The Regulatory Imperium

0:00My topic is the domestic imperium. It's a big topic. I'm going to talk about regulation. I thought I'd start with a couple of quotations from Hayek and then I'm going to end with a couple of quotations from von Mises. I thought that would go over and frown like this. In the Road to Serfdom, Hayek says in the 1976 revised edition, they reprinted it in 1976, and he says that when he wrote the original version of The Road to Serfdom in 1944, socialism meant the nationalization of industry and central planning. But by the mid-1970s, socialism meant something different in the world. It meant essentially the institutions of the welfare state. It meant the transfer of income through the tax system, and it meant welfare. And I would add also it meant the regulatory state. He discussed that as well.

0:50And so what I'm going to talk about, I guess, we usually use the phrase a lot around here, the welfare-warfare state, but of course we live in the welfare-warfare-slash-regulatory state as well. And I agree with Lou that we're making great progress. There's light at the end of the tunnel somewhere. Most of you were here for Lou's talk last night.

2:12The Federal Government, as I am, I didn't believe it. Sure enough, he showed me the regulation that actually regulates the shape of toilets. I was thinking of a good name for the person who thought that one up. To look at an idea of the regulatory state, I thought I'd reproduce this graph here. Federal regulatory spending on staffing is on the bottom, the number of regulatory bureaucrats, And on top is a spending, a federal regulatory activity, and as you can see, despite all the talk about a conservative revolution and a republican revolution and all that, both the staffing and spending on government regulation at the federal level have not abated at all, have not been reduced at all, and they just continue to grow, and so we continue spending about $15 billion a year on the federal bureaucrats in Washington, and several hundred thousand of those are sort of our permanent pests to try to regulate every aspect of our life.

3:19And in addition to that, I looked up an interesting statistic. There are 500,000 elected and 13 million appointed local government, quote, officials to regulate everything from what color you can paint your fence to how much fertilizer you can put in your garden. and that comes out to one local government bureaucrat for every 20 citizens so we are not lacking in government regulators and people who want to patrol our lives and what I thought I would talk about in terms of the regulatory period is the MO or the bonus operandi of the regulatory state in the context of really I guess a A couple of books I've written. I've written a recent book called Cancer Scan. It's about the anti-smoking crusade, which I would argue is not really about smoking and health, but it's really about getting a hold of large amounts of money to fund an expansion of the welfare, warfare, regulatory state.

4:22and I'll explain to you why I believe that and so I'm going to talk about for a while now what the elements are of this regulatory state and what it means for those of us who want to eradicate it but first of all I think it's very important to understand something else Hayek said in The Road to Servenom another quotation from Hayek and he said the principle that the end justifies the means is an individualist ethics regarded as a denial of all morals. In collectivist ethics, however, it becomes necessarily the supreme rule. There is literally nothing which the consistent collectivist must not be prepared to do if it serves, quote, the good of the whole, because the, quote, good of the whole is to him the only criterion of what ought to be done.

5:10And we see this all the time of all the environmental lunatics, for example,

5:46which is called the nanny state, which is really the massive regulation of lifestyles in the name of promoting public health, saving the planet, picture grandiose cause, but I guess one example of this, reason example of this is now that so many of us drive sport facility vehicles that these are becoming a menace to society and the EPA is about to crack down on them and trucks as well. But after having studied these characters, the anti-smoking crusaders, I've decided that, you know, what are their motives? Motive number one, I think, is political plunder for fun and profit. Motive number two is central planning of politically correct lifestyles. And motive number three is to find a way to get money to finance careers as anti-capitalist crusaders, which most of the anti-smoking crusaders happen to be.

6:40Now, I'm not that big on smoking. I smoke a cigar every once in a while, but I'm not saying we should all go out to smoke, but if you consider who the top anti-smoking regulatory zealots are, really, you have Michael Perchuk, former chairman of the Federal Trade Commission, who's a cigar smoker, and Perchuk runs something called the Advocacy Institute in Washington, who trains lobbyists to promote a bigger welfare state, more taxes, more regulation. And my book was reviewed in the New York Times about a month or two ago by 11 left-wing crank. And I'm not going to get anybody, and Lou called me out to congratulate me that it was trashed so severely, because if the New York Times trash is what we're doing, you know we're on the right track.

