Briefly, UET asserts that a great thing or shapeless blob is granted in Article II: “the executive power.” (We naïve folk thought it just named a job.) Presidential power to remove subordinates (at will) follows directly. “Departmentalism” is another implication. This finds the executive to be a coequal interpreter of the Constitution along with Congress and the Supreme Court. (The states need not apply.)

The authors, both law professors, undertake a Maoist Long March through 43 presidencies, turning up many uses (and abuses) illustrating presidential power. It all amounts to a revealing, power-centric history of the United States. The authors purport to adduce “solid antecedents” for their view, such as James Wilson’s ruminations during the Pennsylvania ratifying convention.

Calabresi and Yoo’s key evaluative tool is how much a given president improved and empowered the mighty office. First up, George Washington supervised, removed, controlled all prosecutions (just like George III), called out militia, and granted pardons. Thomas Jefferson executed an embargo and bought Louisiana. Andrew Jackson was a Bonapartist (my term), who somehow embodied The People. Lincoln deployed, suspended, censored, “repelled” attacks, and invented presidential war powers by wedding the commander-in-chief clause to the “Take Care” clause. In fact, say the authors: “The Civil War was fought over the issue of the president’s authority to take care that the laws be executed in the South.” This is a peculiar focus indeed.

Much later, President McKinley’s foreign policy and war strengthened the office. Teddy Roosevelt had no war but nevertheless issued numerous executive orders to expand the reach of the presidency. Woodrow Wilson, war in hand, did much more. Under Franklin Roosevelt, “power exploded,” as he controlled, executed, and issued innumerable orders. Harry Truman got us into Korea with unitary fervor. When he unitarily seized certain steel mills, the Supreme Court declared that while the president has much unspecified power, it wasn’t quite as much as Truman asserted.

Leading largely by stealth, President Eisenhower removed officials, delegated authority, ordered federal troops into Arkansas, and expanded claims of executive privilege to thwart Senator McCarthy. The ill-starred John Kennedy issued numerous orders and had federal troops invade Mississippi. Lyndon Johnson pushed presidential power well beyond Kennedy, and Nixon stalwartly asserted yet more executive powers. The upward trajectory continued on through Reagan, Clinton, and the Bushes.

Other presidents weigh less in the unitary scale. James Buchanan, the authors’ “worst president,” failed to bring on war and grab power. Andrew Johnson at least defended the office against congressional Radicals. Hoover was only so-so but did much executing of Prohibition and issued the Stimson Doctrine. Even Jimmy Carter, called the “nadir” of executive power, at least ordered the freezing of Iranian assets. They also serve who only keep presidential powers intact. Naturally, this reduces the normal (“historically correct”) charges against them.

War meets with awkward treatment in this book. Popular wars or those too ancient to stir controversy may be mentioned, mostly as an arena for presidential heroics. The Mexican War squeaks by and the “Civil War” and World Wars I and II are noticed. The Spanish-American War gets an allusion. Oddly, the word “Vietnam” hardly intrudes on the discussion of Kennedy, LBJ, and Nixon. Neither would we ever learn here that anything warlike happened under George H. W. Bush or Bill Clinton. After all, an office best suited for getting us into wars might seem less lustrous if all the wars were reckoned in.

Now it comes out that there are two flavors of UET. Our authors only claim that whatever executive powers really exist belong to the president alone. They are quite reasonable and do not believe in certain “inherent” powers that George W. Bush asserted. But with so many undefined and nebulous powers so moderately claimed, how can the “moderate” UE theorists spy the “excessive” ones?

Much like Hobbes’s Leviathan, this is a good book: It shows us what is at stake. Is the case made? Should enemies of the UET concede? It might seem so, but there is a problem. It would be easy enough to write a lengthy work proving that for 200 years prominent American burglars have firmly asserted their “right” to break and enter. This would neither put our minds at rest nor establish the “right.”

So it is with the American executive. This interesting book demonstrates that most American presidents have been unwilling to abide by constitutional limits on their power, but not that their power was meant to be almost limitless.

In this landmark book, Beard, a professor of history at Columbia University, argued that the Constitution was “an economic document drawn with superb skill by men whose property interests were immediately at stake.” The Founders, then, rather than being patriots, wise lawmakers, or thoughtful students of government, were primarily in the Constitution-writing business to protect their “property interests.”

Conflicts of Interest

The Founders’ economic motives, according to Beard, were straightforward—they were owed money from their support of the Revolution, and those “public securities” (receipts for loans made to support American independence) were not being repaid under the weak Articles of Confederation. A stronger governing document was needed to ease the transfer of tax dollars from ordinary citizens into the pockets of the more affluent Founders.

Thus, according to Beard, the constitutional convention in Philadelphia in 1787 was promoted by “a small and active group of men immediately interested through their personal possessions in the outcome of their labors. . . . The propertyless masses were . . . excluded at the outset from participation. . . .”

Beard, who was among the first generation of professionally trained historians, gathered evidence on the Founders: “Many leaders in the movement for ratification were large [public] security holders,” he argued. Those who opposed the Constitution owned fewer public securities.

Each state had to vote on ratifying the Constitution, and Beard offered evidence that “the leaders who supported the Constitution in the ratifying conventions represented the same economic groups as the members of the Philadelphia convention.” The Founders, Beard conceded, did not write the Constitution merely to make money, but nonetheless, “The Constitution was essentially an economic document.”

