In Gov’t We (Shouldn’t) Trust

by Martin Harris

Back when it didn’t draw angry charges of Political Incorrectness and expensive-to-defend-against lawsuits from some angry-advocacy law office, store-keepers frequently posted some variation of the “In God We Trust; All Others Pay Cash” warning somewhere near the hand-powered cash register. Since then, the bell for the drawer opening has been replaced by the silence of the credit-card-swipe, but even that requires electronic verification (think Prez 40 and his “trust, but verify” slogan) before acceptance. Trusting those in government was quite clearly not one of the Founding Fathers’ expectations for citizen behavior, which explains why the Second Amendment was specifically intended (read Jefferson, Madison, and Adams on this subject) to enable citizens to resist excessive governance if necessary. Rejecting them was very much a part of the Progressive doctrine from the movement’s origins in the late 19th century: their claim of credibility, as the self-defined top 10% in intellect, understanding, and technical governance expertise, called on us, the subordinate 90%, to accept and welcome their benevolent exercise of superior judgment and discretion on our behalf. In short, we should trust them. A century of public experience with that trust-us politician assurance has produced results leading to a “maybe not” voter response, starting out slowly and nearly silently, but drawing strength and volume as ever-larger examples of politician-discretion-gone-awry come to light. Now one recognized writer, economist John Taylor, argues, as one of his Five Principles, that politician discretion invariably operates in direct opposition to citizen freedom, and that government-by-rule is always better than government-by-ruler, a thesis very close to the ‘government of laws, not men” objective of the Constitution. Two examples, one mostly local and smaller-scale, and one national, of vastly broader long-term impact.

The first traces back to the ’50’s and the wide adoption of planning and zoning in the fast-growing suburbs and then the shrinking central cities, and simultaneously the SCOTUS urban renewal ruling (Berman v. Parker, 1954) that such governmental projects could, at their experts’ discretion, confiscate private property from one group of citizen-owners and convey it to another, when, in the planners’ superior judgment, it was for the public benefit. Concurrently, local planners and zoners took up the we-deserve-discretionary-authority banner: you can see how well they succeeded by comparing, in any town plan, the percentage of land use under their judgmental control via “Conditional Use” back in the ‘60’s with the percentage today. Just so for strip development expansion, ridge-line protection, and so on, all previously referenced in these column-inches. Yes, the urban renewal “discretions” were criticized at the time (think Burlington, VT) and the same principle recently (think New London, CT Kelo case) but to little avail. Arguments for performance-standard zoning, where zoners’ discretion is replaced with rules based on voter-approved quantifiable impacts, have similarly gained little traction.

In contrast, recent revelations of political “discretion” in IRS review of organizational non-profit applications have brought forth new broad-based demands for a broad-based tax. It would be based not on income and investment, both of which, in economic theory, our economy needs and would get more of, with a better tax model, but on consumption of goods and services, transparently collectable under extremely simple rules at point of purchase and therefore much more immune to the “punish-enemies-reward-friends” administrative practices advocated by Progressive Prez 44. Both the Fair Tax (consumption) and the Flat Tax (simplified income) proposals, and a range of other value-added or consumption-based designs, which were making little popular headways prior to the recent revelation of Progressive “discretion” in operation, are now enjoying new popular enthusiasm. Every Tea Party rally shows as many anti-IRS banners as Gadsden flags, as many audit-the-Fed banners as tri-corn hats.

The audit-the Fed argument long pre-dates the Tea Parties, and is based on slow public realization that the century-long currency management “discretion” awarded to the Federal Reserve in 1913 hasn’t worked out well: it takes more than $20 now, in 95% diluted-purchasing-power dollars, to buy what $1 bought then. That’s why John Taylor was pushing his “Taylor Rule”, whereby US money supply would expand only as economic activity required, by rigorous mathematical formula. No Fed “discretion”. He was making little headway on it until recently. In his book, First Principles, he devotes little space to his Rule, but much more to his underlying argument against politician and bureaucrat “discretion” (the keystone of Progressive superior-judgment doctrine) and for measurable and transparent rules placing equal and predictable limits on the rulers as on the ruled. He wasn’t the first: as he describes on p. 20, 18th century economist Adam Smith made the same points; and he hasn’t been entirely alone: as he and other economist writers have (gleefully?) pointed out, even Progressive/Socialist John Maynard Keynes came to admit, before his death in 1946, that a return to a gold or commodity-basket standard for dollar-printing might be a better idea than deficit-spending “stimulus” programs, and even present-day Fed Chairman Ben Bernanke has made the same admissions on the heels of his multiple discretionary Quantitative Easings money-printings which haven’t eased much. To reverse Reagan: first verify, then (maybe) trust.