Chapter XI - Principles That Should Limit Legislation

Both governors and governed are men and women; human beings with average human limitations and ambitions. Good political. engineering, like all good engineering, must consider the stuff to be worked, the product desired, the machinery needed, and the material available for its construction; and must then layout the work and design the machine so as to put least strain upon the material of the machine yet turn out the most and best work. The primary purpose of government is protective, and grows straight out of every man's "inalienable right to life, liberty, and the pursuit of happiness"; to use the sonorous words of the Declaration of Inr249] Too Much Government-Too Much Taxation dependence. Jefferson's thought is simple, and awakens a sympathetic thrill in every breast-free dom to live and get one's bread in one's own way. "Li berty, " however, might well mean no government at all, did I, for instance, not feel that your liberty to swing your fists ends where my nose begins; that your hands are not free of my pockets; and vice versa.

To protect our unoffending noses, and keep our lawful gains, we all stand for government; enough, but not more than enough, for those purposes. The secondary purpose of government is coopera tive, for the common service; and has always followed closely upon its primary function of protection and defense. This last necessarily involves establish ment of military and police power, administration of law and justice, and taxation for the support of all; in short, the framework of government. To en large and use it for providing also roads, water sup ply, and other common needs, which are too unprof itable, too large, or politically too dangerous for private exploitation and supply, and to pay for these too, by taxation, has always been so natural and so easy as to become universal, far back in the history of nations. In legislating for both purposes, also. for low cost and high efficiency of government, with favorable reaction on the governed in creation of good citizen ship, let me once more repeat that the twin princi ples of "Least Strain on Human Nature" and "Least Government" should control.

At its very best, government must always be too complex, too· multifarious-as abundantly shown by the diagram of the Massachusetts organization in a preceding chapter-for good business manage ment; good, that is, in comparison with the simpler affair of big private business, done for profit, and r250) Principles That Should Limit Legislation strictly limited by profit and loss to concentrated and repetitive, simplex activity. It is a well-known maxim of private business suc cess not to spread out too far, not to diversify so much ~s to overtax the brain of the responsible man or men at the top. Mere growth, or extension along existing lines, can go far to the very horizon of trade without excessive mental effort or confusion; but suc cessful effort in many widely divergent directions is humanly impossible. Right there lies the weakness of all. government, especially of democracy; and the blank impossibility of Socialism, to-day so convinc ingly demonstrated by Soviet Russia; in its tempta tion to undertake, at the behest of this or that group, but at the cost of the whole, many more cooperative functions than the very human brain of any responsi ble head of government can possibly direct with suc cess.

It is a rule of good engineering to lighten the load, or else strengthen the material of the machine when the latter threatens to break down. But in the case of government we cannot strengthen human mental ity. Nothing is left but to lighten the burden upon it to the utmost; to invoke the principle of "Least Government." Consider if you will the vast range of governmental function, even at its minimum. Its primary, or protective functions, well settled by centuries of experience, include military, naval, and diplomatic establishment, law-making, main taining courts of justice and police control, and sup port of all by means of taxation. How vast and di verse are these functions; none of them performed for profit, limited by profit and loss, or by any consid eration other than emergency extraordinary! Next consider the secondary, or cooperative func tions, many of them familiar also by centuries. of [ 251 ] Too Much Government-Too Much Taxation experience, such as establishment of moneys, weights and measures, water supply, highways, bridges, posts, education, sanitation, poor relief; and the fostering of trade, art, science, etc. We know that in practice all of the above, and not a few more, are worth establishing, and indeed must be established, by law, at common cost, financed by taxation; be cause too great or too unprofitable, or politically too dangerous, for spontaneous private exploitation.

