Freemanthe

VOL. 21, NO.1. JANUARY 1971

The Feminine Mistake: The Economics of Women's Liberation Gary North 3 To price themselves out of the market is scarcely an appropriate step toward women's liberation.

How to Be a Benefactor Leonard E. Read 15 Self-responsibility well may be the ultimate of social responsibility.

The Woes of the Underdeveloped Nations Erik von Kuehnelt-Leddihn 21 The aggravating gap between living standards in various nations poses a dilemma for proponents of Christian charity.

The Creative Thrust of Capitalism Merryle Stanley Rukeyser 33 Concerning the importance of saving and investment and freedom in developing nations.

Throttling the Railroads (Conclusion): 9. The Future of the Railroads Clarence B. Carson 39 If the railroads and their customers are to survive, it's time to stop government intervention and try freedom.

Cost-Plus Pricing Paul L. Poirot 48 When demand is the only consideration, regardless of supply.

The Protesters W. A. Paton 51 A call for maturity in the attitude and behavior of parents.

Book Reviews: 60 "Envy" by Helmut Schoeck "Youth, University, and Democracy" by Gottfried Dietze

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

A MONTHLY JOURNAL OF IDEAS ON LIBERTY

IRVINGTON-ON-HUDSON. N. Y. 10533 TEL.: (914) 591-7230

LEONARD E. READ President, Foundation for Economic Education

PAUL L. POIROT Managing Editor

THE FREE MAN is published monthly by the Foundation for Economic Education, Inc., a non­ political, nonprofit, educational champion of private property, the free market, the profit and loss system, and linlited government. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, including THE FREEMAN, are met through voluntary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are in­ vited in any amount-$5.00 to $10,000-as the means of maintaining and extending the Foundation's work.

Copyright, 1971, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 10 for $2.50; 25 or more, 20 cents each.

Articles from this journal are abstracted and indexed in Historical Abstracts and/or America: History and Life. THE FREEMAN also Is available on microfilm, Xerox University Microfilms, Ann Arbor, MIch­ igan 48106. Permission granted to reprint any article from this issue, with appropriate credit. GARY NORTH The Feminine Mistake

I FIRST READ about the Women's By focusing attention on the Liberation Fro'nt in the spring of very real fact of differential pay 1969 in a copy of New York, a scales between men and women, new magazine devoted to the cru­ WLF activists have gained a cial problem of how to survive in wider audience than might other­ New York City. That description wise have been likely. Here, it of WLF opened with an account would seem, is a legitimate com­ of a young heiress demonstrating plaint against the supposed in­ karate as one' of the basic skills equities of the capitalist system. needed for her survival. At the Here is where "male chauvinism" time I was inclined to dismiss the makes itself felt: pure discrimi­ WLF·· as just another of the freak­ nation that is in no way related to ish movements that seem to flour­ one's personal capacities or per­ ish in alienated urban cultures, formance. This argument cannot or in the educated segments there­ be dismissed with a'shout of "You of. But in recent months I have look like last year's sneakers, come to the conclusion that the sister !" WLF is important, and that it is The reason the WLF has been dangerous. Not because of the able to gain a hearing on the "crazies" on the fringe - who "equal pay for equal work" pro­ grab the headlines - but because posal is because it is already right WLF has latched onto an appeal­ in line with the last thirty or ing (and fallacious) slogan: forty years of government inter­ "Equal pay for equal work." ventionism. It presupposes that the government, merely by enforc­ Mr. North is a Ph.D. candidate at the Uni­ versity of California, Riverside. ing a wage law, can in some way 4 THE FREEMAN January influence the aggregate economy they imply that capitalism has in to move along "positive, humani­ some way failed the test of common tarian" lines. This proposal, be­ decency. What they do not realize cause it is not radical in 1970, is that competitive market capi­ lends an aura of respectability to talism actually comes closer than an otherwise ludicrous movement. any other operational economic "Some of their rhetoric is exag­ system to meeting their demands. gerated," one intelligent woman All factors of production are re­ remarked to me, "but you can't warded exactly according to their argue with them on this point." productivity in a model of pure I can, and I will. competition; in practice, market capitalism approaches that model "Fair Employment" in a remarkably close way. But The argument in favor of the reward is not in terms of the "equal pay for equal work" rests "equal pay for equal work" slo­ on a concept of labor that was gan; .the reward is based on the overturned in the 1870's. It as­ concept of marginal cost, or "cost sumes that there is such a thing of the most important use fore­ as concrete human labor, a phys­ gone." The cost of any factor of ical entity that in some way production is based on the cost of can be measured. Value is in some the least expensive substitute for way linked to labor, and pay that factor; its value is depend­ should reflect value. This was the ent upon the economic value of its economic premise of virtually all product. In the long run, the free economists until the advent of market tends to work, through modern economics ; Karl Marx was competition, toward a balancing the last major economist to hold (or equating) of economic value the labor theory of value. Modern and economic cost. Any factor of economics rests on the concept production that is receiving too that value is linked to usefulness; large a share of net revenues will the value of labor depends on the be forced to accept a smaller value of labor's output. The dis­ share through competition. This tinction between the two concepts is true whether the factor of pro­ of value is crucial. duction is a computer or a secre­ When Women's Liberation ac­ tary. tivists argue that a basic im­ The advocates of "fair employ­ morality exists in any economic ment" keep pointing to the pro­ system that does not reward all duction side of the equation, laborers equally for equal work, vaguely identifying the product 1971 THE FEMININE MISTAKE 5

with "work." But the return to that there are five other women any factor of production is based ready and willing to take her sec­ upon the cost of replacing that retarial job at $350 a month, then factor just as much as it is based she would be wise not to demand on the value of the factor's prod­ very much more than $350 a month uct. Competition is supposed to in wages. She can demand a bit equalize the two - cost and value more, given the costs of train­ - if maximum economic efficiency ing a new girl, the difficulties in­ is to be maintained. (By economic volved in all bureaucratic changes, efficiency, the economist means the and the tastes of her boss with re­ highest value of production from gard to what constitutes someone a given input of resources, or a who is sweet, cute, and so forth. given .level of production from the But she must limit her demands. least expensive inputof resources.) Therefore, the return to the Willing to Work for Less computer is not based on "work," The WLF complains that women and neither is the return to the are forced to accept menial wages. secretary. The return to each is But in many, many cases, the based upon its contribution to pro­ reason she can accept such wages duction in comparison to the po­ is precisely because she enjoys the tential contribution of the near­ advantages of being a woman: she est competing factor. That is truly has a man who will help bear the fair employment. (Now, one can financial burdens of her own up­ also speak of charity as a means keep. She is on the job in order of increasing the return to a par­ to supplement his earnings, so she ticular human factor of produc­ is willing to work for wages that tion - paying him or her more are essentially supplemental in than he or she is economically magnitude. This, of course, means worth - but one should not argue .considerable hardship for the for this in terms of economics, a working woman who has no hus­ mistake made by virtually all of band to support her. But her case the "fair employment" advocates.) is not fundamentally different A woman who is seriously con­ from the man in his late thirties cerned with getting fair pay for who has eight children and who her contribution - mental, physi­ is faced with competition from cal, or simply resembling Raquel bright, young, single college grad­ Welch - has to ask this question: uates who are willing to take over What would it cost this company his job at the same pay, or per­ to replace me? If a woman knows haps slightly less pay. The value 6 THE FREEMAN JanuarJ of one's contribution to a com­ male chauvinism. Why aren' pany is not directly related to their M.A.'s worth as much al one's marital status or the num­ some man's M.A. (or even B.A') l ber of children involved. I am willing to concede tha­ If the advocates of "fair em­ there is such a thing as a cor ployment" are really concerned porate bias against employinl with morality, then they must ask women. For one thing, men insid4 an additional question: What are corporations have little desire t< the burdens imposed on the per­ expand the pool of available labOJ son 'who is unemployed but who to compete for their jobs. FOJ would be willing to take a job at another, most men probably re lower pay? Fairness should relate sent the idea that women coul< to all those in the economy, not replace them in their jobs. Lik4 just those insiders who happen to most prejudices against collec have the jobs in question. The tives, the thought which galls mal4 supporters of "fair employment" employees is not the idea that ~ legislation are unwilling to face particularly gifted woman migh" the other half of the labor equa­ replace a particular man (whicl tion, the "unfair unemployment" is, really, the kind of decision tha' generated as a direct consequence is made in a business firm), bu" of the "fair employment" law. the idea that "women" can replac4 "men." Minorities and Costs People· are geared to think if The explanation of the "menial terms of aggregates, even in thOSE wages" paid to secretaries is not decisions that are essentially in too difficult to present,· once the dividual (or, in economic terms concept of the return to a factor "marginal"). So those inside com, of production is grasped. Compe­ plain, "If you let one of them in tition keeps wages down, just as you'll have to let them all in,' it keeps prices down. The WLF which is patently false, and t< women are not really that con­ combat it, those on the outsidE cerned with the wages of the yell, "Then if you won't take onE secretary, however. The members of us on his (or her) own merit of the WLF are the better edu­ by George, you'll have to take al cated segment of the female pop­ of us!" So they put pressure or ulation; what they refuse to ac­ the government to pass a "fail cept is the fact that 'women execu­ employment" act that prohibib tives are paid lower wages. That, discrimination, and thereby con it is argued, is a consequence of firms the worst fears of the in 1971 THE FEMININE MISTAKE 7 siders. And then there is pressure lished, and there are fundamental to take incompetents into the costs of reorienting any bureau­ firm, just to meet the external re­ cratic structure. A change in hir­ quirements of the legal system. ing practices certainly affects one Pass a law against economic big­ important part of any company's otry, and you help to confirm the organizational pattern. You do dire predictions of the bigots. not "shake up the system" any Tokenism replaces competition. time without bearing certain in­ Let us therefore assume that stitutional disutilities-costs. The men are bigots when it comes to greater the break with traditional hiring women. Some of the big­ hiring policies involved, the great­ otry, however, is not irrational. er the disorientation, at least There are basic institutional rea­ initially, of the company. sons why women are not sought There· is one final comment that after as men are to serve in ex­ seems appropriate. If a survey ecutive positions. The obvious one were to be made of any· random is that women marry and have secretarial pool in the corporate children. For a job requiring con­ structure of America, it would be siderable training and experience, quite likely that a sizable majority the threat always exists that the of the women would prefer to be woman will quit for family rea­ under male supervisers. Given the sons. Men also quit their jobs, opportunity of serving under a but generally for economic rea­ woman holding a B.A. or a man sons. A company can raise a man's holding a B.A., most women, I salary and at least have some think it is safe to say, would chance of success in keeping him. choose the man (assuming similar Also, a woman's husband may personalities and competence of decide to move out of the area; it the competing candidates). If the is his decisi0n, and his wife must men of a corporation had the follow. There is no way a com­ choice, an even larger percentage pany can fight his decision with would be likely to prefer mascu­ much possibility of success. line superiors. This is a fact of life, unlikely to change in the· near Traditional Hiring Practices future. A corporation must weigh Another basic reason why wom­ the initial disadvantages of en are not hired is simply because thwarting this preference among they have not been·hired in the its employees. The woman prob­ past. Bureaucracies do exist, and ably will have to offer some spe­ habitual· patterns do get estab- cial advantage to the company 8 THE FREEMAN Januar~

that her masculine competitor stand far less chance of gaininJ cannot or will not. her real objective, namely, th opportunity to prove her capacit~ Wage Competition in the occupation of her choice I appeared on a Los Angeles The company hesitates to hire: television show in November of woman, given the definite uncer 1969. It was one of those after­ tainties in hiring women in gen noon talk shows aimed at the eral. (Is she a Women's Lib type ~ "lunch bunch" - a distinctly fem­ What is she after?) But if she inine audience. Preceding me was can offer the company a premiun an articulate, middle-aged lady to offset the logical risks involve( from England, the founder of a (not to mention the questionablE female labor exchange organiza­ hostility), she can make it wortl tion which supplies womanpower the company's risk. The most ob· to various corporations. By pre­ vious premium is a willingness tc 1968 standards, she would have take a lower wage. If she shoulc been considered a militant for fail on the job, the company ha~ women's rights. As the director not lost so much. of this multimillion-dollar organ­ By removing this most effectiVE ization (an even more remarkable of weapons, the WLF would serio feat by British economic stand­ ously jeopardize the possibilitie~ ards) , she was asked what she for advancement by women into thought of the fact that women the higher echelons of American get paid less than men for their business. Only the most obviously labor. "Well," she replied, "the competent women, the ones from best form of competition we wom­ the best schools with the highest en have is our willingness to work grades and most impressive out­ at lower wages. If you were to side activities, would have a shot eliminate that, you would remove at the better jobs. Actually, the our most effective employment WLF proposal borders on the su­ weapon." That woman understands icidal: certainly it would not be the nature of competition. the WLF type who would be hired The fact that the "equal pay for unless she could show some over­ equal work" law is not yet in whelming economic reason why operation makes it possible for a she should be selected over a less woman to obtain that initial ac­ radical miss from a prestigious cess to a previously masculine finishing school (plus an M.B.A. occupation. If she were to demand from Harvard School of Busi­ a man's wages initially, she would ness). The upper echelon posts 1971 THE FEMININE MISTAKE 9

