Book Reviews

The appearance of Centesimus Annus (The Hundredth Year) was a startling occasion for peo ple who have watched the development of John Paul's social thought. Some reports said that in preparing the document he was consulting with some top Western economists sympathetic to the free market-Jeffrey Sachs and Robert Lucas, for example-but no one expected a document that would please the likes of F. A. Hayek or Ludwig von Mises. The issuance of the document must have been an especiallyexcitingoccasionfor Michael Novak, holder of the George Frederick Jewett Chair in Religion and Public Policyat the American Enter prise Institute, and author of numerous works on theology and economics. Novak has argued for years for the compatibility between Christianity and capitalism, and per formed careful textual analysis of papal teaching to reinforce his point. Almost alone, he has kept the Catholic vision of a free economy alive during years when U.S. bishops expressed more skepti cismof markets-and the disparities of wealth that always accompany them-than support for their productive capacities.

Novak's recent book, This Hemisphere of Lib erty, appeared only four months before Centes imus Annus. The nine essays herein, nicely compiled and never before published in this coun try,represent some of Novak's best work. They are not directed toward an audience of academic scribblers, but rather to entire nations. Most of the essaysare taken from lectures deliv ered during the 1980sas Novak toured extensively in Brazil, Argentina, Chile, Colombia, Peru, Guatemala, EI Salvador, Panama, and Mexico, presenting a sweeping vision of the liberty that should be their goal. And they are couched in language that should especially appeal to these audiences. For North Americans, the book serves as a terrific distillation of Novak's most tested thoughts on economics and its relation to religion. Latin America is a part of the "hemisphere of liberty," Novak argues, a phrase introduced by Colombian historian German Arciniegas. And Novak urges Latin countries to claimthat visionby restructuring their political, economic, and cultur al institutions to make them more compatible with true human liberation.

In speaking about the right of private initiative and associated liberties, we never find Novak on the defensive against common criticism of mar kets. He recasts conventional arguments for cap italism in terms imbued with virtue and the com mon good-decidedly not as a rhetorical trick, but as a coherent and Christian view of the social order. In this vein, Novak's most impressive chapter is "Structures of Virtue, Structures of Sin." The socialorder that elevates liberty,he argues, does so not because it ignores the reality of sin, but rather because it is aware of sin's pervasiveness. "The task for a political philosophy that would seek genuine and effective human liberation ... is not the task of building a system designed for angelsor saints.The task is rather to build a system that willwork for sinners." This social order erects checks and balances to government power, insists on an understanding of liberty that is directed toward truth and the good, and channels self interest into socially useful directions that allow for "universal economic creativity."

Novak invokes Hernando de Soto's remarkable work on the underground economy in Peru to show that economic development in the Third World must come from the bottom up. It is be cause of concern for the poor that Christ demands of us, he argues, that legal institutions must reflect the right to exercise entrepreneurial creativity,and the economy must reward, not punish, this virtue. The weight of state intervention in Latin America is what makes the poor suffer; markets offer a lib eration. It is impossible to overlook the similarity in themes and language between the Pope's encycli cal and Novak's work. One can fairly speculate that some of the passages of the encyclical are directly drawn from Novak, if not from this present work, then surely from Spirit of Demo cratic Capitalism or his excellent study Free Persons and the Common Good. Especially notable similaritiesare the emphasis on the human mind as the ultimate economic resource and the market as a means for promoting virtues like cre ativity,thrift, and honesty in the citizenry.

The Pope's encyclicalwillturn new eyes toward the work of Michael Novak. Scholars may begin to rethink Novak's work and understand why he has been right about this pope, and why he has the power to persuade the Vatican. When Novak included the Pope in the liberal tradition of Acton, Tocqueville, and Hayek, many conservatives (myself among them) thought he was stretching things a bit. The Pope's pro-market statements seemed few and far between. But it turns out that Novak had a fine intuition about this pope, seeing in him what few others could. CentesimusAnnus is not only cause for celebra tion, but Novak should enjoy a great deal of per sonal satisfaction as well. The Pope's encyclical represents a vindication of Novak's work, of which there is no better representative and accessible volume than This Hemisphereof Liberty. D Mr. Tucker is a fellow ofthe Ludwig von Mises Institute. TO PROMOTE THE GENERAL WELFARE: MARKETPROCESSESVS.

