A Piece of Street Wisdom; D. Williams

John K. Williams A Piece of Street Wisdom One of the illusions of our age is that wisdom is most likely to be found in the writings of the learned and the deliberations of academia. That this belief is an illusion is demonstrated if, in imagination, we take a tour of Athens as it was in the fifth century B.C. Scholars we can find aplenty. The historian Thucydides is penning a volume which, he claims, "is not ... designed to meet the taste of an im mediate. public, but [to] last for ever."! The philosopher Socrates is raising questions destined to haunt the human mind for millennia. The dramatist Sophocles is writing plays which audiences, in the year 1985 A.D., will still find awesome. Yet in the streets of Athens ordiThe Reverend Doctor John K. Williams has been a teacher and currently does freelance writing and lecturing from his base In North Melbourne, Victoria, Australia. 484 nary people are doing what ordinary people ever have done and ever will do. They haggle in the market, dis cuss the weather, and make wagers on sporting events. They boast of their triumphs, lament their trage dies, and devise their schemes. They tell one another jokes and pass on the latest gossip. Occasionally they spice their conversations with snippets of street wisdom, quoting proverbs they drank in with their mothers' milk.

One such proverb might puzzle us. "Ah, well," one Athenian sighs, "the avenging gods are shod with wool." "True, true," nods his neighbor, and the conversation proceeds. And we wonder. "What," we ask, "does this saying mean?" "The avenging gods are shod with wool." Actually, the saying enshrines a dramatic change in Greek thought, a change explored by Gilbert Mur ray in his magnificent little volume, A PIECE OF STREET WISDOM 485 Five Stages of Greek Religion.2 The Greeks once believed that the aveng ing gods were swift and furious, rid ing in fiery chariots and announcing their entry into human affairs by ear-shattering thunder. They ex acted vengeance with a blazing sword the visibility of which brought fear to the hearts of erring mortals. The proverb questions this picture. The avenging gods, it affirms, are slow, deliberate, silent. No thunder ing sound or blazing sword signifies their presence. Their footfall is as soft as a whisper or a sigh. There is no noise, no spectacle, no chase, no headlong pursuit. For the feet of the avenging gods are shod with wool.

It would be superficial to dismiss the saying because we no longer be lieve in the avenging gods of Greek mythology, be these gods drawn by galloping steeds or shod with wool. Indeed, the Greeks themselves did not take the inhabitants of Mount Olympus too literally. What they be lieved and what the folk-saying we are considering affirmed, is that life is consequential. Actions have con sequences which, while not always obvious, are inescapable. They saw it in nature. A sapling, struggling toward the sky, is in jured. It continues to grow, but the injury it incurred has consequences. The grown tree is crooked. The un intended injury has undesired consequences. So, affirmed the ancient Greeks, with human life. The actions we sow determine the harvest we reap. That this is so is not, they held, entirely to be regretted. If a growing sapling could not bend its trunk to an injury, it could not bend its roots around rocks and seek out nourishment. If error did not carry the consequences of error, truth could not carry the consequences of truth. Unless folly brought the consequences of folly, wisdom could not bring the conse quences of wisdom. If actions defy ing the laws of nature did not lead to disaster, actions in accordance with these laws could not lead to blessing. Indeed, were the world ca pricious rather than consequential, knowledge and partial control of the world would be impossible. Or so the ancient Greeks believed.

Actions Have Consequences No sphere of human activity more displays the reluctance of human beings to acknowledge the conse quential nature of their world than does the economic sphere. Again and again men and women have learned to their dismay that actions defying economic laws lead to disaster, but it would seem that our species suffers what educationalists pretentiously call a "subject-specific learning dif ficulty." National leaders, laugh ingly called statesmen, launch a war against economic reality, then des perately seek for scapegoats when the nation they have so ill-served 486 THE FREEMAN August suffers the consequences. Social re formers, all too many of whom wear clerical collars, proffer for the re mediation of real and imagined so cial ills the snake-oil nostrums of yesteryear. The mistakes of the past are repeated in the present. It is tempting to ask with Bob Dylan, "When will they ever learn?" Dy lan's assurance that "the answer, my friends, is blowin' in the wind" I do not presume to understand,· but I do know that, in the words of Scripture, those who "have sown the wind"

