March

86 "Blat": Corruption in Eastern Europe Michael Brewer An exchange student learns how Communist economies really work. 90 The Great Depression Hans F. Sennholz The causes and consequences of the economic upheaval of the 1930s. 97 The Poor Among Us Ruth Burke The virtue of self-reliance in the face of hardship. 99 Man at His Best Robin Lampson How a small farming community came to the aid of survivors of the 1906 San Francisco earthquake. 103 Libertarian Sympathies: Heart and Mind Joseph S. Fulda The twofold appeal of the freedom philosophy. 106 The Minimum Wage-Good Intentions, Bad Results Roger Koopman Wages rise in response to the creation of new wealth through greater productivity. 108 The Farm Credit Crisis E. C. Pasour, Jr. How government intervention has resulted in agricultural credit problems. 114 The Morality of Freedom Robert A. Sirico The necessary condition for a truly humane society.

118 A Reviewer's Notebook John Chamberlain reviews "Debts and Deficits" by Hans F. Sennholz. 120 Other Books "Economic Liberties and the Judiciary" edited by James A. Dom and Henry G. Manne. "America's March Toward Communism: Forsaking Our Heritage" by Mark W. Hendrickson. CONTENTS MARCH 1988 VOL. 38 NO.3 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 Book Review Editor: Edmund A. Opitz Contributing Editors: BettiJ;laBien 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. Additional single copies $1.00; 10 or more, 50 cents each. For foreign delivery, a donation 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. Permission is granted to reprint any article in this issue, except "Blat: Corruption in Eastern Europe" and "Man at His Best," provided ap propriate 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 The Enemy Within "The fault, dear Brutus, is not in our stars, but in ourselves . . . ." These words, from Julius Caesar, describe a theme found in many of Shakespeare's plays-people being de stroyed not by some enemy outside themselves but by an enemy within. Those of us who value liberty frequently speak as though the enemies of liberty are found outside ourselves. And. in truth there are such enemies-men and women committed to collectivism and busily working to impose it upon their fellows. Yet the significant enemy is to be found within ourselves. The name of that enemy, I suggest, is compromise. Some measure of compromise may be inevi table. I avail myself of the services of a regis tered medical practitioner, even though, in Australia, I am thereby the "beneficiary" of partially socialized medicine. I attend the Aus tralian Ballet, even though it is partly funded by money coercively extracted from my fellow citizens. In a fallen, statist world, pristine pu rity is seemingly impossible.

Yet for all this, many of us betray liberty by compromises we could avoid were we willing to pay the price. For example, we justify our acceptance of social security by claiming that we are merely getting back monies originally taken from us. In truth we are not! The money taken from us has already been spent. The money we receive is being taken from others, usually people younger than we are. In ac cepting that money, we are partners in plunder, sharing in the loot. More seriously, this com promise of principle reduces our stated support of liberty to mere words. We do well to take seriously the activities of enemies of liberty. We delude ourselves, how ever, if we pretend that all these enemies are to be found outside us. The enemy we can most easily conquer is the enemy within, the spirit of compromise that makes our eloquent defenses of liberty ring strangely hollow. George Meredith said it well: In tragic life, God wot, No villain need be! Passions spin the plot: We are betrayed by what is false within.

-John K. Williams Sign of the Times Individuals and corporations are required by law to comply with all rules and regulations that have been published in the Federal Reg ister. But just keeping up with the actions of the executive branch each day can easily amount to a full-time job.... Even the President of the United States isn't expected to keep track of the executive branch by reading the complete Fed eral Register every day. -from an advertisement offering abstracts of the Federal Register. The Freedom to Innovate A centrally managed economy is a static economy. It produces what has previously been produced. It endeavors to satisfy only·existing and well-recognized wants. If there had been universal socialism throughout the past century we would still be making buggywhips. The free market permits one to try new ideas and either to succeed or fail. It is a risk that many will accept because there is ample reward for succeeding. The entrepreneur develops and offers to the free market a new product or ser vice. He takes the risk of offering his creation to a nonexisting or at least non-recognized market. He either succeeds or fails. The re sponse of the free market determines which is the result. If he does succeed there is the chance that a new industry will emerge.

Centralized planning denies this opportunity to innovate. The citizens of such a government produce only what the central authority requires of them. The risk/reward factor is missing. The extent to which a socialist or communist so ciety can expand is dependent on what it can copy from societies operating under the free market system. -E. W. Colt PERSPECTIVE Stolen Jobs What do a luxury hotel in Detroit, a 400-seat seafood restaurant in Baltimore, a Chrysler Plymouth dealership in Salt Lake City, an amusement park in San Juan, Puerto Rico, and two Mitsubishi manufacturing facilities in Bra selton, Georgia, have in common? They all are being built, in large part, with your tax dollars. Over the next two years, reports the De cember 14, 1987, issue of Insight, the Depart ment of Housing and Urban Development will ladle out $450 million in "Urban Development Action Grants." These grants, HUD officials tell us, are needed to create jobs.

But what about the jobs destroyed by these grants? Every dollar the government spends on a politically favored group is a dollar that you or I won't be able to spend or invest as we see fit. Rather than creating jobs, Urban Develop ment Action Grants steal them from other parts of the country. -BJS Felix Morley Memorial Prizes The Institute for Humane Studies has an nounced its 1988 Felix Morley Memorial writing competition. The competition is designed to identify young writers who are interested in the free market philosophy. Applicants (college-age writers, but not necessarily enrolled in school) must submit an application, along with 3-5 clippings of editorials, op-eds, columns, essays, criticism, investigative pieces, or sim ilar materials. Cash prizes will be awarded. The application deadline is June 15, 1988. For more information, contact Morley Prize Secretary Institute for Humane Studies George Mason University 4400 University Drive Fairfax, VA 22030 (703) 323-1055 84 THEFREEMAN IDEAS ON LIBERTY Rewarding Uniformity by Kenneth A. Bisson "Because we had a 100 percent sign-up for fluoride treatments, we are going to make and share a pizza." I was dis mayed to read that statement in my son's weekly parents letter from his third grade teacher. A push toward conformity had tested the integrity of a class of third graders.