Book Reviews

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Independent Sector Do "anything that's peaceful," says Leonard Read - meaning that men should try to solve their problems, either individually or in voluntary association, without putting a gun at their neighbors' heads to make them pay for it. This, in the time of Alexis de Tocqueville, was good American doctrine. But who be lieves it today? The answer is that a lot of people do, but they don't know what to do about it. Our health problems seem so vast, our cities are such jungles, our racial groups are engaged in such bitter strife, that the average individual is cowed into letting the "public sector" take over, with hopes that the "private sector" will somehow continue to make enough money to finance everything from hospital care to subsidizing poor people's rents. Plans Gone Astray The trouble with this formula is that it has a reverse Midas touch, turning everything it touches into dross and tarnished brass. As has been aptly said, slum clearance means "Negro removal."

The centers of big cities knocked down by the Federal bulldozer, are filched by legalized means from small merchants and sold at cut rates to monopolists. Able-bodied men are paid relief for not work ing, and their wives, subsisting on what comes without effort, breed children who continue on the re lief rolls as a matter of inherited tradition. Commodity subsidies are paid out in a program originally designed to help the poor farmers, but 80 per cent of the money goes to the million farmers whose aver age annual income is more than $9,500. Meanwhile, our overregu lated railroads become more and more decrepit, and our subsidized merchant marine, beset by strikes, disappears from the seas. Surveying the dreary landscape, both conservatives and the new style collectivist liberals react with apathy. The conservatives have no 59 60 THE FREEMAN October program. The liberals wonder how so much public debt and inflation can have bought so very little. And philosopher Paul Goodman, a col lectivist liberal in good standing, writes: "Throughout society, the centralizing style of organization has been pushed so far as to be come ineffectual, economically wasteful, humanly stultifying, and ruinous to democracy."

The Voluntary Way Into this picture steps Richard C. Cornuelle with a book designed to bring Tocqueville up to date. Mr. Cornuelle gives his work a most provocative title, Reclairning the American Dream (Random House, $3.95) . The trouble with our think ing, says Mr. Cornuelle, is that we have fallen into the habit of two value descriptions. We talk of the "public sector" (meaning govern ment) and the "private sector" (meaning free enterprise), forget ting that a vast "independent sec tor," devoted to public purposes but paid for by private individuals, exists in the in-between land that used to be such an honored part of the landscape in Tocqueville's century. What is original about Mr. Cor nuelle's book is its clear-sighted ability to marshall convincing de tail. He proves his case that the "independent sector" is capable of "stunning social accomplishments." As he says, a national private organization practically wiped out polio. The Mormon Church took care of all the wel fare needs of its members throughout the worst depression years. Alcoholics Anonymous is al ways there to help an alcoholic who will admit that he needs help.

Cleo Blackburn, without asking the Federal government for a cent, organized slum dwellers in Indianapolis into teams and set them to using the technical meth ods of Indiana's prefabricated housing industry to build houses for themselves. The banks lent money for the land and materials, and took the work of the building teams as a "sweat equity" down payment on mortgages. The Possibilities Mr. Cornuelle multiplies his in stances with such enthusiasm that it will surprise me if he fails to create a new movement that will attract both conserva tives and modern-style liberals into a new "third force" camp. If fully mobil ized, says Mr. Cornuelle with ex hilarating conviction, the "inde pendent sector" could wipe out poverty, put all willing and able people to work, solve the farm problem, give everyone good medi cal care, stop juvenile crime, re new our urban landscape, lever a wider distribution of stock owner1965 THE INDEPENDENT SECTOR 61 ship, provide plenty of good schools and cultural outlets, wipe out segregation, pay reasonable re tirement benefits to all, and even give us a good foreign policy by carrying an independent crusade for human welfare and personal dignity abroad.

