Paul L. Poirot 3

Robert M. Thornton 12

Henry Hazlitt 16

Norman S. Ream 26

Leonard E. Read 32

Institute of Directors 41

AUGUST 1966

Weakness Corrupts .

On Heroes, History, and Our Heritage .

The Case for International Investment •

A Clergyman Looks at Free Enterprise •

Some Reflections on Robots •

The Assault on Free Enterprise •

The Flight from Reality:

23. The Flight from the Constitution, I

Books:

Adenauer's Memoirs

Other Books •

Clarence B. Carson

John Chamberlain

45

60

63

5 '12 % 5 3/4 0/0systematic savings- on 3 year accountsand on 3 year accounts of $10,000 or moreof $5,000 to $9,000 in in multiplesmultiples of $1,000 of $1,000

CURRENT RATE .••

5 lf4 0/0minimumon regularsavings accounts

. ·.·...·..LJmjHMHMl@iilmlM~·.~·······COAST FEDERAL SAVINGS & LOAN ASSOCIATIONDepartment FM, 9th & Hill Sts., Los Angeles, California 90014

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o Please send me a FREE copy of NAME(S)_~~_~~ _President Crail's uAdam Smith vs. (please print)Karl Marx" speech.

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in the name(s) of CITY

THE FREEMAN AUGUST 1966

Vol. 16, No.8

II'" Indiscriminate bombing with Fed­eral Aid in the War on Poverty vic­timizes those who most need to knowhow to help themselves p. 3

II'" The heroic stand of stalwart menpervades our history and constitutesour heritage - lest we forget .... p. 12

yt' Henry Hazlitt rests his case for in­ternational investment on the forces ofthe market rather than the vagaries ofintergovernmental alliances and politi-cal chance p. 16

J;I" The Reverend Norman S. Reamspells out his faith in free enterprise,among free men, under God ..... p. 26

II'" Those robots of automation, sowidely held as causing unemployment,can be a boon to those who understandand use them wisely, contends Leon-ard Read . p. 32

yt' From Britain's Institute of Directorscomes a timely warning of the dangersof government interference in businessmatters p. 41

yt' Getting back to the Constitution, asProfessor Carson suggests in this chap­ter, calls for a renewed understandingof the reasons for limiting governmen-tal powers.... . p. 45

yt' In Konrad Adenauer's Memoirs1945-53, John Chamberlain finds thespiritual, economic, and political foun­dations for the "German miracle"

............ p. 60

~ And Robert Thornton delights inRussell Kirk's commentaries on TheIntemperate Professor and Other Cult-tural Splenetics p. 63

Anyone wishing to communicate with authors may sendfirst-class mail in care of THE FREEMAN for forwarding.

AUGUST 1966

LEONARD E. READ

PAUL L. POIROT

Vol. 16, No.8

President, Foundation forEconomic Education

1l1anag'ing Edito1·

THE FREEMAN is published monthly by theFoundation for Economic Education, Inc., a non­political, nonprofit educational champion of privateproperty, the free market, the profit and loss system,and limited government, founded in 1946, with officesat Irvington-on-Hudson, New York. Tel.: (914) 591­7230.

Any interested person may receive its publications

for the asking. The costs of Foundation projects andservices, including THE FREEMAN, are met throughvoluntary donations. Total expenses average $12.00 ayear per person on the mailing list. Donations are in­vited in any amount....;.$5.00 to $10,OOO-as the means

of maintaining and extending the Foundation's work.

Copyright, 1966, The Foundation for Economic Education, Inc. Printed inU.S.A.

Additional copies, postpaid, to one address: Single copy, 50 cents;3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in wholeor in part, providing customary credit is given, except liThe Case forInternational Investment" and liThe Flight from Reality."

Any current article will be supplied in reprint form if there are enoughinquiries to justify the cost of the printing.

PAUL L. POIROT

THE CURRENT CAMPAIGN in thewar on poverty might be wagedmore successfully had Lord Actondevoted less attention to the cor­rupting influence of power andrecognized that weakness alsotends to corrupt and absoluteweakness corrupts absolutely.

Is that not the lesson of theparable of the talents? Thewicked and slothful servant didnothing constructive with theproperty entrusted to his care;whereupon, the property wastransferred to the good and faith­ful servant whose capacity forstewardship had been proven.There is war on poverty - with avengeance! But many· will doubtthe justice and humanity of trans­ferring property from the least ef­ficient to the more efficient usersof it. Instead, they would proposea negative income tax, for the

more equitable distribution ofwealth. In their zeal for equalityof material possessions, theystumble over the basic flaw of thecommunist idea - the destructionof the incentive for anyone to die­velop and use his talents moreconstructively. They cater to man'sweakness rather than his strength,failing to see that hatred, greed,envy, and similar weaknesses arethe most corrupting vices of all.

Individuals are not equally en­dowed nor do they develop theirtalents at the same pace - each isan individual, with his own scaleof values, wants, satisfactions. Es­sentially, there are but two waysin which a person may implementhis choices. One is through pro­duction and willing exchange,earning power converted to pur­chasing power in the open com­petition of a marketplace policed

3

4 THE FREEMAN August

to the extent necessary to protectlife and property and keep thepeace. The alternative method ofimplementing choices is throughthe physical or political power ofcoercing others to obey and serve,with government perverted intoan instrument of plunder.

Reliance on the Market

Most of us are fully aware thatit is morally wrong to murder,rob, cheat, and lie to one anotherto get what we want. When weseek employment, we instinctivelylook first to the most successfulbusiness managers, savers, cre­ators of job opportunities. L.ike­wise, in our shopping for bar­gains, we tend to buy from themost efficient, most successful sup­pliers, rewarding with handsomeprofits those who best serve ourwants. The market measures aman by what he does with his ownresources. Each man more or lesschooses and is responsible for hismarket position, relative to thatof other self-choosing and self­responsible individuals. Day afterday we depend upon our purchas­ing power and the method of will­ing exchange to implement ourchoices; and we ought to be awarethat this market method serves uswell.

But the market is not the soledeterminant of each man's econ­omic status, there also being "peo-

pIe control" through political ac­tion. To the extent that govern­ment ne gates the individual' schoice, it also renders him irre­sponsible. True, the protectiveservices of government may be de­signed and may indeed help tocurb irresponsible actions of cer­tain individuals, with a resultantnet gain in the total voluntary ac­tivity of all persons in the marketplace. This is man's hope and ex­pectation of a government con­fined to keeping the peace.

Nevertheless, nearly every per­son of restricted means, low in­come, limited purchasing powercan be tempted to see an advan­tage to himself of redistributingall incomes higher than his own.The idea of Federal aid, the nega­tive-income-tax proposal of takingfrom the rich to help the poor,finds popular support. Withoutthought for the consequences, weturn over the power of taxationto those who lack purchasingpower. Thus, the market iswrecked and abandoned, and coer­cion substituted as a new way oflife, when we allow our weak­nesses to corrupt us.

The simplest application oflogic ought to tell us that a weakperson cannot force a strongerperson to help him. So, it shouldbe self-evident that turning fromthe voluntary method to the coer­cive method of fulfilling wants can

1966 WEAKNESS CORRUPTS 5

only work to the disadvantage ofthe weak and poor among us.

Subsidy and Taxation

Government control, aside fromits defensive role of keeping thepeace, may be summarized undertwo general headings: subsidyand taxation.

That "the power to tax is thepower to destroy" seems so clearand obvious, one hesitates to dis­cuss the matter further. Yet, itmust be recognized that a govern­ment without the power to collecttaxes is also powerless to do any­thing else. If government is topreserve the peace, it must be ableto collect taxes enough to pay forthat service. If government is toprotect life and property, it musthave sufficient claim upon livesand property to give the necessaryprotection. But, the fact that anygovernment does involve claimsupon the lives and the property ofthe citizenry is the all-importantreason why the scope of govern­ment should be limited. An un­limited power to destroy thoseunder its influence is more "protec­tion" than anyone can afford. To bedefended to the end of one's re­sources, and then to death, is of noavail. The power to tax is indeedthe power to destroy.

While most of us can see theharmful or dangerous aspects ofthe power of taxation, we may see

less clearly the nature and impactof the governmental power to sub­sidize. Yet, the power to subsidizealso is the power to destroy. Noris the destructive effect confinedto those whose lives and propertyare taxed away to obtain themeans for subsidies to others. Therecipient of unearned goods orservices may sadly discover thetruth of the expression that "oneman's meat is another's poison,"for there· is no surer way to de­stroy a man than to assume theresponsibility for his well-being.

Even the most altruistic volun­tary act of charity is capable oflasting harm to the intended bene­ficiary if it in the smallest degreediminishes his will or capacity tohelp himself. Rare indeed is theindividual with sufficient strengthof character to accept unearnedassistance and not be tempted toask for more. And strength ofcharacter is not a notable qualityamong those most likely to befound on the receiving line for ahandout.

Specific Programs Examined

A more careful examination ofsome specific governmental wel­fare programs may help exposethe futility of such coercive meas­ures to alleviate poverty.

Unemployment compensation,for example, supposedly is in-

6 THE FREEMAN August

tended to help overcome the lackof employment opportunities forpersons whose livelihood dependsupon the sale of their services.The problem of the unemployed isthat their services are not worththe price they are asking in thecurrent market; no employer cansee a chance for profit at suchwage rates; his resources maybetter be used to obtain labor­saving equipment or devoted tos'ome other purpose: he has inmind. But, to make matters worse,the unemployment compensationprogram constitutes a coercivedrain upon an employer'sresources. All other taxes upon hisbusiness or his earnings similarlyreduce his incentive and capacityto provide job opportunities at at­tractive wage rates and to producegoods and services at prices at­tractive to consumers. The heavierthe tax load upon the most effi­cient and successful business en­trepreneurs, the less chance therewill be for the le·ast skilled work­ers to find jobs or to purchasefood, shelter, clothing, and othernecessities at prices they canafford. The poor, rather than thewealthy, are the ones with mostto lose when coercion displaceswilling exchange.

Social security, medicare, andvariou8 other welfare programsare closely related to the unem-

ployment compensation idea andsimilarly disrupt the free flow ofgoods and services between sup­pliers and consumers. The· com­bined old age, disability, andmedicare tax is supposed to leveloff in due course at 11.3 per centof a person's wages up· to $6,600,which comes to a tidy $746 a year.That would be the equivalent of a5 per cent return on a capital in­vestment of about $15,000. If aperson began investing $746 ayear at age 21, with earnings of 5per cent compounded annually, hewould have accumulated $15,000before age 36, $30,000 by age 44,$115,000 by age 65. A 5 per centreturn on $115,000 would yield$5,750 a year - without eating intothe principal.

It is recognized, of course, thatsome wage earners will accumu­late private savings and invest inproductive enterprises in spite ofthe heavy burden of social secur­ityand other taxes, whereasothers would save nothing even ifrelieved of all tax liabilities. Someindividuals tend to be morethrifty and self-responsible thanothers. Be that as it may, the factremains that the presently sched­uled social security tax dep·rivesthe individual of the opportunityto save and invest up to 11.3 percent of his earnings, which couldaccumulate to as much as $115,­000, and possibly more, by the

1966 WEAKNESS CORRUPTS 7

time he had reached age· 65. Thiscompulsory seizure of potentialsavings, for current redistributionamong consumers, deprives indi­viduals and the economy generallyof the capital that could createmore and better job opportunitiesfor all working men and women.And the greatest disservice of thisentire procedure is to the poorestand the least productive membersof society who so need additionaltools and equipment and other fa­cilities to improve their produc­tivity.

True social security may be ap­proached when individuals gen­erally, and voters especially, beginto understand that savings and in­vestment and the prerogatives ofownership are best left in thehands of those whom consumershave rewarded and designated asthe most efficient and generoussuppliers of the goods and servicespeople want. To tax and confiscateproperty and savings is to frus­trate the choices of consumers;and the first and sharpest cutbackin productivity is of those veryitems that had been most abund­antly mass produced - for themasses.

Tax-supported education hasbeen promulgated and widely ac­cepted in theory as a great equal­izer, not only at the elementaryand secondary school levels, but

more and more at the college level,and even for graduate studies.

When a high proportion of thepopulation of a nation is able toread and write, it may be arguedconvincingly that illiteracy is ahandicap and that everyone shouldhave the opportunity to learnthese skills in order that he maybecome a better citizen and a self­responsible, contributing memberof society rather than a hopelessburden to himself and to others.At least, some such rationale laybehind the first steps toward gov­ernment schools in the UnitedStates - elementary schools, oper­ating at the community level.

People can be helped, even com­pelled, to learn to read and write.But not all who can will read orwrite; not every opportunity ex­tended is accepted; not everyonerelieved of self-responsibilityseizes upon the situation as an op­portunity to grow in ability andresponsibility. Indeed, nothing butthe precise opposite may be in­ferred from the sorry record ofthe consequences of governmenteducation in the United States.Never before in the history ofcivilization have so many literatecitizens deemed and decreed them­selves incapable of self-support asin the United States of Americain 1966. There is no evidencewhatsoever that compelling a per­son to learn to read and write will

8 THE FREEMAN August

sharpen the sense of self-responsi­bility within him.

Furthermore, when all havelearned to read and write, somewill read and write more wiselythan others and develop talentsthat others neglect. And eventu­ally, high school diplomas and col­lege degrees will be required - arebeing required - of applicants forjobs of the type formerly fulfilledrespectably by illiterates. Thismay be one of the reasons whymajor universities in the UnitedStates now look to Washington for40 and 50 per cent and more oftheir total budgets. And those whoare obliged to pay the costs ofeducation, from the communitygrade schools of country-club at­mosphere to the tax-supportedcenters for graduate study, are thepoor taxpayers presumed capableof and willing to educate every­body's children but their own.

After tiny tots have been joggedabout town in yellow buses,through red and green lights untilthey no longer are able to distin­guish black from white, they mayproceed to express themselves con­cerning national and internationalproblems until free lunch isserved; .and some eventually maylearn to read and write - withreading machines and automatictypewriters. Whether the studentdropout from such a curriculumis intellectually inferior to the one

who carries on and graduates is anice question that cannot be re­solved by any of the theories andpractices of the system of com­pulsory schooling. Is the one anybetter trained than the other todemonstrate his animal nature inthe streets or otherwise expressthe civil disobedience that passesfor maturity according to the for­mula of personal irresponsibility?Nor should anyone be surprisedthat the heaviest current govern­mental expenditures for highereducation are devoted to researchand development for occupation ofthe moon!

Urban Renewal plans and prac­tices may afford the best illustra­tion of all the misguided cam­paigns in the war on poverty. Ifanyone can be found living in sub­standard housing or other slumconditions, no matter that he isconscientiously doing his best tolive within his means while- striv­ing to help himself toward some­thing better. Root him out, andforce him to find a home he cannotafford in a community with publicservices and tax rates tailoredfor those in high-income brackets.

Government is organized in­tolerance; and there is nothingwrong with such intoleranceleveled against those criminal actsby individuals who disturb thepeace and· jeopardize the life and

1966 WEAKNESS CORRUPTS 9

property of others who are mind­ing their own business. The mostdeplorable kind of intolerance isthat evidenced by the "humani­tarian with the guillotine," thewell-intended reformer armedwith the power of eminent domainand the full force of governmentto simply wipe out all signs ofpoverty and suffering, includingthe individuals so afflicted.

The free market economy is tol­erant of differences in humanwants and capacities, leaving theindividual free to fill his needs ac­cording to his abilities - to drawsupplies from the market in pro­portion to his own offer-and-de­livery of goods and services. Itaffords each person the maximumincentive and opportunity to helphimself, which, in the final analy­sis, is the only kind of help thatdoes not carry the prospect ofgreater harm than good to the in­tended beneficiary.

