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VOLUME 60, NO 3 APRIL 2010 Features 8 Legends of the Fall: The Real and Imagined Sources of Our Bubble Economy by Richard W.Fulmer 13 The End of Medicine: Not With a Bang, But a Whimper by Theodore Levy 17 A Health Insurance Criminal Pleads His Case by James L. Payne 19 The Wisdom of Nien Cheng by James A. Dorn 24 Botswana: A Diamond in the Rough by Scott Beaulier 27 The Improbable Prose of Nassim Nicholas Taleb by Robert P.Murphy Page 17 31 Government Moonshine by Michael Heberling 34 How Shall We Live? by Paul Cleveland and Art Carden Columns 4 Ideas and Consequences ~ Anti-Force is the Common Denominator by Lawrence W.Reed 15 Thoughts on Freedom ~ On the Rule of Law by Donald J. Boudreaux 22 Our Economic Past ~ Private Capital Consumption: Another Downside of the Wartime “Miracle of Production” by Robert Higgs 29 Peripatetics ~ Opaque by Design by Sheldon Richman 37 Give Me a Break! ~ Let’s Take the “Crony” Out of “Crony Capitalism” by John Stossel 47 The Pursuit of Happiness ~ ObamaCare and Unions Page 6 by Charles W.Baird Departments 2 Perspective ~ Murray Rothbard by Sheldon Richman 6 Government Must Stimulate to Avoid a 1937-Style Recession? It Just Ain’t So! by Ivan Pongracic, Jr. 39 Capital Letters Book Reviews 41 The Beautiful Tree by James Tooley Reviewed by Max Borders 42 Capitalism at Work: Business, Government, and Energy by Robert L. Bradley, Jr. Reviewed by Michael Beitler 43 Herbert Hoover Page 44 by William E. Leuchtenburg Reviewed by Jim Powell 44 End the Fed by Ron Paul Reviewed by George Leef Perspective Murray Rothbard Published by n 1946 the fledgling Foundation for Economic Educa- The Foundation for Economic Education Irvington-on-Hudson, NY 10533 tion published a pamphlet titled “Roofs Phone: (914) 591-7230; E-mail: [email protected] or Ceilings: The Current Housing Problem” www.fee.org I (www.tinyurl.com/cpluwy), a brief against rent control President Lawrence W.Reed written by two unknown young economists: Milton Fried- Editor Sheldon Richman man and George Stigler. They would go on to win the Managing Editor Michael Nolan Nobel Prize in economics in 1976 and 1982, respectively. Book Review Editor George C. Leef That’s a remarkable story. But just as remarkable is Columnists Charles Baird David R. Henderson what that pamphlet led to. When it was issued, Stigler, Donald J. Boudreaux Robert Higgs then teaching at Columbia University (his University of Stephen Davies John Stossel Chicago days still lay ahead), told a young student about Burton W.Folsom, Jr. Thomas Szasz it, perhaps changing American intellectual history. Walter E.Williams The student was Murray Rothbard. Contributing Editors “Rothbard,” writes Brian Doherty in Radicals for Peter J. Boettke Dwight R. Lee James Bovard Wendy McElroy Capitalism: A Freewheeling History of the Modern American Thomas J. DiLorenzo Tibor Machan Libertarian Movement,“was delighted to learn of an Joseph S. Fulda Andrew P.Morriss organization promoting his political and economic Bettina Bien Greaves James L. Payne Steven Horwitz William H. Peterson values. ...By 1948, Leonard Read had already noted John Hospers Jane S. Shaw young Rothbard’s deep knowledge of market econom- Raymond J. Keating Richard H.Timberlake ics and libertarian principles (and their history) and Daniel B. Klein Lawrence H.White began to lean on him to vet articles for FEE.” Foundation for Economic Education On visits to FEE Rothbard met Frank Chodorov,the Board of Trustees, 2009–2010 prolific libertarian author who edited The Freeman the Wayne Olson, Chairman first year after Read acquired it. “Chodorov helped Harry Langenberg Walter LeCroy introduce Rothbard to the works of [Albert Jay] Nock, William Dunn Frayda Levy Jeff Giesea Kris Mauren Herbert Spencer, Garet Garrett, and Isabel Paterson, Ethelmae Humphreys Roger Ream among others,” Doherty reports. It wasn’t long before Edward M. Kopko Donald Smith he encountered Ludwig von Mises, an adviser to Read. The Foundation for Economic Education (FEE) is a Thus Rothbard, who went on to become one of the nonpolitical, nonprofit educational champion of great natural-law libertarian figures in history and an individual liberty, private property, the free market, indefatigable advocate/elaborator of Misesian (Austrian) and constitutionally limited government. economics in method and substance, can be said to have The Freeman is published monthly, except for combined January-February and July-August issues. Views expressed by received vital intellectual nourishment at FEE’s Irving- the authors do not necessarily reflect those of FEE’s officers ton-on-Hudson estate. and trustees. To receive a sample copy, or to have The Freeman Rothbard, who died 15 years ago, was at once a come regularly to your door, call 800-960-4333, or e-mail [email protected]. beloved and controversial figure. He was one of the very The Freeman is available electronically through products and serv- few individuals who shaped the modern freedom move- ices provided by ProQuest LLC, 789 