Book Reviews

1995 • 294 pages + index. $14.95 paperback Reviewed by Daniel F. Walker W e've all heard the abominations which pass for popular political discourse throughout America today. "The American way is the way of democracy; the majority rules." "Human rights obviously are more important than property rights." "Rights are given to us by the government." "The 'general welfare' clause of the Consti tution justifies our welfare state and the redistri bution of wealth. " Admittedly, current times offer some hope for a rebirth of appreciation of fundamental consti tutional values. At the Clarence Thomas hear ings, Richard Epstein's Takings was waved around by a Joseph Biden terrified at the prospect of the national government being required to compensate citizens when federal regulations diminish individuals' rights to property. The U.S. Supreme Court has, albeit meagerly, begun to recognize constitutional protection of property rights. This year the Tenth Amendment, too, was rediscovered by the Supreme Court, the federal .

legislative branch has been informed that there are limits beyond which statutes cannot go. State legislatures are passing "10th Amendment Res olutions" as shots across the bow of the Beltway leviathan. Still, the rediscovery of the Constitutional design has a long way to go. Several years ago, Robert Bork referred to the Ninth Amendment as an "inkblot." Few conservatives expressed any dismay at Bork' s commentary. Even in the midst. ofa so-called Congressional "revolution," block grants from Washington to the states, with fewer Federal conditions, are considered an indication of "federalism," as if under that concept the states are only quasi-administrative units of the national government-but with more' 'freedom" to craft programs, freedom "allowed" by Con gress. 791 When an overwhelming majority of legislative "revolutionaries" and movement "leaders" fail to exhibit a sound, complete grasp of our pri mary, foundational document of governance, it is all the more important for the citizenry itself to grasp the essence of that document-to under stand its principles, its historical context, the guiding presuppositions and beliefs of those who drafted the Constitution and those who ratified it.

FEE's most recent collection of essays, Foun dations ofAmerican Constitutional Government, is just the publication for anyone who wants a thorough grounding for understanding our Con stitution and applying it to our political life. This collection of previously published Freeman es says spans 30 years; including contributions from historian Clarence Carson; the late M. E. Brad ford, the noted "Southern agrarian" conserva tive; philosopher John Hospers; historian Robert Higgs; and economist Dwight Lee, among oth ers. The book is marketed as a primer, but be assured that the person who absorbs this book's lessons will gain a sober grasp of the intellectual ground from· which the Constitution grew, its historical context, what the Founders intended it to accomplish, the permissible reach of gov ernment powers, and how profoundly "undem ocratic" our government was structured to be and why that's so. (The primary drawback of this book is the appendix;· while it contains for ref erence the original Constitution and the first ten amendments, the other 17 amendments are not included. Also, the absence of the Articles of Confederation, predecessor to the Constitution, is regrettable.) Several essays stand out. George W. Nilsson's essay, "Not in the Constitution," carefully ex amines the context and meaning of the "general welfare" clause, oft-cited and terribly misunder stood. This essay should be read by every political science undergraduate student, every first-year law student, and every public officialin America. The gist of the es'say?There is no grant of plenary power to the national government; as Nilsson wrote, "Knowing what led up to the war, and reading the charges in the Declaration of Independence; can anyone for a minute think that the colonists generally, and the members of the convention specifically, would have adopted a constitution which granted general welfare pow ers to the federal government?" Clarence Car son's essay on "The General Welfare" nicely complements the Nilsson essay.

Robert Higgs' essay regarding individual rights and the nature of government is a reality based summary which should be widely read.

792 THE FREEMAN • DECEMBER 1995 Higgs destroys the false dichotomy between "human rights" and "property rights," but not before reminding us that "[e]very government, ultimately if not immediately, relies on physical violence to enforce its rule." Professor Dwight Lee's piece on "The Polit ical Economy of the U.S. Constitution" offers a particularly good review of the U.S. Supreme Court's economic jurisprudence through 1986. Lee's likening the government to the role of a referee in a football game is just the sort of illustration appropriate for those who seldom or never have thought through the implications of Constitution-related discussions they've heard before. M. E. Bradford's contribution, "Not So Dem ocratic," is an outstanding essay regarding the profoundly "undemocratic" beliefs of the fram ers of the Constitution and the numerous anti majoritarian mechanisms within the document.