would be converted into semi­ imum wage laws. If the job mar­ monopolies of those women who ket as a whole is covered, then the already hold them. If the WLF's laws tend to force them out of goal is really to open the doors of work entirely. A person who gen­ American business to women­ erates only $1.25 worth of returns large numbers of women - the to his company will not be hired "equal pay for equal work" pro­ if the minimum wage is $1.75. posal is ridiculous. It is self­ Those least able to afford unem­ defeating. Of course, for those ployment - the least ~killed, least women already in the system, the educated - are the ones hurt most law would be an almost flawless by the laws. In this country, as grant of monopoly returns. study after study indicates, this means the Negro teen-age male, Minimum Wage Law for Women but it also means the less skilled Inescapably, from the point of women. Those just entering the view of economic analysis, the market, with little experience and "equal pay for equal work" pro­ training, are the "first fired, last posal is the demand for a mini­ hired." mum wage law for women. The Our WLF propagandists insist minimum wage would be equal to that housework is the intolerable the minimum pay scale for a man curse of the American woman. It of comparable talents and respon­ is housework's boredom and lack sibility. Like all minimum wage of creativity that oppresses wom­ laws, it is primarily a legally op­ en, degrades them into beasts of erating barrier against all those burden. That women would have worth less than the minimum to seek employment as household wage. As shown in the earlier workers is, for the WLF, the ulti­ part of this paper, the woman mate example of male chauvinism. initially is worth less, not because So what do we find? The minimum of her lack of work, but because wage laws have been the most of the higher risks and economic­ effective means of forcing more institutional disutilities associ­ women into employment as house­ ated (in the majority of Ameri­ hold domestics! can firms) with hiring women. Household employment is not In general, minimum wage laws covered by minimum wage laws. force the less productive, higher As a result, those women who risk, less desirable (for whatever have been excluded from jobs in reasons) persons into lower pay­ the covered industries (since they ing jobs not covered by the min- are not allowed to compete by 10 THE FREEMAN January bidding down wages) are now families with large numbers of forced to seek less desirable em­ children [which can now employ ployment. This means they must cheaper servants] and women em­ go to the uncovered industries. It ployed in better paying occupa­ also means that more of them tions, further increases in mini­ than would enter this market in mum wage rates and their cover­ the absence of the laws now try age may be very desirable, how­ to get in, thus forcing wages even ever unwelcome this may be to lower. Professor Yale Brozen of the less educated, less skilled fe­ the University of Chicago made a male worker foreclosed from a study of precisely this effect of better paying job by the rise in the minimum wage laws in the the minimurn rate and coverage." October, 1962 issue of The Journal of Law and Economics. He sur.,. Across the Board Effects veyed the employment figures, be­ Brozen is considering only the fore and after a rise in the mini­ more familiar minimum wage law, mum wage law, in three different the kind which sets a fixed mini­ periods. His conclusion: "In each mum wage per hour for. all memo instance when the minimum wage bers of the population in the cov­ rate rose, the number of persons ered industries. The WLF scheme employed as household workers is not quite the same. What thE rose." He then made this warning: "equal work for equal pay" schemE However, the coverage of the Fair would produce is a minimum wagE Labor Standards Act has been broad­ law for all women throughout aI: ened, and further broadening is pro­ covered industries, from the sec· posed. Much further broadening will retaries to the female vice-presi­ close the safety valve [Le., the non­ dents. It would not be limited tc covered industries into which the un­ merely those employees in thE employed flee]. We will, then, find the $1.50 to $2.50 per hour range. In· amount of structural unemployment stead of seeing only the botton: (Le., unemployment concentrated in segment of female employee~ certain age groups, in one sex, or race, forced to take less desirable posi· in groups of less than a given level of tions, i.e., those which the mer education, and in certain regions) in­ would not be bidding for anyway creasing as minimum wage rates in­ the WLFproposal would see to i1 crease. that all entering female employeeE This prospect, of course, applies would be downgraded (except fOl only to the less desirable employ­ the few token women hired fOl ees or potential employees. "For the purpose of fending off a Fed· 1971 THE FEMININE MISTAKE 11 eral investigation). There would selves in order to be hired. A law be a downgrading all the way will not change the basic economic along the employment ladder. parameters of the labor market; Companies would not outwardly it can only change the ways in break the law, of course, but which the discrimination is ac­ there are many ways to avoid complished. regulations that are undesired by personnel departments. For ex­ Downgrading Hurts Most ample, two applications are re­ at the Lowest Levels ceived: a man holds a B.A. and a The downgrading effect will, as woman holds a B.A., and both seek always, be most harmful to those the same post. The woman had women who are not members of better be from a prestigious aca­ the population segments from demic institution or have had which the WLF recruits its mem­ some kind of previous business bership. As women at one level of experience, or else be physically employment are forced into the attractive, and the man should jobs below - the jobs in which less have no exceptional qualifications training and lower educational to distinguish himself. The wom­ qualifications are required - the an might very well be qualified for women who would originally have an even higher post, one which applied at the lower level will be her male counterpart would not forced to accept an even lower even be considered for, so she is, classification. Finally, the glut in effect, downgrading her oppor­ will appear in the "uncovered" tunities to be employed in the portions of any company's jobs, higher echelon job. For her to i.e., those jobs unaffected by the meet the true demand for labor "equal pay for equal work" law on a competitive market, she can simply because no man would ap­ take a prestigious job at lower ply for them with or without the wages than her male counterpart, law. The law will produce struc­ or take a less prestigious job at tural unemployment in these jobs, equal wages to her male counter­ or else the older pattern Qf wage part. She cannot take a higher competition will appear once job, given equal qualifications of again: women competing only the two applicants and equal pay against other women on a market scales, for the reasons outlined in which not only the usual secre­ above: women are less desirable tarial candidates are scrambling employees for most companies, for jobs, but also the women and they must distinguish them- forced out of the next higher level 12 THE FREEMAN January

of employment by the "equal pay security employment system, one for equal work" law. geared to all those women with im­ Women without husbands or pressive educational backgrounds wealthy fathers to supplement and/or impressive physical pro­ their incomes will be the losers. portions. The "equal pay for equal Women who have not attended the work" scheme is essentially elitist. better colleges will suffer far more As Max Weber pointed out half a than the very bright, highly quali­ century ago, the mass market de­ fied, highly ambitious types who mand for goods and services came can gain access to the prestige to the West only when competition jobs from the start. Men, of shifted to price competition. He course, will continue to be hired. called it "the democratization of Women will then be in competi­ demand," contrasting it with the tion primarily with women. By medieval emphasis on the produc­ changing the competition param­ tion of luxury goods by and for eters from wage competition into elites within the economy. As he educational or experience competi­ wrote, the shift from production tion, the women without the "pa­ for elites to production for a mass per qualifications" - college de­ market "is characterized by price grees, years of successful employ­ competition, while the luxury in­ ment, an attractive photograph ­ dustries working for the court fol­ will be the losers. Their most effec­ low the handicraft principle of tive tool of economic survival, competition in quality." namely, their willingness to com­ What Weber wrote about the ex­ pete with the male employees by pansion of the market for goods accepting lower wages, will have is equally true for the expansion been removed. The beneficiaries of the market for labor. If you will be those women with the col­ want to create a market that per­ lege degrees and those already in mits free entry, mass employment, their chosen jobs. and increased benefits for those not in elite categories, you must Conclusion permit wage competition. Other­ The WLF, by the very nature of wise the employment game will be its economic proposals, has rele­ played in terms of paper quality: gated itself into a role more gen­ employment resumes, college tran­ erally associated with the opera­ scripts and photographs. tion of a medieval guild. It has Naturally, the WLF members become the advocate of a monopo­ tend to be recruited from just listic, prestige competitive, high these elitist segments of the na- 1971 THE FEMININE MISTAKE 13

tion's population. They are the legitimate reward from her em­ girls with the college degrees and ployer, assuming the employer is the affluent fathers who will be serious about staying competitive able to support them until they in the world's markets. can find "the right job." The WLF There are, of course, inefficient girl who is willing to put on a little firms. These will not strive to stay makeup and hide her militancy to competitive, Le., by rewarding her employer will have access to every factor of production accord­ the jobs denied to her less advan­ ing to the value of its output. This taged sisters. She can drop out of is the kind of overstuffed, flabby the WLF and into a prestige job corporation that Robert Townsend at her discretion. Therefore, what attacks in his delightfully icono­ we find in the case of the WLF is clastic book, Up the Organ,ization. a replay of a very ancient tune: a Townsend's recommendation to group calling for the imposition the talented but underpaid woman of a government law for the "good is identical to his recommendation of the masses" ultimately encour­ for the talented, underpaid man: ages a law which would benefit the quit. That kind of firm is not in­ elitist stratum from which it re­ terested in competition and there­ cruits its members. Here is an­ fore uninterested in creativity and other example of the privileged production. It is best to get out. minority which does quite well by Townsend's article in the Septem­ doing good. ber, 1970 issue of McCall's warns women that a company which con­ The Competitive Firm sistently discriminates against Will Pay Women Fairly women at all levels is probably For the woman who is really filled wi th hacks, especially at the competent in what has generally top; a good firm will pay her what been regarded as a man's world, she is worth. She should shop the "equal pay for equal work" around until she finds one, just as scheme cannot help her, and it may Mary Wells, the enormously suc­ hinder her initial access to the job cessful advertising executive, was in which she expects to demon­ forced to do. If a firm is competi­ strate her abilities. Once she gets tive, Townsend writes, it wIll pay the job she wants, at whatever women fairly. salary, she can prove her worth By implication, we ought to con­ as a valuable factor of production, clude that the hostility to women assuming she is talented. She will who have proven their capability need no Federal law to get her rests on a commitment to security 14 THE FREEMAN January above competition. Another mini­ woman who is not loaded down mum wage law will not solve this with paper qualifications, is that problem. What will solve it, as.I initial shot at the job that will argued in the January, 1970 issue serve as her. testing ground, re­ of this journal, is a return to the gardless of whether she gets a decentralized, profit-oriented, free paycheck as large as a man's. market business firm that is not What she does not need, and what shielded from competition by a those of us who benefit from her host of Federal regulations and greater productivity do not need, Federal subsidies, both direct .. and is the establishment of the WLF's indirect. What the competent neomedieval principle, "equal pay woman needs, especially the for equal work," ,

Everyone Wants More

IT MAY BE taken for granted that all men want greater rewards, either material or psychic, or both, than they are receiving. In some the desire for increased reward is much keener than in others; those in whom it is keen are on the lookout for more lucrative employment. Some complain that their rewards are IDEAS ON altogether "too small" and insist that they should have more. If they are able to persuade the community of this, they may be given an additional material reward or they may be offered the chance LIBERTY to work and earn an additional amount. Those whose rewards are considered by the community to be "too small" and who aver that they want to earn more are classed as "unemployed" and are looked upon as a social problem. The "problem" is to increase their rewards. It is assumed (wholly without proof) that they cannot do this for themselves and hence· that society must do it for them. However, the "unemployed" are not differently situated from others. They are receiving some rewards and they want more; the same can be said of us all. If the "unemployed" are helpless, so is everyone.

OSCAR COOLEY, Paying Men Not to Work HOWTOBEA BENEFACTOR

LEONARD E. READ

THE WORLD'S WOES may have been Iem. Thus misled, he is an easy greater and more numerous in victim of the fallacious notion 1850 than now. But, if they were, that the solution of all of these my grandfather as a young man is his "social responsibility." was unaware of them. There were True, each of us is at once a no radios, TVs, or telephones. Iso­ social and an individualistic being lated in backwoods country, he and, therefore, each does in fact had no newspaper, not even a have a social responsibility. How­ magazine. All the troubles of man­ ever, we should know what that kind, so far as he knew, were responsibility is, and what it is those which fell within a distance not, else we will work against he could walk or ride horseback; rather than in harmony with our and they were minor problems, fellow men. few and far between. In brief, The grandfather-size problem, grandfather had no social prob­ as it turns out, is about the maxi­ lems except grandfather-size ones. mum' size any of us is able to But today! There is hardly a cope with. When we get it into disaster or a social mess on the our heads that other people's face of the earth that isn't imme­ problems are our responsibility to diately dinned .into our ears or solve, we "rise" to a level of utter emblazoned in glaring headlines. incompetence. However good our News! And unless one is instinc­ intentions, our meddling makes tively or rationally immune to this matters worse rather than better. calamity barrage, he will incline To illustrate: I am a writer of toward the untenable belief that sorts. It must be obvious to you, every ill of mankind is his prob- whoever you are, that I cannot

15 16 THE FREEMAN January solve your problems. Elect me to turning out better products at Congress and I remain as I am, lower prices, and making larger my competence not improved one profits; they concentrate instead whit by reason of this change in on preserving the corporate im­ occupation. Nor will it upgrade age. These outpourings draw busi­ my competence to place me in the nessmen into a popularity contest highest political office in the land, for which they have no compe­ or to make me the head of A.T. tence, and cause them to de-em­ & T.! phasize their skills in production and exchange, the skills that Business to the Whipping Post brought them to the top. Instead Before considering how we can of serving as spokesmen for free become true benefactors, that is, entry and competition and how how we can soundly discharge our the market economy best serves social responsibilities, let's reflect everyone, they drop into a defen­ on the mischief done in the belief sive role. They shift from portray­ that social responsibility requires ing what is true to denouncing everybody to solve everybody else's· what is not true. Or they may suc­ problems. cumb altogether to these unreal­ For example, take business istic notions, in which event they firms, especially those with the apologize for profits and become most customers, workers, and in­ parties to the growing collec­ vestors. They are today's "whip­ tivism. ing boys." Such firms are picked This is a mischievous trend. If on by politicians, muckrakers, and continued, it will prove disastrous those millions who can be sold not only to investors and workers any nonsense - if it is repeated but to the very customers many of often enough. Pied Pipers with whom are doing the condemning. enormous followings are everlast­ When the emphasis is on the im­ ingly insisting that these corpo­ age rather than the performance, rations assume their "social re­ not only will the performance de­ sponsibility," such as training and teriorate but so will the image. hiring the so-called hard core un­ And everyone involved must bear employed. a share of the inevitable failure. So beset are many executives Public policy, it seems to me, with these widespread collectivis­ should be geared to consumer in­ tic notions that they tend to neg­ terest - that's all of us. And as a lect their proper functions of hir­ consumer, I cringe when business ing the most competent personnel, executives behave as if theirs is 1971 HOW TO BE A BENEFACTOR 17

first and foremost - or, even sec­ greatest value, [the individual] in­ ondarily - the job of looking out tends only his own gain, and he is in for pockets of poverty or the level this, as in many other cases, led by of employment· or the general wel­ an invisible hand to promote an end fare or any other so-called social which was no part of his intention. goal. These men will serve us best Nor is it always the worse for society that it was no, partof it. By pursuing in every way - including allevia­ his own interest he frequently pro­ tion of our poverty and so on­ motes that of the society more ef­ when they stick to their own knit,. fectually thanwhen he really intends ting! to promote it.. I have never known Born a shoemaker, stay a shoe­ much good done by those who affected maker was, by and large, the lot to trade for the public good. It is an of the masses until the idea of affectation.... opening the market to competition was recently discovered - about If "to trade for the public seven generations ago. What a good" is at best an affectation, one revolution that brought about! must then conclude that he should Open opportunity· for masses of trade for his own good, which is people and the most successful war to say that each of us should ob­ on poverty in the history of man­ serve the rules and pursue his kind! own self-interest. Thus will he best .serve others and fulfill his Adam Smith and J. S. Mill social responsibility. What a John Stuart Mill, gifted with in­ switch from current thinking! But sight, was among the numerous events of the past 200 years, if I men to grasp the pursuit of self­ read them aright, confirm this interest as an efficacious way of view - absolutely! life: There is in this thesis, how,;. The only freedom which deserves ever, a presupposition that an in­ the name is that of pursuing our own dividual knows what is to his best good in our own way, so long as we interest. There's the rub; few do not attempt to deprive others of have this knowledge; no one has theirs, or impede their efforts to ob­ it perfectly. tain it. This presupposition may ex­ plain why the· brilliant and cau­ Earlier, Adam Smith had ob­ tious Adam Smith inserted that served that: word "frequently" into his fa­ ...by directing that industry in such mous paragraph. Every now and a manner as its produce may be of the then ~ frequently- there are in- 18 THE FREEMAN January dividuals who more or less intelli­ served by stealing from others. gently perceive their self-interest; This is an interpretation so nar­ and in these cases the ardent pur­ row and antisocial that the more suit of that interest promotes the it is pursued, the more is the pub­ interests of society - contributes lic good subverted. There are, on to the public good. the other hand, those who so in­ The pursuit of self-interest as telligently interpret their self-in­ one's objective is not widely ap­ terest that they would never think plauded. Generally, such action is of trying to pursue their own associated with greed, avarice, good by depriving others of the selfishness. Low-brows! This only same right, or in any way im­ demonstrates the extent of the peding the efforts of others to ob­ confusion. tain their own good. What this amounts to in the Motivation and Interpretation final analysis is serving or ob­ Self-interest is the motivator of serving the self-interest of others human action~ Regardless of pre­ in order to best serve one's self. tensions to the contrary, a com­ This is an interpretation so in­ munist. is as much motivated by telligent that the more it is pur­ self-interest as am 1. In this sued, the more is the public good sense, everyone is self-centered; served. To repeat, it is the fre­ self-interest is the ultimate given. quent appearance of these en­ And to be purely selfless is to be lightened individuals that led dead. Adam Smith to an obscure truth:

