Book Reviews

As luck would have it, he caught innumerable people at the very mo ment when they were moving from thinking into action. Ideas, said the late Richard Weaver, have conse quences. And Mr. Pines began combing the country at a time of consequences, when businessmen were beginning to fight back against excessive regulation, when taxpay ers were organizing to put a cap on both taxing and government spend ing, when parents were objecting to sloppy methods of teaching and ag gressive anti-religious secularism in the schools, and when the New Right in Washington began to make its first BACK TO BASICS 633 fruitful contact with the Moral Ma jority at the grassroots. Nomenclature bothers Mr. Pines a bit. The New Right and the Moral Majority are "rightist" in a political sense, but Mr. Pines properly ob serves that there is nothing political about the return to basics in educa tion, or the quest for spirituality in religion, or the pro-family move ment. "Conservative," Pines says, fits the movement better than "right ist," but there is nothing peculiarly conservative about a concern for na tional defense. Many liberals share a distaste for abortion with conser vatives.

The Old-FashionedLiberalismand The TraditionalistMovement Looking for an umbrella word, Pines settles for "traditionalist." He notes that tradition, in America, in cludes a faith in conquering fron tiers and building better societies, in political democracy and free mar ket capitalism, in a federal system that protects the separate states, and in a "public ritual" that celebrates patriotism. In his discussion of names, Pines shows he has no quar rel with the old-fashioned liberalism of the nineteenth century. But to be useful today it has to be labeled "traditional liberalism," which makes out a tacit case for "traditionalist" as against such obfuscating descrip tions as "neo-conservative." Mr. Pines doesn't do much with the intellectual pioneers of" the tra ditionalist movement beyond noting that George Nash p.as profiled many of them in his 19'16 book, The Con servative Intellectual Movement in A.merica. Of the pioneers he says, "prolific though they were, conser vative intellectual~ generally had but limited impact on: the public policy process." This majy seem a bit un generous of Mr. Pines, for, as the history of Britain! shows, a Fabian Society must com, before there can be any Fabian su~cess at the polls.

But Mr. Pines' decision to take for his starting line the emergence of such conservative or traditionalist institutes as the fIeritage Founda tion, the Hoover Ipstitution and the American Enterprise Institute was correct for his putpose. What he is giving us is con~emporary report age, which is not yet history. Pines' account of the epic fight of the Illinois Power 1 Company against the Columbia Broadcasting System over an alleged rpispresentation is battlefield reporting at its best. Business is only now beginning to break out of its silences, and Mr. Pines is an engaged man in his ef forts to keep the momentum going. The battle of the W. R. Grace Com pany's Peter Graqe for a change in the capital gains !tax had an enor mous impact: wh~n 106 papers had published stories about Grace's em broilment with President Jimmy Carter, Congress cut the maximum 634 THE FREEMAN October rate from 49 per cent to 28 per cent.

With businessmen turning to activ ism, students are also getting into the fight. There are 6,000 members of the new Students In Free Enter prise at 150 colleges, which is a big switch from the campus scene of the Nineteen Sixties and early Nine teen Seventies. Keynes Losing Ground Mr. Pines' front-line reporting took him to the University of Minnesota, whose economics department has been identified with Walter Heller, described by Pines as "America's best-known, most visible Keyne sian." Well, Walter Heller is still at Minnesota. But he is "out of step with most of the exciting work now going on in the department." Pines notes that the new "glittering lights" at Minnesota now-Edward Prescott, Thomas Sargent, Christopher Sims, Neil Wallace-have all turned their backs on Keynes. Pines quotes Tom Sargent, an en thusiastic advocate of the new "ra tional expectations" school of eco nomics. "When I started teaching,"

