the other
public is blatantly bilked of billions! hand, may be considerably differ-
From where we sit, it is easy ent from that determined by the
to view these fellows as fanatics labor theory. Simply stated, the
whose intellectual honesty has principle of supply and demand ob-
been subordinated to their polit- serves that people will demand
ical preferences. They appear to (try to get) the things they want;
reject the free market simply be- and when the supply is great, they
cause Socialists have labeled it will pay less, when short, pay
“capitalist.” But it seems more more. :
probable that they honestly do not This idea of scarcity creating
understand the moral justification an increase in value is the first of
Mr. Stocking owns and operates an advertis- a number of stumbling blocks in
ing agency. His interest in the subject of understanding the morality of

value stems from the fact that the promotion .
of value is his business. market value. It is perfectly pre-

52


===== PAGE 55 =====

1961 VALUE—A MORAL ISSUE 53

posterous, it is argued, to claim utility (value) implies the limits
that scarcity makes us wealthier of our environment: we appear to
(by increasing market values) live in a narrow area of optimum
and abundance makes us poor! conditions any great divergence
Since quite the contrary is the from which will cause dissatisfac-
case, the law of supply and de- tion, discomfort, or death!

mand represents a separation These environmental limitations
from reality. Capitalist economies are at work with all goods and
being self-contradictory, there- services. Consider salt, for ex-
fore, are doomed to self-destruc- ample: it is essential to the proper

tion! electrolytic function of the human
} . body and is valued by many who
The Point of Saturation purchase and consume it a pinch

An English writer, W. F. Lloyd at a time day by day. Yet, if we
(1794-1853), answered this ques- were to consume at one meal all
tion long ago. He pointed out that the salt consumed in a lifetime,
specific wants are satiable and it would cause violent illness or
that value tends to disappear at death! Ice, which we go to such
the point of satiation. His famous pains to produce artificially in our
example tells of a hungry man refrigerators, falls free on the
getting successive ounces of food ground in the winter time. Yet, in-
and demonstrates that his desire stead of being overjoyed at our
for food tends to diminish with newly acquired wealth, we employ

each additional ounce. an expensive waste-removal sys-
Had Mr. Lloyd continued his tem to get rid of the stuff.
analysis, he would have gone into Scarcity (as a prerequisite of

the area of specific abundance and value) is a factor in economics
the creation of negative value. If because it represents a divergence
the subject were fed additional from optimum conditions. A better
ounces of food after he said he word might be unfavorableness.
wanted no more, we can see that Excessive supply can be just as
his negative value would also tend unfavorable as deficient supply.
to change with each succeeding And whether or not such scarcity
ounce, each increase in negative or abundance is good or evil and to
feeling being expressed more in- what extent, is purely a human
dignantly! In fact, if continued judgment. (A scarcity of blue-
long enough, the experiment bottle flies, for example, might
might end in violence! have little economic significance.)

This concept of diminishing Wealth is goods that are valued


===== PAGE 56 =====

54 THE FREEMAN October

because they help achieve opti- ject for years, and have acquired
mum conditions or eliminate non- more experience in this particular
optimum conditions. In a state of area than any other mortal soul.
Nirvana, optimum conditions ap- It would seem to me, therefore,
pear totally achieved; hence, the that in estimating how I value
striving to achieve them disap- things, it would at least be useful
pears as does all value and wealth. to ask my opinion.

The difference between the labor Of course, personal value is
theory and supply and demand ap- thought by many persons to differ
pears to be the difference between entirely from market value. They
an objective and a subjective ap- appear to reason as follows: To
proach to economics. The Socialist the owner of an abundance of
observes objectively that the man- knives, one knife more or less
ufacturing of goods costs a certain would have little value. But be-
amount of labor time. Thus, he can cause it can be exchanged for cash
tell you precisely what the goods in the market place, it has a mar-
are worth regardless of what you ket value which is completely in-
or anyone else may feel about dependent of the personal value its
them. Personal feelings, he might owner might give it.
say, have no place in science! In judging the world according
to our own values, we might easily
conclude that everyone values
knives as little as we do and that

On the other hand, an advocate the mysterious cash value of
of the free market will point out knives is purely the result of some
that there is a vast difference be- trickery of an abstract market.
tween scientific efficiency and But careful study will show that
scientific officiousness. It is just as the collective phenomenon of the
officious to try to tell someone that market actually possesses an
you know better than he what he atomic structure, each constituent
wants scientifically as artfully. part being one indivisible con-

