Book Reviews

Since the House of Representatives was designed to be closely attentive, thanks to two-year terms, to the interests of voters in Congressional districts, the possibility for pork was built into the system. As America grew, so did possibilities for pork, which is now running hog wild. The 1987highwaybill had 152 pork projects costing $1.3 billion; 1992 highway spending included 480 projects costing $5.4 billion. Kelly puts the 1992 budget's total pork at $97 billion. Pork transcends party and ideology; free spending Democrats like Senator Robert Byrd (who brought West Virginia $2 billion in pork in two years) are matched by Re publicans like Senator Alphonse D'Amato (known as "Senator Pothole" for getting public works pork for New York) and Rep resentative Joe ("Steamtown") McDade. "Fiscally conservative" Congressmen both accommodate and emulate porkbarreling colleagues. The President has power to fightpork, but Kelly reveals George Bush as a weaklingnot above his own election-year porkbarreling.

Former Budget· Director Richard Darman comes offeven worse: a Machiavellian prag matist who greased the 1990 budget pact by horsetrading with Byrd, swapping pork for "spending caps." Congressional greed bears much blame for pork, but Kelly rightly fingers the public as the real culprit. Congressmen bring pork home because voters want government to care for them at others' expense, and re elect politicians who do it. Is pork bad? "It depends on what you think the federal government is supposed to do for you and everyone else in the country . . . . Evaluating pork requires you to ask some fundamental questions: Should the federal government really be doing this? ... Just because a project or program sounds like a good idea, can we afford to do it? Just because it doesn't seem to cost me anything, is it really free?" Kelly suggests voting porkbarreling in cumbents out (good idea!); a balanced budget amendment; a line-item veto; term limits; more vigorous Presidential leader ship; a rethinking of government's proper role; and a nationwide decision to forsake pork (my favorite).

Adventures· in Porkland reveals a fatal flaw in the mixed economy: It is all too human for voters to want government to spend money on them, and politically sen sible for politicians to do so, but the results are ruinous: a population addicted to hand outs, a corrupt politics, an overspending legislature, and an economy enfeebled by the resultant debt burden. The only solution is to rout the paternalist philosophy of government, and Adventures in Porkland provides valuable ammunition for the fight. D Dr. Attarian is afree-lance writer in Ann Arbor, Michigan and an Adjunct Scholar with the Mid land, Michigan-based Mackinac Center for Pub lic Policy.

Grand Theft and Petit Larceny, Property Rights in America by Mark L. Pollot PacificResearchInstitutefor Public Policy, 177 Post Street, San Francisco,CA 94108 1993 • 222 pages. $21.95 Reviewed by Grant Thompson F or those who, like myself, are uniniti • ated in the intricacies and nuances of legal history, the language of the Fifth Amendment is straightforward: "nor shall private property be taken for public use, without just compensation." Mark Pollot's Grand Theft and Petit Larceny explains how courts gutted this seemingly explicit clause. As an attorney in the Reagan White House, Pollot drew up an executive order that attempted to curb federal takings of private property. Although a discussion of his role might have been interesting, Pollot is too disciplined a writer to stray into politics. Instead he limits himself to a thorough, if sometimes plodding, account of legal pre cedent and theory. Pollot defines a "taking"

as interference with any portion of a prop erty owner's rights, and notes that consti tutional history and common law support this view. Reaching back to Magna Carta, he discusses the rationale for property rights and demolishes the contemporary myth that they are somehow inferior to other rights. Justice Potter Stewart wrote, "property doesn't have rights, people have rights .... " Pollot shows that in the minds of the founders, property rights were, if anything, more fundamental than other rights. With out the ability to be secure in one's person and possessions, all rights would be mean ingless. Freedom of speech and religion, for example, mean little if the government can confiscate printing presses and churches. The founders recognized this truism through hard experience. First under British rule and subsequently under the Articles of Confederation, Americans found them selves hounded by government interference at every turn. The founders scuttled the 155 Articles largely because state legislatures were blocking commerce, meddling in pri vate contracts and succumbing to every sort of special interest. Yet today's courts reg ularly accept such legislative mischief.

