THEFREEMAN IDEAS ON LIBERTY

FEATURES 196 Insurance: True and False by Llewellyn H. Rockwell, Jr. The false promise ofgovernment security.

200 Globalism and Sovereignty: A Short History of the BrickerAmendment by Thomas E. Woods Jr. An American stand for independence.

205 Born Again: The Resurgence ofAmerican Prohibition by Mark Edward Lender Anti-smoking legislation parallels Prohibition.

210 Creative Destruction-Again by David N Laband and John M Wells The job market changes in response to economic progress.

213 Jack the Radical byAlastair Segerdal Socialism and the creation of"Jack the Ripper."

220 The U.S. Presidents and the Money Issue by Greg Kaza A historical survey.

225 Mary Wollstonecraft-Equal Rights for Women by Jim Powell The individualist roots of feminism.

232 Russell Kirk's Economics of the Permanent Things by John Attarian The conservative thinker's defense ofthe market.

COLUMNS

Center NOTES from FEE-Against the Stream by Hans F. Sennholz

207 POTOMAC PRINCIPLES-That Taxing Time ofYear Again by Doug Bandow

218 IDEAS and CONSEQUENCES-A Vote for Optimism by Lawrence W Reed

238 ECONOMICS on TRIAL-Who Deserved the Nobel Prize? by Mark Skousen

DEPARTMENTS

194 Perspective-No Stephan Kinsella; A look back at the April 1956 Freeman.

241 Book Reviews -The Vandals' Crown: How Rebel Currency Traders Overthrew the World's Central Banks by Gregory 1. Millman, reviewed by Raymond 1. Keating; Shake-Down: How the Government Screws You from A to Z by James Bovard, reviewed by William H. Peterson; Revolution at the Roots: Making Our Government Smaller, Better, and Closer to Home by William D. Eggers and John O'Leary, reviewed by James L. Payne; Wildlife in the Marketplace, edited by Terry L. Anderson and Peter 1. Hill, reviewed by Jane M. Orient; Private Cures for Public Ills: The Promise ofPrivatization, edited by Lawrence W Reed, reviewed by E. S. Savas; The Sacred Fire ofLiberty: James Madison and the Founding ofthe Federal Republic by Lance Banning, reviewed by William 1. Watkins, Jr.; America First! Its History, Culture, and Politics by Bill Kauffinan, reviewed by Gregory ~ Pavlik. THEFREEMAN IDEAS ON UBERTY PERSPECTIVE Published by The Foundation for Economic Education Pride and the Nanny State Irvington-on-Hudson, NY 10533 Phone (914) 591-7230 FAX (914) 591-8910 I do not come from a rich family, and the E-mail: [email protected] other day it struck me that I am, in a way, President: Hans F. Sennholz glad of this. My wife and I recently pur­ Managing Editor: Beth A. Hoffman chased our first house, and, after we had Guest Editor: Gregory P. Pavlik Editor Emeritus inspected it one Sunday while it was still Paul L. Poirot being completed, I remarked to her that it Lewisburg, Pennsylvania Book Review Editor was a satisfying feeling to be purchasing the Robert Batemarco Marymount College, Tarrytown, New York house ourselves. Associate Editor While other aspects of our lives, such Gregory P. Pavlik Assistant Editor as relationships with spouses, family, and William J. Watkins, Jr. friends, are undeniably meaningful and es­ Editorial Assistant Mary Ann Murphy sential to achieving happiness, we humans Columnists also live in the economic world. So it is Doug Bandow Cato Institute, Washington, D.C. natural that surviving, flourishing, and pros­ Lawrence W. Reed Mackinac Center for Public Policy pering would also be a significant source of Midland, Michigan happiness. It is deeply satisfying to have Mark Skousen Rollins College, Winter Park, Florida truly earned something-a car, a new com­ Contributing Editors puter, a job, even if these are derided as Charles W. Baird California State University, Hayward "material" by some. Doug Bandow Cato Institute, Washington, D.C. But this source of satisfaction is being Peter J. Boettke New York University threatened by the welfare state of liberals' Clarence B. Carson and socialists' dreams. American Textbook Committee Wadley, Alabama Well-meaning people often proclaim that Thomas J. DiLorenzo Loyola College, Baltimore, Maryland people have a right to food, to employment, Joseph S. Fulda housing, education, pension plans, medical New York, New York Bettina Bien Greaves care, and so on, and that government should Resident Scholar, FEE Robert Higgs therefore provide us with them. Surely we The Independent Institute, Oakland, California should not let people starve, or be reared John Hospers University ofSouthern California illiterate and uneducated, these humanitar­ Tibor R. Machan Auburn University ians say. But when government gives us Ronald Nash Reformed Theological Seminary these things and relieves us from the respon­ Edmund A. Opitz sibility of providing them, it also removes Chatham, Massachusetts James L. Payne the possibility ofour achieving them, and of Sandpoint, Idaho William H. Peterson taking pride in such accomplishments. Even AdjunctScholar, Heritage Foundation, Washington, D.C. feeding one's family and educating one's Jane S. Shaw PERC, Bozeman, Montana children, provide a feeling ofserene accom­ Richard H. Timberlake University ofGeorgia plishment. When I stand in a grocery line Lawrence H. White and purchase groceries with money I have University ofGeorgia earned myself, Ifeel a self-satisfaction that The Freeman is the monthly publication of The Foundation for Economic Education, Inc., Irvington-on-Hudson, NY 10533. FEE, I doubt any welfare recipient cashing in his established in 1946 by Leonard E. Read, is a non-political, educa­ tional champion of private property, the free market, and limited food stamps evercould. Parents who pay for government. FEE is classified as a 26 USC 50l(c)(3) tax-exempt their children's education in private schools organization. Copyright © 1996 by The Foundation for Economic Education. undoubtedly derive satisfaction from this, a Permission is granted to reprint any article in this issue, except "Mary Wollstonecraft," provided appropriate credit is given and two copies feeling that is denied to the bulk of parents of the reprinted material are sent to The Foundation. The costs of Foundation projects and services are met through whose children are state-educated. donations, which are invited in any amount. Donors of$30.00 or more If the nanny state took care of all our receive a subscriptionto The Freeman. Studentsubscriptions are $10.00 for the nine-month academic year; $5.00 per semester. Additional wants, one could" I suppose, attempt to copies ofsingle issues ofThe Freeman are $3.00. For foreign delivery, a donation of$45.00 a year is suggested to cover mailing costs. convince himself that he really paid for it Bound volumes ofThe Freeman are available from The Foundation through taxes. But I doubt that this contriv­ for calendar years 1972 to date. The Freeman is available in microform from University Microfilms, 300 N. Zeeb Rd., Ann Arbor, MI48106. ance would succeed any better than "play- 194 PERSPECTIVE ing market" did in socialist economies. It is that they must "pay back" the government just not the same. for all the benefits conferred on them, such This is how it seems, in any event, in my as education, roads, or even for the freedom own experience. I attended a large state they had that "allowed" them to earn their university. Although students pay tuition, fortune in the first place. So in practice, the because the school is heavily subsidized by omni-provider state not only removes a tax revenues, tuition covers only a small huge source ofsatisfaction and accomplish­ portion of the cost of their education. The ment from people's lives, it also turns the rest is given to them free by the state~ IfI tell tables on its wards and imposes obligations someone I paid my own way through col­ on them, telling them that they are''in debt" lege-well, it's not quite true, is it? Uncon­ to the state for all it's done for them. In the vincingly arguing, "Well, I probably paid land where "self-made man" used to be one more in taxes than it cost to educate me" ofthe highest marks ofpraise, it has become simply cannot substitute for unambiguously almost impossible to be one. saying "I earned this" or "I paid my own If we want individuals to be able to way." achieve meaningful satisfaction in their Nor would our benevolent providers long lives, to take pride in their accomplish­ let us say even this. I frequently receive ments, we must allow them to fail, as well as requests for contributions to my alma mater, succeed, and we must replace the nanny with the underlying implication that I should state with a regime of self-reliance and "give back," since I obviously was given self-respect. something for free. I have even heard lib­ -N. STEPHAN KINSELLA erals entertain the idea that some sort of "fee" be paid by rich Americans trying to Mr. Kinsella practices patent law with Schnader emigrate to escape taxes, on the grounds Harrison Segal & Lewis in Philadelphia.

Forty Years Ago in The Freeman ...

Frank Chodorov: " ... whenever govern­ a sufficient number ofpersons, even though ment undertakes to solve an economic prob­ no one of them has applied his faculties lem, it simply creates other problems. This to the problems in question. With this as is because the laws of economics operate a notion the imagination begins to ascribe without regard to political 'expediency.' personal characteristics to a collective-the "As Nock observed in Our Enemy, the committee, the group, the association-as State: 'Every intervention by the State en­ though the collective could think, judge, ables another, and this in tum another, and know, or assume responsibility. ... With so on indefinitely. .. .'" this as a notion, the responsibility for per­ sonal thought is relieved and, thus relieved, LeonardE. Read:" . .. there doesn't appear to be any widespread, lively recognition fails to materialize to its fullest." of the fact that conscience, reason, knowl­ Paul Poirot: "The only security any person edge, integrity, fidelity, understanding, can have lies within himself. Unless he is judgment, and other virtues are the distinc­ free to act as an individual, free to be tive and exclusive properties of individual productive in his own behalf, free to deter­ persons. mine what part of that production he will "Somehow, there follows from this lack consume now and what part he will save, of recognition the notion that wisdom can and free to protect his savings, there is no be derived by pooling the conclusions of chance that he can find security anywhere. "

195 THEFREEMAN IDEAS ON UBERTY

Insurance: True and False by Llewellyn H. Rockwell, Jr.

he movie classic Double Indemnity tells But what are the chances that a drug­ T the story of a couple's attempt to com­ dealing gang member in the inner city is mit murderous insurance fraud. Their plans going to be gunned down? These days, were foiled through the investigation of a pretty high. That means high premiums and hard-bitten insurance eXt(cutive. At the low payoffs, or, more likely, no insurance at time, audiences were shocked that a middle­ all. class couple would attempt such a scam. The risk inherent in most insured events The film shows how insurance is sup­ falls somewhere between the impossible and posedto work. The company offered double the very likely. It's a tricky business assess­ payment onlife insurance ifthe policyholder ing risk and staying ahead of the uncertain­ fell off a train and died. Why did the com­ ties with which life confronts us. It is best pany offer such a policy? Because the data handled by hard-bitten capitalists. from past experience suggested that it vir­ Sound insurance requires that people who tually never happened. When it did in fact attempt to beat the company through fraud happen, executives at the company sus­ be weeded out. The astronaut who applies pected foul play. for an asteroid-protection policy, for exam­ As the story makes clear, the business of pie, had better tell the truth about his insurance is the business ofmaking money, profession, or face penalties. Neither can a not granting welfare. That requires collect­ member ofthe Crips be allowed to lie about ing more in premiums than is paid out in his occupation or his address. settlements. To do that, firms must assess the risks inherent in every conceivable set of Government Insurance Fraud conditions. Most ofus don't know the odds offalling Insurance fraud, like that committed in offa train. That's not ourjob. But insurance Double Indemnity, is still illegal-forpeople companies do know, because that is their in the private sector. The federal govern­ job. When a company grants insurance ment, on the other hand, perpetrates huge against some random event, they are betting insurance frauds every day, and taxpayers that it is not going to happen. are enlisted to pay double indemnity settle­ Forexample: What are the chances some­ ments in perpetuity. one will be killed by an asteroid? Pretty low. The most prominent example is the ex­ Ifa company wants to insure against that, it tension of health insurance to the entire will charge low premiums and make high country through programs such as Medicaid payoffs. and Medicare, and the never-ending call for making these schemes or something similar Mr. Rockwell is president of the Ludwig von universal. To insure people for their medical Mises Institute in Auburn, Alabama. bills regardless ofa pre-existing condition is 196 197 like an insurance company offering a widow cessful this trick is, and how much long-term a life insurance policy for her husband after damage can be done. he has been buried. It does not make economic sense. And it Welfare for the Middle Class creates a moral hazard. If insurance com­ panies don't root out insurance fraud, they Otto von Bismarck was an innovator in create a perverse incentive structure that promoting middle-class welfare in the guise can turn a portion of their customer base of social insurance and selling it as a con­ into plunderers. The result is bankruptcy. servative program. Decent people disap­ When governments offer insurance re­ prove of the dole. But social insurance? gardless ofrisk, they create the same sort of Now that's another matter, he found. That's moral hazard. They reduce the incentive to just government protecting people against avoid the very behavior they are insuring uncertainties, just like private insurance. against, which in this case is sickness. Germany still suffers today as a result. Ironically, any form of government­ The English and Swedish governments mandated health insurance will increase the also excelled at duping the public into buy­ degree ofunhealthiness in society. Itreduces, ing varieties of insurance with their tax as Ludwig von Mises pointed out, the will to dollars. In each case, the public formed a health. Ifmedical care comes at zero price, dependency relationship with the State. The risky behaviors carry less of a penalty, and Fabians much preferred this form of social­ healthy behaviors carry less reward. ism over revolution, though the long-run In private markets, your behavior deter­ consequences are not that much different. mines your risk pool. When you get a Ourfederal government offers a variety of speeding ticket, your auto insurance goes false forms of insurance that invite the up. Keep up the behavior, and you won't be "policyholders" to squander the contents of able to get insurance. This is as it should be. the public purse. One of these policies is In a market economy, there is no afford­ offered to bankers. It's called deposit insur­ able flood insurance for people who live on ance. rivers that flood every year. There is no Like the insurance company in Double affordable fire insurance for people who live Indemnity, banks once had an incentive to on combustible underbrush. We can live in keep costs and risks low. Market pressures these areas, but we do so at our own risk. of competition-and the threat of bank Under government health insurance, runs-forced bankers to remain solvent. If those who are covered qualify for reasons banks lent out more deposits than they other than profitability. Risk pools are cho­ promised to keep available for withdrawal sen with politics, not demographic risks, in on demand, they went belly up. Bankers mind. Not evenjoining the Bloods orjump­ would compete by advertising high reserve ing canyons in a motorcycle increases your ratios and pursuing only sound investments. premium. This made for soundness in banking and So long as they qualify as "poor" or more economic stability. "aged," health-club addicts pay no less than But with the Great Depression, Franklin couch potatoes. Government likes to brag D. Roosevelt had the idea of offering insur­ that its insurance can't be taken away, but ance for all deposits. The bankers did not that is the exact opposite of the market­ mind. They no longer had to compete for based insurance message. customers in the same way. Bad loans From the government's point of view, would be bailed out by Washington's print­ providing health insurance has one great ing presses. benefit. It draws people into a dependency If the wad of cash you take to Las Vegas relationship with the government. Bureau­ is your own, you're more careful about what crats get more customers. The long history you gamble on. But ifyou're using someone of government insurance shows how suc- else's credit card, high-stakes poker is def- 198 THE FREEMAN • APRIL 1996 initely the way to go. You get all the returns are allowed to correct downward, the political and suffer none of the losses. support for such programs would not exist. So it is with deposit insurance. Bankers For some reason, unemployment insur­ get double indemnity payments on errors of ance remains among the most untouchable their own creation. Depositors don't care, aspects ofthe welfare state. Ithas led people so long as they get the cash when they want to believe that they have a right to a constant it. But the public pays, through taxation or income stream. the hidden tax of inflation that comes with We were much better off in the old days, running the Federal Reserve's printing when wages were tied to productivity. presses. There was no profit to be gained from Throughout its history, deposit insurance endless looking or waiting for a job. Now has caused bankers to make unsound loans idling about pays double indemnity. and to invest irresponsibly. And as we saw When George Bush was confronted with in the savings and loan scandals, or the growing unemployment a year before his Mexican bankruptcy, it has caused moral term was up, he extended the term length of hazards that cost taxpayers tens ofbillions. benefits. No surprise that joblessness be­ came an even greater problem. Unemployment Insurance We could yet see this p;ogram explode out of control. It has been a long time since The government has another policy to we have had a serious and sudden all-round offer. This one is for workers. It's called recession. When that happens again-and it unemployment insurance. If you lose your will, thanks to the Federal Reserve-and as job, you start collecting benefits. If the many people begin drawing on their insur­ government had advertised this as welfare, ance as are eligible, we could see a fiscal it might not have been so successful. The crisis and a deepening and spiraling loss of dole has never been dignified. But with jobs. unemployment insurance, you collect a Such a situation would look very much "monthly settlement" financed with "prior like a bank run. Everyone will want what premiums." has beenpromised by the insurance scheme. In fact, by its very nature, employment But everyone will know that all the claims cannot be insured in a market, any more cannot be paid out without bankrupting the than entrepreneurship can be. It is not a Treasury, or hyperinflation. random event. Only involuntary events, with premiums carefully controlled for risk, Social Security are conducive to profit-making insurance. Unemployment insurance nearly de­ Government still has anotherpolicy to sell stroyed the British economy. It protected you. It insures you against old age. In the old people from the ravages of unemployment days, the best pro-tection against poverty in all right. It protected them so much that the the older years was saving and a large unemployed decided to stay unemployed, family. But Social Security-the most in­ which drove the economy into the tank. sidious form ofgovernment insurance-did Jobless insurance, combined with other la­ away with some of the need for private bor interventions, prolonged the depression savings or marriage and children. And like in this country as much as seven years. the other forms ofgovernment insurance, it This type ofinsurance creates the illusion was a welfare program that created a new of sticky wages and a stagnant job market. class of state dependents. In a recession, wages are supposed to fall. Today, Social Security is widely recog­ With insurance, wages stay high. They then nized as a Ponzi or pyramid scheme. It is induce mistaken Keynesian policies like insurance fraud on a massive scale. Recip­ fiscal stimulus, monetary stimulus, jobs pro­ ients get checks for far more than they paid grams, and price supports. Iflabor markets in. What is this? Quadruple indemnity? INSURANCE: TRUE AND FALSE 199

Social Security and Medicare have turned the train, and the government collecting the the people that society ought to look toward benefits. for leadership and wisdom-the elderly­ Whether the government is providing in­ into social pariahs with lobbies demanding surance for banks, workers, the elderly, or handouts at the expense of the next gener­ the sick, the mechanism is always the same. ation. Premiums do not match risks, payers end up Ronald Reagan and Alan Greenspan getting looted, beneficiaries transfer their "saved" Social Security in the early eighties loyalty to the State, and massive quantities by raising taxes, but everyone knows that of public and private resources are wasted. the system will eventually burn itself out. Ifyou see this in private markets, chances What young person today believes that are that illegal fraud is involved. If you see Social Security is going to care for him in his this in the public sector, chances are that old age? legal fraud is involved. Despite promises to Social Security, in other words, is going the contrary, the middle class is the ultimate bankrupt. Good, I say. Maybe that will victim of this subversive form of welfare cause people to start having children and provision. saving their money again. Maybe that will The insurance industry is a respectable cause the middle class to sever this most market institution. It provides services for insidious dependency relationship with the people at profit, like any business. What the State. government calls insurance works like any­ thing else the government does. It takes other Squandered Resources people's property byforce and deception, and uses it to gain more power for itself. The current administration had another So long as we know the difference be­ policy it wanted to sell you: access to health tween true and false forms ofinsurance, we care at very little cost. Of course, this can know insurance fraud when we see it. promise was a fraud. It was as fraudulent as And maybe someday, we can make the the claim made by a murderous couple government's managers and employees pay against the insurance company. Except that a double indemnity out oftheir own pockets it would be the middle class being pushed off for this crime. D FEE COMES TO DENVER May 11,1996 8:30 A.M.-2:00 P.M.