Beard’s thesis, seemingly well researched, was presented in a tentative way, but it soon swept the historical profession and became gospel in college classrooms by the 1920s. The Constitution, professors suggested to their students, was not a document worthy of special respect. It was a product of self-interest that should be interpreted loosely and changed as the Progressives saw fit.

The constitutional separation of powers, for example, according to Woodrow Wilson—a friend of Beard’s and a fellow Ph.D. in history—was a “grievous mistake” by the Founders. More centralization of power was needed—especially in the executive branch—to change society through needed reforms, such as the progressive income tax.

Beard made his reputation with his book and went on to an illustrious career: He authored or coauthored 49 books that had sold more than 11 million copies by 1952.

Questionable Scholarship

During the 1950s, historian Forrest McDonald did a more thorough study of the Founders and discovered what can most generously be described as errors in research and, less generously, as fraudulent research. McDonald traveled to archives throughout the original 13 states and meticulously compiled data on thousands of men involved in the debate over the Constitution. After systematically studying the lives of the Founders and the state convention delegates, McDonald wrote We the People, which debunked Beard completely. “No correlation” exists, McDonald discovered, “between their economic interests and their votes on issues in general or on key economic issues.” In fact, McDonald emphasized that in Pennsylvania, South Carolina, and New York “most [public] security holders opposed ratification.”

How could Beard have erred so badly? In part Beard missed the mark because he was trying to hit something else—a Progressive agenda for reform, the excuse to transfer wealth from the haves to the have-nots. If the Founders were merely protecting their economic interests, Beard and his progressive friends were justified in supporting the redistribution of wealth.

How can we be sure that Beard was blinded by his ideology? One indication is that he seems to have willfully distorted his evidence to suggest that certain signers of the Constitution owned more public securities (and other forms of wealth) than they actually did. For example, Daniel Jenifer of Maryland, who signed the Constitution in Philadelphia, held no public securities—a point against Beard’s view that the signers were self-interested. But Beard classified Jenifer among the large security holders because his son Daniel Jenifer, Jr., held several thousand dollars’ worth of them.

But alas, as McDonald shows, “Jenifer had no children—at least no legitimate ones—for in both of the sources Beard used to gather data on Jenifer, it is expressly stated that Jenifer was a bachelor.” Beard also classified Gunning Bedford, Jr., a delegate from Delaware, as a security holder, but, as Beard admits, there were two Gunning Bedfords in Delaware, and the one who didn’t sign the Constitution was the one who owned the public securities. Furthermore, Beard places delegates Nicholas Gilman, William Samuel Johnson, Charles Pinckney, and others as holders of public securities, but they did not acquire these securities until long after they signed the Constitution.

Some of Beard’s mistakes are more subtle. He classifies delegate William Few as a security holder because Few funded a “certificate of 1779” with a “nominal” value of $2,170. True, but what Beard neglects to say is that Few’s “nominal” value was scaled down to a mere $114.80, a sum hardly worth motivating Few to sign the Constitution to redeem.

No doubt all the Founders were concerned about their own finances as well as those of the nation. But in writing the Constitution, they were above all trying to apply principles of natural rights and limited government to create a durable nation that would be a bastion of freedom in an unfree world. James Madison and other Founders diligently studied ancient and modern republics to learn from their mistakes what safeguards to employ to protect liberty while allowing elected politicians enough authority to effectively lead the nation.

The Sacrifices Made

What Beard omits from his history is the wisdom and dedication of the Founders in overcoming narrow self-interest to produce a masterful guiding document for the country. The actions of Robert Morris of Pennsylvania and Nathaniel Gorham of Massachusetts, for example, are remarkable. Both men signed the Constitution and supported it vigorously even though they ultimately lost money doing so.

Both men had committed to buy land with public securities—which were trading at only about 15 percent of par value before the Constitution was ratified. When the Constitution was ratified and the public securities were redeemed, both Morris and Gorham had to buy the securities at par value, so they both lost fortunes. Morris, in fact, went from being the wealthiest merchant in the United States in 1787 to being tossed into debtors’ prison in the 1790s. Contrary to Beard, Morris had voted against his own economic self-interest, and for his country’s financial integrity.

Alas, it says nothing about knowing American history.

Good thing for Sen. Lindsey Graham (R-S.C.). He’d have to find honest work.

Interviewed after Tuesday night’s State of the Union address, Graham was asked about the situation in Iraq. Trying to put the difficulties in perspective, he said the United States did not get its constitution until 1789.

Buzz! Wrong answer, Sen. Graham. But as a consolation prize you get to take home a copy of Merrill Jensen’s book The New Nation: A History of the United States During the Confederation, 1781-1789 . We’ll also throw in a copy of Herbert Storing’s What the Anti-Federalists Were For. And thanks for playing our game.

Seriously, I realize that children learn virtually nothing about the eight years before 1789 during which the United States existed under the Articles of Confederation. But shouldn’t someone who holds himself qualified to be a U.S. senator know that what we call the Constitution was really America’s second constitution?*

The Articles were adopted by the Second Continental Congress on November 15, 1777, and took effect after ratification on March 1, 1781. That was seven months before Cornwallis surrendered at Yorktown on October 19, 1781, and two and a half years before the Treaty of Paris was signed on September 3, 1783.

