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

IDEAS ON LIBERTY

OCTOBER 1964

Production versus Consumption . . . . George Reisman 3
“Industrialitis’” . . . . . . . . . HenryHazliti 13
The Sad Little Story of Wink . . . . . Robert Strother 15
Liberty and Law . . . . . . . . KennethW. Sollitt 21
The Flight from Reality
1. The Mind of the Reformer . . . . Clarence B. Carson 23
In Self-Defense . . . . . . . . . Paull. Poirot 38
The American Way in Economies. . . . Edmund A. Opitz 43
Business and Government. . . . . . W. Allen Wallis 52
Lincoln on Power . . . . . . . . Dean Russell 58
Books:
Doctoring the Body Politic . . . . . John Chamberlain 61

THE FOUNDATION
FOR ECONOMIC EDUCATION, INC.
Irvington-on-Hudson, New York 10533



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

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

» The difference between the ‘“‘pro- » When men rely on violence in their
ductionist’’ and ‘‘consumptionist’”’ relationships, the result is govern-
schools of economic thought is clearly ment power with a tendency to grow.
drawn. p.3 p. 38

» Henry Hazlitt refers to the popular »* The free market economy will

cure for backward nations as an ill- SPring naturally from the proper
ness he would call “industrialitis”. SPiritual and constitutional frame.
p. 13 WOrk., iP 43

ȴ In Socratic style, the President of
the University of Rochester examines
the relationship between business and

»# The story of Wink, Texas, perhaps
tells as forcefully as any other the
futility of trying to rehabilitate an
area the natives want to abandon.
p. 15

government. ............................. p. 52

»* Dean Russell finds in one of Lin-
coln’s earlier speeches a timely warn-
» A minister explains the manner in jo 0ainst the man with a lust for
which laws can help or hinder the pgjitical power. ............ p. 58
cause of liberty. ................. p. 21

» From recent books by Senators
» Clarence Carson opens a new series  Proxmire and Humphrey, John Cham-
on ‘The Flight From Reality,” dealing berlain gleans evidence of what
in this introductory chapter with the Holmes Alexander meant by “The
viewpoint of the reformer. ..... .p. 23 Equivocal Men." ....................... p. 61

Anyone wishing to communicate with authors may send
first-class mail in care of THE FREEMAN for forwarding.


===== PAGE 4 =====

A MONTHLY JOURNAL OF IDEAS ON LIBERTY

OCTOBER 1964 Vol. 14, 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 — $6.00 to $10,000 — as the means of
maintaining and extending the Foundation’s work.

Copyright, 1964, The Foundation for Economic Education, Inc. Printed in

U.S.A.

Additional coples, 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
F'E or in part, providing customary credit Is given, except ‘‘Productlon

versus Consumption,” *‘Industrialitis,’” ‘‘The Sad Little Story of Wink,"
and “The Flight from Reality.”

Any current article will be supplied In reprint form If there are enough
inquiries to justify the cost of the printing.


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

orOPUC TION
VERSUS Cong MPT \ON

GEORGE REISMAN

NOTHING unites the economic phi- omists have returned to the
losophy of the twentieth century directly opposite view. Instead of
more closely with that of the the problem being how continu-
seventeenth century and separates ously to expand production in the
it more widely from that of the face of a limitless desire for
nineteenth century than this: In wealth resulting from the limit-
the nineteenth century economists less possibilities of improvement
identified the fundamental prob- in the satisfaction of man’s needs,
lem of economic life as production. the problem is imagined to be how
Implicitly or explicitly, they per- to expand the desire to consume
ceived the base both of economic so that consumption may be ade-
activity and economic theory in quate to production. Economic
the fact that man’s life and well- theory in the twentieth century
being depend on the production of takes production for granted and
wealth. Man’s nature makes him focuses on the ways and means by
need wealth; his simplest percep- which consumption may be in-
tions make him desire it; the creased. It proceeds as though the
problem, they held, is to produce problem of economic life were not
it. Economic theory, therefore, the production of wealth, but the
could take for granted the desire “production of consumption.

to consume, and focus on the ways These two diametrically op-
and means by which production posed and mutually exclusive
might be increased. basic premises about the funda-

In the twentieth century, econ- mental problem of economic life
Dr. Reisman is Assistant Professor of Eco- play the same role 1m economic
nomics at the College of Business Administra- theory as do conflicting meta-
tion of St. John's University, Brooklyn, New

York. physics in philosophy. Point for
3


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4 THE FREEMAN October

point, they result either in op- prive anyone of employment. It
posite conclusions or in the ad- simply makes possible an expan-
vancement of opposite reasons for sion of production.
the same conclusion. So thorough- If one is on the twentieth cen-
ly and fundamentally do they de- tury, consumptionist premise, one
termine economic theory that they takes another view of machinery
give rise to two completely differ- and the employment of more peo-
ent systems of economic thought. ple. One regards every expansion
of production as a threat to some
portion of what is already being
If one is on the nineteenth cen- produced. One imagines that pro-
tury, productionist premise, one duction is limited by the desire to
realizes first of all that there is consume. One fears that this de-
no such thing as a problem of sire may be deficient and, there-
“creating jobs.” There is a prob- fore, that an expansion of pro-
lem of creating remunerative jobs, duction in any one segment must
but not jobs. At all times, the force a contraction of production
productionist holds, there is as in some other segment. Hence, one
much work to be done — as many fears that the work performed by
potential jobs to be filled — as there machines leaves less work to be
are unsatisfied human desires performed by people, that the
which could be satisfied with a work performed by women leaves
greater production of wealth; and less work to be performed by men,
as these desires are limitless, the that the work performed by chil-
amount of work to be done — the dren leaves less to be performed by
number of potential jobs to be adults, that the work performed
filled — is also limitless. The em- by Jews leaves less to be per-
ployment of more and better ma- formed by Christians, that the
chinery, therefore, argues the work performed by blacks leaves
productionist, does not cause un- less to be performed by whites,
employment. It merely allows men, and that the extra work of some
to the extent that they do not pre- means a deficiency of work avail-
fer leisure, to produce more and able for others.
thus to provide for their needs Neither the productionist nor
more fully and in a better way. the consumptionist desires long
Nor does the working of longer hours or child labor. Here, to this
hours or the employment of wom- extent, both reach the same con-
en, children, foreigners, people clusion. But their reasons are
of minority races or religions de- completely different. The latter

Two Views of Employment


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1964 PRODUCTION VERSUS CONSUMPTION 5

does not desire them because he of these goods in the United
thinks the problem is what to do States is imagined to be a liability
with the resulting products, un- of the American economy because
less other products are to cease it represents a depleted supply of
being produced and other workers consumer desire, thereby sup-
are to become unemployed. The posedly ensuring only a weak con-
former does not desire them be- sumer demand. Prosperity de-
cause he attaches no value to fa- pends on the absence of wealth,
tigue or premature exertion. The and poverty follows from its
problem, in the eyes of the pro- abundance, the consumptionist
ductionist, is not what to do with concludes, because, he imagines,
the additional products produced that priceless commodity, consum-
by longer hours or by child labor er desire, more limited in supply
—only the intense need for the than diamonds, is produced by
additional products calls forth this the absence and consumed by the
additional labor — but how to raise presence of wealth. It is on this
the productivity of labor to the principle that the consumptionist
point that people can afford to relishes war and destruction as
have time for leisure and to dis- sources of prosperity and attrib-
pense with the labor of their utes the poverty of depressions
children. to “overproduction.”

The consumptionist does not
believe that the destruction of

Because he imagines production wealth is the only means of achiev-
to be limited by the desire to ing prosperity. Though he be-
consume, rather than consumption lieves it difficult of accomplish-
being limited by the ability to ment, he has hopes that the
produce, the consumptionist val- supply of his commodity, consum-
ues not wealth, but the absence of er desire, may nevertheless be in-
wealth. For example, he imagines creased by positive measures. One
that the relative absence of such measure is a high birth rate.
houses, automobiles, television By bringing more people into the
sets, and refrigerators in Europe world, one brings more consumer
1s an asset of the European econ- desire into the world. The exist-
omy because it represents a large ence of a larger number of people,
supply of unused consumer desire, the consumptionist tells business-
thereby supposedly ensuring a men, will make it possible for
strong consumer demand. At the business to find someone upon
same time, the relative abundance whom to unload its otherwise

Wealth Through Scarcity!


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6 THE FREEMAN October

superfluous goods. Business will In raising children, the parents
prosper because its supply of must spend money on them which
goods will find a counterpart in they otherwise would have spent
an adequate supply of desire for on themselves. Of course, the
goods. In the absence of a high parents may, and hopefully will,
birth rate, or along with a high consider the money better and
birth rate, the consumptionist be- more enjoyably spent on their
lieves advertising may suggest to children; but still, it is an ex-
the otherwise fully sated consum- pense. And if they have enough
ers some new desire. And, on a children, they will be reduced to
somewhat different plane, techno- poverty. This is a fact, the pro-
logical progress, the consumption- ductionist argues, that anyone
ist argues, may provide new uses may observe in any large family
for an expanding supply of capi- which does not possess a cor-
tal goods, which otherwise would respondingly large income. The
find no “investment outlets.” Or, presence of children does not make
if all else fails, the government the parents spend more than they
may be counted upon to supply an otherwise would have, but only
unlimited consumption —even in spend differently than they other-
the absence of desire. Or perhaps, wise would have. They buy baby
the consumptionist hopes, a coun- food, bicycles, and toys instead of
try may be fortunate enough to be more restaurant meals, a better
in danger of attack by foreign ene- car, or costlier vacations. There
mies and therefore stand under is no stimulus given to production.
the necessity of maintaining a Production is merely differently
large defense establishment. In directed, to the different distribu-
either case, the consumptionist tion of demand.
imagines that the government will The only increase in production
be able to promote prosperity by that could take place, the pro-
exchanging its necessary or un- ductionist maintains, would be as
necessary consumption for the a result of the parents having to
people’s products. take an extra job or work longer
hours to support their children
and still be able to maintain their
The productionist, of course, own previous standard of living.
takes a different view of matters. And when the children grow up,
He argues that the birth and up- the additional market which they
bringing of children always con- are supposed to constitute for
stitutes an expense to the parents. houses and automobiles and the

Production Limits Consumption


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1964 PRODUCTION VERSUS CONSUMPTION 7

like will only materialize to the he approves of it, on the grounds
extent that they themselves are that by creating consumer desires,
able to produce the equivalent of it creates the work required to
these things and thereby earn the satisfy those desires. However,
money with which to purchase this very belief, that advertising
them. It will only be by virtue of creates desires where absolutely
their production, and not by virtue no desires would otherwise exist,
of their desire to consume, that also makes him condemn advertis-
they will be able to constitute an ing. For if it were true that, in

additional market. the absence of advertising, men
CL would be perfectly content with
Advertising and the Consumer very little, the desires created by

Advertising, the productionist advertising mustappear to be only
holds, does not create consumer superficial and basically unneces-
desire where no such desire would sary and unnatural.
otherwise have existed. It is not And this is precisely how the
the case that, in the absence of consumptionist regards them. In
advertising, people would be at his eyes, all desires men have for
a loss as to how to spend their goods, beyond what is necessary
money. Advertising is not re- to make possible bare physical
quired, and would not be suf- survival and a vegetative exist-
ficient, to rouse vegetables into ence, represent an unnatural taste
men. What advertising does is to for “luxuries.” These desires the
lead people to consume differently consumptionist considers to be in-
and in a better way than they herently unimportant. Their only
otherwise would have. It is a tool justification is the creation of
of competition, and, as such, for work. The consumptionist’s con-
every competing product whose ception of the greater part of eco-
sale is increased by it, there is nomic activity, therefore, is that
another competing product whose it represents senseless motion,
sale is decreased by it. with deceit and deception required

The consumptionist’s attitude to make people desire goods for
toward advertising brings into which they have no need, in order
clear relief some further corol- to enable them to pass their lives
laries and implications of his in the production of those very
basic premise. His estimate of same goods.
advertising, like that of war and Paradoxical as it may at first
destruction, is ambivalent, and appear, it is the productionist who
necessarily so. On the one hand, attaches importance to consumer


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

8 THE FREEMAN October

desires. In his view, the desire paint, engines, and machinery —
for “luxuries” is important; it is in their production as do five mil-
necessary and natural; for it is lion automobiles. If the quality
nothing but the desire to satisfy of the automobiles is to be im-
one’s basic needs (which include proved, then a larger quantity of
the need for aesthetic satisfac- capital goods is required for the
tion) in a more perfect and more production of the same number of
improved way. It is from the im- automobiles. For example, a given
portance which attaches to the number of cars of Chevrolet qual-
satisfaction of the desire for “lux- ity require a larger quantity of
uries,” the productionist main- capital goods in their production
tains, that the importance of the than the same number of cars of
work required to produce them is Volkswagen quality; the same
derived, and not vice versa. number of cars of Cadillac qual-
ity require still a larger supply
of capital goods; and the same
The value of technological prog- number of cars of Rolls Royce
ress, the productionist holds, does quality require yet an even more
not lie in the creation of “invest- enlarged supply.
ment outlets” or “investment op- The identical principle applies
portunities” for an expanding to houses of different size and
supply of capital goods. If the quality. A given quantity of eight-
concept of capital goods is prop- room houses of a given quality
erly understood, as denoting all requires the employment of a larg-
goods which the buyer employs er supply of capital goods than
for the purpose of producing the same number of seven-room
goods which are to be sold, then, houses of the same quality. A
the productionist maintains, there given number of brick houses re-
is no such thing as a lack of “in- quires a larger supply of capital
vestment opportunity” for capital goods than the same number of
goods. So long as more or im- wooden houses of the same size;
proved consumers’ goods are de- the bricks or any more expensive
sired, there is need of a larger material constitute a larger sup-
supply of capital goods. ply of capital goods because a
For example, ten million auto- larger quantity of labor is re-
mobiles of a given quality require quired to produce it. The prin-
the employment of twice the quan- ciple applies to food and clothing,
tity of capital goods —twice the to furniture and appliances, to
quantity of steel, glass, tires, every good. So long as more of

Technology and Capital Goods


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1964 PRODUCTION VERSUS CONSUMPTION 9

any consumers’ good is desired, gress, the productionist maintains,
so long as not every consumers’ consists in the fact that it enables
good that is produced is of the us to obtain a larger supply of
very best known quality, there is capital goods, and not that it
a need for a larger supply of cap- solves the problem of what to do
ital goods. with a larger supply. The tech-
nological advances which made
possible the canal building and