Join us for a FEE seminar at the Denver Marriott West, sponsored by the Austrian Economics Study Group, a Freeman Society Discussion Club. Speakers: Dr. Hans Sennholz, President ofFEE Dr. Lawrence Reed, President ofThe Mackinac Center A charge of $60 per person includes a buffet lunch. Contact Dr. Barbara Dodsworth at (914) 591-7230 for reservations. THEFREEMAN IDEAS ON UBERTY

Globalism and Sovereignty: A Short History of the Bricker Amendment by Thomas E. Woods Jr.

istorically, conservatives and libertar­ and his actions in Korea seemed to justify H ians have always maintained a suspi­ conservative apprehensions. 1 In the latter cion of supranational governing bodies. case, Truman argued repeatedly that the Their central fear has been that foreign United Nations Charter was a treaty he had bodies may serve to compromise self­ the duty to execute, and whose authority government and American liberties in favor obviated the need to consult Congress for a of egalitarian and universalist political declaration of war. If Truman could invoke goals. the Charter tojustify a measure as serious as Closely related to this fear were misgiv­ the deployment ofAmerican troops abroad, ings about the steady accretion ofpower in many conservatives wondered, might he not our own executive branch. American con­ appeal to the same authority to implement servatives maintained that socialist projects wide-ranging initiatives of social recon­ dreamed up by global bureaucrats would be struction? held at bay if Congress, the branch of Acutely aware of such concerns, the government closest and most accountable to American Bar Association (ABA) and its the people, made a determined stand for president, Frank S. Holman, laid the intel­ American independence. If too much con­ lectual groundwork in the late 1940s and trol over the direction offoreign affairs were 1950s for what would become the Bricker concentrated in the executive, questions of Amendment. Holman, an early opponent of such grave import might be placed beyond the New Deal and an outspoken champion the reach of popular opinion. ofstates' rights, viewed supranational insti­ The coupling of executive power with an tutions with distrust. In 1948, he ordered the internationalist political agenda became a ABA's Committee on Peace and Law force on the American political scene soon through the United Nations to assemble after the ratification of the United Nations reports on several UN-proposed treaties­ treaty. It quickly became clear that Presi­ the Statute of the World Court, the Geno­ dent Harry Truman favored a strong exec­ cide Convention, the Freedom of Informa­ utive. His 1952 seizure of U.S. steel mills tion Covenant, the News Gathering Mr. Woods, an Intercollegiate Studies Institute Convention, and the Covenant of Human Richard M. Weaver Fellow, is a doctoral candi­ Rights-with respect to their potential im­ date in history at Columbia University. pact on American sovereignty. Alarmed by 200 201 the results, the ABA in 1952 endorsed the It would not be long before these prece­ idea of a constitutional amendment that dents would be invoked by American social would safeguard the Constitution from ero­ reformers to justify progressive legislation sion by international treaty.2 or the abolition of state and local infringe­ ments on what the UN considered "human Missouri v. Holland rights." Only a year after the ratification of the Charter the left-wing National Lawyers Many ofthe concerns shared by the ABA Guild, citing Missouri v. Holland, con­ and otherproponents ofwhat would become cluded that lynching fell under federal juris­ the Bricker Amendment can be traced to the diction and hence anti-lynching legislation obscure and seemingly innocuous case of within federal authority, on the grounds that Missouri v. Holland in 1920. Its rulings on such legislation would serve to satisfy state regulation of the treatment of certain America's human-rights obligations under species of migratory birds were ripe with the United Nations Charter.5 Norwere such significance for the future conduct ofAmer­ arguments limited to left-wing groups. In ican foreign relations. 1948, four Supreme Court justices offering The dispute dated back to 1913, when concurring opinions in the case ofOyama v. Congress passed a measure establishing fed­ California cited the UN Charter as a ratio­ eral regulations over the killing, capturing, nale for the abolition ofa California law that or selling ofsuch birds. At the time, federal restricted land ownership among aliens in­ courts ruled it a usurpation of rights re­ eligible for citizenship, since in practice it served to the states under the Tenth Amend­ applied only to Japanese aliens. Two years ment. But when President Woodrow Wilson later, the companion case of SeiFujii v. codified these regulations in a 1916 treaty California yielded a similar outcome.6 with Great Britain, the Supreme Court up­ A conservative backlash against such de­ held them by citing the so-called supremacy velopments was not long in coming. The clause of the Constitution. The Court con­ constitutional ruminations of the National cluded that if "the treaty is valid there can Lawyers Guild and some of the legal rea­ be no dispute about the validity of the soning employed in Oyama and Fujii may statute. . . as a necessary and proper means well have been isolated cases, but they were to execute the power ofthe Government. ,,3 rich enough with implications for state au­ The decision was a fateful one, for it tonomy to alarm right-wing congressmen would be cited in several subsequent cases who were notoriously protective of local that served to expand the power of the liberties. central government.4 Decades later, in the wake of U.S. ratification of the United Senator Bricker's Efforts to Nations Charter, the precedent set in Mis­ Safeguard American souri and subsequently elaborated in United States v. Pink (1942) took on a profound Sovereignty significance. The Charter had been ratified One such legislator was the fiery Senator with the explicit assurance that it authorized John Bricker of Ohio. For several months, no UN interference in the domestic con­ Brickerhad closely followed the discussions cerns of the United States, or of any other in the American Bar Association Journal member nation. There can be little doubt regarding the ambiguity of the supremacy that the United States would never have lent clause of the Constitution.7 If any senator its support had the document not contained could have been expected to act on such such a stipulation. These Court decisions, concerns, it was John Bricker. In 1951, he however, raised difficult questions regard­ had introduced Senate Resolution 177 in ing that portion of American sovereignty opposition to the proposed International that UN membership may have forced the Covenant on Human Rights, which the UN United States to relinquish. had unsuccessfully attempted to draft since 202 THE FREEMAN • APRIL 1996

1949. The attempt to foist a legally binding The Amendment's supporters hoped that covenant on the nations of the world, these provisions would clear up .the ambi­ Bricker maintained, demonstrated beyond guity in the Constitution over the exact any doubt that the United Nations was implications of the claim in Article VI that attempting to establish itself as a world "[t]his Constitution and the laws of the government. The Covenant, he insisted, United States which shall be made in pur­ "would be more appropriately entitled as a suance thereof and all treaties ... shall be Covenant on Human Slavery or subservi­ the supreme law ofthe land ... anything in ence to government. . .. [T]hose who the Constitution or laws of any state to the drafted the Covenant on Human Rights contrary notwithstanding." In the pages of repudiated the underlying theory of the Bill The Freeman, Frank Holman described the of Rights-freedom to be let alone.,,8 Sig­ Amendment as necessary to preserve "our nificantly, Bricker cited the Fujii case as basic rights as protected by our own Con­ evidence of the ominous potential of UN stitution and the Bill of Rights. ,,12 authority over American domestic policy.9 The Amendment would obviously strike a In early 1952, Bricker decided that the forceful blow against members ofCongress rights of the states and the people were who may have wished to cite the Charter sufficiently imperiled to warrant the other­ when drafting civil-rights measures. 13 In wise extreme recourse ofintroducing a con­ hearings held to discuss the Amendment, stitutional amendment to safeguard them. In Eberhard Deutsch, a member ofthe ABA's his view, the jurisprudential trends exem­ Committee on Peace and Law, cited the plified in Oyama and Fujii gravely jeopar­ dangers ofthe Fujii case and suggested that dized the integrity of "existing laws which without passage ofthe Bricker Amendment, are in our Bill of Rights and our Constitu­ the American Left could well hold "that the tion, thereby forcing unacceptable theories entire civil rights program has already ef­ and practices upon the citizens ofthe United fectively been imposed on the United States States of America. ,,10 For this reason, he through the United Nations Charter itself, warned, a constitutional amendment was without the need for any congressional ac­ critical to the long-term health, indepen­ tion whatever." 14 dence, and sovereignty of the American While the Bricker Amendment earned the republic. contempt of influential members of the The Bricker Amendment contained sev­ Washington Establishment, the libertarian eral crucial provisions. First, any provision journalist Garet Garrett recognized its pop­ of a treaty that conflicted with the letter of ulist origins. What was really at stake, the Constitution would be rendered null and Garrett insisted, was the people's ability to void. Second, a treaty would become effec­ have a voice in the kind of international tive as internal law only with the passage of agreements that would be binding on them, appropriate legislation by Congress; that is, and the protection of everyone's constitu­ treaties would not be self-executing. Fi­ tional rights from the whims of executive nally, the Amendment would rein in the fiat. "The people are told they know not executive with the requirement that all ex­ what they do," he wrote. "They would ecutive agreements between the President weaken American leadership in the world and any international organization or for­ and perhaps destroy mankind's hope of eign power''be made only in the manner and peace. But all they wanted was simply to be to the extent to be prescribed by law." Such let alone. ,,15 agreements "shall be subject to the limita­ The editors of the conservative weekly tions imposed on treaties, or the making of Human Events agreed with Garrett, grati­ treaties." This stipulation would ensure that fied by the outpouring of support for the the executive could not evade the require­ Amendment by ordinary Americans. Early ments for treaties merely by signing execu­ in 1954 the editors exulted in the success of tive agreements instead. 11 "The Vigilant Women of the Bricker GLOBALISM AND SOVEREIGNTY 203

Amendment," who had established regional by an angry populace, Hazlitt believed that coordinators in 39 states and whose officers they would be less likely to compromise succeeded in bringing 500,000 signatures to American sovereignty. By shifting some of Washington. 16 the authority over ratification to the House, Ultimately, the George Amendment, a the people would have much greater re­ watered-down version of Senator Bricker's course if they believed their rights had been original proposal, failed by one vote to threatened by international treaties. IS receive the necessary two-thirds majority of Others were less sanguine. The editors of the Senate. The Freeman lamented that the defeat sym­ A good many Republicans, upon learning bolized the ascendancy of the Cold War ofthe Eisenhower Administration's staunch notion that old-fashioned republican, con­ opposition to the Amendment, withdrew stitutional government had grown out­ their support out ofloyalty to the President. moded and even dangerous for the United Not surprisingly, the vast majority of the States, and that the President needed "great most liberal senators in each party-whom freedom ofaction" in foreign affairs. "Free­ the Old Right Chicago Tribune contemptu­ dom from what?" asked the editors. "Well, ously described as "all the New Dealers"­ freedom from the slow and meddlesome also voted against it. restraints of Congress, freedom from the bickerings of partisanship, freedom from a Positive Effects of the too narrow interpretation of the Constitu­ Bricker Amendment tion, and, above all, freedom from the anti­ cries of the people. ,,19 Some conservatives maintained that all The story of the Bricker Amendment is was not necessarily lost. Indeed, the Bricker more than a historical curiosity. The 1990s fight may itself have had some positive have witnessed a renewed assault on Amer­ effects on the conduct of U.S. foreign pol­ ican sovereignty. We have seen the ratifi­ icy. John Foster Dulles, for example, hoped cation of trade agreements whose suprana­ that the State Department's refusal to ask tional commissions seek to exercise a kind for ratification of the Genocide Convention of veto power over American trade, labor, and its decision to end the U.S. role in and environmental policy. Just last year, the securing a universal human rights covenant UN met to determine the''rights" ofwomen would help to mollify supporters of the and children around the globe. Before that, Bricker Amendment. 17 President Eisen­ global functionaries were busy with plans to hower, moreover, proved himself reason­ dictate the environmental policies of every ably trustworthy in his handling of foreign nation on the planet. affairs, consulting Congress during crises in Today the treaty power poses as grave a Indochina in 1954, the Far East in 1955, and threat to self-government as ever before. the Middle East in 1957-perhaps in part as The voices that speak for American inde­ a consequence ofJohn Bricker's efforts and pendence are few and far between. As the the popular support they received. twentieth century comes to a close, post­ Free-market economist Henry Hazlitt Cold War America awaits its John Bricker. even remained cautiously optimistic of fu­ o ture victory. One way to carryon the struggle, he proposed, would be to intro­ duce a new amendment by which the House of Representatives, as "the body that most 1. Duane Tananbaum, The Bricker Amendment Contro­ directly represents the people," would be versy: A Test of Eisenhower's Political Leadership (Ithaca, N.Y.: Cornell University Press, 1988), p. 49. given a voice in treaty ratification. Since 2. Terence L. Thatcher, "The BrickerAmendment, 1952­ House members, more than their colleagues 54," Northwest Ohio Quarterly 49 (Summer 1977): 107-108. 3. Missouri v. Holland, 252 U.S. 416 (1920). in the Senate or in the other two branches of 4. Thefears ofstrict constructionists overthe implications government, were subject to swift removal of this crucial case are reflected in the very title of Forrest 204 THE FREEMAN • APRIL 1996

Black, "Missouri v. Holland-a Judicial Milepost on the Road 12. Frank E. Holman, "American Rights vs. 'Treaty to Absolutism," Illinois Law Review 25 (1931): 911-28. Law,' " The Freeman 3 (August 10, 1953): 803-805. 5. Tananbaum, p. 85. 13. Tananbaum, "Domestic and Foreign Mairs," pp. 6. Duane Tananbaum, "The Bricker Amendment Contro­ 283-84. versy: The Interaction Between Domestic and Foreign Mairs" 14. U.S. Congress, Senate, Committee on the Judiciary, (Ph.D. diss., Columbia University, 1980), pp. 102-108. Treaties andExecutive Agreements, Hearings, 82nd Congress, 7. Thatcher, p. 108. 2nd session, 1952, pp. 46ft". 8. U.S. Congress, Senate, Congressional Record, 82nd 15. GaretGarrett, "Nullification by Treaty," The Freeman Cong., 1st sess., 1951, 97, pt. 6: 8255. 3 (May 4, 1953): 549-50. 9. U.S. Congress, Senate, Congressional Record, 82nd Cong., 1st sess., 97, pt. 6: 8261-8262. 16. "The Bricker Fight," Human Events 9 (January 27, 10. U.S. Congress, Senate, Congressional Record, 82nd 1954): 1-2. Cong., 1st sess., 97, pt. 9: 11361. The quotation is taken from 17. Tananbaum, "Domestic and Foreign Affairs," p. 290. a resolution adopted by the Tampa Rotary Club, the text of 18. Henry Hazlitt, "Give the House a Treaty Vote," The which Senator Bricker inserted into the Record. Freeman 4 (April 5, 1954): 479-81. 11. Tananbaum, The Bricker Amendment Controversy, p. 19. "A Question of Sovereignty," The Freeman 4 (March 223. 22, 1954): 439-40.

THEFREEMAN IDEAS ON LIBERTY

1995 Bound Volume

turdily sewn in a single volume with navy blue cloth cover and gold foil stamping, the twelve issues from January through December 1995 - 808 Spages, fully indexed for handy reference to the latest literature of free­ dom. More than 100 feature articles on topics such as education, environment, government regulation and control, health care, individual rights, money, morality and ethics, private propert)T, voluntary action, and international trade. Reviews of more than five dozen books. $24.95 each Save! Special introductory price; $19.95, through April 30, 1996 Note: Freeman bound volumes for the years 1986 through 1994 are available at $24.95 each. THEFREEMAN IDEAS ON UBERTY

Born Again: The Resurgence of American Prohibition by Mark Edward Lender

eventy-six years ago, America outlawed Similarly, smoking now faces "back­ Sbeverage alcohol. Initially popular, na­ door" prohibition. Restrictions on advertis­ tional Prohibition eventually collapsed amid ing, increasing bans on smoking, FDA ef­ a chorus of public resentment. The nation forts to regulate tobacco products, assaults learned then what we know now: Prohibi­ on the tobacco industry, and abuses heaped tion doesn't work. on smokers all have the ring of the old For all ofits good intentions, prohibition­ crusade against Demon Rum. ism is fatally flawed as public policy. It Prohibition has never been just about injects government into private lives. It drinking or smoking. Most reformers have makes criminals out oflaw-abiding citizens. wider social agendas. And the risk-free And it tramples on our heritage ofindividual society some seem bent on creating today freedom and responsibility. looks a lot like the perfectionist idealism of Yet prohibitionism is alive and well. In a century and more ago. Ardent drys were fact, the nation could be on its way to not content to mitigate problems; they making some of the same mistakes it made wanted a nation fully cleansed ofits" evils." during the 1920s. This time the target isn't The same is true today, despite evidence alcohol, it's tobacco. that intrusive legal remedies are unneces­ Noone with any sense is calling for a sary. Drinking declined before Prohibition. constitutional amendment against smoking. Under the impact oftemperance education, But prohibition doesn't require such a dras­ millions of Americans voluntarily gave up tic step. In 1920, when the nation voted for the bottle well before the first dry laws. Yet Prohibition, the majority of districts in anti-liquor crusaders drove on, unwilling to America were already dry. Local option tolerate any drinking. Today, the anti­ laws, temperance publicity, and tax policies smoking crusade persists despite declines in had produced a de facto or "backdoor" smoking. Since the 1964 Surgeon General's prohibition in most of the country. Report, perhaps 40 million or more have Professor Lender is Director ofAdvanced Study quit. But the legal quest for social perfection andResearch atKean College ofNew Jersey and continues; voluntary choice doesn't suit the a Visiting Professor at the Rutgers University reform mentality. Center of Alcohol Studies. He is co-author of Unfortunately, prohibitionism has de­ Drinking in America: A History (Free Press, graded public discourse. Zealous to elimi­ 1987) and he has written widely on prohibition. With James Kirby Martin, Lender is completing nate drinking, drys eventually demonized a history ofthe controversies over alcohol and drinkers. The current anti-tobacco move­ tobacco reform for New York University Press. ment has targeted smokers for similar treat- 205 206 THE FREEMAN • APRIL 1996

initiatives are staggering. Heart disease re­ mains America's greatest killer, so should we tax beefor eggs because oftheir choles­ terol content? Do we ban suntanning be­ cause it causes cancer? Or any other per­ sonal behavior because someone else has determined that it is not good for us? However well-meaning its goals, the re­ sults ofprohibition have been disappointing. In the early 1920s, national Prohibition posted only short-term successes in reduc­ ing drinking and alcohol-related problems. Illegal markets grew steadily. Consumption levels climbed. So did disrespect for the law and the corruption of law enforcement. Severe anti-tobacco regulations could lead to the same kinds of trouble. It is clear that illegal markets will fill any void created through cigarette bans. In 1993, for exam­ pie, Canada imposed draconian cigarette taxes in an effort to discourage smoking. Smugglers were soon supplying about one­ third of all Canadian cigarette sales. Mich­ igan tried to tax tobacco into extinction a year later and saw citizens tum to boot­ Carry Nation, hatchet-wielding crusader for American legged products. Moreover, serious First temperance. Amendment issues have arisen from efforts to curb tobacco advertising. Unreasonable mente The matter goes well beyond forcing legal and regulatory attacks on behavior as smokers to huddle in doorways; it has struck personal as smoking and drinking have at the ability ofthe nation to conduct a civil caused at least as many problems as they public policy debate. have solved. All too often reformers have let advocacy Clearly the excesses of prohibitionism outrun evidence. Their claims of addiction are unnecessary. Today, the public is served are a case in point. Temperance zealots well through educational campaigns. These insisted that all drinking led to addiction. are noncoercive and they work: witness the This was obvious nonsense, and the public dramatic decline in smoking after 1964. ultimately called them on it. Similarly many Furthermore, all states and many cities smokers may find it hard to quit, butmillions have laws against tobacco sales to children. have quit. Exaggerated claims of addiction These should be enforced. The consistent are the rhetoric of a movement determined application of suchlaws does not inhibit the on victory at all costs. free choice of adults. Yet it may serve to How far will the logic of prohibition eliminate an emotional propaganda theme extend? Using arguments similar to those among anti-tobacco zealots. employed against drinking and smoking, a America is a democracy and Americans few social critics already have targeted strong can obviously ban behavior that they find perfumes because'they offend others or trig­ objectionable. They have in the past. They ger allergies. Some would tax low-nutrition may again. Before they do, they should be foods because those who eat them could pose aware of the damaging implications of ban­ a burden on the health-care system. ning tobacco. And we all should be honest The implications of these prohibitionist enough to call it what it is-prohibition. D Potomac Principles by Doug Bandow

