Free Enterprise, Peace and Plenty

Dr. Coleson is Professor of Social Science at Spring Arbor College in Michigan.

In all the strident chorus of gloom and doom so characteristic of our age, perhaps the loudest voices are shouting that global famine will soon be upon us—un­less, of course, we smother in the smog or are blown to atoms by the Bomb before a more lingering and painful death can overtake us.

Indeed, two experts, William and Paul Paddock,^¹ have told us flatly that world famine will catch up with us by 1975 and that the United States must make the awe­some decision who will survive. They are certain that Haiti, Egypt, and India are already beyond help and hop. Others can be saved with our assistance, but the assumption is that we cannot afford to waste our relatively meager resources seeking to rescue nations that can­not be salvaged. The U.S. Depart­ment of Agriculture says approxi­mately the same but sets the date of disaster at about 1985, fifteen years hence instead of a mere five.

Lest any of us take comfort from the fact that we do not live in India or Egypt and thus may escape their fate, we should remember that our outlook is not much more encouraging, say the experts. Jacques Piccard^² recently told a scientific symposium that it is "seriously doubtful" whether the human family would survive till the year 2000—a mere 30 years from now. The day of doom is upon us or so the experts tell us.

An integral part of our present pessimism is an obsession with population problems. The popula­tion explosion, so we are told, is a greater threat than the Bomb. While the "teeming millions of Asia" frighten almost everyone, there are those who are telling us that the United States has a seri­ous population problem even now and that we will soon have to start rationing the privilege of having children. "Spacecraft Earth" is be­coming overburdened with people—that’s what we are being told by the experts.

Now, may I say that all of these doleful predictions may come true? For instance, we might have a global atomic war followed by the plague, a recurrence of the Black Death. Such a series of catastro­phes might well destroy civiliza­tion and seriously decimate the human family. But then we have been living with this threat since Cain slew his brother Abel.

During the Thirty Years’ War a little more than three centuries ago, perhaps half the population of Germany was swept away—and, one might add, with very crude weapons, by our standards. Now suppose, given our better tools of destruction, that we well-nigh exterminated the human fam­ily and that a few miserable sur­vivors reverted to barbarism as there is a great likelihood that they would do. Would this solve the population problem?

Population a Perpetual Problem

Actually, the human family has been living with a population prob­lem almost from the beginning. America was saturated with In­dians when Columbus arrived, al­though there are more people in any one of the several of our great cities than there were savages over the entire continent in 1492. Given their way of making a liv­ing, the country could hold no more. If a series of global dis­asters should reduce the popula­tion to barbarism and a small frac­tion of our present total, they would be worse off and feel the pressure of numbers more than we need feel it today.

A study of present population densities is quite revealing. India has only a few more people per square mile than Switzerland; several European countries and Japan show double that density. It may be granted that crude pop­ulation densities do not tell the whole story, but they do have some significance. Certainly, part of these countries have as large a percentage of waste area and other natural handicaps as India. It seems amazing that the "experts" have not made these vital compari­sons more generally known. Here are the latest figures for a few selected countries:³

Another fascinating aspect of the population problem is the fact that interest in Malthus has fluctuated greatly since he wrote his little pamphlet on population in 1798. Although the publication of his work was greeted with a storm of protest from the utopians whose dreams he shattered, he soon con­vinced his contemporaries that the problem was really serious. As John Maynard Keynes told us after World War I:

Before the eighteenth century man­kind entertained no false hopes. To lay the illusions which grew popular at that age’s latter end, Malthus dis­closed a Devil. For half a century all serious economical writings held that Devil in clear prospect. For the next half century he was chained up and out of sight. Now perhaps we have loosed him again.⁴

In other words, Keynes is telling us that Malthus was in fashion from about 1800 to 1850 but that he and his population problems were forgotten in the latter half.

There are reasons for this change. As a delayed reaction to Adam Smith’s teachings, England and, to a lesser extent, her Euro­pean neighbors abolished their age-old mercantilist controls and went "free trade." By some happy chance this was just the time that the American farmers were open­ing up the West. A new plow that would break the prairie sod, the reaper, the railroad, barbed wire, and a host of other inventions and improvements suddenly made bread abundant and cheap. But for the opening up of European mar­kets, however, this flood of grain would have resulted in an Ameri­can farm problem instead of a boon to the poor working men of Western Europe.

To show the change that took place, it may be noted that an English laborer had to work five days in 1770 to buy a bushel of wheat, but his grandson could get one for two and a half days’ wages in 1870.⁵ This, of course, is half price—quite a reduction. Needless to say, the latter had a much bet­ter and more varied diet than his fathers before him. Now in 1970, another century later, the typical American worker could purchase two or three bushels of wheat with one hour’s pay and many could buy a half dozen, if they were so minded.

