Posted on 04/23/2004 4:12:04 AM PDT by Remember_Salamis
Are We Serfs?
By Robert L. Formaini Published 03/23/2004
This year is the 60th anniversary of the publication of one of the 20th century's most influential books, Friedrich Hayek's The Road to Serfdom (hereafter, TRTS). Milton Friedman, speaking at a recent conference held at the Dallas Federal Reserve Bank, said that at the time that Hayek wrote his book, most political policy rhetoric was pro-socialist, not only in England where Hayek then lived, but in America as well. Yet actual policy was very free market oriented. Today, Friedman noted, the rhetoric is more often pro-free market even though the policy reality in both America and Europe is overtly socialist. So Hayek was right? Not quite so fast.
The late George Stigler, a University of Chicago economist of impeccable free market pedigree, disputed Hayek's prediction 44 years after it was written in his own 1988 book Memoirs of an Unregulated Economist. Stigler pointed out that he had lost faith in Hayek's main prediction -- that regulation would continue to increase until total centralization of the economy occurred along with the complete loss of personal and political freedom -- ever coming true. Stigler finished his demurral by stating that "Hayek's orderly mind could not comprehend the survivability of our disorderly world." It's a fair appraisal, and one that seems to suggest an economic paradox: regulations placed on the market can grow in number and complexity, yet people can remain relatively free, and a market-based economy can continue to perform quite well despite such regulations. Following Ludwig von Mises, Hayek denied that such piecemeal regulation could exist in the long run without becoming totalitarian and yet, it clearly does; and not just in the United States. How is this outcome possible? If we really are in a car with Hayek, traveling along the road to serfdom then, like the child in the back seat, we are compelled to ask: why aren't we there yet?
One answer can always be given: "We aren't there yet but, in time, we assuredly will be, so you there in the back seat -- shut-up." Like Marx's proletarian utopia, our own complete serfdom lies always somewhere ahead of us. But how far ahead? No one seems really to know, although many have claimed such knowledge. But false predictions so litter the intellectual landscape that one or two more are unlikely to be much noticed. The claim can be made, and has been made, that mixed economies, while inherently unstable, are not necessarily transitory. Economist Sanford Ikeda has called this the "Misesian paradox," and clearly, it also applies to Hayek's claims in TRTS. But is this view correct? And, even if it is, how useful is such a model for the myopic business of choosing among current public policy proposals all of which, tautologically, can be called "interventions?"
Another possibility is that Americans have learned how to regulate better, doing less damage to the market process and maintaining sufficient economic incentives and continuing competitive pressures so that regulation does not become so burdensome as to shut off good economic results. Many people would like to believe this, regardless of their ideological predilections. Alternatively, we might now regulate things that we didn't before -- so-called "social regulation" -- while economic regulation -- especially price controls -- has diminished over time and become a less important fraction in the regulatory mix.
There are even other possibilities. Economists and other social thinkers may have underestimated the market's ability to adapt to, and to avoid, regulation.1 Many regulations, although they might well continue to do long-run economic harm, become obsolete -- often quickly -- as technology and markets adapt and/or avoid their impact. Many regulations are not enforced, and many are only slightly enforced. Markets are very dynamic and capable of dodging regulation as easily and as often as good halfbacks shed even the most determined tacklers. In other words, as Stigler also pointed out, regulation on paper and regulation in practice are two very different things. If this is not true, then how has our economy been able to absorb, with relative ease, the tens of thousands of regulations passed in just the past decade or so?
Let's look at some numbers -- usually publicized by those who accept TRTS's central theme -- to get some perspective. According to such sources as the Weidenbaum Center at Washington University, the Mercatus Center at George Mason University, the Cato Institute, the National Center for Policy Analysis, the Heritage Foundation and many other antiregulation venues, TRTS's leitmotif certainly does not lack current supporting publicity. In graphs, pie charts and summaries of data, readers are informed that the number of regulations has been rising steadily for decades, the costs are approaching one-tenth of GDP, and there seems to be no end to the growth of the future large slice of our incomes that such rules are going to take from us. To the extent these numbers are true, personal freedom is indeed diminished, specifically: the freedom of one to spend 100 % of his wealth and/or income in any manner he wishes.