A strong case can be made,. andhas been made on numerous occa­sions by countless individuals,concerning the immorality offorcefully taking the property ofthe more provident and thriftycitizenry for redistribution in oneform or another among the. poor.But far too little attention hasbeen paid by anyone to the im­morality and injustice of thus de­priving those poor persons of theopportunity to experience the

reality of cause and consequence,effort and reward, method and re­sults. To feed and clothe andhouse and surround a man's bodywith other physical comforts be­yond the capacity of his mind toappreciate and earn and cope withthese material blessings is to de­prive him of the opportunity ofever rising above the level of adomesticated animal. No greaterinj ury can be inflicted on any manthan to "save" him from earninghis own way. The benevolent gov­ernment that taxes the rich alsorobs the poor at the same time,taking from one his property,from the other his human dignity.When it is recognized that the im­portant part of urban renewalmust take place within the mindsand souls of human beings, it maybe seen that the coercive force ofgovernment can play no construc­tive role in this do-it-yourselfproject of mental and moralachievement.

Transport subsidies, rangingfrom below-cost subway and com­muter fares to the underwritingof luxury liners and plush airtravel, generally tend to transferproperty by force to those whocan afford to travel from thosewho can't.

There are economic as well asother reasons why the poorermembers of a community tend to

10 THE FREEMAN August

congregate and crowd together inwhat seem to be the rundowntenements and slums near theheart of an urban industrial area.There is the inexpensive, second­hand housing they can afford nearto their places of work, with olderand unadorned but nonethelessadequate schools and other serviceand shopping facilities withintheir reach and means. Those per­sons with ambition always havemanaged to help themselves out ofsuch crowded areas if they reallywanted to leave, thus makingroom for others on th,eir way upthe economic ladder. The market,comprised of individuals eachminding his own business, is toler­ant of such arrangements.

There are persons, however,especially among the new rich re­cently moved to Suburbia, whohave failed to understand the ma.r­ket method of progress and whosee no further need for those lesselegant and lower rungs in theeconomic structure. By taxation,subsidy, and force, they wouldabolish slums, displace with or­derly empty space what once werehomes and shops and service cen­ters and sources of livelihood foremergent, self-reliant humanbeings. Then in the name of thedisplaced poor, but more obviouslyin their own interest, the new sub­urbanites clamor for subsidizedsubway fares, subsidized com-

muter services, subsidized free­ways and parking space, subsidizedcorrectives for the destructionthey have promulgated in the nameof renewal and progress. And theinevitable workings of the processof taxation, however steeply grad­uated to soak the rich, are suchthat each dollar of return on in­vestment capital thus withdrawnfrom the market place of produc­tive enterprise means somethinglike six dollars of wages neverearned and never paid.1 The oneswho finally pay, and pay dearly,for every dollar politically di­verted to the "war on poverty" arethe poor workers who so need thefreedom of the market place inorder to help themselves.

Foreign aid to undevelopedcountries will be our final examplehere of the miscarriage of justicein the political war on poverty.

Bad enough that every item as­sembled for give-away by thedonor government, whether it befood and other necessities or themost elaborate kind of capitalequipment, is ultimately at theexpense of those of our own citi-

1 In the highly industrialized UnitedStates over recent years, about 85 percent of personal income has been in theform of pay for work done currently and15 per cent as pay to savers who providetools and job opportunities. See F. A.Harper, Why Wages Rise (Irvington,N. Y.: Foundation for Economic Educa­tion) pp. 19-27.

1966 WEAKNESS CORRUPTS 11

zens most in· need of cheap food,clothing, and shelter and most in·need of the additional capital thatmakes for improved job opportuni­ties and working conditions. It al­ways is the poor who pay mostdearly for goods and services theirgovernment withdraws from thedomestic market in which they aretrying to earn their livelihood.Persons of· means, by biddingenough, can always obtain por­tions of what remains for saleafter government has forciblytaken "its share" of scarce re­sources.

But worse than these domesticinjustices of intergovernmentalgive-away programs is the impactof such measures upon the indi­viduals supposed to be helped inthe recipient countries. Theirs isprimarily a problem of too muchregulation and control by theirown government, too little free­dom and incentive to assume per­sonal responsibility for additionalproduction, saving, and invest­ment. Yet, there is no recor<J.y noreven the slightest hint of any at­tempt to put foreign-aid fundsanywhere except at the dispositionof the government of the recipientnation. Thus are these already au­thoritarian and dictatorial govern­ments sustained and bolstered intheir power to regulate and con­trol the lives of their citizen sub­jects.

Nor does it customarily makevery much difference in what formthe foreign-aid goods and servicesare originally transmitted fromone government to the other. Letus say that boatloads· of foodgrains are intended to stave offstarvation among the teeming mil­lions of India - a million dollarsworth of food. The immediate con­sequence is that the power of theinterventionist government of In­dia is bolstered by that amount. Ithas an additional million dollarsworth of patronage to distributeamong its lackeys and favorites.And the probability that a starv­ing Indian may receive some ofthe foreign-aid food will dependupon how much of it he can affordto buy in the black market.

Many persons, of course, will bequick to condemn the marketeerswho would thus profit from trafficin the necessities of life. On thecontrary, the role of the blackmarketeers is the most construc­tive of any played in the entireforeign-aid procedure. The greatinjustice is done by those govern­mental enthusiasts who woulddeny the functioning of the mar­ket in the allocation of scarce re­sources.

A More Hopeful Approach

In questioning and criticizingthe conduct of the current cam­paign against poverty I have tried

12 THE FREEMAN August

to suggest what seems to me amore hopeful strategy. Twothings, I believe, are necessary tomake of any community the mostprosperous economic and culturalgarden spot of the world:

First, and most essential, is topopulate it with individuals inwhom flows the spirit and under­standing and practice of liberty.Due respect for life, liberty, andproperty under the rules of peace­ful exchange among self-reliant,self-responsible, self-respectinghuman beings would seem to restupon a faith that this is God'sworld, a humility that we arecreatures, and a tolerance towardfellow men peacefully participat­ing as we ourselves aspire to doin the infinite process of the Crea­tion.

Second, though supplemental tothe first, is to relieve that com­munity of every form of govern­ment aid and subsidy and at thesame time relieve it of all tax bur­dens, regulations, interventions,and controls other than those nec­essary and strictly limited to itsown internal policing and its de­fense against foreign attack.

And the mottoes above the opengates of such a free society wouldread:

and

ON HEROES, HISTORY,

AND OUR HERITAGE ROBERT M. THORNTON

"IN TIMES of insecurity when thefoundations of life are severelyshaken," says Bernhard W. Ander­son, "men often turn to the pastto gain perspective. In our time,for instance, the world crisis hasstimulated an intensive study of

Mr. Thornton is a businessman in Covington,Kentucky.

the past and the tradition in whichwe stand."

Our age surely qualifies as a timeof insecurity so it is likely thatmore and more thoughtful peoplewill, as Anderson says, turn to thepast to examine their heritage.Thus, the renElwed interest in themost important of the Founding

1966 ON HEROES, HISTORY, AND OUR HERITAGE 13

Fathers: Washington, Franklin,John Adams, Jefferson, Madison,and Hamilton. All have theircritics, to be sure, but they havenot been forgotten in the nearlytwo hundred years that havepassed since this nation wasfounded. We may wish to discoverwhat makes them great, what setsthem apart from others who livedin their time.

But while we want to knowwhat made the Founding Fathersgreat, few of us are interested inreading anything that treats themas plaster saints. We need to knoweach one's personality with all itsshortcomings, that is to say, weneed to treat them as humanbeings, for only in that way maywe appreciate their greatness,only so can they serve as inspira­tion and challenge to us. To pro­claim perfection for these men is,as Douglas Southall Freeman hasexplained, to deny growth. PaulWilstach speaks of a need to "bal­ance their noble qualities as greatcharacters with their amiabilitiesas fellow human beings." We canbest understand persons of thepast, suggested Albert Jay Nock,if we think of them as men andwomen much like ourselves withtwenty-four hours a day to getthrough as best they could. Theneed, in brief, is to humanize theFounding Fathers without de­meaning them.

But, it might be asked, arethere really persons who mayfairly be called heroes - for in­stance, persons who overcometheir fear and risk their lives forothers or persons who stick bytheir beliefs in the face of strongopposition or temptations? Some"intellectuals" go so far as to saythere are no heroes since aU of usare mere products of determiningforces - biological, psychological,and environmental- over whichwe have no control; hence, we arelittle more than robots doing, notwhat we choose to do, but whatthese forces make us do. Granted,if the nature of man is such thathe can not make free choices andcan not act from disinterested mo­tives and can not do what heknows he ought to do regardless ofwhat he Iwants to do, it is futile toargue whether at certain times,say, during the period whenAmerica became an independentnation, particular men risked"their lives, their fortunes, andtheir sacred honor" out of loveof principles. If, on the otherhand, man is not a helpless pawnand can act disinterestedly, thenwe can investigate to learn if, forinstance, the Founding Fatherswere guided by principles andideals or only by selfish motivesdisguised as a love of liberty. Howthe acts of the Founding Fatherswill be interpreted depends, then,

14 THE FREEMAN August

not only on historical knowledgeand understanding, but also on theview of the nature of man that isimplicit in any work of history.

It is not unexpected that a masssociety derogates the value andrelevance of individual action;hence the "debunking" and dis­regard of our national heroes. Butin diminishing our forebears wediminish rather than exalt our­selves. In demeaning the motivesof the great Founding Fathers wecompromise our own character asfree and responsible men. And itis hardly right to live off thefruits of their commitments whileinsisting they were either un­aware of what they were doing orwere moved by motives differentfrom those they professed.

It is fruitless, anyway, for "in­tellectuals" to say there are noheroes because most persons, espe­cially youngsters, will have theirheroes -like it or not. The realquestion is who will be the heroesto look up to and emulate. DanielBoorstin has observed the mod­ern-day worship, not of heroes butof celebrities. "The hero was dis­tinguished by his achievement;the celebrity by his image ortrademark. The hero created him­self; the celebrity is created bythe media. The hero was a bigman; the celebrity isa big name."These new-model "heroes" are nolonger "external sources which fill

us with purpose" but "receptaclesinto which we pour our own pur­poselessness." "The hero," he goeson to say, "is made by folklore,sacred texts, and history books,but the celebrity is the creatureof gossip, of public opinion, ofmagazines, newspapers, and theephemeral images of movie andtelevision screen. The passage oftime, which creates and estab­lishes the hero, destroys the celeb­rity." Perhaps, remarks Boorstinwisely, "our ancestors were rightin connecting the very idea of hu­man greatness with belief in God.Perhaps man cannot make him­self. Perhaps heroes are born andnot made."

Our generation, in its worshipof the present, scoffs at history asdull and unimportant; a cockybunch, we fail to appreciate thatonly if we know where the roadwe travel came from can we knowwhere it will take us. We fail, too,to understand that all of us, eventhe greatest, stand on the shoul­ders of those who came before.Man, Renan has said, does not im­provise himself. Likewise, Amer­ican society in the middle of thetwentieth century did not sud­denly spring into existence, andthe spiritual and material bless­ings enjoyed by Americans todaywould not be ours if those whopreceded us had shirked their re­sponsibilities to future genera-

1966 ON HEROES, HISTORY, AND OUR HERITAGE 15

tions as we are guilty of doing to­day. A true community, after all,is much more than just a groupof people living at a particularmoment; it is, if you will, a spir­itual body including those whohave gone before and those yet tobe born.

Written history, explains PageSmith, is Uthe effort to pass on tothe sons the wisdom of the fa­thers, and thus to preserve, ratherthan destroy, the continuity be­tween generations." History thusdefined will help the individual todiscover his identity, for an es­sential part of that identity isfound in the story of his past- his "collective autobiography."To destroy the links with the pastand live simply in the present, hecontinues, is to leave oneself at themercy of neuroses, so common inthe present day. Great history,writes Smith, is "the history thathas commanded men's minds andhearts, [history] with a story totell that illuminates the truth ofthe human situation, that liftsspirits and projects new poten­tialities." For the historian him­self the important thing is not toseek a cold objectivity but rather"to conceive of his task as one ofsympathetic understanding of hissubject, a matter of attachmentrather than detachment, of loverather than aloofness." History,Maritain has said, "is not a prob-

lem to be solved, but a mystery tobe looked at...."

Many readers will recognize theabove-mentioned ideas on historyas conservative, not radical or"liberal," for the underlying pre­mise of this concept of Americanhistory is that there is somethingto conserve, a heritage to treasureand to pass on to our ,posterity.There is, indeed; and our tradi­tion, to put it briefly, is liberty.As Clarence Carson has demon­strated, ours is not a revolution­ary tradition but a "tradition ofindividualism, voluntarism, con­stitutionalism, representative gov­ernment, government by law,equality before the law, recogni­tion of moral order in the uni­verse, natural rights, and personalindependence." ~

Authors cited:

B. W. Anderson, Understanding the OldTestament. Englewood Cliffs, New Jer­sey: Prentice-Hall, 1957, p. 288.

Paul Wilstach, Patriots Off Their Pedes­tals. Indianapolis: Bobbs-Merrill Co.,1927, p. 15.

Daniel Boorstin, The Image: A Guide toPseudo-Events in America. New York:Harper Colophon Books, 1964, pp. 61, 63,76.

Page Smith, The Historian and History.New York: Knopf, 1964, pp. 130, 142, 155,206, 245, 248.

Jacques Maritain, University Bookman,Winter, 1966, p. 32.

Clarence B. Carson, The American Tra­dition. Irvington, New York: Foundationfor Economic Education, 1964, pp. 26, 27.

HENRY HAZLITT

16

The Case for

International Investment

• This article by the well-known economic journalist andauthor is reprinted by p-ermission from the February 12,1966 special 75th anniversary edition of Farmand, oldestbusiness jout'nal in Scandinavia, published in Oslo.

Dr. Trygve J. B. Hoff, 70 last November and editor ofFarmand since 1935, has won friends around the w'orldwith his staunch and undev·iating stand for a societycharacterized by la10 and order, freedom, and respect forthe individual and the dignity of man.

Henry Hazlitt is one of the several members of theMont Pelerin Society contributing articles on various as-

pects of business and economics to this commemorativeissue of Farmand.

Copies of the 24,O-page anniversary edition, in English,at $1.50 each, may be ordered direct from Farmand, RoaldAmundsensgt. 1, Oslo 1, Norway.

THE CASE for American invest­ment in Europe is simply part ofthe case for international invest­ment. The case for internationalinvestment, in turn, is simply partof the case for all investment,international or domestic. And thecase for freedom of investmentis simply the case for free trade,for free enterprise, for economicliberty - and for world-wide eco­nomic cooperation.

Lending and investment, whenwisely made, benefit both thelender and the borrower. Let uslook at domestic investment first,where fewer prejudices are likelyto be involved. Investment benefitsthe lender, of course, by givinghim a return on his capital inthe form of either interest orprofit.. He tries to get the highestreturn on his investment conso­nant with safety. Investment bene­fits the borrower as well. If it isa fixed-rate investment, in theform of a loan, a mortgage, orbonds, it gives the borrowing en­trepreneur the capital he needsfor his venture. If his venture issuccessful, he can payoff theamount borrowed and expand hisoperations with his own capitalaccumulated from his profits.

If the investor and the entre­preneur are different people, bothshare in the gain. If the investor

and the entrepreneur is the sameperson, and he is competent andsuccessful, he provides consumerswith some product they want thatthey have not previously been get­ting; or he provides them witha better quality of it; or he pro­vides them with more of it,andprobably at a lower price. So hebenefits consumers. In addition,he either provides more employ­ment or, if there has already beenfull employment in the locality ofhis plant, he tend·s to raise thelevel of wages there.