The Articles remained in effect until the Constitution displaced them in 1789. The process by which the Articles were scrapped — rather than amended — in favor of an entirely new blueprint was dubious. As the Anti-federalist Federal Farmer (most likely Melancton Smith of New York) wrote in October 8, 1787,

A general convention for mere commercial purposes was moved for — the authors of this measure saw that the people’s attention was turned solely to the amendment of the federal system; and that, had the idea of a total change been started [sic], probably no state would have appointed members to the convention. The idea of destroying, ultimately, the state government, and forming one consolidated system, could not have been admitted — a convention, therefore, merely for vesting in congress power to regulate trade was proposed. [Emphasis added.]

Eight years is a significant period for a nascent country to endure after breaking away from an empire. Sen. Graham’s remarks were meant to suggest that what took place in the United States during that time was similar to what’s taking place now on in Iraq. But that is ridiculous. The 13 states did not embroil themselves in civil war or sectarian violence — neither internally nor with one another. Quite the contrary.

Freed from Central Coercion

How was life under the Articles of Confederation? As Merrill Jensen writes, Americans fought against and freed themselves from . . . coercive and increasingly centralized power . . . . They did not create such a government when the Articles of Confederation were written, although there were Americans who wished to do so. . . . Thus the American Revolution made possible the democratization of American society by the destruction of the coercive authority of Great Britain and the establishment of actual local self-government within the separate states under the Articles of Confederation.

Under the Articles, Congress had no power to tax or to erect trade barriers. If it needed revenue it had to petition the states. There was no separate executive branch, with all its potential for de facto quasi-monarchization.

People in the new states, Jensen writes, were full of optimism about the possibilities ahead. Criminal codes were made more humane, with the death penalty removed for all crimes but murder and, in some cases, treason. Property qualifications for voting were abolished over time. Charities and mutual-aid societies were formed, along with library, scientific, and medical associations. Schools were founded. The union of church and state was increasingly opposed. The steps in the direction of religious freedom and the complete separation of church and state were thus halting, but the direction was sure and the purpose was clear, Jensen writes.

Of course there was slavery, which contradicted the philosophy espoused in the Declaration of Independence. But some states moved against it. Within a few years after 1775, either in constitutions or in legislation, the new states acted against slavery. Within a decade all the states except Georgia and South Carolina had passed some form of legislation to stop the slave trade, Jensen writes. New England states and Pennsylvania took steps toward abolition, and anti-slavery societies flourished.

What about the economies of the states? We can infer much from the fact that those who wanted to overthrow the Articles for a new constitution warned of coming economic turmoil if the central government were not fortified. Hence turmoil was a prediction not a description. Although individuals (white males) were free to a hitherto unknown extent, the states were no models of laissez faire. (But then neither was the consolidated national system after 1789. The first economic action of the first Congress under the Constitution was imposition of a protective tariff.)

Rent-seeking (political entrepreneurship) was rampant in the states, as it has been in every real-world system. Subsidies, loans, trade restrictions, and land giveaways were common. In this largely agrarian society, Jensen writes, the dominant note was sounded by American merchants and business men who lived mostly in the seaport towns. . . . Their power was born of place, position, and fortune. They were located at or near the seats of government and they were in direct contact with legislatures and government officers. They influenced and often dominated the local newspapers which voiced the ideas and interests of commerce and identified them with the good of the whole people, the state, and the nation. (Hence, the bad name capitalism has for many people.)

Merchants and manufacturers disagreed on what kind of government intervention should exist, but not on whether it should exist. That’s because they had different competitors. Merchants liked imports but wanted barriers to foreign (especially British) shipping, while manufacturers wanted barriers to foreign goods and didn’t care about shipping. Part of the impetus toward a strong central government was business’s desire for a uniform national economic policy, since individual states, acting alone, could hurt themselves by having more stringent restrictions than their neighbors and one state could capture the lion’s share of trade by competitively lowering its barriers. In other words, the consolidation of 1789 was part regulatory cartel.

Regional Differences

There were also regional differences. Most manufacturing was in the North, so protectionist sentiment was concentrated there. The South had little manufacturing and wanted access to cheap foreign goods. Thus high protective tariffs found little support. Northerners who coveted the southern market realized that only a nationwide trade policy would serve their interests. On the other hand, southern farmers wanted as many shipping options as possible and had little interest in restrictions on foreign carriers.

State economies suffered booms and busts — and a depression in 1784-85 — thanks to paper money, government banking policies, and other intervention. But the crises were not extraordinary. As Jensen summarizes, There is nothing in the knowable facts to support the ancient myth of idle ships, stagnant commerce, and bankrupt merchants in the new nation. As long as ago as 1912, Edward Channing demonstrated with adequate evidence that despite the commercial depression, American commerce expanded rapidly after 1783, and that by 1790 the United States had far outstripped the colonies of a few short years before.

Despite the heavy intervention, the states still had virtually an unprecedented degree of economic freedom. A person could easily get a plot of land and take care of his family by farming. There was no distant overbearing central bureaucracy to worry about. Contact with government was minimal. Imagine what the economic growth and the justice of income patterns would have been had the states practiced laissez faire!

Thus contrary to Sen. Graham, pre-1789 America had a constitution, almost no central government, prosperity, and peace. Not too shabby.

The reasons for junking the Articles of Confederation for the Constitution are worthy of study but too big a topic for today. Suffice it say, as Jensen did, that the founding fathers who wrote the Constitution of 1787 were quite a different set of men from those who signed the Declaration of Independence in 1776.