Thejudiciary justifies this abdication ofits responsibility with a bewildering array of sophistries. Modem court rulings often bor der on self-parody. For example, the courts have justified uncompensated takings be cause: • the owner knew when he purchased property that the government might, in the future, ruin it through regulation; • a builder was already compensated for harsh regulations because the government had "allowed" him to build in the first place; • the builder was already compensated because the government granted him the privilege of using other properties as he wished; • enforcing the Constitution would be too expensive. Although Pollot limits his discussion to takings, he provides insights into other is sues as well. For example, in a discussion of the founders' suspicion of legislatures, Pol lot shares the following quote from James Madison: "If this spirit [that nourishes free dom] shall ever be so far debased as to tolerate a law not obligatory on the legisla ture, as well as on the people, the people will be prepared to accept everything but liber ty. " As Pollot notes, this is an especially telling statement considering that today's Congress exempts itself from dozens of laws, such as the Civil Rights Act of 1964 and the Occupational Safety and Health Act.

Pollot carefully dismantles the argument that paying compensation for takings would prevent vital regulations. First, if a regula tion is truly vital, then the public can afford to shoulder its cost. Either a regulation's benefit is greater than its cost, in which case society reaps a profit even after paying compensation; or, a regulation's benefit is not greater than its cost, in which case the regulation should be discarded. Second, as Pollot points out, courts must rule on what's constitutional, not what's 156 THE FREEMAN • APRIL 1993 convenient. Trial by jury is costly; should this constitutional safeguard also be dis carded? Pollot pulls a quote from the constitutional convention to make a third point: It is natural for men, who wish to hasten the adoption of a measure, to tell us, now is the crisis-now is the critical moment which must be seized, or all will be lost: and to shut the door against free enquiry.

. . . This has been the custom of tyrants and their dependents in all ages. In today's atmosphere of environmental hysteria, this admonition is particularly valuable. Pollot offers a four-pronged strategy to restore property rights: education, partici pation in the legislative process, participa tion in the administrative process, and liti gation. As a tactic for restoring property rights, litigation presents a disproportionate share of both risk and potential. Recogniz ing this, Pollot sets aside a separate chapter to discuss the limits and possibilities of litigation. Unfortunately, Pollot's stiff prose some times obscures the absurdity of modern court rulings. In Berman v. Parker, for example, the court refused to consider some issues because to do so "would result in courts deciding what is and what is not a governmental function." Reflecting on this staggering assertion, Pollot intones, "the difficulty with this statement is that deter miningsuch functions is precisely the role of the courts under the provisions of the Con stitution and the Bill of Rights."

Pollot's restraint adds credibility to his work, but tends to cramp his writing style. In the introduction, Pollot confidesthat' 'the pleasure I ordinarily derive from writing. . . was singularly lacking when I wrote this book," and adds that writing "about the daily violation of civil rights" is burden some. Nevertheless, Pollot's book is well constructed and packed with information. It concludes with an afterword that makes sense of several recent Supreme Court cases. Those who wade through this sobering and useful work will be glad they did. D Grant Thompson is an intern at Reason magazine under an Institute for Humane Studies fellow ship. Official Lies: How Washington Misleads Us by James T. Bennett and Thomas J. DiLorenzo Groom Books, 1800 Diagonal Road, Suite 600, Alexandria, VA 22314 • 1992. 330 pages $19.95 Reviewed by William H. Peterson , 'An honest politician is a contradiction in terms," Frank Chodorov said repeatedly. Chodorov was sharp on the devious ways that governments use to shape public opinion, to win friends and influence people on behalf of the state machine, to set back the cause of human liberty.

This sharpness is the purport of Profes sors Bennett of George Mason University and DiLorenzo of Loyola College in Balti more in their hard-hitting and most worth while book. They contend that the federal government, no matter which party is in power, incessantly manipulates opinion and subverts, if sometimes inadvertently, both truth and democracy. Such subversion is anything but benign. The Old Testament warns us: "Put not thy trust in princes. " The two professor-authors observe how Alexis de Tocqueville in Democracy in America was concerned about the power of government to inculcate a "new servitude" in the people. Wrote Tocqueville in 1835, as quoted here: "Such a power does not destroy, but it prevents existence; it does not tyrannize, but it com presses, enervates, extinguishes, and stu pefiesa people, tilleach nation is reduced to little better than a flock of timid and indus trious animals, of which the government is the shepherd."