And this mutual benefit applies,of course, to international invest­ment. A new foreign venture (likea new domestic venture in a givenlocality), particularly if it is suc­cessful, may hurt less efficient do­mestic (or foreign) producers al­ready in the field. But it will doso only because it is producing abetter quality product or sellingit· at a lower price. In other words,it will do so only because it ismore effectively meeting the needsor wants of consumers in thecountry in which the investmentis made.

Moreover, however regrettableits short-run effects may be on aparticular domestic industry, thelong-run effects of the new foreignventure are bound to be beneficial.For it will either force the do,;,

18 THE FREEMAN August

me~tic industry to become moreefficient (and so to serve domesticconsumers better), or it will forceentrepreneurs in that industry,and new entrepreneurs comingalong, to turn to products in whichthey are at least as efficient as,or even more efficient than, theforeign entrepreneur.

In short, the case for freedomof international investment, thecase for the free flow of funds,is the same as the case for free­dom of international trade, for thefree flow of goods. The countrythat permits the free flow of fundsand goods will have more goodsand services. It will become moreefficient and productive. In brief,it will become wealthier andstronger.

Those who wish to put barriersin the way of international invest­ment are confused by the samefallacies as those who wish to putbarriers in the way of interna­tional trade.

It seems pretty late in the dayto have to refute these fallacies.They have already been refutedhundreds of times, brilliantly andcompletely, by the classical econo­mists and their successors.

Why fear the Supplier?

I will digress at this point onlyto mention one .of these fallacies,because it leads to a false fearthat still has a strong popular

hold. This is that if a foreigncountry, say the United States, isallowed to "invade" the marketsof other countries with its capitalas well as its final products, itwill be able to produce everythingmore efficiently than its Europeancompetition, and so destroy Euro­pean industry. (I'd like to callattention here to the use of suchwar terms as "invade," or suchnatural disaster terms as "flood"or "inundate," to which protec­tionists habitually resort.)

All such fears are, of course,entirely groundless. They have notonly been refuted by the wholecourse of history; they are notonly refuted afresh every monthby the most casual study of thestatistics of imports and exports;but they are refuted a priori byelementary deductive reasoning.Ricardo refuted them once for allwhen he enunciated his law ofcomparative costs. But it shouldbe obvious to the most backwardmind that in the long run a coun­try can only pay for its importswith its exports, and that the ex­tent of the one both makes pos­sible and limits the extent of theother. In the long run a nationcannot expand exports without ex­panding imports; and it cannotdiscourage and restrict importswithout correspondingly discour­aging and restricting its exports.

Trade always balances, when

1966 THE CASE FOR INTERNATIONAL INVESTMENT 19

governments let it alone, for thesimple reason that exporters in­sist on getting paid for what theysell.

In the last few years all of ushave been chattering learnedlyabout deficits in the balance ofpayments. But such deficits, whenpersistent, are always the resultof unsound monetary and fiscalpolicies and interventions on thepart of governments. Typically, agovernment inflates its currencyfaster than its neighbors, and thenartificially supports its currencyquotation in the foreign exchangemarket. But we'll return to thislater.

Americans in Europe

To my short exposition of thetwo-sided advantages of interna­tional investment in general Ishould like to say a word aboutthe particular two-sided advan­tages at this time of American in­vestment in Europe.

The advantage to American in­vestors and American firms isobvious. American investors ex­pect to get a higher return ontheir investment than they couldget at home. American firms openup new markets for their prod­ucts, and at least at the beginningrealize a higher rate of profit onthem than they would by tryingto achieve a further saturation oftheir markets at home. But the

advantages to Europe are enor­mous.

The world today is in the midstof a great technological revolu­tion, which will probably trans­form the face of the world evenmore than did the Industrial. Rev­olution of the late eighteenth andearly nineteenth centuries. Thistechnological revolution, of course,typified by electronics, computers,automation, is merely an acceler­ating continuance of the IndustrialRevolution.

From the producer's point ofview, an enormous amount ofmoney will be made in this tech­nological revolution. To exploit iteffectively requires know-how, bigmarkets, and huge amounts of cap­ital. Now America has these hugeamounts of capital, and it has theknow-how largely because it hasthe capital. It is, in fact, the chiefsource of capital creation today.It has been spending hugeamounts of capital on researchand development, far beyond whatEuropean countries have spent orare able to spend. An idea of thecontrast was given by the Frenchweekly L'Economie in an estimateearly last year that whereasFrance spends less than 6 billionfrancs a year on scientific re­search, the United States spends100 billion - an amount, it adds,three times as great as that of allEuropean countries together. The

20 THE FREEMAN August

estimate given in L'Economie forthe United States agrees fairlywell with the best American esti­mates, derived from figures pub­lished by the National ScienceFoundation. These estimates placeUnited States expenditure for re­search and development last yearat $22.1 billion, of which $15.5billion represents government ex­penditure and $6.1 billion privateexpenditure.

Europe, prosperous though itnow is, and expanding economi­cally as rapidly as it now is, justhasn't got the comparable capitalto spend on research and develop­ment. Nor is it producing it at arate fast enough to finance thetechnological revolution to takefull advantage of it. It needs capi­tal from the United States; and itneeds to import the advancedplants, equipment, and productivemethods that have been developedby this research.

Yet the irony of the presentsituation is that though privateAmerican investment in Europebenefits both Americans and Eu­ropeans, both the American gov­ernment and some European gov­ernments fear and distrust it, andboth are busy putting obstacles inits way.

European Government Objections

Let us disregard why the U. S.authorities fear and dislike the

outflow of American capital andturn to the reasons why some Eu­ropean authorities fear or dislikeits inflow. It is in France, by thede Gaulle government, that thereasons for this distrust have beenmost clearly expressed.

At a press conference on Febru­ary 4, 1965, President de Gaullecomplained that the United States,in effect, was buying up Europeanfirms with Europe's own money.This accusation is so peculiar thatI prefer to quote de Gaulle's exactwords (that is, in English, in theofficial translation) :

He began by pointing out that, be­cause of the gold exchange standard,the United States is not required tosettle its payments deficits in gold.He then went on:

"In other words, capital was cre­ated in America, by means of whatmust be called inflation, which inthe form of dollar loans granted toStates or to individuals, is exportedoutside.

"As, even in the United States, theincrease in fiduciary currency whichresults as a side effect makes invest­ments at home less profitable, thereis a growing tendency in the UnitedStates to invest abroad. The resultfor certain countries is a sort ofexpropriation of some of their busi­ness firms."

Some Americans have beentempted to reply that this soundsungrateful coming from a country

1966 THE CASE FOR INTERNATIONAL INVESTMENT .21

into which we .have poured some$10 billion or $11 billion of aid.But this is beside the point. Wemust admit in all candor that deGaulle is right in attributing partof the amount of our recent capi­tal export to our own inflation andartificially low interest rates. Atfirst glance, also, his charge thatU. S. firms have been in effectbuying out European firms withthe deficit·in the American balanceof payments looks like a seriousone. Yet there is no· "expropria­tion" involved. Where Europeanfirms have been bought up theyhave been paid for with real dol­lars, with real money. And whenEuropean firms accept these dol­lars, and European central banksbuy them and hold on to them fortheir reserves, these are (for themost part) voluntary decisions.European central banks alwayshave the legal right to demandgold for their dollars, whether ornot the American monetary man­agers would be happy about theirdecision.

I come next to the charges ofPresident de Gaulle and othersthat the United States is export­ing part of its inflation to Europe.It may be so; but I should like topoint out that Europe is not forcedto import it. Even if it takes andholds dollars, and even if theseend up as additional reserves inits central banks, no country is

under any obligation to issue anew pyramid of its own credit orcurrency against these paper dol­lars. It can simply use them tostrengthen its reserves and in­crease its reserve ratio.

When Europe imports dollarsfrom the United States it is notimporting inflation; it is merelyimporting temptation. It is up tothe monetary authorities of eachcountry to decide what to do withthe dollars.

Domination

I come to the next chargeagainst American investment inEurope, a charge that is againmainly heard in France. This isthat· the "invasion" of Americancorporations in Europe carrieswith it the threat of "domination"of the European economy.

How real is this threat? An ar­ticle in the French weekly L'E c'On­omie of February 12 of last yearpointed out that American invest­mentsin ·France represent barely2 per cent of that country's grossnational product. Yet what hascaused concern, the article con­tinued, is that this investment isconcentrated in certain key-sec­tors of the French economy. Andit went on to describe the situa­tion in the petroleum and chemi­cal industries, in mechanical andelectrical engineering, and in elec­tronics.

22 THE FREEMAN August

But the charge of "domination"may mean either of two things. Itmay mean merely that a foreigncompany enjoys an uncomfortablylarge proportion of the marketfor a specific product. This maynot be satisfactory to the Frenchproducers; but it indicates that alarge number of French consum­ers prefer it to the product oftheir domestic companies. Andthis competition is a stimulus tothe French manufacturers to im­prove their product.

But the charge of "domination"may imply something more seri­ous - that the American-ownedcompanies would have too much tosay about the economic decisionsof the government of the countriesin which they were located. I canonly say that I regard this out­come as wholly improbable. Thegovernment of any country, notriddled by corruption, seldom has~

difficulty in exercising its· sover­eignty over any foreign-ownedcorporation. The real danger isthe other way round. The foreign­owned company puts itself at themercy of the government of thehost country. Its capital in theform of buildings, equipment, andeven bank deposits may betrapped. In the last twenty-fiveyears, as American oil companiesand others in Asia and SouthAmerica have found to their sor­row, the dangers of discrimina-

tory labor legislation, or discrimi­natory taxation, or even expro­priation, are very real.

Americanization

I come to one last reason foropposition to American invest­ment in Europe - the fear of"Americanization." This is a littlemore difficult to deal with thansome of those I have just re­viewed. But "Americanization," itseems to me, may refer to severalrather distinct things. It may re­fer to an increase in some of theconveniences, comforts, and luxu­ries of life - more and better bath­tubs, lavatories, showers, andtoilets, more supermarkets anddrugstores, more radios, televisionsets, and automobiles. Few people- whether Americans, Europeans,Asians, or Africans - who are in aposition to get these things forthemselves have any objection tothem.

The real objection to some ofthem - like automobiles - is thatwith advancing prosperity toomany oth.er people are also in po­sition to get hold of them, andthen their mere multiplication re­sults in traffic jams that makeeach individual car less useful toits owner. I am willing to confessthat I have no solution to offer tothis problem.

The word "Americanization,"however, may be used to refer to

1966 THE CASE FOR INTERNATIONAL INVESTMENT 23

certain spiritual and culturalchanges - or, rather, I suppose Ishould say, to certain antispiri­tual and anticultural changes­to the increasing pursuit of mere­ly material ends, to a restless in­crease in the pace of both businessand pleasure-seeking, to the vul­garization typified by advertisingbillboards, jukeboxes, and thecommercialization of every phaseof life.

I should be the last to want todefend all this. But I should liketo point out that this is a develop­ment well within the control ofEuropeans themselves. It is per­haps temporarily inevitable whenthe income of the masses growsfaster than opportunities for theireducation and the cultivation oftheir tastes. But increased pros­perity does not necessarily lead toincreased vulgarization and mate­rialism. I have been impressed inthe last ten years by the remark­able growth in the United Statesin the appreciation of serious mu­sic, the reading of serious litera­ture, and the interest in scienceand in the fine arts as reflected -inthe sales of good records and goodpaperback books and the attend­ance at art galleries.

Why U. S. Corporations Invest

I come finally to the question:What reasons induce Americancorporations to invest abroad and

what reasons deter them from do­ing so?

Of course the primary reasonthat an American corporation in­vests abroad is to make a profit.This consideration is not absolutebut relative. It depends upon thealternatives. The corporation goeswhere it expects to make a great­er profit (in relation to the risks)than it can by expanding at homeor by investing or .expandingfurther in some other country.

Of course a multiplicity of con­siderations affect this expectation.The corporation must decidewhether it is better to build a newplant from the ground up or beginby acquiring some existing Euro­pean concern. It must decidewhether it wants its subsidiary tobe wholly owned or whether tomake its investment a joint ven­ture with nationals of the hostcountry. The wisdom of all suchdecisions depends on the specialcircumstances in each case. Giventhe opportunity for profit,themost common moving forces foroverseas investment are the desireto maintain or expand sales by en­tering a new market, or the hopeof preserving an established mar­ket in the face of tariff, exchange,or unofficial barriers. Americancorporations have invested in theCommon Market area or even inthe European Free Trade Area be­cause these areas are protectionist

24 THE FREEMAN August

against outsiders. Another reasonAmericans may invest in a for­eign market is because it may bepossible or easier from there toexport to a third market areawhich otherwise could not bereached because of discriminatingprotectionism or for political rea­sons. If an American company setsup a plant in West Germany, forexample, it may be able to ship in­to East Germany. Or it m.ay setup a plant in some other Euro­pean country to take advantage ofbilateral arrangements that donot exist in countries where it al­ready is.

Once a decision has been madeto invest abroad, a number ofother considerations dictate thechoice of which country shall re­ceive the investment. These canbe grouped into governmental fac­tors and nongovernmental fac­tors. With respect to the firstgroup, American investors seekout a country that has political,financial, and economic stability, afavorable official attitude towardprivate enterprise and the profitmotive, and little or no corruptionwithin the government. Turningto nongovernmental factors influ­encing the choice of country,American investors will considerthe availability of skilled and un­skilled labor, managerial person­nel, banking facilities; road, rail,and harbor facilities; ancillary or

supporting industries; power fa­cHities; and labor costs.

The question of labor costs ismore complicated than is com­monly supposed. It is not simply aquestion whether wage rates arelow in a given country, butwhether they are low or high inrelation to the skill and produc­tivity of the labor available there.

Another reason for direct in­vestment in a given country isthat the material is there. This ofcourse is the reason in the caseof the extractive industries - oil,copper, bauxite, etc.

Deterrents to Investors

The reasons why American cor­porations may not make invest­ments abroad are mainly thatsome or all of these favorable con­ditions do not exist.

Let me give a brief list of somereasons that will deter private in­vestment in a country: (1) lack ofgovernment cooperation or enthu­siasm; (2) lack of local financingfacilities; (3) lack of guaranteeson repatriation of capital andprofits; (4) restrictions on fieldsof investment; (5) limitations onownership by nonnationals; (6)burdensome taxes; (7) unstablecurrency; (8) currency exchangerestrictions; (9) import licensedifficulties on essential materials,machinery, or know-how; (10)burdensome social security legis-

1966 THE CASE FOR INTERNATIONAL INVESTMENT 25

lation; (11) price controls; (12)discriminatory laws; (13) gov­ernment-owned competition; and(14) the possibility of expropria­tion.

I may have seemed to be arguinghere that American investment isan unmixed blessing for Europe,and that all opposition to it is theresult of misunderstanding or un­reasoning prejudice. I do not wishto give that impression. I havethrown my emphasis in this direc­tion mainly because I am writingin a European periodical. If Iwere writing on this same subjectat home my emphasis would bedifferent. I would devote at leastpart of my discussion to deploringand warning against some of themistakes that Americans makeabroad, both in actions and atti­tude - condescension, brashness,disregard of local customs andmethods, refusal even to try tolearn the local language, failure

to employ nationals of the hostcountry to the greatest possibleextent, and so on. Such actionsand attitudes breed a perfectlyjustifiable resentment.

But the faults I have been de­scribing are in the main the faultsof the more recent arrivals inEurope among American compa­nies. An official of the Parker PenCompany tells about a conversa­tion he fell into with a Londontaxi driver. "Are you over herefor pleasure, sir?" asked the taxidriver. "No," replied the Ameri­can, "on business." "What's yourbusiness?" asked the driver. "I'mwith the Parker Pen Company,"replied the American. "Oh," askedthe taxi driver, "does Americahave a Parker Pen Company, too?"