One gauge often cited by researchers of regulatory growth is pages in the Federal Register. This is a mandatory listing of proposed -- as opposed to ultimately adopted -- rules for regulatory agencies. In 1970, the Register had 20 thousand pages. Today, it has almost 80 thousand, or an overall growth of almost 300%. Direct federal expenditures on social and economic regulation have also soared. In 1980, they amounted to just $6 billion. Today, the figure is close to $30 billion for a general increase of almost 400%. There are 35 thousand persons at the federal level working in regulation jobs and that does not include the people working to monitor and oversee the regulators themselves, nor does it include the courts whose time is consumed with regulation cases. Private sector employment specifically designed to cope with regulations of all kinds has also soared, but accurate data on this phenomenon are hard to acquire.
The costs of regulation are, for economists anyway, the opportunities forgone in order to support the current regulation package. They are very hard to measure accurately and their size, especially relative to their benefits, generally depends a great deal on who is doing the counting. The government claims that regulation costs between several billion and a trillion or so dollars, but the benefits received for these outlays are several trillions dollars. The sources mentioned above disagree and place the costs at a trillion dollars (give or take a few billion), while benefits are decidedly lower than the federal estimate. If benefit-cost analysis were an exact science, perhaps these disputes could be authoritatively solved. But it's not, so they won't be.
Both sides in this debate -- those who like regulation and want more versus those who don't and want less or even none -- do agree on one point: there has been a large amount of growth in economic and social regulation and in its cost. American firms do not have only to cope with an increasing regulatory burden, however; there is also the continuous threat of civil litigation and the potential loss of a very large jury award, as well as the threat of government litigation in lieu of regulation.2 Such an environment definitely has effects on firm behavior, redistributing resources, sometimes globally. It does not seem to have the much-touted effect (health care and education are two exceptions) of making all regulated products (there are exceptions, of course) costlier as firms pass along regulatory costs to their consumers. How can this be?
Apparently, firms have the capacity to avoid, or to deflect many regulations even as they continually cut their costs and squeeze out ongoing productivity increases. This avoidance technique can involve many behaviors, but the most common seem to be technological advances (or apparent advances) that change market definitions just enough to enable firms to evade existing regulation, the outsourcing of capital and/or jobs to cut overall production costs, and the inventive use of existing technologies to improve the efficiency of firms' supply chains. More drastically, firms can sometimes move their operations altogether to avoid taxes and regulations. The world is now, whether it wants to be or not, a set of competing nations much as America is a set of competing states and localities; the major competition is for capital. The tools used are the same as well: tax cuts and subsidies, cheap resources, and cheap labor. Despite the recent attempts at "harmonization" -- which is demanded by advocates so this competition cannot work -- it seems unlikely that all nations will ever agree to stop attempting to lure capital to their jurisdictions. As Walter Wriston once said, "Capital goes where it's needed and stays where it's well-treated." That is not likely to change in the near future despite the continuing efforts of all those international busybodies located in Brussels, although it is disheartening to see American courts beginning to look to other nation's laws and legal precedents as they formulate our own and the IRS beginning to report foreign income to other nations' tax collectors. These are very bad trends.
So where does all this leave us on Hayek's road? Perhaps it depends on one's definition of serfdom? Even though there is not total central planned control of the American economy, there is enough piecemeal control to make most of us think twice about not obeying the state. For some libertarians, this is more than enough to vindicate Hayek's argument. We Americans have become but timid shadows of our individualist forerunners, always ready to bow down and comply, not even rhetorically willing to challenge, most of the time, the status quo our governments have arranged for us. This is no small, trivial development for it is the people themselves who, ultimately, are going to reverse -- or not -- this endless march into total government.