That Taxing Time of Year Again

espite their extended budget wrangling, makers enact traditional reforms to keep the D the two major parties agree on one Social Security system from going broke in thing: Social Security is sacrosanct. Tax­ the year 2029." That is, in a desperate payers are suffering as a result. attempt to preserve the system Congress is Today government takes more in payroll likely to hike the taxes on and cut benefits than income taxes from many people. The for baby-boomers. Hall figures that a typical 15.3 percent levy effectively doubles the 36-year-old would then suffer a nearly two marginal tax rate for those with modest percent negative rate of return. And that's incomes. Moreover, the payroll tax is highly just the average. The same age high-earner regressive, since top wage earners pay noth­ would enjoy a negative three percent return. ing on most of their salaries and those It adds new meaning to the line, "I'm from relying on investment income are exempt. the government and I'm here to help you. " The Social Security tax also acts as a direct Even these numbers understate the mag­ penalty on job creation. nitude of Social Security's bad deal. A Alas, it's not just the tax that is flawed. better measure is to compare the annual The program itself is a public Ponzi scheme after-tax Social Security benefit with the built on a financial foundation of unfunded private, after-tax annuity that could be pur­ liabilities. Early next century Social Secu­ chased with the same employee/employer rity is likely to hit fiscal reality and collapse. "contribution." A 36-year-old, low-wage The Washington, D.C.-based Tax Foun­ worker would receive $52,132 (for a couple, dation recently detailed the bad news for after taxes), compared to an annuity of recipients. According to economist Arthur $58,664. The difference is not just an extra Hall, "most members of the baby-boom 12.5 percent year- in and year-out, however. generation-those born between 1946 and When a worker dies, Social Security bene­ 1964-can expect to lose money on Social fits cease, while the annuity's principal re­ Security when it is viewed as an investment mains. Fora low-wage worker thatwould be for retirement." That's bad enough. But if a savings of a halfmillion dollars or more. Congress does what comes naturally, adopt The gap for a high-wage worker is even short-term palliatives rather than address greater: annual after-tax earnings of fundamental problems, the news will get $101,014 versus $137,530, respectively, or uglier. Explains Hall: the negative returns 36 percent more for private retirement. Plus "will almost certainly become worse iflaw- principal worth between one and two million dollars. Looked at another way, William Mr. Bandow is a Senior Fellow at the Cato Shipman of State Street Global Advisors in Institute and the author ofThe Politics ofEnvy: Boston figures that even a low-income Statism as Theology (Transaction). worker entering the market today would 207 208 THE FREEMAN • APRIL 1996 earn up to three times as much investing in proper role for government, it comes next, the stock market. as a last, rather than a first, resort. It is not Social Security taxes would have to be cut Social Security, which recipients view as a up to 30 percent, depending upon the recip­ matter of right and treat as their primary ient's income and age, to accurately reflect retirement income. the annuity value of the expected benefits. Of course, when Franklin Roosevelt es­ As Hall says with admirable understate­ tablished Social Security in 1935, benefits ment: "most boomers will pay too much for were far more modest. But an election­ their Social Security." Indeed. minded Congress raised payments by 25 However, this entire discussion assumes percent in 1972 alone. Demographics has that Social Security survives. Round about also transformed the program. In 1935 life the year 2013 (ifcurrent estimates hold, and expectancy was only 62-three years less they have always been too optimistic in the than the eligibility age for full benefits. It has past) outgo will begin to exceed income. By since risen to 76. In short, Roosevelt kept 2030, admits the Social Security Adminis­ Social Security cheap by ensuring that many tration, the system will be running in the red. Americans-almost half of men and 40 per­ But the news gets worse. The $3 trillion cent ofwomen-died before receiving their surplus supposedly accumulating in the So­ first check! cial Security trust fund to pay benefits Then there's the bulge of76 million baby­ between 2013 and 2030 doesn't exist. Social boomers who start retiring around the year Security merely possesses federal bonds 2010. As late as 1945, 42 workers supported representing cash spent. To redeem those every retiree, which allowed taxes to be bonds-in order to pay retirees, as prom­ fairly low. The ratio today is 3.3, and early ised-will require some combination of next century it will be less than two. In sum, massive borrowing, tax hikes, and benefit Social Security has more people collecting cuts. That's only the start of the fun, how­ more benefits for more years. It's no won­ ever. By 2070 the annual flood ofred ink will der, then, that the system is hurtling towards. be $7 trillion. In fact, between 2010 and 2070 financial disaster. the system is committed to paying out $140 As people tote up their tax bills, they trillion more than it is projected to take in. should contemplate the future. Without Oh, well .... change, the combined Social Security tax rate will have to be raised to upwards of40 A Flawed Program percent-that's in addition to income tax levies to pay for the rest of government. The basic problem with Social Security, Conventional remedies are a mixture of which no one in Washington wants to admit, more modest tax hikes combined with ben­ is that the program is flawed in its concep­ efit reductions, such as raising the retire­ tion. It should never have been created. ment age, capping cost-of-living-adjust­ Government has no right to redistribute ments, and modifying spousal benefits. income, even ifthe beneficiaries are elderly. These would help put off fiscal Armaged­ Nor is there any cause for Uncle Sam to don. However, as Hall points out, they guarantee everyone's retirement. People would also worsen the deal for baby­ have a responsibility to make themselves boomers. financially secure; families have an obliga­ tion to care for their older generations. The Opting Out burden does not belong on taxpayers. What ofthose who are incapable ofcaring The only way to simultaneously avoid for themselves through no fault of their generational war and treat baby-boomers own? Associations, businesses, churches, fairly is to allow workers to opt out ofSocial individuals, and neighborhoods should all Security. Radical though this may sound, in help look after those in need. If there is a 1981 Chile createdjust such a system. More THAT TAXING TIME OF YEAR AGAIN 209 than 90 percent of citizens now invest in for younger workers. The specific details private pension plans rather than participate matter less than returning to people control in the government program. Hall proposes a over their retirement futures. similar approach: baby-boomers would re­ April 15th will continue to be a taxing time ceive a government bond worth their em­ of year as long as Americans expect Uncle ployee/employer contribution (adjusted for Sam to play a combination of fiscal Santa, inflation), which could be used at retirement national nanny, and global cop. Unfortu­ to purchase a private annuity. It would be nately, the burden will grow far worse even easier to design an escape mechanism, unless officials begin planning to replace such as tax credits for IRA contributions, rather than save Social Security. D THEFREEMANIDEAS ON UBERTY

Creative Destruction-Again by David N. Laband and John M. Wells

hose heart bleeds for the virtually Typically, in a growing economy, job W nonexistent blacksmith? In 1900, losses result from two sources: competitive there were 226,477 blacksmiths counted by pressures that force firms to economize on the U.S. Census. Today the number is production costs, and technological devel­ negligible. Who laments the slide into oc­ opments that either improve the production cupational oblivion by tallow-renderers? process of firms or lead to the marketing The invention of electricity and electric of new products that make other products lights killed off the candle-making industry. "outmoded." Both lead to structural unem­ Henry Ford almost singlehandedly wiped ployment and associated hardship for the out buggy manufacturers (as well as cart­ adversely affected individuals. wrights and wheelwrights). Have the violins When the media focus only on individual stopped playing yet? hardships, they fail to consider the long­ The recent announcement by AT&T that term economic consequences of the job company management intends to eliminate losses. Lost is the fact that literally millions 40,000 jobs over three years sent shock of Americans' lives are enhanced by virtue waves through New Jersey, in which a large of the lower prices they pay for goods and number of the job losses are anticipated, services they consume and by virtue of the while precipitating a 5 percent jump in the new, perhaps revolutionary, products that price ofAT&T stock over a two-day period. previously were unavailable. As Joseph Media reaction to the announcement was Schumpeter pointed out in Capitalism, So­ predictable: interviews of wary workers cialism and Democracy, "[t]he opening up likely to lose theirjobs filled newspapers and ofnew markets, foreign ordomestic, and the the airwaves. The anticipated human misery organizational development from the craft makes for good copy and even better 60­ shop and factory to such concerns as U. s. second sound bites. Yet to focus attention Steel illustrate the same process of indus­ on this aspect of the job losses and not on trial mutation-if I may use that biological the underlying causes and consequences term-that incessantly revolutionizes the is to completely overlook one of the most economic structure from within, incessantly fundamental and positive aspects of Amer­ destroying the old one, incessantly creating ica's market economy: job destruction for a new one. This process of Creative De­ a relative few is a by-product of a vibrant struction is the essential fact about capital­ economy that enhances the welfare ofmany ism. " millions of individuals. The value of the aggregate economic en­ hancement to millions of lives utterly Dr. Labandis Professor ofEconomics atAuburn swamps the aggregate economic suffering University in Auburn, Alabama. Dr. Wells is an of displaced workers. An example is illus­ assistant professor ofeconomics at Auburn. trative. Suppose that, in the aggregate, each 210 211 individual in America will gain the equiva­ probably values these advances to the tune lent of $10 worth of added value to hislher of thousands, if not tens of thousands or life each year from price cuts and new even hundreds ofthousands ofdollars, each products produced in 1996, and that, again year. in the aggregate, the developments that Moreover, the job losses suffered by dis­ promoted these gains by consumers were placed workers are typically temporary. achieved at a loss of 100,000 existing jobs. These individuals (or others who might With 260 million (or so) consumers, the have followed them into their old employ­ aggregate well-being of Americans in­ ment) develop new skills that contribute to creases by some $2.6 billion. the production ofother, valuable goods and In truth, the typical consumer probably services. gains far more than $10 worth ofadded value Who weeps for the nearly 37 percent of to his life (especially in a present-value Americans who no longer are engaged in sense) from the introduction of new prod­ farming? In 1900 nearly 40 percent of all ucts and services, as well as by development workers were engaged in farming; today that of new methods of production that lead to fraction is less than 3 percent. Did the lost price cuts on existing merchandise. Think jobs impoverish America? Were job losses ofthe enrichment to human lives generated in the agricultural sector "bad"? Of course by computers and word processors, micro­ not. Far from reflecting evil times in agri­ wave ovens, fax machines, automobiles, culture, occupational flight from farming airplanes, radios and televisions, washing reflected simply stunning gains in farm pro­ machines, disposable diapers, electricity, ductivity during the first halfofthe twentieth hearing aids, contactlenses, pharmaceutical century. The fact that it took only three drugs, and so on. The average American Americans per 100 workers to feed America

5000~------~5.0 , I," r __ , I," I, I\ , I , ,, , I , " " , 4000 J \ :, I" ' I I 4.5 : \j I \\ ,\: " , \\ I,I" J '\ , I \ / \~ \, ,I \J , I \I , " , "" ,, 3000 ~ \ I' I 4.0 ,, I ' " I , ,, 'o! ,, ,I \ I I ---I ,...... I I , .., 2000 , ,, \ 1\ 3.5 I ,\ , , , \ I ,I 1 " \\ , , I ,I\ I, \ I \, , I ,, 1 I, I , 1 " 1000 ...... ,, I I 3.0 I I ,I ,I "II o 2.5 66 68 70 72 74 76 78 80 82 84 86 88 90 92

1-- FAILURES um_ PATENTS I 212 THE FREEMAN • APRIL 1996 in 1995 rather than the 40 in 1900 reveals Government Regulation prosperity that freed up 37 percent of our workforce to pursue other types ofproduc­ Government regulation tends to exacer­ tivity: designing and building automobiles bate the job destruction associated with in­ and aircraft, communications systems, elec­ novative activity. This is because the effect, tric power systems, developing new medical if not the intent, of many government procedures and drug therapies, and invent­ regulations is to insulate the affected indus­ ing new products and processes by the tries from competition. This creates condi­ thousand that contribute to a standard of tions under which domestic firms not only living in 1996 that could perhaps barely be charge higher prices to consumers than imagined in 1900. would exist in a more competitive environ­ A comparison of measures of innovative ment, they lack incentive to produce effi­ activity over time against measures ofbusi­ ciently. Additional innovative activity by ness failure over time reveals the essential potential competitors eventually breaks relationship between creation of new prod­ down the barriers imposed by regulation. ucts and processes and the obsolescence When this occurs, high-cost, regulation­ and death of old products and processes. driven firms are forced suddenly to compete The dotted line in the figure on page 211 with low-cost, efficient, consumer-oriented depicts the number of per capita (times firms. The result tends to be quite sudden, 1,000) new inventions patented over the massive layoffs in the affected industries, 28-year period, 1965-92, inclusive; the solid as opposed to the more measured and con­ line represents per capita (times 1,000) busi­ tinuous labor force· adjustment that firms ness failures. Over the first half of this would undertake in a more competitive period (roughly 1965-77), the intensity of environment. innovative activity falls, as does the inci­ The fact that we are now experiencing dence of business failures. By contrast, declining unemployment with little evidence during the more recent 15 years (1978-92), of any upward pressure on inflation is puz­ the incidence of innovative activity has zling to many economists, as well as non­ generally been rising, accompanied by a economists. We believe that this is not general increase in the incidence ofbusiness surprising at all, given the constant eco­ failures. Obviously, there are many factors nomic metamorphosis that characterizes the that influence both the pace of innovative modem American economy. The dual pro­ activity and business failures, so an exact cesses ofinnovation and re-engineering pro­ relationship between these two data series duction imply continuous job creation as may ·be hard to define specifically. None­ well as job displacement, and an expanding theless, the two graphs suggest, at a mini­ economy with little inflationary pressure. mum, that the innovative activity that is so The announced job reductions at AT&T vital to enhanced economic well-being over and other large (and small) firms may not time is associated positively with the obso­ make the displaced workers rejoice, but lescence of products and industries that, in they should make everyone else feel pretty tum, leads to displaced workers. good. [] THEFREEMAN IDEAS ON LIBERTY

Jack the Radical by Alastair Segerdal

n the late nineteenth century, despite ists. Meanwhile, thousands more protesters I fabulous wealth, gracious living, and an went on a rampage ofproperty damage and industrial revolution that had reached the far looting as rioting spilled over into the resi­ corners of her empire, Britain was also an dential environs ofupper-class Mayfair and island of social unrest. Working-class dis­ the upscale West End shopping districts of content with poverty and disease was fuel­ Oxford Street, Regent Street, and Picca­ ing the rise of socialism, and new doctrines dilly. were calling for revolution and an end to the On November 13, 1887, Queen Victoria's monarchy. Parliamentary controversy over Jubilee year, a battle known as "Bloody the age-old "Irish Question" was bitter as Sunday" erupted in Trafalgar Square when rioting from the Emerald Isle spread to the 100,000 demonstrators, including George not-so-United Kingdom. Its capital, Lon­ Bernard Shaw and the poet William Morris, don, was a city of great commerce, high fought with four thousand police constables. fashion, and sophisticated culture-acity of Three months later, another Trafalgar wealthy gentlemen and gentle ladies, their Square riot prompted Queen Victoria to children attended by nannies as they played write to the prime minister, William Glad­ in Hyde Park. stone: "The Queen cannot sufficiently ex­ London was also a city of unfathomable press her indignation at the monstrous riot poverty. Its East End housed nearly a mil­ which took place the other day in London, lion hungry and impoverished souls living in and which risked people's lives and was a cramped filth. Although working conditions momentary triumph of socialism and dis­ had improved in Britain since the early days grace to the capital." of the Industrial Revolution, working-class London's East End was vilified and ig­ discontent in London had been building up nored, yet despite the anger and disruption, since the late 1870s. Inspired by Karl Marx, Britons of all classes possessed an inbred who lived and wrote in London, the growing distaste for revolutionary ideas designed to voices of socialism were eager to boost this overthrow the established order. No matter discontent, and by 1886 things turned vio­ how poor and impoverished, British work­ lent. In early 1886, one ofthe coldest winters ing men and women cherished theirfreedom on record caused such hardship that, despite of speech and right of assembly. Continen­ the subnormal temperatures, thousands of tal-style government regimentation was out-of-work men and women from the East anathema to this island race. Violence, End docks gathered in Trafalgar Square to when it did take place, was not seen by the hear violent speeches from eminent social- Left as enhancing the road to reform. They realized that fear of the mob would never Mr. Segerdal resides in Glendale, California, inspire the middle and upper classes to where he is a writer. comprehend the plight of the poor. The 213 214 THE FREEMAN • APRIL 1996 socialist-minded and their brethren in the won't fix me just yet. " The text continues to press knew that education via speeches and boast and taunt, ending off with: "Keep this the written word was the only viable means letterback till I do a bit more work, then give ofimpingement. By 1888, London's radical it out straight. My knife is nice and sharp. I press, aware of its growing power to focus want to get to work right away if I get a attention on the capital's social problems, chance. Good luck. Yours truly, Jack the was constantly on the lookout for a new Ripper." Part of a postscript read: "Don't socio-political drama, preferably one guar­ mind me giving the trade name." The letter anteed to increase circulation and vindicate is well written and a careful study of words their left-wing rhetoric. Little did their edi­ like "won't" and capital letters after a torial offices know that before the year was period show proficiency in punctuation. The out, a gruesome saga was to present them phrase "give it out straight," an American­ with the campaign opportunity ofalifetime. ism used by newsmen on both sides of the It began as the hot English summer of Atlantic, is the first hint that the writer might 1888 drew to a close. Police Constable John have been ajoumalist. Both letters used the Neil, a London policeman with badge num­ word "Boss," another Americanism famil­ ber 97 and tired feet, trudged his night beat iar to those with close ties to the United along Buck Row, a dirty little side street in States and the internationally minded Lon­ Whitechapel in the East End of London. don press, but not to the broad population Most of the drunks, drifters, and ladies of and working classes of nineteenth-century the night had disappeared as dawn ap­ England. proached on this last day ofAugust, and the The second letter (sent as a postcard) was only sound along Bucks Row was the slow, particularly daunting because it referred to steady gait of Police Constable Neil. The the September 30 double murder in great assurance of a London bobby's footsteps detail, apparently before these details were gave way to an eerie silence as he stumbled fully known to the police and released to the on the body of a woman. She had been press: "Iwas not codding [sic] dearold Boss murdered, but this was no ordinary killing. when I gave you the tip. You'll hear about Mary Ann Nichols had been savagely dis­ Saucy Jacky's work tomorrow. Double emboweled. Poor Annie Chapman met a event this time. Number one squealed a similar fate on·the night of September 8 and bit. Couldn't finish straight off. Had not time three weeks later, on the night ofSeptember to get ears for police. Thanks for keep­ 29-30, two more wretched souls, Elizabeth ing last letter back till I got to work again. Stride and Catherine Eddowes were added JACK THE RIPPER." Once again, observe to the chain ofdeath, horribly mutilated and the correct punctuation as in ',You'll" displaying similarities to the previous vic­ and in the possessive "Jacky's." Note the tims. capital Sand J in "Saucy Jacky." And note On October 1, the newspapers ran the the clipped newspaper-style giveaway in story together with the complete text oftwo "Had not time to get ears for police." It letters which had beenposted to the London was written in the same handwriting as the Central News Agency. Both were written in first letter, and because it recounted t1le deep red ink and signed under a name that contents of that letter, both were obviously activated the strangest left-wing campaign penned by the same person. Yet details of of all time. these crimes were not publicly known until October 1, when newspapers published "Dear Boss" them. So, it was argued, both letters were not only from the same person (which was The first letter was addressed to "The true), but must have come from the real Boss, Central News Office, London City," killer. and opened with: "Dear Boss, I keep on What was not published was the fact that hearing the police have caught me, but they a barely visible''OC 1" postmark existed on JACK THE RADICAL 215 the address ofthe second letter. (The postal "Jack the Ripper" letters was nothing short service in Central London was very fast, ofmasterful public relations. And it worked. and a letter mailed early in the morning was Within hours of the papers hitting the guaranteed delivery by lunch or early after­ streets on October 1, 1888, Jack the Rip­ noon.) In other words, it was posted after per-and the social conditions in which his details ofthe double murder were already in victims lived-stole the show for months on the newsrooms. It also suggests that the end as a conversation piece. From the writer might have worked at the Central stately homes of the aristocracy down to News Agency since the letters themselves bawdy working-class pubs; from London's were not handed around for otherpublishers Alhambra Theater and Gaiety Music Halls to inspect physically, with the possible ex­ to New York's vaudeville, this unknown ception of the radical Star. killer even spawned mirth over murder. Furthermore, the function of the news Ripper-mania drifted far from the pathetic agency was to deliver news items to news­ rat-infested hovels of Whitechapel and papers and magazines who subscribed to its landed on page one ofthe world's press. The service (rather like today's Associated day the double murder story was released in Press), and it is highly unlikely that a serial London, "Dismay in Whitechapel" head­ killer in a working-class district would have lines ran on the front page of the New York known of this function, or even have heard Times. Queen Victoria herself cultivated an of the agency. Like most serial killers, he unusual interest in what were more politely would probably have written to one paper referred to as the "Whitechapel Murders," only, or taunted the police with notes which and she demanded action. In an age when might never be made public. On the other the Queen's orders were dutifully obeyed, hand, a journalist would understand that nothing happened. The Ripper was not ap­ spicy information addressed to the news prehended, and Victoria was not amused. agency would generate maximum publicity. Once the name had appeared in print, hun­ A Vehicle for Socialist dreds of crank "Jack the Ripper" letters Propaganda were sent to the press and police, and all were rejected as genuine with the possible The "double event" now brought the exception of a note addressed to a Mr. total number of victims to four, and from George Lusk, the Marxist head of the this point on, the murders became an im­ Whitechapel Vigilance Committee. It was portant vehicle for socialist propaganda, written "From Hell" and, interestingly, not replacing homicide as the central issue. For signed with a Ripper signature, but simply as instance, a petition with 5,000 signatures "Catch me when you can Mishter [sic] was sent to the Queen, but it didn't mention Lusk." the need to apprehend the killer. It dwelled More than any previous endeavor, creat­ instead on women "living sad and degraded ing the trade name "Jackthe Ripper" forced lives" in the slums ofWhitechapel. The Star a spotlight on London's destitute and poor, in particular gave extensive coverage ofthe and what a creation! Two of London's murders and unashamedly blamed them on top-selling radical newspapers, the Star and "such economic systems as that of unre­ Pall Mall Gazette, realized that dramatizing stricted competition, backed by the devil's the murders would focus the story directly gospel of laissez-faire." This London daily towards the squalor of "Outcast London." was well known for its biased socialist The first two murders had certainly gener­ crusades, its inflexibility on "Home Rule" ated publicity, and the next two murders, for Ireland, and its denunciation of Metro­ both on the same night, would normally politan Police Commissioner Sir Charles have proven even more newsworthy, but Warren and his allegedly inept, heavy­ publishing news ofthe" double event" with handed police force. the macabre and threatening text of two The Star's large circulation covered a 216 THE FREEMAN • APRIL 1996 wide cross-section of readers, including stuff, it is certain to my mind that it was not those of a more conservative outlook, and the mad miscreant who had committed the this induced other less radical papers, who murders." And in his book, The Lighter were also criticizing Warren, to echo the Side ofMy Official Life, Sir Robert Ander­ Star's rhetoric, albeit with less rebellious son, head of Scotland Yard's Criminal In­ versions. The result was a multi-media push vestigation Division during the investigation for both the Ripper's arrest and an expose of of the murders, commented specifically on the environment in which he operated. Even the second letter when he wrote: "So I will the staid gentlemen of the Fourth Estate only add here that the 'Jack the Ripper' relished the Ripper saga when, almost by letter which is preserved in the Police Mu­ default, the highly respected Times of Lon­ seum at New Scotland Yard is the creation don drew attention to the social conditions of an enterprising journalist." where the killings took place. As for sensa­ Quick to spot what was going on, George tionalism, few could compete with either the Bernard Shaw wrote: "Whilst we conven­ Illustrated Police News or the Penny Illus­ tional Social Democrats were wasting our trated Paper, as issue after issue ran lurid time on education, agitation and organiza­ descriptions and artist sketches ofthe killings. tion, some independent genius has taken the However, nothing surpassed the publicity matter in hand." In a series of interviews that followed the murder ofMary Kelly, the with this writer, former police chief and fifth victim. Reports about "Another pioneer of the FBI's serial crime profiling Whitechapel Horror, More Revolting Muti­ unit, Pierce R. Brooks, said that, in his lation Than Ever" shocked the civilized opinion, the two letters were almost cer­ world and prompted the Queen to telegram tainly the work ofsomeone in the media with her prime minister: "This new most ghastly a social axe to grind. (Brooks also felt that murder shows the absolute necessity for the "From Hell" note might have been some very decided action." Led by the genuine in view of the killer's handwriting socialists, press attacks on the harassed and style, which displayed domination fanta­ despondent Sir Charles Warren became so sies, cruelty, and inner rage.) One oftoday's intolerable that he was forced to resign as noted historians, Martin Fido, said that the head of Scotland Yard. It so happened that murders became famous because the very the attractive Mary Kelly was the last ofthe first elections to the new London County Ripper murders, but this was not known at Council were taking place, and the extreme the time and Ripper fervor continued for leftists saw their chance ofwinning the East months on end after her death. End-atailor-made opening for the radicals. Until 1888, unified administration of the A Radical Campaign? rapidly growing areas beyond the old City of London was completely neglected. Known That the brilliantly conceived "trade as Greater London, its population of five name" was part of a socialist campaign million was governed by a complexity of against the established social and economic overlapping authorities and the result was order seems all the more likely when we administrative chaos. A long overdue solu­ inspect other aspects of this drama. For tion to this dilemma was set in motion by the instance, Sir Melville Macnaughten, Assis­ Local Government Act of 1888, for it not tant Chief Constable at Scotland Yard in only created the London County Council, 1889 (whose notes are the best known ofall but established urban self-government documents on the case) wrote in his mem­ throughout England. (The Council did not oirs: "In this ghastly production I have cover the ancient city itself-the financial always thought I could discern the stained district known to this day simply as "The forefinger of the journalist-indeed, a year City.") At the time, left-wing proposals and later I had shrewd suspicions as to the actual convictions were more or less represented author! But whoever did pen the gruesome by the so-called "Progressives" who had JACK THE RADICAL 217 very close ties with the Liberal Party and the We may never know the author of the emerging Labour Party. The Progressives first two "Jack the Ripper" letters-some were represented at council elections, but documents relating to the Ripper case are not at parliamentary elections, and although missing, and may have been destroyed in most voters in 1888 voted for Conservative the air raids of1940-41. Nevertheless, these Members ofParliament, many London con­ serial murders would never have genera­ servatives were so keen on democratic re­ ted such enormous publicity if the night­ forms for their city that they voted Progres­ marish name had not been invented. As sive in the Council elections. (It was in this for the new Council, its enacted reforms spirit of "Progressive London" that the became a symbol for continuing social re­ Fabian Society flourished.) form, both in London and the rest of the As for the radicals and socialists, their country. The stirring of "Liberal Social­ Jack-the-Ripper newspaper campaign ism" fully surfaced in the 1880s and 1890s worked like a dream. The Progressives won and gave birth to the new Independent a 73-seat majority out ofa total of 118 seats Labour Party, founded in 1893 by Keir on the new council, including radical theos­ Hardie, and renamed the Labour Party in ophist Annie Besant, who won a seat for the 1906 when 29 of its candidates won seats East End. In one Council election after in the general election of that year. Its another, the Progressives gained a majority backbone was the growing trade union of seats, and from its onset the new council movement and, together with the Fabian burst into life and quickly introduced new Society founded in 1884, Labour became programs involving welfare, sanitation, one of the two major political parties from baths, education, and, to a lesser extent, 1922 onward. housing. Their influence on the council also Britain's recurring love affair with social­ curtailed the operations ofunrestricted lais­ ism has extended well into the twentieth sez-faire. century. Although the British Left was In many ways, the Progressive Movement never taken by Soviet Communism, notable added an aura of "respectability" to the exceptions in the 1930s such as the radical cause. Ominous revelations about "Bloomsbury Set" and the secret Cam­ urban conditions necessitated the involve­ bridge society, The Apostles, and its spy­ ment of the ruling classes, notably those master Kim Philby, certainly left their mark. with vast estates. and holdings which were British socialists were more than impressed being leased out to meet the demands of when the American journalist Lincoln Stef­ urbanization. The newly assertive London fens returned from Russia in 1919 and told County Council demanded and achieved a Bernard Baruch that, "Ihave been over into large increase in such leasehold enfranchise­ the future, and it works." These words ment, and, as the century drew to its close, certainly resounded in British (and Ameri­ more and more of the social elite found can) politics, but neither the Labour Party or themselves in demand as urban celebrities. those who voted for them wanted a revolu­ In fact, the London County Council was the tion against the prevailing British way of prime example ofthis "titular association of life. Noteven he who created the trade name the aristocracy with the new civic democ­ "Jack the Ripper" could have foreseen how racy" when the Earl of Rosebery was thoroughly the old Victorian order would be elected as its first chairman in 1889. overthrown. D Ideas and Consequences by Lawrence W. Reed

