Book Reviews

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Economic Liberties and the Constitution THE first assignment I had from For tune magazine in the mid -Nineteen Thirties was to do a story on the ((nineold men" of the Supreme Court. The question of human rights ver sus property rights was then on ev eryone's mind. If you were to sug gest that the right to own property was pre-eminently a human right, you were obviously influenced by ((reactionary" thinkers such as Irv ing Babbitt or Paul Elmer More. You were also, in Franklin D. Roo sevelt's phraseology, a ((horse and buggy" thinker. The judicial heroes of the day in the early Nineteen Thirties were the great ((dissenters," Holmes and Brandeis. Sometimes Harlan Stone went with them. The old stalwarts Van Devanter, McReynolds, Butler and Sutherland-were considered anachronisms. When I visited Pro fessor Felix Frankfurter at Harvard to talk about the court, he said sar castically of Sutherland that you couldn't get blood from a turnip.

376 Now, forty-five years later, Ber nard H. Siegan, who teaches law and economics at the University of San Diego School. of Law, comes along with a book, Economic Liber ties and the Constitution (University of Chicago Press, 5801 S. Ellis Ave., Chicago, Illinois 60637, 383/pp., $19.50), that reverses the dictum of much ((liberal" history. The old ((reactionaries" turn out to be the true liberals. McReynolds in partic ular emerges as something more than the crusty ((aginner" of the New Deal imagination. What Siegan has done is to deal with Supreme Court history in the light of what the Founding Fathers intended. They believed in Natural Rights philosophy; they read Coke and Blackstone, and were cognizant of the claims of ((natural law" theor ists that ~(positive," or enacted, law should go along with fundamentals that were ingrained in the universe and the nature of man. Economic libet1ies were protected ECONOMIC LIBERTIES AND THE CONSTITUTION 377 in the Constitution, with a guaran tee that property could not be seized without just compensation. And, in accordance with the Common Law and traditions going back to Magna Carta, the deprivation of ~~life, lib erty and property without due pro cess of law" made judicial review an absolute necessity in a check-and balance system. People believed in the ~~law of the land," and felt safe from·ex post facto rulings that would impair the obligation of contracts.

~~Due process" was always a nebu lous concept to the layman, and the phrase, ~~substantive due process," doesn't add much to clarification. But ~(due process" can be taken to mean that legal decisions should not de part from constitutional intention. Before the Civil War the Supreme Court held broadly to Chief Justice Marshall's defense of freedom of contract. ~(Due process" was af firmed in the Fourteenth Amend ment. The legal battles of the late Nineteenth and early Twentieth centuries involved conflicting inter pretations of ((public needs," and some of the justices whose reasoning is analyzed by Siegan must seem in consistent when questions of health in bakery shops, for instance, shade off into questions of mere unpleas antness. The swing in sentiment that re sulted in the ((liberal" distinction between ~~human rights" that are more or less absolute and ~(economic rights" that need not be upheld can be charted by reference to two cases.

In one, New State Ice Co. v. Lieb man, the old dispensation hung on; in the other, Nebbia v. New York, we see what Siegan calls the ((ap proaching end of economic due pro cess." New State Ice Co. v. Liebman in volved the liberty of businessmen to enter an established market. The Oklahoma legislature had declared that the manufacture and sale of ice was a (~public business," and hence subject to regulation. An agency was given wide discretion in issuing cer tificates to enter the ice business. When an independent ice man chal lenged the State of Oklahoma, the issue went ultimately to the Su preme Court. Sutherland, speaking for a majority of six, upheld the right of free market entry where there were no considerations of damage to the public health and safety. But Brandeis, in a famous dissent, ar guedthat the Oklahoma statute was not arbitrary. There could be, he said, a natural monopoly in the ice making business if competition were unchecked. There could be (~needless waste." Anyway, the State of Okla homa should be accorded the right to ((experiment."

The importance of the Brandeis dissent was that it foreshadowed na tional policy in establishing the Civil Aeronautics Board and other agen cies designed to control and license 378 THE FREEMAN June entries in a whole host of fields. In Nebbia v. New York the Brandeis ((minority" view became the major ity opinion. By a five-to-four deci sion the Supreme Court upheld the conviction of a small Rochester, New York, storekeeper for the ((crime"·of selling two bottles of milk and a loaf ofbread for eighteen cents. This was in defiance of the milk control law. Justice Roberts, speaking for the majority, ruled that it was not un reasonable for New York to enact legislation that deprived Nebbia of the liberty to sell at prices of his own choosing. McReynolds, speaking this time for a minority that included Van Devanter, Sutherland and But ler, questioned the wisdom of inter fering with the economic rights of little grocers-and also of «twelve million consumers to buy a neces sity otlife in an open market."