POLflaCALTRANSFERS by RichardE. Wagner PacificResearch Institute for PublicPolicy,177 Post Street, San Francisco,CA 94108. 1989. 239 pages· $29.95cloth; $12.95paper Reviewedby PeterJ. Boettke E conomic theory is analogous. to a pair of corrective eyeglasses. Whereas the world appears unclear and indistinct without a 395 pair of glasses, the correct prescription lenses will clarify and bring our vision into focus. Similarly, without sound economic theory to guide us, the complex world of economic phenomena appears as a blur. With the aid of sound economic theory, however, the economic world begins to make sense. To make sense of the modern economic world, we need to understand both the workings of the unhampered market process (and the conse quences of intervention) and the nature of the political process. The workings of market process es have received careful attention in the writings of Austrian economists such as Ludwig von Mises, F. A. Hayek, and Israel Kirzner. On the other hand, the nature of political processes has been articulated by "public choice" scholars such as James Buchanan and Gordon Tullock. In To Pro mote the GeneralWelfare,Richard Wagner, chair man of the department of economics at George Mason University (the home of both the Center for the Study of Public Choice and the Center for the Study of Market Processes), combines the insights of both Austrian and public choice eco nomics to analyze the policies of the welfare'state.

With the decline of the socialist model of eco nomic organization, the battleground for classical liberals has shifted. The main debate today centers around environmental policy and welfare reform. In fact, the new defense of socialism that appears to be emerging takes one of two tracks or com bines them into a new agenda-the necessity of state control to protect against environmental destruction and/or the necessity of expanded state action to protect the least advantaged and provide opportunity to the less privileged. For example, Robert Heilbroner in his now famous New Yorkerarticle ("After Communism," September 10, 1990) holds out the possibility of socialist action on the environment, and Alan Ryan in his Fall 1990Dissentessay ("Socialism for the Nineties") suggests that expanded social ser vices and the provision of public goods in Western democracies demonstrate the theoretical possibil ity and practical desirability of socialism. The model for the post-Communist world is not laissez-fairecapitalism, but the democratic welfare state, as Francis Fukuyama has argued in his reflections on "the end of history."

To Promotethe GeneralWelfareshould prove to be one of the most important scholarly works in 396 THE FREEMAN • OCTOBER 1991 this debate. Wagner provides: 1) a framework of study that should be emulated in future examina tions of the issues, 2) a survey of the existing empirical literature on the failure of the welfare state to deliver on its promises, and 3) systemic suggestions for refo~m that go to the heart of the problem of majoritarian democracy and its rela tionship to the productive sector in civilsociety. Wagner begins with the recognition that there exists a wide divergence between the justification for state welfare programs and the results of these programs. As he points out, "despite the explosion in spending by the welfare state ... the number of people whose money income would place them below the poverty line has generally increased since the War on Poverty began." This sad state of affairs isn't limited to the War on Poverty but per meates all "Great Society" programs. How could such policy failures emerge from seemingly well meaning initiatives?

It is this divergence between rationale and real ity that Wagner hopes to explain to the reader. A key factor, he points out, has been the substitution of political rationales for economic ones in orga nizing social affairs: "The divergence between the justifications for the programs of the welfare state and the actual consequences of those programs -divergences that have by now been documented for a large variety of regulatory programsare an understandable and predictable outcome of an institutional order that can be characterized as a majoritarian democracy, or an unlimited democra cy." Whereas traditionally governmental failures have been excused as due to a lack of political will or a paucity of sufficient information, Wagner argues that there are structuralreasonsfor govern mental incompetence. According to prevailing theory, if well-meaning governmental action fails, the remedy is to try harder, gather more informa tion, or appoint better officials. This explanation, however, misunderstands the Achilles heel of gov ernmental action-the nature of the institutional settings and the incentives they provide to individ uals.

