Tag: government

Leviathan Unchained

Harold Meyerson, writing in The American Prospect argues that Americans are “hypocrites” because we dislike regulations in general, but like specific regulations:

Last Thursday, the Pew Research Center for the People and the Press released a survey that revealed what Pew termed “Mixed Views of Government Regulation.” But “mixed,” in this case, means anti-regulatory in matters of ideology and pro-regulatory in practice. Asked whether they believed that government regulation of business was necessary to protect the public or that such regulation usually does more harm than good, just 40 percent answered that regulation was necessary, while 52 percent said it did more harm than good.

But then came the specifics. Pew asked whether federal regulations should be strengthened, kept as is, or reduced in particular areas. When it came to food production and packaging, 53 percent said strengthen, 36 percent said keep as is, and just 7 percent said reduce. In environmental safeguards, the breakdown was 50 percent strengthen, 36 percent keep as is, 17 percent reduce. In car safety and efficiency, the split was 45, 42, and 9 percent. In workplace safety and health, it was 41, 45, and 10 percent. And with prescription drugs, it was 39, 33, and 20 percent.

This is hardly a new discovery—public opinion polls have shown similar results for decades. In general, Americans dislike government regulations, but they want stronger regulations in specific areas.

The Overreaches of the Regulatory State

Meyerson thinks that this is hypocrisy and that Americans are “in denial.” Meyerson misses the point:
when Americans are directly effected by regulations, they oppose them. But it’s easy for Americans to want those “other guys” to be regulated. And in fact, the numbers are not that heavily weighted towards more regulation. A plurality thinks that there’s too much regulation, a slightly larger plurality thinks that there are two little. A smaller plurality thinks that the amount of regulations are fine the way they are. Together, the number of people who want fewer regulations or the status quo outnumber those who want to expand the regulatory state.

And as the regulatory state grows and the state and federal level, we will likely see the number of people wanting to roll back government regulation rise. Take these examples:

A preschooler at West Hoke Elementary School ate three chicken nuggets for lunch Jan. 30 because the school told her the lunch her mother packed was not nutritious.

The girl’s turkey and cheese sandwich, banana, potato chips, and apple juice did not meet U.S. Department of Agriculture guidelines, according to the interpretation of the person who was inspecting all lunch boxes in the More at Four classroom that day.

The Division of Child Development and Early Education at the Department of Health and Human Services requires all lunches served in pre-kindergarten programs — including in-home day care centers — to meet USDA guidelines. That means lunches must consist of one serving of meat, one serving of milk, one serving of grain, and two servings of fruit or vegetables, even if the lunches are brought from home.

When home-packed lunches do not include all of the required items, child care providers must supplement them with the missing ones.

Imagine what will happen when something like that becomes commonplace. It’s one thing for a government regulator to go after “big corporations” with stupid and destructive regulations. But the second those stupid and destructive regulations effect the average American, it will be time to break out the tar and feathers.

And the school-lunch police aren’t the only example of regulatory insanity going on in America today.As one Nevada farmer found out, the regulatory state doesn’t give a damn about common sense or your rights:

I can’t tell you how sick to my stomach I was watching that first dish of Mint Lamb Meatballs hit the bottom of the unsanitized trash can. Here we were with guests who had paid in advance and had come from long distances away anticipating a wonderful dining experience, waiting for dinner while we were behind the kitchen curtain throwing it away! I know of the hours and labor that went into the preparation of that food. We asked the inspector if we could save the food for a private family event that we were having the next day. (A personal family choice to use our own food.) We were denied and she was insulted that we would even consider endangering our families health. I assured her that I had complete faith and trust in Giovanni our chef and the food that was prepared, (obviously, or I wouldn’t be wanting to serve it to our guests).

I then asked if we couldn’t feed the food to our “public guests” or even to our private family, then at least let us feed it to our pigs. (I think it should be a criminal action to waste any resource of the land. Being dedicated to our organic farm, we are forever looking for good inputs into our compost and soil and good food that can be fed to our animals. The animals and compost pile always get our left over garden surplus and food. We truly are trying to be as sustainable as possible.) Again, a call to Susan and another negative response. Okay, so let me get this right. So the food that was raised here on our farm and selected and gathered from familiar local sources, cooked and prepared with skill and love was even unfit to feed to my pigs!?! Who gave them the right to tell me what I feed my animals? Not only were we denied the use of the food for any purpose, to ensure that it truly was unfit for feed of any kind we were again threatened with police action if we did not only throw the food in the trash, but then to add insult to injury, we were ordered to pour bleach on it.

There was nothing wrong with the food, other than it didn’t meet the purely bureaucratic whims of the health inspector. And this wasn’t one deranged idiot going off on a whim: the state health inspector was constantly on the phone with her superior, who not only ratified each decision, but was apparently calling the shots.

This is the face of government regulation in America: it’s not about protecting people, it’s about power and control. Was the state protecting that elementary school student from anything? No, the options she was later given were worse than what her parents had packed. Was there any danger to the guests of that Nevada farmer? No, but because the government doesn’t want any deviation from their narrow rules, they acted like tinpot dictators and made the farmers throw away the food and pour bleach on it.

