Federal Government Growht; R. Holcombe

The origins of federal growth are in the Constitutional Convention. But the modern period of growth began with the Progressive Era before World War I. Contrary to popular belief, that growth continued through the 1920s. The percentage by which the federal government grew was greater during Herbert Hoover's four years as president than during the first seven years of the New Deal. Roose velt merely continued a longstanding trend. The. story of the growth of the federal government can be divided into two parts: before and after 1913,when the 16th amend ment to the Constitution, which permitted a federal income tax, was ratified. In 1913 federal spending was a mere 2.5 percent of GNP (today spending is almost ten times that level); so if the federal government is mea sured only by spending, little growth took place before the income tax. Before 1913, however, the federal government grew in other ways,by enlarging its power and changProfessor Holcombe teaches economics at Florida State University.

ing its mandate. When the colonies came together to form the United States, the founders viewed the new government as the defender of its citizens' liberty. That meant protecting their rights-and in those days the most significant threat to the rights of indi viduals was, in nearly everyone's eyes, the government itself. By 1913 the federal gov ernment had been transformed into an orga nization not to protect rights, but, ostensibly, to further the nation's economic wellbeing. The first part of our story, then, is how a government that began in 1776 as a protector of individual rights had by 1913 evolved into one that presumed to guarantee the economic welfare of its citizens. The second part of the story is how the federal government, armed with a powerful new source of revenue, began a continuous expansion that lasted through out the twentieth century. One might be tempted to argue that the income tax was the cause of the federal government's growth, but that answer would be simplistic for two rea sons. First, it focuses on spending alone and ignores the growth of the federal govern ment's legal and regulatory power that began well before 1913.Second, it treats the income tax as something thrust on the nation rather than something chosen by its citizens. Con stitutional amendments must have substantial popular support to gain the approval of two-thirds of both houses of Congress and three-quarters of the state legislatures. Amer icans wanted an income tax because they wanted more government, and they wanted 547 548 THE FREEMAN • SEPTEMBER 1997 more government because they believed it would enhance their economic wellbeing.

World War I was a period of enormous federal expansion, and the New Deal is like wise well known as a period of government growth. Yet the time in between, the 1920s,is often characterized as a time of retrenchment. In fact, the 1920s continued the growth that began in the Progressive era and set the stage for the New Deal. Before getting into details, we need to place the decade in the context of the preceding history of the federal govern ment. Federal Growth from 1776 to 1920 The first major event in the growth of the federal government was the ratification of the Constitution in 1789. Before that, the United States was governed under the Articles of Confederation. The Constitution is fre quently praised as a document that protects the rights of individuals and limits the powers of government. But a comparison of the Constitution with the Articles reveals that just the opposite is true. Under the Constitution the federal government gained more power, was less accountable, and had greater latitude to determine its own scope of action. That is what the Constitution was intended to accom plish.I The Constitution established the Electoral College for the selection of presidents, but specified no method for choosing electors.

Several methods were used, but in most states the legislatures picked them. The framers expected that in most elections no candidate would get a majority of electoral votes. That would permit the House of Representatives to name the president from the five top electoral vote getters. That system never worked as envisioned, and by 1828, with the election of Andrew Jackson, the current system of pop ular voting for electors had become firmly entrenched, and along with it the party sys tem.2 From then on, successful candidates owed their success to the support of their parties, and in return used the political system to reward those who helped them get elected. Undoubtedly the biggest event in the growth of the federal government was the Civil War, which established its supremacy over the states. The Civil War brought much new power to the federal government, and laid the groundwork for the growth of interest groups.3 The first interest group to systemat icallyraid the Treasury for its own benefit was the war veterans. Originally, Union veterans were entitled to pensions onlyif they had been injured in battle; they had up to five years to claim them. In 1870veterans pensions totaled $286 million in 1990 dollars and should have then declined. Instead they rose to $1,548 million by 1890, because the Republicans, who dominated the White House and looked to veterans for political support, increasingly liberalized the pension lawsuntil every Union veteran of the Civil War qualified.4 While veterans were a model for future interest groups, the Treasury at that time had decidedly limited means. At any rate, other groups were more interested in regulatory benefits. The Interstate Commerce Commis sion was created in 1887, and the Sherman Antitrust Act passed in 1890.5 The transfor mation of the U.S. government continued as the turn of the century ushered in the Pro gressive Era. The Food and Drug Adminis tration was created in 1906, the Federal Reserve in 1913, and the Federal Trade Commission in 1914. A government initially committed to protecting the liberty of its citizens now seemed to be just as firmly committed to looking out for their economic welfare.