There are two main variables H ••• he [man in pursuit of his in this matter. The first relates own interest] frequently promotes to the motivating power of self­ that of the society more effectu­ interest. In some people it is a ally than when he really intends feeble force, often too low to be to promote it." recognized. Such people sometimes The ardent pursuit of self-inter­ think of themselves as selfless, and est is the way to social felicity they nearly are. In others, self­ or the public good,presuming interest is a powerful motivator that individuals are not allowed of action. (by government) or do not allow The second variable is the one themselves to act at cross pur­ at issue; it has to do with how poses with the freedom of others, intelligently self-interest is inter­ thereby damaging their own in­ preted. For instance, the thief terests. To my way of thinking, thinks of his interest as best this is the way,. and the more pow- 1971 HOW TO BE A BENEFACTOR 19 erfully the individual is moti­ muckraking critics of producers vated to putsue his enlightened who are trying their best to out­ interests, the better. If this is the do competitors, to profit by best right way, then we should not serving consumers. To make lightly abandon it simply because "whipping boys" out of those who we find only a few among us who serve us most efficiently is to dis­ are intelligent interpreters of play an ignorance of our own in­ self-interest. Stick to the right terests. way and concentrate on increas­ What, then, is the alternative ing an enlightened self-interest. to the pursuit of self-interest? It This is the only procedure that is that these people who do not makes sense. even know their own interests should pursue your and my good Beware the Selfless - the public weal! This is to com­ Consider the alternative. Sup­ pound ignorance in society. For, pose each individual were to surely, an individual who does not abandon· his own interests when­ know his own interest cannot re­ ever he observes others misinter­ motely know mine, let alone the preting theirs. countless interests of millions. What are some of these misin­ terpretations of self-interest? All Social Responsibility will agree that theft is wrong. But Now to the final question: How of the millions who wouldn't per­ best can I become a benefactor to sonally steal from any other, what mankind? By assuming my social about those who will, without the responsibility. Of what does this slightest qualm, get the govern­ consist? There are three steps. ment to feather their own nests Number one is to do all in my at the expense of others? What, power not to interfere with the really, is the difference? Were all business of others. to do this, all would perish. If this The danger of minding other peo­ isn't a mistake, pray tell, what ple's business is twofold. First, there is! The list, of course, is long and is the danger thata man may leave his must include every individual who business unattended to; and, second, does unto others that which he there is the danger of an impertinent would not have .. them do unto interference with another's affairs. him.! The "friends of humanity" almost al­ And to be included, also, are·the ways run into both dangers.

1 See my Readiness Is All, a pamphlet. Number two is to mind my own Copy on request. business. 20 THE FREEMAN January

Every man and woman in society Minding one's own business is has one big duty. That is, to take care the doctrine of liberty. Admit­ of his or her own self. This is a social tedly, this has no glamour for the duty. For, fortunately, the matter "friends of humanity," the social stands so that the duty of making the architects, the one's who would best of one's self individually is not a mind other people's business. To separatething from the duty of filling rule out their masterminding of one's place in society, but the two are others is to deny their peculiar one, and the latter is accomplished when the former is done.2 pursuit of happiness. Minding one's own business, on Number three is implicit in the other hand, serves self by minding my own business: prac­ serving others and is a task of a ticing, as best I can, the difficult size to fit the individual - big or and sensitive Judeo-Christian little. This can be life's mostfas­ philosophy of charity.3 cinating venture - self-interest in its most intelligent conception, 2 This and the previous quote from the benefaction at its very best. ~ chapter, "On Minding One's Own Busi­ ness," in What Social Classes Owe To Each Other by William Graham SUmner. ton-on-Hudson, N. Y.: The Foundation This chapter is in a pamphlet. Copy on for Economic Education, 1967) PP. 108­ request. 117. For an instructive and inspirational 3 See "What Shall It Profit a Man?" book on this subject, see Magnificent Ob­ in my Deeper Than You Think (Irving- session, a novel by Lloyd Douglas.

A Code for Survival

EVERYONE is familiar with the intense struggle for existence that is carried on among the trees of a forest. It is asserted that the struggle is so intense, and the issue of life and death so IDEAS ON sharply drawn among the young pines of a thicket, that the cutting of an inch from the top of one of them will doom it to ultimate extinction.... LIBERTY Fortunately, or unfortunately as the case may be, the issue of life and death is· seldom so clearly and sharply drawn among human beings as it is among trees, but in the long run the results appear to be much the same. If that be true, it follows that the religion which best enables men to conform to the laws of the Univ~rse (God's laws) and to survive in life's struggle, will eventually be left in possession of the world.

THOMAS NIXON CARVER, The Religion Worth Having TheWOES 01 the underdeveloped nations

ERIK VON KUEHNELT-LEDDIHN

A FEELING of love and charity to­ something relatively new. Thanks ward one's neighbor,a sense of to official travels and scholarship responsibility and personal guilt residences in North America, Eu­ have characterized Christian rope, and also in Japap., they thought at all times~ Now the world started to realize that in spite of has shrunk, due to the new means their newly won independence of transportation developed by their living standards are way be­ modern technology. Hand in hand low those of the West. But it is with diminished distances goes a primarily the impressions gained sudden discovery of the great dif­ from tourists, illustrated papers, ferences between the nations and movies, television, and books that races-less the psychological, more have given them a hitherto un­ the material differences. known feeling of inferiority, of Of course, the Western nations envy, sometimes even of hatred. have known for some.· time that They have.questioned themselves they were richer than the peoples as to why they are so "underdevel­ of the various tropical and not-so­ oped," why the already rich na­ tropical colonies, while the latters' tions are getting richer while their awareness of their own poverty is progress (though. visible here and there) is so slow that the gap be­ Dr. Kuehnelt-Leddihn is a European scholar, tween them and their former mas­ linguist, world traveler, and lecturer. Of his many published works, the best; known in ters continues to increase - mak­ America is his book, Liberty or Equality? His ing, in a way, a sham of their most recent publication is The Timeless Christian. independence, their emancipation.