Let me put it this way: I spe- sumer (or corporate representa-
cialize in certain kinds of work tion thereof). And while the
but claim to be an expert in prac- values he expresses may be con-
tically nothing. There is one ques- siderably different than my own,
tion, however, on which I am: the they are just as personal to him
world’s leading expert — the ques- as mine are to me.
tion of what I want. I have been The miracle of the free market
collecting information on the sub- is the manner in which competi-

Personal Value Judgments
Versus Market Value


===== PAGE 57 =====

1961 VALUE—A MORAL ISSUE 55

tion increases real values and thus and this is why some of them are
raises the general level of eco- able to produce and sell refrigera-
nomic activity. We could estimate tors at a profit. The market price
the value of refrigerators, for ex- consumers will pay will be just
ample, on the basis of replacing high enough to keep the necessary
otherwise spoiled food. Such sav- manufacturers in business. The
ings in a modern household can least efficient manufacturer who
amount to hundreds of dollars a stays in business will barely break
year. Some families, at least, even or recover his costs — the
might be willing to pay thousands marginal producer; others will
of dollars for a refrigerator, be- show a profit, depending on how
cause even at such high prices, it capably they can cut costs of pro-
would be more profitable to buy duction.
the refrigerator than suffer the
losses of food spoilage. Aristotle's Error

But in the free market, competi- The difficulty in understanding
tors offer refrigerators at lower value appears to go back to Aris-
and lower prices ( and with greater totle. Tangible goods, he thought,
and greater improvements) until were the ethical abstract of
most consumers find it quite profit- wealth. But intangible goods
able to own one. So, the real (services such as retailing) were
miracle of the market is the way just the opposite. Such, he said,
it supplies goods and services at ‘were to be censured.”
prices well below the values many But thanks to studies in modern
consumers hold. Hence, greater clinical psychology, we now know
numbers can enjoy greater abun- that Aristotle had it exactly back-
dance, which in turn stimulates wards: All goods, whether they
production, and so on, up to the originally appear tangible or in-
miracle of modern America. tangible, perform only service.

In other words, because of com- Food performs the service of
petitive forces, the price of refrig- nourishing the body; clothing the
erators is so much lower than service of protection; automobiles
most consumers would be willing the service of transportation;
to pay that those consumers enjoy medicine the service of healing;
a large margin of profit or satis- and so on. Hence, the ultimate ab-
faction in use. On the other hand, stract of wealth is never tangible
competing manufacturers of re- goods, as Aristotle thought, but
frigerators have differing rates of only the intangible, service. And
efficiency or costs of production, goods are the substance of wealth


===== PAGE 58 =====

56 THE FREEMAN October

only so long as consumers continue “profit” is used with at least three
to value the services to be per- different meanings: the acquisi-
formed. But this value is purely tion of cash (profitable employ-
personal, fluctuating and fre- ment), then goods and services
quently capricious. It is upon this (profitable purchase), and finally
intangible — the personal value of the use, consumption, or enjoy-
services — that an advanced, free ment of them (a profitable experi-
market society is based. ence, for example, in attending a
One of the services Aristotle play).
particularly resented was the lend-
ing of money and especially the The Physiology of Profit
collection of interest (though he Profit is a physiological phe-
did approve borrowing money nomenon. Theoretical profits are
without interest). From that day, all right, but if we eat theoretical
some hundreds of years before the food, ride around in theoretical
beginning of the Christian Era, automobiles, and wear theoretical
money lending has been tainted clothing, we may find our physi-
with Aristotle’s ire, and usury has ologies rebelling against our phi-
been considered evil. In fact, in losophizing and might just end up
socialist Russia today, investments in a mental institution. Physically,
are not permitted to earn interest. profit only occurs when the human
As a result, malinvestment is one organism reacts to, or with, some
of their greatest social problems. object or service valued. All other
From these Aristotelian ideas uses of the term refer to this
derived a centuries-long contro- physiological potential. Money it-
versy about which kind of income self is not consumable. The only
was good and which evil. Accord- purpose of profit-in-money and
ing to socialist views, good income profit-in-goods is the ultimate
is that which is sufficient to realization of profit-in-satisfac-
satisfy basic wants. All other in- tion.
come is profit, and, therefore, evil. Socialists believe that the value
This kind of thinking appears of goods depends upon their innate
to derive in part from Aristotelian characteristics. A knife is valu-
confusion about the morality of able because it possesses a unique
income and the meaning of profit. configuration, one that makes cut-
Actually, profit is an integral part ting possible. Therefore, the value
of value: what is valued is only is “in” the shape of the knife. The
the profit which will result from reasoning is good but doesn’t go
consumption. However, the word far enough. It isn’t the shape of