Well, that's the impression thatevery foreign corporation oughtto give in the country in which ithas a subsidiary. ~

CliRlate for Progress

IN A NATION without a thriving business community, privatewealth is generally stored in vaults, or used in conspicuous con­sumption, or invested in real estate, or placed with business com­munities abroad. But where a country's private business is notsubject to Procrustean measures of control, this private wealthis less likely to be shipped abroad, buried, or otherwise divertedinto circuits of low economic potential. It is likely to come out ofhiding, or to be brought home from abroad, particularly sincethe prospects of profit are normally higher in a poor country ifthe political environment is good.

HAROLD FLEMING, States, Contracts and Progress

A ClergymanLool~s atFree Enterprise

NORMAN S. REAM

I BELIEVE that a great number ofclergymen in this country despisesocialism in all of its forms,whether it be called the New Deal,the Fair Deal, the New Frontier,or the Great Society. But they arenot in the majority, and they arenot quoted continually in the news­papers and magazines. They arecertainly not the executives of na­tional church groups which areconstantly issuing, or causing tobe issued, statements proposing anever greater expansion of the wel­fare state. You will perhaps havenoted that most of the ultraliberalspokesmen for religion are in ex­ecutive positions or in theologicalseminaries. Very few of them areparish ministers and parishpriests. Unfortunately, however,The Reverend Mr. Ream is pastor of the FirstCongregational Church of Wauwatosa, Wis­consin.

26

great numbers of clergymen onthe parish level are strongly in­fluenced by the voices which ema­nate from church councils andseminary campuses.

Let me tell you what I thinkthe typical clergyman is like whenit comes to economic and politicalmatters. First we must go backinto history a bit. Back in theearly thirties, a great many peo­ple in this country - clergymen in­cluded - developed what Ludwigvon Mises calls an anticapitalisticmentality. Several religious de­nominations adopted resolutionswhich condemned capitalism equal­ly with communism. One groupvoted a resolution conde:mning cap­italism and advocating its elim­ination, along with the eliminationof the legal forms and moral idealswhich sustain it. Because church-

1966 A CLERGYMAN LOOKS AT FREE ENTERPRISE 27

men, for the most part, were woe­fully ignorant of economics andthe causes of depressions, theyblamed all of the suffering andeconomic malfunctioning whichexisted in our country at that timeon what they mistakenly referredto as laissez-faire capitalism. Al­though this mentality has mod­erated generally during the lastthirty years, it is still prevalentin ofl5cial circles.

Economically Uninformed

The clergy, like most of the pop­ulation, is, as I have already ob­served, woefully ignorant of eco­nomics. There is one difference,however: the clergy are leaders inthe community and have thereforea greater responsibility for beinginformed, especially if they aregoing to issue pronouncements andpass resolutions. But time aftertime I have sat in meetings whereclergymen argued the pros andcons of certain political mattersconcerning which they were abys­mally ignorant. I well rememberon one occasion sitting in a meet­ing where a group wanted to passa resolution favoring the adoptionof the United Nations Declarationof Human Rights. They were al­most unanimously in favor of itbut when I asked them how manyhad read it, not a single personpresent had read the documentthrough. It had a nice title, it

sounded good, prominent personswere· pushing it, so they were forit.

Most clergymen have been sotrained as to develop_ a sensitiveconscience. When they see injus­tice and need in human society,they want to do something aboutit. They do not always stop toconsider what is the best thingto do, over the long run and forall concerned. Over and over againin talking with politically liberalministers, when I have challengedthe socialistic method of meetingthe problem, I have been asked,"Well, don't you care about thesepeople who are suffering or under­going hardship?" And of course Ido care, as all of you care, butone has to be cautious in his care.He has to care enough to see theproblem as a whole and not par­tially.

What Are the Consequences?

This leads me to another strongconviction shared by Dr. Mises. Ihad the privilege of studying un­der him, the dean of classicaleconomists, in two summerses­sions. Over and over again, whenconfronted with a difficult eco­nomic problem, he would insistthat we have to consider the longrun and not just the short run. Tosolve an economic problem bymeeting an immediate need butignoring the long run conse-

28 THE FREEMAN August

quences, is not to solve it at all.Such a method often raises greaterand more difficult problems.

May I suggest a very simpleanalogy. If a panhandler accostsme on the street and is obviouslyhungry, ragged, and in great need,I can give him a couple of dollarswhich will solve all his immediateproblems. It will get him some­thing to eat and a bed. But haveI really solved his problem? Ofcourse not. His problem is muchmore deep-seated than that, andalthough this is a simple analogy,it is a pertinent one. Many min­isters think the solution of ourcomplicated and difficult economicproblems are likewise simple: justget the government to tax thosewho have and give to those whohave not. That, they suppose, willcreate a just and equitable society.

Well, we have been doing thatwith increasing intensity over thepast thirty years. We have, to besure, met some of the immediateneeds of men and women who per­haps didn't have enough to eatand enough to wear and properhousing. But let us look at someof the consequences during thosethirty years. We have a greatlyenlarged national debt, we havegreatly increased taxes, we haveinflation, we have a greater crimerate, divorce rate, alcholism rate,narcotics rate; and in spite of ouraffluent society, there is a strong

undercurrent of feeling in ourcountry that not all is well. Now,would you reply that all of theseconsequences I have enumeratedare not necessarily the results ofa socialistic economic policy? Ithink there is a relationship, andwe need a lot more study to deter­mine just what that relationshipis; for those statistics apply notonly to our own country, but toevery country which has gone in­creasingly socialistic.

A Common Failing

Now, this condemnation of eco­nomic ignorance should not bereserved for clergymen. There arealso businessmen who are econom­ically ignorant. It is not an occu­pational hazard or professionaldisease reserved for one segmentof the population. When MiltonFriedman of the University ofChicago says that the two worstenemies of freedom are liberalprofessors and businessmen, thisis part of what he is talking about.It is economic ignorance thattempts a businessman to seek aquick profit at the expense of along-range economic gain. It ismoral ignorance that lets a busi­nessman break the law or pull afast deal to the detriment of allbusiness and businessmen in thefuture. I am no economic expertmyself, but I know a fake whenI see one; and lots of business-.

1966 A CLERGYMAN LOOKS AT FREE ENTERPRISE 29

men I have known are fakes inthis area. In a really laissez-faireeconomy they couldn't exist. It isthe protection of governmentwhich often saves them from fail­ure.

Not only are most clergymen,like so many Americans, ignorantconcerning the fundamentals ofeconomics; they are also ignorant,like so many Americans, of ourrich heritage, and of what it isthat has made this country sogreat and wonderful. Typical ofthis national ignorance is that pollwhich recently revealed that 85per cent of our young people didnot think patriotism. was vital orplayed any important part in life;61 per cent did not think theprofit motive necessary to the sur­vival of free enterprise; and wellover 50 per cent were in favor ofclose government regulation of allbusiness.

Spoiled Children of History

I must confess that I am notoptimistic about the future of ourWestern civilization and our tra­ditional free institutions. Our civ­ilization and the institutions ofour Western culture depend uponunderstanding and awareness, andthey often demand sacrifice. TheAmerican people today are in nomood to sacrifice. Weare thespoiled children of history.

What it all comes down to is

that, among others, the religiousleaders of our Western civilizationare disillusioned because the freeenterprise system has not broughtabout a national and internationalutopia. Their reasoning seems tobe somewhat as follows: The tra­ditional American system has nottransformed all men into saintsand solved all the problems of hu­man nature; therefore, there mustbe something wrong with the sys­tem. There being something wrongwith the system, the obvious an­swer is to do away with it and trysome other system. Such reason­ing does not properly assess whatthis system has done over thepast 200 years. It does not under­stand and appreciate its benefitsto mankind around the world.

Free enterprise,on the otherhand, has not sold itself to therecipients of its own benefactions.Those whom it has blessed mostdo not appreciate it or understandit. They seem blind to the fact thatsocialism has produced, when com­pared to free enterprise, practi­cally nothing; and the little it hasproduced has been at the cost ofhuman dignity and self-respect.

Did you see those figures pub­lished by the director of the censusa while ago: According to ourgovernment, if you make under$4,000 a year you are in poverty.Yet, three-fourths of the familiesmaking less than $4,000 a year

30 THE FREEMAN August

have their own washing machines.Almost 93 per cent of them havetelevision sets; 60 per cent of themhave automobiles available. Theaverage Negro youth in the Southin the United States has a betteropportunity to get a college edu­cation than the average whiteyoung person in England. Why,in light of all of this, are theremen and women in America - andespecially clergymen - who don'tlike the system that has made itall possible? Is it perhaps an un­derlying feeling that man doesnot live by bread alone, that wedon't have all we need in orderto really live happy, useful, mean­ingful lives? There's somethingmissing, and clergymen are aptto see this more quickly, moresharply, than others.

The Role of the Church

Here, clergymen come face toface with their own failures andthat of the church. It is the busi­ness of the church to purify men'smotives, to enrich their spirits, toinspire them with lofty aims andpurposes. This is not the functionof a manufacturing concern or abank. When the clergyman seesbusiness meeting man's materialneeds, but the church failing tomeet his spiritual needs, he getsa guilt complex which sends himto Selma, Alabama, and out ontothe picket line. It is the business

of the clergyman and of the churchto build religiously oriented indi­viduals with strong moral char­acter and send them out into theworld to transform that world in­to something more akin to theKingdom of God. Because thatKingdom is so slow in coming, be­cause the church is so ineffectiveand weak in its task, there arethose who now want to go outand take the Kingdom by violence,as Jesus warned they would. Busi­ness, free enterprise, capitalism,the profit motive - all of this be­comes the scapegoat for every evilthat exists in society. The clergy­man, I sincerely believe, is uncon­sciously passing the buck for hisown professional failure. But itis not his failure alone. It is thechurch's failure as well; and mostof us are a part of the church. Itis, therefore, our failure, too.

Each individual within the cap­italistic system has a responsibil­ity to be a moral man, and anytime anyone of us acts withoutintegrity, it reflects on the sys­tem. When one business breaksthe law, all business comes undercondemnation. When one execu­tive is immoral, all executives tendto be branded.

Do you remember what AlbertSchweitzer said when somebodyasked him what was the greatestforce and power in the wholeworld? He answered, "Reason,

1966 A CLERGYMAN LOOKS AT FREE ENTERPRISE 31

persuasion, and example, but thegreatest by far is example." Wehave had too many examples ofimmoral businessmen or improperbusiness activities which are notdue to the system under which weoperate, but due to immoralitywithin individuals. All of thesethings, in the mind of the averageman, reflect on the system, onbusiness, on our free way of life.

Albert Jay Nock insisted, in thetitle of one of his books, that thestate - not government, not poli­ticians, but the state - was man'senemy. By its very nature it tendsto grow and intrude upon man'spersonal freedom. It was for thisreason the Founding Fatherssought to set up strong safeguardsagainst the state's arbitrary useof power.

Nock and the Founding Fatherswere alert to the warning issuedcenturies earlier by Confucius.Traveling with some companionsalong a lonely· mountain road hecame upon an old woman weeping.Questioned by the disciples, shereplied, "0, sirs, some time ago

my brother was killed at thisspot by a ferocious tiger. Lastmonth my husband was killed inthis same spot by the same tiger.Yesterday my son was likewisekilled." "But, old woman," askedthe disciples, "if the tiger wasso dangerous why did you notleave this spot?" "Because, sirs,"she replied, "because there is nooppressive government here." Con­fucius then spoke and said, "Re­member this, my sons, oppressivegovernment is more to be fearedthan a ferocious tiger!"

Civilized man has always felthimself to be a creature with adivine origin. As such, he has be­lieved he ought to be free fromthe domination of other men. Forthis conviction he has often beenwilling to give his life.

The time will come, I believe,when men will once more cherishfreedom as did our fathers; andit will be because they havelearned anew that man does notlive by bread alone, even thatbread provided by a benevolent,but omnipotent government. ~

Samuel de PuDendorf

HE IS JUSTLY ESTEEM'D the more excellent Citizen of the World,and the more generous Benefactor to his Fellows . . . the morediligent he hath been in advancing his own Perfection.

SOME REFLECTIONS ON

ROBOTSLEONARD E. READ

MEANS are often confused withends. Thus, when we focus on theemployment-unemployment pic­ture, as I do in this essay, thetendency is to overlook the factthat job holding by itself is, as arule, but a means to the satisfac­tion of wants. The growth of anyindividual's physical and mentalfaculties does, of course, demandexercise, but having a "job" isn'talways necessary for that; thesefaculties can be and often aremore exercised by the jobless­coupon clippers, for instance­than by job holders.

So, we're not seeking employ­ment merely for the exercise. Hu­man labor for its own sake is sel­dom our aim; we labor in orderto enjoy its fruits in the form offood, clothing, and shelter, or tosatisfy other physical and spir­itual hungers. And one of themost essential qualities of being

32

human is the urge to be relievedof burdensome effort and freed topursue more desirable objectives.It is this urge, when men are free,that causes the invention of me­chanical slaves - our tools andmachines; they free us for some­thing hopefully better. This is al­so why we specialize and trade.

In a world which has an infiniteamount of work to be done, in­voluntary unemployment is incon­ceivable - provided the market isfree. Unemployment is always theresult of price (wage) and othercoercive controls. Automation, asI shall attempt to demonstrate,has nothing whatsoever to do withit. Our mechanical slaves -labor­saving devices of all kinds - stemfrom the recognition and pursuitof higher wants than mere sur­vival; they are the means towardsuch ends. Let us therefore try toclear away some of the confusion

1966 SOME REFLECTIONS ON ROBOTS 33

that attends the employment-un­employment problem as related toautomation.

Whenever we come into posses­sion of a source of mechanicalenergy equivalent to one man'senergy, we have added to the workforce a mechanical slave, an au­tomaton, a robot.

No question about it, the robots,at first blush, appear to cause un­employment. Take the automobile,for instance. It disemployed buggyand wagon workers, whip andharness makers, stable hands, anda host of others. True, some wentto work for the auto makers but,nonetheless, the automobile - auto­mated travel, the product of au­tomation - made for unemploy­ment. So goes the chant.

The facts Deny the Theory

Regardless of that first impres­sion, we know that robots do not,in fact, cause unemployment. Forinstance, we have experienced anenormous outburst of automation,yet a high percentage of the popu­lation - about 80,000,000 - is onthe work force; today's manyareas of acute labor shortage re­fute the notion that automationcauses unemployment.

Quite possibly we could settlethe whole question in our ownminds by merely reflecting onprimitive automation : the wheeland a domesticated animal. The

ox-drawn cart, instead of puttingthe owner out of work, gave himhigher level work and multipliedwhat he could· produce and thusconsume.

Or, consider the story of twomen who were watching a hugesteam shovel removing earth inpreparation for the building ofHoover Dam. Said one, "Think ofall the men that shovel is puttingout of work!" Replied the bettereconomist .of the two, "Therewouldn't be a .single person work­ing on this project if all thatearth had to be removed by menwith their hands."

Yes, the automobile disem­ployed buggy workers, but in thesame sense that the ox-drawncart relieved primitive man fromdoing everything by hand. Failureto see this point leads many peo­ple to believe that automationcauses unemployment.

If robots are the cause of un­employment, then the telephone­automated communication - musthave wrought havoc. The fact?The operating companies employover 700,000 people, and severalhundred thousand are employedby the suppliers. But surely, somewill contend, automatic dialingdisemployed a great number ofswitchboard operators. The fact?There are nearly 50 per cent moreoperators today than in 1940.Why? Because automatic dialin~

34 THE FREEMAN August

made possible so much more useof the telephone than before. Ifthe present volume of conversa­tions had to be connected manu­ally, at least 1,000,000 switchboardoperators would be required. Ofcourse, this is a fictitious "if."The manual operation would be soinefficient relative to automaticdialing that the volume would re­quire no such number.

