Of Rule by Experts and Rule by Law

February 22, 2022 Leave a comment

Photo by Adam Szuscik on Unsplash

In the 1990s I was part of a congressional delegation to Argentina, when the Argentine economy was growing strongly and steadily, and inflation was low, the currency convertible 1-for-1 with the dollar.  Trade barriers were being lowered, commerce was booming.  I recall asking Argentines what could possibly darken what seemed to be a bright future.  They were quick to reply:  “Here in Argentina we have no rule of law.  You can have no confidence in getting justice from the courts.”  Not long after, political shenanigans to reward one part of the electorate by a transfer of wealth from others threw the Argentine economy into turmoil.  Momentary good policy is a tough path to walk across bogs of inadequate legal safeguards.  Freedom has rested upon rule by law rather than rule by men.

Fundamentally, the American Revolution was an assertion of the rule of law.  Most of the Declaration of Independence is a litany of abuse by the English rulers.  The Revolution was intended to take power away from man and men and rest it upon laws and rights, soon to be secured by the world’s first written Constitution.

The Progressive Movement, which thrived over a century ago, was a retreat, aggressively stepping backwards to the rule of men as an impatient alternative to the rule of law:  the Rule of Experts.  Their new view—really a very old view dressed up in modern rhetoric—was that there are benevolent experts, to whom we can safely yield our governance, for such understand the process of modern government better than ordinary people do.

It sounds akin to the ancient theory of Divine Right of Kings, that the worldly monarchs are chosen by God and invested with greater wisdom and perspective than the average man and woman.  To their benevolent expertise and fatherly care was entrusted the governance of the rest of us.

Today’s benevolent experts are invested by their colleagues with varieties of credentials certifying their expertise.  Not very democratic, they make no secret of their impatience with the Congress and other constitutional brakes on arbitrary authority.

Just as not all men are always just, not all men are reliably wise.  The American Founders thought to address this problem by the separation of powers, dividing political authority among three branches in the Federal Government and the States.

The current regulatory program rests heavily on the notion that benevolent experts should be entrusted with authority for the big questions and increasingly smaller questions, too.  It has evolved by progressively engulfing the constitutional separation of powers, merging legislative and executive—and often judicial—authority in “independent” regulatory agencies headed by unelected officials.  The unelected federal regulator writes the details of mandatory regulations, charges violators, assesses guilt, and applies penalties.

Professedly efficient, it does not work well in practice.  First, the regulators are not dispassionate umpires, limited to calling the balls and strikes.  They are also players in the game, having their own set of particular interests and incentives that they take care of first.

Second, reliance on benevolent experts assumes what is an unproven, undemonstrated level of knowledge, insight, and forecasting skills.  Regulators are not dumber than the rest of the population, but they are no smarter either.  It is just that life is too complex and the society of the living is proving too much to be run by any designated group of humans and their computers.

A third flaw is mission creep.  Even if the tasks are too great or require too much knowledge, insight, foresight, and other skills in unachievable degree, the regulators still take them on, with each failure met with calls to increase resources and power of the agency.  

An example is the Federal Reserve (commonly called the “Fed”), created with a specific and rather narrow purpose, to make enough funding available for the banking system in times of financial stress.  Before long, the Fed gained control of monetary policy and the practice of controlling interest rates.  Later, it was tasked with promoting maximum employment.  In 2010 the Fed’s role in supervising banks was enlarged to supervising any financial business considered to be systemically significant.  Each augmentation has drawn the Fed away from its narrow, objective task. 

This expansion of authority affects every business and every home.  The Federal Reserve is the world’s biggest rigger of interest rates.  Its prolonged policy of keeping short-term rates at or slightly above zero has resulted in penalizing all savers and those who live off of their savings, transferring trillions of dollars of wealth to borrowers, the biggest borrower being the Federal Government.

A partial but simple solution toward strengthening the rule of law and reducing exposure to the caprice of men would be returning to elected representatives the making of laws.  It is a messy process, exactly the messy process that the Founders intended to preserve freedom from the encroachment of arbitrary and oppressive government.  The regulators, which are theoretically part of the executive branch, should be limited to the duty of implementing the laws that the elected and accountable representatives make. 

If Congress were required to write the rules and mandates, and delegate only the implementation, the mandates of government would be circumscribed by the exposure of a legislative body held directly accountable for what it has wrought.  It is easy for legislators to complain about bad regulatory decisions, but too often, these are decisions that Congress never should have delegated to regulators in the first place.

Filed under bureaucracy, Congress, Constitution, Declaration of Independence, Federal Reserve, freedom, interest rates, progressives, rule of law, Supreme Court Tagged with , , , , , , , , ,

Of Platitudes and Political Attitudes

October 17, 2020 Leave a comment

Photo by Tim Mossholder on Unsplash

I am naturally optimistic.  So you will understand that I rejoiced to see several of my friendly neighbors, who sometimes disagree with me politically, place signs in their yards supporting positions consistent with the views of free market liberty-loving constitutionalists like myself.  That would appear to bode well for candidates in this election who also tend to trust markets, liberty, and constitutional rights.

I will confess that to some the signs might read like a public creed of platitudes.  Perhaps they are intended to present an impressionist attitude of some kind.  Here are the phrases, written in bumper sticker style.  See what you think.

To begin with, who could argue with the obvious truth that “Black Lives Matter”?  I personally know no one who does not naturally embrace the idea.  I do notice that those who in published media lionize the eponymous organization laying claim to the title reveal little material interest in the lives of black police officers, black small business owners, or unborn black children.  That may be why the lady running for Congress in Baltimore’s 7th Congressional District emphasizes that “all black lives matter.”

Next on the signs is the phrase, “No Human Is Illegal.”  That is surely the case in the United States as long as it remains a nation of law and order.  Things that some people do are illegal, but enshrined in the Declaration of Independence and the Constitution is the concept of individual worth.  The notion that people themselves can be illegal is reserved for socialist governments and monarchies, where large portions of the population can find themselves illegal.  That is a crucial reason why the American founders broke from the monarchy and why applying socialism here terrorizes lovers of liberty.

