the freeman 1967 · with healthier sympathies and so berer ideas," wrote [william]...

THE FREEMAN

Y' George Roche looks carefully atsome of the proposals for the youthof America and warns of the dangersof such regimentation p. 195

Y An Illinois businessman turns toThe Law of Bastiat (1850) for guidanceback toward liberty in 1967 .... p. 203

Y' The President of Rockford (Illinois)College deplores the power-seeki ng efforts of many groups in our time andsuggests a search for a moral alterna-tive p. 207

,J" Granville Wilson (no relation to thePrime Minister) seems to understandthe flight from Britain of talent stifledunder socialism p. 215

Y' Harold Fleming, author of TenThousand Commandments, affords apreview here of some ideas to be covered by him in an expanded and updated study of antitrust laws and 'theirimpact p. 221

~ Back to Britain, briefly, as GeorgeWinder focuses on the latest bureau-

cratic bungling of "wages and in-comes" policies p. 231

~ But, as William Henry Chamberlinreadily perceives, not all such bungling is foreign; we have our own widening "public sector" - at public ex-pense '" p. 235

Y' Check again the opening article byGeorge Roche, and then see how Robert Tyson, finance chairman of U.S.Steel, would advise American youth

............ p. 243

~ Drury's Capable of Honor and Alexander's The Spirit of '76 boost JohnChamberlain's hopes for a libertarianrevival p. 250

~ And W. H. Chamberlin shares hisenthusiasm for The Inside Story of theU. N. by Hernane Tavares de Sa

............ p. 2'53

,~ Mary Jean Bennett complimentsRaymond Moley for his latter-day understanding of The First New Deal, inwhich he played a part p. 255

Anyone wishing to communicate with authors may sendfirst-class mail in care of THE FREEMAN for forwarding.

APRIL 1967

LEONARD E. READ

PAUL L. POIROT

Vol. 17, No.4

President, Foundation forEconomic Education

Manag'ing Edit01'

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Copyright, 1967, The Foundation for Economic Education, Inc. Printed inU.S.A.

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A Youth Corps

for America?

GEORGE CHARLES ROCHE III

WITHIN the past two years therehave been several signs pointingtoward the resurgence of an ideawhich the American people traditionally have refused to accept.The warmed-over idea centers oncompulsory service for all youngAmericans. The pressures of thewar in Vietnam, the growing protests over the draft, the problemof unemployment, especially amongyoung people, and the tragi-comicresults of Great Society experiments in the "War on Poverty"have combined to make compulsory youth service a topic of discussion once again.

President Johnson reopened the{····..cllln.'n'.. r in a speech at the Univer-

of Kentucky in 1965, propos"to search for new ways

[wherebyI every young Americanwill have the opportunity - andfeel the obligation - to give at

Dr. Roche is a member of the staff of theFoundation for Economic Education.

195

196 THE FREEMAN April

least a few years of his or herlife to the service of others in thisnation and in the world."

As draft protest, unemployment,and the rest of the problems dogging the footsteps of the GreatSociety continued to mount in intensity, other more specific references to "public service" for youngpeople began to be heard as well.In May, 1966, Secretary of Defense McNamara delivered an address at Montreal in which he admitted that the existing SelectiveService System was unfair andlargely unworkable: "It seems tome that we could move towardremedying that inequity by askingevery young person in the UnitedStates to give two years of service to his country - whether inone of the military services, in thePeace Corps, or in some other volunteer developmental work athome or abroad."

Secretary of Labor Wirtz entered the field during November,1966, with a "policy for youth"along the same lines. The Washington Post reported enthusiastically, "It could become a majorweapon in the War on Poverty, isdesigned to remove inequities inthe educational system and is animplicit deterrent to juvenile deli'nquency."l Specifically, Secretary

1 Frank C. Porter, "Wirtz BroadensYouth Service Plan," Washington Post,Nov. 20, 1966.

Wirtz outlined a plan in whichevery eighteen-year-old Americanboy and girl would be compelledto register in a program which re ...quired two years of education,military service, community service, or employment.

Universal Military Training

Meanwhile, others were offeringyouth proposals of their own.Former President Eisenhower inSeptember, 1966, told the nationthat, while Chief of Staff of theArmy, he had made every effortto establish a system of UniversalMilitary Training for the UnitedStates, and suggested that UMTwould not only solve the problemsof the draft but would achieve anecessary degree of fitness anddiscipline among American youth.He stressed the disciplinary features of such a program: "... although I certainly do not contendthat UMT would be a cure for juvenile delinquency, I do think itcould do much to stem the growing tide of irresponsible behaviorand outright crime in the UnitedStates. To expose all our youngmen for a year to discipline in thecorrect attitude of living, inevitably would straighten out a lot ofpotential troublemakers."2

While the former President felt

2 Dwight Eisenhower, "This CountryNeeds Universal Military Training,"Reader's Digest, Sept., 1966.

1967 A YOUTH CORPS FOR AMERICA? 197

that such a program should bemade compulsory for virtually allAmerican boys, he made it clearthat he would limit this compulsory training to formal militarydiscipline and related matters,since he did not approve of offering an alternative such as thePeace Corps or a conservationcorps.

A Droit Without Guns

Though the former Commanderin Chief proposed to allow compulsion of all American youth onlyfor purposes of military training,it soon became evident that othersocial planners had far more inmind for America's young people.Writing in Saturday Review, aPeace Corps official outlined thegreat social changes that mightresult from such a program:

The young men and women comingout of high school are themselves amaj or undeveloped resource. Theyrepresent America's future. Theyneed to be asked to give some kind ofactive national service. They need "toget the childishness knocked out ofthem, and to come back into societywith healthier sympathies and soberer ideas," wrote [William] James.... They need to cross cultural frontiers, experience the outside world,and become world citizens, says MaryBunting.3

3 Harris Wofford, "Toward a DraftWithout Guns," Saturday RevieuJ, Oct.15, 1966.

As the public discussion of suchcompulsory youth programs progressed, it soon became evidentthat many of those advocatingsuch programs had far more inmind than the mere solution ofsuch problems as the draft andteen-age unemployment. Whenquestioned concerning his proposal, Secretary Wirtz expresseda doubt that present inequities inthe draft were any worse "thanthe unfairness of the way one boyor girl out of every two gets tocollege and the other one doesn't."Clearly, great social changes of asweeping nature were being contemplated by the advocates of compulsory youth programs.

IIEvery Area of National Need"

While former President Eisenhower was willing to limit his proposal for a compulsory youth program to military training andsuch side-benefits in health or discipline as might accrue to American youth, his program wasscarcely an opening wedge formore ambitious social planners:"Former President Eisenhower tothe contrary notwithstanding, thePentagon says it opposes Universal Military Training. What, then,are the nation's needs for nonmilitary service by young' volunteers? The President says thatvolunteers are .. required in 'everyarea of national need,' especially


in teaching, alleviating poverty,and conservation." Thus, HarrisWofford, a Peace Corps administrator, described what he termedan "historic opportunity." He wenton to describe enthusiastically theday of compulsory national service which had already dawned 'inIsrael and Ethiopia. "But it remains to be seen whether America- which, through the Peace Corps,has brought the idea of volunteering to world-wide attention - willnow respond and turn to the Ethi0pian innovation and the exampleof Israel. ... Will Lyndon J ohnson now tap it on a much largerscale? Will the administrationthat established 'escalate' as aword of war find ways to escalatevolunteering for works of peaceto a new level of practically universal participation ?"

Urging that constructive peacetime assignments should be demanded of all, Wofford inquired,"Who is too tall to teach? Whosefeet are too flat to be a tutor? Whyshouldn't almost everyone be I-Afor national service?" Mr. Wofford pointed to the desirability ofan expanded Head Start project,new educational programs of theOffice of Economic Opportunity,new programs stemming from theV{hite House Conference on CivilRights, and an expansion of public education to four- and five-yearolds. 'Vhere would the new teach-

ers come from in this vastly expanded program? "With specialtraining and supervision, hundreds of thousands of volunteers,supported by a Peace Corps-likesubsistence allowance, could be theanswer. To move toward universalearly childhood education, we mayneed to move toward universalservice."

Is education the only needwhich could be filled by a newprogram for American youth? Ifsome Americans are too immatureto fill a teaching position" thereare, however, needs whichyounger volunteers could helpmeet. One of them might even involve washing dishes and clothes.Millions of working mothers, especially in poverty-stricken families, desperately need some systemof day-care for their children.Volunteers just out of high schoolcould be trained to provide this onassignments in homes or specialday-care centers."

A Program with Teeth in It

It seems that once the exerciseof political power is viewed as acceptable, the logic of social planning requires the exercise of thatpower over a larger and largerarea of human affairs. As the Secretary of Labor remarked: "Thiscountry is probably more disposedright now to move ahead on the'social welfare' front with stern-


ness than with sympathy. Thefact, whether attractive or not, isthat concern about juvenile delinquency looms larger today in agood many people's minds. thantheir concern about poverty - eventhough that may well be the causeof the delinquency. There is a cancer here, and the country is readyfor surgery."4

Proponents of these youth programs have been referring to theprocess of "volunteering." Yet,the "voluntary" aspect of the planalways proves difficult to discoverin practice. Secretary Wirtz admitted that serious thought wasbeing given to making such a program compulsory: "It would beprecisely those who present themost serious problems, both forthemselves and for the community, who would fail to take advantage of any or all of the optionswhich were offered them and theircontinuing derelictions and misdemeanors would make a new system seem not to be working evenif it were in fact improving thegeneral situation materially." Yes,America's young people would be"free to choose" among the options, but would be required tofollow one of the alternatives outlined in the plan.

Once such "opportunities" areprovided, it is a short step to insisting upon everyone's benefiting

4 Porter, op cit.

from the plan, whether he wishesto do so or not. Wirtz told an audience at Catholic University, "IfI read the current national mood,and guess at your own reaction, itis that there has been too littledone about people's not using theopportunity they already have."The Washington Post thoughtthose words "presaged a possibleshift of emphasis in the Johnsonadministration's whole social philosophy, regarded by some criticsas overly solicitous and permissive, toward a hard-boiled insistence that the intended beneficiaries of governmental help makegood use of it." The exercise ofpower seems to breed an appetitefor the further exercise of power.

The potential dimensions ofsuch a youth program are staggering. All young people, girls aswell as boys, would be registeredon their eighteenth birthday, orearlier if they have left school.Physical, mental, and psychological tests would be administeredand used to help decide which ofthe various channels of "nationalservice" every American youthwould be compelled to enter. Noone could be exempt; and in allprobability many youngsterswould find themselves directed ona course other than they mighthave chosen. What parent wantsto see his child compulsorily enrolled in such a program?


What Will It Cost?

One question that must beraised in any discussion of compulsory programs designed to enroll all American youth is thestaggering cost of such a plan.Where is the money to come from?In recommending Universal Military Training, former PresidentEisenhower admitted, "I have noready-made plan for financingUMT. I wish only to say that abig, powerful country such asours could surely find a way topay the bill."

Nor did Mr. Wofford providedirect answers concerning the financing of his nonmilitary compulsory youth program: "Howmuch would such a volunteer service program cost? Not as muchin a year as one month of the warin Vietnam. Not as much as doingnothing - as failing to mobilizethe talents and labor of theyounger generation. Not as muchas hiring professional teachers orsocial workers or constructionmen - if we could find enough ofthem - to do what these volunteers could also do."

In other words, however expensive the program, its desirablegoals would justify that expense.This is the plea always advancedby the advocates of any new extension of statist authority.

How would such a program bestaffed? President Eisenhower's

solution: "We could call in reserveofficers for a time if needed, andI am confident that we could findthe other necessary people if wehad to - just as we did duringWorld War II." Just as we didduring World War II! A moretotal involvement of the nationalgovernment in the private affairsof its citizens could hardly beimagined.

Before America embarks onsuch a gigantic raid on the treasury - and even more important,such a major intervention into theprivate lives of its citizens - thenation might ask itself how thepresent "youth programs," alreadyunder political direction, haveprospered. For example, what ofthe Job Corps? One camp in theMidwest had 450 men as enrolleesand more than 450 employees.Seventy employees worked directlywith the Job Corpsmen, meaningthat over 380 governmental employees were devoting their timeto the "administration" of thework actually performed by theother 70.5 This same camp treatedthe American taxpayer who wasfooting the bills for the entire affair to the spectacle of sevenyoung Job Corpsmen committingsodomy against a fellow enrollee.Apparently, this is a simple mis-

5 Don E. Cope, "It's What's Happening, Baby," National Review, Oct. 19,1965.


demeanor in the Job Corps, sincefive of the boys were allowed toreturn to their homes and theothers to re-enter the program atthe Job Corps camp. The statement of one of the hired counselors at the camp makes clearthat thievery was common anddiscipline virtually nonexistent.IVrany of the young men ran awayfrom the camp rather than participate further in what one ofthem described as a "man-madehell."

Meanwhile, the NeighborhoodYouth Corps in the nation's capital reported that 75 per cent ofthe teen-age girls who had beenmembers of the program becamepregnant while enrolled. Officialsof the program swung into actionalmost immediately after this itembecame public knowledge. One ofthe administrators announced thatgirls in the future would be urgedto visit District Health Department Family Planning Clinics. Hespeculated, "Maybe we can't cutthe physiological action, but wecan cut the pregnancies."6

How much money does it taketo produce such results? In theJob Corps, more than $7,300 hasbeen spent to date for each manenrolled in the program! As manyparents well know, that would goa long way toward putting a youngman or woman through college.

6 America's Future, Dec. 12, 1966.

Seeming Lack of Concern

How does it happen that suchproposals can be publicized in oursociety, proposals with such disastrous results in the pilot projects, proposals of such fantasticcost, proposals with such totalitarian implications for our youngpeople, and yet cause little if anypublic outcry?

The answer is a painful one forbelievers in limited government.An erosion of faith in constitutional limitations and personalfreedom has so long continuedthat all proposed governmental actions are considered, not in termsof principle, but in terms of thesolution of some "problem" oranother. There are protests againstthe inequities of the draft? Thenmake the draft equitable by imposing service on all boys! Thereare "social problems" to be solved?Then extend the system to impressall of our young girls into serviceas well! Some parents and privateorganizations are "mis-directing"the accomplishments and trainingof our youth? Then remove thatresponsibility from parents andprivate organizations! Such is theprevailing thinking of our age.

The universal conscription ofour young people for "social" goalsmay be so raw and blunt a forayinto the private sector that it willnot reach fruition at this time.But the trial balloons are up and


such "social planning" surely liesahead unless the direction of ourthinking, not as a group, but asindividual citizens and parents, isreversed.