The Progressive Era was interrupted by World War I, during which federal power advanced in unprecedented ways. The rail roads were nationalized, waterborne shipping was regulated, and the United States Food Administration, created in 1917, controlled all aspects of the food industry, from agricul ture to distribution to sales. Similar regulation was applied to fuels, and eventually to the whole economy.6 When the federal income tax was introduced in 1913, the highest tax bracket was 7 percent for all income above $20,000. Because of the demand for war related spending, by 1918the highest rate rose to 77 percent beginning at $4,000. This was the context in which Warren G. Harding was FEDERAL GOVERNMENT GROWTH BEFORE THE NEW DEAL 549 elected to the presidency in 1920 with the theme, a "return to normalcy." Harding, Coolidge, and Hoover If one looks only at total federal spending, it appears that the Republican administra tions of Harding and Coolidge are a period of retrenchment sandwiched between the big-spending Democratic administrations of Woodrow Wilson and FDR. The Hoover administration does not fit this view even when examined superficially,because the per centage increase in spending during those four years exceeded the growth in the first sevenyears of FDR's NewDeal, before World War II caused spending to skyrocket. Despite the conventional wisdom that big government began with FDR, a closer examination reveals that even the Harding and Coolidge admin istrations were periods of substantial govern ment growth. It was masked, though, by the reduction in war-related spending following World War 1.7 The 1920s,then, were actually a continuation of Progressive Era government expansion, which would last through the New Deal.

Contemporary political-party ideological stereotypes do not fit the pre-New Deal era. At the risk of some oversimplification, they should be reversed. The Republican party, the party of Lincoln, was the advocate of a strong federal government with increasing powers, while the Democratic party, which had most of its power in the South, advocated states' rights and a smaller federal government. Moreover, Harding and Coolidge were not particularly strong presidents, and the Con gress was dominated by Republicans with substantial Progressive leanings. For Harding and, after Harding's death in 1923, Coolidge, a return to normalcy meant a return to the Progressive policies begun before the war. This was even more true of Hoover, who was an engineer by training and a firm believer in applying scientific principles of management to government. During the Wilson adminis tration Hoover was the head of the U.S. Food Administration. He was secretary of com merce throughout the Harding and Coolidge years, before being elected president in 1928.

Federal Spending During the 1920s Aggregate federal spending declined slightly during the 1920s, when measured in inflation-adjusted dollars per person. How ever, that slight decline is really a combination of two different underlying trends. In 1916, federal spending per person was $83.60. (All data are in 1990 dollars.) By 1919 it had risen 16-fold, to $1,329.77.By 1927, federal spend ing had fallen to its low point of the decade, $180.57. The huge decline from 1919 is ac counted for by a reduction in war-related spending, but nonwar spending actually in creased sharply. Note that spending in 1927 was well over double the prewar 1916 level. A more detailed analysis reaches the same conclusion. The 1920s saw huge declines in federal military and transportation spending (because so much transportation was nation alized during World War I). When civilian spending programs are isolated, they show substantial growth. Throughout the 1920s the average annual growth rate of federal spending on commerce, overseen by Secre tary Hoover, was 13 percent. Agricultural spending increased by more than 11 percent a year, and spending on labor interests grew more than 12 percent a year. Federal spend ing on education grew by more than 10 percent per year, as did spending on public improvements and the public domain. Among broad categories, the fastest growth was fed erallaw enforcement, which averaged more than a 17 percent growth rate during the 1920s.Thus, one can see that civilianspending during the 1920sgrew rapidly and that spend ing remained substantially higher than it ever had been before World War I. Measured by spending alone, the 1920s was a decade of major federal government growth.

