All Commentary
Friday, March 1, 1974

A Reviewer’s Notebook – 1974/3


The title of William F. Buckley Jr.’s Four Reforms: A Program for the 70′s (G. P. Putnam’s Sons, $4.95) is a slight misnomer — actually, with characteristic largesse, Mr. Buckley offers his readers six reforms.

Save for the proposal that the American Presidency should be limited to a single six-year term, the Buckley prescriptions will hardly satisfy libertarians who distrust government to mitigate its own present and past depredations. Those who called the late Senator Robert Taft a socialist because he sponsored “lesser evil” public housing and education bills will see in Mr. Buckley’s approach only a Taftian echo. But there is one difference: where Bob Taft really believed that government had a minimum duty to provide houses and schools for the laggards in society, Mr. Buckley professes no such concern beyond a wish to avoid a charge of “misanthropy.” Mr. Buckley describes his reforms as “entirely procedural in character.” They are not designed as “solutions,” but as devices that “seek to free up constricting molds and to flush out accretions of government, so as to induce a greater freedom of movement.”

In brief, the idea behind the reforms is that it might benefit the antistatist cause if the battlefields were to be changed. Mr. Buckley is not proposing that social welfare subsidies should be abolished forthwith. His proposed Welfare Reform reads this way: “Congress shall appropriate funds for social welfare only for the benefit of those states whose per capita income is below the national average.” The “procedural” effect of such a reform would be to continue twenty-two states, beginning with Iowa and ending with Mississippi, as Federal welfare wards. In the twenty-eight above-average states the fight for welfare payments would be transferred from Washington to the state capitals. Presumably the local welfarists would have to make compromises in order to keep taxpayers from moving to those states that threatened them the least. Thus “procedure” would favor the retention of the old Brandeis-Frankfurter idea that states should be prepared to pay for their own social laboratory experiments. Incidentally, the administrative savings under the Buckley plan on the back-and-forth passage of tax money between the twenty-eight above-average states and Washington might be considerable.

Education Vouchers

On education, Mr. Buckley refrains from making the effort to eradicate the memory of Horace Mann. He proposes an Amendment to the Constitution that reads: “No child shall be denied admission to a public school… on account of race, creed, color, or national origin, notwithstanding any provision in the Constitution of the United States or of any State. Nor shall any relief authorized by any legislature for children attending nonpublic schools be denied by virtue of any provision in the Constitution of the United States or of any State.” This would allow for voucher systems, and might save a lot of private schools, both sectarian and parochial. Libertarians would still object that vouchers issued to parents for presentation as tuition money at private schools would lead to state control of curricula. (“He who pays the piper calls the tune.”) But at least the voucher-aided schools would have a little immediate money to live on during a period in which they could organize to send their own defenders to state legislatures.

Shifting the Battlefield

Once again the Buckley “procedure” would shift a battlefield. As it affects parochial schools the Buckley Amendment would, of course, be mere supererogation, for freedom of religion, as guaranteed in the First Amendment, must, under any proper interpretation of the law, cover the right of churches to establish their own standards of education and the concomitant right of their parishioners to keep their share of the education tax money to pay for it. Our judges, in taking a Catholic’s or a Jew’s school money, have been effectively infringing the religious guarantee of the First Amendment all along. So maybe there is need for a Buckley clarifying amendment to supplement the present language of the Bill of Rights.

When it comes to tax reform, the Buckley “procedural” change actually does amount to a significant change in philosophy. With a bow to Friedrich Hayek’s Constitution of Liberty, a great and greatly overlooked book, Buckley proposes that Congress should eliminate the progressive feature of the income tax along with “all deductions except those that relate directly to the cost of acquiring income.” With exemptions gone, Congress should also eliminate the corporation tax. In order to counter the discriminatory features of special taxes, Congress should reimburse taxpayers below the poverty line by giving them a rebate on Federal taxes that are regressive in impact. Mr. Buckley figures that a uniform income tax of fifteen per cent would raise enough to run the Federal government even with the repeal of the corporation tax.

