Tag Archives: regulation

There is no such thing as ‘regulatory capture’

I was in the hearing aid business a few decades ago. As a minority shareholder and chief operations officer, it was my job to build out a network of retail stores, manage our manufacturing operations, and manage the relationship with a foreign manufacturer that provided us products not previously available on the American market. We also had a plan to sell less expensive hearing devices in pharmacies.

Opening our first retail store was an exciting endeavor. We had a good location in a plaza with a solid anchor on a very busy intersection. We prepared our grand opening for months and were understandably excited for our first day of business. We ran ads in all the local newspapers and looked forward to our first patient walking through the door.

The advertisements did generate phone calls, but the first one was not from a potential customer. It was from the State Department of Health, informing us there had been a complaint about one of our newspaper ads. We were required to submit a response to the complaint after which the department would make a determination of its validity and any further action against or required of us.

Obviously, the complaint didn’t come from a customer; we had no customers yet. The complaint came from a local competitor who literally waited for our first hour in business to call the state. This is the way the world works.

The complaint was found to be without merit – our ad was not misleading or out of compliance with any regulations – but it certainly took the edge off an otherwise happy day. We lived and learned.

A few years later, after confirming there were regulatory barriers to selling “assistive listening devices” (not quite hearing aids, but helpful for mild hearing loss at about 1/10^th the price), we tried to lobby the state legislature ourselves. We successfully got our revision to the applicable statutes into a bill about other matters that was sure to pass and were told by the lobbyists we hired that it appeared we would be successful.

Then, on the very last day of the legislative session, the language was taken out after an all-out assault by a much better-funded set of lobbyists claiming our devices would be dangerous if not fitted by an audiologist.

Obviously, our device that peaked at 30 decibels (the average iPod at the time peaked at over one hundred decibels) posed no health risk to those who used it. But it did pose a revenue risk to those who hired the lobbyists – the audiologists. They also argued that hearing loss in some cases indicated other health issues that may not be discovered if the patient didn’t have an exam by a licensed professional before attempting to treat their hearing loss.

In 2022, the FDA approved the sale of full-blown hearing aids over-the-counter (OTC). Apparently, those other health conditions are no longer a concern. The big corporations have finally adapted their business models to include lower cost products and thus they can be allowed without small upstarts like our little firm disrupting their dominance. So, for almost twenty years, consumers were deprived of a significantly lower cost option for hearing loss for no valid reason whatsoever.

This is the way the world works.

One might ask, “How can you say there is no such thing as regulatory capture after having those experiences yourself?”

Simple. The term ‘regulatory capture’ implies there were once regulatory agencies that operated in an adversarial relationship with large corporations for the so-called “public good” that were later ‘captured’ by those corporations and made to serve the corporations’ interests. But that never happened.

‘Regulation’ itself is and has been from the very beginning a practice created by large corporations for the sole purpose of crippling or eliminating competitors.

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Tom Mullen is the author of It’s the Fed, Stupidand Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Capitalists are terrible for capitalism

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U.S. President Donald Trump, flanked by Senior Advisor Jared Kushner (standing, L-R), Vice President Mike Pence and Staff Secretary Rob Porter welcomes reporters into the Oval Office for him to sign his first executive orders at the White House in Washington, U.S. January 20, 2017. REUTERS/Jonathan Ernst TPX IMAGES OF THE DAY

When Donald Trump first ran for president in 2016, the familiar notion that a successful businessman would “run the government like a business” reemerged. We’ve heard this whenever a successful entrepreneur, usually a Republican, has run for president. Of course, the government cannot be run like a business for reasons I provided in 2012 when Mitt Romney was the latest candidate who would purportedly do so.

In short, the private marketplace runs on voluntary exchanges while the government runs on force. Success in the former does not prepare one for success in the latter. It may even make one less prepared for the intrigues of politics, as Donald Trump, Jr. seemed to be saying in his recent interview of Matt Taibbi.

But free market proponents often make the further mistake of assuming that a successful business owner will at least be prone to pro-free market policies. After all, who knows better the blessings of capitalism than a capitalist himself or herself?

