THEFREEMAN IDEAS ON LIBERTY

FEATURES

252 Free Trade and Human Rights in China by James A. Dorn How free trade promotes human rights around the world. 256 What We Know, When We Know It by Llewellyn H. Rockwell, Jr. Another Nobel Prize for irrelevant trivia. 260 Wisdom of a "Liberal" Giant by William H. Peterson The economic principles ofLudwig von Mises. 266 Government Schooling: The Bureaucratization ofthe Mind by Thomas E. Lehman Why privatization is the only "education reform" that can succeed. 270 The Moral Obligations ofWorkers by Jeffrey Tucker The free market promotes productive and ethical labor relations. 276 American Labor Law-Bad and Still Getting Worse by George C. Leef Legislation has corrupted labor relations. 279 Life, Liberty, and Pizza Delivery by Thomas J. DiLorenzo How the free market eliminates "service redlining." 281 Free-Market Emancipation by Karol Boudreaux How competitive markets freed slaves in Colonial America. 285 A Friendly View ofDealing by Tibor R. Machan The justice of free exchange. 287 Benefit Societies in America: The Way It Used to Be by Michael 1. Probst Benefit societies can provide genuine welfare reform. 290 How Galveston Opted Out of Social Security by Ed Myers One county's success in privatizing Social Security. 293 The True American Tradition by Wesley Allen Riddle We ignore our constitutional history at our peril. 295 Atlas Shrugged Revisited: FortyYears ofVoicing the Philosophy of Freedom by Edward W Younkins Ayn Rand's masterpiece lives on. 299 Private Property and "Social" Justice byAntony Flew The charade of"social justice" is exposed. 302 Free-Born John Lilburne: Mighty Martyr for Liberty by Jim Powell A seventeenth-century champion oflimited government.

COLUMNS

Center NOTES from FEE-A Farewell by Hans F: Sennholz 264 IDEAS and CONSEQUENCES-The New Zealand "Revolution" by Lawrence W Reed 283 POTOMAC PRINCIPLES-The New Assault on Capitalism by Doug Bandow 314 ECONOMICS on TRIAL-What's the Best Measure of Inflation? by Mark Skousen

DEPARTMENTS

250 Perspective-Thomas J. DiLorenzo, Thomas Jefferson, John Randolph 316 Book Reviews -Capitalism: A Treatise on Economics by George Reisman, reviewed by Jim Powell; The Pyramid by Ismail Kadare, reviewed by Richard A. Cooper; Sovereign Nations or Reservations? An Economic History ofAmerican Indians by Terry L. Anderson, reviewed by Bruce L. Benson; Jefferson's "Bible": The Life and Morals ofJesus of Nazareth by Thomas Jefferson, reviewed by William H. Peterson; Migrations and Cultures by Thomas Sowell, reviewed by George C. Leef. THEFREEMAN IDEAS ON LIBERTY PERSPECTIVE Published by George Washington on The Foundation for Economic Education Irvington-on-Hudson, NY 10533 The Role of Government Phone (914) 591-7230 FAX (914) 591-8910 E-mail: [email protected] Lost in the fog of another presidential FEE Home Page: http://www.fee.org election year was the fact that 1996 was also President: Hans F. Sennholz the bicentennial of one of the greatest Managing Editor: Beth A. Hoffman speeches ever made by an American presi­ Guest Editor: Thomas J. DiLorenzo Editor Emeritus dent: George Washington's Farewell Address Paul L. Poirot to the Nation in September of 1796. Review­ Lewisburg, Pennsylvania Book Review Editor ing some of the highlights of Washington's George C. Leef last presidential address sadly reminds us of Adjunct Professor ofLaw and Economics, Northwood University how the American republic, as envisioned by Editorial Assistant the founding fathers, has been lost. But it also Mary Ann Murphy Columnists serves as an eternal road map for regaining Doug Bandow our freedoms. Cato Institute, Washington, D. C. Lawrence W. Reed Though he was the most famous military Mackinac Center for Public Policy .Midland, Michigan leader of his time, Washington disdained the Mark Skousen existence of a permanent military establish­ Rollins College, Winter Park, Florida ment. "Avoid the necessity of those over­ Contributing Editors Charles W. Baird grown Military establishments," he said, California State University, Hayward Peter J. Boettke "which, under any form of Government, are New York University inauspicious to liberty, and which are to be Clarence B. Carson American Textbook Committee regarded as particularly hostile to Republican Wadley, Alabama Liberty." Thomas J. DiLorenzo Loyola College, Baltimore, Maryland It is wise to assume that all politicians are Joseph S. Fulda New York, New York liars, Washington advised, for "one of the Bettina Bien Greaves expedients of Party to acquire influence, Resident Scholar, FEE John Hospers within particular Districts, is to misrepresent University of Southern California the opinions and aims of other Districts." Tibor R. Machan Auburn University Special-interest groups may "now and then Ronald Nash answer to popular ends," but as a rule they Reformed Theological Seminary Edmund A. Opitz should be despised. For they inevitably "be­ Chatham, Massachusetts James L. Payne come potent engines, by which cunning, am­ Sandpoint, Idaho bitious and unprincipled men will be enabled Jim Powell Westport, Connecticut to subvert the Power of the People, and to William H. Peterson Adjunct Scholar, Heritage Foundation, usurp for themselves the reins of Govern­ Washington, D. C. ment." It is "the interest and duty of a wise Jane S. Shaw PERC, Bozeman, Montana people," moreover, to "discourage and re­ Richard H. Timberlake strain" government power by every available University of Georgia means. The Freeman is the monthly publication of The Foundation for Economic Education, Inc., Irvington-on-Hudson, NY lOS33. FEE, Washington would be appalled at all the established in 1946 by Leonard E. Read, is a non-political, educational foreign campaign contributions solicited by champion of private property, the free market, and limited government. FEE is classified as a 26 USC S01(c)(3) tax-exempt organization. today's politicians, for such solicitation Copyright © 1997 by The· Foundation for Economic Education. Permission is granted to reprint any article in this issue, except "John "opens the door to foreign influence and Lilburne," provided credit is given and two copies of the reprinted material are sent to FEE. corruption," whereby "the policy and the will The costs of Foundation projects and services are met through dona­ tions, which are invited in any amount. Donors of $30.00 or more receive ofone country, are subjected to the policy and a subscription to The Freeman. Student subscriptions are $10.00 for the nine-month academic year; $S.OO per semester. Additional copies of this will of another." issue of The Freeman are $3.00 each. For foreign delivery, a donation of The "Great rule of conduct for us" in $4S.00 a year is suggested to cover mailing costs. Bound volumes of The Freeman are available from The Foundation for foreign affairs ought to be to trade with other calendar years 1972 to date. The Freeman is available in microform from University Microfilms, 300 N. Zeeb Rd., Ann Arbor, MI 48106. countries, but "to have with them as little 250 PERSPECTIVE political connection as possible" and to "steer Constitution for the United States and of clear of permanent Alliances, with any por­ amendments thereto, they constituted a gen­ tion of the foreign world" except in the case eral government for special purposes, dele­ of extraordinary emergencies. gated to that government certain definite Modern-day "judicial activism" would powers, reserving each state to itself, the likely cause Washington to reach for his residuary mass of right to their own self­ sword, for he believed it to be a devious means government; that whensoever the general of constitutional "change by usurpation" and government assumes undelegated powers, its a dire threat to liberty. Judicial activism is acts are unauthoritative, void, and ofno force: nothing less than "the customary weapon by That to this compact each state acceded as a which free governments are destroyed." state, and is an integral party, its co-states On economic policy George Washington forming, as to itself, the other party: That the favored strict laissez faire. Our commercial government created by this compact was not policy should "hold an equal and impartial made the exclusive or final judge ofthe extent hand: neither seeking nor granting exclusive of the powers delegated to itself; since that favors or preferences" to anyone. Instead, we would have made its discretion, and not the should rely on "consulting the natural course Constitution, the measure of its powers; but ofthings" and "forcing nothing" by legislation that as in all other cases of compact among and regulation. parties having no common judge, each party In Washington's eyes, a laissez-faire eco­ has an equal right to judge for itself ... nomic policy, minimal military establishment, --THOMAS JEFFERSON, the absence of entangling political alliances Kentucky Resolution of 1798 with foreign nations, and a Constitution that would perpetually confound special-interest Parchment Promises politics and keep the size and scope of gov­ ernment to a bare minimum were essential to I have no faith in parchment, sir, I have no "prevent our Nation from running the course faith in the abracadabra of the constitution; I which has hitherto marked the Destiny of have no faith in it. ... If, under a power to Nations." This message is just as important to regulate trade, you draw the last drop ofblood Americans in 1997 as it was in 1797. from ourveins; if ...you draw the last shilling --THOMASJ.DILoRENZO from our pockets, what are the checks of the Dr. DiLorenzo, a professor of economics at constitution to us? ... When the scorpion's Loyola College, Baltimore, Maryland, is this sting is probing us to the quick, shall we pause issue's Guest Editor. to chop logic? Shall we get some learned and cunning clerk to say whether the power to do Jefferson on States' Rights this is to be found in the constitution, and then, if he, from whatever motive, shall main­ Resolved, That the several states compos­ tain the affirmative, like the animal whose ing the United States of America are not fleece forms so material a part of this bill, united on the principle of unlimited submis­ quietly lie down and be sheared? sion to their general government; but that -JOHN RANDOLPH, by compact under the style and title of a commenting on the Tariff of 1824

251 THEFREEMAN IDEAS ON LIBERTY

Free Trade and Human Rights in China by James A. Dorn

he best way to promote human rights values evolve spontaneously as they have in Taround the world is to promote free trade. Chile, South Korea, and Taiwan. The expan­ Trade liberalization improves ties among sion ofmarkets creates a culture ofcommerce nations, increases their wealth, and advances and economic liberty that naturally spills over civil society. Protectionism does the opposite. to social and political life. As people become Governments everywhere need to get out of freer in their economic life, they will demand the business oftrade and leave markets alone. greater autonomy in other areas, including a Western democratic governments, in partic­ stronger voice in government. ular, need to practice the principles of free­ dom they preach and think of free trade not Free Trade as a Human Right as a privilege but as a fundamental human right. The proper function of government is to A free-market approach to human rights cultivate a framework for freedom by pro­ policy does not mean an attitude of indiffer­ tecting life, liberty, and property, including ence toward human rights abuses. Using slave freedom of contract (which includes free labor or political prisoners and compelling international trade), not to use the power of very young children to compete in interna­ government to undermine one freedom in an tional markets are wrong. But blanket restric­ attempt to secure others. The right to trade is tions, such as the denial of most-favored­ an integral part of an individual's property nation (MFN) trading status or the use of rights and a civil right that governments sanctions not directly targeting the wrong­ should protect as a universal human right. doers, should be avoided. The problem is that Market exchange rests on private property, even limited actions are very difficult to en­ which is a natural right. As moral agents, force and unlikely to bring about political individuals necessarily claim the right to lib­ change in an authoritarian regime. erty and property in order to live and to Protectionist measures are more apt to pursue their interests in a responsible man­ radicalize than liberalize closed societies. The ner. Governments should afford the same logical alternative is to use the leverage of protection to economic liberties, including trade to open authoritarian regimes to market free international trade, as to other liberties. forces and let the rule of law and democratic Restrictive trade practices impede not only the flow of goods and services but also the James A. Dom is vice president for academic affairs at the Cato Institute. This essay is a condensed exchange ofinformation and the transmission version ofhisarticle in the Spring/Summer1996 Cato of values that occur with free markets. When Journal. market exchange opportunities are curtailed, 252 253

government power grows, with adverse effects grated to urban areas. They and their families on human liberty. Likewise, when markets were no longer slaves to the state: they expand, individuals gain autonomy and gov­ resisted coercion and initiated what Kate ernment power diminishes. People become Xiao Zhou calls "a spontaneous, unorga­ less dependent on the state and more depen­ nized, leaderless, nonideological, apolitical dent on one another when markets open and movement" that transformed the old commu­ protectionism declines. A case in point is nist system and enhanced human rights.! China. The quiet revolution that has been taking place in China's economy since 1978 is com­ The Chinese Experience bining with the information revolution to strengthen the fabric of civil society, espe­ Before China's open-door policy, initiated cially in China's southern coastal provinces. in 1978, the Chinese Communist Party (CCP) Commenting on China's cultural transforma­ had a monopoly on economic, social, and tion, Jianying Zha writes in her book China political life. China isolated itself from the Pop, "The economic reforms have created West, and the Chinese people had little new opportunities, new dreams, and to some opportunity to expand their horizons. The extent, a new atmosphere and new mind­ repressive system of communal farming pre­ sets. The old control system has weakened in vented China's large rural population from many areas, especially in the spheres of econ­ determining its own fate, and state enterprises omy and lifestyle. There is a growing sense of made the urban population totally dependent increased space for personal freedom."z Any­ on government. The lack of an alternative to one who has visited China and seen the the centrally planned economy made China a vibrancy of the market, the dynamism of the giant serfdom where individuals had little people, and the rapid growth of the nonstate hope of improving themselves and their fam­ sector will concur with Zha's cautious opti­ ilies. mism. After 1978, China's economic reforms­ Commercial life in China is evolving natu­ which liberalized trade, ended collectivized rally as people flee the countryside for im­ farming, and created new employment op­ proved living conditions and the chance to portunities outside the state sector-freed strike it rich in the growing nonstate sector.3 millions of people from the iron grip of the If this current growth continues, by the year CCP. The return offarming to families under 2000 nonstate enterprises will account for the household responsibility system (baochan more than two-thirds of China's industrial daohu) changed the whole dynamic of eco­ output and as much as 40 percent of China's nomic, social, and political life. The state gross domestic product.4 was no longer the master for the 80 percent The liberalization and decentralization of ofChina's population that lived in rural areas. economic life in China has widened the scope Farmers became risk-takers, created new for civil society. Princeton University profes­ markets, developed rural industries, and mi- sor Minxin Pei believes that the gradual 254 THE FREEMAN • MAY 1997

development of China's legal system toward wealth, diminish freedom, and increase the affording greater protection for persons and likelihood of conflict. They also block the property, the growing independence and ed­ natural formation of civil society, which is ucational levels of members of the National fostered by the growth of commerce. Traders People's Congress, and the recent experi­ find it in their own self-interest to treat their ments with self-government at the grassroots customers with respect. Good manners and level will help move China toward a more good business go hand in hand; commercial open and democratic society. He points to the society and civil society are inseparable. upward mobility of ordinary people, occa­ Trade also fosters the rule of law as people sioned by the deepening of economic reform, find it useful to accept common rules, respect and to the positive impact of trade liberaliza­ one another's rights, and be generally toler­ tion on political norms. In his view public ant. opinion and knowledge of Western liberal In The Wealth of Nations (1776), Adam traditions, such as the rule of law, "have set Smith described how the development of implicit limits on the state's use ofpower" and commercial life in Europe "gradually intro­ have promoted the democratization of the duced order and good government, and with legal system. There has been a sharp rise in them, the liberty and security ofindividuals.,,6 the number of civil lawsuits against the state, Likewise, the English liberal Richard Cobden and individuals are winning about one-fifth of wrote in his 1835 pamphlet England, Ireland, their cases, according to PeL5 and America, "Commerce is the grand pana­ Of course, as long as the CCP stands in the cea, which, like a beneficent medical discov­ way of private property and the rule of law, ery, will serve to inoculate with the healthy China will continue to experience corruption, and saving taste for civilisation all the nations and the future offreedom and civil societywill of the world." According to Cobden, "not a remain precarious. But isolating China, by the merchant visits our seats of manufacturing use of trade sanctions or by denying China industry, but he returns to his own country the MFN trading status, would only make matters missionary of freedom, peace, and good gov­ worse and slow political change. Trade has a ernment.,,7 civilizing influence, and that influence is more Harvard economist Robert Barro's recent likely to change China than foreign interven­ empirical work, summarized in Getting It tion and protectionism. Right, shows that earlier writers were correct in seeing a close relation between free trade The Civilizing Influence and free people. Barro finds "that improve­ ments in the standard of living ... substan­ of Trade tially raise the probability that political insti­ Commerce brings people together, not only tutions will become more democratic over to trade goods but also to exchange informa­ time." He argues: tion. Trade liberalization helps to depoliticize The advanced Western countries would contrib­ economic life, widen human experience, and ute more to the welfare of poor nations by reduce the threat of war. Peace and free exporting their economic systems, notably prop­ enterprise tend to reinforce each other. When erty rights and free markets, rather than their countries restrict foreign trade, they reduce political systems, which typically developed FREE TRADE AND HUMAN RIGHTS IN CHINA 255

after reasonable standards of living had been rule of law. As Harry Wu, a former political attained. If economic freedom can be estab­ prisoner in China, put it, "Until private own­ lished in a poor country, then growth would be ership is allowed on a wide scale, genuine encouraged, and the country would tend even­ 8 liberalization-representative government, tually to become more democratic on its own. free markets and individual rights-will re­ main elusive" in China.10 D Conclusion 1. Kate Xiao Zhou, How the Farmers Changed China (Boul- Trade policy and human rights policy ·der, Colo.: Westview Press, 1996), p. 4. According to Zhou (p. 10), "baochan daohu, markets, rural industry, and migration all should not be yoked. Imposing punitive tariffs reduced official control over people's lives, particularly rural on China by removing MFN trading status or people's lives. This great increase in autonomy surpassed any­ thing experienced before in the People's Republic." using other restrictive practices to sanction 2. Jianying Zha, China Pop (New York: The New Press, China for human rights violations will do 1995), p. 202. 3. The nonstate sector consists of all enterprises not directly more harm than good. As Kate Zhou has controlled by the central government or by provincial govern­ shown in the case of China, "commercial ments. Nonstate enterprises include urban and rural collectives (of which township and village enterprises are particularly activity is liberating" and "a major way out of important), individually owned enterprises, foreign-owned en­ governmental control." 9 We should not lose terprises, and joint ventures. Unlike state-owned enterprises, collectives face a hard budget constraint and are primarily market sight of that lesson in the pursuit of some driven. See Michael W. Bell, Hoe E. Khor, and Kalpana Kochhar, "feel-good" policy that has little chance of China at the Threshold ofa Market Economy, Occasional Paper 107 (Washington, D.C.: International Monetary Fund, 1993), changing China's political climate but will p.13. devastate its blossoming market sector. Keep­ 4. Ibid. 5. Minxin Pei, "Economic Reform and Civic Freedom in ing people in China and elsewhere in poverty China," Economic Reform Today, No.4 (1994), p. 12. by restricting their human right to trade is 6. Adam Smith, The Wealth of Nations, edited by Edwin Cannan (New York: The Modern Library, 1937), p. 385. neither ethical nor logical. 7. Richard Cobden, "Commerce Is the Grand Panacea," in What China needs is a new system and a David Boaz (ed.), The Libertarian Reader (New York: The Free Press, 1997), pp. 320-2L new way of thinking. The full range of human 8. Robert J. Barro, Getting It Right: Markets and Choices in rights will come to China only when property a Free Society (Cambridge, Mass.: The MIT Press, 1996), p. II. 9. Zhou, p. 100. rights are treated as fundamental civil rights 10. Harry Wu, "A Chinese Word to Remember: 'Laogai'," and when civil rights are protected by the Washington Post, May 26,1996, p. C7.

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What We Know, When We Know It by Llewellyn H. Rockwell, Jr.

o outsiders, mainstream economics can self-imposed exile from reality to speak about T look strange and obscure, or even silly everyday issues. More often than not, how­ and pointless. The mathematical techniques ever, they do so only for the purpose of that dominate most academic journals can criticizing rival schools of thought. (Think of be intimidating in themselves. And they are MIT's Professor Paul Krugman, one of the all the more alarming since the subject matter profession's leading lights. Most of his pop­ of economics-people who buy, sell, invest, ular articles do nothing but bash supply-side and work-doesn't seem to lend itself to a economics as silly and unscientific.) H.L. wholly mathematical rendering. Physics and Mencken said modern philosophy consists of chemistry, yes. But economics deals with one philosopher trying to show that some people and their choices under constraints. other philosopher is a jackass, and proving it Shouldn't their actions require logical and not beyond all doubt. Much the same could be mathematical explanations? said of economics. Indeed they should, and the best and most When the Nobel Prize committee awards influential economists in history have always its economics prize, reporters attempt to sum used words, not equations, to express their up the winning insight in plain language. ideas. Sadly, the profession took a turn for the Invariably, the result is so banal and ridiculous worse in the postwar era, and having exalted that people wonder why such a prize was Keynesian-style policies, hailed measurement instituted in the first place. People think: and calculus as the essence ofall science, even Physicists are solving mysteries of the uni­ when that science deals with society itself. verse, medical researchers are discovering In pursuit of this goal, economics became new cures, writers are entertaining us, but more and more detached from reality and, what are economists doing? They are merely therefore, from good sense. Economists have confusing us, and for this they get a prize. dealt with this problem by a professional flight Sadly, this was the story again in 1996. into obscurantism. They began to talk only to James Mirrless of Cambridge University and each other, because only members ofthe club the late William Vickrey of Columbia Uni­ could understand and appreciate the peculiar versity won for their work in "information language and the accepted bounds of theo­ asymmetries." The inevitable public confu­ rizing. That pattern still dominates. sion that followed wasn't the fault of the Sometimes economists emerge from their media, which tried to present their theoretical apparatus fairly. The fault lies with econo­ Llewellyn H. Rockwell, Jr., is president ofthe Ludwig mists, who for decades have held on to a von Mises Institute in Auburn, Alabama. theory of human behavior so absurd that it 256 257 took little more than the application of good before extending coverage. A used-car buyer sense to correct it, although much more can develop a more sophisticated understand­ correction is needed. ing of automobile technology, and of the tricks of the trade. Information Asymmetries Can Government What are information asymmetries and Fix the Problem? what did Mirrless and Vickrey say about them? These economists described, in highly Yet it's easy to see why the theory of mathematical terms, what happens when par­ information asymmetries, even when given a ticipants in a market exchange have different free-market spin, is menacing. Ifpeople in the kinds and incomplete levels of information. marketplace are flying blind when making Company managers know more about the such crucial decisions as whether to buy orsell firm's prospects for future profitability than fire insurance, isn't there a role for govern­ stockholders do. A person buying insurance ment in fixing the problem? That's the logic knows more about the potential risks than that led to "lemon laws" mandating used-car the insurer. The used-car dealer knows more dealers to guarantee the quality long after about the quality of the car than the buyer. the deal is made. Indeed, the information­ According to mainstream economic theory, asymmetry literature has collapsed into yet these information asymmetries are something another variation on the "market failure" to fret about, because they produce bumps theme composed by economists back in the on the economic road. Ifyou're a stockholder 1950s. and you think the managers are holding out According to this view, the free market only on you, you may not buy the stock, even ifyou takes us so far in eliminating differences in are wrong in your assumption. In other cases, the information people have. Intervention­ asymmetries can cause people to do things ists claim, and correctly, that perfect infor­ they shouldn't, like buy lemons instead of mation is hard to achieve through voluntary well-functioning cars. efforts. So they take the next step: Govern­ The 1996 Nobel laureates have explored ment should guarantee full information. Thus the issue at great length. For example, they our economy should be burdened by thou­ have argued that information asymmetries in sands of requirements that order business to the insurance market can lead to moral haz­ provide full disclosure, even when consumers ards. An insurer might offer a policy that pays orstockholders are not particularly interested for doctor visits, but he doesn't know that in getting it. the policyholder plans to respond to the The warning labels you see on every prod­ prospect of free care by eating junk food and uct from wine to sunglasses are inspired by the becoming a couch potato. This is a strategic view that consumers have no other way of response, but it causes other insurers to getting necessary knowledge. Every day, we overcompensate by making premiums higher are bombarded with government-mandated than they probably should be (in the assess­ information: how much fat is in our food, that ment of economists). so-and-so is an equal opportunity employer, Mirrless and Vickrey also explained that that the terms on a car loan are subject to the free market has many ways of responding various constraints, and so on. The idea is to to the risks posed by information asymme­ "protect" the consumer, who the government tries. Each party can learn from bitter expe­ presumes can't get the information he needs rience what kind of information he needs to to make intelligent choices. We hear it all so make a profitable exchange. often, we stop paying attention. The stockholder can demand more infor­ The regulations also presume that business mation about the way a company is run be­ is a vast conspiracy designed to hide infor­ fore he buys its stock. An insurer can demand mation from the buying public, yet the reverse more detailed information about a person is the case. The whole point of advertising is 258 THE FREEMAN • MAY 1997 to bring knowledge that a producer has the point. Trends are forever changing. about his product to the consuming public. "However complete and recent statistical in­ What's more, business undertakes this infor­ formation may be," writes Ludwig von Mises, mation-disseminating job at its own expense. "it always remains information about the past Under capitalism, we get most of our infor­ and does not assert anything about the fu­ mation for free, and then decide whether to ture." act on it. Let's contrast this with the information The Uncertainty of the Future confusion inherent in any political race. In the 1996 campaign, the Clinton campaign said In fact, information asymmetries don't exist that the Dole campaign's tax plan didn't add in some markets. They exist in all of them. up, a charge which the other side disputed. They are built into the very fabric of human The dispute couldn't be resolved because the life. As Mises said, "the uncertainty of the different camps used different assumptions future is already implied in the very notion of about how taxpayers will respond to changes action." The future "can never be foretold in the tax code. Voters had no way ofknowing with more than a greater or smaller degree who was right. of probability." Oddly, this is a truth that the With lower taxes, will taxpayers work economics profession has long rejected (or, harder to make more money, or will they more accurately, not thought much about) choose to "purchase" more leisure with their in its futile search for theory analogous to higher incomes? Depending on the choice, physics. government revenue can go up or down by Neither is government any help. If the tens of billions of dollars. The trouble is that market is pervaded by uncertainty and incom­ no one knows in advance what people will do. plete information, the government is even There's an information asymmetry between more so. Officials have virtually no incentive the candidates and the taxpayers, i.e., the to discover true information, one of many people who will actually have to live and work reasons why everything they do brings about under the new tax environment the politicians sheer waste and inefficiency. are proposing. Moreover, there is no reason to think Now, this may appear to be much ado about incomplete information is normatively objec­ nothing, and in many ways, it is. For there tionable (yet another hidden assumption in are two assumptions behind this information this literature). Let's look back to St. Thomas literature that are never proven. First, that all Aquinas's famous example of the desperately parties affected by an economic exchange thirsty man buying water from a single sup­ need perfect information. Second, that the plier. The supplier knows that many other job of economists is to see that people get it, suppliers are on their way, but doesn't reveal someway, somehow. this fact so he can command the highest But these assumptions are absurd. The possible price. In St. Thomas's opinion, the future is always and everywhere uncertain, as water supplier has no obligation to reveal all every investor or stock trader knows. We can his information, though he considers it to be know that certain causes have certain effects an act of charity if he does. (below-market price ceilings cause short­ There are other cases when incomplete ages), but we cannot know with certainty information should not be "overcome," but at what time, by how much, or how people rather protected and guarded. In the early will respond to any change in economic life. sixties, Walt Disney had the dream ofbuilding This is why economists' qualitative predic­ a fabulous Florida theme park encompassing tions about the future can never be precisely 45 square miles. The trouble he faced was in on target. acquiring the property, which was selling for Ask a mainstream economist why his most about $400 an acre. Ifthe existing landowners recent prediction didn't pan out, and he will learned what was afoot, the price of the land always say: trends changed. That's precisely would have skyrocketed. Instead, Mr. Disney WHAT WE KNOW, WHEN WE KNOW IT 259 created 100 corporate fronts, and sent them thrown and replaced by a more realistic on a secret land-buying spree. theory that goes to the heart ofwhat econom­ As Walt Disney knew, there is no moral ics should be attempting to do. Economics obligation to reveal all your future intentions should not be creating other-worldly mathe­ unless that is an explicit part of the contract. matical models that have nothing to do with More to the point, neither party can neces­ human action, and calling in the state to make sarily know what the future holds. The very the real world conform. Economics should existence of the market for stock futures is deal with people and their world as they are, made possible only because people have dif­ alleged imperfections and all. ferent expectations about the future value of A minority of the profession is already the price of the stock. In the never-ending interested; witness the flowering of the Aus­ process of market valuations, we are all con­ trian School, which works in the tradition stantly changing our expectations. The mar­ of Professor Mises's writings. This tradition ket is a process that constantly adjusts what we rejects the goal of perfect information, and know and when we know it. offers a theory that understands how markets What Professors Mirrless and Vickrey have can use the uncertainty of the future to the done is provide an incomplete corrective to a benefit of all, while never invoking the gov­ badly flawed economics paradigm. But more ernment as a means for achieving the is needed: The paradigm should be over- unachievable. D Now available in a Leather Edition! The Monumental Masterwork of "THE GRAND OLD MAN OF ECONOMICS"* Considered by many to be the counterweight of Marx's Das Kapital, HUMAN ACTION is the magnum opus of a genius.