said Sargent, "I gave my students the standard Keynesian stuff." But the "moment of truth" came for Sar gent while he was working with Neil Wallace on a project at the Federal Reserve Bank in Minneapolis. A study that began as the "apotheosis of Keynesianism" started to crum ble after eighteen months of work. "It was a tragic realization," so Sar gent recalls. What Sargent and Wallace discovered was a funda mental flaw in the Keynesian ana lytical method itself. Sargent con cluded that Keynesian "economic models do not work well; they give bad predictions." Looking back to the days when he was teaching courses based on Keynesian analysis, Sargent says: "It makes me sick to my stomach." "I looked up to them," he says of the Keynesian "giants." "I would .not have believed that these men could have been so wrong. It's been like discovering that your parents are wrong." Mr. Pines wrote about the Equal Rights Amendment before it had en countered its doomsdate on June 30 of this year. But he accurately notes that in fighting to keep ERA out of the Constitution, Phyllis Schlafly, Lottie Beth Hobbs, Jo Ann Gasper and other supporters of the "tradi tionalist" family proved that women could exercise their rights of free speech just as effectively as men even without a new amendment. Since the Constitution already guarantees the "equality" of all citizens without ref erence to sex, the ERA would have been redundant. Its proponents said it was needed as a "symbol." But the fight against it by Mrs. Schlafly in favor of the "traditional" family was symbolic, too. And traditionalism, says Pines, will go on winning. ® 1982 OTHER BOOKS 635 THE DOMINION COVENANT: GENESIS by Gary North (The Institute for Christian Economics, P.O. Box 8000, Tyler, Texas 75711) 1982 496 pages - $14.95 cloth Reviewed by Edmund A. Opitz GARY NORTH'S name is well known to readers of The Freeman as the au thor of a score of articles, lucidly written and well argued. His fort nightly newsletter, Remnant Re view, contains brilliant analyses of current economic and political trends, and offers sound advice for those who are struggling to hold body and soul together during this trying period in the world's history. His Institute for Christian Economics issues four publications, one monthly, three bi monthly. It also publishes books, tapes and home study courses. A Di vinity School is on the drawing board.

Dr. North seems to get more things done than any two ordinary people, and all is done well. But central to his life's purpose is the writing of a multi-volume economic commentary on the Bible. Of ordinary exegetical works there is a profusion, but no one, to my knowledge, has ever gone through the Bible book after book to see what the whole Bible has to say about the way our economic activi ties should be organized. Dr. North has dedicated himself to this task, and the formidable book before us is volume I. Gary North's dpctoral thesis ex plored the econon#c thought of the New England Puritans. His theolog ical convictions li~ in this area, that is, within the ort:podoxy laid down by John Calvin. Calvinism strikes some as a legalistic and cheerless creed. But that C*lvin's was a pow erful mind no one can deny, and it is equally true that Calvinism has at tracted minds of the highest caliber from its early days to the present time. Basing their theology on an infallible Book, Galvinist thinkers put modernity to ~he test and find it wanting; it is man~centered not God centered and this causes everything to be more or less skewed.

Gary North sta.rts at the begin ning, with Genesis 1:1, and by the time he reaches Genesis 50:20 he has written a book of 496 pages and dis played a sure-footed understanding of Biblical theology, science, sociol ogy, free market, economics, Dar winism, Marxism,! and sundry other issues. There is he~vy stuffhere, but the writing is lively and heavy does not mean dull. There will be readers who will find som¢thing to disagree with on every other page, but even the most sceptical-+-if they can think at all-will find much to ponder. Readers who want a basic course in Austrian econ~mics will find it here, supplied w~th Biblical rein forcement of key points. If it is light 636 THE FREEMAN October on the Creation vs. Evolution con troversy, there is a 77-page appen dix with 203 footnotes. There are strong opinions on almost every page, and a twenty-page index enables the reader to find his way around in the book.

Twentieth-century socialism has made deep inroad among the more liberal church bodies, and it has re cently gained a foothold among Evangelicals. Which makes it ap propriate to note here the appear ance of a second edition of David Chilton's fine polemic (Productive Christians in an Age of Guilt-Ma nipulators, I.C.E., Box 8000, Tyler, Texas 75711). The New Preface is by Dr. North. , MARKETSAND MINORITIES by Thomas Sowell (Basic Books, Inc., 10 East 53rd Street, New York, N.V. 10022) 1981 141 pages - $12.95 cloth, $5.95 paperback Reviewed by Tommy W Rogers THOMAS SOWELL demonstrates that many of the things we "know" about ethnicity and economic status are not so. Variables commonly thought of as decisive, skin color, for example, prove on examination to be far from determinative. Orientals and black West Indians are more economically successful than are some white groups. Commonly overlooked vari ables, such as fertility, socialization, and attitudinal and behavioral dis position, have a significant impact on incomes and occupations.

Sowell presents some revealing facts: The incomes of ethnic minori ties differ so widely within the group as to call into question the meaning fulness of comparisons based on na tional averages; discrimination can not account for the incomes of minorities who earn more than the national average; the lower earn ings of some groups are not neces sarily explainable by discrimination since other factors may be determi native. With respect to the application of this analytical process, Dr. Sowell outlines his methodology: In applying the general logic of deci sion-making to particular social pro cesses, we will examine the peculiarities of those processes but will treat human beings as similar, whether they are in politics or business or the schools ... We will also avoid making "the market" an automatic producer of certain results, but will instead consider what kinds of mar kets are being analyzed, and what incen tives and constraints exist in such mar kets. The whole emphasis will be on the specific characteristics· of particular de cision-making processes-not on a vague figure of speech called "society."