The problem that faces government officials is one of knowledgeand incentives."The problem of knowledge," Wagner points out, "is the same in questions of public policy as in questions of busi ness. In both cases, someone must reach a judg ment about whether a potential use of resources will be more or less valuable than the alternative use of resources that would have to be sacrificed for the project in question to be undertaken." But while the problem is essentially the same, individ uals in private and public sectors "face different incentives to exercise caution in estimating bene fits and costs and to act quickly in incorporating and reacting to new information." To argue his point, Wagner employs a notorious example of business failure: the Edsel. Ford pro duced the Edsel with the expectation of turning a profit, but when the car turned out to be a failure, profit and loss incentives assured that production was halted quickly.

But the profit and loss pressures faced by busi nessmen are not faced by government officials: "For instance, what ifthe Edsel had been a govern ment product, say the outcome of a public policy similar to the federal government's creation of Amtrak? Would production have been halted as quickly? Or would there have been efforts to continue the program, such as requiring govern ment contractors to use Edsels? Any such measure would make the Edsel look more successful,at the expense of an increased burden on taxpayers. Government regulation would have,been used to cover up an added tax burden that was used to subsidize the government's Edsel." The point of the example is to suggest the recip rocal connection between the knowledge and incentive components of public policy."The incen tive to acquire knowledge and the judgment to identify something as knowledge in the first place depend upon the institutional setting within which people act." The lack of incentive and the corre sponding inability of government officials to access and utilize the contextual knowledge of the market (knowledge that is embedded within the price system and that provides the basis for economic calculation) produces a situation of structuralignorance.Officialswho find themselves in such a situation do not simply throw up their hands and say: "I don't know what to do." Rather, they base their decisions on political rationales since economic criteria are weak or nonexistent.

The logic of political processes under majoritar ian democracy is to concentrate benefits on the well-organized and well-informed interest groups and disperse costs on the unorganized and ill informed mass of voters. As a result, the policy failures of the welfare state are not mi~takes, but rather the "result of the rational pursuit of interest and not really a failure from the perspective of those whose interests are controlling the choice at hand." Better public policy, Wagner argues, is not a mere matter of better selection of officials or improved methods of generating information; it requires a political reformation. "So long as gov ernment is organized according to majoritarian principles," Wagner concludes, "its participation in economic life will contain important forces tending to erode liberty and property, because suc cessful politicians and special interests can profit from the supply of legislation that has these effects." Only through institutional and constitu tional reform in a manner that accentuates the positive activities of government while restricting the negative activities will public policies emerge that are "supportive of the free society that the American constitutional order promises."

To Promotethe GeneralWelfareis an outstand ing contribution to the literature on the welfare state. Richard Wagner convincingly demonstrates how the current array of welfare programs, and their destructive consequences, are the logical result of the political framework of majoritarian democracy. In addition, the book offers wise coun sel for all who seek not only to understand the world, but to change it in a direction that favors individual liberty and economic prosperity. D Peter J. Boettke is aprofessor ofeconomics at New York University. WOUNDED INNOCENTS:mE REAL VICTIMSOF mE WAR AGAINST CIDLDABUSE by Richard Wexler Prometheus Books, 59 John Glenn Drive, Amherst, NY 14228-2197-1990 - 369 pages - $21.95cloth Reviewedby Hannah Lapp T he growing incidence of domestic violence and child abuse in America has provided politicians with an irresistible opportunity for expanding the dominion of government into the most private reaches of its citizens' lives-fam ilyrelationships. Our modem child welfare system is just another example of the nation's clumsy social welfare programs in that it: BOOKS 397 • neglects to deliver the promised services and protections • hurts the purported beneficiaries • infringes upon individual liberties • impedes private solutions • and, naturally, flaunts the disastrous results of its performance as evidence of the need for more funding and control.