This is also mistaken. While running their businesses in the marketplace, successful entrepreneurs are a great boon to society. But when it comes to policy, capitalists are terrible for capitalism. Among history’s most successful capitalists this has virtually always been true.

For the entire history of commerce, business owners have sought the aid of government power to limit or eliminate competition. In 1807, long before the Progressive Era, the New York State legislature granted Robert Fulton, inventor of the steamboat, a 30-year monopoly on steamboat traffic in the state of New York. As Thomas DiLorenzo writes in How Capitalism Saved America, this allowed Fulton to charge exorbitantly high prices until Cornelius Vanderbilt defied the legal monopoly and undercut him.

The Progressive Era itself was a bonanza of crony capitalism. The popular myth about this period has so-called “robber barons” forming monopolies and exploiting customer and employee alike until progressives like Teddy Roosevelt came along to save the day with heavy government regulation.

As Murray Rothbard proved beyond any reasonable doubt, literally no element of this popular myth is true. In fact, it is the opposite of the truth. It is true that hugely successful business owners like John D. Rockefeller and J.P. Morgan attempted to form monopolies over various sectors of the economy. However, every attempt to do so without the government’s help ended in failure.

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Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Who Killed Capitalism and the Internet?

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Back in the 1990s, there was this new phenomenon called “the internet.” It grew exponentially. Entrepreneurs saw the business potential for reaching more customers than they had ever dreamed they could reach through conventional methods. Consumers had more choices of every conceivable product – including information – than they ever had in history.

Like all technological advances, it produced big winners and big losers. Vast fortunes were made by those who built businesses that worked better on the internet. Vast fortunes were lost not only by those internet commerce replaced, but also by those who went long on businesses that didn’t work on the internet – Pets.com being the most infamous example.

The internet revolution was much like the industrial revolution in this respect. It advanced human flourishing in general exponentially but was decried by all those it damaged economically. Many brick and mortar retailers were put out of business, just as the automobile put blacksmiths out of business.

Legacy media faced annihilation. They were no longer the gatekeepers of information. The new generation of internet users had access to information from all over the world at the click of a mouse, including information previously filtered, spun, or suppressed by legacy media. There was a point at which those who had long decried its information gatekeeping and establishment propaganda gleefully counted down the days until the New York Times went bankrupt.

Governments didn’t like the internet much, either. Untaxable interstate commerce was replacing taxable brick and mortar commerce. Republican Congressmen lamented the internet was so new they didn’t know who to regulated it. And, of course, no government has ever liked the free flow of information. That’s why a First Amendment was necessary over two hundred years ago.

The current war on the free flow of information over the internet is led by the political left, but it didn’t start there. Long before conservatives were being deplatformed for opposing wokism, the political right was after internet publishers for criticizing the war on terror. Julian Assange is only the highest profile example. Online porn has also been targeted by the right since the internet’s earliest days.

As with laissez faire capitalism, it seemed like those who stood to lose had two choices: adapt or die. But there was a third choice: call in the government. And that’s just what all those who stood to lose did.

The decades-long destruction of America’s laissez faire free market was accomplished in much the same way.

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Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Tom Mullen’s First Inaugural Address (Excerpt on Regulation)

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…There has been a lot of speculation in the media about how I will direct the various regulatory agencies as far as lifting burdensome regulations or imposing new ones. I have here in my hand a copy of the U.S. Constitution – the only “deal” ever made between the people of the various states regarding a federal government with any constitutional validity – and it says, “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.”

Now, for many decades, there have been various agencies in the executive branch of the government exercising this legislative power in defiance of the Constitution. We call it “regulation” instead of “legislation” so as to deceive ourselves and others that what the EPA, SEC, or FDA does is not legislating and therefore constitutional. But any government agent writing rules that either prohibit or compel behavior with the force of law is legislating.

If we truly believe government only draws it just powers from the consent of the governed, then surely, we can see that this is a problem. The only place anyone ever consented to the federal government having any power at all was in ratification of the Constitution and its various amendments. And that consent was only obtained with great effort and solemn assurances that the government would not exceed the powers delegated to it.

