March

THEFREE IDEAS ON LIBERTY 84 The Terrible0-Word DonaldG. Smith Discriminationin the private and publicsectors. 86 A Chat witha Mass-Man MichaelReed Inconsistencyis no obstacleto statist thinking. 88 State Subsidyto Private Schools:A CaseHistoryof Destruction John Chodes The rise and fall of the Societyfor a Free School. 93 UnionsDrop Their Mask CharlesW Baird Union violencecontinuesin the 1990s. 96 Old Letters and Old Buildings WalterBlock Who owns the product of a person'slabors? 97 Ecology,Socialism,and Capitalism TiborR. Machan The individualrightsapproachis the most natural. 99 The End of Communism DavidGlasner How did Communistregimessurviveso longwithoutpopular support? 107 Why CommunismFailed BettinaBien Greaves Ludwigvon Misesforetold the Communistcollapse. 109 ForeignInvestmentHelps Americans CecilE. Bohanonand T. Norman Van Cott Restrictingthe flow of capitalweakensour property rights.

111 Term-of-OfticeLimitsWon'tReduce Government Abuse Gary M. Galles We need to take the Constitutionseriously. 113 EconomicDevelopmentor EconomicDisaster? BillAnderson Governmentgrants misallocateurban resources. 116 Book Reviews John ChamberlainreviewsDubcekby WilliamShawcross.Also featured: The PoliticsofRich and Poorby KevinPhillips;Agricultureand the Stateby E. C. Pasour,Jr.; MarketSocialismby Anthony de Jasay. CONTENTS MARCH 1991 VOL. 41 NO.3 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 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. FEE, established 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: Thomas C.

Stevens, chairman; Philip M. Spicer, vice chairman; Paul L. Poirot, secretary; 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 © 1991 by The Foundation for Economic Education, Inc. Printed in the U.S.A. Permission is granted to reprint any article in this issue except "Ecology, Social ism, and Capitalism," 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 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. Phone: (914) 591-7230 FAX: (914) 591-8910 PERSPECTIVE NurturingGood or Evll c. S. Lewis, in his preface to The ScrewtapeLet ters,reminds us that good and evil do not spring up in a moral vacuum. He writes: "The greatest evil is not now done in those sordid 'dens of crime' that Dickens loved to paint. It is not done even in con centration camps and labor camps. In those we see its final result. But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices,by qui et men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice." Thus, for instance, we find the roots of Nazism in the works of seemingly genteel philosophers who long predated the rise of Adolf Hitler. And, to cite a more felicitous example, Thomas Jefferson's Declaration of Independence was inspired by the writings of John Locke, who died 40 years before Jefferson's birth.

So it is with all social movements. Good and evil take years to nurture. The lives of children yet un born will be affected by our thoughts, our exam ples, our actions. It takes time to improve the world, and we won't be around to get the final ver dict. But we have the rest of our lives to improve ourselves. -BRIAN SUMMERS CheapLunches The slogan "There is no free lunch" seems to im ply that we have to pay for everything we get. Here a good thought is going wrong by being applied to situations it was not designed for. This slogan was originally intended to suggest that the government cannot supply free lunches to allot us, that there is no magic trick by which we can increase our total national resources by passing laws and setting up bureaucracies; rather, we as taxpayers have to pay indirectly, sometime. In other contexts, however, there arefree (or be low full cost) lunches all the time. None of us al ways pays the full cost of production for what we get. In the modern world each generation gets its lunch at a lower cost of labor than did earlier gen erations, because earlier generations responded to their economic problems with ingenuity and energy. Our ancestors bequeathed us the intellectual wherewithal to get our lunch, if not entirely free, at least much cheaper than if we had to start from scratch. Compare what we "pay" to what Euro peans had to "pay" for lunch and the other meals a few hundred years ago. They paid most of every day's work, whereas we can buy the same amount of raw food with a small fraction of the work time it cost them. And there is no economic or physical force, and no concept in standard economic theory, that suggests that this progressive reduction in the cost of lunch cannot continue indefinitely. We eat our cheap lunch courtesy of the sweat of our ances tors' brows in mental as well as physical labor.

-JULIAN L. SIMON Population Matters The Threatto ChristianSchools The Christian schools have wisely backed away from federal funds and, as long as they do so, they willbe able to maintain their freedom and control. But, more and more, we are hearing Christian school administrators and pastors talk of the bur den of Christian education. More than one Chris tian school has dabbled with the idea of reaching for the carrot of subsidies. Some have even stated that when the controls come, they will scramble to high ground. How foolish to think you can play with fire and not be burned. Now, the government has offered a second car rot, but this time it has been extended, not to the school, but to the parents. Direct aid to the parent through tuition tax credits, the voucher system, child care, transportation reimbursements just to name a few. This is but a back door approach. If they cannot bring the school to accept the funds, they will seek to encourage the parents. They are banking on their need and ignorance. Once the parents have become accustomed to receiving the funds, you will find that these funds will be with held if the school of their choice does not meet par ticular criteria. If they cannot control the school di rectly, they will attempt to control the flow of students, thus forcing those schools who will not conform out of business.

-JAMES R. PATRICK, writing in Foundations of Liberty PERSPECTIVE TaxingInvestments The main cause of a near horizon in investment planning today is not investors or managers-it is government, especially the income tax system. The tax system penalizes saving relative to consump tion. That encourages potential investors not to save, or, if they do save, to do so for less time than they otherwise would. With depreciable assets, the tax system's cost recovery allowances systematical ly favor short-lived assets over long-lived ones be cause the allowances have a smaller present value as asset life rises. Revenue-raising changes in the tax code, which have occurred almost yearly in the last decade, also shorten investment horizons. When these changes are frequent, long-lived in vestments become riskier and thus less desirable than short-lived ones. Because short-lived invest ments mature quickly, investors in them soon have an opportunity to reshape their plans in light of the new tax rules.

-MICHAEL SCHUYLER Institute for Research on the Economics of Taxation Reader'sDigest "Another World," by Richard L. Lesher, which appeared in the September 1990 Freeman, has been reprinted in the January 1991 issue of Read er's Digest, as part of the feature titled "That's Out rageous," pages 163-165. A FalseProsperity War prosperity is like the prosperity that an earthquake or a plague brings. The earthquake means good business for construction workers, and cholera improves the business of physicians, phar macists, and undertakers; but no one has for that reason yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest. -LUDWIG VON MISES Nation, State, and Economy 84 THEFREEMAN IDEASON LIBERTY The TerribleD-Word by Donald G. Smith A s a person who makes his living with . words, I am often disturbed by the misuse of a word. The word articulate,for exam ple, does not mean knowledgeable, but only that a person is easily understood. Infer and imply are often used interchangeably, even though their meanings are quite different. Irregardlessgoes a step further by having no meaning at all.