A Vote for Optimism

s the twentieth century draws to a close national capitals, the public policy debate A and a new millennium begins, should now turns on how much less government we be optimistic or pessimistic about the should do, not.onhow many new duties to course of the human race? give it. Expect pundits and prognosticators of Among intellectuals, the trend is decid­ every persuasion to be offering up their edly in one direction-toward liberating in­ views on this weighty question between now dividuals from the constraints of statism. and the year 2000. Count me among the The world is full offormer socialists; I don't optimists. Not since the Enlightenment know any former advocates of the free swept Europe in the eighteenth century market who have undergone any compara­ have so many trends been moving in the ble philosophical transformation. The stag­ right direction at one time. Let me make my gering volume of publications and confer­ case. ences pouring forth from free-market groups In political and economic terms, this cen­ dwarfs anything coming from other direc­ tury began inauspiciously. Individual lib­ tions. erty, free markets, and representative gov­ Reinforcing these anti-statist trends is an ernment were in retreat, socialism and information/technology revolution that is dictatorship were advancing all over the empowering individuals to take charge of globe. Two world wars and a great depres­ their lives, start new businesses, and com­ sion were followed by widespread accep­ municate freely and instantaneously with tance ofthe fiction that governments should others in every corner of the earth. New heavily spend, tax, and regulate. Commu­ discoveries and productivity gains are mak­ nism-the state in charge of everything­ ing capital and labor more mobile than ever claimed to be the wave of the future and before, bringing higher living standards al­ millions believed it. most everywhere. Today, the values of limited, representa­ In a 1988 study, The Twilight ofGovern­ tive government predominate from Moscow ment Growth in a Competitive World Econ­ to Manila. A chunk ofthe Berlin Wall sits on omy, Richard B. McKenzie suggested that the grounds ofthe Ronald Reagan Library in one of the greatest threats to the march of California. Protectionism is receding as bar­ the omnipotent state was the personal com­ riers to trade come down. In dozens of puter:

Lawrence W. Reed, economist and author, is These words are being typed in a plane at President of The Mackinac Center for Public 33,000 feet en route to St. Louis. The computer Policy, a free market research and educational I am using is about the size and weight of a organization headquartered in Midland,Michi­ small box ofTide but has the internal memory gan. ofthe University Maryland's entire computer 218 219

centerwhen I was a graduate student there two pectancies even in poor countries, with few decades ago. I carry in my shirt pocket enough exceptions, have risen more since 1950 than disks to conduct the business ofa modest-size in the previous 3,000 years. While some may firm. Yet any such observation about the small argue the world has too many people, this size but great power of modem computers startling fact cannot be ignored: the earth is remarkable only because it is no longer astounding. today sustains more than 5 billion people Nonetheless, the computing power on my living far longer and at far higher standards lap represents an immense, not fully recog­ on average than was the case for the mere 1 nized, threat to the economic and political billion the earth sustained less than two power of the U.S. government and other centuries ago. governments around the world. At the same In the United States and many other time, my computer represents a liberation of countries, the environment is generally on "people power," because technology is the mend. The air is cleaner, the water is changing the nature of capitalism. Capital is purer. Conditions that once spawned deadly being freed from the strict confines ofarbitrary plagues and diseases that killed or crippled national boundaries; it is becoming interna­ vast numbers of people are few and far tionalized to an extent never before imagined. between, or relegated to historical foot­ As a consequence, the powerofgovernment to tax and regulate may be in its twilight years. notes. The cover story of the April 1995 Atlantic Monthly declared, "[T]he vast re­ Not long ago, we were awash in predic­ forestation of the eastern United States is tions about an imminent crisis in natural the most important environmental story in resources. In the '70s, forecasters were the nation-one with worldwide implica­ warning of increasing scarcity and rising tions." commodity prices. An American president Not all is well, to be sure. Dictatorships in a woolen cardigan gave us a fireside still exist. Ignorance about the imperatives lecture about why we would have to hunker of liberty and free enterprise can be found down, settle for less, pay more at the gas without looking any further than the nearest pump, even adjust our thermostats and university. Wars haven't disappeared. throw more blankets on our beds. Pockets of poverty, disease, and environ­ A funny thing happened on the road to mental degradation persist. But these disaster: factoring out inflation, natural re­ scourges are increasingly the exceptions in sources are now half as expensive as they a world where they were once the rule. Their were in 1980. Between 1980 and 1992, the greatest enemies-freedom and knowl­ worldwide inflation-adjusted price of food edge-have gained the upper hand and declined by 49 percent; timber, by 13 per­ promise us more progress for as far as the cent; and petroleum, by 62 percent. Cato eye can see. Institute economist Stephen Moore says the Historians record that on the eve of the next century may be "the first era in the last millennium, around the year 999, the history of humanity that natural resource world was rife with dire predictions about scarcity ceases to act as a significant con­ the future. Prophesying doom and gloom straint on economic growth." was the growth industry of the day. This The astonishing progress in lengthening time around, it looks like billions of people life ranks as one of humanity's greatest will be too busy making the world a better triumphs. Capitalist countries have slashed place to indulge in self-fulfilling defeatism. infant mortality and added 15 to 20 years to So there's my vote. As 2000 approaches, the average life span since 1900. Life ex- I cast my ballot for optimism. D 'THEFREEMAN IDEAS ON UBERTY

The U.S. Presidents and the Money Issue

by Greg Kaza

his year marks the tOOth anniversary of advocated a bank' through an expansive T the most important presidential cam­ interpretation of the Constitution, which paign ever to revolve around an issue largely made no provision for chartering federal ignored in contemporary politics-mone­ corporations. Thomas Jefferson and other tary policy. Anti-Federalists urged "strict construc­ The Republicans, with William McKinley tionism" and opposed the bank. In 1791, as their candidate, defended the classical both Hamilton and Jefferson gave Federalist gold standard. The Democratic nominee, George Washington (1789-1797) their inter­ William Jennings Bryan, supported silver pretations. Washington sided with Hamil­ coinage at an above-market rate, and in­ ton, and signed a law creating the First Bank spired inflationists with his now-famous of the United States. "Cross of Gold" speech. Under Federalist John Adams (1797-1801), McKinley won the 1896 election, but the all foreign gold coins ceased to be legal money issue would be eclipsed by fiscal tender. Adams also signed a proclamation policy in the twentieth century. It is fasci­ exempting Spanish silver dollars from sim­ nating, however, to consider that most U.S. ilar silver legislation. The United States was presidents prior to McKinley discussed is­ on a bimetallic monetary standard of value sues·that have virtually disappeared from at this time. Gold served in high-denomina­ today's public discourse. Their opinions on tion coins, silver for smaller amounts. gold, silver, and central banking were not Adopting a bimetallic standard is one only relevant then, but remain so today. thing; maintaining it in the face of fluc­ tuating market values is another. Gresham's Establish a Central Bank? Law states that debased coins (those over­ valued by government) tend to remain in There was no interest in paper money in circulation, while undervalued coins are the early United States after the inflationary hoarded. Since silver was overvalued, gold experiences of the Revolutionary War. In­ began to disappear from circulation. stead, monetary discussions centered on Thomas Jefferson (1801-1809) grappled whether or not to establish a central bank. with this problem even before assuming the Alexander Hamilton and the Federalists presidency. Observing that Spanish silver dollars varied in their silver content, Jeffer­ Greg Kaza is a Michigan state representative. He has taught economics and history at North­ son proposed they be assayed by the govern­ wood University, where he served as an adjunct ment. This led to the Coinage Act of 1792. professor. Part of Jefferson's opposition to the cen- 220 The Foundation for Economic Education Irvington-on-Hudson, New York 10533 Tel. (914) 591-7230 Fax (914) 591-8910 E-mail: [email protected]

April 1996 Against the Stream hen, fifty years ago, this Davenport, John T. Flynn, Garet Garrett, Foundation embarked upon its and Albert J. Nock joined forces with the W great design, the most important disillusioned socialists in presenting an factor was the battle between the creeds ­ intellectual opposition to the general trend. between Marxism and its various oppo­ In the academic world, a few eminent nents. It divided the world into hostile scholars such as B. M. Anderson, H. J. camps which threatened to engulf Davenport, F. R. Fairchild, F. H. Knight, mankind in yet another bloody confronta­ and W. A. Paton scorned the New Deal tion. While the Soviet Union was export­ which was holding sway in education and ing communist dogma to all corners of the communication. They disputed and refut­ world, the West under u.S. leadership was ed John Maynard Keynes' doctrines and barely holding its own. Here the general theories which offered a new defense for mood was one of despair about the failure old errors. Lord Keynes and his American of the old order and the lack of a creed of disciples elevated deficit spending to a its own. political virtue, popularizing an ancient A few disillusioned socialists were tak­ economic fallacy, inflationism, as an ing their stand against the ruthless control appropriate road to full employment and of the lives of individuals by political economic prosperity. Throughout the tyrannies. Observing the inhuman conse­ world Keynesian doctrines were in great quences of political doctrines and ideas, vogue with those governments that were some writers expressed a sense of frustra­ not outrightly Marxian. tion and horror about the systems that The critics not only cried out against the crush and destroy human lives. George inhumanity of a political command system Orwell expressed it in his satirical novels, but also reminded their readers of the Animal Farm (1946) and Nineteen Eighty-Four great heritage of the West, the creed of (1949), which is a prophetic story describ­ individual liberty and the private property ing the dehumanization of man in a mech­ order. The old order had not failed" they anistic totalitarian world. contended, it had been smothered, There was a remnant of old-fashioned expunged, and dismantled by political liberal journalists who questioned the con­ authority. It was not the old order of clas­ tinuous growth of political power and con­ sicalliberalism that had foundered but the trol. John Chamberlain, William Henry new mode of political supremacy in social Chamberlin, Frank Chodorov, John and economic life. It was the surrender of freedom that provoked the return of autoc­ United States or, more specifically, what racy and tyranny. he would urge a newly elected president The Foundation for Economic to do. Read never ran for political office; Education (FEE) set out to reaffirm, he was not even tempted for the sake of expound, and shed fresh light on the phi­ popularity to surrender his principles and losophy and movement of classical liberal­ garble his speeches. ism which stresses not only the dignity of The politicians who managed to be every individual but also the importance elected subjected the American economy of property rights, natural rights, the need to severe stop-and-go manipulations. for constitutional limitations on govern­ Whenever a presidential election ment, and, especially, the freedom of every approached, the Federal Reserve together individual from any kind of political with the Treasury would contrive a fever­ restraint. Building on the writings of such ish business boom, stimulating housing men as John Locke, Adam Smith, David construction and consumer purchases Ricardo, Jeremy Bentham, and John Stuart through inflation and credit expansion; Mill, the writers affiliated with the after each election they temporarily halted Foundation offered a complete doctrine of their inflationary policies, which brought individual freedom. in their wake a new economic crisis and In 1946, Henry Hazlitt, one of the seven the beginning of another recession. Three founders of FEE, published a most popular times in the 1950's the American economy and influential book, Economics In One fell into a deep recession. Thereafter, all Lesson, which was to sell more than one administrations indulged in the pleasures million copies in just a few years and of deficit spending which not only extend­ which continues to sell briskly. It is proba­ ed the stop-and-go system but also permit­ bly the best "little book" on the fallacies of ted the spenders to buy votes and elec­ popular economic notions and policies tions, and acquire great personal wealth. ever written. In time, they were to place a $5 trillion A year later, Professor Ludwig von debt on the shoulders of their children and Mises, a member of the staff of FEE, pub­ grandchildren. lished Planned Chaos which challenged the In politics a man may talk about princi­ popular dogma that capitalism has lost its ple but act on interest. The men and usefulness and that all-round regimenta­ women of FEE never forsook the princi­ tion of economic life is both inescapable ples they professed. They kept the faith, and highly desirable. In 1949, he present­ proud of their great tradition, and confi­ ed his magnum opus, Human Action, dent of the noble cause they were serving. which, in the words of Rose Wilder Lane, They lived by George Washington's motto "is unquestionably the most powerful which they proudly display in the FEE product of the human mind in our time, library: "If to please the people, we offer and I believe that it will change life for the what we ourselves disapprove, how can better during the coming centuries as pro­ we afterward defend our work. Let us foundly as Marxism has changed all our raise a standard to which the wise and lives for the worse in this century." In honest can repair. The rest is in the hands 1948, Leonard E. Read, the president of OfGOd'''L~ FEE, published Pattern for Revolt, which threw all expediency to the winds and set down without compromise what he would say and do if he were president of the Hans F. Sennholz Round-Table Events for Spring 1996

on't miss out on our new series of Spring Round-Table Events! We've revamped the format (and our charges) to enhance your D enjoyment as you listen to great speakers on exciting topics. We'll start our evening at 5:00 with a buffet supper while you chat with friends, then move on to the presentation at 6:30; after a fascinating talk, the speaker will open the floor for discussion. Join us for great fun!

Charge: $25 per person per event; discounts for multiple reserva­ tions in any combination; buy the subscription and save even more! Mark your calendar for: May 4: Murray Sabrin on uThe Economics of Drug and Alcohol Prohibition" June 1: Mark Skousen on "Freedom,·Economic Growth, and Stock Market Performance"

Call or write: Dr. Barbara Dodsworth, Foundation for Economic Education, 30 South Broadway, Irvington-on-Hudson, NY 10533; phone (914) 591-7230 or fax (914) 591-8910.

Special: Autographed by the author! Religion: Foundation of the Free Society by Edmund A. Opitz Introduction by the Right Reverend Robert C. Harvey

Twenty essays eloquently explore the religious roots of American liberty and the free society, the role of the individ­ ual in society, and the relationship between religion and the free economy. The economic case for capitalism will not be heard and understood, the Reverend Mr. Opitz contends, until people "have given proper weight to the argument for the free society based on ethics, inherent rights, and free wilL" Edmund Opitz, an ordained Congregational minister, founder of The Remnant (a fel­ lowship of conservative and libertarian ministers) and The Nockian Society, is a con­ tributing editor of The Freeman. He served as a member of the senior staff of FEE from 1955 until his retirement in 1992. Religion: Foundation ofthe Free Society is vin­ tage Opitz, graced with his elegant style, subtle wit, and gentle erudition. Second printing, February 1996 272 pages, indexed $14.95 paperback April Book Sale FEE Classics Regular Sale Free to Try $14.95 $ 9.95 The entrepreneur is celebrated as the moving force of economic activity and progress. The Lustre ofGold 14.95 9.95 In defense of honest money and the standard of the ages. The Morality ofCapitalism 14.95 8.95 The moral foundation of the private property order. Politicized Medicine 14.95- 8.95 The concentrated effort of politicians to socialize American medical care. Prices and Price Controls 14.95 8.95 The functions of prices and the consequences of government interference with prices. Public Education and Indoctrination 14.95 8.95 The origins of public education and its destructive consequences. FEE Library Series The Freedom Philosophy 9.95 8.95 An anthology of fourteen Freeman essays on the political, economic, and moral aspects of freedom. The Farm Problem 9.95 8.95 The policies which continue to plague American agriculture. Richard M. Ebeling, editor Disaster in Red: The Failure and Collapse ofSocialism 24.95 14.95 A brilliant exposition of the causes that lead to tyranny and oppression. Edmund A. Opitz, editor Leviathan at War 14.95 9.95 A collection of essays which reveal the link between big government, interventionism, and war.

