August

286 Free-Market Mail Is on the Horizon Melvin D. Barger Mail is far too important to be left in the hands of a government monopoly. 291 A Balanced Budget Amendment Hans F. Sennholz It is unrealistic to believe that a balanced budget amendment can dampen the enthusiasm for Federal largess. 295 Poverty: Material and Spiritual Irving E. Howard The consequences of turning to government rather than relying on one's own resources. 298 Which Liberalism? Tyler Cowen An analysis of the British and French traditions of liberalism. 301 The Economics of Errant Entrepreneurs Israel M. Kirzner The great economic virtue of capitalism lies in its ability to stimulate entrepreneurs who create profitable enterprises. 303 The Farm Problem and Government Farm Programs E. C. Pasour, Jr. Market forces are superior to other means of achieving resource adjustments in agriculture. 308 A Free Market in Kidneys? Walter Block A proposed solution to the shortage of human organs for transplant.

309 Take Back the Environment Jorge E. Amador Current policies designed to safeguard the environment encourage pollution, shield the polluter, and leave victims defenseless. 316 A Reviewer's Notebook John Chamberlain A review of Lewis Feuer's "Imperialism and the Anti-Imperialist Mind." 318 Other Books: "The Market as an Economic Process" by Ludwig M. Lachmann. In "Books of Note," John K. Williams reviews works by Roger Freeman, Alejandro Chafuen, and Paul Johnson. CONTENTS AUGUST 1987 VOL. 37 NO.8 THEFREEMAN IDEAS ON LIBERTY Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 President of the Board: Robert D. Love Vice-President of Operations: Robert G. Anderson Senior Editors: Beth A. Hoffman Brian Summers Book Review Editor: Edmund A. Opitz Contributing Editors: Howard Baetjer Jr. Bettina Bien Greaves Jacob G. Hornberger Paul L. Poirot Gregory F. Rehmke The Freeman is the monthly publication of The Foundation for Economic Education, Inc., Irvington-on-Hudson, NY 10533 (914) 591-7230.

FEE, founded in 1946 by Leonard E. Read, is a nonpolitical educational champion of private property, the free market, and limited govern ment. FEE is classified as a 26 USC 501 (c) (3) tax-exempt organization. Other officers of FEE's Board of Trustees are: Bruce M. Evans, chairman; Thomas C. Stevens, vice-chairman; Joseph E. Coberly, Jr., vice-president; Don L. Foote, secretary; Lovett C. Peters, treasurer. The costs of Foundation projects and services are met through donations. Donations are invited in any amount. Subscriptions to The Freeman are available to any interested person in the United States for the asking. Single copies $1.00; 10 or more, 50 cents each. For foreign delivery, a do nation of $10.00 a year is required to cover direct mailing costs. Copyright © 1987 by The Foundation for Eco nomic Education, Inc. Printed in U.S.A. Permis sion is granted to reprint any article in this issue, except' 'One Complaint per Customer, Please,"

"A Balanced Budget Amendment, " and' 'Take Back the Environment," provided appropriate credit is given and two copies of the reprinted material are sent to The Foundation. Bound volumes of The Freeman are available from the Foundation for calendar years 1969 to date. Earlier volumes as well as current issues are available on microfilm from University Micro films, 300 North Zeeb Road, Ann Arbor, MI 48106. The Freeman considers unsolicited editorial sub missions, but they must be accompanied by a stamped, self-addressed envelope. Our author's guide is available on request. PERSPECTIVE Non-Developing Nations Since World War II, more than a hundred new nations have gained independence. Most are primitive, agricultural, and were originally called "backward" or "undeveloped." But now they have a nicer label, "developing." Unfortunately, the label alone does not ensure development. That depends on whether the government welcomes or repels "developers"

(entrepreneurs, savers, investors). Many of these new nations have suffered civil strife, revolutions, and frequent govern ment changes. But the new government that takes over after a coup is usually just as leftist, Marxist, M.aoist, Leninist, communist, or in terventionist as the previous one. Its officials are interested primarily in maintaining power and controlling the economy. Few of them have any understanding of the prerequisites for development. Property in these poor nations is seldom secure; enterprises are usually harshly controlled and regulated; threats of collectivi zation and confiscation abound; foreign in vestors are discouraged; and trade is restricted. A few examples. One new African nation, Burkina Faso, levied high tariffs on animal drawn plows and on irrigation pump engines that its farmers needed to produce. Mozam bique's Marxist government has destroyed that nation's economy; its capital city, Maputo, lacks virtually everything; soldiering is one of the few steady jobs available as only the na tion's army prospers; yet imports of rice, com, and consumer goods in exchange for oil were banned during a recent economic emergency.