Similarly Professors Bennett and DiLorenzo note how Hayek argued that extensive government controls can produce ,'a psychological change, an alteration in the character of the people." Nobody can seri ously argue that controls in America from Social Security to antitrust, from credit expansion to minimum wages, from affir mative action to so-called environmental protection, and so on are not extensive. It follows that government propaganda on be half of these controls serves to undermine individual freedom and that citizens need to read books such as OfficialLies to alert them to the danger. What lies? Take the one that governments can dispel ignorance and educate people, including the young. The authors wonder about this contention in the face of the fact that the "free" public school in America is essentially a monopoly financed by compul sory taxation and secured by compulsory attendance laws. Others laws reinforce that monopoly. The authors note, for example, that a Texas state law states that textbooks "shall not contain certain material which serves to undermine authority."

Professors Bennett and DiLorenzo see that virtually all textbooks in civics or American government throughout the land clothe government in almost saintlygarb. Its servants are selfless, public-spirited bureau crats and politicians whose only aim in life is to serve mankind in general and America in particular. They cite the widely used American Government by Mary Turner, Kenneth Switzer, and Charlotte Redden, who find Congress an "effective" branch of government whose hallmarks are diligence and sobriety. In like manner Professors Bennett and DiLorenzo take on the green lobby in and out·ofthe government, a lobby whose daily propaganda hammers out the message that the sky is falling, that ozone depletion, global warming, acid rain, overpopulation, toxic wastes, and the like will soon wipe out the human race apart from the spotted owl. They analyze some of the misstatements and misconceptions in reports like the Club of Rome's Limits to Growth and the Carter Administration's Global 2000. Employing BOOKS 157 some of the analysis of economist Julian Simon, the authors say the nightmarish projections of Global 2000, now only seven years away, do not bear the stamp of ob jective science but are instead "the preju diced opinions or even the hunches of a small number of government employees."

James Bennett and Thomas DiLorenzo deserve credit for cutting through the steady fog of misinformation and disinformation emanating from the nation's capital. Their readers will profit from their lively book on officialdeception. 0 William H. Peterson, an adjunct scholar at the Heritage Foundation, holds the Lundy Chair of Business Philosophy at Campbell University, Buies Creek, North Carolina. Patient Power: Solving America's Health Care Crisis by John C. Goodman and Gerald L. Musgrave CATO Institute, 224 Second Street, S.E., Washington, D.C. 20003 • 1992 • 672 pages $16.95 paper Reviewed by Ross Korves F or the past 50 years, public policy on health care in this country has led to the concentration of power in the hands of bureaucracies, both public and private. Consumers pay directly for only about 20 percent of the cost of care. Governments pay directly for 40 percent of the care received. Of those people who have private health care plans, over 90 percent have employer-based plans where individuals have little say in the choice of plans. Medi care and state government regulations de lineate in minute. detail how health care providers are to render care. The Food and Drug Administration has complete control over which drugs are allowed on the market and what conditions can be treated. The health care delivery system looks much like 158 THE FREEMAN • APRIL 1993 the failed centrally planned economies of the old Soviet Union and Eastern Europe.

Many serious students of health care policy have concluded that the only ingre dients necessary to solve the current health care problems are more government regu lations, more government spending and less consumer choice. Two health care policy experts have arrived at a sharply different conclusion. John C. Goodman and Gerald L. Musgrave have clearly laid out the argu ments for allowing individuals to make de cisions about financingand receiving health care. Patient Power: Solving America's Health Care Crisis is an important book to read to navigate the maze from our current system of bureaucratic power to a system based on patient power. At 672 pages, only the most dedicated soul would attempt to read the entire book. / The 21 chapters are written so that each covers a specific topic and can stand alone. The book provides good background for how the current system developed with chapters like "How the Cost-Plus System Evolved" and "National Health Insurance in Other Countries." The route out of our mess can only be understood by looking at how we got into it. Other chapters like "Moving Toward the Ideal: An Agenda for Change" and "Privatizing Medicare with MedicalIRAs" dealwiththe needed changes.

