May

Ideas 011 Liberty ~ May 1999 Vol. 49, No.5 A Modern Pyramid by Christopher Mayer "Must I Not Be Believed?" by E. Calvin Beisner Bogus Freedom by James Bovard The Green Scare by Roger E. Meiners Fighting Back by John Landrum Friedrich A. Hayek: A Centenary Appreciation by Richard M. Ebeling The New Money by George C. Leef Gold Policy in the 1930s by Richard H. Timberlake Tensions in Early American Political Thought by Joseph R. Stromberg THOUGHTS on FREEDOM-Hayek Turns 100 by Donald J. Boudreaux IDEAS and CONSEQUENCES-Ending Corporate Welfare as We Know It by Lawrence W Reed POTOMAC PRINCIPLES-Congressional Lost Opportunities by Doug Bandow THE THERAPEUTIC STATE-Gullible Skeptics by Thomas Szasz ECONOMIC NOTIONS-Costs Should Be Revealed, Not Concealed by Dwight R. Lee ECONOMICS on TRIAL-America Is Number 1 Again by Mark Skousen THE PURSUIT of HAPPINESS-Tony Blair and "Fairness at Work" by Charles W Baird 4 12 51 63 21 26 142 I 8 10 14 118 23 28 33 36 44 2 6 53 Perspective-Two Powerful Words by Sheldon Richman Hayek Made No Contribution? It Just Ain't So! by Roger W Garrison Book Reviews America's 30 Years War by Balint Vazsonyi, reviewed by Clarence B. Carson; In Praise of CommercialCultureby TylerCowen,reviewedby Donald1. Boudreaux;CancerScam:Diver sion of Federal Cancer Funds to Politics by James T. Bennett and Thomas J. DiLorenzo, reviewed by John Hood; A Humane Economy by Wilhelm Ropke, reviewed by George C. Leef; All the Essential Half-Truths about Higher Education by George Dennis O'Brien, reviewed by George Roche; Commodity and Propriety: Competing Visions of Property in American Legal Thought, 1776-1970 by Gregory S. Alexander, reviewed by Bradley A. Smith; Against Politics: On Government, Anarchy, and Order by Anthony de Jasay, reviewed by Butler Shaffer.

Last year Israel Kirzner, one of the econo mists I most enjoy, said something during a lecture that was at once simple, true, and deceptively powerful. How powerful I did not appreciate immediately. But in the ensuing months, I have come to see how much was packed into that statement. Professor Kirzner said that the market econ omy can be reduced to two words: private property. At first glance that may seem so obvious as to be uninteresting. At second glance it might summon an objection along these lines: No, private property isn't enough. The market also requires individual liberty, the rule of law, limits on government, respect for contracts, and more. But as I understand the matter (and Profes sor Kirzner), all those things are subsumed by "private property." A society characterized by private property will necessarily have the other features we typically associate with free markets.

Property, for example, is a limitation on government power (one's property of course includes one's person) because it necessarily entails rules governing how people may be treated, whether by other private individuals or state officials. (See Bradley Smith's book review this month.) Property helps to separate the wheat from the chaff in the matter of civil liberties, such as privacy and freedom of speech. Take the issue of falsely shouting "fire" in a crowded theater. This is traditionally used to demon strate that freedom cannot be "absolute." But as Murray Rothbard long ago pointed out, it does nothing of the sort. On the contrary, it affirms property and its extension, contract. If a theatergoer shouts fire, he violates the prop erty rights of the theater owner. If the theater owner does the shouting, he violates his con tract with the patrons. Privacy issues, which modern law and the American Civil Liberties Union have so badly muddled, can only be sorted out when the right to privacy is understood as rooted in pri vate property. For example, contrary to the Two PowerfulWords 2 Idea::, 011 LifJcrly THE F~EEMAN 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, 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 delivery outside the United States: $45.00 to Canada; $55.00 to all other countries. Student sub scriptions 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: Courtesy of the Cato Institute.