Sowell examines the operation of incentives and constraints as influ1982 OTHER BOOKS 637 enced, for example, by intergroup differences, job markets, consumer markets, and government regula tion. Groups with strong family and community ties-such as Chinese, Japanese, and Jews-have been prominent as entrepreneurs, setting up businesses drawn from resources within the ethnic community. Jews often started as pushcart peddlers, Chinese as operators of laundries. Blacks, Sowell observes, have sel dom set up independent businesses, but the subsets of Blacks who have (Black West Indians, Black Mus lims, and followers of Father Di vine's religious sect) contrast sharply with the massive failures in the prosperous 1960s and 1970s of Black businesses financed by the federal government in programs created by "experts" and often receiving pref erential treatment by banks and private and governmental pur chasers.

Dr. Sowell calls attention to the fact that some of the most dramatic rises from poverty to affluence in the United States have taken place among groups who did not follow the political route to economic advance ment, i.e., the Chinese,Japanese, and generally, the Jews. The most polit ically successful American ethnic group-the Irish-were the slowest rising of the nineteenth-century Eu ropean immigrant groups. Dr. Sowell also calls attention to the important role of the values peopIe cherish; the ~ehavior pattern of group is a cruci~l variable in both racial and non-racial contexts. He quotes the ruefu~ conclusion of re former Jacob Riis that some people "carry their slun1s with them wher ever they go." :Or. Sowell believes there is no compelling reason to be lieve that goverrtment activity has benefited ethnic i minorities on net balance, even when that has been its purpose. Futihermore, the fick leness of gover:qment policy sug gests that determining its purpose over some meaningful span of time is not easy, since "whatever the merits or demerits of government policies (relating to minorities), nothing seems ~urer from history than that those pqlicies will change."

Contrasting th~ results of volun tary economic transactions ("the ltnarket") with gqvernmental inter vention which fqrces, penalizes, or subsidizes decisions different from those which the; transactors would have preferred, he finds numerous instances where! even well-inten tioned interventions have thwarted the efforts of etljlnic groups to ad vance. As Dr. Sowell points out, eco nomic analysis qoes not make hu man beings better or more moral, but it does offer insight into the way dif ferent economicjinstitutions affect the well-being of human beings as they are. Dr. Sowell is without question one of the leading economists in the 638 THE FREEMAN October United States. When he writes or speaks he is worth heeding. Milton Friedman describes Markets and Minorities as a breath of fresh air on a topic which is often prejudiced by unreasoning emotion. Sowell's book deserves to become a classic in the literature on the economic and so cial problems of minorities. If it does not so become, it will not be due to any deficiency of analysis or presen tation. , THE PURSUITOF VIRTUEAND OTHER TORY NOTIONS by George ~ Will (Simon and Schuster, Inc., 1230 Avenue of the Americas, New York, N.'f. 10020) 397 pages - $16.50 cloth Reviewed by Joseph S. Fulda WHETHER one follows his twice weekly columns, reads his bi-weekly essays, or enjoys his lively com ments as a television panelist, one cannot fail to be impressed with George Will's expressive erudition.

No other contemporary columnist has quite his way with words or quite his ability to extract, in a thousand words or so, that which is " 'inside' public matters: not what is secret, but what is latent, the kernel of principle and other significance that exists, recognized or not, 'inside' events, policies and manners." Will's latest collection of essays and col umns is truly a restorative for those with Tory sensibilities and "the un derstanding that education consists primarily of arguing from, not with (one's) patrimony." In more than six score finely fash ioned, tightly reasoned pieces, two distinctly different Tory sensibili ties emerge. The first is the con science of the cultural conservative lamenting "the decline of almost ev erything since 1914" of "stained glass minds" which, not altogether jok ingly, "mourn the passing of the thirteenth century: feudal codes, he raldic banners, serried ranks of bishops ..." This is Will at his best, Will the social critic, conveying his urgent concern that Americans not lose what he terms "social sympa thy": "the ability to comprehend, however dimly, how other people (must) live."

