Book Reviews

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN World Citizen THE WORLD CITIZEN was an eigh teenth-century phenomenon. A child of the French Enlightenment, the World Citizen tended to put liberty ahead of country. Sometimes the World Citizen was bemused by those who rated equality ahead of liberty. This led many into J acobin snares, with the guillotine as their reward if they strayed from the gospel pro claimed by Robespierre or some other tyrant of the moment. But the more canny among the World Citizens came to see with Edmund Burke that liberty, in the abstract, could be a delusion. Burke, an anti-ideologue, was satisfied with English liberties in the plural, as defined by the tra dition going back to Magna Carta. Philip Mazzei, an Italian from Tuscany, was a Burkean, even though Burke gets only a bare foot note mention in Mazzei's autobiog raphy, My Life and Wanderings, which is now published for the first time in its entirety. The feisty Maz zei, who was cheated out of part of his patrimony by a rascally brother, became a wanderer early in life. He was inevitably attracted to London by the fact that, in England, "the only absolute power the government may exercise is ito expel in time of war a fore~gner ~hat is suspected of being a spy." "Personal freedom,"

Mazzei reflected,! "is more important for an individual than public free dom." The year in which he chose to settle in London: was 1756, and the Glorious Revol-qtion sponsored by John Locke had not yet surrendered to the "George be King" attitude of Hanoverians who held to the conti nental theory of Divine Right. In addition to being a World Citi zen, Mazzei was aborn trader whose urge to truck and. barter would have entirely. satisfieq his great contem porary Adam Slmith. As a boy in Tuscany Mazzei had studied to be a surgeon. He took!his profession with him to Smyrna in Asia Minor by way of Constantinop~e. But setting bro ken bones borea him. Sailing to London with an, intrepid Captain Wilson, who kept a wary eye out for ?AQ 250 THE FREEMAN April possible French interference, Maz zei set himself up as a teacher of Italian even though he himself had yet to learn English. His. pure Tus can pronunciation stood him in good stead as a teacher for an interim pe riod, but he soon discovered better ways of making money. He became an importer of oils and· wines, mak ing trips back home to Italy to ar range for a supply of Florentine wines that Englishmen might prefer to port and madeira for the summer.

Eventually he opened a London shop, but he put it under the name of Mar tini and Company in order to keep from being known to the Florentine aristocracy as "Philip the shopkee per." Mazzei was a happy Londoner for some fifteen years. His first disillu sionment with English liberties came when John Wilkes' election to par liament was declared invalid. This seemed to Mazzei. to constitute "a death blow to the solid and sacro sanct fundamental law of a free country, which is perfect freedom in the election of the representatives of the people." Mazzei Meets Franklin Mazzei's growing doubts about English liberties coincided with a first meeting with Benjamin Frank lin, the London agent of the Penn sylvania colony. The Grand Duke Leopold back in Tuscany had asked for two Franklin stoves. Franklin didn't like the alterations that En glish craftsmen had made on his stove. After some argument, Mazzei prevailed on a British stoveman to go back to Franklin's own design. The Grand Duke. Leopold got his stoves, and the improvements that went with the true Franklin model cre ated a thriving new business in "many parts of the Kingdom."

Philip Mazzei: My Life and Wanderings. Translated by S. Eugene Scalia, edited by Margherita Marchione. (Ameri can Institute of Italian Studies, 455 Western Avenue, Morris town, N.J. 07960), 472 pages, $14.95 cloth; $9.95 paperback. Franklin led Mazzei to Thomas Adams, a Virginian who was a great friend of Thomas Jefferson. Sympa thizing with the transatlantic colo nists who were insisting on their rights as Englishmen in refusing to honor the Stamp Act or to pay a mild tax on tea, Mazzei decided to go to Virginia. His plan was to take ten Tuscan peasants with him. Once settled in Virginia, he hoped to do mesticate Mediterranean crops in a New World setting. He bought a farm adjacent to Thomas Jefferson's own holdings at Monticello, and soon was raising wheat and Indian corn for shipment to Leghorn in Italy. Jefferson, who had learned Italian 1982 WORLD CITIZEN 251 for himself before he had ever heard a word of Italian spoken, became a great partisan of Mazzei, deeming him "of solid worth, honest, able, zealous in sound principles, moral and political, constant in friendship and punctual in all his undertak ings." When war came to the colo nies, Mazzei could not remain a sim ple farmer and exporter. He became a soldier, and it wasn't long before he had agreed to become Virginia's agent in Paris, where he joined Ben Franklin as an eloquent pleader of the colonists' cause at the French court.

