April

134 The Invisible Hand at Work Jane s. Shaw The only way we can earn income is by providing what other people want. 135 The Tide in the Affairs of Men Milton Friedman and Rose D. Friedman Charting the shifts of opinion and practice, as we move from collectivism toward freedom. 144 Everyone Can Win in a Truly Competitive Market Alan W. Bock Toward an understanding of economic competition. 146 Coping with Smoking Tibor R. Machan Conflicts are inevitable when government becomes the caretaker of our health and arbiter of our social relations. 148 Economics Has the Answer: What's the Question? Edmund A. Opitz Bolstering the economic case for freedom through moral reasoning. 151 Dumping: An Evil or an Opportunity? Alex Huemer Taking advantage of modem-day "rate wars." 153 Protecting Whom from What? Bjorn Ahlstrom When trade is restricted, everyone loses. 155 The International Monetary Fund Ken S. Ewert How the IMF has been a major influence in promoting statist economic policies throughout the world.

161 State Funding Threatens Community Groups Robert J. Schimenz What happens when the political process pinch-hits for individual choice? 162 The Dam Builders Cecil Kuhne When should a dam stay on the drawing board? 164 Tom Paine's Revolution J. Brian Phillips The pamphleteer who brought American colonists to their senses. 166 Book Reviews John Chamberlain examines Benjamin Hart's Faith and Freedom: The Christian Roots of American Liberty. Privatization and Development by Steve H. Hanke. CONTENTS APRIL 1989 VOL. 39 NO.4 THEFREEMAN IDEAS ON LIBERTY Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 President of the Board: Bruce M. Evans Vice-President: Robert G. Anderson Senior Editors: Beth A. Hoffman Brian Summers Contributing Editors: Bettina Bien Greaves Carla. Helstrom, III Jacob G. Hornberger Edmund A. Opitz 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 government. FEE is classified as a 26 USC 501 (c) (3) tax-exempt organization. Other officers of FEE's Board of Trustees are: Thomas C. Stevens, chairman; Ridgway K. Foley, Jr., vice chairman; Paul L. Poirot, secretary; H.F. Langenberg, 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 $15.00 a year is required to cover direct mailing costs. Copyright © 1989 by the Foundation for Economic Education, Inc. Printed in U.S.A. Permission is granted to reprint any article in this issue, except "The Tide in the Affairs of Men," "Everyone Can Win in a Truly Competitive Market," "Coping with Smoking,"

"Dumping: An Evil or an Opportunity?"and "Protecting Whom from What?" 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 Microfilms, 300 North Zeeb Road, Ann Arbor, MI48106. The Freeman considers unsolicited editorial submissions, but they must be accompanied by a stamped, self-addressed envelope. Our author's guide is available on request. Cover illustration: © Geoffrey Moss, Washington Post Syndicate. PERSPECTIVE Look Around Look around the world today and ask: where are the victories against poverty most dramatic? Where is the race to the future being won? Where is peace most secure? Again and again, the answer can be found in that small group of nations where men and women have freedom: freedom to pray and to speak, freedom to vote, assemble and dissent, and freedom to seek their fortune without fear or without favor, and where freedom is coupled with moral responsibility: responsibility to one's community, responsibility to one's coun trymen, and ultimately and inescapably respon sibility to the God who rules us all. For the abiding hope and the unlimited possibilities of freedom rest in the strength of freedom's moral foundations as well as in that crucial link be tween our economic and our personal and po litical freedom.

-WILLIAM E. SIMON Speaking at Templeton College, Oxford Protecting the Irresponsible Most people agree that government should punish irresponsible conduct which infringes, in a direct way, on the rights of others. Thus, there is common agreement on the legitimacy of laws against such conduct as murder, assault, rape, and theft. However, there is also a wide range of con duct which many people consider irresponsible but which does not directly impact against oth ers. Examples include the denying of God, re fusing to care for others, viewing pornography, listening to rock and roll, believing in commu nism, ingesting drugs, and attempting suicide. Should government punish individuals for pursuing actions which are harmful only to themselves? The answer is unequivocally no! Individuals have the absolute right to engage in this type of conduct and it is the sovereign duty of government to protect the exercise of this right.