Here we may leave off comparisons to other government bungling and examine the horrors unique to our childwelfare system, as portrayed by Richard Wexler,a reporter for the Times Union in Albany, New York. His book delivers a bold, up to-date analysis of child protective performance that strikes the unsuspecting reader particularly hard with its vividdocumentation of child-stealing, incompetence, and chaos inconceivable for official ranks. Throughout his writing, Wexler uses the broad label "child savers" in referring to the psycholo gists, social workers, politicians, lobbyists, and the like, who comprise the movement for mass inter vention in families and state custody of children. The label becomes less flattering with each page that tells of the deeds done under its guise. In the name of "erring on the side of the child," little Jennifer Humlen and her brother Chris were plunged into a nightmare from which they have never fully recovered. They were abruptly taken into Los Angeles County custody after a school nurse reported Chris's bruised eye to the Depart ment of Children's Services (DCS). The accident had happened when Chris was playing ball. Their distraught mother, aided by neighborhood support and an attorney from the VOCAL (Victims of Child Abuse Laws) organization, got the children back, through sheer will and luck, in one week's time. But one week in DCS custody was long enough to leave Jennifer bruised, feverish, and dehydrated from the crowded conditions in a chil dren's home, and both children suffered deep and lasting emotional trauma. Wouldn't the DCS offer an apology? "Of course not," says the children's mother. "They're in the right, don't you know?

They're the child savers." Parents, says Wexler, have been deemed child abusers for being late to pick up children after school, for not allowing children to watch televi sion after 7:30 ~M., or simply because a child protective worker botched the arithmetic on a risk-assessment form. "But most of all," he says, 398 THE FREEMAN • OCTOBER 1991 "child savers report parents to authorities, sub stantiate cases against them, and takeaway their children, solely because the families are poor." Chicago resident James Norman was a hard working father with the pride and love for his fam ily that enabled him to support his ailing wife and their four bright children. The bills caught up to him, however, after his wife passed away and he developed a heart condition. In the summer of 1988, the electricity to Norman's apartment was cut off, and a caseworker came to visit. The apart ment was messy, she wrote in her report, but the children "appeared to be very healthy." However, Norman was charged with "financial neglect," and the children were placed in foster care. After a year of desperate efforts to live up to child welfare demands, which included a psychiatric evaluation, a job, and a better apartment, he still didn't have his children back. James Norman finally died of a heart attack-at age 38.

These and uncounted similar cases are included in the child-abuse statistics that often are thrown at us as justification for mass intervention in fami lies. Wexler explains how to decipher intelligently such shocking reports as "over two million chil dren are abused each year across the U.S." What this figure actually represents is the number of reported cases, which include anonymous calls received at state hot-lines. More complete data shows that upon investigation by a caseworker, 60 percent of these reports are dismissed as "unfounded." Broken into categories, figures for 1986bear out that over half of the reports involved "deprivation of necessities," which may just mean poverty, 15 percent involved sexual allegations, and 2.6 percent involved serious bodily injury.The National Incidence Studies counts 161,000cases of serious maltreatment across the country in 1986-0nly a small fraction of the same year's fig ure of over two million children reported to be maltreated.

The widely publicized cases of Lisa Steinberg and Eli Creekmore, which involved child torture and murder, are also misused by child savers for proof of the dilemma they face in achieving the balance between what they claim are two objec tives at odds with each other-family preservation versus child preservation. Neither of these cases, says Wexler, involved delicate decision-making, since the children were repeatedly violently harmed long before their deaths. What these tragedies actually best demonstrate is the system's incompetence, which is partly attributable to its waste of resources in trivial cases. If child savers would recognize the intense emo tional bearing that family ties have on a child, Wexler contends, they would find that family preservation and child preservation are often not at odds with each other. Whether a child is shuttled between foster homes, torn from his parents upon somebody's "gut feelings," or forced to return to parents after years of attachments elsewhere, his need for a secure relationship is being denied. If the dangers inherent to this denial were taken into account, the child protective system would need to be fixed from almost every angle, and fast. Gone would be the argument that "no child ever died of a social-work evaluation"-apremise that Wexler disproves with accounts where children did indeed die from unwarranted removal.

