Clichés of Socialism

Suggested answers to some of the more prevalent.

Forward

1. "The more complex the society, the more government control we need."

ARGUED a college president at a recent seminar: "Your free market, private property, limited government theories were all right under the simple conditions of a century or more ago, but surely they are unworkable in today's complex economy. The more complex the society, the greater is the need for governmental control; that seems axiomatic."



It is important to expose this oft-heard, plausible, and influential fallacy because it leads directly and logically to socialistic planning. This is how a member of the seminar team answered the college president:



"Let us take the simplest possible situation - just you and I. Next, let us assume that I am as wise as any president of the United States who has held office during your lifetime. With these qualifications in mind, do you honestly think I would be competent to coercively control what you shall invent, discover, or create, what the hours of your labor shall be, what wage you shall receive, what and with whom you shall associate and exchange? Is not my incompetence demonstrably apparent in this simplest of all societies?



"Now, let us shift from the simple situation to a more complex society - to all the people in this room. What would you think of my competence to coercively control their creative actions? Or, let us contemplate a really complex situation - the 177,000,000 people of this nation. If I were to suggest that I should take over the management of their lives and their billions of exchanges, you would think me the victim of hallucinations. Is it not obvious that the more complex an economy, the more certainly will governmental control of productive effort exert a retarding influence? Obviously, the more complex our economy, the more we should rely on the miraculous, self-adapting processes of men acting freely. No mind of man nor any combination of minds can even envision, let alone intelligently control, the countless human energy exchanges in a simple society, to say nothing of a complex one."



It is unlikely that the college president will raise that question again.



While exposing fallacies can be likened to beating out brush fires endlessly, the exercise is nonetheless self-improving as well as useful - in the sense that rear guard actions are useful. Further, one's ability to expose fallacies - a negative tactic - appears to be a necessary preface to influentially accenting the positive. Unless a person can demonstrate competence at exploding socialistic error, he is not likely to gain wide audiences for his views about the wonders wrought by men who are free.



Of all the errors heard about the "bargaining tables," or in classrooms, there is not one that cannot be simply explained away. We only need to put our minds to it. FEE seeks to help those who would expose fallacies and accent the merits of freedom. The more who outdo us in rendering this kind of help, the better.



~ LEONARD E. READ





2. "If we had no social security, many people would go hungry."

THOUGH compulsory social security has been the law of the land for little more than a generation, many citizens of the United States are now convinced that they couldn't get along without it. To express doubts about the propriety of the program is to invite the question: "Would you let them starve?"



Millions of Americans are old enough to remember things that happened prior to passage of the Social Security Act in 1935, but where is one of them who ever watched a human being starve? No, we wouldn't "let them starve," Anyone would have to work hard at it, in secret, to approach starvation in this country! So why is it so widely believed that, without social security benefit payments, many people would go hungry?



The social security idea is based on the questionable premise that a man's usefulness ends at age 65. He is supposed to be without savings and without capacity to continue to earn his living. If that premise were correct, it would be easy to see how hunger might develop among the aged. If they're really good for nothing, who wants to be bothered to look after the old folks!



Lumping people into groups and jumping to conclusions about each group - people over 65 would go hungry without social security - is standard socialistic procedure. A corollary socialistic conclusion is that breadwinners under 65 must be compelled by force of law to respect and care for their elders. These conclusions rest on false assumptions made by those lacking in self-respect that they can have no faith in anyone else as an individual. Their faith is in coercion, and they thus conclude that government holds the only answer to every problem.



To those of little faith, it is necessary to explain again and again and again that government is noncreative and can distribute only what it first taxes away from the productive efforts of individuals. "The people" are - first, last, and always - individuals, some more economically creative than others, but each worthy of respect as a human being. To tax a man's earnings and savings, for other than defensive purposes, is to reduce his capacity and his incentive to care for himself and for others, rendering him part slave to others and thus less than human. Furthermore, he also is enslaved and debased who either volunteers or is forced to look to the taxing power of government for his livelihood.



Slavery has been tried in the United States, unfortunately, and a major reason why it failed is that it was, and is, an unproductive way of life; it lets people go hungry. It also is morally degrading to slave and master alike. Yet, we are being told that without compulsory social security taxes upon the young and strong, the oldsters among us would go hungry - perhaps starve; we are invited to try once again a semi-slave system - under benevolent masters, of course. Well, those socialists are dead wrong. Their premises are faulty. Free human beings may be counted upon to care well for themselves and for their fellow men, voluntarily.



What should concern us all is that, if we persist under the false premises of the social security idea (socialism), many Americans will go hungry - not only physically hungry, but morally and spiritually starved as well.



The prime argument against social security is in the moral realm. Giving to one individual or group the fruits of the labor of others taken from them by coercion is an immoral procedure, with destructive effect upon the sense of personal responsibility of everyone involved. But there are sufficient reasons for rejecting the program, even from a strictly materialistic point of view:

It is not old-age insurance; it is a regressive income tax, the greatest burden of which falls on those earning $4,800 or less annually.



The so-called social security fund of about $20 billion amounts to nothing more than a bookkeeping entry, showing how much money the federal government has borrowed from itself in the name of social security and spent for other purposes.



The fact that an individual has paid social security taxes all his life does not mean that any of that money has been set aside or invested for his account; if he ever receives social security benefits, they must come from taxes collected from others (perhaps even from him) at the time.



The matching amounts, presumably paid by employers on behalf of individual employees, are in effect paid by the employees either through reduced wages or through higher prices for goods and services.



Offering a subsidy to those who retire at age 66 does not provide additional savings for plant and tools and thus create jobs for younger workers; it increases their tax load.



A person now entering the social security program at age 20 is scheduled to pay $1.69 in taxes for every $1.00 promised in benefits. * ~ PAUL L. POIROT



* For a more comprehensive review of these and other arguments against compulsory security, see "The Social Security Program" in The Freeman, November, 1962.





3. "The government should do for the people what the people are unable to do for themselves."

IF it be consistent with right principle to have a formal agency of society of delegated, limited and specified powers - government - it follows that there are principles, if we could but find them, which prescribe the appropriate limitations.



The search for these principles has proved elusive, as history seems to attest. Failure to find them has led some distinguished thinkers - sometimes called philosophical anarchists - to decide against any government at all. It has led others - sometimes called socialists - to resolve in favor of the omnipotent State; let government control everything!



Other thinkers, who refuse to approve either anarchism or socialism, settle for what is more a plausibility than a principle: "The government should do for the people what the people are unable to do for themselves." Thus, unwittingly, some avowed conservatives lend support to the socialists. In practice, this plausibility works as follows:

The people express inability in that they will not voluntarily invest the fruits of their own labor in an enterprise that promises to deliver mail to those who choose to isolate themselves. So, let the government deliver the mail-with Rural Free Delivery.





The people, when organizing railroads, will not voluntarily extend their services to communities with few passengers and little freight. Therefore, have government compel unprofitable operations on the private roads or, as in many other countries, form a government road to perform such "services."





The people will not willingly reclaim land for agriculture at a time when government pays people to withdraw good farm land from production. Therefore, let the government carry out uneconomic irrigation and reclamation projects.





The people will not willingly and with their own funds build huge hydroelectric protects to serve areas that can be served more economically by other forms of generated power. Hence, we have TVA and a growing socialism in the power and light industry.





The most up-to-date example of this "system" of determining governmental scope is in the field of astronautics. People simply will not, on their own, invest billions of dollars for astronautical weather reporting, for photographs of the moon's hind side, or for radio conversations - a century or more hence - with a people who might possibly exist in interstellar space. Ergo, let government do these things the people are "unable" to do for themselves! This formula for governmental action implies that the people lack the resources to perform such services for themselves. But, government has no magic purchasing power - no resources other than those drawn from private purchasing power. What we have here is a rejection of the market, a substitution of pressure group political power for the voluntary choices of the individuals who vote with their own dollars. This criterion for the scope of the state leads away from private enterprise toward the omnipotent State, which is socialism.



The enormity of a project is no excuse for governmental interventionism. When the market votes "yes," capital is attracted, regardless of the amount required, to do the job. Witness our larger corporations, bigger than Hoover Dam or what have you!



Government has no right to use force or coercion for any purpose whatsoever that does not pre-exist as the moral right of each individual from whom the government derives its power and authority. *



~ LEONARD E. READ



* For further information on this point, see The Law by Frederic Bastiat (76 pp.) and my Government: An Ideal Concept (149 pp.), both obtainable from The Foundation for Economic Education, Inc., Irvington-on-Hudson, New York.





4. "The right to strike is conceded, but..."

Rarely challenged is the right to strike. While nearly everyone in the population, including the strikers themselves, will acknowledge the inconvenience and dangers of strikes, few will question the right-to-strike concept. They will, instead, place the blame on the abuses of this assumed right - for instance, on the bungling or ignorance or evil of the men who exercise control of strikes.



The present laws of the United States recognize the right to strike; it is legal to strike. However, as in the case of many other legal actions, it is impossible to find moral sanction for strikes in any creditable ethical or moral code.



