Book Reviews

A former activist in the environ mentalist movement, Ron Arnold quit the Sierra Club because it seemed to him it was intent on as serting a monopolistic religious claim to "the powers of salvation and heal ing" as it pushed its fight to preserve the landscape. The old Sierra Club had had a practical mission; it was to preserve certain chosen wilder ness areas and to foster outdoor ac tivities, but not at the cost of deny ing people the "wise use" ofnecessary range lands, forests and mineral de posits. Although John Muir, the patron saint of the Sierra Club, could be pretty mystical in his nature wor ship ("the groves were God's first temples"), the Club, prior to the Nineteen Forties, still held to the old ideas about conservation promul gated by Theodore Roosevelt and Gifford Pinchot in the Bull Moose era. As a forester Pinchot applied the ideas specifically to the federal for est lands. Save for the wooded por tions of our national parks, the fed eral forests were to be put on a 377 378 THE FREEMAN June "sustained yield" basis, with new seedlings taking the place of mature trees as they were "farmed" for lum ber just short of their imminent de cay.

Conservationvs. Preservation With Teddy Roosevelt and Gifford Pinchot, conservation was not to be confused with preservation. There was a point in preserving sequoia and redwood trees, which had century long lives. But "preservationism," when applied on a dogmatic basis to forests of Douglas fir and Sitka spruce, would result in ecological museums filled, eventually, with old and rotting trunks of no esthetic beauty and little economic value. In brief, Roosevelt and Pinchot believed in trusteeship. They were for complete preservation of natural wonders. But "multiple use" should prevail in the rest of the federal pat rimony. The conservation ethic was per fectly compatible with a belief in economic expansion. But the preser vation ethic, which has taken over in all advanced environmentalist circles, looks upon economic expan sion with jaundiced eyes. Belief in the orderly, efficient use of resources to give opportunity to more people, and to raise the general standard of living, is regarded by the preserva tionists as a desecration. With the preservationists, development is a crime.

John Chamberlain's book re views have been a regular fea ture of The Freeman since 1950. We are doubly grateful to John and to Henry Regnery for now making available John's autobi ography, A Life with the Printed Word. Copies of this remarkable accountof a man and his times our times-are available at $12.95 from The Foundation for Economic Education, Irvington on-Hudson, New York 10533. Naturally, when Jim Watt, as a believer in the traditional idea of conservation as "wise use," became Secretary of the Interior, thepreser vationists took immediate alarm. All that they knew ofJim Watt was that he had, as head of the Mountain States Legal Foundation in Colo rado, taken the side of industry in some disputes that grew out of ar guments about multiple use. The preservationists jumped to the con clusion that anyone who would de fend a business interest in an envi ronmental matter must be for lumbering or encouraging mining exploration in the national parks.

Watt, manifestly, had the wrong religion: he believed in a Christian God, not the mystical God of Nature. So the campaign against Watt roared into high before anyone ~ad really taken a proper measure 01 the man.

1983 AT THE EYE OF THE STORM 379 Actually, as Ron Arnold explains it, Watt's ambitions, as Secretary of the Interior ,would meet with the full approval of Teddy Roosevelt and Gifford Pinchot. Arnold tells of the first meeting of Watt with President Reagan. There was instant rapport between the two men. Within a few minutes they had settled on five ma jor Department of Interior objec tives. The first would be to open up the public lands to multiple use in the classic Teddy Roosevelt manner. The second was to reduce our na tional energy dependence-which meant spurring offshore oil devel opment. A third objective was to es tablish a national metals policy, which could begin with an inventory of minerals in the public domain. Fourth, the deterioration of the Na tional Parks must be halted. And fifth, leadership in the Department of the Interior should be provided by paying special attention to what Watt described as "management by objectives."

A ProperMineralsPolicy Ron Arnold's point is that there is nothing subversive of conservation ism in the five-point agenda decided upon by Reagan and Watt. But when Watt began looking into metals pol icy matters he discovered that 42 per cent of federal land was closed to mineral entry, and an additional 25 per cent was "highly or moderately restricted." There were eighty different laws, executive orders and regulations dealing with non-fuel minerals. So finding a proper min erals policy inevitably meant step ping on a few toes. Watt has offered to resign as Sec retary of the Interior any time the President asks for it. Since the im placables of the environmentalist movement remain dedicated to the idea of getting rid of the. man who enjoys· the wilderness without feel ing called upon to worship it, Watt may be gone before Reagan com pletes his first term. But the prob lems posed by the environmental ists' animus against development, or the "wise use" of resources, will re main.

Resources are for people. The co balt that might be found in Idaho cannot rightly be allowed to remain in the ground when our defense in dustries need it. Nor can we refuse to harvest trees when lumber is re quired for new homes for the Baby Boom generation. ® 380 THE FREEMAN June USSR: THE CORRUPT SOCIETY by Konstantin M. Simis (Simon and Schuster, 1230 Avenue of the Americas, New York, NY 10020), 1982 316 pages. $14.95 cloth Reviewed by Bettina Bien Greaves SCARCITY exists everywhere in the world. However, flexible prices and the efforts of entrepreneurs keep se rious bottlenecks and shortages to a minimum in a market economy. Flexible prices reflect market sup ply and demand. Entrepreneurs who are alert to shifts in demand and supply make determined efforts to offer more of those items for which demand is rising. If they succeed, they will make profits and con sumers will be better satisfied.

