Some Further Thoughts on Government Regulation


In several forums, including one long book, Private Rights and Public Illusions (The Independent Institute, 1995), I have argued that government regulation is unjust, a policy unbecoming of a free society. Government regulation is a form of prior restraint, meaning, the legal authorities take aggressive action against citizens before they have done anything that deserves such action.

A principle of justice is that unless one has acted aggressively toward others, or there is extremely good evidence that one is about to do so, no one may restrain one from doing what one wants. No one is authorized to rule another unless this other has taken actions that are themselves an attempt to rule others. Or, as Abraham Lincoln put it, 'No man is good enough to govern another man without that other's consent.' (Indeed, as far back as ancient Greece, some have recognized this point-'see, for example, Alcibiades' debate with Pericles in Xenophan's Memorabilia where Alcibiades shows that legal measures that involve coercion are not in fact laws at all.)

There are those who would reply that government regulation is, in fact, consented to by way of the electoral process, but this is sophistry. The electoral process must conform to due process, not override it, since none of us is authorized to vote other people into servitude. We may vote on who should administer the laws but not on what laws we must live by; that's a matter of argument and must evolve through the common law, not via the vote. That is why a lynch mob is immoral and unjust'-it aims to trump justice, of which due process is a crucial element. Since many people realize that others really have no moral authority to govern them without their consent, as well as that government regulations amount to just such 'governance,' there are massive efforts to evade or circumvent such regulations. Arguably the huge legal departments in major corporations are part of such efforts. The motivation for this is very much akin to what underlies the existence of black markets or smuggling operations'-people do not believe that bans on the production and sale of various goods and services is morally justified, so they work diligently and cleverly to dodge such bans.

This is so even if what's banned is itself unsavory, shameful'-for example, prostitution or mindless gambling. What they do know, at least tacitly, is that there is something radically wrong about governmental efforts to suppress such trade. It is a bit like when we know that police brutality is wrong even if we disapprove of the person who is its target, or when we know that beating someone up for having insulted another is going way beyond any kind of permissible response.

So, in business it is quite possible that a reason why folks so often run afoul of 'the law''-a la Martha Stewart, for instance'-is that much of the law bearing on them is understood by them as harassment, nothing to do with crime or civil order. All those government regulations in banking, manufacture, marketing, sales, and so forth impose burdens on professionals, what with all the rules, fines, and even prison sentences administered not for having violated someone's rights but merely for having the capacity to do so'-they might hurt someone, they might injure someone, they might defraud someone, although they haven't done so at all. Government regulation is nearly all precautionary, preventive, yet in the criminal law that's banned, deemed a violation of due process. Only if someone has violated'-or is very likely to violate'-another's rights, may law enforcement go into action against that individual.

So, one result of this precautionary nature of government regulation is that those covered by it work very hard to evade them. That's so, arguably, because many people do not really believe the regulations are just and thus consider them an imposition they should not suffer. No, they probably haven't some coherent, fully worked out idea about this; but in their guts, as it were, they sense confidently enough that there is something amiss here. And this leads to their treating not just government regulations but nearly all laws as suspect, perhaps not really deserving of compliance.

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Tibor R. Machan's picture
Columns on STR: 70

Tibor Machan is a professor of business ethics and Western Civilization at Chapman University in Orange, Calif., and recent author of Neither Left Nor Right: Selected Columns (Hoover Institution Press, 2004).  He is a research fellow at the Hoover Institution, Stanford University.