If automation caused unemploy­ment, then it would follow that anaddition to the work force of anymechanical energy equivalent toone man's energy - one robot­would disemploy one man. How­ever, this is contrary to observedfact. Today in the U.S.A., eachworker has perhaps 135 mechani­cal slaves - helpers or robots­working for him, each contribut­ing energy equivalent to. theenergy of one human worker.1 Ifeach robot displaced one worker,the unemployment figure would be

1 The figure of 135 mechanical slavesper worker is believed to be conservative,though there are too many variables toafford proof positive. The electrical in­dustry estimates that 67 KWH's is equiv­alent to the energy of a man working an8-hour shift for a year. More than atrillion KWH's were generated in 1965,which would mean nearly 200 electricalrobots for each person in the work force,assuming that there were no energylosses in transmission and use. Some ma­chines convert energy more efficientlythan others; some humans are more en­ergetic than others; so the figure is aguess, at best.

135 times the present work force- 10,800,000,000 - an utter ab­surdity.

If these robots do not displaceworkers, then where does all thisextra energy gO? Should we dis­cover the right answer, we willknow whether they are the work­ers' friends or foes and, as well,whether we should try to encour­age or discourage their prolifera­tion. Let's try to find the answer.

In Grandfather's Day

My grandfather, recalling the1850's, used to repeat, "Manytimes have I walked thirty milesin a day." His boast recentlycame to mind as I flew from NewYork City to Kansas City (1,100miles) in two hours. It wouldhave taken grandfather about 280hours of walking to negotiate thatdistance. He would have been onhis way to Kansas City for thirty­seven days. Only 365 round tripswould have taken every day of hislong life.

Grandfather, in his early days,had only his own energy at hisdisposal- just one man-power.Now assume that he had walkedto Kansas City, taking 280. hours.I made it in two hours by jet. Isn'tit clear that something has to ac­count for that 278 hours miracu­lously, one might say, put at mydisposal? What made this possi­ble? It was, among other factors,

1966 SOME REFLECTIONS ON ROBOTS 35

the billions upon billions of robotdays that assisted in the construc­tion and the operation of that jet 12

But these robots did more thangive me 278 hours unavailable tograndfather. There were 100 pas­sengers on that flight, a freeingfor other use of 27,800 hours.Further, that very same jet maybe good for 25,000 such flights ora total freeing of 695,000,000hours. And that jet is only one ofhundreds of commercial jets. Addall the commercial prop jobs andall the private planes, and theliberated hours become astronomi­cal. Anyway, that's where some ofthe robots' energy went, withoutputting anyone out of work.

The Chance fo Grow

We must, of course, keep inmind that the energy of robotsgoing into airplanes is but somevery small fraction of all auto­mated energy. But the statisticsdo not matter; what is importantis that we understand what theserobots do for us and, also, to us.For one thing, they multiply our

2 I must not leave the impression thatadded mechanical energy alone accountsfor all material progress. There is gain,for instance, in every voluntary ex­change. An idea, a flash of insight, animproved concept of freedom, the aban­donment of a coercive practice, an in­centive, a spirit of entrepreneurship, thepractice of integrity, in short, .spiritualactivities, add incalculably to material aswell as to other forms of progress.

opportunities for unique, enrich­ing experiences. When taking thefamily for a drive at 60 miles perhour, speculate on why the trip ispossible and what is propellingyou at this speed! Think of thesituation were only shank's mareavailable. Or why you can read abook instead of washing thedishes, or write a poem instead offoraging for food. You will, per­haps, stand in awe of and givesome credit to the robots for re­lieving you of the necessity ofsloshing around in the rice pad­dies or scrounging for rabbits soyou won't starve or, yes, frommaking buggy whips.

Or even more: perhaps theserobots have something to do withyour very existence. Less than 400years ago this land we call theU.S.A. had a population variouslyestimated at 250,000 to 1,000,000.Why so small? It was not becauseof the Indians' inability to breed,nor because of unfriendly climateor infertile soils, nor for any lackof natural resources. It was be­cause a foraging economy wouldnot support more than then ex­isted. Assuming no improvementover that type of economy - norobots except some horses - thechances are at least 200 to 1 thatyou would never have knownadult life.

But back to grandfather: henever saw Kansas City; indeed,

36 THE FREEMAN August

through his teen years, he neverwent beyond his walking orbit. I,on the other hand, have visitedHong Kong, as far from home asI can get; my air mileage alone isnow equal to eighty loops aroundthe world. Grandfather didn'thave time enough to do verymany things. I have the time to doa thousand times as many things,and by reason of your and my me­chanical helpers, the robots. This,of course, explains why timesav­ers multiply busy-ness - there areso many more things we can do.For good or ill, we are far busierthan our ancestors ever were.

Grandfather never talked overa telephone in his life. I reach myson - 2,600 miles away - in 10 sec­onds ; I have talked across thePacific, to Buenos Aires, Gander,London, Mexico, and to every nookand cranny of the U.S.A. If therobots have disemployedme, it isfrom the limited opportunitiesgrandfather experienced. There isa better way to put it: the robotshave liberated, not disemployed,humans.

Robots Are a Response

Robots put people out of work?On the contrary, robots becomeeconomically feasible and appearin our lives only as the result of ascarcity of human labor to accom­plish all the tasks we want done.It doesn't pay to do by machine

what can be done more cheaply byhand. Businessmen tend to mech­anize or automate after, ratherthan before, laborers have movedaway from a particular job.

For example, our operation atFEE calls for three large mailingsevery two months, requiring 20workers for two days on each oc­casion. When we began two dec­ades ago, we trained local house­wives for this part-time work andpaid the hourly minimum wage of80 cents. Afterward, the minimumwas raised to $1.00 and later to$1.25. Now assume that FEE wason the brink of bankruptcy, thatis, at that critical point where afew hundred dollars would tip thescales toward institutional sur­vival or closing, and that thelatest minimum wage raised ourcosts to that point. What to do?We bought some robots in theform of a machine: press a buttonand it automatically collates,stuffs, seals, and stamps, doingthe work of the women, quickerand at lower cost. True, the part­time women lost their "pin money"jobs but the rest of us were savedfrom losing ours.

Most people will say that therobots disemployed the women, agrave error. The culprit was noneother than the minimum wage law- governmental interference withthe free market. It was bad lawthat sent our women back to

1966 SOME REFLECTIONS ON ROBOTS 37

housework. As these costs of gov­ernmental intervention rise yearafter year, more and more em­ployers are faced with failure. Therobots have performed a remark­able and incalculable rescue mis­sion.

Men to Match Machines

There isn't anything wrongwith automation per see The seri­ous problems cropping up are notbecause of the robots but becauseof the people who are blessed withthem. These problems, as. near asI can fathom them, have theirorigin in an imbalance .betweentechnological know-how and econ­omic, political, and moral wisdom.The former is remindful of an ex­plosion; the decline of the latteramounts to apostasy. This is dan­gerous, for an increase in therobots we command calls for acommensurate increase in under­standing and virtue. It isn't at allpromising to put a chimp at thewheel of a truck, a truck driver atthe controls of a jet, or a peoplein command of a powerful systemof robots the interworkings ofwhich they but dimly understand.If we aren't to be done in by ourown creations, what then is it wemust understand?

The kind of automation thatproliferates opportunities as tovarieties of employment and, atthe same time, multiplies the

kinds of goods and services thatmay be obtained in exchange forthe fruits of one's labor, is exclu­sivelya free market phenomenon.3Such automation cannot, as is sooften demonstrated, be trans­planted into or copied by authori­tarian societies. Robots that servethe masses are first the outcrop­pings of freedom and then of capi­tal formation, and cannot existwhere these two absolute essen­tials are absent. For instance,steel mills have been built in Rus­sia, India, and other socialistcountries, the effect on the massesof people being further impover­ishment. Automobiles are not be­ing produced for the masses inRussia; only the Commissars canhave them. And so it goes. Thepoint of all this is that if we sub­stitute the governmentally plannedeconomy for the free market, themass-serving robots will tend todisappear until they become asscarce and useless here as theyare in the USSR! This is only

3 I am omitting any discussion of therobotry that does not originate with freemarket processes, the kind that can beand is made possible by the coercive col­lection of funds, the type used to makesputniks and to put men on the moon.Robots originating with socialist proc­esses impoverish rather than enrich themasses of people. For an explanation,see the chapter, "How Socialism Harmsthe Economy" in my Anything That'8Peaceful (Irvington, N. Y.: The Foun­dation for Economic Education, Inc.,1964).

38 THE FREEMAN August

a part of the understanding thatmust accompany our increase intechnological know-how. There ismuch more.

Specialists Are Dependent

As only casual observation re­veals, automation spells specializa­tion - in our own case, to a fan­tastic degree. This, in turn, in­creases interdependence. Is it notself-evident that all of us - no ex­ceptions - are dependent on thefree, uninhibited exchanges of ournumerous specializations?4 Inshort, we are at a level in inter­dependence that can only be sus­tained by a highly intelligent, per­ceptive, and moral people. Forsupport of this contention, reflecton what's involved.

These exchanges, it is plain, areessential to survival. Nor canthey, in a specialized society, beachieved by barter; they cannottake place without an economiccirculatory system, that is, themedium of exchange - money. And

4 Automation makes for specializationwhich, in turn, increases our interdepend­ence on the high quality behavior of eachother. But a new and awesome depend­ence also develops: our dependence onthe robots! They become necessities, thatis, sources of energy we must have inorder to survive. Example: man-contrivedelectrical energy. A century ago its elimi­nation would have had no perceptibleeffect. Were it suddenly eliminated todayall of us, except the few who could existby foraging, would perish. See "TheseOur Gifts," THE FREEMAN, October 1958.

any act, private or public, whichlessens the integrity of the circu­latory medium correspondinglyimperils the complex exchangeprocesses. Inflation, brought onentirely by governmental excesses,and encouraged by a people who donot understand the simple econ­omics of the matter, is the culpritthat .erodes the integrity of themedium. Thus, a people who ex­travagantly automate and who donot at the same time know moreabout, and practice with increas­ing scrupulosity, the economic andmoral facts of life are headed fora disaster greater than inflationhas ever brought on in othercountries.5 To fully appreciate thisdanger, one need but recognizehow far each American is re­moved from self-subsistence, or torecognize how impossible survivalwould be were each individual toexist only on what he alone pro­duces. For reasons not easy toexplain, understanding appears tobe decreasing as robots are in­creasing.

One can hardly imag~ne a so­cietal situation more chaotic thanone with specialization on the in­crease as freedom in transactions

5 Students of liberty will find it profit­able to read and reread Andrew DicksonWhite's classic, Fiat Money Inflation inFrance (Irvington, N. Y.: Foundationfor Economic Education, Inc., $1.25 pa­per, $2.00 cloth, 125 pp.).

1966 SOME REFLECTIONS ON ROBOTS 39

is on the wane. As robots increaseand augment our specialization, somust there be an increase in freeand willing exchange, freedom ofchoice, the free market. As robotsappear, coercion - governmentalcontrol and rigging of the market,for instance - must correspond­ingly disappear. Simple reasoningas well as all the evidence attestto this fact. Yet, an alarmingnumber of people - teachers,clergy, politicians, even entrepre­neurs - are blind to it.

Can Progress Occur in

the Absence of Obstacles?

I have suggested that it isn'teasy to explain why understand­ing seems to shrink as automationexpands. Is there, perhaps, a cor­relation between struggle andsound thinking and, conversely,between easy affluence and intel­lectual~""tdecadence? Of one thingwe are certain: our robots confermore and more material satisfac­tions with less and less effort onour part.

The present trend is toward in­creasing material affluence in re­turn for decreasing effort. Liter­ally millions of individuals are ap­proaching a something-for-noth­ing way of life. Obviously, it isdifficult to keep mentally rigorouswhen the robots are doing one'swork. Indeed, mental rigor maybe impossible unless the individ-

ual experiences a cultural growthcommensurate with growth in af­fluence. This is to say that the in­dividual may vegetate unless herealizes that the purpose of wealthis to release him from drudgeryso that he may more vigorouslypursue those potentialities and ap­titudes uniquely his own. If therobots are to induce our gettingout of life - vegetating - ratherthan getting ever deeper into life- growing - then the late DeanInge's observation is indeed pro­phetic, "Nothing fails like suc­cess."

The struggle to overcome is thegenesis of becoming. It is the lawof polarity, the tension of the op­posites, that spells growth, devel­opment, progress; at least this ap­pears to be Nature's dictum. Menneed new frontiers to explore andoccupy and· transcend, not in theform of politically contrived ob­stacles - heaven forbid! - but inthe form of challenges worthy ofthe mind of the individual humanbeing striving toward his poten­tial. When the struggle for exist­ence is eased, higher level strug­gles must be substituted: expand­ing awareness, perception, con­sciousness, in a word, difficult,hard-to-overcome intellectu aI,moral, and spiritual goals. This isby way of saying that disastercannot be avoided unless a growthin wisdom be up to and on a

40 THE FREEMAN August

parity with a growth in techno­logical know-how.

Elevating Our Ideals

But here is the rub: materialhardship, once overcome, does notand cannot serve as the obstacle,the tension, the springboard forthis required growth in wisdom,this flexing and expansion of theintellectual and spiritual faculties.Material hardship is an obstaclesupplied by Nature or, if you pre­fer, by the environment. Butonce overcome, man is on his own;he has to make his own obstaclesin the form of rationally con­structed goals. As the French sci­entist, Lecomte du NOllY, phrasedit, "To re.ally participate in thedivine task, man must place hisideals as high as possible, out of

reach if necessary." And is notthis creating of our own obstacles,perhaps, the profound lesson weshould learn from the rohot ex­plosion?

The rohots presuppose ourknowing how to live with them.They, as an auto, TNT, sulphuricacid, a jet plane, are dangerousin the hands of those who do notknow their properties, of thosewho are unaware of automation'sdeeply significant meaning. Therohot army, in its present dimen­sions, requires, at a minimum, anunderstanding of private property,free market, limited governmentprinciples - economic and politicalenlightenment - far superior toany such understa.nding everachieved up to this period in his­tory. ~

Labor Saver

WHEN A MACHINE is invented that does the work of twenty menat the wage cost of one, we are all beneficiaries. When a merchan­dising plan is invented that clips 5 per cent from the cost of dis­tribution, every consumer is a little better off. When electronicsbrings first-class entertainment and instruction into our homesat negligible expense, we all live a little more abundantly.

We make progress in two ways: first, by individual effort, andsecond, by the efforts of others. In the last thirty years the dullestand least enterprising among us have been lifted to a standard ofliving and comfort that could not be achieved by any, except avery few, two hundred years ago.

WILLIAM FEATHER, The William Feather Magazine, January 1966

The recent Finance Bill of lUr• .James Callaghan,Britain's Chancellor of the Exchequer,is perhaps the most dangerous ofa long and continued series of assaultsupon the free enterprise system in that nAtion.

The fact that freedom is· similarlythreatened in the United States and elsewheregives universAl importance to the alarmsounded from London by the Institute of Directorsrepresenting more tho" 40,000 British bus-inessmen.

TDEASSAIJLT ONFREE ENTERPRISE

BRITAIN LIVES by free enterprise.It is the whole basis of our way oflife. Even those who openly abuseand deride free enterprise admitthat four-fifths of the nation'sbusiness should stay outside thenet of nationalisation.

Now there are ominous signs ofthe free enterprise system beingeaten away without the country'scitizens being .aware of it. Indeedthe most alarming thing about thelatest and most dangerous assaulton free enterprise is that so manypeople are not· really alarmed.