Criminal Justice

As for reforming the system of criminal justice, Buckley suggests that no great harm would be done by repealing the Fifth Amendment, which is periodically invoked as protection against self-incrimination. The Fifth was originally adopted to prevent brutal beatings by police, Star Chamber excesses, and other Nazi-like practices designed to force confessions. Modern technology, however, could be invoked to prevent torture; all that would be necessary would be to compel the legal authorities to keep tape recordings, oral and visual, of the interrogation of suspects.

As a matter of fact, the Fifth Amendment is already ignored in government practice. It is not accepted by Internal Revenue as an excuse for refusing to admit income derived from smuggling, theft, cheating or extortion even though the declaration of such “earnings” would obviously be self-incrimination.

Only one of the six Buckley reforms does not involve any change in the law. Feeling that something must be done about the problems posed by the longer life-expectancy of old people, Buckley would have the trustees of the ten top-rated private colleges and universities announce that beginning in 1976 nobody would be accepted into the freshman class until he had passed one year in public service, preferably in charitable and religious homes for the elderly. This would not only save on the relief bills, it would also help with the “reestablishment of a lost circuit: of spirit, and affection, and understanding.”

A nice idea, since it involves nothing more than voluntary non-Statist action. But can you see it happening by 1976?

 

THE LIBERAL MIDDLE CLASS: MAKER OF RADICALS by Richard L. Cutler (New Rochelle, N.Y.: Arlington House, 1973) 255 pp., $8.95.

Reviewed by Emerson P. Schmidt

This work is the result of face-to-face experiences and encounters by Dr. Cutler as professor at Berkeley and Ann Arbor, vice president of student affairs and for some years as practicing child psychologist. The author’s experience as vice president at Michigan separated him from his earlier “impractical liberalism.” (p. 52). Now he is a self-made dedicated conservative in politics and economics and in his understanding of the human condition and student psychology. He defines neither liberal nor radical, but adequately characterizes and describes them. His account of personal experience with Tim Leary, Tom Hayden, and other rebels tends to confirm confidence in the author’s diagnosis and prescriptions which pervade the book.

Middle class liberal parents, heavily occupied with their extensive away-from-home activities, entertainment, fun, and indulgences, provide few solid anchors and values for their growing children. Their affluence showers their offspring with vast quantities of toys and other playthings, baby-sitters, exciting amusements at theaters and via TV, and unlimited streams of edibles and beverages. Permissiveness at home, school, and in the community generates a wildness or spirit of rebellion. Drug addiction easily follows.

This satiation of every desire and want develops in the youngster a strong feeling that he is entitled to such quick response from all others. The young child need only ask, and it shall be provided by the loving parents. When he encounters the real world outside, such ready response no longer occurs. As he grows up his desires and wants multiply. They become more expensive to fulfill. At some stage deep frustration may occur.

Most of the book is concerned with a small minority of students and parents; yet these students are deeply distressed and become extreme activists. Why the majority remain calm and studious is not clear. Yet a small minority “is able to terrorize a high school, radicalize a portion of junior high school students, intimidate teachers and principals, and effectively disrupt the process of education at almost any level.” (p. 46). On a campus with 30,000 students, a mere one per cent, 300, can paralyze the institution, take over the president’s office or that of a dean, and disrupt an invited speaker.

The radical student is not easily defined. He may be New Left, Maoist, Stalinist, collectivist, state welfarist. Yet, generally he is not devoted to government centralization, or massive government ownership of industry. He is anti-establishment with a strong flavor of anarchism, nihilism, and authoritarianism. He is often more critical of government than of our capitalist system. He rarely exudes a coherent philosophy on production and distribution, on law and order, or on government. But almost anything is worth a try — at least on paper.

The author discovered that deep anxiety, fear, and individual helplessness runs through the radical’s consciousness — often without the victim’s awareness. These traits abound: arrogance, self-importance, intolerance for any frustration, impatience, fascination with off -the-top -of -the-head solutions, need for immediate relief from tension, intolerance of authority (police and judiciary), strident demands for total freedom with no sense of responsibility. Non-negotiable demands are advanced. (p. 50). Antagonism extends to the family, schools, the church and religion (not merely indifference). All is boring and irrelevant including parents, teachers, law and order, government, the judiciary. Anyone over 30 is passe.

