Democracy vs. Tyranny
I read Claudia Rosett's excellent article on Chile ("Chile's Economic Revolution," Apr.), and one idea occurs to me. There is great confusion in the public mind about the difference between a "democracy" and "tyranny."
We all know how some countries call themselves "Democratic People's Republics." They may even allow a vote once in a while on a one-party basis. However, the citizens of such countries can be completely restricted. They are not allowed to leave the country or to take their assets with them. They may not worship as they wish or communicate as they wish. Russia, of course, is the glaring example.
Other countries, such as Hong Kong, for instance, are too often confused in the public mind as being a heaving mass of desperately poor people. Hong Kong produces more wealth per person per annum than most other communities. It is an exciting example of the market working to the poor man's benefit.
Yet in Hong Kong there are no votes. It is in that sense a "dictatorship." However, the people can come and go as they choose and take their money out of the country as they choose. They can read and write as they choose and discuss anything.
What is important is that economic legislation and the economic climate should be such that it maximizes individual choice. This is so of Chile, even though at the present time there are no votes and there is much to be corrected.
It is important to make the additional point, perhaps even more than Ms. Rosett does, that it is possible to buy and sell even foreign newspapers in Chile. People can come and go and take their money out or take it in as they choose. Taxes are very low in Hong Kong, and they are coming down in Chile.
The interaction of legislation, voting rights, and the maximization of individual choice is a subject which cannot be explained too often.
Atlas Economic Research Foundation
San Francisco, CA
As an avid reader of REASON magazine, I look forward each month to receiving my copy in the mail. And so it was with great interest and fascination that I read Claudia Rosett's article concerning economic decontrol in Chile ("Chile's Economic Revolution," Apr.). While her piece seemed on the whole to be well-researched and well-reasoned, I feel compelled to make a minor correction.
On page 36 there appears a photograph of a rather old and somewhat dilapidated auto, with the caption referring to "crude domestic vehicles like this one." I feel that the facts regarding Chile's economy speak loudly enough for themselves and that the deck does not have to be stacked in the author's favor. What I am referring to is the fact that the vehicle pictured is not an example of "crude domestic" manufacture but is in reality an imported French automobile, the classic Citröen "Deux Chevaux" or 2CV.
Admittedly, the car is missing its front fenders, but neither the design nor the two chevrons on the hood of the car are mistakable. A minor point, perhaps, but attention to detail and facts is one of the strengths of your fine magazine.
Rolling Hills, CA
Ms. Rosett replies: The car in the photograph, which Mr. Leef identified correctly as a Citröen Deux Chevaux, is indeed an example of "crude domestic manufacture." Prohibitive tariffs under Allende made it impractical to import these cars. They were assembled in Chile, under a licensing agreement with Citröen, with some parts supplied by France and the majority of the parts and all the labor supplied in Chile. Once assembled, they sold at more than twice the world price to the captive local market. Even when new, they were crude compared to the imported cars, brought in with 10-percent tariffs, that dominate the Santiago streets today.
Does Crime Pay?
Apparently, Maine State Prison was onto one of the best rehabilitation programs that our country has ever seen ("Making Good(s) behind Bars," Mar.). But there is more to be learned from that story than just that the government, as usual, fouled up something that could have been good if they had left it alone. The prisoners' response to economic opportunity was essentially indistinguishable from that of most of the rest of us.
Could it be that criminals are not mentally defective, but simply ordinary people who have decided that crime does pay? After all, a cost-benefit analysis of thievery shows a net benefit for the thief, unless his victims can impose an extra cost by resistance or punishment. Our understanding of this one simple point could have a major effect on our ability to deal with the crime problem.…
Richard W. Hatzenbuhler
Hoosick Falls, NY
Unearthing the Facts
Both Kelly Ross and you are to be congratulated on the very informative article, "Vanishing Farmland" (Mar.). It supplies a lot of sound data to back up what we have long suspected, that the vanishing farmland threat is simply a delusion on the part of the gullible and a political play on the part of the bureaucrats to keep or increase their emoluments.
