Book Reviews

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN TheAmerican Idea CONGRESSMANJACK KEMP'S reputa tion rests mainly on his supply -side tax legislation, both the Kemp-Roth law that has already been passed and the "fair and simple," or FAST, flat tax which he and Senator Kasten have just introduced. But the more technical aspects of fiscal and mon etary reform take up something less than half the space in the book that Kemp has made out of his collected speeches. Called The American Idea: Ending Limits to Growth (The Amer ican Studies Center, Washington, D.C., 355 pp.), with a foreword by President Ronald Reagan and a pref ace by Irving Kristol, the book ap plies the doctrines of the freedom philosophy to practically every as pect of government, from foreign and military policy to the protection of human rights, and from the compo380 sition of political parties to the chances for an international confer ence to restore the gold standard.

Kemp speaks of a coming "Amer ican renaissance," and he is himself a modern renaissance man. His col lege degree was in physical educa tion, and he began his working life as a third string quarterback for the Pittsburgh Steelers. Later, as a first string quarterback for the Buffalo Bills, he doubled as a labor leader, helping to organize the football play ers union. When still a football player he chanced upon two books, Friedrich A. Hayek's The Constitu tion of Liberty and Ludwig von Mises' Planning for Freedom. These saved him from the journey to the Left that a belief in unionism en tailed for many pro-labor partisans in the Walter Reuther period.

THE AMERICAN IDEA 381 From the Playing Field to the Political Route A Californian who might normally have preferred to return to the Sun Belt after completing a football ca reer in snow country, Kemp was such a favorite with Buffalo fans that he was prevailed upon to remain in the Northeast and run for Congress. He knew that the decline in the steel in dustry might become his Number One political concern. But he also saw that protectionism would be no permanent cure for Rust Belt or "smokestack industry" troubles. In one of the foreign policy speeches in The American Idea Kemp says: "Shortly after I became a congressman 12 years ago, I be came increasingly aware that the problems which afflicted the de pressed Buffalo-area district could not be solved by local projects. Buf falo was suffering from problems· of national scope, which required so lutions on a national level." This perception caused Kemp to behave more like a Senator than a mere Representative. His Buffalo constituency has forgiven him for his refusal to concentrate on "local proj ects." As an ex-quarterback Kemp knew the importance of having a comprehensive game plan. He also knew that politics, like football, is a game of margins. Paradoxes had to be accepted, and some philosophical inconsistencies had to be excused at least for the time being.

So Kemp has always upheld the concept of the Safety Net. He does not talk about getting rid of the Wel fare State. His political sense tells him that the best way of reducing welfare payments is to make them unnecessary. Hence his emphasis on the supply-side ideas of Jude Wan niski and Art Laffer. The supply-side proposition, as elaborated by Kemp in several of his speeches, is this: let potential savings and investment money flow back into the productive mainstream by reducing marginal tax rates. With new industries start ing up and prosperity spreading, the amount of taxation needed to sus tain the Safety Net would shrink. And, with more people taking care of themselves in private industry, the national budget deficit would disappear. The anti-supply-side people, in cludingmany Republicans, have scoffed at so-called Laffer Curve thinking. So one of Kemp's major tasks has been to wean Republicans away from their old austerity con cepts. "Austerity," says Kemp, "is not the solution. It is the problem."

Money and the Market Some of Kemp's speeches that crit icize the Volcker monetarists are highly technical. But, broadly speaking, Kemp doesn't think it pos sible for the monetarists to control the supply of money. "Money," he says, "is not chosen by economists or 382 THE FREEMAN June government officials. It is chosen by the market, by the common agree ment of millions of individuals." Both the Keynesians and the mo netarists, in Kemp's opinion, "have underestimated the degree to which people can and do find ingenious substitutes for whatever definition of money the central bankers are targeting. Witness the explosion of money market funds, overnight re pos, and overnight Eurodollars, none of which are included in MI." And there is always the question of the velocity of money, which cannot be predicted on the basis ofpast history. Kemp, in several speeches, has called for a return to the gold stan dard. This would substitute auto matic controls that would enable en terprisers to do some longterm planning. To quote Art Laffer, gold convertibility would be "a sort of in surance policy for the quality of money." But Kemp, thinking in global terms, considers that the re turn to gold would have to be a de cision made at some future Bretton Woods conference of the world's ma jor economies.