sooner or later "shall'reap the whirlwind."3 Many today have "sown the wind." Many today act as though the laws of economics could be defied. Yet if we listen we can hear a soft footfall. If we look we can see the pale shad ows of ghostly figures just behind us. For the avenging gods, shod with wool, are in pursuit. The Creation of Wealth First, we have ignored the process whereby wealth is created. We have acted as though wealth could be cre ated by political edicts. For most of humanity's history men and women have so acted, hence examples of such behavior are legion. Let us con sider, however, the cluster of writ ings, edicts and policies, usually known as mercantilism, which di rected the economic life of most Eu ropean nations during the seven teenth and eighteenth centuries. Rigorous laws, designed to achieve the goal of an export surplus, con trolled imports. Maximum wage laws allegedly kept the cost of pro duction low. Governments dictated the cost of material goods. The chil dren of the poor were trained so that they could labor in industries judged important by bureaucrats. In the France of Louis XIV state officials decided what industries were to be created and where in France or her colonies they were to be located. Self styled experts dictated, to take but one example, what patterns were to be woven in the state-owned tapes try works at Aubusson, it taking some four years of intense negotia tion between weavers and state of ficials before backwarp could be in troduced into fabrics. Rules laid down between 1666 and 1830 for the textile industry filled in excess oftwo thousand pages.

The situation in the United States of America was only slightly less bi zarre. The distant ruler who, in the words of the Declaration of Indepen dence, had sent "hither swarms of Officers to harass [your] people" in cluded among those officers not a few whose task it was to ensure that such commodities as tobacco, beaver pelts, pig and bar iron, and whale fins were traded only with Great Britain. Hats and woolen goods were not to be ex ported from one of your provinces to another. The story is well told by John Chamberlain in his volume, 1985 A PIECE OF STREET WISDOM 487 The Roots of Capitalism. 4 As an un repentant Anglophile I draw my only comfort from the knowledge that at tacks on George III and his policies penned in your nation were ex ceeded in thoroughness only by an attack penned in Great Britain by Adam Smith. Fruits of Mercantilism But what were the fruits of the eco nomic system coordinated by politi cal edicts we call mercantilism? They were the same as the fruits of any economic system so coordinated.

Life, for the masses, was poor, nasty, brutish and short. The United King dom, France and your country were cursed by recurrent famines. Life ex pectancy at birth was, in the France of 1800, twenty-four for males and twenty-seven for females. In 1780, over 80% of French families spent at least 90% of their income solely .on bread. A few people, admittedly, prospered, but the many did not, and this unhappy situation was perpet uated by a plethora of brutally en forced laws establishing and main taining a rigid system of caste, class and privilege. The disastrous consequences of mercantilism were no accident-in deed, the disastrous consequences of any economic system coordinated by political edicts are no accident. For such economies ignore a simple but unalterable truth. Human beings are not omniscient. The knowledge of any person is fragmentary, impre cise, and imperfect. The point is perhaps best made by considering first the situation of a small, primitive tribe. Its way of life has remained unchanged for gener ations. Members of the tribe know, by and large, what skills the tribe· possesses, what needs the tribe has, and what material resources the tribe enjoys. Given this knowledge, tribal elders or all members of the tribe meeting together can lay down rules specifying how the tribe is to use what it has to acquire what it wants.

But consider the problem facing a large and complex society. Skills are dispersed through literally millions of people, and constantly change as new technologies evolve. People want many different things. The ma terial resources available are dis tributed globally and are charac terized by ever-altering relative scarcities. No individual or set of in dividuals, however wise or however benign, conceivably could collate and synthesize the totality of informa tion so widely dispersed and so sub ject to change. Yet this information, wondrously, is available, and economic deci sions-decisions as to how a people can best use what they have to ac quire what they want-can be made by reference to· this information. Friedrich A. Hayek puts it suc cinctly and puts it well. "Each in488 THE FREEMAN August dividual can rarely know the con ditions which make it desirable, for him as well as for others, to do one thing rather than another, or to do it in one way rather than another. It is only through the prices he finds in the market that he can learn what to do and how. Only they, constantly and unmistakably, can inform him what goods or services he ought to produce in his own interest as well as the general interest of his com munity or country as a whole. The 'signal' which warns him that he must alter the direction or nature of his effort is frequently the discovery that he can no longer sell the fruits of his efforts at prices which leave a surplus over costS."5 Simply, chang ing relative money prices encode in formation about people's changing wants, changing technologies, and changing relative scarcities of raw materials, otherwise unavailable.