Prohibition Much of the rapid growth in the federal law-enforcement budget was due to the pro hibition of alcohol, which began in 1920with the passage of the 18th amendment and lasted until repeal by the 21st amendment in 1933. The Department of Justice enforced prohibi550 THE FREEMAN • SEPTEMBER 1997 tion, along with the Customs Service, Coast Guard, and Bureau of Internal Revenue. The bureau participated because, while alcoholic beverages were illegal, nonbeverage alcohol was to be taxed. But even when illegal alcohol was discovered, as far as the Treasury De partment was concerned, the reason it was illegal was that the taxes were not paid. From 1920 to 1930 bureau spending on enforce ment regarding illegal alcohol rose from just over $2 million to more than $12 million, while revenues rose.from just over $1 million to about $5.4 million. In no year during Prohibition did the bureau collect more than it spent on enforcement. Apparently, even the Bureau of Internal Revenue viewed the law on alcohol not as a method of generating revenue but rather of extending federal law enforcement. Prohibition is probably the most visible area in which the federal government attempted to increase its control over the behavior of Americans during the 1920s.

Federal Corporations Early in its history, the United States in corporated the First and Second Banks of the United States. After the charter of the Second Bank expired in 1836,the federal government did not charter another corporation until 1904, when one was formed to construct the Panama Canal. Federally owned corporations proliferated during World War I, beginning with the Merchant Fleet Corporation in 1917. After the war, most of these federal corpo rations continued in business and lost huge sums of money. The War Finance Corpora tion, chartered in 1918 to help strategic in dustries borrow money, had its charter ex tended in 1921 to assist American business in general. The Federal Land Bank, Spruce Production Corporation, and Sugar Equaliza tion Board were other federal corporations begun during the war that lived on. These corporations provided a model for government growth that extended through the 1920s to the present day. In 1923, 12 federally owned banks were created by the Federal Agricultural Credits Act. In 1924 the Inland Waterways Corporation was estab lished to operate vessels on the Mississippi River, and in 1929 the Federal Farm Board was established to finance agricultural price supports. Creation of those corporations was integral to the growth of the federal govern ment during the 1920s,but their purpose was also significant. In each case they were estab lished to help further the economic wellbeing of a particular group of Americans, reinforc ing the federal government's transition from a guardian of liberty to an organization de signed to oversee the national economy.

Agriculture The 1920swere a difficultdecade for Amer ican agriculture, largely because the world market for farm products was increasingly competitive. As a result, the decade is some times viewed as having favored business over agriculture. But in fact, the federal govern ment began a number of initiatives to further the economic interests of farmers. In 1921 Congress passed tariffs on farm imports, and in 1922 the Capper-Volstead Act exempted agricultural cooperatives from antitrust laws. The Agricultural Credits Act of 1923 made it easier for farmers to get credit from the Federal Farm Loan Board. In 1926 the De partment of Agriculture established a Divi sion of Cooperative Marketing. The Agricul tural Marketing Act of 1929created the Federal Farm Board and, as noted, began federal price supports for agricultural products. Adjusting for inflation, federal spending on agriculture expanded from $17 million (1930 dollars) in 1920 to $49 million by 1930.

Whether evaluated in terms of budgets or number of federal programs, the increased support for agriculture in the 1920s was substantial. The charge that the federal gov ernment slighted agricultural interests is in correct. Antitrust An examination of federal spending gives some indication of the growth of government, but regulation, though harder to measure, also had a big impact. Beginning with the Sherman Act in 1890,the federal government tried to limit the economic power of business FEDERAL GOVERNMENT GROWTH BEFORE THE NEW DEAL 551 through antitrust laws. Before 1905 only 22 cases were brought under the Sherman Act. But antitrust enforcement picked up later in the decade, with 39 cases brought from 1905 to 1909. From 1910 to 1919, 134 cases were brought, indicating more vigorous enforce ment. In the 1920s, the number declined slightly to 125 cases. That decline is deceiving, however, because after the increased enforcement in the prior decade, businesses acted more cautiously.

