Do not think about, write about or deal with human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.
It is said, by some, that the cost of compliance to various levels of regulations in the U.S. is higher than the cost of personal income taxes. Whatever the numbers, regulations cost money in direct compliance costs, salaries of compliance enforcers and distortion of economic activity.
The Mania for Regulating People
Justice Sutherland on Private Rights and Government
Lawrence W. Reed
Rarely do presidents get a chance to appoint more than two US Supreme Court justices in the space of a four-year term. Warren G. Harding appointed four, and he was president for just two and a half years before his untimely death in 1923.
"We have developed a mania for regulating people." — Justice Sutherland
Harding doesn’t get high ratings from historians (an unfair assessment, in my view), but his Supreme Court appointments were above average. Two of them, Edward Terry Sanford and former president William Howard Taft, were eminent legal minds but not always sound in their interpretations of the Constitution. (Both Sanford and Taft, coincidentally, died within hours of each other on the same day — March 8, 1930 — which was a logistical nightmare for their court colleagues who had to attend funerals both in Knoxville, Tennessee, and in Washington, DC.)
The other two Harding appointees, Pierce Butler and George Sutherland, were among the most steadfast defenders of liberty ever to grace the court. Along with Justices Willis Van Devanter and James Clark McReynolds, they rebuked Franklin Roosevelt’s New Deal in one articulate majority opinion after another. (I’ve profiled Butler, Sutherland, Van Devanter, and McReynolds in “Four Justices Who Stood for Justice,” FEE.org, September 2015).
FDR was one of the greatest regulators in American history as he surrounded himself with “bright” academics who believed that Nirvana was just a few thousand regulations away.
Fifty years ago this month, the Freeman published a remarkable speech by George Sutherland, delivered half a century earlier by the future Supreme Court justice. It’s loaded with wisdom about the limitations of government, especially when it comes to regulating personal and private habits. In that 1917 speech, three years before Prohibition began, Sutherland warned,
We have developed a mania for regulating people. We forbid not only evil practices, but we are beginning to lay the restraining hand of law upon practices that are at the most of only doubtful character. We not infrequently fail to distinguish between crimes and vices, and we are beginning almost to put in the category along with vices and offensive habits any behavior which happens to differ from our own.
We proudly reprint here the entirety of Justice Sutherland’s remarks. The next president would do well to appoint a justice capable of a speech this good.
— Lawrence W. Reed
President, Foundation for Economic Education
From the foundation of civil society, two desires, in a measure conflicting with one another, have been at work striving for supremacy: first, the desire of the individual to control and regulate his own activities in such a way as to promote what he conceives to be his own good, and, second, the desire of society to curtail the activities of the individual in such a way as to promote what it conceives to be the common good.
A politician may advocate the complete repudiation of the Constitution and be regarded as an up-to-date reformer and friend of the people.
The operation of the first of these we call liberty, and that of the second we call authority. Throughout all history mankind has oscillated, like some huge pendulum, between these two, sometimes swinging too far in one direction and sometimes, in the rebound, too far in the opposite direction. Liberty has degenerated into anarchy, and authority has ended in despotism, and this has been repeated so often that some students of history have reached the pessimistic conclusion that the whole process was but the aimless pursuit of the unattainable.
I do not, myself, share that view. In all probability we shall never succeed in getting rid of all the bad things which afflict the social organism — and perhaps it would not be a desirable result if we should succeed, since out of the dead level of settled perfection there could not come that uplifting sense of moral regeneration which follows the successful fight against evil, and which is responsible for so much of human advancement — but I am sure that in most ways, including some of the ways of government, we are better off today than we have ever been before. It is, however, apparently one of the corollaries of progressive development that we get rid of old evils only to acquire new ones. We move out of the wilderness into the city and thereby escape the tooth and claw of savage nature, which we see clearly, only to incur the sometimes deadlier menace of the microbes of civilization, of whose existence we learn only after suffering the mischief they do.
Today, as always, eternal vigilance is the price of liberty — liberty whose form has changed but whose spirit is the same. In the old days it was the liberty of person, the liberty of speech, the freedom of religious worship, which were principally threatened. Today it is the liberty to order the detail of one’s daily life for oneself — the liberty to do honest and profitable business — the liberty to seek honest and remunerative investment that are in peril. In my own mind I feel sure that there never has been a time when the business of the country occupied a higher moral plane; never a time when the voluntary code which governs the conduct of the banker, the manufacturer, the merchant, the railway manager has been finer in tone or more faithfully observed than it is today; and yet never before have the business activities of the people been so beset and bedeviled with vexatious statutes, prying commissions, and governmental intermeddling of all sorts.
