May

181 Vietnam: A Fate of its Own James R. Bauknecht After twenty years, Vietnam is still ruled, and ruined, by collectivists. 186 Beans, Bombs, and Bureaucrats James M. McCaffery How government has impoverished the people of Ecuador. 189 Operation Smile D. K. Brainard The charitable activities of American physicians contrast sharply with the inhumanity of the Romanian government health care system. 194 The Question Still Lives Stephen Cain Lessons from the Constitution of the Confederate States of America. 197 Book Reviews Jeff Taylor reviews Rubbish: The Archaeology of Garbage by William Rathje and Cullen Murphy; Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector from Schoolhouse to Statehouse, City Hall to the Pentagon by David Osborne and Ted Gaebler, reviewed by T. Franklin Harris, Jr. CONTENTS MAY 1993 VOL. 43 NO.5 THEFREEMAN IDEASON UBERlY 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 Associate Editors: John Chamberlain Bettina Bien Greaves Edmund A. Opitz Paul L. Poirot, Ph.D. Contributing Editors: Doug Bandow Clarence B. Carson, Ph.D. Thomas J. DiLorenzo, Ph.D. Robert Higgs, Ph.D. John Hospers, 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, except "The Life, Death, and Resurrection of an Economy, " provided appropriate credit is given and two copies of the reprinted mate rial are sent to The Foundation.

The costs of Foundation projects and ser vices are met through donations, which are invited in any amount. Donors of $25.00or more receive a subscription to The Free man. 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 5~" format. Phone (914) 591-7230 FAX (914) 591-8910 PERSPECTIVE The NAFTA Analysis: N01 Free Trade Although touted as "free trade," the North American Free Trade Agreement (NAFTA) is anything but. "Free trade," by definition, is freedom from government in bartering and exchanging. Governments step aside and allow the peoples of their respective countries to exchange goods and services or associate with the peoples of other countries without any (or very little) government interference.

The NAFTA is over 1,700 pages long 741 pages for the treaty itself, 348 pages for annexes, and 619 pages for footnotes and explanations. It is difficultto see how 1,700 pages of government rules and regulations can free trade. By definition,free trade is the removal of government from the trading process, not its expansion. Specific provisions of the treaty prove that it is the opposite of free trade. It sets up a "Free Trade Commission" and a new bureaucracy under this commission called the "Secretariat." This commission, com posed of unelected officialsfrom the partic ipating countries, will interpret the treaty and impose its decisions on member na tions. It also will resolve conflicts and en force its decisions. This is not free trade, but an establishment and expansion of interna tional bureaucracy over sovereign nations' trading policies. True free trade would eliminate tariffs.

The NAFTA not only keeps current tariffsin place during a fifteen-year' 'transition peri od," but also permits these tariffs to con tinue after this period "with the consent of the [nation] against whose good the action is taken." The NAFTA also allows govern ment subsidies and import quotas to con tinue. The NAFTA will also gradually im pose the strict environmental guidelines of the United States on the countries which signed the treaty. If national leaders really wanted free trade, they could abolish unilaterally any barrier that hinders trade with other coun162 tries: tariffs, quotas, subsidies, regulations, licenses, passports-everything. -JOE OORINe Medicare Rules Look at it this way. How would you feel about your job if it were governed by Medi care rules? You might be paid or you might not, and you couldn't tell which before you did the work. In order to receive payment, you would have to fill out a complicated form at least once (often more than once).

Quite often you would have to fight with a bureaucrat and answer insulting and threat ening letters. The maximum rate of payment would usually be substantially less than you could make by doing something else, for example, treating a younger person. And if you made a mistake in your paperwork, or offended a bureaucrat by acting disrespect ful, or did something that was declared unnecessary after the fact, you might have to give all the money back, plus $2,000 for each mistake. Worse, you might even be forced out of your occupation altogether. Would you continue in a job like this? More doctors are saying that to accept a check from Medicare, you'd have to be crazy. -JANE M. ORIENT, M.D. National Service Some years ago Germany enacted a "Law for National Labor Service" that required one year of service for every youth between the ages of 18 and 29. Like the current American proposals, the service was part military and part civilian. The plan was PERSPECTIVE initially voluntary, but was made mandatory after two years.

The proponents of the German national service law promised that all work "under taken by the Labor Service may only be supplementary, Le., work which would not be undertaken in the ordinary way by pri vate enterprise." Similar promises are made by contemporary American supporters of national service. The German plan also praised collectiv ism and sharply criticized individualism and the market system. It advocated that young people be made to perform "service ren dered to the German nation, " and its overall purpose was "to lift men out of economic interest, out of acquisitiveness, to free them from materialism, from egoism . . . ." The Hitler Youth were institutionalized by the "Law for National Labor Service," which operated under the premise that "the child is the mother's contribution to the state. " This was the ultimate in national socialism: the nationalization of people. This is not to suggest that the American supporters of national service are fascists or "national socialists," but to underscore what a tremendous threat to individual liberty such a program entails. Current American proposals may not sound too threatening since they are supposedly vol untary. But the Nazi program also was voluntary when it began, and, as mentioned above, there already are many powerful political supporters of mandatory national service in the United States. For these reasons, national service could pose one of the greatest threats to freedom in the coming decade.

-THOMASJ.DILoRENZO 163 THEFREEMAN IDEASON UBERlY MEXICO: MYTHS AND REALITY by Christopher Whalen M exico is widely recognized as one of the great economic success stories of the 1990s.Under the leadership of President Carlos Salinas de Gortari, the country has moved from a decade of crisis and internal political turmoil following the 1982 debt default to rank among the world' smost attractive emerging markets. Billions of dollars in new foreign money have been invested as hundreds of state-owned com panies have been sold; tariffs have been dramatically reduced or eliminated entirely; and the economy has been opened to foreign investment, reversing decades of protec tion for what was once a largely socialized economy. Despite the appearance of success in material terms, in many respects Mexico in 1993 remains remarkably unchanged. Even with the economic opening engineered by Salinas, Mexico still boasts one of the most skewed distributions of income and wealth in the world, according to the World Bank.