The Constitution is no mere blueprint for popu list, majoritarian government; the supermajority votes required for amending the Constitution obviously are structured and required to prevent tinkering by bare majorities. Consider the Sen ate, where the least populous and most populous states are represented by the same number of Senators: two. A simple majority is not sufficient to override a Presidential veto; two-thirds of the House and two-thirds of the Senate must vote accordingly. Other examples of anti-majoritarian mechanisms abound. One cannot read Brad ford's essay without a deeper appreciation for the "anti-democratic" measures in our Consti tution which passionate, fleeting majorities on given issues cannot ignore, measures which safe guard us from the tyranny of the majority. Clarence Carson's essay on "The Meaning of Federalism" is an excellent survey of the topic, highly recommended. A point particularly appre ciated by this reviewer is Carson's attention to the phrase of states' rights: "states have powers (as do all governments), not rights.... Rights belong to individuals in the American constitu tional system. " Amen. The less semantic confu sion over rights and powers, the better.

Finally, John Hospers' essay concerning "Freedom and Democracy" cleanly picks apart the mythology of democracy as "self-govern ment." "[W]hen people speak of democracy as self-government, they are not speaking about each person governing himself; they are speaking of a process in which a majority of voters, or a majority of members of a legislature, make de cisions which have the force of law for every one, including those who are opposed to what is enacted." Participating in decisionmaking is one thing; living with the consequences of col lectivelymade decisions is entirely another. Hospers' piece is a solid companion to Brad ford's essay; together, they force the worship pers of "democracy'" and "the will of the peo pie" to reconsider the ramifications of their beliefs. Overall, The Foundations of American Con stitutional Government is a refreshing and pro vocative review of historical context, the sub stance, and the political theory infused within the Constitution. Students and non-students alike would do well to arm themselves with this book before confronting those' 'modern interpreters"

who twist the Constitution to justify the intru sive, belligerent "Nanny State" we know as the federal government. 0 Mr. Walker is an attorney in private practice in Tallahassee, Florida. Leviathan at War edited by Edmund A. Opitz The Foundation for Economic Education. 1995 • 191 pages. $14.95 paperback Reviewed by. Robert Higgs P erhaps the most valid justification of govern ment is its defense of citizens against foreign aggressors. But when governments wage war, a thin line separates defense and offense. And even in a defensive war, governments typically de prive their own citizens of many liberties. His torically, war has done more than anything else to enhance the power of governments and to diminish the liberties of the people. Classical liberals have always recognized the dangers of war and supported policies, such as free inter national trade, that reduce the likelihood of war.

The Foundation for Economic Education has stood squarely in this classical liberal tradition, and over the years its monthly publication, The Freeman, has presented many articles alerting readers to the domestic dangers of war and espousing policies that promote peaceful inter national relations. Leviathan at War, edited by Edmund A. Opitz, reproduces many of those articles as well as several other commentaries. The longest essay in the collection, Wesley Allen Riddle's "War and Individual Liberty in Amer ican History," is a previously unpublished con tribution.

In a chapter on "The Roots of War," Ayn Rand succinctly states a major theme ofthe book: "If men want to oppose war, it is statism that they must oppose. So long as they hold the tribal notion that the individual is sacrificial fodder for the collective, that some men have the right to rule others by force, and that some (any) alleged 'good' can justify it-there can be no peace within a nation and no peace among nations." In an excerpt from Human Action, Ludwig von Mises expresses similar ideas. "Aggressive nationalism is the necessary derivation of the policies ofinterventionism and national planning. While laissez faire eliminates the causes of in ternational conflict, government interference with business and socialism create conflicts for which no peaceful solution can be found. " Mises describes how the engagement of governments in "total" war led them inexorably to extend their controls over economic life.

Perhaps the starkest wartime deprivation of liberty is the conscription of men to serve as soldiers. The United States first conscripted men during the Civil War. In World War I nearly 3 million were drafted, in World War II some 10 million, and the draft persisted until 1973. In "The Conscription Idea," written in 1953, Dean Russell lamented that "the principle of conscrip tion is now fearfully close to becoming a perma nent American institution." Russell, who had served in the Air Corps for five years during World War II, rejected the standard defense of the draft, which maintains that the end justifies the means. Said Russell, "Those who advocate the 'temporary loss' of our freedom in order to preserve it permanently are advocating only one thing: the abolition of liberty. " He believed that if the United States were genuinely menaced from abroad, volunteers would come forward in sufficient numbers to defend the country.