/IMises is the first to work out economics on afirm foundation on the principle ofindividual action.... This is the economic bible for the civilized man." -Murray N. Rothbard

LUDWIG VON MISES is now universally acknowledged as one of the fountain­ heads of the worldwide movement toward individual liberty. Here is the classic defense of capitalism, whose impact and influence continue to grow. *Library Journal Elegant dark-blue leather edition, featuring a gold-stamped design on cover and spine, edge-gilded, with bound-in gold bookmark. 928 pages, ISBN 1-57246-021-0 ~ Sale ends May 31, 1997. Sale price $85.00 Published by The Foundation for Economic Education, Inc., (800) 452-3518 THEFREEMAN IDEAS ON LIBERTY

Wisdom of a "Liberal" Giant

by William H. Peterson

e knew Milton Friedman, Henry Haz­ ing" by the state. First-edition reviews were H litt, William F. Buckley Jr., Ayn Rand. mixed. Vermont Royster praised the book in He was the mentor of P.A. Hayek, who went the Wall Street Journal, John Kenneth Gal­ on to win the Nobel Prize in economics. He braith panned it in the New York Times. Yet was a key teacher of Gottfried Haberler of The Economist, while wary of the work's Harvard and Fritz Machlup of Princeton, libertarian implications, still said: "Intellec­ each of whom went on to become president tual power roars through it like a great wind; of the American Economic Association. That it has the impetus of a first-rate polemic and association appointed him distinguished fel­ the impeccable coherence of Euclid." low. His name adorns a think-tank at Auburn He is Ludwig von Mises (1881-1973), the University, a professorial chair at Hillsdale modern leader of Austrian free-market eco­ College in Michigan, a library building at nomics. Francisco Marroquin University in Guate­ The Nazis had three strikes against him: mala. he was a Jew; he was anti-socialist and cham­ In 1920 he foresaw the end of the Soviet pioned the free market; and he refused to Union for its lack of market calculation. A compromise. In 1938 the Nazis confiscated prominent Polish socialist economist, Oskar the contents of his apartment in Vienna. (His Lange, conceding the lack but holding it could personal papers were in turn seized by the still be met, proposed a statue in his honor. Soviets and preserved in Moscow. These In 1949 he set forth a monumental book on newly discovered treasures should soon be philosophy, economics, and politics, Human available to the world.) Action, now out in a fourth revised edition Soon after the fall ofParis in June 1940, he prepared by Bettina Bien Greaves (The Foun­ and his wife, Margit, bravely fled from Swit­ dation for Economic Education, Irvington­ zerland through occupied France to America. on-Hudson, N.Y., 928 pages, $49.95). Other Human Action says it all. It is a paean to editions have been published in German, freedom and free enterprise, a classic on French, Italian, Spanish, Portuguese, Chi­ voluntarism and laissez faire. In it Mises nese, and Japanese. employs an odd word, praxeology, as the Yet he has been largely ignored by profes­ science of human action or choice. He says sional economists who feel he is too "literary," the drive behind choice is ineptly described as too "nonquantitative," too down on "macro­ the profit motive even though the end of any economics," too opposed to "social engineer- action is always satisfaction of some desire of man-ever choosing, acting, rejecting. Dr. Peterson, Heritage Foundation adjunct scholar, is Distinguished Lundy Professor Emeritus ofBusi­ Choosing determines all human decisions. In ness Philosophy at Campbell University, Buies Creek, making his choice man chooses not only be­ North Carolina. tween various material things and services. All 260 261 human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row andsubjected to a decision which picks out one thing and sets aside another. (p. 3) Choosing reflects man's free will, ongoing reasoning, subjective evaluation: a process of continual removal of felt uneasiness. The process evidences the fact that man thinks, that thought distinguishes him from the lower animals. Man is a being capable of subduing his instincts, emotions, and impulses; he can ratio­ nalize his behavior. He renounces the satis­ faction ofa burning impulse in order to satisfy other desires. He is not a puppet ofhis appetites. A man does not ravish every female that stirs his senses; he does not devour every piece of food that entices him; he does not knock down every fellow he would like to kill. He arranges his wishes and desires into a scale, he chooses; in short, he acts. (pp. 16-17) Ludwig von Mises What also distinguishes man is his very Claus. Mises does not share the confusion. social being. He engages in extensive human He condemns the modern revival of collec­ interaction, including unforced exchanges of tivism as "the main cause of all the agonies goods and services. Society, says Mises, is and disasters of our day." He asks the polit­ social cooperation, concerted action, division ically correct to rethink the nature of man, of labor, and combination of labor. Even so, state, and society in light of Adam Smith's he rejects a line by the politically correct who "invisible hand" ofself-interest under the rule see society as a thinking entity and say "society oflaw as the high road to social order and civil believes this," or "society thinks that." society.

It is always the individual who thinks. Society State or government is the social apparatus does not think any more than it eats or drinks. ofcompulsion and coercion. It has the monop­ The evolution of human reasoning from the oly ofviolent action. No individual is free to use naive thinking of primitive man to the more violence or the threat ofviolence ifthe govern­ subtle thinking of modern science took place ment has not accorded this right to him. The within society. However, thinking itselfis always state is essentially an institution for the preser­ an achievement of individuals. There is joint vation ofpeaceful interhuman relations. (p. 149) action, but no joint thinking. (p. 177) The Mises viewpoint is similar to that of Thomas Paine, who called government "a The politically correct also confuse society necessary evil." But while Mises also regards for the state and use the two terms inter­ government as necessary, he does not regard changeably. Too, oblivious to what Hayek it as necessarily evil. called "the fatal conceit," they confuse the role of government in society and endow it Government . .. is by necessity the opposite of with omnipotence and benevolence, see it as liberty. Government is a guarantor ofliberty and a somehow wise and compassionate Santa is compatible with liberty only if its range is 262 THE FREEMAN • MAY 1997 adequately restricted to the preselVation ofwhat leaves it to the voters to decide who should hold is called economic freedom. Where there is no public office andto the consumers to decide who market economy, the best-intentioned provi­ should direct production activities. (pp. 841­ sions ofconstitutions and laws remain a dead 842) letter. (p. 285) Note that Mises holds that consumers are Socialism may be a dead letter today across' sovereign-the real bosses in the democratic the world butnot its vigorous half-brothers­ marketplace. Here every day is Election Day, welfarism and interventionism-both of every candidate runs scared, and every con­ which similarly lack the corrective action of sumer, young and old, daily has an economic market calculation. Interventionism tallied a vote. Indeed, every consumer has quite a few home run when Congress recently raised the such votes. minimum wage by 90 cents an hour, a bit unmindful of its hit on entry-level employ­ The consumers patronize those shops in ability. So Mises cues you on state boomer­ which they can buy what they want at the angs, to explain why "government help" is an cheapest price. Their buying and their absten­ oxymoron. tion from buying decides who should own and run the plants and the farms. They make poor All varieties of [government} interference people rich and rich people poor. They deter­ with the market phenomena not only fail to mine precisely what should be produced, in achieve the ends aimed at by their authors and what quality, and in what quantities. They are supporters, but bring about a state of affairs merciless bosses, full of whims and fancies, which-from the point ofview oftheir authors' changeable and unpredictable. For them noth­ and advocates' valuations-is less desirable ing counts other than their own satisfaction. than theprevious state ofaffairs which they were They do notcare a whitforpastmerit and vested designed to alter. (p. 858) interests. (p. 270) So the irony of today's play on democracy Such reasoning clashes with the modern is that-via protectionism, welfare, interven­ liberal battlecry of "entrenched wealth," with tion, hyper-regulation, egalitarianism, and so the Hobbesian argument of war of all against on-the state ignores or overrules individual all-of, for example, the rich against the poor. rights, the market rule of majority and mi­ If anything, it's practically the other way nority rights, and thus reaps a whirlwind. around. Mises says the wealthy are at the Egalitarianism plays on group rights to mercy of consumers, even poor consumers. compensate for past inequities, to promote Wealth, once invested, becomes "a social equality of outcomes. Mises disagrees. He liability." espouses equal individual rights but sees natural inequality in terms of intelligence, Ownership ofthe means ofproduction is not drive, integrity, beauty, talent, and other at­ a privilege, but a social liability. Capitalists and tributes. (His use of the word "liberal" in landowners are compelled to employ theirprop­ the following is in the nineteenth-century erty for the best possible satisfaction of the sense of the word.) consumers. If they are slow and inept in the performance of their duties, they are penalized The liberal champions of equality under by losses. Ifthey do not learn the lesson and do the law were fully aware of the fact that men notreform their conduct ofaffairs, they lose their are born unequal and that it is precisely their wealth. No investment is safe forever. (pp. inequality that generates social cooperation and 311-312) civilization. Equality under the law was in their opinion not designed to correct the inexorable Well, if consumers are so powerful, why the facts of the universe and to make natural Welfare State, why the Nanny State, why so inequality disappear. It was, on the contrary, the many governmental agencies designed to pro­ device to secure for the whole ofmankind the tect the hapless shopper? And, with govern­ maximum ofbenefits it can derive from it. ... It ment taking 47 percent of the national in- WISDOM OF A "LIBERAL" GIANT 263 come, with "entitlements" alone running at harm a man can inflict on his mind and soul $1.1 trillion a year-and growing fast-why even more disastrous than any bodily evils? Why the persistence of planning in a thousand not prevent him from reading bad books and beguiling guises? seeing badplays, from looking at badpaintings and statues and from hearing bad music? The The alternative is not plan or no plan. The mischiefdone by bad ideologies, surely, is much question is whose planning? Should each mem­ more pernicious, both for the individual and ber of society plan for himself, or should a for the whole society, than that done by narcotic benevolentgovernment alone plan for them all? drugs. (pp. 733-734) The issue is not automatism versus conscious action; it is autonomous action of each in­ For many, Mises, who proved so right on dividual versus the exclusive action of the socialism, remains too unappreciated. He and government. It is freedom versus government his magnum opus, Human Action, await dis­ omnipotence. (p. 731) covery or rediscovery as the New Deal and the Great Society live on, as many wonder But surely the government should inter­ anew if "the era of big government" is really vene against any type of excessive or danger­ over, as social insurance and social justice­ ous consumption such as cigarettes. Recall indeed all manner ofsubtle and unsubtle state America's backfiring Noble Experiment, its interventions-continue to mushroom and violent episode of Prohibition (1920-1933). self-destruct. Opium and morphine are certainly danger­ The market economy needs no apologists and ous, habit-forming drugs. Butonce the principle propagandists. It can apply to itself the words is admitted that it is the duty of government of [architect] Sir Christopher Wren's epitaph to protect the individual against his own fool­ in St. Paul's [Cathedral in London]: Si monu­ ishness, no serious objections can be advanced mentum requiris, circumspice. ["If you seek against further encroachments. ... Is not the his monument, look around. "J (p. 854) D

BACK IN PRINT! Critique ofInterventionism BY LUDWIG VON MISES New Introduction by Hans F. Sennholz he economic principles that Ludwig von Mises expounded in these six essays during the 1920s have endured; they are as valid today as they were in the Tpast. In this volume, Ludwig von Mises emphasizes again and again that soci­ ety must choose between two systems of social organization: either it can create a social order that is built on private property in the means of production, or it can establish a command system in which government owns or manages all production and distribution. There is no logical third system of a private property order subject to government regulations. The "middle of the roadl/leads to socialism because gov­ ernmentintervention is not only superfluous and useless, but also harmful. ISBN 1-57246-058-X • 136 pages • paperback $12.95

Published by The Foundation for Economic Education, Inc. Irvington-on-Hudson, NY 10533 To order, call (800) 452-3518 or fax (914) 591-8910 Ideas and Consequences by Lawrence W. Reed

The New Zealand "Revolution"

"And now that the legislators and do­ The next 20 years produced "Kiwi social­ gooders have so futilely inflicted so many ism"-a harvest of big government and eco­ systems upon society, may they finally end nomic malaise. New Zealanders found them­ where they should have begun: May they selves increasingly victims of exorbitant reject all systems, and try liberty...." tariffs, massive farm subsidies, a huge public -Frederic Bastiat, 1850 debt, chronic budget deficits, rising inflation, a top marginal income tax rate of 66 percent, or producing both material goods and and a gold-plated welfare system. Fpersonal fulfillment, economic freedom The central government in those years makes all the difference in the world. No became involved in virtually every aspect of country proves that more convincingly than economic life. It established its own monop­ tiny but beautiful New Zealand. The story of olies in the rail, telecommunications, and that island country's dramatic transformation electrical businesses. About the only things over the past 12 years needs to be shouted that grew during the period from 1975 to 1983 from the rooftops. were unemployment, taxes, and government Situated in the South Pacific midway be­ spending. tween the equator and the South Pole, New With an endless roster of failed statist Zealand is just two-thirds the size of Califor­ programs and economic ruin staring them nia. Its 3.5 million inhabitants live on two in the face, New Zealand's leaders in 1984 main islands and a scattering of tiny ones. embarked upon what the Organization for New Zealanders-known as "Kiwis"-are Economic Cooperation termed "the most proud of a long heritage as a British outpost comprehensive economic liberalization pro­ that achieved full autonomy in 1931. gram ever undertaken in a developed coun­ In 1950, New Zealand ranked as one of the try." world's five wealthiest countries, with a rela­ All farm subsidies were ended in less than tively free economy and strong protections two years. Tariffs were cut by two-thirds for enterprise and property. Then, under the almost immediately and have continued to growing influence of welfare state ideas that decline. Today, the average New Zealand were blossoming in Britain, the United States, tariff rate is a mere 3.2 percent-virtually and most of the Western world, the country unilateral free trade. In fact, over 90 percent took a hard left turn. of all imports now enter the country com­ pletely free of any quota, duty, or other restriction. Lawrence w: Reed, economist and author, is presi­ dent of the Mackinac Center for Public Policy, a Taxes were slashed. The top rate is now 33 free-market research and educational organization percent, half of what it was when the big headquartered in Midland, Michigan. government crowd was in charge. The average 264 265 income tax level is just 21.5 percent. There are tions imposed are applied evenly and consis­ no capital gains or real estate taxes at all. tently. Environmental and safety regulations Since 1984, the New Zealand government are sometimes burdensome, but are largely has been engaged in a massive privatization offset by low taxes and a business-friendly effort, selling off at least 22 state enterprises. policy climate. Its most dramatic success was the sale of What the New Zealanders did to change Telecom NZ. Pre-privatization, this state labor policy was especially striking, if you'll communications firm boasted 26,500 employ­ pardon the pun. William Eggers of the Rea­ ees, many of them in do-nothing jobs. Lean, son Foundation terms it "the most aggressive modernized, and in private hands, it now and far-reaching labor market deregulation in employs 9,300 and faces competition for the the world." Compulsory union membership first time from such companies as MCI in long was abolished, as were union monopolies over distance and Bell South in cellular. many labor markets. Stripped of special priv­ The country has not suffered some privately ileges that once allowed them to hold the engineered communications nightmare; economy hostage, unions now enjoy a legal rather, it has gone from antiquated technol­ status no different from that of any other ogy to a 97 percent digital system rated second private, voluntary associations. on the planet by the World Competitiveness As the New Zealand ambassador to the Report. Telecom NZ is no longer a drain on United States told a gathering at the Heritage the public treasury. It actually pays taxes. Foundation in Washington, D.C., a few New Zealand's public-sector work force in months back, all these dramatic changes have 1984 stood at 88,000. In 1996, after the most paid off big time in economic dividends. The radical downsizing of any government any­ national budget is balanced, inflation is neg­ where, its public-sector work force stood at ligible, and economic growth is surging ahead less than 36,000-a reduction of 59 percent. at between 4 percent and 6 percent per year. The Ministry ofTransport, when it owned and Eggers reports that after the ports and operated everything from the ports to a railways were privatized, freight costs plunged national airline, employed 4,500. Its entire as much as 50 percent. That helped to offset staff now occupies the equivalent oftwo floors the loss of subsidies to farmers, who are now of a typical downtown office building. among the most competitive in the world. The country's banking system is thoroughly Recent elections brought about a change in deregulated. Even foreign banks are now government once again, but most observers welcome. Americans who have grown accus­ believe the political consensus for free­ tomed to the thought that government should market policies has become too deeply rooted guarantee their bank deposits might be to be easily reversed. Indeed, the only party shocked to learn that in New Zealand, the that openly opposed what New Zealanders central government imposes no deposit insur­ call "the revolution" garnered a paltry 12 ance on financial institutions. Instead, banks percent of the vote. provide full public disclosure oftheir financial There's a powerful lesson here: Big Gov­ conditions and secure whatever insurance ernment sucks the life out of an economy. they need in the open market. Free enterprise can undo the damage. Statists Establishing a new business in New Zea­ everywhere have much to learn from the New land is easy, largely because the few regula- Zealand model. 0 THEFREEMAN IDEAS ON LIBERTY

Government Schooling: The Bureaucratization of the Mind by Thomas E. Lehman

n April 1983, the National Commission on an existing educational system which is, by its I Excellence in Education issued its now very nature, destined to fail. Misguided policy infamous report, A Nation at Risk. The Com­ "solutions" for American education attempt mission found that American students were to salvage a system that is unsalvageable-a experiencing, among other things, a decline in system that is intellectually, socially, and eco­ literacy levels, a diminishing level of science nomically backward. Reformers refuse to ad­ and mathematics skills, and a limited knowl­ mit or to understand that the American edge in the "social sciences" when compared system of compulsory public education has to American students of earlier generations foundered precisely because it is public-that or even to students in other countries. The is, government-controlled. The only solution Commission concluded that serious problems to the serious education problems in America existed in the American system of education. is to proclaim the separation of school and Since the publication of A Nation at Risk, state, and allow education to be bought and Americans have done much soul-searching in sold through the free and unhampered mar­ an attempt to address the problems outlined ket process. in the report. Most of the "solutions" pro­ posed by educators, politicians, and the media Compulsory Public Education: involve increased government funding in an The Economic Dilemma effort to expand training programs, lengthen the academic year, reduce violence, and iden­ Public schools-like all public agencies­ tify and assist those students who are "slip­ are inherently unable to evaluate their own ping through the cracks." Other proposals performance accurately in terms of the satis­ have also come to the forefront, including factions derived by their constituents, i.e., Milton Friedman's educational voucher pro­ students and their parents. The absence of gram, which would ostensibly create "compe­ proper evaluation lies in the inability of the tition" among public schools by offering "tax­ educational bureaucracy (or any government payer choice" in school selection. agency) to calculate profits or losses in terms However, these and other proposals flow­ of numerical assignments to monetary units. ing from Washington, D.C., state capitals, and In other words, public bureaucracies cannot local school districts have missed the mark. perform economic calculation.1 School reformers are attempting to shore up Economic calculation is the process of Mr..Lehman is adjunct professor ofeconomics and comparing and contrasting opportunity costs history, adult and professional studies division, In­ (prices) among a variety of choices facing an diana Wesleyan University, Marion, Indiana. individual actor or group of actors regarding 266 267 the means to achieve a desired end. For a do not operate on a profit-and-Ioss basis, private firm operating within the parameters these administrators have no way of relating of a market economy, economic calculation expenses to tax revenues to determine if the consists in comparing and contrasting the expenses were prudently applied. They do not outputs (expenses) and inputs (revenues) in know whether the resources taken from tax­ order to arrive at the most efficient use of payers were employed according to the most scarce resources in the satisfaction of the urgent demands of consumers. Government consumers' most urgent wants. agencies are deprived of profit-and-Ioss ac­ In the market sector, outputs and inputs countancy methods, precisely what is neces­ (expenses and revenues) are linked through sary to economically evaluate past perfor­ the determination of profit or loss. A profit mance and make changes based upon the indicates that the private firm succeeded in information provided. providing a commodity or service that con­ From an economic point of view, then, the sumers valued more than the costs expended government education system in America is in bringing it about. A loss indicates that the like a ship lost at sea with neither a compass private firm failed to provide a commodity or nor a lighthouse to guide it. Absence of service for which consumers were willing to evaluative information in the form of profits pay more than the costs expended in its or losses makes rational navigation impossi­ creation. Profits are an implicit declaration ble. by consumers that the scarce resources used for the creation of a given commodity were The Political Dilemma prudently applied. Losses are an implicit declaration by consumers that scarce re­ Because education administrators cannot sources were squandered and should have evaluate their agency's performance in terms been employed in a manner more conducive of consumer satisfaction, they resort to non­ to their satisfactions. Regardless the profit or economic criteria. These noneconomic mea­ loss outcome, however, all private firms, op­ surements may be labeled "political calcula­ erating within the confines of an unhampered tion." As with any government agency, the market economy, are offered the ability to American education system is motivated by positively or negatively evaluate their own political considerations, and its performance performance for the immediate accounting must be evaluated in terms of these political period precisely because they have the use of considerations. Evaluative criteria in the field economic calculation. of education thus become the subjective so­ Government bureaucracies have no such cial, ideological, and political goals of indi­ ability. The essence of bureaucracy is that viduals within the establishment itself. The it cannot evaluate performance in terms of success or failure of the organization is based consumer satisfaction because of the absence entirely upon the degree to which these social, of economically calculable profits or losses. ideological, or political goals have been This is why bureaucracies are encumbered achieved. with regulated structural procedures. By their Politically or ideologically motivated ad­ very nature, government educational agencies ministrators within any public bureaucracy cannot link outputs (expenditures) to inputs will, in order to achieve their goals, seek to (tax revenues). There is no relationship be­ employ their authority to the maximum as tween the taxpayer who is coerced into fi­ long as their government-sanctioned position nancing all educational expenditures, and the allows them to do so. They will seek to expand student who is the consumer of what such the annual budget oftheir agency by spending expenditures have created. more than is annually allocated, thus appear­ Because the educational bureaucracy exists ing "necessary" to society. They will seek to within a sea of capitalist economic calcula­ expand their agency's sphere of influence, tion, bureaucrats can calculate and budget thus obtaining greater power and prestige expenses. But, because government agencies than agencies with which they compete for 268 THE FREEMAN • MAY 1997

congressional or municipal funding. They will do not want anything taught that would chal­ attempt to use the power of their positions to lenge or disparage their own established ideo­ force their own subjective values upon society. logical creeds and dogmas. Unless it becomes politically necessary, they do not give a great deal of attention to those The Unconditional Solution: whom their agency is designed to serve, A Free Market in Education namely students and parents. They are not motivated through economic profit and loss, In order to restore academic integrity, but rather by personal political or ideological individual achievement, intellectual freedom, considerations. and a peaceful learning environment to the This process of "political calculation" is American student, we must dismantle the inevitable. When an organization loses the education monopoly and establish separation relationship between revenues and expendi­ of education and state. Government school tures, when it can no longer be influenced administrators and teachers must begin to from without, it becomes influenced from compete in the marketplace of ideas. The within. And, the more power it is granted to American people must begin to see education carry out its political, social, or ideological for exactly what it is: an economic commodity agenda, the more it will become a law unto to be bought and sold in the marketplace itself. The modern "political correctness" and according to the subjective valuations and "outcome-based education" movements, as preferences of education consumers, both well as the ongoing submarginal academic students and parents alike. performance of American students, are a Taxed-based financing of education must direct result of politically and ideologically be replaced with consumer-funded education. motivated educators attempting to socialize Education must be produced and consumed an entire nation ofunsuspecting young minds, according to the demands of independent to remake society in their own egalitarian education consumers, and must be offered at image through the use of compulsory govern­ a competitive price. Outcomes in the educa­ ment education. Government-controlled ed­ tion market must be the sole result of the ucation easily becomes government­ voluntary buying and abstention from buying controlled indoctrination. by education consumers, and not in any way This is not to argue that all or even most the result of intervention by politically or teachers in the government school system are ideologically motivated politicians or public ideologically or politically motivated. Most of administrators. them no doubt receive a great deal of satis­ Further, education must be noncompul­ faction from teaching and want to perform sory. If children (and their parents) do not their jobs well. care to consume the information and knowl­ The same cannot be said, however, about edge provided by the education entrepre­ education officials at the national, state, and neurs competing in the marketplace, so be it. \ local levels of government. Sadly, education Out of self-interest, relatively few individuals \administrators and the teachers' unions have would go uneducated. Moreover, noncompul­ both the taxpayer and the student at their sory education would suppress violence in mercy. They covet their insulated positions schools. Those who did attend would have a b~cause they are able to control the curricu­ financial incentive to make the most of it. lum and enforce government licensing "stan­ Behavioral accountability among students dards" that inevitably discourage competition would be restored. and creativity. Their virtual monopoly status Market-based schools would have the in­ enables them to present their ideological centive to provide a top quality educational biases as unquestionable truths. Any notion of experience to students at a competitive price. a free market in education threatens to undo If a school did not enforce rigorous programs their immunity from accountability to con­ and a thorough curriculum, their graduates sumers. Those in the education establishment would be ill prepared to compete in their THE BUREAUCRATIZATION OF THE MIND 269 respective fields. The school would earn a survive the market-driven search for truth and poor reputation as its graduates would be excellence. Students would no longer be cap­ unable to command respectable incomes, tive to the ideological or political biases of thus discouraging prospective students, caus­ teachers and administrators. Rather, teachers ing financial loss, and forcing the school to and administrators would be required to re-evaluate its performance. Conversely, provide a valuable educational experience to those schools providing the best education to their students in a peaceful learning environ­ their students would earn profits, thus reflect­ ment or find themselves unemployed. ing their proper employment of scarce re­ Americans must begin to realize that the sources. In either case, economic calculation separation of education and state is equally in terms of profits or losses would enable as important as the separation of church and schools to accurately evaluate their perfor­ state. Only then will American students begin mance in terms of the demands of education to experience academic diversity, intellectual consumers. growth, and a crime-free learning environ­ Competition among educational entrepre­ ment. Only then will we be liberated from the neurs would tend to weed false prophets and bureaucratization of the mind. D educational quacks from the market. The general nonsense which now pervades most 1. See especially Ludwig von Mises, Bureaucracy (Spring government school systems would not long Mills, Pa.: Libertarian Press, 1983).