The scope of antitrust enforcement was broadened in the 1920s, and cases were brought against firms in unconcentrated in dustries for conduct that was not obviously in violation of the antitrust laws as previously enforced. Antitrust enforcement is another area in which the federal government in creased its power-yet another reason to question the conventional wisdom that it was excessivelyprobusiness in the 1920s. Academic Influences John Maynard Keynes, in a famous passage in his 1936 General Theory of Employment, Interest, and Money, remarked, "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly under stood. Indeed, the world is ruled bylittle else." Intellectuals also pushed the federal govern ment to broaden its scope in the 1920s. The ideas of Karl Marx were gaining credibility and moving governments into economic mat ters. Perhaps just as significant, although with less ideological content, were the concepts of scientific management that were gaining credibility throughout the United States. Civil Service reform had been initiated late in the 1800s to create a more professional federal work force, and there was increasing interest in applying the principles of scientificbusiness management to government.

In 1920 the National Bureau of Economic Research was established in cooperation with government, private foundations, and aca demic institutions to better measure eco nomic performance statistically so that gov ernment could apply those principles to the economy. Secretary Hoover was a strong supporter of that effort. Indeed, many of the tenets of Keynesian economics that gained prominence during the 1930s were already part of the conventional wisdom of American economists in the 1920s.8 The alliance of academic institutions, private foundations, and government in the 1920swas yet another aspect of the growth of the federal govern ment during the decade. Conclusion The New Deal is often seen as the pivotal event in the growth of America's twentieth century Leviathan. But the federal govern ment has grown since its inception. The most important event in the history of federal government growth was undoubtedly the Civil War. Then, supported by the popular demand for more government involvement in the economy, the ideological foundation of the massive growth in federal spending was laid during the Progressive Era at the beginning of the twentieth century. The federal income tax made that growth in spending possible.

That the federal government grew during FDR's presidency is undeniable. But Wilson and Lincoln had already set precedents for increases in government power in wartime. Thus, the main factors underlying the growth in government were firmlyin place wellbefore the New Deal. D 1. See Randall G. Holcombe, "Constitutions as Constraints: A Case Study of Three American Constitutions," Constitutional Political Economy, vol. 2, no. 2 (Fall 1991): 303-328. 2. See Forrest McDonald, The American Presidency (Law rence, Kan.: University Press of Kansas, 1994), for a thorough history of the evolution of the office. 3. For an excellent history of the Civil War following this theme, see Jeffrey Rogers Hummel, Emancipating Slaves, En slaving Free Men: A History of the American Civil War (Chicago: Open Court Press, 1996). 4. A good reference on the subject is Theda Skocpol, Pro tecting Soldiers and Mothers: The Political Origins of Social Policy in the United States (Cambridge, Mass.: Belknap, 1992).

5. In Terry L. Anderson and Peter J. Hill, The Birth of a Transfer Society (Stanford, Cal.: Hoover Institution Press, 1980), the origin of big government is the Supreme Court's Munn v. Illinois case, which allowed the state regulation of grain elevator rates. 6. An excellent study of the growth of the federal government during the twentieth century, including the effects of World War I, is Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth ofAmerican Government (New York: Oxford University Press, 1987). 7. A more detailed exposition of this material appears in Randall G. Holcombe, "The Growth of the Federal Government in the 1920s,"Cato Journal, vol. 16, no. 2 (Fall 1996),pp. 175-199. 8. See J. Ronnie Davis, The New Economics and the Old Economists (Ames, Iowa: Iowa State University Press, 1971).

Announcinga New Printingof RELIGION AND CAPITALISM: ALLIES, NOT ENEMIES by Edmund A. Opitz, with a foreword by Robert A. Sirico* "...a majorrefutationof the Christian-Socialist,social-gospel view that has becomeso dominant in Western religious thought....[Tlhe Opitz book, with its unusual combinationof economicknowledgeand vigoroustheism,is a majorbreak throughin the scholarshipoffreedom." -M. Stanton Evans, National Review This book deals with the problem of the proper ordering of our economic affairs within the framework supplied by Christian values. It was originally published in 1970 as a Conservative Book Club selection and merited reviews in The ChicagoTribune, ChristianityToday, ChristianEconomics,The Congregationalist,The PresbyterianJournal, ChristianScholar'sReview,JournalofChurchand State,and NationalReview. Edmund Opitz is an ordained Congregational minister, the founder and coordinator of The Remnant (a fellowship of conservative and libertarian ministers), a founder and secretary of The Nockian Society, and a contributing editor of The Freeman. He served as a member of the staff of FEE from 1955 until his retirement in 1992.

