"No government of the left has done as much for the poor as capitalism has. Even when it comes to the redistribution of income, the left talks the talk but the free market walks the walk. What do the poor most need? They need to stop being poor. And how can that be done, on a mass scale, except by an economy that creates vastly more wealth? Yet the political left has long had a remarkable lack of interest in how wealth is created. As far as they are concerned, wealth exists somehow and the only interesting question is how to redistribute it." ~ Thomas Sowell
Had Enough Government 'Regulation' Yet?
By Glen Allport.
Exclusive to STR
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The Blessings of True Regulation in a Civil Society
Many things should be regulated – for health and safety, for protection against fraud, and for other reasons.
Regulation is a normal function of civil society. We don't want to get electrocuted when we touch a toaster or vacuum cleaner, for example, and the makers of electrical devices (and their insurance companies) know that killing customers would be bad business, so – in this case – early in the industry's life, a young electrical engineer founded Underwriter Laboratories, a non-profit safety and testing firm. You probably have a dozen or more products in your home with the "UL Listed" label, including the monitor on which you are reading this. Portable devices, which by their nature are not powered directly by wall current, are typically certified by groups other than UL, although, for example, "UL 1604 certification allows products to be used in potentially explosive environments found in oil and gas, petrochemical, aviation and other industries" (per Panasonic, whose Toughbook laptops* are so certified) and UL has recently added mobile telephone battery certification to its list of services.
* Not entirely on point, but thousands (thousands!) of these $3,000 laptops were recently stolen from a private contractor working for the U.S. Special Operations Command.
Founded in 1894, UL predates OSHA by 76 years. Today, OSHA relies heavily on standards created by UL and on UL testing, on standards created by ANSI, and on other private, non-government groups. Because UL is not a government agency, its customer base is not captive – although non-profit, UL must still either provide a service that people are willing to pay for, or disappear. Market pressures from all sides – from manufacturers, from consumers, from insurance companies, and more – push UL to do an excellent job at a fair and efficient price.
Corruption – such as dangerously easing standards for a manufacturer in return for cash or for a cushy job after retirement from UL – would erode respect for UL and might expose Underwriter Labs and those who run it to civil and possibly criminal penalties, especially if even a single death or injury were to result from the malfeasance. Such corruption would also give competing firms (such as MET Laboratories) a chance to take market share away from UL by providing services that insurance companies, consumers, and manufacturers COULD trust. Not surprisingly, Underwriter Labs appears to have resisted any such temptations and as a result, the firm is a respected and globe-spanning organization. Thanks to UL's competent and efficiently priced services, electrical appliances and quite a few other things, from high-voltage industrial equipment to drinking water, remain both safe and affordable.
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When Government Gets Involved
Underwriter Laboratories and other such groups make the benefits of business regulation crystal-clear. Why is regulation so often a disaster, then? Why does government regulation nearly always raise prices, sometimes – as with medical care and pharmaceuticals – to bizarre levels? Why are regulatory agencies so often "captured" by corporations and used to keep new competitors out of the field, or to protect company profits by creating "standards" that merely legalize shoddy and dangerous practices and products?
The answer is that such problems are inherent in the nature of coercive governance, and not only with regulation. The coercive, monopolistic, and coercively-funded system is the problem; there are competent and well-meaning people in (one assumes) every government regulatory agency, but – as with public schools – the nature of the system itself ensures poor results no matter how well-meaning and competent many of its employees may be.
For that matter, some government regulation would more accurately be termed government-imposed price fixing, as with government-granted monopolies. AT&T was just such a government-created monopoly; when the government eventually broke up AT&T into the "baby Bells" and allowed them to compete, the competition drove long-distance pricing down from 62 cents per minute in 1983 to 10 cents per minute in 2001.
With a small, restrained government, there isn't much coercive State power for industry and other special interests to co-opt. As a government becomes larger and more powerful, this changes. With today's overgrown federal government, the power that corporations can purchase (via lobbying and other methods) is almost limitless.
Given that, it should be no surprise that government-imposed and government-run regulation in the United States is very different in effect from market-based regulation as exemplified by Underwriter Labs and other such groups. Contemporary examples of this sad reality are all around us (and in the links embedded in the text below). Despite the good that government regulation does and despite the honest, competent, hard work of many government employees in the regulatory agencies, the net result of our government-supplied regulation is negative – and often extremely negative, as detailed below.
Non-government regulation – which might largely consist of the same people employed at private firms and non-profit organizations – would provide the good without also creating the bad we suffer from government efforts. Examples of how government-supplied regulation harms more than it helps:
The BP oil-spill disaster and other environmental horrors
Government has been regulating offshore drilling for decades – including while BP destroyed the Gulf, and maybe the Atlantic as well, or maybe, just maybe, the entire planet (see also here, about a possible full-on ice age caused by the spill stalling the loop current that moves warm water north past the East coast and on to Europe). If you thought government regulation and other government meddling played no role in this disaster, see here, here, here, and here – just for a start. (And if you thought the problem was over, think again). Our government has also tried to hide the existence of a six-mile-wide oil plume under the Gulf and to discredit the scientists who found it. In this crisis, as elsewhere, government has often used its power in ways that cause harm. Only the State could forcibly prevent clean-up efforts (one example: early on, the EPA stopped the use of Costner's highly effective centrifuge machines because their discharged clean water still contains trace amounts of oil, thus violating an EPA standard). Only the State can legislate away most or all of an industry's liability for damages (as was done for the nuclear power industry in 1956, as well as for the oil industry and many others). Only the State can get away with refusing to recognize its own liability for horrors beyond anything a private firm could inflict, such as spreading Agent Orange over who-knows-how-many square miles of inhabited land or using thousands of tons of radioactive and chemically poisonous depleted uranium in and around populated areas (not to mention that nano-particles of the stuff are then carried around the Earth on the winds).