After the war Mazzei lingered on in Paris, writing a four-volume work on the colonies. He had something to do with promoting Jefferson's Notes on Virginia, which was writ ten to answer questions proposed by Mazzei's friends, the Duke de La Ro chefouca uld and the Marquis de Condorcet. The French Revolution's course, so different from that of the American Revolution, had Mazzei worried the moment the J acobin Club presumed to dictate policies for the Third Es tate. When the French began to is sue paper assignats for money, Maz zei wrote a warning pamphlet to explain the workings of Gresham's Law. His general preoccupation with the specifics involved in maintain ing individual freedom recom mended him to Stanislaus Augustus II, the elected king of the aristocratic republic o~ Poland. Jefferson approved of Sta4islaus, so Mazzei took on the add~d job of becoming Poland's agent lin revolutionary Paris.

The Partitioning.f Poland The chapters devoted to the story of Mazzei's servic~ to Poland have a tremendous inter~st for the modern reader. As an agent Mazzei picked up some warning indications that the King of Prussia was about to con nive with Russia and Austria in the final partitioning of a most unhappy Polish buffer state. Journeying to Warsaw, Mazzei tried to convey the urgency of the situation. But King Stanislaus's military advisers could not believe in the!. King of Prussia's intended duplicity. When they were finally convinced i, that Poland was about to be erase~ from the map of Europe as an independent nation, it was too late. There was nothing to do for Stanislaus out to resign. Indecent as the partitioning of Po land was, there were still some cour tesies connected with it. The Czar of Russia eventuallyi assumed a part of the deposed King ~tanislaus's debts. Mazzei, in a terrifying posting trip to St. Petersburg ~ndertaken in his seventy-third year, retrieved some of the money he han loaned to King Stanislaus.

This makes a grand finale to a story that is full of meaning for any student of freedom. ~ 252 THE FREEMAN April THE WAYWARDWELFARESTATE by Roger A. Freeman (Hoover Institution on War, Revolution and Peace, Stanford, CA 94305) 511 + xvii pages - $35.00 cloth The book's principal findings and conclu sions are also available in a paperback vol ume, A Preview and Summary of "The Wayward Welfare State" 112 + xii pages - $8.95 Reviewed by William H. Peterson Dr. Freeman ponders the prospect of Western Civilization as he exam ines the enormous human and ma terial resources that the American people over the past quarter-century have invested in hundreds of gov ernmental programs, some of which originated in the New Deal but most during the New Frontier and Great Society eras. This book attempts to evaluate the cost of these programs as well as their returns, positive or negative. It is a masterful study by a man who has been an economist with Stanford's Hoover Institution since 1962, and is now Senior Fellow Emeritus.

Today the nation is faced with crucial decisions over the division of resources between the requirements of national defense and demands for domestic services. Aggravating the issue is the accompanying struggle for more or less redistribution of in come from the more productive to the less productive segments of society. These entitlement or transfer pro grams, including Social Security, grants-in-aid to state and local gov ernments, and subsidies to farmers and others, now cost Unde Sam in excess of $400 billion a year, or 56% of total federal spending, compared with only 35% in 1960 and 27% in 1955. This escalation in transfer pay ments can only undermine the drive to improve productivity, augment capital formation and restore pros perity. Total transfers are now far larger than total federal procure ment, defense and nondefense, and total federal payroll, civilian and mili tary. Indeed, they are greater than the 1981 defense budget and the 1981 total estimated expendi tures for new plant and equipment in the U.S. combined. Hence Free man's justifiable assertion that our welfare state is "wayward," i.e., out of control. Similar lack of control is evident throughout the West-in Canada, for instance, Scandinavia, Britain, France, Italy, the Nether lands, and West Germany-apart from, of course, Eastern Europe.

Witness the failure of social pro grams in health, education, hous ing, crime prevention and aid to families with dependent children. Welfarism has contributed to rising illiteracy, sagging productivity, more broken homes, more absent fathers, more unwed mothers, greater crime in all dimensions, and of course 1982 OTHER BOOKS 253 surging inflation and an increas ingly sputter-and-spurt economy. Rightfully, Freeman thus poses the question: "Can Western Civilization survive?" The problem President Reagan faces in trying to rein this wayward welfare state is an old one. Presi dent Roosevelt warned in his 1935 State of the Union message that "continued dependence on relief in duces a spiritual and moral disinte gration fundamentally destructive to the national fibre," and declared: "The federal government must and shall quit this business of relief." On signing the 1935 Social Security Act he said: "I can see the end of public assistance in America."