This is not to question the moral right of a worker to quit a job or the right of any number of workers to quit in unison. Quitting is not striking, unless force or the threat of force is used to keep others from filling the jobs vacated. The essence of the strike, then, is the resort to coercion to force unwilling exchange or to inhibit willing exchange. No person, nor any combination of persons, has a moral right to force themselves - at their price - on any employer, or to forcibly preclude his hiring others.



Reference need not be confined to moral and ethical codes to support the conclusion that there is no moral right to strike. Nearly anyone's sense of justice will render the same verdict if an employer-employee relationship, devoid of emotional background, be examined:

An individual with an ailment employs a physician to heal him. The physician has a job on agreeable terms. Our sense of justice suggests that either the patient or the physician is morally warranted in quitting this employer-employee relationship at will, provided that there be no violation of contract. Now, assume that the physician (the employee) goes on strike. His ultimatum: "You pay me twice the fee I am now getting or I quit! Moreover, I shall use force to prevent any other physician from attending to your ailment. Meet my demands or do without medical care from now on." Who will claim that the physician is within his moral rights when taking an action such as this? The above, be it noted, is not a mere analogy but a homology, an accurate matching in structure of the common or garden variety of legalized, popularly approved strike.



To say that one believes in the right to strike is comparable to saying that one endorses monopoly power to exclude business competitors; it is saying, in effect, that government-like control is preferable to voluntary exchange between buyers and sellers, each of whom is free to accept or reject the other's best offer. In other words, to sanction a right to strike is to declare that might makes right - which is to reject the only foundation upon which civilization can stand.



Lying deep at the root of the strike is the persistent notion that an employee has a right to continue an engagement once he has begun it, as if the engagement were his own piece of property. The notion is readily exposed as false when examined in the patient-physician relationship. A job is but an exchange affair, having existence only during the life of the exchange. It ceases to exist the moment either party quits or the contract ends. The right to a job that has been quit is no more valid than the right to a job that has never been held.



The inconvenience to individuals and the dangers to the economy, inherent in strikes, should not be blamed on the bungling or ignorance or evil of the men who manipulate them. * Rather, the censure should be directed at the false idea that there is a moral right to strike.



~ LEONARD E. READ



* For a splendid explanation as to why men of questionable character obtain control of unlimited power situations, see Chapter X. "Why the Worst Get on Top" in The Road to Serfdom by F. A. Hayak.





5. "Too much government? Just what would you cut out?"

THOSE WHO SEEK to promote liberty by limiting the power of government often are "floored" with a tricky question, "Very well! Just what would you eliminate?"



It would take a lifetime to answer that question in detail. But it can be answered on principle, leaving some of the difficult details to the questioner. For example:



"I would favor the rescinding of all governmental action - Federal, state, or local - which would interfere with any individual's freedom:



... to pursue his peaceful ambition to the full extent of his abilities, regardless of race or creed or family background;



... to associate peaceably with whom he pleases for any reason he pleases, even if someone else thinks it's a stupid reason;



... to worship God in his own way, even if it isn't "orthodox";



... to choose his own trade and to apply for any job he wants and to quit his job if he doesn't like it or if he gets a better offer;



... to go into business for himself, be his own boss, and set his own hours of work - even if it's only three hours a week;



... to use his honestly acquired property in his own way - spend it foolishly, invest it wisely, or even give it away. Beyond what is required as one's fair share to an agency of society limited to keeping the peace, the fruits of one's labor are one's own;



... to offer his services or products for sale on his own terms, even if he loses money on the deal;



... to buy or not to buy any service or product offered for sale, even if refusal displeases the seller;



... to agree or disagree with any other person, whether or not the majority is on the side of the other person;



... to study and learn whatever strikes his fancy, as long as it seems to him worth the cost and effort of studying and learning it;



... to do as he pleases in general, as long as he doesn't infringe the equal right and opportunity of every other person to do as he pleases."



Unless a devotee of statism specifies which of the above liberties he would deny the individual, he implicitly approves the free market, private property, limited government way of life.



If, on the other hand, he insists that the individual should be deprived of one or more of the above liberties, then let him defend his position. Trying to present his case will more surely convince him of his error than any reform talk a libertarian can contrive. Let him talk himself out of his own illiberality!



In short, instead of attempting to explain the thousands upon thousands of governmental activities you would eliminate, let the author of the tricky question explain just one peaceful activity he would deny to the individual. Isn't this putting the burden of proof where it belongs?



~ LEONARD E. READ





6. "The size of the national debt doesn't matter because we owe it to ourselves."

SOME THINGS a person does owe to himself - intangibles like respect, integrity, responsibility. "This above all, to thine own self be true." But such duties to self are not a debt in the usual sense of a repayable loan or obligation.



If an individual transfers his own money or his own promise to pay from his right pocket to his left, the transaction clearly leaves him neither richer nor poorer. There would be no point in a person's borrowing from himself; but if for some reason he did, the size of the debt he owed himself wouldn't matter at all. However, if A gives his property to B, we do not say that each is as rich or as poor as before. Or, if C buys extensively on credit, his creditors surely do not believe that C "owes it to himself." They are keenly aware that the size of his debt makes a big difference when the bills fall due.



Instead of an individual, one might conceive of a society with the government owning or controlling all property and persons and issuing money or bonds as a bookkeeping device to keep track of its spending. In such a situation, it wouldn't matter how many promises or bonds had been issued or remained outstanding. Since individuals would have neither property nor rights, the socialized government - as sole owner - would only be dealing with itself. But in a nonsocialized society, individuals do have rights and may own property. If the government borrows property from citizen A, then it is obligated to repay that debt to A - not to B or C or D. The individual who owns a government bond may be a taxpayer as well, and thus liable in part for the taxes the government must collect in order to redeem his bond; but B and C and D are also liable as taxpayers even if they own none of the bonds themselves. And the size of the debt makes a real difference to everyone involved.



One of the vital characteristics of the institution of private property is that ownership and control rests with individuals, and whether a person owns or owes makes a whale of a difference in how rich or how poor he is.



The concept of private ownership and control of property further presupposes a government of limited powers instead of a socialized society in which everything and everyone is government owned and controlled. Private property owners presumably have something to say about the extent to which government may tax or seize their property; otherwise, it wouldn't be a limited government, and there wouldn't be private property.



Now, government debt signifies that government has made certain claims upon private property above and beyond the "due processes" of authorized taxation. The semblance of private property must be maintained, else the government could find no "owner" from whom to "borrow" and no taxpayers upon whom to draw when the debt falls due. But, in essence, the government debt is an existing claim against property - like an unpaid tax bill - and the larger that debt, the less is the real equity of individuals in what is thought to be private property. In that sense, the socialization already has occurred, and the government does "owe to itself" because it owns the property. The size of the debt is important, however, because it measures the amount that taxpayers and property owners owe - not to themselves, but to the government over which they have lost control insofar as it now owns and controls them.



It would be most surprising to find a completely socialized government heavily in debt, simply because no sensible property owner would lend to such an institution if he could possibly avoid it. Though deficit financing seems inconsistent with the original American design of limited government, it is possible in an emergency for a limited government to find voluntary creditors, especially among its own citizens who expect the government to abide by its constitutional limitations and thus leave a large base of taxable private property through which debts may be redeemed. But the growing size of the government debt should be of real concern to every creditor and especially to every taxpayer with any interest whatsoever in private property and personal freedom.



~ PAUL L. POIROT





7. "Why, you'd take us back to the horse and buggy."

THE BASIC FALLACY of this all-too-common cliché is a confusion between technology and such other aspects of human life as morality and political principles. Over the centuries, technology tends to progress: from the first wheel to the horse and buggy to the railroad and the jet plane. Looking back on this dramatic and undeniable progress, it is easy for men to make the mistake of believing that all other aspects of society are somehow bound up with, and determined by, the state of technology in each historical era. Every advance in technology, then, seemingly requires some sort of change in all other values and institutions of man. The Constitution of the United States was, undoubtedly, framed during the "horse and buggy" era. Doesn't this mean that the railroad age required some radical change in that Constitution, and that the jet age requires something else? As we look back over our history, we find that since 1776, our technology has been progressing, and that the role of government in the economy, and in all of society, has also grown rapidly. This cliché simply assumes that the growth of government must have been required by the advance of technology.



If we reflect upon this idea, the flaws and errors stand out. Why should an increase in technology require a change in the Constitution, or in our morality or values? What moral or political change does the entrance of a jet force us to adopt?



There is no necessity whatever for morality or political philosophy to change every time technology improves. The fundamental relations of men - their need to mix their labor with resources in order to produce consumer goods, their desire for sociability, their need for private property, to mention but a few - are always the same, whatever the era of history. Jesus' teachings were not applicable just to the ox-cart age of first-century Palestine; neither were the Ten Commandments somehow "out-moded" by the invention of the pulley.