Had enough of the liberal bias in the popular news media? Had enough of "donating" an increasing amount of what you earn to support inefficient, bloated social programs? Had enough of watching our culture degenerate before your eyes? Do you feel like a stranger in an increasingly strange land?

If you answered "yes" to any of the above questions, then you will be interested in a bold, intelligent new magazine, The Social Critic. No, you won't find "inside-the-Beltway" gossip in this magazine. What you will find is vital social and political commentary by great social critics such as Dr. Charles Baird, Director of The Smith Center for Private Enterprise Studies. The Social Crific-a vital conservative resource now in bookstores across America. http://www.socialcritic.com [1'Social Critic ------Introductory Offer: 14% off the newsstand price. One-year (six issues) subscription: $18.00 Please make check or money Two-year SUbscription: $ 34.00 (19% off the newsstand price) order payable to: Name _ The Social Critic Mail to: The Social Critic Address 31121 Mission Blvd., Suite 301 City State __ Zip __ Hayward, CA 94544 THEFREEMAN IDEAS ON UBERTY

The Moral Obligations ofWorkers by Jeffrey Tucker

OU hate your boss. Your hours are bad. the boss to keep him employed. The beauty is YYour salary is too low, and you haven't that it depends on voluntarism. No matter been promoted in years. What's a worker to how many grievances they may have against do? If you can't get your way, and just can't each other, if boss and worker choose to take it anymore, you can quit. In a free market continue the economic exchange, they do so for labor, your skills will be better appreciated by their own free wills. We can assume, in a elsewhere. You gain satisfaction from making free market, that all employment contracts this decision onyour own. In a free society, no work to the mutual advantage ofboth parties. worker is forced to be trapped in a job when Nowadays, the moral code requiring a there is another that appears more inviting. worker to give a day's work for a day's pay It's one of the glorious rights a free society has nearly been shredded. Workers think less offers its members, one that has been un­ and less of production and honest dealing known to most people during most of human and more and more ofrights, protests, strikes, history. and lawsuits. The best-selling cartoon book But what happens if you stick around the of 1996 (featuring the character "Dilbert") is workplace? What ifyou choose to continue in devoted to attacking employers and present­ your present position on grounds that it's ing worklife as a huge ripoff, which is a probably the best you can do for yourself right fundamentally anti-capitalist message. To be now? The answers to these questions have sure, this change in attitude toward work changed dramatically in the last several de­ began long before the advent oflaws allowing cades. There was a time when workers un­ employees to sue companies, even bankrupt derstood their moral obligations to them­ them, for the slightest grievance. The go-slow, selves and to the person who signed their strike-threat strategies of labor unions checks. It was to fulfill the terms of the chipped away at the moral code of workers contract, and do the best job possible. A decades ago. productive life requires virtuous work habits A union member in the 1950s musical and adherence to basic ethical norms; besides, Pajama Game sardonically promised his boss a slothful worker is justly fired at any time. "a day's work, for a week's pay." But back The right to quit and the right to fire are two then, he could only get it through extreme sides of the same coin. The boss can't force measures. In the normal course of the work­ the worker to stay, and the worker can't force day, only the powerless "grievance commit­ tee" lent an ear to the perpetual complainer. Mr. Tucker is director ofresearch at the Ludwig von Even in this pro-union musical, the funda­ Mises Institute, Auburn, Alabama. mental right of the management to hire and 270 271 fire as it sees fit-and the obligation of over backwards to institute its own private workers to do their very best in normal quota system of hiring, if only to keep pro­ times-was never seriously questioned. testers and trial lawyers at bay. It gave out franchises based on the race of the applicant, Job Conflict and allowed more lenient application stan­ dards for groups said to be "underprivileged." These are far from normal times. Trouble­ Yet when one employee's gripe mushroomed makers in the workforce have an exalted into a class-action lawsuit involving hundreds status, as well as the legal right to grab of workers, Texaco ended up having its good whatever they can get from their employers. name dragged through the mud, and shelled For those reasons, many employers now fear out $176 million to lawyers and complaining their employees, and even potential employ­ employees, without ever having entered the ees in the interview stage of hiring. Anti­ courtroom. discrimination law puts the boss in a double The sad tale began with an accountant at bind. If he hires based only on merit, or on a the company's Denver office who filed an hunch that the person is a good team player, internal complaint of racial discrimination, a he must also think of all the people passed powerful weapon in today's workforce. Fear­ by for a job. Are they going to claim to be ing escalation, supervisors even higher up the members of some federally protected victim management chain did everything possible to group (the list ofwhich gets longer every year) make her happy, moving her to a new division and thereby sue on grounds of discrimina­ with plusher working conditions and assuring tion? The courts have upheld the rights, for her that her job would be secure. It wasn't example, of alcohol abusers and convicted enough. When a few hotshot lawyers heard felons to have the same "right" to be hired for of the situation, it was only a matter of time a job as everyone else. before it became a general lawsuit involving In practice, this means employers must pad 1,500 people, most ofwhom had no particular their staffs with officially recognized victims if complaints at all! None of this means that the only to protect themselves from government company was necessarily treating anyone investigation and class-action lawsuits. This poorly on grounds of race. It only means that reality has shifted the balance of power in the the money was there for the taking, so who's workplace. Workers no longer view their first to say someone shouldn't take it? obligation as to do their bestwork for the sake of themselves and the company. Instead, they Take This Job ... know that they are potential lawsuit plaintiffs, and hold it over the management and the In the traditional moral code of work that owners for every slight. A complaining em­ arose in a free market, the situation would ployee can demand pay increases and promo­ have been handled very differently. If the tions through a subtle form oflegal blackmail, accountant didn't like her job, she would have a tactic familiar to most anyone who works in quit and gone to work for someone who a medium- or large-size company. Employers appreciated her more. If she began to com­ now fear using strict standards of merit for plain too loudly of her plight, undercutting promotions and perks. Such evaluations the morale of other employees and creating a might result in a distribution of wages and hostile work environment, she would have salaries that is unequal among the demo­ been fired. If she was at fault, she would have graphic groups represented in the workforce, learned a valuable lesson in workplace ethics and therefore draw the attention of govern­ and human relations. If the company was at ment officials or class-action lawyers. fault, it would have lost a valuable employee Yet even this type of political padding and would learn not to act so hastily next time. doesn't always work. Texaco worked for years This system of mutual rights creates peace­ to keep all types of people represented at all ful cooperation between the employee and levels of its operations. The company bent the employer. Each understands the obliga- 272 THE FREEMAN • MAY 1997 tions he has to the other. The goal, as with ity, an easy prey to all sorts of quacks and any economic exchange, is to better the lot of cranks," and even "morose and neurotic." In everyone involved. Contrary to the old Marx­ what appears to be a description of modern­ ian claim that an inherent conflict exists day America, Mises wrote that "A common­ between labor and capital, a free market wealth in which the tedium of labor prevails makes it possible for them to exchange in a is an assemblage of rancorous, quarrelsome mutually advantageous and profitable man­ and wrathful malcontents.,,3 ner. The Ethics of Work The Joys of Work There is both an economic and moral Ludwig von Mises argues that such a vol­ dimension to the work ethic. The economic untary relationship takes the drudgery (or the side is dictated by the realities ofproperty and "disutility") out of work and can turn it into contract relations. The employee is not the a genuine joy. The worker can delight that he owner; capitalists and stockholders are. The is achieving personal goals, whether material worker has been hired by these owners to or spiritual. He gains "self-respect and the perform a certain function for the good, consciousness of supporting himself and his meaning the profitability, ofthe company. He family and not being dependent on other is free to choose not to do so, but then he is people's mercy. In the pursuit ofhis work the obligated to do at least what he has agreed to worker enjoys the esthetic appreciation ofhis do and then leave the company. skill and its product. This is not merely the There is a respect in which the employer is contemplative pleasure of the man who views an economic benefactor to employees. The things performed by other people. It is the capitalist pays out wages to employees before pride of a man who is in the position to say: he sees the profits of their current produc­ 'I know how to make such things, this is my tion. He is undertaking a risk in an uncertain work.,,,l Moreover, "To be joyful in the per­ economic environment that the employee, the formance ofone's tasks and in overcoming the immediate recipient of wages, is not being disutility of labor makes people cheerful and asked to bear. Moreover, the capitalist cannot strengthens their energies and vital forces.,,2 merely pay the wage he can afford; he is It is only legal interventions that tip the constantly in a position of having to keep his balance in favor of either the capitalist or the employees from being bid away by competi­ employee. There can be no doubt that the tive enterprises, even those that take fewer employee has the upper hand today, much to risks in the market. the detriment ofhis own ethical well-being. By To accept an employment contract means suing and blackmailing his employers, creat­ to agree to provide a certain amount of labor ing hostile work environments, and threaten­ in return for a defined amount of money. To ing to call the government in, the employee is not perform that contract is to violate the implicitly threatening to take property that is terms ofthe contract and to fail to respect the not his to take. That situation is bad for the unique entrepreneurial role of the capitalist. company, for society at large, and even for the It is also the moral equivalent of stealing employee in the long run. It is contrary to a property from the capitalist who has em­ market-based work ethic, which is about more ployed him. A system that gives this person than merely working long and hard, but legal recourse to turn against his employer­ fulfilling the terms ofyour contract by striving benefactor and loot even more property in a toward excellence in the service of the busi­ bitter personality struggle is not a system that ness's institutional goals. respects property rights. As Mises points out, when the worker views On the moral side, we can turn to the himself as a "defenseless victim of an absurd brilliant and beautiful writings of Stefan and unjust system," he becomes "an ill­ Wyszynski (1901-1981), whom former Polish humored grumbler, an unbalanced personal- president Lech Walesa has called "the spiri- THE MORAL OBLIGATIONS OF WORKERS 273 tualleader ofPoland." As the teacher ofJohn reaps this harvest, the crop he gathers in, is Paul II, Cardinal Wyszynski was arguably the eternal life, in which sower and reaper are to key intellectual and religious force behind the rejoice together." This monastic attitude to­ eventual overthrow ofthe communist regime, ward labor spread throughout society as the though he did not live to see it. Imprisoned for faith itself did, eventually supplanting both three years by a totalitarian regime that the paganview thatwork is only for slaves, and labeled him one of the "greatest foes of the even slavery itself. Polish People's Republic," Wyszynski spent As Wyszynski writes of the Christian ideal, many years reflecting on the nature and "workis the duty ofman. This duty arises from morality ofwork in free and unfree societies. the very needs of man's life, as well as from In 1946 he published a full-blown philosoph­ the meaning that work holds for his per­ ical elucidation of the moral obligations of fection. Without work it is not possible either workers.4 As a treatise on everyday morality, to sustain life or to reach the full develop­ its power may be unsurpassed. ment of one's personality. Work is the means His views on work were developed in op­ of God's gift, life, in us, of properly satisfy­ position to the pagan view ofwork, which was ing its needs, and perfecting our rational to despise labor itself. Pagans "regarded phys­ nature." ical work as unworthy of man," Wyszynski Leisure is not the state of nature. Even writes. "It was the duty of slaves. It could not before the fall, Wyszynski emphasizes in op­ be reconciled with the sublimity of the free position to the pagan view, it was necessary mind, for it limited it too much, and made to'work. Work is not punishment for sin; it is it dependent both on itself and on others."s "closely related to the rational nature of But the coming of Christianity corrected this man.,,6 In the Genesis narrative, God's com­ error, elevating work to participation in the mandment to Adam to subdue and rule the creative work of God. In this, the Christian earth preceded the first sin and God's judg­ view follows the example of Jesus Christ, ment. It is only the burden of work that is a who said in the Gospel of John, "my Father consequence ofsin. "By the sweat ofthy brow has never ceased working, and I, too must be shalt thou eat bread." This burden should be at work." bornejoyously as partofour desire to improve The Christian or Western view of work ourselves and our relationship with God. emphasizes the importance of uniting spiri­ The implications seen by Wyszynski de­ tual and physical work. In early monastic life, serve to be quoted at length. "It is the work­ sublime contemplation and hard physical la­ ing man himselfwho most benefits from work bor went hand in hand, and were seen as understood in this way. This is not because he complementary to the achievement of the gets his wages for his work, but because his sanctity ofthe individual soul. As the Psalmist work, which is bound inseparably with his says, "For thou shalt eat the labors of thy person, shapes and develops his mind, will, hands, blessed art thou, and it shall be well feelings, and various moral virtues and char­ with thee." acteristics, as well as his physical and spiritual skills. . .. Work, based on our reason and Putting Talent to Use freedom, should develop our conscientious­ ness, our sense ofduty, and our responsibility. Every person has been given gifts that allow Only then will it be the work of a rational for productivity, and they are intended to be being. Work, understood in this sense, imme­ used in the service of God and of others. diately reveals to us two aims that every man Therefore, man cannot be destined for only ought to achieve in his personal work: the prayer or work. Work helps us to become perfecting of things and the perfecting of the holy, and holiness allows for the inner har­ working man. This is the starting point for mony necessary for productive work. St. social-economic progress, for human civiliza­ John's Gospel uses both images in a passage tion, for moral religious progress, and indeed on salvation: "the wages paid to him who for the culture of the world.,,7 274 THE FREEMAN • MAY 1997

Real Social Work complaints, grievances, and lamentations arising out of their state of sadness.,,9 There are many social virtues associated 2. Longanimity. This is the virtue of for­ with work. Work creates bonds between peo­ bearance or long-suffering, "a spirit of lasting ple, since it requires that we peacefully asso­ endeavor in the pursuit of a distant good," ciate with others. It calls forth both cooper­ writes Wyszynski,10 Every employer knows ative behavior and the constant personal the types of workers who "watch the clock" improvement needed to compete with our from the beginning to the end of their shifts, fellows. It makes it possible for families to who live for the weekend and for vacations, form and thrive. It allows us to be generous and can't see their way to the end of a major with those who are unable to work for reasons project. They do hasty, shoddy work because not of their own choosing. Work even gener­ they lack longanimity, lose creativity and ates universal good, in that we are participat­ hope, do not improve as workers, and even­ ing in the international division of labor and tually break their moral obligations to those acquire the knowledge ofwhat it requires the who employ them. world over to bring about a prosperous social 3. Perseverance. This means a "prudent, order. constant, and continual persistence in a ra­ Of course, none of this is possible in a tionally taken decision to strive toward some collectivist setting, where worker and em­ desired good."u Above all, this means the ployer are not free to contract with each avoidance of emotional outbursts and wild other. The institutional setting required to shifts in mood that might cause us to hate our ennoble work is one of markets, competi­ co-workers or employers, and pursue actions tion, and, above all, private property, which that are designed to cause them damage. For Wyszynski calls "the leading principle of a example, if a person who is pursuing a dis­ well-regulated society."8 The true glory of crimination lawsuit against an employer were private property is not that it allows personal thinking clearly, he would realize there is accumulation. Rather, it allows us to employ much more to be gained over the long haul by others and to be employed in enterprise, with perfecting skills, being rational, and working justly given and received wages, and thereby one's way up. Perseverance engenders others spreads prosperity to more and more mem­ to trust us. bers ofsociety in service ofthe common good. 4. Constancy. This virtue allows us to pur­ sue our goals no matter what obstacles may The Six Virtues of Labor arise from external causes. Perhaps a worker has an employer who treats people unfairly. In addition to the social virtue of work, Perhaps a person is unjustly passed over for a there are also individual virtues associated promotion or a raise. Perhaps he is fired with keeping our moral obligations to those without seeming cause. Constancy allows a who employ us. Quality work requires and person to look past these slights to larger encourages them, even as a free market in personal goals and do what is necessary to labor rewards them. Wyszynski lists and dis­ attain them. "Armed with constancy," writes cusses these virtues, in this order: Wyszynski, "we calmly await even the most 1. Patience. The task of patience is to unpleasant surprises."12 control excessive and undisciplined sadness, 5. Mildness. This virtue is necessary to and the tendency to complain and strike out maintain concentration in a disorderly set­ when things do not go ourway. We are usually ting. "Silence and quietness are the essential more convinced of our own value to a com­ conditions for fruitfulness in every type of pany than are those who employ us, so it work," says Wyszynski, "whether we are deal­ requires patience to put aside resentment and ing with supernatural action, the world of discouragement when we do not get the science, or just ordinary daily work."13 Every recognition we think we deserve. Those who employer knows of workers who spend more do not succeed at this task are "full of time talking than producing, and generate THE MORAL OBLIGATIONS OF WORKERS 275

more noise than thought. But to do truly good of workplace conflict that bombard us every work, for the sake of our employers and day on the news. These virtues were sustained ourselves, requires that we filter out "super­ by a vibrant market economy free of govern­ fluous sensations,,14 and exercise control over ment controls and the conflicts they inevitably our mental faculties. engender. Itwas a system that required personal 6. Conscientiousness. This is the spirit of responsibility, rewarded virtue, and kept the cooperation that makes the division of labor base desire to steal from others at bay. possible, and turns a workplace into a place of However, the passing of that system is no mutual aid. It helps us understand that in any excuse for not retaining and obeying the organization, people must take instruction moral obligations inherent in every aspect of from others. There are structures ofauthority work. Virtuous work is the social and cultural that must be obeyed. Workers must submit foundation of freedom, and we must reclaim to direction. Wyszynski reminds workers that the ethics of work if our liberty is to be this is not a power-based relationship but an regained. It will always be true, as Wyszynski educational one that aims at perfecting work. says, that "work cannot be carried out with a To be conscientious is also to be humble, an clenched fist and a shriveled heart.,,16 For the attitude that drives "out disputes, discord, "result of all human work should be not quarrelsomeness, and division."15 merely the perfecting the thing produced, but What a welcome change that would be in also the perfecting of the worker, not merely the modern workforce, where everyone seems external order in work, but also inner order in to be at each other's throats, each demanding man.,,17 D his rights or accusing someone ofviolating his. If these six virtues are cultivated, writes 1. Ludwig von Mises, Human Action (Chicago: Regnery [1949] 1963), p. 589. Wyszynski, then we can enjoy the blessing 2. Ibid., p. 591. of leisure and prosperity that follow six days 3. Ibid., p. 591. 4. Stefan Cardinal Wyszynski, All You Who Labor (Sophia ofwork, and, he says, fully enjoy the presence Institute Press [1946] 1995). of God after a lifetime of toil and struggle, 5. Ibid., p. 21. 6. Ibid., pp. 23-24. when our sorrow is truly turned to joy. 7. Ibid., p. 28. If these attributes of virtue were once 8. Ibid., p. 42. 9. Ibid., p. 121. deeply ingrained in our culture, today they 10. Ibid., p. 127. seem long gone. We recognize them only 11. Ibid., p. 137. 12. Ibid., p. 139. when we study the diaries of our great­ 13. Ibid., p. 153. grandparents, or read olderworks ofpre-New 14. Ibid., p. 155. 15. Ibid., p. 158. Deal literature, but we don't see these virtues 16. Ibid., p. 186. in most co-workers or the high-profile cases 17. Ibid., p. 151. THEFREEMAN IDEAS ON LIBERTY

American Labor Law-Bad and Still Getting Worse by George C. Leef

ne of the great blunders of American Salting entails an attempt by unions to get O history was the New Deal decision to nonunion firms to hire pro-union workers institute a legal framework for labor relations or even paid union organizers. If one of the that did away with the older common law rules union's applicants for a job (let's say, an of contract, property, and tort that applied electrician, since thus far salting has mainly equally to all parties, replacing them with a been used against nonunion construction highly coercive, asymmetrical scheme in­ firms) is rejected by the employer, the union tended to help labor union leaders achieve then files unfair labor practice charges against their aims. Much has been written on this the company with the National Labor Rela­ subject generally.l My intention here is to tions Board (NLRB), claiming that the appli­ discuss two recent developments in labor law cant was discriminated against because of his that underscore the folly ofhaving abandoned union sympathies, a violation of the National the neutrality and freedom of the common Labor Relations Act (NLRA). There mayor law. may not be any truth to this charge-the manager who made the decision may have "Salting" just thought that another applicant seemed better qualified, or he may have known or Labor unions have never hidden their de­ suspected that the individual was a union sire to eliminate-by nearly any means avail­ "salt" and decided against him on that able-competition from firms and workers ground. As far as the union is concerned, the who choose to operate independently. The truth ofthe accusation does not matter. There flow of dues money into union treasuries is no penalty for filing baseless charges with would be larger and more steady if only the NLRB. Nor is there any cost to the union consumers could be deprived of the option of to file; it has staff attorneys who can handle contracting with lower-cost, nonunion firms. this paperwork very easily. However, defend­ A recently developed tactic known as "salt­ ing against the charges will prove costly to the ing" shows the lengths to which unions will go company. It will have to hire an attorney to to achieve, through manipulation and abuse defend itself and that can absorb a lot of a ofthe legal system, objectives that they cannot small firm's funds. That is precisely the achieve through peaceful means. union's objective. Mr. Leef is president of Patrick Henry Associates: On the other hand, if the "salt" is hired, he Liberty Consultants in East Lansing, Michigan and then can and will foment trouble internally. book review editor of The Freeman. Should the company fire him for his trouble- 276 277 making, destruction, insubordination, and so no choice but to deal with unionized firms. forth, he then happily goes back on the union Union leaders, as they sometimes candidly payroll and files charges for "discriminatory admit, are businessmen. They sell labor. If termination." Again, the company will have to there are only union construction firms, they incur legal costs to defend itself. will have cornered the market. The point of "salting" is to wear a company Second, there is the question of justice. Is down with repeated legal charges, not one it right for any group to use (or abuse) of which was brought by an individual who governmental processes to injure or destroy actually had any intention of working for the competitors? Isn't it wrong to use the law firm and earning his pay. as a sword to impose ruinous costs on rivals Construction unions have launched salting just because you can get away with it? The campaigns against many nonunion construc­ unions would scream if their opponents used tion companies in recent years. For exam­ the same "might makes right" tactics against ple, Toering Electric Co. of Grand Rapids, them, but philosophical consistency cannot be Michigan, has been forced to payout more expected from statists. than $31,000 to "compensate" pro-union Salting is only possible because of the salts whom it declined to hire and, in an effort coercive power invested in regulators by the to bring peace, has agreed to hire pro-union NLRA-the power to punish firms for engag­ electricians for the next five journeyman ing in behavior that is not in breach of any positions that come open. The union's news­ contract, is not tortious, and violates no one's letter brags about "putting a big hurt" on property rights. When such power is created, this company, as if the abuse of legal proc­ it will be used by people who like to get what esses and coercion were something to be they want through coercion rather than proud of. peaceful, voluntary interactions with others. '~Can this be legal?" you may be wonder­ ing. Alas, yes. Last year, 'the Supreme Court The Attack on Employee reversed a court of appeals decision that Involvement union organizers weren't entitled to special legal protection if they apply for work at a In recent decades, there has been a marked firm they are targeting. The NLRA is vague shift in the United States away from the on many points, including this one, but the old-fashioned management style ofjust telling Supreme Court chose to give it an interpre­ workers what to do, and toward using the tation at once hostile to freedom of contract observations and ingenuity of employees to and encouraging to this unscrupulous abuse assist in running the business better. Em­ of governmental processes. Salting has been ployee involvement (EI) works very well un­ given the green light. The unions are gleeful der most circumstances and is necessary to the that their nasty harassing tactic may continue. survival of most American businesses in the It certainly will. intensely competitive global market. It is undoubtedly in the interest of both Why It Matters business owners and employees to have the freedom to find the optimal ways of cooper­ Why should we care about this? For one ating for mutual gain. There is no set formula thing, if unions succeed in driving out non­ for EI. There are so many different businesses union competitors with this kind of coercive faced with so many different and changing harassment, the cost of construction (and circumstances that no one can possibly specify other things) will rise. Nonunion firms are the ideal way to handle EI programs. There despised by unions because they are able isn't an ideal. Each firm has to seek its own. to make more efficient use of labor without Unfortunately, again owing to the National the union's wasteful work rules, and thus Labor Relations Act, managers and workers often underbid unionized firms. In the ab­ are not entirely free to experiment with EI. sence of that competition, people would have One section of that statute prohibits the 278 THE FREEMAN • MAY 1997 management of a company from "dominating may (and often does) lead to more satisfied or assisting" any labor organization. The workers, who are unreceptive to union orga­ original purpose of that section was to pro­ nizers. AFL-CIO official David Silberman, hibit "company unions" back in the 1930s. It for example, claims that the teams established was organized labor's way of coercively re­ by Electromation were a "bald-faced effort stricting the range of options in labor rela­ to stop union organizing." Never mind that tions. (Union spokesmen routinely say that the NLRB specifically found otherwise. The company unions are "sham" unions, but ifthat right question to ask is, "So what?" What . were true, why wouldn't workers readily and on earth is wrong with management taking willingly choose representation by "real" perfectly peaceful steps to increase the level unions?) Today, organized labor, eager to of worker satisfaction? Union leaders talk guard its turf and appear useful, contends that as if they were entitled to interfere with the the kinds of groups established under EI liberty of others to ensure that there will be programs constitute management-dominated a large pool of dissatisfied workers for them labor organizations and are thus illegal. to entice into unions-and then collect dues There has been a lot of litigation over this from. issue. The leading case, Electromation v. One of the most annoying aspects of the NLRB, decided by the NLRB in 1992 and legal battle over EI is the fact that we are upheld by the Seventh Circuit Court of Ap­ talking about speech here. The courts are peals in 1994, broadly restricts EI programs in remarkably eager to extend First Amendment nonunion workplaces. They may not discuss protection to all sorts of symbolic speech any issues that involve "terms or conditions of (dancing, apparel, flag-burning), but they do employment." Electromation Inc. was or­ nothing here to protect actual speech. The dered to disband five "action committees" American Civil Liberties Union does not that dealt with the following subjects: absen­ enter cases like Electromation with a brief teeism/infractions, no-smoking policy, com­ arguing that freedom of speech is being munications, pay progression, and attendance infringed upon, and I would suppose (though bonuses. Most Americans would find it as­ I admit that I have not read the briefs) that tounding that it can be illegal for managers the attorneys for the embattled firms do not and workers to sit down and discuss any aspect even bother to raise First Amendment argu­ of work. Welcome to the Orwellian world of ments. The courts, largely indifferent to em­ the NLRA. ployer freedom, have always turned a blind Some subjects are clearly legal to address in eye to the First Amendment in labor cases. an EI program. For example, managers and workers can discuss the implementation of a Cutting the Gordian Knot workplace attendance policy, but, as Electro­ mation says, they may not discuss absenteeism. The vile "salting" tactic and the legal attack That may seem like a nonsensical distinction, on EI programs are both consequences of but that is exactly what happens when you abandoning the freedom and neutrality of get lawyers battling back and forth over the the common law in favor of the one-sided, meaning of a vaguely written statute. The authoritarian special-interest statute that is problem for employers is that some poten­ the NLRA.2 tially fruitful areas for EI programs are now Both are egregious examples of harnessing taboo, and a cloud of uncertainty hovers over the power ofthe state to accomplish ends that many others. As Howard Knicely, executive would be crimes or torts if the interest group vice president of TRW Inc., said in testimony members tried to do the same things on their before the U.S. Senate, "It is virtually impos­ own. If the union that was so incensed at the sible for an employer and its employees to Electromation Action Committees (the know what they can and cannot do under Teamsters, which had lost a representation current law." election there) had burst into the plant and Organized labor doesn't like EI because it demanded that the committees be disbanded LIFE, LIBERTY, AND PIZZA DELIVERY 279 or else, that action would have been illegal. baby here. The NLRA is coercive interference The NLRA spares unions the expense and with liberty and property rights from start to danger of having to directly violate the rights finish. 0 ofothers. The government does the dirty work 1. Richard Epstein, "A Common Law for Labor Relations: A for them. Critique of the New Deal Labor Legislation," 92 Yale Law If I had a magic wand to repeal bad federal Journal, 1357; and George Leef, "Legal Obstacles to a Market for Employee Representation Services," 9 Cato Journal, 663. statutes, I would put the elimination of the 2. The NLRA is also unconstitutional; there is nothing in NLRA right at the top ofmy list. Many would Article I, section 8 that gives Congress power to regulate labor-management relations. (No, the commerce clause won't do. accuse me of throwing out the baby with the See Professor Epstein's "The Proper Scope of the Commerce bath water, but the truth is that there is no Clause," 73 Virginia Law Review 1387.)