Pass a Law
Under our form of government the will of the people is supreme. We seem to have become intoxicated with the plenitude of our power, or fearful that it will disappear if we do not constantly use it, and, inasmuch as our will can be exercised authoritatively only through some form of law, whenever we become dissatisfied with anything, we enact a statute on the subject.
If, therefore, I were asked to name the characteristic which more than any other distinguishes our present-day political institutions, I am not sure that I should not answer, “the passion for making laws.” There are 48 small or moderate-sized legislative bodies in the United States engaged a good deal of the time and one very large national legislature working overtime at this amiable occupation, their combined output being not far from 15,000 statutes each year. The prevailing obsession seems to be that statutes, like crops, enrich the country in proportion to their volume. Unfortunately for this notion, however, the average legislator does not always know what he is sowing, and the harvest which frequently results is made up of strange and unexpected plants whose appearance is as astonishing to the legislator as it is disconcerting to his constituents.
This situation, I am bound to say, is not wholly unrelated to a more or less prevalent superstition entertained by the electorate that previous training in legislative affairs is a superfluous adjunct of the legislative mind, which should enter upon its task with the sweet inexperience of a bride coming to the altar. As rotation in crops — if I may return to the agricultural figure — improves the soil, so rotation in office is supposed to improve the government. The comparison, however, is illusory, since the legislator resembles the farmer who cultivates the crops rather than the crops themselves, and previous experience, even of the most thorough character, on the part of the farmer has never hitherto been supposed to destroy his availability for continued service.
I think it was the late Mr. Carlyle, who is reported to have made the rather cynical observation that the only acts of Parliament which were entitled to commendation were those by which previous acts of Parliament were repealed. I am not prepared to go quite that far, though I am prepared to say that in my judgment an extraordinarily large proportion of the statutes which have been passed from time to time in our various legislative bodies might be repealed without the slightest detriment to the general welfare.
In other words, most of the regulations are pointless or harmful and add not to the common weal.
Throughout the country the business world has come to look upon the meeting of the legislature as a thing to be borne rather than desired, and to regard with grave suspicion pretty much everything that happens, with the exception of the final adjournment, a resolution to which end, unless history has been singularly unobservant, has never thus far been withheld by general request.
Good Intentions Only
The trouble with much of our legislation is that the legislator has mistaken emotion for wisdom, impulse for knowledge, and good intention for sound judgment. “He means well” is a sweet and wholesome thing in the field of ethics. It may be of small consequence, or of no consequence at all, in the domain of law. “He means well” may save the legislator from the afflictions of an accusing conscience, but it does not protect the community from the affliction of mischievous and meddlesome statutes.
A diffused desire to do good — an anxious feeling about progress — are not to be derided, of course, but standing alone and regarded from the viewpoint of practical statesmanship, they leave something to be desired in the way of complete equipment for discriminating legislative work. Progress, let me suggest, is not a state of mind. It is a fact, or set of facts, capable of observation and analysis — a condition of affairs which may be cross-examined to ascertain whether it is what it pretends to be. But you cannot cross-examine a mere longing for goodness — an indefinite, inarticulate yearning for reform and the uplift — or an uneasy, vague state of flabby sentimentalism about things in general.
In matters of social conventionality we are still rigidly conservative, but in the field of government there is a widespread demand for innovating legislation — a craze for change. A politician may advocate the complete repudiation of the Constitution and be regarded with complacency, if not with approval as an up-to-date reformer and friend of the people, but let him appear in public wearing a skirt instead of a pair of trousers and the populace will be moved to riot and violence.