It is not the case that in the railroad building of the nine-
absence of technological progress, teenth century and the develop-
the supply of capital goods would ment of the steel industry were
continue to expand, but find no valuable, not because they ab-
“investment outlet.” It is not the sorbed capital goods, as the con-
case that what we have to fear sumptionist maintains, but be-
from a lack of technological prog- cause they made possible the ac-
ress is a flood of goods in which cumulation of capital goods. The
every car produced will be the consumptionist does not realize
equivalent of the finest known that capital goods can only be
model Rolls Royce, in which every expanded in supply by means of
house that is built will be a pala- an expansion in their production,
tial mansion, in which every suit and that precisely this is what
of clothes produced will be fit for technological progress makes pos-
the Duke of Windsor, and in sible. Had the technological ad-
which every morsel of food will vances which made possible the
be a rare delicacy, and that then first railroads in the 1830’s not
we shall be at a loss as to how to taken place, the supply of capital
employ our expanding supply of goods required for the expanded
capital goods. On the contrary, and improved railroad building
what we have to fear from a lack of the 1840’s would not have
of technological progress, the pro- been obtainable; or, if obtainable,
ductionist argues, is that we shall only at the price of the expan-
not have an increase in the supply sion of some other industry.
of capital goods, that we shall Had no technological advances
not be able to exploit any con- been made in railroading in the
siderable portion of the virtually 1840’s, the supply of capital goods
limitless “investment outlets” in the 1850’s would have been
which already exist, within the less, both for railroads and all
framework of known technology. other industries. And so it would

The value of technological prog- have been decade by decade, had

As Technology Advances


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

10 THE FREEMAN October

the technological advances made The idea that by consuming his
in railroading or in any other in- product, one benefits the producer,
dustry not taken place. by giving him the work to do of

making possible one’s consump-
tion, is absurd, the production-
For capital accumulation to ist holds. Only the use of money
continue for any period of time, lends it the least semblance of
technological progress is indis- plausibility. If it were true, then
pensable. Only it can make pos- every slave who ever lived should
sible continued increases in pro- have cherished his master’s every
duction, and only continued in- whim the satisfaction of which
creases in production can make required of him more work. A
possible continued capital accumu- slave should have been grateful
lation. The consumptionist is not if his master desired a larger
aware that the very thing which house, an improved road, more
he considers to be the solution to food, more parties, and so on; for
his imagined problem is the the provision of the means of
source of what he imagines to be satisfying these desires would
the problem. Nor is he aware that have given him correspondingly
when he advances technological more work to do.
progress as the solution to the The belief that the consumption
problem of what to do with more of the government benefits and
capital goods, he is confronting helps to support the economic sys-
himself with the problem of what tem is on precisely the same foot-
to do with the larger supply of ing, the productionist argues, as
consumers’ goods, which even he the belief that the consumption of
admits results from technological the master benefits and supports
progress. The consumptionist is the slave. It is a belief the absurd-
faced, in addition to other quan- ity of which is matched only by
daries, with the dilemma of ex- the injustice it makes possible. It
plaining how it is that technologi- is the means by which parasitical
cal progress may raise the rate pressure groups, employing the
of profit by, as he puts it, “in- government as an agent of plun-
creasing the demand for capital,” der, seek to delude their victims
while at the same time, as he ad- into imagining that they are bene-
mits, it increases the production fitted and supported by those who
of consumers’ goods, which, he take their products and give them
maintains, lowers the rate of nothing in return.
profit through “overproduction.” The only economic benefit which

Quandaries of the Consumptionist


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

1964 PRODUCTION VERSUS CONSUMPTION 11

one can give to a producer, argues set of sellers. If, however, the
the productionist, consists in the spending is initiated by those who
exchange of one’s own products have no goods to sell and who have
or services for his products or not obtained their money from
services. It is by means of what someone who has, then there must
one produces and offers in ex- be a set of sellers who can obtain
change that one benefits pro- nothing in return for the goods
ducers, not by means of what they have sold. Their loss will take
one consumes. To the extent that the form either of a depletion of
one consumes the products or ser- their capital, a diminution of their
vices of others without offering consumption, or a lack of reward
products or services in exchange, for their added labor, precisely
one consumes at their expense. equal to the purchases of the buy-
ers who have not produced.

The consumptionist’s advocacy

The use of money makes this of consumption by those who do
point somewhat less obvious but not produce, to ensure the pros-
no less true. Where money is em- perity of those who do, is, the
ployed, producers do not exchange productionist argues, a pathologi-
directly, but indirectly. The buyer cal response to an economic world
receives his goods from the seller. which the consumptionist imag-
The seller receives his goods from ines to be ruled by pathology. The
other sellers, who in turn may re- consumptionist has always before
ceive their goods from still other him the pathology of the miser.
sellers. But the first buyer in the His reasoning is dominated by
series must either himself possess the thought of cash hoarding. He
goods or have obtained his money believes that one part of mankind
from someone who does possess is driven by a purposeless passion
goods, so that the series of ex- for work without reward, which
changes may be closed with the requires for its fulfillment the ex-
first buyer, or the party from istence of another part of man-
whom he has obtained his funds, kind willing to accept reward
making sales of goods equivalent without work. This is the meaning
to his earlier purchases. of the belief that one set of men

What makes the mere spending desire only to produce and sell,
of money appear beneficial is that but not to buy and consume, and
it is the receipt of money by one the inference that what is required
set of sellers which enables them is another set of men who will buy
to obtain the goods of another and consume, but who will not

Where Money Comes In


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

12 THE FREEMAN October

produce and sell. In the consump- does not relieve the economist of
tionist’s world, the producers are the duty of identifying the par-
imagined to produce merely for ticular errors of every consump-
the sake of obtaining money. The tionist argument as though it
consumptionist stands ready to were advanced in good faith. It
supply them with money in ex- does, however, disqualify every
change for their goods — he pro- consumptionist as an economist.
poses either to take from them No scientist, in any field, can ac-
the money he believes they would cept the view that reality is irra-
not spend, and then have someone tional and that irrational action is
else spend it, or to print more required to deal with it.

money and allow them to accumu- Those economists of the present
late paper as others acquire their day who openly and defiantly pro-
goods. claim that the economic world is

Hoarding is not the only phe- “non-Euclidean,” do so happily.
nomenon upon which the consump- That is the way they would like
tionist seizes. Where nothing in the economic world to be. If they
reality, however unimportant and merely believed that economic life
insignificant it may be, will serve, appeared to be irrational, and did
the consumptionist is highly adept not at the same time desire it to
at bringing forth totally imagi- be irrational, they would never
nary causes of economic catastro- proclaim it to be so in fact. In-
phe. Invariably, the solution is stead of leaping to the support of
consumption by those who have consumptionism after only the
not produced, for the sake of those most casual examination of their
who have. Always, the goal is to subject, they would not rest until
demonstrate the necessity and ben- they had identified the errors which
eficial effect of parasitism—to make could make them believe that eco-
parasitism a source of support. nomic life possessed the appear-
ance of irrationality; and the
greater and more overwhelming

In view of the overwhelming such an appearance might be, the
absurdities and contradictions of greater would they realize their
consumptionism and the literal own ignorance to be, and the
perversion of values and emotions harder would they work to over-
which it engenders, one may only come it and expose the errors in-
conclude that its support is volved. It is this which distin-
founded on the interest which it guishes an economist from a Lord
obviously serves. This, of course, Keynes. @®

The Rationality of Economic Life


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

HENRY HAZLITT

“INDUSTRIALITIS"”

IN government circles in nearly gue that a local automobile indus-
every “underdeveloped” nation to- try “provides jobs,” and also that
day there is a fixed idea that the it sets the Argentine on the road
economic salvation of the country to industrialization.
lies in industrialization. Is this really in the interest of
Among outstanding examples the Argentine people? It is cer-
are Egypt with its zeal for dams tainly not in the interest of the
and India with its mania for a Argentine car buyer. He must pay,
government steel mill. But exam- say, about 150 per cent more for
ples can be found everywhere. I a car than if he were permitted to
met a typical one in a recent visit import one without duty (or by
to the Argentine. Argentina has paying a merely nominal revenue-
now imposed a practical prohibi- raising duty). Argentina is devot-
tion on the import of foreign cars ing to car-manufacture capital,
in order to create a home auto- labor, and resources that could
mobile industry that not only as- otherwise be used far more effi-
sembles cars but makes the parts ciently and economically—by pro-
for them. Some of the chief Amer- ducing more meat, wheat, or wool,
ican and foreign producers have say, to buy automobiles rather
established plants there. But it than to make them.
is estimated that it costs today The effect of all government-
about two-and-a-half times as forced or subsidized industrializa-
much to make a car in the Ar- tion isto reduce over-all efficiency,
gentine as it would to import one. to raise costs to consumers, and
Argentine officials are apparently to make a country poorer than it
not worried about this. They ar- otherwise would be.
Reprinted through the courtesy of Newsweek But the authors of the import
Magazine. Copyright 1964 by Newsweek, Inc. prohibition might reply with a

13


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

14 THE FREEMAN October

form of the old “infant indus- the industrialization mania. This
tries” argument that played such is that agriculture is always nec-
a large part in our own early tar- essarily less profitable than indus-
iff history. They may contend that try. If this were so, it would be
once they can get an automobile impossible to explain the prosper-
industry established, they can de- ous agriculture within any of the
velop the domestic know-how, industrialized countries today.
skills, efficiencies, and economies A popular argument of the in-
that would enable an Argentine dustrialization-at-any-cost advo-
automobile industry to be not only cates is that it is impossible to
self-supporting but capable of point to a purely agricultural
competing with foreign-automo- country that is as wealthy as “in-
bile industries. Even if this claim dustrialized” countries. But this
were valid, it is clear that a pro- argument puts the cart before the
tected or subsidized industry must horse. Once a dominantly agri-
be a loss and not a gain to a coun- cultural economy becomes pros-
try as long as the protection or perous (as the early United
subsidy has to be retained. States) it develops the capital to
And even if a self-supporting invest in domestic industries and
motor-car industry were finally therefore rapidly becomes a coun-
established, it would not prove try of diversified production —
that the losses in the period of both agricultural and industrial.
hothouse growth were justified. It is diversified because it is pros-
When the conditions are in fact perous rather than prosperous
ripe in any country for a new because it is diversified.
industry capable of competing It is the great superstition of
with the equivalent foreign in- economic planners everywhere
dustries, private entrepreneurs that only they know exactly what
will be able to start it without commodities their country should
government subsidies or prohibi- produce and just how much of
tions on foreign competition. This each. Their arrogance prevents
has been proved again and again them from recognizing that a sys-
within the United States —for tem of free markets and free com-
example, when a new textile in- petition, in which everyone is free
dustry in the South competed suc- to invest his labor or capital in
cessfully with the long-established the direction that seems to him
textile industry in New England. most profitable, must solve this
There is another fallacy behind problem infinitely better. ®


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

The Sad
Little Story
of Wink

ROBERT S. STROTHER

DURING the last five years, the sandy vacant lots strewn with
Federal government has commit- rocks, rusting oil drums, and
ted some two million dollars to a tumbleweeds.

mysterious attempt to revive a “You can see for two days in
dying boom town in the arid mes- any direction from here,” a big
quite plains of West Texas. truck driver with elaborately tat-

The town is called Wink. The tooed arms told me over a cup of
effort is puzzling because Wink coffee in the TV Café. “But it
has dim prospects, little influence, wasn’t a tornado that done it. It
and few votes. The heavy dose was urban renewal.”
of taxpayers’ money has made Urban renewal is the most re-
some spectacular changes in Wink, cent in the series of turbulent
but instead of bringing it new life events that has marked the his-
as the planners predicted, the tory of Wink. The town sprang
treatment has accelerated its de- into existence overnight in 1926,
cline. when Hendricks No. 1, the first

Driving through Wink along oil well in the area, came in a
Texas Highway 115, a visitor has gusher. Within weeks, Wink was
the impression of a village cleared a rip-snorting canvas, tar-paper,
of debris after a disaster. The and corrugated-iron camp where
municipal water tower and a few thousands of brawling drillers,
buildings here and there were rig-builders, and roustabouts
spared, but much of Wink is a fought and drank after long hours
flat, nearly treeless expanse of of dangerous work in Winkler
—_— County’s rich oil pools.

Mr. Strother is a Roving Editor for The At its roaring peak, Wink

Reader's Digest, with a special interest in
national and foreign affairs. boasted more money, more gams-

15


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

16 THE FREEMAN October

blers, and more honky-tonks than almost a full-fledged ghost town.
any other small town in the West. The tin roofs of fire-gutted shacks
Robberies, gun-fights, and mur- along the main street flapped
ders were common. But as the dangerously in the gritty wind.
workers’ wives came to Wink, the The last doctor moved away. Only
camp gradually became a town of a few oil and oil well service com-
more than 15,000. Some solid panies provided payrolls which
buildings went up along Hend- helped support the 40-odd little
ricks Boulevard. Six churches business firms that clung on. Most
were established. The Wink school of the town trade went to Kermit,
district, with money pouring in the pleasant little county seat. It
from oil-company taxes, built a is seven miles away over a fast
handsome school. (The district is road, and has 10,465 of the coun-
still one of the richest in Texas.) ty’s total population of 13,652.
The post office often served as The last census gave Wink a pop-

many as 10,000 people a day. ulation of 1,863.
“We were dying on the vine,”
From Boom to Bust — Hugh Sasser, a former Wink coun-

The boom collapsed almost as cilman, said. ‘“Then along came
fast as it had grown. The oil urban renewal. None of us paid
business changed from drilling enough attention at first. Nobody
to routine pumping of hundreds really believed it could happen
of wells. Anywhere you look out here.”
in the boondocks of Winkler Learning, however, that little
County today you see pumps in towns as well as cities are eligible
action, their walking beams nod- for Federal slum clearance funds,
ding at the pace prescribed by the Wink voted 187 to 5 in April 1958,
state. Production now is held to to try for some. They set their
50,000 barrels a day. The county’s sights on $336,000.
total output since 1926 has been
more than a half-billion barrels.
But the wealth produced by the The Urban Renewal Adminis-
wells flows, not into Wink, but tration encouraged them to think
to royalty owners who moved long big. It gave Wink $75,613 for pre-
ago to livelier places. liminary studies, including $30,-

“Very few came to stay,” said 000 to run the local urban renewal
R. F. Mackin, a pioneer who is office. When Wink’s renewal pro-
still in Wink. posal seemed to be stuck in Wash-