===== PAGE 59 =====

1961 VALUE—A MORAL ISSUE - 57

the instrument or even the act of they neither intend to wear, eat,
cutting that is valued but only the ride on, or in any other direct way
service performed thereby. Cut- consume the stuff. The value they
ting a piece of meat from a roast project into the gold is only the
—so creating more favorable image of the satisfactions which
meat-eating conditions —is con- they anticipate will be forthcom-
sidered desirable and profitable ing from the consumption of the
by many. Cutting a piece out of goods or services for which they
one’s arm is not. expect to exchange it.
Nevertheless, Socialists believe

that value is an intrinsic part of If Cost Were Value,

all goods, as did the classical econ- Beggars Would Ride

omists. According to Karl Marx, We could all give up working
the “scientific” Socialist, value is for a living if we could only con-
created in the manufacturing proc- vince storekeepers that cost were
ess, derives from laboring, and so value. Every time we walked off
appears in goods as a kind of with another load of merchandise,
crystallization of labor. Specific- so engendering (among other
ally, it is said to be “labor in crys- things) inventory cost, we could
talline form,” and as such im- explain that with each succeeding
mutable ectoplasm, it is not sub- increase in cost, he gained a cor-
ject to modification by the mere responding increase in value and
opinions of the likes of you and so was actually becoming wealth-

me. ier and wealthier.

Modern psychological studies Socialists have long realized
reveal, however, that there is no that the simple incurrence of cost
such thing as intrinsic value — (labor cost) did not necessarily

not now, and never was! What we create value. (They use the word
refer to as intrinsic value is in value to mean wealth, which error
fact the psychological mechanism is basic to the fallacy of the sys-
of projection: we project our ideas tem.) The creative act only oc-
of value into things and then con- curs when labor manufactures
clude that the value is possessed ‘socially necessary” goods. But
by them (is inside them). with a controlled market, the

Most anyone will agree, for ex- mechanism by which we can find
ample, that a twenty-five pound out what is socially wanted is
ingot of gold possesses great in- destroyed. With no free market,
trinsic value. But careful ques- through which the public can com-
tioning will probably reveal that municate its wants and desires, it


===== PAGE 60 =====

58 THE FREEMAN October

becomes the job of socialist ex- clause in the labor theory, there-
perts to estimate what is socially fore, is an automatic demand for
necessary and what is socially un- wholesale thought control.
necessary. At the same time we note that
With some goods, the decision thought control —or, at least a
is clear-cut and little intelligence massive attempt at it — has be-
is needed. Automatic washing ma- come a serious social problem in
chines, for example, appear totally every socialist state established so
unnecessary, so their manufacture far: National Socialist Germany,
might be forbidden. Coarse bread, Fascist Italy, the Union of Soviet
on the other hand, appears quite Socialist Republics, the People’s
necessary, and its manufacture Republic of China, and so on.
would be required. But most goods
fall somewhere between the ex- Social Classes
tremes of socially necessary and In these States the public has
socially unnecessary, and so it been divided into two classes, the
becomes quite a job to determine high class made up of socialist ex-
what should be valued how much perts and the low class made up
and therefore ‘“laborized.” Then, of the workers. The political
the Socialist must instruct the structure is essentially identical
consumer as to what he may want with the aristocratic system of
and what he may not, what he medieval Europe and might prop-
may buy and what he may not, erly be referred to as the New
what he may pay and what he Aristocratic System. The aristoe-
may not pay. And we can almost racy owns all property in the
imagine some modern-day Soc- name of the workers (in order to
rates asking: “Would it be better eliminate the evil of private
if we let them decide for them- ownership) and manages it, with
selves?” the aid of thought control, accord-
It is quite clear that the “Great ing to the principles set forth in
Socialist Discovery” is that when the labor theory as well as a few
labor manufactures the things we assorted ideas of their own. The
value, wealth is created (though economy is essentially feudal with
they never got the terminology the exception that it is primarily
straight). So in order to make the industrial rather than agrarian.
labor theory appear to work, they The trouble has been that in
must control our valuing — that is, every case, megalomaniacs have
control our thinking. The real seized control of the governments
meaning of the “social necessity” at once. They have promptly con-


