There is a pervasive line of thinking in American politics today that says government regulation is an impediment to personal freedom. Adherents to the pure faith of libertarianism have long argued the point; social conservatives eager to appease their pro-business brethren have long co-opted the point. This notion is the central consequence of the idea that all government is separate from the people, and mandates that no form of government can ever reflect the ideals of a people.
Lacking in this conversation are any mentions of what personal freedom is, or who it applies to in our society. In 21st Century America, the conservative arguments on personal freedom center almost exclusively on the right to earn and retain wealth. This economic focus departs from the pure libertarian ideal that encompasses all personal liberties, but serves nevertheless as the foundation of the entire argument. The conflict not addressed, that personal liberties of diverse peoples necessarily conflict with one another, is the conflict that we resolve via a government.
Even the laws that are, on the surface, easily recognized as reasonable limitations to personal freedom are fraught with complication. The law against murder would seem unencumbered by moral ambiguity, but what of self-defense? What of murder done to a child molester? What of murder done in vengeance wholly endorsed by the majority of society? All government regulation, or law, is defined by these moral questions and complications. The actions of government are primarily reflections of these questions, whether the subject is the taking of life or the operating of a business. A good and proper question, answered in part by the confrontation of ideology, is “how much is too much?”
We could pursue this line of argument into the sticky political dilemmas of capital punishment, abortion, war, or sexual molestation; this essay will, however, stay with the more mundane subject of business. What impediment to liberty is formed by the regulation of government and how widespread is the resulting loss of liberty? In confronting this subject with valued libertarian friends who visit The Rational Middle, I am struck by the idea that the liberties of individuals who own or attempt the ownership of business, are more important than the liberties of those who only seek roles as worker/consumers.
I won’t presume any further explanations of the libertarian point of view on this issue; instead, I will offer a selection of vignettes that will illustrate the liberal argument in favor of regulation. Please note that the government of the United States and the governments of its components are representative democracies; they act for and at the direction of the people. To the extent that they fail in this regard, it is the result of a lack of participation and corruptions that are human in nature (i.e. they will exist in any form of government). In other words, it isn’t the model that is failing, but the execution.
Food and Drug
The United States has a system of regulation that moderates the production, distribution, and labeling of pharmaceuticals and food. These regulations, bureaucracies, and systems add cost to the system and can add significant barriers to entry to the various markets. These facts provide a reasonable argument that the liberty of those who would chose to operate ventures in these markets is compromised. The other side of this equation however, the side of the consumer, must also be considered. Would an unregulated marketplace impinge the freedoms of working consumers? It in fact does.
The phrase, “snake-oil salesman”, has a solid grounding in historical fact. Without regulation and enforcement, the market will produce and sell products and services designed to satisfy one primary need; the need of individual businesses to make profit without delivering value to the consumer. Libertarians commonly dismiss labeling laws and production standards with a rallying cry of “personal responsibility”. It is, in their view, the consumer’s responsibility to figure out whether an advertiser’s claim is valid. In principle, this notion works, but only insofar as the consumer has a reasonable ability to discern the truth. But is it reasonable to expect the average consumer has the capacity to research claims, the education to know one claim from another, or the market flexibility to choose an alternative? The individual right for a parent or doctor to know what is in the bottle marked “medicine” supersedes the rights of the snake-oil salesman to market a wonder drug made of sugar syrup.
Unions and corporations have in common a history of collective power used to destructive ends. It is a fact of history that any form of human organization has the capacity to do damage commensurate with its scale. But unions have forced changes to labor practices and cost structures that impose challenges to every business model used within the United States. As before, these facts provide a reasonable argument that the liberty of those who would chose to operate ventures has been compromised. Again however, the looming figure of the worker/consumer poses a challenge to the construct. What gives the rights of an entrepreneur or corporate board supremacy over those of individual workers who choose to form a labor organization?
Again, damning unions as a concept because of bad practices is no more reasonable than damning corporations for the same. Those who choose unions have a commodity to sell, and should have equal rights to leverage market pressures in the marketing of their commodity. Our system has, in the context of labor versus business, been broken largely by a series of laws designed around ideology rather than functionality. Regulations in this theatre of operations have either been “pro-business” or “pro-labor”; I would argue that neither is pro-liberty.
The 20th Century saw the evolution of regulation in the financial marketplace move in a complete circle. For four decades, our democracy had a nearly happy medium of regulation that allowed for tremendous private capital investment aligned with unprecedented banking stability. Opportunities for rationalized deregulations at the end of the century, of the type that would allow for a safe expansion in private investment, were ignored in favor of a wholesale retreat from financial safeguards. The freedom of a handful of individuals to make unlimited sums in unproductive enterprise overcame that of the balance of Americans, both consumer and producer. Market failure on that scale robs more than just the perpetrators of their liberty (and in this case, the perpetrators largely got away with it).
The collapse of the housing bubble, and its effect on the economy, present a case study in both shared liberties and shared responsibility. Reckless financial choices by working Americans formed the fuel for explosive collapse, but the unlimited pursuit of wealth by Wall Street built both the foundation and framework for the tragedy. Both sets of actors in this drama were acting according to freedoms recently expanded, and the consequences were inevitable.
It doesn’t take a majority; of bad police officers, reckless homeowners, profit-seeking investment bankers, perverted ministers, or unscrupulous politicians, to muddy the waters. Laws and regulations are, in the abstract, written to prevent an irresponsible minority from limiting the freedom of the majority. But it is human nature that all of us are candidates for membership in that minority. How fast would you drive if you knew there were no traffic cops on duty (be honest)? Will a fast food restaurant dilute its ground beef it if thinks it can get away with it? Will a banker sell insurance on a financial instrument he doesn’t own, created by another financial institution using fraudulent methods, if they are able to and it will mean windfall profits?
Personal responsibility is vital to the democracy, and the capital marketplace is the most efficient economic engine for our nation. But a healthy acceptance of human nature and economic reality must exist in tandem; an acceptance that manifests in rational and fairly applied regulation and law.
The Rational Middle is listening…