June

215 Houston's Laissez-Faire Housing Policy J. Brian Phillips A free market will provide consumers with the best housing at the least cost. 218 The True Charity Kenneth McDonald By discouraging individual independence, public charity proves uncharitable. 220 Pay Television and Property Rights Joseph S. Fulda A recent FCC ruling concerning pay television has revived questions about freeloading, theft, and ownership of the airwaves. 223 Privatizing Federal Programs Hans F. Sennholz Untangling the many meanings of privatization. 229 Defending the Rich William H. Peterson Wealth does not cause poverty. 231 Banking Before the Federal Reserve: The U.S. and Canada Compared Donald R. Wells Government restrictions made the American banking system vulnerable to panics, while nations such as Canada avoided these crises. 236 A Reviewer's Notebook John Chamberlain A review of Sidney Hook's "Out of Step: An Unquiet Life in the Twentieth Century. "

238 Other Books: "Regulating Government: The Positive-Sum Solution" by Dwight R. Lee and Richard B. McKenzie. "After Apartheid: The Solution for South Africa" by Frances Kendall and Leon Louw. CONTENTS JUNE 1987 VOL. 37 NO.6 THEFREEMAN IDEASON 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 Editorial Adviser: Paul L. Poirot Book Review Editor: Edmund A. Opitz Contributing Editors: Howard Baetjer Jr. Bettina Bien Greaves Gregory F. Rehmke Production: Laurel A. Mascola 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' 'Privatizing Federal Programs," 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 Excusing Irresponsibility Many people are angry at the common spec tacle of convicted criminals escaping punish ment for their crimes, on grounds that they were "not responsible" for tHe social or bio logical conditions which allegedly' 'provoked" their aggression. In recent years a new form of criminal has appeared: the international terrorist. Frequently sponsored by some collectivist regime, the ter rorist commits the most heinous and blood thirsty deeds. Inevitably, sympathetic voices in civilized nations are raised to declare that these were merely acts of desperation, in response to intractable injustices. Then there is the related issue of aggression by communist governments, and the chronic excuse-making responses of Western indi viduals and governments-a phenomena viv idly chronicled in such books as Jean-Fran<;ois Revel's How Democracies Perish.

What links all these issues? Each entails some form of appeasement-of victims ratio nalizing, or even abetting, the outrages of for eign and domestic aggressors. And one other thing links them: the assault on the philosophy of self-responsibility. Ob serve that in each instance of aggression, for eign or domestic, voices of "moderation" are raised to excuse the aggressors of moral re sponsibility for their crimes. Sociologists and psychologists claim that en vironmental or biological factors caused a ca reer criminal to victimize others. What he needs, they say, is understanding and rehabili tation. Diplomats and scholars argue that when the Soviet Union invades a neighboring country or subverts a distant one, it is not being aggres sive; it is merely "reacting" to "historic fears of invasion" in order to "secure its borders." The cure is to reassure the Soviets that we mean them no harm, by means of increased aid, trade, and negotiation.

In each case, individual moral responsibility is obliterated, allowing causality to be inverted - with aggressors being treated as victims, and their victims treated as aggressors. Just as the obliteration of individual responsibility encourages legalized aggression, so too does it sanction those who have no time to ob serve legal niceties. Therefore, it is no accident that with the decline of the philosophy of indi vidualism and self-responsibility, we have seen the explosive increase in crime domestically, and atrocities internationally. -Robert James Bidinotto Controls Raise Prices A recent Canadian study provides revealing information about the. effects of government regulation on prices. In 1982, Statistics Canada began to measure the rates of price increases on goods and services that are regulated by gov ernment and to compare those to the price in creases on products that don't have the benefit of government regulation.

The figures show that since April, 1973, government approved or regulated prices have increased 240 per cent whereas other prices, based on what the market will bear, have in creased only 167 per cent. At the present time, the annual inflation rate of products whose prices are approved is about 6 per cent while those whose prices are determined by good old supply and demand in the market place are in flating at only 3 per cent. In other words, the unmistakable message from the Stat Can figures is that for at least the last 13 years, Canadians have gotten a better deal price-wise on those products whose prices were determined by "whatever the market will bear." The reason for this is not hard to see. Approved or regulated prices are usually prices that are produced under monopoly or under special license from government. For ex ample, eggs, milk, chicken, and airline travel as well as telephone calls have in common the fact that those who produce them enjoy a form of government-sponsored monopoly. The mo nopoly in turn is regulated by the government.

The theory is that by removing the product or service from the market place and permitting a monopoly, the government will ensure that there is no duplication of facilities-e.g., tele phone networks-and no oversupply-e.g., eggs and milk. By regulating the price, the PERSPECTIVE government also attempts to ensure that "the price is right." The problem is that in determining the price they will allow, regulators often have to rely on information from the regulated industry to de termine the costs of production and the reason able profit that is added. What is lacking is the pressure of entrepreneurs who want to lure away their competitors' customers. In the end, what the market will bear is determined by cus tomers and businesses looking out for the best deal, and that is why what the market will bear serves the interest of consumers better than the well-meaning regulations of government.

-Michael Walker The Fraser Institute Vancouver,BritishColumbia Strategies for Freedom What is the best way to attain a free society? Is it political action? Letters to the editor? The endowment of free enterprise chairs on college campuses? Mass mailings and lobbying? I don't know. That is, I don't know the best way others should take because I don't believe there is a single best way that works for ev eryone. We are all different, with different strengths, weaknesses, and interests. I would no more try to tell you the best way to work for freedom than I would tell you the best way to live any other aspect of your life. But I would like to offer an observation. Many people have become so wrapped up in developing strategies for freedom that they seem to have forgotten what freedom is all about. Freedom is an ideal. It refers to the ab sence of coercive intervention in peaceful ac tivities. It can never be compromised because principles cannot be compromised; principles can only be broken.

When we forget this-when we get so in volved in forming strategies for freedom that our main concern is to "put one over" on a gullible public-we aren't fooling anyone but ourselves. For the "freedom" we attain this way will be a false freedom, with no moral conviction, ready to be turned against us by someone smarter than we are at developing a winning strategy. -BJS 204 THEFREEMAN IDEASON LIBERTY The Face of a Bureaucrat by Joe Hochderffer A s an old bureaucrat hater, I had often wondered what a real live bureaucrat looked like. Did he have horns? Spit fire? Scaly skin? Cleft foot? I didn't know. Bureaucrats were the guys who wrote the regulations that took all the do-goodism out of the laws that Congress passed. Or they were the people in the statehouse, underpaid and over worked, who labored in dingy rooms flanking ill-lighted corridors and could hardly wait until the clock struck four. They were faceless, nameless. The unseen enemy. Waiting to pounce on an unsuspecting developer who had submitted plans for a new shopping mall.