Niall Ferguson: The Regulated States of America
Tocqueville saw a nation of individuals who were defiant of authority. Today? Welcome to Planet Government.By NIALL FERGUSON
In "Democracy in America," published in 1833, Alexis de
Tocqueville marveled at the way Americans preferred voluntary association to
government regulation. "The inhabitant of the United States," he wrote, "has
only a defiant and restive regard for social authority and he appeals to it . .
. only when he cannot do without it."
Unlike Frenchmen, he continued, who instinctively looked
to the state to provide economic and social order, Americans relied on their own
efforts. "In the United States, they associate for the goals of public security,
of commerce and industry, of morality and religion. There is nothing the human
will despairs of attaining by the free action of the collective power of
individuals."
What especially amazed Tocqueville was the sheer range
of nongovernmental organizations Americans formed: "Not only do they have
commercial and industrial associations . . . but they also have a thousand other
kinds: religious, moral, grave, futile, very general and very particular,
immense and very small; Americans use associations to give fetes, to found
seminaries, to build inns, to raise churches, to distribute books, to send
missionaries to the antipodes; in this manner they create hospitals, prisons,
schools."
Tocqueville would not recognize America today. Indeed,
so completely has associational life collapsed, and so enormously has the state
grown, that he would be forced to conclude that, at some point between 1833 and
2013, France must have conquered the United States.
Barbara Kelley
The decline of American associational life was memorably
documented in Robert Puttnam's seminal 1995 essay "Bowling Alone," which
documented the exodus of Americans from bowling leagues, Rotary clubs and the
like. Since then, the downward trend in "social capital" has only continued.
According to the 2006 World Values Survey, active membership even of religious
associations has declined from just over half the population to little more than
a third (37%). The proportion of Americans who are active members of cultural
associations is down to 14% from 24%; for professional associations the figure
is now just 12%, compared with more than a fifth in 1995. And, no, Facebook FB +0.41%is not a
substitute.
Instead of joining together to get things done,
Americans have increasingly become dependent on Washington. On foreign policy,
it may still be true that Americans are from Mars and Europeans from Venus. But
when it comes to domestic policy, we all now come from the same place: Planet
Government.
As the Competitive Enterprise Institute's Clyde Wayne
Crews shows in his invaluable annual survey of the federal regulatory state, we
have become the regulation nation almost imperceptibly. Excluding blank pages,
the 2012 Federal Register—the official directory of regulation—today runs to
78,961 pages. Back in 1986 it was 44,812 pages. In 1936 it was just 2,620.
True, our economy today is much larger than it was in
1936—around 12 times larger, allowing for inflation. But the Federal Register
has grown by a factor of 30 in the same period.
The last time regulation was cut was under Ronald
Reagan, when the number of pages in the Federal Register fell by 31%. Surprise:
Real GDP grew by 30% in that same period. But Leviathan's diet lasted just eight
years. Since 1993, 81,883 new rules have been issued. In the past 10 years, the
"final rules" issued by our 63 federal departments, agencies and commissions
have outnumbered laws passed by Congress 223 to 1.
Right now there are 4,062 new regulations at various
stages of implementation, of which 224 are deemed "economically significant,"
i.e., their economic impact will exceed $100 million.
The cost of all this, Mr. Crews estimates, is $1.8
trillion annually—that's on top of the federal government's $3.5 trillion in
outlays, so it is equivalent to an invisible 65% surcharge on your federal
taxes, or nearly 12% of GDP. Especially invidious is the fact that the costs of
regulation for small businesses (those with fewer than 20 employees) are 36%
higher per employee than they are for bigger firms.
Next year's big treat will be the implementation of the
Affordable Care Act, something every small business in the country must be
looking forward to with eager anticipation. Then, as Sen. Rob Portman (R., Ohio) warned readers on this page 10
months ago, there's also the Labor Department's new fiduciary rule, which will
increase the cost of retirement planning for middle-class workers; the EPA's new
Ozone Rule, which will impose up to $90 billion in yearly costs on American
manufacturers; and the Department of Transportation's Rear-View Camera Rule.
That's so you never have to turn your head around when backing up.
President Obama occasionally pays lip service to the
idea of tax reform. But nothing actually gets done and the Internal Revenue
Service code (plus associated regulations) just keeps growing—it passed the
nine-million-word mark back in 2005, according to the Tax Foundation, meaning
nearly 19% more verbiage than 10 years before. While some taxes may have been
cut in the intervening years, the tax code just kept growing.
I wonder if all this could have anything to do with the
fact that we still have nearly 12 million people out of work, plus eight million
working part-time jobs, five long years after the financial crisis began.
Genius that he was, Tocqueville saw this transformation
of America coming. Toward the end of "Democracy in America" he warned against
the government becoming "an immense tutelary power . . . absolute, detailed,
regular . . . cover[ing] [society's] surface with a network of small,
complicated, painstaking, uniform rules through which the most original minds
and the most vigorous souls cannot clear a way."
Tocqueville also foresaw exactly how this regulatory
state would suffocate the spirit of free enterprise: "It rarely forces one to
act, but it constantly opposes itself to one's acting; it does not destroy, it
prevents things from being born; it does not tyrannize, it hinders, compromises,
enervates, extinguishes, dazes, and finally reduces [the] nation to being
nothing more than a herd of timid and industrious animals of which the
government is the shepherd."
If that makes you bleat with frustration, there's still
hope.
Mr. Ferguson's new book "The Great Degeneration: How
Institutions Decay and Economies Die" has just been published by Penguin
Press.
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