The essence of freedom is the right to choose between alternative courses of action. If an in dividual is not permitted to choose an irrespon sible course of action that harms only himself, then he cannot truly be considered free. Does this mean that advocates of liberty necessarily approve of the choices which others make with respect to their own lives? Of course not. But we view liberty as so crucially important to hu man life that we are willing not only to tolerate these choices but also to affirm the right of oth ers to make them. Why is freedom of choice so vitally impor tant? There are three reasons. First, freedom of choice is a God-given right and, therefore, can not legitimately be taken away by man. God wants us to choose good over bad, and virtue over vice, but under no circumstances does He force us to do so. He leaves us free to choose our own way, recognizing that each individual must ultimately bear the consequences of his own choices. Since God permits man to sin against himself, government has no legitimate authority to prevent him from doing so.

Second, freedom of choice is necessary for individual growth. In order to improve and per fect himself, an individual must be provided the widest possible latitude to choose between good and evil. The ultimate conquest over self can take place only through a continuous process of choosing between good and bad, moral and im moral. It is this process of choosing that enables an individual to move forward in his aim of constantly refining himself. Third, freedom of choice makes the pursuit of correct conduct meaningful. If a person is coerced into doing good, or prevented from do ing bad, then his actions mean nothing. It is only when the individual voluntarily and delib erately pursues good for its own sake, rather than as a result of coercion or manipulation, that his conduct has positive meaning for both him self and his God. The true test of a free society, then, is the extent to which laws protect, rather than pun ish, the pursuit of irresponsible conduct which does not directly harm others. Not only is free dom of choice a divine right, it is the only method for individuals to reform themselves in meaningful ways.

-JACOB G. HORNBERGER PERSPECTIVE Where Your Mail Went The Postal Service may soon have to file en vironmental impact statements for all the mail it is dumping in America's trash boxes and dump sters. For example, a Rhode Island carrier was arrested after 94,000 letters were found buried in his backyard. A 1987 survey by Doubleday and Company found that up to 14 percent of bulk business mail was either thrown away or lost. One Arlington, Virginia, postal clerk told a customer, "We don't have room for the junk mail-so we've been throwing it out. " In 1987, 1,315 postal workers were fired for theft and/or mistreatment of mail. A Postal Inspection Ser vice audit found properly addressed mail dumped in the trash at 76 percent of the post offices it visited. A survey by Doubleday found that up to 14 percent of properly addressed third-class mail vanished in the postal labyrinth. The throwing away of mail has become so per vasive that postal inspectors have notified em ployees that it is bad for the Postal Service's business. -JAMES BOVARD "The Slow Death of the U.S. Postal Service," published by the Cato Institute Regulatory Chaos At first blush, the regulatory system seems reasonably orderly. Administrative agencies provide oversight before products go on the market, while the courts supervise matters far ther down the line. But the structure beneath is much more chaotic. The hierarchy of regulatory powers is so fragmented that the system can never say "yes," only "maybe." One agen cy's approval may be trumped by a second's disapproval. Approvals by two agencies may be refuted shortly afterward by a federal court.

And approvals of all three may be rejected by a liability court following an accident decades later.... Any endeavor can tolerate only so much un certainty. Compounding scientific doubt with unnecessary layers of regulatory unknowns will sink many undertakings regardless of their sci entific and economic merits. -PETER HUBER, writing in Technology Review 132 THEFREEMAN IDEASON LIBERTY The Real Meaning of Tax Loopholes by James L. Payne T ax loopholes are one of the great mys teries of modern politics. They are wrong, everyone seems to say, and cru sades are mounted against them time and again. Yet the evil never gets stamped out, for loop holes keep creeping back into the tax code. What causes this curious inconsistency? The root of the problem is a misunderstand ing about taxpayers. At first glance, taxpayers seem to be selfish individuals who spend their income on their own pleasures. Being preoccu pied with their private needs, they ignore the needs of the community. Therefore, govern ment is brought in to reflect those needs. It takes away some of the citizen's money in taxes and spends it on worthy public purposes.