In Russia, however, it is a very different story. There the state seeks to monopolize all production and distribution. Prices do not reflect supply and demand. Private enter prise is illegal. Because private en trepreneurial efforts are prohibited, production bottlenecks are every where and almost all the things peo ple want are shoddily produced and in short supply. Yet people in urgent need of some good or service that the state does not provide to suit them meat or flowers for a special occa sion, toilet paper, plumbing repairs, prompt dry cleaning service, or con siderate medical attention-will use any means necessary, even illegal means, to obtain the things they want. No amount of government control, not even the threat of severe sentences, will keep people from trying to satisfy their wants and needs; it only makes it risky and ex pensive. The corruption that results when peaceful private pursuits are thwarted is the subject of Konstan tin Simis' book.

The first draft ofthis book had been smuggled out of the country to the United States where Mr. Simis ex pected to have it published under a pseudonym. However, in November 1976, when the final revised version was in his Moscowapartment, he was arrested, his apartment searched, his manuscript confiscated and both he and his wife taken in for question ing. They were allowed to return home that night and their daily lives continued-under constant surveil lance and subject to frequent inter rogations-until May 1977 when he was expelled from his job. A month later his wife lost her job too. Then abruptly in the fall of 1977, they were given the choice of going on trial for the book and being sentenced to the camps, or of applying for "permis sion to emigrate" and leave the country within ten days. The Sim ises chose exile, eventually reaching the United States and, in spite of KGB threats, went ahead with his book's publication.

We hear frequently how much the 1983 OTHER BOOKS 381 Russians depend on the food produced on private farm plots, representing only about 3 per cent of the coun try's arable land. However, much less is heard about the dependence of all production on private, often illegal, activities of producers and specula tors in all areas of the economy. Many goods and services are avail able only from black-market "spec ulators." Others are available only in exchange for "gifts" or bribes of some kind. Even official state enter prises must pay tribute of some kind to obtain the materials they need to fulfill their production quotas and to keep production moving. Mr. Simis writes about wide spread buying and selling of mer chandise by private entrepreneurs. Such "speculation" is a criminal of fense in the Soviet Union and the speculator who is caught faces a court trial and severe penalties. Yet the people themselves consider specula tors as "a useful and necessary part of daily life.... Speculation has be. come part and parcel of the life in the Soviet Union because it supplies people with daily needs." Mr. Simis writes of several private entrepre neurs who succeeded so well in serv ing their customers that they amassed millions in gold coins, gems, valuable paintings and historic rel ics. Yet their success was at serious risk and some were sentenced to many years in the camps.

Mr. Simis writes also about "free lance" production, Le., work done outside working hours, outside the system, and of "left-hand" or illegal, enterprises. Some private "facto ries" exist within state factories, of ten "employing" state employees on the side and using materials stolen from the state. The people think nothing of cheating and stealing from the gov ernment or a state enterprise. Cor ruption and bribery are part of ev ery ordinary person's daily life-from the cradle to the grave. To receive adequate care at childbirth, a mother bribes the doctor. Kindergarten tots soon learn that the teacher must be "remembered" on her birthday if the child is not to be held up to ridicule before the class. By the time a stu dent enters the university, he knows that every aspect of schooling has its "price" -so much for admission to a prestigious institution, so much to pass an exam, and so on. Frequent bribes or "gifts" are called for simply in the course of daily living. And af ter death, bodies are stripped by cre matorium employees of gold teeth, crowns and clothing, which soon find their way to the black market.

The system of tribute and gifts is everywhere in Russia. Everyone is on the take-the police, the KGB, high officials, as well as ordinary persons struggling to survive. The Soviet citizen sees nothing immoral in cheating or stealing from govern ment. "Usually," Mr. Simis writes, 382 THE FREEMAN June "he understands perfectly well-that he is breaking the law, but he does not consider his actions im moral. . . . But in private dealings this same citizen will conduct him self in accord with the precepts of common human morality." Thus, Mr. Simis has deep respect for the Rus sian people personally. However, he is pessimistic about the future of his native country. The ruling appa ratus is ."completely infected by cor ruption," he writes. "The Soviet gov ernment, Soviet society, cannot rid itself of corruption as long as it re mains Soviet." And to expect the So viet government to change its na ture is almost as unlikely as to expect the leopard to change his spots. , DEVELOPMENT WITHOUT AID: GROWTH,POVERTYAND GOVERNMENT by Melvyn B. Krauss (McGraw-Hili Book Co., 1120 Avenue of the Americas, New York, NY 10020),1983 208 pages. $17.95 cloth Reviewed by Tommy w: Rogers THE key to prosperity in less-devel oped countries isto utilize the prin ciple of comparative advantage in combination with release of the in centive and creative opportunity presented by the free market. Unfortunately, the social-democratic influence has emphasized taxation and massive, government spending coupled with intense bureaucratic intervention for "redistribution" of income and expansion of the public sector. There has been an almost re ligious commitment to "human cap ital" investment. and "fine tuning."