Life, Liberty, and Pizza Delivery by Thomas J. DiLorenzo

fter 22-year-old Samuel Reyes was shot decided to make it illegal for Domino's (or Aand killed while delivering a Domino's any other fast-food deliverer) to refuse to pizza in a government housing project in San deliver in areas the company believes would Francisco, Domino's suspended pizza deliv­ put its employees' lives in danger. The new eries in the highest crime areas of many cities. law is the basis ofa civil suit by aggrieved pizza The company also developed computer soft­ consumers who apparently believe they have ware that allows its franchisees to flag ad­ a constitutional right to pizza delivery. dresses that are unsafe (a yellow flag means The deep irony of San Francisco's new curbside delivery only; green flag means go service redlining law is that in the name ofcivil ahead; red flag means do not enter). rights it imposes forced labor on Domino's One would think that such an expression employees. The law also makes a mockery of of concern for employee safety would earn private property and freedom of association, Domino's one of the U.S. Department of as the city's politicians seek to coerce business Labor's "corporate social responsibility" owners into associating with violent criminals awards. No such luck. Domino's behavior and putting their employees' lives-and their has infuriated liberal political activists and has business property-at risk. led to a new "civil rights" campaign-against The very idea that pizza delivery is a civil so-called "service redlining." rights issue is absurd. Because the fast-food Because some of the most crime-ridden business is so fiercely competitive and profit sections of San Francisco are in predomi­ margins so low, any business that ignored a nantly black government housing projects, the large customer base because of racism would San Francisco Board of Supervisors recently not long survive. Domino's did not become the hugely successful company that it is by Dr. DiLorenzo, this month's guest editor, is professor refusing to sell its pizzas to blacks. Such ofeconomics in the Sellinger School ofBusiness and discrimination would create enormous profit Management at Loyola College in Maryland. opportunities for its competitors and drive it 280 THE FREEMAN • MAY 1997 from the market. Ifthere are large, unrealized margins at those stores, causing many ofthem profit opportunities in the pizza delivery busi­ to shut down, as has in fact occurred through­ ness in some sections of San Francisco, one out the United States. The residents of these wonders why members of the San Francisco urban areas are then left with fewer places for Board of Supervisors do not invest in pizza purchasing groceries and may very well end delivery franchises there themselves. Accord­ up paying higher prices. ing to their own logic, millions of dollars in The fact that the free market is quickly and profits are just sitting there, waiting for ra­ easily solving the problem of food delivery in cially enlightened business owners to pick high-crime areas, thanks to businesses like them up. Home Boys Catering and Delivery, will likely While politicians in San Francisco and be ignored by most self-appointed "civil rights elsewhere argue over how best to regulate leaders" for the same reason that most poli­ "service redlining," the free market is quietly ticians always ignore the free market in gen­ solving the problems they are concerned eral: Voluntary solutions leave no room for about. A new business in Birmingham, Ala­ politicians to advance their careers by shaking bama, is the model. Home Boys Catering and down the businesses they threaten with reg­ Delivery hires ex-gang members to deliver ulation for campaign contributions and en­ pizzas and other food items to high-crime gaging in media grandstanding. In the name areas of the city.. The business adds a $2.50 of civil rights, San Francisco's politicians service charge (or risk premium) to each would apparently rather enforce a form of delivery, and it has been so successful that it involuntary servitude than sacrifice these ca­ is expanding into other cities. reer opportunities. This particular form ofprice discrimination If the San Francisco Board of Supervisors is rational and efficient, but political dema­ wants to solve the problem of unequal serv­ gogues threaten its existence because of their ice delivery in high-crime areas, it should economic ignorance and political opportun­ create a better business climate in the city ism. Many other businesses, such as grocery through deregulation-especially of food stores, charge what might be called a crime vendors and other small businesses that are premium for operating in higher-crime areas; plagued by occupational licensing regulation; otherwise many of these businesses would tax cuts to spur economic growth; and better not operate there at all. For example, grocery crime control. It needs to stand back and get prices are often slightly higher in higher-crime out of the way of entrepreneurs like Home areas of a city because the stores there incur Boys Catering and Delivery owner Darek higher costs due to a higher incidence of Marcel Eaves. Mr. Eaves provides a valuable shoplifting, break-ins, and robberies. For de­ service to his customers and performs a public cades, politicians who purportedly champion service to his community by employing trou­ "the poor" have condemned this type of bled young men and women and teaching "discrimination" and in some cases have im­ them how to develop a work ethic and to run posed price control laws which prohibit it. a successful small business. America's cities But price controls that prohibit stores from need more entrepreneurs like Mr. Eaves, not passing on at least part of these costs to more laws, regulations, and mandates on consumers will reduce-or eliminate-profit business owners. 0 THEFREEMAN IDEAS ON LIBERTY

Free-Market Emancipation by Karol Boudreaux

oday, when we think about slavery in certain basic beliefs about the sanctity of TAmerica we typically bring to mind im­ property before the law.,,2 ages of nineteenth-century slaves trudging off Breen and Innes tell the stories of a num­ at daybreak to grueling work in cotton fields ber of blacks who lived in Northampton and returning exhausted after sundown. We County on the Eastern Shore during the think ofpeople with little freedom, whose best mid-seventeenth century. These men, admit­ hope for liberty lay only in dangerous escape tedly few in number, were able to contract attempts. with their owners to purchase their freedom. Like any institution, slavery has a history. These purchase contracts typically required It evolved over time, becoming more repres­ the slave to provide hundreds or thousands sive as years passed and as the forces of of pounds of tobacco to the owner. A slave government coercion, such as Virginia's Slave would meet this daunting challenge by work­ Code, were used to restrict opportunities for ing small parcels of land, which his owner blacks. allowed him to use during his spare time. Ifhe In the seventeenth century, however, blacks were both ambitious and lucky, the slave who were either slaves or indentured ser­ might actually raise enough tobacco to meet vants had, at least in one part of the South, a the purchase requirements and gain his free­ unique window of opportunity open to free­ dom. dom. Their story is little known, and worth a As Breen and Innes note: closer look because of the lessons it teaches about the power of free markets and personal Self-purchase obviously operated to the mas­ ter's advantage.... The key to understanding freedom. self-purchase is productivity, for while the great In "Myne Owne Ground," professors T. H. planters of the Eastern Shore required able Breen and Stephen Innes describe settle­ fieldhands ... they obviously did not want ments on the Eastern Shore of Virginia people who were lazy or disobedient. For the between the years 1640 and 1680.1 These slave, the incentives to diligence were quite communities had several interesting charac­ limited.... One answer to the master's peren­ teristics. First, and perhaps most importantly, nial problem was to hold out the possibility of Virginia's colonial government was located freedom. Such an offer provided the slave with far away, across the Chesapeake Bay in a powerful goal, a dream, a reason to sacrifice, Jamestown. Second, tobacco, grain, and live­ and even though the terms of some freedom stock could be profitably raised on the East­ agreements appear grossly exploitive to the modern observer, they were welcome bargains ern Shore. And third, the common-law judges to persons who otherwise faced lifelong bond­ who held court on the Eastern Shore "shared age. 3

Ms. Boudreaux is a research associate at Clemson Purchasing their freedom was only the first University's Center for Policy & Legal Studies. hurdle these remarkable men faced. Once 281 282 THE FREEMAN • MAY 1997 free, they would either have to accumulate find that blacks prospered and faced relatively enough capital, or buy "headrights,"4 to ac­ little discrimination. So long as these freemen quire land and supplies in order to become could provide tobacco, grain, or livestock that small, independent farmers. By renting land their neighbors or merchants wanted, they and growing tobacco and livestock, these succeeded. As Breen and Innes observe, "eco­ men could make a living. While some failed, nomic status rather than racial identity seems many did quite well, buying hundreds of acres to have been the chief factor in determining of land and becoming well-known traders. how blacks and whites dealt with one anoth­ er.,,5 Race Not a Barrier to Success Unfortunately, this relatively brief period of economic prosperity for free blacks in What is fascinating about their stories is Northampton County ended by the close of that once they were part of the market system the seventeenth century. Breen and Innes of Northampton County, these former slaves suggest that it was the very success of the free faced relatively little racial discrimination. blacks that led to their undoing. As these They often successfully sued in Northampton resourceful people accumulated property and courts to protect their property rights. They wealth they represented a growing competi­ accumulated property and traded with whites. tive threat to white farmers. Faced with such In short, they participated fully in the system unwanted competition, white settlers lobbied of voluntary exchange that characterized the government of Virginia to pass increas­ Northampton's market economy. While so­ ingly restrictive statutes, limiting the freedom cial and political barriers existed for these ofblacks. These legislative restrictions culmi­ men, in the market, at least, race was not a nated in the repressive Virginia Slave Code major barrier to success. of 1705 which, Breen and Innes argue, marks The success of Northampton's free blacks the moment at which racial lines "inexorably" provides an important lesson about the func­ hardened and "the tragic fate of Virginia's tioning of markets. In a free market, where black population was finally sealed.,,6 government interference is kept to a mini­ The awful lesson of the Northampton mum and where people are free to contract County free blacks is that this hardening was with one another, those individuals who are made inevitable only by government action. able to supply products that other people Tragically, race relations in America could want will succeed. Buyers look for sellers have evolved differently. In a community who offer the best products at the lowest where a competitive market economy existed, prices. In a free market, the quality and price where property rights were protected by the of the good, not the color of the seller's skin, courts, and where government interference are what count most. Indeed, in competitive was minimal, people dealt with each other in markets, if buyers refuse to purchase goods a relatively colorblind manner. The relevance from a seller based solely on the seller's race, of this lesson to late twentieth-century Amer­ they hurt themselves by passing up good deals. ica is all too obvious. 0 Racial discrimination, in otherwords, is costly in a market system. This lack of racial discrimination is exactly 1. T.H. Breen and Stephen Innes, "Myne Owne Ground"; Race and Freedom on Virginia's Eastern Shore, 1640-1676 (New York: what we see in the early history ofNorthamp­ Oxford University Press, 1980). ton County. Northampton Countywas a thriv­ 2. Ibid., p. 15. 3. Ibid., pp. 72-73. ing market economy in the mid-seventeenth 4. The "headright" system entitled each settler to a grant from century, with relatively little government in­ the colonial government of land, typically 50 acres. Headrights could be purchased and combined. terference from faraway Jamestown. In this 5. Breen and Innes, p. 111. environment, we should not be surprised to 6. Ibid., p. 5. Potomac Principles by Doug Bandow

The New Assault on Capitalism

apitalism has long had more than a few erty and virtue are setting the two against each Ccritics on the left. For years it was said other, treating them as frequent antagonists, that collectivism would eventually outpro­ if not permanent opponents. At the very least, duce the market. That claim died with the they suggest, you cannot maximize both lib­ Soviet Union. What remained of the left then erty and virtue, but, instead, have to choose began to complain that capitalism generated which to promote and which to restrict. too many material goods. However, it would be a mistake to assume The charge always was incongruous coming that one must be sacrificed for the other. from a Gucci-clad elite who enjoyed the best Rather, they are complementary. That is, the market system had to offer. But now liberty-the right to exercise choice, free from similar attacks on capitalism are coming from coercive state regulation-is a necessary pre­ an even stranger source, the right. The mar­ condition for virtue. And virtue is ultimately ket, it is said, is a threat to family, human necessary for the survival of liberty. relationships, values, and virtue. Government Virtue cannot exist without freedom, with­ programs like Social Security are said to be out the right to make moral choices. Coerced pro-family. acts of conformity with some moral norm, Both freedom, which, of course, is what however good, do not representvirtue; rather, capitalism is all about, and virtue are obvi­ the compliance with that moral norm must be ously under assault today. Government takes voluntary. and spends roughly half of the nation's in­ There are times, of course, when coercion come. Regulation further extends the power is absolutely necessary-most importantly, to of the state in virtually every area of people's protect the rights of others by enforcing an lives. Increasing numbers of important, per­ inter-personal moral code governing the re­ sonal decisions are ultimately up to some lations of one to another. The criminal law is public functionary somewhere. an obvious example, as is the enforcement of Virtue, too, seems to be losing ground daily. contracts and property rights. Evidence of more decline is plentiful enough However, virtue reflects a standard ofintra­ in America's political leadership. Things are personal morality. As such, it is an area that scarcely better elsewhere in society, as family lies beyond the reach of state power. and community breakdown continues apace. Of course America today does not seem to Unfortunately, the problem is being com­ be a particularly virtuous place. But then, the pounded as onetime supporters of both lib- natural human condition, certainly in Chris­ tian theology, and in historical experience, Mr. Bandow, a nationally syndicated columnist, is a senior fellow at the Cato Institute and the author and too, is not one of virtue. "There is no one editor of several books, including Tripwire: Korea righteous, not even one," Paul wrote in his and U.S. Foreign Policy in a Changed World. letter to the Roman church, citing the Psalms 283 284 THE FREEMAN • MAY 1997

(Rom. 3:10). This explains the necessity of a sapping their vitality. Private social institu­ transcendent plan of redemption. tions find it easier to lean on the power of Societies can be more or less virtuous. Did coercion than to lead by example, persuade, ours become less so because government no and solve problems. Moreover, the law is longer tries so hard to mold souls? Blaming better at driving immorality underground moral shifts on legal changes mistakes corre­ than eliminating it. As a result, moral prob­ lation for causation. In fact, America's one­ lems seem less acute and people may become time cultural consensus eroded during an era less uncomfortable; private institutions may of strict laws against homosexuality, pornog­ therefore be less likely to work as hard to raphy, and even fornication. Only cracks in promote virtue. this consensus led to changes in the law. In Third, making government a moral en­ short, as more people viewed sexual mores as forcer encourages abuse by majorities or a matter of taste rather than a question of influential minorities that gain power. If one right and wrong, the moral underpinnings of thing is certain in life, it is that man is sinful. the laws collapsed, followed by the laws. Yet the effect of sin is magnified by the possession and exercise ofcoercive power. Its What Government Can't Do possessors can, ofcourse, do good, but history suggests that they are far more likely to do Government has proved that it is not a harm. They may start with the best of inten­ particularly good teacher of virtue. The state tions, but that doesn't prevent them from tends to be effective at simple, blunt tasks, turning a supposedly family-friendly Social like killing and jailing people. It has been far Security into a coercive public Ponzi scheme less successful at reshaping individual con­ lurching toward fiscal disaster. sciences. Even if one could pass the laws And as America's traditional Judeo­ without changing America's current moral Christian consensus crumbles we are more ethic, the result would not be a more virtuous likely to see government promoting alterna­ nation. True, there might be fewer overt acts tive moral views. This is possible only if of immorality. But there would be no change government is given the authority to coer­ in people's hearts: Forcibly preventing people cively mold souls in order to "promote vir­ from victimizing themselves does not auto­ tue." Despite the best intentions of advocates matically make them more virtuous, righ­ of statecraft as soulcraft, government is more teous, or good. It is, in short, one thing to likely to end up enshrining something other improve appearances, but quite another to than traditional morality. All told, an unfree improve society's moral core. society is not likely to be a virtuous one. Indeed, attempting to make people virtu­ In the end, people need to be more willing ous by force would make society itself less to tolerate the quirks and failings, even seri­ virtuous in three important ways. First, indi­ ous virtuous lapses, oftheir neighbors, so long viduals would lose the opportunity to exercise as such actions have only limited effect on virtue. They would not face the same set of others. They should leave the punishment of temptations and be forced to choose between most sins to God. good and evil. This approach might thereby The fact that government can do little to make their lives easier. But they would not be help does not mean that there is nothing it more virtuous, and society would suffer as a should do. We would all be better off if public result. In this dilemma we see the paradox of officials adopted as their maxim "first, do no Christianity: a God of love creates man and harm." Although the community-wide moral provides a means for his redemption, but breakdown most evident in the inner city has allows him to choose to do evil. many causes, government policy has exacer­ Second, to vest government with primary bated the problem at almost every level. responsibility for promoting virtue short­ Governments punish both marriage and thrift changes other institutions, or "governments" through their tax policies. The state has spent in Puritan thought, like the family and church, years attempting to expunge not only religious THE NEW ASSAULT ON CAPITALISM 285 practices but also religious values from the requires sustained effort, including bringing public square; the public school monopoly social pressure against businessmen in the discourages moral education. marketplace-the purveyors of gangster rap, Nevertheless, freedom is not enough. for instance. While liberty is the highest political goal, it Those who believe in both a free and is not life's highest objective. Moreover, while virtuous society face serious challenges in the a liberal, in the classical sense, economic and coming years. But neither cause will be helped political system is the finest one available, it by playing them off against each other. In the will· operate best if nestled in a virtuous social end, neither is likely to survive without the environment. And forming that environment other. 0

A Friendly View of Dealing by Tibor R. Machan

hen people set out to buy or sell in the minimum requirements without which they W marketplace, they do so with some will refuse to trade, in which case no price will terms in mind. But they don't know the exact be agreed to. Finding the right price is a terms they will accept before they start bar­ necessarily mutual process, since it is some­ gaining or as they compare different offers thing that registers the terms ofagreement, as (among stores in a mall, for example). Indeed, it were. considering a trade is itself only the first step Sometimes people feel awkward about not to establishing its terms. As the process cul­ accepting another's terms right from the start. minates, prices and other mutually acceptable It seems like asserting themselves too much. conditions are determined. This is more a sign of lack of confidence in Some view this as if the parties would need their own role in the market process, as if the to compromise, since they do not usually end parties didn't have justice on their side by up with the terms they initially have in mind. asserting their own interests. Well, one fea­ There is, however, no compromise involved ture ofjustice is thatwhen two or more parties at all since there is no such thing as one party consider coming together on some matter, to the trade alone knowing what the price they do so on mutually agreed terms rather is. As in any necessarily cooperative venture, than compelling someone to comply with the all participants, together, establish the crucial demands of another in the process. This is features involved. (In language, for instance, because justice is, in part, respect for another's no one individual sets the precise meaning of standing as a full human being, a person with concepts or words.) They may stick to some his or her judgments to make about his or her conduct in life, including whether and onwhat Dr. Machan, on leave from Auburn University, is mutual terms to join others in certain endeav­ educational programs director for Chapman Univer­ sity andFreedom Communications. He is working on ors. his next book, Business Bashing, Why It's Hazard­ This kind ofjustice, however, is conditioned ous to Your Health. on a more basic moral principle-that one's 286 THE FREEMAN • MAY 1997 own life is not only for one to govern but ought ofothers, but such is not the case unless deceit also to be enhanced, for example, via trade. or fraud is perpetrated. This is the practice ofprudence. There can be Furthermore, the derided business practice occasions when the virtue of prudence is not of advertising is best understood as a kind of so urgent as would be generosity or courage. hopeful "holler" to us from sellers who are Still, it is normally vital to living a good human trying to put meals on their tables, kids life, so justice must make room for it, for through school, or insurance payments in example, in the course of commerce. the mail by attracting us to their goods and Now some interesting points follow from services. They are calling out to us-on radio, this. One is that obtaining what is deemed a TV, magazines, billboards, flyers, catalogues high price for one's goods and services is going (what we so harshly call "junk mail")-so we to depend, in part, on how those kinds of might pay attention to what they are offering things are being received throughout the and we could well use. One should never get marketplace. Another is that most attempts to upset with advertising-it's just the cosmetics obtain a high price need to be understood as employed by the sellers in the course of perfectly justified, unless, of course, they are seeking out a trade, calling attention to their outrageous (in comparison to how such goods good features in the attempt to attract a good or services fare in the marketplace). Even reception from potential buyers. It can misfire when folks find a price annoying, say when it in some ways, including outright deception or, is raised comparatively high in times ofcrises, less drastically, tastelessness or stupidity. they need to recall that such a move is often It would be very nice, more generally, if an honest expression of hope for some extra many people didn't have a one-sided view revenue for the seller in the light of a rare of the pursuit of economic well-being. This opportunity. This is nothing to scoff at. No one one-sidedness consists in finding one's own scoffs at it when done for people by their pursuit honorable but that of others nearly representatives in contract negotiations or always degrading. Such an adjustment of when an agent embarks in one's behalf in attitude would do a lot to raise the reputation selling real estate. Some do call it gouging of the free market and, thus, of the prospects when folks try to cash in on the sudden need of general prosperity. D

The Link "KID Comfortable" Homeschool Conference June 21-22, 1997 • Cal lutheran University (ClU) Thousand Oaks, California ...... Speakers/Presenters: ····\ John Gatto 1~ David Be Micki Colfax • Pat Be Day Farenga a Many Others Workshops • Panel Discussions Activities for Children Take Advantage ofourpre-registration rates! -For Information Call- The Link tr (805) 492-1373 THEFREEMAN IDEAS ON LIBERTY