Political attitudes are usually extremely juvenile and superficial, consisting largely of slogans. Much of the ranting and sloganeering calls for revolution, but without a program. Force rather than persuasion, and emotion rather than reason characterize the radical activists. Position papers are drawn up which are replete with sophomoric rhetoric about war, defense, taxes, money, work, the ghettos, the poor, and minorities. The author does not analyze separately the black activist radical.

The radical places himself above the law; hence he is justified in using violence, arson, and murder; he blocks traffic and the orderly process of government and economic life. Freedom of speech becomes the foundation for all manner of assemblies, speeches, and publications, using language without taste or civility. No outsider merits consideration.

A special chapter “Why the Universities?” shows how they have served as the major staging and recruiting area for the revolution-minded minority. (p. 183). Apparently institutions which adhered to the traditional functions of teaching, maintained standards of rigor and intellectual discipline, and dealt forthrightly with unreasonableness as it began to occur and recognized the reality that they cannot be the allies of every infantile or noxious demand, have had the least difficulty. The hard science divisions of the schools have produced relatively fewer violent radicals than the arts and social sciences.

Liberal, left of center teachers, clergymen, and news media spokesmen have often nurtured and fostered this counterculture. The author provides many constructive insights and countermeasures for the concerned parent, teacher, edit or, and clergyman. Marked changes are required. If the diagnosis and corrective steps provided by the author are ignored, the violent minority may increase, and continue in its troubled and troublesome course.

 

NATIONAL SUICIDE: Military Aid to the Soviet Union by Antony C. Sutton (New Rochelle, N.Y.: Arlington House) 283 pp., $8.95.

Reviewed by: David A. Pietrusza

Dr. Sutton proves conclusively that the technology imported from the West by the Soviet Union has been vital to its military capabilities, both in quantitative and qualitative terms. His newest book is required reading for anyone studying or debating the topic of East-West trade.

Take, for example, the instance of Soviet mechanized military vehicles: There are over 300,000 trucks in the Soviet military arsenal — all built in American constructed plants. Until 1968, the largest of these was the Gorki plant built in 1929-1933 by the Ford Motor Company and the Austin Company. Aside from simple cars and trucks, the Gorki plant has produced armored cars, Red army staff cars, half-tracks, armored personnel carriers, amphibious carriers, truck-mounted weapons, rocket launchers, and the first Soviet wire-guided anti-tank system.

Then there is the Soviet ZIL auto factory, built by the Arthur J. Brandt Company of Detroit in the 1930′s, the “Togliatti ” plant built in Volgograd in 1968-71 largely with American equipment, and the Kama truck plant built in the late’60′s with help from a large number of American companies and lending institutions.

“The tractor plants at Stalingrad, Kharkov, and Chelyabinsk, erected with almost complete American assistance and equipment,” writes Sutton, “and the Kirov plant in Leningrad, reconstructed by Ford, were used from the start to produce Soviet tanks, armored cars, and self-propelled guns… Since 1931, up to half of the productive capacity of these `tractor’ plants has been used for tank and armored-car production.”

Direct military aid, of course, was given to the Soviet Union during World War II. Since the Soviets were then our ostensible allies, there was some rationale for this aid — but not for the massive scale of it. Soviet requests for aid were given priority over all other Allied fronts — even those where U.S. soldiers were engaged.

Let the scope of this aid speak for itself. The Soviets received 14,018 aircraft, 466,968 vehicle units — including 1,239 light tanks, 4,957 medium tanks, 47,728 tanks, 47,728 jeeps, 182,928 two and a half ton trucks, and 491 ships including 77 mine sweepers, 28 frigates, 175 torpedo boats, and 46 submarine chasers.

The Soviet Navy, thanks to Lend-Lease, doubled in tonnage during World War II. Only a few of these naval vessels have been returned to the United States despite agreements which required their return at war’s end. During the Vietnamese War, a number of these Lend-Lease merchant vessels were observed on the Haiphong run — supplying the killers of American soldiers.

In recent years, large sales of American computer technology and ball-bearing grinding equipment have aided the Soviet missile program. But the most senseless action of our government in regard to Soviet missiles involves the decision to allow Soviet specialists to study the manufacture of American accelerometers in 1966 — only 18 months after a Soviet agent had been arrested by the FBI for attempting to purchase one.