They seem not to have noticed

the cracks in the ice, the plume ofsmoke from the volcano, the shift­ing of the landslide; or if theyhave seen it, they dismiss what'shappening as something remote."It doesn't affect me personally, sowhy should I worry?"

By the time you have finishedreading this booklet, we believethat we will have shown how itdoes affect everyone personally,why it's not just the concern ofthe nation's businessmen, but isin truth everyone's business.

Mr. Callaghan's Finance Bill isthe sharpest and most open warn-

42 THE FREEMAN August

ing yet. It will cut deep and hasshocked a lot of people, ordinarypeople who saw themselves a mileaway from this sort of issue. But,make no mistake: the subtle proc­ess had already been going on forsome time before Mr. Callaghangot to his feeton Budget Day. Hemade no secret of the fac't that hismeasures were not a "once for all'"burst of radicalism. Far from it.They are meant as the first in along ,series of anti-business restric­tions.

Capital,says the Chancellor ineffect, is the enemy. Let us beatit to its knees. And in doing justthat,he cuts off industry's rawmaterial. For without capital, thefree enterprise system mustwither. The wall is breached. TheState walks in.

An assault on capital is an as­sault on the means whereby busi­nesses grow. It is an assault onthe reasons why businesses grow.The assault on capital takes shapefor all to see if they have a mindto do so. Look at the facts.

Hard to Raise Capital

The government makes it in­creasingly tough for the business­man to get new capital. It's notonly practically difficult. It's al­most socially indecent. Savage andsteeply progressive tax rates onindividuals and on companies-anda political bias which favours the

spenders rather than the savers- make it impossible to build upreserves. Robbed of reserves, themarket dies. The businessmanmay recall from his school daysthe task of Sisyphus, one of theTitans who was condemned to rollup a hill a stone of ever-increas­ing weight; the businessman hasthis dubious advantage over Si­syphus-he knows he can't win.

But the assault doesn't stopthere. It's almost as difficult todayto keep capital in a business as itis to ac'cumulate it. Compared withthe new Capital Gains Tax, deathduties were a mild imposition, afeather touch compared with afull-blooded lash. The CapitalGains Tax makes no allowance forinflation. It is thus a recurrentcapital levy, that once-for-all taxSir Stafford Cripps, the spiritualforebear of Mr. Callaghan, im­posed in 1948. Of course, it willmean the end of the small busi­ness during the owner's workinglife-time. (When Mr. Heath madethis point in the Commons debateon the Finance Bill a voice from theLabour benches called, "And avery good thing, too.")

What is the ultimate source ofnew capital? The answer is-prof­its. And now, deliberately, profitsare being buffeted from every di­rection: by taxes piled on taxes,by compulsory contributions, byforced levies, by any amount of

1966 THE ASSAULT ON FREE ENTERPRISE 43

cost increases coming directlyfrom government decision. Knockthe profits, and you knock thesystem by which they are made.It's all very simple.

Investors, too, find themselvesin the front line. The governmentinstitutes a vindictive tax policy­"unearned income" is an attrac­tive catchword for those withneither the wits nor the thrift toacquire it. This shrinks the pos­sible return on the investmentstake and has now dimmed eventhe hope of capital gains. Inves­tors are rebuffed no less by theCorporation Tax whose clear pur­pose is to cripple their chances ofa share in profits.

How Long?

What's the total of this dismalarithmetic? At every stage suc­cess is penalised, ambitif)'fl, curbed,and enterprise stillborn. The re­markable thing is that businessactivity and investment should, sofar, have withstood this brutal as­sault as well as they have. Butthere is a limit to the punishmentthey can take. From now on, theeffects will increasingly be felt.New businesses, new investment,new enterprises will dwindle.They must. For the seed-corn isbeing eaten.

Does all this matter ? Well, ofcourse it matters to the businesscommunity. But in fact, it matters

very much to all those who abhorthe prospect of an omnipotentstate, all those who want to livetheir own lives.

Let's get the record straighthere-it's unlikely that anyone elsewill. What we call the free enter­prise system is not just anothereconomic theory, an "ism" in thesame breath as Marxism or so­cialism: it is freedom. Withouteconomic freedom, without thefreedom to save and spend, to ac­cumulate and invest and inherit,without the freedom to mis-spend(for we need no-one to tell uswhether we are spending our ownmoney wisely or not), personalfreedom disappears.

Destroy free enterprise and wewill forfeit tlhe right to make upour oum minds: the final sacrifice.If nobody has any capital, if no­body can launch an enterprisewit,hout the state's approval, thenthe rape of free enterprise is com­plete. This means the death war­rant for any man with the enter­prise and guts to start his ownbusiness.

No businessman is stupidenough to believe that in a periodof rapid technological change andhuge capital requirements therearen't problems to be solved: bigproblems, social and structural.They demand consideration. Theycan be solved. But the last peopleto solve them are governments

44 THE FREEMAN August

and their economic advisers whoeither because they just don't un­derstand the problems, or areswayed by political doctrines, areout to sabotage the whole system.

That's the situation. It's ex­tremely dangerous. If the social­ists have their way, Britain willget less and less investment, lessand less accumulation of capital,fewer rewards for efficiency, arapidly dwindling number of

pione,ers and merchant adventur­ers. There'll be no more Nuffields.Least of all can the business com­munity afford to ignore what ishappening or dismiss it as "merepolitics." But the peril goes deep­er - it strikes at us all. The peril,make no m,istake about it,threatens our way of life, itthreatens our future prosperity, itthreatens our freedom - yours andmine. ~

The Misfortunes of Intervention

ALL THE MISFORTUNES that our beautiful France has been experi­encing have to be ascribed to "ideology," to that cloudy metaphysicswhich goes ingeniously seeking first causes and would groundlegislation of the peoples upon them instead of adapting laws to

what we know of the human heart and the lessons of history. Sucherrors could only lead to a regime of men of blood and have infact done so. Who cajoled the people by thrusting upon it a sov­ereignty it was unable to exercise? Who destroyed the sacredness

of the laws and respect for the laws by basing them not on thesacred principles of justice, on the nature of things and the natureof civil justice, but simply on the will of an assembly made up of

individuals who are strangers to any knowledge of law, whethercivil, administrative, political, or military? When a man is called

upon to reorganize a state, he must follow principles that areforever in conflict. The advantages and disadvantages of the dif­

ferent systems of legislation have to be sought in history.

From Napoleon's reply to the Council of Stateat its session of December 20, 1812.

23.The Flightfrom the

ConstitutionPART I

CLARENCE B. CARSON

THE CONSTITUTION of the UnitedStates was the major obstacle tothe use of the government to re­construct American society. Socialreconstruction by government,. ifit could be done, would require theconcentration of power in·a singlegovernment, the central directionof the exercise of that power, anda concerted effort over an extendedperiod of time. The latter wouldbe a requirement if it were to bedone gradually, and it should beclear that this was the methodgenerally approved by Americanreformers. Ushering in utopia bygovernment action would requirenot only an initial control over thelives of Americans but also a con­tinuing control such as to make

Dr. Carson is Professor of American Historyat Grove City College, Pennsylvania. Amonghis earlier writings in THE FREEMAN were hisseries on The Fateful Turn and The Ameri­can Tradition, both of which are now avail­able as books.

continuing popular decisions im­practical, undesirable, and disrup­tive of the whole course of devel­opment.

The Constitution was carefullydrawn so as to make such uses ofthe government which it author­ized exceedingly difficult, if not im­possible. The Founders did nothave in mind preventing melior­ism (or socialism), of course, forthey had never heard of it, thoughthey· were familiar with mercan­tilistic approaches to amelioration.They were concerned with protect­ing the liberty of individuals andpreventing the government frombecoming tyrannical. Any provi­sions that tend to accomplish thisobject will, at the same time, placeobstacles in the way of using thegovernment for social reconstruc­tion. Tyranny is made possible byconcentrated and unchecked pow-

45

46 THE FREEMAN August

er, by the very conditions whichare necessary for social recon­struction.

Beware of Factions

The Founders were not familiarwith meliorism but they were ac­quainted with factions, interestgroups, and parties. They wereaware, by way of history, of thedamage done to republics, to popu­lar governments, and to liberty bymen joined together in factionsand using political power toachieve their aims. In short, theywere conscious of the dangers offaction and party. James Madisonprovided an acute analysis of thesources and dangers of factionsin the Federalist number 10. Hefirst defined the term:

By a faction I understand a num­ber of citizens, whether amountingto a majority or minority of thewhole, who are united and actuatedby some common impulse of passion,or of interest, adverse to the rightsof other citizens, or to the perma­nent and aggregate interests of thecommunity.1

He explained that this tendency ofmen to group as factions arisesfrom human fallibility and liberty.The partiality of men's visioncoupled with self-love inclines

1 James Madison, Alexander Hamil­ton, and John Jay,The Federalist Papers(New Rochelle, N. Y.: Arlington House),p.78.

them to pursue what they think isfor their own well-being, thoughit be at the expense of others.

The latent causes of faction arethus sown in the nature of man;and we see them everywhere broughtinto different degrees of activity, ac­cording to the different circumstancesof civil society. . . . So strong isthis propensity of mankind to fallinto mutual animosities that whereno substantial occasion presents it­self the most frivolous and fancifuldistinctions have been sufficient tokindle their unfriendly passions andexcite their most violent conflicts....Those who hold and those who arewithout property have ever formeddistinct interests in society. Thosewho are creditors, and those who aredebtors, fall under a like discrimina­tion. A landed interest, a manufac­turing interest, a mercantile interest,a moneyed interest, with many lesserinterests, grow up of necessity incivilized nations....2

The main purpose of Madison'sessay was to refute those who heldthat a confederated (or federal)republic was inappropriate as aform of government for America,since the population was dispersedover a vast area. On the contrary,he held, this was the most propi­tious situation for such a govern­ment. Factions had destroyedsmall republics in the course ofhistory. Pure (or direct) democ-

2 Ibid., p. 79.

1966 THE FLIGHT FROM THE CONSTITUTION, I 47

racy had given too great an op­portunity for. the majority to tyr­annize over .the minority, whereasin America, the indirectness ofrepresentation and the dispersionof the population would make itmost difficult for factions to usethe government for partisan pur­poses.

Pressure Groups Discouraged

Indeed, the United States Con­stitution did place formidable ob­stacles in the way of any interestgroup which wanted to use gov­ernment for its ends. Not only isthe population dispersed over acountry of broad extent but alsoany potential faction or interestgroup may be expected to bespread throughout the country.The manner of election of repre­sentatives established by the orig­inal Constitution made it difficultfor any faction to bring its weightto bear in concert upon the gov­ernment. Only one body of theFederal government - the Houseof Representatives - was origin­ally chosen directly by the elec­torate. Provisions were made forRepresentatives to be selected byvoters within states, usually bydistricts. The electors of the Sen­ate came from within even smallerdistricts, for the Senate was to bechosen by state legislatures. Theelectors of the President werechosen by states, and could be se-

lected by whatever electorate thestates might decide upon.

The difficulties of factions werecompounded by dispersing thepowers of government betweenthe general (Federal) governmentand states, and by separating theFederal government into threebranches. For action to be takenby the Federal government bothhouses of the Congress must actby majorities, the President givehis assent, and the courts enforceit. If any bill fails to get a ma­jority in either house, it does notbecome a law. That is to say,either house may prevent legisla­tion from being passed. If thePresident vetoes a measure, ithas to be passed by two-thirds ofthose present and voting of bothhouses. If the courts will not en­force an act, it is of no effect atlaw. In short, it takes the concur­rence of both houses of Congressand to considerable degree allbranches of government for gov­ernment to act, but it requiresonly one house to prevent legisla­tion and any branch of govern­ment has considerable power toforestall it.

Constitutional Curbs

The Constitution limits the gov­ernment both substantively andin the procedures it requires forchanging it. The powers whichthe Federal government may ex-

48 THE FREEMAN August

ercise are specifically granted inthe Constitution. It is prohibitedto exercise certain powers, i. e.,the passing of ex post facto laws,the restriction of free speech, thetaking of property without justcompensation, and so forth. Allpowers not granted to the Federalgovernment by the Constitutionare reserved to the states or to'the people. To make the limitationupon the government as plain aspossible, the Ninth Amendmentsays, "The enumeration in theConstitution of certain rights shallnot be construed to deny or dis­parage others retained by the peo­ple." The Tenth Amendment says,"The powers not delegated to theUnited States by the Constitution,nor prohibited by it to the States,are reserved to the States respec­tively, or to the people." Moreover,the procedures prescribed foramendment are such as to requireoverwhelming approval throughoutthe country for changes to bemade in the basic instrument ofgovernment. The ordinary routeof amendment is for both housesof Congress to pass a proposedchange by majorities of two-thirdsor more. The measure is then sub­mitted to state legislatures, orconventions within states. Whenthree-fourths of the states indi­cate their approval, the measurebecomes a part of the Constitu­tion.

Protection, the ObjectiveThe purpose of these complex

checks upon the Federal govern­ment (along generally, with sim­ilar checks upon state govern­ments) should be abundantlyclear. They were aimed to preventthe use of the government by fac­tion or party for the special endsof interest groups, to protect mi­norities from abuse by majorities,to keep government action to thatwhich would be in the general in­terest, and to assure that suchaction as was taken would havebehind it a broad consensus. Tomake this emphatic, the originalConstitution requires that alltaxes, duties, imposts, and excisesbe levied "for the common defenseand general welfare of the UnitedStates. . . ." In short, moneysshould only be appropriated forthe well-being of everyone.

These provisions were, ofcourse, only writings on pieces ofpaper in 1789. They had no forceof their own, no power to makeanyone adhere to them, no inher­ent strength to make anyone ob­serve them. They might have be­come dead letters in short order,as so many constitutions have inlater times. Instead, they weregiven vitality and life by menwho found in their attachment tothe Constitution means of achiev­ing goals which they sought andretaining the fruits of victories

1966 THE FLIGHT FROM THE CONSTITUTION, I 49

they had won. For those whosought to forge a Union fromdistinct and disparate states, theConstitution offered them theirbest hope. For those who valuedprotection from an overweeningand arbitrary government, theConstitution was their shelter.Nor were these disparate ends;union and liberty were reconciledfor many men by the Constitution.The Constitution was the primalcontract of the American peoples- the union of peoples by statesestablished by it, the powers ofthe general government stemmingfrom it, the protections againstarbitrary government provided init.

The Constitution did more thanthis: it provided a symbol andsource of continuity to a peoplewho had dispensed with monar­chy, who had cast off the heredi­tary means of continuity, whosought government by law not bymen. At the hands of great jurists- John Marshall, Roger Taney,and others - it became the funda­mental law by which all other lawmust be tested, the body of law towhich all must submit when theyoperated within its jurisdiction. Itwas no longer a mere piece ofpaper; it was that to which judgesdeferred when they applied thelaw, that to which Congress andthe President looked for authority,that in terms of which the power

of government could be brought tobear upon individuals.

The point is this. The Constitu­tion provided diverse modes ofelection for those who should holdoffice under it, separated powerswithin the government, limited thepowers to certain specified objects,and provided protections for therights of individuals. It providedprotections for minorities andmade it most difficult for factionsto gain control of the government.These provisions gained greatforce by the sanctity men came toattach to the Constitution. Thewords became flesh, as it were, ascourts deferred to them, as legis­lators heeded them, as executivesbased their actions upon them.