Third on the signs is the bromide, “Love Is Love.”  Surely it is.  Perhaps it appears because love is the core principle of many religions, such as Christianity, which rests on two commandments (also taught in the Old Testament):  Love God, and love your neighbor as yourself.  As Jesus taught, on these rest “all the law and the prophets.” (Matthew 22:40)  Jesus also taught that with the breakdown of law and order, “the love of many shall wax cold.” (Matthew 24:12)  I am thrilled that churches are being allowed to open again so that they might continue to teach their doctrine of love.

The phrase, “Women’s Rights Are Human Rights,” is given fourth billing on the signs.  That is absolutely true, even if it is violated in many parts of the world.  I am reminded, by my neighbors who have come to the United States from such nations where women’s rights are routinely violated, why I am grateful that my daughters and granddaughters live in a country where their rights are real and protected.

I am grateful that the signs include what is in danger of becoming a meaningless cliché, “Science Is Real.”  Our nation was midwifed by the enlightenment, a rejection of the medieval notion that scientific verities were determined by government or ecclesiastical agencies and votes of councils.  We are all indebted to courageous scientists who stood alone and refused to accept any scientific debate as “final,” who asked more questions that often led to better answers that have made mankind healthier, wealthier, and more flourishing.  May our nation of freedom encourage the continuation of that story.

The penultimate phrase on the signs is the prosaic declaration, “Water Is Life.”  I remember Barry Goldwater, Senator from Arizona, explaining to a skeptical Senate the importance of water rights.  There would appear to be a longtime tug of war in our government agencies about the importance of water management.  As with many important issues, relying upon our federal system of state and national interaction is most likely to give us the best management answers.  National mandates are likely to leave local communities dry.

The final phrase on the signs is the catchall, “Injustice Anywhere Is a Threat to Justice Everywhere.”  An unlimited aspiration, mankind has wrestled with it from the earliest times.  As this is to be an ongoing struggle of which we should not tire, the question is how best to proceed?  Our founders asked that question.  They recognized that arbitrary governments were the worst offenders.  The structure of liberty they established has fostered the multitudinous avenues for virtue that have not ceased to make progress in combating injustice.

I cheer such display of worthy attitudes of support for our nation’s growth in liberty.

By the way, there is a website where you may go to purchase these signs, $10 each.  Free enterprise is wonderful.

Filed under charity, Constitution, Declaration of Independence, freedom, individual worth, justice, markets, rights, rule of law, science, socialism Tagged with , , , , , , , , , ,

Of Presidents and Training for the Job, 2015

March 22, 2015 Leave a comment

More and more I have been struggling for the words to express my concern over the frightening incompetence of the current President of the United States. Barack Obama’s economic blunders deepened and prolonged the recession and bequeathed to us the most anemic recovery of modern times. Most of us have been seriously harmed by those policies, some more than others. Unfortunately, the extent of his economic errors are obscured by the benighted economic management in Europe, which amazingly is managing even to underperform ours.

President Obama’s politics have yielded the opposite of what he publicly promised: division in place of unity, secrecy and deception in place of open government, exclusion of those who disagree with him in place of inclusive embrace of open debate, privilege for the few in place of opportunity for the many, racial bigotry for political gain in place of a “post racial” society, rule by breaking laws and ignoring the Constitution in place of rule of law. I am sure that you could easily lengthen the list. Again, these perfidies have been to some degree obscured by congressional Democrat leaders far too willing to compromise their duties of office and the rights of the legislative branch of government, all to cover up and support the Obama Administration’s outrages on the nation and the political institutions of the Republic.

Most frightful of all, however, is President Obama’s dangerously bungling foreign policy. No friend of the United States is safe from this Administration’s blunders. Vladimir Putin, the boss of a second rate economic and military power—albeit one with a formidable nuclear arsenal—has been able to engage in 19th Century military adventures of invasion, conquest, and territorial acquisition against little more than vacuous bully talk from Obama, the emptiness of which has produced similarly pitiful responses from the leading Powers of Western Europe, derision from Moscow, and fear among America’s friends only recently escaped from the Soviet Union. China commits aggression against India and the Philippines, threatens Japan, and toys with close relations with Russia to isolate the United States, while openly engaging in cyber attacks on the U.S. government and American industry. Islamist barbarians increasingly brutalize Muslims, Jews, Christians, and humanists alike, undeterred by inchoate responses from Obama, who asserts leadership while failing to lead, other than with his transparent policies of pusillanimity and indecision. American allies in the Middle East feel abandoned or betrayed, while enemies are emboldened; the best counter strategy that Barack Obama is able to envision is a plan that might delay but will not prevent the nuclear arming of the mullahs of Iran—committed to the incineration of Israel, the more Jews killed the better. Each day seems to extend the list of foreign policy failures.

While considering the consequences of an amateur in the Oval Office, I came across a brief note I wrote during the 2008 presidential campaign. It might be immodest for me to point out how correct my warnings proved. I can make no claims to perspicacity, as all of this was rather obvious. No self congratulations are in order. It is too dangerous a world to trust the Presidency of the United States to one whose inexperience is only matched by his hubris. This is what I penned August 25, 2008, just before Barack Obama received the nomination of the Democrats:

There are some jobs you just cannot safely do without proper training and experience. Flying an airplane is one that comes to mind. Driving a bus is another. I would put being President of the United States in the Twenty-First Century on the list, too.

President of the United States was a tough job in the days of George Washington. It was even a challenge in the days of Millard Fillmore. It has not become any easier in recent years, and next year it will be a very big job. Considering the global responsibilities of the United States, with several irresponsible oil-drunk regimes threatening peace and freedom (ours and other’s) around the world, can we afford to enroll our new President in a foreign policy on-the-job-training program?

