August

THEFREE IDEAS ON LIBERTY 292 The Border Closed at Midnight Dagmar M. Anderson One family's bold escape from Soviet-occupied Czechoslovakia. 296 Soviet Military Strength Based on Economic Weakness Dwight R. Lee How poor economic performance encourages military spending. 298 School Censorship: Compulsion Creates Conflict John Semmens Can free expression in the public schools be safeguarded? 300 Privatizing the Judiciary Daniel J. Popeo Alternatives to the public court system help ease the current judicial bottleneck. 304 John Bright: Voice of Victorian Liberalism Nick Elliott A champion of free trade, non-interventionist foreign policy, and Parliamentary reform. 308 The Scranton Story Burt Folsom The development of one of America's first manufacturing cities. 319 Booker T. Washington: Apostle of Freedom Robert A. Peterson ,'He lifted the veil of ignorance from his people and pointeD the way to progress through education and industry."

323 Helping the Poor Jane S. Shaw Today's poor need not be the poor of tomorrow. 325 A Reviewer's Notebook John Chamberlain A review of Ali It Takes Is Guts: A MinorityView by Walt~r Williams. 327 Other Books The Fords: An American Epic by Peter Collier and David 1jI0rowitz. CONTENTS AUGUST 1988 VOL. 38 NO.8 THEFREEMAN IDEAS ON LIBERTY Publishedby The Foundationfor EconomicEducation Irvington-on-Hudson,NY 10533 Presidentof the Board: Bruce M. Evans Vice-President: RobertG. Anderson SeniorEditors: Beth A. Hoffman Brian Summers ContributingEditors: BettinaBien Greaves CarlO. Helstrom,III Jacob G. Hornberger Edmund A. Opitz Paul L. Poirot The Freeman is the monthly publicationof The Foundationfor EconomicEducation,Inc., Irvington-on-Hudson,NY 10533 (914) 591-7230. FEE, founded in 1946 by Leonard E. Read, is a nonpoliticaleducationalchampionof private property,the free market, and limited govern ment. FEE is classifiedas a 26 USC 501 (c) (3) tax-exemptorganization.Other officersof FEE's Board of Trusteesare: Thomas C. Stevens, chainnan;RidgwayK. Foley, Jr., vice-chainnan; Paul L. Poirot, secretary;H.F. Langenberg,trea surer.

The costs of Foundationprojectsand servicesare met through donations.Donationsare invited in any amount. Subscriptionsto The Freeman are availableto any interestedperson in the United States for the asking. Additionalsingle copies $1.00; 10 or more, 50 cents each. For foreign delivery,a donationof $15.00 a year is required to coverdirect mailingcosts. Copyright© 1988 by the Foundationfor EconomicEducation,Inc. Printedin U.S.A. Pennissionis grantedto reprintany article in this issue, except "Privatizingthe Judiciary,""The ScrantonStory," and "Helpingthe Poor," pro vided appropriatecreditis given and two copies of the reprintedmaterialare sent to The Founda tion. Bound volumesof The Freeman are available from The FcmndationlJorcalendaryears 1969 to date. Earliervolumesas well as currentissues are availableon microfilmfrom UniversityMicro films, 300 North Zeeb Road, Ann Arbor, MI 48106.

The Freeman considersunsolicitededitorialsub missions,but they must be accompaniedby a stamped,self-addressedenvelope.Our author's guide is availableon request. PERSPECTIVE On the Inside The transmission and use of so-called inside information has been made to seem invidious by the recent hit movie Wall Street. Passing "inside" infonnation is, in itself, a mere exer cise of free speech and a benign one at that, since the infonnation is true and the spread of the truth is no evil. In the movie, though, the information was gained by filial betrayal and by cloak-and-dagger operations that would em barrass the CIA. Likewise, the use of true information to guide one's actions is paradigmatic human ra tionality. So-called market manipulation buying low and selling high - is no more than any businessman does, and the better his knowledge of when something is undervalued, the greater will be his profit. Moreover, it is impossible to draw a clear line demarcating "inside" information from other information.

In the movie, though, the information is used for both revenge and betrayal-to hurt people. Movies like Wall Street, as entertaining as they may be, do little to enhance public under standing about the realities of the business world. Instead, they create undeserved animus and lead to erroneous generalizations. How unfortunate. -JOSEPH S. FULDA Hofstra University Overcoming Racism I have found that if you can make yourself indispensable to people, if you can produce a product that is better than any other product, if you can give people something that they cannot get anywhere else, they will forget about race and they will forget about everything of that nature. I don't run into a lot of prejudice with anyone if I'm making money for them; I don't have any problem with my printer; I don't have any problem with anybody if they need me. And so what we need to do, we need to make ourselves indispensable. We need to be so good at what we do that people need us, and if they need us they will support us.