Sale Ends April 30, 1996 Postage and handling: Please add $3 per order of $25 or less; $4 per order of $26-$50; $5 per order of more than $50. Send your order, with accompanying check or money order, to FEE, 30 South Broadway, Irvington-on-Hudson, New York 10533. Visa and MasterCard telephone and fax orders are welcomed: (800) 452-3518; fax (914) 591-8910. 221 tral bank stemmed from his belief that it catered to commercial and financial inter­ ests, while hurting the agricultural sector. While critical of the Bank of the United States, Jefferson did not undermine it as president. But when the bank's charter expired in 1811, his interpretation ofthe Con­ stitutionswayed public opinion against the bank. His successor, James Madison (1809­ 1817), vetoed a bill rechartering the bank, although he believed in central banking. Unfortunately, the War of 1812 caused suspension of specie payments and state bank inflation. This led to creation of the Second Bank of the United States late in Madison's second term ofoffice. Presidents James Monroe (1817-1825) and John Quincy Adams (1825-1829) supported the central bank during their terms of office.

The Jacksonian .Democrats Andrew Jackson (1829-1837) had a pro­ found influence on monetary policy in the mid-nineteenth century. Jackson vetoed a bill rechartering the Second Bank of the Andrew Jackson was an ardent champion of the gold United States, and signed the Specie Circu­ standard. lar of 1836, which required gold payment of federal debt obligation.s. In his annual mes­ regretted," Jackson said, "that the rich and sages to Congress, Jackson discussed mon­ powerful too often bend the acts ofgovern­ etary matters more than any other presi­ ment to their selfish purposes. ... [W]hen dent. the law undertakes to ... make the rich By this time, the money issue was more richer and the potent more powerful, the than an economics discussion; it grew out of humble members of society-the farmers, regional and even class politics. Jackson mechanics and laborers ... have a right to believed the central bank created an alliance complain of the injustice of their govern­ between ~ig Business and government that ment. " Central bank abolition was a cor­ benefited a few while costing most Ameri­ nerstone of Jackson's successful 1832 re­ cans. "[B]oth the constitutionality .and the election campaign. He confided to Charles expediency ofthe law creating this bank are Carroll, the last surviving signer of the well questioned by a large portion of our Declaration of Independence, "No bank fellow citizens," Jackson said in 1829, "and and Jackson-or bank and no Jackson." it must be admitted by all that it has failed in Mterhis re-election, Jackson attacked bank the great end of establishing a uniform and officers in 1833 for "actively engaging in sound currency." He declared in 1830, attempting to influence the elections of the "Nothing. has occurred to lessen in any public officers by means of its money ... degree, the dangers of which many of our [in] violation of its charter." citizens apprehend from that institution, as In his second term, Jackson struck a at present organized." further blow against central banking by In 1831, Congress rechartered the Bank, sending the Bank's assets to state banks, but Jackson vetoed the bill. 1 "It is to be dubbed "pet banks" by critics. He termed 222 THE FREEMAN • APRIL 1996 central banking "the scourge of the peo­ pIe," and described gold coins as "a sound and portable currency." In 1836, Jackson signed the Specie Circular, which increased gold coinage. 2 That same year, he proposed suspension ofall paper bank notes less than $20. "The attainment of such a result," Jackson said, "willform an erain the history ofourcountry which will be dwelt upon with . delight by every true friend ofits liberty and independence." Jackson was not a monetary nationalist; he saw no reason why foreign gold or silver should not circulate in competition with U.S. coins. In two separate measures, the Jacksonians legalized the circulation of all foreign gold and silver coins.3 In his farewell address, Jackson warned, "The paper sys­ tem ... having of itself no intrinsic value ... is liable to great and sudden fluctua­ tions, thereby rendering property insecure, and the wages oflabor unsteady and uncer­ tain." He attacked fiat money and central banks as undermining free institutions. Martin Van Buren (1837-1841) continued Jackson's policies. One ofhis first acts was Abraham Lincoln's greenback policies led to wide-spread to address the Panic of 1837, a mini­ inflation. depression. Van Buren's solution: stand fast on gold and propose an independent Trea­ Committee. His successor, Whig Zachary sury to further wrest control of the federal Taylor (1849-1850), a hero of the Mexican­ government from central bank supporters. American War, had little to say on the issue. In 1840, Congress passed a bill establishing Whig Millard Fillmore (1850-1853) reversed an independent Treasury, which Van Buren Jacksonian policy, devising a monetary sys­ hailed as a "Second Declaration of Inde­ tem that was the forerunner ofthe National pendence." Banking Act of 1863. Whig William Henry Harrison (1841), a Gresham's Law finally caught up with hero ofthe War of1812, was told by advisers bimetallism in the early 1850s. Gold produc­ to keep his lips''hermetically sealed" on the tion exploded with the discovery of new money issue during the 1840 campaign. mines in California, and then burst, causing Harrison died after one month in office. His a fall in the price of gold relative to silver. successor, John Tyler (1841-1845), vetoed Silver coins disappeared rapidly from the two bills creating a new Bank ofthe United United States. In response, Democrat States, terming them "unconstitutionaL" Franklin Pierce (1853-1857) supported a After the second veto, Bank advocates de­ gold monometallic standard4 with silver manded Tyler abide by the views of the coins circulating at weight. Silver was no Whig-controlled Congress and sign the bill, longer drastically overvalued versus gold, or resign the presidency. Tyler refused. and remained in circulation.5"Pierce had Democrat James Polk (1845-1849) re­ opted for a temporary gold standard, but it sumed Jackson's policies. As a congress­ was short-lived. man, Polk had fought the bank's recharteras Part of the Jacksonian program was re­ chairman of the House Ways and Means pealed under James Buchanan (1857-1861). THE U.S. PRESIDENTS AND THE MONEY ISSUE 223

In a show ofmonetary nationalism, the legal Banking Act of 1863 forever ended the tender power offoreign coins was repealed, federal government's separation from bank­ except for Spanish-American fractional sil­ ing. Lincoln built upon the Federalist/Whig ver.6 But it was the next president who policy of central banking, implanting the would alter the "hard money," anti-central soft-money tradition permanently in the bank policies of the Jacksonians more than United States. 11 any other U.S. leader. Public support for gold specie resumption grew after the war. The Loan Bill of 1866, Lincoln Inflation signed by Republican Andrew Johnson (1865-1869), provided for greenback con­ To his admirers, Abraham Lincoln (1861­ traction from the market. 12 But Johnson 1865) is remembered as "the Father of the refused to sign a bill in 1869 that would have Union. " But the first Republican president provided for specie resumption. That task was an inflationist in monetary affairs, and fell to Republican Civil War hero Ulysses S. his policies led to consequences that are still Grant (1869-1877) in his first act of office. visible today. To pay for the Civil War, The Panic of 1873 did not shake Grant's fear Lincoln abandoned specie and launched a ofinflation; he vetoed a bill proposing green­ paper dollar (the" greenback'') that resulted back expansion. 13 In 1875, Grant signed in rampant price inflation. another bill pledging specie resumption by The Civil War led to an enormous growth decade's end. offederal spending, from $66 million in 1861 7 to $1.3 billion four years later. Lincoln tried The Gold Standard to finance the war initially with government bonds, but public demand for specie pay­ Specie payment was finally resumed in ments led to their suspension at year's end. 1879 under Republican Rutherford Hayes Lincoln took advantage of the fact that the (1877-1881), but greenbacks could be re­ United States was on an inconvertible paper deemed in silver, along with gold, as a result standard by signing the Legal Tender Act of of the Bland-Allison Act. In 1877, Repre­ 1862, which authorized greenbacks to pay sentative "Silver Dick" Bland of Missouri for the war. Initially limited to $150 million, sponsored a bill providing for the free and a second $150 million issue was approved in unlimited coinage of silver. The measure July and a third $150 million issue passed in was supported by the Democratic "silver early 1863.8 By mid-1864, greenbacks were bloc" emerging in the western United worth 35 cents in gold. But at war's end, States, and called for overvaluing silver they had risen to 69 cents on the prospects versus gold. The bill was modified in 1878 by offuture gold redemption.9 Prices rose 110.9 Senator William Allison of Iowa, who fash­ percent from 1860 to war's end. ioned a compromise between Democratic Not surprisingly, greenbacks depreciated free silverites and conservative Republican against gold, leading Lincoln to scapegoat business interests. The Bland-Allison Act "gold speculators." Failing to regulate the permitted limited silver coinage and re­ gold market, he tried to destroy it by passing quired the Treasury to purchase $2 to $4 a Gold Bill in mid-1864 that prohibited all million of silver each month. Hayes vetoed gold futures contracts, and imposed severe the legislation, but his veto was overridden. penalties. Public opposition, however, Republican James Garfield (1881) urged forced the bill's repeal that year. to government debt payments in gold. Al­ Another important consequence of Lin­ though he opposed free silver, Garfield ex­ coin's term was the creation of anew, pressed interest in a bimetallic standard quasi-centralized, fractional reserve bank­ before his assassination. Republican ing system. This laid the groundwork for the Chester Arthur (1881-1885) called for re­ Federal Reserve System, which was even­ peal of Bland-Allison. "They [paper silver] tually established in 1913. The National form an unnecessary addition to the paper 224 THE FREEMAN • APRIL 1996 currency," Arthur declared in 1881. "In ocratic Party was no longer the great laissez­ respect to the coinage of silver dollars and faire, hard-money party of Jefferson, Jack­ the retirement ofsilver certificates," Arthur son, and Cleveland, and the Republicans said in 1882, "I have seen nothing to alter soon emerged as the party of the corporate but much to confirm [these] sentiments." State. 14 Democrat Grover Cleveland (1885-1889, Republican Theodore Roosevelt called 1893-1897) may have been the greatest gold for additional legislation and elasticity in the standard advocate ever to serve as presi­ monetary system.- By 1906, he was calling dent. In his first term, Cleveland singlehand­ for''a considerabl~increase in bills ofsmall edly preserved the gold standard at a time denominations." William Howard Taft when the Democrats split bitterly over the (1909-1913) went even further, declaring in money issue and populism. However, his his inaugural, "One of the reforms to be opposition to tariffs cost him the 1888 elec­ carried out. .. is a change ofour monetary tion. and banking laws, so as to secure greater When Cleveland left office after his first elasticity ... and to prevent the limitations term, the Treasury had a large gold reserve, of law from operating to increase the em­ but it was depleted by Republican Benjamin barrassment of a financial panic." By this Harrison (1889-1893). In 1890, Harrison time, the Federal Reserve's establishment signed the Sherman Silver Purchase Act, was a forgone conclusion and America was requiring the Treasury to buy 4.5 million soon to be saddled with the inflationary, ounces ofsilver monthly. To buy the silver, fractional-reserve system that sets Ameri­ Treasury was to issue a new type of paper can monetary policy to this day. money known as Treasury notes. The act There is a glorious tradition of hard­ was a victory for the Populists, who held money advocates in the history of the that deflation, which hurt farmers, could be United States. Reviving that heritage is reversed by free silver policies. Deflation essential to our economic well-being. Fur­ continued, the gold reserve dropped, pri­ ther, the decline of the dollar after it was vate banking tightened, and the Panic of severed from its last links to gold in 1971 has 1893 ensued. affected all Americans, even if it has been Re-elected and back in the White House, ignored by most elected officials. Economic Cleveland attacked the Silver Purchase Act law cannot be repealed. Easy money leads as a "dangerous and reckless experiment. to inflation in any century. The truths about .. ." He called for its repeal to restore hard money recognized by many ofour best confidence in the dollar. Cleveland knew presidents need to be brought back into the Gresham's Law and defended gold against public square. D inflationists in his own Democratic Party. 1. Jackson's veto was more than 7,500 words in length. Congress tried to compromise, but Cleve­ 2. The Specie Circular's author, U.s. Senator Thomas Hart Benton ofMissouri, was nicknamed "Old Bullion" for his land would not yield and the act was re­ pro-gold views. pealed. Cleveland was the last Democratic 3. Ron Paul and Lewis Lehrman, The Case for Gold (Washington: The Cato Institute, 1982), p. 62. president to support gold. The Populists, 4. Under a gold monometallic standard, the dollar is whose presidential candidate won more defined only as a weight of gold, with silver circulating by weight. This is an example of "free metallism," in which two than a million votes in 1892, returned to the or more metal coins are allowed to fluctuate freely in the same Democrats four years later as supporters of range. 5. Paul and Lehrman, ibid., pp. 63-65. William Jennings Bryan. 6. Ibid., p. 66. 7. Ibid., p. 74. 8. Ibid., p. 75. Lessons for Today 9. Wesley Clair Mitchell, A History of the Greenbacks (Chicago: University of Chicago Press, 1903), pp. 232-38, 423-28. McKinley's victory in 1896 also contained 10. Paul and Lehrman, ibid., pp. 76-77. the seeds of central banking and political 11. Ibid., p. 74. 12. Ibid., p. 96. manipulation that has led to the rampant 13. Ibid., p. 96. inflation ofthe twentieth century. The Dem- 14. Ibid., pp. 117-18. THEFREEMAN IDEAS ON UBERTY