Economic and market regulation
Government has also been regulating banks and investment firms for decades. Government stood by, cheering on the bad guys (sometimes even requiring the bad guys to act as they did, like lend money to people who clearly couldn't pay it back) and inflating the money supply (which has to go somewhere) for bubble after bubble and crash after crash, going back to the Roaring Twenties and subsequent Great Depression, and even earlier. Government itself and the government-chartered Federal Reserve are the culprits here. In plain language, it is government interference (in a thousand ways) that created the present crisis. Not everyone is unhappy with this: Goldman Sachs and many other corporations have strong reasons to thank Mr. Government Regulator Man (and his many kin in Congress and elsewhere), because when your profits stay privatized but your losses are socialized, you practically can't lose! Citigroup (which received $45 BILLION of bailout money) and Bank of America (ditto!) and quite a few other big companies have benefited enormously from the generosity and benevolent oversight of our government. Failure and stupidity couldn't possibly pay so well without the help of Mr. Government Man.
Speaking of failure and stupidity: What regulatory group was keeping an eagle eye on Bernie "The Ponzi King" Madoff while the Ponz-meister was stealing $billions from too-trusting retirees and other investors?
The government's own SEC, of course, which received tips and complaints about Madoff's operation for a decade before the man volunteered his confession. Red flags were everywhere, but the SEC ignored them. Too bad for Madoff's investors, but hey: it's Darwin in action, baby! Considering that Congress has handled our Social Security
contributions taxes in much the same way that Madoff handled his client's money, perhaps we shouldn't be surprised at government failure in this area.
At the top of the regulatory food chain in the monetary realm is the Federal Reserve, a privately owned corporation chartered by the government to create (for a profit) the money used by the United States (and isn't that a bizarre idea?) and to regulate banking in this country. Under Federal Reserve stewardship, the U.S. dollar has gone from a perfectly-stable value of one-twentieth of an ounce of gold per dollar (meaning, for instance, that Henry Ford was paying his assembly-line workers a quarter-ounce of gold per day for building those Model Ts) to our present situation where the dollar HAS no defined value, is tied to nothing whatsoever, and will currently purchase only a tiny speck of gold; about one twelve-hundredth of an ounce (you can check the current gold/dollar ratio at 321gold.com). Americans are leery of the Fed (for good reason) and overwhelmingly want the Fed thoroughly audited at the very least, but instead Congress and the President have recently given the Fed vast new regulatory powers in the 2,000+ page Dodd-Frank Financial Regulation Act. Yet it appears the Inspector General for the Federal Reserve cannot account for $9 trillion in the Fed's off-balance-sheet transactions. (Link includes text and imbedded video of the IG being questioned on the topic, and yes: that was "trillion" with a "t"). We gave sweeping new powers to a secretive organization that doesn't know, or won't say, how it spent nine trillion dollars of our money. Yikes.
Preventing cattle producers from testing their own herds for Mad Cow disease
Another example: Who is it, do you think (hint: rhymes with "USDA") that has been forcibly preventing cattle producers from testing their own cattle for Mad Cow disease?
Once again, the answer is: Government. I cannot imagine any good reason for such stunning and callous tyranny, unless you consider taking the pressure off corporate cattle producers to more closely monitor their cattle to be a good reason. This is government power being used in the service of corporate profit at the expense of human health and safety, and it is sufficiently blatant that major newspapers have written editorials about it (see the two links above). Really, you'd expect that only an over-the-top fictional villain like Dr. Evil would do something like prevent a cattle rancher from testing his own cows for Mad Cow disease. I mean, c'mon!
No market entity, such as Underwriter Labs, would have the power to do such a thing; it would take a group that routinely uses coercion and can get away with it. In short, it would take either organized crime or coercive government.
Harassing and threatening cherry farmers and walnut growers
The similarity between organized crime and coercive government gets stronger the more you look at how government regulation (or any other part of government) operates. For instance, who would threaten cherry growers with fines and maybe worse for providing truthful information about the health benefits of their products (including the results of taxpayer-funded studies)? I'm sure you can guess the answer: Government, in the particular guise of the Food and Drug Administration.
