Sunday, May 17, 2015

Review of By the People: Rebuilding Liberty Without Permission by Charles Murray

Charles Murray, whose most well known books are probably The Bell Curve and Coming Apart, has a new book out this week: By the People: Rebuilding Liberty Without Permission.

Part One is about "coming to terms with where we stand": the Constitution has been completely discarded (after a century of attacks by progressives), the legal system functions "in ways indistingushable from lawlessness," and there is an "extralegal state within a state," regulatory bureaucracies and their administrative law, that threatens every business owner.

Most of us knew all of that already. What is new is that, first, Murray has given up hope of reforming these problems through the political system. (As even Romney noticed, a winning majority of voters is on the payroll of the government.) Second, Murray has a plan that does not require winning elections: attacking the regulatory state through the legal system.

He envisions nonprofits - along the lines of Goldwater Institute - that would take the side of victims of regulatory agencies (OSHA, EPA, EEOC, etc) and aggressively fight the agencies when they seek to disrupt business and citizens with punishments for violating nonsensical regulation. He gives examples in an essay in last weekend's Wall Street Journal.

What he describes is also a business model, which would not have to be done by nonprofits, and which he calls "treating government as an insurable hazard." A dentist buys insurance from DentalShield, and as long as he adheres to sound practices (as defined by dentists, e.g. the ADA), he is indemnified against fines and litigation costs imposed by the myriad agencies that could attack his practice.

You know who else has the business model of protecting against all hazards, and would gladly help a baker who was being fined for having the wrong kind of latch on his flour bins? The Godfather. Ultimately, I think Murray is right that people need and are going to want insurance against the hazard of government. The question is whether the business that delivers it is going to be nonprofit, for-profit, or traditional warlord/mafia.

Of course, if interest rates on U.S. government bonds ever rise - and I believe that that would happen automatically if a substitute currency or store of value superior to the U.S. dollar emerged - then the regulatory hazard will be obviated because there simply will not be the money to bother bakers about their flour bin latches. This extralegal state within a state is - just like the asset bubble, junk bonds, private equity - simply a creature of ultra-low interest rates.



Anonymous said...

A tea-party group targeted by Democrats gets attention from the IRS—and the FBI, OSHA, and the ATF.

Read more at:

Anonymous said...

"pay attention to what Kevin Williamson rightly flags as a key subplot, namely the ability of federal and state regulators to find costly infractions even among a well run, reputable business. If the state wants to make your life difficult, there’s a galaxy of laws out there it can use to do it. The process, as Mark Steyn says, is the punishment."

CP said...

That's a great point, and he doesn't even mention the IRS tea party scandal. He was trying hard to be nonpartisan, but it is an important example.

James said...

It's nice to see Murray thinking outside the box, but this isn't going to work. The courts (or administrative tribunals, or whatever) are controlled by the government and staffed by government employees. Trying to litigate against regulatory agencies means fighting them on their own ground. If conservatives tried to do this on the small scale Murray envisions, the attack would be too weak to make any difference and the government would learn from the experience and develop effective ways to respond.

And the media are going to demonize any effort to fight the government this way. Think of the smears they subjected the Tea Party to. This would be 100x worse. Murray's proposal will only work if it has a broad base of popular support, and the media will do everything they can to snuff that.

At this point, the best thing to do is think of personal solutions. Renounce your citizenship, buy a passport in a tax haven, let you money compound tax-free and without the risk of confiscation. If you want to fight the gov't, do it by coming up with new technologies that circumscribe gov't power, not fighting pointless legal battles. You hint at that in the post-- I have no idea what would constitute a better store of value, but anyone would comes up with one will be a hero.

James said...

Also, regulatory complexity gives the intelligentsia more ways to make money-- established businesses can use them as a barrier to competition, regulators can go to the private sector and sell their familiarity with the regulations, etc. The system serves the interests of the elite, so the most powerful and able will fight tooth and nail to preserve it.

bjdubbs said...

