actual emergency.nThe real budget problem is entitlementnspending. Neariy half of then1991 budget will consist of paymentsnto individuals. The federal budget explicitlynworks to redistribute 12 percentnof the nation’s personal income in waysnthat are philosophically dubious butnpolitically expedient. The battle of thenbudget has been fought mainly betweennpromoters of these open-endednsocial programs on the left and defendersnof the Pentagon on the right. Therenis, however, another sector which hasnbeen hard hit, a sector whose waningnstrength from malnutrition is slowingndown the entire economy: public infrastructure.nThe cutting in half of the rate ofnAmerican labor productivity growthn(from 2.5 percent during 1948-69 tononly 1.1 percent during 1969-87)nsparked a wave of studies of privateninvestment. Government investment,nhowever, has been largely overlooked.nOf the nation’s capital stock, 36 percentnis in the public sector. The 1987nbreakdown was 7 percent military; 18npercent core infrastructure (highways,nports, power plants, water supply andnsewage systems); 8 percent for publicnbuildings (schools, hospitals, prisons,ncourthouses, police and fire stations);nand 2 percent for conservation andndevelopment projects.nBefore the welfare state, such publicninvestment was a major function ofngovernment, second only to the dutynto provide for national defense. It is stillnthe most important contribution toneconomic growth that the public sectorncan provide. Yet public works havenbeen squeezed out of governmentnbudgets at all levels by the explosion innsocial spending over the last twentynyears.nInvestment in core infrastructurenduring 1969-87 grew at 1.3 percentnwhile all other areas showed a meagern0.3 percent. Total federal investmentngained 1.1 percent (down from 2 percentnduring 1948-69) while state andnlocal investment increased only 0.9npercent (down from 4.7 percent duringn1948-69). The large drop in statenand local investment reflects the factnthat the welfare state is not just anfederal phenomenon. In 1970 statengovernments spent slightly less on welfarenthan on highways. By 1987, thenstates were spending more than twicenas much on welfare as on highways.nInfrastructure investment has notnbeen keeping up with the needs of theneconomy. As a result, not only arenpublic services less available (schoolsnand prisons are overcrowded, emergencynservices and utilities are inadequate)nbut roads, bridges, railways, andnpublic buildings are wearing out. Thisngenerates a drag on the entire economy.nThe deep inroads that foreign competitorsnhave made in America’s economicnposition have often beennblamed on the preference Americansnshow for consumption in the presentnover investment for the future. Whetherntrue as a general indictment, it isnvalid for government policies. Politiciansnbelieve that voting billions morenfor income transfers and social programsnwill garner more support thannbuilding power plants, jails, or wastendisposal facilities. Until this perceptionnis changed, the term Big Governmentnwill be a misnomer. Big it is, but it isnfailing to perform the duties of a government.n— William R. HawkinsnARTHUR ASHER SHENFIELDndied on February 13 at the age of 80. AnBritish lawyer and economist, he spentnmuch of the last three decades as anvisiting professor at American collegesnand universities, setting forth with rarenvigor and clarity the principles of thenfree market and its role as the onlyneconomic system compatible with politicalnliberty. His distinctive qualificationnfor this task was a recognition thatnall the institutions of a free society arendependent upon a disciplined and virtuousnpopulace. In 1972 he was electednpresident of the Mt. Pelerin Society,nthe international association of marketneconomists formed by Friedrich vonnHayek and Ludwig von Mises. He andnhis wife, sociologist Dame BarbaranShenfield, lectured at the first nationalnconference sponsored by The RockfordnInstitute, “Capitalism and Culture,”nin 1977. What follows are excerptsnfrom his presentation.nThe most significant feature of socialismnin the United States is the factnthat most American socialists callnthemselves liberals. They have effectivelynappropriated that splendid wordn”liberalism,” which originally meant.nnnand still properly means, the exactnopposite of socialism; indeed, so effectivelynthat their American opponentsnalso dignify them by calling themnliberals.nThis fact is highly significant becausenin large measure it indicates thenposture and character of Americannsocialists. The famous pioneers of socialistnthought have exercised only annextremely faint direct influence uponnAmericans and the American mind. Insay this not because only a minutenproportion of American socialists havenever read Marx or any other leadingnsocialist theorist. That would not bendecisive because only a minority ofnpeople in countries under Marxist rule,nand probably only a minority ofnavowed and active Marxists themselves,nhave read Marx. The majoritynof people in all countries and societiesntake their ideas at secondhand. I say itnbecause the great majority of Americannsocialists would not agree withnMarx or other leading socialist theoristsnif they read them, though’it must benadmitted that in the case of theoristsnespousing, or claiming to espouse,nsome form of democratic socialism, thendisagreement would be partial andnqualified. The truth is that, thoughnthere are cases where the adoption ofnthe liberal label is a matter of subterfugenand deception, in most casesnAmerican socialists really do believenthemselves to be liberals, and wouldnhonestly and perhaps indignantly rejectnthe socialist label.nYet they are genuine socialists, atnleast in the field of economics. Theynbelieve that the solution to all significantneconomic problems calls for somenform or other of governmental intervention.nWhen faced with any economicndifficulty, their first and onlynthought is to call upon the power ofngovernment to deal with it, usually bynsome program requiring large publicnexpenditure and a large bureaucracy.n. . . Contrast the wickedness of thenmodern Welfare State with whatnAmerica once did for the poor of thenWorld. “Give me your poor, yournhuddled masses,” says the Statue ofnLiberty. But that America offered nobodynfree bread and butter, assistednhousing, or anything else except freedom.nNo system of food stamps awaitednthe poor immigrant from Ireland,nItaly or Poland. That America saidnJUNE 1990/11n