March

140 145 149 155 160 163 167 171 174 177 181 185 Center 152 165 190 138 192 THEFREEMAN IDEAS ON LIBERTY FEATURES Risks in the Modern World: What Prospects for Rationality? by Fred L. Smith, Jr. Aaron Wildavsky's legacy: insight into why Americans handle risk as they do. Chemicals and Witches: Standards of Evidence in Regulation by Robert H. Nelson What seventeenth-century witchhunts have in common with modern panics over chemicals. Controlling Risk: Regulation or Rights? by Richard L. Stroup Dealing with risk through the political process leads to ineffective and unjust programs. EcoKids: New Automatons on the Block by Jo Kwong Environmental "education" is destroying the joys of childhood. The Role of Rights by Roger E. Meiners Reducing risk through statutes erodes protection through private property rights. The War on Radon: Few Join Up by Kent Jeffreys The Environmental Protection Agency fails to create a panic over radon.

Making the Polluter Pay by Jonathan H. Adler Why the polluter rarely pays. Why Governments Can't Handle Risk by Randy T. Simmons Five reasons why governments are ill-suited to anticipating harm. Human Health and Costly Risk Reduction by Bruce Yandle Federal regulations waste resources, reduce incomes, and endanger health. Assessing the Risk Assessors by Daniel K. Benjamin Experts should be instruments rather than arbiters in the assessment of risk. Owning the Unownable by Paul Georgia The debate over environmental stewardship echoes the calculation debate over socialism. Adam Smith-"I had almost forgot that I was the author of the inquiry concerning The Wealth of Nations" by Jim Powell An unlikely revolutionary,Adam Smith changed forever the way people think about government. COLUMNS NOTES from FEE-MinimumWages by Hans F. Sennholz Few economic laws, if any, are more malicious than minimum wage laws.

IDEAS and CONSEQUENCES-Recycling Myths by Lawrence W Reed Too often, recycling is promoted as an end in itself. A MATTER of PRINCIPLE~ultural Pollution by Robert James Bidinotto The welfare state plays havoc with the moral character of our society. ECONOMICS on TRIAL-Friedman Challenges Hayek by Mark Skousen The debate continues. DEPARTMENTS Perspective Book Reviews • Doug Bandow reviews Eco-Sanity: A Common-Sense Guide to Environmentalism by Joseph L.Bast, Peter J. Hill, Richard C. Rue· No Turning Back: Dismantling The Fantasies of Environmental Thinking by Wallace Kaufman, reviewed by Lance Lamberton •The Spirit of Freedom: Essays in American History edited by Burton W. Folsom, Jr., reviewed by Wesley Allen Riddle •Public Goods and Private Communities: The Market Provision of Social Services by Fred Foldvary, reviewed by Roy E. Cordato •Systems 'of Survival: A Dialogue on the Moral Foundations of Commerce and Politics by Jane Jacobs, reviewed by Peter J. Boettke.

THEFREEMAN IDEASON LIBERTY Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 Phone (914) 591-7230 FAX (914) 591-8910 President: Hans F. Sennholz Managing Editor: Beth A. Hoffman Guest Editor: Jane S. Shaw EditorEmeritus Paul L. Poirot Lewisburg, Pennsylvania Book ReviewEditor Robert Batemarco Marymount College, Tarrytown, New York AssistantEditor Gregory P. Pavlik Columnists Robert James Bidinotto Staff Writer, Reader's Digest Lawrence W. Reed Mackinac Center for Public Policy Midland, Michigan Mark Skousen Rollins College, Winter Park, Florida ContributingEditors Charles W. Baird California State University, Hayward Doug Bandow Cato Institute, Washington, D.C. E. Calvin Beisner Covenant College, Chattanooga, Tennessee Peter J. Boettke New York University Donald J. Boudreaux Clemson University Clarence B. Carson American Textbook Committee Wadley, Alabama John Chamberlain Cheshire, Connecticut Thomas J. DiLorenzo Loyola College, Baltimore, Maryland Joseph S. Fulda New York, New York Roger W. Garrison Auburn University Bettina Bien Greaves Resident Scholar, FEE Robert Higgs The Independent Institute, Oakland, California John Hospers University of Southern California Tibor R. Machan Auburn University Ronald Nash Reformed Theological Seminary Maitland, Florida Edmund A. Opitz Chatham, Massachusetts James L. Payne Sandpoint, Idaho William H. Peterson Washington, D.C.

Jane S. Shaw PERC, Bozeman, Montana Richard H. Timberlake University of Georgia Lawrence H. White University of Georgia 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, educa tional champion of private property, the free market, and limited government. FEE is classified as a 26 USC 501(c)(3) tax-exempt organization. Copyright © 1995 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 Foundation. The costs of Foundation projects and services are met through donations, which are invited in any amount. Donors of $30.00or more receive a subscription to The Freeman. Student subscriptions are $10.00 for the nine-month academic year; $5.00 per semester. Additional copies of singleissues of The Freeman are $2.00. For foreign delivery, a donation of $40.00a year is suggested to cover mailingcosts.

