When Sir Antony G.A. Fisher, the founder and co-founder of many free-market think tanks around the world, passed away in the summer of 1988 I was president and CEO of the Atlas Economic Research Foundation, which he had founded nearly a decade earlier to help support such groups the world over. He was the Johnny Appleseed of free-market think tanks and it was an honor to try to fill his shoes. With his widow, I set up an annual prize of $10,000 in his name for the best public policy book of the previous two years. Two decades later the list of winners is an astonishing international list, a modern library of liberty.
An early judge for the prize was 1986 Nobel Laureate in Economics James M. Buchanan, the co-founder (and co-leader, with Gordon Tullock) of the public choice school of economics. Jim once wrote to me that we needed to reward publications that had changed the way readers looked at the world lastingly and for the better.
So in choosing for this brief essay on the best public policy books of the past 50 years, I applied Buchanan's test: had they changed the way I viewed the world? This being my list, I included some other criteria: they had to be available in English, have sold reasonably well, and be continuously in print. They did not need to be top bestsellers, but they did need to have been popular. They had to be of use to both professionals and lay people. They had to be really well-written books, and the sort of volumes that could easily end up on the reading lists of several disciplines. They had to get to the heart of an issue. And they had to have touched a nerve; to have stirred up controversy when published.
Great American Cities
I discovered Jane Jacobs's oeuvre in the early 1970s, and though I followed her writings intently, nothing she wrote drew me in quite like The Death and Life of Great American Cities (1961). It remains one of my favorites. Eschewing college, Jacobs learned her trade the hard way, as a working journalist who walked or bicycled through neighborhoods, observing the rise and fall of cities firsthand. Her writing teaches a new appreciation for the complexity of urban life, and makes one fascinated with cities and a keen observer of them.
Jacobs has said "I believe in control from below and support from above," and she is relentless in her criticism of city planners and elected officials who, backed by tax money, think they can plan our lives. To Jacobs, the best cities are the result of human action, not human design. They are built on diversity and dense mixed use, rather than zoning and government attempts to impose order. They are spontaneous and unique. They don't have centralized public transit systems, but private competition among many types of vehicles and operators. In them, the rights of citizens and private companies are known and protected, and it is difficult for public authorities to ride roughshod over them.
The central question of Charles Murray's Losing Ground (1984) is very simple: how did the poverty level remain the same between 1968 and 1980 while the welfare budget quadrupled? During those 12 years, the percentage of Americans defined as poor remained steady at 13%, though amid a growing population that meant a steady increase in the absolute number of poor people. "We tried to provide more for the poor and produced more poor instead," Murray wrote in the book's introduction. "We tried to remove the barriers to escape from poverty, and inadvertently built a trap." How could we have spent more on welfare, but increased the number of welfare recipients? Because our efforts created a system of disincentives to good behavior by, for example, rewarding single moms to have more babies and encouraging the poor to stay at home.
The scope of Losing Ground is enormous: from race, crime, education, and the family to illegitimacy, job programs, poverty, transfer programs, unemployment, and welfare. Murray leaves no stone unturned. The book caused a sea change in the debate on social policy in the United States and Great Britain. As Murray wrote in the introduction to the book's 10th anniversary edition, "much of what was controversial when Losing Ground first appeared has since become conventional wisdom." He attributes this success to three things: first, the tone of the book, which made it accessible to the Left, by being about "not how much it costs, but what it has bought." Murray's approach showed a concern not so much for dollars and cents but for results. David Boaz of the Cato Institute commented: "it changed the discussion from ‘what it costs the taxpayers' to ‘what it costs the recipients' in terms of dependency and poor life outcomes." Also, it gave previously silent conservatives an intellectual framework for opposing new federal programs, while arguing for, and often personally funding, private aid. Then there was the sheer power of Murray's arguments—and his marshalling of an impressive amount of data.
Crisis and Leviathan
When it comes to how, why, and when government grows there is no better scholar than Robert Higgs. His Crisis and Leviathan (1987) has a very clear, crisp framework. It outlines the many reasons why government grows, as well as the countless occasions of government expansion, from modernization, public goods, and the welfare state, to political redistribution, ideology, and crisis. Next follows a discussion of the dimensions of government growth and the concept of the one-way "ratchet": the observation that government growth at times of necessity later becomes permanent, even though the crisis has disappeared. The idea of enacting a "reverse ratchet" permeated Margaret Thatcher's thinking as manifested in her privatizations of the coal mines and steel mills, for example, and in her successful campaign to grant to occupants of public housing the right to buy their houses and apartments.
The beginning of the book alone provides a graduate course in government growth. But Higgs goes on to study six key historical moments, dispelling numerous myths about the normality and inevitability of the state's engorgement: the depression of 1893-1896, the Progressive Era, World War I, the Great Depression, World War II, and recent history up to 1986.