Why Socialism Fails This is why economics coordinated by political edicts do fail and must fail, misallocating resources and thereby spawning destitution and the human suffering destitution en tails. This is why, as Ludwig von Mises compellingly argues, socialist economies cannot succeed. 6 This is why, to make the general specific, Tanzania, which once enjoyed thriv ing agricultural bases but socialized these bases in the name of agrarian reform, is today utterly dependent upon foreign aid for the most basic of foodstuffs. This is why, in socialist nations, men and women are not able to use what they have to acquire what they want, including food for their bellies and she Iter for their bodies. The point is not that their rulers are heartless or evil, deliberately is suing edicts which misallocate re sources. Rather, the point is that eco nomic reality has been defied. The most obvious of truths has been for gotten. People are finite, fallible creatures. The only means whereby finite, fallible beings can, in a large and complex society, obtain the in formation necessary if they are to use what they have to acquire what they want, has been ignored. And the avenging gods, shod with wool, inex orably overtake those who presume to defy reality.

Yet let us not pretend that these gods, slowly and silently, are not pursuing us. We may not totally have abolished a market economy, but we have· severely fettered it, thereby distorting the information changing relative money prices encode. Tar iffs. Quotas. Subsidies. Minimum wage laws. A plethora of regulations controlling industry. We have not ut terly ignored economic reality, but we have infringed its laws. And the consequences are inescapable, their cost to human well-being incalcula ble. For the avenging gods cannot be deterred from their task.

1985 A PIECE OF STREET WISDOM 489 At the heart of economic reality is the thinking, valuing, choosing and acting being we call "man" or "woman." If we are to discover the law-abiding processes defining eco nomic reality, our focus must there fore be upon this being. Should we pretend otherwise, thinking and writing and acting as though ab stract fictions are concretely real, whereas flesh and blood people are irrelevant to our concerns, we invite error and the pursuit of the aveng ing gods. The general fallacy informing such a pretense was called by the philos opher A. N. Whitehead "the fallacy of misplaced concreteness."7 Con temporary philosophers prefer to see the fallacy as an instance of what they call a "category mistake."S In a paper entitled, "Redigging Old Wells,"9 I suggest that social scien tists are peculiarly prone to this er ror. A summary statement of the ar gument I develop in that paper may, however, here be appropriate, al though I urge any person wishing to follow up the point carefully to read Friedrich A. Hayek's volume, The Counter-Revolution of Science. to The Priority of the Particular Imagine that ten people are cast aways on an island. Innumerable re lationships between these people are formed. For some purposes it may be useful to refer to the "community"

or the "society" existing on the island, but these expressions do not signify some single existing entity distinct from the ten individuals and the relationships between them. Rather, the expressions are a useful shorthand whereby we refer to the individuals and their relationships. If one of the ten individuals acquires a monopoly of coercive power, and starts ordering his nine companions around and exacting tribute from them, no mysterious eleventh "thing" called the "state" has mag ically come into existence. All that exists is one bullying ruler, nine bul lied victims, and the relation ships between these sets of individ uals, relationships characterized by coercion. Admittedly, the term "society" is frequently used to include institu tions and customs no living individ ual created. This indicates, however, that the term "society" can desig nate the predecessors of an existing generation and the heritage these people passed on to their successors.

As G. K. Chesterton somewhere ob serves, a particular generation is but "the small and arrogant oligarchy of those who merely happen to be walk ing about." The ten castaways on our imaginary island doubtlessly bring into their present skills and prac tices inherited from the past. The crucial point, however, still holds. Terms such as "community" and "society" and "state" do not refer to concrete, existing "things" some490 THE FREEMAN August how distinct from individual human beings and their relationships. When economists forget this, mis chief is afoot. For the economist who deals in the abstractions called "ag gregates" is ever in danger of losing from his sight the thinking, valuing, choosing and acting individual. He is thus in danger of departing from reality. As a case in point, consider the seemingly self-evident proposition that an increase in the marginal tax rate will be followed by an increase in tax revenues. The assertion seems perfectly obvious-but only if indi vidual people and their possible re sponses to an increased marginal tax rate are ignored.

