The New Bondage; J. Fulda

chievous confu~ion of government with society. BUjt as Hamilton noted, "power over a' man's subsistence amounts to a power over his will." Such power is what Hoover meant when he wrote of "the terror of effec tive deprival to ~ny man of his busi ness and his livelihood." These men understood that the dependence of free men and women on the state for their sustenance, what we might call the paradox of democratic socialism, would soon undermine the blessings of liberty in which they believed so fervently, each in his own way. It is in this context that the new bondage must be under,stood, for those to whom we give a$much as those from whom we take are stripped of some of their dignity and personal free dom. Let us exa~ine the underpin nings of the new bondage. The an nals of government intervention will 243 244 THE FREEMAN April show a decided propensity on the part of government to control what it does not support. Such diverse entities as local governments, business enter prises, private schools, and our lives come under this head. But rare in deed is the agency of government which proffers support without de manding a measure of control. Nor has such control been found uncon stitutional; as one judge wrote, "It is hardly lack of due process for the Government to regulate that which it subsidizes." One can even argue, as Senator Barry Goldwater has, that the appropriation of tax monies eth ically requires some regulation of their use. Legally, ethically, and historically, then, subsidy and reg ulation have been inextricably in tertwined. Such an observation, to be sure, is no argument for the reg ulation attendant upon subsidy, but rather an argument against subsi dies in the first instance.

Sacrificing Self-Reliance in Return for Government Aid Examples of the subsidy-regula tion nexus abound. New York City, the Chrysler Corporation, and the national endowments have each sacrificed something very dear to the American tradition in return for the financial blessings of the state: a tradition of self-government older than America herself, the autonomy of private enterprise, and artistic in tegrity. Under the system of regulated subsidies, government has extended itselfinto all the nooks and crannies of heretofore private life: charity, education, medical care, agricul ture, trade, production, scholarship, art, and family relations. We tell our poor where to live-in housing seg regated by social class-and how much to eat-and thus how much to weigh. We tell parents what their children must learn-the virtues of the state, the new morality, and our debt to ape-like creatures-and what they should eat for lunch. We tell our elderly what transportation to use and when to use it-malfunc tioning state-run systems at odd hours. We decide what medical pro cedures to allow-unnecessary op erations, for example-and when home care can be funded-when sal utary and relatively inexpensive, but even then only with presidential in tercession. We tell our farmers what crops are desirable-tobacco, for ex ample-and what crops must be re stricted-peanuts, for example. We tell our business community what merits encouragement-enterprises so forlorn as to attract no investors without subsidy-and what de serves discouragement-companies so successful that they can outprod uce and undersell their competition.

We fashion all these specifications and regulations as citizens of a dem ocratic state; we must live under them as members of a free society.

1982 THE NEVI! BONDAGE 245 Subsidies Lead to Control But inasmuch as the decision to accept a subsidy is voluntary, can the regulation attendant upon it truly he thought inconsistent with the philosophy of liberty? The an swer, I believe, is in the affirmative and for three reasons. First, we have already remarked on the tendency of the state to regulate that which it does not subsidize. Such regulations often arise from the proverbial transmutation of the carrot into the stick. All too often the real object of gov ernment is not to subsidize what the politicians believe a worthwhile en terprise or endeavor, but to regulate what is still a free enterprise or a social endeavor, with the subsidy a choice means to that typical end. Thus, what begins as a condition for Federal contracts may end as a con dition for doing business with one's neighbor. What begins with subsidy as the reward for compliance with social goals may end with fines as the punishment for deviating from public policy. What begins when the state has not yet exhausted its re sources and overtaxed its populace will remain long after the resources to support what has been taken over are gone.

It will be useful to contrast the regulated state subsidy with private employment or gifts granted in re turn for adherence to conditions es tablished by the giver. The private employer cannpt impose his condi tions of employiment on anyone who does not seek e~ployment with him. The giver of gifts can withhold his largesse but can impose no fines. The state, on the otb,erhand, is ever ready to cross the sh~rp moral line which divides not giv~ng from taking. It is for this r~ason, too, that those concerned witn the growth of gov ernment shouldibe wary ofthe state's assumption of ~dditional functions, even if they are completely volun tary. Thus, even those government services or enterprises which are used only by those iwho so choose and which are comp~etely funded by user fees are suspect. The Postal Service, after all, began with neither a mo nopoly nor a sl!Ibsidy, but has long since acquired both. As long as the entity which owns and operates an enterprise is ~lso the entity with coercive powers, what begins in freedom may end in compulsion.

A second objection to the regula tion which att~nds subsidy is that the regulations i issued often conflict with the rightfull management of the tax monies involved. Thus racial guidelines for companies with gov ernment contracts, while voluntary, are an inefficient-not to mention immoral-us¢ of public funds. Whether the contract is for sanita tion or defense~ it is best fulfilled without regard to social or political goals which miaallocate resources. Again the contrast with the pri246 THE FREEMAN April vate sector is helpful. A private business may indeed set any condi tions it desires for contractors who wish to do business with it, for it operates with its own funds, has no public trust, and will moreover likely be severely penalized by the market if it persists in operating by uneco nomic criteria. The state's funding, on the other hand, is obtained not by mutual consent based on recog nition of the efficient use of re sources, but by that unilateral sys tem of resource absorption known as taxation. Thus a public trust to util ize funds economically arises.

