Montana Public Radio Commentary: The Courtier Society

By: Carl Graham, CEO, Montana Policy Institute

Thanksgiving always reminds me of an old Twilight Zone episode where the aliens show up in sparkly robes with gleaming big eyes and smiles all around. Their elongated fingers carry a book called “To Serve Man,” which everyone naturally assumes is a primer for saving us silly humans from our own ignorance and evil natures. This is during the Cold War, remember, when we all assumed we were going to blow each other to smithereens at any moment.

Naturally the best and the brightest humans start lining up for a trip to the home planet where further enlightenment undoubtedly awaits and a select few will be chosen as mankind’s benevolent overlords. It’s for our own good, of course.

Unfortunately, “To Serve Man” turns out to be a cookbook and the best and brightest are on the menu instead of the guest list.

Maybe it’s just the Thanksgiving tryptophan talking, but I think that’s where this country is headed as people and businesses line up for special treatment from an increasingly centralized and powerful government. At some point they’re going to find out that they’re dinners instead of diners.

We’re already seeing the increased influence exerted by just a few large special interests with access to political power resulting in more restrictions, regulations, and costs that disproportionately fall on small businesses and families, whose voices and opportunities to pursue happiness have grown relatively weaker in the process.

I could give you any number of examples, but let’s just use one that everybody has seen in the papers. The Dodd/Frank banking reform law was passed in the wake of a financial crisis that resulted in taxpayers bailing out big banks to the tune of billions of dollars and looking for someone to blame. Although many of its rules are still being written, we already know that the law includes massive increases in compliance, insurance and capital costs for banks, along with giving politically favored large institutions a de facto “too big to fail” designation.

It’s a law that was written for big bankers by big bankers. They can absorb the increased compliance costs while small banks with much lower margins can’t. They can meet the capital and insurance requirements that stifle small banks’ ability to make local loans to farmers and homebuyers. And of course with an implicit government guarantee, big banks enjoy much lower borrowing costs than small banks giving them even more of a competitive advantage.

The result is that we will soon see our community banks – those that survive anyway – become nothing more than storefronts and loan processors for the “too big to fail” banks that the government has chosen to guarantee. Decisions will be made based on checklists developed in New York and Washington D.C. rather than on personal relationships and local knowledge. Loan proceeds will be shipped out of the state and the big banks will increasingly feed the revolving door of the regulated and regulators until only those that can maintain their political access survive. Consumers will have fewer choices with higher costs, and will have to tailor their lives to meet one size fits all requirements if they want mortgages or small business loans.

But that’s not my point.

My point is that by massively centralizing and expanding government power we’re creating a courtier society, one where access to the King’s court is more important to success than merit or effort or risk taking. Now of course I’m not saying we’re creating a monarchy, but the effect is the same when power, influence and success come from proximity to the levers of power rather than from working hard and taking risks. The politically connected will always have access to power, and so the greater that power the more they will succeed at everyone else’s expense.

The result of this centralization and expansion of power is the systematic elimination of small business in this country. The barriers to entry are becoming so high and the cost of complying with regulation so onerous that would-be entrepreneurs are increasingly unable to make any return on their investments or even go about their daily business without risking fines, penalties, or jail.

Many existing businesses will simply close up shop as regulations and reporting requirements become too expensive or difficult to comply with. Job growth will dry up – especially at the low end of the income scale – as the costs of hiring new employees increase and government becomes a competitor for labor with new and expanded entitlement programs. New entrepreneurs will increasingly look at the barriers to entering the marketplace and the myriad of obstacles erected in their path and just go do something else. The risks and rewards of starting a new business will just not be worth it, especially if their success will be demonized in the increasingly popular political tactic of class warfare.

In a courtier society power is centralized and only that power decides who succeeds and who fails. Decisions are made based on proximity to the throne rather than merit, effort, or even the law. That is the direction we are headed as government becomes increasingly centralized, large, powerful and arbitrary.

The end of this path lies in a business/government partnership where large corporations operate under the umbrella and the thumb of government, and people trade their freedom for a monthly check. There’s a name for that, but I don’t want to be incendiary on this special holiday. Just take a look at Italy in the 1920s for a good example.

And have a Happy Thanksgiving while we still have much to be thankful for.

For Immediate Release
930 Words

Carl Graham is CEO of the Montana Policy Institute, a nonprofit policy research and education center based in Bozeman.
He can be reached at:
67 W. Kagy Blvd., Ste. B
Bozeman, MT 59715
(406) 219-0508

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