Benefit Societies in America: The Way It Used to Be by Michael L. Probst

onventional historical wisdom might acterize the present welfare state-rising C suggest that there was very little poverty illegitimacy, broken families, rampant drug relief in the United States prior to the emer­ abuse, and pervasive violent crime. Finally, gence of the government welfare state. This the mutual aid tradition declined dramatically is not so. Before welfare assistance became about the same time the welfare state began institutionalized, a network of private frater­ its rise. This deterioration lends support to a nal organizations provided economic security common argument made by classical liber­ to workers and relief to people in need. Those als-that as the state assumes responsibility voluntary societies rendered support services for economic relief, private assistance dimin­ based on the principle of mutual aid. By the ishes. end of the second decade of this century, 18 million adult Americans-including nearly 30 Economic Functions of percent of the male population-held mem­ bership in fraternal societies. 1 The fraternals Benefit Societies offered such services as death and burial 1. Life Insurance benefits, medical care, unemployment and sick relief, and education. The primary and most widely offered fra­ These mutual aid societies are referred to ternal services were death and burial benefits, in a variety of ways-as benefit, fraternal, which provided a proper burial for the de­ benevolent, or friendly societies. Some bore ceased and relief to the surviving family elaborate or unusual names. Many have dis­ members? The insurance was priced within appeared, but others, including the Masons, reach of a typical worker. In terms of today's Elks, Odd Fellows, and Eastern Star­ prices, the benefits could be purchased for continue their work today, providing medical about the cost of a single movie ticket per and scholarship assistance for the young and week. Besides providing the death benefit, the residential care for aged members. societies also commonly offered sick benefits,3 These societies are of interest to free­ which were similar to today's unemployment market proponents for several reasons. First, insurance. These benefits provided relief for the benefit society tradition honored the a member during periods of inability to work free-market ideal ofvoluntary exchange. Sec­ due to accident or illness. ond, mutual aid societies were mostly suc­ Fraternal insurance could also be used to cessful at avoiding social problems that char- self-insure against poverty. A member ar­ ranged such protection by appointing the Mr. Probst is a freelance writer in Auburn, Alabama. charitable institution in charge of his care as 287 288 THE FREEMAN • MAY 1997 the beneficiary of his policy. Moreover, many denying access to known gamblers.8 This societies also made provisions allowing for moral encouragement not only helped bring loans to be taken out against the value ofa life members the advantages of living more insurance certificate.4 wholesome lives, but it also served to help keep the payment of benefits in check. 2. Medical Services Because the benevolent societies were In the early part of the twentieth century formed along the lines of mutual aid, mem­ many fraternal organizations began to make bers had a direct interest in the health and medical care available. They created some­ well-being oftheir fellows. The desire to keep thing similar to the HMOs of today by con­ benefit payments low created an incentive for tracting out for the services of doctors who members to monitor each other's behavior in agreed to provide care for members. The fees order to minimize the "moral hazard." In were as low as $1 per year and coverage could effect, peer pressure was used to check the be extended to members' families. This pro­ conduct of members, thus allowing everyone tection allowed for visits to the doctor's office to reap both social and economic advantages. and for house calls on request.5 Fraternal societies also helped to foster pride and self-respect among members. The 3. Education source of this pride lay in the very nature of Other services to which the benefit societies their relief system. Because the societies were devoted considerable resources included ed­ self-supporting, the benefits they dispensed ucation and job training. This was especially were not considered charity, and this, of true among the black fraternals. The broad course, helped preserve the dignity of the range of education opportunities is indicated recipients of its aid. Even the poorest of the by one society's advertisement offering tute­ poor did not want to be on public relief. When lage in "kindergarten, English, normal, col­ benefits were dispensed by the fraternal so­ lege preparatory (classical), college course ciety, the recipients were able to view them as (classical), industrial, sewing, cooking, fancy an entitlement earned, something they them­ work, bicycle, umbrella and furniture repair­ selves had helped to finance with their pre­ ing, mattress making and upholstery."6 vious contributions.9 Immigrants, too, used the benefit society as a tool for education. Because many of the Problems new arrivals spoke only their native language, lessons in English were essential.7 Immigrant While the benefit societies were viewed societies played an invaluable role in this favorably by most, they were not without their respect, helping to educate and acclimate new critics. The most fundamental charge against arrivals. them was that the aid they delivered was inadequate. As historian David Beito points Social Functions of out, however, the concept of relief has Benefit Societies changed in recent history. The only benefit now taken into account is the number of Most fraternal societies did not confine dollars spent. Before the emergence of the their activities to mutual aid. Through the use welfare state, however, the adequacy of sup­ of economic sanctions, the societies typically port was measured in other ways. Satisfactory worked to encourage the practice of high assistance also implied ideas such as the moral standards as well. For example, the building of "character, self-respect, and inde­ Boston African Society stipulated that per­ pendence.,,10 sons whose misfortunes resulted from their Interestingly enough, some of the most own intemperance thereby forfeited all ben­ ardent supporters of the welfare state are efits. The Odd Fellows were also diligent in coming to terms with the apparent inability of this respect, allowing membership only to state-run forms of relief to provide the non­ those of "undoubted probity" and specifically material benefits associated with voluntary BENEFIT SOCIETIES IN AMERICA: THE WAY IT USED TO BE 289 aid. Even in mainstream policy discussions, from providing industrial accident insur­ the consideration that government welfare ance." Further evidence is that by 1931, most programs may, in fact, be unfit to encourage states provided mothers' pensions, and in the these values is not uncommon. 1930s, Social Security and Aid to Dependent Professor Beito cogently argues that those Children were introduced. These increases of who required help before the modern welfare government involvement in economic relief state might very well have envied the material paralleled decreases ofmutual aid activities. 13 aid the disadvantaged presently receive­ While it is possible that such parallels were housing, food, and income-all guaranteed only coincidental, it seems much more likely by the state. But if traits such as self­ that state benefits replaced the need for ones improvement, self-respect, pride, family and provided by the fraternal societies. community cohesion, and relatively safe neighborhoods are considered, today's disad­ Conclusion vantaged class might be very willing to change places with those who depended on mutual For persons concerned about the plight of aid. 11 The success of the benefit societies is the disadvantaged in the United States today, that their mutual aid function helped them the experience of the past may provide the provide relief to those in need while largely best guide for the future. Comparing the avoiding the social breakdown so evident in American tradition of mutual aid to the our current welfare state. modern welfare state seems to confirm F.A. Hayek's ideas regarding progress and the Decline human social order. Hayek believed that human achievement was not the result of So what happened to the benefit societies conscious, collective planning. Instead, Hayek and their practice of mutual aid? There are argued, progress emerges from a trial-and­ various explanations, some accounting for the error process wherever people are free to disappearance of specific services the societ­ copy behavior that has proven successful for ies once provided, others accounting for their others. Maybe it's time we abandon the cen­ decline in general. For instance, Beito reports trally planned welfare state and return to a that the provision of medical care by the model developed through successful experi­ fraternals came under attack shortly after the mentation-a model based fundamentally on turn of the century by physicians who viewed the concept of voluntary mutual aid. 0 the fraternals' contracts with doctors as "a threat to traditional fee-for-service medi­ cine." By the 1920s these efforts had largely 1. David T. Beito, "Thy Brother's Keeper," Policy Review, succeeded, and the loss of medical services in Fall 1994, p. 56. 2. Ibid., p. 55. particular is considered a major cause of the 3. Howard W. Odum, Social and Mental Traits ofthe Negro: organizations' rapid decline. Research into the Conditions ofthe Negro Race in Southern Towns (New York: Columbia University Press, 1910), p. 115. Probably the best and most complete ex­ 4. Richard DeRaismes Kip, Fraternal Insurance in the United planation for the decline of the fraternal States (Philadelphia: College Offset Press, 1953), pp. 114-129. societies, however, is the rise of the modern 5. Beito, p. 56. 6. Odum, pp. 113-114. welfare state. Simply put, government bene­ 7. Beito, p. 58. fits have replaced the need for the provision 8. Leonard P. Curry, The Free Black in Urban America, 12 1800-1850: The Shadow of the Dream (Chicago: University of of the fraternals' mutual aid. Chicago Press, 1981), p. 211. Anecdotal evidence of government welfare 9. Beito, p. 58. 10. David Beito, "Mutual Aid for Social Welfare: The Case activities displacing mutual aid abounds. For of American Fraternal Societies," Critical Review, Fall 1990, p. example, when workers' compensation was 720. 11. Ibid., pp. 723-724. launched in the 1910s and 1920s, employees' 12. Beito, Policy Review, pp. 58-59. mutual aid organizations withdrew"en masse 13. Beito, Critical Review, pp. 726-727. THEFREEMAN IDEAS ON LIBERTY

How Galveston Opted Out of Social Security by Ed Myers

n south Texas, along the windswept Gulf eral companies that became the First Finan­ I Coast where multitudes of hurricanes have cial Group. made landfall over the centuries, there are The men from First Financial took their three history-filled, ahead-of-their-time coun­ ideas, which they called The Alternate Plan, to ties: Galveston, Brazoria, and Matagorda. Galveston County and presented them to Until the early 1980s government entities, County Judge Ray Holbrook and the Com­ such as cities and counties, had the right of missioners Court in 1980. When Judge Hol­ opting out of Social Security and establishing brook, a quiet, soft-spoken Texan, and their own retirement system. This option had County Attorney Bill Decker, a man dedi­ been provided when the Social Security Act cated to the betterment of his county, saw the was passed in the thirties. wisdom and foresight of this concept they Galveston County in 1979 looked into this took charge and shepherded the plan through idea when then-County Attorney Bill Decker its various stages. contacted Don Kebodeaux, highly successful The beauty of the plan was simplicity itself. Houston businessman, and asked him if he The 6.13 percent rate that the government could devise a plan so that Galveston County had been taking out for Social Security in 1981 could opt out of Social Security. At that time now would go into the pension fund for Social Securitywas on the verge ofbankruptcy employees and would be matched by the and no one knew what the future held. Don county. Life and disability insurance were pondered the problem and called in his friend included at first to match exactly the Social Rick Gornto, a leading financial expert, who Security benefits. In recent years the county was later to become his partner. These two increased its participation to 7.65 percent, hard-driving and foresighted businessmen, which included payment of all premiums for realizing the coming problems in Social Se­ life and disability insurance. The life insur­ curity, designed a new program for political ance benefit for those under age 70 is 300 subdivisions that would provide a retirement percent of one's annual. earnings with the planfor employees thatwas many times better minimum benefit of $50,000 and a maximum than the existing Social Security program. of $150,000. Satisfied with the new program, and in order Many spirited debates were held through­ to properly present and handle this program, out the county between Social Security rep­ these two Texas entrepreneurs organized sev- resentatives and the men from First Financial for the benefit of the county employees to Ed Myers is author of the book Let's Get Rid of answer all questions. Balloting on the ques­ Social Security. tion was held in 1981. By a resounding vote 290 291

of 78 percent to 22 percent, the Galveston is 25 years old and makes a $2,000 annual County employees endorsed the idea and the contribution for just ten years, assuming an 8 county opted out of Social Security. percent earnings rate, this individual will have The local unions fought the idea at first, and $314,870 when he or she retires at age 65. If several Galveston County officials also op­ he works continuously for 40 years, he may posed the action. As time went on and they well have accumulated a million dollars, de­ learned more about the program, nearly all pending on his contributions. ofthem saw the sound judgment in this course This idea began taking hold in a big way. of action. Years later Decker, by then retired, The entrepreneurial spirit was alive and well. told the story of how a number of unionized In a short period of time the idea spread and county workers thanked him for his wisdom some 200 other counties, as well as many and guidance. They said at first they had cities, in Texas and throughout the entire serious doubts about giving up the fixed country, saw the latent possibilities of the income of Social Security, but now that they program and were ready to become candi­ were getting ready to retire they were very dates to opt out and join the plan that First happy they did. Financial Group had devised. "TheAlternate Plan has been a godsend for Then as these other political subdivisions Galveston County and clearly improved em­ began to set the wheels in motion for this ployee benefits," said Judge Holbrook re­ farsighted change, up jumped the devil, Con­ cently. He continued, "The 22 percent who gress. Social Security had gone broke the voted against it in 1980 are all supportive now year before and our legislators were now and see the many benefits of having a retire­ looking for ways to bail out the system. ment program other than Social Security, Capitol Hill had already decided to include which most employees under age forty believe the federal employees and then got a rude will not be existing when they retire because shock when it looked as though all employees therewill not be enoughworkers to contribute of the various counties in Texas, and others to this pay-as-you-go system. And now no throughout the country, were about to opt one objects to the mandatory feature which out of Social Security. That was a calamity it was made part of The Plan a few years after could not allow, so Congress canceled the it started." Judge Holbrook, who retired in opt-out clause in 1983. Fortunately Gal­ 1994 after 28 years of distinguished service, veston, Brazoria, and Matagorda counties concluded his narrative by saying, "Of all the had their systems up and running and so the things I accomplished while county judge, grandfather clause applied, and they were setting up this retirement system for Gal­ allowed to continue theirAlternate Plan, much veston County employees is one ofmy proud­ to the chagrin of all these other Texas coun­ est achievements." Now in retirement, Judge ties. Holbrook also pointed out that after just 12 The Alternate Plan that began as a fledgling, years ofservice under The Alternate Plan he is upstart employee benefit plan has stood the now receiving twice as much as he would have test oftime and has shown that it can and does under Social Security. outperform Social Security. The plan that Seeing this tremendous potential in 1982 started in Galveston County ended the first Brazoria County followed suit and opted out year with a modest balance. Today, with over of Social Security in favor of The Alternate 5,000 employees from these three counties Plan. A year later Matagorda County climbed The Alternate Plan has grown to a very healthy on board. and sizable portfolio. Those who retire after Tolbert Newman, operations manager for 20 years will receive three to four times the the First Financial Group who handles the rate as under Social Security. This Alternate overall responsibility for these plans for the Plan is not just an isolated act of a group of three counties, cites the following example responsible and dedicated Texans. There are of the growth that can be achieved in this countless other examples of other local and Alternate Plan pension fund. If an individual state government entities showing the same 292 THE FREEMAN • MAY 1997 responsibility and initiative throughout the having to pay these FICAtaxes in future years United States. There are now five states that will be a tremendous boon to the business are not under Social Security and have their climate and the creation of untold new jobs. own plans: California, Nevada, Maine, Ohio, Larry N. Forehand, president of the Texas and Colorado. In the Colorado plan they now Restaurant Association and founder of Casa have over $14 billion in assets. Local govern­ Ole Mexican Restaurants, a fast-growing ment entities such as police and fire depart­ Texas restaurant chain, had this to say: "We ments have long handled their own retirement currently pay over $1.3 million in matching plans. Social Security taxes annually. Ifour company These plans clearly demonstrate that if left had that $1.3 million a year to invest in new alone enterprising Americans can set up re­ locations, we could build six additional res­ tirement systems, second to none. taurants, employ an additional four hundred The private sector, including the self­ fifty people and add $7.2 million to the employed, will benefit from privatizing Social economy every year. Based on current figures Security as never before. Phasing out the it is estimated that all restaurants in Texas will employer's share of the Social Security tax save $1.2 billion per year." will, over time, return to the business com­ Privatization will bring a win-win situation munity more than $169.2 billion per year. Not fur~L 0

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Subscription OaII1-800-757-9873 $35.00 • Hacienda Publishing ISl~6~~~er Fax: 1- 912-757-9725 - RO.Box 13648- Macon, GA- 31208-3648 THEFREEMAN IDEAS ON LIBERTY

The True American Tradition

by Wesley Allen Riddle

"[In 1776,] the world was born again...." people's sense of a common heritage or a providential mission. But it was not war, nor ". . . [R]emember the deeds of your fathers, emancipation, nor Reconstruction that and by them receive guidance for the future." proved most injurious to that sense. It was an -American Whig Review, 1848, 1849 insidio~s reinterpretation of America's past, o~e whIch altered the original compact in the mericans venerated their past and tradi­ mInds of many people, in order to justify the tions until very recently. Indeed, our A War, .to enact and enforce socio-political sense. of national identity is bound up with equalIty for freedmen, and to impose martial certaIn traditions and institutions stemming law over half the country for a dozen or more from the Revolution and the Constitutional years. The historical revision stayed in place, Convention. America's sense that Providence even after the Union was restored. It contin­ had played a role in the founding also served ued to work injury to our constitutional form to confer heavy presumptive validity to our ofgovernment and to divorce us literally from national beginnings and to the original intent ?ur past-even from the Founders' original of ~he founders. Mere theory or the fleeting Intent and from the terms of our sacred whIm of majority opinion would not sanction constitutional compact. change to the original compact between the The Declaration was elevated to de facto people of the States before the Deity. While Constitutional status. The strictures placed on secularization has played its part in the un­ power by the Founders, their careful system of dermining of American constitutionalism, checks and balances, the Bill of Rights they even a secular constitutional republic can­ placed against the federal government-these not lose continuity with its past, unless it be began to wane as government grew. American transformed. constitutionalism gave way to majority senti­ Itwas in Abraham Lincoln's day that Amer­ ment, increasingly expressed by the central ican historicism suffered a telling blow. The government's open-ended commitment to great church denominations had already split vague notions of "equality" and "rights" from ~orth and South before the country drew language found in the Declaration of Inde­ Its famed and tragic geographic line of polit­ pendence. In allowing this to happen, we have ical ?i~ide. One would expect the cataclysm ignored the unique historical context of the of CIVIl War that followed to complicate any Declaration, its form and function and words Wesley Al~en Riddle was assistantprOfessor ofhistory designed for a specific purpose, i.e., for inde­ at the Unzted States Military Academy, West Point, pendence from Great Britain-not for the New Yor.k, from 1?93 to 1996. He is currently a peacetime structure and aims of a consoli­ Salvaton Fellow wah The Heritage Foundation for the 1996-97term and serves as board advisor to The dated national government! Most among the Social Criticmagazine, chairing its American Civility very same Revolutionary generation, who Project. fought the British Redcoats after declaring 293 294 THE FREEMAN • MAY 1997 our independence, worked hard to give us the (and rights of the people) in the federalist Constitution for the specific purpose of es­ construct.5 Indeed, the Declaration did not tablishing a better government. Furthermore, establish our independence, except as a bak­ they chose a federal republican form of gov­ er's dozen of new sovereignties! Even then, ernment over consolidated union. In terms of all thoughtful statesmen knew the endless function as organic law of the land, the controversies that must surround the recon­ Constitution was ratified-the Declaration ciliation ofrights and the contradictory values was not. of liberty and equality. That is why the Lincoln's Gettysburg Address has served Founders erected a deliberative framework the questionable notion of bridging the out­ based on a moral foundation, which empha­ come of the Civil War to a few words in the sized the commitment to self-government, "to Declaration instead of to the Constitution, rule the deliberate sense of the community." because fourscore and seven years before Article V of the Constitution does, however, 1863 is 1776-not 1789! Although we cannot give us the only legitimate means of changing know all that Lincoln would have done, the our basic commitment: amending the Consti­ historical revision has created a perceived, tution.6 binding commitment to the advancement of We have amended our Constitution many equality at the expense of almost everything times, but we have not amended the Pream­ else. It was the most amazing "open-air ble, which serves as our finest statement of sleight-of-hand.... The crowd departed with national purpose. The promise held out is a new thing in its ideological luggage"-what not for a perfect union, but for one that is amounted to a new Constitution.1 The irony "more perfect." The Framers did not presume is that at the most basic level (especially as to know what a perfect Union is, but they implemented through pure majoritarian de­ did know something about constituting a mocracy), true liberty is incompatible, if not "more perfect Union." They did not confuse altogether incompossible, with total equality.2 means with ends. The Preamble does not We have since moved away from the princi­ mention equality, and the omission is no ples and practices central to the American matter ofoversight. It may be the most salient political tradition of the Founders-"those instance of the Founders' great wisdom, for associated with self-government by a virtuous the Founders were not utopians. Rather, they people deliberating under God,"3 and we told us that a righteous people operating have embraced a contrived "tradition" in­ under the forms and processes established stead. by the Constitution will see justice forth­ Willmoore Kendall and George Carey coming.7 0 equate this embrace to the "derailment" of tradition and the loss of self-government:

OUf Constitution ... is clearly nomocratic in 1. Garry Wills, Lincoln at Gettysburg: The Words That Remade character, largely concerned, that is, with pro­ America (New York: Simon and Schuster, 1992), p. 38. 2. See Erik von Kuehnelt~Leddihn, Liberty or Equality: The viding rules and limits for the government Challenge of our Time (Front Royal, Va.: Christendom Press, through which the people express their will. 1993). Since the derailment, however, the Constitution 3. Willmoore Kendall and George C. Carey, The Basic Symbols of the American Political Tradition (Washington, D.C.: is increasingly viewed from a teleocratic perspec­ The Catholic University ofAmerica Press, 1995 [1970]), p. ix; and tive, as an instrument designed to fulfill the ends, see Wesley Allen Riddle, TheA merican Political Tradition booklet 4 (Irvington-on-Hudson, N.Y.: The Foundation for Economic commitments, or promises of the Declaration. Education, Inc., 1996). 4. Kendall and Carey, p. xxii. See also Michael Oakeshott, On Yet the original Constitution and Bill of Human Conduct (Oxford: Clarendon Press, 1975). The nomo­ Rights say nothing about equality. Moreover, craticlteleocratic framework is utilized in similar vein by M.E. Bradford, in Original Intentions: On the Making and Ratification the "rights" of individuals (life, liberty, prop­ of the United States Constitution (Athens, Ga.: University of erty, safety, pursuit of happiness) until well Georgia Press, 1993). 5. Kendall and Carey, esp. chpt. IV. after the Civil War Amendments, were un­ 6. Kendall and Carey, esp. chpt. V, quote p. 94. derstood in their relation to good government 7. Kendall and Carey, esp. chpt. VI, and see VII and VIII. THEFREEMAN IDEAS ON LIBERTY

Atlas Shrugged Revisited: Forty Years ofVoicing the Philosophy of Freedom

by Edward W. Younkins

ritten in 1957, Atlas Shrugged presents the impact of the welfare state and creeping W a comprehensive statement and de­ socialism (most other nations have already tailed illustration of Ayn Rand's original and become Communist "People's States"). The perceptive philosophical ideas and moral vi­ story may be described as simultaneously sion. This long, complex novel has sold more anachronistic and timeless. The pattern of than four million copies. Respondents to a industrial organization appears to be that joint Library of Congress-Book of the Month of the late 1800s, with large capital-intensive Club survey in 1991 hailed the book as second corporations being run and owned by indi­ only to the Bible in its significant impact on vidual entrepreneurs. The mood seems to be their lives. close to that ofthe depression-era 1930s. Both For Rand, the right philosophy is necessary the social customs and level of technical to create the right story. Atlas Shrugged em­ knowledge remind one ofthe 1950s. The level bodies Rand's Objectivism and introduces of government interference and political cor­ readers to ideas they might not otherwise ruption is similar to that of the 1970s. encounter. Rand uses the story of Atlas The story is an apocalyptic vision ofthe last Shrugged as a vehicle for incarnating her stages of a conflict between two classes of ideas, bringing abstract philosophy to life humanity-the "looters" and the "non­ through character and plot. looters." The looters are proponents of high taxation, big labor, government ownership, A Conflict of Visions: government spending, government planning, regulation, and redistribution. They include Looters vs. Creators politicians and their supporters, intellectuals, The story takes place in a slightly modified religious leaders, government bureaucrats, United States. The country has a "head of scientists who sell their minds to the bureau­ state" rather than a president and a "National crats, and liberal businessmen who, afraid of Legislature" instead of a Congress. The time honest competition, sell out their initiative, is ostensibly the not-too-distant future in creative powers, and independence for the which American society is crumbling under "security" of government regulation. The non-looters-the thinkers and doers-are Dr. Younkins is a prOfessor of accountancy at the competent and daring individualists who Wheeling Jesuit University. innovate and create new enterprises. These 295 296 THE FREEMAN • MAY 1997 prime movers .love their work, are dedicated greater are the penalties he endures in the to achievement through their thought and form of regulations, controls, and the expro­ effort, and abhor the forces of collectivism priation and redistribution of his earned and mediocrity. The battle is thus between wealth. This evil, however, is only made non-earners who deal by force and profit possible by the "sanction of the victim." By through political power and earners who deal accepting an undeserved guilt-not for their by trade and profit through productive ability. vices but for their virtues-the achievers have acquiesced in the political theft oftheir minds' Rand's Entrepreneurial Heroes products. Galt masterminds his plan to stop the motor of the world by convincing many The plot is built around several business of the giants of intellect and productivity to and industrial executives. The beautiful refuse to be exploited any longer by the Dagny Taggart, perhaps the most heroic fe­ looters and the moochers, to strike by with­ male protagonist in American fiction, is the drawing their talents from the world by es­ operating genius who efficiently runs Taggart caping to a secret hideout in the Colorado Transcontinental Railroad, which was Rockies, thus leaving the welfare state to founded by her grandfather. Her brother destroy itself. The hero-conspirators will then James, president in title only, is an indecisive, return to lay the groundwork for a healthy incompetent, liberal businessman who takes new social order based on the principles of all the credit for his sister's achievements. laissez-faire capitalism. Dagny optimistically and confidently per­ Galt, the mysterious physicist who is also forms Herculean labors to keep the railroad a philosopher, teacher, and leader of an running despite destructive government intellectual movement, has invented a motor edicts, her brother's weaknesses, the incom­ that can convert static electricity into useful petence of many of her associates, and the but inexpensive kinetic energy. He chooses silent and inexplicable disappearance of so­ to keep his invention a secret until it is time ciety's competent industrialists, upon whom for him and the other heroes to reclaim the Dagny depends. world. As both society and her railroad are disin­ For two-thirds ofthe novel, Galt exists only tegrating, Dagny attempts to rebuild an old as a plaintive expression-"Who is John Taggart rail line. In the process, she contacts Galt?" He has been in hiding, working un­ Hank Rearden, a self-made steel tycoon and derground as a laborer in the Taggart Tun­ inventor of an alloy stronger and lighter than nels, while recruiting the strikers. steel. Rearden, Dagny's equal in intelligence, determination, and sense of responsibility, Other Heroes becomes her ally and eventually her lover. They struggle to keep the economy running One ofthe key hero-characters is Francisco and ultimately discover the secret of the d'Anconia, aristocrat, copper baron, and continuing disappearance of the men of abil­ former lover ofDagny, who prefers to destroy ity. his mines systematically rather than let them fall into the hands of the looters. Another is Who Is John Galt? Ragnar Danneskj6ld, a philosopher turned pirate, who avenges the work of Robin Hood John Galt, a messiah of free enterprise, is by raiding only public, nonprofit, commerce secretly persuading thinkers and doers to ships in order to return to the productive what vanish mysteriously one after the other­ is rightly theirs. The Randian view is that deserting and sometimes sabotaging their Robin Hood robs from the strong and de­ factories before they depart. Galt explains serving and gives to the weak and worthless. how desperately the world needs productive Robin Hood, the most immoral and con­ individuals, but how viciously it treats them. temptible of all human symbols, reflects the The greater a person's productive ability, the idea that need is the source of rights, that ATLAS SHRUGGED REVISITED 297 people only have to want-not to produce, altruism are evil. Placing the welfare ofothers and that men have claim to the unearned but above an individual's own interests is wrong. not to the earned. The desire to give charity, compassion, and pleasure unconditionally to the undeserving is Galt's Gulch immoral. Galt explains that reality is objective, ab­ The men of ability fade out of the picture solute, and comprehensible and that man is a and are labeled traitors and deserters by rational being who relies upon his reason Dagny and Hank, who remain fighting at their as his only means to obtain objectively valid desks. Ironically, because they haven't been knowledge and as his basic tool of survival. told of the conspiracy, Dagny and Hank are The concept of value presupposes an entity even battling their natural allies-the ex­ capable of acting to attain a goal in the face leaders of the business world who have gone of an alternative. The one basic alternative in on strike. the world is existence versus non-existence. Dagny pursues one of the deserters by Life makes the concept of "value" meaning­ plane to a valley deep in the Rockies, crashes, ful. An organism's life is its standard ofvalue. and accidentally discovers John Gait's head­ Whatever furthers its life is good and that quarters-the Utopian free-enterprise com­ which threatens it is evil. It is therefore the munity created by the former business leaders nature of a living entity that determines what along with several academicians, artists, and it ought to do. artisans. They have set up "Galt's Gulch" Galt identifies man's life as the proper (also known as "Mulligan's Valley") as a standard of man's value and morality as the refuge from the looters and moochers. Dagny principles defining the actions necessary to is the last hero, except for Hank, to reach maintain life as a man. If life as a man is Galt's outpost. While there, Dagny listens to one's purpose, he has the right to live as a the logic of Galt and his associates and falls in rational being. To live, man must think, act, love with Galt, who represents all that she and create the values his life requires. In other holds dear. Inspired by the vision of Rearden, words, since a man's life is sustained through who continues to search for her and battlethe thought and action, it follows that the in­ looters, she decides to return to a world in a dividual must have the right to think and act shambles. Dagny and Hank, who represent and to keep the product of his thinking and Everyman, refuse almost to the end to accept acting (i.e., the right to life, liberty, and Galt's plan and stubbornly fight to save the property). economy. He asserts that since men are creatures who think and act according to principle, a doc­ Galt's Speech: The Essence trine of rights ensures that an individual's of Rand's Worldview choice to live by those principles is not violated by other human beings. All individ­ A national broadcast by Mr. Thompson, the uals possess the same rights to freely pursue Head ofthe State, is interrupted by Galt who, their own goals. These rights are innate and in a three-hour speech, spells out the tenets of can be logically derived from man's nature his philosophy. Among his many provocative and needs-the state is not involved in the ideas is the notion that the doctrine of Orig­ creation of rights and merely exists to protect inal Sin, which holds man's nature as his sin, an individual's natural rights. Since force is is absurd-a sin that is outside the possibility the means by which one's rights are violated, ofchoice is outside the realm ofmorality. The it follows that freedom is a fundamental social Fall of Adam and Eve was actually a positive good. Therefore, it follows that the role of event since it enabled man to acquire a mind government is to protect man's natural (i.e., capable of judging good and evil-man be­ basic) rights, through the use offorce, but only came a rational moral being. Another pro­ in retaliation and only against those who vocative idea is that both forced and voluntary initiate its use. 298 THE FREEMAN • MAY 1997 The Melodramatic Climax been drawn by the story and Rand's eloquent flow of provocative ideas. Galt follows Dagny back to the world and Rand has written the modern-day equiva­ is captured by the looters. In an attempt to lent of a fifteenth-century morality play. Her save the crumbling economy, they offer him characters represent symbols rather than peo­ the position of Economic Dictator, which he ple, are developed on the level of parable or promptly refuses. They torture him, but the fable, and are either all good or all bad. She torture machine breaks down. Then, in a deals entirely in black and white-there are melodramatic confrontation, Galt is rescued no grays in her world to complicate reality by the Utopian entrepreneurs, and the looters and no ambiguous characters. The author are vanquished. clearly communicates whether a character is Galt and Dagny return to the valley, rewrite a hero or a villain by means ofan introductory the Constitution, and add a clause stating that statement describing the individual's virtues Congress shall make no law abridging the or vices. Rand also tends to use a common freedom of production and trade. At the end allegorical technique by which characters' of the novel, just before going back to rebuild names are representative of their personali­ the world, Galt symbolically traces the sign of ties. In addition, good characters are able, the dollar in the air. beautiful, brave, and physically and mentally superior. Bad characters are generally mean­ spirited, cowardly, envious, and physically A Fully Integrated Novel unattractive. and Moral Vision A Powerful Voice for Freedom Atlas Shrugged is an abstract, conceptual, symbolic, and powerful novel of ideas that Atlas Shrugged is encyclopedic in its philo­ expounds a radically new system of philoso­ sophical, political, economic, and psycholog­ phy that challenges many traditional be­ ical scope. This masterwork of logic has a liefs. Rand, a writer of dazzling virtuosity, wonderfully constructed plot and expounds presents her ideas with precision and illus­ an exhaustive, fully integrated philosophical trates them in concrete and detailed terms. system. Rand correctly argues that human The novel combines elements of realism, nature requires freedom. Only when men are mystery, adventure, romance, fantasy, and free to choose can they be moral. The intel­ science fiction and is therefore capable of lectual basis of capitalism is that the individ­ satisfying readers on many separate levels. ual is free by his nature, has responsibility to Atlas Shrugged may be read as a philosophical make moral choices, and has certain inviola­ treatise; a dialogue on ethics; an unabashed, ble rights. original, and insightful defense of capitalism; Atlas Shrugged is essential reading. It tells a a political parable denouncing all forms of fascinating story and presents an impressive, collectivism; or simply an entertaining, easy­ interesting, and thought-provoking portrait of to-read, and absorbing page-turner. businessmen who wo~'t allow politicians to The story is developed in a straightforward, kick them around and thus is as relevant today chronological manner. The narrative is in­ as when it was written. Atlas Shrugged is not terrupted, however, by a great number of simply a novel to be read for entertainment. speeches and monologues scattered through­ Nor is it a treatise solely to be read for out the book as various characters declaim enlightenment. Ayn Rand's masterpiece their values. (Galt's speech alone covers 60 makes a most powerful case for liberty and, pages of the book.) Despite (and for many, therefore, should be read, reread, and shared because of) this lecturing, most readers have with our friends. 0 THEFREEMAN IDEAS ON LIBERTY