I'm enclosing a letter and questionnaire from that American Farmland Trust, which I got last fall, and my reply to it. If I had had access to the information Ross supplies, I could have cited it, but I'm pleased to see that I had the basic flaws of that propaganda program correctly identified.
What other steps might one take to expose this fraud and to chase the trustees out of the Temple of Taxpayers' Money?
Walter R. MacLaren
The problems of innovation and the encouragement of entrepreneurship in high technology are worthy of attention from your magazine. Unfortunately, Mr. Soergel's article, "High-Tech Freeze-Out" (Apr.), is remarkable in its lack of factual information on the subject. Aside from a few statistics on government R&D funding, he provides no support for his argument that this distribution of funds has a negative effect on high-technology entrepreneurs. Instead, we are provided with a potpourri of opinions, clichés, and romantic myths represented as indisputable fact.
For example, the article begins by stating, "It is a fact that small businesses can claim a disproportionate share of technological breakthroughs." Now, these small businesses can certainly claim this, but the validity of this argument has often been challenged. A perusal of any list of successful new high-technology businesses will reveal, for example, that a majority were founded by people formerly associated with the very organizations the author condemns—the "university-agency complex" and large industrial R&D organizations. An examination of the growth of the semiconductor industry, for example, reveals the positive impact that government-sponsored research and technology developed by large industrial laboratories has had on this industry.…
After working for 20 years in high-technology R&D and participating as an investor in venture-capital businesses, I have drawn an alternative set of conclusions to explain the problems encountered by Mr. Soergel. First, successful R&D efforts in high technology require large organizations, with their accompanying synergistic interactions and large resources for expensive facilities. Second, small organizations are often more successful in exploiting the technological breakthroughs that result from these R&D efforts. The distribution of government R&D funds, which the author finds so unfair, is merely a symptom of these realities and not their cause. Finally, it has been my observation that people with good ideas can go into the capital market, even today, and find the resources needed to start high-technology businesses. I know of no venture of this type which has considered government R&D funds as a source of "seed money."
It is not clear exactly what kind of redress is being sought by the author. If he wishes only to rewrite the tax laws to give him additional tax benefits, the effect on the success of venture-capital business will be minimal.…If, on the other hand, Mr. Soergel proposes that government R&D funds be redistributed on a more equitable basis (a concept receiving wide attention from egalitarian-minded congressmen), the result will likely be detrimental to our country's effort in high technology. The elite universities, where government funds tend to gravitate, play a critical role in high-technology entrepreneurship, and it is here where redistribution would hurt most.…
I encourage you to devote more space in your excellent magazine to the problems of high technology and business. However, try to be more selective. An article as heavily sprinkled with myths and clichés as this one should be examined critically. I suggest that you get someone with direct experience in running a successful high-technology, venture-capital business to write an article on his real problems. Unfortunately, such a person is probably too busy trying to solve his problems. Only business failures have the time to write magazine articles.
Robert C. Sundahl, Jr.
Mr. Soergel replies: Mr. Sundahl, in his commentary, carefully skirts the real subject of my article and just as carefully inserts one of his own. As explained in the opening, my article was about three public policies that, in combination, promote venture inequality before the law. Unknowingly, taxpayers finance business expansions but not the start of brand-new enterprises. The article was not about "bigness is bad, and smallness is good," as Mr. Sundahl has misinformed your readers.
He claims "it is not clear what kind of redress is being sought by the author." I beg to differ. In the article's last section, I called for venture equality before the law for everyone—ongoing businesses and individuals. I believe the kind of redress I seek is very clear.
Contrary to Mr. Sundahl's implication, I certainly did not argue for egalitarian federal R&D distributions, such as recently passed by the Senate (S. 881) and under consideration by the House (H.R. 4362). To me, the "Small Business Innovation Research Act" is repulsive, simply because it is not in compliance with the rule of law. If passed, the act will in fact establish yet another quota system.