Tax Models To make this point, I shall refer to two "tax rate-tax revenue" models elaborated by Professors A. Laffer ll and P. Gutmann. 12 I do so with some hesitation, for the models-the so called Laffer Curve and Gutmann Curve-themselves can lure us into committing the fallacy of misplaced concreteness. The models are not photographs of reality or even por traits of reality; at best they are like cartoons featuring characters such as Unc1e Sam and John Bull. Unlike a diagrammatic representation of, say, Boyle's Law, which enables us to make specific predictions about the behavior of gases, the diagrams we shall consider cannot be used as a basis for precise prediction. Yet, given that we exercise due. caution, the Laffer and Gutmann Curves can assist us in understanding a vital truth. The Laffer Curve purportedly shows that increases in the tax rate cannot generate a rise in govern ment receipts indefinitely. A zero tax rate means no government revenue.

A 1% tax rate results in some gov ernment revenue. A 2% tax rate al most certainly leads to greater gov ernment revenue than does a 1% tax rate. Yet a 100% tax rate produces tax revenue approaching that re sulting from a zero tax rate-namely, zero revenue. At some point, an in crease in the marginal tax rate re sults in an individual choosing lei sure rather than paid employment, and if sufficient individuals do this, tax revenue drops. Put it this way. A person earns $100 a day. On Monday he is taxed at the rate of 20%, retaining $80 from his original $100. The cost of leisure-the cost of not engaging in paid employment and instead walk ing in the park, visiting friends, lis tening to the music of Mozart, and so on-is a forgone $80. On Tuesday a 40% tax rate applies, the individ ual retaining only $60 from his earn ings. The cost of leisure has thus dropped, the individual forgoing only $60 if he chooses not to go to work.

On Wednesday and Thursday the tax he pays rises to 60% and 80% re1985 Tax Revenue A PIECE OF STREET WISDOM FIGURE I 491 0% 100% Tax Rate spectively of his earnings. By Thurs day the cost of leisure is temptingly low, being merely $20 forgone. On Friday a 100% tax rate applies. The cost of leisure is now zero-save, per haps, for whatever pleasure an in dividual derives from his work and the company of his working compan ions. Simply, at some point an in crease in the marginal tax rate will so decrease the cost of leisure, that many people will choose leisure rather than paid employment. Tax revenues thus drop. Hence the Laf fer Curve (Figure I). I repeat that this tidy diagram ri diculously oversimplifies complex reality. It might suggest that if gov ernments were smart enough, they could discover a tax rate which, at all times and places, maximizes gov ernment revenue. Clearly, this is nonsense. The point at which the cost of engaging in paid employment that is, forgone leisure-becomes so high that what is forgone by not working is less valuable to an indi vidual than the joys of his leisure ac tivities, varies from person to person and, in the case of a specific individ ual, from time to time. What the Laf fer Curve dramatically displays is that an increase in the marginal tax rate can so reduce the cost of leisure that an individual may rationally change his pattern of behavior in a way that reduces tax revenue. A con sideration of the relationship be tween the marginal tax rate and tax revenue that ignores the thinking, valuing, choosing and acting indi vidual is absurdly simplistic and misleading.

The Gutmann Curve depicts an other possible human response to in creasing marginal tax rates. Instead of choosing leisure rather than paid employment, individuals may choose to transfer their productive activi ties from the "legal" economy to the 492 THE FREEMAN August so-called "subterranean" economy. Gutmann suggests that three dis tinct phases in the relationship be tween the "legal" economy, the "subterranean" economy, tax rates and tax revenues, can be specified. Given a low marginal tax rate, the totality of goods and services people cooperatively produce-a totality, in cidentally, which is itself a fiction we must handle with care-will involve both a legal output and an illegal output, but a relatively small illegal output. As the marginal tax rate climbs, the ratio of legal output to illegal output changes, more indi viduals deciding to switch their pro ductive activities to the "subterra nean" economy. Since typically an illegal activity is less efficient than an open market exchange, the total productive output of a community drops. Finally, a limit is reached: given the institutional structures obtaining, no further economic activities can be transferred from the "legal" economy to the "subterra nean" economy. Hence the Gutmann Curve (Figure II).

