Regulation; J. Pugsley

In the field of medicine, the gov ernment regulates (among other things) who can practice medicine, what schools can teach medicine, what courses are to be taught, what types of medicine are acceptable, where doctors can practice, what prescriptions are allowed, what drugs can be sold, under what con ditions drugs can be sold, who can sell them, what education is re quired for those who sell them, in many cases what can be charged for them, who can manufacture them, and what can be said about them in advertisements. In the field of transportation, gov ernment determines (among other things) who can operate airlines, buses, taxicabs, and railroads, what equipment is acceptable, how often equipment must be serviced, the 707 708 THE FREEMAN December timetable of service, where passen gers can be taken, who can operate the equipment, how much can be charged, what attendants must tell passengers, how passengers must behave while being transported, and how much can be carried aboard the transporting vehicle.

In the transporting of goods, gov ernment regulates (among other things) the amount that can be shipped· by different types of carri ers, what routes carriers can take, how much each carrier can carry, what hours drivers and pilots can operate, what carriers can charge, who can operate transport equip ment, how old operators must be, and what training and experience they must have. Of course, food is perhaps the big gest industry of all, and certainly the most highly regulated. Take the case of a simple hamburger. A study by Colorado State University iden tified over 41,000 state and federal regulations that apply to this com mon sandwich. These regulations apply to everything from the graz ing of beef cattle to the assembly of the burger at your local fast food outlet. This is a small sample. Mountains of regulations suffocate every field of human endeavor, from medicine to manufacturing, from construc tion to energy. The government is out to protect us-from ourselves.

How did politicians and bureaucrats become so concerned about our well being? The Source of Regulation On the surface, the government's regulation of business appears to be a genuine attempt at consumer pro tection. The regulations are justi fied on the grounds that they protect us from greed, ensure open compe tition in the marketplace, and pro tect our domestic economy. While there is a growing feeling that many government regulations are stifling business because of the inefficiency of the bureaucracy, still, almost ev eryone is for them in principle. But that is a part of every good sting. The victim must be totally con vinced that he is benefiting even as he is being robbed. The only reason individuals take action is because they believe they will get something they want by taking that action. People, in gen eral, are not altruists. Yet it would seem that there must be some self sacrificing individuals who are will ing to devote their lives to designing regulations to protect us from greedy businessmen who would sell us shoddy or dangerous products. After all, how could a politician benefit from supporting business regula tion? It must be that he has a genu ine concern for the safety and well being of the public. Otherwise, why would he work so hard to pass so many laws regulating business?

1980 REGULATION 709 It's simple. Politicians who sup port business regulation are not doing so because of deep-seated con cern for public safety-they are merely meeting the demands of lob byists who are hired and paid by businessmen. With only a few excep tions, the entire body of government regulations applying to business in the world today was designed and created by the very businessmen who are being regulated. These are self imposed restrictions. However, do not think for a moment that these businessmen are altruists. These regulations are not aimed at them; they are aimed at you. Business reg ulation is the cleverest of all meth ods ever devised for taking money from you without your knowledge. Sound far-fetched? Of course it does. We have been programmed our entire lives to believe that the gov ernment acts in the interest of the individual. We believe it is one giant consumer protection agency. In fact, it is nothing of the kind. It is one giant agency programmed to protect the business interests of established firms at the expense of the individ ual consumer.

Confidence Games Designed to Curb Competition In real life, there are three ways that a businessman can limit his competition and thus gain your business by default: first, he can get the government to prevent the competitor from offering products at all; second, he can get the government to force the competitor to raise his price; and third, he can get the gov ernment to force his competitors' costs up, thus indirectly forcing up the price. All three of these methods are widespread confidence games that have been around for centuries. By getting government to limit the in troduction of competitive products into the marketplace, any business man can set his own prices for the same products much higher and you will buy from him without suspect ing that he has forced you to do so. If you still question this analysis, examine the evidence. Take some time and research the records re garding which individuals lobbied for regulations, designed the regu lations, and reported violations of the regulations. Time after time, you'll find that it was not wounded consumers who were responsible, but businesses already active in the market. Established airlines lob bied for creation of a Civil Aeronau tics Board, volunteered to draft reg ulations governing airlines, and then screamed when deregulation was mentioned. Established banks lob bied for establishment of the Fed eral Reserve. Established trucking firms demanded regulation of inter state trucking; established shipping firms demanded regulation of ocean freight; established railroads de710 THE FREEMAN December manded regulation of the rails. Es tablished firms do not like competi tion. It threatens to take away their customers, and lower their profits.