The FDA has pulled this same stunt on walnut farmers, using logic that even Dr. Evil might be too embarrassed to employ. William Falloon describes the situation (pdf):
. . . the FDA’s language resembles that of an out-of-control police state where tyranny reins over rationality. To enable you to recognize the absurdity of all of this, I excerpted a few paragraphs from the FDA’s warning letter to Diamond Foods as follows:
"Based on our review, we have concluded that your walnut products [i.e., walnuts] are in violation of the Federal Food, Drug, and Cosmetic Act (the Act) and the applicable regulations in Title 21, Code of Federal Regulations (21 CFR)."
"Based on claims made on your firm's website, we have determined that your walnut products are promoted for conditions that cause them to be drugs because these products are intended for use in the prevention, mitigation, and treatment of disease."
"Because of these intended uses, your walnut products are drugs within the meaning of section 201 (g)(1)(B) of the Act [21 U.S.C. § 321(g)(B)]. Your walnut products are also new drugs under section 201(p) of the Act [21 U.S.C. § 321(p)] because they are not generally recognized as safe and effective for the above referenced conditions.
"Therefore, under section 505(a) of the Act [21 U.S.C. § 355(a)], they may not be legally marketed with the above claims in the United States without an approved new drug application."
"Additionally, your walnut products are offered for conditions that are not amenable to self-diagnosis and treatment by individuals who are not medical practitioners; therefore, adequate directions for use cannot be written so that a layperson can use these drugs safely for their intended purposes. Thus, your walnut products are also misbranded under section 502(f)(1) of the Act, in that the labeling for these drugs fails to bear adequate directions for use [21 U.S.C. § 352(f)(1)]."
If you are getting the impression that corporate profit and the exercise of raw power are more important to government regulators than your piddly-old health, then you are beginning to see what an attorney might call the government's "pattern of behavior" – and not just in the United States. For example, regulatory antagonism to vitamins and other safe supplements is even more extreme in Europe, where supplements are already regulated (and priced) as if they were drugs. This does not make the supplements safer (they are incredibly safe as it is) or protect public health in any way – instead, based on decades of studies showing the dramatic health benefits of many supplements, such "regulation" probably causes the premature deaths of millions from cancer, cardiovascular disease, diabetes, Alzheimer's, Parkinson's, and other conditions by reducing supplement intake – but it DOES make for higher profit margins for several large corporations, and for the medical industry as well.
Banning a natural vitamin – so it can be sold as a drug
Back to the United States and the FDA: the agency has decided to ban a natural form of vitamin B6 (pyridoxamine), despite it having been sold in supplements for years (the FDA apparently disputes this) and despite it having been present in the food we eat since before the human race was identifiably human.
Pyridoxamine is not only the safest form of the vitamin but is highly protective against glycation, and thus able to slow the damage from diabetes (and even, to a lesser extent, from normal aging), improving the health and extending the lives of diabetics and others. The ban was requested by BioStratum, Inc., which wants to sell pyridoxamine, at hugely inflated prices, as a drug. Of course, they'll first have to run human trials (no, I'm not kidding), which means Americans will be unable to obtain this natural and life-saving vitamin for YEARS (other than the smallish amounts we get in food).
We might be able to buy pyridoxamine from its new Big Pharma owners in 2014 (or never, if the firm runs out of money for clinical trials). In the meantime, millions of Americans will suffer from this imaginary transformation of a vitamin into a drug, as the kidney damage, eye damage, and other harm that might have been inexpensively prevented by pyridoxamine goes unchecked (and won't that be terrific for the fiscal health of Medicare?). Later, when the "drug" version – the identical substance – finally becomes available again, Americans will have to pay Big Pharma's insanely high prices for a cheap, natural vitamin. Medicare and other government health plans will ALSO pay the inflated new price, and without discounts: Obamacare forbids anything so déclassé as negotiating quantity discounts from the drug companies, or even importing lower-cost drugs.*
* The drug industry is appropriately grateful to those who, like Senate Majority Leader Harry Reid, helped get the "healthcare" bill passed. Meanwhile, the unintended side effects of this law – such as the potential for massive job loss or loss of existing health insurance benefits for low-income Americans – are only now being considered.
Clearly, your health is not the important thing in all this. Nor are your finances, or even the financial health of the federal government. What IS important is that drug companies will make oceans of money from what would otherwise be just another low-cost supplement at your supermarket or health-food store. The medical industry will enjoy some benefit as well, given that you'll have to see your doctor and get a prescription to obtain pyridoxamine when it finally becomes available again, and also given that diabetic complications will be more advanced and more common than they otherwise might have been, due to pyridoxamine's having been banned for years while the drug companies got their regulatory ducks in a row. And finally, the political class and the lobbying industry benefit from the continued demonstration that government can use its coercive power to the benefit of anyone with enough money and clout to get Congress or a regulatory agency to intervene on their behalf – often in ways that would be criminal if done by anyone else.
For more on the pyridoxamine ban, an FDA announcement on the matter is here. The petition filed with the FDA by law firm Morgan Lewis on behalf of BioStratum, requesting the ban, is here [pdf]. Another article on the subject is here; it includes this sentence: "In 2005, an up-and-coming pharmaceutical company made a big mistake: they invested millions of dollars into developing a drug only to discover that the only active ingredient of the drug, pyridoxamine, was really a common, naturally occurring substance that has been sold for decades at low cost to consumers in the form of a dietary supplement, and has always been available in commonly consumed foods such as chicken and brewer’s yeast." More on both pyridoxamine and the FDA's actions may be found in the Wikipedia article on the topic; there's no mention of Dr. Evil, but I believe that's him laughing manically in the background.