Dr. Sutton, a highly respected Stanford research fellow and the author of a three-volume study, Western Technology and Soviet Economic Development, has received no cooperation from the U.S. Government in his current project. In fact, he has found Soviet official sources to be more open on the subject of East-West trade than U.S. sources.

No one, after reading this work, can be comfortable with the thesis that trade with a totalitarian government is a mutually beneficial procedure.

 

THE FASTEST GAME IN TOWN/Trading Commodity Futures by Anthony M. Reinach (New York: Random House, 1973) 175 pp. $10.00

Reviewed by Hans F. Sennholz

One of the great evils of inflation is the disruption of orderly economic production. Inflation generates malinvestments and maladjustments because economic decisions are no longer guided by considerations of consumer demand, but by the desire to preserve capital assets. Inflation tends to make both objectives mutually exclusive. If you maximize consumer services you may suffer capital losses; if you aim at preservation of your capital, consumer services may have to be curtailed. Calculation of cost and yield becomes nearly impossible when money is depreciating at incalculable rates. Thus, scarce resources become “hedges” against inflation rather than complementary goods in the production process.

When orderly production becomes increasingly difficult more and more businessmen turn to trading in commodities and corporate securities, commonly called speculation. After all, the maladjustments openly invite speculation while material production is hampered by inflation and other government intervention. Rampant inflation discourages production and causes many people, even those least qualified, to seek their fortunes in speculation.

It is not surprising, therefore, that the last ten years of Great Society-New Republican inflation have made speculators out of countless Americans. Every year the number of transactions on the major commodity exchanges is reported to double. Indeed, commodity speculation is inflation’s most spectacular growth industry.

Now, with his great knowledge and insight gained from many years of personal experience in stock and commodity markets Anthony M. Reinach has written a book that is both informative and entertaining. But above all, it is a forceful invitation to his readers to play “the fastest game in town,” the commodities market. For profit, tax benefits, or as an inflation hedge he would like us to consider buying and selling commodity futures contracts. It is true, he wisely warns us against tackling commodities “unless or until you have successfully traded common stocks.” And even then you may “emerge from the commodity fray with bloody noses.” (p. 29) But such occasional warnings and reservations stated in a few sentences do not in the least weaken his invitation made in glowing colors throughout the book. Reinach is a persuasive writer whose reservations are easily overlooked.

His discussion of the technical aspects of commodity trading is laudable indeed. Even a seasoned trader can learn from his analysis of trend and volume action, the characteristics of congestion areas and, above all, his technique of charting that is so essential for all trading. Nevertheless, I reluctantly take exception to the very message of his book: to join in the fastest game in town.

Thomas A. Hieronymus in his authoritative treatise on the Economics of Futures Trading (Commodity Research Bureau, Inc., 1971) reports that of a sample of 8,782 traders in grains 2,184 earned net profits of $2,064,800 while 6,598 traders lost a total of $11,958,200. If we bear in mind that some of the successful traders are professional hedgers who manage large corporate accounts for manufacturers, granaries, exporters and other large users of commodities, what then are the odds of the amateur speculator to be for long among the successful traders, the doctors, dentists, attorneys, professors in Spring Mills, Pa. or any other reader of Reinach’s book?

And yet, we are not denying the important function of speculation in making a commodity market. And no one denies that large profits can be earned by exceptionally able professionals in the field. The layman would be well advised indeed to entrust a small risk capital to a successful account manager. There must be some around although this writer has not yet found one after five years of costly commodity speculation. I know there are some because I happen to know the richest speculator in town. When I recently inquired into which commodity she is trading so successfully she answered, “I don’t really know. My nephew in New York is handling my account. He is the commodity manager of a well-known brokerage firm.”

The present rush into commodity speculation reminds me of the 1849 California gold rush. Among tens of thousands of fortune hunters a few were spectacularly successful. The vast majority only found hunger and deprivation. By far the most successful entrepreneurs were the manufacturers and merchants who supplied the miners with food and equipment and, above all, road maps to the gold fields.
 


  • John Chamberlain (1903-1995) was an American journalist, business and economic historian, and author of number of works including The Roots of Capitalism (1959). Chamberlain also served as a founding editor of The Freeman magazine.