* * *

That means George Washington wasn’t really the first president of the United States. He was the 11th. Ten men served as president of the United States under the Articles. Samuel Huntington was first. Some people erroneously regard John Hanson as first. Huntington’s tenure, September 28, 1779,to July 9, 1781, was transitional; he was elected by the Continental Congress, but by the time ill health forced him to resign, the Articles were in effect. The first president elected under the Articles was Thomas McKean, July 10, 1781, to November 4, 1781. Hanson, November 5, 1781, until November 3, 1782, was the first to serve the full term, of which only one was allowed. President meant president of the Congress. There was no executive branch.

One who looks for information about corporatism is frequently referred to fascism. (In the International Encyclopedia of the Social Sciences, for example, the entry for corporatism reads simply, “See Fascism.”) Indeed, the corporatist ideal achieved its fullest historical expression in Italy under Mussolini’s regime. There, workers and employers were organized into syndicates based on local trades and occupations. Local syndicates joined in national federations, which were grouped into worker and employer confederations for broad economic sectors, such as industry, agriculture, commerce, banking, and insurance. In 1934 the government made peak associations part of the apparatus of state, with one corporation for each of 22 economic sectors. The corporations received authority to regulate economic activities, to fix the prices of goods and services, and to mediate labor disputes.

In practice the Italian corporate state operated not as a grand compromise among economic interest groups but as a collection of sectoral economic authorities organized and dominated by the government in the service of the dictatorship’s aims. Neither capitalists nor laborers enjoyed autonomy or private rights defensible against the fascist regime. (See Mario Einaudi,“Fascism,” International Encyclopedia of the Social Sciences [New York: Macmillan and The Free Press, 1968], pp. 334-41.) Other fascist regimes in Europe and Latin America operated similarly. In light of this experience, one might judge fascist corporatism to have been something of a fraud. The appearance of rationalized popular participation in government failed to mask the dictatorial character of the system.

Not surprisingly, after World War II, fascism became a dirty word and full-fledged corporatism a discredited program. Nevertheless, arrangements bearing some similarity to fascism’s corporate state developed in the democratic countries of western Europe, most notably in Scandinavia, Austria, and the Netherlands, but also to some extent in other countries. No one describes these arrangements as fascist; most commonly they are called neocorporatist.

Neocorporatism (also known as liberal, social, or societal corporatism, sometimes as tripartism) shares with fascist corporatism the preference for representation according to membership in functional economic groups rather than according to location. It disavows, at least rhetorically, fascism’s totalitarian aspects and its suppression of individual civil and political rights. Neocorporatists support the organization of economic interest groups and their participation as prime movers in the formulation, negotiation, adoption, and administration of economic policies backed by the full power of the government.

Political scientists have concluded correctly that the United States is not a corporate state — certainly not a corporate state comparable to modern Sweden or Austria. American interest groups have been too partial in their membership. Normally the government power they hope to seize has itself been fragmented, divided at each level among executive, legislative, and judicial branches and dispersed among the national, state, and local levels in a federal constitutional system. Residual allegiance to liberal ideology and its political norms and practices, including limited government and territorial representation in the legislature, has also impeded the development of corporatism. The American economy is vast and complex. To bring it within the effective control of a few hierarchical, noncompetitive peak associations, as the fascists tried (or pretended) to do in interwar Italy, is almost unthinkable. The closest peacetime experiment, under the National Industrial Recovery Act during 1933–35, did not work and was collapsing of its own weight when the Supreme Court put an end to it.

Nevertheless, recent American history has brought forth a multitude of little corporatisms, arrangements within subsectors, industries, or other partial jurisdictions. They have drawn on both national and state government powers.They operate effectively in the defense sector, in many areas of agriculture; in many professional services, such as medicine, dentistry, and hospital care; and in a variety of other areas, such as fishery management and urban redevelopment. These abundant “iron triangles” normally involve well-organized private interest groups; government regulatory, spending, or lending agencies; and the congressional subcommittees charged with policy oversight or appropriations. A political economy in which such arrangements predominate, as they do in the United States, is commonly called interest-group liberalism or neopluralism. (Elsewhere I have followed Charlotte Twight in calling it participatory fascism.) But it might just as well be called disaggregated neocorporatism or quasi-corporatism.

Under crisis conditions, all the forces normally obstructing the development of U.S. corporatism diminish. Since the early twentieth century, in the national emergencies associated with war, economic depression, rapid and accelerating inflation, or large-scale labor disturbances, the national government has responded by adopting policies that consolidate power at the top and extend the scope of its authority. With power more concentrated and more actively employed, the incentive is greater for latent private-interest groups to organize, increase their membership, suppress their internal disputes, and demand a voice in policy-making.

Government Sponsorship

Far from resenting such a private coalescence of interests, the government usually approves, encourages, and sometimes even sponsors it. In a crisis, swift action is imperative, and the government needs private interests with whom it can deal quickly while preserving the legitimacy that comes from giving affected parties a role in policy-making. When the government is imposing unusual restrictions or requirements on the citizens, as it always does during major emergencies, it needs to create the perception, if not the reality, that these burdens have been accepted—better yet, proposed and chosen—by those who bear them.

National emergencies create conditions in which government officials and private special-interest groups have much to gain by striking political bargains with one another. The government gains the resources, expertise, and cooperation of the private parties, which are usually essential for the success of its crisis policies. Private special-interest groups gain the application of government authority to enforce compliance with their cartel rules, which is essential to preclude the free-riding that normally jeopardizes the success of every arrangement for the provision of collective goods to special interest groups. Crisis promotes extended politicization of economic life, which in turn encourages additional political organization and bargaining.