Economically as well, there is little room for error. So far we have gone through a year and a half of the housing market bust without falling into a recession. But our economic growth is anemic. A small false step or two can put us into a full-blown economic decline, exploding banking and financial markets that will then take years to recover. It is important that economic policy next year be led by someone who understands economic growth and how to promote it. The formula for growth—low taxes and steady prices—is well known to those who have learned the lesson; we do not need a novice who does not have enough experience to know that you cannot tax and spend your way to prosperity. We cannot afford his experiments with our jobs and livelihood.

That is why it is breathtaking that a major political party is on the verge of nominating for President someone so inexperienced as Barack Obama. I am unable to recall a single nominee for President, by any major party, less prepared for the office than Barack Obama. Really, there is the challenge for you. Name a nominee—Republican, Democrat, Whig, Federalist—less prepared than Obama.

Barack Obama likes to liken himself to Abraham Lincoln. I cannot claim to have known Abraham Lincoln or assert that he was a friend of mine, but I do say, Barack Obama is no Abraham Lincoln. Even liberal exaggerations of Obama’s undistinguished career cannot make it compare favorably with the long and grueling life experiences that schooled Lincoln for the White House.

In short, Obama does not have the training for the job. It may be that the Democrats’ talent pool is so thin that he will be nominated. But the job of President is too important—to all of us—to be extended to someone so unready.

Filed under banking, Barack Obama, bubbles, China, Congress, Constitution, deficit spending, economic depression, economic growth, elections, European Union, hubris, inflation, interest rates, international relations, Iran, Islamists, Israel, jobs, law, Middle East, national security, politics, racism, recession, rule of law, Russia, Soviet Union, taxes, Ukraine Tagged with , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Of Presidents and Derelicts

November 20, 2014 Leave a comment

Barack Obama is no fan of the Constitution. He has been known to criticize it for its focus on limiting government, for telling governments what they can and cannot do. He prefers a Constitution that focuses more on telling governments what they should do, at least telling governments to do what he would like, including seeing to the “redistribution of wealth,” or what he calls elsewhere “redistributive change.”

Of course, that is a mischaracterization. Not a mischaracterization of Obama’s views but of what the Constitution says. It does limit government, but it also gives government specific responsibilities and the power to exercise those responsibilities. Article I, Section 8 provides a very clear list of the federal government’s duties. It is noteworthy that those enumerated responsibilities and powers are in the Article that establishes the Congress. The list includes such things as providing for the common defense, borrowing and paying government debts, regulating foreign and interstate commerce, establishing standards for weights and measures, and so forth.

There are plenty of other provisions that limit the powers of the government and how it operates. The Constitution is a balance of governmental duties within a structure intended carefully to limit the government. As a limited government our Republic has prospered. It has struggled either when its duties were neglected (as in the days of President Buchanan, who did nothing while he watched state after state rebel from the Union) or when the limitations have been eroded (as we have witnessed through much of the twentieth century and in the first 14 years of the twenty-first).

The President has specific powers and duties, too, nearly all of which are carefully linked with the role of the Congress. For example, while the President does not make the laws—Article I, Section 1 gives “All legislative Powers” exclusively to the Congress—the President is authorized to make proposals to Congress and has the authority to veto legislation (but not change it) that Congress has approved. Once an act of Congress becomes law, the President then has the explicit obligation to, “take Care that the Laws be fully executed” (Article II, Section 3).

Note the words, “fully executed”. The President takes an oath to fulfill those duties, and nowhere in oath or Constitution is the President authorized to execute the laws only as much as he likes or agrees with them. Once something has become a law, the President may not set aside this or that part of the law or decide that he will only enforce the law so far. His obligation is to take Care that the laws are fully executed.

Average Americans may not like this or that provision of law, but we are not at liberty to ignore any law that applies to us just because we do not like it. The President is not exempt from that common responsibility of all citizens, either. As the chief government executive, who sought to hold his high office of public responsibility, he is even more obligated not only to obey the laws but to execute them, fully. The President may not make the laws, he may not amend the laws, he may not change the laws, and he may not disregard the laws. His duty is to execute the laws, and when he does not he is derelict in his duties.

This is all in accordance with the important division of labor, the separation of powers that the Founders put into the very structure of the Constitution to combat the tendency of all humans to abuse power once it comes into their hands. By dividing the power of government among three separate but coequal branches, dividing legislative power even further between House and Senate, and yet again separating government power between federal and state governments, the Founders went to clear and elaborate lengths to create checks and balances.

Under the American system of government no branch, no person, no group of people in government, are to be able to do very much on their own without getting the other elements of government to go along. Where they are not able to agree, where there is no consensus, for the safety of our freedoms government is prevented by constitutional law from moving forward unless substantial consensus among the different branches can be reached. Those checks and balances again and again, throughout the more than two centuries of our Constitution, have forced the very human people in government to revisit their differences and come to terms with one another, however much they may disagree and be disagreeable. There is safety for you and me in that. And it helps keep our Union together, repeatedly forcing our leaders (and the parts of the nation that they represent and whose authority they exercise) to work with one another, like it or not.

Recently, President Obama has expressed impatience with the Constitution’s checks and balances. After all, he personally, in and of himself, embodies an entire branch of government. The other branches, Congress and the courts, have many different people with a messy variety of ideas. President Obama complains that Congress cannot decide what it wants to do as quickly as he can. In his view, why wait?

By design, Congress of course has something of a multiple personality. It is a gathering of elected representatives, reflecting the diversity of views among the people of the nation. Appropriately, it takes time to build a consensus that accommodates those views, as it should. But President Obama cannot wait. He sees the need to accommodate no ideas other than his own. He has decided that on this issue or that—today it is immigration laws—there is a limit, defined by himself, as to how much time Congress can take to consider things. When time is up, he, the executive branch, will take the matter into his own hands, and pretend to the authority to do it.

His tool of choice today is to abjure his duty to execute the laws fully and instead to execute them partially, just to the extent and manner that suit his own desires, as he engages in another round of redistributive change. That he is endeavoring to violate rather than execute our national, founding law, and his constitutional oath of office, apparently does not trouble him. It is the Constitution itself that troubles him.

But from where does he think he gets his authority to do anything. When he breaks the Constitution, does he not break his very authority to act in the office that the Constitution created?