Mary Wollstonecraft­ Equal Rights for Women by Jim Powell

n Western Europe during the late eigh­ emancipation of the whole sex," she de­ I teenth century, single women had little clared. "Let woman share the rights, and protection under the law, and married she will emulate the virtues of man; for she women lost their legal identity. Women must grow more perfect when emanci­ couldn't retain a lawyer, sign a contract, pated...." inherit property, vote, or have rights over Wollstonecraft inspired people because their children. she spoke from the heart. Although she was As Oxford law professor William Black­ reasonably well-read, she drew more from stone noted in his influential Commentaries her own tumultuous experience. "There is on the Laws ofEngland (1758): "The hus­ certainly an original defect in my mind," she band and wife are one person in law; that is, confessed, "for the cruelest experience will the very being or legal existence of the not eradicate the foolish tendency I have to woman is suspended during the marriage or cherish, and expect to meet with, romantic at least is incorporated and consolidated tenderness." into that ofthe husband: under whose wing, She dared do what no other woman had protection and cover, she performs every done, namely pursue a career as a full-time thing. " professional writer on serious subjects with­ Then along came passionate, bold Mary out an aristocratic sponsor. "I am then Wollstonecraft who caused a sensation by going to be the first of a new genus," she writing A Vindication of the Rights of reflected. It was a harsh struggle, because Woman (1792). She declared that both women were traditionally cherished for women and men were human beings en­ their domestic service, not their minds. dowed with inalienable rights to life, liberty, Wollstonecraft developed her skills on mea­ and the pursuit ofhappiness. She called for ger earnings. She dressed plainly. She sel­ women to become educated. She insisted dom ate meat. When she had wine, it was in women should be free to enter business, a teacup, because she couldn't afford a wine pursue profes~onal careers, and vote ifthey glass. wished. "I speak of the improvement and Contemporaries noted Wollstonecraft's provocative presence-thin, medium Mr. Powell is editor ofLaissez Faire Books and height, brown hair, haunting brown eyes, a Senior Fellow at the Cato Institute. He has and a soft voice. "Mary was, without be­ writtenforThe New YorkTimes, The Wall Street Journal, Barron's, American Heritage, and more ing a dazzling beauty, ... of a charming than three dozen otherpublications. Copyright © grace," recalled a German admirer. "Her 1996 by Jim Powell. face, so full ofexpression, presented a style 225 226 THE FREEMAN • APRIL 1996 of beauty beyond that of merely regular Dissenters whose religious beliefs put them features. There was enchantment in her outside the tax-supported Anglican Church. glance, her voice, and her movements." Among these Dissenters was minister and Mary Wollstonecraft was born April 27, moral philosopher Richard Price, who was 1759, in London. She was the second child in touch with Thomas Jefferson, Benjamin and eldest daughter ofElizabeth Dixon, who Franklin, Marquis de Condorcet, and other hailed from Ballyshannon, Ireland. Mary's radical thinkers of the day. Wollstonecraft father, Edward John Wollstonecraft, was a also met scientist Joseph Priestley, school­ handkerchief weaver. He decided to be­ teacher John Hewlett, and Sarah Burgh, come a gentleman farmer after he got an widow of radical author James Burgh. Al­ inheritance from his father, a master weaver though Wollstonecraft retained her faith in and residential real estate developer, but the Anglican Church, she stood out as a farming was a bust. The family moved seven maverick and became good friends with times in ten years as their finances deterio­ these people. rated. Edward drank heavily, and Mary Dissenters promoted reform of Britain's often had to protect her mother from his cozy political system. The House of Lords violent outbursts. She had rocky relations consisted of aristocrats who inherited their with her siblings. positions. The House of Commons was Mary's formal schooling was limited, but chosen by the very few males who were one of her friends in Hoxton, outside Lon­ enfranchised-just 15,000, about one-half don, had a respectable library, and Mary percent ofadult males-determined the out­ spent considerable time exploring it. Through come of an election. The Test and Corpo­ these friends, she met Fanny Blood, two ration Acts disenfranchised religious Dis­ years older and skilled at sewing, drawing, senters. Moreover, no town had gained the watercolors, and the piano. She inspired right to representation since 1678, which Mary to take initiative cultivating her mind. meant that dynamos of the Industrial Rev­ Spurredbyfamily financial problems, Mary olution like Birmingham and Manchester resolved to somehow make herown way. She were excluded. pursued the usual opportunities open to smart but poor young women. At 19, she got The Influence of a job as live-in helper for a wealthy widow Joseph Johnson who proved to be a difficult taskmaster. Hewlett encouraged Wollstonecraft to Young Adulthood write a pamphlet on education and submit it to Joseph Johnson, the radical publisher and Three years later, in 1781, Mary tried and bookseller with a shop at St. Paul's Church­ failed to establish a school at Islington, yard. He was known as a visionary entre­ North London. Then Mary, Fanny, and preneur who backed a number ofunknowns Mary's sisters, Eliza and Everina, started including the poet-printmaker William a school nearby at Newington Green. After Blake. Johnson published works by Joseph initial success, that, too, failed. She then Priestley and poets William Cowper and worked as a governess for an Irish family William Wordsworth, too. He distributed and saw firsthand the idleness of landed materials for Unitarians. aristocrats. These discouraging experiences Hewlett's suggestion turned out to be a were compounded by the death of Fanny lifeline because, as Wollstonecraft biogra­ Blood from tuberculosis. After Mary's pher Claire Tomalin explained, "Mary was mother died in 1782, she-not her oldest homeless again, without ajob ora reference; brother-assumed primary responsibility she had nothing to live on, and she was in for taking care of her volatile father. debt to several people. She had no marriage Meanwhile, through her Newington school prospects. She was 28, with a face that experience, Wollstonecraft met many local looked as though it had settled permanently MARY WOLLSTONECRAFT-EQUAL RIGHTS FOR WOMEN 227 into lines ofseverity and depression around The French Revolution the fierce eyes. .. hermost remarkable trait was still that she had refused to learn the The outbreak ofthe French Revolution in techniques whereby women in her situation July 1789 triggered explosive controversy. usually attempted to make life tolerable for In November, Richard Price gave a talk themselves: flattery, docility, resignation to before the Society for Commemorating the the will of man, or God, or their social Glorious Revolution of 1688, defending the superiors, or all three." right ofFrench people to rebel and suggest­ Johnson told Wollstonecraft that she had ing that English people should be able to talent and could succeed ifshe worked hard. choose their rulers-anobvious challenge to He published her pamphlet in 1786 as the hereditary monarchy. This alarmed Ed­ Thoughts on the Education of Daughters; mund Burke, a Member of Parliament pre­ with Reflections on Female Conduct, in the viously known for having defended the More Important Duties ofLife. Sales were American Revolution. Burke wrote negligible, but the work launched Woll­ Reflections on the Revolution in France stonecraft's literary career. She sent her (November 1790), a rhetorically brilliant author's fee to the impoverished Blood attack on natural rights and a defense of family and redoubled her efforts. "I must monarchy and aristocracy. exert my understanding to procure an inde­ Burke's ideas as well as his swipes at pendence and render myself useful," she Price made Wollstonecraft indignant. Draw­ wrote. "To make the task easier, I ought to ing on the ideas ofJohn Locke and Price, she store my mind with knowledge-The seed rushed into print with A Vindication ofthe time is passing away." Rights ofMen, among the earliest of some By 1788, Johnson offered her steady 30 replies to Burke. Although this polemic work. She translated books from French was repetitious and disorganized, and Woll­ and German into English. She served as an stonecraft overdid her attacks on Burke as assistant editor and writer for his new jour­ vain, unprincipled, and insensitive-she nal, The AnalyticalReview. She contributed had an impact. She faulted Burke for being to it until her death, perhaps as many as 200 blind to poverty: "Misery, to reach your articles on fiction, education, sermons, trav­ heart, I perceived, must have its cap and elogues, and children's books. bells. .. ." She denounced injustices ofthe Johnson was a good man. He helped British constitution which evolved during Wollstonecraft find lodgings. He advanced the "dark days of ignorance, when the her money when needed. He dealt with her minds ofmen were shackled by the grossest creditors. He helped her cope with her prejudices and most immoral superstition." father's chaotic situation. He calmed her She singled out the aristocratic practice of bouts of depression. "You are my only passing family wealth to the eldest son: "the friend," she confided, "theonly person I am only security ofproperty that nature autho­ intimate with-I never had a father, or a rizes and reason sanctions is, the right a man brother-you have been both to me...." has to enjoy the acquisitions which his Wollstonecraft met more radicals who talents and industry have acquired; and to visited Johnson, including William Blake, bequeath them to whom he chooses...." Swiss painter Henry Fuseli, and Johnson's She lashed out at arbitrary government publishing partner, Thomas Christie. On power: "Security of property! Behold, in a one occasion, she met philosopher William few words, the definition of English liber­ Godwin and Thomas Paine, the Englishman ty. ... But softly-it is only the property of who helped inspire the American Revolu­ the rich that is secure; the man who lives by tion by writing Common Sense. Wollstone­ the sweat of his brow has no asylum from craft dominated the conversation. "I heard oppression; the strong man may enter­ her very frequently," Godwin recalled, when was the castle of the poor sacred?­ "when I wished to hear Paine." and the base informer steal him from the 228 THE FREEMAN • APRIL 1996 family that depend on his industry for sub­ tivist Jean-Jacques Rousseau who wanted to sistence.... I cannot avoid expressing my keep women down. He had written that surprise that when you recommended our "The education of the women should al­ form ofgovernment as a model, you did not ways be relative to the men. To please, to be caution the French against the arbitrary useful to us, to make us love and esteem custom ofpressing men for the sea service." them, to educate us when young, and take Wollstonecraft's work, and everyone care of us when grown up, to advise, to else's for that matter, was later dwarfed by console us, to render our lives easy and Thomas Paine's far more powerful reply to agreeable; these are the duties ofwomen at Burke-The Rights ofMan-but she estab­ all times, and what they should be taught in lished herself as an author to reckon with. their infancy. " Wollstonecraft believed education could A Vindication of the be the salvation ofwomen: "the exercise of Rights of Woman their understanding is necessary, there is no other foundation for independence of char­ She had generally supposed that when acter; I mean explicitly to say that they must revolutionaries spoke of "man," they were bow only to the authority ofreason, instead using shorthand for all humanity. Then on ofbeing the modest slaves ofopinion." She September 10, 1791, Talleyrand, former insisted women should be taught serious Bishop of Autun, advocated government subjects like reading, writing, arithmetic, schools which would end at eighth grade for botany, natural history, and moral philoso­ girls but continue on for boys. This made phy. She recommended vigorous physical clear to Wollstonecraft that despite all the exercise to help stimulate the mind. talk about equal rights, the French Revolu­ To be sure, she had a naIve faith that the tion wasn't intended to help women much. same governments which restricted women She began planning her most famous work, could inexplicably be trusted to run schools A Vindication ofthe Rights ofWoman. She uplifting women. Twentieth-century gov­ wrote for more than three months and was ernment schools have been catastrophes for finished January 3, 1792. Johnson published women as well as men, graduating large it in three volumes. numbers at high cost without the most She despised the government class. fundamental skills. "Taxes on the very necessaries oflife," she Wollstonecraft called for eliminating ob­ wrote, "enable an endless tribe of idle stacles to the advancement ofwomen. "Lib­ princes and princesses to pass with stupid erty is the mother of virtue," she asserted, pomp before a gaping crowd, who almost "and if women be, by their very constitu­ worship the very parade which costs them tion, slaves, and not allowed to breathe the so dear." sharp invigorating air offreedom, they must She specifically cited laws that "make an ever languish like exotics, and be reckoned absurd unit ofa man and his wife; and then, beautiful flaws of nature." by the easy transition of only considering She envisioned a future when women him as responsible, she is reduced to a mere could pursue virtually any career opportu­ cipher. .. how can a being be generous who nities: "Though I consider that women in has nothing of its own? or virtuous who is the common walks oflife are called to fulfill not free?" the duties ofwives and mothers, by religion Wollstonecraft issued an early call for and reason, I cannot help lamenting that women's suffrage: "I really think that women of a superior cast have not a road women ought to have representatives, in­ open by which they can pursue more exten­ stead of being arbitrarily governed without sive plans of usefulness and indepen­ having any direct share allowed them in the dence...." Finally: "How many women deliberations of government." thus waste life away the prey of discontent, Wollstonecraft attacked those like collec- who might have practiced as physicians, MARY WOLLSTONECRAFT-EQUAL RIGHTS FOR WOMEN 229 regulated a farm, managed a shop, and stood France, she fell in love with an American erect, supported by their own industry, adventurer named Gilbert Imlay, who was instead of hanging their heads surcharged always looking for a scheme to strike it rich. with the dew of sensibility." They had a daughter, Fanny, but he lost With A Vindication of the Rights of interest in both of them and walked out. Woman, Wollstonecraft emerged in a class Wollstonecraft attempted suicide twice. M­ by herself. She went beyond her contempo­ ter the second incident, when she was being rary Catherine Macaulay who had written dragged out ofthe Thames, she renewed her passionately about educating women. Woll­ resolve: "it appears to me impossible that I stonecraft was opposed by "Bluestock­ shall cease to exist, or that this active, ings" like Hannah More, Elizabeth Mon­ restless spirit, equally alive to joy and sor­ tagu, and Hester Chapone who had fared row, should only be organized dust. Surely well by making the most of the subordinate something resides in this heart that is not position ofwomen. A succession ofwomen perishable-and life is more than a dream." novelists-Fanny Burney, Clara Reeve, While recovering from despair over Im­ Charlotte Smith, and Elizabeth Inchbald, lay, she took a three-month break with for instance-had portrayed women who Fanny in Scandinavia and produced one of achieved heroic moral stature, but they her most poignant works, Letters Written didn't always celebrate women with brains. During a Short Residence in Sweden, Nor­ A Vindication of the Rights of Woman way and Denmark. The letters were ad­ sold out within a year, and Johnson issued dressed to the unnamed American father of a second edition. An American edition and her child. They provide a travelogue laced translations into French and German fol­ with commentary on politics, philosophy, lowed. and her personal life. Mter witnessing the Wollstonecraft crossed the English Chan­ French Terror, she tempered her hopes for nel so she could see the French Revolution social change: "An ardent affection for the for herself. She was welcomed by expatriots human race makes enthusiastic characters such as the American patriot Joel Barlow, eager to produce alterations in laws and English poet Helen Maria Williams, and governments prematurely. To render them Thomas Paine. She sided with liberal Gi­ useful and permanent, they must be the rondists who, including Marquis de Con­ growth ofeach particular soil, and the grad­ dorcet, favored a constitutionally limited ual fruit ofthe ripening understanding ofthe government and equal rights for women. nation, matured by time, not forced by an But she was horrified at how fast the total­ unnatural fermentation." Throughout the itarian Jacobins seized power and launched book, Wollstonecraft struggled to cope with the Reign of Terror. her grief about Imlay, and she conveyed an Wollstonecraft dreamed that someday immediacy and tenderness that touches the men and women would nurture each other heart. "Ifever there was a book calculated as equals. "The man who can be contented to make a man in love with its author, this to live with a pretty, useful companion, appears to me to be the book," remarked without a mind, has lost in voluptuous William Godwin. gratifications a taste for more refined enjoy­ ments," she wrote, "he has never felt the Relationship with calm satisfaction that refreshes the parched William Godwin heart like the silent dew ofheaven-ofbeing beloved by one who could understand him. " Wollstonecraft decided to pursue her ac­ Alas, she had an agonizing time applying quaintance with Godwin, calling on him these ideas to her own life. She became April 14, 1796. He had a large head, deep-set infatuated with the eccentric genius Henry eyes, and a thin voice. "He seems to have Fuseli, but he was married and brushed her had some charm which his enemies could off after extended flirtation. While still in not detect or his friends define, but which 230 THE FREEMAN • APRIL 1996 had a real influence on those who attained March 29, 1797. She rejoiced that she had his close friendship," reported Godwin bi­ found true love at last. ographer George Woodcock. She went into labor during the early Like Wollstonecraft, he had started a morning of Wednesday, August 30, 1797. school, but his ideas were too radical, and She was attended by one Mrs. Blenkinsop, the effort failed. His literary career had an experienced midwife. Mter 11 o'clock begun with a dull political biography, a book that night, a daughter was born-Mary, who ofsermons and some potboiler novels. Then grew up to be Mary Shelley, author of London publisher George Robinson offered Frankenstein. For a while, it appeared to pay Godwin enough ofan advance that he things were fine, but three hours later, Mrs. could work out his philosophy. The result Blenkinsop notified Godwin that the pla­ was Enquiry Concerning Political Justice centa still hadn't come out ofthe womb. The (1793), describing his vision ofa harmonious longer the placenta remained, the greater society without laws or war. The book the risk of infection. Godwin called a Dr. established him as England's foremost rad­ Poignand who succeeded in removing much ical thinker. of the placenta. Wollstonecraft reported Godwin courageously spoke out against that the procedure was the most excruciat­ the British government's campaign to sup­ ingly painful experience of her life. press the Corresponding Societies which That Sunday, she began suffering chills, were debating clubs interested in revolu­ an ominous sign of infection. Doctors of­ tionary ideas. Godwin wrote public letters fered wine to help ease the pain, and tried supporting defendants. He charged that the other measures to stimulate her body to government's campaign was illegal since eject the remains ofthe placenta. Wollstone­ none of the defendants had committed rev­ craft continued to decline. She died Sunday olutionary acts of violence. These writings morning, September 10, 1797. Godwin was won widespread sympathy for the defen­ so overcome that he didn't attend the fu­ dants, and further prosecution was aban­ neral, held at St. Pancras church where they doned. had been married just five months before. At the time Wollstonecraft called, God­ She was buried in the churchyard. win was a 42-year-old bachelor courting Amelia Alderson, a doctor's daughter. But Posthumous In8uence he was intrigued with Wollstonecraft, de­ spite his initial impression that she talked Soon afterwards, ever-loyal publisher J0­ too much. He invited her to a dinner party seph Johnson issued Godwin's edition ofthe the following week. Included were James Posthumous Works ofthe Author ofa Vin­ Mackintosh and Dr. Samuel Parr, both of dication ofthe Rights of Woman, together whom had written rebuttals to Burke's with Godwin's candid memoir about her. Reflections on the Revolution in France. Although Godwin believed telling all would Mter Alderson rejected Godwin, he be­ boost her reputation, it unleashed a fire­ came more responsive to Wollstonecraft, storm of controversy, and her unsettled and her passion overwhelmed him. "It was personal life became an easy excuse to friendship melting into love," he recalled. belittle her ideas. But Wollstonecraft was haunted by fear of But as author Virginia Woolf remarked another betrayal. Godwin reassured her that about Wollstonecraft decades later, "we he longed for a relationship between equals. hear her voice and trace her influence even Her passion surged again. "It is a sublime now among the living. " American crusaders tranquility," she wrote him, "I have felt it for equal rights like Margaret Fuller, Lucre­ in your arms." By December, she was tia Mott, and Elizabeth Cady Stanton were pregnant. Both Wollstonecraft and Godwin all inspired by A Vindication ofthe Rights of had criticized marriage as a vehicle for Woman. exploitation, but they tied the knot on In recent years, the women's movement MARY WOLLSTONECRAFT-EQUAL RIGHTS FOR WOMEN 231 has become linked with preferential treat­ showed how a woman can succeed with her ment and hatred of men. Today, happily, wits. She urged everyone to achieve his or more people are rediscovering Mary Woll­ her human potential. She spoke out for vital stonecraft who established the individualist economic liberties. She demanded justice. roots ofequal rights. She took responsibility She championed relationships based on mu­ for her life. She educated herself. She tual respect and love. D Critica An interdisciplinary journal focusing on the effects of111arket and state on hUlllan well-being.

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Russell Kirk's Economics of the Permanent Things