But the glass may well be half full rather than half empty. Americans have not, and never will, abandon their beliefs about property and freedom, despite decades of propaganda in government-funded and controlled schools and all the free reeducation any ideologue could hope for in the media's daily anti-business drumbeat. A significant -- and growing -- number of people do not accept the status quo as being the most desirable economic arrangement. It is especially heartening that, due to access to new and varied information sources, it is the young in America who have rediscovered our earlier political tradition and who, despite the state's best efforts, somehow have managed to resist believing in the statist tide that has swept the nation since World War II. (I have been unable to find, after several years of asking, a single student in any of my classes who claims to believe in manmade global warming!) If it's true, as all the blithering candidates from all parties routinely claim, that "Our children are our future," then perhaps we will turn out all right after all. We will never exit from it, but we will also probably never reach the end of Hayek's road.
Then again…
Robert L. Formaini is President of Quantecon, a Dallas based political economy research firm.
Many Americans have done this (abandoned their beliefs about property etc.). Not a majority of them, but enough to cause the rest of us problems.
Recently a local Amish guy petitioned the local govt for the ability to start a kennel on his farm. Why you need a permit to raise dogs on farming land you already farm on, I don't know. A local busybody or two decided that this Amish farmer must want to start a "puppy mill" and showed up and opposed him.
Consider a serf: He worked the land. The Lord each year could say how much of the produce of the serf's land that he would take. Now think about our tax system. My assessment has just gone up. The Lord (the County in this case) has just said how many of my dollars (which are limited) that they will take this year.
Take a look at how serfs (who worked the land) were treated in the Ottoman Empire for an eye opener.
There is physical property that one can own in the United States, but don't pay the taxes on your real estate (for whatever reason say an extended hospital stay) and see how long you "own" it. Incidentally, there is no requirement in some state that the Post Office forward your tax notices.
Interesting. According to free traders regulations are a burden. Here we have both sides agreeing that regulation does provide some benefit. Only the amount is disputed. But, since most free traders use gov. statistics to prove their point, perhaps now they will go against those very same statistics and claim that regulation is only harmful.
While I do understand that there is some burden on the economy from these regulations, I would rather there be some control rather than let human nature have free rein over the economy. Anarchy in business would be just as bad as anarchy in government.
More than likely it's not the P.O. that does not forward the document. That is the prerogative of the sender. Unless specifically noted otherwise, all may is forwarded if you set it up that way.
Like regulations which prevent children from stepping from boulder to boulder along a beach ("No climbing allowed")
Or what about new regulations to "stay off" of a neighborhood school's playing fields because they are now prepped, so that they can be used by organized teams? Children in one of our local elementary schools could not use their field at recess time for at least a year, while it was being "improved." I'm not sure if they can use it now.
Over the past two decades, brand new "No fishing from the pier" signs have popped up in areas where my kids used to fish.
It could be said, for example, that that town's "no fishing" regulation benefits the economy, since people who want to fish in that general area now need to rent or buy a boat.
But the cost to the kids' childhoods is hard to calculate.
I think it is somewhat reminiscent of serfs having to get the medieval lord's permission before doing anything.
Oh, I would say the majotity have abandonded their beliefs about property.
For examples the minimum wage law, American with Disability Act, mandatory x-ray equipment to be purchased by airlines, and parts of the Patriot Act requiring banks to hire an individual soley to monitor bank transactions, all violate the 5th amendment.
"...nor shall private property be taken for public use without just compensation."
In addition, Article I, Section 8, Clause 3, the "commerce clause" has been so blatantly and illogically expanded by rogue, anti-constitutionalist, socialist Supreme Court judges, especially from the infamous 1942 case of Wickard v Fillmore, that no citizen ever questions the jurisdiction of the federal government to regulate "private property" much less that those same regulations violate the Bill of Rights.
Why do almost all citizens assume that federal gender, age, race, sexual orientation and religious anti-discrimination laws placed on business', which are "private property," have jurisdiction and also assume that those same regulations do not violate the rights of these "private property" owners when these laws require them not to use those criteria as a reason to invite individuals onto their private property as employees?
The 9th amendment protects each citizens right to be discriminatory as to whom they wish to invite onto their "private property."
"The enumeration in the Constitution of certain rights, shall not be construed to deny or disparage others retained by the people.