Private Property and "Social" Justice

by Antony Flew

n the preface to the second volume of his arising from terminological changes: "At the I trilogy Law, Legislation and Liberty, F.A. time I wrote socialism meant unambiguously Hayek explained how he came to conclude the nationalization of the means of produc­ "that the Emperor had no clothes on, that tion and the central economic planning which is, that the term 'social justice' was entirely this made possible and necessary." But since empty and meaningless,"l and "that the peo­ then "socialism has come to mean chiefly the ple who habitually employ the phrase simply extensive re-distribution of incomes through do not know themselves what they mean by it taxation and the institutions of the welfare and, just use it as an assertion that a claim is state."3 justified without giving a reason for it."2 In the usage of the socialists (or in the Certainly, as Hayek proceeded painstak­ United States the liberals) of all parties, who ingly to show, this cant expression is usually are the chief, if not quite the only employers employed quite thoughtlessly. Few if any of of the expression "social justice" it, and what those who habitually employ it have even for many is apparently the equivalent ex­ attempted to produce a systematic and con­ pression "equality and social justice," can be sistent rationale for its application. But this is most illuminatingly defined as referring to still not adequate to show that it is "entirely what they themselves see as the ideal eventual empty and meaningless." For there is in fact distribution ofgoods and services ofall kinds; sufficient regularity in the actual usage of the an eventual redistribution which is to be expression "social justice" to provide it with a achieved primarily by "the extensive re­ meaning, albeit a meaning that is somewhat distribution of incomes through taxation and vague and variable. the institutions of the welfare state." Let us approach the problem ofdiscovering Hayek in his discussion of the expression this meaning a little indirectly, by referring "social justice" was also wrong to maintain first to the fact that Hayek dedicated his most that those who use it "just use it as an famous work, The Road to Serfdom, "to the assertion that a claim is justified without socialists of all parties." In his preface to the giving a reason for it." For anyone asserting second edition, which appeared nearly 30 that some policy is required by a kind of years after the original publication, Hayek justice is in fact giving what-if but only if declared that he was still prepared to defend their assertion were true-would constitute all the book's main conclusions. But he the best ofreasons. The truth, however, is that warned against possible misunderstandings social justice as customarily conceived is pre­ cisely not a kind of justice. Professor Flew resides in Reading, England. On the contrary, such "social" justice es- 299 300 THE FREEMAN • MAY 1997 sentially involves what, by the standards of first Book of Plato's treatise on justice. "For old-fashioned, without-prefix-or-suffix justice if I do not know what justice is I am scarcely must constitute a paradigm case of flagrant likely to find out whether its possessor is injustice: namely, the abstraction under the happy or unhappy."4 Indeed it is only on his threat of force (the taxing away) of some of 579th page that Rawls explains that he was what must be defeasibly presumed to be eager "to leave questions of meaning and the justly acquired income and capital of the definition aside and get on with the task of better off in order to give it (less, of course, developing a substantive theory [not of social some often substantial service charge) to justice but] of justice." those whom previous just acquisitions or lack The fundamental principles of what Rawls of just acquisitions have left worse off. The calls social justice are derived from a hypo­ tacit and even sometimes explicit identifica­ thetical social contract. Although he claims tion of justice with equality is equally erro­ that "Throughout the choice between a pri­ neous. For the rules of justice, like all rules, vate-property economy and socialism is left require not that all individuals, but only that open ...,,5 the hypothetical contracting par­ all relevantly like individuals, should be ties who "in the original position" are to make treated in the same way. Who, for instance, the hypothetical social contract nevertheless would recognize a system which insisted that have to take for granted the ultimately col­ the guilty should be treated in exactly the lective ownership of all wealth and income. same way as the innocent as a system of "For simplicity," rather than for any more justice? substantial and compelling reason, they are Most of those professing concern to pro­ required to "assume that the chief primary mote what they call social justice conceal from goods at the disposition ofsociety are rights and themselves the force, indeed even the possi­ liberties, powers and opportunities, income bility of such objections, by tacitly assuming and wealth.,,6 They are to assume, that is to that the sum of all the incomes received and say, that income and wealth are "at the all the wealth owned within some nation is disposition of" that hypostatized collectivity already the collective property of that nation. "society"; altogether uninhibited, it seems, by Hence it is available, free of all morally any morally legitimate prior property claims. legitimate prior ownership claims, for redis­ In what is presented as a theory of justice tribution at the absolute discretion of (social­ readers ought to have been astonished to ly) just redistributors. discover this assumption of the collective ownership of all wealth and income. But they Rawls and Social Justice should have then been utterly flabbergasted to find that, in explaining "The Main Idea A remarkable example ofthe making ofthis of the Theory," Rawls asserts that "Once we assumption was provided by John Rawls in decide to look for a conception ofjustice that A Theory ofJustice. This book has had more nullifies the accidents of natural endowment influence on, and has been more widely cited and the contingencies of social circumstance by, sociologists, economists, judges, and pol­ as counters in the quest for political and iticians than any other philosophical work of economic advantage, we are led to these the present century. principles. They express the result of leaving Although Rawls entitled his 607-page book aside those aspects ofthe social world that seem A Theory of Justice, he revealed as early as arbitrary from a moral point ofview."7 page seven that his true subject was "that of The preposterousness is to present this as a social justice." Yet at no stage does he at­ first and necessary step toward developing a tempt to show how, if at all, this is supposed particular conception of justice. For doing to be related to justice as traditionally under­ justice has traditionally been defined as ren­ stood. He pays no attention to the warning dering to each their due. The version of about the need for definition which Socrates Ulpian's definition employed in the Institutes is scripted to give in the final sentence of the ofJustinian is inscribed on a wall ofthe library PRIVATE PROPERTY AND "SOCIAL" JUSTICE 301 of the Harvard Law School: "To live honour­ actions or policies the psychological associa­ ably, not to injure another, to render to each tions which are presently linked with, and the his due." The expression "his due" or, better, logical implications which are presently car­ "their due," is here naturally construed as ried by, employments ofthe word "just." Very referring to the several deserts and entitle­ understandably they want thus to see them­ ments of different individuals, the deserts selves and to be seen by others as occupying primarily under the criminal and the entitle­ the moral high ground, and they want to see ments under the civil law. their opponents as ex officio callous, selfish, Certainly, if all possible grounds for any and immoral. differences in deserts and entitlements are Perhaps even more importantly, though thus to be dismissed as morally irrelevant, this is rarely recognized, those who share then indeed-always allowing that anyone is the socialist ideals of "social" justice need to still to deserve or to be entitled to anything at equip themselves with what, if only it were all-it does become obvious that everyone's true, would constitute a decisive answer to an deserts and entitlements must be equal. Yet it otherwise properly embarrassing question: By is precisely and only upon what individuals what right are you proposing to deploy the severally and individually are, and have done forceful machinery of the state in order to or failed to do, that all their several and surely impose upon all concerned your own personal often very unequal particular deserts and or party vision of an ideal society? Forjustice entitlements cannot but be based. It is, there­ is precisely not an expression of individual or fore, bizarre superciliously to dismiss all· this group preferences, not such an individual as irrelevant: as merely "the accidents of or party vision of an ideal society. To appeal natural endowment and the contingencies of to justice is to appeal to a standard logically social circumstance." independent of all individual and collective The objection that "social" justice is not a interests or preferences. That is why everyone kind of justice is often countered either by has to allow that what is prescribed by (moral) urging that the world would be a better place justice may properly, though not always pru­ if the distribution of income and wealth were dently, be enforced by (legal) law. This point different from what it actually is or by pro­ was put most decisively by Adam Smith in the testing that this objection is at best trivially penultimate paragraph of chapter one of verbal. It is easy to agree with the first ofthese Section II of Part II of his other masterpiece, contentions. In my personal ideal world, for The Theory ofMoral Sentiments: instance, successful pop stars would not be The man who barely abstains from violating voted to become millionaires by the purchases either the person, orthe estate, or the reputation made by teenage children. But this is simply of his neighbours, has, surely, little positive irrelevant. For it is one thing to justify a merit. He fulfills, however, all the rules of what situation, that is, to show it to be desirable or is peculiarly called justice, and does everything excusable or in some other way preferable to which his equals can with propriety force him the available alternatives, but it is quite an­ to do, or which they can punish him for not other thing to justicize it, that is, to show it ~~ D to be not just "socially" just but plain old­ fashioned, just. 1. F. A. Hayek, The Mirage ofSocial Justice (London: Rout­ ledge and Kegan Paul, 1976), p. xi. To appreciate that and why the issue is most 2. Ibid., p. xi. emphatically not trivially verbal it is sufficient 3. F. A. Hayek, The Roadto Seifdom (London: Routledge and Kegan Paul, Second Edition 1976), p. viii. to ask and answer the question ofwhy people 4. The Republic, S 354C. are so keen to maintain that their actions 5. John Rawls, A Theory of Justice (Cambridge: Harvard University Press, 1971), p. 258. or policies are indeed (socially) just. It is of 6. Ibid., p. 62: emphasis added. course because they want to arrogate to these 7. Ibid., p. 15: emphasis added. THEFREEMAN IDEAS ON LIBERTY

Free-Born John Lilburne, Mighty Martyr for Liberty by Jim Powell

iberty doesn't just happen. Somebody charges. He challenged judges who tried to L must express a compelling vision of lib­ intimidate juries. Four times he faced the erty and make it happen. death penalty. He endured brutal beatings. In many respects, the greatest pioneer was He was imprisoned most of his adult life. John Lilburne, who, in more than 80 pam­ "I walk not, nor act, from accidents," Lil­ phlets written during the mid-seventeenth burne told a friend, "but from principles, and century, attacked intolerance, taxes, censor­ being thoroughly persuaded in my own soul ship, trade restrictions, and military conscrip­ they are just, righteous and honest, I will by tion. He championed private property, free God's goodness never depart from them, trade, freedom of association, freedom of though I perish in maintaining them." religion, freedom of speech, freedom of the Dubbed a "Leveller" by his adversaries, press, a rule of law, a separation of powers, he won the hearts of people and helped and a written constitution to limit government discredit the kinds of criminal justice pro­ power. Lilburne helped bring these dynamic ceedings that were a bulwark of oppression. ideas together fOf the first time in human "While others supported civil liberties to gain history. their own freedom and denied it to their Moreover, he risked death to put them into enemies," wrote historian Leonard W. Levy, action. Lilburne was the first person to chal­ "Lilburne grew more and more consistent in lenge the legitimacy ofthe Star Chamber, the his devotion to the fundamentals of liberty, English royal court that had become a noto­ and he was an incandescent advocate ... he rious instrument for suppressing dissent. He sacrificed everything in order to be free to was the first to challenge Parliament's pre­ attack injustice from any source.... His en­ rogative as a law court for imprisoning ad­ tire career was a precedent for freedom." versaries. He was the first to challenge the Lilburne looked like an ordinary man. prosecution tactic of extracting confessions Biographer M.A. Gibb described Lilburne, in until defendants incriminated themselves. his early twenties, as "slightly built, with a He challenged the standard practice of im­ delicacy of appearance which renders his prisoning people without filing formal powers of physical endurance the more re­ markable. Plainly dressed, after the fashion of Mr. Powell is editor of Laissez Faire Books and a the Puritans, he wore his hair to the shoulder senior fellow at the Cato Institute. He has written for and was beardless; his long, oval face, with its the New York Times, the Wall Street Journal, Barron's, American Heritage, and more than three high forehead, luminous, earnest eyes, and dozen other publications. Copyright © 1997 by Jim often melancholy expression, indicated the Powell. depth of the fanaticism which could fire his 302 303 spirit, while the resolute mouth showed book without a license from the Bishop of strength of purpose and courage to fulfil his London or the Vice-Chancellor of Oxford or aims." Cambridge. Licensed printers, who belonged As Levy acknowledged, "Such men as Lil­ to the Stationers Company guild, helped burne who make civil disobedience a way of enforce the law against unlicensed competi­ life are admirable but quite impossible. He tors. was far too demanding and uncompromising, The proclamation didn't prevent coura­ never yielding an inch to his ideals. He was geous printers from issuing pamphlets chal­ ostreperous, fearless, indomitable, and can­ lenging established authority, and Lilburne tankerous, one of the most flinty, contentious became friends with many ofthese dissidents. men who ever lived.... No one in England He visited the Gatehouse, where Presbyterian could outtalk him, no one was a greater Dr. John Bastwick was imprisoned for writ­ political pamphleteer. ... Had Lilburne been ings that denounced the Church of England the creation of some novelist's imagination, bishops. Bastwick subsequently had his ears one might scoff at so far-fetched a character. cut off. He was, or became, a radical in every­ Through Dr. Bastwick, Lilburne met Wil­ thing-in religion, in politics, in economics, in liam Prynne, the fanatical London Presbyte­ social reform, in criminal justice." rian lawyer who had published many bold attacks on the Church ofEngland. Prynne was Beginnings fined, disbarred as a lawyer, condemned to life imprisonment in the Tower of London, his John Lilburne was born in Greenwich, ears were hacked off, and his cheeks were England, sometime in 1614 or 1615. His branded with the initials "SL" (for seditious parents, Richard and Margaret Lilburne, libeler). Imprisonment, furthermore, meant a were minor officials in the royal court. Mar­ financial drain, since prisoners had to pay the garet died when John was a small child and cost of their upkeep. Richard moved to a country property in East The government considered Lilburne a Thickley, County Palatine. A rather reckless potential troublemaker for visiting impris­ man, he made history in 1636 as one ofthe last oned dissidents. In 1637, he left England and Englishmen to try resolving a lawsuit through went to Holland, where free presses flour­ trial by battle rather than trial by jury. ished. He seems to have spent his savings, John attended schools at Auckland and perhaps about 50 pounds, on printing and Newcastle, where he learned Greek and distributing unlicensed pamphlets. He began Latin. His formal education was over by age with Letany by Dr. Bastwick. Lilburne, how­ 15. He decided to pursue a career in the ever, was betrayed by one ofhis collaborators, prosperous wool trade and went to London. a London button seller. The English govern­ For five years he served as an apprentice at a ment seized the shipment of Dr. Bastwick's wool warehouse. He used what little extra pamphlets, and Lilburne was arrested after he money he had on Protestant literature: "I had returned to London in December 1637. spare time enough," he recalled, "yet I never mispent it, but continually spent it in reading Lilburne versus the the Bible, the Book of Martyrs, Luther's, Star Chamber Calvin's." A fervent Anabaptist, Lilburne rebelled Lilburne was imprisoned in the Gatehouse, against the orthodoxy and corruption of the and his case came before the Star Chamber. Church of England. The Church maintained It stood apart from the common law courts, a clerical hierarchy of bishops, priests, and and proceedings were based on interrogating deacons. Bishop of London William Laud defendants. Those who incriminated them­ spearheaded efforts to crush Protestant dis­ selves were declared guilty and imprisoned. senters. In 1624, the King issued a proclama­ "It was a court of politicians enforcing a tion making it illegal to publish or import a policy, not a court of judges administering a 304 THE FREEMAN • MAY 1997 law," wrote constitutional historian F.W. government official to force a defendant to Maitland. take "any corporal oath, whereby he or she Lilburne was grilled about his trip to Hol­ shall or may be charged or obliged to make land and his knowledge of unlicensed Puritan any presentment ofany crime or offense, or to pamphlets. Although he was only in his early confess or to accuse him or herself of any twenties, he mounted an unprecedented chal­ crime, offense, delinquency or misdemean­ lenge to the legitimacy of royal prerogative our, or any neglect or thing whereby, or by courts: "I know it is warrantable by the law of reason whereof, he or she shall· or may be God, and I think by the law of the land, that liable or exposed to any censure, pain, penalty I may stand upon my just defense, and not or punishment whatsoever." answer to your interrogatory, and that my Lilburne tried to resume his private life. He accusers ought to be brought face to face, to married Elizabeth Dewell, who was to provide justify what they accuse me of." steadfast support during his subsequent im­ Lilburne attacked the Star Chamber be­ prisonments and to raise four children on cause he had never been served with a sub little money. Despite his apprenticeship as a poena, and no bill accused him of any crime. clothier, the Merchant Adventurers guild, He wouldn't pay the court clerk's fee. He which monopolized its trade as other guilds refused to take the ex officio oath promising to monopolized their trades, excluded him be­ answer all questions. The Star Chamber fined cause he didn't have enough capital. His uncle Lilburne £500 and ordered that he be tied to suggested that he help run a brewery, and a cart and whipped as it moved slowly from that's what he did. Fleet prison to Westminster Palace Yard­ two miles. Every few steps, he recalled, his Coke's Institutes bare back was lashed with a whip made from "two or three cords tied full of knots." Alto­ Lilburne spent his spare time studying gether he was lashed some 200 times. The philosophy and law. In 1642, the second part doctor who treated Lilburne reported that of jurist Edward Coke's Institutes was pub­ "the weals in his back, made by his cruel lished, and Lilburne soon got a copy. Coke whipping, were bigger than tobacco pipes." (1552-1634) had championed common law Then Lilburne was put in a pillory where, over arbitrary royal edicts. With common law, officials hoped, he would be humiliated. But local judges made decisions case by case, from he harangued all who would listen with at­ which evolved general rules. They tended to tacks on the government and the Church of be applied more predictably than statutes. England. He was subsequently gagged, one The first part of Coke's Institutes (1628) had woman reported, "with such cruelty that he commented on another jurist's work and caused his mouth to bleed." After several wasn't of much use to Lilburne, but the hours in the hot sun-having already been second part offered learned commentary on whipped for two miles-Lilburne was taken statutes from the Magna Carta through the back to Fleet prison and chained in a cold, reign ofKing James I, who died in 1625. Most damp, dark cell for four months. law books were in French, but Coke wrote in When the "Long Parliament" convened on English and made common law a fighting November 4, 1640, a little-known country creed. From Coke Lilburne gained inspira­ gentleman named Oliver Cromwell, who rep­ tion-Coke, too, had been imprisoned for his resented Cambridge, defended Lilburne in views-and gathered legal precedents which, his first speech. Cromwell declared that Lil­ buttressed with material from the Biblical Old burne's Star Chamber sentence was "illegal Testament, Psalms, and Apocalyptic writings, and against the liberty ofthe subject." Soon he became the basis for his self-defense against was released. Parliament passed bills abolish­ tyrants. ing the Star Chamber, and the king reluctantly He was soon drawn back into the epic agreed on July 5, 1641. Among other things, struggle between king and Parliament. Par­ the bills made it a criminal offense for a liament, enjoying the support of merchants JOHN LILBURNE 305 and traders, controlledmoney the spendthrift restricted his freedom of religion, how the king desperately needed. In 1642, Lilburne Stationers Company restricted his freedom of was commissioned a captain in the Parlia­ speech, how the Merchant Adventurers de­ mentary Army, but he was captured in Brent­ nied his right to work. "To persecute for ford and imprisoned at Oxford Castle. Roy­ conscience," Lilburne declared, "is not ofnor alists offered him a pardon if he would recant from God, but of and from the divell and his principles, but he refused. He was charged Anti-Christ." with treason and sentenced to death. Lil­ During a raid authorized by Parliament, burne's wife, Elizabeth, addressed the House officials found a printing press alleged to have of Commons and persuaded Members to produced Lilburne's offending pamphlet. retaliate by executing captured royalists if any About this time, one of Lilburne's eyes was Parliamentary loyalists like Lilburne were poked out by a pike-circumstances un­ executed. The result was a prisoner exchange known-and Parliament, apparently feeling that gave Lilburne his freedom. he had suffered enough, dropped the matter. He returned to the Parliamentary army In April 1645, Lilburne became acquainted with mixed feelings, because he disapproved with John Goodwin, vicar of St. Stephen's of the Scottish government enforcing the Church on Coleman Street, London. He was Scottish National Covenant on everybody among the Independents, a group that had there. The Covenant called for loyalty to the perhaps one-tenth the following of the Pres­ king, loyalty to Calvinist theology, and a byterians. Independents generally favored re­ commitment to suppress religious dissidents. ligious toleration for everyone except Cath­ Chronic wrangling among military officers olics. Oliver Cromwell, John Milton, and further undermined his commitment to the many other talented people were Indepen­ Parliamentary cause, and when Lieutenant­ dents. Unlike the Presbyterians, who wanted General Oliver Cromwell ordered that every­ to replace the Church of England ecclesias­ body in his New Model Army subscribe to the tical hierarchy with their own, Goodwin be­ Covenant, Lilburne quit. He declared that he lieved each congregation should govern itself. would "dig for carrots and turnips before he Lilburne shared some Independent views, would fight to set up a power to make himself writing in the pamphlet Rash Oaths Unwar­ a slave." rantable that God had appointed Jesus as the Lilburne was influenced by the poet John only lawgiver for His Church, and therefore Milton, who had been charged with violating human lawgivers (ecclesiastical officials) were Parliament's June 1643 law requiring that anti-Christian. This comes close to advocating prior to publication written work must be a separation between church and state. licensed by a government censor and regis­ tered with the Stationers Company. Ordered Walwyn and Overton to defend himself before Parliament, Milton gave a speech that became the famous pam­ Goodwin attracted a number of other no­ phlet Areopagitica (1644). Borrowing from table dissidents to his "Coleman Street en­ pamphlet attacks on monopolies, Milton clave" where they discussed issues and refined maintained that truth tends to prevail when their views. Among those attending was Wil­ markets are open and the press is free. liam Walwyn, a merchant in his mid-forties In January 1645, Lilburne exploded with who, while he wrote some pamphlets, spent rage at the injustices he suffered, and he considerable time encouraging bright people wrote A Copy ofa Letter. It was a challenge to embrace reason and toleration. to Puritan William Prynne, who, having suf­ The keenest thinker and best writer in the fered from intolerance by King Charles and group was Richard Overton, who spent some Bishop Laud, extended intolerance to others. years in tolerant Holland. There he embraced Lilburne talked about how the king and the General Baptist Church, which empha­ bishop injustly imprisoned him, how the Pu­ sized that God's will was revealed directly to ritans enforced the Covenant that further individuals. He returned to England before 306 THE FREEMAN • MAY 1997

