September

THEFREEMAN IDEAS ON LIBERTY FEATURES 540 544 548 552 557 561 564 567 571 575 577 587 589 594 Center 555 569 585 592 538 599 Taking Money Back by Murray N Rothbard Who shall control the vital money-supply function? Free Market Economists: 400 Years Ago by Llewellyn H Rockwell, Jr. Discovering the real founders of economic science. The Ethics of War: Hiroshima and Nagasaki After 50 Years by Gregory P Pavlik Examini~g the moral legitimacy of the use of nuclear weapons. The Attack on Grassroots Liberty by William J. Watkins, Jr. The expanding role of the federal judiciary. The Crusade for PoliticallyCorrect Consumption by Thomas J. DiLorenzo Neo-puritanism run amok. Legislation and Law in a Free Society by N Stephan Kinsella What sort of legal system is appropriate for developing a proper body of law? Mergers and Acquisitions: Why "Greed is Good" by Peter G. Klein The truth about takeovers, LBOs, and other corporate reorganizations.

The Minimum Wage's Dirty Little Secret by David N Laband The least-skilled and lowest-paid workers will lose the most if an increase is passed. It's Time to Privatize Unemployment Insurance by David Honigman and George Leef Freedom of choice and individual contract would benefit individual workers. Strike Out? Blame Fast Food by Francois Melese Grocers face competition from a new source. Is There a Right to Work? by Gary North Only if it means the right to make an offer to consumers. Freedom: An Endangered Species by Robert Greenslade Forsaking our heritage of protecting individual rights. What Free Trade Really Means by Jeffrey Herbener Enacting a policy of unrestrained trade at home and abroad. H.L. Mencken, America's Wittiest Defender of Liberty by Jim Powell A portrait of Henry Louis Mencken, born 115 years ago this month. COLUMNS NOTES from FEE-A $5 Trillion National Debt by Hans R Sennholz IDEAS and CONSEQUENCES-Just Say No to Farm Subsidies by Lawrence W Reed A MATTER of PRINCIPLE-Persuasion or Popularity? by Robert James Bidinotto POTOMAC PRINCIPLES-Budget Debate, Washington-Style by Doug Bandow ECONOMICS on TRIAL-Freedom for Everyone ... Except the Immigrant by Mark Skousen DEPARTMENTS Perspective-WilliamH. Peterson,LeonardE. Read Book Reviews -Criminal Justice? The Legal System vs. Individual Responsibility edited by Robert James Bidinotto, reviewed by Joseph Sobran; A Second Mencken Chrestomathy, Selected, Revised and Annotated by HL. Mencken edited by Terry Teachout, reviewed by Sheldon Richman; The Politics ofEnvy: Statism as Theology by Doug Bandow, reviewed by Jeffrey Tucker; The Elgar Companion to Austrian Economics edited by Peter 1. Boettke, reviewed by Bettina Bien Greaves; Speaking Freely edited by Henry Mark Holzer, reviewed by John Hospers; Life After Television: The Coming Transformation of Media and American Life by George Gilder, reviewed by Raymond 1. Keating; The State is Rolling Back: Essays in Persuasion by Arthur Seldon, reviewed by Charles H. Hamilton; A Moral Basis for Liberty by Reverend RobertA. Sirico, esp, reviewed by John Attarian.

THEmEEMAN 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: Llewellyn H. Rockwell, Jr. Editor Emeritus Paul L. Poirot Lewisburg, Pennsylvania Book Review Editor Robert Batemarco Marymount College, Tarrytown, New York Assistant Editor Gregory P. Pavlik Columnists Doug Bandow Cato Institute, Washington, D.C. Robert James Bidinotto Lawrence W. Reed Mackinac Center for Public Policy Midland, Michigan Mark Skousen Rollins College, Winter Park, Florida Contributing Editors 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 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 Adjunct Scholar, HeritageFoundation, 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 isgranted to reprint any article in this issue, except "Is There aRight to Work?" and "H. L. Mencken," 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$30.00 or more receive a subscription to TheFreeman. Student subscriptions are $10.00 for the nine-month academic year; $5.00 per semester. Additional copies of single issues of The Freeman are $3.00. For foreign delivery, a donation of $45.00 a year is suggested to cover mailing costs.

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, MI 48106. PERSPECTIVE The Other Washington There are two Washingtons. One is in gleaming white, a magnificent sight for the tourist flying into National Airport and catching glimpses of the Capitol Building, White House, Supreme Court Building, Jef ferson Memorial, Washington Monument, and so on. The other Washington is one the tourist rarely gets to see. This Washington epitomizes the Welfare State. To be sure, there's still a seamy side to the glistening Washington, the Shining City on the Hill, even though high officials get duly glorified in Washington's statuary. There they stand: Noble figures in parks, circles, squares, and government buildings in the mode of Greek and Roman temples. Over sized heroic gods in bronze or stone presidents, speakers, senators in friezes or on pedestals with eyes peering and fore finger raised.