Egypt maintains control over her economy, dis courages private entrepreneurs, and the country remains desperately poor. Collectivization and a socialist police state have crippled production in Tanzania. Price controls in Ghana have made that relatively rich country poor. In some African countries, according to one report, farmers who sell on the black (free) market, in defiance of the price controls, are routinely shot. Policies that deter development are not lim ited to Africa. Massive government interven tion in Malaysia discourages foreign investment and production. In El Salvador, the pro duction of coffee, sugar, and cotton plummeted after the larger landowners were expropriated. The proposal for a joint Chrysler-Mexican truck factory was rejected by the Mexican gov ernment lest it lose control of the economy. Stringent labor laws hamper production in Venezuela. The examples could go on and on.

To deserve the label "developing," these poor nations should attract entrepreneurs and investors by protecting private property. -BBG Developing Nations What is the "secret" of developing nations? Let us look at the historical record. Consider, for example, the German eco nomic "miracle" following World War II. Her cities were in rubble and teeming with millions of displaced persons. The people were hungry, their clothes were in tatters, and many were living in makeshift hovels. There was no food in the stores, so both money and ration cards were worthless. Then, in June 1948, a fundamental change took place. The U.S. and British military gov ernments replaced the inflated wartime marks with a sound currency. At the same time German economic minister Ludwig Erhard, against the advice of his advisers, abolished price and wage controls. According to one re port: "The black market suddenly disappeared.

Shop windows were full of goods; factory chimneys were smoking; and the streets swarmed with lorries. Everywhere the noise of new buildings going up replaced the deathly si lence of the ruins. If the state of recovery was a surprise, its swiftness was even more so.... Shops filled up with goods from one day to the next; the factories began to work. . . . One day apathy was mirrored on their faces while on the next a whole nation looked hopefully into the future. " For the first time in years, German farmers and other producers began to bring goods to market. For the first time in years they could sell their produce for money that had some value. The post-World War II "German eco nomic miracle" had begun. With fewer ecoPERSPECTIVE nomic controls to hold them back, the people worked harder and the economy boomed. Similar "industrial revolutions" have devel oped also in Japan, Korea, Taiwan, Hong Kong, and Singapore as each has allowed en trepreneurs more freedom. Even India has re duced some controls over agriculture and is now producing enough to feed her huge popu lation.

History shows time and again that people prosper when governments protect private property, when money is sound, and when in dividuals are permitted to buy and sell at mutu ally agreeable prices. The free market is the only path to economic development. -BBG Socialized Medicine British correspondent Anthony Lejeune re ports in the February 1987 issue of Private Practice on the deteriorating condition of Britain's National Health Service: "[A] 65-year-old mechanic from Battersea in central London had a hernia diagnosed 10 years ago; he was operated on within four weeks. But now he needs another operation, and he has been on the waiting list for a year. At the last annual meeting of the British Med ical Association, Dr. John Marks said that at his local hospital, Barnet General in outer London, patients had to wait 10 weeks for an appointment with a dermatologist, 15 weeks to see an ear, nose and throat specialist and 14 weeks to see an orthopedist. 'You're lucky!' cried doctors in the audience.

,'A survey of 130 hospitals showed that 70 percent had beds temporarily closed or staff doctors who complained of having to discharge patients early to make room for others. A report from the Office of Health Economics estimated that 1,230 people younger than 65 were dying each year from kidney disease because dialysis or transplant facilities were not available, and that three times more people needed coronary bypass operations than were receiving them. " The British experience with socialized medi cine may be a forerunner of developments in I the United States. For some disturbing trends in the U.S. Medicare system, see Dr. Jane Orient's article on page 284.