Filed under Barack Obama, Civil War, Congress, Constitution, courts, duty, federalism, freedom, government, House of Representatives, immigration, law, republics, rule of law, Senate, tyranny Tagged with , , , , , , , , , , , , , , ,

Of the Meaning of “Still” and the State of the Union

May 7, 2014 Leave a comment

These thoughts, first published almost a year and a half ago, still seem pertinent today.

Notice how frequently these days when discussing the state of the American union, or any parts thereof, people rely upon the word “still.” That is a bad sign. When someone says, “I am still able to see my own doctor,” he or she implies that continued access is in doubt. Rather than reassuring, it insinuates caution and reveals anxiety. What do you hear when someone says, “At least I am still married”?

You do not commonly hear people using “still” in connection with things that they are sure of. If a baseball player boasts, “I can still hit the ball out of the park,” is he likely to be in his prime or in the twilight of his career?

Allow me to offer for your consideration a dozen recent objects of STILL in public discourse about the condition of the nation:

  • The United States is still the largest economy in the world.
  • The United States still has the strongest/best military in the world.
  • The dollar is still the world’s reserve currency.
  • The United States still is a free country.
  • America still is the land of opportunity.
  • The Supreme Court still can be counted on to defend the Constitution.
  • By hard work and best effort you still can become anything you want.
  • My children will still have a better life than I have had.
  • My children will still live in a bigger house than the one I grew up in.
  • In this country you can still get the best healthcare.
  • America still has the deepest, most liquid, and efficient financial markets.
  • At least the air you breathe is still free.

Undoubtedly, you can think of more for the list. Then, there are some things we do not hear people saying “still” about any more:

  • America is the best place to get an education.
  • Americans make the best cars.
  • I can freely speak my mind.
  • I can trust what I hear or read in the “news.”
  • You can count on the elections not being rigged.

I forbear going on. You can add more if you wish. There are some topics where the doubt is too palpable for people to venture “still” in their expressions.

If we leave the discussion at that, then we have a sad commentary on the sad state of the union. The expression of “still” in our conversation can reveal a desperate clinging to the past with a forlorn wish that things will work out for the future, without doing the good works to make the good future happen.

I would suggest, though, that “still” can also mean “not over,” or “not gone.” We need not settle for “still” and do nothing about it. That which we value can be reclaimed from assault and reinforced, the erosion stopped, the tide turned. After all, John Paul Jones is famous for winning a naval battle from the deck of his sinking—but still afloat—flagship, because he used it as a platform from which to regain what was lost. “I have not yet begun to fight!” is still part of the American heritage.

(First published February 10, 2013)

Filed under America, Constitution, courage, education, elections, environmentalism, exceptionalism, freedom, healthcare, money, rights, rule of law, Supreme Court, tyranny Tagged with , , , , , , , , , , , , ,

Of the Soviet Union and the European Union

April 8, 2014 Leave a comment

Do you remember when the Soviet Union disappeared? Do you recall how and why? I hope that Vladimir Putin does. An accompanying question that needs to be considered is, why is Ukraine so attracted to the European Union?

To answer the first question briefly, we have to turn our attention to the final days of the old USSR, then led by Michael Gorbachev. Russia, the largest member of the 15 “Republics,” was led by Boris Yeltsin. Under Yeltsin’s leadership, Russia chose to withdraw from the Soviet Union. He said that Russia was weary of carrying the burden—economic, military, and otherwise—for the others. Russia just left, and after a brief try there was nothing that Gorbachev could do to make Russia stay. Without Russia, there was not much left to the Soviet Union, and the other members said “enough,” too. The Soviet Union was gone with hardly a whimper and little lamented except by the class of privileged communist leaders.

The word is that current Russian President, Vladimir Putin, wants to put the band back together, that he wants to reassemble the old Soviet Union, with the coercive influence of the Russian military as his chief tool. Not that he wishes to recreate the communist paradise of Lenin and Stalin. His vision reportedly reaches back to the great days of the czars—though presumably without the trappings of monarchy and royalty. Putin is through and through a Russian, so he wants to recreate a Russian Empire. Continuing along the path that he has set out, the path of creating an empire of the czars after the mode of the Caesars, he is unlikely to succeed. Been there. Tried that. Did not work.

It is hard to understand why Putin would choose that model. Why would he want to deal himself and the Russian people a losing hand? The Russian-dominated Soviet Union, assembled by the Red Army, failed. It did not fail because the Soviet leadership did not try hard enough, or was stingy in expending resources, or showed too little military muscle, to hold it together. It failed because—as Yeltsin recognized—it was costing too much to hold it together, draining too much life from Russia. The USSR was a bankrupt model (morally and financially) for building an empire, especially for keeping an empire. There were not enough hands to hold on tight to everything and everyone.

Perhaps Putin figures that without the burden of communism a strong Russian government could hold and control successfully where the commissars could not. In other words, he would reject the model of Soviet communism and embrace the model of a modern non-communist authoritarian regime, like the Third Reich. That one did not work so well, either.

There is a model available, tried and tested, that would work. It would unleash the power and greatness of the Russian people and at last make the most of the amazing resources of the Russian land. The results would exceed by far even the exaggerated dreams of czars and commissars. Does Putin have the vision?

I refer to the model of freedom, only briefly known to the Russian people, only occasionally offered in limited experiments, experiments that were always wildly successful, surprising only to the governmental leaders who tried them and then abandoned them, frightened by the successes. Applied boldly, we would see a Russian miracle that would change not only Russia but the world—all for the better. Free men and women, operating in free markets, protected by the rule of law enshrining individual rights, erected on the foundation of a constitutionally limited government, would be a model offering limitless growth and prosperity. Moreover, the variety of peoples and cultures in a land as vast as Russia could be recognized and accommodated, attracted and joined together, within a strong but genuine federation, united by the ties of thriving national markets, reassured by the rule of law supported by a just and independent judicial system to safeguard fundamental rights.