By the mid-fifties, Wink was ington, a Wink booster appealed

— to Bonanza


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

1964 THE SAD LITTLE STORY OF WINK 17

to Vice President Lyndon B. John- “It’s the best thing that ever hap-
son as a fellow Texan. Mr. John- pened,” said a businessman who
son passed the letter to Robert C. owned several dilapidated struc-
Weaver, Housing and Home Fi- tures. “It is the only way I could
nance Administrator. Weaver ever sell.”
alertly marked it “priority atten- The nine-man renewal commis-
tion” and sent it to William L. sion appointed by the city council
Slayton, his urban renewal chief- already had approved prices to be
tain. paid for properties in the 221
“And so,” a visiting newspaper- acres of “Project Tex. R-34.” They
man wrote, “Santa Claus came to were high, and opinion about the
Wink.” On June 26, 1961, a tele- effect of the bonanza was divided.
gram, signed by Senator Ralph
Yarborough, announced that the
town would get $891,868 as a “Uncle Sam’s bounty will be
grant, and $1,034,758 as tempo- ‘git-away’ money for about half
rary loan authority. That amount- of Wink,” Mike Fitz-Gerald, a re-
ed to $1,034 per capita, and the tired oilman, predicted. “They’d
news jolted people elsewhere into have headed out of here long ago
the realization that a program de- if they could have. Uncle will find
signed to rid the cities of slums himself financing an exodus.”
had taken a new tack. “I'm just afraid we're going to
“This fantastic project may do end up with a well-laid-out city
some good in the long run by and no people,” said Melvin Dow,
forcing a reassessment of the en- then owner of the Wink Bulletin.
tire urban renewal program,” a To answer skeptics, civic lead-
Houston Chronicle editorial said. ers could point to an “informed
The newspaper figured that if judgment” by the Urban Re-
Houston were given renewal funds newal Administration. “On the
on the same basis per capita, her basis of surveys and studies of
share would be $969,118,446. the existing physical conditions,
Greater New York City’s would land uses, environmental influ-
be about eight billion dollars. ences, and social, cultural, and
Businessmen of Wink were ju- economic conditions in the project
bilant. “It almost knocked me area,” the report intoned in Grade-
down when we got the money,” E. A governmentese, urban renewal
E. Bracken, who served without experts had “reached satisfactory
pay as the town’s mayor told a conclusions on the Community's
reporter who hurried to the scene. continued viability,” and on the

Predictions


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

18 THE FREEMAN October

ready marketability of the land. hope of renewal faded faster than
“Wink will boom again,” de- the original boom. As the doubters
clared the late J. A. (Marble) had warned, people who had wind-
Scogin, head of the renewal com- fall cash in their pockets when
mission. “This splendid pilot proj- chased away from their homes by
ect will bring visitors from all the bulldozers did not come back.
over the nation.” Many had stayed on in Wink
The planners painted a rosy largely because of low living
future. A great shopping center costs.
would rise in Wink, with adequate “It got so we had to advertise
off-street parking and decorative in the Kermit paper for field
cactus gardens. There would be help,” an oil well service manager
new stores, a busy new office build- said. “We were fresh out of able-
ing, and scores of new homes. bodied men here in Wink, and so
Business and industry alike would pretty soon we moved away, too.”
flock to the rebuilt city. In defiance of the costly judg-
A blizzard of government checks ment of the experts, Wink’s dis-
swept Wink. Within weeks, the placed families used their share
commission had paid out $678,658 of the government relocation
for 247 parcels in the 71 blocks money and the payments for their
included in the first project area. properties to get out of town.
Of the 77 families evicted, just They were suddenly able to realize
eight were relocated in low in- a long-cherished dream and move
come housing built with a $225,- to nearby towns which boast such
000 government~loan. amenities as hospitals, movies,
and attractive stores — all lacking
in Wink. At last count, only six
With land cleared, sewers ex- families, instead of the 160 fore-
tended, streets paved, and a new cast, had resettled in the project
city hall in use, the commission area.
sat back to await bids from busi- Several of the 15 displaced mer-
ness concerns eager to set up new chants folded up for good. Others
enterprises in Wink. None ap- moved out of town. The three
peared. The rush of home builders largest oil-field service companies
supposed to be stimulated by the — Longhorn, Production, and
government’s offer of 100 per cent United — followed suit. So did
financing and 40-year mortgages many of their employees.
to almost anyone willing to settle Wink’s population decline so
in Wink, did not develop. Wink’s far is about 800. The number of

Performance


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

1964 THE SAD LITTLE STORY OF WINK 19

water meters in use has shrunk property to be bought, and the
by 80. Mae Barnes, county as- scale of payment for it seemed
sessor, estimates that property almost pure whim. That stirred
valuations in Wink now are $2,- up envy and left a lot of bitter-
607,650, down by $500,000 from ness. In my opinion, a system that
1962. Mike Fitz-Gerald ironically gives appointed board members
renamed his four-room motel arbitrary power to destroy their

“Hope,” explaining, “That's what neighbors’ homes and businesses
remains when all else has fled.” can destroy democracy, too.”
Downtown Wink is almost de- In 1963, Campbell gave away

serted. There is no building in his home in Wink, and with a
progress, and no sign of the new parting blast charging urban re-
stores or the new office building. newal with creating a hostile at-
Of the projected shopping center, mosphere for business, moved
there is visible only acres of paved himself and his company to Ker-
surface, part of it the “adequate mit.
off-street parking,” with intricate .
curbing and few cars. There are Wink Waits
“For Sale” signs on many of the Charges of favoritism are heard
better houses, six of them Fed- everywhere in Wink, and the sus-
eral Housing Agency reposses- picion that ‘‘some people must
sions. have cleaned up on this,” seems
“Wink is the only place I know universal. Critics of the program
where you can’t sell a good house are shunned as civic traitors by
or buy a bad one,” Vaughn Brin- some town leaders. When Paul
son, a builder, said. He explained Foraker and Howard Wall, editor
that the remaining poor homes and publisher of the Wink Bul-
are mostly in the part of Wink [letin, persisted in denouncing the
slated for bulldozing in the next program as wasteful and absurd,
renewal project, and that their the Renewal Agency jerked its ex-
owners cling to them in the hope tensive legal advertising out of
of selling out at high prices as their small weekly. Asked about
did their neighbors in Tex. R-834. Wink’s projected second and
“Urban renewal on such a scale smaller renewal project, Foraker
in Wink was senseless to begin said: “When the government
with, and it split up the people in makes a mistake, it never knows
the town,” George M. Campbell, when to quit.”
owner of Production Service Com- The Wink Urban Renewal
pany, told me. “The choice of Agency occupies a neat building


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

20 THE FREEMAN October

set well back on one of the town’s the Washington headquarters of
few good lawns. The building was urban renewal. Administrator
a medical clinic before the doctors Slayton astonished Rep. Ed Fore-
left. Raymond Parr, the director, man, who as congressman for the
is a likable Texan who took over district knows Wink well, by say-
in 1962. He insists that his faith ing that Wink is not only moving
in the program is unshaken by briskly ahead as planned, but that
the population decline and the it is “an outstanding example of
lack of demand for cleared land. small-city revitalization.” Still
“Wink is all set to grow now,” further, he said in writing: “I
Parr says, “and it sure wasn’t believe this is the kind of pro-
before.” gram visualized by Congress when
Donald McBee, Parr’s predeces- it enacted the first slum-clearance
sor as director and main figure and urban-renewal legislation in
in the first phase of Wink’s pro- the Housing Act of 1949.”
gram, now runs a filling station That checks it squarely up to
in Jal, just over the New Mexico Congress. More than 850 small
line. Wink’s project flopped, he cities have urban renewal pro-
says, because “they chased all the grams under way. Communica-
payrolls right out of town.” tions with them are easy, and
Some people are confident the travel is fast. Before adding bil-
government will solve that prob- lions to the $8.8 billion already
lem by requiring a big defense committed to the urban-renewal
industry of some kind to move and public-housing subsidy pro-
to Wink. grams, members of the Housing
“They can’t just let the whole Committee of Congress might
thing sit here empty like this,” think it prudent to ignore the
one of them said. cheerful progress reports written
by men running the program, and
Will Congress Wink at to take a look for themselves. It
850 Other Renewal Projects? should be useful to know how
News of the wide disparity be- many urban renewal projects over
tween prediction and performance the country are as fantastic as
in Wink does not seem to reach Wink’s. @®


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

LIBERTY
AND IAW

KENNETH W. SOLLITT

AMERICANS have a ready solution The Supreme Court has now
for every problem which confronts made it abundantly clear that, in
us: Pass another law! We heap an age when we are invited to
law upon law, and each new stat- look to Uncle Sam for everything
ute seems to dare us to defy it or from a safety-pin for baby to
find a way of evading it. We spend an aspirin for grandma, we can-
more money to pass laws, and not look to government to teach
more money to break the laws we us morality and religion. This
have passed, than any nation in task is squarely up to the
the world. And we think that the churches, the homes, and individ-
only way to correct all this is to uals.
pass another law! The something The past, if we let it, can teach
that makes laws work is missing. us three important lessons for
We have become so involved in our guidance in the future:
legality that morality is forgotten. The first is that morality can-
And the result is more and more not be legislated. This is not to
laws in a vain effort to keep us disparage law or belittle its value.
from being inhuman to each other. Law has its place in creating an
This is not progress! environment wherein wrongdoing
The alternative is obvious: a is discouraged and those who do
new concern for the moral law right are not penalized. But can
which, if observed, would elimin- we not see by now how ineffec-
ate the need for much present- tive is law when unsupported by
day legislation while permitting moral idealism, good will, and
the remainder to be almost self- self-discipline? From where do
enforcing. This should be man- these come except from inner
kind’s next moral advance. ethical imperatives?
——— oo The second bit of guidance for
Ire Rn Conran aang Miia the future is the observation that

21


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

22 THE FREEMAN October

nothing can redeem society but Therefore, says this philosophy,
the redemption of its parts —in- the less law the better. Repeal the
dividual human beings. People are laws. Break the laws you can’t
not redeemed apart from contact repeal until they are shown to be
with the Redeemer, and it is not unenforceable! Then we’ll have
Uncle Sam’s job to make this con- liberty! But we all know, even if
tact. On us, and on our homes we have never watched a TV
and churches, and on our activity western, that when there is an-
in putting and keeping ourselves archy, there is no real freedom.
and others in touch with moral The other philosophy says that
leadership depends the advance or laws protect our freedom. Traffic
retrogression of the race. laws protect our lives on the high-
We of the church need to wake way, for example, and afford us
up to the fact that the church is freedom to drive where we wish
in a more strategic position than to go. Our lives are protected be-
government. It could be more in- cause certain activities are con-
fluential than all our legislatures trolled. Therefore, says this phi-
and courts combined. It could be losophy, perfect control should be
more effective in saving us from perfect freedom. Pass more laws.
our apparent moral retrogression Control everything! Make it un-
than any combination of law-en- necessary (and incidentally im-
forcement agencies, welfare pro- possible) for people to make up
grams, and increased budgets to their own minds about anything.
support them. But awareness of This is liberty, 1984 style.
these facts is not likely to come Fewer people would be led to
until churchmen begin to concen- these extremes if the churches
trate on doing their job instead proclaimed the truth that the ideal
of lobbying for more laws. of perfect liberty is achieved only
Third, we need to straighten when we do what we ought, and
out our thinking about the rela- not because it is the law, and
tionship between liberty and law. when we create by religion and
We are the victims of two plaus- morality a society in which peo-
ible but conflicting philosophies. ple don’t need to be protected from
One philosophy holds that laws each other. This is not to be
limit freedom. True, no man may achieved by passing laws but by
do what he wants so long as there teaching religious truth and moral
is a law to prevent him, and many responsibility, which is our job
of our laws are of this variety. and not Uncle Sam’s. @®


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

JE oe
~~ Is .

REALTY Reformer

CLARENCE B. CARSON

SR

He regarded the world as a flux to be formed by his own mind.
~~ R, R. PALMER

The supreme architect, who begins as a visionary, becomes a

fanatic, and ends as a despot.
— WALTER LIPPMANN

Two DEVELOPMENTS stand out on problems and offering the solu-
the canvas of the world scene in tions. Newspaper columnists echo
the twentieth century. Viewers the sentiments of speakers or pro-
may differ as to whether these vide them, as the case may be.
two dominate the picture or not, One day attention may be focused
but there should be no denying upon the need for reform of the
that they are there. The first is bail system. On another, the sys-
the tremendous surge of reform tem of trial by jury may be up
effort that has been going on in for examination, and proposals
the world for most of this century may be forthcoming for discard-
and that is by now so pervasive ing it. Or again, the decaying
that it could be called universal. centers of metropolitan areas may
In the United States hardly a day be described as the background
passes that some reform is not for some proposal to use govern-
proposed, advanced, revived, or ment to renew them.
instigated. Speakers scurry about Nor is the United States alone
over the country describing the in being the scene of a prevalent
reform bent. Many other countries
Dr pSarson is Professor of American History share the bent with Americans
American Tradition, both of which are now willingness to radically alter ex-

available as books. This article marks the be- ea. . . . .
ginning of a new series. isting institutions to accomplish

23


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

24 THE FREEMAN October

the reforms. Thus, in predom- make over men and societies is in
inantly agricultural lands propos- the ascendant today.
als for redistributing the land are
favorite remedies for what ails
the population. This panacea often The second development cannot
has to share the spotlight, how- be so readily reduced to a phrase
ever, with plans for rapid indus- for purposes of description. Actu-
trialization. These economic meas- ally, this development has many
ures are usually only the most faces. One of them, perhaps the
well known of the reforms being most prominent, is disorder.
undertaken, depending upon the There has been mounting dis-
country and what its particular order in the world in the twen-
“problems” happen to be. Some tieth century: disorder in the re-
countries may be occupied with lations among nations which
“crash” programs of school build- evinces itself in almost continu-
ing, others with placating dis- ous tensions and erupts in spo-
sident racial or religious groups, radic catastrophe violence, dis-
others with providing various wel- order in relations among groups
fare programs, and so on. which manifests itself in violence
This reform bent is not re- between and among groups, dis-
strained, however, by national order in families indicated by
boundaries nor restricted to sov- broken homes and juvenile delin-
ereign states. It has promoted quency, and disorder of person-
the establishment of institutions ality manifested in widespread
in international organizations. mental illness.
For example, the United Nations Another face of this develop-
has associated with it an Inter- ment is violence. The volume in
national Labor Organization, a the New Cambridge Modern His-
Food and Agriculture Organiza- tory which deals with the twen-
tion, a World Health Organiza- tieth century is called “The Era
tion, and others. There have been of Violence.” The textbook on the
gatherings for regional planning, Western world in the twentieth
such as those that were promoted century by Frank P. Chambers
by the Marshall Plan. There is the has the interesting title, This Age
more general phenomena of for- of Conflict. Who has paused to
eign aid, and there are interna- consider how many kinds of vio-
tional loan agencies to finance re- lence have begun to assume reg-
form programs. Conceiving the ular forms and have even been
matter most broadly, the drive to institutionalized in this century?

