May

THEFREE IDEASON LIBERTY 172 The Cambodian Experiment in Retrospect Morgan O. Reynolds The Khmer Rouge's efforts to replace the market economy with socialism yielded predictable results. 175 Old Banking Myths Hans F. Sennholz Refuting the fictions and fallacies that have created widely·accepted myths about banking. 180 Where Will It All End? Scott C. Matthew The destructive results of one case of "doing good" via the judicial process. 183 Who Are the Problem-Solvers? James L. Payne Individual action and voluntary organization can make a difference in working toward a better society. 185 The Levelers: Libertarian Revolutionaries Nick Elliott Seventeenth-century champions of individual rights. 190 At Whose Expense? Philip Smith Who will pay the bill for expensive social programs? 192 Of Special Interest Lloyd Cohen Using the tools of economics to define and explore "special interest" projects.

197 Private Enterprise in Poland Barbara Sall Despite the heavy hand of government and an uncertain future, the Polish private sector endures. 200 Readers' Forum 202 Book Reviews John Chamberlain explores Max Singer's Passage to a Human World: The Dynamics of Creating Global Wealth. Other books reviewed: The Electric Windmill: An Inadvertent Autobiography by Tom Bethell, Liability: The Legal Revolution and Its Consequences by Peter W. Huber, and Beyond Good Intentions: A Biblical View of Politics by Doug Bandow. CONTENTS MAY 1989 VOL. 39 NO.5 THEFREEMAN IDEASON 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 CarlO. 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, chainnan; Ridgway K. Foley, Jr., vice chainnan; 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. Pennission is granted to reprint any 3.rticlein this issue, except "Old Banking Myths," 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 Microftlms, 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. PERSPECTIVE Property and Welfare If private property rights are sound principles of a just society, then the welfare state, since it forces people to part with what is theirs even against their own choices, is unjust. To put it simply, it perpetrates legalized theft by taking from some persons what belongs to them and making it available, without the consent of the owner, to others. While the objective the gov ernment may serve by this could be justifiable and even noble, the means used to promote that objective are plainly criminal.

Of course, one can ask, how else might those objectives be achieved? The answer is, "In mil lions of possible peaceful ways, but not by means of the violation of the rights of others0'" We are not to be made slaves even with the excuse that the goals of our slavery are laud able. We are not to be deprived of our honest holdings even if we do not use them as gener ously and wisely as others may have discerned we ought to. Most of all, we are not to be made the subjects of kings, politburos, or majorities who devise the objectives of our lives for us without our consent. What we do to solve our problems-those dire ones that lead some very decent people to yield to the idea of the welfare state-is a matter for us to discover and imple ment as diligently as possible. -TIBOR R. MACHAN Auburn University The Educational Challenge Education has always been a major part of the American Dream. Originally schools were pri vate and attendance voluntary. Increasingly, government came to playa larger role, mandat ing compulsory education, funding education, establishing and administering schools.

We are proud, and with good reason, of the widespread availability of education, but, un fortunately, in recent years our educational rec ord has tarnished. Parents complain of declin ing quality. Educators complain of the atmosphere in which they are required to teach. Students complain of boredom. Taxpayers complain of growing costs. Hardly anyone maintains that the schools are giving young people the tools they must have for the year 2000. Public education is, I fear, suffering from the same malady that afflicts so many other gov ernment programs. As Justice Louis Brandeis wrote in 1928, "The greater dangers to liberty lurk in insidious encroachment by men of zeal, well meaning but without understanding." The malady is one of an overgoverned soci ety. In education it has taken the form of deny ing parents control over the type of education their children receive. The increasing role of government has adversely affected education at all levels. It has fostered an atmosphere that both dedicated teachers and serious students find inimical to intellectual development.

Now, more than ever, we must be able to provide the educator with the necessary tools for presenting in an accurate way the -ever important concepts of a free society. And, in so doing, we must not forget the cultural and his torical setting for the development of a market society. It is not enough to understand the rela tionship of supply and demand. Our teachers must be able to convey to our youth through historical understanding the necessity of a free society in the world in which we live. The challenge we face is clear. Americans must do what is necessary to re-establish the economic base of a free society. The problems have been identified, solutions proposed . . . success now depends on the will. -SHERIDAN NICHOLS American Enterprise Forum The Uninsured An estimated 37 million Americans lack health insurance, up 25 percent since 1980. Why are so many people going without medical coverage?

According to a study written by John Good man and Gerald Musgrave for the National Center for Policy Analysis, state regulations have priced many Americans out of the insur ance market. Recently enacted laws require PERSPECTIVE· many forms of coverage that a lot of people don't want and can't afford. For example: "Thirty-seven states require health insurance coverage for the services of chiropractors, three states mandate coverage for acupuncture, and two states require coverage for naturopaths (who specialize in prescribing herbs). ,, At least 13 states limit the ability of insurers to avoid covering people who have AIDS, or who have a high risk of getting AIDS. "Laws in 40 states mandate coverage for al coholism, 20 states mandate coverage for drug abuse, and 30 states require coverage for mental illness. " In trying to expand benefits, state legislators have hurt the very people who can least afford them.

-BRIAN SUMMERS What Protection Teaches Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same-to prevent trade. The dif ference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war. -HENRY GEORGE, Protection or Free Trade Reader's Digest Reprints Education Article "Why College Costs Are Rising," by John Hood, has been reprinted in the April 1989 Reader's Digest. This article originally ap peared in the November 1988 issue of The Freeman. We have extra copies of the Digest version of Mr. Hood's article. Please write to FEE, stating the quantity you'd like.