Impatience Undermines Freedom
The difficulty which confronts us in all the fields of human endeavor is that we are going ahead so fast — so many novel and perplexing problems are pressing upon us for solution — that we become confused at their very multiplicity. Evils develop faster than remedies can be devised. Most of these evils, if left alone, would disappear under the powerful pressure of public sentiment, but we become impatient because the force of social organism is not sufficiently radical and the demand goes forth for a law which will instantly put an end to the matter. The view which prevailed a hundred years ago was that the primary relation of the government to the conduct of the citizen was that of the policeman, to preserve the peace and regulate the activities of the individual only when necessary to prevent injury to other individuals or to safeguard the public; in short, to exercise what is comprehended under the term “police power.” It is true that the government was not rigidly confined to these limits, but whenever it undertook to go beyond them it assumed the burden of showing clearly the necessity for so doing. The whole philosophy found its extreme expression in the Jeffersonian aphorism “That government is best which governs least,” while Lord Macaulay’s terse summary was “The primary end of government is the protection of the persons and property of men.”
Of course with the tremendous increase in the extent and complexity of our social, economic, and political activities, alterations in the scope and additions to the extent of governmental operations become inevitable and necessary. To this no thoughtful person objects, but unfortunately the governmental incursions into the new territory are being extended beyond the limits of necessity and even beyond the bounds of expediency into the domain of doubtful experiment.
When Vices Become Crimes
There is, to begin with, an increasing disposition to give authoritative direction to the course of personal behavior — an effort to mold the conduct of individuals irrespective of their differing views, habits, and tastes to the pattern, which for the time being has received the approval of the majority. Under this process we are losing our sense of perspective. We are constantly bringing the petty shortcomings of our neighbors into the foreground so that the evil becomes overemphasized, while the noble proportions of the good are minimized by being relegated to the background. We have developed a mania for regulating people. We forbid not only evil practices, but we are beginning to lay the restraining hand of law upon practices that are at the most of only doubtful character. We not infrequently fail to distinguish between crimes and vices, and we are beginning almost to put in the category along with vices and offensive habits any behavior which happens to differ from our own.
We not infrequently fail to distinguish between crimes and vices.
I do not, for example, question the moral right of the majority to forbid the traffic in intoxicating liquor, nor its wisdom in doing so. No doubt the world would be better off if the trade were entirely abolished, but some of the states have recently gone to lengths hitherto undreamed of in penalizing the mere possession of intoxicating liquor and — since no one can use liquor without having the possession of it — thereby penalizing its personal use no matter how moderate such use may be. To put the consumer of a glass of beer in the penitentiary along with the burglar and the highwayman is to sacrifice all the wholesome distinctions which for centuries have separated debatable habit from indisputable crime. Such legislation, to say the least, constitutes a novel extension of the doctrines of penology.
Hitherto, laws on the subject have taken the form of prohibiting and penalizing the traffic, but not the personal use, which seems to have been quite generally regarded as falling outside the scope of the criminal law. The use of intoxicants or tobacco, however injurious to the user, has not generally been thought to involve the element of immorality. Hence the attempt to coerce an abandonment of such use by punitive legislation directed against the user, however desirable the result itself may be, will inevitably run counter to the sentiment, still rather widely entertained, that the imposition of criminal penalties for any purely self-regarding conduct can only be justified in cases involving some degree of moral turpitude.
It does not require a prophet to foresee that laws of this character exacting penalties so utterly disproportionate to the offense, can never be generally enforced, and to write them into the statutes to be cunningly evaded or contemptuously ignored will have a strong tendency to bring just and wholesome laws dealing with the liquor question into disrepute.
It is sometimes a matter of nice discrimination to determine, as between the liberty of the citizen and the supposed good of the community, which shall prevail. The liberty of the individual to control his own conduct is the most precious possession of a democracy and interference with it is seldom justified except where necessary to protect the liberties or rights of other individuals or to safeguard society. If widely indulged, such interference will not only fail to bring about the good results intended to be produced, but will gravely threaten the stability and further development of that sturdy individualism to which is due more than any other thing our present advanced civilization.
In passing legislation of this character, doubts should be resolved in favor of the liberty of the individual, and his power to freely determine and pursue his own course in his own way should rarely be interfered with, unless the welfare of other individuals or of society clearly requires it. “Human nature,” says Mill, “is not a machine to be built after a model, and set to do exactly the work prescribed for it, but a tree which requires to grow and develop itself on all sides, according to the tendency of the inward forces which make it a living thing.”
Human nature is so constituted that we freely tolerate in ourselves what we condemn in others, and we are prone to condemn traits of character in others simply because we do not find the same traits in ourselves. Very often the evil is in the eye of the beholder rather than in the thing beheld, for he is a man of rare good sense who can always distinguish between an evil thing and his own prejudices.