The Corrosives of Civilization


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

1964 THE MIND OF THE REFORMER 25

A few examples of institutional- tegration of civilization. For what
ized violence may refresh our is civilization but order, peace,
memories. There are industrial settled and regularized relations
strikes, concentration camps, pur- among men and groups, and con-
ges, “nationalization” of property; ditions of liberty among individ-
and even street fights among ju- uals? Disorder, violence, and ag-
veniles have assumed the semi- gression are the antithesis of civ-
form of “rumbles.” ilization. To the extent that they
Yet another face of this devel- become pervasive, civilization dis-
opment is the decline of liberty integrates in equal degree. In
and the removal of protections short, the corrosives of civiliza-
from around the individual. In tion have become dominant in
some countries this has occurred many places on the earth and they
rapidly as in communist and fas- threaten to become pervasive
cist revolutions. In others, such everywhere.
as the United States, it has oc-
curred by a process of attrition.
The loss of liberty may occur in
such an apparently innocuous The pressing question for all
manner as the zoning of city of us, of course, is why this turn
properties, or it may assume the of events occurred. Why have
most drastic proportions of being there been total wars, concentra-
held in jail without a hearing. tion camps, confiscations of prop-
The point, however, is that the erty, circumscriptions of liberty,
circumscription of liberty is a institutionalizations of violence in
virtual universal phenomena in this century? So far as we know,
this century, though there have there were few who expected any
been some movements to and fro such turn at the outset of the
in this matter. Certainly, the one century. The literary evidence
new kind of government to emerge suggests the contrary, for it con-
in this century has been totalitar- tains visions of peace, prosperity,
ianism. The tendency of govern- and triumphant civilization in the
ments everywhere has been to twentieth century. And those who
adopt some of the features of to- would be leaders have continued
talitarianism, though the exi- to hold out such visions up to the
gencies of war may be the occa- present, even as violence mounted
sion for such adoption. and wars became total. Indeed,
The composite face this second the glowing pictures of the future
development wears is the disin- which reformers still paint have

Attempts to Reform Society
Have Undermined It


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

26 THE FREEMAN October

hardly been tarnished by this un- tween reforms and the disorder of
toward course of events. these times, the matter can be left
Yet, it will be my contention at this point with the assertion
that there is and has been a direct that the connection exists. The
connection between the first and question can now be stated more
second developments described directly. Why have men been bent
above. That is, reforms have re- upon reforms and used methods
sulted in disorder, violence, and to achieve them which have re-
the diminution of liberty. To put sulted in varying degrees of dis-
it briefly, the attempts to make order and tyranny? Why are men
over society and man have been bent upon reforming everything
made by the undermining of be- in our time?
liefs, the destruction of institu- This would probably appear to
tions, the uprooting of traditions, be a silly question to anyone who
and the aggressive use of govern- knows no history before this cen-
mental power. tury. Indeed, the bent to reform
The framework of order and goes back at least into the nine-
liberty has everywhere been great- teenth century, if not before.
ly shaken by this course of events Ralph Waldo Emerson asked in
and in many places utterly shat- 1841: “What is a man born for
tered. A semblance of order has but to be a Reformer . . .?” In-
usually been maintained or restored deed, the bent to reform — the urge
in most places, but it has quite to change, to make over, to redo —
often been at the expense of lib- was well established in the out-
erty. To state it another way, the look of many considerably before
disorder resulting from the un- this century got underway.
dermining of traditional morality Even so, it should be made clear
and the unraveling of the bonds that this is not a usual attitude
of social unity has been quelled by for most people. Quite likely, peo-
governmental power. The result ple have ever been inclined to pre-
has been the police state which fer the well-worn path to the un-
has emerged everywhere in vary- charted course, the familiar to
ing degrees in the twentieth cen- the new, the customary to the in-
tury. novative, and the established to
the prospect of reform. So deep-
seated is this inclination that peo-
Since it will be a part of the ples have often rebelled against
burden of the remainder of this radical change and welcomed the
work to show the connection be- restoration of the old order after

The Bent to Reform


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

1964 THE MIND OF THE REFORMER 27

a radical attempt at change. At write speeches, provide the ma-
most times and in most places in terial for the mass media of com-
the past, reforms and reformers munication, advise businessmen
have gotten short shrift. Innova- and politicians, and so pervade so-
tion has been much too perilous a cieties today. Government leaders
game for a profession of innovators are quite often accredited intellec-
to be established. In short, for the tuals, or so one may judge by the
reform bent to become acceptable number of them (particularly in
to great bodies of people required Latin countries) who effect the
a reversal of outlook on a huge title of “Doctor.”
and probably unprecedented scale. It will be my contention, then,
Insofar as reform depended upon that the reorientation of popu-
popular approval, a great trans- laces in the direction of continu-
formation of outlook had to take ous reform has been the work of
place. intellectuals. And, it may be inci-
dentally noted at this point, the
proposal and fostering of reform
The prime movers both of re- quite often provides intellectuals
form and of the changed outlook with their work.
have been those who may be iden- It is in order at this point to
tified as intellectuals. This brings make some distinctions which will
us to a third development of the help to focus attention upon the
nineteenth and twentieth centu- valid historical connections among
ries: the vast proportional in- the above developments. There are
crease in the number of intellec- reforms and reforms, reformers
tuals. They could not actually be and reformers, intellectuals and
counted, for the question of who intellectuals. Not all reforms pro-
is an intellectual has to be an- mote disorder; not all reformers
swered by definitions; opinions have been instrumental in insti-
will differ, and the application of tuting tyranny; not all intellectu-
the most precise definition would als have contributed to the cir-
be exceedingly difficult. cumscription of liberty. The spe-
Nonetheless, there should be no cies involved must be distin-
doubt that the number and sway guished from the genus.
of intellectuals has greatly in-
creased, probably in some direct
proportion to the triumph of the There are at least four levels or
reformist orientation. They teach kinds of reform. The one that has
school, profess at universities, been most universally appealed to

The Intellectuals

Individual Reform


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

28 THE FREEMAN October

and most generally recognized as amendment of constitutions, ex-
beneficial has been individual re- tension or restriction of the suf-
form. Prophets, preachers, and frage, changes in the modes of the
teachers have ever exhorted their selection of officials, the abolition
hearers to repent and to reform. of trial by jury, the creation of
They have usually meant that the boards and commissions, and so
individual should regroup and in- forth.
tegrate the forces within him, Since institutions are means to
that these should be brought to ends, their reform does not neces-
bear upon some worth-while ob- sarily entail movement in any par-
ject or end, and that he should act ticular direction. Thus, institu-
morally and responsibly in the tions may be reformed so as to
course of his life. create a balance of power in gov-
Advocates of this kind of re- ernment and enhance liberty. Re-
form differ as to how it may be form may even give formal recog-
achieved. Some hold that such in- nition to traditional but unestab-
ner reform can only be wrought lished institutions. It can be so
by the Grace of God. Others hold radical, however, as to disrupt the
that it can be done by acts of the tenor of political life. And reform
human will. Idealists usually hold can be used to destroy or under-
that it is accomplished by focusing mine the institutions which pro-
upon some worthy ideal. But they tect liberty and maintain order
all agree that inward reform is within society. It all depends upon
possible and desirable. Such re- the methods used and the end that
forms and reformers need not de- is in view as to the tendency of
tain us for long. They have been such reform.
with us for as long as there are

records, and they have certainly Liberal Reform

not wrought the contemporary The third kind of reform is
predicament. We need only pause much more difficult to name. It
to wish them well, and move on. should be called liberal reform, de-

spite the semantic difficulties in-
Institutional Reform volved. Liberal reform is that

The second level may be called which removes legal restrictions
institutional reform. Such reform upon the individual and thus en-
is concerned with the changing, hances his liberty. There was a
creating, or disposing of organiza- great deal of such reform in the
tions. Examples of this kind of re- eighteenth and nineteenth century
form would be the writing and in Europe and America. Examples


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

1964 THE MIND OF THE REFORMER 29

would be the abolition of slavery, tional and liberal reforms are so-
the removal of mercantile restric- cial reforms. Examples of ame-
tions upon the economy, the dis- liorative reform can be given that
establishment of churches, the range all the way from a compul-
abolition of primogeniture and en- sory social security tax to the
tail, and the revocation of class wholesale confiscation of property.
privileges. It was these kinds of The advocates of such reform are
reform that gave reform a good usually called “liberals” in twen-
name in the nineteenth century tieth century America, but they
and helped to establish the reform have worn many labels in the
bent. world: democratic socialists, so-
It should be noted, however, cial democrats, communists, revo-
that the method of reform is very lutionary socialists, fascists, and
important even if the end can be so on.l
universally acclaimed. Thus, the Method is important, of course,
abolition of slavery could be car- and peoples bearing these names
ried out in such a way as to re- subscribe to a great variety of
spect the property values involved, methods. It is better to have one’s
or it could be carried out so as purse stolen than to have his life
to amount to the confiscation of taken. It is better to be put into
property. The latter was the meth- prison, other things being equal,
od used in America; hence, it was than to be shot in the back of the
accomplished by aggression and neck. It may even be better to
accompanied by deep rents in the have a moderate redistribution
fabric of society. In general, of wealth accomplished by parlia-
though, where liberal reform was mentary means than to have a
accomplished by appropriate dictator proclaim the confiscation
means it was conducive to order, of all private property. But all

liberty, and prosperity. varieties of meliorists appear to
CL share many common objectives in
Ameliorative Reform the contemporary world. They

The fourth kind of reform is want to make over man and so-
ameliorative reform. This sort of ciety by political means so that
reform involves the use of gov- —— M

: _ 1 Technically, Marxist revolutionaries
ernmental power to improve peo are not reformers. In fact, however,
ple or the conditions of their lives. they have not destroyed governmental
It is what is ordinarily meant power, as they were supposed to do,

. but have seized it. They then use it to
today by social reform, though effect their ends. That is, they become
strictly speaking both institu- reformers.


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

30 THE FREEMAN October

they will conform to some version submit more or less to conditions.
they have in mind. Such reforms, In time, they may even forget
when they have been undertaken, that the system is maintained by
have resulted in widespread dis- force, or that things could be
order, suffering, violence, and loss otherwise. After all, most peoples
of liberty. at most times have lived under
It would take us too far afield varying degrees of oppression.
from the present inquiry to enter Nonetheless, ameliorative reform
into extensive proofs of the con- introduces violence into life. The
nection between ameliorative re- force charged with keeping the
form and the resultant disorder peace becomes the disturber of
and tyranny. Let us be content, the peace. Traditional relation-
then, with an axiomatic statement ships are disrupted. Liberty is
of the reasons for the connection. restricted and reduced.
To wit: men live their lives within
a framework of customary rela-
tions and patterns for achieving The amount of suffering de-
their ends and solving their prob- pends upon the kind and degree
lems. In the absence of positive of reforms. In communist lands,
force, they have worked out and actual starvation often follows the
accepted these patterns volun- attempt to make over society.
tarily, or they submit to them More moderate reforms may only
willingly. Any alteration of these lead to the decline of investment
by government involves the use or in industry, to the deprivation of
threat of force, for that is how those on fixed incomes, to the
governments operate. The old or- loss of spontaneity in human rela-
der must be replaced by a new tions, to a desultory conformity
order for the reform to be to the establishment, to the rigid-
achieved. The result of the force- ity of conditions, and so on. A
ful effort to do this is disorder. considerable literature now exists
Theoretically, the new order re- detailing the consequences of
places the old order; in fact, it ameliorative reform efforts by
does not. It is, at best, an uneasy governments; anyone not con-
peace maintained by the presence vinced by theoretical proofs
of armies, as it were, for these should avail himself of it.2
may be only an augmented police ——— —
force. Men may adjust to the new 2 It is not my contention that all
. disorder and suffering are caused by
disorder, resume the course of governmental intervention or that they
their lives as best they can, and would disappear if it did. On the con-

Reform Creates Suffering


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

1964 THE MIND OF THE REFORMER 31

The blueprints for ameliorative lectual” can be defined so as to
reforms (and revolutions which refer only to those who want to
have eventuated in reform) have make the world over, and “intel-
been provided by intellectuals. lectualism” can be defined as the
They run the gamut from Saint- inherent outlook which promotes
Simon to Karl Marx to Eduard such reformism.

Bernstein to Georgy Plekhanov to This is a dubious use of lan-
Karl Kautsky to George Bernard guage. It does not conform to con-
Shaw to Sidney and Beatrice temporary conventional usage nor
Webb to Eugene Debs to Lester does it take into account the ety-
Frank Ward to John Dewey. mology of the words. In the cur-
These, and many others, have rent parlance, an intellectual is
made analyses, drawn plans, de- one who works mainly with ideas.
scribed utopias, provided visions, The American College Dictionary
and, in short, have supplied the defines “intellectual” as ‘“‘appeal-
ideological ammunition in the bat- ing to or engaging the intellect

tle for ameliorative reform. There ..., of or pertaining to the intel-
is a sense, then, in which it can lect . . . , directed or inclined
be said that intellectuals have toward things that involve the in-
caused the reform effort. tellect . . . , possessing or showing

intellect or mental capacity, esp.
to a high degree. ...”

Certainly, it would be valid to Such definitions apply equally
say that the initiative for such ,5 well to those who oppose re-
efforts has come from reformist form ag to those who favor and
intellectuals under the sway of ,4yance it. It may be that those
ideologies. This fact has brought 1, work with ideas are more
forth from some the conclusion jjkely to make mistakes in the
that the attempt to make man and ea); of ideas than those who do
society over results from some in- ot in something of the same way
herent trait in the intellectual, or {nat those who construct tall
that the real villain of the piece is yy yildings are more apt to die from
something that may be called in- falling than those who stay on
tellectualism. Undoubtedly, “intel- (he ground. At the same time,

Intellectualism Defined

trary, suffering and disorder —both in- those who are at home in the
dividual and social —have always existed :

for human beings and, so far as I know, realm of ideas should be least
will continue to do so. My concern is likely to use them wrongly. If that
with that portion of suffering and dis- js not the case, the matter re-
order caused by planning and executed . . Lo.