by John Attarian

hile Russell Kirk (1918-1994) is prop­ ward the understanding of norms, and to­ W erly recognized for his role in reviving ward conformity to norms. Real decadence American conservative thought, his rumi­ consists in the movement of mankind away nations on economics have received little from the understanding ofnorms, and away attention. Yet he gave economics due con­ from obedience to norms. ,,3 sideration, and was a sturdy friend of eco­ One ofthe central elements ofKirk's view nomic freedom and a foe of statism. More­ ofhuman nature was his belief in the tenets over, because he drew on religion, morality, of orthodox Christianity. Made in God's and a comprehensive view ofhuman nature, image and likeness but fallen and imperfect, Dr. Kirk achieved important insights in man is a mixture of good and evil. And as political economy that a purely economic a spiritual being, man has deep needs of a approach would have missed. spiritual nature. People are inherently rest­ Kirk's starting point was belief in God less, and need challenges and adversity to and a "belief in an order that is more than keep them and their love of life keen: human,"l which rules both society and in­ dividuals. A transcendent God implies that Something in human nature seems to call for eternal truths exist, that "human nature is the possibility ofa real victory in life-and the a constant, and moral truths are perma­ possibility of a real defeat. Life is enjoyable only because Hope exists: hope for success nent. ,,2 of one sort or another. And hope for success This conviction that certain norms, or cannot exist without a corresponding dread of enduring moral standards, exist was central failure. In a very real sense, life is a battle; we to Russell Kirk's world view; upholding never could be happy were it otherwise.4 them was his life's work. These "Permanent Things"-norms of courage, duty, justice, A crucial corollary is that "life without integrity, charity, and so on-owe their obstacles is boredom, just as life without existence, and authority, to a higher power purposeful work is infinitely dreary," and than social good. wealth "without duties or challenges', For Kirk, loyalty to the Permanent Things spells lifelong unhappiness. "Mankind," is the standard for judging individuals, so­ Kirk warned, "can endure anything except cieties, and institutions. "Real progress boredom."5 Without challenges, people consists in the movement of mankind to- tum to mischief and escapes. Kirk also stressed prudence. Human na­ John Attarian is afree-lance writer in AnnArbor, ture is imperfect, society is complex and Michigan. reckless, shortsighted policies may not only 232 233 fail, but produce worse evils than they Competition address. Necessary reforms should be thoughtful and judicious. With keen insight, Kirk argued that free enterprise best.suits our nature in another way: its competition provides the struggle Moral Foundations against obstacles which true happiness and of the Market fulfillment require. Its freedoms and These beliefs were the foundation of choices, e.g., ofoccupation, help meet "the Kirk's advocacy ofthe free-market system. fundamental human longing for self-reli­ Kirk insisted that economics cannot be ance. They make men and women free. ,,10 separated from morals and character: "ma­ Morally, too, competition surpasses other terial prosperity depends upon moral con­ systems. If ethical and governed by con­ victions and moral dealings" -specifically, science, competition benefits all: a high degree of honesty, industry, charity, As Samuel Johnson said once, "A man is and fortitude. Intellect, initiative, shrewd­ seldom more innocently occupied than when ness, vigor, and imagination are also cru­ he is engaged making money. .. ." Econom­ cial. 6 He argued that a free economy is the ically and morally, a competitive system is best economic system for encouraging these nothing to be ashamed of. On the contrary, it characteristics and virtues: provides for human wants, and respects hu­ man freedom, far better than any vague "Ordinary integrity," Edmund Burke wrote, scheme ofreliance solely upon altruism, orany "must be secured by the ordinary motives to system of forced labor. In essence, it is not integrity. " Men and women are industrious, competition which is ruthless; rather, it is the thrifty, honest, and ingenious, in economic lack ofcompetition that makes a society ruth­ life, only when they expect to gain certain less; because in a competitive economy people rewards for being industrious, thrifty, honest, work voluntarily for decent rewards, while in and ingenious ... the vast majority work a non-competitive economy a few harsh mas­ principally out ofself-interest, to benefit them­ ters employ the stick to get the world's work selves and their families. There is nothing done. 11 wrong with this state of affairs; it is merely a condition of ordinary human nature. Com­ petition puts a premium on industry, thrift, Property honesty, and ingeniousness, for the slothful, Private property too received Kirk's vig­ the spendthrift, the known cheats, and the orous endorsement. Besides making the stupid fall behind in the economic contest of argument that private property is essential free enterprise.7 to freedom, 12 Kirk went much further. Prop­ Like Adam Smith, Kirk held that pursuing erty is a prerequisite of civilization and self-interest serves the public interest. culture. "Unless property is secure, there Moreover, "Industry, thrift, honesty, and can be no civilized life; for without the right ingeniousness deserve concrete rewards. A to keep what is one's own, and to add to that competitive economy provides these re­ if possible, there can be no leisure, no wards. ,,8 He argued that free enterprise is material improvement, no culture worthy of not only useful in rewarding these virtues, the name." 13 but good and just: better than other eco­ Moreover, property fosters right soul­ nomic systems, it encourages loyalty to the craft; "it is one of the most powerful in­ Permanent,Things. struments for teaching men and women Similarly, Kirk recognized that "Ability responsibility, for providing motives to in­ is the factor which enables men to lift tegrity. ,,14 themselves from savagery to civilization." Finally, Kirk deemed saving a bulwark of Like virtues, ability requires rewards­ freedom, since it gives material indepen­ including material rewards. A society which dence and security, thereby averting servile doesn't reward ability stagnates.9 dependence on government.·· In rewarding 234 THE FREEMAN • APRIL 1996 saving, the market economy promotes free­ To say that the "democratic" state would not dom. 15 deprive anyone of liberty is to play upon In sum, Dr. Kirk saw a free economy as words. The democratic state, like any other, is the economic system best suited for pro­ directed by individuals, with all the failings to moting loyalty to the Permanent Things he which humanity is heir, especially ... the lust for power. To suppose that the mass-state cherished. But Kirk's endorsement of the would be always just and generous toward its market sprang not from spiritual and moral slaves is to suppose that there would exist, truths alone. Its other root was a firm grasp upon all its levels, a class ofphilosopher-kings ofeconomic realities. He neverforgot Irving superior to human frailty, purged of lust and Babbitt's wise admonition that imagination envy and petty ambition. Butin modern Amer­ and theorizing should be "disciplined to the ica we have no such class to draw upon; facts. ,,16 indeed, often we seem to be doing what we can to abolish that sense ofinherent responsibility and high honor which compensates a patriar­ The State chal or feudal society for its lack of private Like his defense ofthe free economy, Dr. liberty.22 Kirk's rejection of statism combined philo­ A command economy is not only unfree, sophical and economic considerations. it stifles individual growth: providing for Keenly aware of human imperfectibility people's wants and making their choices for and reality's constraints, he categorically them keeps them in "perpetual childhood," rejected all utopian economic schemes. thus discouraging "full development of Utopia, he reiterated, means Nowhere. mind and character.' ,23 Only incremental improvements in the hu­ Desire for security inspired much of mo­ man condition are possible-and the only dernity's drive to statism, but Kirk warned real progress is within individual characters that swapping freedom for security is "a and consciences. 17 devil's bargain. " Political freedom, individ­ Prudence, too, argues powerfully against ual rights, and economic freedom stand or statism. "Society is not a machine," Kirk fall together. And once the free market's saw, but rather "a delicate growth or es­ ordinary rewards for ordinary integrity dis­ sence," 18 with causality running between appear, economic performance inevitably economy, society, and culture in complex declines. "In the modern industrial world, it ways. Prosperity makes a flourishing culture really is not possible to buy economic se­ possible; but Rome's decline shows that curity at the price of liberty.' ,24 government economic mismanagement Since productive work is indispensable, "may undo a high culture. ,,19 Also, "our and requires material rewards as both in­ industrial economy, of all systems man centives and rightful "ordinary rewards ever created, is that most delicately depen­ for ordinary integrity," Kirk warned espe­ dent upon public energy, private virtue, cially against excessive taxation. It not only and fertility of imagination.' ,20 Hence the discourages work but depresses private need for caution, lest government disrupt saving below that needed to replace and the economy and exact unforeseen forfeits. increase capital, thus diminishing produc­ For example, while government cannot tion.25 Likewise, overregulation discourages create ability, statism can extirpate it. "The enterprise, investment, and production.26 thing has been done before. ,,21 Better that Dr. Kirk was a scathing critic of Social we not meddle with things we don't under­ Security. Centralized, compulsory, wield­ stand. ing ever-expanding arbitrary power, it Furthermore, imperfect people cannot be "bears nearly all the marks ofa remorseless trusted with much power. Kirk exploded collectivism. ,,27 While acknowledging that both statists' moral pretensions and demo­ some people wouldn't save on their own, he cratic ideologues' crass error of confusing maintained that it would be better "morally democracy with liberty: and economically" to let them make their RUSSELL KIRK'S ECONOMICS OF THE PERMANENT THINGS 235 own mistakes .and to provide voluntary ern ones, and replacement of small busi­ charity, than to embrace forced saving. He nessmen involved in local life with managers argued that Social Security's stated motive, of large impersonal corporations.34 provision for the poor elderly, is disingen­ For Russell Kirk, then, statism was both uous; the real reason for Social Security's morally wrong and, in flouting the realities expansion is that it gives the government of economics and human nature, destruc­ access to "a vast reserve of money and tive. Moreover, its corrosive effects on credit," and is "disguised taxation," evad­ culture, social life, and character promote ing opposition to new taxes.28 Kirk's robust "true decadence"-forsaking the Perma­ moral denunciation of Social Security, as nent Things. tyrannical and mendacious, towers over today's conservatives' ingratiating endorse­ Order and Liberty ment and proposals to "save" it. One great strength of Kirk's viewpoint is Kirk believed that government has a valid that he spotted pernicious consequences of role. Human nature being what it is, "inany statism ramifying in directions which econ­ tolerable society, order is the first need. omists commonly overlook. Not only is the Liberty and justice may be established only inheritance tax a confiscatory capital levy ,29 after order is reasonably secure. ,,35 Histor­ it undermines the natural aristocracy of ically, people used government to establish wealth and noblesse oblige that provides order. Neither property nor markets can leadership and cultural patronage. "No so­ function without it. Property can exist" only cial institution does more to develop decent when some form of political order ensures leadership and a sense ofresponsibility than that a man may keep what is his own. ,,36 does the inheritance oflarge properties, and Markets require protection against theft and of the duties that accompany those proper­ fraud; enforcement of contracts; and reli­ ties. ,,30 Furthermore, the inheritance tax able weights and measures. "In these and weakens the social fabric by damaging the other ways, markets are made possible by family's economic base, as "a capital levy political authorities. Otherwise, buyers and discriminating against family enterprises sellers could not come together to exchange and partnerships" and threatening "disso­ goods safely. Without political protection, lution of family farms of any extent. ,,31 even the most simple market economy Likewise, assessing real property at would collapse." (Kirk's italics) Violence "speculative current market values-that and crime plagued the California gold rush is, taxing real property at what it might be until orderly government was established in worth if converted to other uses-has en­ 1849. 37 couraged the destruction offarmland and of Moreover, Kirk knew the limits and costs farm families in the neighborhoods ofgrow­ of things economic. Modem controversies, ing cities and towns." It thus abets urban he maintained, overemphasize economics. sprawl and the demise of the farm popula­ The real conflict "is between traditional tion and the farm family, 32 a bulwark of society, with its religious and moral and traditional mores. political inheritance, and collectivism" Inheritance, capital gains, and progres­ (Kirk's italics).38 Ultimately, the clash is sive income taxation make launching new between "opposing concepts of human na­ small businesses out of personal savings, ture." and maintaining existing ones, extremely His view that people are spiritual beings difficult. Family businesses are forced to led Kirk to maintain that though a prosper­ incorporate, or sell to large corporations.33 ous economy is good in itself, "its real Such taxation encourages retail consolida­ importance is the contribution it makes to tion, thereby abetting loss of humane scale our justice and order and freedom, our in retail trade, uglification of towns as old ability to live in dignity as truly human buildings are razed for less attractive mod- persons. ... Economic production is merely 236 THE FREEMAN • APRIL 1996 the means to certain ends.',39 Those ends 1. Russell Kirk, A Program for Conservatives, rev. ed. are''to raise man above the savage level, to (Chicago: Henry Regnery Co., 1962), p. 41. 2. Russell Kirk, The Politics ofPrudence (Bryn Mawr, Pa.: make possible the leisure which sustains Intercollegiate Studies Institute, 1993), p. 17. civilization and to free man from the con­ 3. Russell Kirk, Enemies ofthe Permanent Things: Obser­ vations ofAbnormality in Literature and Politics (New Roch­ dition ofbeing a simple drudge." Regarding elle, N.Y.: Arlington House, 1%9), p. 20. efficiency as an end in itself merely dupli­ 4. Russell Kirk, The American Cause (Chicago: Henry 40 Regnery Co., 1957), pp. 100-101. cates the error of Communism. 5. Russell Kirk, The Sword ofImagination: Memoirs ofa Kirk realized better than many ofcapital­ Half-Century ofLiterary Conflict (Grand Rapids, Mich.: Wil­ liam Eerdmans, 1995), p. 412. ism's otherdefenders that economic activity 6. Russell Kirk, Economics: Work and Prosperity (Pensa- does not occur in a vacuum; free markets cola, Fla.: A Beka Book Publications, 1989), pp. 365-367. 7. Kirk, The American Cause, p. 102. require moral, cultural, and social founda:­ 8. Ibid., p. 103. tions. Ideas and beliefs govern conduct,41 9. Kirk, A Program for Conservatives, pp. 180-182. 10. Kirk, The American Cause, p. 105. and exist in a hierarchy. Religious ideas are 11. Ibid., pp. 101, 104. the most fundamental: "culture springs 12. Russell Kirk, Intelligent Woman's Guide to Conserva- from the cult," as does morality. M'orality's tism (New York: The Devin-Adair Co., 1957), pp. 72-73. 13. Ibid., p. 67. primary purpose is "to order the soul and to 14. Ibid., p. 69. order the human community, not to produce 15. Kirk, Economics, p. 193. 16. Irving Babbitt, Democracy and Leadership (Indianap­ wealth. Nevertheless, moral beliefs or dis­ olis, Ind.: Liberty Fund, Inc., 1979), p. 258. beliefs have economic consequences.' ,42 17. See, e.g., Kirk, Intelligent Woman's Guide, pp. 16-17; Recfaiming a Patrimony (Washington, D.C.: The Heritage "Political problems, at bottom, are religious Foundation, 1982), p. 9. and moral problems. ,,43 Thus, capitalism 18. Kirk, A Programfor Conservatives, p. 181. 19. Russell Kirk, The Wise Men Know What Wicked Things "is a development from certain moral as­ Are Written on the Sky (Washington, D.C.: Regnery Gateway, sumptions of Western civilization" and Inc., 1987), p. 17. 20. Kirk, A Program for Conservatives, p. 210. "can exist and prosper only within a moral 21. Ibid., p. 180. order. ,,44 Christianity condemns envy, thus 22. Kirk, Intelligent Woman's Guide, p. 107. helping protect the market from its enemies. 23. Kirk, The American Cause, pp. 106-107. 24. Ibid., p. 107. But as religion wanes, envy and blaming 25. Kirk, Economics, p. 243. free markets and property for one's frustra­ 26. Ibid., p. 244. 27. Kirk, A Program for Conservatives, p. 160. tions-and therefore statism-grows.45 28. Ibid., p. 161. Dr. Kirk's ultimate assessment of free 29. Kirk, Intelligent Woman's Guide, p. 110. enterprise was positive, and his outlook 30. Ibid. 31. Kirk, The Wise Men Know What Wicked Things Are cheerful: "there is reason to believe that the Written on the Sky, p. 51. productive market economy will be func­ 32. Ibid. 33. Russell Kirk, Confessions of a Bohemian Tory (New tioning well a century from now. The errors York: Fleet Publishing Corp., 1%3), pp. 267,272. ofcommand economies and the blunders of 34. Ibid., pp. 271-272. 35. Kirk, Politics ofPrudence, p. 167. utopian welfare states have become obvious 36. Kirk, Intelligent Woman's Guide, p. 68. to a great many people, while Adam Smith 37. Kirk, Economics, pp. 228-231. continues to make economic sense.',46 38. Kirk, Intelligent Woman's Guide, pp. 9, 106. 39. Kirk, The American Cause, pp. 95-96. The free economy's foes often argue that 40. Russell Kirk, "Ideology and Political Economy," Amer­ there is more to life than economics. Indeed ica, vol. 96, no. 14, January 5, 1957, p. 390. 41. Kirk, The American Cause, pp. 12-14. there is, Dr. Kirk realized-and a free econ­ 42. Kirk, "Capitalism and the Moral Basis ofSocial Order," omy, provided it is operated by humane Modern Age, vol. 35, no. 2 (Winter 1992), pp. 101, 102. 43. Russell Kirk, The Conservative Mind, 7th rev. ed. people, serves humane values and the Per­ (Washington: Regnery Books, 1986), p. 8. manent Things best. Defenders ofeconomic 44. Kirk, "Capitalism and the Moral Basis ofSocial Order," p.102. freedom would do well to steep themselves 45. Ibid., pp. 103-104. in the wisdom of Russell Kirk. D 46. Kirk, Economics, p. 368.

Economics on Trial by Mark Skousen

Who Deserved the Nobel Prize?

"Prizes shall be awarded to those persons failed to receive the Nobel Prize? I asked who during the previous year have several colleagues to name their favorite rendered the greatest service to mankind." deceased economist who was still alive in -Alfred Nobel's last will (1895) 1969, why that economist deserved the award, and what major works should be ince 1969, the Nobel Memorial Prize in cited. Their choices were as follows. SEconomic Science has been awarded to more than two dozen eminent econo­ Ludwig von Mises mists, including Paul Samuelson, Friedrich Hayek, Milton Friedman, James Tobin, Ludwig von Mises (1881-1973), the pre­ and Robert Solow. Last year the winner eminent Austrian economist, was every­ was Robert Lucas, the Chicago economist one's first choice. Of his many original who developed the rational expectations contributions, three stand out: the theory of theory. the business cycle, the socialist calculation Lucas's winning the Nobel Prize reflects debate, and methodology. Most important the growing dominance offree-market eco­ works: Theory ofMoney and Credit (1912), nomics in the profession. In fact, econo­ Socialism (1922), and Human Action (1949, mists from the University of Chicago re­ 1966). ceived the award in five ofthe past six years. The prize, established by the Bank of Swe­ Murray N. Rothbard den, is awarded by a six-man committee, headed by Assar Lindbeck, who has grad­ Murray N. Rothbard (1926-1995), the ually grown more conservative over time. libertarian iconoclast who popularized Mis­ Economist Robert Kuttnerbemoans the fact esian economics in America, was nearly that several prominent Keynesians were everyone's second choice. He made original ignored by the Nobel committee during their contributions in welfare economics and lifetimes: Joan Robinson, Nicholas Kaldor, monopoly and tax theory, but was best and Sir Roy Harrod (Business Week, No­ known for his remarkable ability to write vember 12, 1990). clearly and profoundly about money, busi­ Are there any free-market economists who ness cycles, and government policy. Major works: Man, Economy and State (1962), Dr. Skousen is an economist at Rollins College, America's Great Depression (1963), and Winter Park, Florida 32789, and editor ofFore­ Power and Market (1970). His booklet cast & Strategies, one ofthe largest investment newsletters in the country. For more information What Has the Government Done to Our about his newsletter and books, contact Phillips Money? has probably had the greatest in­ Publishing, Inc., at (800) 777-5005. fluence of all. Several colleagues also men- 238 239 tioned his last great work, a two-volume mittee has matched Alfred Nobel's original history, Economic Thought Before Adam desires. His last will and testament created Smith and Classical Economics (Edward five prizes (physics, chemistry, physiology Elgar, 1995). or medicine, literature, and peace), all for actions that were to benefit mankind in a H. Hutt very practical sense, much like his inven­ w. tion of dynamite. Dynamite is not used William H. Hutt (1899-1988), a classical solely as a tool of war; it plays a valuable economist who for half a century taught role in mining, construction, and transpor­ at the University of Cape Town, was fre­ tation. Nobel's last will is filled with words quently mentioned as a third candidate. such as "discovery," "invention," "im­ Hutt's major contribution was in labor eco­ provement," "ideal," "brotherhood," and nomics, wherein he argued that persistent "peace." In sum, scientists, authors, and unemployment was due to above-market activists who have improved the lot of wage rates imposed by government regula­ mankind deserve the Nobel Prize. tions. He was a long-time critic of Keynes­ In the past, the Swedish academies have ian economics and apartheid in South M­ given prizes to outstanding citizens who rica. Major works: The Theory of Idle have rendered the "greatest services to Resources (1939), Keynesianism: Retrospect mankind": Roentgen for discovering x-rays, and Prospect (1963), and Economics ofthe Marconi for developing the wireless tele­ Colour Bar (1964). graph, Banting for isolating insulin, and My fellow economists also recommended Fleming for discovering penicillin. Yet, at several other names: Oskar Morgenstern the same time, the Swedish Royal Academy for his Theory of Games and Economic has awarded many obscure and sometimes Behavior (1944, co-authored by John von minimal contributors while ignoring many Neumann) and On the Accuracy of Eco­ noteworthy individuals. In literature, for nomic Observations (1950); Gottfried Hab­ example, Mark Twain and Leo Tolstoy never erler for his Prosperity and Depression received Nobel honors. (1937) and his exposition of the Austrian In science, the following were over­ theory of the trade cycle; Frank Knight looked: Thomas Edison for the electric for his Risk, Uncertainty and Profit (1921); light bulb; August and Louis Lumiere for Jacob Viner for his history of economic motion pictures; Willis Haviland Carrier thought and the development ofcost theory for air-conditioning; Orville and Wilbur in The Long View and the Short (1958); and Wright for the airplane; Henry Ford for Henry Hazlitt for his Failure ofthe "New mass production; George Washington Economics" (1959). Carverfor agricultural techniques; Vladimir Surprisingly, several free-market econo­ Zworykin and Isaac Shoenberg for televi­ mists felt that Joan Robinson (1903-1983) sion; Robert Watson-Watt for radar; Frank merited the Nobel Prize, not for her politics, Whittle and Hans Pabst von Ohain for the but for her scientific contributions, such jet engine; Chester Carlson for xerography; as The Economics ofImperfect Competition Howard Aiken, John P. Eckert, Jr., and (1933). In 1975, she was widely expected to John W. Mauchly for the digital computer; win the Nobel Prize, but was ultimately Jonas Salk for the polio vaccine; and Ted denied it because of her extreme political Hoff for the microprocessor. (I thank views and her admiration of Mao's China Michael H. Hart, author of The One Hun­ and Kim II Sung's North Korea. dred: A Ranking of the Most Influential Persons in History [Citadel, 1992], for pro­ What Nobel Really Wanted viding this wish list of potential Nobel win­ ners.) Surely these men have made a signif­ In reviewing the winners of the Nobel icant difference in our way of life and Prize, I wonder how well the Nobel com- standard of living. 240 THE FREEMAN • APRIL 1996 A Nobel for W.E. Deming? entrepreneurs. For example, surely W. Ed­ wards Deming (1900-1993) deserved the In keeping with the spirit of Nobel, the Nobel Prize in economics. Although not a Nobel Memorial Prize in Economic Science trained economist, his dynamic "quality­ ought to expand its universe from high control/consumer research" approach de­ theory to applied science. Ifthe Nobel Prize veloped in post-war Japan revolutionized can go to finance theorists such as Harry the world of production, consumption, and Markowitz, perhaps it could be extended job creation as much as any Friedman or to management theorists, statisticians, and Samuelson. 0 Private Cures for Public Ills: The Promise of Privatization edited by Lawrence W. Reed The Crisis: •Soaring government deficits • Crushing tax burdens •Bloated bureaucracies and regulatory red tape •Public sector waste, fraud, inefficiency The Solution: Private services! "Privatization is an idea whose time has come....No one who fancies himselfa 'public servant' should dismiss it out ofhand. I urge students ofeconomics and public policy to read this collection." -John Engler, Governor of Michigan (from the Foreword) rOin garbage collection to poll.'cing, services once considered the province of the public sector are Inoving to the private sector. Ainericans are quickly Flearning the value of privatization in tenns of cost and efficiency. Unlike many public deparhnents and agencies, private finns respond to Inarket forces and thus to the wishes of the people. Services are delivered not begrudgingly, but proInptly and econoinically. The essays in this iInportant new book froin FEE exanline the history of privatiza­ tion, its successes, and prospects for the future. The contributors-proininent scholars, professors, and policy analysts-provide an in-depth look at this wave of the future. Private Cures for Public Ills is the definitive exainination of the proinise of privatization. 200 pages, indexed $14.95 paperback Please add $3 per order of $25 or less, $4 per order of $26-$50. Send your order with the accompanying check or 1110ney order to FEE, 30 South Broadway, Irvington-on-Hudson, NY 10533. Visa and MasterCard telephone and fax orders are welco111ed: (800) 452-3518; fax (914) 591-8910. 241

