Start at the Beginning; R. LeFevre

Robert LeFevre START AT THE BEGINNING WERE I called upon today to teach a course in basic economics, I would begin at the beginning. It is my observation that this procedure is rarely followed these days. It has been my lot for a number of years to deal with management trainees for several companies, in cluding one large corporation. Most of these trainees have come from some of our finest colleges and uni versities. Perhaps as many as twenty per cent have studied adMr. leFevre founded and for years presided over the Freedom SChool In Colorado and has lectured and written extensively in behalf of freedom and the market. His latest book, just off the press, Raising Children for Fun and Profit, Is comprised of the Freedom School home study course of the same name. The book I. available at $10.00, from P. K. Slocum, 7333 Corey Street, Downey, California 90242. vanced economics, and a few hold degrees in the discipline. Probably as many as fifty per cent have re ceived advanced degrees in one or another field. These young men and women are far above average. All are talented, a few gifted, and here and there an undoubted genius.

I work with eight hundred to a thousand people of this caliber every year. Perhaps one in a thousand can relate the myriad bits of data learned in school to the realities of human existence in this world. Most arrive for my seminars with two economic assumptions of direful foreboding: (1) The large corpora tions represent a constant danger and must be controlled by the government; (2) Without antitrust laws, the Environmental Protection 195 196 THE FREEMAN April Agency and other bureaucratic interventions, private businessmen, large and small, would walk roughshod over the entire popula tion of this country. The reason? Free enterprise leads inevitably to monopoly. These seminar attendees did not invent these anxieties. They learned them at the feet of their professors, many of them professors in econom ics. It Is Futile to Argue I have learned from experience that any attempt to dispute these conclusions by direct debate is largely futile. As the early rhyme sters had it, ((a man convinced against his will, is of the same opin ion, still."

However, if I can go to the begin ning to point out the realities un dergirding all economic theory, then I have a chance of showing that an entirely different set of conclusions is warranted. What then are these realities which should be seen at the begin ning? Or, even before that question is asked, what is the purpose of the study of economics? Most of us are acquainted, perhaps by the process of a kind of social-intellectual osmosis, with the classical definition: economics is the study of the production, distribution and consumption of scarce resources. (Note: Currently the last, two words are frequently replaced by the words ((goods and services" and the concept of scarcity is omit ted.) While that definition is adequate, it lacks impact and immediacy. I would like to add to it a statement I must credit to Clark and Rimanoczy who pointed out nearly two score years ago that economics is the study ofttHow we live." That phrase brings it home and puts it on one's lap.

To understand economics is to un derstand how we take hold of the various resources of this world and put them together in such a way that we can stay alive. More. We do not, in economics, study merely the necessaries to retain the human heart beat. We want to survive, true. But we all want to live with some degree of personal satisfaction. To survive without any personal satisfactions would be to sustain a living death. Any prisoner in any jail receives the assurance that those who restrain him will do all in their power to keep him alive. That is not enough. We want to be alive as human beings, not as caged ani mals. It follows that everyone, who wishes to stay alive as a human being, should understand at least the basics of economic lore. Those who have no such interest should wisely stop reading at this juncture.

1979 START AT THE BEGINNING 197 Were I to teach economics, I would try to make these points clear. What is the first reality we should recognize as soon as we have iso lated our area of inquiry? 1. Man is a profit-seeking crea ture. I will not endeavor to prove that point at this time; rather, I state it categorically. However, I will em bellish it enough to remove a com mon misunderstanding. The word profit is so affiliated with bookkeep ing procedures that I can anticipate an assumption here. Some will b~ certain I have said that everyone wants to profit in terms of dollars. This is decidedly not so. Many are not interested in dol lars, as such. Whatever interest he might have in dollars, every human being seeks to obtain more of what ever it is he values. Conversely, he seeks to prevent the loss of anything he values. I am using the term profit in a philosophic or even in a psychologi cal sense. So I will introduce another term and use it in place of the word profit.

Every human being· seeks plus factors. His plus factors may be dollars. But they might also be friendship, love, good health, a com fortable bed, a good meal, a rare book, a work of art, a day of leisure, a job, a good bridge game, or anything else his heart, body or mind desires. In this sense, man is a profit-seeker. He seeks to satisfy his desires what ever they may be. 2. Man lives in a world of limited (scarce) resources. Let me pro vide an illustration. Man is a land using creature. His habitat is land, not air and not water. He uses air and water, but land is where he lives. Our planet has a limited sup ply of land. Approximately thirty per cent of the earth's surface is above water and not all of that read ily habitable. The total population of the world, whatever it may be at any given moment, must use the re sources of this world's land to sur vive and satisfy human needs and wants.

3. Not only is our world one of limited resources, the resources we do have are unevenly distrib uted. No two pieces of land are equal in terms of utilization. Some plots of land have multiple utility. Some are near water or receive rain fall. Some are not and do not. Some land contains minerals, oil, metals and various chemicals. Some is ap parently barren in terms of our present knowledge and technology. In an attempt to be ufair," a division of the land so that each person would have an equal amount of ac reage would be about as unfair as anything that could be imagined. The person receiving a few acres in the middle of the Gobi desert has a 198 THE FREEMAN April high probability of dying of thirst. The person receiving a few acres in the middle of Beverly Hills might do very well indeed. 4. The same diversity of dis tribution we find in land re sources is found with human re sources. Human beings are un evenly distributed about the. globe.

