President’s Letter, Kansas Stockman Magazine“Regulation vs. Freedom”
Have you noticed that KLA tends to oppose much new legislation? Why is that? Are we just a contrary bunch that is opposed to nearly everything? Are we against change in general? To the casual observer it may look that way, but KLA’s opposition to new legislation or regulation is derived from political philosophy that has been hammered out over more than a century, and that is re-ratified every time KLA members set policy.
We recognize that most legislation is put forward in a well-intentioned attempt to address some social ill. But we have learned to ask whether the social ill being addressed by the bill is real or merely perceived. Quite often bills are proposed to cure a social ill that exists only in the perception of an activist minority. And even if the social ill actually does exist, poorly crafted legislation may do little or nothing to truly address the problem at hand.
On the other hand, the costs incurred by society because of that legislation are real and very frequently underestimated. The out-of-pocket costs of compliance, such as having to hire extra clerical help or legal expertise, should be easy to quantify. However even these direct costs are often overlooked. And the out-of-pocket costs are just the tip of the iceberg. How do we quantify the lost productivity caused by a new legislative edict, and the ripple effect that lost productivity has on private businesses, government, and the economy in general?
The costs mentioned so far are substantial, and we have yet to mention the greatest cost inherent in many pieces of legislation. That cost is the cost of lost opportunities, stifled innovations, and diminished alternative futures. While a piece of legislation may be telling us what we can do, it is also extending the boundaries of what we cannot do. And by telling us what we cannot do, that legislation is diminishing our freedom to decide which directions are best for our businesses and our lives. When that happens, society as a whole can be the loser, because options have been snuffed out. Enterprise has effectively been limited, and innovation has been stifled. When legislation is proposed that would prohibit packer ownership of cattle, that legislation is also placing limits on the ability of cattlemen to get involved in the packing business. The inadvertent result could well be the prevention of industry coordination and integration that many now recognize as vitally important to recapturing lost demand for beef.
John Stossel of ABC News recently examined why some nations are so inventive and prosperous while others are mired in economic stagnation. Stossel pointed out the cases of India and several European countries which are true democracies but which never seem to make much economic progress. Stossel and the experts he interviewed concluded the critical factor is economic freedom, pure and simple. Those nations that wrap their citizens in a cocoon of statutory and regulatory do’s and don’ts are destined to stagnate, regardless of their political or economic philosophy. And those nations more prone to keep restrictions to a minimum and allow their citizens the freedom to pursue their own destinies are the ones who make real economic progress.
Walter E. Williams, Professor of Economics at George Mason University, said it well: “We have made a significant departure from the constitutional principles that made us a rich nation in the first place. These principles of freedom were embodied in our nation through the combined institutions of private ownership of property and free enterprise.” Respect for those twin institutions of private property ownership and free enterprise are quite evident in the philosophy developed by KLA during its 107 years of existence, and KLA members recognize the severe threat that over-regulation represents to these principles. For this reason, when we communicate with our legislators we are typically asking them to refrain from “doing unto us” rather than asking them to “do for us”.