Book Reviews

-MANCHESTERUNITY (British charitable organization), 1938 I n 1984 Charles Murray published Losing Ground, an indictment of America's welfare state. In that book Murray offered statistical proof on the counterproductivity of social engi neering and relief measures such as Aid to Fami lies with Dependent Children-that on balance and over time public welfare compounds rather than relieves social despair and destitution. An underclass emerges, persists, grows from one gen eration to another, with all manner of perverse repercussions. Now Murray follows up his American analysis with a pared-down study of the British welfare experience and comes up with a similar finding -the rise of a British underclass, the growth of a culture of poverty, of what I call "the professional poor": those who forgo livelihoods and openly feed at the public trough as a way of life. Here he is careful to differentiate between the British poor and the underclass. The Bible observes that the poor shall be "always with you."

Similarly,Murray sees that some people will ever be at the bottom,that a bottomin any statistical vertical range of incomes has to occur by defini tion, that the dynamics of life, history, and eco nomics will necessarily shuffle incomes up and down, that some historians have a point in noting a cycle "from shirt-sleeves to shirt-sleeves in three generations." The subsidized underclass is something else. So 83 what gives this latest Murray study special bite is not just his seeing that the underclass is swellingin England, but his observation that three British phenomena which have turned out to be early warning signals for the American underclass are being insufficiently recognized. This is evident in commentaries by four British sociologists (one of whom is a Labour Member of Parliament) which are included in this volume. The three phenomena are: illegitimacy, violent crime, and labor-force dropouts.

Illegitimacy has escalated in Britain-from 5.1 percent of births to single women as a percentage of all births in 1958to 25.6 percent in 1988,a five fold increase in just 30 years. This rising illegiti macy is strikingly concentrated in the underclass, in communities without fathers in the traditional sense. The fewer the fathers, argues Murray, the greater the tendency of children to "run wild," to abandon schooling and employment, or to become criminals. Naturally enough, crime also escalates-from 27 crimes of violence per 100,000 population in 1958 to 314 in 1988,with again the preponderance of that crime concentrated in the slum neighbor hoods, in males in the second half of their teens. So school and labor-force dropouts are also on the rise. For to many in the British underclass, work is an aversion. Murray relates an illustrative anecdote. Recently contractors carrying out extensive renovations in a British low-income housing project were obliged to hire local youths for unskilled labor as part of a legislated work experience program. Thirteen youths were hired.

Ten actually showed up on the first day. By the end of the week, only one was still at work. What Murray is describing is a viciouscircle.He sees these social problems as interconnected, as reinforcing one another, with both the dole and drug abuse increasing significantly.He writes: Youngmen who are subsisting in crime or the dole are not likely to be trustworthy providers, which makes havinga baby withouta husband a more practical alternative. If a young man's girl friend doesn't need him to help support the baby, it makes less sense for him to plug away at a menial job and more sense to have some fun-which in turn makes hustling and crime more attractive, marriage less attractive. With out a job or family to give life meaning, drugs 84 THE FREEMAN • FEBRUARY 1992 become that much more valuable as a means of distraction. Not a pretty picture in Britain. Nor in America. So what to do? In this first-rate study Dr. Murray pleads for central governments in London, Wash ington, and elsewhere to get out of the way, to return to "authentic self-governing communities"

that reward responsibility and stigmatize irre sponsibility. What he is really saying,I think, is that the West has to return to first principles, to basic values such as self-accountability,self-worth, privatecharities, marriage, families, limited government, private property, the sovereignty of the individual. Social engineering is an oxymoron. The welfare state everywhere is bankrupt. D Dr. Peterson, Heritage Foundation adjunct scholar, holds the Lundy Chair of Business Philosophy at Campbell University,Buies Creek, North Carolina. PROSPECTSFOR GROWTH:A BIBLICAL VIEW OF POPULATION,RESOURCES, AND THE FUTURE by E. Calvin Beisner CrosswayBooks, 9825 West Roosevelt Road, Westchester, IL 60154 •1990 •282 pages • $9.95paper Reviewedby Doug Bandow A !though collectivism has ignominiously collapsed not only in Eastern Europe but in the Soviet Union as well, it survives in America among environmentalists and within the church. There may, indeed, be no area where the ological thinking is more muddled than the envi ronment, with the emergence of pantheism with a Christian gloss.