East Eisenhower Parkway,PO ment at its start. Even advocates of the freedom philos- Box 1346, Ann Arbor, Michigan 48106-1346. More information ophy who never read a word he wrote have been can be found at www.proquest.com by calling 1-800-521-0600. Copyright © 2010 Foundation for Economic Education, influenced by him.With a passion nonpareil, Rothbard except for graphics material licensed under Creative Commons set out to create a self-conscious libertarian movement, Agreement. Permission granted to reprint any article from this issue, with appropriate credit, except “Let’s Take the ‘Crony’ which he accomplished through his activism and Out of ‘Crony Capitalism’.” charisma, as well as through his writings—from the THE FREEMAN: www.thefreemanonline.org 2 PERSPECTIVE: Murray Rothbard scholarly to the popular—in economics, history, politi- will change subtly and gradually,but patients will even- cal philosophy, and social criticism. For one man to tually notice the degradation in service. Such is where have turned out Man, Economy, and State/Power and “reform” will lead, says Theodore Levy. Market; America’s Great Depression; The Ethics of Liberty; All during the debate over the reinvention of med- Conceived in Liberty (four volumes on American history ical insurance, it was taken for granted that individuals through the Revolutionary War); For a New Liberty— should be forced to buy coverage. James Payne, who and so much more—is something astounding.We prob- refuses, is ready to accept his status as a criminal. ably won’t see his likes again. (See David Gordon’s Nien Cheng suffered unimaginable oppression at Freeman article, “Murray Rothbard’s Philosophy of the hand of the Chinese communist regime but went Freedom,” www.tinyurl.com/ycfbybb.) on to be a passionate spokeswoman for freedom. On I feel lucky to have known Murray. He was always a the occasion of her death, James Dorn offers a tribute delight to be around, whether talking about some to this heroic woman. obscure historical figure, traditional jazz (before the When people think of Africa, sadly, they think of electric guitar intruded), classic movies, or the future of poverty and oppression. But that has not been true for liberty.He was unfailingly optimistic and ever ready for Botswana. Scott Beaulier explains this little-known suc- a laugh. He was what he called H. L. Mencken (whom cess story. he treasured):“the joyous libertarian.” Nassim Nicholas Taleb is a provocative writer who To say that he was controversial even within the free- scoffs at the idea that human affairs can be predicted dom movement is an obvious understatement. His appli- scientifically. Robert Murphy introduces us to the man cation of libertarian and market principles to even the who popularized the term “black swan.” “traditional functions” of limited government—that is, Ethanol is still in our gasoline, and besides all the bad his belief that the free market can and should provide things you’ve heard about it, it also harms engines. all legitimate services competitively—stirs heated debate Michael Heberling has the details. today. While his originality in the matter he called Broadly speaking, there are only so many ways for “anarcho-capitalism” is clear, he himself might say he was society to be organized, and only one is in harmony simply picking up the baton carried by the pioneering with freedom and human nature. Paul Cleveland and nineteenth-century free-market economist Gustave de Art Carden elaborate. Molinari, whose seminal essay,“The Production of Secu- Here’s what our columnists have whipped up: rity,” Rothbard first brought to American libertarians. Lawrence Reed says he doesn’t care what you call Whatever one thinks of Rothbard’s answer to the yourself as long as you oppose aggressive force. Donald question raised therein, there can be no doubting the Boudreaux defines the rule of law. Robert Higgs dis- value of the question itself; it forces one to examine the cusses capital consumption during World War II. John contours of liberty, the nature of the State, and there- Stossel dissects crony capitalism. Charles Baird antici- fore the very possibility of limiting its powers. pates how health care “reform” will help labor unions. Those who cherish liberty cannot calculate their And Ivan Pongracic, Jr., reading Paul Krugman’s claim debt to Murray Rothbard. that more government spending will fend off a 1937- * * * style recession, responds,“It Just Ain’t So!” We lead off with the winning essay in the second Books on private schools for the poor, political cap- annual Eugene S.Thorpe writing competition: Richard italism, Herbert Hoover, and the Federal Reserve Fulmer’s “Legends of the Fall:The Real and Imagined occupy our reviewers. Sources of Our Bubble Economy.” Of the 182 entries In Capital Letters, Thomas Szasz answers a reader’s addressing the causes of the current housing and finan- concerns about religious identification and George cial debacle, Richard Fulmer’s was judged the best.

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