7:28But Michael Purchock himself just could not help himself, could not help himself to write a letter to the editor to pile on to this. and he thought a real zinger that would really destroy all my credibility was, and they printed this, and he called me a libertarian tobacco propagandist. And to the left there is nothing more evil, nothing in the world, than someone who believes in liberty and enjoys a good cigar every once in a while. That is the ultimate evil. So he thought, all I need to do is destroy these tax creditabilities, call them a libertarian tobacco propaganda, it's because all my friends in Washington will just immediately see that and that will be a signal that they should not take this guy seriously. And that's Perchuk, another of the top gurus is a guy named Stanton Glantz, who teaches at the University of California, San Francisco.

8:21And he's a leading public health crusader, and he's such a darling of the left that they did a profile of him as People Magazine last summer. And he's a big fat guy. And I thought, you know, he's a public health advocate telling everybody don't smoke, you'd think he'd look healthy. I was expecting him to look healthy, but he looked terrible. His belly went over his belt. Why should I listen to this guy about healthy lifestyle? And the third tough proponent for the past 20 years of the old anti-smoking movement, someone who has introduced bills in Congress for 20 years running down to implement the political agenda of these characters is Ted Kennedy. The third person, the third tough man in the lifestyle police is Ted Kennedy.

9:06These are some of the reasons why I was originally suspicious of this whole anti-smoking thing, thinking public health is not really what these people are after. You've got a cigar smoker, someone who looks like he's ready to die of a heart attack any moment, and Ted Kennedy telling us how to live our lives in a more healthy manner. I wouldn't be too hard on Kento. He was the first Democrat to come out of the Ben Clinton because of the later sex scandal. He offered to drive Monica Lewinsky home. So it shouldn't be too hard on him. Well, I think that just in having studied how this crusade has commenced over the past number of years, which I think is going to spurt net for the regulation of beer, wine, liquor, fast food and a lot of other things.

9:59They've already got a technique down that has succeeded and they're about to extort tens of billions of dollars, maybe hundreds of billions of dollars from the tobacco company. I think they're going to try the same technique for other types of things that we consume in the name of public health. We eat too much of this, we drink too much of that. There's already a lawsuit in Washington State where a man is suing the dairy industry because of the argument that he has hardening of the arteries caused by drinking milk all his life. A Yale professor has proposed excise taxes on higher fat foods. The more fat content, the higher the excise taxes. and U.S. News even reported that they expect, talked about an epidemic, a public health epidemic I'm expecting to be a beer and wine industry net.

10:50Well, the first result of this, the ends justify the means, as Hayek said, or collected this. The highest end is the greatest good for the greatest number. And so whatever the methods are, doesn't really matter that much. And the first result of this kind of belief with regard to the regulatory crusaders in the smoking movement, especially anti-smoking, is rampant lying. Just look at the keystone arguments that have been made. The one keystone argument is smokers are a financial burden on society. Well, common sense will lead you to question this by thinking, well, smokers pay heavy excise taxes all their lives. And it is true that a 30-year-old man who quits smoking is likely to live seven or eight years longer, which means if he doesn't quit smoking, he's going to die seven or eight years sooner.

11:44So the end result of the smoking habit is smokers are net subsidizers of the rest of us, because in terms of, or a lot of us, necessarily about the budget, the government budget, they pay heavier taxes than the rest of us do their whole lives

12:29to our argument that they impose externalities on the rest of us by raising our taxes. They get sick with heart disease and cancer and they make us pay for it. Well, clearly, the evidence is that the opposite is true. The smoker actually subsidized the rest of us, but that doesn't matter because the ends justify the means. It was a trick, a gimmick used to get this passed and it worked. You get many laws passed taxing, raising higher taxes on cigarettes and so forth. The second big lie in this case was the second-hand smoke scam and the EPA took a look at 30 existing studies on the possible correlation between so-called second-hand smoke and cancer, the incidence of cancer and 24 of 30 studies found no correlation at all.

