October 8th, 2014

I Once was Lost but Now am Found

I had the privilege of serving as a substitute preacher for Brian Phillips and filling the pulpit last Sunday at Holy Trinity Reformed Church in Concord, NC. My sermon was on Luke 15, which contains the parables of the lost sheep, the lost coin, and the lost son (better known as the prodigal son).  I have included a link to the sermon below. I may share some of the insights from preparing and studying the text as separate posts in the future.

 

April 19th, 2014

How the state ruins everything: Regulations

All Americans have been bombarded with the narrative from about the time they could talk: there are evil businessmen out there everywhere, so we need government regulations to protect us from them.  This is taught in various ways at all levels of government schools, and almost as ubiquitous in mainstream entertainment as the regulations themselves.  (When isn’t the villain in a Scooby Doo mystery the evil businessman?) The narrative is rarely examined because it makes sense to most people at face value.  Therefore we let the various levels of government regulate everything, from the precise chemical composition of our motor vehicle fuel, to the size of our toilet bowls. Government regulators tell employers who they can hire (child labor regulations, regulations about labor organization, immigration regulations) for how much (minimum wage regulations), and how long (occupational safety regulations).  But the narrative making sense at face value is not an adequate substitute for taking a critical look at it.  What if in practice the regulations actually accomplished the opposite of what the average person thinks they do?  What if those regulations, and all regulations dating back beyond the so-called “Progressive Era” were actually crafted by agents of the evil corporations to advance their own ends?  After all, what’s more evil than using force and coercion to achieve your business goals?

The Validity and Place of Regulations

The Bible has all kinds of regulations and commandments for how people ought to live their lives in obedience to God.  Here are a few examples of these regulations:

  • Work six days and rest one (Exodus 20:8-11)
  • Do not lend with interest to the poor (Leviticus 25: 35-38)
  • Do not wholly reap the corners of the field when harvesting. Leave the gleanings for the poor and the stranger. (Leviticus 19:9-10)
  • Do not use unjust weights and measures (Deuteronomy 25:13-16)
  • Do not muzzle an ox when it is treading out the grain. (Deuteronomy 25:4)
  • Give a tithe of your increase. (Deuteronomy 14:22-27)

With the exception of Sabbath-breaking in Israel, none of these regulations carried a civil penal sanction.  Rather, those that failed to keep God’s commandments fell under the judgment of the Triune God.  You will reap what you sow, and unlike a petty bureaucrat, God won’t look the other way and take a bribe.  Because God will judge all men and women on the last day, the primary form of regulation in the Bible is self regulation, not coercive external government regulation.  If you believe (like I do with good reason) that the God of the universe is sovereign over every aspect of history, including the uncertainty of entrepreneurial activity, the fact that God has revealed the right way to do things is enough.  There is no need or value for the government to add additional coercive regulations to God’s law.  The remainder of this article will be devoted to convincing other people who don’t share my biblical absolutism that government regulations do more harm than good, and that the unhampered free market provides the best regulatory system.

Who is doing the regulating?

Most people support or reject legislation based on the title of the bill and the sound byte of a politician being carefully and wilfully distorted through the lens of pro-regulation media.  I will link here to a recent example of a typical letter written by the Food and Drug Administration to 23andMe telling them to cease and desist selling their product.  The letter is saturated megalomaniacal (and since it’s coming from the FDA, absurdly hypocritical) disdain for all things not the state.  For those of you who don’t feel like reading the letter let me translate it: That’s a nice company you got there.  It would be a shame if something were to happen to it.  How’s about you pay us some protection money? Because, you know, unfortunate things like FBI raids happen to businesses all the time.

These are the people who are doing the regulating.  The libido dominandi (lust to dominate) is as old as sin and the people with the greatest lust for power are the ones who get elected to political office and appointed to government positions.  Even if you don’t have the first-hand experience of living in a neighborhood with a home owners’ association, the concept of a home owners’ association president on a power trip is one that is almost universally identified with.  If the local home owners’ association can bring out the worst in people and invariably attract the most power-hungry busybody in the neighborhood, imagine what kind of sociopaths the prime positions in a world-dominating empire attracts.