In reprinting Religion and Capitalism, FEE honors the notable accomplishments of Edmund Opitz, and preserves an intellectual legacy for a future generation of Christian scholars. *Father Robert Sirico is founder and president of the Acton Institute for the Study of Religion and Liberty in Grand Rapids, Michigan. Published by The Foundation for Economic Education, Inc. Irvington-on-Hudson, NY 10533 ISBN 1-57246-070-9 • 328 pages • paperback $19.95 To order,call (800) 452-3518 orfax (914) 591-8910 The Foundation for Economic Education Irvington-on-Hudson, New York 10533 Tel. (914) 591-7230 Fax (914) 591-8910 E-mail: freeman@westnet.com September 1997 The Nanny State I 've never smoked. I even dislike being near lit cigarettes. (Cigar and pipe smoke don't bother me.) Moreover, I'm sure that smoking is addictive and unhealthy. Nevertheless, the ballyhooed "tobacco settlement" announced in June leaves a taste in my mouth far more foul than would be left by choking my way through an entire carton of unfiltered cigarettes.

The foulest feature of government's long-running harassment of the tobacco industry is the elitist presumption that tens of millions of Americans are too dimwitted to be trusted with their own fates. This presumption follows from the belief that "Big Tobacco" profits by selling goods to people who really don't want to buy what they buy. Tobacco companies are portrayed as enjoying boundless powers to warp the judgment of all but the most perspicacious souls. Smokers smoke only because each encountered once too often the Marlboro man's rugged visage or a billboard show ing Joe Camel's imminent success at scor ing with the jazz-club's most fetchin' camel-babe. These brushes with Madison Avenue sorcery cripple people's self preservation faculties. Government (the argument concludes) must intervene on smokers' behalf to punish "Big Tobacco," for no earthly force except the state has the fortitude or wisdom to rescue citizens from the spell of such a mighty demon.

In short, popular sentiment against tobac co companies holds that Americans cannot make sensible choices for themselves. But on what evidence does this dogma rest? Merely showing that cigarette smok ing is both addictive and increases smok ers' chances of contracting fatal illnesses does not prove that smoking is irrational. Smoking has costs, to be sure, just as almost all of life's activities have costs. But smoking also benefits smokers. Nonsmok ers' failure to appreciate these benefits no more proves that smoking is without bene fits than does a bachelor's failure to appre ciate the benefits of marriage prove that marriage is without benefits. Of course, antismoking zealots craven ly deny their puritanical busy-bodiness. Instead, antismoking snobs issue all man ner of ad hoc excuses in attempts to manu facture popular support for their fanatical crusade. In addition to the tired refrain that tobacco advertising hypnotizes vast numbers of otherwise sane folk, the anti smoking lobby regularly shrieks that" chil dren must be protected!" or that "second hand smoke kills, too!" or that "smokers' health-care expenses are a cost to us all!"

Let's examine each of these excuses for expanding government power. "Childrenmust be protected!"Well, obvi ously. But families, not governments, are the proper source of protection from most of life's pitfalls. Government's job in a free society is to police against violence and theft rather than to be an antidote for each of life's innumerable imperfections. It's up to families to instill those values that help children avoid life's perils. Out side its legitimate domain of policing against violence, government is stagger ingly klutzy. Entrusting it with the all important but delicate task of molding children's character makes no more sense than entrusting a barroom bouncer to per form laser surgery on your eyes. Not only will government fare worse than parents at keeping children clear of life's tempting dangers, it will simultane ously fail to treat adults as adults. Forget that banning cigarette advertising in the name of protecting children necessarily also bans such advertising for adults. More omi nous is the threat that adults' -including parents' -actions will be ever more closely controlled by government on the grounds that adults influence children. With billions of dollars poured hysterically into anti smoking campaigns "to protect kids," is it plausible that government will not deal heavy-handedly with parents and other adults whose actions diverge from the offi cial message issued from Washington?