In U.S. history, quasi-corporatism has risen and fallen over the course of national emergencies, but each episode has left legacies, accretions of corporatism embedded in the part-elitist, part-pluralist structure of American government. By now these accretions, taking the form of disaggregated neocorporatist arrangements scattered throughout the economy, add up to a significant part of the political economy.*

*The foregoing discussion is drawn from a much longer, fully documented account in my book Against Leviathan: Government Power and a Free Society (Oakland, Calif.: The Independent Institute, 2004), pp. 177–200.

Governments need to protect our history (and us), we’re told, by funding historians, stopping malls, and providing standards for the teaching of history in schools. It turns out, however, that markets do exist for history, often in surprising places, and that entrepreneurs have found ways to “sell” history quite effectively.

My family recently visited American Girl Place in Chicago. The Pleasant Company, which operates this store together with its extensive catalog and website operation, has created a profitable niche selling history to tens of thousands of young girls. True, the history is dressed up in cute outfits and accessories, but it is real history. The company’s message to parents makes it clear that selling history is critical to its product line: “American Girl’s creator, Pleasant T. Rowland, believed that engaging stories about girls living at important times in the past–and dolls standing as tangible symbols of these characters–could breathe life into history, turning it into something real and personal, something today’s girls could hold in their hands.”

How does the company do it? Three things are critical.

First, the company has designed products that attract and hold the attention of its target audience, preteen girls, while simultaneously appealing to the family members who make the buying decisions. For the children, the dolls are attractive, fun to play with, and capable of acquiring an astounding amount of period clothing and other accessories. For the parents and grandparents who pay the bills, the dolls combine a well-made product with the bonus of an “educational” toy that will encourage children to learn about history and to read the accompanying books. As the company’s website sums it up: “At American Girl, we’re committed to helping you protect your daughter’s individuality, intellectual curiosity, and imagination. We offer age-appropriate books and playthings for every stage of her life–keepsakes we hope she’ll one day want to share with a daughter of her own.”

Second, the company has paid attention to its market and designed a set of products for it. There is Felicity, a child of colonial America just before the Revolution; an African-American, Addie, who has a heartwarming story of escape on the Underground Railroad; a Hispanic, Josefina, from New Mexico in 1824, when it was still serious about its Hispanic culture as something more than a theme park; an American Indian, Kaya, with a strong story of Nez Perce culture from 1764; Kirsten, a Swedish immigrant from 1854; Samantha, a wealthy child from 1904; Kit, a child of the Depression in the Midwest; and Molly, a child during World War II. In contrast to the assumptions of those who call for government-mandated diversity, the Pleasant Company has shown that markets respond to diverse customer populations. I am sure that future dolls will feature immigrants from other cultures as well. (In other product lines the company also offers diverse products: its modern dolls come in multiple skin tones to allow customers to get a doll that matches their child’s color.) As it turns out, children don’t just want the doll that matches their own ethnicity–they want them all. My younger daughter’s bedroom is now a multicultural mélange mirroring our society.

Third, the company has a successful product. My daughters’ school “social studies” books drain the life from American history. The Revolutionary War and Civil War become the opportunity for dry recountings of dates and names, mixed in with “inspiring” vignettes of diverse ethnic groups. These vignettes are, to be blunt, dull as dishwater because committees determined to offend no one wrote them. The American Girl books, on the other hand, are lively and engaging. Because they’re fun to read, they get read–over and over and over. My daughters have undoubtedly absorbed more American history from the American Girl books–including more of the social history of “underrepresented” peoples that school text-selection committees seem to value so highly–than from their textbooks and social-studies classes combined.

Knowing the Market

Are there downsides to these wonderful products? Of course. The books aren’t always as complete as I’d like; the explanation of the Great Depression’s causes doesn’t satisfy me as an economist, for example, and I’d like a lot more detail on the lack of freedom in Sweden that drove Kirsten’s family to the United States. The books don’t have a consistent classical-liberal analysis of events. Indeed, they don’t really analyze many important events at all. But if the books did satisfy me on these points, they’d bore my daughters to tears. I might know more economics than the Pleasant Company and its authors, but they know a great deal more about what kids will and won’t read. A few eight-year-olds may want to read serious economics and political theory, but most won’t. On the whole, I think the Pleasant Company and its authors have struck about the right balance between entertainment and history in the books and the “back stories” for the dolls.

One other aspect of the product line deserves mention. In addition to buying the dolls and their many accessories through catalogs and websites (www.americangirlstore. com), you can visit the store. In addition to all the products, the store offers a musical production, lunch, tea, and dinner, a doll hospital, doll hair salon, and photo studio. On our visit my younger daughter got her picture taken with two of her dolls, had lunch with the dolls, and attended the musical. The lunch is designed to be elegant (keeping in mind that it is for children). The food was surprisingly good, cleverly presented, and cheerfully served. The dolls ate along with us in special chairs and with miniature plates and cups. The musical involved a club of girls and their dolls, learning to get along with one another after a dispute over who was whose best friend. The store was packed with girls and their dolls. (The only boys in sight were sitting in chairs waiting for their sisters to hurry up and get done.) Many girls were there with their grandmothers, others with mothers or other relatives.

