November

IDEASON LIBERTY 412 The Economic Way of Thinking, Part 2 by Ronald Nash The importance of subjective valuation in economics. 416 National Health Care: Medicine in Germany 1918-1945 by Marc S. Micozzi, M.D. Increased involvement of the German government in funding health care and medical research established a political-medical complex that the National Socialists later used in carrying out their extermination policies. 421 Medicine and the Welfare State by Melchior Palyi The march of authoritarian medicine from Bismarck and Lenin to the modern welfare state. 431 What Hunger Insurance Could Teach Us About Health Insurance by Joseph Bast An exercise in imagination helps to explain why we spend so much on health care. 435 The Freeway to Serfdom by Jane M. Orient, M.D. Pleas for "comprehensive health care reform" to "insure universal access" signal danger. 436 The Consequences of Managed Competition by Vincent W. Cangello, M.D.

Limiting the physician's option to refer patients to specialists points the way to lower quality health care. 438 The Coming Financial Collapse of Social Security by Peter J. Ferrara The Social Security trust funds are essentially a sham that cannot assure future financial security. 448 The Politics of the "Fair Share" by Gary North What will be everyone's "fair share" of judgment when the process of political theft produces economic disaster? 452 Book Reviews John Attarianreviews Social Security: What Every Taxpayer Should Know by A. Haeworth Robertson; Israel M. Kirzner's review of Mises: An Annotated Bibliography: A Comprehensive Listing of Books and Articles by and About Ludwig von Mises, compiled by Bettina Bien Greaves and Robert W. McGee; Peter F. Steele's review of The Ruling Class: Inside the Imperial Congress by Eric Felton; William H. Peterson reviews Prosperity Versus Planning: How Government Stifles Economic Growth by David Osterfeld.

CONTENTS NOVEMBER 1993 VOL. 43 NO. 11 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. 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 "National Health Care: Medicine in Ger many 1918-1945," provided appropriate credit is given and two copies of the re printed material 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 $25.00 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 5Vi' format.

Phone (914) 591-7230 FAX (914) 591-8910 PERSPECTIVE Voluntarism in Health: A Forgotten Solution In a period of escalating medical and insurance costs, the working poor are faced with inadequate medical care. They are people who exist on the edge of poverty and live without government assistance. They are proud and self-reliant. ... The Bradley Free Clinic in Roanoke, Virginia, exists to meet the needs of our community's less affluent with respect and dignity. Our mission is to provide medical, dental, and pharmaceutical care to the Roanoke Valley's working poor using vol unteer professional staff. We are one of some 140 free clinics across the country offering family practice medical care to indigent patients. The success of the Bradley Free Clinic lies in voluntarism, a time-honored Ameri can tradition that is often left out of discus sions on how to remedy our country's health care ills. Until the advent of Medicare and Medicaid in the early 1960s, numerous hos pitals operated with the primary intention of providing health care for the disenfran chised. The Bradley Free Clinic and others like it have revived this forgotten method of providing health care for those unable to afford it. They have again made it possible for the medical community to care for the poor without the costs imposed by bureau cratic intervention.

Physicians have been extending solace to the poor for decades, usually in a very quiet, low-key fashion; they do not need or wish publicity for these activities. Most physicians, then and now, hold that help ing the poor is part of their professional responsibility. Free clinics provide an ex cellent opportunity for physicians to con tinue to help the poor in a clean, well-run, clinically contemporary setting. Through the coordination of their services, the phy sicians of Roanoke have proven this to be true. -JOHN M. GARVIN, M.D., writing in Philanthropy, published by The Philanthropy Roundtable 410 411 The Kingdom That Gives Beethoven a C What's happening in the world of arts subsidies says a lot about how modern governments are evolving. In the United States, there has been a contest between arts pressure groups and John Q. Public over subsidizing distasteful and porno graphic art, and John Q. has lost. Across the Atlantic, in Great Britain, arts administra tors are in the process of turning the whole theory of democracy upside down.

In Britain, the agency that doles out the subsidies is the Arts Council. Its music branch has developed quite distinctive tastes in composers, and it has decided to put taxpayer money where its mouth is. The Independent, a leading London newspaper, found that it had adopted a formula to simplify grant-giving, classifying composers into four grades. At the bottom of the heap are the grade D composers who deserve no sUbsidy at all, old favorites like Johann Strauss and Ed ward Elgar. Grade C composers, a category which includes Beethoven, are worth a subsidy of only 450 pounds per concert. Grade B composers, including heavies like Mahler, merit 1,000 pounds. Hitting the jackpot, at grade A, accorded a subsidy of 2,000 pounds sterling per con cert, are Harrison Birtwhistle and Peter Maxwell Davies. These gentlemen are not rugby players or Arctic explorers. They are modern composers whose principal claim to fame is that the British public can't bear to listen to their music.

This grading system has upset concert organizers who naively supposed that it was their job to put on concerts that peo ple wanted to come to, not stay away from. One promoter, Michael Blackledge, pointed out that he filled all 750 seats in Bedford's Corn Exchange when the concert fea tured politically incorrect Elgar and Delius, but that only 25 came when the approved modern composers were performed. He finds the grading system unworkable. "It's artistic interference with people on the PERSPECTIVE ground who know their audience, " he said. Years ago, when the idea of massive arts subsidies was first proposed, arts insiders had reason to be worried. They were per fectly aware that what they were doing wasn't art as far as the general public was concerned. If democracy worked the way it was supposed to, they would be left off the gravy train. Voters would communicate their desire for likeable music to their rep resentatives, and they, in turn, would tell the civil servants to give the public what it wants. Arts administrators, doing their dem ocratic duty, would contrive subsidy pro grams boosting Viennese waltzes and leav ing Birtwhistle and his chums down at the wine bar in the dustbin of history.

Fortunately for the insiders, none of this happens. British arts administrators don't suppose for a minute that they are servants of the people. Indeed, they have become quite self-righteous about their duty to give the public what it doesn't want. The music director of the Arts Council, Kenneth Baird, was not apologetic or embarrassed when asked about.the policy of emptying concert halls with grade-A dissonance. "We are happy with these categories," he said. "It is our duty to support the new and most adventurous, given that that is the least likely to appeal to audiences and sponsors. " Somewhere between John Locke and John Major democracy got left in the dust bin. The modern state does not function, as the theorists hoped it would, to translate popular desires into policy. It has given rise, as the arts subsidy scene clearly proves, to a more or less insulated class of public officials who use the power of the state to implement their own prejudices.

We used to call this arrangement taxation without representation, and it used to make us angry. -JAMES L. PAYNE THEFREEMAN IDEASON LIBERTY THE ECONOMIC WAY OF THINKING PART 2 by Ronald Nash I n the first part of this eight-part series, we learned that economics is the basic study of conscious, purposive human behavior. We also learned that the unavoidable fact of scarcity in life requires human beings to rank the things they regard as important and then make choices. The subject of this month's essay is the fact that all economic valuation is subjective. Objective Theories of Economic Value Anyone who observes how human beings act in economic exchanges can easily see how various things are thought to have more value than others. It is natural to wonder about this fact. What is it about one thing that makes it more valuable than another? Why do people want some things more than others? Why are some things so valued that people are willing to make significant sacri fices in order to obtain them?