Friday, January 6, 2012

Boiling the Frog

The latest bureaucracy headed by a "Czar" in Washington (Consumer Protection) brought into focus for me how we have gotten to the big, expensive, inefficient government that is strangling the country today.

The Founders' original intent was to keep the Federal government as small and unintrusive as possible, which also implied that the people would be on their own to solve most problems that came up. Without getting into the details, this meant issues that were impractical for states or localities to deal with separately, such as national defense, interstate issues, issuing "coinage" (tho the states were not initially prevented from issuing their own), etc. One can see in the content and language of the Constitution an underlying commitment to guard against the infringements on personal liberty that had been suffered under the iron fist of English rule.

Over the years since the founding, problems or opportunities have arisen which begged for a solution. Initially they generally had to do with national defense when we nearly went to war with France during Adams' administration, and did under Madison. National defense implied a national army/navy, which implied federal taxes to pay for it. We almost lost the War of 1812, and prosecution of it was seriously hampered, by the general revulsion against Federal taxes -- not only among the people, but especially in Congress (hard to believe, huh). If not for local efforts to raise state militias, buy arms, build or obtain ships, and even to engage in armed defense under local auspices, we might have lost that War. And the state militias were generally short term and proscribed from fighting beyond their own state's borders. Imagine trying to conduct a war under those conditions!

As time went on, other stuff came up: the Erie Canal in 1816, the Panic (Recession)
of 1837, the trepedations over Mexican abuse of Americans living in the Republic of Texas 1836-1845, the Civil War (oh that), Reconstruction, the need for a national Navy as countries like Japan (1868) and Germany (1871) united and began making noises, labor unrest and abuse beginning in the late 19th Century when the Industrial Revolution had really gotten going, etc. I could bore you with a more complete list, but I'm sure I have accomplished that with this one.

Which gets us to about 1900. This is where we began to run off the rails, slowly at first, but with each derailment justifying the next more serious one. By 1900 the United States was certainly among the most prosperous and powerful nations on earth. The fact that 90% of the US population did not even have indoor plumbing puts it into perspective, but we were very prosperous by the standards of the time. This had happened mostly because industry and invention had flourished unfettered by government red-tape, regulation, and and other interference. People expected to fend for themselves and didn't expect, or want, the Federal Government to do it for them. That laissez-faire approach, however, gave rise to "problems" that, before all that progress, would probably have been accepted as the price for all the good it portended; ie, child labor (so now the 10-year-old kid was working in a factory instead of milking the
cows), employer "abuse" of workers, "corporate greed", the famous meat-packing scandals, corporate monopolies, etc. Few complained at the time, for example, about the "abuse" of the Chinese immigrants who worked on the Transcontinental Railroad, including the Chinese workers themselves, because the rewards were so great for all involved.

But once the fruits of a relatively free economy had settled in and were kind of taken for granted, there was sentiment to address the negatives that had been part of it. The idea that it might not have happened at all without producing the distasteful by-products doesn't seem to have been appreciated.

It is at this point Big Government was born. Big Government was a child at first, not that big and powerful, but along came the Pure Food and Drug Act of 1906, enacted to address the meat packing abuses exposed by the Muckrakers of the prior decade or so. It's worth mentioning here that each government intrusion is seen as necessary and justifiable at the time. What is not so apparent is the aggregate effect over time of all such justifiable and necessary individual actions/regulations/bureaucracies/expenditures. I'm not going to get into it here, but you can see the Doctrine of Unintended Consequences at work.

Viewed as a continuum, it is evident that the threshhold that "requires" government intervention has been constantly lowered over time. One can see the progression by comparing the government response to the Galveston hurricane of 1900, certainly one of the most disastrous in US history, to each succsssive such natural disaster right on thru Hurrican Katrina. FEMA, SHEMA. They didn't have no stinkin' FEMA in 1900. All recovery activities after the Galveston hurricane of 1900 were private and local, with the exception of use of some Army tents for survivors. The entire town was practically wiped out, folks, but you didn't see "victims" sitting around waiting for their FEMA trailers, food, money, etc, then complaining that it wasn't sufficient. If you look at each successive such hurricane, each was followed by incrementally more government involvement, culminating in Katrina, for which the Federal Government was actually blamed by some of the breathtakingly clueless. Don't that just beat all? Was each of these increases in government assistance good? Again, looking at each in isolation, it probably was; however, in the long-term, big picture it is not.

So back to 1916 and the imposition of the first permanent Federal Income Tax. Lincoln had had the temerity to request enactment of the first one in 1862 to pay for the Civil War (or at least the Union part of it), at the confiscatory rate of 3% and temporary. And guess what . . . it was a flat tax! But I digress.

By 1916 the Federal government had grown sufficiently large, intrusive, and inefficient that it needed a more constant source of revenue. From there it simply grew, with each new "crisis" requiring less and less justification for Federal government intervention. It all got a big boost in 1932 with the New Deal, and again in the 1960's under Lyndon Johnson (Medicare -- to which the high cost of today's healthcare can be directly traced -- welfare (aka "War on Poverty", a futile pursuit if there ever was one), and a bunch of other lovely-sounding, well-intentioned government programs the long term effects of which were either not considered or were misjudged).

So now we have the Consumer Protection Czar. Oy. My problem with it is not the recess appointment nature of it or any other political reason; my problems with it, in no particular order, are that a) it will add another costly bureaucracy to the Federal Gov't; b) it will add another tangle of regulations and oversight, much of which will either duplicate or conflict with existing ones; and c) it will yet further erode the public's ability to fend for itself. None of this is remotely balanced by any benefit to derived from the government taking over responsibility for what citizens are best-equipped to do for themselves. One of the characteristics of the long-forgotten free-economy that made this country the most prosperous in human history is that consumer abuse was self-policing, in that consumers simply stopped patonizing those services they didn't like. That worked great until we got sufficiently comfy that we wanted to alienate that function to government so that, without thinking about it, we would receive the benefit of vigilance without having to be vigilant ourselves. Politicians, ever with an eye to the next election and long gone when the negative consequences arrived, were only too happy to oblige.

And this gets to the root of the issue: each time we get incrementally lazier, there is a price to pay far beyond the salaries of the people we hire to be vigilant in our stead. As I said somewhere else, it all reminds me of Swedish King Gustavus
Adolphus' flagship Vasa which was designed to be the most powerful ship afloat at its launch in 1628. It had cannons in every conceivable place, including the lower deck just above the water line (see any problem here for a sailing ship?) and others crammed onto the upper decks. Each cannon could be justified as it made the ship more powerful. Within an hour of launch it lay on the bottom of Stockholm Harbor, made unseaworthy by the addition of too many cannon. The Federal Government is already under water, primarily from having grown too large, inefficient, unwieldy, and costly.

And we, like the frog put in a pot of cold water, are thankful for each small bit of additional warmth, not mindful that, by the time it becomes uncomfortable, it will be too late.

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