How vast and various they are in our modern states and cities. Each is a huge and separate business of itself, having nothing in common with the others but public ownership for public service. All must· be organized, like other big businesses, for continuity of policy and operation, with permanent and expert staff; yet they cannot be independent, or decentral ized, but must be co-ordinated and integral parts ofa political administration, which changes from year to year, whose head or heads must answer for them all to the people, and must therefore try to direct them, even though the task is impossible. There are limits, best known to big-business men, to efficient business organization. What they are, in any given case, is best learned by trial; but any old and experienced organizer will, I think, confirm my assertion, that the protective and cooperative functions, which are forced on modern government by their inherent impossibility as private under takings, which must be developed by government at the cost of the taxpayers, are already too numer ous for efficient organization. That, of course, cannot be helped; but we can at least undertake no more, and can leave it to' private exploitation, for private profit, to supply every additional human service and human need whose creation offers such profit. The state need seldom guarantee a profit; history proves [ 252 ] Principles That Should Limit Legislation that fact. But it also proves that nothing so stimu lates and insures private supply of human needs as government protection, along with the lives and savings of the poor, of the capital and profits of the rich. Indeed, creation and supply of the necessaries and luxuries of life are so directly dependent on protection of capital and profits, that we might well coin as a political slogan the phrase, "For Maximum Protective, but Minimum Cooperative, Govern mental Activity."

There is one· more powerful reason for believing in "Least Government" in its reaction on the gov erned. I refer to the inestimable value of its byproduct of "Individualism." . As a chain is no stronger than the metal of its links, so the race is no stronger, relatively to other races, •than the fibre of its men and women, in dividually. Strong races make strong nations; therefore government should do nothing whatever to foster in its people the vicious habit of lying down on the public treasury for private support ; should re lieve no man from the stern necessity of earning his own living and saving his own money, especially if he wishes to be well off; should exempt no one from the consequences of his individual idleness, improvidence, or dishonesty. The state is the creation, not the creator, of its citizens. To teach any man that it, or anyone else, owes him a good living, or an easy job, because some other man makes one by brains or hard work, is to hurt him as deeply as pauperizing him can hurt the state. So rfar as history tells the story of 'Paternalism, of ~Collectivism in actual practice, of attempt to make government support the people instead of their supporting government, nothing but demoralization and disaster has come to government [ 253 ] Too Much Government-Too Much Taxation and people alike. Such a tale is unrolling itself to day in vast misfortune to Soviet Russia. How long will it be, I wonder, before that great country will be forced back to "Least Government" ? As for poverty and· riches, unequal distribution of wealth, etc.-all that legislation can or ought to do for the people is to guarantee to all grown folks equal political oppor tunity for life and liberty, and for such pursuit of happiness as their individual powers permit of; and to all children at least such reasonable chance to develop a sound mind in a sound body as can be given them with or without their parents' help. No legislation can equalize the natural endowments of human beings, or nullify their natural weaknesses.

Why the Creator made men differ so we cannot tell; but certain it is that "Society" cannot change them. It can leave the Creator's work alone, with a clear conscience; while legislators may well, to paraphrase the Declaration of Independence, pay decent regard to the experience of mankind when tempted to allot men equal division of unequal earnings. For most human relations there is no better re liance than upon the Common Law, that wonderful accumulation of long centuries of Roman and Anglo Saxon evolution of justice---the actual working result of countless experiments in unravelling the tan gles of men's affairs far more completely than made to-order law, class legislation, can do to-day. I am not a lawyer, and speak ignorantly; but I have already cited, as a conspicuous instance, the failure of the Sherman Law, and shown the entire sufficiency of the Common Law to protect us all against combination in restraint of trade. We can safely let well enough alone. The less new law, the better.

Lastly, for government's own sake, for its efficien cy, let us apply the principle of "Least Strain on Hu[ 254] Principles That Should Limit Legislation manNature." As the Lord's Prayer puts it, "Lead us not into temptation, but deliver us from evil." The law should so limit the scope and layout the detail of government function as to offer least op portunity for graft; and should so reward employees as to make faithful service pay better than graft. These are easy things, and are actually done every day in thousands of businesses, far larger in the ag gregate than government itself. It is common sense to make it worth while for good men to work for government. This applies especially to the Secondary, or Cooperative Functions enumerated above. These are undertakings at the common cost, for the common good, forced upon the state, not conducted for profit, and ultimately financed by taxation. For both reasons, and because it is hard to say when to stop (for instance, in extension of sanitation at the demand of .enthusiasts to the point of making provi sion for maternity at the.cost of the taxpayers) they are too often the children of bureaucracy and graft; malevolent sisters, that with their mother, demagogy, have been the bane of all government, from that of Imperial Rome down to that of Soviet Moscow. It is hard to gain popular support nowadays for a six-word rule or principle like "The Less of them the Better"; but it is safe to say "The Less Legislation about them the Better."