Such actions are commonplace
Is this sort of thing unusual? Is it unique to the FDA and the USDA? Of course not. It is the norm and has been the norm from the start of government regulation in the United States. The phenomenon is called regulatory capture, and here is Luke Mitchell on the topic: "When Congress created the first U.S. regulatory agency, the Interstate Commerce Commission, in 1887, the railroad barons it was meant to subdue quickly recognized an opportunity. 'It satisfies the popular clamor for a government supervision of railroads at the same time that that supervision is almost entirely nominal,' observed the railroad lawyer Richard Olney. 'Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad interests.' [Moving into the present, Mitchell continues] ". . . The Democratic deal for the drug companies is, if anything, even sweeter than the Democratic deal for the insurance companies." (from Understanding Obamacare by Luke Mitchell, Harper's Magazine) [Emphasis added]
There's more – an endless listing, I'm afraid. For example, the FDA approves patented pharmaceutical drugs that kill about 100,000 per year* (diabetes drug Avandia being only the latest major scandal in this area) while blocking consumer access to information about the safety and efficacy of over-the-counter supplements which are often more efficacious than patented drugs, incredibly safe (typical annual death toll in the U.S. from supplements: zero), and which, in many cases, have been safely used for centuries. For that matter, the FDA forcibly denies terminal cancer patients medicine that might save them and which, in some cases, is widely and safely used elsewhere. And as everyone is painfully aware, FDA regulation of the pharmaceutical industry has, quite predictably for government regulation, resulted in on-patent drugs becoming insanely expensive. By one accounting, even generic drugs are eight times more expensive than they should be.
* Add medical mistakes and other deaths from regulated medical/pharmaceutical products and services, and the death toll from America's heavily regulated "health care" industry may exceed 750,000 per year. On the death toll from supplements: some sources show slightly higher figures than "zero" but none that I've seen suggest more than a handful of deaths per year.
A more civil society is the only cure for the damage we've created
Seriously: eliminating coercive, monopolistic government regulation is the only way the United States will return to its former, widely-envied situation of healthcare that is both state-of-the-art and highly affordable. House calls by the family doctor used to be cheap and commonplace (I am old enough to remember them) – and pro-bono healthcare was easy enough for doctors to set up that it, too, was common. Like today's market-regulated electronics industry, today's medical and drug industries should be providing dramatically cheaper and better products and services year after year. Government regulation, which displaces healthy market regulation and other functions of civil society, is the reason we can no longer easily afford drugs and medical care and can no longer, in many cases, even obtain certain drugs and types of medical care that might improve or even save our lives. Freedom and compassion have been replaced with regulation-at-gunpoint, and the costs are enormous whether measured in money or lives.
All of this is a perfect example of the difference between regulation as practiced by Underwriter Laboratories and other non-government groups, and regulation as practiced by the Federal government. One is a blessing; the other a curse.
The truly weird thing about this is that so many Americans believe government-imposed regulation is the only kind of regulation available, and that it's a good thing – that without such twisted, counter-productive, and deadly "regulation," we would have horrible problems. Yet the FDA itself (for example) causes so many problems, in so many ways, that the Life Extension Foundation's William Falloon has called the FDA "the number one cause of death" for Americans. Falloon isn't kidding; he has been documenting outrageous and often deadly behavior by the FDA for decades.
Seriously: is there ANY other group as bizarrely evil and incompetent as government? To quote Will Smith: "No. HELL no." In truth, no other group (Apple? Microsoft?) even comes close, although note that I include corporatism – the bonding of corporate and government power – in my definition of "government".
The horrors described above are in addition to aggressive foreign wars, the aggressive and racist "War on People Who Use Pot and Certain Other Drugs," and the long slimy trail of genocide and torture and other cruelty that government has been responsible for since, well, since the first gang of psychopaths decided that farming other human beings might be easier and more lucrative than working for a living. I mean, really: take money from people by FORCE and then spend it however you want? What psychopath wouldn't jump at THAT in a heartbeat? Give it a fancy name and hey! – you da' man!
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Ringo's Law and the Case of the Upside-Down Incentives
The harm caused by government regulation is an unavoidable manifestation of Ringo's Law, which states: "Everything government touches turns to crap." Nothing in the natural sciences is more accurate than Ringo's Law or shows more predictive power, as even a cursory study of history will show. Ringo's Law is one of several reasons that abolition of coercive government, as championed by Thoreau and many other Classical Liberals, is the only sensible approach – just as abolition was the only sensible approach to full-on slavery.