Technology may progress over the centuries, but the morality of man's actions is not thereby assured; in fact, it may easily and rapidly retrogress. It does not take centuries fur men to learn to plunder and kill one another, or to reach out for coercive power over their fellows. There are always men willing to do so. Technologically, history is indeed a record of progress; but morally, it is an up-and-down and eternal struggle between morality and immorality, between liberty and coercion.



While no specific technical tool can in any way determine moral principles, the truth is the other way round: in order for even technology to advance, man needs at least a modicum of freedom - freedom to experiment, to seek the truth, to discover and develop the creative ideas of the individual. And remember, every new idea must originate in some one individual. Freedom is needed for technological advance; and when freedom is lost, technology itself decays and society sinks back, as in the Dark Ages, into virtual barbarism.



The glib cliché tries to link liberty and limited government with the horse and buggy; socialism and the welfare state, it slyly implies, are tailored to the requirements of the jet and the TV set. But on the contrary, it is socialism and state planning that are many centuries old, from the savage Oriental despotisms of the ancient empires to the totalitarian regime of the Incas. Liberty and morality had to win their way slowly over many centuries, until finally expanding liberty made possible the great technological advance of the Industrial Revolution and the flowering of modern capitalism. The reversion in this century to ever-greater statism threatens to plunge us back to the barbarism of the ancient past.



Statists always refer to themselves as "progressives," and to libertarians as "reactionaries." These labels grow out of the very cliché we have been examining here. This "technological determinist" argument for statism began with Karl Marx and was continued by Thorstein Veblen and their numerous followers - the real reactionaries of our time.



~ MURRAY N. ROTHBARD





8. "The free market ignores the poor."

ONCE an activity has been socialized for a spell, nearly everyone will concede that that's the way it should be.



Without socialized education, how would the poor get their schooling? Without the socialized post office, how would farmers receive their mail except at great expense? Without social security, the aged would end their years in poverty! If power and light were not socialized, consider the plight of the poor families in the Tennessee Valley!



Agreement with the idea of state absolutism follows socialization, appallingly. Why? One does not have to dig very deep for the answer.



Once an activity has been socialized, it is impossible to point out, by concrete example, how men in a free market could better conduct it. How, for instance, can one compare a socialized post office with private postal delivery when the latter has been outlawed? It's something like trying to explain to a people accustomed only to darkness how things would appear were there light. One can only resort to imaginative construction.



To illustrate the dilemma: During recent years, men in free and willing exchange (the free market) have discovered how to deliver the human voice around the earth in one twenty-seventh of a second; how to deliver an event, like a ball game, into everyone's living room, in color and in motion, at the time it is going on; how to deliver 115 people from Los Angeles to Baltimore in 3 hours and 19 minutes; how to deliver gas from a hole in Texas to a range in New York at low cost and without subsidy; how to deliver 64 ounces of oil from the Persian Gulf to our Eastern Seaboard - more than half-way around the earth - for less money than government will deliver a one-ounce letter across the street in one's home town. Yet, such commonplace free market phenomena as these, in the field of delivery, fail to convince most people that "the post" could be left to free market delivery without causing many people to suffer.



Now, then, resort to imagination: Imagine that our federal government, at its very inception, had issued an edict to the effect that all boys and girls, from birth to adulthood, were to receive shoes and stockings from the federal government "for free." Next, imagine that this practice of "for free" shoes and stockings had been going on for 10, these 184 years! Lastly, imagine one of our contemporaries - one with a faith in the wonders that can be wrought by men when free - saying, "I do not believe that shoes and stockings for kids should be a government responsibility. Properly, that is a responsibility of the family. This activity should never have been socialized. It is appropriately a free market activity."



"What, under these circumstances, would be the response to such a stated belief? Based on what we hear on every hand, once an activity has been socialized for a short time, the common chant would go like this, "Ah, but you would let the poor children go unshod."



However, in this instance, where the activity has not yet been socialized, we are able to point out that the poor children are better shod in countries where shoes and stockings are a family responsibility than in countries where they are a government responsibility. We are able to demonstrate that the poor children are better shod in countries that are more free than in countries that are less free.



True, the free market ignores the poor precisely as it does not recognize the wealthy - it is "no respecter of persons." It is an organizational way of doing things, featuring openness, which enables millions of people to cooperate and compete without demanding a preliminary clearance of pedigree, nationality, color, race, religion, or wealth. It demands only that each person abide by voluntary principles, that is, by fair play. The free market means willing exchange; it is impersonal justice in the economic sphere and excludes coercion, plunder, theft, protectionism, and other anti-free market ways by which goods and services change hands. It opens the way for mortals to act morally because they are free to act morally.



Admittedly, human nature is defective, and its imperfections will be reflected in the market. But the free market opens the way for men to operate at their moral best, and all observation confirms that the poor fare better under these circumstances than when the way is closed, as it is under socialism.



~ LEONARD E. READ





9. "Man is born for cooperation, not for competition." or "The idols of the market place must yield to those of humanity."

THE FLAW in this cliche is the implication of incompatibility between competition and cooperation, between the procedures of voluntary exchange and the objectives of human beings.



What socialists call "the idols of the market place" include competitive bargaining and free trade as well as the private ownership and control of property. These are the means by which each individual may pursue his choices and objectives to the limit of his own ability - within the limits of due respect for the lives, the property, and the related unalienable rights of his fellowmen.



Though the free market affords the maximum opportunity for each and every unit of humanity to approach the fulfillment of his potentialities, this is not what the socialists have in mind. The socialistic concept of ideal humanity involves giving to each person according to his needs, regardless of his efforts to earn what he wants. According to this view, the whole of man consists of his capacity to consume, which sheds light on the contention that "man is born for cooperation, not for competition," In other words, man is born for comfort and ease, not work and struggle!



The "cooperation" of socialism refers to the sharing of whatever is available to consume, regardless of how it came to be produced or saved, or who might claim ownership. Man, as consumer, is to help himself to anything he needs - but at the other fellow's expense. The double trouble with this concept of "cooperation" is its inherent immorality and the fact that it doesn't work. The theory doesn't work out in practice because most human beings won't work - or save - if they're systematically robbed by loafers, or taught to be loafers themselves. And, whereas voluntary charity may be considered one of the highest forms of moral human action, it seems clear that reversing the process to let the receiver of alms grasp what he wants from whom he pleases is quite as immoral as any other form of theft.



Because consuming may follow but cannot precede production, it is important that economic policy give consideration to producers and encourage them. Private property - the right to the fruits of one's own skill and labor, earned by serving rather than exploiting others - affords such encouragement. The owner of property is free to trade with others, if they are willing. He may not force anyone to buy his goods or services, but must vie for the buyer's favor - cater to the consumer - in open competition with all other producers within his market area.



Stiff competition? Yes, indeed. But also cooperation of the highest order, for it involves absolute respect for the lives, the property, the freedom - the gamut of human rights - of every peaceful person in the world. No one is empowered by free market procedures to enslave any other person, or to compel him to buy or sell anything.



To cooperate effectively, individuals must be free to choose with whom to cooperate and for what purposes. And competition provides the opportunity for such choice. If there is but one maker of bread, there can be no choice. So, competition is the necessary prelude to cooperation.



What social arrangement could possibly be more humanitarian than to let each individual rise to the full limit of his creative potentialities? The competitive free market does this and thus maximizes the opportunities for the more capable among men to behave charitably toward their less fortunate brethren. It is not a question of cooperation or competition. Cooperation and competition in the market place afford the best hope for each individual and for humanity in general.



~ PAUL L. POIROT





10. "Americans squander their incomes on themselves while public needs are neglected."

THE SOCIETY is affluent, we are told - but affluent only in the private sector, alas! The public sector - meaning the political structure which our society spends a third of its energy to maintain - starves. Mr. and Mrs. America bounce along in their tail-finned chariot over a bumpy highway - the best road their government can build with the niggardly resources permitted it. They queue up to pay scalpers prices for tickets to the World Series with nary a thought that this indulgence contributes to the nonbuilding of a political housing project in an already overcrowded city. That evening they dine at an expensive restaurant, and government, as a result, lacks the means to supply water for a dam it has just constructed in a drought area. Americans, in short, go in big for private indulgence at the very time when the Crisis, long anticipated by the Certified Thinkers, demands The Opulent State.



Those who advance this line of criticism are perfectly correct on one point: if there is to be an increase in political spending, there must be a consequent decrease in private spending; some people must do without. The well-being of individual persons in any society varies inversely with the money at the disposal of the political class. All money spent by the governing group is taken from private citizens - who otherwise would spend it quite differently on goods of their choice. The State lives on taxes, and taxes are a charge against the economically productive part of society.



The Opulent State, fancied by levelers who criticize the Affluent Society, cannot exist except as a result of massive interference with free choice. To establish it, a society of freely choosing individuals must yield to a society in which the lives of the many are collectively planned and controlled by the few.



