The Law – Growing Like a Weed
By Pater
Tenebrarum
In a recent
article at the Mises Institute entitled 'Decriminalize the Average Man', Wendy McElroy
writes:
“If you reside in America and it is dinnertime, you have almost certainly broken the law. In his book Three Felonies a Day, civil-liberties lawyer Harvey Silverglate estimates that the average person unknowingly breaks at least three federal criminal laws every day. This toll does not count an avalanche of other laws — for example misdemeanors or civil violations such as disobeying a civil contempt order — all of which confront average people at every turn.”
(emphasis added)
Along similar
lines, here is a brief excerpt from Chalres Norman Fay's 'Too Much Government,
Too Much Taxation', a book published in 1923 (!) on the
production of laws:
“The natural result of filling local and state legislative bodies with second- or third-rate men of small experience and limited education, who go there to make what they can out of the job; especially when coupled, as it is in most states, with the practice of paying them a per-diem allowance for time spent in session, is a flood of perfectly useless legislation.
Each alderman, representative, or senator feels, of course, that he is there to legislate, and that he ought to do something himself in that direction. Some bill must be introduced and passed that bears his name. The most enticing proposition to him is apt to be one involving the expenditure of public money in his district; or perhaps the regulating or controlling some other fellow whose ways he does not like; or per contra the throwing of something in the way of someone whom he does like.
[...]
There are a thousand reasons for introducing a thousand or more bills; and introduced they certainly are.”
(emphasis added)
In an interview
with the Austrian Economics Newsletter that he gave a while ago, Hans-Hermann Hoppe stated:
“The democratic ruler does not invoke the principle of private property to show that he is the legitimate ruler. He invokes the principle that no property is entirely private. It follows that these people are tempted to think of law as simply legislation.
Under democracy,
you can change law whenever you want. No one knows what the laws
will be tomorrow. In fact, hardly anyone knows what the laws are today, because
there are so many. In this way, democracy undermines the value of
property and undercuts long-term planning and decision making.”
We would submit
that while in the beginning, the flood of regulation and legislation of the
modern State was more or less the result of the factors Charles Fay describes
above, this jungle of laws and thicket of regulations in the meantime serves a
very specific purpose. By making a criminal out of everybody, as
all of us are every day bound to break a number of laws and regulations without
even knowing it, anyone who is disliked by the State or one its minions can
be made into a target to be harassed at will.
Once there are so
many laws that it would be simpler to jot down what isn't expressly forbidden
yet, it is completely vain to talk of the 'rule of law'. One has in fact
arrived in a state of tyranny – and an iron fist is hiding behind the velvet
glove.
As Ludwig von
Mises says in 'Omnipotent Government':
“The total complex of the rules according to which those at the helm employ compulsion and coercion is called law. Yet the characteristic feature of the State is not these rules, as such, but the application or threat of violence.”
(emphasis added)
Striking the Root
What prompted us
to write about this was an article we came across recently, in which the author
complains that “Regulators Repeat Exactly
What They Did During the Last Housing Boom” by failing to
implement certain provisions of the 'Dodd-Frank' Act, one of the government's
more weighty attempts (literally) to close the barn door long after the horse
has fled. It is actually quite ironic that the act bears the names of Messrs.
Dodd and Frank, who were among those most vociferously arguing in favor of the
government-instituted subsidies and market distortions that led to the massive
lending spree to borrowers who were not creditworthy. This is not to say
that bankers didn't act irresponsibly, but the very basis for their
irresponsible acts has been created by the government.
Our first thought
upon reading the article was, “what makes anyone think that a telephone book
sized tome of additional regulations can somehow make us 'safer'?” After all,
the mortgage credit market was already one of the most
over-regulated business activities in the country prior to the
housing bubble. In fact, it is a very good bet that the more regulations there
are, the more unsafe the financial system will become. This is so because these
regulations provide only an illusion of safety – by making
everybody think that they will 'prevent' another crash, they invite precisely
the kind of risk taking behavior that will in the end contribute to producing
the next crash (after all, everybody knows now that nothing can go wrong
anymore!).
In fact, all such
complaints fail to strike the root. If the privilege of fractional reserve
banking were repealed, there could be no more credit expansion that was not
backed by an increase in genuine savings. There would no longer be the need for
a 'lender of last resort' to bail out the banks when the inevitable busts
strike and bank runs ensue as the holders of fiduciary media try to save what
they can. The banking cartel could be immediately put out of business and
replaced with a free banking system, i.e., a free market in money and banking.
Would this require thousands of pages of regulations? Actually, no. The entire
regulatory framework for such a system would fit on the back of a napkin.
A Graphical
Comparison
Our friends
at Incrementum AG in
Liechtenstein are about to publish a big chart book that will be made available
for download at Acting Man as soon as it is officially released. In the
meantime, we have asked for permission to show two specific charts from the
collection that are pertinent to this discussion. Anyone looking at these
charts must ask himself how people survived a hundred years ago. Evidently they
were in a state of near anarchy, and as the State's apologists assure us at
every turn, that would mean 'chaos'. The first chart shows the number of pages
of US tax law since 1913. The second chart shows the number of pages of
specific pieces of legislation enacted since 1913 compared to the Declaration
of Independence. Note that most of these acts were supposed to 'avert another
crash' or other bubble-related financial unpleasantness. Of course not one of
them was aimed at curbing the creation of money ex nihilo.
The number of pages of US tax law.
Pages of specific legislation, compared to the Declaration of Independence. The Frank-Dodd Act is rather
conspicuous.
Is it often
argued that retaining the Glass-Steagall Act would have averted the crash of
2008, but this is extremely doubtful. The Act did nothing do stop credit
expansion, it merely segregated certain banking activities. It is certainly the
case that deposit banking should be regarded as a fundamentally different
business from loan banking and merchant or investment banking, but the problem
is not with whether or not single corporate entities are allowed to engage in
all these businesses.
If a 100% reserve
for demand deposits were enforced, depositors could never be in danger of
losing their money due to a bank going bankrupt. There would be no debate over
whether tax payer bailouts are necessary and no central bank would be expected
to blow up the money supply by nearly 90% in 5 years in order to reliquefy the
banks on the backs of savers and all users of the currency. Bankrupt banks
would simply be closed, and their depositors would move their deposits
elsewhere.
In closing, we
leave you with another apposite quote by Ludwig von Mises from
'Liberalism':
“No wonder that all who have had something new to offer humanity have had nothing good to say of the State or its laws!”
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