October

by Donald J. Boudreaux IDEAS and CONSEQUENCES-Where Are the Omelets? by Lawrence W. Reed POTOMAC PRINCIPLES-Health Care: Over the Canadian Cliff? by Doug Bandow PERIPATETICS-The Love of Economics by Sheldon Richman ECONOMIC NOTIONS-Comparative Advantage by Dwight R. Lee ECONOMICS on TRIAL-Chicago Gun Show by Mark Skousen THE PURSUIT of HAPPINESS-Conflicting Visions by Walter E. Williams 4 43 10 14 19 27 31 , 17 25 29 , 41 51 63 , 8 2 6 50 53 Perspective-Ever Striving by Sheldon Richman Legalized Theft Is Good for the Poor? It Just Ain't So! by Thomas J. DiLorenzo Capital Letters Book Reviews The Great Philanthropists and the Problem of "Donor Intent" by Martin Morse Wooster, reviewed by George C. Leef; The Crisis of Global Capitalism by George Soros, reviewed by Brink Lindsey; Nixon's Economy: Booms, Busts, Dollars, and Votes by Allen 1. Matusow, reviewed by David L. Littmann; To Serve and Protect: Privatization and Community in Criminal Justice by Bruce Benson, reviewed by Morgan O. Reynolds; Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed by James C. Scott, reviewed by Aaron Steelman; Silencing Science by Steven Milloy and Michael Gough, reviewed by Kenneth Silber; Staring into Chaos: Explorations in the Decline of Western Civilization by B. G. Brander, reviewed by Gleaves Whitney.

Ever Striving It is not "mere theory" to say that entrepre neurs, lured by the prospect of pure profit, constantly strive to make our lives better. It happens somewhere every moment of the day, usually out of sight. It is so ubiquitous we take it for granted. One of the most fascinating lectures I ever heard was about how the Coca-Cola Company works assiduously to make cans and bottles with fewer materials and less energy. A few decades ago, only an arrogant he-man could crush a can against his head. Today, a 90 pound weakling can do it. As a result of Coca Cola's efforts, we have lighter containers and more resources for other things that enhance our lives. (Why environmentalists think busi ness has an interest in using more resources than necessary continues to mystify me. Are businessmen "greedy" or not?) Now comes news that Hewlett-Packard is developing computer parts the size of-hold on-molecules. According to researchers, we could someday have computers 100 bil lion (that's not a typo) times faster than the best personal computers available today. (Pre diction: We'll still be impatient.) Not only that, these computers will be cheap. John Markoff of the New York Times writes that the researchers "envision a world in which super computing power is so pervasive and inexpen sive that it literally becomes an integral part of every man-made object."

Markoff explains that today's computer technology is limited by the wavelength of light, which is used to create integrated cir cuits on silicon chips. But the research team "has found a way to build circuits using chem ical processes rather than light, making the switches as small as a molecule," Markoff writes. "As a result, the researchers believe that they can make components for future computers several orders of magnitude tinier than today's smallest transistors." The smaller integrated circuits will work much faster and use less electricity. The mar ginal cost of production will approach zero. Researchers say such tiny computers will perIdeas On Liberty 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 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, Jf.

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, 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 ofthis 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. 2 mit vast increases in the storage of data. But it gets more exciting than that. Markoff reports that they "could create a new class of 'Fantas tic Voyage' -style machines, like sensors trav eling within a person's bloodstream, issuing alerts if health problems are encountered." Who can predict what other valuable services they will render? Scientific problems remain to be solved, and it will be several years before the tiny computers become consumer products, but we'll be hearing more about this. Watch for the term "moletronics" (molecular electronics). Isn't capitalism wonderful? * * * It seemed liked a good idea. At a small, iso lated private college, students were invited to use any of 20 collectively owned bicycles to get around campus. What could go wrong?

Plenty, write Daniel Alban and E. Frank Stephenson in their story of the relationship between private property and responsibility. The Clinton administration wants to make sure it can unscramble your encrypted e-mail and computer files. That requires controls on security programs that the government can't crack. Claude Morgan has a status report on this latest power grab. The "war on drugs" has eroded property rights and a host of what are called civilliber ties. Now it even jeopardizes freedom of the press. Paul Armentano demonstrates that in the name of keeping young people from using drugs, the federal government is undermining the integrity of the news media. Wilhelm Ropke, an important German classical liberal during the darkest days of the twentieth century, would have been 100 years old this month. Richard Ebeling's apprecia tion of Ropke's life and work brings to our 3 attention one of the intellectual heroes of our time.

At the center of capitalism is the entrepre neur. While big entrepreneurs like Microsoft's Bill Gates and Wendy's Dave Thomas get lots of attention, little ones, like the barber on the comer, are usually taken for granted. Joseph Fulda pays proper tribute. Did the Federal Reserve expand or restrain the supply of money in the fateful 1920s before the stock market crash and Great Depression? In recent months, Richard Tim berlake argued in these pages that the Fed practiced restraint to a fault. In a rebuttal this month, Joseph Salerno argues that the Fed was the engine of inflation that wrecked the American economy and paved the way for the New Deal. Understanding the Fed and the depression requires an understanding of the nature of money. Bettina Bien Greaves offers a primer in the tradition of Ludwig von Mises. In our columns this month Donald Boudreaux discusses government, markets, and the real source of "inefficient lock-in"; Lawrence Reed asks where the omelets are; Doug Bandow documents the Medicare nightmare; Dwight Lee takes up the law of comparative advantage; Mark Skousen aims at gun control; and Walter Williams identi fies a conflict of visions. Thomas DiLorenzo, contemplating the alleged need for the gov ernment to give away other people's money, declares: "It Just Ain't So!"

In the book section, reviewers evaluate works on philanthropic foundations gone astray, George Soros's lament about global capitalism, Nixon's economic record, crimi nal justice, the conduct of states, attempts to impede scientific progress, and the literature of the decline of Western civilization. -SHELDON RICHMAN by Donald J. Boudreaux Who's "Locked In" to What? P oliticians and bureaucrats are prone to overemphasize problems with the world and to propose command-and-control "solu tions." Economists, sad to say, have aided and abetted that mindset with a series of suspect theories of how markets are doomed to per form inadequately. Thankfully, not all economists have played this game. Many of the better ones have done outstanding research showing that free mar kets consistently deliver maximum value. For example, while most economists 50 years ago were convinced that only vigorous antitrust enforcement could keep industries from becoming monopolized, far fewer econ omists today hold such a belief. One reason for this change is that a handful of researchers during the mid-century wisely re examined the theoretical grounds supporting antitrust. (Aaron Director, Milton Friedman's brother-in-law, deserves special recognition for conveying to countless law students a deep understanding of how free markets keep unregulated industries from becoming monopolized.) But another reason is that guided by these better theories-other researchers found persuasive evidence that the market doggedly resists monopolization.