One objection to governmental interference with the personal habits, or even the vices of the individual, is that it tends to weaken the effect of the self-convincing moral standards and to put in their place fallible and changing conventions as the test of right conduct, with the consequent loss of the strengthening value to the individual of the free exercise of his rational choice of good rather than evil. Enforced discipline can never have the moral value of self-discipline, since it lacks the element of cooperating effort on the part of the individual which is the very soul of all personal advancement.
We may, therefore, well pause to consider whether the benefits which will result to society from a given interference of this character are sufficiently important to compensate for the loss of that fine sense of personal independence, which more than any other quality has enabled the Anglo-Saxon race to throw off the yoke of monarchical absolutism and substitute democratic self-government.
It must not be forgotten that democracy is after all but a form of government whose justification must be established in the same way that the justification of any other form of government is established; namely, by what it does rather than by what it claims to be. The errors of a democracy and the errors of an autocracy will be followed by similar consequences. A foolish law does not become a wise law because it is approved by a great many people. The successful enforcement of the law in a democracy must always rest primarily in the fact that on the whole it commends itself to a universal sense of justice, shared even by those who violate it.
Any attempt, therefore, to curtail the liberties of the citizen, which shocks the sense of personal independence of any considerable proportion of the community is likely to do more harm than good, not only because a strong feeling that a particular law is unjust lessens in some degree the reverence for law generally, but because such a law cannot be successfully enforced, and a law that inspires neither respect for its justice nor fear for its enforcement is about as utterly contemptible a thing as can be imagined.
Another thing which may well give concern to thoughtful men is the tremendous increase during late years in the number and power of administrative boards, bureaus, commissions, and similar agencies, the insidious tendency of which is to undermine the fundamental principle upon which our form of government depends; namely, that it is “an empire of laws and not of men”; the meaning of which is that the rights and duties of the individual as a member of society must be defined by pre-established laws and not left to be fixed by official edict as they may be called into question from time to time. The American people have heretofore enjoyed a greater freedom from vexatious official intermeddling and arbitrary governmental compulsion than perhaps any other people in the world. Despotism has found no place among us because we have been subject to no restraint save the impartial restraint of the law, which has thus far stood superior to the will of any official, high or low.
It is not enough, however, that we should continue free from the despotism of a supreme autocrat. We must keep ourselves free from the petty despotism which may come from vesting final discretion to regulate individual conduct in the hands of lesser officials. To this end the things which organized society exacts from its members must be particularized as far as practicable by definite and uniform rules. Liberty consists at last in the right to do whatever the law does not forbid, and this presupposes law made in advance — so that the individual may know before he acts, the standard of conduct to which his acts must conform — and interpreted and applied after the act by disinterested authority — so that the true relation to one another of the conduct and the law may be clearly ascertained and declared.
It is, therefore, of the utmost importance that the authority which interprets and executes the law should not also be the authority which makes it. The law must apply to all alike. The making of law is an exercise of the will of the state; the interpretation and application of the law is an exercise of the reason of the judge. The legislator concerns himself with the question Is the proposed law just in its general application? The official who administers the law has nothing to do with the abstract question of its justice; his function is to ascertain what it is and whether it has been violated. The two functions are so utterly different that the necessity of vesting them in separate hands has been long recognized. To confer upon the same man, or body of men, the power to make the law and also to administer it would inevitably result in despotic government by substituting the shifting frontiers of personal command for the definite boundaries of general, impersonal law. “The spirit of encroachment,” said Washington in the Farewell Address, “tends to consolidate the powers of all the departments in one and thus to create, whatever the form of government, a real despotism.”