The book reprints Daniel Webster's stirring speech opposing conscription when it was pro posed in 1814. "An attempt to maintain this doctrine upon the provisions of the Constitu tion, " declared Webster, "is an exercise of perverse ingenuity to extract slavery from the substance of a free Constitution. " Anyone would be struck by reading Webster's speech alongside the unanimous decision of the U.S. Supreme Court upholding the constitutionality of the draft in 1918.Then, Chief Justice Edward White found himself' 'unable to conceive" how anyone could regard conscription as involuntary servitude obviously, America's effective constitution had changed enormously since 1814. In an excerpt from a 1944 book, the British military historian BOOKS 793 B. H. Liddell Hart criticizes conscription, calling it "a decisive step towards totalitarianism." In "How to Finance a War," Willard M. Fox exposes the fallacy that the costs of war can be shifted to future generations by debt financing.

He observes that "the real cost of waging war is borne by the living who are deprived of things that in the absence of war could be produced and consumed in ordinary peacetime life. No amount of fiscalhocus pocus can change that reality. " He also shows how the U.S. government has re sorted to inflation to help finance its wars, and he explodes the myth of wartime prosperity. He concludes that' 'by a combination of persuasion, appeals to patriotism, veiled threats of coercion, and bidding a high enough price, government can get what it wants in the market" for most wartime purposes. Nothing displaces sound morality quicker than warfare~ Soldiers are lionized for indiscrimi nately killing people and destroying property actions that would ordinarily bring moral cen sure. Governmentpropagandaencouragescitizens to dehumanize.enemy populations, so that mass murder can go forward without moral restraint.

Leonard E. Read's contribution, "Conscience on the Battlefield," challenges the herd mentality underlying the savagery that attends the waging of war. Mark Twain's classic "War Prayer" hits the same target. James Madison spoke wisely when he warned that "of all the enemies to public liberty war is, perhaps, the most to be dreaded." It is incon ceivable that, absent the wars ofthe past century, the government of the United States-and prob ably many others as well-could have grown nearly so powerful. From its participation in wars, the U.S. government gained, for example, high income-tax rates and income-tax withhold ing, the system used to finance the voracious modem welfare/warfare state. Even more impor tantly, victory in the world wars convinced Americans that the federal government has the ability to achieve great social objectives in the public interest and can be trusted to do so. A clear progression leads from wartime economic plan ning to the massive contemporary government meddling in economic affairs.

Edmund Opitz deserves much credit for com pilingan excellent collection of commentaries on a subject of the greatest importance. No matter how much Americans may wish to throw off the shackles of the welfare state, recover their lost liberties and live in peace, they stand little chance so long as the government can divert them by engaging in war. As Opitz wisely observes, 794 THE FREEMAN • DECEMBER 1995 "while many people say they want peace, few know or want the things that make for peace. . . . When men rely on political privilege to acquire economic goods, they have already embraced the near end of a principle whose far end is war." D Robert Higgs is Research Director for the Inde pendent Institute. Alien Nation by Peter Brimelow Random House. 1995 • 327 pages. $24.00 Reviewed by Gregory P. Pavlik P eter Brimelow, a journalist and senior editor at Forbes and National Review, has written a stimulating and illuminating discussion of the morass that passes for U.S. immigration policy.

Brimelow argues, correctly, that current immi gration regulations are part of a wider trend that seeks to change the face of America: that is, the official policy of the federal government is part and parcel of the domestic social engineering efforts that aim at a radical transformation of American society from its European mores, folk ways, and culture. Hence, along with the eleva tion of Third World lifestyles under the leftist rubric of "multiculturalism," current supporters of U.S. immigration laws and so-called open borders, are buttressing anti-Western trends by importing masses of largely unassimilable minor ities. Contemporary libertarian critics of open bor ders contend that immigration serves to bolster the cost and size of the welfare state, a point that Mr. Brimelow demonstrates conclusively. It is also important to note that the current shape of immigration is politically determined: it actively limits the immigration of skilled Europeans who are more likely to assimilate-as well as add to the economy.

In his book, Mr. Brimelow addresses the economics of immigration directly. He shows that the economic benefits from recent immigra tion have been almost unnoticeable. In fact, there would have been virtually no loss of economic growth if the current massive immigration wave had never occurred. Brimelow also shows that the quality, in terms of economic potential, of current immigrants is much lower than that of the current American work force, the long-range effects of which have yet to be felt. Mr. Brimelow also provides a provocative demonstration that free trade can replace immi gration in public policy, allowing us to enjoy the benefits of the international division of labor without the social dislocations and destructive ness of mass immigration. As an example, "[t]he Japanese have factories in the Philippines rather than Filipinos in lapan." A similar situation existed in Victorian England. In Britain, the period of "splendid isolation" was characterized by almost unlimited free trade and virtually no immigration. In other words, the interp.ational division of labor and the mobility of capital ten~s to eliminate the need for large-scale immigration.