Back to regulation: Most people think we could reform our failed regulatory agencies, including the SEC, the FDA, the USDA, the Dept. of the Interior (which regulates oil drilling, including in the Gulf), the Minerals Management Service (MMS is that part of the DOI which most directly regulates oil drilling – or was; it is being renamed the Bureau of Ocean Energy Management, Regulation and Enforcement, or BOE for short), and the EPA (another federal agency regulating oil drilling; EPA regulations and other laws and rules were actually used to prevent clean-up after the BP spill in the Gulf in several ways; at the same time, the EPA has allowed the massive use of the incredibly toxic Corexit dispersant, which apparently does nothing to fix the oil disaster [other than to save BP money by hiding the extent of the problem, keeping the oil mostly out of sight] and which is now entering the food chain in the Gulf).
Every regulatory agency we have is a "failed agency" because coercive government is, for obvious reasons, the worst way to do anything ever devised. Well, other than things like genocide and torture and aggressive war and so on, but that's only because civilized people don't DO things like genocide and torture and war.
Weirdly enough, even failure itself doesn't work in the realm of coercive government. Failure has a function in the real world: to get those who fail out of the way of those who can do better. This function is why, for instance, Honda Motors is a successful multinational corporation, and Yugo is history.
How does failure operate on government agencies? Incredibly, the answer, for the most part, is: exactly opposite to how failure operates in the market. In government, or in industries protected/regulated by the government, failure is often a good thing, in the sense that failure leads to more money and more power being taken from "customers" and given to the State or to the "too big to fail" (but not too big to be stupid!) businesses involved.
In other words, the incentives here are upside-down.
How can that be? Easy: it happens through the magic of coercion. Yes, coercion is the special ingredient that lets the State fail miserably at almost everything, and then – time after time! – use that failure to justify taking even more money and control from the humans being farmed – er, from the citizens. Or "consumers," or whatever we're calling them these days.
Because normal businesses don't have access to that magic ingredient – coercion being a crime and all – they can't force their customers to pay for crappy products and services. Without the sparkly powerful brawniness of coercion, ordinary businesses have to actually not-fail in the marketplace, because customers of ordinary, non-sparkly businesses don't have to pay – not for things they don't want, anyway. But customers of the State do have to pay, like it or not (and or else, if you know what I mean) and they have to pay even when the goods or services are exceptionally crappy, and even when the customers don't want and don't use the goods or services, and even – this is where you can really see the awesome sparkly power of coercion – even when the customers think the goods or services are vile and evil and horrible, like, say, war and torture and stuff.
Wow! Try that, Honda Motors!
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Crisis and Reform as Tools for Expanding Tyranny
One reason "reforming" a failed State regulatory agency (or a regulated industry) only makes things worse is that the reform typically supports the Universal Statist Game Plan; to wit:
Take more money and power from the people whenever possible, and make sure the transfer is permanent.
State failure (or any other crisis) is thus a tool for increasing the power of the State. Of course, it helps to blame the failure on something else: "the market" is an especially good patsy because blaming the market not only shifts blame FROM the State but infers that the market, and thus civil society generally, is unable to function properly without the State's power elite micro-managing everything – a double win for those in power! This attitude is exemplified by Rahm Emanuel's famous comment: "You never want a serious crisis to go to waste." Mr. Emanuel is (at least as I write these words) Obama's chief of staff, but his comment encapsulates the view of ruling elites everywhere and in every age.
Crisis is such a useful tool for the power elite that throughout history, those in power (and those hoping to displace them) have not only used crises to further empower themselves, but have often contrived their own, custom-made crises: false flag attacks, supposed drug threats, "cold" wars, economic emergencies of various stripes, and so on. The crisis is pitched as proving the "need" for more government control; a media campaign is typically orchestrated toward that end, and soon: Yippee! It's Christmas day in Washington or Moscow or wherever, with gaily-wrapped packages of new government powers and tax-streams nestled beneath the tree. Again, this dynamic works to the advantage of those in power whether the crisis is "genuine" or something callously engineered.
Despite my lame attempts at humor above – sorry, but I need something to help counter the horror of all this – the reality is even worse than I've made it sound. For example, a recent AP story about The Washington Post's project on the growth of intelligence agencies since 9/11 (a multimedia effort titled A Hidden World Growing Beyond Control) says that "there are now more than 1,200 government organizations and more than 1,900 private companies working on counterterrorism, homeland security and intelligence in some 10,000 locations across the U.S." The infamous and truly scary secret police agencies of recent history, including the KGB, the Gestapo, the SS, the Stasi, and others, would be insanely jealous of what the Bush and Obama administrations have put together to surveil and increasingly to dominate the American people. "Growing beyond control" seems an understatement, and the growth of this evil isn't over yet: the push to strip civil liberties from Americans continues.
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As we have already seen, the ongoing, unavoidable damage caused by using a coercive, centralized monopoly to run so much of society brings plenty of crisis situations all on its own, even when no crisis is being purposefully engineered. You've seen these crises (of both types), and been affected by them your entire life.
It is worth remembering the incentive structure here: A failure – especially a nice, juicy, EPIC failure – can be used to expand existing agencies or even as pretext to create a new agency or (jackpot!) a fleet of new agencies such as the TSA, Homeland Security, the National Counterterrorism Center (NCTC), and others after 9/11. It is fair to say that the incentives here are not merely upside-down but actually opposed to the well-being of the masses. That is, government has strong incentive to fail, and for that matter to not resolve a given crisis quickly if a longer-running or deeper crisis might set the stage for an even bigger power grab.