That people are concerned about the environ ment is hardly surprising.The popular image is one of impending disaster. Writes E. Calvin Beisner: This poor world. It's overpopulated. Exploited. Polluted. Unorganized. Nothing short of radical and stringent new measures will prevent catas trophes. Left to themselves, people ... breed mindlessly, multiplying geometrically to their own destruction. They rape the earth, stripping it of its resources, leaving nothing for future generations. They poison air, water, and land, heedless of their own safety. So runs the conventional wisdom. Although powerful critics of this apocalyptic view-Kent Jeffreys, Julian Simon, Fred Singer, Fred Smith, and R. J. Smith, among others-have not been silent, none of them has really spoken to America's religious community. Happily, Beisner, a prolific writer from Pea Ridge, Arkansas, has helped fill the void. Prospectsfor Growthprovides a welcome antidote for both the doomsayers who would wreck the economy and the tree-huggers who would have us worship the earth.

In Beisner's view, the most fundamental prob lem is theological: "Theology, in all its depart ments, supplies the guiding principles by which to answer all the pragmatic problems of political economy." God has created the earth and given man dominion over it. He is to act as steward, "to cultivate it and keep it." (Genesis 2:15) Exactly how we are to do so is not spelled out in Scripture, however, so Beisner moves on to what he calls the "foundational principles of civil government and economics." His conclusion is that freedom is bet ter than statism: "the free market excels over the controlled market in regard to both Biblical ethics and productivity." After laying this basic groundwork for assessing environmental problems, Beisner turns to specific issues. He begins with the lurid predictions of deadly overpopulation, which he rightly dismisses for being fanciful. "In fanning the flames of the population scare, statistics are more misleading than fun." He shows that the United States and the world are not overcrowded and that predictions of certain doom in the future don't take into account the behavioral changes and technological develop ments that willinevitably occur.He concludes that "what we learn from history is that over the long haul and on the average, per-capita health, eco nomic wellbeing, and psychological wellbeing tend to improve faster than population grows."

Beisner backs up this assertion with separate chapters on population and both living standards and economic growth. He is particularly adept at demolishing the 18th-century Malthusian view that continues to dominate the thinking of such scaremongers as Stanford's Paul Ehrlich, whose erroneous predictions of mass famine in the 1970s haven't stopped him from making new doomsday forecasts for the future. In sum, Beisner writes: . .. population growth yields short-term losses but long-term gains.... Over their lifetimes, people tend to produce more than they con sume; higher population density makes possible greater economic efficiencies from division of labor, economies of scale, and capital applica tion; more people mean more and faster increases in knowledge and its application through discovery, innovation, and invention. These long-term benefits of population growth so far outweigh the short-term costs that eco nomic production has consistently outgrown population. There is no reason to think this trend has ended or will end in the foreseeable future.

Equally trenchant is his discussion of natural resources. Improved productivity and continuing innovation-leading to both substitution of one substance for another and transformation of eco nomic processes altogether-have resulted in what he calls "multiplying returns" from resources. As a result, natural resources are actually becoming more abundant. This fact is reflected in the steady increase in the estimated reserves of everything from copper to oil to zinc; between 1985 and 1990 alone proven international petroleum reserves jumped by 400 billion barrels.Moreover, resource prices have been consistently falling. Finally,Beisner takes on the myriad of environ mental "problems" that are said to beset us. Although he acknowledges that pollution is a legit imate issue, he finds that the environment has been getting cleane,r,not dirtier. And, relying on the lat est scientific evidence, he debunks some of the most outrageous scaremongering, particularly acid rain, ozone depletion, radon, and global warming.