This is the Will educated at Ox ford ("Like civilization, it is cumu lative, complicated, old and densely packed.") who reminds us that edu cation "presupposes students who acknowledge their incompleteness and teachers who believe that the purpose of education is to put some thing into students rather than to let something- 'self-expression' out." But there is a second Tory voice which makes itself heard in Will's 1982 OTHER BOOKS 639 pages, and it is political. This is the argument that since "social and cul tural anxieties find their way onto a society's political agenda" it is well to use government as "an instru ment of conservative values, tem pering and directing social dyna mism." Will believes, indeed, with much of the New Right, that the "nation's moral makeup is, today, soft wax on which national leadership can leave a long-lasting impress." Need less to say, this is not the classical liberal's view of the rightful role of, the state, and George Will does not present it as such. "The overriding aim of .liberalism, properly under stood, is the expansion of liberty ...

Conservatism, properly understood, rejects the idea of a single overrid ing aim. Real conservatism is about balancing many competing values ... " Well, life is about balancing competing values, but the classical liberal does not want such decisions made in the political realm. Not all of us have the same values, simi larly ranked, and it is thus that lib erty is not only itself a value but also the sine qua non for all personal value choices: it is not the role of government to undertake .the bal ancing of competing values. To Will, "... libertarianism is a recipe for the dissolution of public authority, social and religious tra ditions, and other restraints needed to prevent license ... '? To call one self a "libertarian conservative," he asserts, is a label as contradictory as "promiscuous celilPate." But few lib ertarians are nihilists, and those who are never redeemi themselves with the nobel label "cbnservative." The truth is that conftksion is being pro nloted here at a ~ather elementary level: the doctri:p.e that morality ought not to be ~mposed is philo sophically distinc~ from the doctrine that there is no mprality.

If Will sees lib¢rty in general as the antithesis of! sustained virtue rather than as ffu.e crucible out of which virtue is fotmed, his attitude towards capitalis~ is even less sat isfying. It is no~ animus, by any means, but ratqer what George Gilder aptly labeUed "the dirge of triumph." The 1980 Rep~blican platform, Will argues, is woven from two in compatible stranqs. "One is cultural conservatism. Th~ other is capitalist dynamism. The .latter dissolves the former." This, says Will, is perhaps the only point Marx got right. Capi talism, he continqes, is a "relentless engine of chang~, a revolutionary inflamer of appetites, enlarger of ex pectations, and aiminisher of pa tience." "Republic4ns," he warns, "see no connection be~ween the cultural phenomena they! deplore and the capitalist culture they promise to intensify." For Will this tension be tween the bourgeois ethic and con serving social v~lues presents an "especially vexing" dilemma-that 640 THE FREEMAN of "deciding what is to be conserved, and how."

Mainstream conservatives can, however, and for the most part do, accept the position of Frank S. Meyer and Friedrich A. Hayek, that the al leged tension between social conser vatism and economic freedom is largely given the lie by history. The first century of our nationhood saw both morality and piety, on the one hand, and freedom and the private property order, on the other. Rather than working against each other, freedom and tradition reinforce each other as Hayek so beautifully expos ited in The Constitution of Liberty. Will writes that "Capitalism means the liberation and incessant flaming of appetites," the "predictable con sequence" of which is "social disin tegration." But, as Will should know, HANDSOME BLUE LEATHERLEX that is not the way things worked out. Social disintegration was brought on by slavery, not liberty, and later by intervention, not eco nomic freedom. But these are subordinate mat ters, among philosophical soul mates, for on almost any specific policy issue, Will's instincts are not with the statists. In essays such as "Government and the 'Cheerleader Problem' ," "The FTC as Federal Nanny," and "Sexism in the Car Pool: DOT Rides to the Rescue," Will proves himself as witty an antista tist as ever was. But perhaps his fin est writings are his legal analyses, which give one "the joy, than which there is nothing purer, of an argu ment firmly made, like a nail straightly driven, its head flush to the plank." I FREEMAN BINDERS $4.00 Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 32, NO. 11 • NOVEMBER 1982 The Fine Art of Cheating Ridgway K. Foley, Jr. 643 How coercive programs invite corrupt practices an'long beneficiaries and victims. Keynesism in a Nutshell l1enry Hazlitt 650 Keynes failed to see the disastrous consequences of continued inflation. Economic Democracy Biill Anderson 651 How political intervention perverts the economic process. The State Wades In Steve H. Hanke 660 A case study of the high cost of government assistance. A Rebirth of Economic Freedom: The De-Bureaucratization of American Business Jack D. Douglas 662 How business is turning toward smaller operations for better results. Capitalism and Greed James Doti 673 A personal experience brings home the lesson that selfjinterest serves others as well. First-World Wealth and Third-World Poverty John Jefferson Davis 678 How production and trade help to overcome poverty.