My favorite statue is in white granite, in Mussolini modern. It stands before the Fed eral Trade Commission Building on Penn sylvania Avenue. The statue is a powerful 12-foot-tall horse representing "Trade" be ing held back by an equally powerful 10 foot-tall man representing "Government," probably a bureaucrat. The sculptor knew his onions. To my knowledge, though, there is no statue of a Washington officialpocketing an unmarked envelope but there are many of those who have legally collected loot in the form of votes or political action committee (PAC) campaign funds for privileging some body or some group with tax, regulatory, spending, or welfare goodies. Loot-seeking and-bestowingfar outpaces tourism as Wash ington's leading industry-an industry peo pled mostly by thousands of lawyers who lobby for their clients across America. Yet it is the Welfare State that dominates Washington, that also comes in two forms.

The first is the traditional one for the poor. It involves public housing, Aid to Families with Dependent Children, food stamps, Medicaid, and so forth. The second form is estimated by Washington economist Her538 bert Stein to be five times bigger, and it includes Social Security, Medicare, and low-cost loans to college students-welfare then for the nonpoor including the rich. Welfare for the rich-truth indeed stranger than fiction. Tax something and you get less of it, subsidize something and you get more of it. D.C., with the highest per capita property and individual income taxes in the land, causes residents and businesses to flee mainly to nearby Maryland and Virginia and lower income, property, and sales taxes. D.C. 's 1991 per capita tax burden comes to $4,037; New York City's, in contrast, $2,190. So taxes plus high crime and poor schools have driven 200,000 mostly middle-class people out of D.C., cutting the population by 25 percent (from 800,000 to under 600,000), shrinking the tax base accord ingly. Currently, the $3.4 billion D.C. bud get is short by $722 million for a 42,000 workforce in a maze of bureaucracies and programs that is not only broke, but broken.

But then D.C., with Uncle Sam's big helping hand, richly subsidizes welfare for some 200,000, with 130,000 on Medicaid alone. Thus the welfare cornucopia's bitter fruit: In convicts per capita, murder rate, low SAT math scores, one-parent families, infant mortality, low-birth-weight ba bies-in other words, in depressing cate gory after depressing category-Washing ton, the capital of the United States, if not of the world, leads America. At one point, then-D. C. Mayor Sharon Pratt Kelly pleaded with President Clinton to call out the National Guard to patrol Washington's crime-torn streets. Ideas have consequences. The Welfare State is an idea whose time has long fled but whose misery goes on. Its authors, the distinguishedmembersofCongress,sitatop PERSPECTIVE Capitol Hill whose shadow falls across D.C.'s social dissolution-the other Wash ington, America's Welfare State in micro cosm. A state of utter failure.

-WILLIAM H. PETERSON Dr. Peterson, a contributing editor of The Freeman, is the Distinguished Lundy Professor of Business Philosophy Emeritus at Campbell University in North Carolina. For further information on the statistics cited, see D.C. by the Numbers: A State of Failure by Thomas N. Edmonds and Ray mond J. Keating. The Blessings of Liberty A free market is out of the question except among a people who prize liberty and know the imperatives of liberty. Liberty is not a one-man term but, like the free market, finds its complete realization in universal prac tice: every man on earth is born with as much right to his life, his livelihood, his liberty as I. No one can rationally prize liberty for himself without wishing liberty for others. To realize liberty, to tear ourselves loose from political rigging, to unshackle creative energy, to achieve freedom in transactions, does not, as many contend, require that the individual wait until all others take these steps in unison with him. Implicit in such a council of delay is the taking of no steps by anyone, and this is fatal to liberty. An individual can stand for liberty all by him self; a nation can practice liberty to its own glory and strength though all other states be slave. The blessings of liberty are conferred on all who live by her credo; and basic to liberty is the unrigged market.

-LEONARD E. READ 1898-1983 Anything That's Peaceful, 1964 Cover illustration: Men counting gold and treasures, woodcut by lost Amman (1539-1591) of Nuremberg. Courtesy, Dover Publications. 539 THEFREEMAN IDEASON LIBERTY Taking Money Back by Murray N. Rothbard M oney is a crucial command post of any economy, and therefore of any society. Society rests upon a network of voluntary exchanges, also known as the "free-market economy"; these exchanges imply a division of labor in society, in which producers of eggs, nails, horses, lumber, and immaterial services such as teaching, medical care, and concerts, exchange their goods for the goods of others. At each step of the way, every participant in exchange benefits immeasurably, for if everyone were forced to be self-sufficient, those few who managed to survive would be reduced to a pitiful standard of living. Direct exchange of goods and services, also known as "barter," is hopelessly un productive beyond the most primitive level, and indeed every "primitive" tribe soon found its way to the discovery of the tre mendous benefits of arriving , on the market, at one particularly marketable commodity, one in general demand, to use as a "medi um" of "indirect exchange." If a particular commodity is in widespread use as a meMurray N. Rothbard (1926-1995) was the S.l.