Missing Link Graciously Supplied

Forgive me, Gentle Reader. I’m feeling poorly, as you might imagine from the events of yesterday, and I doubt I can sit here for very long. (Anyway, the little tube does say “Do not drive or operate machinery,” and a computer is a machine, right? Right?) But one of my functions on the Web is to complete skeins of reasoning others have left incomplete.

Sometimes that lapse is because the commentator at issue is unable to fill in the steps missing from his argument. That’s hardly the case with Bill Whittle:

...but all the same, quite a lot of persons would regard his connection of “good intentions” legislation to mass slaughters by totalitarian governments as fanciful. It’s not, and I’m here to tell you why.

The missing link is the black market.

Whenever a government steps into the economy to provide, prohibit, or regulate some item, whether it be toothpicks, tuitions, or taxidermy, some persons will be dissatisfied with the prescribed conditions regardless of the specifics. Some fraction of those persons will want what they want on terms other than the government’s dictates badly enough to try to skirt the law. Their efforts to do so create a black market, which our excessively enlightened age prefers to call an “underground economy.” The existence of a black market undermines the effects of the government’s decrees. The Very Important Persons in charge find their prognostications to be in error...error that’s plainly visible to the consuming public. Law enforcement is called in.

But law enforcement is a tiny fraction of the consuming public. It can’t be everywhere, watching everyone, at every instant. Moreover, the use of law enforcement to suppress “economic crimes” causes the profitability of trade in the black market to increase while it weakens public confidence in the government’s efficacy and benevolence. (It also exerts a corrupting influence on law enforcement, but that’s a subject best left for another screed.) That draws in additional suppliers and additional purchasers. The black market fraction of trade in the controlled item increases, in defiance of the State’s wishes. The progression reveals the State’s claim of economic omnipotence for what it is: a fantasy. The Very Important Persons in charge can’t have that. Efforts to eliminate the black market intensify as the “above-ground economy” stutters and weakens.

The State learns the limits of its power upon its own hide as tax revenues decline and lawlessness proliferates.

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Once upon a time, a government with the noblest of intentions -- “Liberte, Egalite, Fraternite!” -- strove with all its might to control a single economic phenomenon. In brief, it decreed that its unbacked paper money -- assignats -- should be treated as equivalent to gold or silver. The consequences spread rapidly, compelling that government to pass wage and price controls that blanketed the entire economy of France. Hearken to Andrew Dickson White, the founder of Cornell University, on what came next:

[I]t was found that the Maximum (a decree of the governing council of revolutionary France that set maximum prices and wages for all goods and services) could not be made to work well—even by the shrewdest devices. In the greater part of France it could not be enforced....To detect goods concealed by farmers and shopkeepers, a spy system was established with a reward to the informer of one-third of the value of the goods discovered. To spread terror, the Criminal Tribunal at Strassburg was ordered to destroy the dwelling of anyone found guilty of selling goods above the price set by law. The farmer often found that he could not raise his products at anything like the price required by the new law, and when he tried to hold back his crops or his cattle, alleging that he could not afford to sell them at the prices fixed by law, they were frequently taken from him by force and he was fortunate if paid even in the depreciated fiat money—fortunate, indeed, if he finally escaped with his life.

Involved in all these perplexities, the Convention tried to cut the Gordian knot. It decreed that any person selling gold or silver coin, or making any difference in any transaction between paper and specie, should be imprisoned in irons for six years—that anyone who refused to accept a payment in assignats, or accepted assignats at a discount, should pay a fine of three thousand francs, and that anyone committing this crime a second time should pay a fine of twenty thousand francs and suffer imprisonment twenty years in irons. Later, on the 8th of September, 1793, the penalty for such offences was made death, with confiscation of the criminal’s property, and so reward was offered to any person informing the authorities regarding any such criminal transaction. To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of “having asked, before a bargain was concluded, in what money payment was to be made.”

[Andrew Dickson White, Fiat Money Inflation In France]

Yes, Gentle Reader: It really happened in enlightened, predominantly Catholic France, the birthplace of Voltaire, Pascal, and Montesquieu. It happened again in the Soviet Union under Josef Stalin, and in Red China under Mao Tse-tung, and it’s happening today in North Korea under Kim Jong-un. And it’s happening today in various pockets of the American economy. Consider especially the great number of persons, unable to get “above-ground” work sufficient to support their families, who resort to trading in prohibited goods, offering unlicensed services in regulated fields, or working “off the books”...often at hazard of life and freedom.

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As Bill Whittle explains in the embedded video, the rise in college tuitions as a consequence of government-guaranteed student loans is the first step down a road to hell. We’re already seeing the consequences: not only are tuitions rising to consume the whole of the guaranteed funds; the “institutions of higher learning” are funding ever less serious, ever more pernicious “curricula” to satisfy the demands of vocal, politically influential pressure groups. Graduates heavily laden with student-loan debt are taking their first steps into the world of business and commerce, only to discover that potential employers no longer trust that their dearly bought credentials have any meaning. Alternative occupations, many of them already illegal, are multiplying—and the federal and state governments are imposing ever more severe regulations and ever more draconian penalties upon them.

Though certain specifics of this case of government intervention into the economy would not appear in other realms, the mechanism itself is universal. Yet the Very Important Persons determined to defend their “good intentions” against that inexorable mechanism will never admit to having erred. They will intensify their efforts and tighten their grip until no means to do so remains untried.

Will you, who voted to give them power, acknowledge the reality they have strained to ignore?