Alien Nation is a hard-hitting rebuttal of the positions embraced by advocates ofopen borders in other ways. Supporters of mass immigration obscure the dangers that continued immigration from the Third World presents to America's European civilization. The basis of this obfusca tion rests in part on what has been called the Myth of Economic Man-the fallacious world view that boils all of human society and interac tion down to economics and materialism. There are values, ways of life, and aspects of civiliza tion that are extrinsic to economics, and moti vations for human behavior that are determined by longstanding cultural practice-and even bi ological urges-that a purely economic world view is unable to address, understand, or explain. It's worth noting that the Myth of Economic Man also underlies classical Marxism, whereas it is decidedly not a part of the free market view of the Austrian School which teaches that human ac tions are motivated by human values which may be entirely unrelated to material concerns.

Mr. Brimelow also makes an important corol lary point: freedom and free markets do not-in fact, cannot-emerge from a vacuum. Freedom is a political category that emerges from a par ticular history that lends itself to a particular political disposition. If this were not the case, free political institutions would be the hallmark of world politics. Mr. Brimelow's contention is that the supporters of our current policy, and their apologists in the open borders corner, are in the process of overhauling the character of America. No honest person can believe that this will be without political ramifications. D Mr. Pavlik is Assistant Editor of The Freeman and Director of FEE's Op-Ed program.

The Case for Free Trade and Open Immigration edited by Richard M. Ebeling and Jacob G. Hornberger The Future of Freedom Foundation. 1995 • 143 pages. $17.95 cloth; $9.95 paperback Reviewed by Robert Batemarco S hould a free country's freedom stop at its borders? Libertarians have long answered this question with a resounding "No!" Yet in recent years, some staunch friends of a free and open economy have come to see open borders as a threat to domestic freedom rather than a complement to it. Peter Brimelow, whose pro vocative Alien Nation is reviewed in this issue, is a case in point. The contributors to The Case for Free Trade and Open Immigration, however, see freedom as indivisible. They are of one voice in blaming any adverse consequences ofour most recent wave of immigration on our domestic welfare state. They view calls to restrict immigration as confirmation of Mises' claim that any hampering of the market economy creates problems which are used to "justify" further intervention. Co-editor Richard Ebeling blames, "licensing restrictions, .

heavy tax burdens, ... welfare programs, . government schools with their mandatory bilin gual programs," as opposed to immigration per se, for any threat immigration poses to our economy and our culture. Ultimately, their advocacy offree immigration rests on the sanctity of property rights. As Shel don Richman points out in his piece, "There is nothing inherently coercive about a foreigner's move to the United States. He pays for trans portation. He rents or buys living quarters. He works for a consenting employer or starts his own business." If he does not, he is an invader rather than an immigrant and should indeed be repelled. Those anti-immigrationists who, in the heat of argument, treat all immigrants as an invading army, however, seem to have lost sight of this distinction. One important libertarian pro-immigration argument this book fails to include is the nature and magnitude of the new powers we must hand over to our government if we are really serious about sealing our borders. The power already granted to disrupt operations and levy fines on employers of illegal immigrants seems to have had minimal effect. Can seizing those BOOKS 795 employers' assets or putting them in prison be far behind?

While the immigration issue is currently stir ring up controversy among free-marketeers, it only constitutes half of this book. The rest deals with free trade, where among libertarians con sensus still reigns. As in the chapters on immi gration, the contributors exhibit a knack for getting down to first principles. James Bovard, for instance, succinctly captures the essence of what distinguishes fair trade from free trade by posing the query: "Is coercion ever fairer than voluntary agreement?" Discussions of managed trade, U.S. protectionist policies, and Friedrich List's role in promoting protectionism round out this section of the book. The contributors to this volume should be quite familiar to readers of The Freeman, most having served as FEE staff members, lecturers, or writers for The Freeman. In addition to editors Hornberger and Ebeling, contributors include Leonard E. Read, Ludwig von Mises, Bettina Bien Greaves, W. M. Curtiss, Lawrence W.