The most impressive aspect of the store was the calmness of the hundreds of children 8 to 12 years old, each clutching her doll and many dressed in outfits that matched the dolls’ clothes. Having led two Girl Scout troops, I can attest that this was not due to the innate good behavior of young girls. The good behavior and good manners on display were clearly the result of the store’s product, an elegant experience with one’s doll, family, and friends. Think of it: a merchant found a way to get young children to behave by offering them that experience and charging them for it. We often hear people decry the terrible effects of commerce on culture and civility. Our visit to American Girl Place suggested that it is possible for commerce to have the opposite effect.

An American Girl Success

There are four important lessons from the success of the American Girl dolls. First, history can be sold–even to children. This shouldn’t be a surprise given that popular history and historical fiction are best-sellers for adults and children alike. But given the regular rending of garments and gnashing of teeth over the alleged dumbing down of our culture, this is surely encouraging. Of course, not all girls play with American Girl dolls or read their books. But enough do that the series is a huge success and continues to expand. How big a success? The founder of the company sold it to Mattel in 1998 for $700 million, and the company has sold over 80 million books and seven million dolls.

Second, the profit motive is enough to produce a product line that truly values the experience of multiple cultures. The American Girl series includes a representative sample of the different peoples who populated this country. The representations are respectful of cultural differences, emphasize strong role models from each, and are, as far as I can tell, reasonably accurate in their portrayals. One aspect of the dolls might not please diversity advocates, however: All are American girls first, rather than hyphenated Americans. This is a melting-pot vision of America, not one built on never-ending division along ethnic lines.

Third, history can be fun, and markets make it so. It is far too easy as an adult to forget what made us interested in history when we were young. History is interesting when it is fun and fun because it is interesting. The American Girl dolls make playing and reading about history fun. That’s much more likely to create future historians than the dead text of social-studies books written by committees. Talking about what my daughters have read in their American Girl books has provoked substantive conversations that have opened up new avenues for my children and led them to want to read more about specific topics. Unlike government schools, which can force children to read boring books, the Pleasant Company can succeed only if it can convince children to ask for its products and parents to buy them. Market pressures produce better products.

Finally, the dolls are the result of a classic entrepreneur’s vision. Pleasant Rowland, a former teacher and textbook writer with no formal business training, once visited Williamsburg, Virginia. As she told Fortune Small Business in an interview in the fall of 2002, “Off I went, thinking I was going to have a nice little vacation. Instead it turned into one of the seminal experiences of my life. I loved sitting in the pew where George Washington went to church and standing where Patrick Henry orated. I loved the costumes, the homes, the accessories of everyday life–all of it completely engaged me. I remember sitting on a bench in the shade, reflecting on what a poor job schools do of teaching history, and how sad it was that more kids couldn’t visit this fabulous classroom of living history. Was there some way I could bring history alive for them, the way Williamsburg had for me?”*

Rowland, then 45 years old, took her savings and created the business from scratch in little more than a year. She built the Pleasant Company into a $300 million-per-year business in 12 years. With any luck, girls who graduate from the dolls to business school will one day be studying Rowland’s story as a case study of entrepreneurial talent.

What’s the moral? Markets aren’t supposed to sell history, or if they do, it is almost always claimed to be inaccurate or dumbed down to the lowest common denominator. The success of the American Girl dolls suggests otherwise: good history sells, and entrepreneurs will find ways to sell it. The result benefits us all. Pleasant Rowland got rich on selling children a history of America that is multiethnic, emphasizes the contributions of strong women, and is accurate. Countless children got wonderful toys. Parents and grandparents got to watch their children and grandchildren grow up with a love of history. If markets can do that, what can’t they do?

The decline in the core curricula of universities and the growing “cultural illiteracy” of high school and college graduates have been lamented in many books and articles. As universities have redesigned their curricula to fit the demands of political correctness and the particular interests of their faculties, we have seen an alarming rise in the number of college graduates who know little about the basics of American history and the Western tradition. But as troubling as this is, we need also to examine the state of economic education in America.

Though college economics programs have not suffered the same degradations that have occurred in many other disciplines, the fact is, in most major universities economics has never really been taught as well as it should have been.

The problem with the way most universities teach economics is the overwhelming emphasis on mathematics. When I was an undergraduate at the University of California, San Diego, in the 1980s, I remember one economics professor who, after displaying one particularly confusing mathematical function, stated bluntly that if you don’t understand advanced calculus, you’ll never understand economics. As I was struggling through calculus at the time, this was of concern to me.

Mathematics is, of course, useful in understanding economics. Unlike other disciplines, such as political science, which have increasingly used mathematical formulations to explain principles, mathematical formulations actually do make sense in the study of economics. Though given the inability of economists to forecast GDP growth from quarter to quarter, and continual doubts about the accuracy of how we measure GDP in any case, the mathematical exactitude economists sometimes like to pretend exists in this “science” is a bit comical.

But as good and useful as mathematics is in economics, we have to remember what is behind all the variables in these formulas. The great economist and philosopher Wilhelm Röpke reminded us in his classic, A Humane Economy, that the economy is nothing more than the interaction of human beings. Or, similarly, the basis of economics is the title of Ludwig von Mises’s tome, Human Action. The founding work of economics, An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith, is a work of observations that, without the use of advanced mathematical formulas, explains how markets function and how resources are effectively deployed. Smith’s “invisible hand” may not be possible to graph or to represent as a mathematical formula, but it is as important in understanding market economics as are supply and demand curves.