Try freedom

The disastrous record of coercion when it has been tried is wellknown. The productive and ennobling capacities of a societypervaded by freedom are equallywell known. But there are none soblind as those who will not see.We must first train ourselves tothink the problem through andapply the evidence already beforeus if any lasting changes are tobe produced. The point is simple:Freedom works, if we will but allow it. Is teen-age unemploymenta problem? Then remove the coercion of the minimum wage law andafford businessmen a chance toprofit by hiring and trainingyounger people. Protest against

the draft is a problem? Then stimulate enlistment by hiking military pay and benefits enough tobe competitive with the privatesector.

Yet, such solutions seem beyondthe planner's comprehension. Whencoercive legislation creates problems within a society, as eventually it must, the coercionist answer is always the same: applymore coercion. This is exactlywhat is proposed in the compulsory "social service" impressmentof America's. young people.

After urging a universal service program for youth, Secretaryof Defense McNamara concludedhis Montreal address with wordsfar more appropriate to the freedom alternative than to the position he was advocating: "I, forone, would not count a global freesociety out. Coercion, after all,nlerely captures man. Freedomcaptivates him." ~

KEITH WOOD

MANY thoughtful people have become alarmed about the rapidlygrowing power of government.Those who have advocated government interventions have thoughtthey had all the answers. Nowtheir socialist chickens are cominghome to roost. Every such schemeof government intervention hasbeen tried and tried again - andalmost without exception the failure has been a dismal one.

It has often been noted that aproblem is close to solution once ithas been clearly and adequately defined. As I have observed the problem from the vantage point of afree enterpriser, it seems to methat it can be expressed this way.People want to do things to upliftthemselves or others. This altogether commendable desire hasbeen widely encouraged by theteachings of our religious leaders.But as soon as we decide to dothings for ourselves or others, we

Mr. Wood is President of Wood BrothersManufacturing Company of Oregon, Illinois.This article, condensed from a recent speech,expresses his concern over the growing tendency of organizations and groups to turn fromvoluntary to coercive methods.

bump into a limitation of resources. Although some people havemore resources than others, everyone has his limitations. Thoughtless or careless dissipation willsoon exhaust the material meansof anyone.

Now, finding ourselves in thissituation, there are two things wecan do: Each of us can do what heis able to do within his own limitations orhe can seek to augment hisresources by those of others. Thereis nothing necessarily wrong withthe combining of resources to do ajob. A great deal can be accomplished in this way; examples areall around us. The physical facilities of a church organization are agood example. However, when wedecide to mobilize the resources ofothers to assist in carrying out ourplans, there is one other choic~ wehave to make. This is whether ornot to rely on the voluntary helpof other people.

The rawest forms of coercionare rejected by almost everyone.There are very few who think theyshould take a gun and hold up the

203


local bank in order to get the resources they think they need. Butthere is a way to do the same thingthat has long been sanctioned byour society. This way is to levy atax and hire a policeman to enforceits collection.

This, in my opinion, constitutesa perversion of the police power.Policemen and courts should protect us in our lives and the enjoyment of our private properties. Ourprivate property is the fruit of ourlabor and it should be ours to enjoyas we see fit so long as we injure noother peaceful person. The policemen and courts should not be usedto take from some to give to othersor to take from all of us for thebenefit of a privileged few.

This may seem like a radical doctrine, and it is today! However, itwas well understood by the authorsof our Constitution and the principle was quite well observed forthe first century and a half of ourcountry's existence.

There are no doubt many reasons for our failure to successfullysupport and defend the limited government our forefathers so wiselycreated. It seems to me that one ofthe main reasons for our failurehas been the popular glorificationof the idea of majority vote.

It is true that there are manythings which must be decided bymajority vote. There appears to beno other satisfactory way. But just

because majority vote is a goodway to decide some things doesn'tmean that it is a satisfactory wayto decide all things. A typewritermay be excellent for writing letters, but that doesn't make it agood adding machine! The limitation that should be put on majorityvote is a moral principle. We shouldrefrain from doing anything bymajority vote that we would nothave a moral right to do as individual people.

When this idea is taught, allkinds of practical objections occurto everyone. This is simply becauseviolations of the principle are sowidespread that we find it hard toimagine any other way of doingthings. A good example is a publicswimming pool as has been financedby taxes in many communities.Now a swimming pool is a wonderful thing. Our family has one.It has been a source of enjoymentto the neighbor's children as wellas our own. It is fine for a community to have an adequate swimming pool. Still, it must be admitted that many children have successfully reached adulthood andmany adults have successfully livedout their lives without ever goingnear a swimming pool. If exerciseis desired, it can be had in otherways. If recreation is needed, thechildren can play baseball or football. There is nothing essential,then, about a swimming pool.

1967 LIBERTY AND LAW 205

However, in spite of its beingnonessential, given the presentframe of mind of the Americanpeople, there is little problemabout getting a majority vote andlevying the subsequent taxes tofinance a swimming pool. By sodoing, we require the elderly person who lives on a pension to paypart of the cost of the swimmingpool. The widow who may hardlybe able to support herself finds thetaxes on her home increased.

This is usually accomplished bya simple majority vote of thosevoting - a very small minority ofthose who will pay the price. Thisis a process which seems to me tobe immoral and unj ust.

Are there alternative ways bywhich these things can be done?Of course, there are! Many communities raise funds by popularsubscription for swimming pools.This method has been very successful and the promoters are notthen burdened by any question asto the morality of their actions.Many country clubs provide swimming pools. In some communities,small groups of people get together to finance a pool for theirmutual enjoyment.

It is difficult to convince peoplethat this principle should be adhered to so rigidly. However, it islikewise hard to convince peoplethat they should always be honest!Or that they should never steal!

The laws of God are violated everyday and many times. A principle,however, is not invalidated by ourfailure to observe it. The soundprinciples of a moral order are independent of our observing them.It is similar to the law of gravity- if we jump off a cliff, we'll landjust as hard whether or not webelieve in the law of gravity!

It is easy, of course, to be discouraged when actual society iscompared to any ideal. How canwe do things differently when particular ways have become woveninto the pattern of our lives? Thisis not an easy question to answerexcept in one respect: each one, asan individual, can easily quit advocating the extension of government into any areas where government action is questionable.

We should have a well-financedpolice department for the suppression of crime. Our courts shouldbe provided with adequate facilities for judging the cases whichcome before them. All citizensshould cooperate with governmentin its legitimate function of preventing injustice. This work hasnothing to do with swimmingpools, parking lots, airports, renewal of blighted business areas,or the thousand and one othergovernment interventions that disrupt our lives, destroy our security, and limit our opportunities.


Frederic Bastiat, a Frencheconomist, statesman, and authorwho died in 1850, wrote a remarkable book called The Law. As adeputy to the legislative assembly,Mr. Bastiat opposed the socialismto which France was xapidly turning at the time. In the course ofhis opposition, he explained eachsocialist fallacy as it appeared:

This question of legal plunder mustbe settled once and for all, and thereare only three ways to settle it:

1) The few plunder the many.

2) Everybody plunders everybody.

3) Nobody plunders anybody.

It is impossible to introduce intosociety a greater change and agreater evil than this: A conversionof the law into an instrument ofplunder. What are the consequencesof such a perversion? It would require volumes to describe them all.Thus we must content ourselves withpointing out the most striking.

In the first place, it erases fromeveryone's conscience the distinctionbetween justice and injustice.

No society can exist unless the lawsare respected to a certain degree. Thesafest way to make laws respected isto make them respectable. When lawand morality contradict each other,the citizen has the cruel alternativeof either losing his moral sense orlosing his respect for the law.

These two evils are of equal consequence, and it would be difficult fora person to choose between them.

The nature of law is to maintain

justice. This is so much the case that,in the minds of the people, law andjustice are one and the same thing.There is in all of us a strong disposition to believe that anything lawful isalso legitimate. This belief is so widespread that many persons have erroneously held that things are "just"because law makes them so. Thus, inorder to make plunder appear justand sacred to many consciences, it isonly necessary for the law to decreeand sanction it....

Law is justice. And it is under thelaw of justice - under the reign ofright; under the influence of liberty,safety, stability, and responsibilitythat every person will attain his realworth and the true dignity of hisbeing. It is only under this law ofjustice that mankind will achieveslowly no doubt, but certainly - God'sdesign for the orderly and peacefulprogress of humanity.

It seems to me that this is theoretically right, for whatever the questionunder discussion - whether religious,philosophical, political, or economic;whether it concerns prosperity, morality, equality, right, justice, progress, responsibility, cooperation, property, labor, trade, capital, wages,taxes, population, finance, or government - at whatever point on thescientific horizon I begin my researches, I invariably reach this oneconclusion: The solution to the problems of human relationships is to befound in liberty. ~

Frederic Bastiat's The Law, translated by DeanRussell, is available from the Foundation forEconomic Education, Irvington - on - Hudson,New York, 10533. $1.00 paper; $1.75 cloth;quantity rates on request.

The Moral Equi\lalent

of Power

JOHN A. HOWARD

SOME twenty-five years ago a mandied and bequeathed a small fortune to be spent in helping the people of other nations to understandthe American way of life. Theagents chosen to .administer thefunds were bright, conscientiousfolk and they went to work to carryout the intentions of the deceased.The task sounds simple enoughwhen it goes by the first time, butit is an elusive object when onetries to apprehend it. After all,what is the American way of life,and how can it be explained?

After many months of seekingadvice from experts and weighingcarefully one project after another,the executors concluded that themore elaborate or grandiose theplan, the less likely it was to fulfillthe purpose. Ultimately, they de-

Dr. Howard is President of Rockford College,Rockford, Illinois. This is a condensation ofhis Convocation Address of September 21,1966.

cided to make some movies aboutthe everyday life of inconspicuouscitizens, with the commentaryavailable in many· different languages.

The film follo'wed a paper boy onhis early morning .route, and amilkman on his, as they left theirdeliveries on front porches and atapartment doors. A small townbanker was shown at his desk discussing loans with farmers, andlater, in his overalls, painting hisfront fence. There was a committeemeeting of a service agency andsome firemen playing baseball withthe neighborhood kids.

Such scenes scarcely seem destined to nUlke the blood boil withundying "....,,~J.llsiasm for the American waJ of life, but there aresome messages here which youand I cannot read. We are blindto what we take for granted. Weattach no special significance to

207


whatever is commonplace in ourown lives. However, in many nations, nobody would' dream ofleaving anything outside a frontdoor, especially anything as desirable and as swipeable as freshmilk or today's paper. The readiness with which an American dirtfarmer can obtain a loan forseeds, fertilizer, and machinery isa surprise to many peoples, butnot half as astonishing as thevision of a banker doing manuallabor. A view of public servantsengaged in a children's ball gameis likewise a jaw-dropper in thosenations where a status positionrequires a rigid formality of behavior. But the real shocker inmany foreign cultures today, as itwas to the Frenchman, ·Alexis deTocqueville, one hundred andthirty years ago, is the voluntarybanding together of common citizens in a service agency to helptheir neighbors.

The films portrayed simple actions in the lives of trusting, helpful, friendly, unpretentious people. It was a benevolent society inthe precise meaning of that word- benevolent~ well-wishing.

Today many of us might seethese films as the creation of anaive P-ollyanna~or at least as thepresentation of a distortedly favorable and falsely healthy American community. The festeringsores-of poverlYI prudery, hypoc-

risy, human exploitation, and unfulfilled civil rights have beenunbandaged and revealed in alltheir raw ugliness, and the publichas come to look upon the generalAmerican as something less thanhealthy, if not outright sick. Actually, the executors of the bequests were not all that insensitive or indifferent to our socialproblems, but their charge was toconvey what was unique about lifein this country, and in that, I believe their work is still remarkably valid.

However, the qualities of American life which they highlightedare, it seems, waning. And it is tothis point that I think we mustattend today. Trustfulness, friendliness, helpfulness, and unpretentiousness seem to be yielding tosuspicion, arrogance, aggression,and defiance. Power is becomingthe dominant motive of our domestic relationships as well as ourinternational ones - power soughtand power wielded and powerfeared. We observe on all sidespeople trying to force others tobehave differently. Alternate techniques of human interaction arebeing cast aside in favor of muscleand might.

flnion Abuses of Power

In'recent months we have seenunion phalanxes running roughshod over the opposition, exerting

1967 THE MORAL EQUIVALENT OF POWER 209

brute power with apparent indifference to the consequences forthe general public or even for the\velfare of their own membership.A self-defeating newspaper strikein New York City eventuallywrested some concessions, principally for severance pay,from thoseemployer newspapers which survived the strike. In the same city,the public transport workersforced a new wage scale which thecity officials confess they cannotpay without subsidy from otherlevels of government. The grounding ofa number of major airlinesextracted precedent-setting payincreases. Wholly apart from themillions of people whose livelihoodwas directly, and in many cases,very seriously curtailed by thesework stoppages, the effects uponthe nation were damaging beyondany possible justification.

The right to· strike has beenwholly accepted as a technique ofthe conduct of life in America.And yet this right has fosteredthe concentration of power to suchan extent that a relatively smallsegment of the population candisrupt the entire economy.

The Federal government haslikewise come into greater andgreater power which it applies withincreasing frequency. It has, in recent months, publicly threatenedthe banks and the Chicago schoolsand the producers of tobacco and

aluminum and steel with theheavy guns of its economic arsenal to the point that the officersof an increasing range of enterprisescandidly admit they can nolonger express public oppositionto the policies of the WashingtonAdministration. When power isconcentrated, freedom is threatened. When power is used, freedom is curtailed. A diminishingatmosphere of freedom would normally arouse the intellectual community to the defense of the victims, but, so far, the governmenthas used its coercive weapons inbehalf of objectives dictated bythe intellectual community andthe freedoms that have beenabridged were those of Htheenemy." The traditional defendersof freedom have either cheeredor sat silent.

One Violation Becomes theJustification for a Chain of Others

This attitude on their part is, Iam convinced, woefully shortsighted, for aggression begets aggression and feeds on itself. Successful strong-arm techniquesused on one battlefield are quicklyadapted by the storm troopers onanother. The intellectuals whohave been so willing to have thegovernment overpower those whothink otherwise are finding theirown academic centers victimizedby powerful assailants. If there is


any truth to Professor Feuer'sarticle entitled "The Decline ofFreedom at Berkeley" in thecurrent issue of The AtlanticMonthly, last year's student assault has already brought substantial devastation to one of theworld's most renowned academiccenters.

