February

Kenzer, reviewed by Richard M. Gamble; The Costs of War: America's Pyrrhic Victories by John V. Denson, reviewed by Doug Bandow; Enviro-Capitalists: Doing Good While Doing Well, by Terry A. Anderson and Donald R. Leal, reviewed by Bruce Yandle; Higher Superstition: The Academic Left and Its Quarrels with Science by Paul R. Gross and Norman Levitt, reviewed by Thomas F. Bertonneau and Richard L. Cutler; Between Power and Liberty: Economics and the Law, edited by Richard M. Ebeling, reviewed by Philip R. Murray.

MonsterIdeas 011 Ub('/ (11 THE F'EEMAN Published by The Foundation for Economic Education Irvington-on-Hudson, NY 10533 Phone (914) 591-7230 FAX (914) 591-8910 E-mail: freeman@fee.org FEE Home Page: http://www.fee.org President: Donald J. Boudreaux Editor: Sheldon Richman Managing Editor: Beth A. Hoffman Editor Emeritus Paul L. Poirot Book Review Editor George C. Leef Editorial Assistant Mary Ann Murphy Columnists Charles W. Baird Doug Bandow Dwight R. Lee Lawrence W. Reed Mark Skousen Walter Williams Contributing Editors Peter 1. Boettke Clarence B. Carson Thomas J. DiLorenzo Burton W. Folsom, Jr. Joseph S. Fulda Bettina Bien Greaves Robert Higgs John Hospers Raymond 1. Keating Daniel B. Klein Wendy McElroy Tibor R. Machan Ronald Nash Edmund A. Opitz James L. Payne William H. Peterson Jane S. Shaw Richard H. Timberlake Lawrence H. White The Freeman is the monthly publication of The Foundation for Eco nomic 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 50l(c)(3) tax-exempt organization. Copyright © 1999 by The Foundation for Economic Education. Per mission is granted to reprint any article in this issue, 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 $30.00 or more receive a subscription to The Freeman. For foreign delivery, a donation of $45.00 a year is suggested to cover mailing costs. Student subscrip tions 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. 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. Rule No. 1 for slaying the Hydra: slay it.

Don't just cut off one-or even a few-of its heads. That's not good enough: the head might grow back. Kill it dead. How many times do we need to be taught that lesson before we learn it? During the presidency of Ronald Reagan the Department of Justice ended the long, unjust, and wasteful antitrust case against IBM. Moreover, antitrust prosecutions dropped significantly. This happened because Reagan's team included an antitrust staff heavily influenced by Chicago-school critics of antitrust theory and practice. Having sipped from the cups ofYale Brozen and then Robert Bork (whose Antitrust Paradox made a deep impression), the staff understood that the history of antitrust prosecution was most ly a history of government's going to bat to save weak competitorsfrom consumer-pleasing companies. It was about protectionism, not monopoly. But the Justice Department people did not object to antitrust in principle. So while they abstained from interfering with mergers and other activity that previously would have sum moned the government's wrath, they did not seek repeal of the government's authority to prosecute companies for peaceful activity.The Hydra was sedated, not slain. When the Clin ton team replaced the Reagan team, the Hydra awoke. Ask Bill Gates.

Agriculture is another example of reform ing the Hydra. A couple of years ago congres sional Republicans boasted that they had put the appalling system of farm subsidies on a seven-year track to oblivion. They sappily called their bill the Freedom to Farm Act. But in the last session, with farmers' incomes off and the election bearing down, the GOP-run Congress did a one-eighty. Farm subsidies were nearly doubled. The head grew back. In the 1970s the rock group Steppenwolf performed an intelligent song about America and its government called "Monster." The chorus was, "There's a monster on the loose. It has our heads in a noose." Regardless of 2 good intentions, most members of Congress who pay homage to the free market don't understand that you can't phase out a monster over seven years. If you try, you deserve to get bitten. But the rest of us don't. * * * Most people seem to believe that if the gov ernment were not regulating safety in air trav el, airplanes would routinely fall out of the sky. Eric Nolte, a commercial airline pilot, shows that this belief betrays a woeful failure to understand how a free economy works.

What to do with a piece of property should be a fairly straightforward matter. But when the property is a decommissioned govern ment-operated military airport, the simple becomes the hopelessly complicated, as Tibor Machan demonstrates. The European Union. The new euro curren cy. What is going on in Europe? Norman Barry compares the ominous process of Euro centralization with the American constitution al experience. Pope John Paul II's trip to Cuba last year was remarkable in many ways. One of them had to do with what the Pope said about fam ily and education in Castro's paradise. David Boaz says America's education establishment should have been listening. President Clinton says "save Social Securi ty first." But should it be saved at all? The intrinsically flawed pay-as-you-go transfer program is given a thorough going-over by Harry Dolan. Trust in government is at an all-time low.

Those who lament this state of affairs chide the people for their wariness. But Dwight Lee and Jeff Clark argue that government is only getting what it deserves. The 1998 winner of the Nobel Prize in eco nomics is an Indian-born economist who favors government intervention to improve 3 the lot of the people. Baron Mitra contends that India has had enough of that already. Ludwig von Mises is reputed to have said that government is the only institution that can take a useful commodity like paper, slap some ink on it, and make it worthless. But that paper is imposed on us with the magic words "legal tender." D. Alexander Moseley wonders if it is time to banish those words. The Big Corporation is the bogeyman of every socialist and lesser interventionist. But not to worry, writes Max More, because the market process and technology favor decen tralization and competition. Beware cost-benefit analyses for government programs. As Karen Selick points out, they stand on a foundation of quicksand: namely, the erroneous principle that one person's costs can be compared to another's benefits.

The University of Wisconsin was once a bastion of free speech. Then Donna Shalala, the future secretary of health and human ser vices, took over. Jon Sanders says it's been downhill ever since. He was a nineteenth-century American individualist who battled for free speech and the right of women to be as free as men. At age 75 he was sentenced to a year at hard labor for his trouble. Wendy McElroy chroni cles the life of Moses Harman. Our intrepid columnists, Lawrence Reed, Doug Bandow, Dwight Lee, Mark Skousen, and Charles Baird, take on government air ports, the folly of alliances, business honesty, Amartya Sen, and the International Labor Organization. George Selgin looks at the case for a worldwide central bank and implores, "It Just Ain't So!" Book reviews this month scrutinize urban education, taxation, early black entrepreneurs, the costs of war, enviro-capitalism, anti science, and economics and the law.

-SHELDON RICHMAN We Need a Global Fed? It Just Ain't Sol S ome economic pundits see every instance of economic disorder as proof of the defects of capitalism and of the need for more extensive government regulation of the econ omy. It never seems to cross their minds that government regulations might even destabi lize markets. A recent example of such think ing comes from Jeffrey E. Garten, dean of Yale's School of Management, who in the September 23, 1998, New York Times, urged creation of a global central bank to stabilize the world economy. Garten begins with a summary of U.S. financial history that would make any eco nomic historian blush. From the Civil War to the 1930s, Garten writes, the American econ omy "was an uncontrollable Darwinian process" marked by frequent booms and busts and "countless bank failures." Then, to every right-thinking citizen's vast relief, the federal government stepped in, creating the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and "most important, the Federal Reserve." The "harsh, invisible hand ofAdam Smith" was thus mod erated, and the business cycle brought under control.