On Unintended Consequences

Last post I discussed the excellent book Everything I Want to Do Is Illegal, by Joel Salatin, and this time I want to extend the analysis a bit.  In the book, he describes a situation where he is instructed by some federal food police to alter his pricing for his beef such that his business becomes not a beef producer, subject to sales tax, but a service provider, subject only to income tax (which every farmer has more than enough deductions to offset).  This is a compromise to avoid shutting down his operation for a phantom infringement of some obscure and destructive regulation.

See what happens here.  Someone complains to his representative about beef being prepared in unsanitary conditions.  The representative gets a law passed forming an agency to inspect beef packing to make sure it’s sanitary.  Then the agency promulgates a gigantic mess of regulation, ostensibly to make sure that if the regulations are followed, the beef will be safe.  Businesses then bear the cost of complying with the regulations, even though they are of necessity made to fit operations that are massively different from theirs.  This cost is least easily borne by small businesses, many of which close.

Thus the original complaint, focused on getting safe meat to the table, closes the businesses most likely to provide it.  That’s consequence #1.  It also raises the cost of the meat.  That’s consequence #2.  And then, best of all, it encourages those businesses which are accidentally now the focus of regulatory scrutiny, to cheat and evade not only the regulation but the taxes that they were happily paying before.  That’s consequence #3.

How much of the US economy is in the gray and black markets now?  10%?  20%?  I’m not talking about the hiring of illegal workers, which absolutely fits into consequence #3 above, but other things like the evasion of labor law by paying under the table, or the changing of business classification from for-profit (taxpaying) to not-for-profit (non-taxpaying), without changing the nature of the business at all, simply to avoid regulation that makes it increasingly impossible for the business to make money.

Salatin’s book describes a situation where the cheese police came and shut down a small cheese factory because it was selling uninspected (though perfectly safe) cheese at a farmers market.  So the enterprising woman called the bureaucrats and asked what the restrictions were on fish food.  They said there weren’t any.  So the next week she labeled her product “Fish Bait Cheddar” and “Fish Bait Swiss”, and nobody could touch her.  Until someone decides to regulate fish bait.  Which someone inevitably will.

Leia Organa famously once said, “the more you tighten your grip, the more star systems will slip through your fingers.”  This is a terrific commentary on the current US government.  There is already no theoretical way that all the rules and regulations we have could ever be enforced.  Life would come to a grinding halt altogether.  So we are reduced to cheating, lying, and turning a blind eye, running our economic activity in the gray areas, inside the house, but in the walls and the crawl spaces, in order to get anything done at all.

I hate it.  And I think it’s ridiculous.  And I’m now thinking, after reading this book, that I might finally have to give in and run for office.


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