-JOHN H. JOHNSON, Chainnan The Johnson Publishing Company publisher of Ebony and Jet Steel Blues, Part I In 1984, the Reagan administration per suaded major steel exporters to restrict their shipments to the U. S. market. The goal was to reduce the share of steel imports from 26 per cent to 22 per cent of total domestic sales and, in the process, to create jobs in the beleaguered U.S. steel industry. Did the plan work? That depends on how you look at it. According to a study by Wash ington University economist Arthur Denzau (' 'How Import Restraints Reduce Employ ment, " published by the Center for the Study of American Business), by 1986, the "volun tary" trade restrictions had added an estimated 16,900 jobs to the U.S. steel industry. But the restrictions also raised steel prices, making it more difficult for U.S. auto makers and other American producers who use steel to compete in world markets. Because of the trade restrictions, Denzau found, the U.S. metal fab rication industry lost 26,000 jobs, nonelectrical machinery lost 11,800 jobs, electrical ma chinery suffered 4,600 job losses, and transpor tation equipment lost 7,600 jobs.

The net employment effect of the trade re strictions: the loss of more than 35,000 Amer ican jobs. - BJS Steel Blues, Part II Caterpillar Inc. of Peoria, Ill., is having trouble getting the steel it needs to build tractors for a $2.2 billion export business that employs 14,000 people. The company has asked U.S. mills for more steel, but the mills cannot deliver it. Nor can Caterpillar get steel from overseas, because U.S. quotas imposed in 1984 limit imports. The shortages are now con stricting Caterpillar's exports. . . . Steel import quotas are forcing Davis Walker Corp., the largest steel wire maker on the West Coast, to pay a 10 percent to 15 percent pre mium over world prices on its steel. . . . Scotchman Industries Inc., a machine tool maker in Philip, S.D., has seen steel prices from domestic mills rise 17 percent to 25 per cent in the past year. . . . PERSPECTIVE Quota-induced price increases are filtering through to housing prices, says John P. Hayes, chairman of National Gypsum Co. of Dallas, because steel is a large component in construc tion. "If we have a demand for, say, 1.5 to 1.6 million houses a year, and we can only sell 1.3 to 1.4 million because of high prices, why that means all of those jobs for people to build to that demand level won't be there," he says.

-Insight, March 14, 1988 The Unseen Governors Several years ago I began asking students in my college class to tell me who keeps order in Grove City, Pennsylvania, a town of 10,000, when college is in session. They invariably re sponded, "the local police," or "the Pennsyl vania State Police," or "the campus security officers," and then, sometimes, "the Dean of Men. " The students were convinced that soci etal peace and order were produced almost en tirely by what might be called the visible gov ernors-most often officials of the State. But then I pointed out that in our town, if just 500 citizens decided to do wrong, our dozen local policemen, a handful of security guards and the officers of the closest state police barracks ten miles away would be hard pressed to bring the five per cent of the population under control. "How," I ask them, "could order ever be maintained if all 10,000 people set out to dis obey the law?" The orderly existence we enjoy in towns like Grove City is not the product of the threat of statist force. The orderly and free society we have is due primarily to the presence of unseen governors-not primarily to billy clubs or the rotating red light of squad cars. To emphasize, order in communities results from the inhibiting (dare I use that now disreputable word) restraints of morals, religious convic tions, conscientious scruples, and the regular izing and meliorating bonds of custom, tradi tion, usage, and observance.

-JOHN A. SPARKS Grove City College 292 THEFREEMAN IDEAS ON LIBERTY The Border Closed at Midnight by Dagmar M. Anderson W ith a jerk, the train slowly began leaving the station. We passed houses, factories, railway crossings, just barely visible in the darkness. I looked out the window beaded with raindrops, saying good-bye. The gentle swaying of the train soon became monotonous. If anyone had told me three months earlier that my family and I would be fleeing our na tive Czechoslovakia, with all our belongings packed in five suitcases, and an uncertain fu ture ahead, I would have told him that was as unbelievable as the day it all began . . . August 21st, 1968. My ears began attending to a distant sound. It was coming closer. The closer it got, the louder it got. What was it? I had never heard that before. Then my whole room began to shake. An earthquake? I was fully awake now. I frantically dove out of bed to look out the window. It was still dark outside. Leaning over the edge I had to plug my ears because the noise was so loud. A long line of large dark silhouettes was slowly creeping up our one-way street. Tanks? That's what they looked like.