Now, I know there are individual counter-examples who nobly refuse to act according to the incentives of political power (Ron Paul being chief among them), but these people are rare and they must have a general fear and mistrust of political power to refrain from using it to further their own ends or the ends of those that hold their purse strings.  Another well known tendency of government regulatory agencies is the “revolving door” relationship government regulators and officers of large corporations have.  Hank Paulson’s famous jump from Goldman Sachs to the Secretary of the Treasury is regularly mirrored by smaller fish jumping back and forth between the corporate and regulatory ponds.  And this shouldn’t surprise anybody because…

Who Is Actually Helped and Harmed By Government Regulations?

Who is helped more by government regulations, giant corporations or the guy trying to start a business out of his basement?  Let me ask some questions to see if we can figure it out:

1. Who is more able to afford an army of lawyers to staff necessary to maintain regulatory compliance?

2. Who has more power to be able to buy politicians via campaign contributions and political action committees?

3. Who has greater ability to hire an cadre of lobbyists to ensure that the actual words in the regulations (not the titles of the bills, mind you, the actual content) promote their interests at the expense of everybody else?

The answer to all three of these questions is obviously giant corporations.  This should come as no surprise.  These snake oil salesmen have been at it for quite some time.  Who funded the so-called Progressive Era?  Were the little consumers that the laws claimed to protect the ones providing the huge grants to universities and the campaign contributions to the people who took power?  No, the Progressive Era with all its anti-business rhetoric was financially backed by the very same people who were allegedly going to be  hurt by it.  It worked out pretty well for the J.P. Morgans of the world.

The Toughest Regulator of Them All: The Free Market

Another part of the standard narrative is that the free market doesn’t work because it favors the corporations at the expense of the average person.  The establishment asserts the following:

1. The free market ends in monopoly. You need the government to step in and regulate the size of corporations and ensure fair competition.

2. The government must enact regulations to protect the consumers.

Given the previous section about who actually writes, funds, and lobbies for regulations, the reader should already be suspicious about this.

In a market economy free of coercion, the consumer (not the producer) has the power.  The consumer is always looking for the best product at the best price.  Even the brands with the best loyalty have to prove themselves anew to their customers or they will lose business to competitors.  Let’s use the example of the fanatical Apple Zealot. Apple has more leeway with the Apple Zealot than the average firm does with its customer. Apple doesn’t need to worry about losing the Apple Zealot to Microsoft, but if Apple rested on its laurels and didn’t improve its product much (like in the 1990s)  while some start-up out of his garage (say, the next Steve Jobs) develops a better product and sells it at a better price, all except for the True Believer would consider abandoning Apple for the hypothetical product.

The free market does not tolerate complacency from entrepreneurs.  If you have a profitable business, other entrepreneurs will enter the field to compete with you. The higher the profit margin; the more competitors enter the field.  If you don’t continue to improve your offering to the marketplace, those sales will go to competitors. Those profits will turn into losses and the free market will regulate you out of business.  It is difficult to stay on top in a free market.  That’s why the robber barons resorted to regulation.  If you have legal, coercive barriers to entry, it takes much less work to maintain your place on top because fewer people can enter the field to compete with you.  It is far easier for someone with inherited wealth to buy a bureaucracy than it is to please a customer.

A true profit and loss system rewards those who love their neighbors as themselves in the marketplace. Continued and sustained success in the free market is actually an application of the golden rule.  Absent coercion, voluntary exchange can only take place when both parties value what they are receiving in the exchange more than they are giving in the exchange.  Moreover a pure profit and loss system incentivizes civility.  If you have the choice between two firms for a product or service that are otherwise equal, you will choose the one that treats you better.