Force cannot be a legitimateweapon in my hands and an improper one in yours, if we areequals. Once force becomes themain instrument of public policy,all aspirants to anything are automatically licensed to intimidateand brutalize, if they can. One isreminded of an illustration used recently by Barbara Ward. "I wouldeven go further and say in NewGuinea, it is attractive to live ina village because every time youleave that village, you changeyour language and that gives youa perfect right to head-hunt in thenext village. Well, obviously thisis a very attractive way of running human affairs and this iswhat some people want to restorein Europe. What after all was1914 and 1939 but the idea thatyour tribe can head-hunt in thenext village?" We haven't yet returned to actual head-hunting, butwe are aimed in that direction.

Civil Rights Plus Power

The civil rights movement hascaught the disease, and has made

the predictable progression froman original basis of limited, applied pressure to a spectrum ofcoercive action that includes outright terrorist tactics, leavingmany of its most genuine and active participants confused anddismayed at the beast they havehelped to nourish.

Perhaps you saw the article inLook Magazine reporting an interview with Lillian Smith, theauthor of Strange Fruit, who wasone of the best-known backers ofthe Student Non-Violent Coordinating Committee. Miss Smith,gravely weakened by cancer,talked about her resignation fromSNCC when it embraced the BlackPower concept. She recalled anearly warning she had made tothe officers of that organization."You're going to have the sametemptation that Jesus and Gandhihad - the temptation of personalpolitical power. You will want toget power in your own hands . . .You will want to stir people'shatreds."

As in the case of. anybody thatstarts down the path of powertactics, the civil rights leadershave had to run faster and fasterto keep ahead of their troops, procuring more devastating arms andmaking more sweeping demands tosatisfy the power appetite theyhave generated. Napoleon and Hitler and Stalin, indeed, all tyrants,


have been destroyed by the sameself-accelerating pace of aggression.

In the Name of the Church

The national acceptance of forceas the main technique for changeis nowhere so startlingly manifestas in a statement printed in theJuly 31st issue of the New YorkTimes signed by forty-eight members of the National Committee ofNegro Churchmen. Their purposeis to help people comprehend thereasons behind the thrust for BlackPower and to justify Black Powerwithin a certain framework of understanding. The entire text isbased on an assumption that "powerlessness breeds a race of beggars," and that it is only as poweris placed in the hands of Negroesthat they can achieve the actualrole of complete citizens and thefull dignity of human beings.

There is some reason to believethat instead of powerlessnessbreeding a race of beggars, powerbreeds a race of tyrants, but mypoint here is that these are Christian clergymen who declare thatpower in its coercive, leverage, intimidating sense, is essential to thefull life of a citizen. It is my recollection that Christ at no time recommended or endorsed the use offorce to accomplish any of his aspirations for mankind. His doctrine was a self-policing one. He

did not urge that prostitution beprevented by law and stamped outby a constabulary. He directed theindividual offender to go and sinno more. That half a hundred ofChrist's prominent ministers wouldproclaim a human right to powerin his name is, I should think, dramatic evidence of the degree towhich coercive power is coming todominate the hopes as well as theactions of all segments of our population.

The Process of Corruption

Now, there are some fundamental problems that may arise whenforce becomes the instrument ofsocial interaction. I shall indicateonly two. One is that however loftythe original motives of any powerwielding group, human nature issuch that that power eventuallyseems to fall into the hands eitherof self-serving or self-righteousofficers. On the one hand, the original slogans become hypocriticaljustifications for plundering thecommunity and for gathering morepower. On the other, the officersseek additional power in order toforce their "enlightened" views onmore and more people.

Perhaps you heard of the company president who called in anemployee who had refused to signup for the pension plan. "You signor be fired," he declared. "I'll sign,"was the quick response. "Well, why


in blazes didn't you sign before1"demanded the boss. "Nobody explained it to me like this before."

Any person can readily compilehis own list of corporate profiteers,or labor leaders, or government officials, or college executives, whosecommendable motives, whichbrought them to positions of leadership, have yielded to the empirebuilding impulse and whose concern for their constituency has given way to the grinding and inhumane techniques of tyranny.

The degree to which the pressfor power leads to corruption ofword and deed is dramatically illustrated in the Berkeley uprisings, and has been incisively analyzed by Ayn Rand in an essay entitled "The Cashing In." She observes:

To facilitate the acceptance offorce, the Berkeley rebels attempted to establish a specialdistinction between force andviolence: force they claimed explicitly, is a proper form of social action, but violence is not.Their definition of the termswere as follows: coercion bymeans of a literal physical contact is "violence" and is reprehensible; any other way of violating rights is merely "force"and is a legitimate peacefulmethod of dealing with opponents.

For instance, if the rebels oc-

cupy the administration building, that is "force" ; if the policemen drag them out, that is "violence." If Savio seizes a microphone he has no right to use,that is "force"; if a policemandrags him away from it, that is"violence."

Consider the implications ofthat distinction as a rule of social conduct: if you come homeone evening, find a stranger occupying your house and throwhim out bodily, he has merelycommitted a peaceful act of"force," but you are guilty of"violence" and you are to be punished.

The theoretical purpose of thatgrotesque absurdity is to establish a moral inversion: to makethe initiation of force moral, andresistance to force immoraland thus to obliterate the rightof self-defense. The immediatepractical purpose is to foster theactivities of the lowest politicalbreed: the provocateurs, whocommit acts of force and placethe blame on their victims.

force and Counterforce

The first problem inherent in theuse of coercive power as a social instrument - the abuse of power byits agents - is a problem of humantendencies, albeit regUlarly recurrent tendencies. The second difficulty is an absolute and is always


available to those who would use itin the situations where power isused to produce change. If any action is taken because of appliedforce, then the logical means forbringing about a counteraction isto amass an even greater counterforce. We watch with well-justifiedsqueamishness as the thrust forBlack Power provokes the counterthrust to quash Black Power. Aggression begets aggression andfeeds on itself. Unless there is amassive and convincing repudiation of the strong-arm tactics inthe field of civil rights, and in thearena of student demands, we canexpect to see civil disorder spreading to every other point where issues are joined. When the acceptedvehicle for social change is coercion, the destination is ultimatelyeither absolute despotism or primitive, savage anarchy. In eithercase strength prevails, reason issuperfluous and compassion an impediment. The rallying cry of theBerkeley Free Speech Movement,"Strike now, analyze later," is amonument to power gone berserk.

Let us remember that in the history of man, the usual condition ofhis life has been one of oppression.Tyranny has reigned over mostpeoples most of the time. We inthis country have been blessed witha period of liberty and security anddomestic tranquillity. It may bethat our luck has run out - that it

was only luck - that reason andgood will are recessive human qualities and aggression the dominantone. It appears as if our society isnot only tolerating force as themeans of social change but encouraging and even demanding it.

let Government Do It

What can be done about a tendency of society to rely on force toaccomplish its ends? Man has longsought a moral equivalent of war.Our problem here is to move thattarget a little closer with, perhaps,a better chance of hitting it. Whatwe need now is a moral equivalentof power.

In the first place, most civilizedmen have a natural reluctance, individually, to jam something downsomebody else's throat. The use offorce seems to grow in acceptability as it becomes the instrument ofa committee or a group, or betteryet, an even more impersonal agency, the law. It would be a strangeparadox, but I suspect one couldmake a good case for the proposition that the law has become a substitute for morality. In any event,to avoid the circumstances whichinvite the use of more force, theefforts to produce social changemust be undertaken by individuals or by the smallest possiblegroup of human beings. Changeundertaken by large groups or bygovernment decree seems to neu-


tralize moral impulses, to paralyze compassion and to evoke resentment and resistance. If it ispossible to create within a societya moral equivalent of power, itmust emerge from a decentralization, really an individualization ofaction. It will require what mightbe termed voluntary amelioration.

There is still much of the trusting, the helpful, the friendly, andthe unpretentious in the Americanpeople, but it is being upstaged bythe rioters and the power-seekersand the promisers and the mischief-makers who feed on unrest,and by the hysteria they create.

.Many well-intentioned people havebeen swept along by seductive slogans and have, perhaps thoughtlessly, lent themselves to new coercion and new aggression. We seemto be moving further and furthertoward a public reliance on force.History tells us unmistakably thatthat is folly.

The Challenge

What is needed is a new breed ofyoung leadership which will findanswers that do not create newtyrannies in eliminating old, whichwill apply the immensely satisfyinghuman qualities of invention andcompassion and stamina in attending to needed change and whichwill have the raw courage to damnthe demagogues and the intelligence to discredit them.

Schweitzer said, "The tragedyof life is what dies inside a manwhile he lives." The same can besaid of a civilization. Much of whathas been best in our society seemsto be dying in the process of tryingto cure what has been worst. If weheal the sores and lose the soul, thezombie we will have left won't beworthy of survival. The irony isthat those qualities of Americanliving which have been our greatest glories can, I am certain, bedirected to the successful elimination of the qualities of Americanliving which have been our greatest trials. The moral equivalent ofcoercive power is already ours, atwork in all those voluntary, trustful, benevolent acts and operationswhich have characterized the bestin the American way of life. Thetask is to multiply the number ofresponsible centers of local initiative so that the needed changes canbe effected with benevolent ratherthan brutal means and with increased understanding and cooperation rather than fear, resentment, and retaliation as the endresult.

The Secretary of Health, Education, and Welfare, John Gardner,has noted that we are faced with anumber of great opportunities brilliantly disguised as insoluble problems. The discovery of creative alternatives for coercion is certainlyone of them. +

LIBERTY'S

DECLINE

IN BRITAINGRANVILLE WILSON

NOONE who loves liberty canafford to disregard what is happening in Britain today as basicfreedoms succumb to socialismand an insatiable bureaucracy.

The British people have learnedthe basic lesson of socialism sincethe socialist government waselected in October, 1964. It issimply that socialism means controls, and controls grow by whatthey feed on.

However much they may tryto disguise the fact when theyare seeking votes at an election,socialists believe in controls. Tothem, a life without controls isa vacuum, an intolerable limbo tobe filled by handsomely remunerated bureaucratic know-it-alls.

Mr. Wilson of England for many years haswritten on economic and political affairs forBritish and overseas newspapers and magazines.

At the center of the socialists'creed is their conviction that notonly market forces but human nature itself can be altered by whatthe government calls its "pricesand incomes policy."

It is widely believed, in bothBritain and the United States,that the prices and incomes policybecame necessary solely becauseof Britain's financial crisis, whichoccurred immediately the socialists took office in 1964. This is amistake. The financial crisishelped to prepare the ground forthe attempt to control prices andincomes, but the policy was workedout as long ago as 1958.

At that time, when the socialists were in opposition, theydrafted a document called "A Planfor Progress." Of course, the plan

215


did not call for a financial crisis;but everything else that has happened since 1964 dates back tothat ambitious blueprint for thenew socialist order.

The document pointed out thatfrom 1955 to 1958 Britain's output growth virtually came to astop, and that higher wages ledto higher labor costs. The assumption which the socialists drewfrom this was that labor costs andprices rose not because of the demand for higher wages but because output growth was so small.In other words, restriction in production had increased prices. Thesame result, the document said,could be created by excessivespending power.

The broad conclusion whichthe socialists drew from thesepremises was that the growth ofmoney incomes must be keptbroadly in step with higher productivity.

The best laid plans began to goawry, however, as soon as the socialists came to power. To counteract the flight from the poundsterling the government borrowed$3 billion from the American Federal Reserve Bank and nine othercentral banks. The loan has to berepaid by 1970.

After more than two years ofsocialism the British people stubbornly refuse to increase productivity. It had been assumed that

they would respond magnificentlyto the election of a "workers'government" by working harder,but they did not do so. Anyonebut a doctrinaire socialist wouldhave understood why: they weredisillusioned by the fact that socialism meant bigger taxes andless take-home pay. This refusalto make socialism work as theplanners had hoped led to the bitter comment by Britain's socialistprime minister, Harold Wilson,that many British workmen areafflicted by "sheer damn laziness."

Revolt Against Planners

The refusal of the British people to work harder for less, andthe need to reassure Britain'screditors in the United States andEurope, were reasons why Britain's socialist planners decidedto give the nation a massive doseof deflation and even more onerous controls.

Social historians will probablylook back on the socialists' annualconference in October, 1966, asthe five days which changed theBritish way of life forever. Inthose five days the planners killedoff so many sacred political cowsthat the socialist movement re..sembled a Chicago stockyard depicted by the youthful Upton Sinclair.

To a background of angryshouts from workless men of

1967 LIBERTY'S DECLINE IN BRITAIN 217

"Traitor!" and "You are a disgrace to the party!" the plannersremorselessly did to death in Britain:

• full employment,• collective wage bargaining

between trade unions and employers,

• the right of an employer voluntarily to increase the payof any worker or group ofworkers.

The basic freedom of a workerto negotiate his pay with his employer has gone. Under the Pricesand Incomes Act, trade unionistscan be fined up to $1,500 or evensent to prison for striking.

Many trade union leaders areconvinced that collective wage bargaining has been abolished inBritain for all time. It is widelyassumed that in July, 1967, a National Wages Board will be set upto decide who, if anyone, qualifiesfor a pay rise, and the only function of the trade unions will be tocooperate in recommending a scaleof priorities.

If that happens, the Britishtrade union movement under socialism will have been reduced toa status not much more importantthan that of the trade union movement in Russia. It win have become a creature of the state.

Meanwhile, prices in Britaincontinue to rise while wages arevirtually frozen.

Some socialist intellectuals whoapplauded the government's pricesand incomes policy have begun tohave second thoughts. The policy,they claimed, was justified becauseit halted wage inflation, and pricecontrol would tame the capitalists.Unfortunately, the intellectualsforgot to read the small print. Intheir enthusiasm for a measuredesigned to prevent wages anddividends from rising, they overlooked the fact that the government said that prices could rise if .price increases were the result ofthe government's own measures inputting up taxes and increasinginterest rates.

Thus, everyone is poorer at thesame time that his freedom isdiminished.

Criticism Unwelcome

Some British socialists have already begun to dissent from themeasures taken in pursuit of socialism. They have no illusionsleft. The Tories claim that thegovernment will have to set upconcentration camps to accommodate all its opponents. That maybe deliberate political exaggeration, and yet the history of socialism is full of persecution offormer comrades who opposed authoritarianism.

Dissent may be the lifeblood ofsocialism when the party is in opposition, but it quickly loses its at-


traction when the party comes topower.

When that happens, dissentersbecome a danger to the socialistidea, and their freedom to criticize is described as heresy.