Again, my warning message: Dia grams depicting a relationship be tween abstractions are an economic health hazard! Yet the diagram does depict a very real choice individuals can make when confronted with an increase in the marginal tax rate. The Gutmann Curve, like the Laffer Curve, suggests that a government may threaten its own well-being and, indeed, the well-being of an en tire community-by increasing mar ginal tax rates., A decrease in gov ernment revenues does not in itself disturb me; indeed, I deplore at tempts to "sell" the Laffer and Gut mann Curves to governments by the Iure of increased government reve nue. I am disturbed by a decrease in the number of goods and services a community produces and provides, Output ----------.- Total Output --------.-lIIegal Output t Legal Output J Tax'-- ......... ....a...- ----l"'- ...... Rate FIGURE II 1985 A PIECE OF STREET WISDOM 493 for this affects the material well being of all people-save, perhaps, government officials. Certainly, a decrease in the number of goods and services available to a community is disastrous from the point of view of the poorest.

Marginal Tax Rates Affect the Marginal Dollar I have but touched on the conse quences of tax. policies dictated by theories which, focusing upon aggre gates, ignore the real world of flesh and blood people. I make one further point. Marginal tax rates affect, by definition, the marginal dollar. Now the marginal dollar is important, for it is that dollar which an individual is most likely to save and to invest. Put it this way. An individual wins the lottery and, after tax, has $100,000 at his disposal. He is tempted either to invest that sum and add, let us say, $10,000 per an num to his income stream; or to blow the lot on a luxury cruise. The cost of the cruise is considerable: a for gone $10,000 per annum. A mar ginal tax rate of 50% reduces the cost of the cruise to a forgone $5,000, for the income derived from investing $100,000 at 10% per annum is taxed at 50%. The marginal tax rate of97% which obtained in pre-Thatcher Britain reduces the cost of the cruise to a mere $300 forgone per annum.

Extravagant consumption is thus encouraged, and capital formation is discouraged. And this is disastrous, for capital formation is the sine qua non of economic growth. Jeopardize economic growth, and human beings suffer-again, particularly the poorest. My primary claim, however, is simple. The rules defining a fasci nating game with abstractions and aggregates, and the laws defining economic reality, are not identical. If the rules defining a game are ap plied to the real world, an invitation has been extended to retribution. And the invitation is accepted. The avenging gods, shod with wool, set about their slow and silent task. The People's Money Money matters. By "money" I mean merely an economic good sought by all or nearly all members of a community and used primarily for present or future exchanges, Wlits of the economic good "money" being exchanged for services and other goods. The discovery of money was a momentous discovery, for without it the cooperative activities of the division of labor and free ex change could not have gone beyond rudimentary forms. Indeed, if any person doubts that money matters, that person should ponder the recent obscenity that was Pol Pot's regime in Cambodia. By abolishing money and its uses, Pol Pot and his hench men devastated an economy and forced men and women humbly to beg 494 THE FREEMAN August from state officials what they needed to survive.

As the title of a recent volume af firms, money today, in most devel oped and seemingly secure nations, is in crisis. 13 Indeed. ~ .urge you to read the volume in question: Money in Crisis, edited by Barry N. Siegel. Within its pages "economists from such diverse perspectives as mone tarism, Keynesianism, rational ex pectations, supply-side economics, and the Austrian school" proffer a variety of proposals with a single ob jective, namely, "to make monetary institutions strictly accountable and devoid of political and bureaucratic influences." This cover description of the book accurately indicates the book's contents. In a very real sense, however, money has always been in crisis. The long history of money can be read as an ongoing war between rulers and the ruled. It is no accident that money controlled by the masses through the market was once called "the people's money" as against money controlled by political rulers and their associates.