The State, in our Affluent Society, already deprives us of one-third and more of our substance. Not enough! say the critics. How much then? Fifty per cent? A hundred? Enough, at any rate, so that no life shall go unplanned if they can help it. This is the ancient error of authoritarianism. The intellectual, from time immemorial, has dreamed up ethical and esthetic standards for the rest of mankind - only to have them ignored. His ideas may be ever so sound, but his efforts to persuade people to embrace them meet with scant success. The masses are too ignorant to know what is good for them, so why not impose the right ideas on them by direct political action? The State is too weak and poor? Well, make it strong and rich, he urges; and it is done. But when the State is strong and rich, it devours the intellectual together with his defenseless ethical and esthetic standards. The State acts from political and power motives, as by its nature it must. It cannot possibly be the means of realizing the dreams of spiritual advance.



Every society devises some public means of protecting its peaceful citizens against the violent action of others, but this is too limiting a role for government to satisfy the censors of the Affluent Society. Such a government cannot legislate morality or enforce egalitarianism. The massive State interference they advocate is designed, they say, to protect the people from the consequences of their own folly, and the way to do this is to pass anti-folly laws to prevent wrong choices.



There are degrees of wisdom, true, and some people are downright foolish. This being the case, a lot of people will live by the rule of "easy come, easy go." They spend their money at the races when the roof needs repair, or they install color TV even though they are still paying on the motor boat. In a free society this is their right! This is part of what it means to be free! And folly is not made less foolish by collectivizing it, as witness the political imbecilities to which every government is liable! Freedom means the capacity to make choices; and exercise of freedom invariably results in some choices that are unwise or wrong. But, by living with the consequences of his foolish choices a man learns to choose more wisely next time. Trial and error first; then, if he is free, trial and success. But because no man is competent to manage another, persistent error and failure are built-in features of the Opulent State.



~ EDMUND A. OPITZ





11. "Labor unions are too powerful today, but were useful in the past."

To BELIEVE that labor unions actually improve the lot of the working people is to admit that the capitalist economy fails to provide fair wages and decent working conditions. It is to admit that our free economy does not work satisfactorily unless it is "fortified" by union activity and government intervention.



The truth is that the unhampered market society allocates to every member the undiminished fruits of his labor. It does so in all ages and societies where individual freedom and private property are safeguarded. It did so 1,900 years ago in Rome, in eighteenth-century England, and in nineteenth-century America.



The reason grandfather earned $5 a week for 60 hours of labor must be sought in his low productivity, not in the absence of labor unions. The $5 he earned constituted full and fair payment for his productive efforts. The economic principles of the free market, the competition among employers, a man's mobility and freedom of choice, assured him full wages under the given production conditions.



Wages were low and working conditions primitive because labor productivity was low, machines and tools were primitive, technology and production methods were crude when compared with today's. If, for any reason, our productivity were to sink back to that of our forebears, our wages, too, would decline to their levels and our work week would lengthen again no matter what the activities of labor unions or the decrees of government.



In a free market economy, labor productivity determines wage rates. As it is the undeniable policy of labor unions to reduce this productivity, they have in fact reduced the wages and working conditions of the masses of people although some privileged members have benefited temporarily at the expense of others. This is true especially today when the unions enjoy many legal immunities and vast political powers. And it also was true during the nineteenth century when our ancestors labored from dawn to dusk for low wages.



Through a variety of coercive measures, labor unions merely impose higher labor costs on employers. The higher costs reduce the returns on capital and curtail production, which curbs the opportunities for employment. This is why our centers of unionism are also the centers of unemployment.



True enough, the senior union members who happen to keep their jobs do enjoy higher wages. But those who can no longer find jobs in unionized industries then seek employment in nonunionized activity. This influx and absorption of excess labor, in clerical occupations, for instance, tends to reduce their wages, which accounts for the startling difference between union and nonunion wage rates. It gives rise to the notion that labor unions do benefit the workingmen. In reality, the presence of the nonunionized sectors of the labor market hides the disastrous consequences of union policy by preventing mass unemployment.



The rise of unionism during the past century is a result of the fallacious labor theory of value, which held that all profit and rent and interest had to come out of the "surplus value" unfairly withheld from the workers. Labor unions are the bitter fruit of this erroneous theory, with a record of exploitation of workers far more grievous than the alleged evils the unions were supposed to rectify.



~ HANS F. SENNHOLZ





12. "We have learned to counteract and thus avoid any serious depression."

A PERSISTENT COMPLAINT against the capitalist system of competitive private enterprise is that it leads to periodic booms and busts. The implication is that businessmen either want to promote depression or that they are powerless to prevent it. Further implied is that some other system - invariably a form of socialistic intervention - would stimulate continuous growth and progress and feature automatic stabilizing devices to offset and forestall any threatened depression.



Long favored among the tools of political intervention is the oft discredited but never abandoned scheme of subsidizing farmers, on the ground that one prosperous farmer will generate a contagious prosperity among at least half a dozen urban dwellers. This myth was perhaps most widely circulated and implemented some thirty years ago, but it was still being promoted by at least one of the presidential candidates in the fall of 1960. Meanwhile, farm subsidies have increased until they exceed in annual amount the combined earnings of all operators in the subsidized segments of American agriculture! That could scarcely be called farm prosperity, hence, little stimulation for the rest of the economy; and it seems fair to conclude that this antidepression device doesn't work.



A more modern variation on the same theme, patriotically camouflaged as national defense, is the foreign aid program into which the federal government has poured $78 billion at taxpayers' expense since the end of World War II. But this overseas pump-priming has neither won friends to defend us in case of war nor strengthened our domestic economy. Instead of bringing domestic prosperity, it brought us inflation and the pricing of American goods and services out of foreign markets. Foreign subsidy is no better than farm subsidy as an antidepression stimulant for the home front.



Social Security is often mentioned among the measures to combat depression. Yet, the Congress has been hard-pressed to keep the boosts in Social Security benefits coming fast enough to squeeze the beneficiaries through a prolonged period of fairly good times. It is inconceivable that the system has left in it any further priming power to be released in case of depression.



Other touted political antidepressants include such federal building and spending projects as post offices, hospitals, schools, highways, dams, and similar welfare measures to aid depressed areas. But like Social Security, these priming devices also have been pushed to their limit in a frantic effort to keep the economy standing still at boom tide. Who is to provide subsidies in anything like comparable amounts in case of depression?



The planners' ultimate weapon to combat depression is deficit financing - government spending in excess of tax collection. But this weapon depends for its effectiveness on a blind patriotic faith in the integrity of the government and its ability to make good on its debts. Unfortunately, perhaps, the real power to challenge the soundness of the American dollar today is not in the hands of "patriotic American citizens," but in the hands of foreigners who currently hold dollar claims equal to the entire stock of gold supposed to back our paper money. So it would seem that even the ultimate weapon against depression has been proved a dud, of no help in an emergency.



The gist of it all is that the capitalistic free market system has been falsely blamed for booms and busts that in reality have been the result of government intervention, subsidy, deficit financing, and inflationary tampering with money and credit. The only kind of a boom a businessman can generate is to "build a better mousetrap," and the only person he can "bust" is himself.



Economy-wide booms and busts can be generated only by a great power - the government itself. The cure for itself is to turn the management of business back to businessmen and consumers guided by the free market. Let government confine itself to policing the market-protecting production and exchange against fraud and violence.



~ PAUL L. POIROT





13. "Human rights are more important than property rights."

TRICKY PHRASES with favorable meanings and emotional appeal are being used today to imply a distinction between property rights and human rights.



By implication, there are two sets of rights - one belonging to human beings and the other to property. Since human beings are more important, it is natural for the unwary to react in favor of human rights.



Actually, there is no such distinction between property rights and human rights. The term property has no significance except as it applies to something owned by someone. Property itself has neither rights nor value, save only as human interests are involved. There are no rights but human rights, and what are spoken of as property rights are only the human rights of individuals to property.



Expressed more accurately, the issue is not one of property rights versus human rights, but of the human rights of one person in the community versus the human rights of another.







U.S. Supreme Court Justice

GEORGE SUTHERLAND It is not the right of property which is protected, but the right to property. Property, per se, has no rights; but the individual - the man - has three great rights, equally sacred from arbitrary interference: the right to his life, the right to his liberty, the right to his property... The three rights are so bound together as to be essentially one right. To give a man his life but deny him his liberty, is to take from him all that makes his life worth living. To give him his liberty but take from him the property which is the fruit and badge of his liberty, is to still leave him a slave.



The Bill of Rights in the United States Constitution recognizes no distinction between property rights and other human rights. The ban against unreasonable search and seizure covers "persons, houses, papers, and effects," without discrimination. No person may, without due process of law, be deprived of "life, liberty, or property"; all are equally inviolable. The right of trial by jury is assured in criminal and civil cases alike. Excessive bail, excessive fines, and cruel and unusual punishments are grouped in a single prohibition. The Founding Fathers realized what some present-day politicians seem to have forgotten: A man without property rights - without the right to the product of his own labor - is not a free man.



These constitutional rights all have two characteristics in common. First, they apply equally to all persons. Second, they are, without exception, guarantees of freedom or immunity from governmental interference. They are not assertions of claims against others, individually or collectively. They merely say, in effect, that there are certain human liberties, including some pertaining to property, which are essential to free men and upon which the state shall not infringe.