They should be organized under general laws, not by special procurement; as bureaus of as few depart ments as possible. The law should state the gen eral intent of each activity, and fix its appropriation, but leave details to its official head, who should be given power to expend his appropriation; be loaded with full responsibility; and given a substantial money interest in results and economies actually [ 255 ] Too Much Government-Too Much Taxation achieved. This last would require in each case a system of accounting such as to reveal performance within estimate, and service beyond estimate, both within appropriations; so that a valuable man and his staff can enter the public service with the prospect of leaving it in later life, well off as well as honored members of the community. But no such Coopera tive Function should be undertaken, no service for the common good should be established at public cost, no matter how eagerly sponsored by some perfectly respectabl~ group of faddists; legislators should never tax the people to put the Government into any activity, which has already developed, oris likely to develop, spontaneously, at private risk for private profit.

Two good reasons dictate this rule: first and strongest, that a situation is at once created which offers almost irresistible temptation to politicians and department employees to blackmail private invest ors already in or about to enter the same field of enterprise; second, and plenty strong enough for hon est legislators, the fact that it is almost impossible for government to serve the public as well or as cheaply as would private ownership and control. In passing from this interesting subject of efficient organization of Cooperative Functions of govern ment I would remark that my plea for giving broad power and responsibility to executive heads of such organizations, with corresponding concentration of responsibility on their shoulders, is in flat contradic tion of the old New England temperamental dis trust of men in office; though it embodies the princi pIe of successful commercial management, thus to centre power and responsibility in the hands of well-chosen men and leave their hands untied by clumsy statute.

Precisely the same plea applies to drafting municipal [ 256 ] Principles That Should Limit Legislation charters; which would thus become flexible, and en tirely workable without the frequent amendatory legislation now customary. Coming back to consideration of the governed and their human rights, which democracy is supposed to protect (Vice-President Coolidge defined democracy the other day as "obedience to law made by the people") the principles of Individualism and Least Government order that laws protecting life and liberty must be few, broad, simple, and negative. They need not strictly compel what I am naturally free to do, but must broadly forbid that which I may not do without injury to my neighbor. Human activity needs neither stimulation nor compulsion; nothing but protection and freedom to follow lines of least resistance. This negative principle should be substituted, and the sooner the better, for the affirmative principle, now so widely held, of state restriction or compulsion of industry and commerce.

The whole great mass of laws, and the useless boards and commissions enforcing them, to regulate big business, should be done away with. They are not needed to protect life or liberty. They never should have been placed upon the statute books -at all; for if liberty be there the natural energy and the daily need of man will automatically make the best of natural conditions. The sound rule of legislation fostering commerce and trade is to leave them absolutely free from governmental control, subject only to the natural forces of the markets, the law of supply and demand. First, because they are spontaneous, and grow best when most -let alone; second, because control means preference, conflict of interest, and division of class against class; and third,· it breeds constant tempta tion to corruption of government by bribery. In ,[ 257] Too ~Much -Government-Too Much Taxation short, the state is better off without the interests; that is, without laws that create them.

Legislation Affecting Property. We come along now to a third group of Principles: In the civilized state the law has mainly to deal with and protect property-not merely public, but private property; the absolute right of every free man to the product of his own energy, his own work with hand or brain, his own thrift, his own risk taken. Protection to property is the very essence of law. The ruling principles of legislation regarding prop erty are twofold: first, that of JUSTICE-that he who does any service whatever shall get reward pro portionate; small or great, or even unlimited-except by the obligation to keep bargains, and never to deceive; second, the principle of EXPEDmNCY that original creation and accumulation of property, or capital, is the prime need of every country, and is out of all comparison more important than its mere distribution. For it goes without saying, that wealth must first certainly exist before it can be distributed at all.