A dream? Perhaps it is, but a realistic one. This offers the answer to the second question. Why is Ukraine attracted to the European Union? Does not the European Union offer just such an option? Is not the economic prosperity and individual freedom—and room for national expression—found in the European Union obviously different from the offering of today’s Russia and the memory of the old empire? Is it not fear of the specter of the czars and commissars that haunts Ukrainians?

Was not the creation of the European Union once just such an impossible dream as a truly free and just Russian federation? For hundreds of years the fathers and mothers of the peoples of the European Union made war, large and small, upon each other, French against Germans, Germans against Austrians, Austrians against Poles, Poles against Germans, and round and round again. Today such wars among these same people are unthinkable.

Assembling such a federation takes time, patience, and skill. It may be too tempting for an impatient Putin to rely on his military muscle to make an empire. Perhaps for a brief time he could succeed by force to reassemble much of the old Soviet Union as a greater Russia. The greater challenge, the one that has proven impossible, is to hold such an empire together by force.

Such empire of force would very soon prove ungovernable, with rebellions large and small flaring up constantly. The brutality exerted to try to hold it all together would make the task of unity even harder and progress nigh impossible. It would drain away, once again, Russia’s strength in an unending effort, just as it eroded the strength of the USSR. Maintaining greater Russia by force has always proven a burden far greater than its worth, in the long run a losing effort that has collapsed in a weaker and vulnerable Russia. World War I was one example, the end of the Cold War yet another.

The people of Russia—along with its neighbors—can have a better and brighter future. A Russia built on individual freedom, free markets, free peoples, would unleash a new era of prosperity. Russia would become a beacon of wealth and success, with all Russians participating. Instead of Russians leaving to find their future, they would return to their homeland. If Japan can prosper on islands scarce in natural resources, imagine what free Russia could do, rich in resources, harnessed efficiently by the discipline of the markets.

Instead of an empire of force, a free and flourishing Russia would draw its neighbors to it as the European Union beckons to them today. No longer facing Russian fists, neighboring nations will come knocking at the door, eager to associate with Russia voluntarily, attracted by opportunities for betterment.

Of course, that is the theory. In practice, the more that Russia seeks the path of freedom and abandons the chimerical lure of military conquest, it will succeed. Russia would then achieve its real greatness in the world, the only way that it ever really could.

Filed under communism, economic growth, European Union, federalism, freedom, markets, military, prosperity, rule of law, Russia, socialism, statism, Ukraine

Of the Rule of Law and the Separation of Powers

March 27, 2014 2 Comments

In the 1990s I was part of a congressional delegation to Argentina. At that time the Argentine economy was growing strongly and steadily, inflation was low, the currency was pegged to the dollar, convertible 1-for-1. Trade barriers were being lowered, commerce was booming. I recall asking Argentines what could possibly darken what seemed to be a very bright future. They were quick to reply: “Here in Argentina we have no rule of law. You can have no confidence in getting justice from the courts.”

That reminded me of Washington Irving’s observation on a European judge, from his famous work, The Alhambra:

It could not be denied, however, that he set a high value upon justice, for he sold it at its weight in gold.

Not long after that visit, the politics of income redistribution and confiscation threw the Argentine economy into turmoil, where it has remained.

I recently spoke with an economist friend of mine, who was waxing eloquent about the attractive monetary and tax policies in Bulgaria. I remarked that this would probably invite foreign investment. He replied, “No, there is no rule of law there.”

The point is that good economic policy cannot long survive inadequate legal safeguards. Many businesses that made major investments in China, attracted by a market of a billion people, have learned that the lack of a reliable legal and justice system in China has undermined much of the business value they thought to find. A similar story has been holding back investment and economic development in Russia.

Bringing that home, I would venture that concern for changing rules (or even lack of rules)—the substitution of arbitrary bureaucratic powers in Washington over objective rule of law—has been inhibiting more robust investment in the United States, a major cause for our current anemic economic recovery.

An ancient king in the Western Hemisphere, named Mosiah, warned, “because all men are not just it is not expedient that ye should have a king or kings to rule over you.” (Mosiah 29:16) Because men are not consistently just, freedom has historically rested upon rule by law rather than rule by men.

Fundamentally, that was the very reason for the American Revolution. Our revolution was based on the rule of law, an assertion of the rule of law, a response to violations of the rule of law by the English king and parliament. Most of the Declaration of Independence is a lengthy litany of violations of law by the English rulers. The Revolution was designed to take power away from man and men and rest it upon laws and rights, soon to be secured by a written supreme law embodied in the Constitution. Any erosion in the force and effect of the Constitution is an erosion of the rule of law and of the freedoms that rely upon law for their defense.

The Progressive Movement that thrived about a century ago, and found a major advocate in the federal government in President Woodrow Wilson, aggressively proposed an alternative to the rule of law. This program was the Rule of Experts. Their new view—and it really was a very old view though they dressed it up in modern-sounding rhetoric—was that there are Benign People, Experts, who know the process of modern government better than most people do, to whom we can safely yield governing authorities.

It sounds akin to the ancient theory of Divine Right of Kings, that the monarchs of the world are chosen by God and endowed with greater wisdom and perspective than the average man and woman. To their benign expertise and fatherly care was to be entrusted the governance of the rest of us.

The modern Rule of Experts people have much the same view, that these experts were endowed by their universities and other sources of expertise with ability far above that of most, and it would be wise to trust ourselves to their benign care. Not very democratic, and in fact these Benign Experts make no secret of their impatience with the Congress and other constitutional brakes on arbitrary authority.

As King Mosiah wisely pointed out that men are not always just, it is also appropriate to recognize that putting men in government does not make them any more reliably wise than the rest of us. The American Founders thought to address this problem by dividing political power among not only three branches in the Federal Government but also by embracing the federal system of dividing government with the States.

The current regulatory structure and program of the United States rest heavily on the idea that Benign Experts should be entrusted with authority for many of the big questions facing Americans and for many of the much smaller questions, too. That is certainly the structure of the Dodd-Frank Act, to offer one recent, prominent example among many.

