Wednesday, March 10, 2010

A Salute to Barney Frank, D-Mass.

The Frank Principle
‘I would let people gamble on the Internet, I would let adults smoke marijuana; I would let adults do a lot of things, if they choose. But allowing them total freedom to take on economic obligations that spill over into the broader society? The individual is not the only one impacted here, when bad decisions get made in the economic sphere, it causes problems.’
– U.S. Rep. Barney Frank (D-Mass) Apr 23, 2009 interview with

Three cheers for Rep. Barney Frank… for being honest. He doesn’t want you to have the liberty to take on economic obligations (like mortgages, agreements to buy and pay for something, establish a savings account, lend or borrow money, etc.) because, if you made a mistake, others would be affected. Since ‘take on economic obligations’ pretty much means the same as ‘make economic decisions’, Rep. Frank is saying he wants to deny American economic liberty.

Just about everything we do has effects that spill over into the broader society. That's what it means to live among others.

We don't live on separate islands

If I check out a library book, nobody else can check it out until I return it, and the interest in the book might induce the library to buy another copy. If I buy something, my action tends to encourage the raising of the price of that thing. If I put something up for sale, that tends to lower the market price of that thing. If I grow my own corn it adds, in a tiny amount, to the world supply of corn and, because I'm not buying corn, pushes the price down, ever-so-slightly. (During the New Deal, the FDR administration declared that growing your own food is not a private activity and is subject to government regulation. I kid you not.)

All human economic activity affects all other humans participating in the extended order of voluntary human exchange – the free market – and that is exactly why the extended order works to create wealth and improve human living conditions.

Leave aside the question of who is going to supervise you in taking on economic obligations, and ignore the fact that government meddling in economic decisions caused the 1929 crash, created and sustained the subsequent Great Depression, caused the recent Housing Bubble, and brought about the crash of 2008; forget that Rep. Frank’s record of making economic decisions for the rest of us is beyond abysmal… think about the principle he is advocating: you will have liberty except when making economic decisions or taking economic actions.

(BTW: Gambling on the internet involves the taking on of economic obligations: if you lose, you've gotta pay up.)

Maybe the government won’t exert the full control the Frank Principle theoretically grants. After all, he was talking about the big financial institutions that made poor decisions, not about ordinary people. Maybe the federal income tax will never go above 5%. Maybe Social Security taxes will never be higher than 2% of earnings. Maybe taxes will never be withheld from your paycheck. All those things would never happen, according to those advocating the specified federal interventions.

Maybe the Civil Rights Act of 1964 specifically prohibits racial set-aside, quotas, and affirmative action, as Senator Hubert Humphrey loudly declared on the Senate floor. (Sen. Humphrey said he would "eat his hat" if anything in the Act permitted those things. It took less than 10 years for the federal government to decide the Act permitted them.)

So, what’s the big deal – you give up a little economic freedom but you have liberty in everything else? OK.

Think about your week. How much do you do that doesn’t involve working for pay, buying something, consuming something you have already purchased, deciding not to buy something, deciding not to consume something, or paying a kid to mow your lawn? All those actions are economic activity and, according to the Frank Principle, in theory subject to government direction and control. What car do you buy? Do you drive the car to work? How quickly do you accelerate up to the legal speed? What do you eat for lunch? What present do you buy for a family member? What shoes to buy (that is, what shoes you wear)?

Rep. Frank would let you smoke marijuana, but he would have the government regulate prices, quantities, packaging, and quality – because these involve economic obligations – so you would be free to smoke marijuana but no at liberty to buy it or sell it without abiding by government rules.

If it happens outside you head, it's economic
How much of your life would be your own, within your personal zone of autonomy and independent of government coercion, under the Frank Principle? You could walk to the park and sit on a bench. You could walk to the public library and read a book. You wouldn’t be able to grow your own marijuana because that is an economic activity that effects others (you are depressing the price of marijuana by adding to the supply).

Rep. Frank and his political allies may not want to run your life for you, but do you want to surrender your liberty? Are you worth so little as a human being?

The Frank Principle is not new; it's almost 200 years old. The Frank Principle was a key element of Bolshevism, Fascism, Maoism, and all the totalitarian movements of the 20th century. They all started as benign as what Rep. Frank proposed. All of them.

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