Such is the importance of Crisis and Leviathan that a 25th Anniversary Edition has come out from the Independent Institute of Oakland, California, where Higgs is a senior fellow.
The Other Path
The Other Path (2002) first appeared in its author's native Peru as El Otro Sendero. It was a title chosen very deliberately: the country was under internal attack by the violent Maoist guerilla movement Sendero Luminoso, or Shining Path. In place of its Communist agenda, Hernando de Soto offered the capitalist Other Path. His insight was that the poor were attracted by Maoism not because they were poor, but because they were excluded from the legal economy. For example, it took lobbying and standing in line six hours a day for a year to get a license to operate legally a commercial sewing machine, and over two years to get a permit for a new bus route.
It was an astonishing revelation at the time that most people in Peru and similar societies were operating outside the law, and most property and businesses were too. The big insight De Soto brought was not only the absence of property rights throughout many economies but also how this inexorably led otherwise honest entrepreneurs into the drug trade; without property rights there is no incentive to invest long term, so people opt for a much shorter term, drug-related crop.
They had even created an "extralegal law" for settling little local disputes. But this makeshift law was insufficient, leaving most poor people vulnerable to a range of threats from Sendero Luminoso to the drug barons. Gangs took advantage of the absence of property rights to force farmers into growing crops for the narcotics trade.
As much as 75% of mankind lives in a similar condition, without the protections necessary for prosperity. "How can you fill a bill of lading if you don't have a legal address or an officially recognized business?" De Soto writes. Place a Harvard MBA in a favela next to Sao Paolo in Brazil and he will be lost. He could get no credit, because no property rights are protected by the state. Try being a financial wizard without any access to finance. The people of the Third World do not need injections of "aid" or even well-meaning Peace Corps volunteers. They need property rights.
Sendero Luminoso saw the book take off like a rocket. There was even a condensed version—issued as a newspaper supplement—and a cartoon version. Trade associations representing hundreds of thousands of extralegal entrepreneurs took out newspaper ads proclaiming support for The Other Path. Its publisher was Hernando's think tank, the Institute for Liberty and Democracy, and by 1991 a national poll ranked the place fourth among Peru's "most powerful institutions," behind the presidency, the army, and the church.
Inevitably the Maoists, called by the State Department "the bloodiest and most murderous guerilla group ever to operate in the Western hemisphere," attempted to take out de Soto with attacks on his home, his car, and finally, on July 20, 1992, a 400-kilo car bomb at his office. Three people were killed that day, and 19 others—mostly innocent passers-by—were injured. De Soto narrowly escaped, and the 17 men assigned to kill him were caught and jailed. His ideas soon defeated the Maoists, and led to sweeping reforms throughout Peru and Latin America. The Other Path has also reached large parts of Africa, Asia, and Central and Eastern Europe, and today, based on this book and his later The Mystery of Capital (2000), he advises about 20 heads of state.
The Beautiful Tree
James Tooley's The Beautiful Tree (2009) is a masterpiece. It changed my views on two issues: education and economic development. Tooley's story is a surprising account of how very large numbers of the poorest children in the world are receiving superb private educations from for-profit entrepreneurs. Reading his work was the single most eye-opening moment of my life in public policy.
As a student of P.T. Bauer, I knew that foreign aid was the corrupt way for the poor in rich countries to support the rich in poor countries, but Tooley has surpassed Bauer. He brings us a triumphant story, a story of enterprise, success, and achievement on an astonishing scale. It is so counter-intuitive: millions and millions of the world's poorest kids living in the worst slums are being taught by private entrepreneurs. When Tooley tested tens of thousands of children, he found that they outperformed their peers in nice neighborhoods attending state-run schools.
It is hard to grasp, so hard that as Tooley visited country after country he met with a wall of denial. Even his free-market friends on the ground were dubious upon hearing of his projects. But on registering at his hotel it took one taxi ride into the worst slums to find scores, hundreds, thousands of for-profit schools. Some of the places where they flourish are so inaccessible, it is no wonder the officials do not know they exist—not one of them has ever been there.
Tooley's story is an astonishing affirmation of human resourcefulness, enterprise, and responsibility. It is an entertaining adventure story and travelogue, too: at one point the author is hauled in for interrogation by Robert Mugabe's thugs in Zimbabwe. It's Indiana Jones meets education policy, as one reviewer wrote.
Tooley found that in the state-run sector the licensed teachers cannot be sacked and often do not even turn up to school. When they do, they have huge classes, teach in a desultory manner, gossip out in the corridors, and even drink alcohol and fall asleep at their desks. In the private sector, though wages are a mere 20% of the state sector, the teachers are on the job, passionate about what they do, and are held totally responsible.When I talk to students, I show them The Beautiful Tree and say that if they want to change the world for the better, this book should be their model.