21 22 THE FREEMAN January

This sort of questioning goes on attempt to internationalize the ab­ not only among the "emerging na­ surd idea that equal wealth is a tions," but also in our midst. Sinc.e just demand of all individuals of Christians are sometimes moved one country - all differences in by virtues and often have a laud­ this matter today constitute a able propensity to seek the rea­ provocation and a manifestation sons for an unhappy state of af­ of rank injustice. Even if one fairs in their own and not in some­ might advocate equal pay for equal body else's failings, they increas­ work, what happens to the man ingly tend to attribute the poverty who toils much harder than the of the "emergers" to their o,vn average? In Austria, for example, colonialist expansionism in the the legal 43-hour week for workers past and their grasping economy is soon to be reduced to 40 hours, in the present. The Latin Amer­ but (as a poll found out) the self­ ican masses, the starving Hindus, employed work more than 62 hours the miserable "Blacks" in Africa on the average. (My own average are all so badly off because we are is 81 hours.) It is also obvious so prosperous! Human beings, so that work which requires decades they reason, after all are equal; of training and education cannot they have basically the saIne de­ be remunerated in the same way sires, the same intelligence, the as skills that can be acquired in a same reactions, the "fundamentally week, a few months, or a year. same" attitude toward work, pleas­ ure, love, and food. So, if a con­ To Lacl< Is to Envy siderable part of the world is left Yet, whatever the reasons for a way behind in the general scram­ bigger income, envy comes into ble for prosperity, it cannot be play. And envy also has a leading their fault - and if it is not their role in international relations. A fault then it must be ours. Fjither country which acquires wealth we progressed so fast that they quicker than another one is, in our cannot keep pace or we brutally present "climate," committing an exploited them in the past, stunted injustice, an act of collective ag­ their growth, and are still contin­ gression and must be morally con­ uing such malpractices. As a re­ demned. But since it is not (not sult, their living conditions are yet!) considered immoral to work "incompatible with the dignity of harder or to be· more intelligent­ man." though personal qualities are sys­ In this reasoning there are sev­ tematically ignored··by the demo­ eral fallacies, starting with the cratic doctrine in the political 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 23 field - one has to look for or in­ Larger areas with a slightly in­ vent moral arguments that are creased number of "comfortably still accepted. In other words: if off" people - let us say, during the nation A has a much higher living High Middle Ages - existed only standard, has greater wealth than one minute before twelve. And· a nation B, the reason is that A ex­ sizable number of countries with 'ploited or still exploits B. (New majorities enjoying the blessed Lefters have leveled this accusa­ state of "material dignity" can tion also against the USSR.) only be found in the last 80 years The poverty in certain "under­ or, according to our time table, developed" nations appears· to us 14 seconds before twelve. Needless to be real misery. But is it really to say, there still are many areas "extra-ordinary"; is it really "in­ today where living standards are compatible with the dignity of not much higher than they were in man"? This might be so from our the Neolithic period (11 :50 to subjective Western point of view 11 :56 on our clock). This means if, for instance, we compare the life in caves, in illness, heat and living standards of an unemployed cold, hunger, boredom, despair, in German worker with those of a perpetual fear of wild beasts, jobless Indian in Calcutta, a city snakes, all the enemies of early whe,re one-fourth or one-fifth of man. During that period, as we the population is born and dies in learn from excavations, the aver­ the streets. But at the same time age age of men who survived we have to take into consideration childhood was 28, of women 22 that mankind, according to the lat­ years. est estimates, is about half a mil­ I think that we even have illu­ lion years old and that anything sions as to the life of the upper approaching "conditions compat­ crust in the more recent past. ible with the dignity of man" 5,000 Louis XIV could never get rid of years ago existed only in a very his lice and Versailles in the sum.. few spots among a handful of a mer emitted an unbearable stench. chosen few. Frederic II of Prussia smelled to high heaven. Travel was an un­ The Rarity of Freedom mitigated torture. It has been es­ If we were to envision man's timated that the living standards long emergence on the dial of an of His Excelle,ncy, Herr von ordinary clock, then such - still Goethe, Prime Minister of Wei­ exceedingly rare- conditions arose mar, would never be accepted to­ just 5 minutes before twelve. day by a skilled German laborer 24 THE FREEMAN January who just pushes buttons to get have seen minorities (often of a classic music, jazz, warm air, or combined ethnic, racial, and re­ a movie right in his room, a man ligious character) .doing materi­ who owns a vehicle outranging- in ally better, sometimes even much speed and comfort anything Goe­ better than their neighbors living the could have dreamed of. Viewed in the same climate, under the in the light of statistics, the ques­ same government, the same laws, tion as to what is compatible with the same economy. (Climate, as the dignity of man. is a very diffi­ the student·of anthropogeography cult one to decide. There was a knows, is one of the least im­ time - Biblical times! - when len­ portant but most frequently cited tils were a choice dish. Obviously, factors determining the inclina­ the various nations, races, and tions for hard and systematic tribes are living in various stages work.) Yet all these differences of development. But where would are almost willfully overlooked by we be if no individual, no tribe, the sentimental Christian roman­ no nation could progress unless ticist. Knowingly or unknowingly, all the others did as well? Prog­ he is even affected by a number of ress always implies a few pioneers Marxist notions. leading the path - and not waiting Leftist thought, we must bear endlessly until the rest, the less in mind, has infiltrated Christian endowed, the lazier, the less enter­ thinking to a remarkable degree. prizing, the less self-disciplined (See THE FREEMAN, Fe'bruary, ones decide to catch up. 1968.) A superficial reading of the Bible, the exhortations of Sentimental Romanticists Christ not to become a servant of Yet here, precisely, we come to Mammon but to remain "poor in the initial error about the woes spirit," the monastic ideals (in a of the"underprivileged" countries. secular version), the tradition of Individuals within a nation, and the mendicant orders, the rise of the nations themselves, are neither a bourgeois civilization not par­ identical nor equal. There are some ticularly devoted to religious fer­ biological reasons for this state vor, "practical materialism" which of affairs (scientifically too much is possibly a result of a. commer­ under debate to be enumerated cial outlook - all this has initially here) but, above all, there are de­ fostered leftist currents in the cisive cultural patterns which Evangelical ("Protestant") world, might be changed in the long run but .. then. also appeared with un­ but certainly not overnight. We expected vigor in the Catholic do- 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 25 main. This is an odd· development the only persons physically chas­ because, as Max Weber and, later, tiz'ed by Our Lord were the mer':" Alfred Miiller-Armack have dem.;. chants. Now the same process can onstrated with clarity and full be observed in the Catholic documentation, it was in the world Church. There are "internal" rea­ of the Reformed faiths that Ital~ sons for this state of affairs, but ian-born "capitalism" reached its also external (Marxist) influences. apogee and the modern so-called Not to .be overlooked is also a "Protestant Work Ethic" came in­ certain amount of subconscious to being. Medieval man worked opportunism. A new (leftist) very little. Between 90 and 140 "trimphalism" thinks to regain feast days (besides the Sundays) the "lost working class." The de­ were no rarity. On the other hand, nominationally mixed areas of Christmas was not a holiday in Central Europe reflect the age-old Scotland even at the turn of the Catholic animosities against the century. The combination of. free Jewish banker, the Calvinist man­ enterprise, hard work, and the ufacturer, and the Lutheran big saving habit helped the "Protes­ landowner. To St. Thomas Aqui­ tant" countries to overtake the nas, trade was of the most doubt­ Catholic and Eastern Church na­ ful moral value; but if one reads tions; and only after they adopted the great social-economic Encycli­ the "Protestant Way of Life" cals from Leo XIII to Pius XII one were the Catholic countries of the still finds no trace of leftist West in our days able to compete thought. A man like Father Gus­ successfully with their neighbors tav Gundlach, S.J., of the Gregori­ to the north. This process,how­ an University, a friend of mine ever, has not taken place in most and practically the author of countries of Latin America. We Quadragesimo Anno, steered clear look for it in vain elsewhere, ex­ of all leftist pitfalls. The situation cept in the Far East, where an changed under John XXIII, per­ entirely different motivation ex­ sonally a very conservative pon­ plains the contempt for the dolc'e tiff, when the Encyclical Mater et far niente (delightful idleness). Magistra was composed largely·by professors of the Lateran Uni­ Twisting Theology versity. The .. inroads of leftist economic In the Encyclical Popularum and social·thinking became mani­ Progressio which had a distinct fest first in Protestant theology. "overseas message," the leftist Suddenly, one remembered that tenor was somewhat more dis- 26 THE FREEMAN January tinct. Not the Gregorian, not the under the pontificate of Paul VI, Lateran University, but a group certainly not known as a radical of Dominicans in Paris working innovator, may be attributed to under the leadership of the late the fact that the· Catholic Church Father Lebret were the main au­ has practically no outstanding thors of this message. Father economic or financial· .minds of Lebret who before' his demise lec­ the first order. At the moment tured in Latin America said at a only one living author comes to meeting in Sao Paulo: "Whether my mind. Here we are faced. with God is on the side of the commu­ a situation aptly described by the nists or the capitalists, I do not late Wilhelm Roepke, who had profess to know, yet I have a pointed out that economics with­ sneaking suspicion that God rather out ethics are inane and that favors the communists. And if you moralizing without economic ask me whether I am unhappy knowledge is disastrous. about this, I must answer you candidly that I am not." These Charity or Justice? circumlocutions simply imply that This sort of injunction also a good Catholic ought to lean should have been heeded by Miss rather toward communism than Barbara Ward (Lady Jackson) toward free enterprise and the who for some time has been con­ ideals of personal liberty. No won­ sidered an expert on the "emerg­ der that L.atin-American "Chris­ ing nations." In her recently pub­ tian-Democratic" parties are often lished book, The Angry Seventies, far more socialist than the social­ prepared for and published by the ist parties themselves. They fre­ Papal Commission on Justice and quently excuse their attitude as Peace in Rome, she reminds us of designed to "take the wind out the plight of the hungry and des­ of the sails" of the Marxist par­ titute masses overseas which will ties, but in this respect they are wreak the most terrible venge­ singularly ineffective. Note the ance if we do not make bigger case of Chile where a most thor­ and better efforts to aid them ma­ ough agrarian reform has merely terially and if we do not redress resulted in a marked decrease of our trade' balance with them. To agricultural production and an her - and to a number of well­ equally marked increase in leftist meaning souls - we are guilty of votes which has produced a Marx­ their misery. (Last February the ist president. Bishop of Innsbruck, in a pastoral The ascendancy of leftist ideas letter, claimed that poverty in In- 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 27 dia is due to the colonial period. A clarion call to charity would be Apparently the wily sons of Al­ all right, but "justice"? Nor do I bion introduced the caste system like her big stick, the menace of and some 250 million holy cows to the hungry millions rubbing us India !) out altogether. India's untouch­ At least one per cent of the ables or the peons of Colombia GNP, so Miss Ward argues, must would starve to death amidst the be set aside and handed. over to ruins of Ruhr valley factories. these nations without too many Their military victory (a most strings attached. There should be doubtful event) would not solve international coordination, some anything. sort of World Bank, to handle these transfers. She even demands Anticolonialism that a steadily increasing share Let us first look at the possible of the resources should be chan­ methods of such aid. In theory, an neled through international agen­ effective means of aiding the cies. (If I understand her rightly, "emerging nations" would be to by the end of the seventies these enlist all sorts of enterprises of grants should reach colossal pro­ the Free World to invest if the portions.) The amount of aid due "emerging nations" (a) had polit­ should be stipulated in interna­ ical stability, and (b) could offer tional treaties and the obligation real security. If they could meet to shell it out laid down and "given these two preconditions, the for­ the force of law." One thinks with eign investors would be satisfied horror of what would happen in with a rather modest return. But case of a grave economic crisis few of the countries can give us when our own populations would these guarantees; and thus the be suffering - break the treaties? history of foreign capital overseas Miss Ward's dream to aid the has always been a history of eter­ underdeveloped nations financially nal expropriations by "national­ and materially is no doubt a pro­ socialist" governments. foundly Christian one,and we This lack of stability and secur­ would have nothing against it in ity can be explained. The "new principle if she were: (a) to show independent nations" which now us a reasonable and effective way play such a big role in the U.N. to do it, and (b) if she would not escaped much too early from their call her plan a "new kind of jus­ tutelage: in the case of Latin tice," thus appealing to our rather America in the early nineteenth masochistic Western sense of guilt. century, under the pressure and 28 THE FREEMAN Janua.ry with the aid of the Washington­ colonialism. And in a free world, London axis; and, after World "neocolonialism"- one nation own­ War II, under the threats of the ingproperty in another one - is Washington-Moscow axis, each also unavoidable. There is, if one partner' outdoing the other in insists, even Swiss and Dutch "anticolonialism." In this game "neocolonialism" active in the the Soviets, in the possession of United States. It is significant Northern Asia, were thoroughly that Emperor Haile Selassie and hypocritical while the Americans President Tubman of Liberia de­ projected quite illegitimately their plored the fact that their two own historic experience to entirely countries never had experienced different circumstances..The Con­ the material advantage of a co­ go obviously had nothing in com­ lonial period. mon with the Thirteen Colonies, If the "underdeveloped nations" and Patrice Lumumba was not a (this, needless to say, excludes ex­ dark George Washington. colonies which were mere exten­ Colonialism is not an invention sions of the British motherland) of wicked manufacturers and escaped much too early from the bankers, as Hobson and Lenin as"'" domination of civilized powers, the sumed, but a natural activity of same can· be said about our Ger­ most nations faced with a pO'wer­ manic-Teutonic' ancestors who de­ vacuum (or a cultural void) either stroyed the Roman Empire thus on their borders or beyond the starting the Dark Ages. A group sea$.Without the British colonial of historians, discussing the time drivethe United States would not required for our forebears to exist; without Bavarian colonial match again roughly Roman lev... efforts this Austrian writer would els, agreed on a period lasting up not ~xist; without Greek colonial­ to nine hundred years. ism Aristotle and Archimedes and Pythagoras would not have been Progress Takes Time born; without Spanish "colonial­ Our democratic illusions as to ism" the Aztecs 'would have gone human equality make us think on slaughtering up to 20,000 men that the Western (or the East a week at the Teocalli; without Asian) performance can be re­ the French,' colonizing spirit the peated elsewhere in .almost no Zenanyana, the unspeakable hor­ time~ It takes generations of mor­ rors of the Evil Night, would still ally, intellectually, psychologically be celebrated in Dahomey. There retrained people .to establish a is just .good colonialism and' bad technological civilization of high 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 29 material standards, a civilization thanks to startling discoveries, a demanding a maximum of ·disci­ new agrarian development is in pline, responsibility, enthusiasm sight but let us remember the for hard work, cleanliness, accu­ words of Dr. J. S.Kanwar of the racy, quickness of mind, reliabil,;; Indian .Council of Agrarian Re­ ity, veracity, objectivity, realism, search in New Delhi who said saving instincts, business sense. that if modern agrarian methods Just visit factories in India (or were diligently used in only two even in Russia) and you will see major Indian States (out of 14), where the human difficulties lie. all of India could properly be fed; Just read the pertinent books on would this be done in all of India, Africa, dealing with the African two-thirds of the produce could be psyche in·its present stage. (To­ exported. But there are profound morrow it might be different since psychological and cultural rather nations are "plastic" and change than purely "financial" reasons their character in the· course of why .India starves and why the time, but we are .talking about trouble in the rest of the Under­ today..) Weare here referring to developed World is about the same. documentary works like Michel The average working time for the Croce-Spinelli's Les Enfants de average Mid-African (male) farm­ Poto-Poto containing taped discus­ er is four hours a day. After all, sions with Africans, or the Social­ it. took us centuries of trial and ist Rene Dumont's L'Afriqueno1ire error, of disappointment and real est mal partie. suffering, to acquire our .knowl­ By and large the necessary hu­ edge, our skills, our experience, a man presuppositions for a modern, sense of reality, and our dyna­ partly industrial, partly agrarian mism. I am talking here not only economy do not yet exist in the as a historian and theoretical re­ "emerging nations," except in searcher, but also as a man who Eastern Asia (Japan, both Chinas, annually circles the globe. Korea, Vietnam, but not in the rest of Indo-China) .unless West­ Prelude to Investment ern financing, Western manage­ Would Be Guarantees ment, Western engineering and In other. words, the necessary know-how, and the enforcement of precondition for effective aid, as Western work discipline are far as·investments go, would be brought into play:. Absenteeism guarantees ---' all sorts of guaran­ overseas sometimes reaches in­ tees. In·order to be fruitful and credible proportions. Fortunately, lasting, investments must be se- 30 THE FREEMAN January cure against expropriation, .sabo­ Agrarian Reformers tage, brigandage, trade union Higher living standards, how­ blackmail, the destructive forces ever, can never be provided by of civil wars, guerilla activities. agriculture a:lone. And, a techno­ Yet, how are we going to achieve logical civilization demands great this? The governments with some sacrifices in the form of obedience, sort of permanence who can effec­ a sense of accuracy, time, and co­ tively give such guarantees are operation. Industrializing a happy­ very few and far between. The go-lucky, dreamy, agrarian nation democratically governed countries without strong material ambitions are in many cases even less to be can only be done with a great deal trusted than benevolent autocra­ of training, education,motivation, cies because democracy provides although some ideologues main­ the frame for the legal, nonrevolu­ tain that it can be done more tionary rise to power of confisca­ quickly by the harsh imposition tory and collectivist ideologies. I of totalitarian rule, enslaving un­ would rather invest on the Ivory willing workers. However, one Coast- which is effectively ruled does not get very far by this by a realistic man dedicated to method, witness the case of Russia free enterprise - than in Chile un­ and its satellites with the excep­ der present conditions. tion of East Germany. Even East And if we talk not about invest­ Germany is far from having West ments, but about gifts, let me German living standards because quote you a bright African, who one cannot drive fast in the best complained that in the old days car if the brakes .are on. France as a colonial power paid for Still, East Germany has the everything, but now "we look most "Protestant Work Ethic," and ridiculous, one seems to be more that places it apart from the other incapable than before." France satellites. Intelligent observers like aids Africa still far too much. "If 1. Rosier, Fredrick B. Pike, and we really must sink, all right, then Jean Gebser have realized that the let us sink. Only too often, this aid key to a material improvement which is given to us makes our overseas is the refashioning of lives too easy and· it finds no good the minds and habits of "under;., place in the economy of our coun­ developed" nations. This, however, try. It really does not help - on cannot be achieved without a rad­ the contrary: it makes us lose all ical change of their cultures. Take sense of reality." (LesEn/ants de only the fact that in Hindi the Poto-Poto, pp. 360-361.) word for yesterday and tomorrow 1971 THE WOES OF THE UNDERDEVELOPED NATIONS 31

is the same. (It· differs from "to­ ence, reached $61 million dollars day.") The automobile does not by 1806. Colonies might be a mat­ mix with juju. As Arthur Koestler ter of national pride or of military has told us in The Lotus and the interest, but if inhabited by a Robot, civilizations are package "backward" population, they sel­ deals. One cannot pick out certain dom are a paying proposition. items and leave the rest. It is, moreover,by no means accidental that· the present Euro­ Emerging Nations, pean prosperity arose with the Orphaned Too Soon loss of colonies, that the European At the root of the tragedy we nations with the greatest per cap­ indeed find the· premature decolo­ ita incomes (Switzerland, Nor­ nization. In this connection it has way, Sweden) never had colonies. always to be kept in mind that The expenses involved in provid­ colonies, contrary to a generally ing the colonies with roads, rail­ accepted myth, were profitable on­ roads, hospitals, health services, ly in a very few cases. Of Ger­ schools, universities, administra­ many's colonies before 1914, only tive machines, military and naval Iittle Togo was in the black. The installations, while still so much Belgian Congo was a sound finan­ had to be done at home, were cial proposition only in the 1940­ enormous. And if well-meaning 1957 .. period. Between 1908 and Americans complain that the Bel­ 1960 Belgium invested no less gians or the Portuguese did noth­ than 260 million .gold francs and ing for the higher education in earned 25 million. The profits their colonies, that native M.D.'s France derived from its colonies and Ph.Do's did not· roll en masse in .this century was about one­ from the assembly lines, let them fourth of the original investments. remember the net result· of the Disraeli thundered against the "intellectu.alization" of the Amer­ "miserable colonies" and Richard ican Indians; in spite of great Cobden inquired: "Where is the material sacrifices, the results are enemy who would do us the favor not encouraging. What simply to steal them from us?" Adam happened all over the globe is Smith was right when he ridiculed that the colonial youngsters left the panic which broke out in Brit­ the home of their foster parents ain after the loss of the Thirteen prematurely in a huff and now Colonies: British exports to North demand that someone else care for America, valued at $15 million a them. (The two sugar daddies, year before American Independ- Unele· Sam and Uncle Ivan, are in 32 THE FREEMAN January for it too.) The young runaways Who, after all, should be the im­ refuse to face their defeat. They mediate recipients? Certainly not belong - to use the labels of H. the gov~rnments of most of these Fortmann - to Cultures of Shame, countries. I think with horror of while we belong to a Culture of the palatial buildings erected by Guilt. And they have nicely suc­ Mr. KwameNkrumah, of his lux­ ceeded in making some of us feel ury yacht, of the golden bed of his very guilty. Of course, Westerners finance minister, of Mrs. Indira are occasionally tough people, but Ghandi's check for $50 million there can be no doubt that we offered to Nasser after the Six­ have treated each other infinitely Day War, of loans to certain Latin worse than we treated the nations American countries reappearing and tribes in overseas areas who, as. deposits in American and Swiss without Western medical services, banks. Or should we distribute would exist on a much smaller cash at street corners? scale. God gave to most, though not to Self-Help all, of these countries prodigious As charitable Christians,. we natural wealth. Tangible wealth, ought to aid them. Let us, how­ however, as Japan, Switzerland, ever, discard the notion of a "New Scandinavia, and Taiwan teach us, Kind of Justice." Let us findintel­ is the fruit of human effort. ligent ways to help them in trans­ Therefore, we have to try pa­ forming themselves into modern tiently to show them a way which, nations because, for better or after everything is said and done, worse, they want it. In the mean­ can only somehow resemble ours. time we ought to determine the This is a most complex and, above way and modality of such (chari­ all, psychologically difficult ven­ table) efforts. This is a most diffi­ ture. The "underdeveloped na­ cult problem whose treatment tions" would have to take our ex­ ought to vary from place to place. tended hand without. any display Handouts certainly will not do. of false pride -'- take it or leave it., John Milton