Reed, and Gregory F. Rehmke. For those inter ested in understanding the classical liberal view that both people and goods should be permitted to cross borders freely, this book is an excellent place to start. D In addition to editing the book review section of The Freeman, Dr. Batemarco is a marketing research manager in New York City and teaches economics at Marymount College in Tarrytown, New York. Simple Rules for a Complex World by Richard A. Epstein Harvard University Press. 1995 • 375 pages. $35.00 Reviewed by William H. Peterson A m~rica broods over laws and lawyers, as wItness: Q. Why didn't the shark eat the lawyer? A. Professional courtesy. Q. What are 500 lawyers at the bottom of the ocean? A. A good start. Q. How can a single lawyer in town without enough to do succeed? A. Get another lawyer to move into town, and both will thrive. Witness more. In 1936, at the height of the New Deal, the Federal Register had 2,411 pages 796 THE FREEMAN • DECEMBER 1995 of myriad rules and regulations; in 1991 it came to 67,716 turgid fine-print pages, a 28-fold in crease, a sort of Full Employment Act for At torneys. The United States, with a population of 260 million, has some 800,000 lawyers; Japan, with half that population, has 15,000. In the 15-year-span between 1972 and 1987 the number of Washington lawyers increased fourfold, from 11,000to 45,000.

What gives in this lawyerization of America with its ten millionlaws trying to emulate the Ten Commandments? Richard A. Epstein, the James Parker Hall Distinguished Service Professor of Law at the University of Chicago and the author of the 1985 classic, Takings: Private Power and the Power of Eminent Domain, rejects the con ventional wisdom that so many laws and so many lawyers are but a natural outgrowth of an in creasingly complex society. Like a fresh breeze, he harks back to Jefferson-Thoreau: That gov ernment is best which governs least. To Professor Epstein, government works best when it sets the rules of the road, not when it tries to determine the composition of the traffic. He likens the breakdown of numerous forms of U.S. regulation to the breakdown of socialism in Eastern Europe-in both cases public officials can't overcome disincentives and critical infor mational gaps. Moreover, many regulators avoid or evade legal rules to "constrain their [own] self-interested behavior," engaging in "rent seeking," catering to special interests. Such becomes a vast shadowy, shoddy business of the modern regulatory state.

Like Henry Thoreau, the Epstein solution is simplify, simplify. His rules include individual autonomy, private property rights, freedom of contract, and protection from aggression or in advertent harm against person or property. That protection supposedly covers, per the Fifth and Fourteenth Amendments, just compensation for public takings of private property. Supposedly, for that protection has waned since the New Deal. Waned until recently, as Professor Epstein illustrates in reviewing the seminal case of Lucas v. South Carolina Coastal Council. Developer David Lucas bought two beachfront properties only to find state authorities charging him ex post facto with harming tourism and unobstructed ocean views. They then took away his right to develop his two properties with no compensation whatsoever. In 1992 the U.S. Supreme Court in effect ordered South Carolina to fork over $1 ,500,000to Mr. Lucas-and his lawyers. South Carolina thereby took title to the lots, and promptly, and most ironically, resold them for development of single-familybeachfront homes.

Professor Epstein hails the resurrected take but-pay idea. He sees it as a blow for liberty since government demands less when it has to pay more. Similarly the author applauds the flat tax. He sees a progressive tax allowing the government too much political leeway on the level of taxes and their incidence, especially on "the rich." Also, rent-seeking special interests pressure law makers for concessions on deductions and in come exclusions, all adding to complexity and administrative costs. So the 10,Ooo-pageInternal Revenue Code hardly stands as a monument to simplicity. Too, progressive rates spur income redistribution and warp incentives to work, save and invest, thus setting back economic growth. Richard Epstein, like Thomas Jefferson, rec ognizes that a legal system should be anything but a complete social system. He sees that the private sector under the rule of law can better advance the interests of society without the social engineering in interventionist statutes like the Fair Labor Standards Act of 1938, the En dangered Species Act of 1973,and the Americans with Disabilities Act of 1990. He comments: "Complex rules for a complex world are an invitation for disaster."