President Kennedy likewise urged Congress and the nation to reverse the trend of welfarism. He signed a bill on July 26, 1962, "shifting the emphasis of the nation's welfare program for the needy from the dole to rehabilitation," saying that it "makes possible the most far-reach ing revision of the public welfare program since it was enacted in 1935. This measure embodies a new ap proach-stressing services in addi tion to support, rehabilitation in stead of relief, and training for useful work instead of prolonged depen dency." Again, President Johnson, on signing the Economic Opportunity Act of 1964, said: "We are not con tent to accept the endless growth of relief or welfare 'rolls. We want to offer the forgotte~ fifth of our people opportunity and riot doles." President Cart¢r prepared a simi lar plan and stated in his accompa nying message ofAugust 6, 1977: "As I pledged during! my campaign for the presidency, i1 am asking the Congress to abollish our existing welfare system, and replace it with a job-oriented pr0$Tam for those able to work and a silmplified, uniform, equitable cash assistance program for those in need whoiare unable to work ... combine effective work require lnents and strongiwork incentives."

The most impressive. failure is So dal Security, who$e trust fund is fast approaching zero~ Freeman argues that Social Security is increasingly insecure. He notels that it has a de liberately built-in anti work bias, with its limits on wage and salary income that can ije earned by bene ficiaries from age$ 65 to 72. What is equally significartt: more than half of the workers no longer wait until age 65 to collect retirement benefits: half the men andi nearly two-thirds of the women who demanded and were awarded Soc~al Security in 1976 were 62 to 64 years old. The question w:HetherAmerica and Western Civilizamon can survive is indeed relevant. Welfarism has be come a state of ~ind; Washington has become a pub~ic trough. Govern ment, the problem, is still looked upon as a solutionl Can a people who 254 THE FREEMAN April voted themselves into this mess vote themselves out of it? New York economist A. Gary ShilHng noted that most Americans are now de pendent on government pay, gov ernment pensions, welfare aid, sub sidies, bail-outs or other forms of income derived from the public trea sury. Such dependency increased from 36.7% in 1960 to 50.2% in 1979.

Roger A. Freeman has performed a public service with this monumen tal work, which amply documents the foresight of Mr. Justice Brandeis who warned us a half century ago that: "Experience should teach us to be most on our guard to protect liberty when the government's purposes are beneficent ... The greatest dangers to liberty lurk in insidious en croachment by men of zeal, well meaning but without understand ing." THE REGULATIONOF MEDICAL CARE: IS THE PRICE TOO HIGH? by John C. Goodman (CATD Institute, 224 2nd Street, S.E., Washington, D.C., 20003), 1980 135 pages - $5.00 paperback Reviewed by Tommy W Rogers Dr. Goodman, assistant professor of economics and Director of the Cen ter for Health Policy Research at the University of Dallas, contends that most of the failures we encounter in the delivery of health care are not due to failure of the free market but are, to the contrary, the result of governmental interventions; re quirements, prohibitions, and regu lations with respect to medical prac tice.

Dr. Goodman, in point blank fash ion, accompanied by persuasive doc umentation, places much of the blame for this state of affairs on or ganized medicine which, according to him, has "for over 100 years, sought and obtained special privi leges from government." Dr. Good man's book is not an indictment of the medical vocation itself, but is a stinging indictment of what he sees as medicine's long and extensive in volvement with government to re strict free competition in the market place in the interest of medical care provisioners. Goodman traces the history of the American Medical Association from its initiation in 1847 as a scarcely veiled cartel through the 1910 Flex ner Report which was widely util ized by state legislatures as a ratio nale for drastically limiting the supply of physicians. Goodman follows with a discus sion of the purpose of licensing, re strictions on advertising, and re strictions on price competition. He questions the efficacy of the licen sure mechanism to promote medical care quality, challenges the breadth of medical school education (such as the limited knowledge of non-natu1982 OTHER BOOKS 255 ropathic physicians as to the heal ingpower of nutrition) and indicates that the free market has a moreeq uitable answer as to the providing of health care than is to be obtained by the decisions of groups and com mittees whose underlying objective is served by restrictive licensing.