Government is either a nanny for none or a nanny for all. "Secondhandsmokekills!" Scientific data undermine this assertion. But let's sup pose that secondhand smoke does increase nonsmokers' risks of serious illness. Would government regulation then be jus tified? No. Owners of private buildings have strong incentives to make appropri ate tradeoffs. If enough smokers wanted "smoking" restaurants, owners would supply them. Nonsmokers would be free to avoid such restaurants. Likewise, if enough nonsmokers wanted smoke-free restaurants (as they surely would if secondhand smoke truly were hazardous) owners would supply them. In fact, a world spared one-size-fits-all government regulation would feature a wide variety of options for both smokers and non smokers. Different nonsmokers-each with different tolerances for the risks and unpleasantness of secondhand smoke would each choose what amounts of secondhand smoke to encounter. The case for regulation built upon secondhand smoke's alleged health risks is feeble-fee ble, that is, unless one resorts to the pater nalistic canard that nonsmokers, like smokers, are too witless to do what's good for them.

"Smokers'health-careexpensesare a cost to us all!" This increasingly popUlar anti smoking battle cry is correct only insofar as health care is collectivized. Without government-subsidized and regulated health care, smokers' medical expenses would not be unloaded on nonsmokers and taxpayers. To the extent that non smokers' health-care costs (or taxes used to fund government-subsidized health care) are higher because smokers smoke, the best solution is to de-collectivize health care funding. Another problem with justifying harass ment of tobacco companies on grounds that smoking increases nonsmokers' expenses is that it proves far too much. Consider a good Samaritan who saves the life of a stranger severely injured in an auto wreck. Without the Samaritan's help, the stranger would have died. But because of the Samaritan's intervention, the stranger lives (say) another three years-years spent, however, undergoing expensive government-subsidized medical treat ments. The Samaritan caused taxpayers' health-care costs to rise. Should govern ment then sue the Samaritan for increasing taxpayers' health-care costs? Of course not.

The alleged principle allowing government (in the name of taxpayers) to sue tobacco companies because smoking increases tax payers' burdens is not itself sufficient grounds for penalizing tobacco companies. But as with the secondhand-smoke argument, facts deny that smoking increas es taxpayers' costs of subsidizing collec tivized health care. Precisely because smokers are more likely to die earlier than nonsmokers-and because medical expenses are highest for the very old smoking may actually reducethe amounts that taxpayers pay to fund collectivized medicine. I have my own proposed tobacco settle ment. Let's recognize that smoking is vol untary. Let smokers enjoy their cigarettes, and let tobacco companies be regulated only by the market by putting an end to government's odious molestation of smok ers and tobacco companies. Donald J. Boudreaux President LABOR DAY BOOK SALE Free with each order:Hans Sennholz's pamphlet NMan Must Work"

E. Calvin Beisner PROSPERITY AND POVERTY A compassionate discussion of the visible differences in income and wealth. Clarence B. Carson THE FLIGHT FROM REALITY An excellent analysis of our intellectual flight from economic and political reality. Abraham Ellis THE SOCIAL SECURITY FRAUD The author brilliantly dissects the inherent problems surrounding America's Social Security system. Burton W. Folsom, Jr., editor THE INDUSTRIAL REVOLUTION AND FREE TRADE This anthology discusses the changing social and economic thought that gave birth to the Industrial Revolution and the tremendous improvements in working and living conditions that followed. Freeman Classics AMERICAN UNIONISM: FALLACIES AND FOLLIES The intellectual origins and economic implications of the union ideology. FREE TO TRY The entrepreneur is celebrated as the moving force of economic activity and progress. UP FROM POVERTY Powerful essays reflecting on the ills of public assistance, which must be paid for by that chronically Forgotten Man, the taxpayer.