Postscript. Unlike so many attorneys hiding behind circumlocution and legal gobbledygook, this law professor has the added virtue of writing directly and-what else?-simply. D Dr. Peterson, Heritage Foundation adjunct scholar, is Distinguished Lundy Professor Emer itus of Business Philosophy, Campbell Univer sity in North Carolina. Liberty and the Great Libertarians edited and compiled, with Preface, Introduction, and Index by Charles T. Sprading. With a new Foreword by Carl Watner Fox & Wilkes. 1995 • 362 + xiv pages. $24.95 cloth; $14.95 paperback Reviewed by Daniel Klein I was at Powell's bookstore in Portland and saw the aged print on the binder-edge of the yellowed dust-jacket: Liberty and the Great Libertarians-Sprading-$l. 50. Very curious, I thought. The Preface began with a definitionfrom Webster's: "Libertarian: One who upholds the principle of liberty, especially individual liberty of thought and action." This "Anthology of Liberty" collected the most libertarian passages from the writings of Burke, Paine, Jefferson, Godwin, von Humboldt, Mill, Emerson, the abolitionists, Josiah Warren, Thoreau, Spencer, Spooner, Ingersoll, George, Tucker, Auberon Herbert, and many others. In all it was 540pages, "published for the author," in Los Angeles. I marvelled at the publication date: 1913.

When I arrived back home the new catalogue from Laissez-Faire Books was waiting, with a reedition, newly typeset, of this remarkable volume featured on the cover. The new dust-jacket contains information pro vided by Carl Watner about Charles Sprading (1871-1959).As a convert to Benjamin Tucker's individualist anarchism, Sprading moved to Los Angeles soon after the turn of the century. In that city he spoke frequently for the Liberal Club. He was active in the Libertarian League and served as contributing editor of its journal: The Liber tarian (1922-1924). During the 1920s Sprading wrote several tracts and short books which were published by The Libertarian Publishing Com pany. The Libertarian League in Los Angeles "petered out during the 1930s, as its main par ticipants passed from the scene." It is apparent from the care and judgment that went into the selection, as well as from Sprad ing's Introduction, that the libertarian spirit was alive and well in Los Angeles in 1913.

Sprading shows a delight in aphorisms and short pithy passages. There are ample pages of selected "Laconics of Liberty," representing scores of thinkers, famous and obscure. The volume serves as a libertarian sampler permitting easy acquaintance with insightful and passionate lovers of liberty. To me the special significance of the book is Sprading's resolute usage of the term "libertar ian." There is no reason to think that Sprading fancied the thought of having a definitive char acterization of The Good in all political matters. The wide-ranging material might suggest that Sprading was aware of ambiguities and incom pleteness of the idea of individual liberty, even in its specifically libertarian sense. It is a growing awareness today· of limitations of the paradig matic libertarianism of the late, great Murray Rothbard, I believe, that has prompted leaders of the movement to promote alternative names for the party of liberty-"neoliberalism,' , "marBOOKS 797 ket liberalism," "classical liberalism," "postlib ertarianism. " These are efforts to project a less brittle philosophy which nonetheless affirms the worthiness of radical anti-state reform. I've been gathering a file of material that shows that long before Rothbard, diverse writers saw the trouble of the term "liberal" and employed "libertari an." Sprading's book is a landmark that assists one in maintaining that the family name is libertarianism. 0 Dr. Klein is Assistant Professor ofEconomics at the University of California, Irvine.

Public Policy and the Quality of Life: Market Incentives versus Government Planning by Randall G. Holcombe Greenwood Publishing Group. 1995 • 190 pages. $55.00 Reviewed by Jane M. Orient T his book asks a lot of the right questions. On general issues, it is a primer on free-market solutions. It considers how private regulatory mechanisms might work. It shows how market incentives could be harnessed to protect the environment and reduce pollution. It highlights important political insights: "political victories are never permanent . . . with government own ership, there is no way to prevent those with political power from using it to gain access to publicly owned resources." When it gets to specifics, however, the book is a real disappointment, and in fact could be detrimental to the cause. The author is appar ently not very well informed about either medical or environmental issues and thus discredits the very solutions that he favors.

The American Medical Association is not the answer to regulation of the medical profession. The AMA is allied with the government in preserving a medical cartel. Because of the AMA's help, destructive governmental interfer ence, such as the price controls called the "Re source-Based Relative Value Scale, " gain a cred ibility they otherwise could never earn. The AMA would indeed like to be involved in "po licing" the profession by coercive governmental means. It would like to have absolute immunity for establishment "peer reviewers." In fact, California does grant absolute immunity, even 798 THE FREEMAN • DECEMBER 1995 for actions taken in bad faith for anti-competitive motives. When "private" regulators can tell ma licious lies with impunity, the resulting House of Peers can become at least as corrupt as the government. This is not to say that private regulation could not work. It already does, to some extent. The bulwark against bad doctors is informed patients.