A Lack of Choice Third, there comes the realization that acceptance of the subsidy is of ten not, after all, a full and free choice. Is the decision to send one's children to public school-to accept the state education subsidy-fully voluntary, or is the decision influ enced by the forcible extraction of public school tuition monies via tax ation? Not only does one have the sense that one has paid for the sub sidy-that it is not a subsidy taken from others at all-one has been forcibly deprived of the resources to purchase the service on the market. State compulsory education laws leave no recourse, in the absence of such resources, but to patronize gov ernment schools. Consider, as another example, our beleaguered automobile manufacturers. These once-successful giants have been saddled with a myriad of uneconomic regulations. Their abil ity to borrow funds for needed mod ernization has been hampered by in cessant government issues. Their ability to use their own capital to modernize has been checked by a tax code biased against capital forma tion. Worst of all, for decades the de mand for their product lines was distorted by an energy policy of price controls; the false signals which en sued led these overly trusting com panies on down the road to ruina tion. After the state has thus crippled their ability to operate without sub sidies, it beckons, privilege in hand; all it asks for in return is yet more control. More often than not, the large, failing enterprises that gov ernment "saves" and ultimately runs are in need of saving only from the consequences of prior government intervention. Again, this is no ar gument for subsidies to such enter prises, but rather an argument against the controls accompanying such subsidies while they continue.

Likewise, the poor man will find his needs attended to by a host of paternalistic agencies offering in kind benefits that drastically cir cumscribe consumer choice. Why is it that in this fair land populated by a generous people, private charity, which the chroniclers of voluntar ism tell us was once plentiful, is no longer adequate? Government con1982 THE NEW BONDAGE 247 sumes the major portion of personal income, ostensibly for eleemosynary purposes, that is why. As Albert Jay Nock observed some fifty years ago, we are as likely to refer the man in need of aid to the appropriate gov ernment agency as to aid him our s(!lv(!s. By Rbsorbing 9uch a. la.rge portion of our resources, Nock con tinued, government usurps social and interpersonal initiatives as well. In deed, it is no small tribute to the American character that so much that is worthy is still supported pri vately, without subsidy or favor, de spite confiscatory taxation.

In sum, then, while the decision to accept a subsidy is not made un der duress, a great many coercive measures in some manner or other impinge on it. The element of voli tion in the regulations which are the price of subsidy is part of the insidi 0us and seductive nature of subsi dies, not a cause to disregard the President's warning. TreatedDisrespectfully Nor are the motive forces behind the new bondage entirely benign. In part, such programs as in-kind. ben efits, categorical grants, and regu lated subsidies derive from a decid edly illiberal view of those being aided. That is the view that having failed at self-sufficient production, the poor are not able to direct their own consumption wisely either. It is the view that the state, with the aid of professionals land social scientists who understan<ll such things, must therefore "help" them plan their lives. It is likewise the view that those local majQrities which dare to differ with the ~ational majority on such issues as, educational priori ties, the balance! between liberty and security, the balance between the free exercise ofrelimon and the proscrip tion of its establishment, or the pri macy of freedom. of association are not to be trusted with the customary full faith and credit. The farmers cannot farm, ~he traders cannot trade, and the frDanufacturers can not manufacture as well as can the "experts" in and around govern ment, proponents of this view seem to be saying.

To a greater eiKtent,though, these programs are th~ natural result of a corrupted democracy, in which the liberties and prCl>pertiesof individu als, once belie~ed inalienable, are regularly put to1the trial of a major ity vote. The election of representa tives by district rather than at large localizes their political base. Thus, social, economi~, ethnic, religious, occupational, qr interest groups, which in a larger area would. form insignificant mi~ority factions, are able, separatel~ or in coalition, to gain political c<)ntrol over the dis trict. ("By a faction," wrote Madison in the tenth Federalist paper, "I un derstand a nuimber of citizens, whether amounting to a majority or 248 THE FREEMAN a minority of the whole, who are united and actuated by some com mon impulse of passion, or of inter est, adverse to the rights of other citizens, or to the permanent and aggregate interests of the commu nity.") The factious spirit, further promoted by the hypostatization of groups so common in the political discourse of the day, is then re flected in the likes of quotas, entitle ments, and class action suits.

Serving Special Interests The turmoil of factions, which are today known as special interest groups, is also largely responsible for the new bondage. In-kind programs and categorical grants permit the easy identification, coagulation, and milking of these interest groups by politicians. Politicians, in turn, are easily swayed to commit ever-greater depredations on the public treasury by factions which form a substantial part oftheir support. Further, in-kind programs, categorical grants, and regulated subsidies are particularly amenable to the bureaucratic em pire building against which Jeffer son and Tocqueville warned. If a man Frederic Bastiat would have power over the activities of society, he would search no far ther than these baited hooks. In contrast, only the poor would benefit from a single cash grant pro gram, not the bureaucrats whose fiefdoms would be swept away, not the milk producers or construction workers assured a market without the fullness of competition, not the educators paid wages exactable from government only. Only the localities would benefit from block grants, not the supervising Federal agents, not the intermediating state agents, not the implementing local agents, nor again the natural constituencies of the many categories that· the Con gress has so painstakingly isolated over the years.

This should come as no surprise, \ for the system of unlimited democ racy in the name of charity is in reality a system whereby some ben efit from the failures, misfortunes, and dependency of others. When subsidies are granted without spec ification or regulation, only those subsidized benefit. That is why such subsidies so rarely emerge from the political process. , IDEAS ON LIBERTY OUR DEMANDS, therefore, place The State in an obvious dilemma! If it refuses to grant the requested benefit, it is accused of weakness, ill-will, and incapacity. Ifit tries to grant their requests, it is obliged to load the people with increased taxes-to do more harm than good-and to bring upon itself general displeasure from another quarter.