The Dirty Dozen: 12 Court Cases that Expanded Gov't (or something like that) is a good look at how the Supreme court replaced representative gov't with the regulatory state.

I don't think that overregulation is a product of affluence, as you suggest. The Algerian fruit peddler who lit himself on fire was protesting gov't regulation. It's universal. BRICs like India and Brazil have the problem of a large state havning developed before the economy did. The US was just fortunate in that its economy developed before a strong state had a chance to emerge.

Another high quality review, btw.

Anonymous said...

Here's an example of what you're talking about...

Cash tips at restaurants are obviously hard to audit/verify. It used to be that if a restaurant's wait staff reported at least 7% of cash sales as tips, the restaurant would be ok.

I had a restaurant client get audited late last year. Cash tips reported were about 15% and credit card tips were about 18%. In its infinite wisdom, Missouri decided that the cash tip % had to be at least as high as the credit card tip my client was deemed to owe about $2,000. Not to mention that they assume the "missing" cash tips are taxed at the highest bracket.

So, if you eat at a restaurant in Missouri, and you tip a higher % when you pay with a credit card than you do when you pay with cash, you are effectively placing another tax on the restaurant owner.

I've never had a client get audited without having to pay something. Like you say, it's nothing more than a shakedown.

Mr. Gotham said...

Unfortunately, the govt would outlaw that kind of insurance. It's kind of like how the courts are rigged in favor of trial lawyers. The self preservation instincts of govt bureaucracy are remarkably strong and really couldn't care less about the public interest.

It's time to start looking for other places to live where rule of law is better protected. I think that will be the only way to protect wealth when the end game plays out here.

History says you can't win trying to protect your assets from a state that is going broke. Argentina and VZ just the latest examples.

James said...

History says you can't win trying to protect your assets from a state that is going broke. Argentina and VZ just the latest examples.

Hungary has also confiscated pensions a la Argentina. I have no doubt that will eventually happen here too-- when it gets rough, the government will force people to put their 401ks, IRAs, pensions, etc. in Treasuries.

Taylor Conant said...

I would be interested to see what countries/states the readers here believe are viable alternatives to the US given the concerns outlined here. CP and I have discussed this subject at great length and one of his contentions is that most places you might try to set up shop as an American (especially Anglo-American), you also run the risk of being seen as an "outlander" who might be scapegoated in the event of some calamity or economic problem.

CP said...

"I’m subject to the same drug testing requirements as United Airlines. I am the drug testing coordinator for our company, so I am responsible for scheduling drug tests and surprising employees when it is their turn to be tested. As it happens, I’m also the only “safety-sensitive employee” subject to drug testing, so basically I’m responsible for periodically surprising myself with a random drug test. As a supervisor, I need to take training so that I can recognize when an employee is on drugs. But I’m also the only employee, so really this is training so that I can figure out if I myself am on drugs. As an employee, I need to take a second training course so that I learn about all of the ways that my employer might surprise me with a random drug test and find out about drug use. But I’m also the employer so really I’m learning about how I might trap myself."

Mr. Gotham said...

@Taylor Connant

The two that seem most viable to me are Switzerland and Singapore, though neither is easy to get into on a long term basis. I don't think the Swiss will bankrupt themselves and they've done a good job of avoid ruinous wars. Singapore is a little more problematic on a civil liberties basis, but they seem to respect property rights and historically the place has been run rationally. Of course if China goes expansionist, they could be vulnerable.

The other possible strategy is to get citizen ship from some place like Nevis and buy property in several fairly safe countries around the world and travel from place to place as a visitor. You would have to think about where to domicile your wealth, but I'd probably pick Switzerland for that. Might want to own some gold and distribute it to several countries around the world to diversify risk of seizure.

Biggest thing would be to get beyond the reach of US tax collections. Of course you would have to pay an exit tax on accumulated gains if you renounced citizenship, so you would have to figure that into the equation. Argues for doing it sooner rather than later.

Anonymous said...