Siegan says that the prose in «McReynolds' dissent ... is scarcely in keeping with the image of old guard reactionaries and those who tread on the rights of the masses." Why, so Siegan asks, «have so many legal commentators missed the point of economic due process? Were Holmes and Brandeis really the he roes of that Court?" Since the New Deal the Court has followed a general pattern of accord ing udue process" protection to eco nomic issues only when they affect the First Amendment. Beyond that, the Court has tended to reject judicial review of government restraints on economic liberty. Siegan thinks the time has come for a reversal of current policy. Judicial review, he says, is firmly rooted in the Consti tution. The judiciary has uno au thority to eliminate constitutional protection for economic liberties." Congress and the State legislatures, being subject to pressures from small groups seeking ide~logical favors, can't be trusted with the «final au thority" in socioeconomic matters.

The Court should rehabilitate our Constitutional principles and bring an end to the substitution of politi cal competition for the economic competition that protected the con sumer before the world turned over on its axis in 1933. i THOUGHTS RULE THE WORLD by Leonard E. Read (The Foundation for Economic Education, Irvington-on-Hudson, N.Y. 10533), 1981 128 pages - $6.00 cloth Reviewedby Perry E. Gresham, President Emeritusand DistinguishedProfessor,Be thany College. LEONARD E. READ has produced his own two-footshelf of books. Thoughts Rule the World is number twenty seven. This handsomely bound ·new volume has all of the sparkle and charm of his earlier books with the 1981 OTHER BOOKS 379 added dimension of experience and wisdom which is reserved for what Norman Ream calls ((the chronolog ically gifted." Napoleon, dejected and in exile, his dream of world conquest faded, reflected on his experience and said - Uthe pen is mightier than the sword." Had he thought still more .deeply he might have arrived at the conclusion that the pen is nothing without thought, and that thought truly rules the world. The world of Leonard Read is made up of learn ing, thinking and writing about Lib erty. His thoughts are not intended for world conquest. He has spent his life in a relentless effort to know the truth and to share his discoveries with those who come to him with seeking minds.

Those who are out for a polemic to correct the left-leaning liberals will find no encouragement in this book. Read is no contentious debater. He bears no relationship to the young philosophers of Plato's Republic who were described as ((like puppy dogs who bite and tear one another, with out a true vision of truth." Read be lieves that one who loves liberty must study it, live it and let the example of his integrity and rectitude draw to him those who would learn. The Sage of Irvington has illumi nated one hundred eighteen pages with a most amazing range of pert i nent quotations. He begins with his old friend, Ralph Waldo Emerson, and concludes with Oliver Gold smith. In between is a startling ar ray of philosophers, economists, poets, emperors and presidents with a spate of scientists and saints for good measure. The intellectual com panions of Leonard Read are from all ages and all places.

While this book is made up of twenty-six brief essays on liberty, it is not without an underlying unity; nor is it devoid of intellectual rigor. Herein the reader finds ((logicalrea soning from a sound premise." An swers to important questions are throughout the book. The proper role of government, the miracle of the market, the failure of coercion, the creative power of free individuals and many other truths become self evident as the book proceeds. Now and again an insight comes through as an almost poetic image. Take for example the observation: ((Whenlittle men cast long shadows, the sun is setting on a civilization." The author transcends again the owl wings of economic prose and flies on eagle wings of poesy as he writes: ((As to the glory and sublimity of truth, all is mystery." Few moral philosophers have given adequate notice to the relationship between manners and morals. Read devotes a wise chapter to this very subject and comes out with a conclu sion which is both persuasive and brightened with hope. uTrue,. good manners lead to good morals. When 380 THE FREEMAN June enough individuals thus blest rea son justly from a sound premise, Liberty will again prevail!"

Leonard Read is not only a thinker, writer, teacher and executive. He is also a man of great faith. He sees the liberty which rang out from the Liberty Bell as secured by the fact that the Declaration invoked the rule of God rather than the rule of man. Free individuals under God are not easily subjected to the tyranny of command government. The chapter, ~~Goodness: The First Step to Free dom" views creativity as the hope for humanity, and goodness as par ticipation in the Creation. John Mil ton's Areopagitica is called in to dis tinguish between liberty and license. ~~None can love freedom heartily, but good men, the rest love not freedom, but license." Individual creativity is regarded as goodness which is to be guarded with religious devotion. Grover Cleveland is seldom quoted. Only Read would find an epochal de cision in an obscure administration. Cleveland, on principle and against his political self-interest, refused to sign a bill that would aid some Texas farmers in a time of distress, but thereby turn charity over to the gov ernment. Cleveland saw the respon sibility for human survival and eco nomic well-being as individual responsibility and voluntary shar ing rather than as an opportunity for politicians and bureaucrats to buy votes and power with other peopIe's money. Read commends Cleve land for understanding the role of government as that of ~~keeping the peace and invoking a common jus tice." This good·press for Cleveland makes me proud of my kinsman, Walter Q. Gresham, who was his Secretary of State.