Policies of high taxation and big government have been ruinous for Third World Countries. Implementation of the welfare ethic in less-developed nations "of ten has resulted in economic chaos, political violence and eventual mil itary dictatorships." Economic de velopment efforts have too often taken the form of zero-sum redistri butionist programs. Preoccupation of a country with income distribution, wherein one group can obtain a larger share of a stale economic pie only at the expense of another group, "is to condemn it to a kind of Tan zanian tango of poverty and repres sion, redistributing an exceedingly small economic pie for an exceed ingly long time to come." Krauss notes that it is bad enough when economists give out erroneous advice because the theories on which they base their advice is faulty. It is even worse, he states, when erron eous advice results from abuse of scientific authority to impose per sonal biases on others under the rule of scientific law. Krauss feels that acceptance of the advice of Prof.

1983 OTHER BOOKS 383 Walter Heller of the University of Minnesota has been particularly detrimental to Third World coun tries. Heller's 1954 statement that the income distribution pattern of many less-developed countries is "a compelling case for redistributive government finance" would be dis missed as pure bunk if the speaker were not wrapped in scientific robes, but many naive persons, Krauss states, accepted Heller's dictum as scientific truth simply because Hel ler had a strong scientific reputation. Krauss demonstrates how foreign aid hurts and retards development in less developed nations. With re spect to efforts to expand the World Bank, Krauss observes that "the World Bank has become an impor tant vehicle by which the public sec tor has replaced the private one in much of the Third World. The sim ple truth is that several interna tional banks ... want U.S. and other taxpayers to bail them out from their past imprudent investments ... by bailing out the borrowers from im pending bankruptcy through the World Bank."

Development Without Aid is a tre mendous statement on the effect of the Welfare State as the enemy of the masses. Big government, as Krauss unequivocally demonstrates with telling comparison and docu mentation, is destructive of the economy in a multiplicity of ways. The author posits economic development without aid as "an essential condition for economic develop ment." Krauss makes a compelling and convincing argument that the international marketplace is a much more potent antidote to poverty in less developed areas than is the in ternational transfer of income. i PRIVATIZING THE PUBLIC SECTOR: HOW TO SHRINK GOVERNMENT by E. S. Savas (ChathamHouse Publishers,Inc., Chatham, N.J. 07928) 164 pages. $15.00 cloth Reviewed by Lawrence W Reed "Public choice theory" in economics, as it has developed over the past decade or so, tells us that the public sector - government - possesses many inherent weaknesses as a pro vider of goods and services. For ex ample, it has a tendency toward bu reaucracy; it leans toward the creation of franchised monopolies; and it has little incentive to be effi cient. By its very nature the public sector is a poor provider of economic services.

To "privatize" is to turn over to private citizens a task (provision of a good or service) heretofore carried out by some government entity. It means the establishment of crea tive, noncoercive, profit-seeking, 384 THE FREEMAN marketplace mechanisms in place of the government's power to tax, spend, regulate, confiscate, or monopolize. Privatizing is the peaceful way of dismantling the State brick by brick. Savas establishes early on that there is an awful lot to dismantle. He identifies and explores in depth three major factors which have con tributed to the enormous growth of government: a demand for more government services, by recipients of the services; a desire to supply more government services, by the producers of the services; and, in creased inefficiency, which results in the seeming need for more govern ment to do the same job. Some free market believers may HANDSOME BLUE LEATHERLEX chafe at what appears to be a case for privatization that is less enthu siastic and more roundabout than need be. Savas, for instance, throws an occasional bouquet at that curi ous halfway method involving gov ernment-issued vouchers. Others may want to see less emphasis on the utilitarian (what "works") ap proach and more emphasis on the philosophical (what advances indi vidual liberty ) approach.

In any event, Privatizing the Pub· lic Sector is a timely and thoughtful contribution to the issue of reducing the scope of government in our over governed society. It should be wel comed and studied as a work of con siderable value. I FREEMAN BINDERS $4.00 Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 the Freeman VOL. 33 NO.7 • JULY 1983 Your Freedom-What About It? Robert Bearce 387 A serious look at the economic and political conditions that make freedom possible. Prescription for Economic Health Elgin Groseclose 395 Suggested correctives for the mania of going into debt. The Constitution and Paper Money Clarence B. Carson 399 Current inflation calls for review of what the Founders thought of the idea. Why Anticapitalism Grows Henry Hazlitt 409 Brief answers to common questions about capitalism. The Moral Case for Competitive Capitalism Donald B. Billings 413 The strength of capitalism lies not only in its efficiency but in its ethical foundations.