Nowhere in the Constitution is the president or any member of the executive branch delegated power to legislate. Neither can the Congress simply delegate this power to the executive through legislation. Any alteration in the distribution of powers in the Constitution must be made by constitutional amendment. The sole power granted the executive concerning the legislative process is the veto, which itself can be overridden by Congress with sufficient support among its members.

Therefore, any regulation written by an employee of the executive branch, or anyone else, that is not subsequently passed by the House of Representatives and the Senate, and signed into law by the president, represents rule without the consent of the governed.

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Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

It’s Not the Elites’ Fault; It’s Yours

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My fellow liberty broadcaster Alan Mosely put out a humorous tweet that read, “Who knew Omicron would be such a hero?” He was retweeting an announcement that the World Economic Forum in Davos had been called off due to the Omicron variant.

Certainly, no good ever comes from a bunch of billionaires hobnobbing with the heads of national governments. Ditto the Bilderberg Group, The Council on Foreign Relations or any of several other such elitist gatherings.

But here’s the part most people miss: No bad really comes from them either. Sure, the Federal Reserve was cooked up at a secret meeting of elites on Jekyll Island. But it only became reality because of overwhelming support from the public after it was pitched as a way to protect them from the “elites.”

There was plenty of opportunity to hear opposition to the Act from the minority of Congressmen and Senators who voted against it. But the public ignored their warnings and supported the Act anyway.

Ditto the 16th Amendment. This was also pitched as a way to shift the burden of taxation away from the middle and poorer classes to the rich, the “elites.” The public swallowed this bait and switch hook, line, and sinker, and today clamor for the so-called elites to pay even more income taxes.

But whom do income taxes really hurt the most? The super-rich, making millions or billions in income? No. It’s those middle-income earners, especially those who work the hardest to get ahead, for whom that extra $10,000 – $20,000 paid in income taxes could represent significant capital accumulation over a period of years.

Maybe it’s just a coincidence that this provides a barrier to competition for those above. Does it really matter if it’s intentional or not, since it does?

Right down the line, the public overwhelmingly supports policies that harm them when pitched as protection from the elites. The god-awful Teddy Roosevelt styled himself the “Trust Buster.” His even more awful cousin sold the New Deal to protect the public from the “greed” of the rich.

Everyone was outraged by the EpiPen scandal a few years ago. This was the direct result of the FDA having legislative power, acquired during the New Deal without any amendment to the Constitution, and using it to keep competitors of the EpiPen off the market.

That’s just one little product protected by just one of scores of federal agencies but it’s representative of how the entire New Deal regulatory structure works. And the public not only approves of it but constantly clamors for more.

I don’t care how many private jets Elon Musk or Bill Gates owns. Their getting richer doesn’t make me poorer. Quite the opposite, in fact. But here’s what does make me poorer: government intervention that purports to protect me from “the elites.” That the elites overwhelmingly support it should tell you something.

No system in the past has ever resulted in economic equality; nor will any system in the future. But here is one thing history should have taught you by now: If you set up a system where the property of the elites and yours is subject to disposition by majority vote, you shouldn’t be surprised when the elites end up with all of yours.

Most people on my e-mail list get this. For all those who don’t, I offer these thoughts as some you can pass on to counter so-called “populist” arguments for further “regulating” or plundering the elites. It’s a sucker’s game.

Don’t forget my new e-book, It’s the Fed, Stupid, is also available in paperback here. It’ll cost you less than a sawbuck and is great for introducing friends to our ideas.

Like the music on Tom Mullen Talks Freedom? You can hear more at tommullensings.com!

It’s Time to Repeal and Replace the Republican Party

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Gop slash 2 President Trump attempted Friday to put a smiley face on the defeat of the American Health Care Act (ACHA), known to its opponents as “Obamacare Light.” From his perspective, the failure to secure enough Republican votes to pass the AHCA will lead to a “better bill” in the long run, because that future bill will have bipartisan support. The president did not elaborate on how the bill he envisions would be better or what about this bill, which he virtually threatened members of his own party to vote against, he didn’t like.