By imposing the highest-evertaxes and the worst-ever creditrestrictions, the socialist plannershave begun to kill the private capital investment goose which laysthe golden eggs. The Confederation of British Industry expectsthat private investment will fall15 to 25 per cent during the next12 months. During the same peri0d profits are expected to fall 12Y2per cent.

The Selective Employment(payroll) Tax alone is taking $2billion a year out of private industry. This is about a quarter of thesum normally spent in private capital investment.

At the same. time that privateinvestment is drying up, publiccapital investment is soaring. Private businessmen have lost confidence, but the socialists are goingahead in finding more and moremoney out of taxes for the nationalized industries. By the middle of1967, for the first time in Britishhistory, nationalized industrieswill be increasing their capital investment at a higher rate thanprivately-owned industries.

The significance of this is thatby supporting nationalized indus-

tries liberally out of the taxpayers' money, the socialists will havesucceeded in their aim of alteringthe whole basis of the Britisheconomy in favor of state-controlled concerns. For, as the British taxpayers know to their sorrow, a nationalized industry doesnot need to make a profit. Its losses can always be met by the imposition of bigger taxes.

Curbing the Press

Keeping step with the individual's loss of freedom is the threatwhich the credit squeeze poses tothe whole of the British press.

The nation's newspapers andmagazines are already in serioustrouble. By the end of 1966, whenconsumer spending had been severely reduced and unemploymenthad soared to well over half a million, newspaper advertising appropriations had been sharply cut.

Some small newspapers andmagazines have ceased publication because they lacked the capital to stand losses caused by thewithdrawal of advertising, andeven the bigger and wealthiernewspapers are so reduced in sizethat they have become shadows oftheir former selves.

If the credit freeze lasts for another 12 months, it will hit Britain's press so hard that the restriction of choice will make amockery of democratic freedom to

1967 LIBERTY'S DECLINE IN BRITAIN 219

read minority opinion. If that happens, financial stringency will haveachieved what Nazi Germany'sbombers failed to accomplish dursix years of war.

At stake is nothing less thanwhat John Milton, one of England's greatest poets, describedmore than 300 years ago as "theliberty to know, to utter and toargue freely."

We are being reminded forciblyin Britain today of Milton's famous words about what wouldhappen if freedom of publicationwere to be lost. He warned : "Wecan grow ignorant again, brutish,formal, and slavish."

There are eleven major nationalnewspapers in Britain, and sevenof them are said to be running ata loss.

According to Lord Thomson,Britain's multimillionaire newspaper proprietor, who also ownsnewspapers in the United Statesand Canada, the economics of thenewspaper business dictates thatonly four, or possibly five, of Britain's big newspapers will survive.

If that happens, millions ofreaders will be denied access tothe kind of material they want toread. It is not a situation likely tomake for a healthy and informeddemocracy.

The socialists seem quite unconcerned by the drying up of thesources of free expression. They

have no particular love for thepress, and they actively dislike theadvertising industry, which theydescribe as parasitic and wasteful of money and effort. If theadvertising industry disappearsdown the drain, there will be fewtears shed among socialist planners.

Men of Outstanding AbilityFlee the Socialist State

Britain's socialist governmentis, however, acutely worried by therate at which so many eminentscientists and medical men aredisappearing down the "braindrain."

One-third of the annual outputfrom British medical schools isnow emigrating to North America,Australia, and New Zealand, andeven that high proportion couldrise this year.

There is no doubt at all whyBritain's scientific and medicalbrains are deserting their nativecountry. They are fed up - withtheir pay, their working conditions, their diminished status under socialism, and their prospects.

British government spokesmendescribe the emigrating brains asunpatriotic.

Those who are going, however,urge that they should be free tosell their brains to the highestbidder. They also consider it abasic freedom that a person


should be able to move in searchof better conditions.

That freedom may be diminished during the next few months.The British government is said tobe considering a ban on foreignfirms advertising in British newspapers and magazines for scientific and technical staff. This wouldcut off American scientific agencies, both government sponsoredand privately owned, from theirmost promising source of material.

Just what this would mean toAmerican aerospace and electroniccompanies has been described byMr. William Douglass, a recruiting agent for big American andCanadian firms. He says: "Thereis no doubt that the scientificallytrained man in Britain is vastlysuperior to his American equiva-

lent. He has a much more specialized expertise which is most valuable."

The proposed ban will not onlydisappoint American scientificagencies, but it will infuriate allthose British scientists who aredesperately anxious to find freedom outside their native land.

British scientists concede thatsuch a ban would slow' down thebrain drain, but they doubtwhether, by itself, it would effectively block it. Unless the socialists ban emigration altogether,scientists say, a determined manor woman will always find away.

The British fight for freedomhas been going on for centuries.It is unthinkable that the spiritwhich animates it will ever beextinguished. +

The Ranks oj Bureaucracy

IF EVERY PART of the business of society which required organized concert, or large and comprehensive views, were in thehands of the government, and if government offices were universally filled by the ablest men, all the enlarged culture andpracticed intelligence in the country, except the purely speculative, would be concentrated in a numerous bureaucracy, to whomalone the rest of the community would look for all things: themultitude for direction and dictation in all they had to do; theable and aspiring for personal advancement. To be admittedinto the ranks of this bureaucracy, and when admitted, to risetherein, would be the sole objects of ambition.

.lOHN STU ART MILL, On Liberty

ThePURPOSES

ofANTITRUST

HAROLD M. FLEMING

THE BASIC PURPOSES involved inthe enforcement of the antitrustlaws of the United States -likethose behind many other activities of the U.S. government - areobscure and in some cases contradictory.

These regulatory activities of"the Government," might be expected to reflect an emotionallyintegrated Higher Personality, atpeace with itself and withoutserious inner conflict. But certainlyin the antitrust activities, this isnot so. The aims of the two enforcement agencies-the Federal TradeCommission and the Antitrust Division of the U.S. Department ofJustice - are palpably confused.So are the laws. So is Congress.And so are businessmen.

There are broad reasons forlooking into those purposes. The

Mr. Fleming, for many years New York Business Correspondent of the Christian ScienceMonitor, is a prominent free-lance writer onbusiness and economics.

Sherman Antitrust Act has beencalled a part of the American"economic constitution." The enforcement agencies and the courtshave vastly enlarged its meaningfrom the fairly simple and briefact of 1890 whose drafters werechiefly concerned with federalizing the common law about conspiracies and monopolies. So unambitious seemed the original concept that the House of Representatives passed the final versionunanimously, 270 to 0; for someyears after 1890 "the ShermanAct" meant the ill-fated SilverPurchase Act of 1890; the original drafters of the Antitrust Actseemed unconcerned when it remained virtually a dead letterthrough the speculative mergermania of 1901; and the present antitrust laws, as interpreted, wouldhorrify Senator Sherman. For thegenealogy of today's antitrust (asinterpreted) runs back, not to Sen-

221


ator Sherman, but to Ida Tarbell,Teddy Roosevelt, Woodrow Wilson, Louis Brandeis, Wright Patman, and Thurman Arnold, not tomention Edward Bellamy andThorstein Veblen. And many oftheir purposes were confused, conflicting, and confusing.

Today, the man-in-the-streetmay still think that "the ShermanAct" consisted of marchingthrough Georgia, but not the businessman. The law, as interpreted,now touches almost every nerveof American business. It is athicket, an obstacle race, a slalom,a mined field through which acorporation's lawyers must guideit. It is hard to tell what businesstransaction next may be foundillicit.

One reason for this is the vagueness of the law today, as interpreted. Here is an example, as theSupreme Court sees it:

A merger which produces a firmcontrolling an undue percentageshare of the relevant market, andresults in a significant increasein the concentration of firms inthat market, is so inherently likelyto lessen competition substantiallythat it must be enjoined....(italics added)

u. s. v. Philadelphia National Bank,374 U. S. 321 (1963)

The underlined words have no precise meaning; nor can anyone de-

fine them legally except the Supreme Court.

The "Relevant Market"

The definition of the relevantmarket is a particular teaser.Whether one is charged with conspiring, monopolizing, excluding,foreclosing, or illegally merging,the question automatically comesup, "in relation to what market1"

In the important Cellophanecase (U. S. v. du Pont, 351 U. S.377, [1956]) the du Pont lawyers,rebutting a charge of monopolizing, argued that the relevant market was not cellophane, of whichdu Pont sold 75 per cent, but "flexible packaging materials" in general, of which du Pont sold lessthan 20 per cent. And the SupremeCourt majority agreed.

But three Justices (Warren,Black, and Douglas) dissented,saying that cellophane was therelevant market and condemningthe formulas both of "reasonableinterchangeability" and of "interindustry competition." Had theybeen a majority, this would havemade du Pont guilty of monopolizing.

However, eight years later they'were part of a Court majoritywhich said that "we must recognise meaningful competitionwhere it is found to exist....Where the area of effective competition cut across industry lines,

1967 THE PURPOSES OF ANTITRUST 223

so must the relevant line of commerce...." (U. S. v. ContinentalCan Co. et al., 378 U. S. 441,[1964]) This decision broke up themerger of a large metal containermaker and a large glass containermaker.

The "Incipiency" Doctrine

Perhaps the broadest huntinglicense the antitrust laws give theenforcement agencies is the socalled "incipiency" doctrine. Itconsists in the two little words"may be," well known in courtshipand politics. The Clayton Act of1914 was written to "nip monopolies in the bud," that is, in theirincipiency. So it banned quantitydiscounts, tying clauses, and thebuying of competitors' stock"where the effect may be to substantially lessen competition." Thelegal nleaning of "substantially"has in the last 30 years been,vhittled to almost nothing, butthe "may be" has proved a littlegiant. It has even been compounded, in the current antimerger drives, to "incipient incipiency," proscribing acts the effectof which "may be" to produce results the effects of which "maybe ... ," and so on.

To "incipiency" the antitrustenforcers imaginatively haveadded a "potential competition"concept. The idea is that if, forinstance, two firms join in a new

venture, they substantially lessencompetition because one mighthave gone in and the other havestayed out and so constituted potential competition. Thus said theSupreme Court in 1964:

. . . a finding should have beenmade (by the trial court) as tothe reasonable probability thateither one of the corporationswould have entered the market bybuilding a plant, while the otherwould have remained a significantpotential competitor.... (italicsadded) \

u. S. v. Penn-Olin Chemical Co., 378U. S. 158 (1964) :

Promotion of Competition?

With all this weaponry available, what are the purposes of theantitrust laws?

The first sentence of the Reportof the Attorney General's NationalCommittee to Study the AntitrustLaws had an answer:

The general objective of theantitrust laws is promotion of competition in open markets.

This Report, dated March 31,1955, is the last word in an ambitious effort to appraise, review,and make recommendations on theantitrust laws. There has beennothing since of the sort. Sixtymembers, chosen from the leadersof the antitrust bar. and aided bythe heads of Antitrust and the


FTC, worked nearly two years onthe report, "to prepare the wayfor modernizing and strengthen..ing our (antitrust) laws," as thePresident wrote at the time.

Strange to say, perhaps, theword "competition" is not in theSherman Act of 1890. SupremeCourt Justice Holmes so noted inhis Northern Securities (1904)dissent:

The court below argued as ifcompetition were the expressedobject of the act. The act saysnothing about competition. I stickto the exact words used. . . .

And if, by "competition," as inthe Attorney-General's Report, ismeant "hard competition," thereis probably good reason for theword's absence from the ShermanAct. In those days many peopleconsidered competition an almostunmitigated evil, to be coped withby price agreements, pools, trusts,mergers, combinations - and laws.Thousands of firms were put outof business by the industrialtransformation brought by railand wrought by steel. Edward Bellamy, perhaps the most influentialwriter of his day, in his LookingBackward, remarked that

... competition, which is the instinct of selfishness, is another'word for dissipation of energy,while combination is the secret ofefficient production.

Senator Hoar, a year after helping draft the Sherman Act, opinedthat a common sales agency couldquite legally maintain a reasonable price if its object was "merely saving the parties from destructive competition with each other."

The Clayton Act (1914), urgedby President Wilson along withthe Federal Trade CommissionAct, certainly wasn't written toenforce hard competition; and theRobinson-Patman Anti-Price Discrimination Act of 1936, aimed atthe new grocery chains, all butoutspokenly was intended to softencompetition and has been so used.The trend since then was neatlysummed up a few years ago by anastute British observer who notedthat "there is an element of underdoggery in the (American)antitrust laws...." (A. D. Neale,The Antitrust Laws of the U.S.A.,Cambridge University Press,1962. p. 461)

A Handicapping Process

Evidence of the law's beingused for the purpose of bluntingcompetition is increasing in the1960's. Inherently, it is a processof handicapping larger competitors in favor of smaller ones. Itappears, for instance, in theFTC's newly fashionable "deeppocket" theory, which frowns onthe entrance (by merger or acquisition) of a large firm into an

1967 -THE PURPOSES OF ANTITRUST 225

industry carried on by small firms.It appears in discussion of thetouchy subject of whether the lawshould prevent injury to competition or injury to competitors - asubtle difference in theory but abig one in practice, since the injured competitors are always seenas smaller ones.

Perhaps the most striking instance in this decade was in theaftermath of the electrical equipment conspiracy. After the sentencing of several of the conspirators to jail, the Department ofJustice presented the companiesinvolved with a consent decree fortheir signature, in which theywere to promise not to sell at unreasonably low prices - on pain ofcontempt of court. (This wouldprotect the weaker competitorsfrom such stronger ones as GEand Westinghouse). This was inbroad principle what their employees had just been jailed for.

Whether Competitors Are to Be

Preferred Over Competition

Many people are confused, andmany volumes have been written,because principle and practice areso at odds. An interesting straddle was made by the Chief Justiceof the Supreme Court in a 1962decision where a shoe manufacturer's purchase of a retail shoechain was condemned because itmight lead to concentration which

might lead to a "substantial lessening of competition." Said ChiefJustice Warren:

Of course, some of the resultsof large integrated or chain operations are beneficial to consumers. Their expansion is notrendered unlawful by the merefact that small independent storesmay be adversely affected. It iscompetition, not competitors, whichthe Act protects.

But we cannot fail to recogniseCongress' desire to promote competition through the protection ofviable, small, locally-owned businesses. Congress appreciated thatoccasional higher costs and pricesmight result from the maintenanceof fragmented industries and markets. It resolved these competingconsiderations in favor of decentralization. We must give effect tothat decision.

Brown Shoe Co., v. U. S., 370 U. S.294 (1962)

Commenting on this muchquoted tour de force, a Yale professor of law said:

No matter how many times youread it, this passage states: Although mergers are not unlawfulmerely because small independentstores may be adversely affected,we must recognise that mergersare unlawful when small independent stores may be adverselyaffected.