A pure profit and loss system helps curb the wickedness of man whereas a meddlesome government amplifies it.  One of the primary criticisms of the free market is that it is utopian.  The criticism goes something like this: “Sure, I’d be in favor of a free market if all men were saints, but because there are wicked and evil people in the world we need government regulation to keep these wicked people in line.”  The widespread acceptance of this narrative doesn’t make it true or valid.  Given the wickedness of man, a system that rewards evil people for being civil and providing useful products and services to others can use will tend to mute the evil tendencies that people have.  Evil people will try to press for every advantage they can get, but if they are limited to voluntary exchange they have no choice but to at least pretend to be good people.  I’ve already covered above (see Who is doing the regulating?) the incentives that cause the most vile and evil people with the greatest lust to power to pursue political power. A coercive regulatory system doesn’t keep the wicked people in line; it gives the wolves the keys to the hen house.  The bigger and more powerful the government, the more vile the lot of thugs and mountebanks that run it will be.

Summary and Conclusion

In this article, I have argued that the existing system of regulation in the modern state does not actually achieve what its proponents claim that it does.  The most effective form of regulation is self regulation before the eye of Almighty God. The regulatory racket helps large, well connected corporations and bureaucrats at the expense of small businesses, entrepreneurs, and ultimately consumers. Government regulations inhibit the ability of the market to adapt to the changing conditions affected by supply and demand, creating (hopefully) unintended consequences that tend toward the impoverishment of the average person.  The alternative, the free market consists of voluntary transactions. It rewards those who are of the most service to the consumer and causes those who cannot provide adequate goods and services to go out of business, which in turn frees resources up for other entrepreneurial efforts. The free market is a far stricter regulator than any man-made law could ever be because each day the entrepreneur must seek to satisfy customers at the risk of losing them to the competition. The free market also tends to foster voluntary cooperation and competition over against government regulation where the biggest scoundrels always seem to find themselves in charge and use force and threats of force to get people to bend to their will.

The narrative in favor of government regulation and against the free market, when examined critically, turns out to be nothing but propaganda.  The idea is to have enough people who are seen as experts (preferably with Ph D. at the end of their names) repeat the lie over and over again with room for debate or dissent. At the end of the day, unless you are an influential member of a government agency or large corporation all these regulations don’t help you, they hurt you. Even if you are part of one of the special interest groups that directly benefits from regulation in your occupation, you are hurt enough by the regulation of everything else that you still lose out overall. Don’t just think of the known affect that this has (fewer more expensive choices) but think of the opportunity cost of regulation.  How many things have not been invented or improved upon (or have been invented but never made it to market) because of the stifling regulatory environment?  The regulatory environment in the United States is not a net boon to society; it is a severe drag, crippling entrepreneurship like the Handicapper General in Harrison Bergeron.

July 13th, 2013

How the state ruins everything: Immigration

This post is hopefully a series of posts on how the state ruins everything.  The overriding thesis of this series is that individual people can run and plan their own lives far better than the coercive agency of the state can do it for them, and that whenever government intervenes in any aspect in our lives beyond the very narrow biblical scope of punishing crime (not sin, crime), it fails to solve the problem it claims to be solving and creates several other problems and distortions that turn people who could otherwise peacefully coexist into enemies.

Immigration and the Correct Attitude of the Christian Toward the Alien

In the Old Testament, compassion was commanded toward the alien.  This was in spite of the fact that aliens were “without Christ, being aliens from the commonwealth of Israel and strangers from the covenants of promise, having no hope and without God in the world. (Ephesians 2:12 KJV).”  What was the correct attitude of Israel toward these aliens and sojourners? The covenant people were free to trade with aliens and sojourners, were commanded to provide hospitality to them, and were to be a kingdom of priests that the aliens might know the LORD was God.  The people of Israel were commanded not to be led astray by foreigners to serve false gods.  They were also not to trust in alliances with foreign governments.  While many of the warnings against disobedience stated that aliens would inherit their possessions and rule over them, the correct solution was not xenophobia, but faithfulness.  Jonah knew that the repentance of Nineveh was a precursor to the judgment of Israel because he was familiar with the blessings and curses of the covenant and knew that Israel was deserving of the curses.  Rather than repenting, Israel (led by her tyrannical and unbelieving government) “cracked down” on immigrants, aliens, and sojourners (Malachi 3:5).  They did the exact opposite of what was commanded by adopting the false gods, trusting in alliances with foreign powers, and oppressing the alien and sojourner.