Now what about the so-called human rights that are represented as superior to property rights? What about the "right" to a job, the "right" to a standard of living, the "right" to a minimum wage or a maximum workweek, the "right" to a "fair" price, the "right" to bargain collectively, the "right" to security against the adversities and hazards of life, such as old age and disability?



The framers of the Constitution would have been astonished to hear these things spoken of as rights. They are not immunities from governmental compulsion; on the contrary, they are demands for new forms of governmental compulsion. They are not claims to the product of one's own labor; they are, in some if not in most cases, claims to the products of other people's labor.



These "human rights" are indeed different from property rights, for they rest on a denial of the basic concept of property rights. They are not freedoms or immunities assured to all persons alike. They are special privileges conferred upon some persons at the expense of others. The real distinction is not between property rights and human rights, but between equality of protection from governmental compulsion on the one hand and demands for the exercise of such compulsion for the benefit of favored groups on the other.



~ PAUL L. POIROT





14. "Employees often lack reserves and are subject to 'exploitation' by capitalist employers."

IT IS FREQUENTLY argued than an employee is at a bargaining disadvantage when he seeks a favorable employment contract because he has less of a reserve to draw upon than does an employer. It is said that the employee needs bread for his family's supper, whereas the employer needs nothing more urgent than a new yacht. The effect of such dramatization is to draw attention from the subject of the employer-employee relationship. The employee wants the use of tools and managerial services, and the employer wants the workman's services so that together they may create something useful in exchange for bread, yachts, or whatever else either of them may choose to buy with his part of the product.



It is true that some employees have little except their weekly wages as a buffer against bill collectors. And if the loss of a week's wages is that serious to a man, it may be a sign that he isn't a good enough manager or, for some other reason, prefers not to try to make a living by working at a business of his own. Thus, he is in this sense dependent upon job opportunities created by others. But in a competitive society, a person is not bound to continue working for others, nor is he bound to depend upon anyone employer for an opportunity to work. Some employees, of course, prefer not to change jobs; free men have that choice. Unless competition has been strangled by coercive intervention, employers will be competing against one another for the productive services of employees. This competition between employers for an employee's productive capacity is the thing that constitutes the employee's reserve, just as the reserve value of capital depends upon the competition for the use of that capital.



In this connection, it may be interesting to speculate for a moment as to just how an employee's reserve compares in dollar value with a reserve fund of capital. For instance, let us assume that a young man might reasonably expect to find regular employment for a period of forty years at an average weekly wage of $100. For a nonworking person to draw a comparable income from a trust fund - assuming that it earns interest at the rate of three per cent and that the principal also is to be used up over the period of forty years - an original capital investment of $120,000 would be required. The fact is that a man who is willing and able to work does have a kind of reserve - in a sense, a better reserve than is available to the man who has nothing except money or capital. Robinson Crusoe could have salvaged the ship's silver, but as a nonworking capitalist, he would have starved. According to the story, he saved his life by digging into his reserve capacity to work.



This same principle applies in our own kind of a complex society where each of us depends more or less upon exchange for his livelihood. If a man owns a million dollars, yet refuses to offer it in trade, he may go hungry, just as an employee may be faced with hunger if he refuses to turn his services to productive use. The market does not automatically guarantee subsistence to those who stop producing and trading while waiting for a better opportunity to present itself. An employee who chooses not to work may properly complain that he has no other means of support, but he ought to confine his complaint to the person who is solely responsible for his sad plight - himself. No one else has any right to make him work, nor any moral obligation to support him in his voluntary idleness.



The employee who wants to sit until an employer comes forth with a more attractive job offer may say that he doesn't have the reserve to enforce his demand, but what he means is that he doesn't have control over other employees who are willing to accept the jobs which are offered.



The true nature of the employer-employee relationship may be understood by those who see that individuals are involved - two individuals - each of whom owns and controls something of value.



The employee is an individual who has a right to offer his services for exchange - a right which is or ought to be recognized by the employer. Labor, thus voluntarily offered by any person, is a form of property - his property - and he may offer it as a marketable commodity. If a man voluntarily offers his services for sale, that doesn't make him a slave. It is simply an expression of his right to his own life.



The employer also is a worker who has a right to offer his services for exchange. In some instances, it may happen that the employer is also the owner of capital goods - land, plant facilities, raw materials, and tools. A man has a right to own private property - as much of a right as any man can claim to the product of his services. But whether or not the employer also is the owner of productive tools and facilities, he doesn't create job opportunities for others except as he offers his own managerial services in the competitive effort to please customers. The manager offers his services, just as any other employee offers services, and the object of their bargaining is to determine a satisfactory exchange rate for what each has voluntarily offered.



~ PAUL L. POIROT





15. "Competition is fine, but not at the expense of human beings."

THERE MUST BE a reason why protection or the Welfare State is so popular and has made such headway in our country and throughout the world.



Undoubtedly it is because many people believe it is the best way to relieve poverty and promote more general prosperity.



If that is true, then why do they so believe? Could it not be because the material results of protection, in whatever form it takes, are both concentrated and obvious, while the costs, the consequences, are diffused, concealed, spread out in small amounts? Force is usually quicker and more noticeable than persuading - getting a person to think and reason.



When the State gives a man material assistance or protection from competition, it relieves him immediately and temporarily of part of his problems. It is so concentrated and concrete, it is easy to see, while the taxes for this particular protection are diffused and indirect in most cases. Or when labor unions protect a worker from competition of other workers and he gets an increased money wage, it is easy to see. It is also immediate. In short, the benefits are concentrated and present and thus easy to see, while the costs, the disadvantages, are diffused and paid for in small amounts by many other persons and are thus harder to see. Superficially, the costs may seem to be postponed, as though the redistribution were yielding a societal advantage for a time; but this is strictly an illusion stemming from inadequate cost accounting methods. The actual costs, if they could be seen, are as real and as immediate as are the presumed benefits.



The union member sees he gets more dollars in his envelope and thus believes he is benefited. What he does not see is that if he can get temporary material benefits by striking, many other workers will do the same thing. Nor does he see that the employer has to get all the money he pays in wages from his customers - other workers. If he is not able to collect all costs, including wage payments, and if there are no profits or no hopes for profit, there are no jobs. This unemployment reduces production and increases prices. On the other hand, the more profits, the more competition between employers to hire help, the higher real wages will be. Also, the more competition in selling the product, the lower prices the employees have to pay. This is continuous and diffused and thus harder to see.



So all these extra labor costs are passed back to other workers, past or present, along with any extra costs that stem from lower production, unemployment, featherbedding, seniority, strikes, nonproductive business agents, lack of individual responsibility, and so on. But these costs are diffused - a penny here and there on the hundreds of different items everyone uses - and they are thus harder to see. Besides, they are lumped with all other costs so that it is difficult, if not impossible, to know how much they total.



The same diffusion that takes place in labor unions' added costs takes place in every protection or subsidy by the government - federal, state, county, city, or board of education. The added costs in the form of taxes are diffused and scattered over thousands of articles. Most people look at immediate wages or prices they get for what they sell under protection as all benefit, and fail to see the little additional prices added to hundreds of items they buy. Nor do they see that these added costs continue as long as the cause continues.



It is also difficult to see how a free and unhampered market benefits the worker because the benefits are on everything he buys, though small on each item. The benefits are not in one lump sum. Nor are they temporary, as are arbitrary wages, but continuous and cumulative.



The benefit of personal charity also is concentrated and easy to see because it is a lump sum. Many people believe the donor is benefiting mankind more than the person who puts the same wealth into tools that increase production, thus raising real wages and lowering prices in a continuous process. The benefits from more tools are so diffused that many people think continuous charity is more beneficial to mankind than furnishing tools that benefit everyone.



Those with practical experience in producing the comforts of life are convinced that the best way is for each and every person and the government to have respect and reverence for the creative energy of all mankind.



Free, private enterprise is not as spectacular nor as easy to see as the socialist way of temporarily diffusing poverty by eating up the seed corn - the tools - which will increase poverty in the long run. Free enterprise is the surer and so far the only known way of constantly improving the well-being of mankind.



What we need is not to be blinded by the transitory benefits of protection but to see the blessings that continuously follow the free, private enterprise system, even if it is harder to see - that the gain of one in creating wealth is the gain of all.



~ R. C. HOILES





16. "We're paying for it, so we might as well get our share."

THIS IS HOW many otherwise responsible citizens rationalize their own line-up at the federal trough. Farmers see businessmen getting their tariffs. Businessmen observe subsidies to farmers. Labor leaders eye them both for copying. Angelenos see the Gothamites getting federal aid, and Miamians read about federal handouts to Seattleites. Such logrolling of special interests grows, and "how to get ours" becomes the "economic" talk of the nation. That a naughty feeling often attends this weak excuse is understandable.