IDEAS ON BUT what more oft in nations grown corrupt, And by their vices brought to servitude, Than to love bondage more than liberty­ LIBERTY Bondage with ease than strenuous liberty? The Creal; of Cap;

MERRYLE STANLEY RUKEYSER

WHILE the unaware and the fan­ The secret success ingredients tasy builders have been gleefully have included the introduction of pointing to the imminent decline better methods and increased use of capitalism, the world of reality of capital goods - labor-aiding in Southeast Asia, West Germany, machinery - under conditions that and elsewhere has since World enlarge individual freedom of War II demonstrated the enor­ choice and incentives. Such dis­ mous potentials of the open mar­ ciplines as improving technology, ket free choice system in' accel­ increasing capital investment, and erating productivity. introduction of new management On my recent visit to the Ori­ techniques stand in sharp contrast ent, I was struck with the potency with the effortless panaceas sugar­ of ideas and philosophy in im­ coated with labels of "liberalism" proving hitherto meager levels of and socialism. Socialism's appeal material well-being. Certainly is based largely on emotional fac­ Taiwan, Hong Kong, South Korea, tors rather than on relative per­ Singapore, and even Japan are formance in achieving better liv­ without large natural resources, ing under competing systems. but the industriousness of their If little Taiwan is used as a work force under improved man­ microcosm for fact finding, it be­ agement and increased foreign in­ comes clear that there are broadly vestment have delineated the two approaches to problem solv­ complex factors that make for ing. One is the purely demagogic accelerated growth. approach of ignoring costs .and individual preferences and assur­ Mr. Rukeyser is well known as a business con­ sultant, lecturer, and columnist. ing perpetuation of even unwanted

33 34 THE FREEMAN January activities through the "miracle" Such approaches are self-defeat­ of subsidies. If, by way of illustra­ ing. The Republic of China on the tion, railroad labor, material, and island of Formosa turned from tax costs are out of line with such folly. It acts on the belief revenues, the easy solution lies that progress lies in technological in clamoring for subsidies. Sim­ improvements which cut costs ilarly, if arbitrary lifting of con­ through improved productivity. It struction wages far out of rela­ takes creative talent for inno­ tionship to productivity results in vators to devise methods for mak­ prohibitively high costs, the ing two blades of grass grow "remedy" is for the state to sub­ where but one grew before, but sidize the operation. Yet the per­ political hopefuls persist in pon­ sistent use of such uneconomic tificating that we'll subsidize you approaches in New York City and if you can't get costs down to a elsewhere, in the face of historic level customers are able and will­ frustration, has been to deteri­ ing to pay. The providers of sub­ orate real estate and cause much sidies are being liberal with other needed new housing construction people's money. They interfere to be stillborn. Making the land­ with the essentials of a competi­ lord stand between the home tive system in which the customer renter and inflation has caused is the boss. By buying or with­ unthinkable shortages and human holding orders, the consumer in degradation. But the uninformed, a free economy decides what seeking scapegoats, fail to see should be produced, in what quan­ that those who insist on rent ceil­ tities and according to what spec­ ings without corresponding ceil­ ifications. When there are subsi­ ings on costs are in the position dies, however, government forci­ of the man who murdered his bly steps in and weakens the father and mother and then capacity of the customer to disci­ pleaded for clemency on the pline the businessman. Instead .of ground he was an orphan. resting the survival of an enter­ prise on pleasing potential buyers, Consequences 01 Intervention the inefficient hope to get by The chaos in real estate is not through pressuring politicians. a testament to weaknesses of the When the businessman recoups free market. On the contrary,' it part of his costs out of levies by springs from decades of bureau­ government on the taxpayers, the cratic interference with the op­ customer is weakened in his sov­ eration of a free market. ereign rights at the market place. 1971 THE CREATIVE THRUST OF CAPITALISM 35

Instead of facing the discipline China (Taiwan) reports an an­ of innovating or perishing, the nual increment in economic activ­ inefficient producer rests on his ity of 8 to 10 per cent, while the laurels and hopes to live on the mainland was stagnating. Para­ crutch of subsidies. But this phrasing Marie Antoinette's "Let makes everyone poorer, since in­ 'em eat cake" at the time of the efficiency and waste are thus French Revolution, the mainland socialized, not eliminated through communists were in effect telling new and improved techniques. their underfed people: "Let 'em The creative energy inherent in eat propaganda." economically prudent operating More impressive than the im­ principles has caused a growth perfect statistical information rate in Taiwan (Formosa) far about mainland China has been above the 5 per cent a year target the eagerness of its nationals to set by the U.N. for emerging un­ escape, as evidenced by the num­ derdeveloped nations. Taiwan had ber of people pressing to get into been handicapped by fifty years of Hong Kong, whose population stagnation under Japanese over­ rose from 600,000 at the end of lords. Only 25 per cent of. its World War II to in excess of scarce land - about 2.3 million 4,000,000. Meanwhile, per capita acres - is arable; and industry income in Taiwan rose from a fifteen years ago was primitive. bare $43 in 1952 to $258 in 1968. Personal incentives under the In agriculture, if 1952 is taken Chiang Kai-shek regime were as 100, production of farm prod­ heightened by the sale of govern­ ucts in Taiwan in 1969 had grown ment owned land to farmers. to 226. While the total area culti­ vated increased only two or three Taiwan vs. Mainland China per cent, the yield per acre was With massive economic aid doubled. The intensification re­ from the United States which sulted not only from technical came to an end in 1965, Taiwan farming procedures, but also with its forward thrust in farm­ through land reform, better farm ing and in commerce and industry, credit facilities, and rural elec­ has become a yardstick for meas­ trification. So impressive have uring the high cost on the Chi­ these gains been that the Taiwan nese mainland of operating there Government has recently been in accordance with Leninist-Marx­ sending out at its own expense ist doctrine. technical missions to emerging Since 1953, the Republic of countries in Africa, Latin Amer- 36 THE FREEMAN January

ica, and elsewhere to demonstrate with the rise in prosperity there how to fight hunger by producing has been a partial narrowing of more on available farm acreage. the gap between Southeast Asian The results reflect a consolidation labor costs and those in the West. of many changes, including pest Such emerging competition poses control, crop rotation, mechani­ new problems for the United zation on farms, and better moti­ States; we can no longer ignore vation of farmers. Principal crops high money wage rates here on include rice, wheat, soybeans, the ground that we possess unique sweet potatoes, and vegetables, means of offsetting them through and the little island nation also technology. Japan· and its neigh­ produces peanuts, sesame, pine­ bors have adopted sophisticated apples, and sisal. As a result, Tai­ technology. wan has not only become self­ sufficient in food, but actually ex­ Investment Makes the Difference ports some. Taiwan has gone in diametri­ In industry since 1952, the an­ cally the opposite direction from nual rise has been 14.2 per cent collectivization in mainland China. and in manufacturing 15.1 per This is evidenced by the fact that cent. Despite the sharp percentage private enterprises in Taiwan gain in wages, labor rates and have grown 14-fold over the last living standards are still low­ 18 years, whereas governmental not only by U.S. and Western economic operations there, in­ European standards, but also in cluding enterprises formerly comparison with Japanese levels. owned by the Japanese and turned Japan has been experiencing a over to the government, and pow­ labor shortage, and has diverted er, railway, highway, ports, and some of its industrial production communications - all in the pub­ to Taiwan, South Korea, and else­ lic sector - have meanwhile mul­ where, where labor has been more tiplied only 5 times. abundantly available. Japan and In contrasting the approach· in the noncommunist nations in Taiwan with that of mainland Southeast Asia, including Hong China, a spokesman for Taiwan Kong, and Singapore, have suc­ said: "Communist China. has al­ ceeded with negligible natural ways been against 'material in.,. resources. The countries import centives,' although small doses of raw materials and export finished such rewards existed both in agri­ goods. Originally they traded culture and industry. The 'Cul­ primarily on low labor costs, but tural Revolution' tried to eliminate 1971 THE CREATIVE THRUST OF CAPITALISM 37 even these small doses, but re­ Progress Abroad Matched cently there has again been less by Deterioration at Home denunciation of material rewards While there have been new which seems to indicate that some laboratory demonstrations since enterprises are again resorting to World War II in Japan, Southeast this 'reactionary' practice. Asia, West Germany, Republic of "The low productivity in China South Africa, and elsewhere of is also due to lack of investment the vitality of the free market and capital." the competitive system, there has Republic of China officials as­ been in the United States, the sert that the island nation is now world's traditional showcase of internally generating enough cap­ free enterprise, an increased tend­ ital to finance its continuing de­ ency to whittle away ati the system. velopment. Right now, after giving lip The earlier strides made in service for more than a genera­ Taiwan were made possible not tion to freer international trade, only by better management meth­ this country, under the pressure ods and better disciplined workers of rising competition from Japan, but by capital formation. This was West Germany, and elsewhere, has set in motion by investment by been reversing policy and discuss­ foreigners, including Chinese liv­ ing the achievement of salvation ing overseas. These figures, sup­ through restrictive quotas rather plied by the Taiwan Government, than through establishing better show the trend: technology which would enable Americans to hold their own with­ FOREIGN INVESTMENTS BY COUNTRY out artificial props. (Expressed in units of $l,OOO-U.S. Currency) After World War 1, fear of the United foreigner resulted in increased im­ Year States ~pan Others Total migration restrictions in this 1953 1,881 160 2,041 1954 2,028 14 50 2,092 country, with rigid quotas. This 1955 4,42'3 4,423 1956 1,009 1,009 was done to save the relatively 1957 11 37 48 1958 1,116 1,116 well paid jobs of domestic work­ 1959 100 45 145 1960 14,029 309 14,338 ers. But capital is international, 1961 4,288 1,301 375 5,964 and, while the movement of men 1962 738 2,664 639 4,041 1963 8,734 1,397 216 10,347 was restricted, capital flowed 1964 10,223 728 916 11,867 1965 31,104 2;081 1,955 35,140 across boundaries. Through direct 1966 17,711 2,447 746 20,904 1967 15,726 15,957 7,005 38,688 investment American· companies 1968 34,555 14,855 4,035 53,445 opened their own facilities in for­ 1969 27,882 17,642 36,697 82,221 TOTAL 174,442 60,753 52,634 287,829 eign labor markets. Thus, there 38 THE FREEMAN January was leakage in the primitive ef­ cedures, relations between govern­ fort to preserve jobs on a basis ment and business, and in man­ other than competitive efficiency. agement policies to heighten effi­ Now, in face of the hazard of ciency in making and distributing pricing ourselves out of markets, goods and services. Certainly the there has been talk in the House inflationary policy of the Federal Ways and Means Committee of government and the class bias in setting import restrictions on the labor-management laws can­ shoes, textiles, and other products. not be swept under the rug. In his But, even if such quotas would State of the Union Message two temporarily appear to do the job, years before he retired, President they would tend to lead to blind L. B. Johnson, while giving a alleys. If Japan, for example, is goodie to the unions in recom­ restricted on shipping textiles to mending repeal of Section 77B of the United States, its enterpris­ the Taft Hartley Act assuring ers will strive for survival through freedom of the states to pass capturing a substantial part of right-to-work laws, significantly the foreign markets to which suggested a review of the whole American firms are still exporters. field of labor-management legisla­ tion. The concepts in existing Fed­ The prime objection to seeking eral labor-management laws are salvation by restraining the free­ obsolete and reflect the depression­ dom of the marketplace is that it bred fears of 1935 when the Wag­ diverts attention from real prob­ ner Act was passed. The need is lems. The basic issues are the need­ to let economic forces operate ed changes in U.S. technology, through the open competition of laws, collective bargaining pro- the unhampered market. ®

The Methods of Capitalism

IDEAS O~ AMONG the "less developed" countries, as the term is most often used, almost all have at least one thing in common. They are countries that desire capital but have not yet put into practice LIBERTY the methods of capitalism.