Robert H. Bork, speech before National Industrial Conference Board,March 3, 1966


The "Social-Purpose" Theory

A hearts-and-flowers accompaniment to the use of antitrust as asafety net for small business hascome into fashion since WorldWar II. It is generally attributedto Judge Learned Hand in the Alcoa case:

Throughout the history of thesestatutes it has been constantly assumed that one of their purposeswas to perpetuate and preserve,for. its own sake and in spite ofpossible cost, an organization ofindustry in small units which caneffectively compete with one another. (italics added)

u. s. v. Aluminum Company ofAmerica, 148 F.2nd 416 (1945)

The Supreme Court liked thisdecision so much that it quotedmuch of it shortly afterward inthe Tobacco case; but some people said Judge Hand invented theabove theory. He didn't. Fiftythree years earlier the SupremeCourt of Ohio, in ordering thebreakup of the Standard Oil trustin that state, gave as one reason:

A society in which a few menare the employers and a greatbody are merely employees or servants is not the most desirable ina republic; and it should be asmuch the policy of the laws tomultiply the numbers engaged inindependent pursuits . . . as tocheapen the price to the consumer.

State v. Standard Oil Co., 49 Ohio137 (1892)

And this has pretty much become antitrust dogma; so much sothat Supreme Court Justice Harlan, dissenting from a recent antimerger decision (all high-courtmerger decisions are antimerger)remarked that it amounted to

a presumption that in the antitrust field good things come usually, if not always, in small packages.

u. S. v. First National Bank & TrustCo. of Lexington, 84 S.Ct. 1033(1964)

Though this "social-purpose"doctrine might have seemed compatible with the principles of economics prevailing in 1892, it ishard to take seriously now, 75years later, except as one moreargument to reinforce the casefor antitrust protectionism ingeneral. It is unhappily reminiscent of New Delhi's economic restrictions in favor of cottage industry. It certainly would implya forcible and disastrous transformation of the American economy - whether backward to horseand-buggy days or forward tosome utopia as yet without formand void, is quite unclear.

More Fun! More Skulls Crushed!

These implications of the social-purpose doctrine throw a pinpoint of light on one of the keypurposes to which, certainly forthe last 30 years, the antitrustlaws have been turned, namely,


social and economic destruction.The Antitrust Division, after

winning the breakup of StandardOil, the Duke tobacco combine, thedu Pont powder trust, and a fewother combines, faned in 1916 tobreak up the American Can Company, in 1920 U. S. Steel, and in1927 International Harvester.

A lull followed; but in the1930's, during and after the T. N.E. C. hearings, there was new talkabout "fragmentation" and "atomization" of American industry,and a hurricane of cases followed.

Among the first was an attackon over 300 oil companies, seekingso many changes that the industry called it the "Mother Hubbard" case (like a large loosegown). One plea was for a breakup of the industry into its fourmajor components, production,transport, refining, and marketing.

This case was postponed at therequest of the defense authoritiesand was dropped in 1948 as entirely too unwieldy, but was succeededby the "West Coast" case,where divorce of marketing,among other forms of industrialmayhem, was asked - and refused by the court.

Meantime, the Antitrust Division attacked and sought thebreakup of Alcoa and of the GreatAtlantic & Pacific Tea Company,and in 1948 it sought the breakupof the four then largest meatpack-

ers into 14 companies. The courtsrefused breakup of the first two,and the Division dropped the meatpacker case when the court refusedto hear testimony going back morethan 20 years.

But in 1947 the Divisionbrought a civil suit against 17 investment banking firms - a business which had already been underregulation by the Securities andExchange Commission since theSecurities Act of 1933. The caseeventually ran to a court recordof over 100,000 pages, cost the defendants over $4 million, and resulted in a 417-page verdict byJudge Harold Medina dismissingthe case and commenting that theJustice Department had been ledastray "by a fundamental, factualmisconception of the way investment bankers in general function."

The Division also had sought tounlimb American Telephone of itsmanufacturing subsidiary, Western Electric, finally settling for aconsent decree merely requiringTelephone to give away ("dedicateto the public") 8,600 patents. Thenthe Division, having obtained aSherman-Act conviction of UnitedShoe l\tIachinery Corporation formonopolizing, asked for its breakup into three companies, thoughit had only one plant. JudgeWyzanski refused.

In the fall of 1952 the Division


brought charges of criminal conspiracy against the five major oilcompanies doing business in theMiddle East, while a civil case wasbrought against them for overcharging the Marshall Planagency by $67 million for oil. Theovercharge case was scathinglydismissed by both trial and appeals court; and the inflammatory"international petroleum cartel"case, after scandalizing the companies' names in the Middle East,was quietly settled with three ofthem, and the other two cases arestill, in 1967, dragging on "indiscovery."

The 129-Company" Oil Case

In the spring of 1958, followingthe American oil industry's million-barrel-a-day emergency oillift to Europe during the Suezcrisis, the Antitrust Division, under Congressional pressure, obtained a bare-majority Grand Jurycriminal indictment of a selectedgroup of oil companies for allegedly conspiring to raise crude-oiland gasoline prices. After 18months of pawing over a millionor more company documents, theDivision presented a case whichin eight days broke down intocourtroom absurdities, and thecompanies were acquitted withoutbeing required even to presenttheir defense. Cost to the government, $2,500,000; cost to the com-

panies, an estimated $7,500,000.The Federal Trade Commission

over most of the 1950's was quixotically trying (perhaps) to curethe gasoline business of its pricewars with a confusing series ofeconomically absurd price discrimination charges in Jacksonville,Birmingham, suburban Atlanta,and Norfolk, Virginia. Finally itgave up, dismissed the charges,held a big hearing, and promisedto publish some "guidelines,"which, however, have not yetbeen published.

All this time the Antitrust Division was intermittently tryingto "export the Sherman Act," inthe process hampering Americanbusiness abroad, annoying theState Department, and riling foreign courts.

What would have happened ifAntitrust and F. T. C. had wonthe above-mentioned cases, is anybody's guess - the agencies hadno proposals. There is an inklingin a remark of Judge Carter "inthe West Coast oil case when herefused to order the companies tosell off their marketing operations:

You cannot unring a bell. I amconvinced that the dislocationsthat would occur would be of suchnature that I don't think we canfully imagine or comprehend withany accuracy what would be theresult.


At present the F. T. C. and theAntitrust Division are quietly obstructing.the modernization ofthe structure of the banking,dairy product, beer, cement, shoemanufacturing, and other industries, and the growth of the newmultiple-market and multipleproduct diversified companies.*

Political Instead 01 Economic Power

It is hard to see how such acourse of conduct, of which theabove is only an abbreviatedsketch, can add up to any majorpurpose except that of destructionand obstruction in the use of theantitrust laws. And to cap it all, theenforcement agencies have fordecades been saying in effectthat though the heavens andearth shall pass away, the antitrust laws (as interpreted) mustbe enforced. Said a chief of theAntitrust Division in 1964:

. . . the view that the antitrustlaws may hamper the growth ofthe economy mayor may not bevalid, but it is irrelevant underour present laws.

William Orrick, Jr., Dun's Reviewand Modern Industry, June, 1964

John Jewkes observed in Ordealby Planning that,*Britain has long had but six banks, whilethe United States has perhaps 10,000; butthe Antitrust Division says that to mergesome of these would do harm that would"clearly outweigh in the public interest"the prospective.benefits to the "convenienceand needs of the community" (Bank MergerAct of 1966) but it objects to having toprove this.

The normal procedure is for theplanners first to seize power, andonly later to consider what shouldbe done with that power.

A major concern of the antitrust authorities is the allegedeconomic power held by large private companies. It is often called"monopoly power," and has, theoretically, a sort of free-floatingexistence, intently discussed inantitrust literature but curiouslyunreal to businessmen.

The following, though pennedby a minority member of the Attorney-General's Committee, expresses one of the major purposesin present official antitrust policy.He said that Antitrust

. . . performs the function ofkeeping governing power in thehands of politically responsiblepersons. Power to exclude someone from trade, to regulate prices,to determine what shall be produced, is governing power. . . . Ina democracy, such powers are entrusted only to elected representatives of the governed.

Louis B. Schwartz, quoted on page 2,Attorney General's Report.

Supreme Court Justice WilliamO. Douglas wrapped it up in hisdissent in the Columbia Steelcase:

Industrial power should be decentralized. It should be scatteredinto many hands, so that the fortunes of the people will not be


dependent on the whim or caprice,the political prejudices, the emotional stability of a few self-appointed men.

334 U. S. 495 (1948)

(He was talking about the executives of U.S. Steel Corporation,but, except for the penultimatetwo words, some people might readit to be about the Supreme Courtitself.)

But the "scattering" of power"into many hands" is not what ishappening - nor what the Supreme Court is doing. The powerit is taking, or trying to take fromthe larger private companies, it isgiving to the enforcement agencies.

Said former Attorney GeneralNicholas deB. Katzenbach a yearago, commenting on the AntitrustDivision's perfect score in its recent antimerger cases:

We have had so many SupremeCourt decisions in the merger areathat it has been hard for us todigest them.... It may be that

we have, from the point of viewof business, more power than isnecessary or essential to the carrying out of an intelligent mergerpolicy.

I am inclined to believe that wemay be able to block more mergersthan it makes economic sense toblock.

The current rapid accrual ofeconomic power to the antitrustenforcement agencies, barelysketched above, was perhaps anticipated by Lowell B. Mason,former chairman of the F. T. C.,in his Language of Dissent, whenhe wrote:

In this country no one need fearthe belted, booted, and uniformedoutfit.... The man to watch isthe man in the brown tweed suit.Mild, courteous, and scholarly, hehas no badge, no boots, no gun,no warrant. All he has is a littleidentification card in a cellophaneholder, issued by an institutionthat is investigator, grand jury,prosecutor, petit jury, and judgeall for one and one for all. ~

The Invisible Hand

By DIRECTING that industry in such a manner as its produce maybe of the greatest value, he intends only his own gain.... He is inthis, as in many other cases, led by an invisible hand to promotean end which was no part of his intention.... By pursuing hisown interest he frequently promotes that of the society more effectually than when he really intends to promote it.

ADAM SMITH, The Wealth of Nations

THEca

GEORGE WINDER

SOME FORM of socialism is assuredonce a country accepts an inconvertible currency as its monetarymedium. Its money either willlose all value, as it did in Germanyand several other European countries between the World Wars, orit will be "saved" only by drasticgovernmental action involving allthe rigors of socialist authoritarian rule.

Britain is slowly realizing thisfact. The British pound over thepast twenty years has been losingvalue at about twice the rate ofthe American dollar. Such inflation is reflected, of course, in constantly rising wages, which leadsmany persons to demand government control of wages to haltfurther price rises. That notionoriginated among Keynesian econ-

Mr. Winder is a long-time analyst and reporter of monetary and other politico-economic affairs in Britain.

omists, but is welcomed by socialists who see in it a means to theirends. Naturally, they would insistthat if wages are to be controlled,then prices and profits must alsobe controlled.

Though many of the Britishpeople found this new policy opposed to all their previous ideas,they gradually came to accept itas a way to achieve a stable pound.Mr. Macmillan, the ConservativePrime Minister, had failed on several promises to end the inflation.Why should the socialists, underMr. Harold Wilson, not be giventheir chance?

The socialists had come topower at a time of crisis in Britain's foreign trade, when it wasimperative to reduce costs and sostrengthen the value of the pound.Their first attempts were halfhearted. They cut defense esti-

231


mates and increased taxation, anotable example being a surtaxon all manufactured imports. But,in their first two years of office,government spending rose 24 percent, from 6.8 to· 8.5 billionpounds.

In mid-1966 the pound was being supported not only by the International Monetary Fund but alsoby the leading central banks ofthe world. The socialist government took this opportunity to impose on the British people its newpolicy of control of wages, prices,and incomes. For the first timesince the Statute of Labourers inthe fourteenth century, all wageswere under the complete controlof the government. It had prepared the way by persuading theConfederation of British Industries and the Trade Union Congress to consent to an Early Warning System by which all increasesin wages and prices were to bereferred to the National Board ofPrices and Incomes. The TradeUnion Congress had been promised that any increases in profitsor dividends were to be similarlyscreened.

"Voluntary Cooperation II

Under the Power of Coercion

This unusual system of persuasion began with no positive Act ofParliament to make it legally effective. But the intensification of

the crisis allowed the governmentto pass through Parliament itsPrices and Incomes Act with thenecessary authority for control.

The Act ordered a generalstandstill (freeze) on all wages,prices, and incomes, to last untilthe end of 1966 and to be followedby six months of "severe restriction." The fiction of voluntary enforcement was kept alive but it wasonly a short time before the government invoked its power of coercion : "Although the Government has been obliged to bringPart IV of the Prices and Incomes Act 1966 into operation,they hope that severe restraintwill be observed on a voluntarybasis, and that the same generalresponsible attitude which hasmarked the period since 20th Julywill continue. The Governmentwill use their statutory powers forthe sole purpose of ensuring thatthe voluntary support of the majority is not undermined by theactions of a few." This is verymuch like the Sergeant Major'sdemand for volunteers ... or else.

All incomes derived from employment and every other type ofincome, including professionalfees and dividends, are thus madecompletely subject to governmentcontrol. The Act provides for afine of £ 500 or more for anyemployer who contravenes its provisions by paying over the stipu-

1967 CONTROL .OF WAGES AND INCOMES 233

lated wage rate - for paying toohigh a wage!

According to a governmentWhite Paper: "It is not expectedthat there will be any general increase in dividends during thenext twelve months.Nevertheless,all company distributions, including dividends paid by companies,are subject to the standstill andshould not be increased during thetwelve-month period." As towages: "The standstill to the endof 1966 is intended to apply toincreases in pay and to reductionin the working hours .... During the six-month period of severerestraint (i.e., the first six monthsof 1967) the criteria for consideration of new proposals for payand hours will be more stringentthan those set out in Part I of theWhite Paper on Prices and Incomes Policy and for the timebeing the income norm must beregarded as zero. The guidingprinciple must be that of nationaleconomy and social priorities."

All long-term contracts for increased wages were at the sametime canceled: "It will clearlyhave been inequitable to introduce a standstill on incomes whileallowing these existing commitments to go ahead unchecked."

It is highly probable that theprices and incomes period of severe restraint will be extended indefinitely. Many people foresee

that as Britain abandoned international free trade during the financial crisis between the twowars, so she will abandon the system of free enterprise during thepresent crisis. As one WhitePaper warns: "During the comingmonths, the Government will consult with interested parties aboutthe best way of carrying forwardthe productivity, prices and incomes policy after June 1967."

