November

Fist of Steel by Dale R. DeBoer Germany and the "Third Way" by Norman Barry 4 17 28 38 143 52 63 THOUGHTS on FREEDOM-Stop Stopping Price Cutting by Donald J. Boudreaux IDEAS and CONSEQUENCES-States, Economic Freedom, and Wealth Creation by Lawrence W. Reed POTOMAC PRINCIPLES-Emotive Policymaking by Doug Bandow THE THERAPEUTIC STATE-Is Mental Illness a Disease? by Thomas Szasz ECONOMIC NOTIONS-Comparative Advantage Continued by Dwight R. Lee ECONOMICS on TRIAL-A Private-Sector Solution to Poverty by Mark Skousen THE PURSUIT of HAPPINESS-The AFL-CIO: Renaissance or Irrelevance? by Charles W. Baird 2 6 54 Perspective-Who's Who in the School-Voucher Movement by Sheldon Richman Invisible Hand Obsolete? It Just Ain't So! by Roy Cordato Book Reviews Market Education: The Unknown History by Andrew 1. Coulson, reviewed by George C. Leef; China in the New Millennium: Market Reforms and Social Development edited by James A. Dom, reviewed by Steven W. Mosher; The Shadow University: The Betrayal of Liberty on America's Campuses by Alan Charles Kors and Harvey A. Silverglate, reviewed by Daniel Shapiro; Principles for a Free Society: Reconciling Individual Liberty with the Common Good by Richard A. Epstein, reviewed by William H. Peterson; Driving Forces: The Automobile, Its Enemies, and the Politics of Mobility by James Dunn, reviewed by John Semmens; President Grant Reconsidered by Frank 1.

Scaturro, reviewed by Burton Folsom.

Idc(ls 011 Llbcl tu 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 Russell Roberts Mark Skousen Thomas Szasz 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 1. Keating Daniel B. Klein Wendy McElroy Tibor R. Machan Andrew P. Morriss 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 SOl(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 "Material Progress Over the Millennium," 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 portrait of Albert Einstein: CORBIS/BeUmann. 2 Who's Who in the School Voucher Movement Watching the shifting line-ups in the school voucher contest is revealing. The voucher is one of those insidious "reforms" that its advo cates herald as an achievable "step in the right direction." The direction varies depending on who's speaking. For some it's improvement of the government's monopoly schools through competition. For others, it's elimination of the government's role in education. That's one problem with the voucher movement: it's a coalition with incompatible objectives. To date, the coalition has consisted mainly of conservatives, with a significant minority libertarian element. Many other libertarians, however, have warned that the voucher is a Venus flytrap. It looks pretty, but stay away. It was only a matter of time before someone other than conservatives and libertarians became attracted to vouchers. Considering that key constituents of the Democratic Party, inner-city minority residents, poll in favor of vouchers, it was inevitable that leaders of that party would take an interest.

An editorial in the May/June New Demo crat, published by the Democratic Leadership Council and Progressive Policy Institute (the "moderate" Democrats with whom Bill Clin ton has long 1?een associated), embraced vouchers in a new defense of government schools. These New Democrats are "gloomy" that the public response to vouchers and pri vate scholarships has been so enthusiastic. Recent developments "should be a wake-up call to liberal Democrats who have blocked, watered down, or gummed up reforms such as charter schools and other types of public school choice," the editorial states. Sensing that government schooling is in peril, it rec ommends that any voucher bill be amended to force private schools to admit all children and "meet or exceed specified performance stan dards to continue receiving taxpayer funds." Here's the punch line: "Such an amendment would effectively turn voucher-supported pri vate schools into public charter schools." As the editorial correctly points out, "A public school is not defined by who 'owns' it, but rather by two features: universal access and accountability to the public for results." The implicit third feature is tax financing.

The New Democrat anticipates that many voucher champions will object. "Fine," it says. "Let's separate the sheep from the goats on education: let's find out who's really inter ested in improving student achievement and who's interested in simply gutting public edu cation." Education separationists understand that these two goals are not in conflict. The question for voucherians who favor separation of school and state is: who is more likely to shape the voucher legislation that eventually gets enacted? I am not the first to predict it, but I foresee a day when the voucher advocates and vouch er opponents (excepting the libertarians) switch sides. It won't be long. * * * With slightly more than a year to go before the start of the new millennium, it's worth while to contemplate how much wealth human beings have created over the last one. Calvin Beisner takes an inventory. The theory of spontaneous order holds that social cooperation and coordination occur without a central plan and with minimum force. Andrew Morriss has studied a particu larly striking example-involving elementary schoolchildren.

Once upon a time American coins honored liberty not political leaders. The country's founders insisted on it. That all changed. Stephan Gohmann teaches a revealing lesson. The newspapers heralded the finding: Ein stein's brain was different? What does that mean? Steven Yates gives the gray matter some thought. The U.S. Constitution contains terms that strike the modem ear as unfamiliar. The spe cific practices referred to may be passe, but as Wendy McElroy notes, the terms may not be as outmoded as one might think. For classical liberals, welfare is bad, chari ty is good. Really? Daniel Oliver points out 3 that it all depends on what the meaning of "charity" is. The Clinton administration has plans to use the FBI to monitor all traffic on the Internet for our own protection, of course. Prudent policy or another leech on liberty? Aeon Skoble emailed his conclusion. Freud said that sometimes a cigar is just a cigar. The Food and Drug Administration would have you believe that in light of its alleged effect on health, a cigar is actually a pack of cigarettes. Jacob Sullum scrutinizes the latest call for warning labels.

A quarter century ago many people believed the world's supply of fossil fuels would run out. Considering that a gallon of milk (a "renewable resource") costs more than a gallon of gasoline, that prediction seems flawed. It's even more flawed than you think, says Robert Bradley, Jr. Once again Big Steel wants help from Washington. How good is its case that foreign steelmakers are "dumping"? And is that a bad thing? Dale DeBoer has the unalloyed truth. Western Germany, once the post-World War II economic dynamo, today looks like any other European welfare state. Norman Barry identifies the causes of decline. Our columnists offer a smorgasbord of insights: Donald Boudreaux pounces on "predatory pricing." Lawrence Reed exam ines the connection between the size of state governments and economic success. Doug Bandow analyzes post-Columbine gun policy. Dwight Lee continues his discussion of com parative advantage. Thomas Szasz dissects the metaphor of "mental illness." Mark Skousen relates the story of a private bank in the world's poorest country. Charles Baird takes the pulse of the AFL-CIO. And Roy Cordato, meditating on the claim that the "invisible hand" will be irrelevant in the 21st century, protests: "It Just Ain't So!"

Reviewers this month assay books on a free education market, prospects for a civil society in China, political correctness on campus, the principles of a free society, the automobile, and Ulysses S. Grant. -SHELDON RICHMAN e>n. by Donald J. Boudreaux Stop Stopping Price Cutting "There's nothing new under the sun." This aphorism speaks volumes about Uncle Sam's antitrust suit against Microsoft. One of the government's principal accusations in this suit is that Microsoft is a predator-meaning that the attractive deals that Microsoft today offers to consumers cannot be matched by its rivals. When the hapless rivals eventually are bankrupted by Microsoft's pestiferous arti fice, Bill Gates and his lieutenants will use the monopoly power they've acquired to raise prices, restrict output, and slow the pace of innovation. The benefits that consumers get from Microsoft's good deals today will be swamped by the costs that consumers endure tomorrow when Microsoft is a monopolist.