This is a small sample of what has happened to the Western living standard in the last couple centuries. Life for the average worker is no longer a struggle for enough bread to keep the family alive, although he may have some problem keeping up the payments on his color TV set, his boat and, more recently, his snowmobile. If life is still a struggle, it is no longer for mere survival but for the "good life" as it is now defined.

Poverty Follows No Pattern

Unfortunately, the blessings of the Western revolution in science, technology, medicine, and our whole way of life have not spread as they should to the so-called backward areas, and there are even serious "poverty pockets" in our own midst. One of the most shocking experiences that an afflu­ent American can have is to find himself suddenly out in a native village in some underdeveloped re­gion of the world. Our American may consider himself poor, but he has no notion of what the word poverty means until he sees how the other half lives. Furthermore, allowing for differences in culture and climate, he is seeing how his own ancestors lived and not too long ago either.

Famines were once common in the West just as they still are over too much of the world today. This leaves us with the disturbing ques­tion why we have been unable to export progress. All parts of the earth have had contact with the focus of modern civilization, West­ern Europe and more recently the United States, since the period of discovery. In fact, Japan, which was closed to outside contact until a little more than a century ago, caught up with the West in a few giant strides while other lands with three or four centuries of contact with more progressive na­tions have languished and fallen behind.

Of course, some people explain the backwardness of much of our world in terms of exploitation by Western capitalists. But, if this accounts for Latin American prob­lems, for instance, the same sys­tem should have condemned Anglo­-America to poverty, since we were also European colonies. Business­men have made money in the un­derdeveloped lands, but they have lost it, too, in large amounts and often without enriching the na­tives by their losses: nationalizing an industry commonly benefits no one but a few bureaucrats.

Nor is it possible to explain the difference between one country and another in terms of natural resources; few countries had less than Switzerland to start with and perhaps none has done better than the Swiss with what was at hand. Indeed, the several familiar ex­planations for the plight of the have-not nations have so many obvious exceptions that they prove little, although they may contain an element of truth.

Foreign Aid in History

We, the presumed affluent, are often accused of being indifferent to human need, both at home and abroad. This, again, is only part of the story. In addition to a long history of private charity, mis­sionary endeavor over much of the earth, Herbert Hoover’s relief ef­forts in Europe during and after World War I, and many others down to the present hour, we must not forget that the United States has launched two massive attacks on poverty on a global scale in the last half century, the first during the prosperous 1920′s and the sec­ond since World War II.

We forget that foreign aid was not a recent invention. Following the First World War, having won the "war to end all wars," we then set out to abolish poverty. During the "Golden Twenties" representa­tives of American banking and brokerage firms wandered up and down the earth, tempting foreign­ers to borrow our money. We suc­ceeded in loaning about $15 bil­lion,⁶ which does not seem like very much until we recall that this was approximately five times the annual Federal budget of that era—try five times Nixon’s current budget for size, although this would not be comparable either. According to Garet Garrett, at one time there were no less than twenty-nine representatives of American investment firms "solic­iting a small Latin American coun­try to make a bond issue in Wall Street." Later, when we wanted our money back, we were roundly abused and depicted as Shylock demanding our pound of flesh. This is hardly fair. As Garrett tells us further, taking us to a country bank before the Crash of ’29 where some threadbare farm woman is depositing her butter and egg money:

Fancy telling that woman at the "savings" window, who gets her mon­ey up in small bills from the deeps of an old satchel, that her dollars, multi­plied ten times by the bank, will go to build ornaments for a grand boule­vard in a little Latin-American coun­try she never heard of, or to build workmen’s houses in a German city better than the house she lives in.⁷

This is something we forget. Her pump was out by the barn and she had no plumbing or electric lights. She didn’t know she was donating this money, but was try­ing to save a little for a "rainy day" or perhaps to educate one of the children or buy her family some little luxury, a convenience that they had long wanted. More recently, a lot of poor, hard-work­ing Americans have helped for­eign bureaucrats and potentates to buy Cadillacs and the like when the American contributors were hard pressed to keep up their pay­ments on quite ordinary auto­mobiles.

Certainly the "Forgotten Man" in America—the poor fellow who pays the bills both at home and abroad—has been as much sinned against as sinning. But this was only the beginning of sorrows. Following the Second World War, "having learned nothing and for­gotten nothing," we proceeded to do more of the same through our global foreign aid program, now mostly under government auspices. I have sought signs of its success when I have been abroad; but my foreign friends as well as Amer­icans on the ground have told me that it was all a big mistake and that most of the money has been wasted. Still, the programs go on and will no doubt continue, like those of the boom years before 1929, until national bankruptcy terminated them.