In a sane world, the people responsible for those decisions would be fired immediately. But this is not a sane world. It’s a world where too much power has been abdicated, too much common sense abandoned, and too much authority ceded ever upwards. And that is why Americans hate regulation—and as more Americans experience this kind of rampant idiocy, the number of Americans who see the regulatory state as the enemy will only increase.

And when Americans say that there are too many regulations on small business, they are absolutely right. Take for example what happened to a small business trying to operate a beer garden in Arlington, Virginia. Government bureaucrats at the local level are ofter just as rapacious and just as foolhardy as their compatriots on the state and federal level. For another example, watch this video outlining the many needless hurdles a small business owner has to go through to open an ice cream parlor in San Francisco.

We talk about how important it is to foster the growth of small businesses and how critical it is to get Americans working again. But as the above examples demonstrate, our system of massive government overregulation costs jobs and takes thousands of dollars out of the economy and into the hands of the government apparatchiks who administer this maddening system.

So yes, it’s easy for the average American to say that someone else should be regulated—given that the media has turned big corporations into mustache-twirling villains at every opportunity it’s no wonder that a plurality support more regulation. But when Americans look at the issue of regulation holistically, they see the reality that regulations hurt more people than they protect.

Meyerson thinks that the problem with America is that government isn’t powerful enough. But a government powerful enough to make BP, GE, or any other company do whatever government wants is a government that is powerful enough to make you do whatever government wants. And that doesn’t even get into a discussion of regulatory capture. Big business doesn’t hate government regulation—they’ve learned to use it as a cudgel to beat down competition before they can rise up to challenge the established players. That beer garden in Virginia can’t afford an army of lawyers and lobbyists to negotiate with the regulators—but a chain restaurant can. What is the result of this nonsensical regulatory overreach? Fewer small business and more powerful big ones.

American’s aren’t hypocrits—at least not in the way Meyerson accuses them of being. Rather, Americans need to understand that the same sort of regulatory insanity that causes schoolchildren to be given chicken nuggets or farmers to have to throw away perfectly good food is no less idiotic and no less harmful when it’s applied to big corporations.

Cash For A Clunker Of A Policy

Law prof Richard A. Epstein has a withering look at the “Cash for Clunkers” program that gave car buyers a $4500 check to trade in an old car for a new one. As with any government program, the intentions of the program and the reality of the program were not quite at odds with each other:

Yet exactly what does the American people get for this expenditure? On the bright side, the beleaguered automotive industry gets yet another shot in the arm. But that cheery argument repeats the common mistake that I addressed two weeks ago: Using tax dollars to stimulate one industry necessarily impairs the recovery prospects of everyone else. To make matters worse, some stimulus payments are just outright gifts, because lots of last week’s eager sellers might have traded in their clunker in the near future anyhow. And no one has a clue as to how many miles would be put on these clunkers anyhow.

The problem with the “Cash for Clunkers” program is that it won’t provide much stimulus, but it will burn through billions in in taxpayer dollars. Is the possible increase in overall gasoline efficiency worth the $1 billion now spent and the billions more that may be spend reviving the program? It’s doubtful we’ll know, because the actual results don’t matter. Congress is essentially buying support by raiding the public fisc under dubious pretenses.

Two thousand years ago, the called it panem et circenses—but “Cash for Clunkers” seems to have much more consonance, even if the concept remains essentially the same.

Why Small Government Is Better For The Little Guy

Hardvard economist Edward L. Glaeser has a fascinating and provocative piece on what he calls “small government egalitarianism”:

In the 20th century, President Woodrow Wilson campaigned on a “New Freedom,” opposing Teddy Roosevelt’s big-government Progressivism. While Roosevelt wanted the government to manage monopolies, Wilson wanted trust-busting and less protectionism. Wilson perceptively noted the dangers of too much government: “If the government is to tell big business men how to run their business, then don’t you see that big business men have to get closer to the government even than they are now?”

Wilson’s warning could not be more prescient. Look at the “stimulus” bill snaking its way through Congress. It is positively loaded with pork for special interests, handout for big donors, and only a fraction of it will go to the sort of crucial infrastructure projects that were supposed to be its very purpose. The “stimulus” bill could not be a better example of why Big Government hurts the poor. Even setting aside the issue of whether government spending creates jobs at all, this bill certainly won’t put enough people to work to make even a dent in the skyrocketing unemployment lines. Instead, billions of dollars will go to the politically well-connected and unscrupulous. The difference between Bill Blogojevich and most of Congress is that Blagojevich got caught.

Small government is good government. Small government helps the American worker because it does not allow the kind of concentrations of power that we have now. Why do big corporations spend billions on lobbying Congress to tilt the law in their favor? Because Congress has the power to tilt the laws in their favors. The reason why the Founders deliberately created a limited government of enumerated powers is to prevent the kind of naked interest-buying that we see now. The more power you give the government, the more incentives there are for government to use their power for their own advantage.

With Congress’ approval at a historic low, the idea that the case for small government is no longer worth making seems absurd. If anything, now is the best time to push a vision for a government that is smaller, more responsible, and more accountable. That such a government would ultimately be more equitable is a beneficial side-effect.