Opponents of the AHCA opposed it because it was too much like The Affordable Care Act (Obamacare) itself. Trump’s comments beg the question for anyone hoping for less government in health care, rather than more: How exactly will participation by the Democratic Party make the next bill better?

It’s fair to say Trump is far from a typical Republican, especially on health care. He’s supported single payer government health insurance in the past, even as recently as his 2016 campaign. But what about the rest of the GOP? If the House of Representatives is any indication, merely tweaking and renaming Obamacare was a viable solution to what they have denounced for seven years as the first step down the slippery slope to socialism.

This is by no means an isolated incident in the GOP’s history. Despite running on reducing the size and influence of the federal government, Republican presidents and Congresses have consistently presided over more significant expansions than the Democrats. A look at historical data on federal outlays reveals that federal spending increases far more when a Republican is in the White House than under a Democrat, regardless of which party controls Congress.

Beginning with Nixon, federal spending has virtually doubled during the administrations of all three two-term Republican presidents. Even Eisenhower increased it fifty percent, despite two year-over-year cuts in 1954 and 1955, respectively, equaling the percentage increase under LBJ’s “Great Society” (although the latter was accomplished in one term). Spending increased far less under Democratic Presidents Clinton and Obama than under any post-war Republican president who served two terms. It seems unlikely that trend will change under President Trump, who has proposed $60 billion in increases to military and Homeland Security spending.

Republican rhetoric also typically includes “slashing” regulations on economic activity, but the reality rarely bears any resemblance to the rhetoric. Like many of his Republican predecessors, Eisenhower created an entire new department, Health, Education and Welfare, which paved the way for LBJ’s medical entitlements. Nixon created the EPA, which alone is responsible for some of the most stifling regulation on business. Reagan is widely credited for massive deregulation, but most of the meaningful deregulation was passed while Carter was president. George W. Bush’s only two meaningful economic policies were the economically destructive Sarbanes-Oxley Act and the TARP bailout.

Over the entire sixty-four years since 1953, voters truly interested in reducing the size and influence of the federal government have decried what have recently come to be called, “RINOs,” (Republicans-in-Name-Only). This is a term popularized during the Tea Party era to describe Republican politicians who run on shrinking the federal government, but who govern more like liberal Democrats once in office. If only a real Republican could be elected, say the grass roots, then the federal government would finally be brought back within its constitutional limits.

But when have these “real Republicans” ever existed? Once upon a time? If one goes back to its founding in 1854, the Republican Party was the big government party. By 1860, the platform included all the familiar big government planks from its predecessors, the Whigs and the Federalists. And spend big they did, particularly on railroads and other infrastructure, in addition to raising protectionist tariffs.

It wasn’t until Woodrow Wilson and the new Democratic Party leapfrogged the Republicans in terms of big government that Republicans even campaigned on shrinking the federal government, which wasn’t exactly a radical idea following the spending and regulation ramp-up during the largest war in human history to that point. Evidently, Warren Harding and Calvin Coolidge are the only “real Republicans” to have ever occupied the White House. And let’s not forget that both merely returned policy to that of their 19^th century Republican predecessors. Harding and Coolidge praised Alexander Hamilton’s economic policies and governed accordingly.

Considering the present Republican administration, there has never been a better time for those truly interested in smaller government to confront reality: the ninety percent of Republican Congressman who would have voted for the AHCA are the real Republicans. They represent what the Republican Party has been about for the entire 163 years of its existence: big government conservatism.

It’s time to repeal the GOP and replace it with a party truly committed to less government, free markets and a peaceful foreign policy. While the numbers associated with third parties are not encouraging, one cannot ignore the vast potential represented by that half of the electorate who don’t vote at all. Together with the large number of Republican and Democratic voters who “hold their noses” and vote for the lesser of two evils, a new party formed from the Libertarian, Constitutional and Reform Parties, marketed to disaffected non-voters, could represent a viable alternative.