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

32 THE FREEMAN October

A Pithy Question ence of a communist conspiracy,
The question can now be and by the attraction which com-
framed which will bring us to the munism has had for intellectuals
heart of the inquiry. Why have so over the years.
many modern intellectuals been But it must be noted that com-
devoted to ameliorative reform munism was an idea before any
and/or revolution? Why have conspiracy existed, that it too was
they (and do they) promote re- a product of intellectuals. More-
forms which, when put into effect, over, there have been and are
result in disorder, violence, and many anticommunist intellectuals
oppression? Is it because they who are wedded to melioristic re-
love disorder? Is it because they form. Most reformist ideas have
are violent men by nature? Is it been openly advocated or pre-
because they despise liberty and sented, quite often long before
long to see oppression introduced? any conspiracy existed. Conspira-
There may be intellectuals of such cies have to do largely with the
a character, but most of them cer- destruction or seizure of govern-
tainly are not. Probably, no group mental power, though this is
of people has ever been so devoted sometimes advanced by ideologi-
to the ideas of peace, harmony, cal subversion, which may also be
freedom, and plenty as have mod- covert. It should be noted, too,
ern intellectuals. Their works are that some intellectuals have been
replete with references to these taken in, or so they claim, by
words, and contain numerous ‘front’ organizations.
plans for the realization of the But after everything has been
goals that are implicit in them. said for this theory, there are too
There have been explanations many facts, and too many intel-
from those who perceive that lectuals, which it does not account
many intellectuals are actually at for. Why, for instance, are intel-
war with that which they profess lectuals so readily attracted to
to seek. One of these stems from communism? Since they are sup-
the conspiracy theory of history. posedly adept at ideas, they ought
According to some versions of to be the first to perceive errors
this view, intellectuals are in them. Instead, intellectuals are
“dupes” of the conspirators, nota- the one group in a country from
bly those in the communist con- which the largest contingent sym-
spiracy, or else they are part of pathetic to communism can be
the conspiracy. This view is given drawn. This must mean that many
a certain plausibility by the exist- intellectuals are already commit-


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

1964 THE MIND OF THE REFORMER 33

ted to the idea of reconstructing among people were free and spon-
the world before they accept any taneous, when the last vestiges of
particular -ideology, or, to put it the exploitation of man by man
another way, that they are prone had been removed from human re-
to ideologies which contain plans lationships. This thesis can have
for remaking the world. Conspira- only limited application at most.
cies are not causes of ideas, but
effects; they may be used to pro-
mote particular causes, but they This work will be devoted to
are creations, not creators. making a quite different explana-
There is another explanation, tion. My thesis will be that the
not quite a formal theory, for ac- gross disparity between the vi-
counting for the reformist predi- sions of the intellectuals and the
lections of intellectuals. It goes realities which they help to create
something like this: Intellectuals and perpetuate has resulted from
want power and prestige. Reform- limitations in their conception of
ism offers opportunities for them reality. They visualize freedom
to achieve these, for they can and create oppression. Assuming
draw up the plans and to some their good faith and sincerity,
extent direct the execution of this can only mean that they have
them. To put it baldly, intellec- misconceived the materials with
tuals do not care how much de- which they are working. Many in-
struction they wreak so long as tellectuals are indeed deluded, but
they can achieve their own per- . it is no simple delusion such as is
sonal power objectives. To any- imagined when they are described
one who has known or read the as “duped.” It is a delusion rooted
works of many reformist intel- deeply in the contemporary out-
lectuals, this view should be in- look, supported by voluminous re-
credible. search, propagated by a prodigious
Of course, none of us knows the educational effort, and developed
hidden motives of another, but by a steadfast attention to an as-
such a view does not square in pect of reality. It has an extensive
many instances with what we do history and has been developed by
know. The theories of most re- some of the best minds of the last
formists have not been power century.
theories at all. Earlier reformers The centerpiece of the delusion
quite often envisioned a condition is the belief that there are no
in which all political power had limits to man’s creativity. Reality
been destroyed, when relations can be endlessly shaped and re-

The Great Disparity


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

34 THE FREEMAN October

shaped to suit the purposes of nation for him, and he is apt to
men. In effect, man has no fixed denounce as cynics those who call
nature; the universe contains no him back from the nowhere-never
unalterable laws. Stated so [and to reality?

bluntly, many intellectuals might Eric Voegelin calls the phe-
hedge at subscribing to these nemenon “gnosticism,” but he, too,
premises. Yet these are substan- is describing the attitude of the
tially the premises upon which re- reformist intellectual in the fol-
formist intellectuals have based lowing:

many of their programs. They . . . In the Gnostic dream world
have, as R. R. Palmer said of Na- . nonrecognition of reality is the
poleon Bonaparte in the prefatory first principle. As a consequence,
quotation to this piece, “regarded types of action which in the real
the world as a flux to be formed world would be considered as mor-

by ... [their] own minds]. ally insane because of the real effect
which they have will be considered
The Phenomenon Recognized moral in the dream world because

The flight of the intellectuals they intended an entirely different
from reality has not gone entirely effect. The gap between intended and
unremarked. In the following quo- real effect will be imputed not to the
tations each taken from a differ- Gnostic immorality of ignoring the

, structure of reality but to the im-
ent contemporary writer, the phe- morality of some other person or

nomenon is recognized, though the gociety that does not behave as it
intellectuals are characterized by should behave according to the
different names by each writer. dream conception of cause and ef-
Thus, Thomas Molnar calls them fect.

“progressives,” but he is talking Calling them “liberals,” and
about the reformist intellectual: getting down to specifics, James

. . . It [his description] points to Burnham says:
the basic attitude of the progressive,
his contempt for the structure of
life, its given situations and hard
data; and it evokes the impatience
with which he presses for the social,

. . . The liberal ideologues proceed
in a manner long familiar to both
religion and psychology: by con-
structing a new reality of their own,

political, economie, international 3 Thomas Molnar, The Decline of the
pattern that his ideology dictates Intellectual (Cleveland: World Publish-
him to favor. The envisaged ing Company, A Meridian Book, 1961),

. p. 132.
and blurred picture of what would 4 Eric Voegelin, The New Science of

be the opposite of life's actual im- politica (Chicago: University of Chi-
perfect conditions has a great fasci- cago Press, 1962), pp. 169-70.


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

1964 THE MIND OF THE REFORMER 35

a transcendental world, where the the most illusory part, to that same
soul may take refuge from the pro- extent they may be drawn farther
saic, unpleasant world of space and and farther from the object of
time. In that new and better world, their search. None of us is im-
the abandonment of a million of
one’s own countrymen and the capit-

ulation to a band of ferocious ter- . ‘re
rorists become transformed into P3T to the concrete realities of

what is called “liberation.” . . . A history, in humility submitting
crude imperialist grab in the South assertions to the test of fact and
Seas or the Indian subcontinent be- reason. We must relive, if only in
comes a clearing up of the vestiges the imagination of the recreation
of colonialism. The failure to re- that is history, the sojourn of the
taliate against gross insults and reformist intellectual before we
injuries to envoys, citizens and Prop- can understand him and the delu-
erty becomes a proof of maturity i. into which he has been en-
and wisdom. snared.
The Quest for Truth The reformist intellectual, then,
has been caught up in a flight
from reality. What is to follow
will be largely an account of that
flight, told against a background
of the central Western tradition
of what constitutes reality. The
main attention will be focused
upon the thought of the American
reformist intellectuals, but this
will be recounted alongside Euro-
5 James Burnham, Suicide of the West Dean intellectual developments, of
(New York: John Day, 1964), p. 302. which the American forms a part.

mune from this partiality of sight.
Thus, it is necessary that we re-

But this view has to be seen to
be believed. It must be set forth
in its complexity and depth, with
an understanding that the quest
for truth is not undertaken in a
well-lighted room. It is under-
taken by men who see only in
part, and to the extent that they
concentrate their attention upon

The next article in this series will concern “Symptoms of the Flight.”


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

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

In Seli-Deiense ---

PAuL L. PoIROT

HOWEVER MUCH one might wish it governmental force within any
otherwise, a realistic view of man- society.
kind reveals that violence against It is well to recognize and re-
others is still in common use as a member that the purpose and
way of trying to satisfy human nature of violence is to overpower,
wants. And this is the reason for and that the prevailing power bloc
government. in a society is the effective gov-
Whether government is orga- ernment at any given time. Vio-
nized for the purpose of attacking lence as such carries no built-in
and plundering or for the purpose regulator or means of self-re-
of protecting life and property, it straint; the object ever is over-
may be concluded that the size and powering strength. The tendency
scope of government — relative to of government is to grow in
the total of human relationships power. Old governments do not
within a society — will depend di- simply wither away, but invari-
rectly or indirectly upon the ex- ably and inevitably die by violence
tent to which individuals rely at the hands of a superior force
upon violence against others to try that may be either externally or
to satisfy their wants. internally initiated; a government
Every act of trespass against is dead when it can no longer
the person or the property of an- defend itself.
other, against that other's will, Observing this fatal tendency
tends to provoke retaliation in of governmental power to grow
kind; and such actions and reac- —and grow corrupt-—has led
tions of violent nature continuous- some individuals to the conclusion
ly work themselves out so as to that governments are the cause
constitute and justify the effective of violence among men and that

38


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

1964 IN SELF-DEFENSE 39

peace would reign universal if scribed bounds of defending the
only all existing governmental lives and property of all peaceful
structures were dismantled. What citizens. There is overwhelming
these persons fail to see is that and irrefutable evidence that the
human nature is the source of government of the United States
violence among human beings and of America has been drawing unto
that to change human nature it- itself through the years vast
self is a bit more complicated than powers over the peaceful creative
simply to change or abandon cer- activities of the citizenry — powers
tain institutional manifestations greatly exceeding those defined
of the nature of man. and specified in the Constitution.
Until all men are agreed that To draw the foregoing conclu-
all men are perfect, violence is apt sion is not to say that the Found-
to manifest itself as govern- ing Fathers were derelict in their
mental control in one form or duty to future generations. Quite
another. Thus, it would seem far possibly they were aware that a
more fruitful to try to learn to live Constitution can do little, if any-
with government than without it. thing, more for a people than they
Despite the discouraging record are able and willing to do for
of the decline and fall of empires, themselves. Perhaps they knew
there is no shred of evidence that that the government they formed
the people involved might have might tend to grow in power and
done better without governmental grow corrupt. They might well
structures. have understood that there is
nothing in the nature of any gov-
ernment that would automatically
The modern rapid drift toward serve to regulate and limit its
socialism, even in the United scope and size. Conceivably, their
States of America under what is major aim was to raise a standard
widely acknowledged to be one of to which the wise and honest
the outstanding efforts of history might repair —if and when men
to diffuse and limit governmental sought freedom and were worthy
power, may not be taken as evi- of it.
dence that such efforts were fruit- In any event, there are no
less. One may properly conclude grounds for a conclusion that the
from the American experience people of the United States today
that the Founding Fathers did are in worse condition than if
not devise a government that there had been no effort to consti-
would keep itself within the pre- tute a government of limited

Government Has No Automatic Limits


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

40 THE FREEMAN October

powers. That the limits are being Yet, there are among men those
violated and exceeded in our time who would choose an open path in
is neither a discredit to the preference to being reformed, and
Founding Fathers nor is it neces- sometimes they react to reform
sarily a reflection on those now efforts in ways that lead to vio-
holding political office and exer- lence. Implicit in the so-called
cising the power of government. right to picket is an unfounded
Our big government is simply presumption that the victim will
and solely a measure of the ex- not reply in kind. And the right to
tent to which citizens of the strike implies that none will strike
United States have come to rely back. But some men violently
upon violence in their relation- resent being picketed and struck
ships. Government has no alter- against. That fine line between
native but to grow in proportion peaceful picketing and rioting is
to such violence — or be displaced often blurred and scarcely dis-
by a superior power. If there are tinguishable, even to the seasoned
those of us who want less govern- law enforcement officers assigned
ment intervention, then it be- to duty for such mass demonstra-
hooves us to find new ways and tions of collective “passive resist-
means to rid ourselves and our ance.” There can be little doubt
fellow citizens of our violent na- that much of the inordinate
tures. growth of government power in
the United States in our time
How to Reform the World? results from the attempt to serve
Where does one begin? If he the interests of organized pres-
were to take his cue from the sure groups and, at the same time,
popular approach, he would likely to restrain their propensity to
join in the demonstrations to violence.
“ban the bomb” and to reform The American prohibition ex-
the rest of the world en masse. periment affords a clear example
He would form an organization of the way in which violence
to show a superiority of numbers erupts and government grows out
favoring his proposed reform. of the efforts of some persons to
Then, with nothing but peace in reform others. Marching, chant-
their hearts, the assembled re- ing, sloganeering, hatchet-swing-
formers would sit in their neigh- ing demonstrators depict the evils
bor’s path until he saw the error of alcohol until a majority is
of his ways and joined their ranks aroused to pass a law to prohibit
to help save other lost souls. the manufacture and sale of in-


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

1964 IN SELF-DEFENSE 41

toxicants. Then, behind the law, — enforce our agreements in re-
arise gangs of bootleggers and straint of trade.
their constant gang warfare. This, — intervene in foreign affairs.

— suppress foreign competition.

— underwrite our unemployment
and business failures.

— support farm prices.

in turn, calls for armies of law
enforcement officers, beset by
bribery and corruption and vio-
lence on the grand scale. — rebuild and renovate depressed
Consider for a moment a few’ areas.

of the jobs one pressure group or — et cetera, et cetera, et cetera.

another among us has persuaded
policemen to do for us, by violence

if anyone resists: Though far from complete, this

list is sufficient to signify a great
deal of violence and a great deal
of government in our lives. And
it affords a major clue as to why
policemen may sometimes fail to
appear promptly at the scene of a

— teach our children, not only the
three R’s, but all the pertinent
facts of life.

— build our homes, summer camps,
ski resorts.

— perform our charities. crime. With so many more laws to
— purify our drinking water. enforce, there are that many more
— dispose of our garbage. definitions of and opportunities
— conserve our resources. for illegal action.

— carry our mail. Careful scrutiny of the forego-
— provide our electricity. ing list will reveal another star-

— build and maintain subways,

railways, highways, waterways, tling fact: that many of the

and airways supposedly domestic interven-
_ regulate interest, freight, and tions of the advanced welfare state

utility rates of all kinds. have international consequences
— protect us from floods, droughts, that lead to war. For instance, the

hurricanes, earthquakes, fires, postal service, subsidized ocean

freezes, insects, poisons, and ghipping and international air

other hazards. } transport, foreign aid, farm price
— build and staff our hospitals. . .