Signs of Progress Is Mr. Cornuelle indulging in wild utopianism when he indulges in such comprehensive list-mak ing? Our government seems to think so: vide the recent break through staged almost without op position by the Great Societarians who profess to speak for liberal ism. But the "public sector," in practice, does so poorly for indi viduals that it is a rare community whose citizens don't have to look to the independent and private sectors· to minister to their needs. In the course of newspaper columning over the past three years I have come upon scores of in stances which parallel those listed by Mr. Cornuelle. In Savannah, Georgia, the wife of a utility mag nate borrows the money to buy up a decrepit portion of an old city's downtown area - and, surpris ingly, turns it into a tasteful real estate venture that not only satis fies human needs at low cost but also earns a profit. In New Haven, Connecticut, a group of citizens turns an old business college into a fine liberal arts institute, Quin nipiac College, by charging enough to cover the education it dispenses and, simultaneously, let ting the students find their own food and lodging "off campus," as was the centuries-old style in con tinental Europe. In Milwaukee, Wisconsin, the teenagers, with an initial push from Elmer Winter of Manpower, Inc., have found more than a thousand jobs a summer for adolescents over the past two years. In Vermont, lumber com panies lease their more maj estic mountain land for ski centers, where thousands disport them selves at popular prices. In Colo rado and in the Poconos of Penn sylvania, the Baptist Church main tains camps for its young people and lets the more indigent among them pay their fees by a minimal amount of work. In Los Angeles, members of the Western Student Movement volunteer their teach ing services in a program de signed to rehabilitate dropouts.

All of these instances, and many more like them, have come to my casual .. attention even though, un like Mr. Cornuelle, I was not busy with any systematic search for them. The "independent sector" keeps turning up rich evidence every where of response to the old Amer ican idea that voluntary associa tion can take care of almost any62 THE FREEMAN October thing. Testing his theory before writing about it, Mr. Cornuelle himself organized United Student Aid Funds, Inc., to guarantee bank loans made to boys and girls seeking college educations. In a space of three years USA Funds, Inc., has guaranteed 68,000 loans totalling $40 million - proving to Mr. Cornuelle's satisfaction that the need for "Federal aid to edu cation" is an illusion. Attention, Churchmen Near the close of his book Mr. Corn uelle, himself reared in a par sonage, puts two sets of statistics in poignant juxtaposition. Almost 118 million people in 320,000 re ligious congregations in America are told there is nothing much for them to do but "be pious and pay their taxes." Meanwhile, there are a million people in the country who are listed as "unemployable cases." This amounts to about 3 per church. In other words, if each church in America were willing to help three people "out of helpless poverty. into productive employ ment," a formidable problem "would come tumbling down like the walls of Jericho."

This is something to think about for the clergymen who are joining marches on Washington to stimu late bigger Federal relief pro grams that invariably end by in stitutionalizing unemployment. ~ ~ MERCHANTS MAKE HISTORY by Ernst Samhaber, New York: The John Day Co., 1964, $6.95, 396 pp. Reviewed by Robert M. Thornton THIS BOOK is neither a dry com pilation of dreary facts and fig ures, nor a treatise on economics; it is the absorbing story of the in fluence of trade upon history - an exciting tale of merchants travel ing into strange and exotic lands, venturing forth over dangerous seas, mountains, and deserts, and risking their fortunes, if not their lives, to buy and sell. Scanning the annals of trade since the beginnings of recorded history, Mr. Samhaber, a mer chant and scholar, finds proof that government interference in eco nomic affairs, whatever the' inten tions may be, always does a great deal of harm in the long run. Di rect harm is wrought by political interventions, and then govern ments typically try to repair the damage by inflating the currency.

This cure compounds the disease! As the author observes, "How tempting always are the gains of inflation and how terrible and dis astrous are its invariable conse quences !" There are, generally speaking, two ways in which government may interfere with the market: it may grant merchants and others 1965 OTHER BOOKS 63 special privileges in the form of monopolies, tariffs, exchange con trols, import and export quotas, and the like; or, on the other hand, it may assault the mer chant class by taxation, legisla tion, regulation, and confiscation. In either case, the public suffers. But when merchants are let alone - not pampered and not abused the public prospers. Rarely, over the centuries, has government kept hands off. Usually, competi tion causes apprehension in those involved, and some businessmen run to the government for protec tion. Any privileges they receive from government are paid for by the consumers in the form of higher prices and a scarcity of goods.