There can be little doubt thatthis policy is not merely to meetan emergency, but envisions ascheme of redistribution to be imposed on Britain for as long asthe Socialist government lasts.

Opposition from Left and Right

Strangely enough, although thegovernment has obtained the consent of the Trade Union Congressto this policy, many trade unionsstrenuously oppose it. Mr. FrankCousins, former Minister of Technology, has resigned over thisissue, though it cannot be saidthat those trade unions whichsupport him are particularly interested in freedom; they merelywant the power to bargain fortheir own wages, whether thereis increased productivity or not.

One stout defender of free en..terprise among the Conservativesis Mr. Enoch Powell. He is constantly condemning Labour's policy and showing the extreme dan-


gers of its implications. He advocates, as a remedy, the freeingof exchange rates so that theBritish people will know the truevalue of their pound. The remainder of the Conservatives, ofcourse, are against inflation; butthis did not help the pound whenthey were in power. They failedto advocate a balanced budget oranything else resembling fiscal responsibility.

The believers in free enterprisehave been led into a trap by thisconstant inflation. If they do notnow agree to Labour's prices andincomes policy, the pound will lose

all value; and if they do agree,they must give the governmentunlimited power over the economyand their own freedom of choice.

The pressure of the trade unionsmight eventually release wagesfrom control; but dividends wouldcontinue to be decided by the government "in the national interest"and to meet "the claims of socialneeds and justice"- as though itwere the sole judge of thesethings.

The only policy which can prevent socialism's entry by the backdoor in this manner is to see thata country's money is sound. ~

French Inflation, 1789-1799

Now BEGAN to be seen more plainly some of the many ways in

which an inflation policy robs the working class ... the classes

living on fixed incomes and small salaries felt the pressure first,

as soon as the purchasing power of their fixed incomes was re

duced. Soon the great class living on wages felt it even more

sadly.... the demand for labor was diminished; laboring men

were thrown out of employment ... the price of labor ... went

down . . . . Working men of all sorts were more and more

thrown out of employment.

ANDREW DICKSON WHITE, Fiat Money Inflation in France

The GAPbetween Earning

and Receiving

WILLIAM HENRY CHAMBERLIN

THERE WAS A TIME, within thememory of living men and women,when what an American earnedwas his to keep, subject to thepayment of moderate Federal andlocal taxes. And, as a corollary,the American was supposed topay his rent and medical expensesand make reasonable provision forhis old age. This was economiccapitalism - or individualism, touse a more accurate word; it wasa simple and understandable system, and it was admirably calculated to promote hard work andindividual responsibility. Thestate stayed off the back of the

Mr. Chamberlin is a skilled observer and reporter of economic and political conditions athome and abroad. In addition to writing anumber of books, he has lectured widely andis a contributor to The Wall Street Journaland numerous magazines.

taxpayer and, in turn, expectedhim to look out for the presentand future needs of himself andhis family.

Now, scarcely a trace of thissystem remains. Because of enormously increased Federal, state,and local taxes and because of thegrowing burden, on the productive part of the population, ofwithholding levies for various welfare programs, the gap betweenwhat a man earns and what hereceiYes, between his nominalwage or salary and his "takehome" pay, has steadily widened.Take someone who earns $150 aweek, an average rather than ahigh salary in this age of shrunkenand shrinking dollars. After deductions for Federal and statetaxes and for so-called social se-

235


curity levies, very heavily increased this year because ofcharges for Medicare, an earnerin this bracket receives less than$115 a week, a bite of almost 25per cent of what he is supposedto earn.

This is distinctly a growingtrend. The amount deducted fromwages and salaries is higher thisyear than ever before, even during the years of World War II.An ingenious mathematician witha computer, equipped with statistical information on the probablegrowing cost of the programs authorized by the late spendthriftCongress, might be able to calculate that the state's lien on theearnings of the productive bysome future year, say 1984, mightswallow up such a proportion ofthese earnings as to tempt therecipient to apply for public relief in order to subsist.

It Happened Before andCan Happen Here

Do not think this is an exaggerated, alarmist picture. It hashappened before in rich and prosperous states, and it can and mostprobably will happen here, unlessthe people find some effectivemeans to check and reverse thetwo parallel trends that are making the phrase, "independent middle class," more and more of amockery. These trends are the

proliferation of bureaucracy atall levels and the ever enlargingencroachments of bureaucraticspending agencies on the earningsand reserves of producers. Thestate of affairs in the ByzantineEmpire under the reign of J ustinian, described in George Finlay'sGreece under the Romans, flashesa warning for us:

At last the whole wealth of theempire was drawn into the imperialtreasury; fruit trees were cut downand free men were sold to pay taxes;vineyards were rooted out and houseswere destroyed to escape taxation.The increase of the public burdensproceeded so far that every yearbrought with it a failure in the taxesof some province, and consequentlythe confiscation of the private property of the wealthiest citizens of theinsolvent district, until at last all therich proprietors were ruined and thelaw became nugatory.

The law to which reference wasmade had established collective responsibility for the payment oftaxes. But, it is not necessary tolook to the empire of Justinian tofind houses being destroyed because of inability to meet tax burdens. In the Mt. Desert region ofMaine, with which I am familiar,and no doubt in other districts,it is not uncommon to find innsand large private houses torn downbecause the owners have foundthe taxes too heavy to pay.

1967 THE GAP BETWEEN EARNING AND RECEIVING 237

Pay as You Earn

There are several reasons forthe substantial and rapid growthof the gap between what one earnsand what one is allowed to retain.A big contributory cause, and ademoralizing development on several counts, was the institution,during World War II of PAYE,the abbreviation for Pay As YouEarn. Previously, the taxpayerpaid his tax at the end of thefiscal year and knew exactly whatthe Federal and state governments were costing him. But withP AYE the practice developed ofdeducting from the pay checkFederal tax, state tax, and an assorted variety of social insurancepayments. As a consequence, thetypical taxpayer has scarcely anyidea what he is obliged to pay onthese various counts.

It would be a gain for financialrealism and clarity if the taxpayer were given the full amountof his wage or salary and thenrequired personally to pay all thelevies which are now lumped under one process of deduction.There would then be less excusefor the persistent but mistakenidea that the government paysout of some nonexistent resourcesof its own for aid to Hottentots,for a large variety of schemes designed to combat poverty (no oneof which remotely approaches inefficacy the decision of a poor per-

son, if unemployed, to look for ajob, or, if holding a low paid job,to train himself for somethingrequiring more skill), for Medicare and other provisions of socialwelfare legislation. The moneyfor all these numerous forms ofgovernment spending comes di1"'ectly out of the pockets of thepeople. If this fact were moregenerally known, as it would be ifthe taxpayer had to payout theclaims of the various taxing agencies after he had the feel of a fullsalary check in his pocket, publicappraisal of legislators who areprodigal and of those who areeconomical with public moneywould probably be radically different from what the polls havebeen showing.

The Growing Burden

Fifty years, or even thirtyyears ago the American citizenwas regarded as having done hisduty if he took care of himselfand his family and made reasonable offerings to religious, charitable, and educational projects ofhis choice. Noone expected himto play the Atlas role of assumingresponsibility for curing povertyin Africa, Asia, Latin America,Appalachia, Harlem, Watts, andother slum areas.

The theory had not become popular that, unless the richer nations of the world, with America


at their head, somehow subsidized the economically retardedpeoples of the southern hemisphere, not through the normalmethods of trade and investments,but through direct handouts ofone kind or another, the peace ofthe world would somehow be endangered. This theory leaves outof consideration the fact thatmodern history records no case ofa war started by poor, economically backward peoples againstmore affluent powers - and for agood and obvious reason. A people must be fairly affluent beforeits rulers can develop the expensive weapons of large-scale destruction that are dominant inmodern warfare.

Now, the American taxpayer isrequired to shoulder burdens ofwhich his grandfather neverdreamed, which his father felt inmuch lighter degree. He is supposed to pay for defending democracy in countries where mostof .the people do not understandwhat the word means, for combating famines which recur withmonotonous regularity as a resultof climatic, social, and economicconditions over which he has nocontrol, for keeping a stream ofaid flowing to countries of whichsome, so far as their governmentsare concerned, are clearly hostileto this country, on occasion stirring up mobs to attack our em-

bassies and other installations, inone case, in defiance of all therules of civilized diplomacy, placing our ambassador under housearrest.

Our Strange BehaviorToward friend and foe

Indeed, our current policies inAfrica seem to be in curious inversion of the normal responsesto friendly and hostile behavior.We are meek as lambs when ourcitizens are arrested and expelled,our flag insulted, our embassiesand reading-rooms invaded andsacked by riotous mobs. But weeagerly associate ourselves withsanctions and hostile declarationsin regard to two countries whichhave always maintained friendlyand correct relations with us andwhich maintain far better conditions, as regards standard of living, and peaceful and orderly living conditions, than a number ofAfrican lands which are torn withsavage tribal feuds and whichhave suffered clear retrogressionsince independence was, perhapsoverhastily, established. The twocountries are, of course, SouthAfrica and Rhodesia.

Our representatives in the UN,as they blithely vote for sanctionsagainst Rhodesia and for a resolution setting this country on acollision course with South Africaabout the mandate over Southwest

1967 THE GAP BETWEEN EARNING AND .RECEIVING 239

Africa (an issue that is emphatically none of America's business),seem oblivious of· the lessons ofthe Congo and, more recently, ofNigeria. Suppose we co,nld, bysanctions or threat of sanctionsand military force, bring downthe two most efficient and prosperous regimes on the African continent. Would the conditions thatwould follow necessarily be to ournational advantage or liking?Here is a practical illustration ofthe disadvantages of our membership in the UN. Before thatorganization existed, Americans,as individuals, were free to holdany opinions they chose about theracial franchise in Rhodesia, orthe desirability of South Africa'sadministration of SouthwestAfrica, or the theory and practiceof apartheid in South Africa. Butthe United States governmentwould have taken no official stand,would not have involved itself inunnecessary quarrels and complications.

Now, the supposed necessity ofconciliating the artificially swollen bloc of new African nations inthe UN Assembly (a bloc of whichthe voting strength is in grotesquedisproportion to the political,economic, and educational development of its members) leads theUnited States representatives inthe UN to seek such quarrels andcomplications - out of which new

financial burdens and responsibilities may grow.

Domestic Welfarism

There is just as little prudence,just as little promise of relief forthe overburdened taxpayers in domestic policy as in foreign policy.The 89th Congress, which hasnow passed into history, earnedthe doubtful distinction of beingthe "spendingest" Congress inAmerican history, at least in atime of nominal peace. And mostof its spending was not connectedwith the hostilities in Vietnam,but with a host of schemes calculated to pillage the thrifty forthe benefit of the thriftless. HEW,the Department of Health, Education, and Welfare, has grown frommodest beginnings into an empiredisbursing 30 billion dollars annually, and completely incapableof administering its numerousand complex functions efficiently.To quote James Reston of TheNew York Times on the· recordof the 89th Congress:

In its first 174 years the Congressof the United States voted $5.8 billionin Federal funds for education; in1965-66 alone the 89th Congress voted$9.6 billion. The first 88 Congressesvoted approximately $10 billion forhealth since the establishment of thePublic Health Service in 1798; in thelast two years the 89th Congress hasvoted $8.2 billion for health, includ-


ing Medicare, almost as much as inthe previous 166 years. And the record of most of the social and economicinnov~tions of the 89th Congress follows the same pattern.

Now it would be absurd to suggest that the United States wasseriously lacking for either education or health before the 89thCongress went on its spendingspree. This country was a pioneerin providing education for all itschildren and has long led theworld in the proportion of itsyoung men and women enrolledin colleges. Nor have Americanssuffered from neglected health.

Loss of Local Control

What has changed is that muchpower and emphasis has shiftedfrom elected school boards, responsive to the feelings of theircommunity, to a distant irresponsible bureaucracy in Washington;and the simple human patientdoctor relation of the past hasbeen fuzzed up by the intrusionof an enormous official apparatus,smothering patients and doctorsalike in an avalanche of questionnaires and red tape.

Most economists agree that theheavy increase in governmentspending during the last years isa cause of the inflation which hastouched off boycotts of stores andother protests. And inflation isanother cause of the gap between

what a man is supposed to earnand what he receives in realvalues. He may be receiving thesame number of dollars, even alarger number of dollars, in hispay envelope. But if those dollarsbuy less, the effect is much thesame as that of the ever-growingbite at the pay check, representedby taxes and social security levies.

Finally, the American taxationsystem, especially on the Federallevel, is heavily weighted againstthe individual who does not liketo be dependent on state handoutsand would rather provide his ownand his family's social security.Three points should be borne inmind in this connection.

Inequitable Taxation

First, the Federal income taxis levied on a steeply graduatedbasis. In most countries theweight of taxation is more or lessevenly distributed between directand indirect forms of levy. Noform of tax is pleasant; but direct graduated taxation bearsmuch more heavily on savers thando sales or excise taxes. The Federal income tax, therefore, has astrong leveling effect and sometimes makes the gap between whata man earns and what the stateallows him to keep almost grotesque, as graduation advancesrapidly in the upper. brackets.

Second, there is a gross and

1967 THE GAP BETWEEN EARNING AND RECEIVING 241

palpable injustice in the practiceof taxing the same source of income twice, once when it is earnedby a corporation, again when itis received by the individualstockholder in the form of a dividend. For a time, a slight abatement on income tax was grantedin recognition of this injustice;but even this has now been abolished. So, income that has alreadybeen taxed at the rate of almost50 per cent as corporation incomeis taxed again at individual income rates when it is received bythe stockholder. In the case ofpersons in high income tax brackets this means that the government, with two bites at the samerevenue, may take 75, 80, or even90 per cent of net income whichit has assumed no risk in earning. If this is not socialism, it issomething pretty close to it.

Third, there is the capital gainstax of 25 per cent on any profitearned from selling a stock orpiece of tangible property at ahigher price than the owner originally paid for it. This form oftaxation implies both an injusticeand an economically undesirableconsequence. The injustice is thatthe "capital .gain" often barelyor insufficiently compensates forthe loss which inflation has inflicted on the stock or property.The owner would only be evenwith the game if he sold a stock

held for the last twenty-five yearsat two and a half times the pricehe paid for it. The undesirableeffect of the capital gains tax isthat it "locks" the investor intocertain holdings and takes awayfrom the market the desirableelement of liquidity.