And patients should inform themselves not by asking the AMA but by asking a nurse, another doctor, a malpracticelawyer, or familyand friends. The author gets even further off track when he states that Health Maintenance Organizations offer "improved" incentives. Actually, HMOs put physicians and patients in an automatic conflict of interest. Furthermore, the author confuses "traditional fee for service" (in which the patient paid most bills directly) with prepay ment for consumption (most bills paid by third parties), erroneously called "insurance." On environmental issues, the book gets the principles right but the technical details wrong. For example: "the elimination of lead and as bestos from the environment is a legitimate public health goal because those substances have been linked to noncommunicable health prob lems." First, it is impossible to eliminate these natural substances from the environment. Sec ond, efforts to reduce the amounts to lower and lower levels have led to absurdities that actually increase risk, if by no other mechanism than wasting money that might·have been spent in a productive way.

This book may help to balance an academic reading list. But its dry professorial prose is unlikely to inspire the layman. The majority of Freeman readers could better invest both their time and their money in reading the classics. D Dr. Orient is an internist in solo private practice. She serves as the Executive Director of the Association of American Physicians and Sur geons. She wrote Your Doctor Is Not In, Healthy Skepticism about National Health Care (Crown, 1994). A Trade Policy for Free Societies: The Case Against Protectionism by Robert W. McGee Quorum Books, Westport, Conn.• 1995 • 197 pages. $55.00 Reviewed by Joseph T. Salerno F or over two centuries, economists have ar gued that protectionism is a policy designed to "protect" not consumers and workers at large but special interests, namely, inefficientdomestic firms and their often highly paid and unionized labor forces. "Protecting the American econo my" from cheap foreign imports of agricultural products, apparel, and pharmaceuticals, for in stance, means creating a greater scarcity and increasing the prices of food, clothing, and med icine in the United States.

Robert McGee's book clearly and concisely drives home the point that protectionism is a species of monopoly privilege that benefits spe cial interest groups at the expense of the average American. The first section, the "Philosophy of Protectionism, " ruthlessly exposes and refutes the web of misconceptions and fallacies that lie at the heart of the protectionist case. McGee not only sets forth and then demolishes, one by one, 17 of the most common arguments in favor of protection, but also presents the positive argu ments for free trade. Unlike most economists writing on the subject, McGee does not limit himself to expounding the "utilitarian" or effi ciency aspects ofthe free trade case, as important as this task obviously still remains. He also emphasizes its ethical dimension, in particular the fact that "The moral basis of free trade is property rights." In Part II of the book, McGee undertakes an assessment of the crushing' 'Cost of Protection ism" borne by American consumers and work ers. He provides a useful summary of recent studies that have attempted to estimate the monetary costs of protectionist policies, in the form of higher prices and misallocated resources, both for the economy as a whole and for indi vidual industries. For example one study esti mated that, in 1986 alone, protectionist policies cost U.S. consumers about $65 billion in higher prices. Another study reckoned that Reagan's "voluntary export restraints" on Japanese auto manufacturers cost American car buyers $14 billion in·1984 alone. Various analyses have also indicated that protectionism raises the price of clothing to American consumers by between 39 and 76 percent for imported items, which in tum facilitates a 19 to 46 percent increase in the price of domestic apparel. Perhaps the most egregious example is sugar. Protection of this industry has forced Americans at times to pay up to four times the world price for sugar. Nor does the author overlook the nonmonetary costs of protectionism in terms of lost jobs, the social conflict and squandered resources involved in lobbying for or against various protectionist measures, the re duction of consumer choice, and the attenuating of individual rights of property and contract.

The third and final part of the book is devoted to an analysis of "Antidumping Policy." Espe cially enlightening is McGee's expose of the shocking arbitrariness inherent in the adminis tration of the antidumping laws. Concluding a blistering and well-deserved cri tique of the intellectually bankrupt philosophy of antidumping policy in chapter 10, McGee writes: Antidumping laws cannot be justified by any theory of liberal democracy. They are not utilitarian because they do not result in the greatest good for the greatest number. Indeed they provide good for the minority (producers) at the expense of the greatest number (con sumers). They reduce rather than enhance social cooperation and harmony. They violate rights. Even redistributionists would argue against them because they redistribute income in the wrong direction-from the poor and the middle classes to the rich. There is no rational reason why antidumping laws should exist.

