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From the President 2 Global Corruption and the Interventionist State by Richard M From the President 2 Global Corruption and the Interventionist State by Richard M. Ebeling Columns 4 Perspective -I, Liberal by Sheldon Richrnan 6 America Needs Socialized Medicine? It Just Ain't So! by Jane Orient 16 Thoughts on Freedom - Drops and Splashes by Donald J. Boudreaux 24 Peripatetics - Moral Alchemy by Sheldon Richrnan 29 Our Economic Past - Thomas Garrett and the Underground Railroad by Burton Folsom, Jr. 47 The Pursuit of Happiness - Honesty and Trust by Walter E. Williams Page 6 Features 8 Government, Fiscal Responsibility, and Free Banking by Richard M. Ebeling 12 Ayn Rand: A Centennial Appreciation by Chris Matthew Sciabarra 18 A Consensus Society by Russell Madden 20 How Government Destroys Medical Care by Steven Greenhut 26 Selling the Free Market to Nonbelievers by Ralph Hood 27 Yo, Brooklyn! Get Real About Politics and Sports by Raymond J. Keating 31 The Vision of William P. Lear by Anthony Young 35 The TobaccO'Quota Buyout: More Legal Plunder by E.G. Pasour, Jr. 39 Capital Letters Page 29 Book Reviews 41 In Defence of the Realm: The Place of Nations in Classical Liberalism by David Conway Reviewed by Richard M. Ebeling 42 Is the Market Moral? A Dialogue on Religion, Economics, and Justice by Rebecca M. Blank and William McGurn Reviewed by James Otteson 43 No Excuses: Closing the Racial Gap in Learning by Abigail Thernstrom and Stephan Thernstrom Reviewed by Karen Y. Palasek 45 Political Class Dismissed: Essays Against Politics by James Ostrowski Reviewed by George C. Leef Page 42 From the President Global Corruption and the Interventionist State BY RICHARD M. EBELING n a recent survey of 50,000 people in 62 countries respondents in France, Germany, Italy, Spain, and the around the world, at least one out of every ten peo­ United Kingdom assigned about the same degree of Iple admitted that he had bribed some corrupt significance to political corruption as those in North political official or government administrator during America, between 1 and 2 percent admitted they or the preceding 12 months. There seem to be very few someone in their household had paid a bribe to a places anywhere in the world where such political government official during the preceding year. bribery does not occur. The omnipresence of such TPs more comprehensive 2004 Global Corruption political corruption should not be surprising; it is Report, released last spring, revealed that the primary inseparable from the modern interventionist state. bases for political corruption around the world were According to a report released in December by government procurement contracts, electoral Transparency International (TI), a nongovernmental contributions by special-interest groups, and bribes for organization headquartered in Berlin, one out of every regulatory benefits or limits on both domestic and two people in the West African nation of Cameroon foreign competitors. had paid a bribe during the previous 12 months. In The pervasiveness of political corruption, unfortu­ Albania, Bolivia, Kenya, Lithuania, Moldova, and nately, can be neither reduced nor eliminated through Nigeria, one out of every three citizens said he various forms of legislative and legal reform, as organi­ had done so. In the Czech Republic, Ecuador, zations such as TI often advocate. Corruption is an Ghana, Mexico, the Philippines, Pakistan, Romania, inevitable outgrowth of the interventionist state and Russia, and Ukraine, one out of every four to five peo­ can only be "cured" through the establishment of an ple acknowledged bribing someone connected with unrestricted free-market economy. the government. The essence of the market economy is that each of In 36 of the 62 countries surveyed, respondents said us can acquire what others have only through volun­ that political parties were the most corrupt, followed tary acts of exchange. We must each apply ourselves in by parliaments and legislatures, the police, the legal ways we hope will attract potential customers, per­ system and judiciary, and the tax authorities. Seventy- suading them to purchase what we are selling instead seven percent of all respondents stated that petty of what our rivals are offering. On the free market the political corruption (involving business licenses, traffic only moral and legal "weapon" permitted to "capture" violations, and so on) was a big problem in their coun­ customers is to offer better, more useful, and less- tries. Eighty-five percent said that "grand" political expensive goods to the buying public. Violence and corruption at the highest levels of government involv­ fraud are outside of the market's "rules of the game." ing the political elites and special-interest groups was a Sometimes we will not be able to get what we want. major problem. If we are not as good at satisfying consumers as our While few Americans or Canadians admitted they competitors are, our incomes