February

THEFREE IDEAS ON LIBERTY 52 Reducing Regulation of the Defense Industry MurrayWeidenbaum Restoring the role of private risk bearing and businessinitiative. 56 Mr. McAllister's List Donald G. Smith An ever-changing"Four Hundred" reflects the dynamicnature of a free society. 58 The Dark Lessons of Utopia Alex Kozinski Are we to learn anything at all from the collectivistdisaster that befell hundreds of millionsof people? 68 Freedom and the Prospect for Soviet Economic Reform DwightR. Lee The connection between market institutions and tolerance for economic freedom. 73 Puppets and Freedom in Czechoslovakia Doug Reardon A puppet maker's aspirations illustrate the strugglesof a nation comingto terms with freedom. 75 Of Skunks and Salmon JamesA. Maccaro Attempts to regulate Mother Nature result in disaster. 76 Who Is a Self-Made Person? TiborR. Machan Making the most of talents and opportunities.

77 Philanthropy in a Cold Climate PeterFrumkin New kinds of charitable organizations are blossomingin the Soviet Union. 80 Rustic, U.S.A. T. FranklinHarris,Jr. The shortcomingsof economicdemocracy. 82 Not Up to Snuff Evelyn Pyburn Government effrontery regarding "substandard" housing. 83 Book Reviews WilliamH. Peterson reviews The EmergingBritishUnderclassby Charles Murray; Doug Bandow reviewsProspectsfor Growthby E. CalvinBeisner; Gary M. Galles looks at QuicksilverCapitalby Richard B. McKenzieand Dwight R. Lee; Russell Shannon on Libertyof Conscience:RogerWilliams in Americaby Edwin S. Gaustad. CONTENTS FEBRUARY 1992 VOL. 42 NO.2 THEFREEMAN IDEASON LIBERTY Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 President of The Board: Bruce M. Evans VicePresident: Robert G. Anderson Senior Editors: Beth A. Hoffman Brian Summers Contributing Editors: Bettina Bien Greaves Edmund A. Opitz Editor Emeritus: 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: Gregg C.

MacDonald, chairman; Lovett C. Peters, vice-chairman; 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 $20.00 a year is required to cover direct mail ing costs. Copyright © 1992 by The Foundation for Economic Education, Inc. Printed in the U.S.A. Permission is granted to reprint any article in this issue except "The Dark Lessons of Utopia," "Puppets and Freedom in Czechoslovakia," and "Who Is a Self-Made Person?" 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 SocializedMedicine Some years ago, I sat in on a discussion the late Dr. Ben Rogge was having with some college stu dents. He was then professor of economics at Wabash College in Indiana. A student asked, "Dr. Rogge, don't you believe we should have a national health-service program of some sort?" Rogge smiled and asked the student, "What do you have against sick people? Would you visit on them the same quality of services we have seen come from other government-run programs or systems?" He mentioned a few of the more glaring exam ples of waste and inefficiencies at that time. Rogge's point should be easy enough for every one to understand, whether it be applied to medicine or any other service in our life for which we rely upon good, competent, efficient people.

-DAN OST, writing in the September 25, 1991,issue of the Reading Times, Reading, Pennsylvania FlightCanceled A few years ago, at the Western Reserve Histor ical Society Aviation Hall of Fame, Elbert Rutan, designer of the famous plane that circled the earth nonstop was honored, as were his brother Richard, who flew the plane, and Jeana Yeager, also of the crew. Elbert Rutan made a charming, short accep tance speech. After describing the efforts to design the plane and to complete the world flight, he made observations that deeply stirred me. He said that many airplane manufacturing companies wanted him to work for them. He considered it. He visited these companies and studied the conditions under which they worked. He, as a creative design er, decided that he couldn't work under the condi tions in these factories. Rules, regulations, laws, and limitations would make it impossible for him to remain creative. Thus he decided to go it alone where he could follow his enthusiasms, his imagi nation, his inventiveness, without limits.