===== PAGE 61 =====

1961 VALUE—A MORAL ISSUE 59

verted the “benevolent despot- basis is the observation that he
isms” into tyrannies as horrifying is the only reliable authority on
as any recorded in history. the subject of how much he wants
In order to make it easier for of what. Whether or not youcallthis
the socialist world to understand a law or theory depends upon the
the high moral level of an ad- respect you have for others. To
vanced, free market society, it the cynic, consumer value is
might be helpful to look at the theory. To someone who has
law of supply and demand along learned respect for his fellow
lines that more or less parallel the citizens, it is law.
socialist structure. The “supply” part of the law of
The “demand” part of the law, supply and demand is the volun-
representing the aggregate of tary manufacture of goods and
personal or consumer value, is services in response to the re-
significant only in terms of the wards offered in the free market.
cash offered. Potential customers The manufacturing involves the
may think they value some com- risks inherent in specialization —
modity a great deal, but if the the same specialization which
cash offered doesn’t match the creates such economies in produc-
protestations, we have evidence tion costs —and so requires a
with which we can separate the stable political system under
real from the imaginary. Hence, which all participants tacitly
consumer value as expressed in agree to exchange equal rights
cash is a precisely delimited, for one another and follow the
though temporary and changing, same rules of behavior (law). The
reality. But consumer “interest” equality involved refers to rights
in new products represents a and laws and not to such physical
speculative thing because there matters as height, weight, serv-
is no telling whether the “inter- iceability, bank balances, and so
est” will be backed up with cash on. For men of good will, respect
when someone finally appears with for the rights of others is a moral

the merchandise. obligation which is assumed vol-

untarily. Among those of ill will,

Consumer Law of Values a police force is required to pro-
Thus, a free market economy is tect the rest.

based upon a consumer law of Supply is “controlled” by con-

value, validated in cash, in which sumer expressions of value in
value is measurable only in terms terms of cash: a consumer bids
of consumer choice. Its moral higher (is willing to pay higher


===== PAGE 62 =====

60 THE FREEMAN October

prices) for goods he wants more, To question the morality of the
so encouraging greater supply; law of supply and demand, upon
he bids lower (or not at all) for which the free market is based, is
goods he wants less or none of, to question the individual's right
so discouraging the manufacture to value. It implies that it would be
of a flood of unwanted merchan- more moral for a clique to impose
dise. In this way, for example, its own values upon the majority.
the manufacture of horse-drawn To some personalities, such tyran-
wagons has been effectively dis- ny may appear supremely moral.
couraged in Western nations But to the majority, it sounds in-
since the advent of the automo- sane!

bile, * * *

Hence, a free market economy This “philosophical structure” rep-
can be described as a philosophi- 7¢sents a line of reasoning and
cal structure founded upon and therefore can be referred to as com-
controlled by the general will mon sense. It will surprise many

hi . . ’ readers to learn that some intellec-
which is expressed in, and in that tuals believe that common sense has

way determined by, the free mar- peep discredited. They feel it is so
ket. studded with imperfections as to
With this brief rearrangement, have become utterly useless. But
a consumer law of value can be common sense is just the layman's
contrasted directly with the labor term for rationality. And recent
theory of value. The incentive psychiatric opinion holds that imper-
system of supply contrasts di- foot rationality 18 considerably better
rectly with the compulsory sys- an even the most perfect irration-
. ality. Although common sense may
tem. Hence, the basis of a volun- po : .
) be studded with imperfections, until

tary, free market society can be

i . the advent of superman, it's all we
directly contrasted with that of mortals have to work with; so we

an aristocratic or socialist society. might as well make the best of it.

The Power to Tax . ..

“THE TAX HISTORY of the United States in recent years has been
fairly sensational. A visitor from Mars would suspect that a
Communist fifth columnist was writing the laws for the purpose

of making private enterprise unworkable.”