All in all, he concludes, we need to defend the "paramount principles" of "life,liberty,and proper ty." The practical reasons are obvious enough: "To the extent that life,liberty,and property are protect ed, economic growth willabound; to the extent that they are undermined, economic growth willsubside or even reverse," he'writes. But even more impor tant is the moral dimension. For "in the final analy sis, government planning-whether of population, resource use, or the economy-amounts to nothing but brute force." And that, he explains, violates "the Biblicalprinciple of liberty." D Doug Bandow is a Senior Fellow at the Cato Institute and the author of The Politics of Plunder: Misgovern ment in Washington. BOOKS 85 QUICKSILVERCAPITAL:HOW THE RAPID MOVEMENTOF WEALTHHAS CHANGEDTHE WORLD by Richard B. McKenzie and Dwight R. Lee The Free Press, 866 Third Avenue, New York, NY 10022 1991 • 315 pages • $24.95cloth Reviewed by Gary M. Galles T he effects of taxation (or regulation, which is taxation in disguise) can be understood by analogy to the children's game of dodge ball. In search of revenues, governments throw various types of taxes at their citizens. Those who can relatively easily dodge the tax burden by changing their behavior (e.g., through moving their assets, exploiting tax loopholes, or entering the underground economy) aren't hit very hard or often, making them poor targets for taxation.

Those who find it difficult to dodge because such behavioral changes are more costly (e.g., produc ers with large existing physical plants, which are difficult to relocate) are tempting taxation targets, and can become seriously bruised as increased tax es fuel the growth of government at their expense. These citizens would like to be able to switch over to a less taxing game of dodge ball run by some other government, if only they could move at a low enough cost. The central argument of Quicksilver Capitalis that technological changes are dramatically tilting the game of tax dodge ball in favor of the dodgers, by making capital in all forms more mobile, which limits the power of governments to tax citizens without giving them sufficiently valued services in return. "As a consequence, governments have lost much of the monopoly power that undergirded their growth in earlier decades.... governments have had to compete against one another by seek ing more efficient policies in order to retain the physical and human capital that is now so crucial to modern production processes and to the tax bases on which governments depend." The opti mistic upshot is that the myriad of inefficient gov ernment policies are beginning to shrink away,and with them burdens on the governed. Attempts to act otherwise are becoming self-defeating, quickly driving the "quicksilver" tax base away to more hospitable shores.

McKenzie and Lee begin by delineating the changes in technology, particularly the quantum 86 THE FREEMAN • FEBRUARY 1992 leaps in computer sophistication and the conse quent reduced scales of efficient production, that drive their premise that capital is being trans formed from political captive to quicksilver.Then they demonstrate the growing international inte gration of goods, services, and capital markets that is consistent with their mobility argument, fol lowed by what seems to be every piece of domestic and international evidence on government expen ditures, reduced tax rates, regulations, and privati zation that supports their hypothesis. Throughout, they reiterate the power of increasing capital mobility to reshape the fiscalworld by taking pow er from government, and the often dramatic differ ~ences between their interpretation and policy pre scriptions and the more pessimistic ones of others.

The book is well written for lay audiences, and anyone not already well informed on these issues could hardly fail to learn something. (Though beyond their description of the technological tidal wave taking place, little new willbe found by those well versed in the field. The authors' 1987 book RegulatingGovernment,excerpted in the Febru ary 1987Freeman,does a better job in dealing with many of the growth-of-gqvernment issues.) How ever, despite a plausible argument that is highly attractive-implying a declining scope for govern ment in areas where it had no business in the first place-their conclusion that we are headed for a world of Slim-Fast governments is ultimately unconvincing. The biggest problem with their argument that capital's ability to move to other locations is putting government on a diet is that such a strong claim is not clearly consistent with the evidence. For instance, despite repeated claims of the power of their quicksilver capital insight to change the world, the authors themselves back away from such assertions to the much more modest conclu sion that "We have only argued that greater capital mobility and production sophistication have con strained the growth of governments. Though there is a good chance that governments will actually start contracting on many fronts, the prospects of that outcome are uncertain. To date, the evidence only supports constrained growth relative to national income."