The value of the merchant, ex plains Mr. Samhaber, and the rea son he should never be arbitrarily hampered, is that he, like money, acts as a lubricant in the economy. Present-day economies are incon ceivable without merchants, just as they would be impossible without a medium of exchange (money). Barter has great limitations and will do only for the simplest econ omy. Complex transactions re quire money and merchants. The latter bring together, over long distances and periods of time, the buyer and the seller. This is what distinguishes merchants from other men of business .. They are not concerned with banking, pro ducing, or retailing; they are en gaged simply in buying goods to be resold, hopefully, at a profit. As to what would happen if there were no merchants, read the wonderful little story Mr. Sam haber tells at the beginning of his splendid book. It is worthy of another free-trader named Bastiat! ~ • UNIVERSITY ECONOMICS, by Armen A. Alchian and William A.

Allen, Belmont, California: Wads worth Publishing Co., 1964, 924 pp., $7.95. Reviewed by Dr. GeO'rge M. Wattles, Rockford College. University Economics is a refresh ing and worthy addition to the spate of texts intended to guide students who wish to understand principles of economics. Like the reversible raincoat, it may also perform a second function reason ably well. The layman could hardly find a more thorough and instruc tive reference book for his private study. A word of caution to all purchasers: Buy a copy from the second printing. Unfortunately, the first printing contains a pro fusion of typographical errors. Students of economics will ap preciate the many practical ques tions which follow each chapter. They will learn much from the unique section which gives an64 THE FREEMAN October swers to about one-half of the questions. By observing which questions are answered and which are given indefinite answers, the careful reader will perceive the caution and respect with· which these authors approach their sub ject. More than most of their fel low authors, Alchian and Allen are careful to separate the science of economics from all loose and opin ionated use of economic shibbo leths. They are particularly care ful to avoid the impression that study of economics will lead us to panaceas.

The forte of this book is its de tailed discussion of micro-eco nomics - the economic behavior of individual persons and firms. Ap propriate emphasis is given to the importance of private property. The effects of attenuation of our property rights, whether directly, indirectly, or by threats, is de scribed more clearly than in any similar work. For example, the reader will understand why his regulated public utility behaves as it does. Instead of intemperate criticism of governmental interference in the market place, these authors wisely rely on reference to proven and basic economic principles. They lead the reader to his own sound conclusions. The paucity of space devoted to discussion of popular current economic issues is both a strength and a weakness. Some readers may be disappointed. In the long run, however, the student will come to appreciate the relative emphasis on fundamentals. He will find that his knowledge of economics is vital as he seeks to comprehend the panorama of problems ahead, and he will perceive the economic facet of issues which had previously ap peared to have none.

Among the more worthy discus sions, one must cite those which involve popular concern about price rigidity, "excessive" adver tising expenditures, and pro ducers' control of product design and product price. The analysis of monopoly utilizes the important distinction between firms whose market power results from gov ernment action and those whose advantage is subject to competi tive market forces. The omnipresent topic of infla tion is another which is treated with rare skill and perception. A clear separation is made between causes and effects of inflation. The areas of international trade and balance of payments are ade quately handled but are not clearly superior to similar chapters in cer tain other texts. None of us can read this well written text without adding depth to our understanding of our own economy, and of every other. ~ Francis E. Mahaffy 3 Clarence B. Carson 6 Howard Kershner 21 Tom Rose 23 Muriel Osterhaus 28 Hans F. Sennholz 30 W. M. Curtiss 37 Herbert Spencer 42 Leonard E. Read 50 Paul L. Poirot 53 NOVEMBER 1965 The Causes of Violence The Flight from Reality 14. Capturing the Hearts of Men Legalized Coveting .