April

THEFREEMAN IDEASON LIBERTY FEATURES 188 192 198 200 203 208 216 220 223 228 Center 195 225 241 186 243 The Entrepreneur on the Heroic Journey by Candace A. Allen and Dwight R. Lee Daunting deeds seen in a new light. The Free Market: Lifting All Boats by Don Mathews The market economy benefits the poor in myriad ways. Stockholders as Stakeholders by Edward W Younkins Issues of management, ownership, and control. Star Trek and Collectivism: The Case of the Borg by Steven Yates A frightening depiction of a "collective brain." The Myth of the "Independent" Fed by Thomas J. DiLorenzo The Fed, like any other governmental institution, has always been manipulated by politicians. What Big Government Is All About by David Boaz An excerpt from Libertarianism: A Primer. Can the Budget Be Cut? by Doug Bandow It's time to put corporate welfare on the chopping block. Government-Mandated Insecurity by Tadd Wilson Privatizing Social Security is the only morally and economically sound reform.

Competition in Education: The Case of Reading by Daniel Hager Let the marketplace determine the best pedagogy. Benjamin Franklin: The Man Who Invented the American Dream by Jim Powell The enterprising Founder who "snatched the lightning from heaven and the scepter from tyrants." COLUMNS NOTES from FEE-Faith in the Fed by Hans F: Sennholz IDEAS and CONSEQUENCES-There's More to Government Than You Think by Lawrence W Reed POTOMAC PRINCIPLES-The Judgment of History by Doug Bandow ECONOMICS on TRIAL-Free Marketers Miss Opportunity at AEA Meetings by Mark Skousen DEPARTMENTS Perspective-Herbert London, Edmund A. Opitz, F. A. Harper Book Reviews •Business as a Calling: Work and the Examined Life by Michael Novak, reviewed by Raymond 1. Keating; The Truth About the National Debt: Five Myths and One Reality by Francis X. Cavanaugh, reviewed by Robert Batemarco; Slouching Towards Gomorrah: Modern Liberalism and American Decline by Robert H. Bork, reviewed by Jessica Schupak; The Last Monopoly: Privatizing the Postal Service for the Information Age, edited by Edward L. Hudgins, reviewed by William H. Peterson; The Industrial Revolution and Free Trade, edited by Burton W Folsom, Jr., reviewed by Gene Smiley.

THEFREEMAN IDEAS ON LIBERTY 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 FEE Home Page: http://www.fee.org President: Hans F. Sennholz Managing Editor: Beth A. Hoffman Guest Editor: Doug Bandow Editor Emeritus Paul L. Poirot Lewisburg, Pennsylvania Book Review Editor George C. Leef Adjunct Professor of Law and Economics, Northwood University Editorial Assistant Mary Ann Murphy Columnists Doug Bandow Cato Institute, Washington, D.C. 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 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 John Hospers University of Southern California Tibor R. Machan Auburn University Ronald Nash Reformed Theological Seminary Edmund A. Opitz Chatham, Massachusetts James L. Payne Sandpoint, Idaho Jim Powell Westport, Connecticut William H. Peterson Adjunct Scholar, HeritageFoundation, Washington, D.C.

Jane S. Shaw PERC, Bozeman, Montana Richard H. Timberlake 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, educational champion of private property, the free market, and limited government. FEE is classified as a 26 USC 501(c)(3) tax-exempt organization. Copyright © 1997 by The Foundation for Economic Education. Permission is granted to reprint any article in this issue, except "What Big Government Is All About" and "Benjamin Franklin," provided credit is given and two copies of the reprinted material are sent to FEE. The costs of Foundation projects and services are met through dona tions, 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 this issue of The Freeman are $3.00 each. 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 1972 to date. The Freeman is available in microform from University Microfilms, 300 N. Zeeb Rd., Ann Arbor, MI 48106. PERSPECTIVE What Money Can't Buy Education is very much in the policy air, and virtually everyone says that we must spend more to improve our schools. In fact, the way politicians seek to prove that they are in favor of education is by promising to increase outlays for government schools and education programs. A little perspective is in order. From the end of World War II until 1965 per student expenditures (adjusted for inflation) doubled. In the next two decades, 1965-1985, real per student outlays doubled again, and from 1985 to 1995 per pupil expenditures increased by 20 percent. In short, over the last half century the price of education nearly quintupled. By any standard, that's a big jump. It is an especially remarkable increase considering the dramatic decline in the price of technologies deployed as educational aids.

