December

THEFREE IDEASON LIBERTY 460 The Economic Way of Thinking, Part 3 by Ronald Nash Understanding what the market system is, and how it operates. 464 The American Educational Establishment, 1993 by John Hospers A penetrating survey of the current intellectual climate. 470 Toward a Free Market in Higher Education by William G. Stuart The alternative to state-delivered, state-financed higher education. 475 J. Gresham Machen: A Forgotten Libertarian by Daniel F. Walker A portrait of a prominent defender of political liberty and economic freedom. 478 Macro Mistakes by Roger M. Clites Aggregate statistics may have no meaning in an individual case. 479 Little Lessons in Larceny by Russell Madden Teaching basic economic principles to young children. 481 Learning from Experience by Ivan Pongracic Why have so many so-called intellectuals repeated the mistake of becoming enamored of Communism. 487 The Case for Happy Endings by Karina Worlton The benefits of positive, uplifting literature.

489 A Nation of Children by Brandon Crocker Americans will eventually discover they cannot be free if they rely on the state to take care of them. 491 Thomas Chalmers and the Poor Laws by Clifford F. Thies How a nineteenth-century clergyman achieved success relieving poverty. 494 Book Reviews John Chamberlain reviews The Rebirth of the West by Peter Duignan and L. H. Gann; The Tragedy of American Compassion by Marvin Olasky, reviewed by Daniel A. Bazikian; and Failure and Progress: The Bright Side of the Dismal Science by Dwight R. Lee and Richard B. McKenzie, reviewed by William H. Peterson. 499 Index 1993 CONTENTS DECEMBER 1993 VOL. 43 NO. 12 THEFREEMAN IDEASON LIBERTY Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 President: Hans F. Sennholz, Ph.D. Editor: John W. Robbins, Ph.D. Senior Editor: Beth A. Hoffman Editor Emeritus: Paul L. Poirot, Ph.D. Associate Editors: John Chamberlain Bettina Bien Greaves Edmund A. Opitz Contributing Editors: Doug Bandow Clarence B. Carson, Ph.D.

Thomas J. DiLorenzo, Ph.D. Roger W. Garrison, Ph.D. Robert Higgs, Ph.D. John Hospers, Ph.D. Tibor R. Machan, Ph.D. Ronald Nash, Ph.D. William H. Peterson, Ph.D. Richard H. Timberlake, Ph.D. Lawrence H. White, Ph.D. 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 non-political, educational champion of pri vate property, the free market, and limited government. FEE is classified as a 26 USC 501(c)(3)tax-exempt organization. Copyright © 1993 by The Foundation for Economic Education. Permission is granted to reprint any article in this issue, provided appropriate credit is given and two copies of the reprinted material are sent to The Foun dation. The costs of Foundation projects and ser vices are met through donations, which are invited in any amount. Donors of $25.00 or more receive a subscription to The Free man. Student subscriptions are $10.00 for the nine-month academic year; $5.00 per semester. Additional copies of single issues of The Freeman are $2.00. For foreign deliv ery, a donation of $40.00 a year is suggested to cover mailing costs.

Bound volumes of The Freeman are avail able from The Foundation for calendar years 1972 to date. The Freeman is available on microfilm and CD-ROM from University Microfilms, 300 North Zeeb Road, Ann Ar bor, MI 48106. A computer diskette contain ing the articles from this month's issue is available from FEE for $10.00; specify ei ther 31/2" or 51/4" format. Phone (914) 591-7230 FAX (914) 591-8910 PERSPECTIVE An AncientPrinciple The reason I am opposed to the Federal Department of Education is that it repre sents a very ancient principle in the field of education, which, it seems to me, has been one of the chief enemies of human liberty for several thousand years-the principle, namely, that education is an affair essen tially of the State, that education must be standardized for the welfare of the whole people and put under the control of govern ment, that personal idiosyncrasies should be avoided. This principle of course, was enun ciated in classic form in ancient Greece. It is the theory, for example, that underlies the Republic of Plato. But the principle was not only enunciated in theory, it was also, in some of the Greek states, put into practice.