13:17Only two found a statistically significant correlation and this of course says nothing about causation. It's just correlation. And so what they did is they ignored the 24 studies and focused on the 6 that either said that there is a correlation or some of the studies found a negative correlation with more exposure to second-hand smoke to lower the incidence of cancer, which says something about the usefulness of these kind of econometric techniques, I guess. And, but anyway, so they did this and they manipulated the data that was involved in those six studies so that they could come out and say that they have found a link between exposure to secondhand smoke and cancer. And as the old saying goes, if you torture the data long enough, it'll confess.

14:05That's what happened there. Bob Livio, a retired businessman who works at the Cato Institute now, He donates more money to the Cato Institute than what they pay him in salary, and so he's a real crusader, he's an ideological crusader. But anyway, I saw him on C-SPAN a few weeks ago, and he pointed out that someone got a hold of the same data that the EPA used on second-hand smoke, and added one more variable, whether you're left-handed or right-handed. And they found a statistically significant positive correlation between being left-handed and getting cancer. All over things equal. Just to show that if you put up variables in these equations, you can find a correlation with all damn near anything.

14:50And that's apparently what happened. But again, the ends justify the means, so it doesn't matter that you've corrupted science. Speaking of things that news media ignored, we mentioned that this morning, there was an article in the New York Times about six months ago that the journalists make very little of it because most journalists know nothing about statistics or economics or most anything, I suppose, most journalists. The article said the EPA, since it has had such a tough time establishing statistically significant correlations between ostensible causes of cancer like cellular phones and cancer, that they're going to do away with the use of statistical significance as their standard.

15:36I zeroxed it, I gave it to all my colleagues, and I said, can you believe this? And the news media just kind of ignored it. To me, I thought it was a huge deal that the EPA was finally admitting we're a bunch of pond men, and here's the proof. We can't find statistically significant links between all this bogus cancer scares, so we're going to change the science. And so, uh, line number three with regard to the anti-smoking crowd is, this is one study done by Stanton Glantz. And those of you who have read about the scientific method, what is the scientific method? Well, in theory, uh, some theory is used to arrive at a hypothesis, and it is supposed to be a testable hypothesis, and in theory the results should be able to be reproduced by other researchers.

16:27So typically what we're told is that if someone does one study saying that X causes Y, then if other people can replicate that study over time, then that may come to be accepted by the profession, whatever the profession is, as part of the learning of that profession. Well the way in which the smoking regulators, the anti-smoking regulators have corrupted science another way is that government funded studies of this sort include hundreds of thousands

17:57When Jeff Tucker and I were sitting in the bar last night, he asked if he could smoke, and they said, no, you have to go outside into the lobby to smoke. Usually, if you're in a hotel and you say, can I smoke? They say, no, you have to go in the bar. But now in California, they say, no, you have to go in the lobby to smoke. But this has been a catastrophe. The real world experience has proven that this one study was a bunch of baloney, as common sense would indicate. There is such a riot here in California. A newspaper article on this that I cut out a couple of weeks ago says, one month after the nation's toughest law against indoor smoking took effect in California, a wave of civil disobedience is swooping through the state's bars, taverns and clubs. And people just aren't enforcing it. And it talks about this one guy who, in front of his patrons, was smoking.

18:48He feels obligated, because it's the law, to go up to them and say, you do know smoking is illegal, and if they persist, he just gives them an ashtray. And that's clearly not working. And so common sense and experience tells us this was bogus. But this is one of the ways in which science has been perverted or politicized or corrupted in the pursuit of political correctness through regulation. Line number four is that the state must educate kids, tell them about the smoke, and it works. It works to have the state educate kids and tell them about the smoke. There have been study after study of California, which has led the country, public school anti-smoking campaigns, that have found that the teenage smoking rate is at an all-time high in California, and it went up after they started spending millions of dollars having adults go into schools and preach to kids, Don't smoke, don't smoke, don't smoke.