The authors use the first sentence in the preface to define the message, "The thesis of this book is simple:Ifwe want to solve the nation's health care crisis, we must apply the same common-sense principles to med ical care that we apply to other goods and services. " More than 650 pages later in the conclusion, they are still stressing the same point, "The assumptions of the advocates of greater government control are false. Self interested behavior is a normal and natural characteristic of human beings. Socialism does not work in health care any better than it does in any other market." In a normal market system the pursuit of self-interest results in the needs of others being met at the same time. In the govern mentregulated health care market, the out come is much different. "The result is a marketplace in which the pursuit of self interest often does not solve problems, but creates them instead."

Goodman and Musgrave are not new to the health care policy debate. Goodman, president of the National Center for Policy Analysis in Dallas, Texas, has spent much of the past 20 years researching and writing about the failure of government-run health care plans and how markets could deal with health care delivery and financingproblems. Over the past ten years, Goodman and Musgrave, the head of an economic consult ing firm in Ann Arbor, Michigan, have collaborated on many studies that formed the basis for much of the book. The key element of their reforms is equity in taxation by permitting all taxpayers to purchase a health care plan and have med ical savings accounts to pay small medical bills out of pocket. "To give all people the same economic incentives to purchase health insurance, premiums paid by employ ers should be included in the gross wages of their employees, and all taxpayers should receive a tax credit equal to, say, 30 percent of the premium." The allowable health plan deduction or credit would be limited to a premium for no-frills, catastrophic health insurance.

The arguments for permitting auto assem bly line workers and school teachers to control their health care decisions and fi nancing are fairly easy to grasp. Goodman and Musgrave go beyond that by looking at how to privatize Medicare. They also pro pose to decentralize Medicaid, move the decision-making to the community level, and allowprivate charitable organizations to bid on providing services to. low-income people. Near the end of the book is a chapter on "The Politics of Medicine" which primarily describes the politics of medicine in·coun tries that have government-run health care. For those readers who are not familiar with "public choice" economics, the first part of the chapter provides an excellent overview of why politicians from different parties often support the same public policies. Sev eral additional readings are also suggested.

That chapter alone is worth the price of the book and has implications far beyond health care. While Goodman and Musgrave have many proposals to reform health care pol icy, they never lose sight of the fact that markets are always evolving in ways that we cannot anticipate. "The most that politi cians can do is change the rules·of the game. Once the rules have been changed, the tedious process of replacing cost-plus insti tutions with market-based institutions can begin. But the process of change must itself be market-oriented- brought about by mil lions of people pursuing their own self interest. " Patient Power is a powerful message that needs to be heard in the current policy debate on health care. D Ross Korves is an economist with the American Farm Bureau Federation in Park Ridge, Illinois. What Has Government Done to Our Health Care? by Terree P. Wasley CATO Institute, Washington, DC • 1992 163 pages. $19.95 cloth; $10.95 paper Reviewed by Gerald Musgrave N ever before has so much relevant infor . mation and clear explanation of health economics been condensed into such a thin volume. If every Congressman were to read this book on a flight home, America would have much less to fear from the Clinton administration.

Ms. Wasley's references are a virtual "Who's Who" in market approaches to health care. She includes a sprinkling of the usual villains, but uses them as strawmen or foils for her analysis. The book faithfully condenses the analyses and approaches be ing developed and used by the new market oriented health economists. Under the old approach, markets are to be manipulated. That conventional wisdom is to prescribe BOOKS 159 1950s-style social engineering masked by 1990s-style politically correct rhetoric of "Global Budgets" and the oxymoron of "Managed Competition. " After reading this book, one would certainly know that free market, deregulatory approaches to health care financing have merit. The book contains the best synopsis of the history of twentieth-century health care. Not one in 100health economists knows that World War II price and wage controls are an important cause of today's problems. To dampen the problem caused by wage con trols, in 1942 the War Labor Board ruled that fringe benefits in the form of health insurance would not be considered inflation ary, and thus not controlled. Enrollment in group hospital insurance grew from less than seven million to about 26 million from 1942 to 1945 and marginal income tax rates rose from about four percent to 23 percent.