By focusing largely on the system's injustice to children, Wexler proves that he is not in favor of parents' rights versus children's rights. He does, however, address the frequent violation of Consti tutional rights when homes are entered, children strip-searched, or parents denied due process dur ing prosecution-largely because of child protec tive agencies' arrogant attitude that "we're only here to help, so you have no rights." Veteran Child Protective supervisor Philip Leduc is quoted admitting: "If the level of intru siveness perpetrated allegedly to protect children were attempted in any other field, we would be in jail, we would have the Supreme Court coming down with innumerable decisions against us." A good case could be made here for limiting government involvement in the child-abuse prob lem to its legitimate function of crime control, and cutting out the social programs involved. This would serve to guard against the abuse of Consti tutionalliberties as well as to protect children more effectively, particularly if violent crime in general were better controlled. Wexler, however, advocates non-coercive government intervention in most child-neglect cases, and dreams of a net work of "Homebuilders" who would help out fam ilies with money, support, and practical services instead of grabbing their children. While he shows that the cost of these programs would easily be covered by the savings in foster and institutional care of children, he fails to explain how we can insure that paid strangers such as Homebuilders will truly care about the families they deal with.

Our government in general has failed to prove itself capable of doing the work of charities, much less the work of preserving families. In conclusion, Wexler is an expert at uncovering the abuses in our child protective system, although flawed in some of his arguments on causes and cures. The child-abuse issue is one that deserves examination by everyone concerned with preserv ing individual rights, and Wounded Innocents is among the most thorough and readable works on the subject-the kind of book that leaves a lasting impression on its reader. 0 Hannah Lapp is a dairy farmer and writer in Cassadaga, New York. PARLIAMENT OF WHORES: A LONE HUMORIST ATTEMPTS TO EXPLAIN mE ENTIRE U. S. GOVERNMENT by R1. O'Rourke The Atlantic Monthly Press, 19 Union Square West, New York, NY 10003 • 1991 • 255 pages • $19.95cloth Reviewedby WilliamH. Peterson I never lack material for my humor column when Congressis in session.... [For] every time Congressmakes a joke, it's a law. And every time they make a law, it's a joke.

-WILL ROGERS M eet P. J. O'Rourke, the White House correspondent for Rolling Stone maga zine and a reincarnated if earthier Will Rogers. O'Rourke holds that giving money and power to government is like givingwhiskey and car keys to teenage boys, that a little government and a lit tle luck are necessary in life but only a fool trusts either of them, that the mystery of government is not how Washington works but how to make it stop, that every government is a parliament of whores, but-and what a but this is-that in a democracy such as ours the whores are us. Or take the author's contention that he is first, last, and always a conservative. How so? Well, he says,conservatism relies on personal responsibility and private liberty. It is an ideology of, by, and for the individual. A conservative, you see, takes his fellowsone by one. The modern~day liberal, on the other hand, plays to the crowd. But crowds, says BOOKS 399 O'Rourke echoing Mackay,Le Bon, and Ortega y Gasset, "are noisy, unreasonable, and impatient.

They can trample you easier than a single person can." Or how about this iconoclast's theory that God is a Republican and Santa Claus is a Democrat? God, explains O'Rourke, is a stern fellow,patriar chal rather than paternal. God holds men strictly accountable for their actions. God is difficult. He is demanding. He is unsentimental, and so it is "very hard to get into God's heavenly country club." Santa Claus is different. He's cute. Huggable. Always jolly. Ho-ho-ho! Loves children, animals, and the environment. Sure, he may know who's been naughty and who's been nice, but he never does anything about it. He's famously generous to the poor and indeed to everyone else without giv ing a fig about the cost or any quid pro quo. Gen erous to a fault. Hence, maintains O'Rourke, keenly aware of the law of no free lunch, Santa Claus is preferable to God in every way but one: "There is no such thing as Santa Claus."