HAR OL D M. FLE MIN G, States, Contracts and Progress CLARENCE B. CARSON Throttling the Bailroads

The Future of the Railroads

VIRTUALLY everyone who has any is endemic around and within most interest in and knowledge of the cities of any size. Exhaust from transportation situation in the the internal combustion engine United States must agree that the used on automobiles, buses, and railroads are in trouble and that trucks principally is a major pol­ their difficulties are very closely lutant of the atmosphere. Railroad related to a host of other trans­ unions are perennially on the port problems. verge of striking and tying up The vast Penn Central system is transportation throughout the bankrupt. One after another once length and breadth of the country. famous passenger trains have been Highway building in the urban­ cut, and less well known ones have ized areas of the country goes on long since been canceled. Most at a torrid pace and yet it always companies say that they lose appears to be behind the rising money on their commuter busi­ demand for highways and streets. ness. Street transportation com­ Disposal of waste - in some con­ panies in most cities are generally siderable part a transportation money losers. Traffic congestion problem - is a mounting burden. The decline of the railroads is Dr. Carson is a frequent contributor to THE FREEMAN and other journals and the author not a development isolated from of several books, his latest being The War on the Poor (Arlington House, 1969). He is everything else in America; the Chairman of the Social Science Department at Okaloosa-Walton College in Florida. effects extend outward to the much

39 40 THE FREEMAN January more comprehensive matter of all international carriers under its of transportation, and what hap­ auth 0 r i t y. Indeed , Cong r ess pens to transportation affects the charged the Interstate Commerce commercial and fraternal life of Commission with some such task a people. as this for surface·transportation in an act passed in 1940. The pre­ Proposed Remedies amble said: Proposals for doing something about the transportation situation It is hereby declared to be the na­ tional transportation policy of the have not been wanting. Govern­ Congress to provide for fair and im­ ments at various levels have begun partial regulation of all modes of tentative and hesitant reversals of transportation subject to the provi­ long term policy toward the rail­ sions of this Act, so administered as roads within the last decade or so. to recognize and preserve the inher­ Politicians have at long last ceased ent advantages of each; to promote to talk of the railroads as if they safe, adequate, economical, and effi­ were a menace that somehow has cient service and foster sound eco­ to be contained else it will destroy nomic conditions in transportation the country. They have begun to and among the several carriers; to treat them more as if they were encourage the establishment and respected elderly grandparents, maintenance of reasonable charges for transportation services, without for whom some provision must be unjust discrimination, undue prefer­ made in the period of their dotage. ences or advantages, or unfair or Subsidies are now being provided destructive competitive practices; to for various commuter trains and cooperate with the several States some for longer distance ones. The and the duly authorized officials Federal government is about to thereof; and to encourage fair wages commit itself to take over and run and equitable working conditions; the remaining passenger trains, if all to the end of developing, coordi­ the companies cannot do so. In a nating, and preserving a national similar fashion,cities have been transportation system by water, subsidizing or otherwise taking highway, and rail, as well as other means, adequate to meet the needs over street transportation sys­ of the commerce of the United tems. States, of the Postal Service, and of One proposal which has much the national defense.! support is that government should devote itself to coordinating the 1 Quoted in Marvin L. Fair and Ernest W. Williams, Jr., Economics of various modes of transportation Transportation (New York: Harper, within the country as well as the 1950), pp. 727-28. 1971 THE FUTURE OF THE RAILROADS 41

Politically Impossible basis upon which men would oper­ All this may sound quite plausi­ ate to coordinate transportation bleon paper. Why, indeed, should would be taken from the past­ the government not develop a na­ Le., would be historical. If all the tional coordinated system of trans­ data that might conceivably be portation? Why could it not use brought to bear on transportation the carrot and the stick, alternat­ were fed into a computer, the an­ ing with regulations and induce­ swers that could be obtained from ments skillfully administered so the computer, so far as they would as to achieve this national goal? be factual, would be answers for The most direct reason why some time in the past. To make government cannot develop a co­ the point concrete, it might be pos­ ordinated transportation system sible to construct a. model for a is in the nature of politicf. Politi.. coordinated transportation system cians operate by conciliation and for 1925 on the basis of data now compromise. They attempt to bal­ available. But none can be con­ ance interest against interest, re­ structed now for 1975 except by gion against region, rural popu­ extending current figures - that lation against urban, and so on. is, fixing it in the present pattern Whichever interests are at the - or by'speculating as to what will moment most clamorous and cru­ be needed in the future. cial to election victories will 're­ The Uncertain Future ceive the most attention. It is diffi­ cult to see how this would be likely The deepest reason why govern­ to result in coordinated economic ment cannot intervene so as to activity. provide a coordinated system is At a little deeper level, it can be that no one knows what modes of seen why government would not transportation are wanted iri what succeed 'in this even if it could quantity and of which quality in mirror the electorate much better the future. The present writer than it usually does. Government does not know how many passen­ intervention tends to fix relation­ ger trains between which points ships in patterns that have existed may be wanted in the future. He at some, time in the past. This is does not know whether there so, not only because government should be more or less than there action inhibits change and places are at the moment. He does not obstacles in the way of adjust­ know how many hopper or grain ments to new circumstances, but cars will be needed next season, also because any sort of factual how many automobile carriers, 42 THE FREEMAN January

how many gondolas, how many readily give up when they are flat cars, where a new railroad wrong; they frequently continue should be laid and an old one dis­ to throw our good money after continued, where new stations their bad decision. They have fer­ should be built and old ones aban­ tile imaginations when it comes doned, and so on. This writer does to thinking of reasons for operat­ not know, nor does anyone else, ingenterprises at a loss. If they what 'will be wanted in the future. operate passenger trains which If he did know, he could become have only an occasional passenger, fabulously rich by providing it at they can still justify it on the just the right time and right place. grounds that if an all out war But alas, such infallible foresight came the trains would still be is denied to us mortals, whether needed, along with many other we are clothed with the powers of reasons of like character. government or not. Past experience indicates, also, This being the case, a coordi­ that if government enterprises do nated transportation system, if not succeed economically, the poli­ there is to be one, will have to be ticians rather than· blaming them­ built by trial and error, by specu­ selves will blame the people, or, lation; and it will never be com­ more precisely, some portion of pleted until all change has ceased. the people which can serve as a This means that there will be mal­ scapegoat.. Government power may investment, that there will be then be used to make the people waste, that some of the specula­ fit the procrustean bed of facilities tions will not payoff. This is one that government has provided. It of the central arguments for hav­ is easy to see how this might work ing such speculations made by pri­ with a coordinated transportation vate investors rather than govern­ system. The more popular modes ment. If government agents guess could be scheduled at inconvenient wrong, we all pay. If private in­ hours and the less popular ones at vestors guess wrong, they lose. peak hours of transport need. In­ creasing restrictions on the use of Irresponsible Performance private automobiles and trucks at Everybody's Expense and airplanes would likely be made But we do not all simply pay in efforts to make governmental once and get it over with if those facilities payoff. (Of course, pri­ in government guess wrong about vate companies like to have such what is wanted; we may continue aids as these from governments to pay and pay. Politicians do not when they can get them.) 1971 THE FUTURE OF THE RAILROADS 43

Summation of Evidence ing collective bargaining, byestab­ But it is not necessary to resort lishing seniority systems and work to the imagination to examine the rules, and by fixing an expensive effects of intervention. This work retirement system on the rail­ has already explored many of roads. these in detail in connection with 7. produced bankruptcies, cod­ the railroads. The main reason dled inefficiency, and adopted pen­ there is not now a coordinated sys­ alties of one kind or another for tem of transportation in this coun­ the efficient. try is government· intervention.. A 8. fostered overconstruction at summation of the conclusions from the outset, prevented the aban­ evidence already presented will donment of unremunerative lines make the point. Government inter­ and facilities, and required the vention in railroad activity has: railroads to pay for expensive 1. discouraged investment by safety measures which are usually limiting earnings and prescribing provided at taxpayer ,expense for conditions of operation. other modes of transportation. 2. discouraged innovation not 9. taken from railroad manage­ only by harassing investors but ments most of the authority for also by making railroads continue making entrepreneurial decisions costly operations once they have but fastened upon them the re­ been established. sponsibility for continued opera­ 3. discouraged consolidations tion. that would have produced truly The list could surely be extended transcontinental systems by the but the point emerges: long and short haul clause as well The present transportation mess as other devices. is a result of government interven­ 4. discouraged competition by tion. The railroads have been establishing rates and service re­ greatly limited in their appointed quirements and by fostering con­ task of helping to link the coun­ solidations among naturally com­ try together commercially and fra­ petitive lines. ternally. They have been .ham­ 5. subsidized and advanced other pered, restricted, limited, inhib­ modes of transportation while in­ ited, harassed, regulated, pushed, hibiting railroad competition by pulled, and controlled. The fact regulatory measures. that some railroads can still oper­ 6. empowered railroad employ­ ate profitably is testimony to the ees against the companies by sup­ great economic advantages of this porting unionization, by sponsor- mode of transportation. 44 THE FREEMAN January

Subsidies and Controls government takeover of the rail­ The Federal government is now roads. proposing to take over and operate There is a way out of this mess, passenger trains if the companies however, which promises much will not continue them. Already better results. It is a way that subsidies are being provided for even the railroads may be too the Metroliners on the Penn Cen­ timid (or too fearful) to suggest. tral and for some commuter It is a way that promises much trains. There is a familiar pattern for investors, for management, for in this activity. Governments first workers, and, above all, for con­ adopt restrictions and regulations sumers. It is the way of freedom which· inhibit private enterprise rather than control. It is the way in providing certain services. of economy rather than waste. It Then, they enter the field to pro­ is the way of service rather than vide the services. It has happened servitude. It is the way of muster­ with city transportation systems. ing the ideas and abilities of nu­ It has happened with housing. merous men rather than the stulti­ Once in the field, governments ex­ fying concentration of .decision­ tend their domain, and taxpayers making power which now obtains. are called upon to make up the It is the way of prosperity rather losses incurred by government than depression, of life rather operation. What community in than death for an industry. America will not want a Metro­ In short, turn the railroads liner? And what politician will not loose! Remove the restrictions, see votes in requiring the govern­ limitations, controls, prescriptions, ment to provide it? and regulations which now hamper Some railroads may see a bo­ and restrain them. Allow them to nanza in all this. But they should serve in whatever ways they can long since have learned to beware and will, profitably and felici­ of governments bearing gifts. It tously. There is no reason why is easy to see that if government they should not be allowed to, and operates passenger trains, and every reason why they should. private companies the freight trains, a contest will quickly· de­ free the Market velop over which shall bear what If what is wanted by Americans proportion of the costs. Govern­ is a coordinated transportation ment can bankrupt line after line system which will provide for by shifting the costs toward their transportation needs, then freight, thus setting the stage for one of the ways they can hope to 1971 THE FUTURE OF THE RAILROADS 45 have it provided is to turn the rail­ subsidize competitors in various roads loose, turn them loose to ways. charge market determined prices, turn them loose to form whatever Chaos Now Prevails combinations may appear to those Americans have been taught to involved to be desirable, turn them believe over the years that chaos loose to extend services where they would result if this were done. It will and to abandon those that are is true that we could expect many unwanted, turn. them loose so that changes if railroads were freed their managements can make the from restrictive and inhibiting entrepreneurial decisions, turn legislation. One of the things that them loose to hire whom they will might be expected is that under at whatever wages are mutually the prod of economic necessity rail­ agreeable between employer and road men would begin to shake off employee, turn them loose from their lethargy and become more the grip of subsidized and privi­ vigorous. Competition would re­ leged competitors, turn them loose vive: among railroads, with to take advantage of their low ba.rges, with trucks, with automo­ variable costs and allow them to biles, with airlines, and so on. increase their proportion of the Railroad managers might be ex­ traffic so as to meet their high pected to cease thinking of ways fixed costs - in short, turn them to curtail service and to start loose from the ubiquitous grip of thinking of ways to extend it. As government. some railroads began to be quite The most direct way to accom­ profitable, investors would be lured plish this would be to repeal the into putting more money in them. vast century-long tangle of state Stocks whose prices have been and Federal legislation affecting stagnant for decades might be ex­ the railroads. Abolish the Inter­ pected to begin to fluctuate con­ state Commerce Commission and siderably. Ima.ginative entrepre­ the· various state regulatory com­ neurs would dream of nationwide missions. Remove all prescriptions rail systems and move to form as to rates, service, investment, them. Prices of rail services would sale, abandonment, long and short fluctuate, differ from company to hauls, new construction, and so on. company and region to region. This would leave the railroads New sources of goods and services free to manage their own affairs. would be opened up to vie with Remove all the special privileges established ones. Some services extended to labor unions..Cease to would be abandoned and new ones 46 THE FREEMAN January would be conceived. Truckers, other for limited space, a chaotic barge lines, and airlines would feel situation which results in the the spur of competition. Com­ rending crashes which produce panies that could not compete suc­ their annual huge tolls of dead cessfully would sell out or go out and wounded bodies .and vehicle of business. destruction, the imminent poten­ If this be chaos, it has never tial chaos which strikes perpetu­ been clear why the consumer ally threaten, the chaotic struc­ should fear it. It is clear why all tures and facilities of a declining sorts of vested .interests might railroad industry unable to attract and do fear competition and en­ new capital, and so on. It is ironic terprise,why those in the business to fear that freedom would result fear competition for they may not in chaos when we are confronted be able to hold their own, why on every hand with chaos, both ac­ labor union leaders and those with tual and potential, much of which seniority fear the competition of has resulted from intervention. would-be workers, and why truck­ Of course, the railroads are not ers, barge lines, and airlines would the only means of transport that fear freed railroads. But the worst should be .freed. Others are re­ the consumer - which is all of us stricted and restrained by regula­ - has to fear from competition is tion also. It is this restraint of lower prices and better service. If commercial transport, while leav­ the increase of choices and deci­ ing individual transport free, sions he is offered be chaos, then which has produced so much that many would no doubt welcome is unwanted today, so many of the such chaos. deaths and injuries on the high... ways, so much of the congestion, Freedom Brings Order so much of the pollution, and so Actually, we have the chaos now, much of the contest for limited the chaotic tangle of legislation space..If we continue to inhibit within which all commercial trans­ commercial transport, we shall, no port operates, the chaotic patch­ doubt, have to place increasing re­ work of railroads over which strictions on individual transport. goods and people must pass to go There is another way. It is to free from coast to coast, the chaotic all transport of any restraints situation on the streets and high­ that are not directly related to ways as vehicles of a vast assort­ protecting life, liberty, and prop­ ment of shapes, sizes, and operat­ erty. Coordination will occur ing conditions vie with one an- within the marketplace; profes- 1971 THE FUTURE OF THE RAILROADS 47 sionals will do much of the work the railroads is bleak. 80 is the of transport; the amount of con­ future of consumers of their ser­ gestion and pollution will probably vices. Over a period of about be greatly reduced; and the ninety years, virtually every sort choices of means and quality of of intervention has been tried­ transport will increase. 8uch a intervention which has brought us prognosis is warranted from past to the present pass. It is time for experience with the market. yet another experiment - an ex­ As things stand, the future of periment with freedom. ~

IDEAS ON

LIBERTY An Orderly Universe

WE THEREFORE BELIEVE in liberty be­ say: Laissez faire! Leave it to cause we believe in the harmony of chance! But we, who are believers, the universe, that is, in God. Pro­ have the right to cry: Laissez passer! claiming in the name of faith, for­ Let God's order and justice prevail! mulating in the name of science, the Let human initiative, the marvelous divine laws, flexible and vital, of our and unfailing transmitter of all dynamic moral order, we utterly re­ man's motive power, function freely! ject the narrow, unwieldy, and static And freedom, thus understood, is no institutions that some men in their longer an anarchistic deification of blindness would heedlessly introduce individualism; what we worship, into this admirable mechanism. It above and beyond man's activity, is would be absurd for an atheist to God directing all.