Charles Calomiris, of the Columbia University business school, described the theory of the Dodd-Frank Act and related regulations this way:

The implicit theory behind these sorts of initiatives, to the extent that there is a theory, is that the recent crisis happened because regulatory standards were not quite complex enough, because the extensive discretionary authority of bank supervisors was not great enough, and because rules and regulations prohibiting or discouraging specific practices were not sufficiently extensive.
(Charles W. Calomiris, “Meaningful Banking Reform and Why it Is so Unlikely,” VoxEU, January 8, 2013)

This program of federal regulation has been imposed increasingly in contravention of the basic constitutional principle of separation of powers, by merging legislative, executive, and judicial authority in “independent” regulatory agencies. The unelected federal regulator today decides the details and specifics of binding mandates, identifies violators of those regulations, assesses guilt, and applies penalties.

Taken together our current regulatory system, by merging rather than maintaining the separation of powers of the Constitution, is eroding the rule of law. It is returning us to the age old practice of rule by men, with all of the potential for abuse of rights and freedoms, abuses that fill up most of the sadder pages of human history.

During the debate over the creation of the new financial consumer Bureau, Senate Banking Committee Chairman Dodd boasted that with this new agency people would no longer have to come to Congress for the enactment of new consumer laws. The Bureau would take care of all that.

There are serious operational flaws—too often overlooked—in the program of governance by Benign Experts. First, the regulators are not dispassionate umpires, limited to calling the balls and strikes. These umpires are also players in the game, the federal agencies each having their own set of particular interests and incentives that they take care of first.

Second, reliance on Benign Experts assumes an unproven, undemonstrated level of knowledge, insight, and forecasting skills. AEI President Arthur Brooks, in his book, The Battle, provides one of many examples of this flaw:

Federal Reserve economists were still forecasting significant positive growth and moderate unemployment in May and June 2008. They believed that economic growth in 2009 would be 2.4 percent, and unemployment would be 5.5 percent. What we experienced instead was negative growth, double-digit unemployment, and the destruction of at least $50 trillion in worldwide wealth. No one can get the numbers exactly right, to be sure. But getting them this much wrong certainly lends a whole new meaning to the expression ‘margin of error.’
(Arthur C. Brooks, The Battle, p.46)

It is not that regulators are dumber than the rest of the population, but they are no smarter either. The regulatory problems are increasingly too great for any designated group of humans to solve.

Third flaw, mission creep: power attracts power. Even if the tasks are too great, require too much knowledge, insight, foresight, and other skills in unachievable degree, the regulators still take them on, especially if the task increases the reach and influence of the agency.

I offer two examples from an example-rich environment.

Basel III capital rules started from a simple idea, that banks all around the world should be subject to the same capital standards. Capital (the financial cushion a bank carries against losses) is one of the three key elements of sound banking, the other two being liquidity and earnings. These international rules did not remain simple. Developed by an international team of experts from around the world, who labored on them for years, the rules number hundreds of pages, affecting the entire financial structure and business model of a bank, any bank. Congress was not involved and has no particular role in approving the rules. When exposed to public review they attracted thousands of comment letters expressing dismay that they are a bad fit for the U.S. economy. In the end, though, the regulators can go ahead with what they alone think is best.

A second example would be the Federal Reserve. One hundred years ago this year the Fed was created with a specific, identifiable, and rather narrow purpose, to provide liquidity for the banking system in times of financial stress. Before long, the Federal Reserve gained control of monetary policy and built up the practice of controlling interest rates. Later, it was given the task of promoting maximum employment. Under Dodd-Frank the Federal Reserve’s role in supervising banks and bank holding companies was expanded to supervising any financial business considered to be significant for financial stability. Each of these powers has drawn the Federal Reserve away from its narrow, objective task, to broad fields of subjective authority.

Perversely, this expansion of authority into more judgmental areas is eroding the independence of the Federal Reserve, making it yet one more political player in Washington, with responsibilities that far exceed human ability to fulfill, but which reach to every business and every home. The Fed’s prolonged policy of keeping short-term interest rates at or about zero has penalized all who save and live off of their savings, transferring trillions of dollars from savers to borrowers, the biggest borrower being the Federal Government, a policy decided by a small group of Washington experts.

I offer a partial but simple solution to point us back toward strengthening the rule of law and reducing our exposure to the rule of man and men, however expert they might be. Return the lawmaking and the policy decisions to the elected representatives. It is a messy process, but exactly the messy process that the Founders intended to preserve freedom from the encroachment of arbitrary and oppressive government. The regulators, which are theoretically part of the executive branch, should be left with the duty of implementing the laws and policy decisions that the elected and accountable representatives make.

If Congress were required to write the rules and mandates and delegate to the executive agencies only the execution, the mandates of government would be circumscribed by the limitations of a legislative body forced to be directly accountable for what it has wrought. It is easy for legislators to complain about bad regulatory decisions, when all too often these are decisions that Congress never should have delegated to regulators in the first place.

We would still have laws and regulations, but the laws might be more direct and specific, and perhaps fewer and surely smaller. We would probably not have Dodd-Frank Acts that number thousands of pages read by no congressman or Senator, containing a cacophony of half-baked ideas and multiple solutions to the same problem, all left for the regulators to sort out.

And legislators might recall this caution, from Thomas Paine:

Laws difficult to be executed cannot be generally good.
(Thomas Paine, The Rights of Man)

(First published February 17, 2013)

Filed under Argentina, banking, bureaucracy, Congress, Constitution, Dodd-Frank Act, Federal Reserve, federalism, freedom, government, interest rates, knowledge, law, progressives, rights, rule of law, Russia, statism, systemic risk, tyranny, Woodrow Wilson

Of War and Virtue

March 3, 2014 4 Comments

One hundred fifty years ago the United States remained divided in a brutal war of rebellion. Rather than unusual, such convulsions are typical in the establishment of representative republics. It does not come easy for a population new to a republic to embrace in practice the idea that matters of life and wealth should be resolved by votes. It seems that the age old recourse to arms and blood has to be tried again a time or two before people, who have only experienced more abusive government, come to accept that ballots and representation, enshrined in the rule of law, are a better way of deciding a society’s important issues.