For obvious reasons, this bromide evokes no sense of guilt in Socialists - those who would communize society; federal handouts fit perfectly into their design of substituting government control for personal responsibility. The feelings of remorse are confined to individuals who think of themselves as conservative or libertarian. Unable clearly to diagnose their inconsistency, they at least suspect themselves of being Janus-faced.



To bring this political picture into focus, let's substitute one man for the majority, and a few for the millions, otherwise sticking to an accurate matching in structure. A man - call him Robin Hood - aspires to the role of God. He observes that the people in his shire come out unequally when freely exchanging the things they grow, the stock they raise, the items they make. Some fare a lot better than others. It never occurs to this Caesar of the countryside that dullness, laziness, indolence - as against ingenuity, initiative, industry - play a hand in these discrepancies. He sees only the inequalities and, in egotistical disdain, only his system for erasing them.



So, bow in hand, our self-appointed hero takes the produce from all unto himself. He'll dole it out as he sees the need. "Social justice" of his variety, will be served!



The Socialists in the shire - those who believe in the communalization of the product of all by coercion - may well be expected to hail this man and his tools of force.



But, what are we to think of those who have a libertarian bent, of those who pay lip service to the free society, and then go on to assert, "We're paying for it, so we might as well get our share." What sincerity or depth can be ascribed to their lip service? Do not actions speak louder than words? By their actions, are they not, most effectively, giving support to the socialistic design? Endorsing the Welfare State? Upholding Caesarism?



Frederic Bastiat, more than a century ago, referred quite accurately to the above behavior as legal plunder, and explained in simple terms how to identify it:



See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. *



No individual with libertarian pretensions can, in good conscience, advocate legal plunder. What, then, should be his position? He has only one way to turn. Bastiat, the libertarian teacher, was again helpful: "Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law - which may be an isolated case - is not abolished immediately, it will spread, multiply, and develop into a system."



Today, in the U.S.A., such law is not the isolated exception. It is already "a system." This system of plunder derives much of its support from individuals who do not subscribe to socialism but who say, "We're paying for it, so we might as well get our share."



~ LEONARD E. READ



* See The Law by Frederic Bastiat. Foundation for Economic Education, Irvington, N. Y.





17. "I'm a middle-of-the-roader."

ARISTOTLE, some twenty-three centuries ago, developed the idea of the middle way or, as he thought of it, "the golden mean." He used the term to describe certain virtues which consist of an intelligent moderation between the extremes of two opposite vices.



One concludes from his reflections that courage lies midway between cowardice and rashness; liberality between stinginess and extravagance; ambition between sloth and greed; modesty between the Milquetoast type of humility and the strutting dictator's kind of pride; frankness between secrecy and loquacity; friendship between quarrelsomeness and flattery; good humor between moroseness and buffoonery; self-control between indecisiveness and impulsiveness.



A century or so later the idea was given a perverse twist in Ecclesiastes - descending perilously close to the modem view.



"In my vain life I have seen everything; there is a righteous man who perishes in his righteousness, and there is a wicked man who prolongs life in his evil-doing. Be not righteous overmuch, and do not make yourself overwise; why should you destroy yourself? Be not wicked overmuch, neither be a fool; why should you die before your time?"



In the twelfth century the eminent rabbi, Maimonides - again on the high road - was counseling his followers to choose the golden mean. His middle way, like Aristotle's, was that ideal route which leads between two extremes of opposite vices.



In our day, "middle-of-the-road" is more an excuse for intellectual sloppiness than a guide to moral discipline. There is nothing golden about it and it does not qualify as a mean. For instance, there is no middle way, as George Schwartz put it, between monogamy and polygamy. Nor is there any golden mean that can be derived from subdividing a single vice. Halfway between the theft of a small amount and the theft of a large amount is robbery all the way, no matter how you slice it!



In the jargon of our times, "I'm a middle-of-the-roader," has only political connotations. It means, when the drift is socialistic, that its advocates waver midway between a modicum of socialism and whatever extreme of socialism happens to be in popular favor. Thus, the middle-of-the-roader always finds himself wherever the currents of opinion dictate; he has no other basis for judging where his stand should be. The more extreme the socialistic view, the deeper will he be engulfed in socialism.



Quite obviously, there is no virtue in being a political middle-of-the-roader. This position sounds something like the golden mean, but there the resemblance ends. What we have is a confusion of sound with sense. The former is not even a reasonable facsimile of the latter. Middle-of-the-roadism is but a platitudinous position riding inexcusably on the reputation of a splendid philosophical conviction.



~ LEONARD E. READ





18. "Customers ought to be protected by price controls."

IT WAS a receipted bill for electrical service rendered in 1907 by the Edison Light and Power Company to a customer in Wichita, Kansas. The bill was for $7.00, for a month's service - for only 14 kilowatt-hours of electricity. (Collection must have been something of a problem in those days, because the bill specified: "Less 20 per cent if paid before the 10th of the month.")



The bill was made out on a postal card, the other side of which bore the one-cent stamp that paid for its delivery across town.



In the 58 years since 1907, the postage rate has risen to 4 cents a card - 400 per cent of what it was then; whereas, the price for electricity has steadily declined from 50 cents per kwh to 2 cents now - 4 per cent of what it was then.



An average American home today, if fully electrified with air conditioning and heating, would use about 24,000 kwh annually, costing $480. At the 1907 rate, that cost would be $12,000; and if kwh prices had behaved as has the price for delivering a post card, the electrical bill would be $48,000 annually. Except, that no one would use electrical appliances!



One may speculate as to what those respective rates might be today had the situations been reversed, with a government monopoly of electrical service, and a free enterprise postal service!



How much profit was earned over the years by the Edison Light and Power Company and its successors in Wichita is unknown to us, but we do know that within a recent period of years while the Post Office was accumulating a deficit of $10 billion, its largest competitor in the communications field, the privately owned American Telephone and Telegraph, showed $22 billion in profits - despite the fact that the rates it could charge for phone service were regulated and controlled by the Federal Communications Commission.



The comparative performance of governmental and private enterprise, even when both are subject to price control, is further illustrated in adjoining news items from the front page of The Wall Street Journal of November 27, 1964:



Postal rate increases for business mail may be recommended by President Johnson in his January budget message. The increases might be as much as $300 million annually. Postmaster General Gronouski said the President ordered him to draw up proposals for rate boosts on second and third class mail. These would chiefly affect newspaper and magazine publishers and users of direct-mail advertising.



* * *



American Telephone reductions in long-distance interstate rates estimated at $100 million annually were announced by the Federal Communications Commission. The cuts take effect in two stages on Feb. 1 and April 1. The FCC said it had moved for the reductions, to which AT&T indicated it had agreed reluctantly, after reviewing the company's profit picture.



In view of all the talk about protecting consumers, the record suggests that private enterprise is a better caretaker than the government.



~ PAUL L. POIROT





19. "The welfare state is the best security against communism."

THIS PROPOSED DEFENSE against communism is not new, though we hear it afresh in 1961. It has circulated in various shadings since "the cold war" began. A similar excuse was used to finance socialistic governments abroad with American earned income under the give-away programs that by now aggregate more than $78 billion: "Socialism is a good cushion again communism."



Such terms as communism, socialism, Fabianism, the Welfare State, Nazism, fascism, state interventionism, egalitarianism, the planned economy, the new deal, the fair deal, the new frontier are simply different labels for much the same thing. To think that there is any vital distinction between these so-called ideologies is to miss the really important characteristic which all of these labels have in common.



An ideology is a doctrinal concept, a way of thinking, a set of beliefs. Examine the above-mentioned labels and it will be found that each is identified with a belief common to all the others: Organized police force - government - should control the creative and productive actions of the people. Every one of these labels - no exceptions - stands for a philosophy that is opposed to the free market, private property, limited government way of life. The latter holds that the law and its police force should be limited to restraint of violence from within and without the nation, to restraint and punishment of fraud, misrepresentation, predation - in short, to invoke a common justice. According to this way of life - the libertarian ideal - men are free to act creatively as they please.



Under both the Welfare State and communism, the responsibility for the welfare, security, and prosperity of the people is presumed to rest with the central government. Coercion is as much the tool of the Welfare State as it is of communism. The programs and edicts of both are backed by the police force. All of us know this to be true under communism, but it is equally true under our own brand of welfare statism. Just try to avoid paying your "share" of a TVA deficit or of the farm subsidy program or of federal urban renewal or of social security or of the government's full employment program.



To appreciate the family likeness of the Welfare State and communism, observe what happens to individual freedom of choice. Under either label (the ideology is the same) freedom of choice to individuals as to what they do with the fruits of their labor, how they employ themselves, what wages they receive, what and with whom they exchange their goods or services - such freedoms are forcibly stripped from individuals. The central government, it is claimed, will take over. Full responsibility for ourselves is denied in order to make us dependent on whatever political regime happens to be in control of the government apparatus. Do these labels mean fundamentally the same thing? As an exercise, try to find any meaningful distinction.



Our planners are saying, "The Welfare State is the best security against communism." The Russians could say, with as much sense, "Communism is the best security against the Welfare State."