19:47Of course, that's the surest way to get kids to smoke, right? It's the forbidden fruit syndrome. And yet, there's a lot of money to be made by the people who manage these programs. The people who cannot get a job doing anything else in the marketplace can get a career as an anti-smoking crusader by going into the schools and putting on these phony programs. In California, for example, here's what they get paid to do. Holding outrageous stunt contests. The idea is to try to shock a loved one into quitting smoking. The winner of one contest was a young girl who ate an entire can of Mighty Dog dog food. There are trips to Yosemite. They give away backpacks. They give away lottery tickets. And they have pool parties, carnivals, and so forth. So it's just one big party.

20:36And the idea is to treat the kids real nice, buy them stuff, take them on trips, and then seduce them into not smoking that way. And no one ever checks whether this works. They tell the kids, if you promise not to smoke, we'll take you to Yosemite. That'll work. Yeah, that'll work. And of course the kids are smarter than the regulatory zealots are, so they just take them for all our worth and go to Yosemite and have a good time. and it hasn't worked but but but there's a lot of might be made so the first result of this crusade has been rampant lying in the name of the higher club but the second with another result is tax funding of politics and I've written several books on this on tax on politics beginning several years ago whereby in California for example they passed a law in 1988 to raise tobacco Taxes, but much of the revenue is earmarked to go to so-called non-profit organizations

21:39that then use the money to lobby for even higher excise taxes and advertising bans and other restrictions and regulations. So the people who lobby for the higher taxes get the tax money coming back to them, which they use to lobby some more, and there are laws against it, but the government just seems And that's even more insidious than just providing pork-barrel jobs. In Massachusetts, for example, where they raised the tax in the name of public health on cigarettes, they provided a phone bank where you could call in and people will tell you, you know, you really shouldn't smoke. And they'll tell you that it's a quick-smoking phone bank, and they have five employees Answering the Phones, and eight supervisors, and the eight supervisors make about $55,000 a year.

22:32And so what they're doing here really is just using tax dollars to pay the salaries of the American Cancer Society, the Massachusetts Division, and under the guise of this phony phone bank, and that really is all they do. People can call in and they can try to persuade them. The Centers for Disease Control, another egregious example of tax-funded politics in pursuit of regulatory purity, I suppose, is the Centers for Disease Control has spent millions of dollars training lobbyists to lobby for gun control laws, training them all the ins and outs of how to get gun control laws enacted because the Centers for Disease Control has defined gun ownership as a disease and their statutory obligation is to eradicate disease right so that so in other words and I'm not making this up I have all the documentation in my office I have a grant document from the Centers of Disease Control to various groups someone who works with the Florida Department of Health sent it to me because

23:36they think it grants to public health department state level to lobby to train lobbyists for things like that and so that's that's an example I mean by Tax Fund and Politics. This is something that Thomas Jefferson called sinful and tyrannical way back in 1786, compelling people to pay for political causes with which they disagree. The fourth result of the growth of the regulatory state that I see in my studies of the anti-smoking campaign, which I think is the future of the regulatory campaigns, is the politicization A lot of non-profit organizations that used to be involved in providing assistance to individuals, charitable institutions, have essentially become arms of the state. One example I'll give you here is the American Lung Association.

24:25You may have heard recently that the EPA has proposed new clean air regulations to eradicate invisible sub-particles that are so small they're hardly measurable. And this was done on the basis of a study done by some researchers who refused to make the data public. Some of you may be up on this. But anyway, it's going to be a new, more stringent regulatory regime in terms of clean air regulation. Now, the way in which this came about, the EPA Administrator, Carol Bronner, has said we had to do this. We were sued and a judge told us we lost the lawsuit. We have to do this. It's not our fault. We didn't want to do this. Well, yeah, that's true. They were sued.