might be reduced. This paid bribes ("petty" or "grand") to someone in govern­ in turn would reduce our ability to acquire what others ment, in both countries the respondents said that on a are offering on the market. The only way to prevent or scale of one to four (with one being "not at all" and reverse this is to find better ways to supply goods and four being "to a large extent"), the occurrence of political corruption ranked above a three. While Richard Ebeling ([email protected]) is the president of FEE. THE FREEMAN: Ideas on Liberty 2 Global Corruption and the Interventionist State services at attractive prices that will earn us the The business of the interventionist state, therefore, incomes we would like. is the buying and selling of favors and privileges. It The nature of the interventionist state is to short- must lead to corruption, because by necessity it uses circuit the free market and keep it from doing its job, political power to harm some for the benefit of others, namely, seeing to it that each of us applies himself and those expecting to be either harmed or benefited in ways that serve others while pursuing his own will inevitably try to influence what those holding self-interest. The interventionist state goes beyond power do with it. protecting our lives and property, and assuring that all In addition, it should not be forgotten that human association is based on peaceful and mutual such corruption slowly eats away at the moral fiber agreement. It intervenes by using coercive power and of the society. Austrian economist Ludwig von influencing the outcomes of the market through the Mises explained this over 70 years ago in his Critique application of political force. of Interventionism: Transfers of Wealth Public opinion is not mistaken if it scents cor­ he government taxes the public and has huge sums ruption everywhere in the interventionist state. Tof money to disburse to various programs and proj­ By constantly violating criminal laws and moral ects. It imposes licensing and regulatory restrictions on decrees they [the bribers and the bribed] finally lose free and open competition. It transfers great amounts the ability to distinguish between right and wrong, of income and wealth to different groups through good and bad. If finally few economic goods can be sundry "redistributive" schemes. It controls how and produced or sold without violating some regulation, for what purpose people may use and dispose of their it becomes an unfortunate accompaniment of "life" own property. It paternalistically imposes legal stan­ to sin against law and morality. The merchant dards influencing the ways we may live, learn, who began by violating foreign exchange controls, associate, and interact with others around us. import and export restrictions, price ceilings, et Those in the government who wield these powers cetera, easily proceeds to defraud his partner. The hold the fate of virtually everyone in their decision­ decay of business morals ... is the inevitable con­ making hands. It is inevitable that those drawn to comitant of the regulations that were placed on employment in the political arena often will see the trade and production. potential for personal gain in how and for whose ben­ efit or harm they apply their vast life-determining The interventionist state is a political garden that decrees and decisions. Some will be attracted to such inevitably sprouts the weeds of bribery and corruption. "public service" because they are motivated by And over time it tends to envelop and replace all ideological visions they dream of imposing for the traditional and ethical norms of conduct and morality. "good of humanity." Ending global political corruption in its various Some will see that bribing those holding this polit­ "petty" and "grand" forms, therefore, will only come ical power is the only means to attain their ends. This with the removal of government from social and may be to restrict or prohibit competition in their own economic life. When government is limited to pro­ corner of the market or to acquire other people's tecting our lives and property, there will be little left to money through coercive redistribution. For others, buy and sell politically. Corruption then will be an however, bribing those who hold the regulatory infrequent annoyance and occasional scandal, rather reins may be the only way to get around restrictions than an inescapable aspect of today's social and eco­ that prevent them from competing on the market nomic life around the world. ||) and earning a living. 3 JANUARY/FEBRUARY 2005 • ") THE Perspective FREEMAN I, Liberal Published by The Foundation for Economic Education n October a few of us at FEE traveled all the way to Irvington-on-Hudson, NY 10533 Tbilisi, Georgia, one of the former Soviet Union's Phone: (914) 591-7230; E-mail: [email protected] imperial possessions, to put on a two-day student www.fee.org I seminar in the political economy of freedom.
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