The Government Is In Business; P.L. Poirot

THE IS GOVERNMENT IN BUSINESS tgpaulof. poirol X IF YOU, as a property owner, have occasion to negotiate with an electric company concerning a right-of-way across your lands for its transmission lines, you may want to take some lessons in bargaining from the na~ tion's largest landlord, the federal government. For many years, the government has exercised consid-: erable control over the activities and operations of the privately-owned electric companies. And out of its in terest in flood control, conservation, national defense, and miscellaneous matters, it has developed an enormous power-generating and distribution network in various parts, if not quite all, of the United States. Obviously, any proposed extension of lines or services by any pri vately-owned electric company might turn out to be "in conflict with the power marketing program of the United States." So, that is one of the dangers guarded against in new regulations issued March 23, 1963, by the Depart ments of Interior and Agriculture relative to rights-of way for power transmission lines across federally-owned lands: No right-of-way is to be granted for electric facili ties which the Secretaries of Interior and Agriculture may 420 THE GOVERNMENT IS IN BUSINESS 421 deem to be in confiict with the power marketing program of the United States.

Furthermore, applicants for rights-of-way for electric lines across public lands must agree to allow the federal government to use any of what the government decides may be "excess" capacity of the line. And the government would have the right, at its expense, to increase the line's capacity and to use such increase for its own purposes, thus jeopardizing any reserve for future expansion that the line's owner might have intended. Naturally, the privately-owned electric companies are perturbed about the stringency of these new regulations~ Even the most casual witness of the extension of the "TVA Yardstick" since the first inch was granted in 1933 must realize by now that the "power marketing program of the United States" has no natural limits, that it is de signed to encompass every square foot and every citizen of the country, and that those in charge must deem to be in conflict with their program any and every privately owned electric generating and distributing facility in the land. The federal government already has pulled tight the noose of its monopoly over the electric power indus try in the TVA territory_ When and where its next fore closure will come is debatable, but the definite trend of the times and mood of the electorate is in that direction.

The timing is strictly a matter of political expediency. Slightly more than a quarter of a century ago, when the Rural Electrification Administration was under de bate in Congress, Representative Sam Rayburn of Texas sought to reassure the nations' private electric power in422 PAUL L. POIROT dustry: "May I say to the gentlemen that we are not in this Bill intending to compete with anybody. By this Bill we hope to bring electricity to the people who do not now have it. This Bill was not written on the theory that we were going to punish somebody or parallel their lines or enter into competition with them." Contrary to Mr. Rayburn's solemn and sincere assur ances of 1936, the growing REA giant is reaching out to serve not only rural customers but industrial and sub urban markets as well. Five out of six new REA co-op customers, in fact, are now commercial, industrial, or nonfarm consumers. And tax funds are being loaned through REA at less than cost to finance lumber plants, housing projects, and, in one case, snow-machines for a ski resort.

The recent regulations governing rights-of-way across federal lands mark perhaps the most extreme, abusive, and arrogant grab for power yet attempted in a major movement toward socialization of the electric power in dustry of the United States. This latest step cannot be described as a new break in the principles of private ownership, voluntary exchange, or limited government those principles were long since fractured and abandoned in this particular struggle; what we witness now is more like a final lunge or death blow to competitive private enterprise. One of the proper functions of a government of limited powers is to protect the rights of citizens to life and prop erty-as long as each lives and uses his property peace fully and without injury to others-and to constrain those THE GOVERNMENT IS IN BUSINESS 423 who might attempt such injury. But when the govern ment itself acquires the ownership of land or any other property, who then is to constrain the government in its injurious use of such property? The principle of limited government is thus abandoned whenever the government claims title to land. It is abandoned whenever the gov ernment takes the first step toward building a hydroelec tric dam or power-generating plant or transmission line.