Once again: regulation is necessary, but coercive government – an inherently psychopathic institution, because coercion is a crime – is the wrong tool for the job. The FDA (called the Bureau of Chemistry at the time) was founded in 1906 for perfectly good reasons: Nothing like Underwriter Laboratories had been created to ensure the purity and safety of foods and medicines. Regulation was sorely needed, and "muckraking" journalism such as Upton Sinclair's The Jungle put the problem front and center in the public mind. Yet the FDA has not only failed to properly regulate our food supply and our medicines (problems like those Sinclair described continue), the agency has, as we have seen, used its coercive power to cause serious harm to the people the FDA is supposed to protect. We would have been far better served to let a market response to Sinclair's book emerge, and for that matter, government could have used its bully pulpit to encourage such a solution – but that is not how government empires grow.
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How Mal-Regulation by the State Destroyed the Modern World
The relentless increase in government's reach in the United States has done more than convert Thomas Paine's "haven for Mankind" into a darkening police state and a poverty-stricken yet aggressive empire; it has destroyed many normal functions of civil society, replacing civil, market-based solutions (including pro bono and other charitable efforts) with coercive, centralized, government-run or government-controlled versions. Regulation is not the only natural function that has suffered in this regard, but two key regulatory failures in the last few years are especially troubling.
The financial crash of 2008 and the massive, ongoing BP oil spill in the Gulf of Mexico (which has now hit the beaches of every Gulf state) mark a tipping point that ends one age, especially in the West, and begins another. Damage from these two events continues – neither is repaired or even contained, despite assurances to the contrary – and that damage is in the process of ending the world we have long considered "normal." Say goodbye to full employment at high wages (or any job at all, for many Americans) with job security and generous benefits; to comfortable retirement with a fully-funded pension; to low prices for food, gasoline, and most other consumer items; to a strong real estate market; and to a natural environment still healthy enough to take for granted. All of that and more is gone for good, or at least for several generations to come.
Am I overstating the problem? I hope so, but I don't see how. At the very least, these two catastrophes are epic in scope and among the worst of their kind ever seen.
It is important to understand that neither of these disasters had to happen. Both of these cataclysmic fiascos would have been prevented by proper regulation. Replacing civil society, including civil society's natural regulatory mechanisms, with a coercive monopoly funded by coercive taxation and run largely by coercive means – for the benefit, inevitably, of a power elite – is neither healthy nor safe for society as a whole, and if these twin disasters don't teach us that, I can't imagine what will.
The regulatory simulacrum of State oversight is a shape-shifted replicant with different interests and incentives than the real thing. This unnatural corporate tool, cloaked in the guise of corporate regulator, emerges from the bonding of special interests (corporations especially, but also unions and other groups) with State power structures.*
* One particularly relevant example: the oil industry's often-decried influence on the Bush/Cheney administration, which included successfully pushing for regulatory changes (includes video, 2 min 9 sec) that saved money for the oil industry but are now implicated in the BP disaster in the Gulf and in dozens of lesser spills as well.
State-run regulation is not so much inept as it is actively harmful. Not only has government regulation failed us in the financial and environmental spheres, it actively contributed to both the Crash of 2008 (opening act for The Greater Depression, now in its early stages) and the BP Gulf of Mexico oil disaster – this last being both an ecological and a financial disaster that in the end may far exceed the scope of Chernobyl, another government-caused nightmare. (Speaking of which, a site titled Obama's Chernobyl has come online with news and links about the Gulf crisis).
Even before the ongoing BP event in the Gulf, the world's oceans (and rivers; see here, for example – note that the FDA is mentioned as testing only 2% of imported fish, despite much of that being contaminated) had already suffered "fundamental and irreversible ecological transformation" per a recent report* in Science Magazine.
* From the linked article – and remember, this was the situation before the BP disaster in the Gulf: "This is further evidence we are well on our way to the next great extinction event," said Ove Hoegh-Guldberg, the director of the Global Change Institute at the University of Queensland in Australia and a co-author of the report.
John Bruno, an associate professor of marine sciences at the University of North Carolina at Chapel Hill and the report's other co-author, isn't quite as alarmist, but he's equally concerned.
"We are becoming increasingly certain that the world's marine ecosystems are reaching tipping points," Bruno said, adding, "We really have no power or model to foresee" the impact.
~ It's not just BP's oil in the Gulf that threatens world's oceans by Les Blumenthal, McClatchy Newspapers
Coming on top of that, the Gulf of Mexico oil disaster – even the cleanup efforts are toxic (video, 1 min 37 sec – includes the claim that all of the Exxon Valdez cleanup crew is now dead, at an average age of 51) – may ultimately damage the global environment enough to cause a massive drop in environmental carrying capacity (the environment's ability to support life). 1.84 million gallons (and counting; one source suggests 42 million gallons is the true number) of toxic chemical dispersants have been added to the mix of oil, methane, and other poisons in the Gulf, and the true damage from all this will not be known for years or decades. There is even a chance that damage to the Gulf floor will lead to a planet-wide extinction-level event of a particularly nasty type – one seen several times before in Earth's history.
