Archive for the ‘Rent-Seeking’ Category
My interests in politics and political philosophy are largely organized around a theme of declension—the gradual decay and decline of a people. This is what the title of this blog is meant to suggest, in fact. My general view is that we are somewhat beyond the point in building our “tower” at which our project truly served the needs it was designed for. Our Founders’ goal, at its core, was simple: to organize a political system that would protect our property and generally otherwise leave us alone to cultivate our own gardens. The energies of the modern progressives, however, who seek to command and conquer more and more of American economic life with government, are precariously accelerating the decline of the American political regime.
As Tocqueville can again demonstrate, while modern progressives will bemoan limited government attitudes by arguing that the exigencies of modern life render such standoffish economic views outdated, this is undermined by the fact that the progressives and their dangerous views were anticipated as early as the 1830s.
First, Tocqueville suggested that, following the initial phase of building the American political-economic system, the desire to amass great fortunes would eventually give way to a realization of the equality toward which democracies naturally tend.
The remembrance of the extraordinary events to which they have been witness is not effaced from the memory of men in a day. The passions that the revolution had prompted do not disappear with it. The sense of instability is perpetuated in the midst of order. The idea of easy success survives the strange vicissitudes that had given rise to it. Desires remain vast though the means of satisfying them diminish daily. The taste for great fortunes subsists even though great fortunes become rare, and on all sides one sees disproportionate and unfortunate ambitions ignited that burn secretly and fruitlessly in the hearts that contain them.
Alexis de Tocqueville, Democracy in America, Univ. Chicago Press, 2002 (Mansfield and Winthrop, eds.) at 600 (emphasis added). Tocqueville then explained how this momentum led eventually to democracy—and the state of equality of conditions that democracy brings—by “prevent[ing] any of them from having very extensive resources, which necessarily confines desires within fairly narrow limits.” Id. at 601. This “equality produces the same effects everywhere; wherever the law does not take charge of regulating and slowing the movement of men, competition suffices for it.“ Id. at 602 (emphasis added). “All that he demands of the state is that it not come to trouble him in his labors, and that it assure him the fruits of them.“ Id. at 604 (emphasis added.)
This sentiment was still strongly felt when it was enshrined in—and, sadly, shortly thereafter deliberately read out of—the Privileges or Immunities Clause of the Fourteenth Amendment. As Tim Sandefur explains:
Ratified in 1869, the 14th Amendment prohibits states from abridging the “privileges or immunities” of citizens, or depriving them of the “equal protection of the laws,” or “due process of law.” The Amendment’s sponsors—particularly Representative John Bingham and Senator John Sherman—intended the “privileges or immunities” clause to protect the natural rights and common-law rights of all Americans. Among these, Bingham said, was “the liberty…to work in an honest calling and contribute by your toil in some sort to the support of yourself, to the support of your fellowmen, and to be secure in the enjoyment of the fruits of your toil.”
(Emphasis added. See also Sandefur on Jeremiah Black and the Slaughterhouse Cases.)
This is a happy state of affairs, in which the genius of industry and self-reliance has led Americans to prosperity, and yet the political system of democracy has naturally led to a state of relative economic equality. But it was also at this point that real trouble came to Americans, for their eyes were still fixed on the possibility of getting their hands on all the fruits of industry while competition with their neighbors rendered it difficult to make their fortunes. This state of affairs puts at risk the general spirit of freedom in economic life, and causes individuals to look to other means to obtain some manner of economic advantage over their competitors.
But if the people grow restless or their commitment to freedom wanes or their resolve weakens, they will come to a dangerous realization: they can become government employees. And this will result in a government scrambling to make good on its promise of the distribution to all its subjects of the estimable product of a once virile, industrial people, which product has come to be replaced by that of the ever-diminishing productive energies of a now slow and entitled people whose ambition has been sucked out by the promise of a patrimony paid from the government largesse. As Tocqueville warned, in a country “boundless and full of inexhaustible resources,” and where its people “are always surrounded with more goods than they can seize,” “[w]hat is to be feared in such a people is not the ruin of some individuals, soon repaired; it is the inactivity and softness of all.” Id. at 594 (emphasis added).
In this regard, the following passage from Democracy in America is among the most prescient of its almost 700 pages:
But if, at the same time that ranks are being equalized, enlightenment remains incomplete or spirits timid, or if commerce and industry, hindered in their development, offer only difficult and slow means of making a fortune, citizens, despairing of improving their lot by themselves, rush tumultuously toward the head of state and demand his aid. To be put more at ease at the expense of the public treasury appears to them to be, if not the sole way they have, at least the easiest and the best way open to all to leave a condition that no longer suffices for them: the search for places becomes the most practiced industry of all.
It will be so above all in great centralized monarchies, where the number of paid offices is immense and the life of officials assured enough so that no one despairs of obtaining a post and of enjoying it peacefully like a patrimony.
I shall not say that this universal and immoderate desire for public offices is a great social evil; that it destroys the spirit of independence in each citizen and spreads a venal and servile humor in the whole body of the nation; that it suffocates the virile virtues; nor shall I have it observed that an industry of this kind creates only an unproductive activity and agitates the country without making it fruitful: all that is easily understood.
But I want to remark that the government that favors a tendency like this risks its tranquillity [sic] and puts its very life in great peril.
. . . .
In democratic peoples as in all others, the number of public posts in the end has bounds; but in these same peoples the number of the ambitious has none; it increases constantly by a gradual and irresistible movement as conditions are equalized; it is bounded only when men are lacking.
Therefore, when ambition has no outlet but in administration alone, the government in the end necessarily encounters a permanent opposition; for its task is to satisfy with limited means desires that multiply without limits. One must indeed be convinced that of all peoples of the world, the most difficult to contain and direct is a people of place-hunters. Whatever efforts its chiefs make, they can never satisfy it, and one should always be apprehensive that it will finally overturn the constitution of the country and change the face of the state solely out of the need to make some places vacant.
Princes in our time who strive to attract to themselves alone all the new desires that equality sparks, and to satisfy them, will therefore end, if I am not mistaken, by repenting of having engaged in such an undertaking; one day they will discover that they have risked their power in rendering it so necessary, and that it would have been more honest and more sure to teach each of their subjects the art of being self-sufficient.
Id. at 605-06 (emphasis added).
Now consider all this when coming across reports such as the following:
Economist Gary Shilling has calculated that 58 percent of the population is dependent on the government for “major parts of their income,” including teachers, soldiers, bureaucrats, and other government employees; welfare and Social Security recipients; government pensioners; public housing beneficiaries; and people who work for government contractors. By 2018, Shilling estimates, an astounding 67 percent of Americans could be dependent on the government for their livelihood.
See also here.
If we cannot find a way to curb these “place-hunters,” we seem destined to reach a political and economic tipping point much sooner than we perhaps expected.
Steve Bainbridge provides some good explanations why more regulation doesn’t make greed go away, it just modifies the way in which it is expressed, i.e., through rent-seeking. The “invisible hand” is no longer such — it’s just busy in back rooms making deals.
Putting the government’s spanner in the works is unwise for another reason. Used to be the government would shake its fists at the private sector in moral outrage, but ultimately recoil to its own domain. With an effectively limitless federal jurisdiction, finger wagging is now followed by swift, comprehensive, and mindless reform. Government would be better off had we left a few teeth in the Commerce Clause: the economy can’t be your scapegoat when you can claim control of it at whim. Kind of reminds me of the image of the dog chasing the car who wouldn’t know what to do if he caught it. Except there are probably more things a dog can naturally do with a car than our federal government can do with the economy.