1641 and became an unlicensed printer. He edy (1645): "Lilburne's case is singular, that a demanded religious toleration. He published member of the body represented, a free-born some of Lilburne's pamphlets, and he wrote subject ... that such a subject, contrary to the his own. Overton based his thinking more on tenor of Magna Carta, contrary to the late fundamental principles than Lilburne who Covenant and Petition of Right ... should be filled his pamphlets with common law prece­ three times imprisoned without showing dents. Overton-who also wrote satire­ cause, by a Parliament professing reformation sometimes' displayed a wicked wit. Soon Lil­ and defense of our laws and liberties, and burne was embroiled in controversy again. On without any urgent or apparent necessity of July 19, 1645, the Presbyterian Dr. John state enforcing it. ... I need not say how much Bastwick claimed Lilburne had publicly crit­ the public liberty is wounded in the injury icized William Lenthall, Speaker of the doubled and trebled upon their fellow man." House of Commons, and Lilburne was again imprisoned. But by this time Lilburne knew England's Birthright Justified that nothing inspired people as much as somebody who was willing to stand up fear­ In Newgate prison, Lilburne wrote En­ lessly for his ideals. Summoned before the gland's Birthright Justified against all arbitrary Committee on Examination, he refused to usurpations, whetherRegall orParliamentary or answer questions and demanded to know the under what Vizor soever (1645). Lilburne op­ charges against him. "I am a free-man," he posed the arbitrary power of Parliament by insisted, "yea a free-borne denizen of En­ appealing to the"declared, unrepealed Law" gland, and I have been in the field with my ofliberty and justice. "It is the greatest hazard sword in my hand, to adventure my life and my that can be run into," he wrote, "to disart the blood against tyrants for the preservation of onely known and declared Rule; the laying my freedom, and I do not know that ever I did aside whereof brings in nothing but Will and an act in all my life that disenfranchised me of Power, lust and strength." He maintained that my freedom, and by virtue of my being a free England's fundamental laws should "be in man, I conceive, I have as true a right to all the English ... that so every Free-man may reade privileges that do belong to a free man as the it as well as Lawyers." He insisted that a trial greatest man in England, whatsoever he be, would be proper onlywhen formal charges are whether Lord or Commoner, and the ground filed, when they refer to known laws, and and foundation of my freedom I build upon when the defendant can confront the accuser the Grand Charter of England." The Com­ and have an adequate opportunity to present mittee on Examination ordered him back to a defense. Newgate prison. Lilburne went on to denounce government­ On August 9, he was again summoned granted special privileges. He attacked the before the Committee on Examination, this government-granted monopoly on preaching. time to answer questions about A Copy of a Lilburne spoke out for free trade as he Letter . .. to a Friend, an inflammatory pam­ attacked government-granted business mo­ phlet which he had allegedly written in prison. nopolies like the Merchant Adventurers Again, he refused to answer questions and guild, which barred competitors from the demanded to know the charges against him. woollen business. He declared that such mo­ The Committee ordered that he be impris­ nopolies were "contrary to the law of Nature, oned in case it should later be proven that he the law of Nations, and the lawes of tHis wrote the pamphlet. William Walwyn orga­ Kingdome." nized protests and presented a petition with Moreover, Lilburne wrote that the "Third more than 2,000 signatures to the House of Monopoly is that insufferable, unjust and Commons. tyrannical Monopoly of Printing," which Par­ Lilburne had come to stand for the rights of liament granted to the Stationers Company. It all English people. As one anonymous pam­ "suppresse every thing which hath any true phleteer wrote in England's Misery and Rem- Declaration ofthe just Rights and Liberties of JOHN LILBURNE 307

the free-borne people of this Nation." Book against the House of Lords. On June 11, he publishing, he maintained, "should be like a was summoned to appear before the House of cryed Faire, and each one free to make the Lords and asked if he knew about this latest best use of their Ware." seditious pamphlet. He countered by de­ Lilburne observed that the longer politi­ manding to know what, if any, charges were cians remain in Parliament, the more corrupt filed against him. The House of Lords com­ they become: holding office "breeds nothing mitted him to Newgate prison, where he wrote but factions and base cowardlinesse, yea and another pamphlet, The Freeman's Freedom sowing up of mens lips, that they dare not Vindicated. He defied "my Lords, you being, speak freely for the Commonwealth, nor as you are called, Peers, merely made by displease such and such a faction, for feare of prerogative, and never intrusted or impow­ being Voted and thrust out oftheir unfit to be ered by the Commons of England." enjoyed Offices." Lilburne called for annual The House of Lords ordered the Keeper Parliamentary elections and universal male of Newgate to deliver Lilburne for another suffrage: "Ought not the free-men of En­ interrogation, but he issued a defiant letter gland, who have laboured in these destroying to the Keeper: "Sir, I am a freeman of times both to preserve the Parliament and England, and therefore am not to be used as their own native Freedoms and Birthrights, a slave orvassal by the Lords, which they have not only to choose new members, where they already done, and would further do.... Take are wanting once every year, but also to renew this for an answer, that I cannot without being and inquire once a year after the carriage of traitor to my liberties dance attendance at those they have chosen." He urged people to their Lordship's bar." When the Keeper re­ do as much as they could to remedy wrongs fused to let Elizabeth Lilburne visit him, he through constitutional action, but he implied defied officials to cut out his tongue and if this failed, people have a right to rebel. sew up his mouth, and he threatened to set Lilburne's pamphlet stirred debate. En­ the House of Lords afire. He was put in gland's Lamentable Slaverie (1645), an anon­ solitary confinement, and there were renewed ymous pamphlet attributed to William Wal­ efforts to prevent him from getting pen and wyn, saluted Lilburne's courage but said that paper. his case depended too much on Magna Carta. Back before the House of Lords, Lilburne Walwyn wrote that the right to resist unjust refused to show traditional respect by kneel­ imprisonment stemmed from "reason, sense ing-he insisted he would kneel only to his and the Common Law of equity and justice." God. Helashed out at the Lords and was fined Walwyn pushed further toward a natural £2,000 and sentenced to solitary confinement rights vision, saying "That liberty and privi­ in the Tower of London. lege which you claim is as due to you as the Lilburne's friends again rallied to his de­ very air you breathe." fense. Elizabeth Lilburne organized groups of Summoned to court in October 1645, Lil­ women who visited the House ofCommons to burne was told there weren't any charges offer her husband's petition for justice.A Pearl against him. He petitioned the Lord Mayor in a Dunghill (June 1646), a pamphlet vari­ for his liberty and was released October 14. ously attributed to William Walwyn or Rich­ He petitioned Parliament to be compensated ard Overton, reviewed Lilburne's ordeals and for his unjust imprisonment but got no­ expressed outrage "that free commoners, who where-further undermining his faith in Par­ by the laws of the land are not to be adjudged liament. of life, limb, liberty, or estate, but by com­ moners, should at the pleasure ofthe Lords be The Freeman's Freedom liable to their summons and attachment by Vindicated pursuivants, to their oath ex officio, to their examination in criminal causes, to self accus­ In early June 1646, he wrote The Just Man's ing, and to imprisonment during their plea­ Justification, which spelled out his grievances sures, the chosen Commons of England, the 308 THE FREEMAN • MAY 1997

supreme power, standing by like a cipher, as members ofParliament, as well as by the King, unconcerned, mere lookers-on." and they themselves have taught us by their In July 1646, Overton affirmed the sover­ Declarations and practises, that tyrannie is eignty of the people when he wroteA Remon­ resistable ... what is tyrannie, but to admit no strance of many thousand citizens and other rule to govern by, but their own wils?" free-born People ofEngland to their own House The Levellers gained so much influence in ofCommons, illustrated with an engraving of the New Model Army that the Presbyterians Lilburne behind bars. He underscored Lil­ who controlled Parliament decided they burne's call for freedom of religion, freedom should try to disband the Army. They passed of the press and annual Parliamentary elec­ bills dismissing soldiers without much com­ tions. Overton followed this pamphlet in pensation for their service. Consequently, August with AnAlarum to the House ofLords, there was seething discontent, and Lilburne which escalated the protest. Lilburne, he and Overton helped rally the soldiers. A wrote, "hath got a good cause, and all good petition, titled To the Right Honble. and Su­ people (that desire not to live by the oppres­ premeAuthority ofthis nation, the Commons in sion ofothers) on his side." Overton's author­ Parliament Assembled, was presented to Par­ ship of this second pamphlet was discovered, liament. "We still find the nation oppressed and he too was arrested and dispatched to with grievances ofthe same destructive nature Newgate prison. as formerly, though under other notions," it Parliament continued to hold Lilburne and asserted. It called for religious freedom, free­ Overton in prison, even though King Charles dom of speech, free trade, and a rule of law. had fled to Scotland in June 1646, and the royalist stronghold of Oxford had surren­ The Agreement ofthe People dered, ending the first English Civil War. Many people felt they had been betrayed by Meanwhile, Lilburne's ideas inspired Army Parliamentary forces, which supposedly radicals to draft the Agreement ofthe People, fought for freedom. Lilburne remained as for a firme andpresent Peace, upon grounds of resolute as ever: "If I be called a state heretic, Common-Right. The forerunner of modern I answer for myself that the Parliament's own constitutions, it made clear that sovereignty declarations hath made me so, and if I be rested with the people. It called for dissolving deluded and deceived, they are the men who the Long Parliament and holding Parliamen­ have done it." As historian G.P. Gooch noted, tary elections every two years. It specified that "By its injudicious treatment of the most representation should be proportional to pop­ popular man in England, Parliament was ulation. It provided freedom of religion. It arraying against itself a force which only barred military conscription. It envisioned a awaited an opportunity to sweep it away." rule of law: "That in all Laws made, or to be In his pamphlet London's Liberty in Chains made, every person may be bound alike, and (October 1646), Lilburne emphasized that the that no Tenure, Estate, Charter, Degree, basis of legitimacy is consent: "The Omnip­ Birth or place, do confer any exemption from otent God, creating Man in his own Image the ordinary Course of Legall proceedings, (which principally consisted in his reason and whereunto others are subjected." understanding) ... made him Lord over the The Agreement of the People was the issue earth....But made him not Lord, orgave him at the "Army debates" in Putney on October dominion over the individuals of mankind no 28 and 29, 1647, where ordinary people dis­ further than by free consent, or agreement." cussed the future of their country. Lilburne became convinced that Parlia­ The Army debates seemed to favor radical ment betrayed liberty, and he appealed to ideas, a threat to the harsh discipline that was ordinary people and the Army rank-and-file. a secret of Cromwell's military success. He In The Oppressed Mans Oppressions (January ordered his loyal armed forces to intimidate 1647), he wrote: "Tyrannie is tyrannie, exer­ the radicals, and he conducted a court martial cised by whom soever; yea, though it be by for most stubborn opponents. TheAgreement JOHN LILBURNE 309 ofthe People was history, but it was a landmark moved to blockade London. Accordingly, the for liberty. Nowhere else in Europe had there House of Commons needed support from the been such a serious effort to resolve funda­ Levellers, who had presented petitions with mental issues through discussion. over 8,000 signatures demanding Lilburne's Lilburne, granted time away from prison release. On April 18, 1648, it voted to drop while still serving a term, began organizing the charges against Lilburne. The next day, the first political party. His supporters identified House of Lords concurred. Parliament fur­ themselves publicly by wearing sea-green rib­ ther voted Lilburne £3,000 as compensation bons. As House of Lords informer George for his suffering in prison ever since the Star Masterson reported, Lilburne's agents went Chamber proceedings-but Lilburne refused "out into every city, town and parish (if they to accept any taxpayer money. could possibly), of every county of the king­ By November, Cromwell had crushed the dom, to inform the people of their liberties king's forces, and many in the Army wanted to and privileges, and not only to get their hands execute the king. But Lilburne declared that to the Petition." Lilburne raised money, held liberty depended on a balance of power: "I rallies, responded to adversaries. "We must look upon the King as an evil man in his own some visible authority for the present," actions, and divers of his party as bad: but the Masterson quoted Lilburne as saying, "or else Army has cozened us in the last year; and we shall be brought to ruin and confusion, but fallen from all their promises and declara­ when we have raised up the spirits of the tions, and therefore could not rationally any people through the whole kingdom ... we more be trusted by us without good cautions shall force them to grant us the things we and security ... and the Parliament as bad desire." as they could make them; yet there being no otherbalancing power in the Kingdom against Imprisoned Again the Army but the King and Parliament, it was to our interest to keep up one tyrant to In January 1648, as a result of Masterson's balance another." tips, Parliament ordered Lilburne to stand It became apparent that Army officers trial for sedition and treason-and he was might prevail, and Lilburne met with Com­ again imprisoned. He wouldn't stop talking. misary-General Henry Iverton about a com­ "I fell of preaching law and justice out of Sir mitment to Leveller principles. But they Edward Coke's Institutes (then in my hands), raised objections, especially to religious tol­ and the Parliament's own declarations, to the eration and representative government. soldiers that guarded the House, telling them While Lilburne was hoping to resolve consti­ that they were raised to fight to preserve the tutional issues, Army officers grabbed power. liberties and freedoms of England, but not to On December 6, Colonel Thomas Pride forc­ destroy them, which they must of necessity ibly prevented 240 Presbyterian Members of do if they laid violent hands upon me to force Parliament from entering the House of Com­ me to prison upon the House's illegal war­ mons, thereby purging opponents of the rant, and in making me a slave they subjected Army. As pressure mounted to hold a special themselves to slavery." The soldiers fell under trial for King Charles and execute him, Lil­ his spell and had to be replaced with tough burne countered that such a trial would be a Puritan recruits. Lilburne reported that he treacherous step backward away from a rule was saved when his wife defiantly stood be­ of law, and that there wouldn't be anyone left tween him and soldiers brandishing their to limit the power of the Army. The king was swords. beheaded on January 30, 1649. Cromwell Cromwell faced the prospect of renewed hailed this as an .event "which Christians in civil war. There wasn't any settlement with after times will mention with honor." King Charles I. Scottish forces seemed likely Lilburne proved to be more perceptive than to cross into England at any moment. The John Milton, who had rushed into print with English navy vowed its loyalty to the king and a pamphlet defending the execution. Milton 310 THE· FREEMAN • MAY 1997

put all his confidence in Cromwell, whom he Cromwell heard about it, he reportedly fumed referred to as "our chief of men," and he that "the Kingdome could never be setled so worked as a government secretary in Crom­ long as Lilburne was alive, and that either he well's emerging dictatorship. would stop his mouth or burst his Gall, rather Lilburne picked up his pen again. In En­ than run the hazard of such discontents and glands New Chains (February 1649), he la­ mutinies as are dayly contracted in the Army mented, "where is that liberty so much pre­ by meanes of his Seditious scribbling." tended, so deerly purchased?" He attacked In France and Scotland, royalists recog­ the purged "Rump" Parliament-which con­ nized the late King Charles's son Charles as sisted of 60 or 70 Members-for bypassing the legitimate successor, and there were re­ trial by jury, interrogating a Member about ports that royalist forces were assembling in his religion, passing a law to conscript sea­ Ireland. Accordingly, Cromwell planned a men, imprison people for debt, and enforce military campaign to subdue Ireland, which restrictions on printing. He renewed his call had been revolting against English rule since for ending religious tithes, government­ 1641. But Levellers resisted. They gained granted monopolies, and restrictions onprint­ much support among soldiers who hadn't ing. been paid for their previous campaigns. Soldiers plotted revolt in Salisbury, Ban­ bury, Aylesbury, Oxford, Lancaster, Ply­ "John 0' the Tower" mouth, Bristol, Carlisle, Windsor, Derby­ In March, Army officers dispatched about a shire, and Yorkshire. Cromwell captured hundred soldiers to seize Lilburne in his room hundreds ofrebels and hauled the ringleaders at Winchester House. He, along with Richard before firing squads. Twenty-three-year old Overton, William Walwyn, and Thomas Robert Lockier led about 60 men to seize the Prince, were taken to Parliament and sum­ regimental colors and lock themselves inside moned before Oliver Cromwell's Council of London's Bull Inn until their claims were State, which demanded to know if he was the satisfied. Cromwell captured him and ordered author ofEnglands New Chains. He refused to him shot, and the Levellers gave him a cooperate, protesting that the officials were farewell fit for a general-more than a thou­ reviving high-handed practices from the Star sand soldiers in his funeral procession, his Chamber. Then he told the crowd gathered coffin covered with sprigs of rosemary dipped outside what was going on. Cromwell, frus­ in blood. Four regiments rebelled, and Lev­ trated by the intransigence ofthese Levellers, eller agitation threatened a widespread mu­ reportedly thundered: "I tel you, Sir, you have tiny, but Cromwell struck fast, crushing the no other Way to deale with these men, but to Levellers at Burford in May 1649. break them in pieces ... if you do not break Cromwell promoted a holy war against them, they will break you!" Accused of trea­ Ireland. When he learned that Protestant son, they were sentenced to the Tower of royalists were based in Drogheda and Wex­ London. ford, on Ireland's east coast, Cromwell or­ Levellers circulated petitions for "honest dered a massacre that Irish rebels would John 0' the Tower," signed by some 40,000 never forget. "The Enemy were about 3000 people. They held rallies where people dis­ strong in the Town," he reported after storm­ played their sea-green ribbons. People sang ing Drogheda. "I believe we put to the sword about "the bonny Besses in the sea-green the whole number of the defendants ... dresses." Cromwell told his Council ofOffic­ ordered by me to put them all to the sword. ers: "I thinke there is more cause of danger ...I am persuaded this is a righteous judg­ from disunion amongst ourselves than by any ment of God upon these barbarous wretches. thinge from our enemies." ..." After slaughtering everybody in Wex­ Lilburne, Overton, Walwyn, and Prince ford, Cromwell suggested that the town was issued a new Agreement of the People, which fair game for English settlers. Cromwell trans­ elaborated on their libertarian views. When ferred title for vast Irish lands to English JOHN LILBURNE 311 owners. Historian George Macaulay Treve­ Lilburne Charged with lyan observed: "In Ireland as Oliver left it and High Treason as it long remained, the persecuted priests were the only leaders of the people because On September 14,1649, Attorney-General the English had destroyed the class of native Edmund Prideaux demanded to know if Lil­ gentry. The Cromwellian settlement rendered burne had written An Outcry of the Young the Irish for centuries the most priest-led Apprentices of London, but Lilburne denied population in Europe." the government's right to question him. A As Lilburne's two sons were dying ofsmall­ warrant for his arrest was issued five days pox, he issued another pamphlet from the later, and at the Guildhall, London, he was Tower of London, The Legal Fundamental! charged with high treason. Liberties (June 1649). It attacked Army offi­ "Dressed carefully in doublet buttoning cers for ruling "over us arbitrarily, without down to the hips," wrote biographer Pauline declared Laws, as a conquered people.... Gregg, "with lace at the neck and cuffs, And besides ... we would not trust their bare trousers slashed and decorated, good boots words in generall onely, for they had broke and spurs, there was nothing at first glance to their promise once already, both with us and indicate the struggle he had been through. It the Kingdom; and he that would break once, was apparent, however, that strife over the would make no conscience of breaking twice, years had coarsened his features, that the if it served his ends." delicacy of the young man's face had gone. Out on bail to visit his family, Lilburne The disfigurement caused by his eye injury further escalated attacks during the summer many years before gave his face in repose a of 1649. He aimed to incite rebellion with his slightly saturnine look. He no longer curled pamphlet An Outcry of the Youngmen and his hair back from his ears, as he had done as Apprentices of London (August 1649). Ad­ a young man, but let it hang to his shoulders, dressing the soldiers, he wrote: "Do you slightly grizzled and somewhat unkempt. The justify these actions done in the name of the expanse of forehead was more apparent than army? Do you uphold the Agreement of the ever, and the profile still showed the high People so far as to use your swords in its ascetic nose. Itwas perhaps in the eyes and the defense? ... We earnestly beseech you to mouth that the greatest difference showed. At acquaint us whether from your hands ... we twenty-three Lilburne held the simple belief may expect any help or assistance in this our that the demonstration of an injustice led to miserable distressed condition. ... You ... its abrogation. Seven years later disillusion­ the private Souldiers of the Army, alone, ment and bitter struggle had left their mark in being the instrumentall authors of your own the set of his mouth and the challenge in his slavery and ours." No wonder Cromwell re­ eyes." portedly resolved that "either Lilburne or As always, Lilburne handled his own de­ himself should perish for it." fense. He caught the Attorney-General and Cromwell seems to have feared there might judge by surprise. They had expected him be a dangerous backlash if Lilburne were simply to express general principles and deny executed. He couldn't be court-martialed, since that the court had jurisdiction. Instead, with he wasn't in the army. If he were charged with Edward Coke's Institutes and other law books sedition, he could be expected to document a by his side, he tied up the proceedings with case that Cromwell's "Rump" Parliament and one technical objection after another. He Council of State violated well-established En­ demanded to see the indictment against him. glish law. Levellers taunted Cromwell: He picked apart circumstantial evidence that he was the author ofAn Outcry ofthe Young "A Fig for the Rascals, whate'er they can Apprentices of London. He noted that the do, "Rump" Parliament's sedition law was en­ Though their plots are laid deep, yet John's acted after he had already been imprisoned in are so too." the Tower of London. Despite the judge's 312 THE FREEMAN • MAY 1997 objections, he repeatedly told the jury that next day, he was captured by sheriffs and they were empowered to issue a verdict on brought to Newgate prison. Awaiting a likely laws as well as the facts in his case. trial, he wrote another pamphlet, Plea in Law. The trial was over in two days, and he won He harangued the court about his right to see a stunning acquittal. Levellers struck a silver the indictment, and eventually he got a copy. and copper-gilt medal in his honor. It showed He disrupted proceedings by raising techni­ his picture and was inscribed with these calities and challenged the legitimacy of the words: "John Lilburne saved by the power of law which was the basis for it. He played to the the Lord and the integrity of his jury who are jury. He buttressed his case by reading from judge of law as weI as fact. Oct. 26, 1649." Edward Coke's Institutes. He countered alle­ Unfortunately, he got into disputes while gations of his royalist ties by writing yet trying to collect rent from former royalist another pamphlet. Jury verdict: "John Lilbu­ properties given him as compensation for his rne is not guilty ofany crime worthy ofdeath." unjust imprisonments. One of the cases was He was returned to the Tower of London, judged by Parliament, which saw an oppor­ then to the Castle Orgueil on the Isle of tunity to get even: in December 1661, Lil­ Jersey, and later to Dover Castle. He missed burne was fined £7,000, banished from En­ the birth of another child. At Dover Castle gland, and threatened with execution if he Lilburne became a Quaker and preached for ever returned. In Holland he read books like Quakers when periodically he was let out on Plutarch's Lives and John Milton's Defense of parole. the People ofEngland. He corresponded with During August 1657, he was on parole in friends in England and met with exiles, his Eltham, visiting his wife. His health began to every move watched by spies-royalists fail. On August 29, the day he was due back blamed him for the execution ofKing Charles at Dover Castle, he died in her arms. He was I, while Cromwell's people suspected he was only about 43. "I shall leave this Testimony conspiring with royalists. Meanwhile, he behind me," he had remarked, "that I died for wasn't earning any money, and Elizabeth the Laws and Liberties of this nation." Some Lilburne pawned household goods to make 400 people followed his plain wood casket for ends meet. burial in a Bethlehem churchyard near Bish­ The only institution which conferred some opsgate. legitimacy on Cromwell's regime, by now Oliver Cromwell died the following year, known as the Protectorate, was the Long and his son Richard tried to hold the Puritan Parliament, which had sat for a dozen years Protectorate together, but people had had without an election. In 1653, Lilburne broke enough of it. Factions within the Army began his discreet silence and wrote L Colonel John to fight one another. Fearing chaos, Parlia­ Lilburne Revived which encouraged people to ment turned to the Stuart heir who became demand new Parliamentary elections. On King Charles II. He didn't, however, regain all April 20, 1653, Cromwell dissolved the the obnoxious powers that his father had "Rump" Parliament. Rather than take the possessed. Royal prerogative courts like the risk of elections, he asked congregational Star Chamber never came back. Parliament, churches to nominate worthy candidates from not the king, controlled taxation. This was which the regime's Council of Officers would part of John Lilburne's lasting legacy. make selections. Many of his daring demands for criminal Lilburne inquired if he could get a pass to justice reform came true, too. Historian return home but was asked if he would stop George Macaulay Trevelyan observed, "the making trouble, and he replied: "I am as free Puritan Revolution had enlarged the liberty born as any man breathing in England (and ofthe accused subject against the prosecuting therefore should have no more fetters than all Government, as the trials of John Lilburne other men put upon me)." Weeks went by, but had shown.... Questions of law as well as of no pass arrived, and the impatient Lilburne fact were now left to the Jury, who were free crossed the English Channel on June 14. The to acquit without fear of consequences; the JOHN LILBURNE 313 witnesses for the prosecutionwere now always likely successor was his brother James, who brought into court and made to look on the was an ardent Catholic. prisoner as they spoke; witnesses for the The Earl of Shaftesbury (Anthony Ashley defense might at least be summoned to ap­ Cooper) and his compatriots in London's pear; and the accused might no longer be Green Ribbon Club-the name recalled Lev­ interpellated by the King's Counsel, entan­ eller days-promoted the succession of the gled in a rigorous inquisition, and forced to Duke ofMonmouth (James Scott), the happy­ give evidence against himself. Slowly, through go-lucky son of Charles II by one of his court blood and tears, justice and freedom had been mistresses. Monmouth gathered a military advancing." Added historian H. N. Brailsford: force and marched from town to town, "thanks to the daring of this stripling, English greeted by bonfires and church bells. By 1682, law does not aim from the first to last at the Shaftesbury, Algernon Sidney, Richard Rum­ extraction of confessions. To Americans this bold, and others in the Green Ribbon Club right appeared so fundamental that they em­ contemplated a general insurrection. Charles bodied it by the Fifth Amendment in the II struck back, and Shaftesbury fled to Hol­ constitution of the United States." land, but at Rumbold's Rye house, remaining Green Ribbon rebels plotted the king's as­ A Forgotten Man sassination. They were caught and executed. Rumbold, who had been a Leveller, delivered But Lilburne became a forgotten man. His a famous scaffold speech affirming Leveller pamphlets were unsigned and easily lost. His principles. "I am sure there was no man born many stirring lines were buried amidst volu­ marked of God above another," he declared, minous prose about specific legal cases which "for none comes into the world with a saddle later generations didn't care about. upon his back, neither any booted and The next thinker to develop a bold vision of spurred to ride him." liberty was the philosopher John Locke, Thomas Jefferson adapted Rumbold's whose Second Treatise on Government pre­ phrasing in one of his last letters, June 24, sented a compelling case for natural rights, 1826: "All eyes are opened, or opening, to the private property, representative government, rights of man. The general spread of the light a separation of powers-and the right of ofscience has already laid open to every view rebellion if government thwarted individual the palpable truth, that the mass of mankind liberty. But Locke seems not to have read has not been bornwith saddles on their backs, writings by Lilburne or any of the .other nor a favored few booted and spurred ready Levellers. Oxford University scholar Peter to ride them legitimately, by the grace of God." Laslett did conclude, though, that it was "from English historian John Richard Green was conversation and casual contact, not from among the few nineteenth-century authors to documentary acquaintance, that Locke inher­ recognize the crucial importance of the Lev­ ited the fruit ofthe radical writings ofthe Civil ellers. "For the last two hundred years," he War." wrote, "England has been doing little more Under Charles II, vengeful Parliamentary than carrying out in a slow and tentative way royalists, eager to get even for their suffering the schemes ofpolitical and religious reforms during Cromwell's regime, enacted the "Clar­ which the army propounded at the close ofthe endon Code." It barred religious dissenters Civil War." (those who preached against the Church of Behind many ofour most fundamental civil England) from entering a town or city. It liberties there stood John Lilburne, a mere provided prison terms for anybody caught in apprentice who helped develop a bold new a dissenting worship service. There were fears vision of liberty, took a principled stand, of intensified persecution when, in 1679, risked his life, defied tyrants, and got his story Charles II became seriously ill, because the out. He suffered that we might be free. D Economics on Trial by Mark Skousen

THE FREEMAN MAY 1997

What's the Best Measure of Inflation?