The odds of such scenarios are unknown, but this video taken during a June 21, 2010 flight over the Gulf (9 minutes 55 seconds) gives a sense of what has already happened – and no wonder flights over the Gulf have been severely restricted. Seeing the devastation – or at least, some of the surface effects – is quite different from reading about it. If you set the video to maximum resolution and full screen, you will be stunned at the vastness of what has already happened and at how puny our efforts to mitigate the damage really are. Imagine oil continuing to gush into the water unabated, not for two months but for two years, or 20 years, or for centuries: take your pick, because no one is certain how long this will go on. Fair warning: included are views of dead and dying whales, dolphins, and other creatures trapped in open water poisoned with unimaginable volumes of crude oil and chemical dispersants, to the horizon and beyond. Here and there, the ocean is on fire and columns of black smoke rise into the clouds. Little wonder this has already been called "the worst man-made environmental disaster in history." Also, little wonder that State coercion is being used in various ways, large and small, to hide the truth from the public (see 6’4” Cop Bullies 4’11” Videographer as She Videos a BP Worker Taken Away in Ambulance; includes 9 min 3 sec video; cop shows up about halfway in).
Isn't the well capped now? Maybe, maybe not. And even if it is – and even if the cap holds – most of the oil being leaked into the Gulf may be from cracks in the seabed miles from the well that is being shown on newsfeeds. Oil industry insider Matt Simmons [who died suddenly as this was being written] believes exactly that; he recently "described the real blowout as an open hole gushing 120,000 barrels of toxic crude every day below the surface of the Gulf six or seven miles away from the riser. And BP is ignoring it, he said. 'What you are seeing on television, what BP is saying about relief wells . . . that's a total ruse,' said Simmons." (from Simmons' Take on Oil Spill in the Gulf by Christine Parrish in the Free Press). Certainly, the corporate and government efforts to prevent citizen access to the cleanup efforts and to control news about the Gulf suggests we are not getting a full and truthful account of the situation. Perhaps things are quickly getting better, as some news reports suggest (as opposed to simply having the oil out of sight, submerged in huge lakes and plumes or mixed with Corexit and dispersed into tiny globs that sea life cannot avoid ingesting), but if so, why all the secrecy and thuggery?
Even if we avoid the worst of the possible Gulf spill scenarios, it appears certain that the actual damage, which will continue for years and perhaps for many lifetimes, will eventually far exceed the market value of BP if it hasn't already. Among other things, a BP collapse would be a financial crisis in addition to the environmental crisis BP has caused.* For one thing, BP is a huge supplier of credit; Jim Sinclair, quoted in the link immediately above, says that "BP extends . . . the amounts, quality and duration of credit a bank could only dream of. . . . God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples." Other economic harm – via damage to the fishing industry, via lost tourism revenue, via lowered (or vaporized) real estate values, and via upward pressure on food prices (from possible toxic rain over much of the nation's farmland, as well as from loss of the megatonage of seafood normally harvested each year from the Gulf) has already been catastrophic and will surely become worse. Another possibility: sea life rebounds but is contaminated with enough Corexit and oil to be unhealthy to eat – in which case, the disaster is either loss of the Gulf fishing industry or the continuation of that industry and wide consumption of tainted seafood. Which would be worse? America's Gulf Of Mexico - A Toxic Crime Scene by Stephen Lendman suggests the latter; this piece is quite sobering and very different from the happy-face reporting in the mainstream media.
* Another horrific, oil-related crime BP is famous for – although not famous enough – is the company's role in the 1953 overthrow of the popular, elected Prime Minister of Iran, Mohammad Mossadegh, and installation of a pro-West dictator (the Shah). In true corporatist fashion, the British and American governments did most of the work on this project for BP. Hatred for the puppet government, which became infamous for torture and repression, eventually led to a revolution overthrowing the Shah and establishing an Islamic state – in what had been a modern, secular, and democratic nation.
Speaking of economic devastation: the financial and economic crash begun in 2008 is still in progress despite mainstream efforts to portray the current situation as a recovery. The underlying problems have not been solved; instead, government action has prolonged the problems and made them worse. "You don't recover from a debt crisis with more debt", as Gwyn Morgan put it recently in the Globe and Mail. Merk Investments Senior Economic Adviser William Poole echoes that sentiment: "It is clear that the federal government and many state and local governments have dug themselves, and us as citizens and taxpayers, into a terrible fiscal hole." The "financial reform bill" won't solve the problem, either: always remember Ringo's Law.