. . . supports, international trade
— insure us against illness, ac- . .

cident, old age. agreements, tariff policies, and
— supervise our gambling. similar governmental activities
— judge our published communi- breed foreign antagonism and lead

cations. to armament races and defense
— broadcast political ‘messages to tactics that bring nations to the

foreigners as well as ourselves. brink, and then to war.


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

42 THE FREEMAN October

If violence is in the nature of The Key to Peace

man, as we have presumed, and Beyond resort to force for such
not necessarily a consequence of defense, peaceful persons would
government, it would seem logical look to their own efforts, and to
to defend oneself against this evil voluntary exchange through serv-
tendency. Thus, reasonable men ice to others, to satisfy their own
will try to codify their rules of wants. Their hope for a better
conduct, ‘raise a standard to world or a better society would be
which the wise and honest can re- through self-improvement rather
pair,” and organize their defensive than the reform of other persons.
forces to constitute the govern- Self-improvement is a do-it-your-
ment of their society. Its sole, logi- self project without violence
cal purpose would be to suppress toward others; it affords an ex-
any outbreak of violence, fraud, ample others may follow without
or coercive threat against the life provoking their violent retalia-
or property of any peaceful per- tion. It broadens the path to lib-
son, with general taxing power erty, diminishes the need for gov-
sufficient to sustain itself in this ernment.

limited defensive role. It is the key to peace. @®

| IDEAS @N LIBERTY Frederic Bastiat

THE PRINCIPLE or justification for the collective right of govern-
ment is based on individual right. The common police force that
protects this collective right cannot logically have any other
purpose or mission than that for which it acts as a substitute.
Thus, since no individual can logically or legitimately use force
against the person, liberty, or property of another individual,
then the common force — for the same reason — cannot logically
be used to destroy the person, liberty, or property of individuals
or groups.


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

(w The American Way .

in Economics : Eomunp A. Opitz

EcoNoMIcs deals with our daily willing to grant that the motives
bread, with the provisioning of of the Pilgrims and the Puritans
our material and creaturely needs, were mixed. But ask yourself this
with the way we make our living. question: “If the Separatists had
But the way a person makes his been able to worship God as they
living is related to the things he pleased, without hindrance or
is living for; and a nation’s mode penalty, in England, would they
of operating in the economic realm have emigrated to this continent
cannot be detached from that na- when they did — or at all?” Merely
tion’s understanding of the end to ask this question is to get the
and purpose of human life. An obvious answer; the impelling
economic system, in other words, motive behind the seventeenth
functions within a framework of century migrations and resettle-
ethical and spiritual components. ments was the search for a place
It has a legal framework, also. where these religious dissenters
This means that the discussion of might be free to worship God
economic concepts cannot proceed as they chose. Writing about the
very far without invoking spirit- men and women who established
ual and constitutional concepts. Plymouth colony, Alexis de Tocque-
If we look back over our own ville said, “. .. it was a purely in-
history, in its religious, political, tellectual craving that called them
and economic sectors, we note that from the comforts of their former
one key word fits each of them. homes; and in facing the inevit-
The key word is “Freedom.” I am able sufferings of exile their ob-
ject was the triumph of an idea.”

The Reverend Mr. Opitz is a member of the It was the idea of human free-
staff of the Foundation for Economic Educa- dom under God. Now, candor

tion, Book Review Editor of THE FREEMAN, .
lecturer, and seminar discussion leader. compels us to admit that the

43


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

44 THE FREEMAN October

Puritan idea of freedom contained If anything were wanting to this
some blind spots. The Dissenters necessary operation of the form
sought freedom on these shores to of government, religion would
worship God as they pleased; it have given it a complete effect.
was not their aim to establish the Religion, always a principle of
general condition of religious lib- energy, in this new people is no
erty where every man might wor- way worn out or impaired; and
ship after his own fashion. In the their mode of professing it is also
political realm they countenanced one main cause of this free spirit.
governmental invasions of per- The people are Protestants, and
sonal liberty which we would re- of that kind which is the most
gard today as intolerable; and in adverse to all implicit submission
the economic sector their practices of mind and opinion. This is a
could hardly be described as free persuasion not only favorable to
market. But despite their short- liberty, but built upon it... . The
comings in practice, these people dissenting interests have sprung
had hold of an idea which had the up in direct opposition to all the
power to act as a solvent of exist- ordinary powers of the world,
ing injustices, taboos, and ignor- and could justify that opposition
ance. This dynamic idea was the only on a strong claim to natural
principle of liberty. It could hard- liberty. Their very existence de-
ly have been otherwise, for the pended on the powerful and un-
Puritans were children of the Re- remitted assertion of that claim.
formation, and the spiritual lib- All Protestantism, even the most
erty stressed by the Reformers cold and passive, is a sort of dis-
could not help branching out into sent. But the religion most pre-

secular liberties. valent in our northern colonies
i . is a refinement on the principle
A Great Religious Tradition of resistance; it is the dissidence

Let's listen to the words of of dissent, and the protestantism
Edmund Burke on this point. of the Protestant religion.”
Burke made a great speech on The Founding Fathers, in other
Conciliation with the American words, were the inheritors of a
Colonies and warned his hearers great religious tradition and the
that the colonists were made of American dream of a society of
stern stuff. The way they all share free men was largely a projection
“in their ordinary governments,” of that religion. This is how the
he writes, “never fails to inspire original American equation got
them with lofty sentiments. . . . its built-in religious dimension.


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

1964 THE AMERICAN WAY IN ECONOMICS 45

Christian by Absorption 1900 years of Christian insistence
Every society is held together upon the immortality of the soul.
because its members share a com- Christian idealism is manifest in
mon understanding of certain the culture and habits of the peo-
basic principles. There must be a ple. . . .. The American owes all
consensus as to the object of ulti- this to the Church . .. He owes it
mate concern — God. There must to the leadership the Church pro-
be some agreement as to the re- vided in the founding, settlement,
lation between God and man, and and political integration of his in-
as to the nature of man and his credibly bounteous land.” (For-
proper end. There must be some {une, January, 1940)
agreement as to what constitutes In short, our institutions and
justice, honor, and virtue. The our way of life are intimately re-
source from which a society de- lated to the basic dogmas of the
rives its understanding of these Christian religion. From this faith
matters is its religion. In this we derive our notions of the mean-
sense, every society is cradled in ing of life, the moral order, the
some: religion, Christian or other- dignity of persons, and the rights
wise. The culture of China is un- and responsibilities of individuals.
thinkable without Confucianism; Ours is a Christian society, with
Indian society is the expression its counterpart in a secular polit-
of Hinduism; and Islam is com- ical state.
posed of followers of Mohammed. And this religious heritage, to
In like fashion, our Western put the matter briefly, spells out
culture stems from the Judeo- into personal liberty in the politi-
Christian tradition; we are a cal and social spheres. The God
branch of Christendom. As one of who gave us the freedom to accept
our editorial writers has said, or reject Him certainly intends us
“The United States is not Chris- to be free in our relations with
tian in any formal sense, its other men. People who believe this
churches are not full on Sundays, will, when they come to draft the
and its citizens transgress the fundamental rules for the govern-
precepts freely. Butit is Christian ing of a society, design a political
in the sense of absorption. The structure severely limited in scope.
basic teachings of Christianity They will limit government so as
are in its bloodstream.The central to unshackle the productive and
doctrine of its political system — creative energies of men. Govern-
the inviolability of the individual ment will keep the peace by re-
— 1s the doctrine inherited from straining those who disturb it.


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

46 THE FREEMAN October

The men who drafted the Con- self. In this respect, an economic
stitution did not design a stream- order is somewhat analogous to a
lined political structure. James crystal. Not even the most skilled
Madison and the others had been chemist could build up a crystal by
once burnt by government, and adding molecule to molecule; but
they were twice shy. They created almost anyone can set up the con-
a political structure in which the ditions under which a erystal
national government was to be in- would construct itself. Remember
ternally self-governed by three sep- how you made rock candy, by pre-
arate but balanced powers, and the paring a saturated sugar solution,
several states were to retain their and then into this clear thick lig-
original sovereignty in order to act uid a piece of string was dipped on
as a counterpoise to the central which the sugar crystals formed.
authority. This entire political Something of this sort happens in
equilibrium revolved around the human affairs in the realm of eco-
sovereign individual; the only ex- nomics, but to understand this
cuse for government was to secure we'll have to examine the nature
him in his rights. The Founding of economic activity and the hu-
Fathers knew that a free govern- man purposes this serves.
ment implies an unfree people, so Economics is the realm of busi-
in the interests of personal liberty ness, industry, and trade. On the
they pinned down their govern- surface, economics deals with
ment to strictly limited, defined, prices, production, exchange, and
and delegated functions. The words the operations of the market place
“no” and ‘“not” employed in re- as a reflection of our buying and
straint of governmental power oc- consuming habits. Fundamentally,
cur 24 times in the first seven ar- however, economics is concerned
ticles of the Constitution and 22 with the conservation and steward-
more times in the Bill of Rights. ship of the earth’s scarce goods.
At the basic level, there are four
such goods. One is human energy.

So far, I have had little to say A man can put forth just so much
about economics, as such. The work before exhaustion demands
omission is deliberate, and the rest and repair for his body, and
reason is this: An economic system as a result men devise labor-sav-
does not have to be constructed; ing devices. A second scarce good
establish the proper spiritual and is time — the thing that’s always
constitutional framework and an running out on us. A third is ma-
economic order will construct it- terial resources — iron ore, wood

The Realm of Economics


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

1964 THE AMERICAN WAY IN ECONOMICS 47

pulp, living space, and so on. if these processes begin to falter
The fourth is natural energy, and work badly, his attention is
such as is found in a waterfall. drawn away from his life's goal
These goods-in-short-supply are and begins to focus on them in-
our birthright as creatures of this stead. He becomes a hypochon-
planet. Use them wisely, as natural driac. Given other circumstances
piety dictates and common sense he may become a glutton. In any
confirms — that is, providently and event, he has idolatrously erected
economically — and human well- means into ends, to the detriment
being results. of both means and ends.

As a result of economic activity, Economic activity, too, may be-
using and combining these four come an end in itself for a person
scarce goods, we get the bewild- whose life lacks more worth-while
ering variety of goods in today’s goals, oreven for a society when its
markets — houses, automobiles, value system is scrambled. It is
foodstuffs, entertainment, dental up to a society’s religious institu-
services, round-the-world trips and tions to keep its value system in
so on. Relative to the demand for repair; and if they fail to respond
these things, they are scarce —else with new duties to meet new oc-
they wouldn't be economic goods! casions, it is inevitable that the
Every day we are faced with the false gods will take over. Then we
necessity of choosing between two may have what Albert Jay Nock de-
or more things we want, knowing cried as ‘‘economism” —the doc-
that if we buy this we must do trine that tBe whole of life con-
without that. We work at some job sists in the production, exchange,
or other, and are paid for our and consumption of things.
efforts, which enables us to buy
things to satisfy our most urgent
wants. The net result of this kind All creatures take the world
of individual action in society is pretty much as they find it, except
that scarce goods are allocated ef- man. Man alone has the gifts which
ficiently. enable him to entertain an idea and

Economic activity in a healthy then transform his environment in
society is in the realm of means, accordance with it. He is equipped
being somewhat analogous to di- with needs which the world as it
gestion in a healthy individual. A is cannot satisfy. Thus he is com-
person has aims for his life which pelled to alter and rearrange the
far transcend the processes by natural order by employing his
which his body is maintained; but energy on raw materials so as to

Beyond Basic Needs


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

48 THE FREEMAN October

put them into consumable form. and a mere shelter for the body
Before he can do much of anything develops into a cathedral to house
else, man must manufacture, grow, the spirit of man.
and transport. His creaturely needs
man shares with the animals, but
he alone employs economic means There are three schools of
— tools and capital —to satisfy thought as to man’s economic na-
them. This is an enormous leap up- ture and needs. First there are the
ward, for by relying on the eco- economic determinists, who argue
nomic means man becomes so effi- as if man were merely a soulless
cient at satisfying his bodily hung- appendage to his material needs.
ers that he gains a measure of in- For them, the modes of production
dependence from them. When they at any given time decree the nature
are assuaged, he feels the tug of of man’s institutions, his philos-
hungers no animal ever feels: for ophies, and even his religions. Eco-
truth, for beauty, for meaning, for nomics, under this dispensation,
God. will be a tool of the state. On the
It conveys something like a half opposite side of the fence is a
truth and a whole error to label school of thought which appears to
man a spiritual being. He is, in regard it as a cosmic calamity that
fact, a spiritual being who eats, each soul is sullied by connection
feels the cold, and needs shelter. with a body which must be fed and
Whatever may be man’s capacities kept warm. Spiritual purity will
in the upper reaches of his nature not be attained until there is deliv-
— to think, dream, pray, create — erance from this incubus; but un-
it is certain that he will attain to til that happy day, let us try to
none of these unless he survives. forget that man has creaturely
And he cannot survive for long needs which only the products of
unless he engages in economicactiv- human labor can satisfy. Nothing
ity. At the lowest level economic in this scheme to dispose men to
action achieves merely economic pay any attention to economics!
ends: food, clothing, and shelter. But there is a third way.
But when these matters are ef- The mainstream of the Judeo-
ficiently in hand, economic action Christian tradition is character-
is a means to all our ends, not only ized by a robust earthiness which
to more refined economic goods but makes it as alien to the material-
to the highest goods of the mind ism of the first of the above al-
and spirit. Add flying buttresses ternatives as to the disembodied
and spires to four walls and a roof, spirituality of the second. Soul