Politically, the Republicans should be doing what Sen. McCain threatened to do and “make famous” every single pork-barrel project in the “stimulus” bill. The message here is simple: tens of thousands of Americans are losing their jobs every day and Congress is paying off its campaign contributors with pork. Americans should be disgusted by the performance of Congress right now. The myth that this trillion-dollar boondoggle is anything but a case of Congress acting like robber barons of old should be laid to rest. Congress wants to claim that they’re “creating jobs”, but instead they’re giving more and more cash to the same politically well-connected actors.

This is precisely why small government is so crucial to having a more equitable society. If Congress were only allowed to spend money on truly national projects there would be no ability to send pork to campaign contributors. Big Government does not produce an more equitable society, it rewards those who side with the politically powerful. Small government benefits the people because it doesn’t allow Congress to game the system to benefit their own interests.

Take a simple but common example. When new regulations come down from all the federal agencies, have John and Jane Doe on Main Street had any opportunity to shape that new rule? Of course not, even if they compulsively wade through each daily edition of the massive Federal Register to see what rules are being proposed the most they can realistically do is send a strongly worded letter. Can Washington interest groups shape that rule? They pay lobbyists great amounts of money to do exactly that. Can business interests shape that rule? Absolutely, and they have their own army of lobbyists for just that purpose. So is it any shock that John and Jane Doe are under-represented in the process?

It’s a myth that “big business” and powerful special interests love small government and hate regulation. Why should they? They have the clout in Congress to make sure that the regulation benefits them. They can use their political connections to steer millions of taxpayer dollars to them. They can benefit from the access they have to Congress and even the White House. They know that P.J. O’Rourke’s great maxim is correct: “when buying and selling is legislated, then the first thing to be bought and sold are legislators.” The bigger and more intrusive government is, the higher the barriers to new competitors. Look at the most heavily-regulated markets in this country: they tend to be dominated by a handful of large players who can use their access to lobby government to keep those regulations in place. They benefit the most from the regulatory state, and they have every interest in seeing Big Government stay big.

If you’re a little player, like a “Mom and Pop” operation, forget it. The costs of regulatory compliance are too high. If you can’t afford the lobbyists, you can’t play the game, and you get squashed.

That is why we need smaller, less intrusive, and more accountable government. We need to reduce the incentives for the big players to game the system and increase the chances for small players to enter the market. That way the benefits go to the best and the brightest, not the most politically well-connected.

Here is where liberalism fundamentally gets it wrong: government regulation of the market will never produce equality. It will only benefit the big players. If we want a more egalitarian and equitable society we cannot put in place barriers that keep the small players out. Glaeser is right, and the case for small-government egalitarianism is one that needs to be made now more than ever.

Why The Markets Are Scared Of A Blue Tide

Ed Morrissey finds that financial advisors are worried about a Democrat in the White House more than the housing bubble bursting:

[Advisors are] less concerned about recession than dealing with the economic policies of a new Clinton administration. They fear that a big increase in taxes will erode equity investments, especially given the proclivity of Democrats to target equity funds for new taxes to pay for their increased spending. Eighty-one percent feel that Democrats will raise capital gains taxes, income taxes, and dividends.

In the Financial Times, left-wing Representative Barney Frank gives them plenty of reason to be afraid. Rep. Frank wants to turn back the clock on 20 years of strong economic growth and wants to increase the regulatory strictures that threaten the future of the US economy:

Democrats believe that government’s role as regulator is essential in maintaining confidence in the integrity and fairness of markets, and we believe that economic growth alone is not enough to reverse unacceptable levels of income inequality. In the wake of the subprime mortgage crisis, credit markets round the world contracted sharply in response to concerns among market participants about the value of exotic and opaque securities being offered in largely unregulated secondary markets. This staggering implosion and its damaging and widespread reverberations make it clear that a mature capitalist economy is as likely to suffer from too little regulation as from too much.

The reality is that the US economy is highly over-regulated, especially in the wake of Sarbanes-Oxley, which created massive new regulatory structures without much consideration of their impacts. This is a global economy. Jobs which could be created here can just as easily be created in London, Dubai or Hong Kong. The more we add to the regulatory burden, the more incentives there are for companies to create jobs elsewhere. The more regulatory burdens put on small businesses, the lower job growth. The US has the second-highest corporate tax rate in the industrialized world—even socialist Sweden does not tax corporations at the rates we do.

With increasing unemployment and a falling dollar, the very last thing that government should be doing is adding more anchors to economic growth. There is an inverse relationship between burdensome regulation and economic growth. It is somewhat ironic that just as a center-right movement towards more economic freedom seems to be sweeping Europe that opportunistic politicians in the United States would be charting a retrograde course.

There are two major burdens to America’s future: one is regulation, and the other is a failing educational system. Politicians like Rep. Frank are making these problems even worse. It’s hardly surprising why financial advisors would fear a Democratic sweep in Washington: if the Democrats embraced such bad economic advice, our current economic problems could easily be just the beginning of the story.