It is not my purpose to narrate the fascinating albeit depressing story of the battles between a "people's" money-and a "ruler's" money. All I wish to affirm is that the laws of eco nomics, the precepts of high moral ity, and the blessings of individual liberty, lead to the injunction, "Put not thy monetary trust in princes." A people who so place their trust shall be pursued and overtaken by the avenging gods. A Choice from the Market How best to secure money not sub ject to "political and bureaucratic in fluences" can be debated and today is hotly debated. My own conviction is that we should, with Friedrich A. Hayek, agitate for the de-monopoli zation of money and choose a gold currency from whatever rival cur rencies result. By a 'gold currency,' I mean simply coins made from gold and carrying information as to the maker and weight of the coins and notes the issuers of which must, by law, on request convert into what ever weight of gold the notes specify.

While personally choosing such a currency from whatever currencies the free market makes available, I would keep an interested eye upon alternative forms of currency avail able. Who knows in advance what new discoveries individuals might make? I stress this openness to alterna tives simply because some advocates of the case for gold attempt to utilize for their own purposes the strategy so brilliantly deployed by Lord Keynes, namely, ridiculing the views of opponents. There is nothing ob jectionable in this: reductio ad ab surdum is a legitimate form of ar gument, even when spiced with humor. What is objectionable is the 1985 A PIECE OF STREET WISDOM 495 suggestion that people could not value rare pieces of paper carrying certain words, or that walking gold is~ "scientific" whereas valuing printed pieces of paper is "magical." People can value anything. Of course paper money has no intrinsic value, but neither does gold. The "value"

of any good is not some "thing" in hering in the good, but a relation ship between an appraising mind and a good appraised. A Reasonable Doubt At this point, permit me a second personal aside. I am second to none in my admiration for Ludwig von Mises. I do not believe, however, that Mises is honored if his admirers fail to do what he invariably did, namely, be prepared to question any claim. Frankly, I have some worries with Mises' "regression theorem," at least as sometimes stated. 14 Crudely, the theorem can be understood as as serting that units of money can be exchanged for services and other economic goods if and only if what first functioned as money had a non monetary use. It must be possible to trace back the monetary use to a non monetary use. I see no absurdity in asserting that an extraordinarily in telligent human being could have realized that some substance all peo ple in a community would accept in an economic exchange would serve a very. useful function. I see no ab surdity in asserting that this individual might specify some rare sub stance, hitherto regarded as utterly useless, as an ideal candidate for a currency. I see no absurdity in as serting that the case for using this substance as money might be ac cepted by a community. The happy coexistence of such intellectual per spicuity and such persuasive prow ess in a single individual is absurdly unlikely, but it is not logically im possible or empirically impossible.

The point is possibly pedantic. Maybe it is sufficient to say that we are ill-advised to overstate the case for a gold currency or to assert that individuals in a money-creating and-providing free market could not create and provide a paper money somehow protected from the cupid ity of those providing it and from po litical and bureaucratic influences. How such could be done I know not and that such will be done I believe not. But the free market again and again has done what many said was impossible. Hence my option: the de monopolizing of money, my own choice from whatever currencies the market provides of a gold currency, and my ongoing observation of the success or failure of non-gold currencies. Milton Friedman's advocacy of a constitutional amendment proscrib ing the arbitrary inflation of the cur rency by government fails to con vince me. First, unless people thoroughly understand why money 496 THE FREEMAN August matters, an amendment passed to day could be revoked tomorrow. Sec ond, an acceptance of "non-arbi trary" inflation, whether under a 2% rule or a 5% rule 15 or any other rule, overlooks the effect of any inflation upon the relative prices of goods and services. Friedman's arguments against a gold currency have, I sub mit, been anticipated and answered in Ludwig von Mises' volume, On the Manipulation ofMoney and Credit.16 Money Matters Similarly, Friedrich A. Hayek's advocacy of the de-monopolization of money,17 divorced from the pruden tial advice that one should choose from any alternatives proffered a gold currency, does not satisfy me.

While not saying that competition between rival paper currencies could not discover means for securing a non-inflatable currency, I would not, and the pun is intended, bank upon such a possible discovery. During your nation's history different states issued their own paper currencies, and these currencies, in a very real sense, competed. 18 This precedent, so to speak, does not provide grounds· for optimism. My main point, however, is simply that money matters. If men and women entrust their nation's mon etary system to rulers who can in flate the currency, the avenging gods make ready to strike. And there is no protection from their vengeance. Advertisements promising men and women that an investment in gold will protect them "from inflation" and that should read "from the ef fects of inflation" -are utterly mis leading. The effects of inflation are not identifiable with the decreasing purchasing power of a nation's mon etary unit. The entire communica tion system that is the free market in a free society is distorted by in flation, and that distortion can be come so grotesque that a market economy ceases to function. There is no protection from the wool-shod, avenging gods.