Editor's note by GEORGE B. DE HUSZAR, inspired by an unfinished passage in Frederic Bastiat's Economic Harmonies. PAUL L. POIROT

EVERY SELLLER of a commodity or mining the price as do the supplier's service wants to cover his costs of recorded expenses. Cost, of course, production and receive something influences the supply side of the over and above such costs if pos­ market and thus the price; but sible. He spends long hours.keep­ costs incurred do not determine ing records and, with rare excep­ price. tion, believes that he actually sets To believe or to say that any the price of his goods and services item of commerce is but the sum by adding a margin above his of the costs incurred in producing expenditures. it - a package of somebody's prior The truth, however, is that all labor - is to introduce a confus­ recorded costs of an item are ing irrelevancy into the bargain­ washed· out and rendered irrele­ ing process that determines the vant by the actual market price at price at which free trade takes which that item is traded - a price place. The only relevant factors determined by the competitive ina voluntary trade are that forces of supply and demand. That each party to the transaction, at price becomes the new "cost" of the moment, values what he re­ consideration to the next user, ceives more than he values what regardless of how much labor he he gives. Each thinks that he or any prior owner expended on gains from the trade, no matter that particular item. And if he what costs were incurred to pro­ sells it in turn to another willing duce what he gives or gets in buyer, the latter's demand will exchange. have as much to do with deter- That's all there is to the sub-

48 1971 COST-PLUS PRICING 49 jective theory of value. It takes as the result of labor or work. If into account the demand as well he's working for wages, he de­ as the cost of production. And this mands a wage rate high enough to determination of prices in the keep pace with "the cost of living." open competitive market affords If he's selling wheat or corn or the current running record of beans, he wants prices high enough costs and returns that a business­ to cover his costs of production. man needs in order to calculate If he's providing a postal service profit or loss and judge whether under an exclusive government or not to continue a particular monopoly, he wants postage rates business activity. to cover costs. His record of yesterday's costs In other words, the seller's in­ and returns may afford him some clination is to try to hedge against clues as to the efficiency of his the forces of supply and demand procedures. But today's prices are so as to assure a price that would the nearest indication available to include a "fair" markup over costs. him as to .what tomorrow's costs What he seeks, in effect, is a and returns may be. What are to­ guaranteed customer. And the day's prices for the buildings and postal service monopoly is a good machinery in use as compared with example of such a condition. If other production facilities now on the customers do not cover the the market or waiting to be in­ costs, other taxpayers are obliged vented? What are today's prices to do so. Market prices, with com­ for various raw materials as com­ petitive postal services, are for­ pared with available or potential bidden. There is no way of know­ substitutes? How do today's prices ing what might be the demand for for hired help compare with prices or the supply of postal services if for labor-saving machinery? And buyers and sellers were obliged to how do today's prices for his sale­ look to the market to tell them how able commodity or service com­ much of which scarce resources to pare with prices for competing devote to such purposes. Resources items? are simply used in the postal monopoly, with no way to know The Labor Theory whether the use represents con­ Despite this marvelous facility servation or waste. The force of of market pricing and economic government sees to it that the calculation, it man as producer full costs are covered by taxpayers, finds it almost impossible to view regardless of the inefficiency and his.product or service other than waste. 50 THE FREEMAN January

Outside the Market goods and services as a package of Government pricing and govern­ labor or the sum of the costs of ment contracts, including the pay­ production, they will continue to ment of subsidies of any kind, al­ turn to government for subsidies, ways are on a "cost-plus" basis handouts, privileges, guaranteed because in those cases the efficient incomes, protectionism, and the market method of pricing has like. The more this is done, the been prohibited. Supply and de­ less chance there is to trade for mand are ruled out of the determi­ gain in the open market - the only nation: the customer is led to be­ system· of pricing that conserves lieve the resources involved are rather than wastes scarce re­ not very scarce- relatively free; sources.1 Chief and foremost the supplier is guaranteed that among those scarce resources is taxpayers will cover his costs, man, not for his capacity to con­ whatever they may be. Such social­ sume as the socialists implY,but istic pricing affords no effective for his productive power to serve method of economic calculation by himself by serving others. , which to measure success or fail­ 1 It may be assumed that the most ure, profit or loss, conservation or urgent purposes of consumers will be waste. Thus, socialists are fore­ served in one way or another and that it is best to do it as efficiently as possible. doomed to stumbling in the dark A businessman's profit or loss is the with their outmoded labor theory measure of his efficiency-his capacity to of value - the sum of costs. minimize the cost of serving consumers. Profit denotes the conservation, and loss As long as men continue to view the waste, of scarce resources.

Security May Betray Us

WHENEVER I hear that the government is helping someone, I feel sorry for that person. Or whenever I find that someone, by a IDEAS ON monopoly grant of power, has a sure market or a sure job, I feel sorry for him too. Even helping a person to help himself may be a disservice to him; for you will probably - perhaps uncon­ sciously - compel him to do it your way. Charity, if needlessly LIBERTY bestowed, probably will have a vicious effect. People who are promised support will hardly work. All grants, all subsidies, all rewards for services not rendered have a deleterious effect on character; and if character is not of foremost consideration what is? . , ARCHIBALD RUTLEDGE . ..'-6 ~:- .,-- If . -- -~ THE PROTESTERS ,

w. A. PATON

SOCIOLOGISTS and psychologists (to sumea measure of responsibility say nothing of other academic spe­ for the consequences. Especially cialists) have been having a field in the "social sciences" there are day diagnosing, explaining, and­ many instances of instructors who at times - condoning the phenom­ neither require serious study of enon widely known as "student the subject (such as it is) nor reg­ unrest." Indeed, the concern of ular class attendance, which leaves some of the professors has waxed their students with plenty of time to the point of willingness to pro­ to cultivate restlessness. And in mote, and even to participate in, some departments it is easy to the programs of the campus re­ find members who seem to be none volters. With this situation it is too busy themselves, either at not unreasonable to conclude that teaching or engaging in· any other the sympathetic professors have form of scholarly endeavor. This played a significant part in pro­ is still not the typical state of af­ viding a climate that encourages fairs, it should be acknowledged, student discontent, and must as- in medicine, engineering, and the professional schools generally, Dr. W. A. Paton is Professor Emeritus of Ac­ counting and of Economics at the University where a majority of the students of Michigan. Since retirement in 1959, after 45 years on the Michigan staff, he has done are striving diligently to gain a part-time teaching and lecturing at 14 colleges and universities in 10 states, for periods rang­ handhold on a career ladder, and ing from a few weeks to a full school year. most of the teachers are trying This experience has afforded an unusual oppor­ tunity to observe the development of campus hard to be helpful. unrest, and the reactions of teachers and admin­ istrators to wayward student behavior. Playing a.role perhaps more im-

51 52 THE FREEMAN January portant than that of the profes­ currently witnessing cannot rea­ sors in opening the door' to the sonably be regarded as construc­ restless and unruly are the acqui­ tive efforts to improve the educa­ escent and obliging administra­ tional process, or amend alleged tors, widely represented among bad practices in any other area. today's college and university Fomenting disorder, smashing presidents, deans, and other of­ windows and burning buildings, fleers. The extent to which these throwing missiles (from bricks people cater to the dissident and rocks to bombs and bullets) groups is nothing short of amaz­ at the police and other official law­ ing, and deeply disturbing, to enforcement personnel, physical many old grads. And boards of attacks on students and teachers trustees and regents should not who are trying to carryon - these escape mention in this connection. are hardly the earmarks of an Often a majority of the members idealistic reform movement. of the governing board are not fa­ I have personally viewed hun­ vorably inclined toward the atti­ dreds of shattered windows and tudes and policies of faculty and doors on the beautiful grounds of administration, but they turn one of the world's renowned pri­ their backs most of the time and vate universities and the experi­ pussyfoot even when conditions ence was nightmarish. At a large clearly call for a positive stand. state institution, which I know well, one episode was the seizure Semantic Confusion of the new undergraduate library, To support the view that the which cost the taxpayers several leaders in campus disorders are millions, by a band of twenty to idealists troubled by the ills of the thirty "youths" who held posses­ educational system, and incensed sion for many hours while wreck­ by the limitations of prevailing ing files and equipment, disar­ programs for dealing with the ranging and damaging thousands plight of the disadvantaged and of volumes, defacing walls, and downtrodden, resort is had to some otherwise disporting themselves. very sorry semantics. Words are The result was a shambles, forc­ potent weapons in man's affairs, ing a temporary complete closing and their misuse can bring unfor­ of the building, to the great dis­ tunate results ranging from minor advantage of the thousands of un­ misunderstandings to tragic con­ dergraduates regularly using the frontations and crises. The dis­ library's facilities. This costly ca­ turbances in the schools we are per of the "militants" is only one 1971 THE PROTESTERS 53

of a long list of interferences with lapse, like a house of cards, of normal operation during the last our political and economic insti­ three years, usually featured by tutions. Apologists for the student violence and vandalism, and the activists, and the disorders in total effect has been a substantial which they figure prominently, impairment of the functioning of should take note of this estab­ the university. To date, moreover, lished fact. There is room for ar­ not a single student participant in gument, of course, as to just how the disruptive incidents has been potent the professional agitator expelled, or even suspended. A cells are, in stirring up trouble. dean did indeed announce suspen­ With respect to the faculty sion of one stalwart "youth" who members and administrators who knocked a teacher down and broke are prone to defend groups and his glasses, but the outcries of organizations sponsoring militant outraged "student government" "movements" and activities, there groups and their faculty support­ is a noticeable tie that binds: al­ ers soon induced a revocation of most to a man they are either out­ the dean's initial decision. right socialists, or dominantly so­ Query: Why shouldn't campus cialistic in outlook. They are all rowdies, thugs, vandals, and riot­ definitely unfriendly to private ers be properly and plainly de­ business enterprise and an un­ scribed, instead of being labeled hampered, competitive market; as "protesters," and credited with they damn capitalism at every op­ an earnest desire to better school portunity, in the classroom and environments and operations and elsewhere, either bluntly or by assist in solving all pressing so­ sly slurs and digs running from cial problems? faint praise to half-truths and downright misrepresentation. Gen­ Professional Agitators eralizing as to the views of the There is solid evidence that student troublemakers is less war­ hardened agitators, often trained ranted, but that the leadership of abroad, are involved in most the various groups is heavily major strikes and riots in the loaded with Marxists and procom­ schools as well as on the streets. munists is very clear. These are people dedicated to de­ Nothing can be done, needless stroying the American educational to say, to convince the partyline system and - ultimately - produc­ foreign agents, and their con­ ing a condition of general chaos firmed fellow travelers and syco­ that will insure the complete col- phants, that there is any merit in 54 THE FREEMAN January the American experiment in indi­ from early childhood on into the vidual freedom - freedom to move adult years. But perhaps this is about, to choose an occupation, to what ails us. Perhaps we are so save and acquire property, to pros­ swamped with information - and per, and (on occasion) to become misinformation - that the power wealthy. But we can still hope to think, to reason, to get at the that the host of well-meaning citi­ nub is becoming atrophied. zens who have been somewhat tol­ As most careful observers will erant of the youthful "protesters," agree, the protesters and revolu­ and indifferent to the turmoil they tionaries have been aroused rather have stimulated in the schools, than restrained by the permissive will wake up, and exert a restrain­ and indecisive tactics of those in ing influence before the wrecking charge.. Give them an inch and operation reaches the point of no they'll take a mile is just as true return. today as in the past. Will we nev­ er learn that coddling and cajolery Widespread Mental Smog will not check those bent on tear­ One striking feature of the ing our schools to pieces, or en­ times is the willingness of people gaging in any other form of law­ generally, and especially in the lessness? And neither will "trying ranks of the intellectuals, so­ to understand," "opening new called, to disregard plain facts and avenues of communication" (a be beguiled by illusions and mi­ fancy description for setting up a rages. Common sense seems to be flock of committees, conferences, on the wane. The widespread men­ and discussion groups), and other tal smog from which we are suf­ soft-soap suggestions from pro­ fering, it may be urged, is much fessorial ranks, aimed at advising more dangerous than the fumes or mildly admonishing, restore emitted by our motor. vehicles. order and efficient functioning to This condition appears the more the campus. remarkable, at first glance, in a society equipped with an incred­ The Need to Take a Stand ible array of gadgets providing Nobody favors arbitrary or ty­ almost instantaneous and world­ rannical suppression of the rest­ wide communication, a flood of less and discontented, even when printed material on every con­ they have no solid ground under ceivable subject, and an elaborate their feet. (We greatly need the educational framework designed to inventive and innovative indi­ keep us occupied with learning vidual, in all fields.) But taking a 1971 THE PROTESTERS 55 definite and determined stand, lay­ proportions, a mountainous de­ ing it on the line and not backing fense effort, which probably can­ down, are essential to the curbing not be· greatly relaxed in the near of destructive conduct, in school future, growing governmental in­ or out. There are, at long last, a terference and control in all few schools where this position is fields, coupled with fiscal irres­ being asserted, forthrightly, and ponsibility and the continuing some supporting voices are being plague of inflation. In short, we raised in high places in govern­ have about all the troubles and ment. Delay has, of course, made difficulties we can take. Any sub­ the chore of restoring order much stantial addition to the load at more difficult. Purging academic this juncture may topple us. And staffs, stiffening admission re­ in the face of the prospect of tre­ quirements, and increased willing­ mendous increases in population ness to resort to expulsion are (according to the predictions) developments badly needed. how can the present per-capita A concluding question: What standard of living be maintained, will be the impact on American to say nothing of improvement? productivity, on the level of out­ The almost forgotten truism that put of goods and services, of the "we can't consume any more than diversion of time and energy to we produce" still holds. attempts to cope with student law­ lessness, plus the serious impair­ The Exposure of Nonsense, ment of the usefulness of our edu­ All in Good Time cational facilities accompanying To clear the air, blow away the the school disorder and destruc­ mists of nonsense and confusion, tion? The economic system in this there is a great need for men of country is already showing signs the stamp of Jonathan Swift, of staggering, despite the momen­ Gilbert and Sullivan, and our own tum achieved by the technologi­ Will Rogers. What a blessing it cal advance, under the burden of would be if a crop of talented hu­ costly programs reflecting the pre­ morists and satirists were to occupation with the needs of the spring up, with the genius to ailing, the elderly, and the "dis­ riddle with ridicule the preten­ advantaged," a widespread and sions and poses of the "liberal" increasing irtdifference to effi­ professors and their ilk! (We ciency and good performance, a have Al Capp, but he needs help.) complex and stifling tax struc­ Once joking about the prevailing ture, a crime wave of frightening absurdities became popular, a re- 56 THE FREEMAN January turn to sanity, to order, to decent mine seventy-odd years ago, and behaviol'" - as the standard to I read and reread it until I knew which all men should strive to re- many of the tales "by heart." (1 pair - might well be in sight. A wonder if there are any third gale of laughter would surely be graders nowadays so stimulated good medicine at this juncture. by the stuff provided for them.) Even some of the "protesters" One of the "poems" included was might be nudged into joining a a satire written by Matthew jocular chorus, and looking with Browne (pen name of William less favor on commotion and Brighty Rands, 1823-1882), first wanton destruction. published in 1864. This is worth Recently I happened to open up being brought to light again for my battered copy of Book of its own sake, and also because it Tales, a volume edited by William might serve as a model for a hu­ Swinton and George R. Cathcart morous piece on the antics of the and published in 1880 as a read- present-day protesting "youths." ing supplement for third graders. Here, then, is "Lilliput Levee," This book was a great favorite of taken verbatim from the Tales:

111I1111111

L illiput Levee 1. WHERE does Pinafore Palace stand? Right in the middle of Lilliput Land! There the queen eats bread and honey; There the king cop-nts up his money. 2. Oh, what a wonderful change to see! Nothing is dull as it used to be, Since the children, by clever, bold strokes, Have turned the tables upon the old folks. 1971 THE PROTESTERS 57

3. Now the thing was easily done, The children being two to one; Brave as lions, quick as foxes, With hoards of wealth in money-boxes. 4. They seized the keys, patrolled the street, Drove the policeman off his beat, Built barricades, and stationed sentries: Give the word when you come to the entries! 5. They dressed themselves in riflemen's clothes; They had pea-shooters and arrows and bows, So as to put resistance down: Order reigns in Lilliput Town. 6. They went to the druggist's, broke in the door, And scattered the physic all over the floor; They went to the schoolroom, and hid the books; They munched the puffs at the pastry-cook's.