Government, instead of using its leverage to remove the many legal obstacles which have kept a genuine free market .from working in the medical care arena, acted during the Nixon administration to impose ad ditional exemptions, privileges, and subsidies in the form of "health maintenance organizations." HMOs, Goodman feels, represent triumphs of "managerial, legal, political, fi nancial, marketing and negotiating skill" which may well be laying the groundwork for a federally regu lated health care marketplace. Although organized medicine and its allies have resisted the more ex treme .proposals for comprehensive national health insurance, there is no assurance they will continue to do so. Goodman detects a disturbing recent trend among providers of health care services, the recognition that socialized medicine under their control and on their behalf will give them unlimited access· to· utilize a controlled system in their interest.

"Many within the health care indus try want to shape and. mold national health insurance proposals to fit their own economic interests rather than oppose them outright," the author states. He adds that "As they have in so many other countries, the pro ducers of health care may soon be (~ome the architectS ofnational health insurance in the United States." Goodman's op~nion is that the hurden of protecting our health care nonsystem from further governmen tal intrusions vtill probably fall squarely on the! shoulders of the general public anp that if socialized medicine is ultiInately turned back it will be patients!, not practitioners, who will be prim~rily responsible. DEMOCRACY A~D LIBERTY by William E. H. Lecky Introductionby WilliamMurchison (LibertyClassics, 7440 North Shadeland, Indianapolis,Indiana!46250), 1981 Vol. 1, 479 pages; vql. II, 501 pages $18.00/set,cloth; $6iOO/set,paperback Reviewed by Tomm~ ~ Rogers William Edward .Hartpole Lecky (1838-1903), Irish historian, essay ist, and member:of Parliament, is sued DemocracyaruJ, Liberty in 1896.

Lecky was convin~ed that the statist radicalism which:asserted that only the majesty of the collective state <:ould·ensure well~being against the vagaries of the capitalist structure would eventually[ result in an en forced servitude of the citizenry.

256 THE FREEMAN Democracy and Liberty is an eclectic history which deals with the tendencies of the political world in many different countries. English representative government, French democracy, American democracy,-the functions of legislative bodies, labor questions, woman questions, the growth of socialism, are among the topics which Lecky discusses with a depth of knowledge and methods of reasoning which are helpful in eval uating contemporary issues. Lecky was particularly concerned with the effect of universal suffrage bestowed on the basis of posited ab stract "rights" rather than on char acteristics which defined the solid, trustworthy, educated, working cit izenry. A tenet of the older liberal ism which asserted the rights of the individual against the state was that primary political powers should be with the owners of realty. The doc trine that men to whom the land be longed, at least in minute or yeoman amounts, were the men who ought to govern was held by Dr. Franklin and by a large segment of the Amer ican colonists. Lecky felt a major danger of representative govern ment was its potential degeneration into a system of veiled confiscation of one class voting the taxes which another class would be compelled to pay.

Lecky felt that the privilege of suffrage rightly varied according to the special characteristics and circumstances of nations. That there is no certain and specific"natural right" of suffrage was said to be illustrated in the American experience. There were no uniform rules of suffrage in the colonies. Even subsequent to the adoption of the Constitution, the various States differed considerably in their qualifications for voting, al though property qualifications pre vailed in most states. Lecky felt that the organic emer gence of the right of suffrage in Western Civilization was aptly set forth by Chief Justice Story. In his Commentaries on the Constitution, which Lecky felt was one of the most valuable works ever penned on the science of politics, Story said that voting, irrespective of whatever foundation it may have in natural law, had always been treated as a civil right in the practice of nations, regulated by each society according to its own circumstances and inter ests.

Lecky endeavored to follow the tendencies that were altering the contours of the political world right up to the publication of his Democ racy and Liberty. All the eloquence and learning that Lecky mustered, Murchison writes in the introduc tion, was shouted into the teeth of the gale. Nevertheless, Lecky was a man worth listening to in 1896. And, his conversation, rooted in tradition and experience rather than frenzies of the moment, is still valuable. @ the Freeman VOL. 32, NO. 5 • MAY 1982 The Functional Role of Profits Arnold iW. Johnson 259 All of us should understand and approve the profit-an¢J-losssystem. The Role of Incentive Lawrence W. Reed 265 Why self-responsibility generally out-performs government intervention. Trickle-Down Economics Gary North 268 The wealth of nations depends not so much on the few rich but on what those of the middle class do with their money. Corporate Mergers: Method or Madness? Sheldon Richman 282 A study of the market processes behind the merger activity.