Coalitions Formed

Yet, for a good many years now,the government of these UnitedStates has been embarked on aprogram of social transformation­on and off, but more and more. Theassent to these efforts at social re­construction has been obtainedmainly by appeals to factions andinterest groups. The art of politicshas become largely the art ofachieving majorities by gainingsupport from a sufficient numberof factions. The reverse of whatMadison predicted has occurred;he held that the mode of election ofrepresentatives and of the exerciseof power would make it extremely

50 THE FREEMAN August

difficult, if not impossible, for thegovernment to fall into the handsof factions. The electorate was sodispersed that factions would beprevented from bringing theirweight to bear as a unit upon thegovernment. Instead, the countryis today divided into factions andinterest groups which wield greatinfluence upon the government andpromote the concentration of pow­er in government. This concentrat­ed power is then used in programsof experimentation at social recon­struction.

There has been a flight from theConstitution. It has not been byconstitutional amendment, thoughone or two amendments have fa­cilitated the flight; for there areconstitutional means for amendingthe Constitution. In any case, theConstitution has been IittIechangedfrom the original, with one excep­tion, in regard to the selection ofrepresentatives. The flight fromthe Constitution has been accom­plished without altering the verbalcontent of the document generally:it has been done by extraconstitu­tional developments, by interpreta­tion, by the assumption of powersnot granted, by the gaining of pow­ers by one branch at the expense ofanother, and by allowing somesafeguards to atrophy or be al­tered.

Some early extraconstitutionaldevelopments set the stage for the

flight from the Constitution,though in themselves they mayhave been innocent enough. TheConstitution provides that thePresident shall be chosen by anelectoral college. Each state has asmany electors as it has Senatorsand Representatives in the Con­gress. They are chosen in the man­ner directed by state legislatures.The assumption was that electorswould be chosen because of theireminence within their states andthat they would select a Presidentwithout reference to anythingother than their own choice. Theoriginal Constitution provided thateach elector should vote for twopersons. The person receiving thehighest number of these votes, pro­vided it constituted a majority,would become President; the onereceiving the next highest wouldbe Vice-President. In case no can­didate got a majority, the electionwould revert to the House of Rep­resentatives, where each statewould have one vote. Initially,state legislatures often chose elec­tors.

Party Politics

One extraconstitutional devel­opment was the growth of politicalparties. Some of the early leaders,notably George Washington, hopedthat political parties would not de­velop in America. I t was a vainhope. The outlines of parties be-

1966 THE FLIGHT FROM THE CONSTITUTION, I 51

gan to form over the very questionof the ratification of the Constitu­tion. Within a few years they hadtaken definite· shape under theleadership of Alexander Hamiltonand Thomas Jefferson. The Con­stitution has no reference to suchorganizations; they are given norole to play. But Alexander· Hamil­ton was a man with a vision, a vi­sion of a unified people in a nationmade great by the vitality and ex­tent of its commerce and manu­facturing. He proposed to attainthese objects by an energetic useof the Federal government. J effer­son welded together a party to op­pose much of this governmentalactivity and intervention, and indefense of a strict construction ofthe Constitution. By 1800, politicalparties had assumed much of theextra-constitutional role they have.continued to play in our history.It has been a fateful role, for itenables factions to determine pol­icy, insofar as political parties de­termine policy, across the lines ofelectoral districts.

Parties early gained sway in theelectoral college, i. e., electorswere chosen on a party basis. Butthe constitutional mode for thevoting of electors tended to thwartthis. If all of a party's electorsvoted for the same men for Presi­dent and Vice-President, therewould be a tie between these twomen, and the election would revert

to the House of Representatives.Indeed, this happened in 1800 andmight have been expected to hap­pen regularly thereafter. Instead,the Twelfth Amendment was rati­fied in 1804; it provided that eachelector should have one vote forPresident and one vote for Vice­President. Thus, the way was pre­pared for party determination ofcandidates and for electors to be­come mere figureheads for theirparties.

Additionally, states decided fora whole slate of electors. When, ashappened shortly, the electors werepopularly chosen, all the votes of astate were cast for the party'selectors receiving a majority ofthe votes of the citizenry. Most ofthe electors might have beenchosen in congressional districts,the remaining two in state-wideelections, thus dispersing the vote.This was not done. By having allof them chosen by a state-widemajority the way was opened tothe forging of majorities by ap­peal to state-wide factions or in­terest groups. Political partiesprovided the instrument for fac­tional use at the national level.

Early Abuses Insignificant

It would be a mistake, however,to make much of these early de­velopments. They provided a po­tentiality for the factional use ofgovernment and for the concen-

52 THE FREEMAN August

tration of power. The Federal gov­ernment was used for interestgroups in the nineteenth centuryon occasion, most notably in thecase of the protective tariff. Butthere were still many obstacles toconcerted party efforts to carryout programs. Most of these de­velopments had to do with thechoice of a President. Members ofCongress were still chosen in theway originally prescribed.

Nominally, congressmen adoptedsome party label, but there werefew effective devices for enforcingparty discipline. A congressmancould vote for a program advancedby his party or not, as he chose,and only those within his districtcould discipline him. Even if onewho had voted against most of theplanks of his party's platformshould be defeated in his district,it would be by no means clear thathis failure to serve as a party manhad led to his defeat. The Presi­dent had little authority over con­gressmen; the Founders had tried,with considerable success, to makeit so. Each branch was to be inde­pendent of the others. Moreover,the Constitution, as it was ob­served, placed great substantivelimits upon what could be done bygovernment, in any case. Manyother changes had to be made be­fore the government could be usedfor a sustained effort at socialtransformation.

Reform by AmendmentThree other constitutional

amendments deserve mention. TheFourteenth Amendment, declaredratified in 1868, made all thoseborn within the United States cit­izens of the United States. Also, itextended in other ways the au­thority of the Federal government.It prohibited the states to takelife, liberty, or property withoutdue process of law. Moreover, theamendment was rather vaguelyworded, and this ambiguity hasbeen exploited and amplified bythe Supreme Court as it has usedit as a basis for the extension ofthe sway of the general govern­ment. The Sixteenth Amendment,which authorizes direct taxeswithout reference to population,enabled the Federal government toenact an income tax, thus greatlyincreasing the revenue availableto it.

But for the empowerment offactions, the Seventeenth Amend­ment was probably the most im­portant of all. It was ratified in1913, in the same year as the Six­teenth, and it provided for the di­rect election of Senators. There­after, Senators were to be electedby state-wide popular votes. Fac­tions and interest groups couldplay roles in these elections nowthat had formerly been denied tothem. A pivotal minority couldprovide the necessary votes for a

1966 THE FLIGHT FROM THE CONSTITUTION, I 53

majority. An interest group withlarge numbers in it could virtuallydictate the choice of a party candi­date in an election. This result hasbeen most noticeable in stateswhich have several importantminority groups, such as organ­ized labor and racial minorities.

IIlndependentll Agencies

Most of the changes and ac­cretions of power, however, havebeen accomplished without benefitof constitutional amendment. Oneof the most effective devices forevading the constitutional separa­tion of powers and enabling theFederal government to exercisegreatly expanded powers has beenthe so-ealled independent commis­sion, e. g., the Interstate Com­merce Commission, National LaborRelations Board, and Federal Com­munications Commission. Sincethese organizations will be treatedin greater detail elsewhere,they need only be alluded to here.They have played a very impor­tant role in the attempts at socialtransformation, however. The in­tricate regulation which reform­ers have sought could hardly beencompassed in general legisla­tion.The separation of powersmade it very difficult to take ac­tion. The executive branch mightapply legislation in ways not con­templated; the courts could, asthey did frequently for many

years, nullify the action as a viola­tion of due process, or some otherconstitutional protection. The in­dependent commissions, however,frequently combined all thesefunctions -legislative, executive,and judicial. Though their powersderive' from Congress, they arenonetheless real.

The change in the role of thePresident, particularly as regardslegislation, too, has been donewithout formal constitutional al­teration. The President's formallegislative powers are mainly neg­ative. He may veto bills that comebefore him. Except in foreignaffairs, this is the extent of thegrant of powers over legislationto him. (He is, of course, chargedwith faithfully executing thelaws.) Strong Presidents in thenineteenth century were frequent­ly men distinguished for theirvetoes. Andrew Jackson and GroverCleveland come readily to mind.But by the early twentieth cen­tury, as some Presidents bee,ameenthusiastic about meliorism, theybegan to perceive possibilities forthe chief executive to take overmuch more of the leadership andinitiative in legislation. TheodoreRoosevelt showed the way to suchleadership, but it was WoodrowWilson who formulated the theoryof presidential predominance inthe government.

In his early writings,Wilson

54 THE FREEMAN AugU8t

indicated his regret that the Pres­ident was "merely an administra­tor." On one occasion, he wrote:

If you would have the present er­ror of our system in a word, it isthis, that Congress is the motivepower in the government and yethas in it nowhere any representativeof the nation as a whole. Our Execu­tive, on the other hand, is national:at any rate may be made so, andyet has no longer any place of guid­ance in our system. It represents noconstituency, but the whole people,and yet, though it alone is national,it has no originative voice in do­mestic national policy.s

By the early twentieth century,Wilson had seen the way to changethis situation. Since the Presidentis the leader of his party, he maybecome the leader of. the nation,or at least he

. . . has it in his choice to be. . . .His is the only national voice inaffairs. Let him once win the ad­miration and confidence of the coun­try, and no other single force canwithstand him, no combination offorces will easily overpower him....If he rightly interpret the nationalthought and boldly insist upon it, heis irresistible; and the country neverfeels the zest of action so much as

3 Quoted in A. J. Wann, "The Devel­opment of Woodrow Wilson's Theory ofthe Presidency: Continuity and Change,"The Philosophy and Policies of Wood­row Wilson, Earl Latham, ed. (Chicago:University of Chicago Press, 1958), p.58.

when its President is of such insightand calibre. Its instinct is for unifiedaction, and it craves a single leader.4

Some of the devices by whichthe President's powers were ex­panded were inherent in the office,or so the proponents of presiden­tial power have argued. The Pres­ident is charged by the Constitu­tion with notifying each Congressof the State of the Union. He isalso authorized to recommend tothem "such Measures as he shalljudge necessary and expedient...."He is commander-in-chief of thearmed forces. He can make trea­ties, by and with the advice andconsent of the Senate. His· role inforeign affairs is, by the nature ofthese provisions, an eminent one.Wilson noted that when foreignaffairs are foremost in nationalconcern, the President's stature isapt to increase and his role ex­pand. As commander-in-chief, thePresident is in a position of lead­ership in making war.

foreign Entanglement

It is worth noting that the samePresidents who have been mostdeterminedly devoted to melioris­tic reform have also been thosewho have gotten us most deeplyembroiled in foreign affairs whichusually led to war, that is, Presi­deI!ts Theodore Roosevelt, Wood­row Wilson, Franklin Roosevelt,

4 Quoted in ibid., p. 61.

1966 THE FLIGHT FROM THE CONSTITUTION, I 55

Harry Truman, John Kennedy, andLyndon Johnson. Nor is the con­nection entirely accidental. Em­broilment in foreign affairs notonly increases the role of thePresident in decision-making butit is more than likely to involvethe United States in such wars asoccur. Moreover, twentieth cen­tury wars have been leading occa­sions for the introduction of re­formist innovations, regulations,and restrictions, and these can,and have been, blamed upon theexigencies of war.

This is not to say that Presi­dents have involved the UnitedStates in war in order to advancereform programs. If such a thinghad occurred, it would probably beforever beyond the reach of his­torical proof.5 Since we lack suchproof, the matter can be suffi­ciently explained in this way.Presidents with a penchant forintervention can most readily ex­ercise it in foreign affairs, forthe bulk of their interventionistpowers lie in that realm. Inter­vention is likely to lead to war.Once the country is involved in

5 Witness, for example, the spate ofbooks during and after World War IIattempting to prove that Roosevelt de­liberately provoked the attack on PearlHarbor. Yet, they prove only that hemight have done so, that the policies hefollowed did little to inhibit a sneak at­tack. The chances are good that nothingmore than this will ever be proved, forhidden motives are involved.

war, the President can use it asan occasion and opportunity fordomestic intervention. The pen­chant to intervene, which is prob­ably rooted in human nature inthe will to power, is, of course,nurtured and provided with in­tellectualist justifications in me­liorist ideologies.

The President as Lawmaker

The President's powers havebeen increased in a number ofother ways. The incidental au­thorization in the Constitutionfor the President to recommendmeasures to Congress has servedas a base for Presidents to takethe initiative in legislation. Pres­idents in the nineteenth centurydid not utilize this much for pro­moting particular acts of legisla­tion.

There were many reasons forthis. The main one is that nine­teenth century Presidents werenot committed to extensive re­forms. They did not conceive it tobe their mission to transformAmerican society. Had theythought otherwise, however, therewere good and sufficient reasonsfor them to abstain from legisla­tive leadership. The President'sprimary task is administrative,the execution of the laws. If hebecomes involved in the making ofparticular laws, he may take· po­sitions which will unfit him for

56 THE FREEMAN August

executing them, particularly if hehas vigorously opposed measuresthat are subsequently passed overhis veto. Congress might well re­sent presidential tampering withits prerogatives. The President'sprestige would be at stake in themeasures he promoted.6 Moreover,he does not have sufficient leverageover Congress to get his measuresenacted. Its members are chosenindependently of him.

Most of these objections anddifficulties have, of course, beenovercome or shunted aside in thetwentieth century, for Presidentshave taken over legislative leader­ship. Woodrow Wilson was thefirst to do so on a large scale,though Theodore Roosevelt hadpointed the way. Wilson ran onthe basis of a program called theNew Freedom, and, once, inaugu­rated, he proceeded to get the pro­gram through Congress. Sincethat time, Presidents have gonemuch farther in assuming leg­islative responsibilities. Thisreached a peak in two years: 1933and 1965. In 1933 many of thebills which were passed by Con­gress were actually drawn by menin the executive department, sentto Congress, and, in the case of

6 In parliamentary systems, of course,the Prime Minister does take such lead­ership. But if he is defeated on an issuehe considers crucial, he may resign orbe forced to do so. No such alternativeexists for a President.

some of them, passed withoutbenefit of committee examination.By 1965, Congress had come toaccept the presidential initiative asstandard procedure. The tradi­tional roles of the two brancheshad been reversed; Congress couldexercise what amounted to a vetoon bills proposed by the executive,but the initiative had passed tothe President.

Platlorms lor Change

The difficulties of doing thiswere overcome in various ways.In the firs't place, Presidents didbecome reformers. It became cus­tomary for presidential candidates,at least Democratic ones, to setforth a program of changes whichthey expected to institute ifelected. These programs have oftenbeen given names, as New Free­dom, New Deal, Great Society,and so forth. Not only have presi­dential candidates run on these,but congressional candidates aswell. Once elected, a President isthen assumed to be committed torendering these into bills whichhe is to push through Congress.

Secondly, the prestige of the of­flce of President has been builtup, particularly in wartime. Thatof Congress has suffered by com­parison. When Congress has failedto pass presidential bills, it hasbeen labeled obstructionist, and hassuffered from both subtle' and not

1966 THE FLIGHT FROM THE CONSTITUTION, I 57

so subtle vilifications by colum­nists and assorted publicists. Inshort, Presidents-with assistancefrom their numerous helpers inthe media of communication-havefound ways to advance particularproposals without losing face ifthey fail. Instead, Congress issupposed to lose face by failingto pass them.

Third, Presidents have foundways to bring sufficient congress­men to heel to forge majoritiesfor much of their legislation. Inthe main, these consist of patron­age, spoils, and pork barrel. Con­gressmen are brought around bypromises of government projectsto be located in their districts,getting their men appointed tooffice, a new dam, a new post of­fice building, a new Federal officebuilding, a defense plant, a gov­ernment contra.ct, and so on, adnauseam.