The Human Situation


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

1964 THE AMERICAN WAY IN ECONOMICS 49

and body are not at war with each written constitution to certain
other, but are parts of our total delegated functions. But are there
human nature. It is the whole not, some might ask, alternatives
man who needs to be saved, not to the free market, private prop-
just the soul. Creaturely needs erty economy? What about so-
are, therefore, legitimate; and be- cialism, or the planned society?
ing legitimate they sanction the The answer to these questions is
economic activities by which alone that there are many ways to liqui-
they can be met. date an economy, but there is only
Such an understanding of the one way to produce economic
human situation prepares us to goods. There are no genuine al-
accept the idea that economics is ternatives to the free market
a discipline in its own right, gov- economy. Every so-called alterna-
erned by its own natural laws. tive depends upon political redis-
This tradition also makes it plain tribution. Political interventions
that economic action is in the in the economy deprive some peo-
realm of means, and thus properly ple of what they produce for the
subject to noneconomic criteria. assumed benefit of other people.
These noneconomic criteria are This is to commit an injustice,
supplied by our religion, which and, of course, it diminishes
deals with the meaning and pur- production.
pose of this earthly life, and the There is only one way for man-
destiny of man beyond it. When kind to live and improve its eco-
men have a lively sense of the nomic circumstances, and that is
spiritual dimension of their lives, by applying its energies to nature
they are in a good position to cope and nature’s products. Goods are
with the problems posed by the produced in this way and in no
political and economic sectors; but other. But once produced, the
when there is an erosion of spir- goods of some men may be acquired
itual values, the malaise here will by other men through political
be reflected at the social level. manipulation. Every variety of
socialism rests upon this practice.
Let government perform this serv-
ice and the trek to Washington is
I have been discussing the sig- on. Once on, it will grow in geo-
nificance and some of the ear- metric progression as group after
marks of economic life in a free group organizes to apply political
society — a free society being one pressure to get something for
which limits its government by a nothing; organized labor, the

There Is No Alternative to
the Free Market Economy


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

50 THE FREEMAN B October

farm bloc, veterans, regional dom: freedom to write and speak,
groups, educationists, the aged, freedom to worship and teach,
and others. and, most neglected freedom of all,
Business and industry, strictly freedom of economic enterprise,
speaking, have to do only with i. e., consumer sovereignty in the
the deploying of economic factors market place. A believer in free
and resources — somebody making speech accepts this principle even
something, transporting it, ex- though he is fully aware that
changing it. A businessman or in- its exercise will result in cam-
dustrialist, pursuing his aims as paign oratory, socialist tracts, up-
an entrepreneur, seeks to turn lift drivel, pornography, public re-
a profit. The appearance of a pro- lations prose, modern poetry, and
fit indicates that his talents are the “literature” of a beat genera-
being employed in a manner ap- tion. The defender of free speech
proved by a significant number of recognizes these things as cor-
people. Absence of a profit, on the ruptions of the divine gift of com-
other hand, ought to be his clue munication, but they are part of
that people are instructing him the price he is willing to pay for
to go into some other line. So long freedom. Freedom costs, and thus
as a man produces and sells things it cannot endure among a people
people want at a price they are who do not understand this or, if
willing to pay, he operates accord- they do, are unwilling to incur
ing to the rules of economics. The these costs.
vast majority of our millions of Acceptance of the principle of
business enterprises are conduct- economic liberty means that the
ed in this fashion. All that is nec- consumer has a right to demand,
essary to keep this operation go- and the producer a right to sup-
ing is for the law to inhibit and ply, any item which does not in-
penalize cases of theft, fraud, and jure another —as injury is de-

violence. fined in laws against assault,
theft, and fraud. This means that
Freedom Costs poor taste and doubtful morals

Something like this was the will find expression here just as
dream of classical Liberalism. It they do in the kindred fields of
was what Adam Smith had in speech and religion. A rock-and-
mind when he spoke of “the lib- roll performer will ride around
eral plan of equality, liberty, and in a pink Cadillac while a sym-
justice.” phony orchestra has to beg for

Classical Liberalism meant free- funds. A race track will be built


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

1964 THE AMERICAN WAY IN ECONOMICS 51

where common sense would dic- is governmental control and bu-
tate a playground. People refuse reaucratic planning of economic
to buy mere transportation; they life. The guarantee of religious
want a chariot with lots of freedom is worth little if the
chrome, tailfing, and three hun- devotees are denied the economic
dred horses under the hood. means to build their temples,
Freedom costs, and the costs print their literature, and pay
of freedom in the areas of speech, their spiritual guides. How mean-
press, worship, and assemblage ingful is freedom of the press if
are generally acknowledged by a there are no private means to
significant number of articulate buy paper and presses? And there
people. These freedoms are not is no full right to assemble if
under assault — not in this country, buildings, street corners, and va-
at any rate. In the case of eco- cant lots are government owned.
nomic freedom, the situation is ‘“Whoso controls our subsistence
different. Few people mistake the controls us.”
abuses of free speech for the prin-
ciple itself; but the abuses of If government is properly lim-
economic liberty loom so large in ited, men are free. In a free so-
the modern eye that it cannot de- ciety a certain pattern of econom-
tect the market principle of which ic activity will be precipitated.
they are violations. This pattern will change con-
stantly. It will respond as men
have less or more political liberty.
Freedom, in sound theory, is It will be modified as technology
all of a piece. It hinges on prop- advances, taste is refined, and
erly limiting government. A so- morals improve. Properly speak-
ciety may be called free when its ing, the economic pattern of a
government does not dictate mat- free society is capitalism, or the
ters of religion and private con- market economy. Under -capital-
science, does not censor reading ism the people are economically
material, curb speech, nor bar free, exercising control over their
lawful assemblage. But mere pa- own subsistence, and thus they
per guarantees of these important become self-controlling in other
freedoms are worthless if there freedoms as well. @®

And Government Must Be Limited

Reprints available, 10 cents each.


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

Business and

ONE WAY to convey some of the clusion was by counting some of
flavor of my “position” or ‘“ideol- the bundle. He started out “1, 2,
ogy” is to give you a few quota- 3, 4.” After a while he got to “33,
tions that I use frequently be- 34, 35.” Then he came to “65, 66,
cause they seem to me both amus- 67, 68.” But there he stopped, say-
ing at a superficial level, and at a ing, “Shucks, if it’s right this far,
deeper level to reflect important it must be right all the way.”
truths. I'll mention three, and Now I'll admit that it is going
leave you to figure out their rela- to take more time than you have
tion to government and business. right now to figure out what those
First, there is the saying at- stories imply about my position
tributed to a popular nineteenth and ideology. Let me suggest that
century American humorist that you forget them for now and try
“What you don’t know won’t hurt to figure them out later. In the
you, it’s knowing so darned much meantime I'll try another ap-
that ain't so.” proach — also indirect, but at least
Second, there is Murphy's Sec- different. I'll thrash around for
ond Law of Social Dynamics. This some labels that I think have some
states that “If you just let well meanings, at least to some people,
enough alone, things will go from at least sometimes, that might ap-
bad to worse.” ply to me, at least approximately.
Third, a great deal of what is One such label would be “Man-
accepted as factual knowledge in chester Liberal.” Another would
present-day orthodox economics be “Chicago Conservative.” In ac-
has about the same basis in fact cepting the term “liberal,” how-
as the conclusion of a certain bank ever, I want to hasten to refer you
teller, who reported that a bundle to its root meaning of liberty and
of dollar bills contained exactly freedom. I would reject the label
one hundred bills, as labelled. The “liberal” in its common contem-
way the teller reached that con- porary usage, which is roughly
Dr. Wallis is President of the University of equivalent to “collectivist,” “g0-
Rochester. This is a slight condensation of Cae uy . s .
his remarks of February 18, 1964 at the cialist,” “statist,” or ‘“mercantil-

University of Minnesota Symposium on Great ist.”
Issues in Government. ’

52


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

G ov ern ent W. ALLEN WALLIS

Similarly in accepting the label was, to put it rather baldly, that
“conservative,” I would hasten to business is evil, inhuman, degrad-
emphasize its root meaning in pre- ing, and corrupt, and that busi-
serving. I would reject the mean- nessmen are malefactors, robbers,
ing now coming to be accepted of war-makers, and boors. No one, as
“reactionary,” “authoritarian,” far as I know, ever stated it that
“fascist,” or “elite-ist.” What I bluntly; but that is the common
would emphasize is not conserving denominator that ran through the
the status quo and protecting ex- novels, the sermons, the essays of
isting interests, but conserving journalists, the plays, the car-
the forces of progress, which are toons, and the teachings of so-
liberty and individualism. In other ciologists, political scientists, and
words I am a conservative in the historians. (Note that I omit econ-
sense that I want to preserve omists; their views on economics
liberalism. have always been out of step with
the views of other social scien-
tists, as well as out of step with

Some things have changed a the intellectual fashions of the
lot since the twenties. Some things day.)
have stayed the same. Nothing Some of the more thoughtful
in the 1960’s is more like the and scholarly members of the in-
1920’s than the views people have telligentsia of the twenties and
about government and business. thirties (they referred to them-
The only difference is an over- selves as ‘intelligentsia’ before
‘whelmingly important one prac- they thought of the less preten-
tically. Now, most people say the tiousdesignation “eggheads”) pub-
things, and politicians pursue the lished research studies in which
policies, that were confined in the they purported to show:
twenties to social scientists, nov- —that we had an “economy of
elists, historians, journalists, min- abundance” (a phrase that played
isters, and teachers —to opinion the role in the early thirties that
leaders, in short. “affluent society” played in the

The prevailing climate of opin- late fifties) in which old-fash-
ion among these opinion leaders ioned scarcity economics had no

Opinions in the Twenties

53


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

54 THE FREEMAN October

useful role —was, in fact, mis- — and, going back into history,
leading; that the birth of the modern

— that we were controlled by economy in the Industrial Revolu-
“America’s sixty families”; tion was a time of worsening con-

— that the principal cause of ditions for the poor, for child
war is munition makers who labor, etc.

idiotically delight in stimulating This list of a dozen or so pro-
consumption of their product; positions that were prevalent in

— that the American economy the inter-war period could be ex-
was built by “robber barons”; tended to great length. What I

— that our natural resources had want to do is not so much dispute
been wastefully ravaged and de- them as to point out that each is
spoiled; an assertion about facts. Each can

—that corporation managers be checked by careful, painstak-
have become, through a ‘“mana- ing, and laborious research — re-
gerial revolution,” a power unto search more careful than that of
themselves, beyond the reach of the bank teller I described earlier,
stockholders; and less quick to jump to conclu-

—that consumers and labor sions.
would be helpless pawns of busi-
ness — “100,000,000 guinea pigs”
— except for government protec-
tion; Now, as a matter of fact, each

— that the economy would fluc- of the propositions I listed has
tuate wildly without government been investigated — though not
stabilization; with the thoroughness and repli-

— that the Great Depression of cation that would be brought to
the thirties represented a collapse bear on propositions of compara-
of the enterprise system — a “crisis ble importance in the engineer-
in the old order”; ing or medical sciences. Not one

— that government measures in of the propositions I quoted is es-
the thirties ended the Great De- tablished. I will not say that any
pression; of them has been proved false, be-

— that there has been a “de- cause all that I want to argue for
cline of competition” and a rise of my present purposes is that we
monopoly; rest our views and our policies

— that wealth and income are about government and business on
becoming ever more tightly con- purported facts that actually are
centrated; not established facts.

These Propositions Are
Open to Question


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

1964 BUSINESS AND GOVERNMENT 55

(I may remark parenthetically is moving, you need to know more
that, although it is irrelevant for than just one point on it. To es-
this discussion whether these tablish that things are not per-
propositions are actually false, I fect is not equivalent to establish-
formed my list exclusively of ing that things are getting worse;
propositions which I think are yet that is the conclusion usually
widely believed and which, in my drawn.
judgment, are indicated by the When I was a student, I also
best evidence available to be false. took some courses in logic. I
But I repeat: All that I claim for learned that in a syllogism it takes
the purpose of this discussion is more than one premise to support
that many widely-believed prop- a conclusion. Even if it were es-
ositions important for establish- tablished that things are getting
ing policy are not in fact well worse, it would not follow that the
enough established to justify bas- government could or should do
ing conclusions or policies on anything about it. That conclusion
them.) would require an analysis of the

But even if we accept the likely effects of the proposed rem-
pseudo-facts on which so much of edy, an issue that is seldom raised
the case for government interven- with any seriousness.
tion in business rests, we still have Now why do I go into all this
no basis for the conclusions methodology? When am I going
reached. A curious feature of the to tell you what the government
work of the inter-war period should do about business, if any-
which so strongly dominates our thing?
attitudes today is that nearly all
of it purports to establish only a
single proposition. That proposi-
tion almost invariably is one or Well, I am not going to try to
another of the many facets of the tell you what to think about that
central proposition that our econ- subject. I am going to be satisfied
omy and society are not perfect. if I can persuade a few of you to
From that a variety of far-reach- think about it. What I think my-
ing conclusions are drawn. self, and what I would therefore

Now when I was a student at recommend that you think, runs
the University of Minnesota, I so counter to prevailing precon-
took some courses in mathematics. ceptions and patterns of thought
One useful thing I learned is that that I would be wasting my time,
to find out which way a function except for the pleasure it might

The Need for Skepticism
and Fresh Evidence


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

56 THE FREEMAN October

bring to any of you who tend to to weather, becomes “This week's

agree with me. weather is different from last
What I ask is that you take a week’s; therefore the present
reasonably open-minded view — weather can be changed by next

even a positively skeptical view. week.” Then “can be changed,”
Examine the basis for your beliefs already a non sequitur, somehow
about the facts of our society and comes to mean “changed in speci-
economy. Scrutinize the analysis fied desirable ways by the govern-
by which the facts lead to the ment.”
conclusions. Then check the con- .
clusions in fresh ways, by fresh The Need for Analysis
evidence. Beyond these weaknesses of fact
In refraining from telling you and logic there is another fatal
what to think, and just urging you flaw in most arguments for gov-
to think, I am influenced strongly ernment intervention in the econ-
by a personal experience. When I omy. That is the almost total
first went to the University of failure to examine actual experi-
Chicago as a graduate student in ence with government interven-
1933, IT had been reading The Na- tion, to see what experience shows
tion and The New Republic reli- about the kinds of problems and
giously every week for more than the methods in which government
ten years, and believing every intervention is successful or un-
word in them. One day at Chi- successful.
cago a professor brought to class Back in the 1930’s, when I was
an issue of The Nation, and read studying at Minnesota, at Chi-
a brief paragraph which purport- cago, and at Columbia, there was
ed to demolish the old saw that perhaps more excuse than there is
“You can’t change human nature.” now for failing to analyze the rec-
The professor analyzed the para- ord of government control, for at
graph into two propositions. First, that time recent experience with
“Human nature has changed”; intervention was limited. There
second, “Therefore, human nature wasn’t really much excuse, how-
can be changed.” He pointed out ever, because almost all human
that the argument was a complete history has involved extensive
non sequitur. It was not his point government intervention, and the
that the future may not be like noninterventionist period of the
the past. To clarify his point let nineteenth century was more or
me drop human nature and take less unique. Furthermore, even in
up the weather. The logic, applied the nineteenth century noninter-