story of how currency markets developed and grew, and eventually how more power­ BOOKS ful, efficient, and integrated financial mar­ kets now work to impose some checks and balances on both government fiscal and The Vandals' Crown: How Rebel monetary policies. Currency Traders Overthrew the Millman sets the tone for this story early World's Central Banks on by noting: "Although investors have by Gregory J. Millman always had to take into consideration the quality ofa government's management ofits The Free Press. 1995 • 305 pages. $23.00 economy, traders now have an unprece­ dented degree of power to sweep the finan­ Reviewed by Raymond J. Keating cial foundation out from under poorly man­ aged, politically unstable, or uneconomic he first 225 pages of The Vandals' governments before the bureaucrats even T Crown generally make for interesting know what has happened." He continues: reading-describing some fascinating de­ "For better or worse, since the collapse of velopments in financial markets and the the Bretton Woods international monetary economy. The remaining 50 or so pages order, traders provide the only financial unfortunately skew off in a different direc­ discipline the world knows." tion-either better left for another book or The reader might expect the author to simply discarded altogether. Much of this wrap up such a book perhaps with an book, though, lives up to its tantalizing analysis of how the economy performs un­ subtitle-"How Rebel Currency Traders der today's intertwined monetary, fiscal, Overthrew the World's Central Banks." and financial systems. However, Millman Author Gregory J. Millman explores var­ concludes this book with a look at a host of ious intriguing moments in monetary his­ legal infractions and shady schemes con­ tory. He writes of France's great inflation cocted by various financial traders over the between 1418 and 1423 and takes note of past few years. Millman sought to show John Locke's contribution to monetary "the weaknesses of a financial system that thought. He also offers a brief discussion is more efficient than any financial system of the gold standard, pointing out that one in history, but may also be more vulnerable of the great merits of gold is its ability to to moral hazard than ever before." The Van­ restrain the activities of monetary authori­ dals' Crown tarnishes in these last pages. ties. After all, inflation results from govern­ After showing the shortcomings (namely, ment's mismanagement ofmonetary policy. inflation) of monetary policy under the dis­ Indeed, the author clearly shows that even cretion ofgovernment bureaucrats, Millman gold-based monetary systems go awry when seemed compelled to attack the individuals government officials tinker with and try to operating in the financial markets as well.' circumvent the system's disciplines. Among Human nature is human nature, but the the examples of government mischief he author offers no comprehensive and com­ cites are the trade war and currency deval­ pelling arguments as to why more efficient uations of the Great Depression, and the financial markets might be more "vulnera­ inflationary U.S. monetary policy that even­ ble to moral hazard." His substantial em­ tually destroyed the flawed Bretton Woods phasis in the closing pages on the wrongdo­ monetary regime. ings of a handful of players in the financial As the U.S. dollar was de-linked from markets also gives the mistaken impression gold-effectively in the late 1960s and offi­ that corruption is widespread and such in­ cially in 1971-a new source for monetary dividuals possess the capabilities to wreak discipline had to be found. This is where The catastrophic economic havoc. Vandals' Crown shines. Millman tells the Markets ensure that individuals rarely, if 242 THE FREEMAN • APRIL 1996 ever, possess such power. The competitive outrageous and absurd infringements on marketplace possesses real checks and bal­ life, liberty, and the pursuit of happiness. ances, which make widespread corruption The infringements are rife and they spring impossible. After offering an often eloquent from petty bureaucrats and zealous officials, explanation as to how markets can act as a elected and unelected. disciplining force on government, Millman Mr. Bovard reminds us of an April 1995 should understand that markets, operating Gallup Poll revealing that 39 percent of within a sound system of property rights, Americans hold that "the federal govern­ discipline themselves. ment has become so large and powerful that In the end, the ability of the government it poses an immediate threat to the rights and to do substantial economic evil far outstrips freedoms of ordinary citizens." He notes that ofthe individual. Even with the checks that President Clinton meanwhile regularly provided by financial markets, as explained denounces public cynicism about govern­ in The Vandals' Crown, government mis­ ment goodness and purity. deeds continue, with markets, the economy, The Bovard approach alphabetically ar­ and individuals paying the price. This ranges cases of government running amok should have been Mr. Millman's closing from A to Z. caveat. [] Under A, for example, he treats affirma­ Mr. Keating is chief economist with the Small tive action, noting Equal Employment Op­ Business Survival Foundation. portunity Commission chairman Clifford Alexander making the case for quotas and declaring in 1968: "We ... here at EEOC Shake-Down: How the Government believe in numbers. ... Our most valid stan­ Screws You From A to Z dard is in numbers.... The only accom­ by James Bovard plishment is when we look at all those numbers and see a vast improvement in the Viking. 1995 • 141 pages. $14.95 picture." The U.S. Forest Service got criticized on Reviewed by William H. Peterson numbers for not hiring enough female fire­ fighters (many woman applicants are unable tem: A federal program routinely subsi­ to pass the Service's strength tests for I dizes welfare families living in oceanfront lugging heavy firefighting equipment). Up­ apartments in upscale La Jolla, California. shot: It advertised: "Only unqualified ap­ Item: The Food and Drug Administration plicants may apply." refuses to approve a machine that gives CPR Under M, Mr. Bovard observes the to heart attack victims because the victims lengths to which the Drug Enforcement cannot give their informed consent. Administration goes to stamp out the evil of Item: The Federal Highway Administra­ medical marijuana: In La Mesa, California, tion proposed a special waiver for the dis­ a citizen was sentenced to prison for 16 abled to allow truck drivers to be qualified to months for raising a tiny amount of mari­ drive even ifthey were blind in one eye and juana to treat his AIDS symptoms. had weak vision in the other. DEA steadfastly refuses to allow doctors The above items are gleaned from this to prescribe marijuana to treat glaucoma expose of overweening, inept, ham-fisted that could turn into total blindness, despite government, prodding James Bovard to ask: findings by Yale medical Professor Steven Has our government run amok? Duke and others of marijuana's positive Good question, and one put forth by the therapeutic effects on the disease. author of Lost Rights: The Destruction of Under Z, Mr. Bovard goes after zoning American Liberty. James Bovard, a con­ abuses: Coral Gables, Florida, charges res­ tributor to the Wall Street Journal and the idents $35 to get a permit to paint the New York Times, here exposes a host of bathroom in their home-orthe dining room BOOKS 243 or any other room. Local building inspec­ For partisans of liberty, however, this tors patrol the streets looking for painting book is something of a disappointment. trucks parked at homes which may have not Eggers and O'Leary are staffers at the paid the fee. Reason Foundation, the libertarian think In 1993 the New York City building in­ tank that publishes Reason magazine. Their spector bushwhacked Fordham University. problem is a familiar one for those on the Fordham had gotten a permit to build a 480­ Right: how to criticize government without foot radio tower on its Bronx campus. But offending the mainstream politicians and after getting the tower half-finished, NYC journalists who are so deeply committed to reversed its position and revoked the per­ it. Not surprisingly, they pull their punches. mit, setting Fordham back by $500,000. The result is a book about shrinking gov­ (Was Fordham reimbursed? You must be ernment which fails to explain why govern­ kidding.) ment should be shrunk. As Bovard quotes Albert Jay Nock: They mean their book to be a right-wing "How little important it is to destroy a answer to David Osborne and Ted Gaebler's government, in comparison with destroying Reinventing Government. The premise of the prestige of government." Agreed. D that book, eagerly embraced by the Clinton Dr. Peterson, an adjunct scholar at the Heritage administration, is that government should Foundation, is Distinguished Lundy Professor not be viewed as a necessary evil: it is a Emeritus of Business Philosophy at Campbell worthy problem-solving machine that just University in North Carolina. needs an injection of efficiency and flexibil­ ity. While Eggers and O'Leary make some Revolution at the Roots: Making Our conservative points, they don't take issue Government Smaller, Better, and with this basic outlook. Their remedies Closer to Home closely resemble Osborne and Gaebler's: introduce competition, cut down on red by William D. Eggers and tape, and so on. As a result, they say, we John O'Leary will end up with''better" government. Kept The Free Press. 1995 • 405 pages + index. under cover is the argument that govern­ $25.00 ment has a fatal flaw that cannot be reformed away. Reviewed by James L. Payne Mter a few hundred pages, the reader starts to wonder whether Eggers and or the general reader, Revolution at the O'Leary are purposely omitting discussion FRoots provides a comprehensive survey of this fatal flaw, or just aren't aware of it. of government-shrinking attempts around Their principal reform idea is actually rather the nation. Prodigiously researched, it takes pro-government, the so-called "Tenth us to every comer of the land: welfare Amendment Revolt." The aim is to reduce reform in Wisconsin, Michigan, and New the federal government by getting state Jersey; budget control in New York and governments to take over many ofits activ­ Philadelphia; tax and spending limits in ities. For example, they are all for having Arizona and Colorado; community policing government fund mental hospitals; they in Houston; vouchers in Milwaukee. Prom­ just don't want the federal government to inently mentioned are the private, voluntary do it. organizations which prove they can do a A libertarian would hardly concede a better job than government: the Marcus governmental role so easily. The fatal flaw Garvey school for inner city youngsters in looms too large in his thinking, namely that Los Angeles (where second-graders read government action is based on the initiation college texts), the St. Martin de Porres offorce, which is an inherently corrupt, and shelter for women in Chicago, and dozens of corrupting, way to approach public prob­ others. lems. For real libertarians, talking about 244 THE FREEMAN • APRIL 1996 better government is like speaking ofbetter into an asset. It is not a collection ofrhetoric war: an oxymoron. but ofdetailed economic analyses ofhow to Ignoring libertarian roots also means that manage wildlife resources, including endan­ Eggers and O'Leary give away the moral gered species, buttressed with a wealth of high ground. Thinking people on all sides are references, tables, and graphs. now coming to realize that government does The extinction of species is not a modern not have a promising future. Nobody ex­ phenomenon. In the British Isles, the wol­ pects-as the socialists of earlier genera­ verine, wild boar, and lynx were probably tions expected-that government will bring gone before historic times. However, in us to utopia, or even to a harmonious, modem times, property rights to large hold­ functional community. Now the debates are ings in Britain (where 92 percent ofthe land about limiting the damage. By accepting was privately owned in the late 1800s, in government as society's problem-solver, contrast to 28 percent in the United States) Eggers and O'Leary join the fatigued pes­ gave English landowners ownership rights simism of the modem mainstream. They to the ambient wildlife as well. English law concede that none of their reforms, even if is a more promising model for preserving fully implemented, will bring impressive species than is the myth of the "noble results. The best we can hope for, they say, savage" (the American Indian). are "minor improvements." One particularly interesting analysis of Is this all we have to offer future genera­ the" economics offatal mistakes" concerns tions? Is this what we want on our tomb­ endangered predators such as eagles. We stones, that we made minor improvements currently have a fine-and-imprisonment sys­ in a fundamentally sick system? What hap­ tem, but the bounty for killing an eagle is pened to the vision of a voluntary society? nonetheless about $25. Ranchers have an We have abundant proof that voluntary incentive to kill eagles because of the dam­ institutions do work. Think of the glorious age they cause. In a free-market scheme to future that beckons if we deliberately ex­ protect eagles, someone (groups of conser­ panded these approaches. We can see, al­ vationists?) would have to compensate own­ most within reach, a society based on co­ ers for livestock lost to predation. operating with our neighbors instead of The discussion of elephants shows how forcing them. conservationists often have things back­ Idealistic? Probably a little. But if liber­ ward. The ivory trade, rather than being a tarians don't do the dreaming, who will? D threat, may be a means to preserving an Dr. Payne, a contributing editorofThe Freeman, animal that is very destructive to agricul­ is a Bradley Fellow at the Heritage Foundation ture. "The African farmer's enmity toward and the author ofCostly Returns: The Burdens elephants is as visceral as western mawk­ of the U.S. Tax System. ishness is passionate," states the book, quoting David Western. The right to profit Wildlife in the Marketplace from their ivory would give someone an incentive to preserve the elephant. edited by Terry L. Anderson and The book challenges the assumption that Peter J. Hill public management is always the best way Rowman and Littlefield Publishers. 1995 • 191 to preserve wildlife. Natural areas now have pages. $22.95 paperback to pay their way in political currency: "It is entirely possible, depending upon who hap­ Reviewed by Jane M. Orient pens to exercise political control, that they will fare better in the economic market than his compendium of nine articles takes they do in the political market. Those who T examples from the Hudson's Bay Com­ seek the free lunch promised by public pany, 1700-1763, to emerging Africa, to management always run the risk that others show how to tum wildlife from a liability will be served." BOOKS 245

Parts ofthe book are quite technical, and They are as valid today as they were when it is not on the whole intended for casual first written. Many more recent writings reading. It is a valuable resource for those provide much greater detail and depth, of engaged in serious study ofinnovative ways course, and many well-documented experi­ to conserve wildlife while meeting the needs ences since then have confirmed the expec­ of human beings. 0 tations of those of us who are among the Dr. Orient is an internist in solo private practice. earliest "privatizers." But for the reader She serves as the Executive Director of the who wants just a light exposure that never­ Association of American Physicians and Sur­ theless covers the waterfront, this book geons. She wrote Your Doctor Is Not In: Healthy satisfies the need. Considering that there are Skepticism about National Health Care (Crown, now about 150 English-language books on 1994). the subject, this is no mean accomplish­ ment. Private Cures for Public Ills: The In his chapter, Hans Sennholz deems Promise of Privatization divestment to be the only acceptable form of privatization, and warns that other forms of edited by Lawrence W. Reed privatization-contract, franchise, or The Foundation for Economic Education. voucher-will save no· money and will in­ 1996 • 208 pages. $14.95 paperback stead perpetuate a large and even growing government role in society as private firms Reviewed by E. S. Savas join the chorus for more government spend­ ing. That concern was not misplaced in his volume might well be called A Pri­ 1987, but the evidence now is overwhelming T vatization Anthology, for it brings to­ that large savings and a decline in the gether a fine selection of articles on the number of government employees are real-' subject that have appeared over the last ized by introducing competition into the dozen years. Most of the 24 chapters (nine­ delivery of public services. Indeed, this is teen of them) were first published in The the most common form of privatization in Freeman; another, by the editor, Larry the United States, and it has been adopted Reed ofthe Mackinac Institute in Michigan, most effectively at the local level, where is an original article written expressly for financial constraints have been most binding this book. (unlike the federal government, cities can't The book is well organized, divided into print money) and services are most visible to six sections: (1) the conceptual basis for the populace. "Contracting out" works, privatization, studded with well-chosen when it's done right, and in my opinion this quotations from Adam Smith, Ludwig von is a good way to privatize collective (that is, Mises, and Friedrich Hayek; (2) opportuni­ "public") goods. One must remain alert, ties for privatization at the federal level; (3) however, to the dangerthat programs which transportation privatization; (4) privatiza­ government should not be engaged in at all tion applied to the natural environment; (5) (providing individual or private goods) opportunities for privatization at the state would be maintained through contracts or and local level; and (6) overcoming the vouchers and sold under the banner of opposition to privatization. The chapters in privatization. this slim tome are brief and snappy. Aver­ The section on federal privatization op­ aging about seven pages in length, each is an portunities focuses on welfare, space, and easily digestible morsel. The reader can dip postal service. The one on transportation in anywhere and find rewarding intellectual deals with railroads (in Japan and Michigan) nourishment. Despite the fact that three­ and private roads, and explains how priva­ quarters of the chapters first appeared in tization of roads can greatly improve high­ print in the 1980s, their message is neither way safety. The section on privatization in dimmed by time nor faded by familiarity: state and local government addresses 246 THE FREEMAN • APRIL 1996 planned communities, prisons, and schools, to the support and operation of big-city and ends with a chapter that rightly raises zoos. Those whose only prior exposure to the alarm that further federal intrusion into privatization has been newspaper stories education, under the guise of aiding and about garbage collection and private prisons improving the schools, will bring down pri­ should find this entire section to be an vate schools to the low level of many gov­ awakening as to the breadth and full import ernment-run schools. of privatization. Dwellers in metropolitan areas are too My own definition of privatization is re­ rarely exposed to the idea that privatization flected throughout the book: privatization can protect the environment and preserve means relying more on the private institu­ natural resources. Instead they are sub­ tions of society-the market, voluntary jected to a steady drumbeat from an urban groups, and the family-and less on govern­ elite-the self-styled, virtuous guardians ment to satisfy people's needs. D ofthe environment-thatthe private sector, Professor Savas is Director, Privatization Re­ in its lust for profits at any cost, is a ruth­ search Organization, School of Public Affairs, less despoiler of the environment. It is Baruch College, City University ofNew York. particularly satisfying, therefore, to find four fine essays that address this topic, in a section entitled ' 'Private Property and The Sacred Fire of Liberty: Environmentalism." Clint Bolick points out James Madison and the that under public (Le., government) owner­ Founding of the Federal Republic ship of forests and grazing lands, manage­ ment and effective property rights are exer­ by Lance Banning cised by self-interested bureaucrats and, as Cornell University Press. 1995 • 543 pages. a consequence, the public interest is gener­ $35.00 ally overlooked or thwarted. He provides a fine primer on the issues and explains per­ Reviewed by William J. Watkins, Jr. suasively and without rhetoric how private ownership can better achieve the public istorians have painted James Madison purpose. Reed continues the section with H as a young centralizer and nationalist his eye-opening chapter that presents case who later defected to the philosophy of studies of private firms and not-for-profit states' rights and strict construction of the groups that preserve wilderness sites and Constitution. Madison was also accused of provide full access to the public. philosophical apostasy by his contemporar­ The next chapter, by two South Africans, ies. Alexander Hamilton, his collaborator Nancy Seijas and Frank Vorhies, gives a on The Federalist, bitterly complained that fascinating account of private preservation after 1789 Madison was "seduced by the of wildlife in the South African bush. expectation of popularity" in Virginia and Twenty private reserves, bound together in thus opposed his former allies. a voluntary consortium, enable visitors to Madison's political thought, however, is see lions, cheetahs, elephants, giraffes, much more complicated than critics and hippos, rhinoceroses, and other exotic (to historians would have us believe. In The Americans) species in their natural habitats. Sacred Fire ofLiberty, Lance Banning at­ It is in the interest of these businesses to tempts to demonstrate that Madison did not maintain cohditions and to protect the ani­ change horses in midstream, but rather mals from poachers-an ever-present prob­ acted consistently throughout his career. lemwhen animals are owned by "the Banning begins by examining Madison's public" in government sanctuaries. The last stances in the Continental Congress in the chapter in this section brings us back to the early 1780s. The young Madison, according United States in a discussion of private to Banning's research, was strikingly similar ownership and other privatized approaches to the Madison of the 1798 Virginia Reso- BOOKS 247 lutions, which boldly enunciated the com­ nation. According to Banning, Madison was pact theory ofthe Constitution. While in the arguing that a large republic offers more Continental Congress, Madison opposed an security from majority abuses. In Madison's independent federal power to impose taxes, view, the extension of the republic could insisting that his native Virginia was abso­ only curb democratic ills when local and lutely sovereign within her chartered general interests were properly and strictly bounds. In an incident foreshadowing a divided. Increasing the number offactions, clash with Hamilton, Madison fought a plan which Madison considered a great evil, was for a national bank on the grounds that the not his intent. power to charter a corporation was not In short, the research presented in this enumerated in the Articles of Confedera­ book makes it apparent how the Father of tion. Madison evinced frustration at the the Constitution could both oppose the Congress's powerlessness to carry out its Washington Administration and later frame delegated functions, but did not seek to the Virginia Resolutions. The Sacred Fire of expand these functions except in the realm Liberty is an excellent examination of the of trade. thought ofJames Madison and an important Madison's experiences in the Continental work of historical revisionism. Banning's Congress led him to craft the Virginia Plan portrayal ofMadison as a son ofthe Virginia at the Constitutional Convention. At the piedmont, consistent advocate of states' convention, Madisonjoined with the nation­ rights, and strict constructionist, does much alists in recreating the federal government, to aid our understanding ofthe Father ofthe but Madison the nationalist was far different Constitution. D from the Hamiltonian nationalists. Madi­ Mr. Watkins is assistant editor ofThe Freeman. son, in Banning's view, merely sought "a constitutional device that could secure the general government's supremacy within a America First! Its History, Culture, system where the overwhelming burden of and Politics responsibilities would still be carried by the by Bill Kauffman states." (Italics in original) The Northern commercial elites, on the other hand, had Prometheus Books. 1995 • 296 pages. $25.95 plans for a much more energetic government than Madison expected. Reviewed by Gregory Pavlik Though Madison did collaborate on The Federalist to defend the same plan of gov­ ill Kauffman's new book is a mix of ernment, Banning shows that Madison and Bbiographical essays, historical com­ Hamilton's interpretations of the plan were mentary, and contemporary criticism. antipodes from the start. Whereas in Hamil­ America First! sets out to describe a way ton's contributions there are numerous ref­ of looking at the culture and politics of the erences to the value of a great commercial United States that is distinctly American. In republic, no such language can be found in one sense, it is a history ofnativist populism Madison's. Madison's support of the new and isolationist sentiment. On the other plan of government was predicated on his hand, Kauffman mixes in to the equation a belief that agricultural producers would be strain of aristocratic, blue-blood American­ dominant and keep the regime within its ism that makes it harder to pin his America proper bounds. Firsters down on class lines. When applied Perhaps the greatest contribution Ban­ to contemporary politics, Kauffman lumps ning makes is his reevaluation ofFederalist together Gore Vidal, Jerry Brown, Pat No. 10. Banning unabashedly asserts that Buchanan, and Ross Perot under one roof. No. 10 was neither an unequivocal endorse­ And, as he explains, they "fit together like ment ofa large republic nor an endorsement pieces ofajigsaw puzzle: the true puzzle [is] for multiplying the variety ofinterests in the how it could ever have been otherwise." 248 THE FREEMAN • APRIL 1996

Kauffman's seemingly odd. union makes Luddite and hill-billy particularist; and a sense because Vidal, Brown, Buchanan, gaggle of other notables who exemplified and Perot all react against the United States what it means to be an American. Empire in one way or another. Kauffman The last half of the book or so is com­ pines for an older America that minded its prised of essays on rebuilding an America own business and made virtue of republi­ First movement around the republican prin­ canism. As he asks in the conclusion: "do ciples championed in the first half. It brings we really want to live in an America in which to mind another recent book on American the flickering image of a starving Rwandan politics: David From's Dead Right. Not on CNN is more immediate to us than the because there are any meaningful parallels, plaintive cries of the hungry girl down the but because Kauffman's outstanding analy­ road; a world in which young Americans sis· will go largely unpromoted and ignored don blue helmets and travel halfway around by the big journals of liberalism and con­ the world to enforce the resolutions of the servatism, while Frum's neo-conservative United Nations, while in small towns across work remained the talk of the New York­ America volunteer fire departments are un­ Washington establishment for months. dermanned?" He'll have none ofthe globa­ Frum vigorously promoted the global activ­ loney that dominates the contemporary in­ ist-beltway Right, gently chiding them for tellectual scene. He holds up American their over-reliance on big government. In dissident voices for admiration, not because contrast, he treats America Firsters and Old they are dissidents, but because they're still Right holdovers as neanderthals and moss­ Americans. backs-more fit for the fever swamps than What emerges is a brief for Jeffersonian the intellectual scene. It speaks volumes decentralism, strict noninterventionism in about the price of dissent in America. Be­ foreign squabbles, and authentic localism in tween the two wings of the ruling class of politics, business, and life. He lays out his faux liberals and faux conservatives, ideal.through the lives of Americans who "there's not," to quote another America shared this vision in some way: Hamlin Firster, "a dime's worth of difference. " Garland, the midwest literary populist; My only complaint about the book is that Amos R. E. Pinchot, the wealthy, cantan­ it is too short. There are so many America kerous left-wing populist described by his­ First heroes, most ofwhom fell on the wrong torian Arthur Ekirch as "better than any­ side of history, that it is an absolute neces­ one, except perhaps A. J. Nock in our time, sity to revive their memory. A secondary . . . a precursor of the libertarian move­ problem which emerges from its brevity is ment"; literary master Edmund Wilson, that the book seems to be plagued by gaps. who hated war and refused to pay income It jumps from progressive to Old Right to taxes on principle; Gerald Nye and John T. anti-Cold War figures without filling in the Flynn, heroes ofthe Old Right resistance to details of their struggles. It doesn't convey the Roosevelt New Deal and War Deal; the feeling that many of these individuals Alice Roosevelt Longworth, daughter of represented-and still do represent-mass Theodore and nemesis of Franklin; Sinclair public sentiment, rather than cranky-but­ Lewis, literary champion of small town correct views. Nevertheless, America First! America; Gore Vidal, whose foreward to is a highly relevant and readable book from America First! doesn't shrink from remind­ start to finish. It deserves the attention I'm ing the reader how much of our supposed sure it won't get. D "defense" budget is squandered in the ser­ vice of the American Empire; "the other Mr. Pavlik is associate editor of The Freeman Arkansas Bill," isolationist Senator William and editor of Forgotten Lessons: Selected Es­ J. Fulbright; Edward Abbey, Earth First! says of John T. Flynn, published by FEE.