There are many threats to freedom and democracy in our over-governed and over-regulated society, and the iconic phrase that Thomas Jefferson almost coined “The price of liberty is eternal vigilance” has become almost a cliché. President Eisenhower famously warned of the power of the Military/Industrial complex, but his warning can be extended more generally. Wherever there are large, entrenched bureaucracies and interest groups, and especially when they deploy large publicly-funded budgets, and where they pursue some cause that can be presented as desirable (education, health, workers’ rights), they become more remote, more expensive, less accountable, and increasingly self-serving.
The tax-payer may be providing the funding, but he has in the end little control over how the money is spent, and frequently the activity serves the interests of the bureaucrats or the producer interest, not the tax-payer.
My good friend Iain Murray is a VP of the Competitive Enterprise Institute in Washington, and has pulled together a masterly analysis of the way this process occurs, with example after example of egregious spending and waste, with the tab picked up by the long-suffering citizen. “Stealing You Blind” analyses this phenomenon in the USA, but readers will find striking parallels with Britain and (perhaps even more) with the EU.
I first met Iain Murray when he was working (as I was) on the Climate Change issue, and he has been a doughty warrior in that battle. His book “The Really Inconvenient Truths” is well worth reading. Iain is British. He emigrated to the USA in 1997 after working as an adviser to the Department of Transport. He is a visiting fellow at the Adam Smith institute in London.
But his new emphasis for the CEI is on what he describes, aptly, as “The regulatory state of the robber barons”. He looks at the way regulatory structures and regulatory authorities feed off each other, fuelling the inexorable growth (and cost) of those authorities. This applies especially in tax law, which becomes ever more complex, and requires ever more bureaucrats to control it. In his chapter “Red Tape Bondage Games” he gives further examples of this symbiosis of regulation and bureaucracy.
He looks at education and health as key areas where costs escalate as rules, and regulatory agencies, and the producer interest conspire to achieve ever greater complexity at the expense of the pupil or patient, whose interests (which justify the whole insane structure) actually come way down the priority list.
The relationship between trade unions and (especially) public sector employers comes in for much analysis. It is alarming to see how the interests of both sides tend to coalesce — more staff, more money, more tasks to perform. Thus do governments grow their client constituency. Gordon Brown was a past master of the art.
Then there is the relationship between regulators and industry, and again there is a perverse alignment of interests, which operates against the interests of customers and tax-payers. Here Murray draws attention to the pernicious practice of “revolving doors”, where legislators, regulators and captains of industry rotate between jobs, and share a common interest in maintaining and growing the system.
We might have hoped that large companies would campaign against over-regulation. But they often see a huge benefit in onerous regulation. Large companies can cope with the costs of compliance, so regulation favours big, middle-aged, sedentary corporations, while creating barriers to entry for the new and the innovative. Over-regulation entrenches monopolies.
Murray calls this process “regulatory capture”. It’s like the Stockholm syndrome, where hostages grow to love their captors.
So far, so negative. But Murray ends on a positive note, with a prescription for reform. It’s difficult to summarise in a few words, but Murray calls for less government; privatisation of a range of government agencies; transparent government contracts; strict limits for regulatory agencies; a single, fair tax such as the flat tax; and an end to labour union privileges in the public sector. There is a way forward, but it needs courage and political will. Everyone involved in politics should read this book.
“Stealing You Blind”, Iain Murray, Regnery Publishing http://regnery.com; ISBN 978-1-59698-153-9; US$27:95