One hundred fifty years ago, in 1864, the people of the young United States were still learning that painful lesson. But the instruction was nearing its end. Back in July of 1863, at Gettysburg and Vicksburg, the outcome of the war became inevitable. The rebels of the southern states were going to lose, constitutional government of the United States was going to succeed. The only chance for the rebels would be if the loyal people of the nation lost their determination to persevere to reunite the nation and reaffirm the constitutional republic. Often that seemed in the press to be an iffy question, but in reality the republican will remained strong. The hundreds of thousands who sacrificed life and limb in the field of war, in an overwhelmingly volunteer army (the number of drafted soldiers remained relatively minor), testified to that determination.

In the winter of 1863-64 U.S. soldiers in the field reenlisted in large numbers. Throughout 1864, and into the Spring of 1865, many thousands more would die, but the battles were becoming increasingly futile for the rebel cause, little more than adding to the destruction and suffering that rebel commanders were pulling down upon themselves and their fellows and families in this national lesson in self-government.

For the rebel soldier, experiencing defeat after defeat to his regiment, his corps, or his tattered army—with only occasional respites and temporary successes—it all may have felt pointless. The high and growing rate of desertion from rebel armies in those days suggests so. The historian comes to this point in the conflict and is tempted to describe the remaining rebel heroics and gallant but failing defenses as futile, the casualty lists a bloody tally of worthless and wasted sacrifice—particularly for so ignoble a cause as breaking up the best form of government on the earth at the time.

From the perspective of the rebel “cause” it was pointless, the continued bloodshed and destruction a burden for which the rebel leaders—in the rebel government and at the head of the rebel armies—will surely have to give an accounting before the Judge who weighs the doings of nations and those who lead them. Does that mean, therefore, that the daily struggle of the individual rebel soldier was meaningless? His effort could not change the outcome, only affect in some small way its overall cost.

And yet, throughout 1864 and to the end of the war, there were meaningful and often pitched battles fought on every field of action. The battles to which I refer echo a passage from The Book of Mormon written almost two thousand years before, describing an ancient American people after a very long war:

But behold, because of the exceedingly great length of the war between the Nephites and the Lamanites many had become hardened, because of the exceedingly great length of the war; and many were softened because of their afflictions, insomuch that they did humble themselves before God, even in the depth of humility. (Alma 62:41)

War, on a very personal level, appears to accelerate moral development. Individuals become more virtuous or more evil more quickly than they might under more peaceful conditions.

I believe that for the individual rebel soldier, as for perhaps every soldier, the real battle was his own, and in the end it was the most important battle with the most long-lasting consequences. Abraham Lincoln understated that the world would “little note, nor long remember” his speech at the dedication of the Gettysburg National Cemetery, though he perhaps correctly predicted that the world would never forget the great battle fought there.

In the full scheme of things, in terms of what really matters in the eternal worlds after this temporary one is rolled up and its purposes completed, the individual battles fought by each soldier on each side will be recognized as far more important than the whole Battle of Gettysburg. The battle of armies is a temporary one. The battle fought by each soldier, whether he exercises virtues or chooses vices, is the more permanent, the one that has never ending consequences. The battles of freedom were fought in recognition and preservation of these more important personal struggles we all have.

In the battles of 1864 and 1865 of the American War of the Rebellion the rebel soldier could not change the outcome of the war. But in each case his own personal triumph or defeat was there to be etched into his character more permanently than the scars of bullet and saber in his flesh.

As my son has often reminded me, everyone who fought in the Civil War died. And all of them lived. So must we all die, and yet we will all live again where there is no more death. By the time each of us leaves mortality, each must face and fight his battles, the ones that really matter far above those recorded in the history books of the world.

Filed under Abraham Lincoln, choice, Civil War, civilization, Constitution, death, elections, freedom, government, individual worth, military, morality, perseverance, rule of law, sacrifice, The Book of Mormon

Of Closed Governments and Coming Together

January 9, 2014 Leave a comment

Battered and bruised and stretched and torn, our Constitution still has life in it. One of its central principles is that no one person can do much by himself in Washington, for good or ill. We are watching that play out in this year’s appropriations process. We see that it is impossible for one man, the President, to make a new law. It is similarly impossible for one House of Congress, whether Senate or House of Representatives, to do so alone.

Under the Constitution, all appropriations bills must originate in the House of Representatives, where they are given their initial shape and substance. Next, the Senate must concur or amend. If the Senate chooses to amend, the bill goes back to the House, which can either agree to the Senate amendment, disagree, or disagree with a further amendment. If there is disagreement, representatives from House and Senate can meet to resolve those differences. If they do and succeed, then each House, first one and then the other, passes the bill, after which it is sent on to the President.

It is still not a new law. According to the Constitution, the President may not amend the bill that has passed both Houses of the Congress. He can choose to sign it, making it a law. It does not become a law unless he does. He can choose to veto it. In the latter case it goes back to the Congress, where it can only become law if both Houses override the President’s veto.

I lay this process out in some detail, because to listen to the institutional media and most of the pundits you might think that they have all forgotten, or never learned, how the constitutional process of making laws works. It is not an easy process. In fact it was meant to be difficult. Some seem to wish it were easy, at least for enacting the policies that they favor. They would wish to make one or more constitutional parties to law making redundant and of no separate account or purpose other than to do the will of their favorite other. They should, instead, take comfort that it is easier to defeat policies that they oppose.

The genius of the Constitution for making laws is that it requires three separate parties of people, sometimes with very different views, to come together to make anything a law. The Founders made it difficult because they were not very fond of new laws. They knew that an abundance of laws could mean a scarcity of freedom. And so it is today, but it has taken over 200 years to build up the awesome pile of laws that regulate so much of our lives, and yet it still is harder to make a new law than many would wish.

Our Constitution requires that a lot of people have to work together to make a new law. When they do not, nothing happens. That is why much of the federal government has run out of money and has “shut down.” A new law is needed to appropriate the money for these shuttered parts of the federal government to open.