The book ranges over many fasci nating landscapes of the mind. A chapter is devoted to mental growth, another to mutual obligations. The problem of ends and means comes in for full consideration. Conscience, a persistent problem in moral philos ophy, gets a new insight and a new definition. Long-range goals for a creative and effective life are brought under the spell of Lecomte du Noiiy, Thoma,sCarlyle and Immanuel Kant. The story of the Stoic philosopher, Epictetus, is truly inspiring as re lated in chapter twenty-one. Here is a little Greek slave with a crippled leg derived from the cruelty of his master, who nevertheless lives with so much joy and wisdom that the world made pilgrimage to his ob scure home for information and in~ sight. Read calls this ~~the law of at traction" and a wise formula for anyone who aspires to interest peo ple in the philosophy of freedom. ~~Each of us is the architect of his own character," says Leonard Read, and with this remark his students are on their own. Individual free dom is the only freedom that finally matters and individual responsibil1981 OTHER BOOKS 381 ity is a concomitant. Governments cannot be creative. Only individuals can bring the insights and innova tions which remake the earth and the societies which inhabit· it. This does not· rule out the important fac tor of voluntary cooperation. Free dom of association is a fundamental liberty, but coercive association can be tyrannical. ' The obnoxious word ((mandatory"

has no place in this volume. Those who try to impose their wills on oth ers by force are not hated and they are not denounced, but they are in vited to consider the folly and indig nity of their· beliefs and practices. Everyone is invited to study the freedom way of life. The bungling mail service by government, com pared with the effective transmis sion of voice by private industry, is illustrative of the advantages of free enterprise. Many students of political econ omy have overlooked the impor tance of envy and covetousness in social and political affairs. Not so Leonard Read who writes, HWe should note the extent to which this (guiltless' taking of property by coercion is rationalized. Accom plices, bearing such titles as philos ophers and economists, rise to the occasion: they explain how the pop ular depredations are good for ev eryone, even the looted. Thus, we find that covetousness, unchecked in the individual, lies at the root of the decline and fall of nations and civi lizations." The cure for envy and covetousness lies with the attitude of each individual. The person who counts his blessings cannot covet.

Another aspect of the freedom way of life which is frequently over looked is the fact that free people have more fun. Those who are zeal ous for mandatory controls on ev erything are grim and fierce. They miss the excitement and pleasure of free choice. Read sums up this idea with a one-liner: ((Have fun, or for get it!" Leonard E. Read is himself the greatest ofhis books. His long life of dedication to liberty is the exempli fication of all he writes. He not only praises consistency but lives it. He honors humility and admits his ig norance and fallibility. He thinks truth and lives love. Whitehead wrote, ((Philosophy begins in wonder and ends in wonder." By that defin ition Read is a true philosopher, for he has asense of the numinous which he calls ((mystery." The Foundation he has created is a quiet center for the study of liberty which draws thinkers from all over the world. He has not yielded to despair nor failed to find joy in the search for truth and freedom.

The final chapter of Thoughts Rule the World is HGood News." The opening quote for the essay is the author's own. ((Experience has con vinced me that there is a thousand 382 THE FREEMAN June times more goodness, wisdom and love in the world than men imag ine." This is no mere optimism. Read has the critical eye to observe and the good judgment to avoid unwar ranted assertions. There is a quality of hope and happiness in every sen tence. The book is good news indeed!, A TIME FOR ACTION by William E. Simon (Reader's Digest Press, 200 Park Avenue, New York, N.Y. 10017), 1980 $2.75 paperback Reviewed by Timothy G. Nash THIS latest contribution from the feisty former Secretary of the Trea sury-briefer but just as potent as his bestselling A Time for Truth is a compelling indictment of moral, political, and economic decay. This decay is embodied in and promoted by a government run amok-a mon strous bureaucracy which threatens our liberties and our standard ofliv ing.