Employers could launder wages through insurance companies. That is, the normal health expenses we all have could then be consumed with pre-tax dollars at a saving of 23 percent. Today, with total marginal tax rates being over 50 percent (federal, Social Security, Medicare, and state), it is not surprising that most of us obtain health care via employer-purchased' 'insurance" rather than our own personal and portable cover age for catastrophic situations, and why we don't self-insure for small bills. Many other historical issues are covered, but the treat ment of this one is superb. The book covers the slippery slide to nationalized health care. It is an interesting and thought provoking analysis. Ms. Was ley's thumbnail sketches of foreign systems should give any thoughtful person hesitation about graftingan alien approach to an Amer ican culture. A final section introduces what is called ,'Health Care Based on Consumer Choice. "

Noone blames farmers for hunger, or car penters for homelessness, and the author does not blame health care suppliers for the other-than-utopian treatment of illness. She presents the major free market approaches to health care financing such as medisave accounts. She also offers deregulation, in160 THE FREEMAN • APRIL 1993 cluding the elimination of costly and waste ful mandates. For example, some states require that treatment by chiropractors and herbal healers, care for the "accidental" smoking of crack, and payment for items such as toupees be covered in all insurance policies. If only one Senator understood and fought for the ideas in this book, there would be hope that Teddy Kennedy would be denied his lifetime dream of socialized medicine. If that happened, this book would become a modem classic. D Dr. Musgrave is the President of Economics America, Inc., in Ann Arbor, Michigan, and the publisher of The Right Guide.

We Hold these Truths by Lawrence Patton McDonald The Larry McDonald Memorial Foundation, P.O. Box 745, Marietta, Georgia 30061 • 170 pages. $18.95, $11.50 paperback T he first edition of this book appeared in 1976 as both a bicentennial tribute and reminder to the American people of their ideological origins; this revised edition was published in 1992. Its 21 chapters are an excellent introduction to the theory and history of American constitutional govern ment. Dr. Larry McDonald wrote the book while he was serving as a Congressman from Georgia, several years before he and 268 others on a South Korean jetliner were killed by the Soviet Air Force in 1983. This new edition contains the texts of both the Declaration of Independence (and its sign ers) and the Constitution (and its amend ments), as well as two tributes offered at Congre,ssman McDonald's memorial ser vice. Congressman McDonald's discussion of social security discloses both the strength of the man and the book: For more than half a century, most leading politicians and other government officials have lied to the people about social security insurance. Government sold the people on the idea that they were buying a good, cheap insurance policy which would be honestly administered by government ....

But the government program was never insurance. It laid payroll taxes aside in a trust fund of government debt-not as a reserve to pay long range liabilities, but as an emergency reserve to use in years when social security taxes fell below so cial security benefits. Private insurance operators doing that sort of thing would be prosecuted .... Why would politicians lie to the people? Because social security has always been the mother lode of political ore for poli ticians to mine. For more than five de cades they have been buying votes for themselves with promises to improve the social security system by increasing its benefits and allowing more people to par ticipate.... We Hold These Truths would make an excellent text for high school government classes or homeschoolers. -JR The Right Guide: A Guide to Conservative and Right-or-Center Organizations Edited by Wilcox, Shackman, and Naas Economics America, Inc., 612 Church St., Ann Arbor, MI 48104.444 pages. $74.95.

T his is a useful encyclopedia of libertar ian and conservative organizations. It is cross-referenced and indexed in a dozen different ways, and includes both U.S. and foreign organizations. The Guide is praised by Robert Hessen, William E. Simon, Wil liam A. Niskanen, and Julian Simon, among many others. It should be useful for libraries and public policy organizations that are interested in cooperating with other like minded groups. -JR IDEASON LIBERTY 164 Mexico: Myths and Reality Christopher Whalen Mexico's economy is growing, but its legal and political system remain corrupt and despotic. 168 The Life, Death, and Resurrection of an Economy Michael C. Monson In 1895 Argentina was as prosperous as Germany and more prosperous than Austria and Switzerland. Here are the reasons why. 176 Will Constitution Trump Revolution in Eastern Europe? K. L. Billingsley The collapse of Communism in Europe may not result in freedom after all.