If the only solid evidence they can muster to support their hypothesis is that governments are growing more slowly than they used to, much of their presentation needs tempering. (If a 600pound man goes from gaining three pounds a week to "only" two pounds a week, we won't soon be calling him "Slim.") This evidence seems far more consistent with increased capital mobility being one influence constraining governments, but not the dominant one. The reductions in the high est marginal tax rates they cite, similarly, seem more consistent with undoing previous tax rates so high that countries were "around the bend" on the Laffer curve of high-income citizens, thereby los ing tax revenues, than with a reduction in the size of government because capital is becoming more mobile. Also seemingly inconsistent with the argument that capital can easily move to avoid taxation, leading government to tax it more lightly,is the tax treatment of capital in the United States in recent years. Capital gains and corporate taxes have risen dramatically, alternative minimum taxes have been imposed, state and local business levies have jumped, and property tax increases have been lim ited more by populist political rebellion than by capital migration. It seems that either capital is less mobile than McKenzie and Lee maintain, sharply restricting the power of their entire argument, or that the well-known shortsighted bias of govern ments is leading them to sacrifice possible future gains from attracting as yet uninvested capital in favor of exploiting the large stock of already sited, "captive" physicalcapital. (Remember that even if one tries to sell such capital and leave, greater gov ernment exactions will be capitalized into lower sales prices, making avoiding such burdens quite difficult.) In addition, the market restrictions and other favors of interest-group politics, which, according to their argument, should have been reduced, hardly have been dying out.

My overall evaluation of the book is best summed up by Nobel prize winner James Buchanan's dust jacket comment that "Their argu ments [of reduced monopoly power of govern ments everywhere] are surely convincing, up to a point. But I shall keep my fingers crossed, and I shall advise all classical liberals to keep their rhetorical powder dry." Their analysis is plausible, and there is hope that increasingly mobile capital will become a greater constraint on the power of government in our lives. However, any substantial reduction in governmental power will wait until more people realize that organizing individuals through the coercive power of government rather than through the voluntary cooperation of mar kets seldom generates more valuable information, creates more wisdom, or produces better incen tives for decisionmakers to promote the well being of others. Too few citizens have thought about these issues carefully enough to understand how small the list of logically defensible roles for government is. What is needed is straight thinking in this area, because so long as people believe in ever more roles for government, government will grow. [] Professor Gary Galles teaches in the Social Science Department at Pepperdine University, Malibu, California.

LIBERTYOF CONSCIENCE:ROGER WILLIAMSIN AMERICA by Edwin S. Gaustad WilliamB. Eerdmans Company,225 JeffersonAvenueSE, Grand Rapids,MI 49503 -1991 - 229 pages - $14.95paper Reviewedby RussellShannon B y and large, immigrants to the United States have been attracted by economic opportunities. Yet, in the early colonial days, North America was primarily a refuge from religious oppression. In fact, many who came to these shores quite literally escaped,most notably the Pilgrims, who fled the English government of James I, a Christian king as determined to prevent emigration to avoid inhospitable policies as the modern Communist regimes controlling the vast areas of China and the Soviet Union. Nonetheless, many colonial governments com manded as much religious conformity as the regimes the settlers had abandoned. As a result, some settlers felt so stifled, or caused such discon tent, that they were forced to flee even farther.

Among these was Roger Williams, whose story is masterfully told in a new biography by Edwin S. Gaustad. By the time Williams,a graduate of Cambridge and a private chaplain to a Puritan leader, left for America with his wife in 1630,Charles I was king, and colonization was being encouraged rather than thwarted. But once established in his new homeland, Williams almost immediately found himself at odds with most other Massachusetts set tIers on two issues. BOOKS 87 First, he believed that the Ten Commandments should be considered not the basis of civillaw,but, rather, as guides to individual behavior. In his view, civil authorities should have no jurisdiction over essentially spiritual matters. Dismayed at prevail ing practices, Williams drew a sharp distinction between "Christianity," which drew directly on the teachings and principles of Jesus, and "Christen dom," which for him involved what Gaustad calls "a polluting mixture of politics with religion."