Good Heavens, Good Book!
William Allen's scholarly review of Anne Wortham's book, The Other Side of Racism (Mar.), raises some interesting methodological points, but I fear his readers will miss the crucial points about her book. The Other Side of Racism is a powerful scholarly, moral, and political analysis and indictment of all forms of black racism, quotaism, reversism—and all other attempts to reduce black individuals to racial categories. Anne shows the many different ways in which these attempts violate the basic constitutional rights of all Americans and threaten to rob blacks of the right to gain real self-esteem. And she does this by systematically analyzing the basic dimensions (the "fundamentum divisionis") of concrete political programs and leaders, not by imposing some ad hoc sociologistic typology on our vastly multichromatic society. And she does this with all the forcefulness, truthfulness, and beauty that spring from her own experience.
I feel sure that Bill will agree with me that this is a major work deserving a careful reading by everyone dedicated to individual rights—but, good heavens, Bill, I just wish you'd said so!
Jack D. Douglas
La Jolla, CA
Who's Missing the Mark?
Eric Zuesse's letter in the March REASON received unjustifiably short shrift by the editor-in-chief. First, given Mr. Poole's endorsement of pinpoint-accurate missiles, the defensive weapons called for must be seen primarily as protection for this first-strike capability. "Defensive" weapons can be purely defensive only in the absence of offensive capability.
Second, it is Mr. Poole's "reload" thesis that is specious. Given the US government's long-standing first-strike approach to nuclear warfare, how can anyone believe that the ICBMs are intended to hit only empty silos? Why should the Soviets believe that? Considering that reloading requires the slow trucking of missiles from storage sites (where they could also be fired) to used silos, who really believes that this is going to be a factor during a nuclear war?
Finally, Mr. Poole closes his response with this contradiction: he says the United States is "not trustable with absolute power"; I maintain that if one really believes that, one would not trust the US government—or any other—with nuclear bombs.
Mr. Poole replies: Mr. Richman is well aware that the US government has long maintained a first-nuclear-use capability as a consequence of its NATO treaty obligation to defend Europe (an obligation, incidentally, that REASON is on record as opposing). Given the large superiority of Warsaw Pact conventional forces, it has long been recognized that the only credible defensive response by NATO to an all-out Warsaw Pact invasion of Europe by conventional forces would be nuclear retaliation. Thus, given existing US treaty commitments, there is a very real defensive (that is, retaliatory) use for pinpoint-accuracy ICBMs—to strike Soviet missile silos, command-and-control centers, etc. Any reasonable transition to European self-defense would require a period of years during which the US treaty obligation would remain in force. During that period, the protection of US ICBMs would remain important.
Mr. Richman's second point, about silo reloading, seems to presume a single nuclear war scenario—an all-out exchange that is over in an hour or two. Yet any number of other scenarios is plausible, some lasting as long as several weeks. In most of these other scenarios, the ability to hit empty silos before they were reloaded could be crucial.
Finally, Richman says that the US government is not trustable with nuclear bombs. If that is literally true, then the only alternative is for the United States to abandon all nuclear weapons unilaterally. Mr. Richman has advocated just such a course in other forums. As for me, I would rather take my chances with a nuclear-armed US government than risk living under a Soviet government, which is a likely outcome of unilateral US disarmament.
Nowhere in Ray Young's article on the Anthony dollar ("The Mint Strikes Out," Apr.) was it mentioned that, alone among all the countries that I know of, the United States prints all its money the same color. As a consequence, in the aggregate a great deal of money must be lost due to mistaking the denominations of bills. Also, of course, it's much easier to raise the denomination of a bill if you want to do some counterfeiting.
The whole thing seems awfully stupid, even for the US government, which has given us those M-16 rifles and M-1 tanks ("Fighting with Failures," Apr.). Perhaps we should let the Japs design and build our armaments.
Richard L. Lotreck