It is a very ancient thing-this notion that the children belong to the State, that their education must be provided for by the State in a way that makes for the State's welfare. But that principle, I think you will find if you examine human history, is inimical at every step to liberty. -J. GRESHAM MACHEN Education, Christianity and the State The Value of Families Separation, divorce, and failure to marry, rather than lack of economic opportunity, are responsible for many of the economic problems experienced over the past two decades. The breakup of the traditional American family largely accounts for the anemic in crease in median household income, the failure to reduce the poverty rate more quickly and an increase of 10 percent in the income disparity between rich and poor households since 1970. In 1969,70 percent of all households were married couples, 11 percent were single parent families and 19 percent were non family.

By 1989, only 56 percent of households were married couples, while the single parent households had increased to 15 per458 PERSPECTIVE Profligacy Hits the Jackpot With compulsory taxes absorbing so high a proportion of income, it may appear par adoxical to speak of voluntary taxes. But what is a government lottery, if not a vol untary tax? Certainly, a person may avoid the tax by not participating in the lottery. The state of New York spends millions of dollars each year to try to prevent illegal gambling. One might conclude that the law makers believe gambling is an evil which should be suppressed. But no; we find the state permitting and even encouraging cer tain types of gambling. Bingo is permitted under certain conditions and betting at race tracks where the state gets a heavy "cut" is encouraged. And now, the statewide lottery to raise money for "education"! The state felt it needed more general revenue than it could raise through its many tax sources. So, why not try a "voluntary" tax like a lottery, and call it "education"? This might remove the onus for some who think gambling is a little bit evil and who do not realize that this isjust another way of swelling the general reve nues of the state.

Regardless of how one may appraise the moral aspects of gambling, there seems little doubt that a state lottery operates as a regressive tax, taking heavily from the poor, even though voluntarily. Historically, gov ernments that have resorted to lotteries have had in common a tendency toward decadence. The state lottery feeds the idea of "something-for-nothing" already far ad vanced in this country. From the standpoint of the lawmakers, it is a "last resort," desperation effort to fill the coffers of a profligate state. -W. M. CURTISS, "Taxation Theory," reprinted in Taxation and Confiscation (FEE, 1993) and appetite, and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things that men of intemperate minds cannot be free. Their passions forge their fetters." Sincerely, TOM ALCIERE -LUDWIG VON MISES I am writing in response to "Vietnam: A Fate of Its Own" (May 1993).

In Vietnam, a cab driver had to bribe a policeman $3 to avoid being arrested while transporting foreigners for hire. In America, you have to pay an investor $100,000 for a medallion before going into business, or police will arrest you for cutting in on an unconstitutional, government-protected monopoly. The Sins of the Intellectuals To the Editor: Historic Quotes Edmund Burke said, "Men qualify for freedom in exact proportion to their dispo sition to put moral chains on their own appetites. Society cannot exist unless a controlling power is put somewhere on will 459 The intellectual leaders of the peoples have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization. The intellectuals alone are responsible for the mass slaugh ters which are the characteristic mark of our century. They alone can reverse the trend and pave the way for a resurrection of freedom.

cent and nonfamily households had mush roomed to 29 percent. Had it not been for this change between 1969 and 1989: Real median family income, which in creased by only 2 percent, would have increased by 13 percent. The poverty rate would have dropped from 14 percent to 10 percent instead of 12 percent. The income inequality between rich and poor households, which grew by 10 percent, would have increased by only 5 percent. -EXECUTIVE ALERT THEFREEMAN IDEASON LIBERTY THE ECONOMIC WAY OF THINKING PART 3 THE FREE MARKET SYSTEM by Ronald Nash P rior segments of this eight-part series explained the nature of economics, es pecially the way in which scarcity forces us to rank our options and make choices. They also discussed the importance of recogniz ing that all economic value is subjective. A necessary third step in becoming economi cally literate includes understanding what "the market system" is and how it operates.