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

1964 BUSINESS AND GOVERNMENT 57

vention was only comparative; often or less severely since the
there was a good deal of experi- Securities and Exchange Commis-
ence that could have been ana- sion was established?
lyzed. Are consumers served better in
But in the mid-thirties, inter- states where public utility regula-
vention again became the prevail- tion is strong and effective than
ing policy, and now in the mid- in states where it is weak or non-
sixties we have had more than a existent?
quarter of a century of experience We have tried to set minimum
that ought to be analyzed. Yet prices and maximum prices, mini-
there has been no real analysis of mum wages and maximum wages.
this experience. We still operate What have the effects been?
on the faith of our fathers and Some of these questions are
grandfathers of the 1920’s, a faith only now beginning to be investi-
rooted in wrong facts and bad gated, on a small scale. One of the
logic. leaders in this effort is a former
member of the Minnesota econo-
mics department, George Stigler,
Of course, everyone realizes in now president of the American
a general way that the farm pro- Economic Association. Stigler
gram has been a mess. How many summarized some of his tentative,
know, however, that only a few preliminary judgments by giving
commodities are regulated, and five rules to be applied when
that those that are regulated are judging what economic tasks a
the ones that make all the trouble? government can perform and
And which way does the causal re- what it can’t. Let me summarize
lation run, if there is one? Is it Stigler’s five rules for you:

Examine the Record

because commodities are regulated Rule 1. The government cannot
that they are troublesome; or is do anything quickly.

it because commodities are inher- Rule 2. When the government
ently troublesome that they are performs detailed economic tasks,
regulated ? the responsible authorities cannot

Since the Federal Reserve Board possibly control the manner in
was established 51 years ago, has which they are performed.
our monetary system behaved bet- Rule 3. A democratic govern-
ter or worse, from the point of ment tries to treat all citizens a-
view of cyclical stability and eco- like, ignoring individual differ-
nomic growth? Have investors ences.
been taken to the cleaners less Rule 4. The ideal policy from a


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

58 THE FREEMAN October

government’s viewpoint is one to think. The reason I think I have
with identifiable beneficiaries who so much to gain by just getting
each gain a lot at the cost of many you to think is that widely ac-
unidentifiable persons, none of cepted arguments for government

whom is hurt much. intervention in the economy are
Rule 5. The government never largely based on erroneous views
knows when to quit. of the facts, incorrect drawing of

This concludes my message. I'm conclusions, and complete failure
not trying to tell you what to to examine the record of inter-
think, I'm just trying to tell you vention. ®

LINCOLN
on POWER

DEAN RUSSELL

AT AGE 28, Abraham Lincoln de- whether at the expense of emanci-
livered perhaps the most profound pating slaves or enslaving free-
speech he ever made. He was warn- men. Is it unreasonable, then, to
ing his audience to beware of the expect that some man possessed of
man with a lust for political power. the loftiest genius, coupled with
Actually, he could have been un- ambition sufficient to push it to its
knowingly talking about himself utmost stretch, will at some time
when he said, “Towering genius spring up among us?...
disdains a beaten path. It seeks “Distinction will be his para-
regions hitherto unexplored ...It mount object, and although he
thirsts and burns for distinction; would as willingly, perhaps more
and if possible, it will have it, so, acquire it by doing good as
Dr. Russell is a member of the staff of the harm vet, that opportunity being
Foundation for Economic Education and Di- past, and nothing left to be done
rector of tho FEE School of Political Economy. in the way of building up, he would


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

1964 LINCOLN ON POWER 59

set boldly to the task of pulling I merely know that such persons
down.”! exist (in the United States as else-
The idea advanced by Mr. Lin- where) and that I will do every-
coln in that speech is just as true thing in my power to stop them.
today as it always has been. Cer- That includes this appeal to you
tain persons seem born with the to beware of the mass hysteria
desire to rule over others. And that threatens to place the fate
they will do almost anything to get of this nation (for any reason) in
to the top. Adolf Hitler was one the hands of some “savior.” For
of them. So were Al Capone and however necessary such action
Napoleon. And many religious may seem at the moment (and
leaders have also instigated and however honorable the leader may
directed the repressions and be), the ultimate result will be
slaughter that are necessary to disaster.
compel men to conform to the opin- Mr. Lincoln also recognized that
ions of others. Kings, business- danger when he said, “When such
men, generals, priests, labor lead- an one does [spring up among us],
ers, elected officials — history and it will require the people to be
the daily newspapers are filled with united with each other, attached
them, large and small, highly re- to the government and laws, and
spected and generally hated, tower- generally intelligent, to success-
ing geniuses and cunning thugs, fully frustrate his designs.”
all wishing to compel men to con- The founders of this nation,
form to their plans. They will from whom Abraham Lincoln de-
promise anything and do anything, rived his general philosophy, were
as long as it advances their ambi- also acutely aware of this danger.
tions to rule over others. It is spelled out in various words
and in various ways in the Decla-
ration of Independence, the Fed-
I do not really understand why eralist Papers, and other docu-
anyone wants to force another per- ments that pertain to our revolu-
son to conform to his viewpoint. tion and to the birth of the United
Doubtless the psychiatrists and States. Perhaps Thomas Jefferson
psychologists can explain it.I can’t. phrased it best when he said, “In
_— questions of power let no more be
I From an address before the Young heard of confidence in man, but
hae na Mangold, Mlinols, Jan- bind him down from mischief by

Century-Crofts, Complete Works, 1, 46, the chains of the Constitution.”?
edited by John G. Nicolay and John Hay. "2 Kentucky Resolutions, 1798.

Such Power Must Be Thwarted


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

60 THE FREEMAN October

That is why the Founding Fathers why I am willing to pay almost
deliberately constructed a most any price to frustrate the designs
cumbersome form of government of the ambitious genius with a de-
that was designed to prevent any sire for power, whatever his pur-
single person or small group from pose.

gaining the power to force all of True, he might use his power to
us to conform to their opinions build up instead of to tear down,
and viewpoints, good or bad. to free slaves instead of to enslave

free men, to feed hungry people
If We Value Freedom instead of to regiment them. But
True enough, this division of the record of history is most dis-
powers among many units of gov- couraging on that point. Yet, year
ernment is often inefficient and after year, we American people
costly in an economic sense, and it continue to permit and to encour-
is also often the source of some age the increasing concentration
injustices. We could doubtless save of power in one place, Washington,
money and increase efficiency, for D. C,, and in the hands of one per-
example, by putting all local and son, the President of the United
state police systems under the au- States.
thority of the FBI in Washington.
And that solution might also de- I am not here talking about the
crease gangsterism and stop much party in power. I am here talking
of the corruption and miscarriage about the power itself and the
of justice that is uncovered from fearful temptation it offers to
time to time in local police forces. those who are politically ambi-
Let us never forget, however, that tious. If we value freedom, we
the temptation to rule over others must begin to disperse that power
seems to be present to some de- back to the states, the local govern-
gree in every one of us. That is ments, and the people themselves.

@

[ ooo AS ®N CIB0ETY | Woodrow Wilson

THE HISTORY of liberty is a history of limitations of govern-
mental power, not the increase of it. When we resist, therefore,
the concentration of power, we are resisting the processes of
death, because concentration of power is what always precedes
the destruction of human liberties.


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

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

DOCTOR Gy
rise JIBOIOY
ISNOINIGIVI(E

SOCIALISM, as a pure doctrine, out with a tract called The Cause
is dead. But interventionism, its Is Mankind (Praeger, $4.95).
half-brother, is very much alive. Both Proxmire and Humphrey
The social warfare in this coun- have capacious hearts, and many
try has shaken down to a contest of the pills and poultices which
between two forces, one of which they prescribe are of a nature
believes that a business system to give immediate relief to the
ought to work according to prin- patient. But the problem of the
ciples, and another which thinks side effects of the medicines is
of the economic body in terms of something that doesn’t particu-
the human body, as something to larly concern our economic doc-
be doped and medicined and tors. If they can keep the patient
patched and plastered to keep it going for the present, they are
going as illnesses assail it. willing to let the future decide
The politicians, of course, set whether he will live for one year,
themselves up as the doctors in or ten, or thirty.
charge of the health of the eco- Of the two doctors, Senator
nomic body. They mean well. Two Proxmire is the least pretentious.
of them are out with books this His book is a mixture of shrewd
season: William Proxmire, the observations and untested conclu-
senior Senator from Wisconsin, sions. At the beginning of his
has written Can Small Business book he puts his finger on one of
Survive? (Regnery, $3.95), and the major difficulties which the
Hubert Humphrey, the voluble aspiring small businessman must
crusader from Minnesota who overcome if he is to live. “Since
nursed the Civil Rights bill to World War II,” says Senator
success in Congress, has come Proxmire, “expansion through re-

61


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

62 THE FREEMAN October

tained earnings has become more to trifle with the tax laws unless
difficult, especially for small busi- there is a clear showing of sub-
ness. Higher taxes immediately stantial benefits to all within the
take away a big chunk of the small business community.”
profits, while ever-soaring equip- In between the Senator’s re-
ment costs demand a higher level marks about the difficulty of build-
of capital expenditure for effi- ing up investment funds through
cient production. Without that retained earnings in a high tax
efficiency, no businessman can world and the grudging admis-
compete for long ... At the very sion that small business should °
time when business capital re- get tax relief, there are pages
quirements are greatest, there- which assail the banking system
fore, retained profits are mini- for failing to finance small busi-
mal.” ness growth. But the Senator has
} just got through saying that busi-
Tax Relief ness can’t very well grow if pro-
Now, if this analysis is cor- fits are “minimal.” So why should
rect, as I believe it is, the solution the banks finance enterprises that
is glaringly obvious: untax the can hardly promise much of a
businessman, let him retain more pay-off. The Senator’s logical slip
than minimal profits, and then is showing.
watch his smoke as he plows his
own money into new and efficient
machines. But tax relief, which Because the banks are reluc-
Senator Proxmire implicitly sug- tant to tie up funds “to make
gests on page twenty-six, is not maturities of five years and over,”
really dealt with in Can Small Senator Proxmire wants the gov-
Business Survive? until page 194 ernment to do the lending. It does
is reached. And even here the Sen- some of this now. Unfortunately,
ator is grudging. He says, “In says the Senator, the government
setting priorities for federal tax is apt to put its money into such
relief, small business should cer- things as motels and bowling al-
tainly be at the top of the list. leys, which are things that nor-
However, those who want to mally manage to get going without
change the federal tax laws should government aid. Having made out
be charged with showing that a case against the business judg-
such changes would clearly and ment of Small Business Admin-
positively benefit small business. istration lenders, the Senator is-
I would certainly not be willing sues a ringing call to put the SBA

Government Lending


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

1964 DOCTORING THE BODY POLITIC 63

deeper into the banking business. mass production. It’s just a mat-
The money, of course, would have ter of cutting a nickel here and a
to be guaranteed by the taxpayers nickel there out of the price in
of the U.S., which would add to either case.

the “higher taxes ... (that) take

away a big chunk of the profits” Humphrey's Humanitarianism

of American business. Senator Humphrey's lack of
So Senator Proxmire’s inter- logic is even more disconcerting
ventionist type of economics cir- than Senator Proxmire’s. The
cles on itself, like a snake trying Senate Majority Whip is for all
to live by eating its own tail. sorts of heart-warming things
In between calling for medicine that are very much to his credit
that has bad side effects, the Sen- a3 3 humanitarian. He wants to
ator gives the small businessman gee Negroes educated to the point
some good advice. He tells him here they can command jobs in
to take advantage of local develop- competition with whites. He wants
ment groups, some of which oper- to train more teachers, build more
ate from private funds. He gives research centers, provide more
them good counsel about sound hospitals, subsidize more theaters
business training. He tells them and art foundations, go in for
how to discover and to attract more government lending and
technical brains. He has some- conservation. The bill that would
thing to say about good bookkeep- pe presented in the budget for all
ing. this does not seem to bother the
Then, circling on himself again, Senator at all. For, along with
he emerges as an enemy of shop- proposing the millennium in “pub-
ping centers that give leases to lic sector” spending, the Senator
chain stores. And he champions ig for tax cuts and for controlling
Federal “quality stabilization,” inflation.
which would force price main- Neither Senator Proxmire nor
tenance on branded goods. He is Senator Humphrey is a villain
against “loss leaders.” Yet he in Holmes Alexander's The E quiv-
praises Henry Ford for lowering ocal Men: Tales of the Establish-
the price of the automobile. For ment (Western Islands, $4). Yet
the life of me, I can’t see the dif- they are equivocal in their eco-
ference in principle between the nomics. If what they advocate
economics of the chain store and should ever possibly work out
the discount house and the eco- over the long pull, T would be
nomics of the Ford system of greatly astonished.


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

64 THE FREEMAN October

Mr. Alexander's own equivo- peninsulas outside of our sphere
cators are those who let our coun- of defense, and men of science
try down little by little in this who recommend near-traitors to
business of dealing with the threat those who are recruiting for
of overseas Communism. His fic- government agencies.
tional types include columnists
who advocate giving funds to for- Mr. Alexander’s linked cycle of
eign governments to saddle social- short stories is not precisely a
ism on their own people, rich in- roman d clef. He scrambles his
dustrialists who try to curry favor people well. But anyone who has
with Khrushchev, secretaries of lived and worked in Washington
war and state who fail to act in will take great pleasure in ob-
time to prevent a certain wall serving how Mr. Alexander has
from being built in a mid-Euro- selected from reality to confect a
pean city or who put contested most absorbing parable. @®

| 1oaas OIN 1006a9Y. | Economic Intelligence

MANY accept limited government as an important national goal.
But some people do not view the postwar expansion of govern-
ment as being inconsistent with this goal. They say that as popu-
lation and production increases, it is only natural to expect that
government will grow in proportion.

This argument does not fit the facts. The truth is that govern-
ment spending — federal, state, and local — has increased much
more rapidly than either population or production.

The following table shows (in billions) the increases over the
16-year period (in actual, not constant dollars):

Avg.
Annual
1947 1968 Increase Increase
Population (millions) 144.7 189.4 30.9% 1.7%

Private national product 205.9 459.9 123.4% 5.2%

Total govt. nondefense

expenditures 33.1 109.9 232.0% 8.0%
Federal govt. nondefense 22.6 61.0 171.1% 6.9%
State and local govt. 10.6 48.9 361.3% 10.2%

From the Weekly Bulletin of the Cham-
ber of Commerce of the United States


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

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use as an instrument of plunder rather than RAAT

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

“7
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©

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