Conclusion It would be pleasant if economic reality were not as I have depicted it. But our desires must be adjusted to reality, for reality will not adjust itself to our desires. Yet I remind you of what I said ear lier. If error did not contain the con sequences of error, truth could not contain the consequences of truth. Unless folly brought the conse quences of folly, wisdom could not bring the consequences of wisdom. If actions defying the inexorable laws of economic reality did not end in disaster, actions complying with those laws could not result in blessing. I remind you also of what that blessing involves. Men and women freed from the horrors of destitution. Men and women, their material 1985 A PIECE OF STREET WISDOM 497 needs satisfied, freed to create beauty bringing delight to their souls and to seek truth bringing joy to their minds. Men and women freed to foster and to nourish the warm and intimate relationships that make human life holy. Men and women freed to dream dreams of an even greater future and to struggle to make their dreams come true. All that, and so much more, is involved in the blessing we seek.

So maybe the avenging gods are but angels in disguise. Maybe, by visiting upon us the consequences of error and folly, they lure us back to the pathway of truth and wisdom. Maybe they wish us well, not ill. For the pathway from which we stray and to which they so insistently re direct us, is the pathway leading from a city doomed to crumble and which nothing can save to a city our forefathers in the fight for liberty founded, and which we, under God, are called upon to complete. , -FOOTNOTESIThucydides, The Peloponnesian War, trans. Rex Warner (Harmondsworth: Penguin Books, 1972), p. 48. 2G. Murray, Five Stages of Greek Religion (London: Watts and Co., Thinkers' Library Edi tion, 1935), pp. 72-8. 3Hosea 8:7. 4J. Chamberlain, The Roots of Capitalism andianapolis: Liberty Press, 1976), pp. 39-41. 5F.A. Hayek, 1980s Unemployment and the Unions (London: Institute of Economic Affairs, 1980), p. 28.

6L. von Mises, "Economic Calculation in the Socialist Commonwealth," in Collective Eco nomic Planning ed. F.A. Hayek (London: Ru tledge & Kegan Paul Ltd., 1935), pp. 87-130; idem., Socialism andianapolis: Liberty Press, Liberty Press Edition, 1981), pp. 95-130. 7A.N. Whitehead, Process and Reality (New York: Macmillan, 1929), p. 11; idem., Science and the Modern World (New York: Macmillan, 1929), p. 75. 8G. Ryle, The Concept of Mind (London: Hutchinson, 1949), pp. 16-18. 9J.K. Williams, "Redigging Old Wells," The Freeman, June, 1985. l0F.A. Hayek, The Counter-Revolution ofSci ence andianapolis: Liberty Press, second edi tion, 1979). 11A.B. Laffer, "Government Exactions and Revenue Deficiencies," Cato Journal, 1 (Num ber 1, Spring 1981), pp. 1-22. 12p. Gutmann, "The Subterranean Econ omy," Financial Analysts Journal (November December, 1977), pp. 26-34. l3B.N. Siegal, ed.,Money in Crisis (San Fran cisco: Pacific Institute for Public Policy Re search, 1984).

l4Mises, Human Action (Chicago: Regnery, 1966), pp. 408-11, 610£.; idem., The Theory of Money and Credit (New York: The Foundation for Economic Education, 1971), pp. 97-123. 15Friedman, The Optimum Quantity ofMoney (Chicago: Aldine, 1969), pp. 46-8. 16Mises, On the Manipulation of Money and Credit (Dobbs Ferry, N.Y.: Free Market Books, 1978). 17F.A. Hayek, Choice in Currency (London: Institute of Economic Affairs, 1976); idem., Denationalization ofMoney: The Argument Re fined (London: Institute of Economic Affairs, second edition, 1978); idem., "The Future Mon etary Unit of Value," in Siegel, op cit., pp. 323 35. 18E. Groseclose, Money and Man (Norman: University of Oklahoma Press, 1976), pp. 180 93.