The "people" are the private owners of stock certificates, purchased with their private property, their money, to share private ownership of a business with other private citizens.
When and how did this arrangement become "public?"
Most citizens would object, vehemently, to their federal government "regulating" their home by stating that it is unlawful for you to refuse the entry of any person into your home for reasons of gender, age, race, sexual orientation, and religion.
But, by using conventional logic and wisdom of the jurisdiction of the "commerce clause," your home is subject to such jurisdiction. It is not "private property," as most would assume, but it is "public property."
The reason your home is "public property" is because most homes have a mortgage associated with them. That mortgage is usually held by a financial institution engage in "interstate commerce."
Subsequently, these finacial institutions, engaged in "interstate commerce" are the "real" owners of most citizens homes and are subject to the jurisdiction of laws enacted under the guise of the "commerce clause."
Granted, this jurisdictional scenario for federal regulation of your home has not been fully enacted yet, but it is only a matter of time until the final de-sensitizing of baby boomers, gen-X, and future generations to abandonment of private property to the "commerce clause."
The socialist will then have complete victory.
So, do you see the illogical and socialist definitions that almost all Americans have accepted about what is private property and public property, with the net effect that they have indeed "abandon(ed) their beliefs about property and freedom."
The desensitivation of people must occur over gradually, except in really unusual cirucumstances, (i.e., 9-11). The powers that be have spent quite a bit of time working on the children of this land. I'm sure you've read about the insane methods that schools have adopted in their quest to enforce 'zero tolerance' policies. This is getting children used to authority figures having absolute, arbitrary, capricious power over them.
We've had metal detectors in airports for a few decades now, and they are now in the schools as well - a visible reminder of who has the power, and who does not, that must be traversed each day the children attend school. We have, in the past several years seen the use of metal detectors expand greatly, and now we've come to the point where we see them in many other government buildings as well. We have to protect the safety of the ruling class from the lowly serfs don't you know? In the wake of 9-11-2001, we've seen airport securty be raised to levels of idiocy that defies all logic, when the simpler solution would be to simply encourage the citizens of this country to bear their own arms for their defense. At the very least, pilots, most of whom are ex-military, should be given blanket permission to arm themselves.
The problem with either of these solutions, however, is that they would empower the serf. Above all else, it is this that the ruling class will fight more ferocously than anything.
One might think that the recent trends regarding concealed carry laws is a positive sign that bucks this trend of continual serf disempowerment. I suppose in some ways it does, as it reinforces the concept of personal responsibility - certainly not a goal of FedGov or any of the several subsidiary StateGovs out there. There are a few of the things that bother be about CCW laws though.
First, every state that has allowed CCW licenses have placed significant barriers to entry for what should be a natural God-given right, (as it is in Vermont and Alaska). A "license" is a state grant of permission to do that which would otherwise be unlawful. Therefore, the state has, by default won the argument as to the nature of the "right", and has converted it (unlawfully IMO) into a priviledge. A priviledge that must be paid for and renewed on a periodic basis.
Second, many americans have fought for years against gun registration schemes. It would seem that the states that have adopted the CCW regulations have now, in hand, a list of the people with the most interest invested in the right. If I were a conspiratorily minded fellow, I might just think about this and go "Hmmmmm".
There is more of course, but I really need to get busy again. :-)
That's for sure.
Who are the Value Producers?
Who are the Value Destroyers?
Who is the host?
Who is the Parasite?
What protection do value producers need? When a value producer has been harmed he or she needs to take the suspect before an impartial jury in order to gain restitution for his loss and suffering.
As for industry participants, they have a mutual benefit in setting codes for each respective industry and those that intertwine. Where ISO900 serves industries well Underwriter's Laboratory and similar serve consumers well. Industry participants have a need for redress when a party to a contract has not fulfilled their part of the contract.
Today a person can know for certain that if a person, group of persons or government causes them harm and or suffering that they have a need to take the criminal or parasite before an impartial jury. In that forum the victim can do his or her best to convince the impartial jury that he was harmed and to what extent suffered due to the criminal or parasites actions against him.