Bound volumes of The Freeman are available from The Foundation for calendar years 1972to date. The Freeman is available in microform from University Microfilms, 300 N. Zeeb Rd., Ann Arbor, MI48I06. PERSPECTIVE Risk, Rights, and Regulation In her book about medieval Europe, A Distant Mirror, Barbara Tuchman describes a world so dangerous that one or two chil dren died as infants for every three that were born. Death was so likely, she says, that parents invested little emotion in their chil dren during the first five or six years; chil dren were "left to survive or die without great concern." In contrast, Americans live in a world that is extremely safe. The vast majority survive to a healthy adulthood; a child born today can expect to live 75 years. Today, death is tragic in part because it is so rare. Yet the actions of Americans imply the opposite. Americans have allowed their government to intervene with the goal of protecting them against risks. The govern ment now bans many chemicals, controls emissions of small quantities of chemicals from industrial plants, clamps down on pesticide residues on vegetables, and slows down the introduction of potentially valu able new drugs-all in the name of greater safety.

Most of the risks being addressed are small. These policies may actually be in creasing our risk by reducing our self reliance and frittering away resources that we need if we are to deal with our problems individually. Reliance on the government in this area erodes freedom just as it does in every other area. Fortunately, a number of people who share a concern for liberty have been trying to figure out how to reverse direction and stop turning every fear or danger over to the government. A number of those thinkers are represented in this issue of The Freeman. The purpose of this issue is to help us understand why we have turned over so much risk coping to the government, what harm it has caused, and what, over the long term, we can do about it. Technically, this issue is about' 'risk pol icy" and' 'risk assessment," as wellas more generally about environmental problems. But I hope to show that "risk" is more than 138 a technical matter, and I hope that these articles will point the way toward steps we can take to deal with risks while enhancing freedom.

This issue also includes an essay about the life and work of the great economist Adam Smith. While this short biography does not deal overtly with risk to human life or to the environment, as most of the other articles do, Adam Smith was not silent on the sub ject. He well understood one of the recur ring themes of this issue: When hazards occur, governments usually make them worse, not better. Consider the following quotation (found on p. 493 of the Modern Library edition of The Wealth of Nations): "Whoever ex amines, with attention, the history of the dearths and famines which have afflicted any part of Europe ... will find, I believe, that a dearth never has arisen from any combination among the inland dealers in corn, nor from any other cause but a real scarcity, occasioned sometimes, perhaps, and in some particular places, by the waste of war, but in by far the greatest number of cases, by the fault of the seasons; and that a famine has never arisen from any other cause but the violence of government, at tempting by improper means, to remedy the inconveniencies of a dearth."

-JANE S. SHAW (Jane S. Shaw, Senior Associate of PERC, a research center in Bozeman, Montana, is this month's guest editor.) . Free Market Environmentalism Free market environmentalism is based on two premises, the first of which is that free markets provide the higher incomes that in turn increase the demand for envi ronmental quality. Few would deny that the demand for environmental quality has in creased dramatically in the past 25 years, PERSPECTIVE and there is growing consensus that the cause of that increased demand is rising incomes. New studies show that the rela tionship between per capita income and environmental quality follows a "J-curve" pattern. At very low levels of income, en vironmental quality may be high because no effluent is produced. As incomes rise above some minimum, pollutants increase and the environment deteriorates. But then at per capita incomes of approximately $5,000per year, environmental quality begins to be come a luxury good. Above that income level, estimates by Don Coursey of Wash ington University in St. Louis show that for every 10 percent increase in income there is a 30 to 50 percent increase in the demand for environmental quality. We may all be environmentalists now, but the cause is not a born-again experience at Walden Pond; it is increasing wealth generated by free mar kets that has given us the wherewithal to afford environmental luxuries.

The second bulwark of free market envi ronmentalism is that market for environ mental amenities provide incentives for in dividuals to treat the environment as an asset rather than a liability. . . . Coercive environmentalists claim to know where we ought to go and use the powers of govern ment to get us there . For them there is never enough wilderness, species should not go extinct, and pollution should not exist. That asserted, why not use command and con trol? Free market environmentalists make no claims that they know what ought to be done. That will be determined by human action revealed in voluntary transactions where prices provide incentives for willing buyers and sellers to cooperate to achieve their mutual ends. -TERRY L. ANDERSON and DONALD R. LEAL "Letters," Regulation, No.2, 1994 139 THEFREEMAN IDEASON LIBERTY Risks in the Modem World: What Prospects for Rationality? by Fred L. Smith, Jr.