In a few places we will find millions of people living within a few square miles. Elsewhere we have zero popu lation. Thus the distribution of human beings ranges from im pacted, to dense, to settled, to sparse, to zip. The same disequilibrium of human abilities is evident. Some persons can perform in a superior fashion at almost any endeavor or enterprise. Some have very meager competency. Most of us occupy the undistinguished center, capable or even superior at some tasks, bumblers or worse at others. And there are a few, always, who cannot manage. Were I to attempt a teaching of economics, I would try to make the foregoing points. clear. Much more could be said in every instance, of course. There are a few more preliminaries. 5. All resources, capable of being owned, are prop erty. Property is that item, real, personal or abstract, that can be identified as a thing in itself and is capable of being controlled by one or more humans under certain condi tions. To survive and to survive with any hope of comfort and satisfaction it is necessary that each human being dominate his own environ ment in his own interest to some degree.

This is not only true of man, it is true of any living organism. Life, as we understand it, is only possible when a given entity is able to obtain what it needs from its surroundings. Nature has denied us the evidence of perpetual motion. Man is not born with a built-in power pack which makes him indifferent and indepen dent of his surroundings. Even the sun is cooling. 6. Man is totally dependent upon property. He cannot survi ve without it. But property makes no decisions. All decisions over prop erty are made by human beings who are capable of controlling that prop erty under certain conditions. Noth ing happens in the market automat ically. If something is to be pro duced, someone must make a deci sion to produce it. If something is to be distributed, someone must make a decision to distribute it. If some thing is to be consumed, someone must make a decision to consume it. In the absence of man, nature takes over and property obeys natu1979 START AT TIDl BEGINNING 199 rallaws. When man is present, he learns natural law and, with that knowledge, exercises dominion over both natural and manmade prop erties.

7. Who is the proper decision maker over any given piece of property? A single choice is available. Either the person owning the property. will make decisions over that property. Or a person not owning the property will make the decisions. Who else is there? There are billions of pieces of property in the world. Each piece of property is owned by an individual or a group, or it is unowned. There are also billions of people in the world. If we decide that a nonowner should make the decisions over a property an individual owns, what incentive would there be for anyone to own anything? Further, which nonowner (when there are billions of nonowners in respect to each item owned) is to be given the authority over a property he doesn't own? If we assume that all the nonown ers should vote on each decision to be made, we reach the impondera bility of numbers as well as the imponderability of information availability among those who -are to vote. Indeed, we enter the theater of the absurd. Clearly, to reach deci sions, either the owner or a selected group of nonowners must -decide.

The argument most often advanced in support of this latter practice is that private owners of property are profit-seekers and might make deci sions that would injure others. Where is the evidence that nonown ers are not profit-seekers? If I were called upon to make a decision over my neighbor's property, would I not be inclined to make a decision that would serve my ends, rather than my neighbor's? While it is certainly true that the owner of a given item of property may lack in wisdom, it is equally true that-a nonowner may also lack in wisdom. But there is one thing to be said in favor of decision making-by owners. To become an owner, certain thrift, forbearance and concern have al ready been expressed, either by the owner in person, or by those others who bestowed the property upon him and thus expect him to make decisions. The only thing that can be said in favor of having nonowners make de cisions over property they do not own is that they are there. But the owner is there, too.

8. Something needs to be -said about decisions. Any decision is a finality. We cannot have it both ways. You cannot have your cake and eat it, too. Are we to have homes only be cause others decide? Are we to wear clothing only when others make 200 THE FREEMAN that decision? Are we to eat only when others reach that conclusion? If you decide affirmatively in these last questions, then you have decided that man should be kept like an animal in a cage. And who de cides which cage? Some other human being with no more wit nor wisdom than any other. either right or wrong behavior. That is to say, I can confine my deci sion-making to myself and my own resources in all categories. If I so limit my decision-making, it follows that I cannot commit a wrong against another. Since I do not pre sume to be an authority over anyone except myself, nor over any property except my own, my relationship 9. Finally, there is the question with all others is peaceful and per of right and wrong. I am not mits them to be free. Further, I am speaking of ~~good" or ~~bad." Good or free, for the only person limiting my bad are words derived from our re-· . behavior is myself. And freedom spective value judgments. Right and means self-control.

wrong relate to appropriateness in When I am not content with this terms of reality. and presume to make decisions over Without attempting a complete other persons and other persons' argument, because of space limita-property, and do so against their tions, may I merely state categori-wills, then I am violating their basic cally that there is only one way any natures as profit-seekers and am human being can physically inflict imposing wrongs upon them. an injury and· hence impose a Were I to undertake the teaching ~~wrong" on any other human being. of economics, I would begin with He presumes to act as the authority these beginnings. It is only when over another person or that other these ultimate givens are fully person's property against that per-grasped and appreciated that we can son's wishes. This is contrary to the enter the halls of the arcane mys basic nature of man as a profit-teries provided by higher mathemat seeker. As a profit-seeker, each of us ics, calculus and statistical fore seeks to make decisions over his own casting of probabilities. The person and prQperty, and must do so economics professors may now take to stay alive and to achieve any over. If they do so at this juncture, it measure of satisfaction. I am not is unlikely that they will presume speaking of children, nor of any the danger of the large corporation other incomplete or incompetent or the inevitability of monopoly, mentality. I speak of man qua man. given a free market in a context of As a human being I am capable of private ownership of property. Ii Davis E. Keeler The Indivisibility of Liberty THE indivisibility of liberty is illus trated by the frequent occurrence that the violation of one Uright" may also involve the violation of some other right. For example, a restric tion on freedom of contract may also be thought of as a denial of equal treatment. The imposition of wage and price controls in an inflationary economy provides a good case in point.