Indeed, it is abandoned whenever the government under takes to set the rates and otherwise regulate the opera tions of privately-owned electric companies. So, there are no fundamental libertarian principles left upon which one can then make a firm stand when the federal power agency takes its next logical step-such as posing impossi ble conditions for rights-of-way across federal lands. Why should anyone be particularly concerned at that late stage? This is no gross exaggeration or wild prediction of something that might possibly happen in the United States many years hence. The monopolization of the elec tric power industry under government ownership and control already has happened, in our time, before our very eyes, just as it has happened before in other lines of business activity, and as it will continue to happen if citizens of the United States are willing to abandon the basic principles of private ownership and control of property, voluntary exchange, personal responsibility, and limited government.

Nor is "the power marketing program of the United States" by any means limited to an interest in the pro424 PAUL L. POIROT duction and transmission of electrical ene:r:gy. Federal and state taxation, regulation, and control of the pro duction, importation, pricing, transmission, and market ing of oil and gas is a burdensome fact familiar to all. And few persons have even bothered to doubt the pro priety of what amounts to a government monopoly of the budding business in atomic energy. There are indeed many facets to "the power marketing program of the United States"; and there are numerous examples in other fields to show the nature of the trend. Communications and Transport Everyone knows that it is now illegal to undertake any operation in conflict with "the communications program of the United States." The government monopoly of the postal service is complete. Government control of the air waves is absolute; there is no opportunity for a strictly private and independent system of radio or television communication. The so-called private telephone com panies are franchised, regulated, and controlled. Most magazines could be put out of business tomorrow at the whim of the Postmaster General. And even the news papers can be shut down whenever the government chooses to .look the other way as union leaders flaunt the special privileges inherent in labor legislation.

A similar pattern toward government monopoly is emerging in "the transportation program of the United States." It has been a long series of steps from the first post roads as provided in the Constitution to the expandTHE GOVERNMENT IS IN BUSINESS 425 ing, federally subsidized and controlled system of inter state highways. And federal interest in mass urban trans portation is the latest major development. Meanwhile, we have a heavily subsidized merchant marine for over seas transportation, as well as a government program for rivers and harbors and canals and other inland water transport. The railroads have paid dearly and still pay for those early land grants along their rights-of-way through the underdeveloped government lands of a struggling young nation. Passenger and freight rates are strictly regulated; proposed mergers or abandonment of lines carefully scrutinized and often forbidden; rail road properties and services mercilessly taxed by every uni t of government from the federal on down to the level of the local school district; wages and hours and working rules featherbedded under a blanket of government sanc tionall of which comes very close to the same thing as absolute ownership and control by government. As for air transport, the only part of the business not directly oper ated or heavily subsidized by government is strictly regu lated as to routes, rates, records, reports, romance, and routine. Little wonder that Americans find it so difficult to imagine a transportation service to the moon unless the government provides itl Another clear example of government monopoly is in "the monetary and credit program of the United States."

The Constitutional authorization "to coin money" and "regulate the value thereof" has been twisted through cen tral banking, fractional reserves, and deficit financing into an engine of inflation that persistently grinds away 426 PAUL L. POIROT the value of private savings, builds minor cyclical busi ness fluctuations into major disastrous depressions, and threatens to destroy the credit of the United States among the nations of the world. Money and credit, instead of serving as a lubricant to facilitate trade, have been mo nopolized by the government into a combination brake accelerator that regulates and controls and frustrates the will of consumers and the activities of businessmen who would try to serve them. Agriculture and Labor Less clear, perhaps, in its monopoly characteristics but at an advanced stage, nonetheless, is "the agricultural production and marketing program of the United States."

