A Complaint

To the Editor:

I have a complaint.

I have been sending money every year to FEE for several years so that I could continue to receive The Freeman. I don’t want this to change.

My complaint is my loss of sleep and damage to my health caused by each issue of The Freeman. When it arrives I sit up to all hours to read it from cover to cover, frequently write letters to compliment authors, and then usually mail my copy to a friend (or enemy). This process occurs every month and it is causing me to lose sleep, damaging my health, and prevents me from devoting full time to the three novels I’m trying to write.

The problem is that the magazine is too good. The solution is simple. Every other issue print mediocre articles, or even just send out a blank magazine. This won’t completely solve the problem, but at least I’d know that every other month I would receive some relief.

I do trust that you will attend to this request promptly.

Robert T. Smith
Smyrna, Georgia

On Industrial Policy

To the Editor:

I found Dennis Bechara’s discussion of industrial policy in your August issue to be a useful source of documentation of the folly of agencies such as the Reconstruction Finance Corporation and Japan’s MITI attempting to direct investment. In his discussion of the changing pattern of the U.S. economy, however, he overlooks a major change taking place within the manufacturing sec tor which lends further support to his thesis. That change is the shift of manufacturing from a corporate sector which is sufficiently shielded from market forces in the short run to operate by planning to a competitive sector which responds quickly to market forces. Zoltan Acs examines that shift in his book, The Changing Structure of the U.S. Economy: Lessons from the Steel Industry

That shift puts the lie to an argument long used to justify industrial policy: John Kenneth Gal braith’s view that the corporate sector is based on planning rather than prices, so that all that industrial policy would do is transfer the planning from self-interested firms to supposedly public-interested bureaucrats. Acs’s study shows that firms which use planning to resist market forces in the short run do not grow, but shrink, in the long run. Industrial policy could prevent that shrinkage only at the expense of the growth of the innovative competitive sector. Thus, the only possible reason to have an industrial policy in that case would be to undo a condition brought about by industrial policy in the first place. One can read this into the Iacocca quote which Bechara uses on the first page of his article. As with other interventions, the solution is to eliminate the original intervention rather than to try to correct the problems caused by intervention with more intervention.

Getting Even

To the Editor:

The John Williams article in the September Freeman, “The Disease From Which Civilizations Die,” caused me to reverse a fondly held idea with respect to the use of governmental programs.

The question is whether it is morally acceptable for me to accept government benefits such as Social Security and Unemployment Insurance, should they become available. In the past, I thought yes, on the premise that it is some sort of return of stolen property.

But Williams’s argument clobbers my little metaphor. His story starts with his being robbed by a pickpocket. Then at some future date he acquires some clout over the thief. If he participates in future loot, Williams is not recovering his property. Rather, he becomes a partner in a new crime, not a victim enjoying a measure of restitution.

Williams’s story of the pickpocket is a classic.

Rational Self-Interest

To the Editor:

My congratulations to Professors Asmus and Billings for their excellent article on “Human Nature and Human Action” in the October Freeman. However, a few nagging questions remain unanswered. Allow me to play devil’s advocate.

Of primary concern to our Founding Fathers was the connection between virtue and freedom. The Founders were certain that a just society could not remain free unless its citizens were sufficiently virtuous. In other words, how will a market economy promote the necessary virtues required to sustain a free society? Indeed, what are the moral virtues commensurate with liberal capitalism? What will prevent a free society from degenerating into corruption and licentiousness?

Asmus and Billings are absolutely correct in identifying the relationship between market economics and human nature and action. Absent from their central thesis, however, is a moral defense of selfish action. Yes, such action may be “purposeful,” but it is selfish just the same. For the history of moral theory teaches us that selfishness is bad and sacrifices to others the morally good. What the defenders of capitalism desperately need is an ethical advocacy of egoism and rational self-interestedness. We must take the higher ground.

Help Is on the Way!

To the Editor:

One of your authors showed me a copy of the July 1985 issue of The Freeman, and it was a breath of fresh air in an otherwise typically stultifying Washington day. So that I might look forward to a few more such breaths, I would appreciate your adding me to the mailing list for future issues.