In the course of obtaining a B.A. in economics at UC San Diego, I was never assigned a single page of The Wealth of Nations. (Nor, for that matter, was I ever assigned anything by Wilhelm Röpke or Ludwig von Mises.) All the core courses I took in microeconomics and macroeconomics were focused on mathematical theorems and models (invariably Keynesian, not Austrian). Elements of human action did occasionally come up in explaining things like “Giffin goods” (goods that people consume less of as their incomes increase), which posed “quirky” exceptions to the economic models we were being taught. And in microeconomics the intuitive assumptions of human behavior behind the shapes of demand and supply curves were routinely explained. But for the most part, a typical college course in basic micro or (particularly) macroeconomics was 90 percent mathematical equations with scant attention paid to the vagaries of human behavior. (This is still the case, as confirmed by my perusal of standard textbooks and course syllabi, and my speaking with recent college graduates.) And when such behavior is explicitly discussed, it’s usually in the context of how it can be neatly captured in a mathematical model.

More Than Mere Science

One factor behind the stress on mathematical modeling is the belief by the fraternal order of economists that being able to construct models and mathematical proofs elevates economics from a mere academic discipline to a “science.” One of the outcomes is the conceit that the economy (the decisions and interactions of millions of individuals) can be accurately understood, modeled, and manipulated, which in turn encourages faith in central economic planning–a faith which is belied by history.

When I was an undergraduate, Ronald Reagan was president. Keeping up with current affairs, one of my macroeconomics professors devoted some class time to the ideas behind the so-called “Laffer Curve,” which was the basis of the Reagan administration’s argument that lower tax rates would increase revenue. Though this professor was more or less “conservative,” he nonetheless scoffed at the notion because, as he proceeded to show, getting more tax revenue through lower tax rates was mathematically impossible. Of course, the mathematically impossible proved possible after all. In the wake of Reagan’s tax cuts the revenue generated by even the highest income tax brackets increased, though they experienced the greatest percentage rate reductions.

My economics professor, like many economists, put too much stock in mathematical formulas and not enough in the study of the complex dynamics of human behavior in which incentives, interaction, preferences, and even individual “quirkiness” cannot be effectively plugged into a mathematical model. Although modeling can be a useful tool, we have to recognize its limitations, since we cannot predict with any degree of precision the various, and often far-reaching and unforeseen, effects of particular policy decisions on the behavior of millions of individual human beings.

My old economics professor who thought advanced calculus was the key to understanding economics was wrong. The key to understanding economics is understanding human action. Economic education will improve in this country when works that portray the grand nature of the economic process-works by Adam Smith, Wilhelm Röpke, Ludwig von Mises, F. A. Hayek, and others-are given an important place in the university.

Experiment in Liberty is an experiment by a certified public accountant in writing a history of the United States. It is sometimes a flawed experiment and often idiosyncratic in organization; but this book is nonetheless more reliable than most texts now being used in high-school and college classrooms across the country, as it places liberty rather than the state at the center of our history.

In tracing American history, Gray looks at the impact of liberty on our political and economic development. Liberty, he argues, has been the key to American progress, with government a gaudy but unproductive sideshow. That is a vital shift from the common approach that leads the reader to believe that government is the driving force.

Experiment in Liberty is rather thin on the colonial period, but ably covers the American Revolution and economic development thereafter. On Alexander Hamilton, Gray is, I believe, too negative. It’s true that Hamilton involved the federal government in activities beyond the scope of Article 1, Section 8, of the Constitution. But he ought to be commended, not criticized, for helping to redeem the near worthless Continental bonds and thereby establish U.S. credit at home and abroad. Gray overreacts when he concludes that if Hamilton “had . . . not been martyrized by falling to Aaron Burr’s bullet in a duel . . . he would likely have disappeared quietly from the pages of history.”

The author does a good job of tracing westward expansion and the industrial growth of America during the nineteenth century—again a result of the actions of free individuals operating under a system that protected life, liberty, and property. On the rise of big business, Gray ignores the standard historical line and sagely concludes that “envy and fear describe in a nutshell what drives the criticism of trusts and monopolies.”

Gray is also sharply critical of the Progressive Era and the New Deal. He points out the dangerous concentration of power in Washington that began so forcefully early this century and takes a dim view of the justifications advanced for subjecting people to the yoke of federal bureaucracies.

However, he should have hit the problem of the income tax harder than he did. Tax rates, contrary to Gray, did not remain low until 1943. During World War I, the rate on top incomes was hiked to 77 percent; it came down to 24 percent in the 1920s, but shot up first to 79 percent and then to 90 percent under FDR. Understanding the history of the income tax is understanding twentieth-century America, and here Gray lets the reader down.

Unlike many history texts, Experiment in Liberty recognizes the deluge of problems with the growth of government from the Great Society era to the present. Gray frequently quotes John Stuart Mill, F. A. Hayek, and Ludwig von Mises in advocating greater individual choice and less government regulation in modern American life. His refusal to take at face value the usual claims that government programs work and must correct for “the failures” of the free market sets this book apart from the run-of-the-mill history of the United States.

Gray properly criticizes the United States for its Indian policy, but his analysis is sometimes simplistic. The Indians often were paid for their land and sold it voluntarily. If he had studied the fur trade, he would have seen Indians and whites in a market economy frequently working well together. The American Fur Company, under John Jacob Astor, did more for the American Indian than did government paternalism, which led to Indian removal.