We call the Russian brand of governmental coercion "communism." They, however, refer to their collective as the "Union of Soviet Socialist Republics." The Russians call our brand of governmental coercion "capitalism." In the interest of accuracy and clarity, we, also, should call ours "socialist."



Socialism in Russia (communism, to our planners) and socialism in the U.S.A. (the Welfare State, to our planners) have identical aims: the state ownership and control of the means of production. Further, one as much as the other rests on the use of police force. In Russia the force is more impetuously applied than here. There, they pull the trigger and think later, if at all. Here, the government relies more on the threat of force and acquiescence of the citizen.



Alexis de Tocqueville predicted over a century ago the characteristics of the despotism [the Welfare State] which might arise in America: "The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd."



~ LEONARD E. READ





20. "Don't you want to do anything?"

THE SOCIALISTS use good psychology when they depict themselves as champions of political "initiative" and "action." They know that both attributes still demand the respect and admiration of decent people. Therefore, in the name of action and progress these self-styled activists denounce the friends of freedom and individual enterprise for their "negative" attitudes and "do-nothing" policies. "Don't you want to do anything?" is a common retort that aims to stymie all objections.



These arguments are wholly fallacious. Their premises must be rejected and their conclusions corrected. In reality the call for action is a manifestation of individual lethargy and inertness. It is tantamount to a call for government action rather than individual initiative.



The advocate of foreign aid who depicts in dark colors the misery and suffering in foreign countries does not mean to act himself when he demands action and initiative in this field of social endeavor. He does not mean to send CARE packages to starving Asians and Africans. And he does not plan to invest his savings in the socialized economies of India or the Congo. He probably knows rather well that his investments would soon be consumed, squandered, and confiscated by governments that are hostile to capital investments. And yet, he calls on his government to waste billions of dollars of the taxpayers' money.



The advocate of more abundant and better housing does not mean to use his own funds to provide low-rent housing. He, himself, does not want to act; he calls on the government for action. It is the government whose initiative and action he would like to employ and the people's tax money he proposes to spend. He, himself, probably is a tenant complaining about high rentals but shunning the tasks and responsibilities of house ownership. He is probably aware that the returns on apartment house investments are mostly meager and always jeopardized by rising taxes and government controls. Therefore, he prefers safer investments with less worry to him. And yet, for better housing conditions he clamors for government action and spending of tax money.



Most advocates of "better education" are clamoring for more state and federal aid to education. They are convinced that better education depends on additional spending of government funds. They want new school buildings, more classrooms, modern equipment, and transportation, and, above all, higher teacher salaries. Since individual effort seems so minute in their grandiose schemes of spending, they fall on the government as the bountiful source of limitless funds.



The apostle of rapid economic growth does not advocate personal initiative and action. He does not mean to offer his own effort and thrift toward economic growth. It takes more than $15,000 in savings to create an additional job. Even more savings are needed if the job is to be more productive with higher wages and better working conditions. In his personal life the growth apostle probably is spending next month's income on consumption, relying mainly on charge accounts and installment loans. He, himself, does not save the capital that is needed for economic growth. His call for initiative and action is merely a call for government expenditures financed with the people's money or through inflation.



This is why the quest for "initiative" and "action" must be seen as a quest for government action. When seen in proper perspective, the question, "Don't you want to do anything?" actually means "Don't you want the government to spend the people's money on foreign aid, housing, education, economic growth, and so forth?" It means in many cases "Don't you want socialism?"



This analysis clearly reveals why the friend of freedom and individual enterprise is often denounced for being "merely negative." The terms "positive" and "negative" are relative to given points of orientation. Whoever opposes socialism and all its encroachments on individual initiative and action is "negative" in the eyes of socialists. But he is unwaveringly "positive" when freedom is the criterion of orientation, because freedom is his positive concern. His life is filled with initiative and action.



~ HANZ F. SENNHOLZ





21. "Big business and big labor require big government."

LIKE ALL SOCIALISTIC CLICHES, this bromide is born of socialistic beliefs. For, if one believes in socialism (state ownership and control of the means of production), or that



"the complexity and interdependence of the scientific-industrial state calls for national planning. The individualism of the eighteenth and nineteenth centuries is a casualty of technology, as are old theories of private property. Government must intervene more and more in the nation's industrial life... " 1



then it is plausible to assume that big business and big labor require big government. The bigger the industrial operation, the bigger must be the political apparatus which owns, controls, and manages it. Under socialism all business and all labor and all government are but parts of one and the same thing.



However, if one believes that the group is secondary to the individual and his emergence, that all men are equal before the law as before God, and that men are endowed by their Creator (not by the state) with the right to life, liberty, and the pursuit of happiness, then the above proposition is a non sequitur. The conclusion has nothing more to do with the postulate than does the claim that a big man requires more policing than a small one. If man is created for his emergence, then government is but a police power organized to defend and free productive and creative action from destructive action.



The size of private and voluntarily organized effort, be it business or labor, is unrelated to the amount of governmental restraint or control needed. A single thief or a lone pirate or an individual killer or a one-man kidnapping project may properly put hundreds, even thousands, of governmental agents on the trail while a peaceful, self-disciplined organization of enormous size needs no inhibitory or defensive action whatsoever on the part of government.



It is the amount or prevalence of violence, fraud, misrepresentation, predation, spoliation - not bigness - that should affect the size of the police apparatus. A society of people who never injure each other would need no government at all, but the more thieves, liars, ruffians, seekers of something-for-nothing, the bigger must be society's police force.



One of the reasons for believing that "big business and big labor require big government" is the strong tendency to equate corporate and labor union size with "economic power." Economic power, however, is only purchasing power, a form of power for which most of us quite properly strive. Actually, the more economic power others have, the more can each of us receive for what we have to offer in exchange. Economic power is a good, not a bad, power.



Now, there is a type of power related to size, which is to be feared: namely, political power - the power to force or compel compliance. This power shows forth in business and labor organizations as monopoly power - price and wage and production control - armed protection against competition. 2



Monopoly or political power is always associated with force. There is no such thing as monopoly without coercive backing. 3 Now and then organized coercion is of the criminal type such as Al Capone employed to monopolize the Chicago beer market; but, for the most part, private organizations accomplish similar results only by forming an alliance with the compulsive force of government. All laws restricting competition and willing exchange of either goods or services are examples of political-monopoly power.



Little as well as big businesses or labor unions, if they succeed in gaining special privileges by the force or largess of government, will expand the bureaucracy, add to governmental expense, quicken inflation, and lead to political corruption. Organizations in the private sector, whether large or small, require of government only that it be incorruptible. A failure to grasp this distinction will burden us with a private-public combine in big corruption, an unscrupulous and irresponsible "partnership" - the people's ruler.



~ LEONARD E. READ



1 Excerpted from "Caught on the Horn of Plenty" by W. H. Ferry, Vice-President of the Fund for the Republic, Inc.



2 See "Two Kinds of Power" by Paul L. Poirot. The Freeman, February 1960. Copy on request from Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y.



3 See "From Whence Come Profits?" by John Chamberlain, and "Incompetent Employers" by Francis Amasa Walker. The Freeman, October 1959. Copy on request from Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y.





22. "We believe in presenting both sides."

YOU HEAR IT EVERYWHERE. "We believe in presenting both sides." That concept is endorsed by the overwhelming majority of persons who arrange the education and information programs for colleges, service clubs, discussion groups, business organizations, and others. They believe in presenting the case for socialism along with the case for the free market. Challenge them and they will reply: "Objectivity and fairness demand that we present the arguments for government ownership even though we ourselves don't believe in it."



Do objectivity and fairness demand that they present the case for coin clipping? They say no. Then why do they arrange for speakers and teachers who endorse the monetization of debt? After all, the device of monetizing debt is merely a modern arrangement of the old idea of clipping coins.



Objectivity and fairness aren't the real reasons a person arranges for the presentation of both sides. The primary reason is this: The person hasn't made up his own mind! He doesn't arrange for a defense of coin clipping because he himself has repudiated the idea of coin clipping. He arranges to have the case for monetization of debt presented because he himself hasn't yet repudiated that method of financing government.



Objective persons have repudiated the ideas of astrology, slavery, alchemy, witchcraft and the divine right of kings. They no longer believe that the earth is flat. Therefore, no objective person can, in good conscience and fairness, be responsible for having those ideas presented as valid. In like manner, if a person has rejected the ideas of government ownership and government controls, advocates of those ideas won't be on any programs over which he has authority.



When a person voluntarily arranges for the presentation of socialistic ideas along with free market ideas, you may be sure of this: He hasn't completely repudiated socialism; he hasn't completely accepted the ideas of the free market and of government restricted to the equal protection of the life, liberty, and honestly acquired property of everyone.



Here is a truism: If the evidence clearly indicates that an idea or policy is untrue or evil, no fair and objective person will voluntarily arrange to have it presented as valid.



~ HUGHSTON M. MC BAIN





23. "If free enterprise really works, why the Great Depression?"