Our White House correspondent has fun with high school civicstexts, which are about as close to reality as Santa Claus. He chooses the current Harcourt Brace Jovanovich book, American Civics,one of America's most widely used texts. The book includes standard chapter headings such as "Our Federal Court System" and "How a Bill Becomes a Law." But American Civics,short on politics' naked jungle law of seizure, short on Machiavellian manipulation ala the Keating Five, i.e., short on what makes the real Washington tick, is a droner, mechanistic, bland, a yawn, despite its pictures in color instead of black and white and despite its insertion of boxed items such as: "CAN YOU GUESS? "One of our Presidents had a serious physical handicap. Who was he? Answer is on page578." O'Rourke also has fun with the 1991 Federal budget. According to the budget proposal origi nally submitted to the Congress in February 1990 by President Bush's Budget Director Richard Dar man, it contains some 190,000accounts. Mr. Dar man explained that if a concerned Congressman spent but one minute perusing each one of these accounts, at eight hours a day, it would take more than a year to study the budget.

That's bad enough. But by the time the budget 400 THE FREEMAN • OCTOBER 1991 emerged from interminable hearings and "Budget Summits" and was billed as the "final budget com promise," it contained a whopper of a tax increase notwithstanding the pledge of President Bush ("read my lips") of no new taxes. Further, it landed on the House floor at 6:58A.M. on Saturday, Octo ber 27, 1990, during what was called "a Congres sional sleep-over." By then the revised and revised budget had grown fatter by more than 1,000 pages of legisla tion-a pile of paper 10 inches thick, weighing 24 pounds, entailing outlays of $1.23 trillion, and, according to O'Rourke: "Nobody knew what it contained. No one, not one single person in the entire United States had read this document." Nor was anybody able to, there being but a single copy for the entire House, or inclined to, with the Con gressional election little more than a week away.

Other targets of the O'Rourke cannon include the National Conventions (with equal fire on Bush and Dukakis), the State Department, Defense, Agriculture, Health and Human Services, Social Security, Environmental Protection Agency, and the Office of National Drug Control Policy (head quarters of the Drug Czar whose War on Drugs, according to the author, is a lost cause). In any event, whores all over the place. O'Rourke winds up his work on scoundrelism by switching to the story of democracy in the little town where he lives in New Hampshire. There he relates how the townspeople found themselves Get Organized! obligated to spend $6.2 million inasmuch as Congress had passed the Safe Drinking Water Act of 1982 mandating that all water drawn from sur face sources must be filtered and chlorinated whether necessary or not. But he also finds his fellow townspeople play ing the same coercive game by attempting to deny a local property owner the right to develop his property into a golf course and condo complex. The townspeople's attempt was, in O'Rourke's opinion, "wanton, cheap, and greedy -a sluttish thing."

Look, says the author, no longer so amused, "We were goingto use our suffrage to steal a fellow citizen's property rights. We weren't even going to take the manly risk of holding him up at gunpoint." He then comes up with the blockbuster idea that governmentis morally wrong. He argues that authority has always attracted the lowest elements in the human race, that all through history mankind has been "bullied by scum." (Here he seems to go beyond thinkers from Aristotle to Mises who held that government, while very much subject to abuse, is still an institu tion requisite to civilization.) A perhaps unfunny ending to a funny book, but is it any unfunnier-or funnier-than government in America today? D Dr. Peterson, Heritage Foundation adjunct scholar, holds the Lundy Chair of Business Philosophy at Campbell University,Buies Creek, North Carolina. Attractive blue binders for twelve issues of The Freeman will keep your 1991 issues in order. Price: $12.00 postpaid.

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