Now, the world is several thousand years old, and countless experiments have been made in getting rich quickly, both private and public. Yet the great big fact that sticks out at the student is, that all actually existing wealth has been gathered and saved by private individuals; comparatively few in number,though exceptional in ability and thrift. Furthermore, that the great mass of the people, whether in capitalistic or non-capitalistic countries, never create and never save at all, except when in spired by someone of creative mind; and, third, that no more does government, in practice, create or save wealth, but only grabs it in taxation, often badly expended. [ 258 ] Principles That Should Limit Legislation Moreover, history reveals that even private energy will not save and use wealth in productive industry unless encouraged to do so by state protection in sure and undisturbed ownership thereof. ·Take away that protection, and wealth disappears, industry and com merce die, unemployment and general misery ensue; as to-day in Russia-and a thousand times before in the long history of war, conquest, and fO hher govern ment.

Lastly, what we call CAPITAL,or wealth, is unbe lievably small in proportion to population, and al ways will be. There never was or can be enough of it to go around, and make everyone well off. At the outbreak of the World War, iUI9I7, wealth averaged for the United States $4,560 per worker-men and women included (Census Bureau estimated wealth of United States in 1917, 220 billion dollars. Selective Draft Bureau roll of workers same year, 48,283,000. Quotient, or average per worker as above, $4,560.) Does anyone imagine for a moment that those work ers saved that capital themselves? Or does anyone believe they would in future save any such sum, even if presented with the entire income upon it? In 1919, the N. Y. World Almanac figured at 72 billion dollars .(which far exceeded other estimates) the total prod uet of the United States-or for say 50,000,000 workers, $1,44° apiece; so the income ort each worker's pro rata share of all capital (say $4,560 as above) at usual rate of 5 per cent, would be $228; which, if added to his $1,440 earned would make his total income $1,668. Labor would then get everything, and Capital nothing, out of the na tion's year's work; but would the workers' grow rich, or does anyone imagine in that case that Labor would save anything worth while out of that extra 75 cents a day? Would not most workers simply spend a [ 259 ] Too Much Government-Too Much Taxation little more on food, clothes, and movies? Further more, would owners keep on working their plants to produce that extra 75 cents if they got nothing them selves doing so? If not, what would then b,ecome of plants and workers, too? Ask Soviet Russia the answer!

I have digressed long, because this is perhaps the most immediately important general principle to be grasped by an honest legislator, to wit: "THE MORE CAPITAL, THE BETTER," for the state and all its people. For, 1st, capital pays its owners nothing un less employed; 2nd, if employed, it must forthwith employ labor-usually paying the latter, collectiveiy, far more than it pays owners; 3rd, it is created and saved by very few-even though they employ many in creating it-while the many save very little be cause most workers would rather spend than save; 4th, there is nowhere enough capital to supply the demand for starting new industries; 5th, the greatest stimulus that ever has caused creation and saving of capital is unlimited private ownership, protected by the state; and, therefore, 6th, however selfish the capitalist, however rich he may be already, it is still to the best interest of state and people to leave him absolutely free to create and save more capital; and to protect him in its ownership!

The laws relating to business corporations are but a part, I may here remark, though an important one, of those affecting private property. A lot of blundering regulation' and confiscation of corporate earning power has been preached and practised for many years, on the pretext that a corporation is the crea ture of the state, owing its life and powers to the state; and that what the state gave, the state can take away. So the legislatures cutloose against the corporations, mistakenly. [ 260] Principles That Should Limit Legislation As a matter of fact, the only thing the state gives any corporation is the permission for a lot of citizens to contribute, each so much-and no more-to the, capital of some lawful enterprise, which everyone or all of them have already entire constitutional right and liberty to go into as individuals, or pattners. The one reason why an investor prefers to become stock.

holder· in a corporation, instead of partner in a firm, is to limit his liability for, debts of the concern to the sum already put in; instead of becoming liable, as a partner does, for every dollar it may ever owe, even though it costs him his entire fortune. The one reason why the state interposes the corporate form of business, and thus relieves him of extra risk he never meant to take, is to induce him to put in the sum he did mean to risk. The state recognizes the fact that only by means of thus limiting risk is it possible to finance great enterprises, involving enor ous liabilities; and therefore permits all men to chip in only as much as they please, and stop chipping in when they please. The state creates absolutely nothing, except a record and certificate of organiza tion, at cost of a dollar or two; a fee for the Secretary of state, or some Bureau; and for itself, you bet, a capital stock tax, promptly collected in advance.