If outlays determined educational quality, we would expect students today to be five times smarter than students in 1945, or at least a little bit better informed than students of a generation ago. However, the results of SAT and other tests demonstrate an almost inverse correlation with spending. For example, when median SAT scores reached their apogee in 1963, per pupil expenditures were about $2,400. Today expenditures are well over $6,000per student, but median SAT scores have fallen about 150 points. Factors like the expansion in the number of students taking the test account for part of the decline, but the results are still dismal. In short, it is time to debunk the claim, once and for all, that achievement and ex penditures are correlated. If they were, Iowa, which spends less on education than almost any state in the union, should not routinely score first or second in the nation on the SAT.

Expensive specialized government pro grams have no greater effect. A 1995 Depart ment of Education report concluded that the gap between "disadvantaged students and others" had not closed despite the expendi ture of $100 billion on Title I programs since 1965. In fact, there is scarcely an initiative one can cite, including Head Start, that demon186 strates spending more money leads inexorably to greater achievement. This reality is starting to sink in. Gary Burtless, in his study "The Effect of School Resources on Student Achievement," pub lished by the liberal Brookings Institution, concludes that "on balance, the case for additional school resources is far from over whelming.... Increased spending on school inputs without any change in the current arrangements for managing schools offers little promise of improving either student performance or adult earnings." Thus, reformers genuinely concerned about student performance should look first to the more basic issue as to who runs the PERSPECTIVE schools. Unfortunately, many supposed re formers are not serious. Rather, soi-disant reformers, such as the National Education Association, have a stake in maintaining the status quo and ensuring an infusion of addi tional money.

The primary hope for the future lies with parents coming to the conclusion that a bigger tax bite does not result in smarter children. When parents refuse to spend more money for poorer performance, genuine reform may finally be possible. -HERBERT LONDON Dr. London is John M. Olin Professor of Humanities at New York University,New York. FortyYears Ago in The Freeman . .. Edmund A. Opitz: "There is little in our culture-even in our religion-which serves to bring our minds to bear upon the great human themes .... Our minds are preoccu pied more with the means of getting a living than with the ends for which life should be lived. Our lives are so fragmentary and full of distractions that we seldom get around to those things for which, in our more thoughtful moments, we feel a need. Yet even the least of us occasionally entertains angels unawares by acts of kindness, by doing more than our duty, by striving for justice, by spreading beauty, and by speaking the truth. Our lives are shot through with eternity, and we live in the midst of things of permanent value which serve to remind us what we really are and to what we are called."

F. A. Harper: "[Government] is constantly insolvent, obligating itself to spend something it does not yet have. It has no earned revenues from prior services rendered and sold in the market at a net gain, as you do when you go shopping with money you earned at yester day's work. The government, instead, must obtain by force of taxation the revenue with which to pay its bills.... "Tax assessments to pay almost all the costs of government are imposed by force. Payment is obligatory on everyone, whether he wants the 'service' or not-whether he uses it or not. He must accept it from the government source at a dictated price, even though he may know a better and cheaper way of obtaining a service he wants." -APRIL 1957 187 THEFREEMAN IDEAS ON LIBERTY The Entrepreneur on the Heroic Journey by Candace A. Allen and Dwight R. Lee 'What do you want to be when you grow up?" was a question that adults reg ularly posed to all of us when we were young.