Free enterprise is a fine concept when a businessman wants to com plain about government interfer ence. in his own affairs, but when competition threatens his markets, he is quick to point the political guns at his adversary. When the entrenched firms suc ceed in getting the government to regulate their industry, you, the consumer, are the loser. You are not protected by these regulations; you are denied the chance to buy the product of someone who might have been willing to offer you a lower price or a different quality. You are deprived of your chance to set your own values on goods. Conclusion: Intervention Lowers the Standard of Living Price controls, wage controls, anti trust laws, professional licensing laws, minimum wage laws, immi gration laws, tariffs, and all other forms of personal and business reg ulation result from the attempt by one individual to limit 'your ability to spend your money with whomever you choose, or to sell your property at whatever price you choose.

These laws are justified on the grounds that people are somehow injured because the individual who owns goods or services is asking too high a price for them. If you catch a fish, how is someone else injured if you set a price he thinks is too high? Why is someone else's opinion better than yours as to what price you should sell it for? Whose fish is it, anyway? Does it belong to you, who caught it, or another individual who wants it, or to all the other individ uals who make up society? When the majority of individuals in a society try to enforce their claim on the production of others through the legal process, they are guaran teeing that their society will have a lower standard of living than if they honor each person's right to enjoy and set his own value on the fruits of his labor. The standard of living of any nation is directly proportion ate to the personal freedom enjoyed in that nation. The people of China and India are not poor because they are stupid; they are not poor be cause they lack natural resources; they are not poor because they lack modern industrial tools. They are poor because they have lived for dec ades under social systems in which the established, entrenched classes are able to use law and custom to control the production, price, and sale of all goods and services produced. By removing the ability of individuals to benefit from inge nuity and hard work, they have de stroyed the incentive of individuals to produce and save. Without sav. ings, there is no capital for the cre1980 REGULATION 711 ation and improvement of the tools of production, and without tools there is only poverty.

Legalized plunder destroys the standard of living of any nation be cause it attempts to violate all of the economic laws that are an immuta ble part of human nature. Legalized plunder has strangled China, India, and most of the rest of the socialist or communist world. It is the reason for their abysmally low productiv ity, and the subsistence-level exis tence of their cItizens. By the same token, the people of the United States are not rich be cause of any special intelligence, natural resources, or work habits. We are rich because for the first 150 years after the founding of the na tion individuals were allowed nearly total freedom to produce and control the products of their labor. This freedom encouraged individuals to develop habits of hard work and thrift, and to apply their intelli gence to the natural resources in order to create the wealth of this na tion. As one person after another discovered that government is a willing agent that will plunder oth ers on request, plunder has grown and the rewards of production have fallen. Thus, the freedom that cre ated the nation withers, and so does your standard of living. , This essay is a condensation of a chapter, reprinted by permission, from Mr. Pugsley's latest book, The Alpha Strategy. The book is avail able from The Common Sense Press, Inc., Costa Mesa, California 92627, $13.95.

IDEAS ON LIBERTY Regulation of American Business UNLESS the pronouncedtrend toward more and more regulation ofmore and morematters involvedin the daily conductofbusiness can be halted, it is questionable whether American business can retain the necessary freedomofdecisionand action to meet the challenges which lie directly ahead. Ifwe sit by and permit theincreasing encirclement ofbusiness by bureaucratic regulation, we cannot in all commonsense continue to ex pect the fruits ofa vitally-needed expanding economy. As a nation we are at this moment facedwith tremendous responsibil ities,both to our own people and to the entire free world beyond. They can never be met without the creative contributions of a dYnamiceco nomic sector, yet we stand in danger of witnessing American business being little by little painted into a corner so small that it leaves hardly enough roomin whichto turn around.

JOHN E. SWEARINGEN, from an address, February 28, 1962 Clarence B. Carson Organizing Government Employees UNIONIZATION of government em ployees is the ultimate in unioniza tion. It is the embodiment of the ideal toward which unionism is bent. That ideal, or aim, has been ob scured by the quasi-religious ideol ogy within which unions operate. The bent of unionism is to monopo lize the available labor supply in an industry and to eliminate all com peting laborers. By so doing, it can raise the price of labor-in wages, working conditions, and fringe ben efits. But labor unions are ever being thwarted, or at least restrained, in private industry. They are restrained by the fact that most private businesses do not have a monopoly. There are competDr. Carson has written and taught extensively, spe cializing In American Intellectual history. He Is a fre quent contributor to The Freeman.