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Paul Krugman's Illuminating Smear: How the Right and the Libertarians Diverged

By Brian Doherty - April 24, 2007 12:00 AM

Paul Krugman was recently called on to smear the recently deceased economist and libertarian polemicist Milton Friedman in the pages of the New York Review of Books. Among the bill of particulars was that Friedman's policy-commenter career began "under rather odd circumstances." That is, under the aegis of the Foundation for Economic Education (FEE). As Krugman quotes the liberal historian of the Goldwater movement, Rick Perlstein, FEE, founded in 1946 and still around today, "spread a libertarian gospel so uncompromising it bordered on anarchism."

That's scary enough for the NYRB reader. But it gets worse. The next sentence points out, case closed, that "Robert Welch, the founder of the John Birch Society, sat on the FEE's board."

Ironically, the very thing that made the Birchers such a long-lasting symbol of right-wing nuttiness and evil was this very sort of guilt-by-association. The very mention of this tenuous connection is supposed to prove that Friedman's politics must be similarly eccentric or sinister.

First of all, although Welch and FEE were part of a general community of afinity centered around free markets, Welch was never actually a member of FEE's board.  Still, the story of FEE, and Friedman's and Welch's role in it, is more interesting than Krugman's quick smear would have it, and cuts to the heart of some of the distinctions and conflicts over the years between, and among, libertarians and conservatives.

Libertarians and conservatives have often been allied. Libertarianism is a core part of the conservative zeitgeist. Indeed, it could be argued that the libertarianism in them was the central appeal of such conservative politician-heroes as Barry Goldwater and Ronald Reagan.

But libertarians and conservatives are not the same. Why what started as a mostly unified gang of opponents of Rooseveltism and the New Deal in the late 1940s/early 1950s split into self-consciously libertarian and conservative components is a complicated story. But one important aspect of it revolved around a curious, but very American, man named Leonard Read, FEE's founder, who ran it until his dying day in 1983.

Read was born and raised a Michigan farm boy, served his country during World War I, and later sought his fortune among the perfumed fruit orchards and rolling hills of California. By 1939 he had become general manager of the Los Angeles branch of the Chamber of Commerce.

He had already been converted to a consistent modern libertarianism by a Southern California Edison executive named William Mullendore, and over the course of the 1940s Read adopted most of the movement's heroes and influences as his own, particularly Ludwig von Mises, Ayn Rand, and Rose Wilder Lane. There was little room at the Chamber for such an uncompromising libertarian. By 1945 Read quit, seeing no hope for a group whose president had announced in 1943 that "the old-style capitalism of a primitive, free-shooting period is gone forever."

FEE was a curious sort of ideological non-profit. Read would never explicitly scrape for funds; none of these modern direct mail letters warning of the imminent passage of this dreadful legislation or success of this horrible politician if they didn't give generously, and by return post! Read never directly asked anyone to give anything, he proudly insisted, relying on the free choice of potential supporters to come their way—which it did. While FEE would sell its pamphlets and magazine, The Freeman, their material was also free to anyone who asked. FEE eschewed specific controversies involving politicians and personalities, believing that inculcating the proper principles about freedom was the most important task for the future of American liberty.

Read had a winning, folksy style, strong on metaphor. He explained the coordinative powers of the free market through the unusual, and true, observation that no single human on earth could make a pencil, or could even know all that one needs to know to make one, yet the market creates them in such abundance we can lose them without a second thought. His inspirational summation of what libertarianism was all about was "anything that's peaceful." While he'd speak to big groups, he thought small gatherings or even face-to-face talk was best for spreading the light of liberty. Woe betide someone sitting next to Read on an airplane who wasn't in the mood to hear about how coercion could never generate creative activity, or how various government officials ought more properly be called, say, secretary of external violence, or secretary of predation.

Krugman doesn't tell you that Friedman's pamphlet for FEE, written with George Stigler, about rent control, created stress between Read and one of his heroines, and until then his supporter, Ayn Rand.

Rand was outraged that the Friedman/Stigler pamphlet seemed to say that rationing through government action was morally equivalent to rationing through free markets, merely less efficient. The resulting foofewaw, in which FEE added a footnote against Friedman and Stigler's wishes disagreeing with them on some points, was a great encapsulation of the wars between moral and prudential arguments that have run through the libertarian movement ever since.

As for Welch, along with all his highly imaginative beliefs about the extent of communist infiltration in the U.S., when it came to economics they were pretty straight-line Misesian. The great Austrian economist's books could be found in American Opinion bookstores across the land.

Welch's admiration for FEE, which was real, came from his love of free market ideas, not because FEE was some adjunct of Welch's eccentric anti-commie mission. " a philosophy to be despised and explained away," Read wrote. "It is not a military threat to be feared and shot away." One of Read's homiletic pamphlets, Conscience on the Battlefield, has him imagining himself dying in a bloody mire in Korea and being visited by his conscience, who tells him murdering amid an army in the name of the state does not absolve him of his sins. No overseas communist military could really harm the U.S., so he should abandon any "self-defense" excuse.

The appropriate response to communism, overseas or domestically, was a major fault line between what became the "conservatives" and what became the "libertarians" in that early 1950s coalition. Read explicitly pooh-poohed Welch's conspiracy mongering in conversations and letters; Welch, hearing of this, gentlemanly told fellow Birchers that Read's economic education work should be lauded and supported regardless.

When it came to Buckley's nascent National Review, forger of the modern conservative consensus, a onetime chairman of FEE's board, expressing Read's attitude, admitted that he had "a little bit the fear that too much attention may be paid to being anti-Communist and not enough to being against communism." To Read and those who hewed to his libertarian line, the warmaking powers of the state were one of the most horrible things about it, and they did not believe it was a proper duty of the American government to go abroad to destroy international communism, or to legally crush domestic communism.

This became one of the clearest dividing lines between nascent conservatism and libertarianism, with the Buckley side mocking libertarians' effete and useless disengagement from the Cold War, scoffing at them for evading serious geopolitics for little intellectual seminars on demunicipalizing garbage service.

Despite these divisions and Read and FEE's role in them, FEE and its monthly magazine, The Freeman, have remained a vital educational and conversion experience for young libertarians and young conservatives in the benefits and propriety of free markets. An iconic photo of Reagan has him reading a copy on a plane with Nancy snuggled in his shoulder. As Reagan's telegram of condolence on Read's death put it, "our nation and her people have been vastly enriched by his devotion to the cause of freedom."

Reagan claimed his free-market leanings came from the likes of Mises and Frederic Bastiat, heroes of FEE; for Reagan's contributions to economic freedom, in either practice or merely ideology, we have Leonard Read and FEE to thank. Robert Welch and Milton Friedman were fellow travelers and supporters on his path; despite Krugman's insinuation, neither deserves credit, or blame, for each other's contributions, or FEE's.

Brian Doherty is a senior editor at Reason magazine and the author of Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement (PublicAffairs).


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