February

Taking Taxes: The Case for Invalidating the Welfare State by Donald J. Kochan An appeal to constitutional principle. Does Big Mean Bad? The Economic Power of Corporations by Don Mathews Answering a common criticism of capitalism. Virtual Liberty by Matthew R. Estabrook How liberty and technology reinforce each other. No, Fred, There Is No Free Enterprise-At Least Not Here by Mark Ahlseen State government versus the entrepreneur. Cultivating Dissent: Wetlands Regulators Down on the Farm by David J. Porter A Pennsylvania farmer battles bureaucrats to save his family's livelihood. Is Social Security Pro-Family? by Daniel Lin Encouraging fulfillment of private obligations is the only way to fortify the family. Increasing Access to Pharmaceuticals by Doug Bandow Choice and competition are the keys to finding solutions for our healthcare problems. Freedom, Militias, and the Violence Inherent in the System by K. L. Billingsley Focusing on root causes.

War and Liberty in American History by Wesley Allen Riddle Why war is always inimical to the Republic. Victor Hugo-Liberty and Justice for All by Jim Powell The inspiring life of the author of Les Miserables. COLUMNS NOTES from FEE-Machiavellian Politics by Hans R Sennholz IDEAS and CONSEQUENCES-The Perversion of Economic Development by Lawrence W Reed POTOMAC PRINCIPLES-Nonessential Government by Doug Bandow A MATTER of PRINCIPLE- •••Paved with Good Intentions by Robert James Bidinotto ECONOMICS on TRIAL-Another Shocking Reversal in Macroeconomics by Mark Skousen DEPARTMENTS Perspective-Tibor R. Machan Book Reviews -The Freedom Revolution by Dick Armey, reviewed by William H. Peterson; Bioethies-Opportunities, Risks, and Ethics: The Privatization of Cancer Research by Robert K. Oldham, reviewed by Jeffrey A. Singer; Japan: Who Governs? The Rise ofthe Development State by Chalmers Johnson, reviewed by Russell Shannon; Guns, Crime, and Freedom by Wayne LaPierre, reviewed by Bowen H. Greenwood; Risk by John Adams, reviewed by John Semmens; From Here to Economy: A Shortcut to Economic Literacy by Todd G. Buchholz, reviewed by Raymond J. Keating; Private Rights and Public Illusions by Tibor Machan, reviewed by Doug Den Uyl; Land Rights: The 1990s Property Rights Rebellion by Bruce Yandle, reviewed by Jonathan H. Adler.

THEFREEMAN IDEASON UBERTY Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 Phone (914) 591-7230 FAX (914) 591-8910 E-mail: freeman@westnet.com President: Hans F. Sennholz Managing Editor: Beth A. Hoffman Guest Editor: Doug Bandow EditorEmeritus Paul L. Poirot Lewisburg, Pennsylvania Book ReviewEditor Robert Batemarco Marymount College, Tarrytown, New York AssociateEditor Gregory P. Pavlik AssistantEditor William J. Watkins, Jr. EditorialAssistant Mary Ann Murphy 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 ContributingEditors Charles W. Baird California State University, Hayward Doug Bandow Cato Institute, Washington. D.C. Peter J. Boettke New York University Clarence B. Carson American Textbook Committee Wadley, Alabama Thomas J. DiLorenzo Loyola College, Baltimore, Maryland Joseph S. Fulda New York, New York Bettina Bien Greaves Resident Scholar, FEE Robert Higgs The Independent Institute, Oakland, California John Hospers University of Southern California Tibor R. Machan Auburn University Edmund A. Opitz Chatham, Massachusetts James L. Payne Sandpoint, Idaho William H. Peterson Adjunct Scholar, Heritage Foundation, 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 nonpolitical, 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 © 1996 by The Foundation for Economic Education. Permission is granted to reprint any article in this issue, except "Victor Hugo," 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 subscriptionto 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 $45.00a 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, MI48106. PERSPECTIVE Once Again, Freedom Is at Fault ,'The condition upon which God hath given liberty to man is eternal vigilance," was how John Philpot Curran put it. Sure enough, but there are different kinds of vigilance. My experience suggests that one of the most important forms in a relatively free society such as ours is to unfailingly meet arguments promoting the violation of human freedom. I thought of this when I came across the book by Cornell University economist Rob ert H. Frank and Duke University political scientist Philip J. Cook, The Winner-Take All Society (The Free Press, 1995). The authors argue that in many fieldsof work we sometimes encounter what they see as a disturbing phenomenon: a few superstars taking all the money, leaving everyone else to fight for the leftovers. As they put it, "The incomes of the top 1percent more than doubled in real terms between 1979 and 1989, a period during which the median income was roughly stable and -in which the bottom 20 percent of earners saw their incomes actually fall by 10 percent." Be cause of this Frank and Cook recommend you guessed it-a drastic expansion of the system of progressive taxation.