In the New Testament, those who were afar off have been brought near.  Christianity is truly an international religion.  In an important sense we are all aliens and sojourners (1 Peter 2:11).  We wait for a city that has foundations, whose maker and builder is God (Hebrews 11:10).  Our primary allegiance must never be to the borders drawn by some sociopath more than a century ago, but to our brothers and sisters in Christ.  There is no room for nationalism or xenophobia in the church.  Just as war should be abrogated because there are Christians on both sides that are unwilling to take up arms against other Christians, xenophobia and animosity toward immigration should disappear because many of the people trying to come to your nation would be fellow Christians.

Human Action and Relocation

Moving from one location to another is a costly ordeal.  In order to move from one location to another, a person must value their appraisal of his situation at his destination more than his appraisal of his current situation plus the cost necessary to relocate and the risk that things won’t work out as he plans.  If you value the two equally, you will not take the action to relocate; you must value the “after” (as appraised in advance of taking the action) more than the “before” in order to act.  This often means leaving behind family, friends, loved ones, and a culture and/or language that you are familiar with and the risk of facing hate, discrimination or oppression at your destination.  Property that is too expensive or impractical to move must be left behind or sold.

Think about what it would take for you to move across the country or to another country.  It’s the same for people who leave other countries to move here.  In 2006, I left my life in New Hampshire to move to North Carolina and marry my wife who lived there.  I gave up a lot.  I don’t see my family or friends from home more than a couple of times a year.  However, I knew that my wife would have needed to make a similar sacrifice and it was cheaper to live in North Carolina. I valued the life I was gaining more than I valued the life I was leaving behind.

Why do people relocate?  It depends on the person.  These valuations are subjective which allow for trade to be possible.  Some might relocate in hope of a better job or business opportunity.  Others might relocate to flee oppression or famine.  Some people relocate for religious reasons, either as missionaries or to be a member of a particular church or religious community.  Some people value the lifestyle of being a transient or vagabond more than putting down roots in a single location, but even transients need to make decisions about which place to go next and when to make the move.  In all cases the person relocating needs to believe that his life will be better in the new location as he subjectively values the situation in advance of making the move.

How Government Involvement in Immigration Destroys Correct Attitudes Toward Immigration and Encourages Animosity and Distorts the Incentives for Relocation

If you think moving within a country is a hassle, just try it if your intended destination is across an arbitrary line that some sociopath bureaucrat drew over a century ago.  The conservatives and Republicans (many of whom are Christian) glibly state that people should just follow the immigration laws.  Either these people are disingenuous when they say this or they don’t realize that the agencies that control immigration are like the DMV on steroids.  If you are politically connected, you go to the front of the line.  If not, you get to wait and wait and wait.  This is just the direct involvement in government in immigration.  All the “immigration reform” in the world won’t solve the problem.  The best thing that the government could do is admit that they can’t regulate immigration for people better than they can regulate it for themselves.

The greater problem in government involvement in immigration is the problem of incentives created by the myriads of other programs.  Let’s contrast two societies.  In one of them, people are free to come and go as they please, but they need to pay their own way or rely on voluntarily provided charity.   In the other society, you are not allowed to relocate there, but if you do manage to smuggle yourself in, you are promised a free lunch at somebody else’s expense.  Free education, welfare, medical care, you name it.  Now think about how this affects people’s valuations in whether they choose to relocate to that nation or not.  Because people make their decision to relocate subjectively, the populations who would relocate to society A and society B are very different.  To transform a familiar aphorism, it’s the socialism, stupid.