Anyone who has lived where poverty really hurts, either at home or abroad, can understand the feeling that something must be done. With the gap between rich and poor allegedly widening year by year, and with revolutions breaking out on every hand, ob­viously something must be done and at once. It is easy to under­stand why concerned and well-meaning people are wringing their hands and insisting that our for­eign aid efforts, massive as they seem to many of us, are only "band aid" programs which must be expanded on a colossal scale un­til they begin to do some good. Indeed, a few years ago, the fa­mous British periodical, Punch, carried an article advocating a "scientific" and systematic war on global poverty in which

… the rich countries would be re­quired to surrender a proper fraction of their productive resources to an international body charged with the duty of assisting the economic pro­grammes of the needy nations: prog­ressive taxation at the international level.⁸

It is easy for the unsympathetic reader to dismiss such a proposal as preposterous; but those of us who have been out where people live perpetually on the brink of disaster, where a minor crop fail­ure may result in starvation, see the urgency of the problem, even if we don’t consider the Punch proposal as desirable or workable. Unfortunately, there are a lot of good people of conservative leanings who, while they decry socialist schemes, do not see a free enterprise alternative to these pro­grams. They are mostly negative. They should remember that tre­mendous progress also took place in the nineteenth century when laissez faire was in fashion. This is when the United States devel­oped from a backward country to a wealthy, powerful nation which has recently carried so much of the world’s burdens in war and peace.

Private International Finance

It is well to remember that Brit­ain went through its own cycle of development a few years before we did. Germany followed us, and Japan has come along quite re­cently. Strangely, a lot of this happened before presidents had economic advisors and before such questions were an off¹cial concern. We must not forget that much of this rapid, even explosive, eco­nomic development took place in an era of relatively open inter­national markets and when it was still easy and fairly safe to invest money anywhere in the world.

For decades during the Vic­torian era English investors put their money in assorted ventures all over the world and in great amounts. To the extent that these paid off, the British businessman tended to reinvest in other proj­ects that he discovered as he cared for his international commitments. A dozen years ago Richard M. Nixon called attention to the fact that the United States would have invested $30 billion abroad in 1958 instead of the trifling $4 billion we did lend, had we invested at the rate proportionately that the Brit­ish did in 1910.⁹ England invested a lot of money in the New World on both continents. In addition to heavy investment in the United States in the last century, she rolled out a railroad across the Argentine pampas and took beef in return.

What an enormous benefit we could have bestowed upon the earth if we had invested that $30 billion and more year by year in sound projects that gave returns which were then reinvested.

Unfortunately, we have not yet come to understand international finance, a tragedy for both us and the world. It is true that condi­tions were more favorable for in­ternational investment during the Victorian era of sound money, open markets, and reasonably respon­sible foreign governments. But have we worked for the restora­tion of order and stability in international economic relations in the last half century, particularly when we had the resources to do it? The attitude rather seems to be, " ‘Tis better to have loaned and lost than never to have loaned at all."

Returning to Malthus and global famine, it is interesting to note that the old mercantilist world of the 1790′s, with its controls and regulations which impeded prog­ress and reduced output, had a population problem. As men moved into the Victorian era with its open markets and full production, somehow the problem of human need diminished in magnitude al­though, of course, it never dis­appeared. It is well to remember also that there were no great wars in Europe from 1815 to 1914, which may be more than a coincidence. One may ask also if the re­turn to agricultural restrictions, tariffs, quotas on foreign trade, and a multitude of other combina­tions in restraint of both produc­tion and trade may not have some­thing to do with global famine to­day as well as our epidemic of wars. Is not our Neo-Malthusian­ism now a consequence of our neo­mercantilism?

A distinguished English land-use expert, L. Dudley Stamp," estimates that the world could hold ten billion people instead of the trifling three and a half billion now on earth, provided only that we had full production and open markets and without going to any strange new diets such as sea­weed. Another Englishman, Colin Clark,^¹¹ places the capacity of this planet at 28 billion, assuming only that we all did as well as the peo­ple of the Netherlands. Perhaps this is asking too much, but if the rest of us could manage even to do half as well as the Dutch, this still adds up to 14 billion or four times the present world population.

Granted, the world population cannot mount indefinitely and no doubt India should stabilize her population and shoot the sacred cows as swiftly as possible, con­sistent with good common sense and respect for the opinions of others. However, why place all the burden of change on India, when we, too, have some "sacred cows" that need shooting? Have our sev­enteenth century mercantilist practices become to us more sacred than life itself? According to Frederic Bastiat, "When goods do not cross frontiers, armies will." Should not our war-weary age consider open markets as one pos­sible path to peace and world pros­perity?