Concerned parents—who are looking for sensible histories of the U.S. for their high-school and college-age children—will be pleased with this book. It’s a sad state of affairs when retired accountants write better histories of our country than do the historians, but that is the case at present. Gray has served up an excellent feast of information on liberty in the United States, and its essential role in creating American health and prosperity.

“The creation of the United States of America is the greatest of all human adventures. No other national story has such tremendous lessons, for the American people and for the rest of mankind.” So begins Paul Johnson in his upbeat and first-rate A History of the American People.

As a British historian and non-academic, Johnson avoids the pitfalls of so many American historians. Academic historians in particular often impose a double straitjacket on U.S. history: first, that economic issues have been paramount in shaping American politics; and second, that government intervention in the American economy has been necessary and benign. Johnson disputes both of these points.

Johnson gives due attention to economic issues, but he also highlights the crucial role of religion in shaping American history. For example, he takes the Puritans seriously as men of ideas. Later, he analyzes the Great Awakening, the religious fervor of the 1740s. “The Great Awakening,” Johnson argues, “was thus the proto-revolutionary event, the formative moment in American history, preceding the political drive for independence and making it possible.” George Whitefield, its leader, “was the first ‘American’ public figure, equally well known from Georgia to New Hampshire.”

In Johnson’s history, the rise of America to world prominence is a fascinating story, full of key inventions and daring entrepreneurs. Liberty, not government, is what extended the American dream to millions of Americans, immigrants and natives alike, during the 1800s.

The 1900s might well be called the century of big government in U.S. history. “It was [President Woodrow] Wilson who first introduced America to big, benevolent government,” Johnson asserts. But Wilson “was corrupted by power, and the more he had of it the deeper the corruption bit, like acid in his soul.”

Johnson prefers Calvin Coolidge: “No one in the 20th century defined more elegantly the limitations of government and the need for individual endeavor, which necessarily involves inequalities, to advance human happiness.” Coolidge cut taxes, promoted free enterprise, and had the lowest misery index (inflation plus unemployment) of any president in this century. “Of those who came to power at the same time as Coolidge, all the most notable were dedicated to expanding the role of the state.”

When the Great Depression hit, both Hoover and Roosevelt brought bigger government to America—and much of it had negative consequences, according to Johnson. “No series of events in modern history is surrounded by more mythology than the New Deal,” Johnson writes. “There was no actual economic policy behind the program.” Democratic Presidents Kennedy and Johnson and Republican Nixon expanded government further. But, Johnson says, Ronald Reagan, a “conservative revolutionary,” challenged the Democratic hegemony. Johnson curiously ignores Nixon’s failed economic intervention, but praises him for challenging the Kennedy money and the “liberal” media.

Johnson’s history is a superlative achievement, not only for his knowledge and insights but also because he is an able writer and captivating storyteller. In a recent interview, Johnson showed impatience with historians who “niggle” at his work, but more niggling by his editors would have cleared up a variety of misspellings and minor errors. Zachary Taylor was a Whig, not a Democrat; it’s Alfred Sloan, not “Sloane,” and John W. Davis, not “Davies.” But let me niggle no more.

Critics accuse Johnson of being biased, but he is in fact balanced and nuanced in his treatment of historical events and personalities. Johnson appears biased to other historians because so many of them are accustomed to teaching from the standard “liberal” texts that dominate the market—for example, Samuel Eliot Morison’s Oxford History of the American People.

Where Johnson treats Coolidge with respect, Morison lashes out, calling him “a mean, thin-lipped little man, a respectable mediocrity . . . dour, abstemious, and unimaginative.” Where Johnson dissects the New Deal, Morison is filled with gushing praise, saying that it was “just what the term implied—a new deal of old cards, no longer stacked against the common man. . . . Probably it saved the capitalist system in the United States.”

These snippets are typical of the “history” most Americans have learned. Johnson’s excellent work often stands in opposition to the conventional wisdom. It deserves a wide readership among students as well as adults, and if so, we may yet train our next generation to appreciate American history.

Physicists tell us that a solid rock is mostly empty space interspersed with occasional dense specks of matter. “In much the same way,” says Thomas Sowell, “specks of knowledge are scattered through a vast emptiness of ignorance, and everything depends upon how solid the individual specks of knowledge are, and on how powerfully linked and coordinated they are with one another.”

Knowledge and Decisions takes us on a tour through the vast emptiness of ignorance to show how dispersed knowledge forms the architecture of human institutions. Building on F.A. Hayek’s insights in “The Use of Knowledge in Society,” Sowell analyzes economic, political, and legal decisions in terms of their use or neglect of this knowledge. The book includes page after page of lapidary examples, from discussions of rent control, affirmative action, and intelligence tests to the reasons that people dislike “middlemen.”

Sowell also addresses American history over the past century. Because the United States is now a nation of employees (rather than self-employed farmers), many people do not bear the consequences of their decisions directly. With feedback from their decisions weakened, they tend to demand political changes that reduce others’ freedom and ultimately their own. And “experts,” who have incentives to ignore dispersed knowledge, “solve” problems by overturning alternatives that people have found to be more valuable.

Sowell addresses other aspects of decision-making, such as constraints, trade-offs, and incentives. But knowledge is paramount, partly because few understand its importance. As this book achieves greater recognition, that understanding should grow.