Practically every nook and cranny of the sprawling federal establish ment feels Simon's sting in this book-the regulatory agencies, the executive branch, the State Depart ment, and the Congress, to name a few. The CCcounterculture"which in recent years has dominated that federal establishment has its roots in four critical elements: ttthe me dia, the public interest groups and think tanks, the second and third echelons of the bureaucracy, and, increasingly, the courts." Simon ar gues that an uncomprehending pub lic has allowed these groups to do great damage and that disaster and dictatorship loom ahead if the public fails to regain the vision of Amer ica's Founding Fathers. The new mood in the country may be the beginning of the reawaken ing which Simon hopes for. Ameri cans are coming to understand that tta government big enough to give you everything you want, is also big enough to take away everything you've got." Americans are also waking up to the fact that in our dangerous world, all the welfarist schemes devisable will be for nought if government neglects its proper function as a peace-preserving agency for defense.

In the final chapter, Simon pre scribes solutions to the problems he has described. They include balanc ing the federal spending, reducing taxes, scaling down money supply growth, harnessing the bureau cracy, and restoring a strong de fense posture. That may sound like a broken record to readers here, but as Simon says it, it sure doesn't. A Time for Action is packed with facts and figures drawn from Si mon's experience in Washington and 1981 OTHERBOOKS 383 seasoned by his commitment to principles. It is the stuff from which budget-cutters and statesmen are made. For every freedom believer who wants ammunition in the cam paign to stave off tyranny,. this is one arsenal which should not be overlooked. , THE POLITICAL ECONOMY OF FEDERALGOVERNMENT GROWTH: 1959-1978 by James T. Bennett and Manuel H. Johnson (Center for Education and Research in Free Enterprise, Texas A&M University, College Station, Texas 77843) 145 pages _ $12.95 cloth; $4.95 paperback Reviewed by Harold C. Gordon, Director of Education for the National Federation of Independent Bumness BENNETTAND JOHNSON, economists at George Mason University, reveal that official statistics often· under state the true burden of govern ment. Agency budgets, for example, do not take account of the enormous sums that businesses must spend in order to comply with regulations.

Nor are future pensions, loan gUar antees, and other long-term or con tingent obligations reflected in cur rent expenditures, despite the fact that they are mounting rapidly. Employment figures are equally misleading. Thousands of full-time personnel are reclassified part-time every year to circumvent limits on hiring. As many as eight million more individuals-contractors, con sultants, and st~te and local em ployees-depend on federal grants and programs for their paychecks. There have been important quali tative changes as well. During the twenty-year period examined by Bennett and Johnson, policymakers at GS-13 to GS-15 levels more than tripled in strength. This is «the bu reaucracy," and it has a vested in terest in its own expansion. The rational self-interest of any other actor in the political process is liable to change; that of the bureau crat is immutable. Civil service pro tections have made it virtually im possible to fire him, and he gets no rewards for being· efficient, econom ical, or productive. On the contrary, his promotions, salary increases, and status depend almost entirely on his multiplying the number of people working under him.

The authors build a persuasive case for regarding the bureaucrat as the real villain in the piece. They examine his skill in cultivating other political actors· and playing them off against each other, his shrewd ma nipulation of ucrises," his use of the media, and (this is increasingly im portant) his clout at the polls. At a time when low voter turnouts are 384 THE FREEMAN common, government workers are one bloc that can always be counted on to show up in force. The authors' analysis is also ap pealing because it suggests a possi ble solution. If the bureaucrat is the prime mover for growth because the existing incentive system has pro grammed him for that role, restruc turing the system might well im prove his behavior. Bennett and Johnson suggest a number of changes that could be made in this respect, utilizing both the carrot and the stick. Promotions and salary in creases should be tied to job performance, not to the number of under lings. Discipline and removal procedures should be simplified. In addition, the authors propose that a ((tax" be levied on the budgets of agencies that create paperwork for the private sector. If an agency's ap propriations were liable to be re duced every time it introduced an. other form, there would be less unnecessary paperwork.

In short, an admirable primer on government growth. Short, pithy, and illuminating, it ought to be re quired reading for every one of Mr. Reagan's budget cutters. , HANDSOME BLUE LEATHERLEX FREEMAN BINDERS $3.00 Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 31, NO.7 • JULY 1981 Curbing Competition Russell Shannon 387 Efforts to curb may hurt more than the competition itself. "Who's in Control of the Country?'~1 Clarence B. Carson 390 Who will control the government if individuals lack self-control? Talent Not so much a gift as an achievement. Robert E. Hood 399 Book Reviews: 404 "The New Right: We're Ready to Lead" by Richard A. Viguerie "Gold, Peace, and Prosperity: The Birth of a New Currency" by Ron Paul The Renewal of Liberty Let us return to first principles. Paul L. Poirot 409 Virginia Bill of Rights 410 As drafted primarily by George Mason and adopted June 12, 1776, a model for other states and the national government.