In his prolificwritings,Williamspointed out that England, in the last century or so, had passed through a variety of theocracies, both Catholic and Protestant, each proclaiming divine sanction and each requiring a religiousconformity that Williams bluntly termed "spiritual rape." Human reason suggested to Williams, in Gaustad's words, "that coercing one religion upon all is like making one suit of clothing for everyone to wear, one size of shoe to fit every foot." Such rigidity, Williams pointed out, had perverse practical consequences, for it adversely affected the economic climate. As he noted, after the Dutch abandoned religious per secution' Amsterdam prospered because of the energetic people it attracted. For expressing his radical views, Williams was forced to leave Massachusetts. With some friends and supporters, he established a settlement at Providence, in what is now Rhode Island. Howev er, things didn't go much better there, because the people who joined him were not only religious individualists but also political individualists, frus trating efforts to raise taxes and provide for the common defense. (It should be recalled that this independence endured: Rhode Island was the last of the 13 original colonies to ratify the Constitu tion.) Further, there was constant conflict with both Massachusetts and the new settlements in Connecticut over land rights, forcing Williams to spend much time, at his own expense, in England trying to resolve the disputes.

It was in the matter of land rights that Williams found a second profound disagreement with many of his fellow settlers. He flatly denied that the English king had the right to dispose of land held by the peoples referred to as Indians. Instead, he insisted that the settlers should pay these prior inhabitants.· Because of such views, Williams got along well with the Indians, consid ering them in many respects more civil and cour teous than people from his native land. He set up 88 THE FREEMAN • FEBRUARY 1992 a successful trading post and bargained with the Indians for the land he sought. Nevertheless, despite Williams' intense efforts at establishing amicable relationships, conflicts between the set tlers and the natives eventually erupted in horri ble bloodshed. Yet Williams left his mark. Clearly his beliefs, though controversial at the time, lie at the very heart of our more modern concepts of liberty and property. In the last part of his book Gaustad traces the evolution and impact of these views. In his own time, Williams shared ideas with John Milton. These ideas were the predecessors of the political beliefs of John Locke, not to mention the expressions of religious freedom later espoused by James Madison and Thomas Jefferson.

In more recent times, Gaustad points out, in the 1967Supreme Court decisionthat prohibited statemandated prayers in New York public schools, Roger Williamsis noted in a favorable footnote ref erence: It is in part from Williams that we derive the notion that the state should not dictate our prayers. However, Gaustad expresses alarm at more recent Supreme Court decisions, in which some justices, most prominently William Rehn quist, have expressly repudiated the.principles so brilliantly asserted by Williams, Jefferson, and Madison. In the spirit of Roger Williams, Gaustad con cludes with a somber warning: "Religion has the power to persuade, never the power to compel. Government does have the power to compel, but that government is wisest and best which offers to liberty of conscienceits widest possible range." D Professor Shannon teaches in the Economics Depart ment, Clemson University.

ECONOMIC FREEDOM AND INTERVENTIONISM An Anthology of Articles and Essays by Ludwig von Mises Selected and Edited by Bettina Bien Greaves Forty-seven of the preeminent Austrian economist's shorter pieces, all written after Mises came to the U.S. in 1940, gathered from many sources into a well-organized and annotated collection. Topics include: • the importance of private property • interventionism • savings and investment • the dangers of inflation • Keynesianism • Marxism • the proper role of government • bureaucratic management All around the world, long-time advocates of economic planning are being forced by circumstances to admit that their policies haven't worked. This book sets forth, with inescapable logic and clarity, the reasons why. It also shows how capitalism, with its democracy of consumers, helps to reduce conflicts and point the way to peaceful human cooperation. Plus: Mises' original evaluations of F. A. Hayek's The Constitution of Liberty, Murray Rothbard's Man, Economy and State, Israel Kirzner's The Economic Point of Vie~ and Hans F. Sennholz's How Can Europe Survive?

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