TO ENUMERATE the blessings and advantages of competitive private enterprise before most any audience in this day and age is to evoke the protest: "Well, if the free enterprise system is so wonderful, how do you account for the unemployment, bank failures, and prolonged business depression of the early 1930's? Are periodic depressions an inevitable cost of freedom?"



Free enterprise, of course, does not prohibit or preclude human or business failure. Freedom to choose, to exercise one's own judgment in the conduct of his life and his business, permits mistakes as well as growth, progress, and success. Among fallible human beings, it is to be expected that some of us will fail in some of our ventures. Human failure cannot be eliminated entirely, but the harm can be localized. It is one of the advantages of competitive private enterprise that the penalties for failure are levied against those who fail - the damage is not assessed against the whole society - and that the greatest rewards go to those whom their fellows deem most worthy of success. This is self-responsibility, the other side of the coin of personal freedom to choose. To be held accountable for one's errors is to assure the optimum of responsible human action in society. This is the primary reason why the free enterprise system is so much to be preferred over the only possible alternative: a system of central planning, authoritarian control, dictatorship, where one man makes all the mistakes, always on the grand scale, and always at the expense of everyone else. The great weakness of socialism is that no one, neither the leader nor any of the followers, assumes any sense of accountability or responsibility; someone else is always to blame.



This is why the advocates of central planning and government control are prone to cast the blame for the Great Depression onto someone else - to make free enterprise the goat. But there is nothing in either the theory or the practice of responsible individualism, with individuals held accountable for their inevitable errors, that will explain a major depression such as the one following the boom and crash of 1929. Such massive social upheavals require some other explanation.



If one looks back upon the events and causes of World War I, he discovers that our own government had long been inhibiting free enterprise in numerous major ways. Since 1913, we have had a politically controlled fractional-reserve central banking system capable of irresponsible and uncontrollable expansion of the supply of money and credit - the engine of inflation. And this engine has been used with monotonous regularity in an attempt to finance, implement, camouflage, nullify, or offset the many other costly programs of government intervention.



We have had a steeply graduated income tax to penalize the thrifty and successful. We have had government regulation and control of transportation, public utilities, and many other business enterprises. Much of the more recent legislation giving special coercive powers to the leaders of organized labor had its origin during World War I. Especially in the 1920's, we began experimenting on a major scale with farm support programs. We have had wage and hour legislation, tariffs, and many other forms of protectionism and government control. But, most and worst of all was the inflation growing out of the deficit spending of World War I and the Federal Reserve Board's artificially depressed interest rates of the 1920's.



This government promotion of cheap money during and after World War I led at that time to private speculation and investment of resources in unsound business ventures, just as similar policies are doing now. During such a boom period there always is a great deal of malinvestment of economic resources under the illusion that the government can and will keep on promoting easy money-inflation. The continuing inflation temporarily hides many of the mistaken judgments of businessmen, tempting others to make similar mistakes instead of taking sound corrective actions. With government pumping forth the money, all businessmen are inclined to be borrowers, until bankers eventually find themselves overloaned on bad risks.



The crash of 1929 was strictly a crash of confidence in the soundness of the government's monetary policy - the government's dollar - the shocking discovery, accompanied by great despair, that government interventionism or socialism doesn't work as promised.



Free enterprise can accomplish miracles of productivity, but it is wholly incapable of causing a major boom of speculative malinvestment which inevitably ends in a crisis of readjustment called depression.



The opening question should be restated: "If government control (socialism) is so wonderful, why the Great Depression?" What happened in 1929, what happens whenever political intervention prices the various factors of production out of the market and leaves idle plants and idle men, must be attributed to socialism - not to free enterprise.



~ PAUL L. POIROT





24. "Federal Aid is all right if it doesn't bring Federal control."

ONE MIGHT THINK that this tired, old cliche would have been laid to rest long ago. But whenever a proposal is made for a new way to hand out federal funds to states or local units of government, some spoil-sport is certain to say: "But, we don't want control along with the money." And advocates of the new legislation will say: "You won't get federal control; we have written the bill in such a way that control of the funds will stay with the local unit."



In the early days of "farm programs," farmers were told that federal subsidies for this and that didn't mean they would have to submit to federal controls. Fortunately, this unsound theory was tested in the United States Supreme Court. In 1942, in the case of Wickard vs. Filburn, the Court opined: "It is hardly lack of due process for the government to regulate that which it subsidizes."



Who would deny that the regulation of that which is subsidized is sound fiscal policy? It would seem to be the height of irresponsibility for any unit of government, or other organization for that matter, to hand out money without control over its expenditure. This principle applies whether the subsidy is from federal to state, federal to local, or state to local units of government. The question here discussed is not whether such subsidies should be made, but rather, whether we can expect control to accompany the grants.



The Newburgh relief case in the summer of 1961 is an excellent example of the principle. Officials of the Hudson River city of Newburgh in New York concluded that their welfare costs were getting out of hand. The city's share of these costs was greater than the cost of police protection and almost as much as the cost of fire protection and public works. Some families were receiving welfare payments each month in excess of the take-home pay of some city employees with comparable-sized families.



So, it seemed logical for the city to have a look at the rules and regulations under which welfare payments were being made. The decision was to draw up their own rules and regulations - a new code to cover the handing out of welfare funds. This decision ran straight into the principle we are discussing. It seems that, of the total amount of money distributed under Newburgh's welfare program, more than half came from federal and state grants. With the funds came rules and regulations for their use. And, why not? Threats of withholding of federal and state funds have been made, but at the moment, city officials seem determined to write their own rules even if it means paying their own bills.



Illustrations abound of grants in aid from larger units of government to smaller, and of the controls that accompany the grants. Federal Aid for Education, hotly debated in the current Congress, brought forth the usual arguments that control need not go with the aid. But we have had long experience with aid for education at the state level, and the evidence is conclusive. There is no reason to think that federal aid would be different. What local school board has not been faced with the rules laid down by the state regarding education and certification of teachers, choice of text books, questions of transportation of pupils, tenure of teachers, building programs, curriculums, days of attendance, examination of students, and a host of others? Is there no federal or state regulation of the school lunch program where "surplus" food is involved?



Can you imagine a multibillion-dollar federal highway program with no regulation of engineering specifications, location, signboards, and so forth and so on?



Or federal or state housing? Why shouldn't rules and regulations be established regarding nationality, race, and income of the renters? Or government contracts? When a government contracts with private firms for the manufacture of its many requirements, it would seem proper for it to write any specifications it pleases with regard to wages and hours of the workers.



A classic example of how controls accompany grants is our treatment of the American Indians. Who can imagine what the status of the Indian would be today, had he gained the freedom exercised by other Americans - the freedom to be responsible for himself? Instead, he has been a "ward of the government" for decade after decade - controls accompanying handouts.



The solution to what many feel is too much federal or state control of our daily lives is not to be found in trying to write laws that would, in effect, make these units of government irresponsible in their fiscal affairs. Sound fiscal policy requires control by the unit of government that makes the funds available. Whether or not it is a proper function of government to make such funds available is quite another story and cannot be considered here.



The principle involved is not unlike that which governs the finances of a family. So long as the father supplies the son with spending money, it is proper for the father to have something to say about the spending, even though the son may be saying or at least thinking' "Boy, will I be glad when I get to earning my own money and can spend it as I wish!"



The solution is so simple and obvious that it hardly needs stating. If we don't want state or federal control of certain of our activities, we must not have state or federal financing of them.



~ W. M. CURTISS





25. "The United States Constitution was designed for an agrarian society."

"The President is hobbled in his task of leading the American people to consensus and concerted action by the restrictions of power imposed on him by a constitutional system designed for an eighteenth century agrarian society far removed from the centers of world power." 1



* * *



WHAT IS MEANT by "consensus" in this context? It means the shaping of a unified, common collective by Executive action in order that the nation can speak with one voice - the voice of the President. This project, if successful, would put an end to freedom of speech and freedom of the press, for obviollsly there can be no nation-wide "consensus" when everyone is free to advance his own opinions.



What is meant by "concerted action" in this context? It means, among other things, that the U.S.A. shall act as a disciplined body under centralized direction. Economically, the President would determine where, in the markets of the world, our largess would be bestowed and withheld and under what conditions. This would substitute a single, arbitrary exchange mechanism for untold millions of exchanges. How can there be a "concerted action" of a whole nation when anyone is free to buy and sell whatever and wherever and to whomever he chooses? This would spell an end to what is left of the free market in this country. Further, it would sound the death knell to private properly, for an individual must be in control of a good or a service before he can be said to own it. The call for "concerted action" is the call for all-out federal control.



The best instance of "consensus" and "concerted action" among the nations of the world today is Russia. There the Premier of the Supreme Soviet is not "hobbled in his task of leading the... people to consensus and concerted action by the restrictions of a constitutional system designed for an eighteenth century agrarian society." In Russia - still substantially agrarian 2 - both the consensus and the action are whatever Premier Khrushchev dictates. Freedom of choice as to how one employs himself, what he does with the frui