At this point, what could those seeking smaller, less intrusive government possibly have to lose?

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Dear Queen Elizabeth: Can we come back?

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Dear Queen Elizabeth,

It’s been 239 years and we’re finally ready to admit we made a mistake. Just as your predecessor warned us, taxes are much higher, the government more oppressive, and liberty more non-existent than they ever were under the British monarchy.

We’re willing to bury the hatchet and rejoin the British Empire with that sweet tax deal you had for us in 1775. Don’t worry about representation. We tried it. Taxes skyrocketed.

Everything else we complained about got worse, too. Representative government issues more general warrants than the king’s officers ever did. In most cases, it doesn’t even bother with warrants. It just vacuums up our electronic data and peruses it at its pleasure.

It calls controlling everything from the food we eat to the amount of water in our toilets “regulating trade,” when all King George meant by that was levying a few tariffs. Our Federal Register is over 80,000 pages long. It’s insane.

In short, we were wrong. Let’s just pretend the whole, silly misunderstanding didn’t happen. I know it’s asking a lot, but you seem even nicer than George III was.

We’re willing to pay next year’s taxes at 1775 rates in advance. What say you?

Sincerely,

Your Prodigal Colonists

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

What does the word “liberal” mean?

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government_approved I’m trying to figure out what the word “liberal” (derived from the same Latin root as “liberty”) means when used in a political context. The best definition I can come up with is the belief that individuals should be allowed to make absolutely no decisions themselves regarding any aspect of their lives.

Instead, they will eat and drink only food the government allows them to, in packages labeled as the government directs, in portions the government deems healthy.

They will work only for compensation the government deems “fair,” neither lower nor higher than what is allowed, and they will keep only that portion of said compensation the government doesn’t require for distribution to someone else.

They will live in houses built to the government’s regulatory specifications, including the light bulbs they use, the safety devices they employ and the amount of water in their toilets.

They will raise and educate their children as the government directs, in schools they are forced to pay for whether they use them or not, studying only subjects the government approves and taught the way the government says they should be taught, regardless of how idiotic the government’s teaching methods are.

They will treat illnesses only as the government prescribes and only from caregivers the government “licenses,” including preventative treatments, whether they want them or not. They will pay for that treatment with an insurance program they are required to purchase.

They are mandated to associate with whomever the government directs them to, with legal penalties if they don’t.

While living this completely directed life, they are not to say or even think anything the government deems offensive.

If they fail to comply with any of the above, uniformed, armed men will come and drag them away and lock them in a cage.

If I understand correctly, there is another, related word to describe this destruction of personal choice over time. We call that “progress,” from which we get the word “progressive.”

Am I in the ball park?

Merry Christmas: Mary gives birth to a great libertarian

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TAMPA, December 24, 2012 ― It’s not a surprise that libertarian themes pervade many iconic Christmas specials. After all, they celebrate the birthday of one of the great libertarians of all time.

In the Gospels, government is exposed as evil right from Jesus’ birth. A paranoid Herod is willing to kill all of the babies in the kingdom to try to eliminate the perceived threat represented by Jesus.

Tax collectors are considered de facto sinners, on a par with prostitutes. Libertarians would consider this unfair to prostitutes, but for the times this couldn’t land better.

Jesus himself doesn’t disappoint, either. From the moment he begins his ministry, he wages a nonstop verbal war against the hypocritical, oppressive, tax-devouring Temple priests. Jews at the time were required to pay annual taxes to the priests and were also expected to come and make sacrifices at the Jerusalem Temple. To do so, they had to buy the livestock for the sacrifices from the priests and deal with the priests’ money changers.

That’s why the libertarian from Galilee kicked the money changers out. This would have been considered a revolutionary act.

One can’t help but equate Jerusalem at that time with Washington, DC, an entire city of tax-fed, opulent wealth.