Regulation of Business
The danger, therefore, which is threatened by the multiplication of bureaus and commissions consists in the commingling of these powers. The authority conferred upon these administrative bodies is becoming less and less limited. The jurisdiction to deal with particular subjects involving the conduct of individuals is conferred in terms which tend to become increasingly indefinite.…
Not only are the business activities of the country being investigated, supervised, directed, and controlled in such a multitude of ways that the banker, the merchant, and the men of industry generally are afloat upon a sea of uncertainty where if they succeed in avoiding the mines of dubious statutes by which they are surrounded, they are in danger of being blown up by an administrative torpedo, launched from one of the numerous submarine commissions by which the business waters are everywhere infested, but the government is invading and is threatening to more seriously invade the market place itself, not as a regulator, but as a participant and competitor. We seem to be approaching more and more nearly the point where the old philosophy that whatever can be done by the individual should not be done by the government even though it may be well done, is to be abandoned for the new and dangerous doctrine that whatever can be done by the government, even though it may be badly done, should not be permitted to the individual.…
The regulation and control of merely self-regarding conduct, the multiplication of administrative boards and similar agencies and the invasion of the field of private business, which I have thus far particularized, illustrate rather than enumerate the various tendencies of modern legislation and government to depart from those sound and wholesome principles which hitherto have been supposed to operate in the direction of preserving the individual against undue restraint and oppression.
Class legislation, the most odious form of legislative abuse, is by no means infrequent. In state and nation statutes are to be found which select for special privilege one class of great voting strength or set apart for special burdens another class of small numerical power at the polls.
Separation of Powers
Next to the separation and distribution of the legislative, executive, and judicial powers, the most important feature of our plan of government is the division of the aggregate powers of government between the nation and the several states, to the one by enumeration and to the other by reservation. I believe in the most liberal construction of the national powers actually granted, but I also believe in the rigid exclusion of the national government from those powers which have been actually reserved to the states. The local government is in immediate contact with the local problems and should be able to deal with them more wisely and more effectively than the general government having its seat at a distance. The need of preserving the power and enforcing the duty of local self-government is imperative, and especially so in a country, such as ours, of vast population and extent, possessing almost every variety of soil and climate, of greatly diversified interests and occupations, and having all sorts of differing conditions to deal with.
A foolish law does not become a wise law because it is approved by a great many people.
There is, unfortunately, however, a constantly growing tendency on the part of the general government to intrude upon the powers of the state governments, more by way of relieving them from responsibilities they are willing to shirk than by usurping powers they are anxious to retain. Especially does any inroad or suggested inroad upon the federal treasury for state purposes meet with instant and hearty approval. The grave danger of all this is that the ability as well as the desire of the people of the several states to carry their own burdens and correct their own shortcomings will gradually lessen and finally disappear, with the result that the states will become mere geographical subdivisions and the federal character of the nation will cease to exist save as a more or less discredited tradition.
These and many other matters afford temptation to further discussion to which I cannot yield without undue trespass upon your patience, which I feel has already been quite sufficiently taxed.
Human Dignity and Property
Fifty years ago a great French writer — Laboulaye, I think it was — speaking through the lips of one of his American characters, uttered these words of wisdom and of power, words which are as true today as they were when they were written:
The more democratic a people is, the more it is necessary that the individual be strong and his property sacred. We are a nation of sovereigns, and everything that weakens the individual tends toward demagogy, that is, toward disorder and ruin; whereas everything that fortifies the individual tends toward democracy, that is, the reign of reason and the Evangel. A free country is a country where each citizen is absolute master of his conscience, his person, and his goods. If the day ever comes when individual rights are swallowed up by those of the general interest, that day will see the end of Washington’s handiwork; we will be a mob and we will have a master.
It is now as it has always been, that when the visionary or the demagogue advocates a new law or policy or scheme of government which tends to curtail the liberties of the individual, he loudly insists that he is acting for the general interest and thereby surrounds his propaganda with such a halo of sanctity that opposition or even candid criticism is looked upon as sacrilege.
But the time has come when every true lover of his country must refuse to be misled or overawed by specious claims of this character. Individual liberty and the common good are not incompatible, but are entirely consistent with one another. Both are desirable and both may be had, but we must demand the substance of both and not accept the counterfeit of either. Crimes, we are told, have been committed in the name of liberty. But either the thing that was called a crime was no crime or the name of liberty was profaned, as though one should become an anarchist in the name of order.
Liberty and order are the two most precious things beneath the stars. The duty which rests upon us of this generation is the same that has rested upon all the generations of the past; to be vigilant to see and absolute to repel every attempt, however insidious or indirect, to destroy liberty in the name of order, or order in the name of liberty, for the alternative of the one is despotism and of the other the mob.
To destroy liberty in the name of order is a difficulty which will continue to perplex.
Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”
Cui Bono–Cherchez les Contingencies