March

by Lawrence W. Reed '23 POTOMAC PRINCIPLES-America's Forgotten War by Doug Bandow 35 PERIPATETICS-Smoke Got in Their Eyes by Sheldon Richman 152 ECONOMIC NOTIONS-Opportunities and Costs by Dwight R. Lee 55 ECONOMICS on TRIAL-Y2K and Entrepreneurial Error by Mark Skousen , 63 THE PURSUIT of HAPPINESS-Illuminating the Unseen by Russell Roberts 2 Perspective-Life Imitates Gilbert by Sheldon Richman 4 Asia Needs Capital Controls? It Just Ain't So! by Lawrence H. White 54 Capital Letters: Vive la Difference? 57 Book Reviews -For Your Own Good: The Anti-Smoking Crusade and the Tyranny of Public Health by Jacob Sullum, reviewed by John Attarian; Star-Spangled Men: America's Ten Worst Presidents by Nathan Miller, reviewed by Gene Healy; Fantasies of Salvation: Democracy, Nationalism, and Myth in Post-Communist Europe by Vladimir Tismaneanu, reviewed by David L. Prychitko; Out of Order by Max Boot, reviewed by George C. Leef; A History of the American People by Paul Johnson, reviewed by Burton Folsom.

PECTIV'E Life Imitates GilbertIdeas 011 Lt[JCr1U THE F\££MAN 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 1. 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 J. Boettke Clarence B. Carson Thomas J. DiLorenzo Burton W. Folsom, Jr. Joseph S. Fulda Bettina Bien Greaves Robert Higgs John Hospers Raymond J. 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 501(c)(3) tax-exempt organization. Copyright © 1999 by The Foundation for Economic Education. Per mission is granted to reprint any article in this issue, except "To Each His Due" and "The Great Bequest," 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.

Cover image of World War I soldierscourtesyof LebanonCounty (Pa.) HistoricalSociety. In jolly old England Queen Elizabeth II has stripped the hereditary peers of their parlia mentary power in the House of Lords. The act constitutes the leveling of the dukes, earls, marquesses, viscounts, and barons, some of whose titles go back to William the Con queror, Duke of Normandy, who subdued England in 1066 and became William I. For devotees of another William-William Schwenck Gilbert (1836-191 I)-this all has a familiar ring. Gilbert, of course, was the liberal spirit and comic librettist who with Arthur Seymour Sullivan composed the great est collaborative effort by Englishmen ever Monty Python, Lennon and McCartney, and Churchill and Bomber Harris included. Mencken called Gilbert "even above Mark Twain, the merrymaker of his generation." Gilbert's arsenal of jibe and joke and quip and crank was reserved almost exclusively for men of rank. As his alter ego, Jack Point, put it in The Yeomen of the Guard: At peer or prince-at prince or peer, I aim my shaft and know no fear!

Gilbert played with the idea of radical change in the House of Lords in his and Sulli van's opera Iolanthe. In synopsis, a band of fairies casts a spell on the Lords for coming between a young shepherd and his betrothed, Phyllis. Magically, Strephon is seated in Parlia ment and "carries every bill he chooses." But the fairies go further. Speaks the Fairy Queen: Peers shall teem in Christendom, And a Duke's exalted station Be attainable by ComPetitive Examination! Gilbert had no more mercy for the Peers than the Fairy Queen did. His Lord Mount ararat explains that an undistinguished group of noblemen had never barred England from greatness in the past. When Wellington thrashed Bonaparte, As every child can tell, 2 The House of Peers, throughout the war, Did nothing in particular, And did it very well: Yet Britain set the world ablaze In good King George's glorious days! Even a lowly sentry knew the score. Private Willis points out that members of Parliament, "if they've a brain and cerebellum, too," leave their brains outside Westminster Hall "and vote just as their leaders tell 'em to." Not that that's a bad thing: But then the prospect of a lot Of dull M.~ 's in close proximity, All thinking for themselves, is what No man can face with equanimity.

All ends well, of course. Each Lord marries a fairy-happily exchanging House of Peers for House of Peris. No moral here, just an observation: Gilbert saw hereditary rank, and government in gen eral, as something to be knocked down a notch. It's good to see the world catching up with him. * * *It cannot be said too many times: Property is the key to liberty, justice, and prosperity. Which is why Tom Bethell's new book, The Noblest Triumph, is such a welcome addition to the literature of freedom. In the excerpt reprinted herein Bethell examines the crucial connection between property and justice. Speaking ofjustice, more than a few people think the gap between what corporate CEOs and workers are paid is a scandal. The gap is real; the injustice is illusory, as Charles Baird demonstrates. Since the atrocious murder of a young homosexual man in Wyoming last year, the push for a national "hate crimes" law has been renewed with vigor. Not so fast, writes Melis sa Suarez, who finds good reasons to be wary about well-meaning legislation aimed at states of mind.

In 1943 the great classical liberal Ludwig von Mises wrote a book about Mexico's eco nomic problems. The manuscript lay forgot3 ten in his papers until our own Bettina Bien Greaves found it in 1997. It was translated into Spanish and published in Mexico. Eduar do Turrent discusses the significance of Mises's work. The cost of government regulation is not merely the money spent but the untold things we must do without because innovation is sti fled. Eric Nolte provides a glimpse of what we would be enjoying were the federal govern ment not regulating aviation. The Western idea of limiting government power-and clearing a large space for indi vidual creativity-is the product of a long, complex, and unplanned historical process. Tom Palmer takes us on the consequential journey from servitude to freedom and back. Everyone knows that Americans save too little. Too few know why. John Hood puts the idea of saving into historical perspective and comes to some provocative conclusions.

Remember the last time the government declared some problem solved and disbanded the agency charged with solving it? Neither do we. Harold Jones, Jr., says it's not our memory that is failing. To win someone over to the freedom phi losophy' it helps to connect with the intu itions he already possesses. James Otteson sets out a game plan for persuading philoso phers that liberty is indivisible. It's not just for philosophers. In columns this month, Lawrence Reed inveighs against "living wage" legislation, Dwight Lee expounds on opportunity costs, Doug Bandow revisits the stupidest war of the twentieth century, Mark Skousen ponders the millennium bug, and Russell Roberts, our newest contributor to "The Pursuit of Happi ness," looks for the unseen. Lawrence White mulls over Jagdish Bhagwati's nod to capital controls, and counters, "It Just Ain't So." Books that come under review this month deal with the war on tobacco, the ten "worst"

presidents, the post-communist world, judi cial corruption, and Paul Johnson's history of America. -SHELDON RICHMAN Asia Needs Capital Controls? It Just Ain't So! C iting the East Asian financial crisis, the well-known trade economist Jagdish Bhagwati has recently given support to retain ing capital controls in developing countries. In essays in Foreign Affairs and more recent ly, the Wall Street Journal ("Yesto Free Trade, Maybe to Capital Controls"), Bhagwati cau tions that the "overwhelmingly powerful" case for free trade does not imply an equally strong case for free capital flows because there is "a unique downside to a policy of free capital flows." The downside is that "capital flows are subject to what the economic histo rian Charles Kindleberger of MIT has called panics, manias, and crashes." Bhagwati contends, against the well-known argument that speculators who bet against fundamentally strong economies will be dis ciplined by losses in the marketplace, that "the unfortunate fact is that speculation can be self-justifying." That is, by abandoning an economy, investors can themselves weaken it.