While waiting for his flat tax pro posals to revive enterprise every where, Kemp is pushing his concept of enterprise zones. The decaying in ner cities, he says, would revive if businesses were to get tax breaks for starting new factories within their confines. The idea has already had a limited success in England. It is no 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 auto biography, A Life with the Printed Word. Copies of this re markable account of a man and his times-our times-are available at $6.00 from The Foundation for Economic Edu cation, Irvington-on-Hudson, New York 10533. substitute for making the whole North American continent-or, in deed, the world-a huge enterprise zone, but it would bring a certain im provement at the margin. Kemp can't figure out why the House of Representatives majority dominated by Speaker Tip O'Neill can't see it.

Kemp goes to Japan for corrobora tion of his ideas. Japan, he says, has the lowest tax burden of any indus trialized country, "29 percent of the economy in 1981, compared with 34 percent in the U.S., 46 percent in France, and 45 percent in West Ger many." Most capital gains in Japan are tax free, and so is the first $12,000 of interest income per per son. The personal savings rate inJa pan is almost 20 percent. "Everything depends on incen tives," says Kemp. That is the lesson of his book. @J 1985 OTHER BOOKS 383 BEYOND LIBERALAND CONSERVATIVE by William S. Maddox and Stuart A. Lilie (Cato Institute, 224 Second St., S.E., Washington, D.C. 20003), 1984 197 pages _ $18.00 cloth Reviewed by Charles H. Hamilton YEARS AGO, Albert Jay Nock decried "the managed glossary of politics." It is still with us as terms like "con servative" and "liberal" are used al most exclusively to describe all manner of political attitude and philosophy. Adding a multitude of prefixes-thus inventing new liber als, old conservatives, neo-conser vatives, and so forth-has merely added to the confusion. The usual two-term continuum of the political spectrum does not work. They have become what Jeremy Bentham called "impostor-terms."

Now two political scientists have presented a more complete perspec tive. Maddox and Lilie use four terms based on a person's attitude on two issues: government interven tion in economic affairs and on the expansion of personal freedom. (The latter dimension is the most unsat isfactory, since the authors don't make clear whether government in volvement expands personal free dom or eliminates it.) In such a ma trix, the authors posit, conservatives opposeeconomic interventionism but support restrictions on personal freedom; liberals support economic interventionism but oppose restric tions on personal freedom; libertar ians oppose both economic interven tionism and restrictions on personal freedom; and finally, populists sup port both governmental interven tion in the economy and restrictions on personal freedom. Using this framework, the authors found that the public was made up of 24% liberals; 26% populists; 18% libertarians; and 17% conservatives.

The authors are able to explain the apparent contradictions that plague election results and opinion polls: John Anderson's impressive support from "liberals" and "conservatives" in 1980, and Gary Hart's perplexing degree of success in 1984. Indeed, the implications of Reagan's victory are best understood when one views it as an uneasy alliance of libertarians and populists with a minority of conservatives. The authors analyze a massive amount ofpublic opinion survey data using their four categories. The re sults are a fascinating reinterpre tation of recent political history and of the opinions that Americans hold. The authors show that over the past couple of decades there has been an increasing appreciation for the im portance of economic and personal freedom issues. And their comments on the so-called baby-boom genera tion suggest that these concerns 384 THE FREEMAN have the potential for becoming much more important in the years ahead. This is heartening news.

More interesting, and much more important, are some of the implica tions one can derive from the four categories for discussions of political philosophy and values. The "impos tor-terms" of the past perpetuate a confusion about the nature and in terrelatedness of freedom. Maddox and Lilie go a long way in the direc tion of clarifying the philosophical and value content of political labels. Because they are limited by the con straints of the survey data they use, they cannot go far enough. Hope fully, surveys in the future will be more philosophically consistent. If the authors are right that eco nomic issues may become subordi nated to issues of personal freedom in the coming years, then it is esFreeman binders pecially important that the case for the intimate interdependence of eco nomic and personal freedom be clearly articulated. We cannot have one without the other. There is great need to explain further the key dis tinction between government inter vention in economi~ and personal freedom issues, and a free market so cial system dedicated to genuine per sonal freedom and initiative.

Maddox and Lilie have developed a first-rate framework for using po litical labels and have analyzed as best they could how they apply to American political attitudes. Given the massive changes in attitudes over the last decade, and the pros pect that these will continue, the book is an invaluable aid in plan ning how to present the freedom phi losophy to a new and eager generation. • handsomeblue leatherlex • each binderholds twelve issues • a handyway to organize currentand past issues of The Freeman Order from: THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 10533 $5.00 each the Freeman VOL. 35, NO. 7 • JULY 1985 Legalized PlunderA Page on Freedom, No. 21 Leonard E. Read 387 Beware those who advocate the Welfare State. Pandora and Hope John K. Williams 388 Reports of the death of the universe have been exaggerated. Compulsory Bargaining Reviewed Bargaining, yes; compulsion, no.