Throwing more debt, more fiat-money creation, more government spending, and ever-more mal-regulation at a problem caused at the most fundamental levels by those exact mistakes has failed every time it has been tried in history. As a result of such actions, the unfolding of The Greater Depression has been slowed down, at the expense of making the underlying problems even worse. How much worse? Investor Bob Chapman says ". . . we are about to experience the worst economic collapse sine [sic] 1348. The stock market is topping out readying itself for its most disastrous fall in history. . . . You are about to enter a world of chaos from which few will survive unscathed. A world of no banks, no public facilities, no food and rampaging gangs of desperate people. Unemployment of 50% and little law and order. Violence will be rife." Chapman has an annoying habit of being right in his economic forecasts, so I find his extreme views more credible than I wish I did. Nor is Chapman alone; others are also warning that the financial and economic problems of the West are far worse than most believe and that the actions being taken in response to those problems are, for the most part, making things worse. Well-known investment guru Marc Faber sees a crash so dire that he recommends protecting your property with high voltage fences, barbed wire, booby traps, military weapons and Dobermans. Economist John Williams of Shadowstats.com paints a similar picture to Chapman's and Faber's in an interview by Karen Roche of The Energy Report:
TER: Clearly you see us spiraling out of control.
JW: We've been talking about an economic recession, but we are headed for something far worse. I define a depression as a 10% peak-to-trough contraction in the economy. In terms of the broad economy, we're not down 10% in GDP yet. So while we're not formally in depression, we're certainly seeing it in a number of indicators and I think we'll be in a depression, with GDP down 10%, in the near future.
A contraction greater than 25% peak-to-trough puts you in a great depression. That is what I envision, but we'll be taken there by hyperinflation and a resultant cessation of normal commerce.
TER: Hyperinflation means different things to different people. How do you define it?
JW: My definition has been and will remain very simple. When the largest-denomination note in circulation—the $100 bill in the case of the U.S. dollar—has the same value as toilet paper, you have a hyperinflation. You saw that in the Weimar Republic. People papered their walls with money.
TER: I think you've said that the only reason that Zimbabwe's economy survived is because they started using dollars as black market currency.
JW: But you don't have anything like that in the United States as a backup. We're going to have a much rougher time in the U.S., of all places, than they had in Zimbabwe. Zimbabwe was able to function because people could exchange the local currency into dollars, and then buy things with the dollars, so the economy continued to function. Without some kind of a backup system, as the currency becomes worthless you'll see disruptions to key supply chains. When people don't have food, you end up in very dangerous circumstances. [Emphasis added]
Whether such a nightmare scenario comes to pass or not (it certainly fits with many historical examples of the inflationary/State-overgrowth endgame, from ancient Rome to modern Zimbabwe), there is no question that America and most of the Western nations are headed for a long period of hard times. Stunning debt levels, unfunded and unpayable entitlements, government intrusion and taxation to the point where wealth creation is heavily discouraged, government increasingly favoring corporations over the citizenry as a whole, a corrupt monetary system designed for the ongoing stealth extraction of wealth from the citizens (a system nearing the end of its lifespan; i.e., fiat currencies are so debased that public trust in them is evaporating), and other factors combine to make clear that the great mass of people in the United States and in many other countries are facing times of severe hardship.
Once again: all of this financial and environmental destruction was unnecessary. Honest and effective regulation would have prevented it, and prevented much other damage besides.
As the world falls apart, know that the coercive State is the direct and unambiguous cause of the disaster. Using the State as regulator is a major element here, but in fact, as Ringo's Law reminds us, everything the State does causes harm. The combined damage from all government actions has finally reached the point where the system itself is collapsing. Do not let anyone tell you that even more government is the answer. A short quiz to help make the point (final section follows below this chart):
- 6 -
The Path to a Healthy and Civil Society
Much that the State does is nothing but crime and corruption – no surprise given that the foundation for the State is coercion, a serious crime in itself.
But some things now done by the State are necessary – business regulation, air traffic control, and environmental protection, for examples. This does not mean the State must do those things; such things can and must be done by civilized means if civilization is to survive long-term. If we want a civil, free, and compassionate world, then we must behave in civil fashion: Everything must be done (and funded, where funding is necessary) without initiating coercion against peaceful human beings. We must abolish the crime of coercion, not only when used against traditional slaves but when used by anyone, against anyone, other than in defense.
Societies have been run in criminal fashion via coercively-funded States for thousands of years, and the results are clear: war, terror, torture, outright murder including genocide and democide, needless poverty, massive theft from the people for benefit of an elite, widespread environmental destruction, and emotional damage on a vast scale. Even using coercion only for funding (i.e., taxation) ensures that a government will increasingly do things its citizens do not want done – including things against their own interests. "Lack of customer satisfaction" is the least of the problems created by using a psychopathic, coercive system to run entire nations. States committed a quarter-billion murders in the 20th Century – in addition to many millions of war dead and all the other crimes committed by governments, from torture to unjust imprisonment. Why on Earth do we put up with this?
It is long past time for us to stop giving psychopaths the tool they need to create such horrors. Coercion is a crime, legally in most jurisdictions and certainly in human terms, and there is no excuse, nor any good reason, for using coercive structures to run society.
Proper, honest, and effective regulation is only one of the critical elements of civil society that we have lost. By allowing the coercive State to assume ever-more of the normal, important functions of society, we have inevitably become a less civilized society.
Coercion has brought us to where we are, on the brink of a nightmare. We either begin creating a more civilized world – a world of love and freedom; of compassion and respect for the rights of all, including for the young – or the two great evils of widespread emotional damage and technologically-empowered tyranny will increasingly tear our world apart.