Individuals are no longer free to produce and sell such crops as tobacco, cotton, peanuts, or wheat in competition with the government program. Many wheat growers are to be commended for their courageous stand in the recent wheat referendum. But, there is no way to reconcile the principles of freedom with a political process whereby the past producers of a given commodity, and no others among the taxpayers of a nation, are privileged to vote whether to accept heavier subsidies and more stringent control or smaller subsidies and less control. Freedom in agriculture means no subsidy and no government control of agricultural production and marketing, no matter how many persons vote otherwise. "The labor marketing program of the United States" is not yet a tight monopoly; some persons are still free THE GOVERNMENT IS IN BUSINESS 427 to work for anyone offering a job opportunity at a wage rate mutually acceptable. But in this area, too, the trend is unmistakable. Under government legislated and sanc tioned compulsory unionism, one job classification after another is withdrawn from the free market, held for union members only, withheld from other individuals qualified to perform the work satisfactorily. And more and more of the types of employment still open to non union workers are being covered by minimum wage laws which block out those least productive workers incapable of earning the legal minimum wage. Government unem ployment compensation and social security programs and tax policies made idleness more attractive, often more re munerative, than creative effort. And all of these govern ment subsidized and enforced fringe benefit items cut from the wage, leaving less and less of the total open to free bargaining between employer and employee.

Freedom in Jeopardy While the foregoing examples by no means exhaust the list of goods and services that have been brought partially or wholly under government monopoly in the United States, they should suffice to illustrate to anyone con cerned that economic freedom is seriously threatened; that one advance toward the welfare state leads inexora bly to the next step; that the proponents of government regulation and control of creative activities are in deadly earnest; and that once allowed in principle, there is no logical stopping of compulsory intervention until the 428 PAUL L. POIROT government owns and controls not only all the property in a given industry but also all the people dependent on that industry as investors, employees, and consumers. Go Back to Basic Principles Let us return now to the immediate problem of the private electric companies concerning rights-of-way across government-owned lands. The companies may contend, of course, that the government ought to be a kind and benevolent landlord, willing to grant rights-of-way with no strings or conditions attached.

But suppose an electric company were seeking a right~ of-way for a power line across the lands of one of its com peti tors in the electric business-as the builders of coal pipelines are now seeking rights-of-way across properties owned by the railroads, which also want to transport coal. Under such conditions, is the property owner expected to grant right-of-way to a competitor strictly on the lat ter's own terms? This, of course, is not a reasonable ex pectation. As electric power companies well know, property own ers along a proposed right-of-way can be most demand ing in their terms and conditions. And occasionally, such opposition may be confronted with governmental power of eminent domain to force acceptance of "fair and rea sonable" terms. However, the government's power of eminent domain is of no avail when that self-same gov ernment is the demanding owner of the property at is sue. So· it is that the electric companies, licensed, charTHE GOVERNMENT IS IN BUSINESS 429 tered, regulated, and controlled by the government, are strictly at the mercy of the government when seeking right-of-way across government-owned .land.

To argue their case logically before the court of public opinion the electric companies and other businessmen similarly threatened by governmental encroachment will be obliged to hark back to the fundamentals and basic princi pIes of personal freedom of choice and full respon sibility for the consequences; private ownership and control of property; voluntary exchange of all goods and services in open competition; and government limited in scope and power to the defense and protection of the life and property of every citizen equally against unprovoked acts of violence, fraud, predation, with a system of courts to decide matters in dispute and armed forces powerful enough to enforce all such decisions and to collect taxes sufficient to maintain the government in its proper functions. By these basic principles, it is possible to explain logi cally why neither power companies nor any other creative activities should be chartered or licensed by the govern ment in the first place, but left instead to competitive private enterprise; why the government has no business whatever in the generation or transmission of electricity or as producer or provider of any other goods or services that have a market price, leaving all this to competitive private enterprise; why the government should neither own nor control any parcel of land or any other scarce goods and resources beyond the necessary tools and in struments of war, leaving such ownership instead to the 430 PAUL L. POI ROT highest bidder and thus to the most capable management that can be found by the true and tested methods of open competition; why the government should grant neither favor nor exemption to any individual or group.1 Then and only then can life and property be reasonably secure in the possession of those who have earned and paid for their rights-of-way.

1 For further explanation of these limitations, see Government: An Ideal Concept by Leonard E. Read, Foundation for Economic Education, Irvington-on-Hudson, New York (1954). 149 pages. $1.50 paper, $2.00 cloth.