7. They sucked the j am, they lost the spoons, They sent up dozens of fire-balloons, They let off crackers, they burnt a guy, They piled a bonfire ever so high. 8. They offered a prize for the laziest boy, And one for the most magnificent toy; They split or burnt the canes off-hand, And made new laws in Lilliput Land. 9. N ever do to-day what you can Put off till to-morrow, one of them ran; Late to bed, and late to rise, Was another law which they devised.

10. They passed a law to have always plenty Of beautiful things: we shall mention twenty,- A magic lantern for all to see, Rabbits to keep, and a Christmas-tree, - II. A boat, a house that went on wheels, An organ to grind, and tarts at meals, Drums and wheelbarrows, Roman candles, Whips with whistles in the handles, - 58 THE FREEMAN January

12. A real live giant, a roc to fly, A goat to tease, a copper to sky, A garret of apples, a box of paints, A saw, and a hammer, and no complaints. 13. Nail up the door, slide do,vn the stairs, Saw off the legs of the parlor chairs, ­ That was the way in Lilliput Land, The children having the upper hand.

14. They made the old folks come to school All in pinafores, - that was the rule,­ Saying, E ener-deener-diner-duss, Kattler-wheeler-whiler-wuss. 15. They made them learn all sorts of things That nobody liked. They had catechisings; They kept them in, they sent them down In class, in school, in Lilliput Town. 16. Oh, but they gave them tit for tat! Bread without butter, - stale at that, ­ Stick-jaw pudding that tires your chin, The marmalade on it ever so thin. 17. They governed the clock in Lilliput Land: They altered the hour or the minute hand; They made the day fast, or made it slow, Just as they wished the time to go. 18. They never waited for king or for cat, Or stopped to wipe their shoes on the mat; Their joy was great; their joy was greater; They rode in baby's perambulator! 1971 THE PROTESTERS 59

19. There was a levee in Lilliput Town At Pinafore Palace. Smith and Brown, J ones and Robinson, had to go,- All the old folks, whether or no. 20. Everyone rode in a cab to the door; Everyone carne in a pinafore: Lady and gentleman, rat-tat-tat, Loud knock, proud knock, opera-hat. 2l. The palace, bright with silver and gold, Was full of guests as it could hold. The ladies kissed her Majesty's hand: Such was the custom in Lilliput Land. 22. His Majesty knighted eight or ten, Perhaps a score, of the gentlemen; Some of them short, and some of them tall; Arise, Sir What's-a-name What-do-you-call! 23. Nuts and nutmeg (that's in the negus); The bill of fare would perhaps fatigue us; Forty fiddlers to play the fiddle: Right foot, left foot, down the middle. 24. Conjurer's tricks with poker and tongs, Riddles and forfeits, comical songs; One fat fellow, too fat by far, Tried "Twinkle, twinkle, little star!" 25. His voice was gruff, his pinafore tight; His wife said, "Mind, dear, sing it right;" But he forgot, and said "Fa-Ia," - The Queen of Lilliput's own papa! 26. She frowned, and ordered him up to bed; He said he was sorry; she shook her head: His clean shirt-front with tears was stained, But discipline must be maintained. 27. Now, since little folk wear the crown, Order reigns in Lilliput Town; And Jack is king and Jill is queen In the very best government ever seen. A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

THE MORE orthodox way of at­ that must ultimately tell any sens­ tempting to refute a socialist, or ible person that it is the division any kind of collectivist, is to ap­ of labor that supports our huge peal to his latent sense of rational­ modern populations, the envious ity. Since every individual is dif­ and the unenvious alike. This is ferent, equality - as distinct from the mentality dissected by Helmut legal equity - cannot be legislated. Schoeck (Envy, Harcourt Brace The attempt to do so suppresses Jovanovitch, $7.50). the innovative spirit in a society, Curiously enough, the term "en­ and everyone is the poorer for it. vy" is hardly mentioned by any of If you can get a socialist to admit our big-name contemporary sociol­ this, you have him where you want ogists or political philosophers. him. He will be compelled to sup­ There are plenty of economists port some adaptation of the com­ who are prepared to refute social­ petitive principle in order to ism by recourse to the rational square his thinking with a sense appeal. One even finds them behind of reality. the Iron Curtain - or one did be­ Unfortunately, the world is full fore the Czechoslovak crisis re­ of people who are not in the least sulted in the suppression of the concerned with creating a socialist Ota Siks who were trying to re­ order for idealistic reasons, how­ validate market principles in the ever misguided the reasons may sluggish Eastern societies. But be. These people aren't looking for there seems to have been a con­ a progressive society of any type. spiracy of silence about the sub­ What they want to do is to pull ject of envy. front-runners down, to penalize In combing over the literature excellence, to make everybody the on social change, Professor Hel­ same, for reasons that are ground­ mut Schoeck, who taught at Em­ ed in emotion. They are the envi­ ory University in Atlanta before ous ones who cannot stand to see returning to Europe to take a anybody move out of the ruck. chair of sociology at the Univer­ They are impervious to the logic sity of Mainz, discovered that on-

60 1971 ENVY 61 ly one modern writer, a French­ reprehensible, human drives. Adam man named Eugene Raiga, had Smith spoke of the need for laws ever devoted a single book to the to· keep property from being in­ role of envy in stirring social and vaded and destroyed by the envi­ political disturbances. Against this ous. Herman Melville, in Billy meager showing there have been Budd, dramatized the envious man hundreds of writers from R. H. as the embodiment of evil, and Eu­ Tawney to Michael Harrington gene Sue's Frederick Bastien: who have rung the changes on the Envy dealt with the subject almost alleged sin of acquisitiveness. In­ clinically in fiction that foreshad­ deed, it has been considered far owed modern psychoanalysis. And more wicked to provoke envy than the ancients and the relatively an­ it has been to break the command­ cient, from Aristotle to Chaucer ment that says, "Thou shalt not and Francis Bacon, were not covet." Justice Oliver Wendell afraid to speak against the envi­ Holmes used to twit his friend, ous man. Harold Laski, about the "passion Professor Schoeck thinks that for equality," which seemed to modern social and political theor­ him a dissembling way of "ideal­ ists have repressed the concept of izing envy." Significantly, Laski, envy out of sheer embarrassment. though he was the most rhetori­ The whole surge of our modern cally gifted of the British Labor society has been toward "socializ­ Party's publicists, avoided answer­ ing" the economy, and if one were ing Holmes's pointed remarks. If to admit that the movement has he had tried to do so he would been in response to resentful and have inevitably called attention to evil men, it would create a most the ugliest side of the socialist unpleasant and painful state of movement. affairs. The iniquitous secret of Aside from Eugene Raiga and a socialism is that it leads, in its few novels such as L. P. Hartley's more extreme manifestations, to a Facial Justice one has to go back world without sociability or so­ to the nineteenth century to find ciableness. With Leftist theoreti­ any extensive commentary on envy cians taking over so many of the as perhaps the chief destructive media and so many of our univer­ element in society. The philoso­ sity chairs, it is hardly likely that phers, Kant, Schopenhauer, Kierke­ we will get much dispassionate gaard, Nietzsche, all had some­ treatment of the subject of envy. thing to say on what they consid­ What we do get is a literature of ered one of the more important, if circumlocutions. The writers speak 62 THE FREEMAN Januan

of "conflict," which is a matter of to the hiding place for a lonel~ overt behavior. Envy is a silent, feast. It is part of the myth of ~ secretive process that can be hid­ "golden age" to suppose that pre den behind protestations of ideal­ historic communities were joyfu istic concern for equality. Since it utopias where everyone shared. an< is silent (nobody likes to admit nobody envied anybody else. it), our writers don't have to pull The possibility of creating ~ it out of the closet. But Professor collectivist society without env~ Schoeck surmises that the failure founders on the necessity of giv­ to identify envy for what it is has ing somebody the power to main· had much to do with the maso­ tain order. Naturally, power oj chism of our younger generation, any kind provokes envy amon~ many of whom feel guilty because those who do not have it. It is nc their parents have money, or be­ accident that the Russians haven'i cause the nations of the West are been able to create an equal soci· more prosperous than those of the ety; if they had, it would have reo "third world." The positive and suIted in a situation in which no­ energizing values of capitalist so­ body would do the less congenial ciety are lost sight of simply be­ work. To get production out of thE cause we no longer tolerate any poor slobs in the "classless" soci­ discussion of envy and covetous­ ety, the Soviet managers have had ness as being among the more to establish a 40:1 differential be­ sterile human·attributes. tween maximum and minimum in­ Professor Schoeck·· is .willing to comes. In Western countries, concede the high-mindedness of where the urge to utopianism some socialist theorists. But he has hasn't yet killed the market econ­ recourse to anthropology to prove omy, the ratio is more like 10:l. that envy remains a constant in Even the Israeli kibbutz has society, no matter what the prin­ proved disappointing to those who ~iple of organization. In primitive hoped that communal life could be collectivisms the envious man con­ a life without envies and resent­ centrates on little things. The Siri­ ments. To exist at all, the kib­ ono Indians of Bolivia denounce butzim have had to make use of the hoarding of food. But although the products, the technology, and they conform outwardly to collec­ the achievements of individualistic tivist norms, the individual Siri­ societies. They have succeeded to ono hunter will hide his catch out­ some extent, but at the cost of side the camp. After nightfall he producing a younger generation will return, possibly with his wife, that is obsessed with the fear of 1971 ENVY 63

showing signs of individual su­ truth, devious pursuits of material periority. The individual who ex­ .' things, intellectual sacrifices, and the ercises a poetic gift feels guilty, absence of freedom - all can be found and it is judged an offense to do in modern universities. intellectual work when physical Sympathetic to youth and its labor is demanded. problems, Dietze feels that the Professor Schoeck, recognizing young people living in what he human nature for what it is, calls "the liberal-democratic era." doesn't expect to do away with en­ have sufficient uncertainty and in­ vy anywhere. But the time has security to face without the fur­ come, he says, for a "hardening ther uncertainty and insecurity towards exaggerated sensitivity to likely to result from contacts with envy." It makes no sense for us to the modern university. From that behave "as though the envious man point on, however, he parts com­ was the main criterion for eco­ pany with protesting students, em­ nomic and social policy." We phasizing that today's protesters should treat the envious man for tend to favor those courses of ac­ what he is, a person who wants to tion most detrimental to genuine pull others down without bother­ education. ing to expand his own capacity In Professor Dietze's analysis, for excellence. both university failures and stu­ dent failures are traceable to a ~ YOUTH, UNIVERSITY, AND single cause - the politicalization DEMOCRACY, by Gottfried of the university, a direct result of Dietze (Baltimore: Johns Hop­ mass democracy and the accept­ kins Press, 1970), 117 pp., $6.50. ance of the welfare state: Reviewed by George C. Roche III The present breakdown of law and IT HAS BECOME commonplace to order, usually reflected in crimes criticize the modern university, against property rights, is in a large its faculty, and students. The sig­ measure the natural consequence of nificance of Professor Dietze's so-called social legislation. Individual latest work is that he goes far be­ citizens cannot be expected to respect yond such criticism. property rights if the government Not that he approves of the has consistently disregarded these present academic community: rights and destroyed public trust and all sense of obligation. Laziness, vanity, and arrogance, the Today's students have grown up in seeking of and corruption through this atmosphere. Rioters are the power, the elimination of excellence, children the welfare state has re­ the negation of the search for the leased. 64 THE FREEMAN

When rioting students protest Professor Dietze's erudition ir against the "Establishment," they philosophy, history, law, and let· apparently do not realize that they ters comes to bear on the subjec1 themselves are a product of that of the university's proper place iIJ Establishment: society. The ideal for the student: the scholar, and the university it­ ... the student diagnosis of pres­ self comes alive as the reader be­ ent societies is a quack diagnosis, gins to understand the meaning for establishments are not sick be­ cause they are insufficiently demo­ of a "community of scholars." cratic, socialist, egalitarian, etc., but Youth, University, and Democ­ for the very opposite reason - name­ racy is filled with insights for stu­ ly, because they have gone too far to dent, teacher, and administrator. the left. Student aims, therefore, are The book also makes clear to the likely to increase the illness of so­ rest of us that, for all the short­ ciety rather than to heal it, just as comings of today's universities, a doctor who makes a wrong diag­ we must be careful to distinguish nosis and applies the wrong therapy between today's politicalized cam­ is likely to worsen his patient's con­ pus and the historic role of the dition. Rioting students are outcasts of the establishment only on the university. Seen in that historic surface. On closer inspection, they role, the university should be and are its products. Student rioters are can be a bulwark against the mob outcasts of the establishment only mentality: insofar as the establishment has re­ mained healthy. Insofar as it has ... universities, developing along become sick, they are representative with constitutionalism, have pro­ of it. They are the poison produced tected the freedom of the individual by the infections of the body politic, against authoritarian popes, kings, out to destroy that body. and popular demagogues, and [can] The author reminds us that this continue their libertarian mission in has all happened before, describ­ modern democracies. That mission implies maximal benefits for the ing the vulnerability of Weimar community - including youth. For democracy: only free universities can serve Political factions fought it out in truth, and only advancement toward the Reichstag, in the streets, and in the truth can satisfy the perennial universities, which increasingly had quest of a traditionally confused, become places for political debate sad, and brave youth for clarity and and controversy. In the end, Hitler bring about the kind of public good arose and ... streamlined the uni­ youthful idealism has always longed versities into his system. fu~ I