Book Reviews

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Freeing Our Economy JOHN DAVENPORT'S The U.S. Econ omy (Regnery, $5) is a short book, but, with the possible exception of Henry Hazlitt's Economics in One Le$son, it packs more wisdom in ~ss space than can be found in any other contemporary essay on the subject. Where else, in so short a com pass, could you find something that: 1. Tells you why the free mar ket, far from being the creation of anarchists, depends on a legal and institutional framework protected by a special type of government that is itself limited by law; 2. Brings Bastiat up to date in showing why the "unplanned" market economy (which is in ac tuality the meshing of a million voluntary plans) is more efficient than any other way of coordinating the energies of men; 3. Explains what profit is, and tells why its appearance or disap pearance is a signal that is indis pensable to the efficient deploy ment of the factors of production; 4. Makes mincemeat of such recent "original" thinkers as Adolf EerIe and John Kenneth Galbraith, who have spawned a new "con ventional wisdom" that fails to make connection with what is nec essary to produce and distribute affluence; 5. Shows us where Keynes was right as well as where he went wrong - and then tells us what befell the American economy of the nineteen thirties when the dis ciples of Keynes mistook the mean ing of what the master had said about the relation of profits to wages; 6. Shows how our farm policies have made the rich farmers richer, the poor farmers poorer, and, for better or worse, have driven thous ands off the land to seek employ ment in the city; 7. Demonstrates the shortsight edness of labor leaders who seek to push wages higher than the natural growth of productivity will support; 8. Moves easily through the tangled thickets of monetary theory, foreign exchange problems, 62 THE FREEMAN February tax policy and governmental spending for the "public sector"?

The answer to the foregoing lengthy question is that nobody in recen t years has let his mind sweep over so wide a horizon and brought back so much in such a pithy manner of writing. The effect, of course, is to make a corresponding pith in a review extremely difficult, for how con dense something that is in itself 190 pages of rigorous condensa tion? One is forced to be arbitrary in picking something out of Mr. Davenport for extended discus sion. I won't attempt to talk about Mr. Davenport's description of the workings of the economy of New York City, for that would be to fracture something that is a little jewel of writing. Maybe the best thing to pull out of Mr. Daven port's pages at this moment is his outline of how the Federal budget could be cut. Some Ways to Save Mr. Davenport would not do anything to hurt our military es tablishment, for he believes that the Communists would not hesi tate to attack us if they thought they could beat us. But he would hack large gobs of expenditures from space exploration and for eign aid. He doesn't see why fami lies who are having trouble send ing children to college should be forced to contribute to "shooting the moon." And, while he would support such outposts of the free world as Formosa and Korea, he would definitely curtail aid to countries that are either inside the Communist camp or are so "neutral" against us that they think nothing of shooting our planes down, wrecking our over seas information libraries, or help ing the pro-Communist forces in Latin America or the Congo.

In agriculture, Mr. Davenport would save the taxpayer $3 to $4 billion a year by following a re sponsible policy of lowering sup ports and eliminating controls. He sees no sense in burdening the great mass of the population with a price-support system which ex tracts $5 billion a year from city folks just to pass most of it along to the top layer of farmers that could get along in an unrigged market anyway. Presumably our agricultural support policy could be changed without really hurting anybody if we would establish a cut-off point, giving aid only to farmers who are below the $5,000 a-year income mark. And this aid could be made contingent upon a willingness on the part of the poor farmer to learn some new trade, or to take part-time employment in decentralized industry. Mr. Davenport doesn't mind it when the Federal government 1965 FREEIN'G OUR ECONOMY 63 dredges the Mississippi River or interests itself in flood control.

But he thinks the budget could be slimmed down if we were to re frain from turning river develop ment into a drive to develop gov ernment-generated electric power. The TVA, which was started to bring flood control and water-gen erated power to the American southeast, is now burning coal to make much of its electricity. The ironic thing is that much of this coal comes from strip mines which rip off topsoil in the general area whose devastated lands the TVA fertilizer was supposed to improve. The elimination of the Federal bulldozer from the scene could save the government another pretty penny. As things have been going, "urban renewal" has been lifting slum populations out of one congested area only to dump them down into another. On two blocks in the center of a city close to my home, urban renewal has driven out at least twenty small busi nesses to replace them with two big department stores, one of them owned by a national chain. Thus, urban renewal abets the growth of monopoly - and the taxpayer helps finance it. Mr. Davenport would let the cities renew them selves by repealing local rent con trol laws (which penalize private builders) , and by eliminating anti quated building codes.

Precious Incentive Mr. Davenport does not try to total up the budget savings that might result from the application of his ideas. But they would surely enable the Federal government to get back into the $80-billion area, which would permit a more ra tional tax policy. The cry would go up that this would be "starv ing" the "public sector." But, as Mr. Davenport suggests, Ameri cans have always been ingenious in taking care of their needs by developing a multiplicity of volun tary means. The U.S. public al ready spends more than $20 bil lion a year for private medical care, and 80 per cent of the popu lation has some form of health in surance. In order to take care of all this, it is important that the medical profession should continue to attract good men. The compul sions involved in the "socializa tion" of medicine, even as mani fested in the proposed Medicare, are hardly likely to lure competent people into the medical schools.

Mr. Davenport was a poet be fore he was an economist, and a philosopher before he was either. He looks at economics in its wider context, as a branch of human ac tion that often competes with other activities for time and en ergy. Because he realizes that economics is shot through with value judgments, Mr. Davenport 64 THE FREEMAN February knows that it cannot be considered apart from ethics, a theory of gov ernment, and even religion. His own bias is in favor of a life de voted to the extension of freedom, but he knows that economic and political institutions are often the prey of people who love power for its own sake. His general aware ness of the whole flow of history keeps his book from being just one more sterile contribution to the sort of science that has been called dismal. ~ So, Be Discouraged! DISCOURAGEMENT is not negative per see The word, says Webster's, means the state of being deprived of courage or con fidence. A truly creative thinker wants to lose the courage to take every course except the right one. He wants to lose con fidence in former ways which are insufficient to meet present needs. He wants to be guided to right action by his failure to find success in wrong actions.

My own experience as a mechanical engineer, after I left college, is a case in point. I was involved with the design of products and equipment that for commercial reasons needed to be patentable. Whatever could be designed after past patterns was of no use. So I learned to rejoice (literally) whenever I came across an obstacle that nothing extant could overcome an obstacle that completely discouraged the use of past patterns of design. I knew if I could design around that obstacle I would in all likelihood have a patentable product. "Therefore," said Paul, "I take pleasure in infirmities, ... for when I am weak then am I strong." ROBERT DOLLING WELLS, in The New Individualist Newsletter, No. 22 The Frontier Is Freedom • A Moral Code for Rational Man . Light Brings Forth the Eye 59 62 Paul L. Poirot 3 William Henry Chamberlin 9 Karl Brandt 12 Edmund A. Opitz 22 John C. Sparks 30 Leonard E. Read 34 C/ar-ence B. Carson 40 Edward P. Coleson 54 John Chamberlain 1965MARCH Nor Oysters from the Desert Sands .