Taxing the Middle ClassOut of Existence

A former Commissioner of Internal Revenue, Mr. T. ColemanAndrews, familiar from his officewith the many inequities and thewell-nigh hopeless complexity ofthe system, voiced this heartfeltappeal to members of Congresssome ten years ago:

Whether you believe it or not,everybody is being overtaxed and themiddle class is being taxed out of existence. Thereby the nation is beingrobbed of its surest guaranty of continued sound economic developmentand growth and its staunchest bulwark against the ascendancy of socialism. We, who somehow have managed to hold on, finally are beginningto see the shameful extent to whichwe have been made the special victims of rapacious tax enactments and we don't like it....

High rates of tax don't mean anything when there isn't anything totax.

What with ever-growing withholding from wages and salaries,inflation, and outrageously high


leveling rates of taxation by theFederal government and by manystates, the prospect that the individual will be able to retain areasonable share of what he earnsis pretty dim. But so long as wepossess basic freedoms of election and expression, all is not lost.

Experience is a good teacher,and as people become more accustomed to living in a mare'snest of obstructive bureaucracyand seeing hard earned money vanish in the smoke of withholding,inflation, and oppressive taxes, astrong surge of revolt may build

up. What is most necessary is toeducate, educate, educate. Two lessons that should be driven homein season and out of season are:

That government bureaucracywill always deal with any socialproblem more slo'wly, wastefully,expensively, and incompetentlythan the private agencies whichit seeks to supplant.

That, when government lightlyproposes to spend tens of billionsof dollars for some utopianscheme, it is not spending· "its"money, but yours, and mine, andour next-door neighbor's. ~

Two Ways

SEVERAL MONTHS AGO, the Federal Government announced that

it was going to conduct a sweeping investigation of the opera

tion of American Telephone & Telegraph. The natural assump

tion of the public was that the Federal Government believes that

profits, and rates perhaps, of this regulated utility are too high.

The result of this investigation is that the price of A. T. & T.

stock has dropped precipitately, and three million A. T. & T.stockholders are worried.

A. T. & T. does make a huge profit, but it needs these profits

to plow back into expansion of plant and equipment. We have

the best telephone service, at the lowest cost in the world, in the

U.S.; but, this doesn't restrain powerful bureaucrats from at

tacking A. T. & T., which is a model of efficiency under private

ownership, while our publicly owned post office loses over 800

million dollars a year.

ROSS ROY, "Can Detroit Be a Leader in Freedom of Enterprise?"

INVESTINGIN YOURSELF

ROBERT C. TYSON

LAST YEAR I took a trip throughSouth America, and I witnessedmuch of a continent in fermentand in a quandary. I saw firsthandthe ravages of runaway inflationon the social fabric. I heard officials, bankers, professors, andbusinessmen wonder out loud onhow to stop inflation and transform social unrest into economicdevelopment - into a speed-up ofeconomic growth.

The problem was crystallized ata conference on economic development that I attended. A memberof the conference rose to his feetand addressed the gathering, stating: "At times we seem to be trying to grow forests while forgetting the nature of the tree."

Somewhat surprised, everybodyMr. Tyson is Chairman of the Finance Committee, United States Steel Corporation. Thisarticle is from his address at Samford University, Birmingham, Alabama, August 27,1966.

in the audience turned to thespeaker.

"Why don't we realize that wecan only move an economy forwardwhen we get the individual tomove forward? Without him," hecontinued, "we move backward."

This set me to thinking aboutself-development and economic development, about the role of theindividual in the oftentimes elusive art of nurturing economicgrowth - of achieving a sustainedrise in the creation of goods andservices - a problem common toall countries, to every type of poIitical economy.

Economic growth is no idlephrase; although but a part of theso-called dismal science of economics, it is one of the most powerful forces in the sweep of current events.

Kings, presidents, generals, and

243


even dictators worry about it because no society can be great unless its productive power is unleashed.

Yet the very word "growth" canbe misleading, and too many of usmay be mesmerized into thinkingthat it is more or less biological ifnot automatic, that it can be fertilized, seeded, cultivated, and harvested like so many acres of wheator cotton, that it can be simplyplanned from above and orderedinto existence, that it can even beaccelerated through - presto -revving up the money press.

Only When Free . ..

So we sometimes lose sight ofthe fact that economic growth,even in a closed society like communism, is an intensely personalmatter, that it rests heavily onh uman psychology, on individualmotivation, on voluntary choices.We forget that printing-press inflation is an affront to the individual, a delusion that steals awayhis savings and corrodes his senseof dedication to work and thrift.Above all, we overlook the essential fact that only when the individual is free can he be fullyproductive and creative, that society and all social institutions, including the church, government,university, and corporation, liveand think and act only throughthe individual.

But, like "growth," freedom also seems to me to be not alwaysunderstood. Many Americans, forexample, seem to hold that freedom is a grant of government, forgetting that our Declaration ofIndependence holds that all menare "endowed by their Creatorwith certain unalienable Rights,that among these are Life, Liberty, and the pursuit of Happiness."If liberty were not so endowed,then what government couldgrant, government could also takeaway.

Indeed, the genius of the Founding Fathers was their realizationthat government is most falliblewhen it comes to usurpation offreedom, that men in public officeshould not be blindly trusted, thatthe American government therefore had to be, through the Constitution, strictly limited in itspowers, subjected to checks andbalances, and expressly prohibitedfrom infringing on the endowedfreedom of the individual. Ourswas to be a government of lavv,not of men. And thus does theBill of Rights seek to confirm liberty under law.

Again, quite a few of us appearto believe that while free speech,free press, free assembly, and freeexercise of religion are thoroughgoing freedoms, free enterpriseis somehow an exception to therule. I call your attention to the

1967 INVESTING IN YOURSELF 245

growing grid of so-called "voluntary" controls in the guise ofguidelines and guideposts.

Importance of the Individual

I believe, in other words, economic growth flourishes under freedom, under responsible citizenshipand government, under individualgrowth. I believe individual growthstems from the individual's abilityto serve, from his dedication toservice, and from the raising ofhis sights on his aspirations andpossessions-incentives, if you will.And I believe individual incentivesare indispensable to growth in afree society and, as the manifoldproblems of communism prove, inan unfree society as well. Ironically, the individual in communistsocieties, under a philosophy ofmaterialism, loses both materialwell-being and freedom. As AdamSmith, that canny Scotsman,father of modern economics and,incidentally, professor of moralphilosophy, noted almost two hundred years ago : "It is not fromthe benevolence of the butcher,the brewer, or the baker, that weexpect our dinner, but from theirregard to their own interest." Inbrief - responsible self-interest.And thus does the public interestin economic growth involve thelawful private interests of individual growth.

I believe, in short, the social

good is advanced through the individual's free but responsible"pursuit of Happiness." So myphilosophy for growth comes downto social growth through economicgrowth, economic growth throughindividual growth, and individualgrowth and individual fulfillmentthrough self-investment and selfdiscipline.

<apital Formation

To be sure, textbooks and economists treat capital formationadding to the total capital stock ofa country - as the road to economic growth. This is true, as far asit goes, but it doesn't go farenough for, again, such thinkingcan lose sight of the individualtree for the forest. Capital formation is indeed at the center ofeconomic growth, but individualgrowth and individual investmentare the foundation of capital creation. Thus, when we speak of aninvestment in an industry or in acountry, we speak directly or indirectly· of investing in people, inthe individual. The individual, asa saver, is the beginning of investment; he, as an investor orconsumer, is the end purpose ofinvestment. In a free society, inother words, capital investment isof the people, by the people, forthe people - or, more accurately,of the individual, by the individual, .for the individual,


Now, who is this mysterious individual to whom I allude? He isa very unique being - he is eachone of you. When you as an individual have confidence in the future, in the purchasing power ofyour money, in the inviolability ofcontracts and property - in short,in the climate of investmentyou will very likely work harderand save more. You may evendirectly commit your savings inan investment and share the ownership of enterprise. With theseacts of working, saving, and investing, the wheels of economicgrowth begin to turn and theeconomy moves ahead.

So far so good. Yet the road toeconomic growth is usually not sosimple, nor so smooth. Self-discipline is called for. Work involvesenergy, time, wear, and tear. Saving involves forbearance, abstinence, doing without. Investinginvolves risk, uncertainty, the possibility of loss.

But along come soothsayers andsome of those cloaked in politicalpower who proclaim an easierway, an easier life, instant ornear-instant wealth, welfare, andsecurity. They argue: Let's takecare of the individual, for he's notresponsible for his shortcomings;society is to blame. Let's spendourselves into prosperity. Let'sforget savings, for thrift can beantisocial. Let's run up the public

debt, for we merely owe it to ourselves. And, let's not worry toomuch about inflation, for it is theprice of economic growth.

This siren song is heady; theballot box becomes a short cut toparadise.

Of course there is a catch tothis catchy tune - in fact, a lot ofcatches fraught with delusion andwith losses of liberty. So, to me,the great economic question of theday ought not to be: How can wemaximize our security andgrowth? Rather it ought to be:How can we maintain our libertyand hence our growth? For inliberty, in the Constitutional design of free choice in America, wehave the mechanism for motivating the individual, for achieving economic growth and hencegenuine economic security, alongwith the opportunity to preserveand advance freedom.

A Time of Testing

But I believe liberty is beingtested as never before in America.I believe that our faith in free institutions is being tried. Campusrowdyism is giving many a college president a hard time. Riotersin our streets are beleagueringmany of our major cities. Lobbyists and special interest groupsdemand all manner of handoutsfrom the government - local,state, and especially Federal. In


the name of welfare and security,the demands are for more andmore - not tomorrow but today.These demands strain the bodypolitic - and eco1].omic - and erodethe foundations of our liberty.The hop~ of government-providedwelfare and security seems to havebecome a widespread obsession.Have we lost the lesson of howshortsighted was the welfarism of"bread and circuses" in ancientRome? Did Benjamin Franklinhave many of us in mind when hewrote: "They that can give up essential liberty to obtain a littletemporary safety deserve neitherliberty nor safety"?

To these questions I would onlyadd the thought that liberty is notan abstraction; it is an intenselyindividual concern. It is also, asI have said, a social concern. Individual growth and social growthare as one; individual responsibility and social responsibility arealso as one. Hence, I see freedom,responsibility, and growth as athree-way evolving process.

To me, freedom and its preservation imply personal responsibility which, in turn, implies selfdiscipline. Unless we disciplineourselves, there is danger that aBig Brother may do it for us. Responsibility, in other words, cannot be casually shuffled onto thegovernment. Responsibility meanscarin~ about others as well as

caring for one's self. It means responsible self-discipline in theform of voluntary associations ofindividuals caring about other individuals. It does not mean further delegation of health, education, and welfare to the government which is to delegate excessive, and perhaps corruptive, political power.

Limits on Government

We should understand, then,that while government is necessary for law and order, that inproportion as we give government power to do things for us,we give it power to do things tous. Indeed, we should understandthat the result of maximizing security via government is a maximizing .of loss of individual freedom.

Hence, I believe we must discipline ourselves in the demandswe put upon government. To themaximum extent possible weshould "do it ourselves." Weshould realize that gains in national production originate withgains in individual production. Weshould realize that production andfreedom have a common price: responsibility, work, forbearance,self-investment, self-discipline.

And I believe that each of usmust discipline himself to thinkthrough and resist the temptations of the soothsayers - temp-


tations which undermine both theincentives and the independenceof the individual. For example, wehear:

"Reduce hours, spread the work,and prevent unemployment." Thisis a tempting but shallow and socially costly demand. There is nofixed lump of work to be done. Thework to be done is infinite and tothe extent that each of us worksless, less is accomplished. Andtime, after all, is relative - thefact that people worked twelvehours a day around the turn ofthe century is .called economicslavery; the fact that some people currently work fourteen hoursa day on two jobs is called moonlighting.

"Regulate job-destroying automation" is also suggested. Thisone has a certain specious plausibility. But automation is the new'war-cry of all those who havefalsely believed in technologicalu~employment all the way back tothe machine-smashing Luddites ofearly nineteenth-century England.The current labor shortage testilies eloquently to the fallacy ofthis argunlent which leaped intoprominence several years ago. Automation and machines realignand expand employment opportunities, increase the employee'sproductivity, and raise everyone'sIiving standards.

"Curb profits and raise wages"

is another cry. But profits are thespark plugs in the engines of enterprise. Curbing profits wouldthus curb enterprise and hencewages. Indeed, without profitsthere would be no private enterprise and no private wages whatsoever.

"Restrict private affluence" is apopular theme. This thought attacks income inequality and wealthaccumulation and carries the implication that, as in communism,we should all share and sharealike. The argument, however,flies in the face of realism, of thediversity of skills and talents, ofthe need for individual incentives,of the fact that in a free societythe consumer rewards in proportion to the contribution that eachof us makes to production.

"Expand public welfare" hasmuch hasty appeal. This demand,sometimes predicated on a socalled "starved public sector," carries the pretension to some of ourcitizens that greater welfare iswithout injury to the private sector. Here it should be rememberedthat government cannot give unless it first takes away, that excessive welfare can warp the incentive to work of both the individualwho receives it and of the individual who pays for it, that itcan consequently stunt economicgrowth.

"Put human rights over prop-


erty rights" is another bit of falselogic. Of course property has norights, but property-holders do.And no individual can exist without property - food, clothing, andshelter. Without private propertythe individual would have to turnto government for sustenanceand so surely surrender his freedom. Human rights are not extended by denying property-holderrights. On the contrary, humanrights and dignity are promotedby helping the property-less individual to help himself, to teachhim marketable skills so that hecan acquire property. on his ownand attain independence.

Economic Growth Dependson Responsible Individualism

Let me conclude, then, that thekey to economic growth is the freeindividual, that true freedom cannot exist without personal responsibility, that without such responsibility liberty becomes license andtransgresses on the freedom ofothers - license and transgression,in other words, by both individualand government.

Again, freedom involves choices- critical choices; and choices involve consequences - critical consequences. Consider some ramifications of freedom:

Freedom to choose your leadersin public office.

Freedom to choose your friendsand associations.

Freedom to choose your way ofworship.

Freedom to choose your careerand where you work.

Freedom to choose how you willutilize what you own and what youearn - whether to save or tospend, whether to invest or to consume.

Yet each of these choices cutsmore than one way. With thepolitical choice, for example, youcan vote for the candidate whopromises that he will work to preserve our liberty. Or you can votefor the candidate who promises"pie in the sky."

I am convinced the "pie" hereand now will be bigger and ourliberty safer as we invest in ourselves - and discipline ourselvesto better serve others. ~

Beware of Enslaving Others

WHAT YOU SHUN enduring yourself, attempt not to impose onothers. You shun slavery - beware of enslaving others! If you canendure to do that, one would think you had been once upon a timea slave yourself. For vice has nothing in common with virtue, norfreedom with slavery.