SUMNER H. SLICHTER (circa 1940)


===== PAGE 63 =====

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

Vo
} JS f
The TW QOjBaruchs

,
_ = i
EI

BERNARD M. BARUCH, as the two comb’s words some seventy years
volumes of his My Own Story later, they went:
(Holt, $5 and $6) make plain, has “When prices go up, two proc-
been two men. The problem of rec- esses will set in — an increased pro-
onciling the two Baruchs is one duction and a decreased consump-
that our time has not been able to tion. The effect will be a gradual
solve. Nor does Mr. Baruch help fall in prices. If prices get too low,
very much when it comes to at- two processes will set in — de-
tempting a reconciliation. He sim- creased production because a man
ply states the case for each Baruch, will not continue to produce at a
lucidly and candidly. They exist loss and, second, increased con-
quite apart from each other. sumption. These two forces will
The first volume of the memoirs tend to establish the normal bal-
is by all odds the most interesting. ance.”
Here we see the private Baruch in Ten years after his first intro-
action. A young South Carolina duction to Professor Newcomb’s
boy of Jewish extraction who was political economy Baruch ‘became
brought to New York City at the rich by remembering those words.”
age of eleven, Baruch was never When other men tried to suspend
particularly bothered by anti-Sem- the law of supply and demand in
itism. He assumed that he was as copper, hoping to effect a corner
good as anybody, and the world that would keep prices high, Ba-
paid him the compliment of taking ruch bet on the discovery of new
him at his own valuation. At the sources of copper. Indeed, he
College of the City of New York in helped bring new sources into be-
the eighteen eighties he listened to ing by backing a young mining en-
Professor George B. Newcomb ex- gineer from Missouri named Dan-
pound the law of supply and de- iel C. Jackling. It was Jackling who
mand. As Baruch recalls New- applied strip mining methods to

61


===== PAGE 64 =====

62 THE FREEMAN October

the cheap exploitation of low-grade on this breed — and he was usually
Utah ore. Along with the Guggen- in a strong cash position whenever
heims, Baruch knew that Mother they had bid stock prices too high.
Nature makes it virtually impos- He was not one to fall for the “mad-
sible for a “trust” in any raw ma- nesses and delusions of crowds.”
terials to exist for very long. And, For his own part, Baruch pre-
simply by recalling Professor ferred the Edward Harriman type
Newcomb's words about supply and of “speculation.” Harriman used
demand and applying his own acute his knowledge of the market to
sense of timing, Baruch made pick up control of the Union Pa-
money by being in and out of cop- cific when it was “two streaks of
per at the right moments. rust.” He made his purchase pay
For a long period the young Ba- off by putting the Union Pacific on
ruch carried his office more or less its economic feet. In short, he was
in his hat. He worked as a partner a “builder” — as Garet Garrett was
in a brokerage firm, but he made later to maintain in a novel based
his millions by trading on his own on Harriman’s career.
account. On one occasion he tried Baruch was also a builder when
to make money out of his prior it came to developing raw materi-
knowledge that a coffee price main- als. He tried to interest the elder
tenance scheme was being cooked J.P. Morgan in Texas sulphur. Un-
up. It was his one big mistake: the fortunately he used the word “‘gam-
price of coffee, quite in accordance ble” in Morgan’s presence — and
with Professor Newcomb’s words, Morgan bowed him out of his of-

fell. fice with a curt statement, “I never
gamble.” Actually, there was no
The Speculator’s Role “gamble” to Baruch’s sulphur

Baruch makes no apology for proposition, for an oil engineer,
having been a “speculator.” The Herman Frasch, had developed a
speculator is necessary if free mar- method of melting sulphur in the
kets are to be maintained. True earth and piping it to the surface,
enough, there were good and bad where it could be allowed to solid-
speculators in the days when Ba- ify in cooling bins. Baruch got
ruch was first amassing a little cap- expert engineering advice about his
ital. Bad speculators sometimes Texas sulphur deposits —and he
made money by operating pools held on to his great capital gains
which bid the market up and down in the Texas Gulf Sulphur Com-
without much relation to the forces pany by selling out before the 1929
of production. Baruch kept his eye crash. The Morgans missed out on


===== PAGE 65 =====

1961 THE TWO BARUCHS 63

the deal — but then, as Baruch puts from farmers to pay for the losses.
it, they were not in dire need of (The idea was that this would dis-

the money anyway. courage excess production.) As
Mr. Baruch explains it, he didn’t

