May

168 Wilderness Cathedrals and the Public Good William C. Dennis The role of government in preserving - and destroying - wilderness areas. 175 Liberty and Property Joseph S. Fulda Who shall have control over what is produced and what is consumed? 179 The Private Property System and the Decent Society Tibor R. Machan A society built on the principles of private property makes it pos~ible for people to be morally responsible. 182 Laissez Faire as a Development Policy John Semmens A policy of planned development may sound good in theory, but reality is quite a bit different. 188 Black Marx Edward Theberton How socialism has utterly destroyed the economy of the African nation of Mozambique. 192 Fighting Communism with Free Trade and Open Immigration Frank W. Bubb By opening its borders to people and goods from the Third World, America could draw people away from the false promises of communism.

199 A Reviewer's Notebook John Chamberlain A review of Cities and the Wealth of Nations by Jane Jacobs. CONTENTS MAY 1987 VOL. 37 NO.5 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 !VI. 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' 'Brack Marx," 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 Unexpected Consequences Government intervention inevitably makes conditions worse, the late Ludwig von Mises often explained, even from the viewpoint of a program's original backers. The current de pressed state of V. S. shipping offers a dramatic example. Congress passed the merchant marine law in 1886, and the Jones Act of 1920, to protect V. S. shipping. Yet from the point of view of the V. S. shipping industry, these laws have made conditions worse, not better. The 1886 law forbade foreign ships from transporting people between two U.S. cities. The 1920 law required all ships engaged in V. S. coastal trade to be built in the V nited States and to sail under the V.S. flag. But the drafters of these laws could not anticipate fu ture conditions. Ships are no longer a primary means of travel; the cost of building and man ning V.S. ships has skyrocketed, especially be cause of rising V.S. labor costs; and V.S.

coastal cities now include such popular tourist ports as Oahu, Hawaii, and Anchorage, Alaska. Because of the high cost of construction in the V. S., foreign shipping now enjoys a sub stantial cost advantage. As a result, relatively few V.S. ships now engage in world trade. And by taking advantage of loopholes in the mari time laws, foreign ships now carry much of the lucrative V.S. tourist traffic to Alaska and Ha waii. Foreign ships can carry passengers on a round-trip cruise from Los Angeles to Los An geles, via Hawaii, where brief stops are al lowed. Although foreign ships cannot pick up one-way passengers in Seattle who want to cruise to Alaska and fly back, they can pick them up a few miles away in Vancouver, British Columbia. Meanwhile, Seattle, Wash ington, which once flourished as a seaport, finds much of its port facilities lying idle, as the bulk of the Alaskan cruise business bypasses Seattle to sail from Canada.

Government legislation, intended to promote and encourage the V. S. shipping industry, has had unexpected consequences. It has not only led to the decline of the very industry it was supposed to help, but also to the encourage ment of foreign competition. In Marc Connelly's 1930 Pulitzer Prize win ning play, "Green Pastures," God complains that every time he performs a miracle, he soon has to perform several others to solve the problems caused by the first one. Such has been the case with the "miracle" of maritime regulation. Government should stop subsi dizing, regulating, and controlling shipping and shipbuilding and let consumers decide which ships and what shipping routes to support with their business. -BBG Rent Control The battle lines over rent control seem to be clearly drawn. On one side stand the landlords; on the other side are the tenants. And the issue seems clear enough: Should powerful landlords be prevented from raising rents above reason able levels? When viewed in these terms, rent control attracts many adherents.

But there is another way to look at the rent control issue, and a third party which is almost completely ignored. This third party is the pro spective tenants effectively locked out by rent control. Controls prevent these people from bidding for apartments, thereby creating a housing shortage. These people have to wait for someone to vacate a controlled apartment, crowd into uncontrolled housing, or live in an other community. Thus, the real rent control issue is: Should outsiders be prevented from bidding for apart ments? Of course, when apartments are decon trolled, prospective tenants tend to bid up the rents of previously controlled units. But in so doing, they provide incentives for new con struction. As time passes, this new construction relieves the housing shortage created by rent controls, and brings rents down to market clearing levels. When rents are controlled by supply and demand, and not by political edicts, PERSPECTIVE landlords have no more power than their ability to offer attractive apartments at reasonable rents in a competitive housing market.

It is difficult to identify the prospective tenants locked out by rent control. Thus, they have no organizations and no politicians eager to champion their cause. But they surely in clude many people who, frustrated by the housing shortages created by rent control, pursue careers in more hospitable parts of the country. These people will get by, and many of them will prosper, but the rent-controlled com munity will be poorer without them. -BJS Soviet Monopolies "Government-owned services, though not adequately developed, were in a monopoly sit uation, dictating to consumers the kinds and range of services, their quality, cost, duration of fulfillment, and so forth." -From an article in the Soviet newspaper Tass, November 19, 1986, announcing a new Soviet law permitting citizens to engage in lim ited forms of private enterprise. Hungarian Candor "In your opinion, should Hungary resemble more the capitalist countries or the socialist countries?' , "It should resemble more the capitalist countries. ' , "In the Hungarian economy, what changes are needed?"

,'Fundamental. " "Agree or disagree: Only prices of luxury goods should be determined by market forces. ' , "Disagree. " ,'Do you want little differences in earnings or big gaps?" "Big gaps. " "What layers of society get bigger-than average earnings now?" "Those with the biggest mouths. ' , -from an official Hungarian public opinion interview, as reported in The Wall Street Journal (January 8, 1987).