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Chapter 118 of 142 · The Freeman 1990 by Foundation for Economic Education

Government Isn't Living Up to Its Contract; R. Koopman

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it doesn't evoke instant excitement. Most of us associate contracts with banks, car dealers, realtors, and the like, and think of them in terms of payment plans and other finan cial obligations. But in reality, a contract exists whenever two or more parties agree to be bound by a mutual arrangement-which mayor may not take written form. Contracts, therefore, are a basic expression of voluntary actions, free agency, and free will. They are the mortar that holds together a peaceful and free society. Without contractual relationships, there would be neither order nor freedom of choice. The Constitution is an excellent example of a contract, whereby the people contract the specific services of the federal government and establish strict prohibitions on governmental power to safe guard their liberties. Both sides are required to honor the letter of the agreement, but the relation ship set forth in this document makes clear who (Le., the people) is the superior party, and who is serving whom.

Marriage can be viewed as a contract between two people. While, in a civil sense, all marriages have a certain commonality, they are also highly individualistic "contracts," reflecting the values, religious beliefs, personalities, and so on, of the husband and wife. Business relationships, like wise, are contractual in nature, whether written or verbal. So, in the same sense, are employer employee relationships. Contracts imply several things: 1) that the rela tionship was entered into with the full knowledge Mr. Koopman is a businessman in Bozeman, Montana. of the individuals, 2) that it was arrived at freely, without force or coercion, and 3) that the relation ship was perceived by all parties as beneficial. For a contract to be valid, then, there can be no inter ference by outside parties. Obviously,freedom of contract is essential to an open, competitive, exchange economy. The entire system of free market transactions is based on con tracts. The strength of this system is its diversity, and the extent to which it maximizes individual choice and personal freedom.

But somewhere in our history we began to accept, ever so slowly,the notion that government (our Constitutional servant), has the right to inter fere with the contracts of free people. I'm sure the argument in the beginning was the same as the arguments are now, as·all levels of government continue to erode our ability to contract freely with anyone for anything. The rationale is always that it is for the "public good." Funny thoughI've never met one of those "publics." I know that I'm not one, and as I look around, all I ever see are individuals, never publics. Maybe they're kind of like leprechauns, these publics, and the only ones who can spot them are politicians. They're always being talked about by the politicians, and all the laws seem to be passed in their behalf. They must have hired a great lobbYist! But stop and consider all the ways that govern ment denies the individual his right to determine his contracts with others. Take employment rela tionships, for example. Do Americans still have the right to form whatever mutually beneficial relationship they choose when they go to work for someone or hire someone? Of course not. Our "servant" governmentdoesn't permit us, because they have a "better idea" in mind. So they force wage minimumson us that extinguishmany jobs altogether. They force worker's compensation insurance on us, even if the individual worker wouldrather passon that "benefit" and take other benefits or higher wages instead. They force unemploymentinsurance on us in the same way.

The Freeman 1990

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