There are other incentives that affect immigration.  The minimum wage law forbids people from legally working at a rate below the rate decreed by government.  Let’s hypothetically [heh] state that you have a large adolescent and young adult population that is unemployed and you have another large population of people who believe their lives would be so much better working at a sub-minimum wage that they are willing to risk crossing a border contrary to government edict to work a black market job. Then in the classic government way, those in power use immigration to drive a wedge of division to pit people against their neighbors.  The frustration felt by the people who are upset that money is being taken from them by force and given to people who came to the country for a free ride is understandable, but it is misdirected.  The anger and frustration should be directed at the government itself, but instead most of these people look to the government to pass a law and save them by legislation.

Less understandable is the person who seeks to get laws passed against immigration because they are afraid that foreigners are going to come in, work for lower wages and steal [sic] their [sic] jobs.  Most of these people simultaneously give lip service to the idea of capitalism and the free market and don’t get the irony.  In the 2012 and (especially) 2008 Republican primary debates, it seemed like 40% of total debate time was occupied by the candidates arguing about who will build the biggest wall to keep people in, er, I mean, out.  Even Ron Paul, whom I admire greatly and is right on just about every political issue got caught up in the confusion over immigration.

The Opportunity Cost of Immigration and Relocation Barriers

In economics, opportunity cost is the value you miss of the best alternative being forgone by the choice you actually make.  Because you don’t know the results of the best alternative, opportunity cost is a hidden cost and is often overlooked in analyses of hypothetical situations.  The opportunity cost of government intervention will be a running theme in my series on how the government ruins everything.  The sad truth is that none of us even know how badly government intervention has lowered our standard of living – we can only imagine what things might have been like.  Your opportunity cost of immigration and relocation barriers are all the inventions, products, and services that you never see because people can’t relocate as they see fit.

Let’s use an example of somebody from history (when you had more freedom than today in this area) who was in the right place at the right time but could not be under today’s conditions.  Steve Jobs’s biological father was Syrian.  Right now Syria is under OFAC (Office of Foreign Assets Control) sanctions from the United States government, meaning that you cannot do business with Syria.  Imagine all of the products and services that Steve Jobs has had a hand in (Apple and Pixar will be the most notable).  If the sanctions against Syria were timed differently, you don’t get Steve Jobs – he doesn’t exist because his parents never meet.  Steve Jobs’s very existence was a product of greater freedom of movement than we have today.  Just try to imagine the inventions, products, and services we do not have today that we would have if we had greater freedom to relocate for ourselves instead of having government try to control and manage it for us.

 

What Immigration Would Look Like In a Free Society

If people were able to come and go as they pleased, provided that they relied solely upon their own money or the voluntary charity extended by others, then there would never be such a thing as an immigration “problem” anywhere.  If a bunch of people flocked to a certain place prices of real estate would adjust to the influx of immigration.  Some people currently living in the destination area would sell their land for a profit and go live elsewhere on the profit gained from the sale of their land.  There is a natural equilibrating tendency here.  If the cost of moving to a certain location changes, it will affect how many other people believe it is worthwhile to relocate there.  Because you never truly realize equilibrium, there will be other factors (inventions, new businesses, climate changes, etc.) that will cause people to readjust their valuation of where they want to live and whether they wish to relocate.

How would the life of the average person be improved under immigration freedom?  Even the person who never moves in his life would be better off, and here is why.  If you have freedom of movement, people can relocate to where the entrepreneurial opportunities are.  Relocating is in its essence a form of entrepreneurship.  When there are fewer barriers to the freedom of movement, the average person gets more and better products and services to choose from at better prices because the freedom of movement allows for greater flexibility in the labor market.  Relocation “entrepreneurs” are able to get where they need to be with less cost and red tape.

Which Society Would you Rather Live In?

Earlier in this post, I contrasted society A (the free one) and society B (which is essentially the one we live in now).  Which one would you prefer to live in?  Remember back to my discussion of opportunity cost.  We have many people today who think that the solution to the “immigration problem” is to become even more like East Germany than we already are.  Do you want to live in a society where you are frequently accosted by people with guns and demanded to produce your papers (comrade)?   Do you think that some petty bureaucrat would do a better job planning where you live your life and whom you associate with better than you can do it for yourself?  I didn’t think so.  How about we apply the Golden Rule and afford others the same freedom that we would want to have granted to ourselves?