A bit of rhetoric serves well: how is it that for several decades, if not the past 150 years, people and society have prospered and flourished despite seventy-five years ago neither the value producer nor society had the laws and regulations of the 1990's to protect them? How is it that people and society prospered and flourished in the 1980's without the new laws and regulations enacted in just the first three years to the twenty-first century? How is it that we flourish and continue to prosper this year without next year's new laws and regulations?
Conversely, how could the value destroying politicians and bureaucrats have been able to expand government to leviathan size -- usurping ever more and larger unearned paychecks -- if not by parasitically leaching off the life-blood backs/efforts of the value producers?
The value creators and producers of the world need to be left alone to go about living their lives as they see fit. And on the rare occurrence that they are attacked -- have force, threat of force or fraud foisted upon them -- have at their disposal a court and impartial jury.
That's it. For certain, politicians and bureaucrats are not better equipped than the value producers at benefiting individuals and society. To the contrary, if not for the value producers and their efforts politicians, bureaucrats and other parasites would perish.
By far, the most important function/responsibility and primary focus of government is to protect individuals life and property from terrorist attacks and other parasites that initiate force, threat of force and fraud.
Going forward from 2,500 years ago -- from the Golden Age of Greece -- history shows whose creative, productive efforts advanced technology to most benefit his fellow man. They are the Value Producers.
The parasites are those that have lived off the value producers' efforts. For without the value producer and his efforts parasites would have no host to leach from. Or, at the very least, perish when the value producers realized that which was slowly draining the lifeblood from them and refused to sell or trade their goods, services, technology advances and art to parasites. Scorning them in the process -- akin to pouring salt on a leach.
The bottom line: value producers have almost always lived up to their part of the contract; politicians, bureaucrats and other parasites have severely defaulted on their part of the contract. Despite monumental advances in creating a constitutional representative republic form of government, politicians and bureaucrats have increasingly defaulted on their part of the contract. In the process they have facilitated increasing the number of "small-time" parasites.
The goal is to identify the value producers and drive a wedge between them and the value destroyers. In order to successfully do that the responsibility of each party to the contract must be clearly defined and articulated.
The value producers commits to leaving people alone to go about their own business -- accepting mutual associations as history has proven occur in the natural course of going about one's own business.
Government employees commit to the primary focus/responsibility to protect individuals and property from terrorist attacks and other parasites that initiate harm, threat of harm and fraud.
The biggest "hammer" for driving the wedge between the value producers and value destroyers is to abolish the IRS and implement a consumption tax--NRST.
If the terrorist parasites win, we die!
Excellent point. In the middle ages, everything - the forest, the land, the animals - all belonged to the king. If you so much as snared a rabbit on his land, you'd be hung.
It's the same thing today, when the gov't tells us that people can't pick up a rock, or a piece of driftwood, or dried sticks from a national park. We consider ourselves "lucky" to be able to hunt or fish on our own private land, but if the eco-wackos had it their way, we wouldn't even be able to do that.
Yeah, didn't we realize that the founding fathers put the interstate commerce clause in just so the federal government would have the totalitarian power it requires to operate a fair and just society?
Although that clause is the mechanism, I would also say that one of the real methods by which government is gradually stealing our liberty is by taking responsibility for our lives, in every aspect. It's done with benefits and "entitlements," bequeathed in the name of fairness. However, these entitlements are chains, every bit as surely as any other historical model of authority.
Down here in South Florida we, I mean the feds, have a national park, Everglades National Park.
It so happens that you can access it by boat, anywhere along many miles of its outside borders, from the Keys to the Gulf of Mexico. That means that at any given time, there are lots of folks in the Park, but not under strict Ranger supervision.
I can tell you that when the rangers come by to see what you're up to, which they do often, their attitude is often not too polite. It sometimes feels like you are a serf, caught trespassing in the King's forest. This, even though you have a perfect right to be there. I almost wish they'd never made a park there, and just let the place get developed, beautiful as it is. If they close it to boats and fishing, as they often discuss, I will definitely wish that.
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