All the cash, plant, employment, product, sales, and profit (or loss) are created solely by the thrift, cour age, and management of private citizens, who. al ready had the constitutional right to create all these things as individuals; and who would do so but for fear on the part of each of them of undesired and unlimited future liability. To illustrate this assertion, I cite past experience. Twenty-five years ago the State of Illinois, desiring to rid its records of the names of a host of dead stock companies, passed a law taxing all corporations each [ 261 ] Too Much Government-Too Much Taxation $1.00 per annum for annual registry. The result was that over 10,000 corporations, many of them nominally capitalized at hundreds of thousands, even millions, of dollars, died an instant death for lack of $1.00 each to pay that registration fee! Two of them were corporations of my own promotion whose property had passed into larger combinations. Yet all the power of the great State of Illinois had been exercised on behalf of these so-called creatures of the state; whose worthless names were tangled in the records at the State House like the empty, tenuous carcasses of moths and midges in a last year's spider web.

There is no moral right and no political sense in the control of the corporation by the state, on the ground that it is the creature of the state. The state has already received the desired consideration for the use of the corporate form, in the mere estab lishment of productive enterprise financed by the corporate capital. The possibility of added material prosperity to the state is full compensation I will not say for the powers conferred, but for the menace withdrawn. Further demand, in the way of taxa tion, regulation, or limitation of the free and natural course of the business of corporations is nothing more or less than demagogic blundering the inevita ble result of which is to check the very production which was the object in view. Therefore, let the honest legislator apply to the treatment of corporations the identical principles applicable generally to private undertakings, namely, of justice-or reward limited only by service; and of expediency, or stimulation of the creation of capital in every possible way.

In the case of what might be called natural mo nopolies (such as telephone service-in which it is to [ 262] Principles That Should Limit Legislation everyone's interest to belong to the same telephone system; or street railways-in which no more than one line can occupy the same street, and universal transfers between lines of the same company on different streets are desirable) the argument for protection of the public from possible grasping ava rice deserves due consideration. There is, of course, such a possibility under such circumstances; but his tory shows that the risk is negligible. I have been able to find no instance in large American cities dur ing the past half-century, of advantage taken, or great plunder realized, by any such natural mono poly; though many a promoter has ·done handsomely himself. Cost of service to the public has always come down; and for the most part, voluntarily, as its volume increased. The canon of· business which I have heretofore referred to, known as the "law of diminishing returns," is far too powerful for any mistaken greed of owners; and rapidly brings down charges for service· to the lowest profitable figure which the vendor can afford to make, for the very simple reason that such is, in practice, the best way to make money for the owners of the property. In law or in theory, there is no reason why the city or the state should not go into or regulate the street railway, or the gas business; or the bakery, or any other business, in order to furnish the lowest, best and cheapest service to the people; but in practice there is the entire experience of mankind dead against it. It is safe to make the broad assertion that such attempt has never been made with sub stantial advantage to the state or the people. Why then should an honest legislator slam his constituency against a stone wall, when he can lead it comfortably through an open gateway?

[263 ] CHAPTER XII, LEGISLATION ON LABOR BEFORE passing from talk about legislation it is worth while, on account of its immediate interest, to apply the general principles above laid down to the specific sub ject of Labor . You will notice I spell the word with a capital L, because Gompers & Co. spell it that way. When they use the word, it always means Organized Labor; it does not mean laboring men in general. Mr. Gompers is, however, a master of camouflage and his phrases intentionally carry the impression that they are the utterances of a vast and inarticulate multitude of very human beings. They are, in fact, those of a powerful, closely compact, quasi-political machine; which no more represents the actual temper of the mass of American laborers than the high-tariff group in Congress ex presses the wish of the mass of American consumers ; who kick bitterly when, for instance, their bill for coffee, sugar, or a suit of clothes, is marked up, be cause of a rise in tariff. According to the United Mine Workers, the whole people are just now crying for high-priced coal; and according to the Farmer Bloc and the mill-men they are crying for high priced flour and woolens; but you and I, reader, know they are crying for just the contrary.