There are a few minor flaws in the book. For example, McGee's novel accounting analysis of the trade deficit, presented in chapter 2, is not well grounded in economic theory: it attempts to quantify and interpersonally aggregate the gains from trade and conceives these gains as depen dent on the gross profit rates of the participating firms, which are arbitrarily assumed to be equal. Without this unrealistic assumption, similar hy pothetical arithmetic examples could easily be constructed that purport to prove that "trade deficits are bad" for the United States. Overall, however, this book is well worth a read by anyone, including the professionaleconomist, seriously interested in understanding and possi bly contributing to the intensifying debate over what constitutes an economically optimal-and ethical-trade policy for the United States. D Dr. Salerno is Professor of Economics at the Lubin School ofBusiness, Pace University, New York City.

BOOKS 799 Discovering a Good Society Through Evolution and Design by Martti Vihanto Turku School of Economics and Business Administration, Turku, Finland. 1994 • 262 pages. $47.00 paperback Reviewed by Kyle S. Swan M artti Vihanto'sDiscovering a Good Society Through Evolution and Design, is an in teresting and new approach to Austrian welfare economics and social philosophy. Vihanto' s treatment consists of first, an extended essay explainingthe main tenets of Austrian economics and their historical development. He reviews the Austrians. on methodology, how theorists in the Austrian school have historically ap proached economics, and introduces the con cepts of human ignorance and entrepreneurial discovery. The six remaining previously published essays elaborate on the various elements introduced in the first by bringinginto the picture contributions from different disciplines. For example, Vihanto borrows from public choice theory for his cri tique of contemporary welfare economists who develop fancy social welfare functions to justify the unlimited government action they recom mend. These economists' models assume benev olence in government officials when James Buchanan, among others, has demonstrated that people in government are self-interested like everybody else and tend to misuse public power for personal gain. Abandoning the assumption of benevolence paints a more realistic picture of political phenomena and strengthens Vihanto' s criticism of the use of unrestrained government action to enhance welfare.

Discovering a Good Society's strongest area is the discussion of the spontaneous order. The pursuit of one's own interests results in an unplanned harmony of interest;. As spelled out by the Physiocrats of eighteenth-century France and echoed by Classical economists such as Adam Smith, the spontaneous order always re ferred to a state of affairs where individuals utilized given information to coordinate their ends, clearly a static concept. The subtle refine ments made by Austrian economists Ludwig von Mises and F. A. Hayek implied a spontaneous ordering and evolution of the market highlighting the inevitable possibility that competitive forces would push individuals to discover as yet unfore800 THE FREEMAN • DECEMBER 1995 seen possibilities with unknown results. Such are the workings of a truly spontaneous order. Vihanto broadens this analysis to apply to social theory in general. He explains that delib erate search for unforeseeable discoveries is impossible. The best social, political, and legal institutions for the maintenance of society must be discovered. Says Vihanto, in a liberal order "we should create favorable conditions for such discoveries rather than be content with .the in stitutions we currently happen to know."

These institutions affect all members of society and thus must in the minds of all members be agreeable not to just a few privileged members of society, a majority of elected officials,or a bureau of planners. Unanimity is a necessity. Austrian economists have shown that you can only know individual subjective preferences through a per son's actions. As Mises said, preferences cannot even be said to exist outside individual acts of choice. By rational reconstruction of their ac tions we interpret their goals, desires, prefer ences, etc. Vihanto argues that there are only two ways for individuals to reveal their preferences for or against institutions. First, by popular referendum. However, the unanimity criterion makes this option unlikely. Second, by moving to or remaining in a society where the institution exists. Vihanto calls this group competition and argues that good institutions willbe discovered as an unintended consequence of this process.

Moreover, as individuals move from societies with· "bad" institutions to those with "good" ones, these latter societies willhave survived the natural selection process and potentially prosper. The process may also lead societies with "bad" institutions to adopt the institutions that have proved successful for more prosperous societies. Vihanto's discussion is really teaching us the importance and benefits of decentralization, by echoing the classical liberal stance on toleration and experiments in living. His seems an excellent argument for states' rights advocates or even secessionist movements. The impetus for change lies in these decentralized units. The United States potentially has 50 different models to discover the best ways of doing things. Further investigation into the implications of Vihanto' s study may yet bear fruit. D Mr. Swan is a member of FEE's staff and a graduate student at New York University.

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