The First Law of Economics; A. Reinach

[38 ] other way. At $2,000 per pair, even the wealthy man's wardrobe wouldn't contain many shoes. Now between $1.00 and $2,000, there is a price at which you will own several pairs, a price at which you will own only one pair, and a price at which you will own no shoes at all. Working down from the top figure of $2,000, let's say that the retailer starts reducing his price a penny at a time-and let's also assume that at each new price you are unable to predict any further reductions. Your active interest in shoes may not be aroused until he gets his price down to somewhere under $100. But at some price under $100, you will say to yourself: "Well, I guess I'd better buy one pair, anyway." That hypothetical price at which you say, "O.K., I'll take them," may be $87.72. This means that you turned down those shoes when they were offered to you at .$87.73. There is a very narrow margin between a sale and no sale. This same thing holds for everybody else who may want shoes, and it is just as true for every other thing that is traded in the market place-yachts, houses, bread, and medical services. Turning the example around, it can be clearly seen that every penny reduction in the price of goods and services permits additional people to enjoy those goods and services, and each cent rise discourages somebody from that enjoyment. Prices, of course, also guide production, a higher price being a stimulant and a lower price a sedative to the producer.

All of us are consumers of literally thousands of goods and services. The items now in your home probably number well into the hundreds. And yet each of us [39 ] produces only three or four goods or services-or maybe just one. We trade the one that we produce for those thousands of things that make our lives more gratifying. Here's what happens to the consumer in particular, and to trade in general, when the government interferes in the market place: There was once a time when the Czechoslovakians were the most efficient makers of shoes. They traded their shoes to Americans for automobiles, farm equip ment, and other things which we produced more effi ciently than they or our competitors. Our own shoe manufacturers were therefore faced with converting their production to something wherein they, too, would be competitively productive. But they feared change. So, cloaking their fear in a worthy cause, they sought gov ernment "protection." Aid was forthcoming in the form of a tariff on Czech shoes.

Prices of shoes went up. A few wealthy citizens felt that they could no longer afford as many shoes as they once had, and the less wealthy were obliged to own fewer shoes or deprive themselves of something else they may have wanted. Some, who could afford to wear shoes at Czech prices, now chose to go shoeless rather than pay the new "protected" prices. Although we are mainly concerned with the consumer, it can also be seen that government interference affects others. For example, some marginal retail shoe stores were now forced out of business, and more prosperous stores found themselves less prosperous through loss of trade. The same holds true for the shoe importers, whole[40 ] salers, jobbers, and others. The Czechs, of course, have had their shoe market curtailed. And the manufacturers of those items which had been used in trade for the Czech shoes were injured in proportion. This is only part of the picture, but it does serve to illustrate the endless harm generated when government enters the market place.

Take silver as another example. How much more sil verware would you own today if there were a free mar ket price for silver? The examples are endless. The government today is in thousands of market places-directly and indirectly. Indirectly, the government can price an article beyond the reach of millions simply through taxation. The tax on luxury items, such as jewelry and furs, is an excellent example. How many husbands have saved to buy their wives a piece of jewelry only to find that, although they could afford the desired item, they couldn't afford the tax thereon? The extent of such hindrance to trade is truly enor mous when one weighs the total cost of government against the fact that the margin for exchange may be no wider than a penny. The government can never repeal this basic law of demand and supply-nor its consequences. Its interfer ence in the market place can only increase total costs and prices-and thus prevent your owning and enjoying addi tional goods and services you want and could afford at free market prices.

[41 ] THE CASE FOR THE PRIVATE SCHOOL A CENTURY ago education was almost entirely privately supported and controlled throughout the United States. Indeed, it was not until the early years of the nineteenth century that the first free school (for Negroes, inciden tally) was established in New York City. Schools were operated by religious organizations or individual educa tors. The parents directly paid tuition with occasional benefactions from grateful alumni. The private schools turned out fewer graduates proportionately than now emerge from the government (public) school system, but there was no criticism that these could not properly read, write, spell, and figure, nor that they were ignorant of geography, civics, and the great Christian principles that motivate men. Under this diverse system based on various educational philosophies and with widely varying curricula, the percentage of literate persons was not only large and increasing but regimentation of instruction was impossible, and there was wide experimentation.