Jesus has no patience for excessive regulation, either. When he encounters a Jewish law that does not address actual criminal activity, he encourages his followers to break it. When the meddling scribes confront Jesus with allowing his disciples to eat without washing their hands, Jesus lets loose with his customary anti-government invective, calling them hypocrites and then instructing “the people” to ignore this idiotic law and focus on not committing real crimes instead. (Mark 7:1-23)

Jesus doesn’t have much use for social conservatives, either. When they bring a woman who has committed adultery before him to be stoned, he shames them into letting her go (John 8:1-7). He does not condone her sin, nor imply that she may not be judged by God for it. He makes the distinction between those actions which constitute harm to other human beings and can therefore be punished by men and those which do not constitute harm and can only be judged by God.

Jesus shows no such objection to the law against theft, committed by the men crucified with him. Unlike adultery, this constitutes actual harm against the property of another. One of the thieves says that he is justifiably punished and Jesus does not contradict him. He offers forgiveness but not escape from punishment (Luke 23:40-43).

Michael Moore seems to think that Jesus’ message is inconsistent with free enterprise. Perhaps Mr. Moore should actually read the gospels. The heroes in most of Jesus’ parables are businessmen and property owners. The villains, like the evil vinedressers in Mark 12:1-12, are those looking for unearned wealth. The beauty of this story is that it affirms property ownership on the literal level and simultaneously represents a symbolic shot at the corrupt Temple priests.

The third steward of Matthew 25:14-30 is punished for not being a capitalist. Again, there is a symbolic meaning here, but Jesus chooses a free enterprise-friendly vehicle to convey his message.

While Jesus says that wealth can be a distraction, he unambiguously states that it is not a sin in and of itself. Jesus has many wealthy friends, including the wealthy women who support him and his disciples during his ministry (Luke 8:3). He does not consider them sinners as he does those who derive their wealth from taxation. If only today’s “liberals” would learn this distinction.

While Jesus often encourages people to voluntarily give to the poor, he never once implies that this should be accomplished by forced redistribution, especially through the Jewish government he spends the rest of the gospels criticizing.

Even during his passion, Jesus continues to make libertarians stand up and cheer. Anticipating the 5^th Amendment by over 1700 years, Jesus refuses to talk to the cops or give evidence against himself. In John 18:20 he basically says, “If you have some proof, present it. You’re not getting anything from me.” He likewise refuses to talk to Pontius Pilate.

The result? Acquittal. Pilate “finds no case against this man.” Of course, both the Roman and the Jewish governments break their own laws and Jesus gets crucified anyway, providing another libertarian lesson about the moral character of most governments.

Whether they believe in God or not, all libertarians have good reason to celebrate the birth of Jesus Christ. If only more Americans would be Christ-like by holding the government in contempt, resisting its ridiculous edicts, rebelling against its wealth redistribution and honoring free enterprise, we’d all be a lot freer here in the “land of the free.”

And if we observed the one rule this great libertarian gave us on dealing with one another, “Do unto others as you would have them do unto you,” we’d live in a safer, more peaceful world.

Merry Christmas to all.

Libertarians are not corporate apologists

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TAMPA, October 22, 2012 – In the wake of Ron Paul’s campaign and with Gary Johnson rising in the polls, libertarianism may just get a hearing for the first time in decades.

Already, the usual fallacies have resurfaced. If you don’t want the government to run education, you must be against education. If you don’t want the government to run healthcare, you must not want people to get healthcare.

This misunderstanding is often summed up with comments like, “I’m not sure I’m comfortable with an ‘every man for himself’ society.” This springs from the absurd assumption that human beings never confer benefits upon one another except when forced to do so at gunpoint.

One corollary of the “every man for himself” theory is that a libertarian society would “let corporations run wild,” resulting in a small, wealthy elite controlling all of the resources and exercising oligarchical rule over the rest of society. (So do we live in a libertarian society now?)

Most people would probably be surprised at the libertarian stand on corporations. In a libertarian society, they wouldn’t exist. Corporations are creatures of the state. They are created by the government and endowed with privileges that individuals do not have. This contradicts a fundamental premise of libertarianism, that all people are created equal and have equal rights.

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