They will continue to be without operating money until the elected representatives in the House and Senate and the President work together to make a new law. The Constitution forces them to work together. Nothing will happen until they do, whether that takes a day, a week, or longer. The Constitution requires sufficient cooperation for law making. For either House, or Senate, or President to be able to make laws without the other would impose the tyranny of one set of views over the rest. The Constitution will not allow that. The Constitution forces a meeting of the minds, either by persuasion or by compromise, or in practice some of both.

The Constitution is a beautiful thing. I rejoice in it. I can be patient for a while as it does its work and forces our elected leaders to come together. The issue is not keeping parks open. The issue is preserving our freedom and our society. The Constitution still has some power to do that.

(First published October 1, 2013)

Filed under civilization, Congress, Constitution, freedom, government, House of Representatives, law, media, patience, rule of law, Senate, tyranny

Of Washington and the Life of the Nation

November 22, 2013 1 Comment

Washington, D.C., is a strange place. I speak from experience. My whole working career has been in Washington. In many meetings with people visiting Washington I have explained to them that Washington is not America. Few have been surprised by the remark. In many visits away from Washington (and in connection with my work I accept nearly every invitation to leave town and be among those whose lives too many in Washington try to run) I am ever and powerfully reminded how different the rest of America is from Washington. I have not been surprised. Kansas City is much closer to America than Washington ever was or will be.

In support of the point I offer a few painful examples. I see one each day that I drive into the city. Looking at the cars around me I note that very few are more than a few years old. At the same time I am impressed by how many of the cars are foreign luxury models. It is typical, when paused at a stop light, to notice that many of the surrounding cars are BMWs, Mercedes, Lexus, Acuras, Audis, and not an insignificant number of Jaguars, high end Range Rovers, and Porsches. I also see a lot more Prius cars and other hybrids. This is not to say that there is anything inherently wrong with driving any of these or any other late model high-priced cars. I merely note it as very different from what I see when paused at a typical traffic light in other cities and towns in America.

As an aside, I am grateful to the people who buy and drive a Prius or other model of hybrid, because they subsidize my purchase of gasoline. Their cars do use less gasoline (though not enough less to compensate their owners for paying so much more for their cars), leaving more for people like me who drive regular gasoline-consuming vehicles. That reduction in gasoline demand helps reduce the price.

The Prius drivers might be offended were I to tell them, however, that I am entirely unimpressed by their conspicuous token of environmental sensitivity. Their purchase and operation of a Prius, after all, is very likely more harmful to the environment than is my more conventional automobile. First of all, they pay $10,000 or more extra to buy their hybrid, and if the price system works at all efficiently that means that making a Prius or other hybrid consumes far more in resources than making a conventional car. Second, the hybrid car fans and their coteries in the D.C. area have convinced the masters of the highway networks to create special less-traveled commuter lanes that the hybrid drivers are permitted to use, meaning that they reduce the efficiency of the highway infrastructure. So, to the Prius drivers of the world I say, thanks for the subsidy, but save your enviro lectures for when you are looking in the mirror.

The automobiles of the nation’s capital region are a sign of an even more painful reality of how Washington is different from the rest of America. It is also the wealthiest part of the nation, by far. On April 25, 2013, Forbes magazine published an article about the richest counties in the United States in terms of average income (Tom Van Riper, “America’s Richest Counties”). Six of the ten richest counties are in the Washington, D.C. region, including the top two and one more out of the top five. While recession lingers in the rest of the nation, Washington and its suburbs are doing rather well, with unemployment down to 5.5%, well below the national average.

I will also say that I am not opposed to wealth and wealthy people. I wish all of the world to be wealthier and rejoice that it is far wealthier today than people of just a few generations ago could have dreamed. But we could all live so much better still. I ache that the policies of governments around the world stifle economic growth and development and hold so many of their people down in poverty. The poor nations of the world are not poor because their people are less talented and intelligent than others, but because their governments are so oppressive and have been for generations.

Therein lies my beef with the wealth of Washington and its environs and the key to its estrangement from America. That wealth is hard to explain from the perspective of value added to the rest of the nation. Washington is basically a one-company town. Unlike other one-company towns, however, it produces little that adds enough value to the lives of others that would allow it to prosper in open competition in free markets. The product of Washington instead is forced upon the rest of the nation, whose productive income is confiscated to keep the Washington wealth-eating machine going.

Try to name an economic product or activity that is not somehow subject to special handling by or permission from someone in Washington or controlled from Washington. After the Dodd-Frank Act, for example, all financial activities have become more subject to direction by Washington bureaucrats than ever before. Today, a bank has to pay more attention to its regulators than it does to its customers. Who gets the best attention out of that arrangement? The same is true for energy producers, communications firms, health care providers, and you can continue the list. All that special handling comes with a toll, payable in taxes, or borrowed from the financial markets, or layered upon private incentive and individual initiative. Today in Washington the most convincing argument for new rules and laws is to announce that something is “unregulated.” When you regulate liberty, how much liberty survives? How much of America survives?

Next year, 2014, will mark the 200th anniversary of the burning of Washington by the British in the War of 1812. The curious thing about the burning of Washington was that it did not make a lick of difference. The rest of the nation went on about its business, little harmed or even affected. The same was true during the Revolutionary War when the British occupied Philadelphia. Rather than end the war it did nothing to bring the British victory. In America the nation was not run by its government, and in fact government was mostly irrelevant to the daily life of the people. That was very different from European experience, where nations were so dominated by their rulers that capturing the capital was tantamount to beheading the country.

Washington is strange to America. That can be tolerable, but only if it is smaller and less significant. Let the real nation draw its life from the people and live where they live their lives without direction from their rulers. Let us have a Washington whose disappearance would not mean much to the rest of the nation.

(First published May 18, 2013)

Filed under America, banking, Dodd-Frank Act, economic growth, environmentalism, exceptionalism, federalism, freedom, government, poverty, productivity, rule of law, socialism, statism, taxes, tyranny, Washington, wealth

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