F. A. Harper WHY WAGES RISE An incisive discussion of the economic principles that determine wage rates. Hans F. Sennholz THE POLITICS OF UNEMPLOYMENT ((hardcover) A brilliant examination of various programs and policies leading to unemployment. Gustavo R. Velasco LABOR LEGISLATION FROM AN ECONOMIC POINT OF VIEW (hardcover) A refutation of spurious arguments about labor legislation and unionization. Regular $14.95 15.95 14.95 14.95 14.95 14.95 14.95 8.95 24.95 6.95 Sale $12.95 11.95 10.95 10.95 10.95 10.95 10.95 6.95 19.95 4.95 Sale ends September 30, 1997. All titles are paperback unless otherwise noted. Postageand handling:Please add $3 per order of $25 or less; $4 per order of $26-$50; $5 per order of more than $50. Send your order, with accompanying check or money order, to: FEE, 30 South Br-eadway, Irvington-on-Hudson, NY 10533. Visa and MasterCard telephone and fax orders ($10 minimum) are welcomed: (800) 452-3518; fax (914) 591-8910.

IS POLITICS INSOLUBLE? NEW FROM FEE! EDITED BY FELIX R. LIVINGSTON HENRY IlAzLITT Is Politics Insoluble? by Henry Hazlitt Edited by Felix R. Livingston During the ninth decade of a long and productive life, Henry Hazlitt (1894-1993) made plans to write a treatise on political science. In 1978 he prepared a provisional outline for a book that would have the title Is Politics Insoluble? Hazlitt planned to include chapters on legislation, government growth, centralization of power, and alternative forms of government. Other chapters would touch on ideas of prominent politi cal thinkers, including Plato, Aristotle, John Locke, America's Founders, James and John Stuart Mill, Herbert Spencer, T. H. Huxley, Wilhelm von Humboldt, Henry Maine, and Robert Nozick. In a 1984 letter confirming the donation of his personal library to The Foundation for Economic Education, Hazlitt wrote: "one particular book that I am still planning ... is already half written: Is PoliticsInsolu ble? The title chapter was published in Modern Age, and about four or five additional chapters in The Freeman.I hope to do up to perhaps a half dozen more to make a complete book." Unfortunately, Hazlitt never fin ished the project and eight of the outline's fourteen chapters remained unwritten at the time of his death.

Now, The Foundation for Economic Education is proud to make the six essays-along with four other Hazlitt pieces-available in one col lection. Edited, and with an introduction by Felix R. Livingston, Hazlitt's essays remind us that just as there were two Greeces in history, constitutional Athens and despotic Sparta, so are there two Americas. The first is bound by the rule of law and upholds the private property order and its attendant obligation to self-reliance and self-discipline. In this America, "every man, whoever he is, can act best and live happily." But there is also a second America. Its laws go far beyond those that are "just, definite and minimal," and its judges twist precedent to transform judicial decision into judicial legislation. In the second America, oppor tunities to "act best" are narrowed and hopes to "live happily" are dashed. This anthology will help readers understand how the first America can be realized and how dangers inherent in the second Amer ica can be diminished.

Felix R. Livingston, vice president of The Foundation for Economic Education from 1994 to 1997, is dean of institutional research at Washington and Jefferson College in Pennsylvania. Published by The Foundation for Economic Education, Inc. 30 South Broadway, Irvington-on-Hudson, NY 10533 ISBN 1-57246-067-9 • 152 pages • paperback $14.95 Visa and MasterCard orders: 1-800-452-3518 Potomac Principles Military Follies and Memorial Day Memories by Doug Handow W ashington, D.C., is ever the city of contradictions. Eloquent speeches about freedom by legislators voting to limit liberty. Emotional promises to aid the needy from policymakers whose actions cause pov erty and destroy families. Heartfelt tributes to military veterans from politicians who treat soldiers as gambit pawns in a global chess game. The latter becomes particularly stark on Memorial Day, always the most poignant of holidays. It is a celebration, but of a peculiar kind: remembering the enormous sacrifice by millions of Americans who have served, and all too often died, in war. And such sacrifices may not be over.