If Michael Jordan, Tom Brokaw, John Grisham, John Silber, Cindy Crawford, Larry King, Sandra Bullock, Rush Lim baugh, George Will, Barbara Cartright, Anne Rice, Michael Jackson, and Arnold Schwarzenegger take home so much of the available money in their respective profes sions, we must take action. We must take the money from them. This will discourage super-stardom and allow us to redistribute their ill-gottengain to others-whom we did not elect, by our choices in the free market, to support when spending our money. Pol iticians and bureaucrats would be autho rized, if these authors had their way, to correct our errors, to eliminate this egre gious "market failure." Why are unequal incomes regarded as a market failure? Because the top achievers 66 aren't really more deserving than those bunched below them. Surely Rush Lim baugh's radio rap isn't so much better than that of the typical local talk show host.

Michael Jordan plays superbly, but not well enough to justify all the endorsement con tracts he receives. Michael Jackson ... well, you get the idea, don't you? I confess that this resonates with me a bit. I am a small-time writer: my 12 books haven't brought in enough to pay for the paper on which they are printed, my col umns earn me a pittance compared to what George Will collects, and so on and on. I am envious, at times, of all those who live in the big cities and get exposure on the Sunday morning news programs. Even in my field of philosophy, there are stars whose popular ity-manifest in their repeated appearance on the pages of not only the most prominent and prestigious scholarly journals but also of national magazines and Sunday book review supplements-is way out of proportion to their talent and achievement. They are where they are in large measure from bad habit, luck, or knowing the right people with their superior achievements probably accounting for a fraction of the rewards they reap, not just in money earned but in influ ence they peddle.

But so what? How dare anyone suggest that this is something that others ought to redress through coercive government inter vention? It is an outrage. I don't know if the scholars who propose this are simply morally obtuse or actually envious of the fame and fortune of a few others in their field-perhaps Nobel Prize winners Gary Becker or Milton Friedman in economics, for example. Their motivation doesn't make any difference. What is clear is that they are proposing yet another phony excuse to increase the power of the State over the lives of citizens in a supposedly free society. PERSPECTIVE It is perhaps worth noting that the com plaint voiced by Frank and Cook applies to an era of American economic history that is hardly characterized by a national economic policy of laissez faire. Quite the contrary our national economic system has become ever more managed by government. Regu lation, taxation, nationalization of land, control of wages and labor relations, wel fare, and the rest have continually ex panded, both at the state and national levels.

At most there has been some decrease in the rate of the growth of government interfer ence. Even the current Republican Con gress has not managed to reduce govern ment regulation and spending, but only stem proposed increases in some areas. But even if it were true that a bona fide free market had spawned something akin to the winner-take-all society, so what? If I wish to ogle two or three supermodels and thus increase their wealth beyond what their competitors earn, that is my business. My earnings, my time, and my good or ill fortune are for me to distribute to willing takers, not for the politicians and bureau crats whose power Frank and Cook are so eager to rationalize. Frank and Cook can, of course, do some good by letting us know about the trends of which they write. But their proposed rem edy is wrong and should be rejected by anyone concerned for the future of our society. Liberty does require eternal vigi lance, especially when confronting sophists who would arm the statists with greater power over us.

-TIBOR R. MACHAN Dr. Machan is Professor of Philosophy at Au burn University, Alabama. His book, Private Rights and Public Illusions, sponsored by the Independent Institute of Oakland, California, was recently published by Transaction Books. 67 THEFREEMAN IDEASON LIBERTY How High a Price for Civilization? by Stephen Gold I n the battle over tax reform, skirmishes over the current level of taxation are inevitable. As in the past, supporters of big government will almost certainly complain that taxpayer advocates only focus on one side of the fiscal equation, that is, the revenue side. What about the return on our money? As Justice Oliver Wendell Holmes once said, and high tax enthusiasts are wont to repeat, "Taxes are what we pay for civilized society." Of course, when Justice Holmes made this observation in Compafiia de Tabacos v. Collector (1904) the average American's total tax burden was about 7.6 percent of his income. Today, federal corporate income taxes alone account for a higher percentage.