All Commentary
Friday, August 1, 1986

Perspective: Seize the High Ground

If liberty is to prevail in its intellectual struggle with socialism, its friends must seize the high ground of morality. The free market, private property, minimal government approach to society is right morally. All the varieties of socialism, interventionism, forced welfare, redistribution, and so on—any interferences with the peaceful pursuit of happiness—are wrong. Over and over again, friends of liberty must point out, politely but steadfastly, that all interventionist schemes are wrong because they require a gun to be pulled on peaceful people. The socialists have had the high moral ground too long, because no one has opposed them. They cannot hold it in the face of reason and clearly articulated principle.

The principle of liberty and property—the right of all people to use their own lives and possessions in peaceful pursuit of the good as they see it—is a sacred principle not to be compromised. It is the foundation on which the just and happy society is built. We must stress its importance, and the disasters that occur when we tamper with it.

One Sunday morning last year, when the New York Times carried its heart-wrenching, front page picture of Ethiopian refugees trudging across baked wastes toward the Sudan, a friend asked if I would not justify taxation for such a good cause as the relief of those emaciated souls. Shouldn’t the right to property come second to relieving suffering of that magnitude?

I replied that the Ethiopians were starving precisely because their right to property had been put second. To endorse taxation for the relief of the starving Ethiopians would be to endorse the essential moral wrong that underlies their starvation.

Any person who proposes government force against peaceful people should be reminded politely but firmly that the principle is wrong. The means are wrong. They are not allowable, whatever the ends. Eventually those means lead to destruction.


Inflation in Brazil

Brazil attracted worldwide attention several years ago when it adopted “indexation” in the attempt to make inflation tolerable for the masses. This scheme provided for wages, salaries, rents, and mortgage payments to rise automatically each month to compensate for the inflation. However, the government did not halt the monetary expansion via the printing press or bank credit. Thus the economic crisis continued, with the irregularities and inequities inflation always brings.

To alleviate the developing crisis, the Brazilian government has now adopted new measures to freeze prices and control salaries. And it has introduced a new currency, the “cruzado.” However, according to Visão, a leading Brazilian news magazine, “The real cause of inflation—excessive expenditures by the Government financed by the printing of new money—is not even considered.” Visão goes on to say that “The official position . . . gives no assurances that the Government will cease its inflationary tactics while the prices are being frozen. So, what we have is ‘repressed inflation,’ . . . which only helps to camouflage the present crisis.”

Visão compares the situation in Brazil to that in Chile under the Marxist regime of Allende. “A feeling of general animosity has been raised against the business community and the supermarkets and department stores have been the targets of mob violence.” Visão equates the Brazilian government’s economic package with “a leftist coup . . . an extreme case of State intervention in the economy and an assault on individual rights.”


The Tin Cartel

The tin cartel recently collapsed—under the weight of human ingenuity. The International Tin Council (ITC), which consisted of 22 member nations, worked to hold the price of tin above market-clearing levels. The ITC relied on a “buffer stock” of tin purchased or contracted for to smooth out fluctuations in tin prices and to hold prices up. But artificially high prices proved to be the cartel’s undoing.

In addition to calling forth new supplies of tin from previously undeveloped sources, higher prices spurred changes on the demand side. Every increase in the price of tin brought new minds to bear on the “tin problem,” searching for ways to use less and to substitute alternate materials.

High prices led to so many innovations in the use of tin substitutes that tin deposits are now less valuable than they otherwise would have been. As a recent Wall Street Journal article pointed out, tin cans have lost their place as the primary container for beverages, and that change probably is irreversible.

Human ingenuity created the myriad uses for tin, and this same ingenuity has discovered substitutes for tin. The rate of discovery and substitution is related to the price of tin and the prices of substitute materials. If prices are held artificially high, as was done by the ITC, they convey false information about the availability and mining costs of tin.

Thanks to the International Tin Council, and the entrepreneurs who reacted to higher prices, there are now fewer uses for tin, and more for aluminum, plastic, and paper.