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 Russell Roberts Mark Skousen Thomas Szasz Walter Williams Contributing Editors Peter J. Boettke Clarence B. Carson Thomas J. DiLorenzo Burton W. Folsom, Jf. 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 ACLU, it is not a violation of privacy for an employer to refuse to hire smokers, even if they smoke only at home. It is simply a mat ter of freedom of association, which is an extension of private property.

If you're ever asked to stand on one leg and sum up the free society in two words, you now know how to do it. * * * The great pyramids of Egypt fascinate tourists, real and vicarious, by the millions. Yet few, unfortunately, appreciate the tragedy they represent. Christopher Mayer contem plates what might have been and looks at one of our own modern pyramids. President Clinton's impeachment crisis has ended. His legacy is now set. Calvin Beisner fittingly revisits another leader whose prob lem with truth-telling got him into hot water. Many philosophers have offered definitions of freedom. Perhaps the most pernicious has been "freedom from want."James Bovardlooks at the implications of that twisted definition. Much of the steam of the interventionist environmental movement has been provided by certain horror stories that everyone has heard and everyone believes. What if those stories are grossly exaggerated or untrue?

Roger Meiners trains his magnifying glass on the Green Scare. Anyone who puts his mind to it can be a spokesman for the freedom philosophy. A ready platform exists wherever you· are. The Internet is one method, but, as John Landrum explains, the old-fashioned way still affords ample opportunities. EA. Hayek, one of the twentieth century's greatest advocates of the free society, was born 100 years ago this month. Richard Ebel ing surveys the long and fruitful career of the 1974 Nobel prize winner. The U.S. government has gone to a lot of trouble redesigning the money to thwart coun3 terfeiters. George Leef says there's a better way to accomplish the objective. Richard Timberlake continues his series on monetary policy in the fateful 1920s and 1930s. In this installment he looks at the Fed eral Reserve's gold policy after the Great Depression hit. The political philosophy at the root of the American Revolution was a novel mixture pestled in the mortar of a remarkable histori cal moment. Joseph Stromberg leads a tour through the compound.

In the columns department, FEE President Donald Boudreaux celebrates the birthday of his hero, EA. Hayek. Lawrence Reed lam poons corporate welfare. Doug Bandow reminds us that the era of regulatory govern ment is not over. Dwight Lee writes of the need for costs to be revealed. Mark Skousen concedes he was wrong about Japan and Ger many. And Charles Baird looks at the labor policy of the British Bill Clinton. Roger Gar rison reflects on Paul Krugman's belief that Hayek and Austrian business cycle theory are insignificant and protests: It Just Ain't So! We proudly announce that Thomas Szasz will join us six times a year with a new col umn, The Therapeutic State. For about half a century Tom Szasz has been the chief and at times only opponent of the medicalization of morality, particularly through the alliance of Psychiatry and State. His regular contribu tions to The Freeman will cover an area too often neglected by advocates of freedom. The inaugural column skewers the strangely selec tive professional skeptics.

In the book department our reviewers pass along their impressions on such topics as neo socialism, the arts in a market economy, the politicization of nonprofit health organiza tions, a classic on the "humane economy," higher education, property in American legal thought, and political philosophy. -SHELDON RICHMAN by Donald J. Boudreaux Hayek Turns 100 E conomics captivated me from the moment that I first saw on a chalkboard a supply-and-demand graph. That was in Janu ary of 1977. I was then an 18-year-old college freshman at Nicholls State University in Thi bodaux, Louisiana. I immediately took to pes tering my economics professors for sugges tions on what to read in economics. One of my professors, Bill Field, told me about Milton Friedman. I began reading Friedman's Newsweek columns and was immediately struck by his logic and passion. (One of these articles, in particular, really res onated with me; I believe that its title is "Free not Fair," in which Friedman argued that gov ernment attempts to engineer fairness succeed only in restricting our freedoms.) Soon there after I read Milton and Rose Friedman's Cap italism and Freedom. Its power floored me.