EPICTETUS

ARE V lEW E R I 5 NOTE BOO K

MEN can dream, can't they? And,while they are about it, theymight as well dream about a political future that would restoreto us our individual dignity andfreedom to own and act. We needparables to tell us that the libertarian philosophy has regenerative power, and that we aren'tnecessarily destined to become aworld of ants or bees, each of usassigned for life to our littleplace in a communistic heap orhive.

Two good men have dreamedrecently about a forthcoming dramatic shift in American politicalbehavior that will save us fromthe hive. One of them, AllenDrury, is an old hand at writingpolitical fiction. His latest novel,Capable of Honor (Doubleday,$5.95), is the third installment ofwhat has been proj ected as a tetralogy. Once again we meet oldpolitical and diplomatic heroes andvillains who made Mr. Drury'sAdvise and Consent and A Shadeof Difference such memorable

250

JOHN CHAMBERLAIN

stories of crises in Washington,D.C., and in the outer world.

The other political dreamer isHolmes Alexander, one of ourmore lively conservative newspaper columnists. His novel, TheSpirit of '76 (Arlington House,$6.00) , follows the same basicpattern that forms the groundwork of Mr. Drury's Capable ofHonor, for each story is builtaround the flummoxing of moderncollectivist "liberals" by a strongpresident of libertarian bent whohappens to be in the White Hous~

because of the death in office ofa predecessor.

Like Mr. Drury, Mr. Alexanderhas written an installment in aseries, for two characters who appeared in Alexander's collectionof short stories about Washingtonpolitical life, The Equivocal Men,are with us again in The Spirit of'76. One of the characters is CalvinBorton, the "liberal" scandal-mongering columnist; the other is hisconservative opponent, Phil Obermeister, a decent fellow who has

1967 POLITICAL DREAMS 251

a hard time selling his stuff toan opinionated "liberal" press.Together these characters give thereader a running commentary inpiquant counterpoint on what happens in Mr. Alexander's spiriteddream tale.

The Role of the Press

Of the two novels, Drury'sCapable of Honor has the moreprofessional finish. Like its twopredecessors in the projected tetralogy, it makes canny use ofcontemporary parallels, takingbits and pieces of living peopleand recombining them to formnew, but instantly recognizable,human beings.

Everything that Mr. Drurywrites is courageous, but Capableof Honor is the nerviest thing hehas yet done, for this novel takesthe whole mass communicationsindustry in the United States forits collective villain. The leaderwho gives the signals to newspaper, magazine, radio, and TVin Capable of Honor is a portentous columnist named Walter Dobius, more familiarly known tohis old colleagues as "WalterWonderful." He is not basicallyan evil man, for he believes inwhat he is doing. But he does evilwith an utterly humorless inadvertence, for he can't conceive thatthere should be an elementaryfairness even on the front pages

in the presentation of news assuch. Walter Dobius thinks thereis only one side to any givenstory, and that side is the onethat grows from his own "liberal"bias.

So, when "good old Harley Hudsou," who has become Presidentof the United States after sevenfrustrating years in the VicePresidency, actually stands up tothe communists when they massacre American citizens and burnStandard Oil installations in faroff Gorotoland in Central Africa,Walter Dobius takes it as a personal affront. His advice wouldhave been to let the UN "negotiate" with a bunch of bush communists who had illegally seizedthe power in Gorotoland with theundercover help of Soviet Russiaand Mao Tse-tung's Red China.And, when Moscow and Pekingcompound their mischief by touching off a seizure of the PanamaCanal by "local patriots," thusputting the U.S. into two smallwars some eight thousand milesapart, Walter Dobius considers itas a sign from the Deity thatHarley Hudson must be punishedfor his refusal to give in to thecommunists in the first place.

Harley Hudson is a characterthat has been synthesized by taking a snippet of Harry Truman,a goodly portion of Lyndon Johnson, and large elements of Barry


Goldwater, and whirling them alltogether. But the Hudson personality rings true for all of theoddity of the mixture, for it isthe "old American" parts of Truman, Johnson, and Goldwater thatare here. Hudson's embattled Secretary of State, Orrin Knox ofIllinois, is one part John FosterDulles, one part Bob Taft, onepart Paul Douglas, and one partKarl Mundt, which is to say thathe is a man to be trusted whenthe old-fashioned honor of theUnited States is involved.

But the new word with WalterWonderful and his crowd is peace.It is the old story of WinstonChurchill and Neville Chamberlain, told over again in Americanterms. But Walter Dobius andhis TV friend, the Big TV Chain"anchor man," Mr. Frankly Unctuous, can't see the Munich analogy in Gorotoland, or the partitioning-of-Poland parallel in thecommunist connivance to "share"the Panama Canal with a localstooge, Felix Labaiya, who hasbeen Panamanian Ambassador tothe United States.

When he succeeded to the Presidency through the death of hispredecessor, Harley Hudson promised his old colleagues on CapitolHill that he planned to step asideafter completing his term. Butwhen Walter Wonderful and hisfriends turn virtually the entire

mass communications industry into a conspiracy to put Ted Jason,the Governor of California, intothe White House, it is too muchfor "good old Harley" to take.Like other politicians before him,he argues himself into taking an"indispensable man" position anddecides to become an active candidate to succeed himself.

Naturally, being the "head ofthe party" by virtue of his incumbency, he has certain built-in campaign advantages. But he barelysucceeds in making it, and thecloseness of the shave is whatmakes Capable of Honor the exciting fiction that it is. The dayis saved only because one of Mr.Drury's old "villains," the BobLeffingwell who lied in an earlierDrury fictional panel about hisyouthful association with the communists, happens to turn "hero"at the eleventh hour, thus delivering crucial New York conventionvotes to the Harley Hudson column.

There is vast excitement in theway Mr. Drury manipulates everything, and there is much food forthought in it, too. The novel isparticularly good in its portrayalof the effect which conniving withunderworld violence and lawlessness has on politicians who woulddo anything to win. It is weakestin its failure to make allowancefor the possibility that commu-

1967 POLITICAL DREAMS 253

nism in Red China, in Soviet Russia, and in satellite eastern Europe is about' to decay from within. But this possibility, which iscurrently hinted in a hundred dispatches from Hong Kong andTokyo concerning events in mainland China, never occurs to WalterWonderful and his gang. Theywant to temporize and shilly-shally with the rest of the West in theUN because they would in the lastanalysis rather be Red than dead.

A Principled Decision

Mr. Alexander's story dealswith a President, Jerry Chase,who actually does step down inorder to keep his word to himself. But, unlike Drury's HarleyHudson, Alexander's mythicalPresident has already succeededin creating a "Chase cult" that ispowerful enough to guarantee avictory for a good American conservative over a "liberal" American of the Finnegan clan.

Where Mr. Drury's White Houseincumbent wins a victory for hisside by using the great powers ofhis office, Mr. Alexander's protagonist actually succeeds by relinquishing many of the overaggrandized perquisites of the modern chief executive. Thus, President Jerry Chase is more truly inthe "old American" grain thanPresident Harley Hudson. ButAlexander's "liberal" columnist,

Cal Borton, is far less of a menaceto a good libertarian American future than is Drury's Walter Dobius. In stooping to conquer, Harley Hudson does what he has todo.

Mr. Alexander's novel is evenmore frankly a dream than is Mr.Drury's, for it involves revulsionsin the contemporary Americancharacter that are more instantaneous than those which Mr.Drury writes about. The worldmoves swiftly in Mr. Alexander'shappy prose where its tread ismore hesitant in Mr. Drury's vision of what is in the cards forthe day after tomorrow. But bothnovels are good bracers for libertarians who are suffering from aloss of nerve. +

~ THE PLAY WITHIN THEPLAY: THE INSIDE STORYOF THE U.N. by Hernane Tavares de Sa (New York: AlfredA. Knopf, 1966) 309 pp., $5.95.

Reviewed by William HenryChamberlin

AN INSIDER in a world organizationnaturally sees most of the game.Especially· when the insider is asurbane, as sophisticated, and asfree from propaganda cliches asthe author of this book, a Brazilianformer Undersecretary for Information at the East River head-


quarters of the United Nations.Mr. de Sa has quit the organizationand distributes his bouquets andbrickbats without fear or favorand with a pleasing absence of inhibitions.

One could hardly ask for a morereadable guidebook on what makesthe U.N. wheels revolve, on the hectic U.N. social life, with an average of two cocktail parties a day.The rules for these parties are outlined in lively fashion; the readeris initiated into methods of gathering diplomatic information, of unloading bores on wives, on observing such taboos as not creatingmixes of Israeli and Arab dele~

gates, or throwing a South Africanrepresentative into close contactwith representatives of blackAfrican states.

Some of Mr. de Sa's observationsare on the social column gossipside; but he can be quite seriouswhen the situation demands. Hestrengthens the misgivings ofmany Americans about their country's timid role when the Hungarians struck for freedom in 1956;in his opinion, the Soviet leadership was undecided about the advisability of all-out intervention tocrush Hungary and a firmer American attitude, with some appropriate military gestures, might havetipped the scales in the right direction.

He is vigorous and forthright in

his condemnation of U.N. action inusing its expeditionary force tocrush Moise Tshombe's autonomous regime in the Congo, a stupidmove in which the United Statesunfortunately cooperated and concurred. He notes that this venturehad no justification under theCharter, brought the U.N. to thebrink of insolvency, and made anyfuture similar operation unthinkable, tartly summing up:

So the Congo episo-de might turnout, after all, to have been a usefullesson. Still, at ten million dollarsa week (the sum the U.N. wasspending on its military and civilianoperations) Congo College chargedthe U.N. a stiff tuition for its education.

As a general rule, with one important exception, the Brazilian exofficial of the U.N. displays a refreshing and often humorous quality of hard-boiled realism in distinguishing the men from the boys,the few genuine powers from themany phonies. He seems to goastray, however, in suggesting thatthe U.N. serves the interests ofUnited States foreign policy. Justthe reverse is the case.

This is most clearly illustratedby the way in which America's representatives at the U.N. have letthemselves be dragged along byAfrican states into provocativepositions toward Rhodesia andSouth Africa, two countries with

1967 OTHER BOOKS 255

which the United States has noground for hostility whatever.Were there no U.N., it is scarcelyconceivable that the United StatesGovernment would have participated in sanctions against Rhodesia, which, unlike some recipientsof American bounty, has never insulted the American flag, burneddown United States installations,and made life unsafe for UnitedStates diplomatic personnel. Orthat it would have struck a crusading pose on such an issue- as theSouth African mandate overSouthwest· Africa, or apartheid ingeneral.

But, this one blind spot aside,the author gives a spirited andhighly readable account of the wayin which the passengers in theEast River Noah's Ark fight andplay and generally behave themselves. +

~ THE FIRST NEW DEAL byRaymond Moley, with the assistance of Elliot A. Rosen (NewYork: Harcourt, Brace & World,1966), 577 pp., $12.50.

Reviewed byMary Jean Bennett

FOR AN INSIGHT into the New Deal- and if the past is prologue, anoutlook for the Great Societyone could scarcely do better thanread Raymond Moley's masterfulThe First New Deal. Moley, nowa columnist for Newsweek, was

the Columbia law professor whogathered together in 1932 and fora number of years directed thefamous "Brain Trust." This wasan early think tank that includedsuch figures as Rexford Guy Tugwell and Adolf A. Berle, J r 0' andthat funneled policies and speechesto Franklin Delano Roosevelt andhelped frame the social revolutionknown as the New Deal.

To Moley, schooled on the Progressive Movement, on "progressives" like .Henry George andCharles Beard, the Great Depression called for pragmatism - boldapproaches. to solve the cruel problems of industrial stagnation: bankfailures by the thousands, unemployment in the millions, factoriesoperating at a fraction of their capacity, home and farm mortgagesbeing foreclosed at a rate neverbefore witnessed in the country.

Moley was attracted to the NewYork governor by FDR's "pragmatic optimism," which was "marvelously effective because it was socontagious." Again, FDR's "activism was a correlative of his optimism and his love of experimentation." In one of his first assignments as a speech-writer, Moleyinserted the phrase, "the forgottenman," into an early FDR 1932 campaign address. The phrase waslifted from William Graham Sumner's famous essay of that title.But Moley and FDR used it in an


entirely different sense. The phrasecaught on; Moley was in.

He witnessed history - andhelped make it. He gives inside accounts of the sweeping 100 Daysbeginning in March, 1933, and ofthe London Economic Conferencebeginning in July, 1933. But slowlydisillusion set in; the vision ofeconomic recovery in a free societyreceded; desperation and radicalism gained ascendancy. FDR's acceptance speech to the 1936 Democratic Convention triggeredMoley's break with FDR.

Moley had a hand in the speechdraft and in fact supplied thephrase, "rendezvous with destiny,"but he was dismayed by the excesses that crept into the draft viaother "ghosts": denunciations of"economic royalists," "new mercenaries," "concentration of control," "privileged princes," and"economic dynasties thirsting forpower." This was not the FDR of1932 and earlier; this was not theman who had accepted the Democratic nomination for President in1932 with the words:

We must eliminate unnecessaryfunctions of Government-functions,in fact, that are not definitely essential to the continuance of Government. We must merge, we must consolidate subdivisions of Government,and, like the private citizen, give upluxuries which we can no longerafford.

Nor was this the man who hadrun on the 1932 Democratic Partyplank:

An immediate and drastic reduction of governmental expendituresby abolishing useless commissionsand offices, consolidating departments and bureaus and eliminatingextravagance, to accomplish a saving of not less than 25 per cent inthe cost of Federal Government, andwe call upon the Democratic Partyin the States to make a zealous effort to achieve a proportionate result.

In short, by 1936 Moley was fedup and soon submitted his resignation. In 1939 he published hiscritical memoirs, After SevenYears. The metamorphosis waspretty complete. His teacher,Charles Beard, apparently wentthrough the same cycle and Maley'writes that "Beard and I had manyconversations in his later days, inthe 1940's, and perhaps he and Iboth went through -a change inwhich we re-examined all of ourearlier preconceptions."

So it came to be that Moley, achampion of reform, found thatcentralization can lead to excess,that there was truth in Acton'sthesis on the corruptibility ofpower, that he felt more at home inthe Republican Party for whosePresidential candidates he workedlong and hard, from Wendell Willkie to Barry Goldwater. ~

the freeman 1967 · with healthier sympathies and so berer ideas," wrote [william]...

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