2012-06-13

Cochrane on An Overlooked Minarchist Principle

I am a bit slow on the uptake here, mostly because at the time the following blog post was written, I was in between countries....

In a very concise blog post, Chicago School economist John H. Cochrane (not to be confused with Austrian School economist John P. Cochran) highlights a concept vital to the understanding of the minarchic flavor of libertarianism:
We talk about "regulation," but the real issue is rules vs. discretion. Regulating by simple clear rules is much better than regulation by discretion, or by rules so complex they amount to discretion. When a zoning inspector can come in after the fact and always find something wrong, it's in invitation to corruption. We are increasingly a country in which "regulation" means that regulators can tell people what to do on a whim, not one in which clear objective rules are imposed.
I recall from The Road to Serfdom that Hayek referred to this principle as the classical liberalism idea of "Rule of Law," although that term has been used to describe so many different, competing principles that it is probably best to avoid that phrase.

I believe the prevailing philosophy in American politics shifted at some point from a general agreement that rules are to be imposed like surgical incisions, when deemed necessary, to the general idea that regulation qua regulation is simply "necessary."

When you compare the two concepts, it's clear that there is more ambiguity in the latter notion. It is a lazier philosophy. We simply create an overseer and let him do the rest. If the overseer suffers from glut, we oversee the overseer. And so on, and so forth.

All of this vanishes when society adheres to the principle Cochrane describes. If our focus truly is on making rules to prevent specific outcomes (i.e. something more specific than "corporate overreach" or something), then we will govern well.

If, on the other hand, we simple accept the idea that "some regulation is needed," and then we stop thinking about it, then we are in no position to complain when our freedoms disappear and simple things like opening a business become cartoonishly Kafkaesque.