25:10They were sued by the American Lund Association, a grantee of the Environmental Protection Agency. The EPA has given... In our book, we've just documented it through Freedom of Information Act data that we've acquired, that the EPA has given millions of dollars of grants to the EPA. So the EPA, or to the ALA rather, so the American Lund Association can sue the people who gave them the money for more stringent cleaning regulation. So the American Lung Association to a large extent, not totally, at the local level, they still do a lot of things educating kids about lung health and so forth, but the national organization has become essentially the Sierra Club. And the fifth result of this kind of crusade that I've seen, you know, studied is the main goal here, as I said, is not so much public health, improvement public health, but money, money, money, money, to get money to finance careers as anti-capitalist activists and money for causes that really have nothing to do with the ostensible reason for the higher taxes.

26:21For example, tobacco taxes have been raised state by state. The pending tobacco settlement that Congress is talking about at the moment, Clinton has proposed sending billions of dollars to the states for a daycare initiative. And I have a copy here, a friend of mine sent me, of something called the California Children and Families First Initiative. And this, I think, is the outline for what the Clintons have in mind when they say daycare and talk about daycare. It's being honchoed here in California by Rob Reiner, the comedian. The guy who used to play the role of Meathead on All in the Family, Rob Reiner. He's become the Clinton administration's unofficial spokesman on daycare policy, Meathead.

27:09But anyway, what the proposal is to increase tobacco taxes and to get federal money to finance government-run daycare from birth to age five. Then when the kids are age five, they go into the government-run schools for the rest of their lives. And so what this proposes is a set of regulations that would oppose a uniform system of daycare providers Providers, that they all have to comply with one system concocted by this California Children of Families First Commission. And they even say that one of their goals is to eliminate duplicative systems, which is another way of saying eliminate competition and freedom of choice. And so one of the other conclusions that I've come to in my research on all this is that the assault on tobacco is not just an assault on the tobacco industry. It's an and an attempt to get a hold of the large amounts of money to expand the regulatory reach of governments in areas that have nothing to do with smoking.

28:11And that's why I think what's coming next are assaults on quite a few other industries. And I'll just give you a synopsis of what I mean here before I bring on the Mises quotes. In these other industries, on the other industries, I'll just mention that there have been groups like the Center for Science and Public Interest, those which campaign against Chinese, Italian and Mexican Food, and their research technique is questionable, to say the least.

29:01They get to a restaurant, put five different dishes into a blender and send it to a lab, and the lab comes back and says, boy, there's a lot of fat in that food. And they get huge headlines condemning that. And this sort of thing, I think, is the reason why we're going to be seeing assaults on fast food, beer, liquor, wine next. I'll conclude by quoting von Mises, as far as the significance of this crusade for politically correct consumption, for politically correct lifestyles, one of the things that von Mises If it is true that the government derives its authority from God and is entrusted by providence to act as the guardian of the ignorant and stupid populace, then it is certainly its task to regimen every aspect of the subject's conduct.

30:01That God sent ruler knows better what is good for his wards than they do themselves. It is his duty to guard them against the harm they would inflict upon themselves if left alone. Once the principal has admitted that it is the duty of government to protect the individual against his own foolishness, no serious objection can be advanced against any further encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine, and why limit the government's benevolent providence to the protection of an individual's body only? Is not the harm a man can inflict on his mind and soul even more disastrous than any bodily evil? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music?

30:52The mischief done by bad ideologies surely is much more pernicious, both for the individual and for the whole society, than that done by narcotic drugs. No fraternal government ever shrank from regimating its subjects' minds, beliefs and opinions. If one abolishes man's freedom to determine his own consumption, one takes all freedoms away. The naive advocates of government interference with consumption unwittingly support this case of censorship, inquisition, religious intolerance, and the persecution of dissenters. That's quite a mouthful, but I think that's exactly what's going on, and that's why I've been writing a lot against the anti-tobacco crusaders and taking a lot of heat from them because I think at heart they're proceeding against human freedom.