February

47 The Affirmative Action Complex Mitchell Bard The illusion of societal responsibility. 49 Defending the Market Tibor R. Machan Answering a popular indictment of the free society. 52 Privatization: Best Hope for a Vanishing Wilderness Lawrence W. Reed Private organizations lead the way in conserving O1:lr natural environment. 58 Communal vs. Private Property Rights James D.Gwartney and Richard L. Stroup The abuse of communally held resources. 60 Ethics and Bottle Deposits Richard R. Mayer Coercion at the local supermarket. 61 The Primacy of Freedom Brian Summers Why work for freedom? 64 Economic Power Joseph S. Fulda Who wields "economic power" in a free society? 66 The Self-Interest of Self-Regulation J. Brian Phillips Honest businessmen want to protect both consumers and themselves. 69 The "New Socialism" John K. Williams New-style socialism poses a grave threat to freedom. 73 Howard Dickman's Industrial Democracy in America Robert James Bidinotto The intellectual roots of trade unionism.

78 A Reviewer's Notebook John Chamberlain A review of "Out of the Poverty Trap" by Stuart Butler and Anna Kondratas. Also featured: "Hayek on Liberty" by John Gray. CONTENTS FEBRUARY 1988 VOL. 38 NO.2 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: Bettina Bien Greaves Jacob G. Hornberger Paul L. Poirot 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 © 1988 by the Foundation for Economic Education, Inc. Printed in U.S.A. Pennission is granted to reprint any article in this issue, except "Communal vs. Private Property Rights," 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 1969to 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 bya stamped, self-addressed envelope. Our author's guide is available on request. The illustration of St. Paul's Cathedral by Gustave DoTe is used with courtesy of Dover Publications. PERSPECTIVE Who Are the Poor? When 81. Paul's cathedral was rebuilt after the Great Fire of London of 1666, King Charles II visited the finished building. Upon com pleting his inspection, he allegedly turned to the architect and proclaimed that he found the cathedral "awful, amusing, and artificial." The architect was delighted. In those days, the word ' 'awful" signified what today we would call "awe-inspiring." "Amusing" and "artificial" corresponded to today's terms ,'amazing" and "artistic." This is a rather striking example of the usually harmless ways in which words change in meaning over the years. Yet some changes in the meaning of words are ominous. Consider the word "poverty."

The term has always signified a significant shortfall of goods and services relative to some standard. But what standard? The goods and services needed for bare sur vival? The goods and services necessary for basic health? The goods and services needed for a "tolerably comfortable and secure existence"? Over the years, poverty bas been equated with a significant shortfall of goods relative to all these standards. The latest suggested standard, however, is profoundly different from the above. Poverty today is widely understood in terms of a signifi cant shortfall of goods relative to the goods possessed by the wealthiest members of a given society. In this way, the notion of "poverty " has been linked to the concept of "equality." To abolish poverty it becomes necessary to ensure that the ' 'gap" between the wealth possessed by the poorest members of a society and the wealth possessed by the wealthiest members of that society does not exceed some-neces sarily arbitrary-factor.

Some quite amazing conclusions derive from this definition of poverty: • By this defmition,a society in which all people were equally destitute would be a so ciety without poverty. • If poverty signifies a significant shortfall of goods relative to the goods possessed by the wealthiest members ofa society, poverty can be claimed still to exist until complete equality of possessions is realized. AU that bas to be done is continually to redefinewbatconstitutes a "significant shortfall." In this way the "poor are always with us." So, alas, is the veritable army ofgovemment employed "poverty fighters' 'primarily respon sible today for defining poverty! Each conclusion, surely, is absurdly unac ceptable. That says something about the defmi tion! -John K. Williams Robbing Ourselves Consumption by the wealthy, however con spicuous it might be, represents only the' 'tip of the iceberg" and isn't much affected by the various tax schemes whether of the ,'soak-the rich" or "help-the ricb" variety. Increase their taxes and the bulk of the tax will be paid from PERSPECTIVE their savings-savings which ultimately pro vide the housing stock, factories and productive machinery which house and employ millions of citizens. (Decrease their taxes, on the other hand, and again their consumption is relatively unaffected, but savings, investment, employ ment all increase.) Dole the increased tax re ceipts from the wealthy out to nonproducers and you increase demand without increasing supplies. Prices will rise and everyone's stan dard of living will decline accordingly.

Only to the extent that the wealthy are first able to restore a portion of their confiscated assets (through higher profit margins in re sponse to increased consumer demand, for ex ample) will they begin to offer jobs, agree to higher wages for workers, and so on. The net result is that the wealth bestowed on nonpro ducers is derived not from one wealthy stratum of society but rather from all strata, roughly in proportion to income and wealth shares that prevailed before the attempted redistribution. -William T. Chidester Market Vantage Pass the Hay . . . . I strongly suspect that if Henry Ford had had to bring out his Model T in today's environ ment, the courts and the regulators would have stopped him. Dam thing was dangerous; why, you could break your arm cranking it. Of course, horses were dangerous, too, but as an established technology, horse transportation would have fared better in the courts and regu latory halls. . . .

We are stifled by our own do-gooders, our law courts, our bureaucrats. Today the Wright brothers could not get off the ground. Could our early railroads have passed an environ mental impact or safety test? What would the unions have done to Eli Whitney's cotton gin? -Peter Huber, writing in the July 13, 1987 issue of Forbes.