"The Consumer Price Index overstates survey workers visit approximately 21,000 increases in the cost of living by about 1.1 stores in urban areas and collect prices on percentage point a year." these items. The CPI is a market basket index -Michael Boskin, Stanford Universityl ofthese items, valued according to a weighted average. ccording to recent surveys, most profes­ Asional economists believe that the Con­ What's Missing in the CPI? sumer Price Index (CPI) consistently over­ states the cost ofliving in the United States by Unfortunately, the price-index methodol­ one percentage point or more. Even pro­ ogy is defective in two ways. First, the current market economists such as Michael Boskin CPI fails to take into account quality improve­ and Milton Friedman assert that the CPI, ments, new products, substitutes, and sale which is prepared monthly by the Bureau of prices. As a result of these omissions, many Labor Statistics, exaggerates changes in the economists argue that the CPI tends to over­ living expenses. estimate the cost ofliving in the United States. As a result ofthese studies, the government Second, the CPI does not include all items hopes to establish a more accurate CPI and determining an individual's cost of living, and thus save Washington billions of dollars. The this fact may cause the CPI to consistently CPI is used to index federal taxes and Social underestimate the cost of living. How many Security payments. A lower CPI could in­ people buy a fixed market basket of goods crease tax revenues by $70 billion and reduce and services that match in any way the gov­ Social Security checks by $75 billion over a ernment's survey for "an urban family of five-year period. It could substantially reduce four"? the federal deficit. For example, I have two children in college. The CPI is determined each month by a According to government surveys, college survey of prices of 364 items that compose a tuition and related expenses have risen at typical bundle purchased by urban consumers double-digit rates over the past decade or two. during the base period, 1982-84. Items include But the CPI doesn't cover college expenses. food, consumer goods and services, rent, and My family and I also travel frequently property taxes. Each month several hundred outside the United States. Overseas the dollar has lost much ofits purchasing power over the Dr. Skousen is an economist at Rollins College, past 20 years. How does the CPI reflect the Department of Economics, Winter Park, Florida dollar's decline? It doesn't. 32789, and editor ofForecasts & Strategies, one of the largest investment newsletters in the country. The Crime has been a problem in our commu­ third edition ofhis book Economics of a Pure Gold nity, so we bought an expensive security Standard has recently been published by FEE. protection plan for our home. The CPI 314 315

doesn't include such an expenditure in its In short, you have two major deficiencies in fixed basket of services. the CPI, one that overestimates inflation and What if interest rates rise? The CPI does another that underestimates inflation. Which not directly account for the costs ofborrowed force is stronger? I don't know, but it would money or mortgage payments. be national folly to include the former and ignore the latter. The Biggest Omission Mises to the Rescue But probably the most serious defect of the CPI is that it does not register the largest item In determining the best measure of infla­ in everyone's household budget-taxes. The tion' we should remember the words of Lud­ CPI covers property taxes, but not sales taxes wig von Mises. Mises refers to the "level" of or income taxes. Today, government expen­ prices as "inappropriate" and "untenable" ditures (the most accurate measure of total because"changes in the purchasing power of taxation) represent 32.2 percent of the econ­ money must necessarily affect the prices of omy (GDP). If the CPI is supposed to repre­ different commodities and services at differ­ sent the cost of living, doesn't it make sense ent times and to different extents." He goes that it should include taxation, the cost of on to say, "The pretentious solemnity which government? statisticians and statistical bureaus display in Taxes and government spending have been computing indexes of purchasing power and rising rapidly throughout the twentieth cen­ cost of living is out of place. These index tury, as the following graph shows: numbers are at best crude and inaccurate illustrations of changes which have oc­ The Growth of Government curred.,,2 Expenditures, 1929-1995 According to Mises, inflation (deflation) is defined as increases (decreases) in the supply (as a percent of GOP) of fiat paper money by government, not 35 changes in the prices of individual goods and services. According to this definition, the cost 30 of living and declining purchasing power of the dollar have been extraordinarily and un­ 25 necessarily high in modern times. If we use the monetary base (funds on deposit by the 20 Federal Reserve) as a measure offiat money, 15 the money supply has increased 141 percent since the 1982-84 base period. If we use a 10 broader definition, M2 (coins, currency, checking accounts, and money market funds), 5 the money supply has increased 75 percent. Either way, monetary inflation has been sig­ o nificantly higher than the CPI's 60 percent. Perhaps increases in the money supply should Source: Economic Report of the President be used as a better gauge of inflation. But it Since 1982-84, the base period for the wouldn't make Washington happy-it would current CPI, total government expenditures mean less tax revenue and higher Social have increased from $1.1 trillion to $2.5 Security checks. D trillion, a 127 percent increase. During this same period, the CPI has risen only 60 1. Wall Street Journal, February 25, 1997, p. A24. Professor Boskin headed a government panel investigating the CPI. percent. Clearly, if taxes were included in the 2. Ludwig von Mises, HumanAction, 3rd ed. (Regnery, 1966), CPI, it would be rising at a much higher rate. p.222. 316

From classical economics, Reisman takes "the recognition of saving and productive expenditure, BOOKS rather than consumption expenditure, as the source of most spending in the economic system. Closely related to this, I have brought back the Capitalism: A Treatise on Economics wages-fund doctrine and have made clear the by George Reisman meaning of John Stuart Mill's vital corollary prop­ Jameson Books. 1996 • 1,096 pages. $95.00 osition that 'demand for commodities does not constitute demand for labor.' I have reinstated Reviewed by Jim Powell Adam Smith's recognition that in a division-of­ labor society the concept of productive activity must incorporate the earning of money and that n this monumental work (81/2 by II-inch pages), because of its failures to earn money, government I Reisman offers the most comprehensive de­ is a consumer.... I have reintroduced Ricardo's fense of capitalism ever written. He covers funda­ insights that capital can be accumulated not only by mental principles and a wide range ofpolicy issues. saving but also by anything else that serves to He discusses controversies-especially environ­ increase wealth.... The main thing I have dis­ mentalism-which have emerged since Ludwig von carded in classical economics is any notion that Mises and Ayn Rand wrote their immortal books. wages are determined by the 'cost of production of Reisman attempts something nobody else has labor.' " done: combine some doctrines from classical eco­ Many Austrians will surely counter that Aus­ nomics, plus the free-market economics of the trian economics already builds upon what was of Austrian School and the pro-capitalist moral vision enduring value in classical economics, but as noted, of Objectivism. He is perhaps in a unique posi­ Reisman learned economics from Mises himself, tion to pull this off, having long been a friend and and he labored some 18 years on this book, so his intellectual compatriot of Ayn Rand, and having views aren't offered on a whim. Capitalism will be attended Ludwig von Mises's New York University a stimulating read even ifyou disagree with him on graduate seminar for years. Reisman translated some important theoretical issues. Mises's work on methodology, published as Epis­ Rand's influence is perhaps most apparent in temological Problems ofEconomics. Reisman's discussion of individual rights, liberty, Reisman, now an economics professor at Pep­ competition, monopoly, and environmentalism. perdine University, tells how this magazine helped Like Rand, Reisman sees progress as "a self­ him on his intellectual journey more than four expanded power of human reason to serve human decades ago. "It was one of the early issues of The life." He draws on her insights when he talks about Freeman," he recalls, "that I had my first exposure philosophical influences which are essential for to the writings ofLudwig von Mises.... I could see capitalist civilization-and philosophical influ­ that Mises knew the history of economic thought ences which threaten to destroy it. and that he was presenting a strong, self-assured Capitalism climaxes with a radical agenda for position. . .. I bought Socialism and over the liberty. Again reflecting Rand's influence, he pre­ coming months had one of the very greatest sents a powerful moral and practical case for intellectual experiences of my life, before or since. abolishing government schooling, minimum-wage ... Here at last was a great, articulate defender of laws, compulsory unionism, Social Security, Medi­ the economic institutions of capitalism." care, welfare, business subsidies, rent controls, in­ Although a thoroughgoing Austrian, Reisman come taxes, fiat money, and other types of govern­ believes that classical economists made some en­ ment intervention which cause so much misery. during contributions to the case for capitalism. "A For instance, after explaining his proposal for leading application of the classical doctrines, of cutting off the flow of taxpayer money to govern­ which I am especially proud," he says, "is a radically ment schools-thus going far beyond the current improved critique of the Marxian exploitation debate over school vouchers-Reisman adds: "the theory. In my judgment, classical economics makes public education system is inherently unsuited to possible a far more fundamental and thorough­ teach any subject about which there is controversy. going critique of the exploitation theory than that This is because teaching such a subject necessarily provided by B6hm-Bawerk and the Austrian entails forcing at least some taxpayers to violate School ... [and] also provides the basis for greatly their convictions, by. providing funds for the dis­ strengthening the refutation of the ideas of semination of ideas which they consider to be false Keynes." and possibly vicious. On the basis of this principle, 317 the public schools should be barred from teaching The pyramid is not just a physical construction, not only religion, but also history, economics, but a psychological structure that compels submis­ civics, and biology. In the nature of things, only sion. Kadare, from Stalinist Albania, zeroes in on private schools, for whose services people have the his target. "In the first place, Majesty, a pyramid is choice of paying or not paying, can teach these power. It is repression, force, and wealth. But it is subjects without violating the freedom of con­ just as much domination of the rabble; the nar­ science. The fact that barring the public schools rowing of its mind; the weakening of its will; from teaching these subjects would leave themwith monotony; and waste. a my Pharaoh, it is your very little to teach, and place them in a position in most reliable guardian. Your secret police. Your which they may as well not exist, simply confirms army. Your fleet. Your harem. The higher it is, the the fact that public education should be abolished." tinier your subjects will seem. And the smaller your Amen! subjects, the more you rise, a Majesty, to your full Reisman does a fine job explaining the creative height." genius of capitalism, and the moral dimension Kadare gives us the myriad details which would really makes the book compelling. He articulates accompany such a project, but with a peculiar a rigorous defense of individual rights, open mar­ resonance for the survivor ofthe twentieth century, kets, free trade, hard money, and freedom of our age of total war and the total state. The con­ movement. Capitalism is a classic. D scription of labor and other resources, the reports of police, and the plans of the master planners all Mr. Powell's biographical profiles of the heroes of give us a sense of eerie recognition in our more liberty appear monthly in The Freeman. enlightened age of Hitler, Stalin, and Pol Pot. The pyramid project drags the nation from one reported conspiracy to another. Arrests, tortures, The Pyramid and executions construct the pyramid just as much by Ismail Kadare as granite, basalt, and alabaster. "Every morning Arcade Publishing. 1996 • 161 pages. $21.95 people learned with a shudder of terror the names of those arrested during the previous night." This Reviewed by Richard A. Cooper is an Egypt as police state, with its inhabitants to be molded to the whims of their rulers. But Egypt, of course, is a stand-in for its predecessors and lbanian novelist Ismail Kadare unveils the successors in the sorry spectacle of state building. A mystery behind structures of statist tyranny in From the Egypt ofthe Pharaoh Cheops, Kadare his perceptive fable The Pyramid. On the surface, takes us on a strange excursion in time and place it is a reconstruction, a retelling of the actions of to the empire of Central Asian conqueror Timur the pyramid-building Pharaoh Cheops of Egypt. the Lame (also known as Tamerlaine), who erects But, like the real pyramids, it has its own secrets another pyramid. This Central Asian pyramid is to be revealed. It is a tale oftyranny ofall times and constructed of skulls of the conquered. From the places, wherever and whenever those who hold distant past he transports us again, this time to power seek to enshrine their power and their ideas Communist Albania's capital ofTirana for another on the lives and backs of the ruled. I rank The state building exercise. Here again the pattern of Pyramid among the great literary depictions of State power underlies the "modern" structure. tyranny and its consequences. Finally, from Enver Roxha's Communist Alba­ The new pharaoh Cheops dismays his courtiers nia, Kadare carries the reader to our own time. by dropping hints that he may not construct his own With the poet's insight and richness of image, pyramid. They fret, but know not why they worry; Ismail Kadare exposes how the structures of Stat­ they think the pyramid should be built, but only ism reveal their true nature if we but look. The because it is traditional. Eventually, they find the Pyramid will no doubt be compared to George answer in their ancient texts as a magic prescription Orwell's 1984. I think it a superior book, with its for the health of state. "To launch works colossal combination of everyday realistic details and the beyond imagining, the better to debilitate its in­ voice of historical experience underneath the habitants, to suck them dry. In a word, something crushing burden ofthe structure. The details of the exhausting, something thatwould destroy body and domination differ. The causes invoked differ. But soul, and without any possible utility. Or to put it the blueprints are telling in their similarities. 0 more precisely, a project as useless to its subjects Richard A. Cooper makes his living as an export­ as it would be indispensable to the State." import manager while exploring ideas as a freelance Why is the pyramid indispensable to the State? writer. 318 THE FREEMAN • MAY 1997

Sovereign Nations or Reservations? An this began to change, and especially after the Civil Economic History of American Indians War violence became the primary means of re­ solving disputes. Anderson convincingly attributes by Terry L. Anderson much of this change to the incentives facing the Pacific Research Institute for Public Policy • military bureaucracy-incentives to secure their 1995 • 202 pages. $19.95 jobs, to expand, and to create an environment conducive to promotions. Reviewed by Bruce L. Benson Similar bureaucratic incentives facing the Bu­ reau of Indian Affairs (BIA) explain the almost total lack of effective economic development on took a couple of Prometheus-award-winning Indian reservations since the Indian Wars, in I libertarian science fiction novels and Terry opposition to the myth that there is something Anderson's Sovereign Nations or Reservations? about Indians themselves which prevents them along on a recent vacation. I chose to read the from adapting to market-based economic activi­ science fiction first, but that was a mistake­ ties. The politically correct suggest that Indian Anderson's book is better. Not only is it very well culture and heritage, their love for nature and written, but it tells a compelling true story that communal nomadic life-style, stand in the way of provides a much more devastating critique of the their assimilation into the modern market econ­ state and a much more convincing case for bas­ omy. Others see some inherent flaw in the Indian ing a society on individual freedom and private people. Both are wrong. American Indians have property than any fictional story can. Economic always adapted to changing conditions. When history may not sound as exciting as science fic­ Indians were placed on reservations, they quickly tion, but Anderson's version is, as he debunks a began to adapt. Agricultural activity was develop­ large number of popular myths about Indians that ing quite rapidly until the BIA and Congress have impeded a clear understanding of the lack of started meddling with the evolving property rights economic advancement on Indian reservations. systems on reservations. Then, through a series of Among the myths that fall is the claim that prior statutes reflecting the political demands of white to the arrival ofEuropeans, Indians lived in almost and bureaucratic interest groups, the institutions idyllic societies where everything was communally and property rights on reservations were changed, owned and shared, and where nature was so undermining individual Indians' incentives to in­ revered that Indians only took what they could vest in productive economic activity while creating consume. Anderson explains that in reality, North incentives to focus on group rent seeking. American Indians developed private property The variation in productivity across reservations rights in resources whenever the benefits of pri­ today reinforces Anderson's main point. Produc­ vatization exceeded the costs. Furthermore, while tivity is significantly higher on reservations where Indians certainly had a great deal of respect for a relatively large portion of the land is privately nature, as anyone trying to subsist in a harsh owned as compared to land held in trust by the BIA environment must, their techniques for harvesting or land that is tribally owned and administered. common pool resources such as buffalo (where the Furthermore, tribal governments that are consti­ cost of establishing private property rights were tutionally constrained support more economic prohibitive) often led to tremendous waste (e.g., a growth than tribal governments that can arbitrarily large percentage of the meat from buffalo driven change the rules of the game and redistribute over buffalo jumps was simply left to rot, and large wealth. areas of prairie were burned to force buffalo into The story Anderson tells is not unlike the story traps). Itwas only after the European introduction that can be told about less developed economies all of the horse (a privately owned resource among over the world. He tells it very well. Individuals Indians) that less wasteful hunting techniques everywhere adapt to the incentives and constraints developed. that they face: secure private property creates Another politically correct myth is that Indians incentives to produce and expand wealth, and were continually coerced and exploited following centralized power creates incentives to pursue the arrival of Europeans. The history of Indian­ other peoples' wealth. 0 White relations in North America breaks roughly Dr. Benson is Distinguished Research Professor in into two periods. Before the United States gov­ Economics at Florida State University. ernment began maintaining a standing army, ne­ gotiation dominated with relatively few violent confrontations. After the Mexican-American War BOOKS 319

Jefferson's "Bible": The Life and Do unto others as you would have others do Morals of Jesus of Nazareth unto you. (The Golden Rule) In addition, 38 parables are offered. These by Thomas Jefferson include the parables of the lost sheep, the wedding American Book Distributors. 1996. 140 pages. feast, the talents and the three servants, Lazarus $15.00 (plus $3.50 shipping) paperback and the rich man, the hidden treasure, the lamp under the basket, and the instruction to build on Reviewed by William H. Peterson rock and not on sand. All point up a key moral or truth. The foreword by nationally syndicated colum­ "... the Laws of Nature and of Nature's God." nist William Murchison of the Dallas Morning News is on target. Mr. Murchison finds our hose eight words and their underlying pre­ times "despiritualized" (or, to use the perception T cepts in the Declaration of Independence, of Gertrude Himmelfarb, demoralized and says Judd W. Patton, associate professor of eco­ de-moralized). He agrees wholeheartedly with the nomics at Bellevue University in Nebraska, in his Jefferson premise that the practice of morality is introduction to this book, account for much of the essential for the well-being of society. He finds it success of the American Experiment in-savor the ironic that use of this book in the classroom, even phrase-self-government. But what the Founding on the authority ofThomas Jefferson, will likely be Fathers really meant by this phrase was govern­ prohibited-while, let me note, sex education and ment of self by American citizens and their leaders "free" condom distribution go merrily on. in accordance with a strong moral code. In Jeffer­ This edition highlights moral precepts in red and son's ((Bible": The Life and Morals of Jesus of indexes the precepts and parables by page and New Nazareth, we learn much about what Jefferson Testament chapter and verse. Judd W. Patton thought that moral code to be. deserves credit for republishing an important piece The background of Jefferson's Bible is interest­ of American history. He hopes the practice of ing. In 1819-1820 he decided to set forth the giving a copy to each representative and senator, "pure moral principles" of Christianity. Repro­ beginning with the 105th Congress in 1997, can be duced here are the title page and table of con­ revived. tents in Jefferson's own handwriting. He literally I hope he is right and recall a relevant quotation cut out and pasted verses from Matthew, Mark, inscribed in marble in the Jefferson Memorial in Luke, and John into an 82-page book. In 1813 he Washington, D.C.: "I have sworn upon the altar of had described their wisdom as "the most sublime God, eternal hostility against every form oftyranny and benevolent code ofmorals which has ever been over the mind of man." Jefferson's ((Bible" is worth offered to man." reading and contemplating. 0 This unpublished work was held in the Jefferson Dr. Peterson, a Heritage Foundation adjunct scholar, family until it was found by Cyrus Adler in 1886. is Distinguished Lundy Professor Emeritus ofBusi­ Adler purchased it for the Smithsonian Institution ness Philosophy at Campbell University, Buies Creek, in Washington in 1895, and it was published in North Carolina. 1904. For the next half-century, ending in the 1950s, a copy of Jefferson's "Bible" was presented to each new senator and representative at his swearing-in ceremony. This is a handsome, well-thought-out edition. Migrations and Cultures Fifty moral principles, including the Ten Com­ by Thomas Sowell mandments, are presented. Here are some of Basic Books. 1996 • 516 pages. $30.00 them: Be a peacemaker. Reviewed by George C. Leef Avoid anger. Be a light to the world. Don't be hypocritical. t is an article of faith among egalitarian oppo­ Be a forgiving spirit. I nents of laissez-faire capitalism that the statis­ Love your neighbor as yourself. tical discrepancies one finds in a free society are Do not steal. (Eighth Commandment) proof of its immorality. They note "abnormally" Do not covet. (Tenth Commandment) high concentrations of people with a certain char­ Be diligent in all you do. acteristic among the poor or among the rich and 320 THE FREEMAN • MAY 1997 conclude that the state must step in to cure the shows this in case after case. The Chinese in apparent inequity. Hence, their strident demands Malaysia, for instance, were far more inclined to for affirmative action and other policies to promote entrepreneurship, hard work, and investment than "equality." the more relaxed Malays, so it was not in the least The implicit assumption in this line ofreasoning "abnormal" that the Chinese became the business is that people ought to be randomly distributed and plantation owners for whom the Malays throughout income groups and occupations. To the worked. egalitarians, something is abnormal and wrong if Unfortunately, the ugly emotion of envy also people from Group A have a high poverty rate and appears in case after case. The economic success of people from Group B have a negligible poverty the immigrant groups usually sparks resentment rate; if people from Group X tend to dominate in and violent backlash against them. The depressing profitable businesses while people from Group Y thing about Migrations and Cultures is that it are concentrated in menial labor. It is this assump­ repeatedly highlights this deep flaw in human tion that Thomas Sowell has spent many years of nature. Rather than either learning from and his life refuting. After Migrations and Cultures, it emulating the successful or at least conceding them lies exposed as sheer but dangerous nonsense. their due, the natives usually claim that they have The book concentrates on the migrations of six been "exploited" and seek to confiscate some or all groups of people: Germans, Japanese, Italians, of the wealth of the more future-oriented groups. Chinese, Jews, and Indians. Sowell notes that these Political demagogues thrive on these intergroup groups were far from homogeneous (northern and resentments and have a powerful interest in fan­ southern Italians are quite culturally different, for ning the flames. example), but took with them stocks of skills and, Besides confiscating and redistributing the more importantly, habits wherever they went wealth of the successful, politicians can advance around the globe. Often, the newcomers brought themselves by promoting preferential policies to skills and habits-a culture-that was markedly "solve" the "problem" of underrepresentation different from that of the indigenous population. among the "disadvantaged" groups. Readers may Naturally, the natives and immigrants would not be surprised to find out that "affirmative action" is instantly and randomly mix, but rather each pop­ neither new nor unique to the United States. The ulation would tend to concentrate in the fields government of Thailand, for example, established where their respective cultures gave them compar­ employment quotas for Thais and enacted many ative advantages. laws designed to handicap the Chinese back in Several traits stand out as common among the the 1930s. Similar policies have been followed six groups: a willingness to engage in hard work, a in Malaysia and, most disastrously, in Sri Lanka, propensity to save a great deal, even of meager where a once-harmonious country has been trans­ earnings, and placing a high value on education. formed into a bloody battleground, thanks to When people from cultures with these character­ governmental interference with the spontaneous istics mixed with people from cultures without order of the market. Americans should pay atten­ them, the results couldn't be statistical random­ tion to the long-term damage that these policies do. ness. Indeed, Sowell points out, backward nations Cultures are not fungible. For all the beating have at times eagerly sought immigrants from of drums for "celebrating diversity" that we get in particular nations precisely because their cultures America, one thing we don't hear is that certain were expected to help advance economic develop­ cultures tend to encourage productive behavior, ment beyond what the natives could do. That is harmony, and progress, whereas others encourage why, for example, Germans wound up in Paraguay. envy, sloth, and conflict. The multiculturalist in­ These days, nations beg for foreign aid, but luring sistence that all cultures are equally "valid" and skilled immigrants was much more productive. must not be treated "judgmentally" crashes on the The critical difference between the immigrant rocks of Sowell's meticulous (there are 2,431 groups and the native populations into which footnotes) scholarship. It's fine for young Ameri­ they moved was that the immigrants were more cans to learn about other cultures, but they also future-oriented. Hard work, saving, education­ ought to learn that cultures have consequences. these are all attributes of people who are thinking Like Sowell's many other books, Migrations and toward the future. Although the immigrants usu­ Cultures is a strong antidote to an array of statist ally started out in extreme poverty, their tenacious cliches. I recommend it highly. 0 pursuit of a more prosperous future led to rising incomes. In contrast, the more present-oriented George C. Leef is book review editor of The natives remained economically stagnant. Sowell Freeman.