From Demand and Supply really believe in the “protectionist
to Price Controls basis” of MeNary-Haugenism.
By the strangest of cosmic iron- “Still,” he says, “if the farmer
ies, Woodrow Wilson asked Ba- could not be aided by the reduction
ruch, the nation’s foremost prac- of industrial tariffs . . . then he

tical believer in the law of supply ought, in simple justice, I thought,
and demand, to take charge of the to enjoy the same advantage en-
War Industries Board in World joyed by industry under the pro-
War I. The War Industries Board tective system.”

proceeded forthwith to suspend the Ruefully, the “non-laissez faire”
normal workings of supply and de- Baruch writes:
mand by state intervention. Ba- “If we were unable to knock

ruch used his knowledge of men to down the old artificiality of the in-
purchase copper and steel for the dustrial tariff, which interfered
government at what amounted to with the normal working of sup-
“gift” prices. He appealed to the ply and demand, we had to build up
patriotism of such tycoons as the a new artificiality to offset it. This
Guggenheims and Henry Clay usually happens when we inter-
Frick —and got what he wanted pose man-made laws against natu-
without using the big stick. When ral law. We have to interpose an-
other suppliers held out for the other innovation to save us from
natural wartime price, he threat- the effect of the first.”
ened, bullied, or cajoled. But he The case against “planning”
couldn’t stop inflation altogether. could nothave been more succinctly
After World War I the “second” put. And when the New Deal — us-
Baruch, the disbeliever in “laissez ing such World War I “Baruch
faire,” took over. As a Democrat, men” as Peek and General Hugh
Baruch backed the efforts of Johnson — tried to circumvent the
George Peek to suspend the work- natural workings of the market by
ings of supply and demand in agri- such devices as AAA and the
culture. He was for the McNary- NRA, Baruch remained a skeptical
Haugen bill which sought to main- spectator. “I attempted to help
tain domestic grain prices by Johnson in the herculean task he
dumping the surpluses abroad and had undertaken,” says Baruch,
collecting an ‘equalization fee” the good Democrat, but “I was


===== PAGE 66 =====

64 THE FREEMAN October

often unhappy with the measures circumstances of modern war. He
adopted by NRA. On more than is all for keeping the idea of the
one occasion, I warned Johnson War Industries Board alive for
that he was trying to do too “crisis” use. But the question is:
much.” Later, in a letter to Jo- When does the crisis begin, and
sephus Daniels, Baruch said of when are we to know that it is
NRA and other “fiat” measures over? The political mind, enamored
that “I don’t think any of them of “control,” swiftly gains a vested
will ever work until we pass a interest in maintaining that
fiat changing the law of supply “crisis” is always here.

and demand, and the workings of In neither volume of his memoirs
human nature.” does Baruch supply a way of cir-

cumventing the political mind —
The Dilemma and in consequence the “two Ba-

But if one can’t change the work- ruchs” cannot be reconciled. They
ings of human nature, how fight a exist as two separate personalities
war without inflation? Baruch still inside the same tall and imposing
maintains that prices and alloca- physical frame which still enjoys
tions must be controlled under the life at the age of ninety-one. @®

Nonsense vs. Common Sense

OUR COMPULSORY social programs are ingraining decadence and
we are paying for them with something more precious than
money, our freedom. One cannot truthfully keep shouting for
freedom and vote it away in the name of “for the common good.”
“For the common good” often means “For my good.” Such ac-
tions are plain nonsense. More use is needed of that arch enemy
of nonsense called “common sense.” We should do for ourselves
what we have been voting to force the other fellow to do for us
through government. Let us remember that in curtailing the
other fellow’s freedom we are curtailing our own. The law of

consequences cannot be by-passed.

RALPH E. LYNE, Taylor, Michigan


===== PAGE 67 =====

ESSAYS
ON LIBERTY

VOLUME VIII, just published (448 pp., indexed),
contains selected writings from THE FREEMAN and

NOTES FROM FEE, from June 1960 through June 1961.
Cloth, $3.00 Paper, $2.00

Cloth, $19.00

© So —all 8 volumes rere $13.00
Consider these volumes, either singly or in the set, as

choice and thoughtful Christmas gifts.

ORDER FROM:

THE FOUNDATION FOR ECONOMIC EDUCATION, Inc.

Irvington-on-Hudson, New York



===== PAGE 68 =====

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