On the face of it, it is difficultto imagine a more ironic develop­ment than this latter one. To Con­gress belongs the power of appro­priation, as well as the initiationof acts. Yet, congressmen truckleto the President to get a portionof the largess they have voted todistribute. There is an explanationfor this, however, and it will getus to the nub of the matter. Acongressman is one man amongmany men. Theoretically, his votecounts for no more than any other,

and in the course of a few yearsof legislating, his district shouldcome out on a par with all otherdistricts in getting Federal larg­ess. Of course, not all men areequally influential in Congress,some have important seats oncrucial committees, others not.Such a congressman can parlayhis influence in Congress into size­able gains for his district by alsoserving the President faithfully.Presidential discretion in handingout benefits greatly augmentswhat a congressman could get onhis own.

Budgetary Difficulties

These are but accommodations,however, by which some congress­men get their quid pro quo foryielding up their legislative pre­rogatives. The prerogatives hadto be yielded up as Congress gaveits assent to the building of an evervaster Federal establishment. Thefact is that it is no longer prac­ticable for Congress to devise abudget, or, what amounts to thesame thing, initiate appropria­tions. Congress cannot oversee thevast Federal establishment effec­tively; it cannot devise the intri­cate regulations and restrictionswhich now govern the Iives ofAmericans. It cannot do the workwhich a huge Federal bureaucracynow performs, nor could any otherlegislative body.

58 THE FREEMAN August

The flight from the Constitutiondoes not consist simply of thepower which factions can now ex­ercise, of the concentration ofpower, or of shifts in the relativeweight of the branches of govern­ment. It stems from the overrid­ing of the substantive limitationsupon the powers of the Federalgovernment. In short, much ofthe huge Federal establishmenthas been built by the exercise ofpowers that were not granted inthe Constitution. Most of the reg­ulations, restrictions, expenditures(excepting for defense) and far­flung activities were not author­ized by the Constitution. Nor havethey been authorized by amend­ments. Instead, they have beenacquired by reading into the Con­stitution what is not there, and pro­mulgating mystifications aboutwhat is there.

A Word for the Court

Those seeking a scapegoat toblame for the flight from the Con­stitution may find it convenient toplace the burden of responsibilityupon the Supreme Court. Yet suchan historical interpretation wouldbe a gross injustice to many·of themen who have made up that au­gust body. It is true· that the· ma­jority of the Court have nowjoined the flight from the Consti­tution, may even be in the fore­front of it, but this is a recent de-

velopment. The members of allbranches of the government arecharged with observing the Con­stitution, the members of Con­gress and the President no lessthan the courts. A majority ofeither house of the Congress canjust as surely nullify a bill on thegrounds of its unconstitutionality- by refusing to pass it - as theSupreme Court can nullify an actof Congress - by refusing to en­force it. The President can veto abill on the grounds of its uncon­stitutionality. It could still bepassed over his veto, but thiswould be no reason for a Presi­dent to fail to do his duty by theConstitution. It is true that theSupreme Court has the last say,but to the extent that the flightfrom the Constitution has beenby the regular legislative route,the courts have only concurred inflights already made by otherbranches.

Moreover, the Supreme Courtheld out much longer against thegeneral flight from the Constitu­tion than did any other branch.Initially, it greatly circumscribedthe activities of the InterstateCommerce Commission, made oflimited effect for a number ofyears that strange piece of legis­lation known as the Sherman An­titrust Act, only very reluctantlyaccepted the privileged status oforganized labor. It did not readily

1966 THE FLIGHT FROM THE CONSTITUTION, I 59

concur in the piecemeal absorptionof property rights by governmentin regulatory measures. The Fed­eral courts held out for four yearsor more against· the drastic meas­ures' of the New Deal after theCongress had become a rubberstamp for executive measures. Itnullified the central acts- of theearly New Deal when it invali­dated the N.R.A. and A.A.A.

But there are limits to what canbe expected of men, and thoselimits apply to justices of the Su­preme Court as well as other men.For years before 1937, a literaryassault upon the Constitution hadbeen going on. Writers had pro-claimed that the Constitution wasitself a class document, that it hadbeen drawn by well-to-do mer­chants and planters to serve theirinterests. It was outmoded, otherssaid, perhaps well enough suitedto an agrarian society but hardlyfit for an industrial one. Newtimes require new measures, othermen proclaimed. A new outlookhad been developed; in terms ofit government was supposed toact in accord with the needs ofthe moment, not in accord withsome "ossified" eighteenth cen­tury "piece of paper." In theory,the Court's position is secure;in practice, it is not certain how

long it can hold out against thecombined Congress and Pre,sident.The men who make up thesebranches are popularly elected.They are the voice of the people,so the argument ran. Could ninemen withstand the wrath of anation, prevented from going inthe direction it wanted to go? TheCourt might have held out withimpunity. At any rate, it did not.After 1937, it capitulated, forwhatever reasons following Roose­velt's ill-fated Court Reorgani­zation Bill (popularly known ashis "Court Packing Scheme").Since that time it has only rarelycalled a halt to some particularreconstructionist activity.

The above is to set the recordstraight. The role of the- Court indefense of the Constitution whenthe other branches were irrespon­sibly evading its limitations hasgone unsung. The point needed tobe made, too, that, legends to thecontrary notwithstanding, theCourt is not the sole keeper of theConstitution. This is a solemn re­sponsibility enjoined upon thosewho serve in all branches of thegovernment. The courts have,however, played an increasing rolein the flight from the Constitu­tion, and that story needs to betold also. ~

The next article in this series 'Will further describe"The Flight from the Constitution-II."

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

KONRAD ADENAUER'S Memoirs1945-53 (Regnery, $10) is a workthat is best described by such ad­jectives as "dogged" and "slog­ging." But if there is no genius inthe telling of this story, there wasgenius in the way Adenauer, asthe postwar leader of West Ger­many's Christian DemocraticUnion, lived it. A seventy-year-oldex-Mayor of Cologne when thewar was nearing its end, he wasthe figure on whom the history ofWest Germany - and therefore theentire West -was to pivot. Hislife since 1945, both as party lead­er and as his country's Chancellor,may be taken as a virtually com­plete refutation of the materialist,or economic determinist, theory ofhistory.

If it hadn't been for his pres­ence on the scene, West Germanywould surely have returned to the

60

so-called comity of nations as aMarxist state, or group of states,complete with nationalized indus­tries, planning boards, directedlabor, and all the rest of it. Thisis what Dr. Schumacher's SocialDemocratic PaTty was proposing,and this is what the British, whowere in charge of Adenauer's stateof North Rhine-Westphalia, weredisposed to accept. After all, therewas a labor government in Londonafter Churchill's dismissal in 1945,and "planning" was what ClementAttlee, Ernie Bevin, and HerbertMorrison, the British socialists,thought they understood.

As a pa.rty with a long Germantradition, the Social Democratsshould have walked away with thecrucial election in 1949 that sig­naled the rebirth of a German na­tion. But Adenauer, the Rhine­lander who had been thrown out

1966 ADENAUER'S MEMOIRS 61

of his job as Mayor of Cologne bythe Nazis, tapped spiritual re­sources that had been dormant inGermany for well over a decade.He was not an economist himself,but, as a Christian philosopher, hebelieved in the, primacy of thefreely-choosing individual. Hewent up and down West Germanypreaching that the· sort of cen­tralized economic control that wasadvocated by Dr. Schumacher's so­cialists would not differ, in es­sence, from what the Germans hadknown under Hitler. It was hisgenius as a politician to recognizethe. voltage in the phrase, "thesocial market economy." Erhard,the present Chancellor of WestGermany, had brought this to himas a disciple of the Roepke schoolof neoliberal economics, and it wassemantically right for the times.For, in its implicit assertion thatthe market creates social valuesout of individual and group com­petition, the new phrase chal­lenged the Marxist shibboleths ona ground that could appeal to theChristian conscience.

The Marlcet Economy

As Erhard, who was to becomeAdenauer's Minister of Econom­ics, put it, the social market econ­omy would produce a maximum ofwell-being and social justice byletting free individuals make anefficient contribution to an order

that embodies a social conscience.Where state welfare was neces­sary to sustain war cripples intheir hospitals, and to provide forthe stream of refugees and dis­placed persons from the Commu­nist East, the affluence created bythe market economy could betaxed. A government committed tosocial market competition wouldsee to it that taxes were not leviedin a way to discourage incentive,and it would also insist on an in­dependent control of monopolies tosafeguard genuine competition.

No doubt the coupling of theadjective "social" with the noun"market" could be utilized to justi­fy the wildest aberrations of statewelfarism. We in America are wellaware of what can be done bycanny manipulation of the "gen­eral welfare" clause of the Consti­tution. But the Christian Demo­cratic Union governments of WestGermany have not been sophisticalin their application of the Roepke­Erhard theories. They have pro­vided incentives to invest, theyhave steered cle,ar of inflation, andthey have done more than theirpart in the attempt to create awide free-trade area in westernEurope.

A Touchy Situation

Looking back on the history of1945-53 which is covered in thismost impersonal of autobiogra-

62 THE FREEMAN August

phies, the whole story may seeminevitable. The Soviet Russians,by their aggressive post-1945 be­havior, forced the nations of theWest to regard West Germany astheir own particular buffer againstcommunism. It would have beensilly to pulverize a buffer by ap­plying the Morgenthau plan forturning West Germany into a re­gion without industry; this wouldhave created such chaos that theCommunists would have been ableto take over from within. So thedecision to rebuild the British,American, and French zones as aviable modern economic unit wasmade. The Marshall Plan took holdat the end of 1948, raw m,aterialspoured in, individuals were per­mitted to start their own busi­nesses, and to support everythingelse there was a currency reform.

Yet it was actually touch and gowhen it came to creating a formfor the first new national govern­ment in West Germany in 1949.After the Christian Democratshad won their surprising victory,many in Adenauer's own partywished to form a coalition withthe Social Democrats. The SocialDemocrats were willing, but theydemanded the Ministry of Eco­nomics as their price for collabo­ration. After all, they held 131seats in the new Bundestag asagainst the Christian Democrats'139. Potentially, this made them

an extremely powerful opposition,and in a parliament in which tenseparate parties were representedthere was always a possibility thatthey might have their way. Sothey felt justified in wishing tohave the power to create the indus­trial shape of the new nation.

Principle Prevailed

Adenauer, however, was con­vinced that the election consti­tuted a mandate for a generallyfree economy. The Social Demo­crats and the Communists hadpolled eight million votes, which,presumably, had been cast for so­cialism of one kind or another.But thirteen million votes hadbeen cast for the antisocialistparties. The CDU's Minister Pres­ident Altmeier of the Rhineland­Palatinate spoke plausibly for acoalition with the Social Demo­crats, and his words were greetedwith applause. He raised the fearthat a strong Social Democraticopposition in the Bundestag woulduse nationalist arguments to at­tack every effort at understandingwith the occupying powers.

But Adenauer insisted that acoalition would be taken as abreach of faith by a vast majorityof the voters if the Social Demo­crats were to get the Ministry ofEconomics as their share of thebargain. "There is a great dif­ference," he said, "between our-

1966 ADENAUER'S MEMOIRS 63

selves and the Social Democratsregarding the principles of Chris­tian conviction. Moreover, there isan unbridge,able gap between our­selves and the Social Democrats inthe matter of economic structure.There can only be either a plannedeconomy or a social market econ­omy. The two will not mix. Inview of these differences it wouldnot even be possible to have aChristian Democrat as Minister ofEconomics and a Social Democratas Under-secretary of State. Wecould never get things moving."

The words of Der Alte Ade­nauer were convincing, and a coali­tion of anti-Marxist parties fol­lowed. So it was Erhard, and notthe Social Democrats' ProfessorNolting, who took charge of WestGermany's economic future. TheGerman "miracle" followed. Andwhen relative stagnation and in­flation continued to dog the effortsat recovery in "Keynesian" nationssuch as Britain, the Erhard-sup­ported economies of Roepke-and,incidentally, the Mt. Pelerin So­ciety- began to take on a lusterwhich nobody save a few FEE die­hards would have deemed possible.

Adenauer's reconstitution offar-off things and battles long agolack Churchillian sparkle. But theevents create their own drama.This is a document for FEE-ers toread with pride. •

.. THE INTEMPERATE PROFES­

SOR AND OTHER CULTURALSPLENETICS by Russell Kirk.(Baton Rouge: Louisiana State

University Press, 1965. 163 pp.$5.00.)

Reviewed by Robert M. Thornton

RUSSELL KIRK'S credentials as acritic of higher education are im­peccable. A well-educated, widely­traveled man of letters, he has ob­served at first hand teachers andstudents and administrators onthe 200 or more campuses wherehe has lectured in the past dozenyears. He does not like what hesees.

Many professors are more in­terested in indoctrinating' thosesitting under them than in de­veloping a disinterested love oftruth. Embracing relativism and/or nihilism, some teachers areeager to upset whatever ideals andconvictions their students bringwith them from home. Studentsshould learn to think for them­selves, but our institutions oflearning were founded to conserveand extend the nation's heritage,not to destroy it.

Dr. Kirk, unlike many todaywho write on the subject,under­stands education to be, not thepouring of facts or techniques intoa young person's head, but a spirit­ual process, if you will - a certainrelation between teacher and pupil

64 THE FREEMAN August

and the object of their studies.This being the case, the remedyfor the ills of education is notmore money, bigger plants, ormore classroom gimmicks; anddefinitely not more funds fromWashington which will be fol­lowed, quite naturally, by Federalcontrols.

The most provocative essay inthis collection of fourteen is, inmy opinion, "The Rarity of theGod-Fearing Man." We like to betold that God is love, a "Chum,never to be dreaded because He isindiscriminately affectionate."This notion would have scandal­ized the tough-fibered Calvinistwho settled our land and developedits institutions. Such a man,"knowing that divine love and di­vine wrath are but different as-

peets of a unity, is sustainedagainst the worst this world cando to him; while the good-naturedunambitious man, lacking religion,fearing no ultimate judgment,denying that he is made for eter­nity, has inhimno iron tomainta.inorder and justice and freedom.. . . If the fear of God is ob­scured," Kirk continues, "then ob­sessive fear of suffering, poverty,and sickness will come to thefront; or if a well-cushioned statekeeps most of these worries atbay, then the tormenting neurosesof modern man, under the labels of'insecurity' and 'anxiety' and 'con­stitutional inferiority,' will be thedominant mode of fear." This isspiritual bondage, and once it set­tles in, political and economic en­slavement are not far behind. ~

HANDSOME BLUE LEATHERLEX

FREEMAN BINDERS

Binders with Issues insertedfor Calendar Years 1963 and 1964:

$ 5.00

10.00

Either year

Both

Binder only, $2.50 each

Also available instandard clothbound volume, $2.50

in a new, attractive,low~priced paperback:

$ .95

2.00

6.00

45.00

Single copy

3 copies

10 copies

100 copies

Cj ••••••

'" ' ~~:I~O=--J

~ of MAINSPRING (279 pp., in­dexed) was published in 1947. Since Mr. Weaver'spassing, this great book has been the property ofFEE. Previous to this new paperback edition, 350,­000 copies have been printed.

One large company's circulating library for em­ployees required 150 volumes to meet the demand.

Based on FEE's experience, MAl NSPRING topsall books as a starter for any aspiring student ofliberty. Easy reading - indeed, exciting - the be­ginner becomes so interested in freedom that hecan hardly help pursuing the subject further.

FEE's recommendation: Keep a good supply ofthe paperbacks on hand to present to any individualwho shows a spark of interest in freedom.

THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK, 10533

TO ESTABLISH A DESPOTISM

• A general State education is a mere contrivance for

moulding people to be exactly like one another: and the

mould in which it casts them is that which pleases the

predominant power in the government, whether this be a

monarch, a priesthood, an aristocracy, or the majority of

the existing generation; in proportion as it is efficient and

successful, it establishes a despotism over the mind,

leading by natural tendency to one over the body.

J. S. MIL L, On Liberty