May

IDEAS ON LIBERTY 164 Private Property Rights:An Endangered Species PaulD. Kamenar Private property rightsand economicdevelopmentare rapidlysuccumbingto bureaucraticregulationin the name of the environment. 167 The SocialRole of Private Property Rights Gene Smiley Ownershipis the bond that bringspeace and stability. 169 Savinga Forest:What Can We Do? MichaelReed Refrain from "neighborly"coercionand seek peacefulsolutions. 172 Buildinga Bam HannahLapp An industriousfamilyof 13 workstogether to expand their dairyfarm. 176 FreemanInterview:Wan Ronnan DanielR. Pruzin An exiledChineseentrepreneur speakscandidlyof his work with the pro-democracymovement. 183 The Real Case AgainstTaxes James L. Payne Lookingbeyond the economicargumentsagainsttax-and-spendprograms. 185 Eastern Europe: The EconomicStakesAre High Gary l<' Small The impactof the possibleemergenceof a capitalistEastern Europe. 187 The Messagefrom Eastern Europe WilliamH. Peterson Counteringthe forcesof soft socialism.

192 John Arbuckle:Entrepreneur, TrostBuster,Humanitarian ClaytonA. Coppin Rememberingan innovativeand enterprisingAmerican. 196 Roger and Me and Free Enterprise James L. Doti A film review. 198 Book Reviews John ChamberlainreviewsThe ExaminedLife by Robert Nozick.Also featured: A Callto CivicService:NationalServicefor Countryand Communityby Charles C.Moskos. CONTENTS MAY 1990 VOL. 40 NO.5 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 Edmund A. Opitz Paul L. Poirot Copy Editor: Deane M. Brasfield 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 champi on 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, sec retary; Don L. Foote, Treasurer. The costs of Foundation projects and services are met through donations. Donations are in vited in any amount. Subscriptions to The Freeman are available to any interested per son in the United States for the asking. Addi tional 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 mail ing costs. Copyright © 1990 by The Foundation for Economic Education, Inc. Printed in the U.S.A. Permission is granted to reprint any article in this issue except "Building a Barn" and" Freeman Interview: Wan Runnan," pro vided 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 1971 to date. Earlier volumes as well as current is sues are available on microfilm from Univer sity Microfilms, 300 North Zeeb Road, Ann Arbor, MI 48106.

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. FAX: (914) 591-8910 PERSPECTIVE TowardArgentineFreedom The complete reestablishment of the right to property and respect for contracts requires the elimination of the official organs of control of prices, exchanges, schedules, and rates of interest, the liquidation of the state banks, the annulment of taxes on profits and assets, the privatization of the subsoil, and removal of the regulations on the use of land. The market in all useful activities should be opened to competition without discrim ination. Trade with monies from taxes should be prohibited. Government would then be limited to protecting the life and property of the country's in habitants. If legislative action were to take this form, the black markets would soon disappear, fugitive cap ital would return without fear of reprisals, institu tionalized begging would cease to exist, fiscalpriv ileges would automatically be extinguished, and national reconciliation would become a fact.

-MEIR ZYLBERBERG, writing in La Prensa (Buenos Aires, Argentina), September 11,1989 The BankingCrisis "The American financial system was fashioned by legislators and is regulated by regulators who together created a cartel that is crumbling under the weight of its own contradictions. The system rests on government force, rather than voluntary cooperation. Enmeshed in countless laws and reg ulations, it was unable to cope with the rampant in flation of the 1970s,and the globalization of eapital markets during the 1980s.... "Most policymakers are resisting the only ratio nal conclusion that can be drawn: the time has come to dismantle the financial cartel of which the S&Ls are an integral part. It is an aberration and abomination. If a cartel structure, which restricts competition and divides the market, does not func tion satisfactorily, and inflicts painful losses on the underwriter, it is reasonable and just that it should be abolished. When all expedients of the cartel system have failed, we may try freedom."

-HANS F. SENNHOLZ, "The Savings and Loan Bailout: Valiant Rescue or Hysterical Reaction?"

AmericanScience I have seen science in operation in many coun tries. One strength of American science is the high level of independence given to young people, who have the freedom to join the system, cooperate, and compete with their fellow scientists, and be judged by their peers. On the other hand, in soci eties that have strong central planning of science, the positions of power are fewer and more impor tant, and the incentives to act politically to advance one's career are very strong. As a consequence, people are corrupted by politicking and distracted from producing good science. Another enormous advantage in Western science, particularly in com parison to the socialist countries, is the flourishing of small companies that can rapidly provide the chemicals and the tools that are needed for the constantly changing interests of scientists. -BRUCE N. AMEs, Chairman Department of Biochemistry University of California at Berkeley Howto SustainAgriculture The only really sustainable agriculture is one based on private control of the means of produc tion and prices set in the marketplace. Prices set in the political arena teach us farmers to think as indecisive dependents; prices set in the market place teach us to.think and act as responsible and independent businessmen.

Farmer addiction to Federal handouts is dan gerously high and even now may not be terminated without political disruption. The direction taken by U.S. agriculture must undergo dramatic change if we are not to completely lose private control of land use in this country. -GERARD BOURGEOIS a dairy farmer in Morris, New York Decontrolin India When Rajiv Gandhi began accelerating the lib eralization of the economy in 1985, there was an outcry from the Indian "left" that he was selling the common man down the river to rapacious busiPERSPECTIVE nessmen who needed to be held in check by a mul titude of controls. Even moderate voices opined that liberalization would help economic growth, but skew the distribution of income in favor of the business class .... Three and a half years down the road, it is pos sible to sit back and review the evidence. And the bottom line is that liberalization has aided the con sumer greatly at the expense of inefficient busi nessmen. Indeed, many businessmen are now protesting about "excessive" liberalization and competition that has led the ~ess efficient among them to the brink of bankruptcy.

The most spectacular change has come about in two-wheelers-scooters, mopeds, and motor cy cles.For decades earlier, the consumer was obliged to buy substandard vehicles from companies like Scooters India for want of an alternative, and the waiting list for Bajaj scooters ran to over 10 years. The two-wheeler industry was liberalized in the early 1980s, and capacity has almost tripled since then. New units have come up in collaboration with all the best known names in the world-Hon da, Vespa, Suzuki, Kawasaki, Peugeot, Yamaha, Zundapp, Garelli. The result has been an unprece dented choice of models for the consumer, the dis appearance of waiting lists, and the offer of cheap installment finance by producers. Kenetic Honda and Lohia Machines, whose scooters once fetched a hefty open market premium, have slashed their prices in order to stay in the market. The waiting period for even a Bajaj scooter has shrunk dramat ically.

While the consumer has gained, many produc ers are in dire straits. Scooters India, Chamundi Mopeds, Andhra Pradesh Scooters, and Kelvina tor's Avanti model have already fallen by the way side. Only those really meeting consumer needs-notably Bajaj and Maharashtra Scoot ers-have been able to maintain their profit margins. Less dramatic but similar stories can be told of cars, TV sets, syntheticfibers, computers,and many other liberalized industries. -SWAMINATHAN S. ANKLESARIA AIYAR, "Who Gains by Liberalization?" sponsored by The Project for Economic Education, Bombay, India 164 THEFREEMAN IDEASON LIBERTY Private Property Rights: An Endangered Species by Paul D. Kamenar L ast July, John Pozsgai, a 58-year-old, self employed truck mechanic, was sentenced to three years in jail by a Federal judge and fined $202,000for violating the Clean Water Act. This is the longest prison sentence ever meted out in the United States for an environmental crime.