I began to speculate on what would have hap pened in the days of the aircraft pioneers if they had been working under the conditions that exist 50 today. 1pictured that foggy morning at Kitty Hawk when the Wright brothers stood ready to fly after years of hard work. Orville Wright is just about to step into the plane to make the first flight. An in spector steps up. "Mr. Wright, you are violating the law. We forbid this flight; you don't have a pilot's license." Then I pictured the Ryan Airlines plant. They worked day and night to complete Charles Lind bergh's Spirit ofSt. Louis in 60 days. A remarkable achievement. An inspector steps up. "Mr. Ryan, you are violating the law. We will have to close the plant. You are paying your office boy less than the minimum wage. You refuse to pay overtime." And then I pictured the morning in New York when the Spirit ofSt. Louis stood fueled and ready for the famous flight to Paris. The last weather re port is in-Lindbergh is just climbing into the plane-an inspector steps up-this flight is can celed. "Mr. Lindbergh, you are violating Rule 7102.

You are overloaded." Can it be that Mr. Rutan has put his finger on one of the reasons why American leadership is slip ping? And why America finds it hard to compete? It is worth thinking about. -FREDERICKC. CRAWFORD,Founder and Honorary Chairman, TRW Inc. But I Like Oat Flakes! I was standing in my local grocery store, which displayed shelf after shelf of various breakfast ce reals, looking for my favorite. At first I was annoyed because I was in a hurry and 1 couldn't find it. Then my reaction turned to amazement as I realized how many different kinds of cereals they had: There were hot cereals, cold cereals, cereals made of corn, of wheat, of rice, of oats, sometimes combinations, some with added dried fruits, some with nuts. There were balls and flakes and bite-sized biscuits. Then nearly all of these were duplicated, in some fashion, by different companies. 1fleetingly wondered why they carried so many.

Then I was struck by the humor of it-with all this to choose from, I couldn't find the one I want ed. I wanted oats. I wanted flakes. I wanted the ones put out by a certain company. I liked them PERSPECTIVE better than any other cereal. Still, it seemed down right silly that, with so many to choose from, I wasn't satisfied. My mind flipped suddenly from those laden shelves to pictures of shelves 1 had seen in Rus sia--empty shelves, and 1 was transported to what 1imagined might be the complaint department in a Communist country. "I would like this brand of oat flakes." "No oats. We got some barley, and next month our allotment calls for some ground wheat, but the shipment might be held up." "But 1 want oats. Oat flakes." Narrowing eyes. A scowl. "Are you a trouble maker? No oats. I've never heard of oat flakes ... " The reverie was broken as my cart reached the cash register. The clerk didn't wear a commissar's uniform, just a red apron, and a tag that said, "Man ager." He smiled, "Yep, a little shorthanded today, so here 1am."

"Well, I'm glad you are the manager. I was dis appointed that you are out of oat flakes. 1really like those oat flakes you usually have." The pad and pencil came out. "We are! Well, we'll fix that. Let's see: oat flakes. Now which brand did you say? Yes ma'am! We'll fix that!" I smiled as I loaded my groceries. I don't get to be queen very often, but, as a consumer there, that's what 1was--even if just for a moment. -DONNIS STARK THOMPSON Kenai, Alaska Culturaland EconomicGoods It is a mistake to make a categorical division be tween cultural and economic goods. All·economic goods are in essence cultural goods. Animals and savages have no knowledge of anything remotely like the trading activity of a civilized society. A book, a record, the performance of a symphony, a religious sermon, the services of a lawyer, the bak er's bread-these are all to various degrees goods achieved by societies with a high cultural level, but at the same time with a high economic level, since they are all for the service of others.

-MEIR ZYLBERBERG Buenos Aires, Argentina 51 52 THEFREEMAN IDEASON LIBERTY Reducing Regulation of the Defense Industry by Murray Weidenbaum W hen most people think about regulated industries in the United States, they have in mind the local electric or gas utility,whose rates are controlled by the state pub lic service commission. In contrast, the defense industry rarely appears on anyone's list of regu lated sectors of the American economy-but it should. A major cutback in defense spending, which is the outlook for the early 1990s,is the ideal time to focus on this part of American industry and to restore the role of private risk bearing and busi ness initiative. The reality wasbest described a few years ago by a senior Pentagon official who asked the heads of two companies-a public utility and a defense con tractor-about the government rules that were the framework for managing their respective enter prises. From the utility, the request yielded a few pages that spelled out the state-enforced guide lines. The defense contractor, in contrast, had to comply with over 450 major specifications, direc tives, and instructions, weighing several hundred pounds. The Federal officialconcluded, "The real ity is that there are infinitely more controls in the so-called free enterprise environment of the major weapons systems contractor than there are in the controlled environment of the public utility."