- The Washington Times - Sunday, February 17, 2002

By Charlotte A. Twight
Palgrave Press/Cato Institute, $26.95, 422 pages

Americans proclaim their country to be the land of the free, but today that is true only in the most relative sense. As Charlotte Twight, a professor atBoise State University, observes in her new book, "Dependent on DC," there are few aspects of human existence about which the federal government is not concerned:
"The shift from personal autonomy to dependence on government is perhaps the defining characteristic of modern American politics." The result is a world which the nation's Founders would not recognize. Where we work, how much we earn, what we eat, what we do with our property, and how we go about our daily lives are often dictated by Washington, D.C. The benefits for government officials are obvious enough, the author notes, but, "From the perspective of individual liberty, it is a disaster whose full consequences are yet to unfold."
The point is not that government was never before intrusive. But the intrusiveness today is pervasive. And largely uncontroversial among a people whose ancestors plunged into a revolution rather than accept arbitrary rule from afar. America's transformation has taken decades. The author's objective is to demonstrate how the interests committed to an expansive state have won. (Her book is published by Palgrave in conjunction with the Cato Institute, with which, to be fair, I should acknowledge my own association.)
What drew the writer to her target was the contention by some free market economists that however inefficient government might appear to be, it nevertheless represented the most efficient outcome. If there was a better solution, the political process would move to a lower-cost equilibrium.
It is a profoundly silly argument. The author explains that she became determined "to develop a rational explanation of how and why inefficient outcomes may be sustained in the governmental arena." She emphasizes transaction costs. Human interaction such as acquiring information and enforcing contracts is expensive, and that expense affects outcomes. Political transaction costs, writes the author "are not always unavoidable real-world constraints but instead are often products of deliberate choices made by government officials to redirect policy outcomes toward those that they personally prefer." In turn, warns the author, "such institutional change facilitated widespread ideological change that buttressed and reinforced the new powers of government."
The way government manipulates transaction costs are many. One common tactic is to increase the cost of information. Lies, euphemisms, and obfuscation are the norm labeling as "deficit reduction" legislation that delays a balanced budget, for instance. Reducing the apparent burden of taxation by making exactions indirect and complex. Changing the form of subsidies (cash to in-kind, such as food stamps) to make them seem more justifiable. Using complicated regulations. Restricting access to information and the availability of competitive private services, engaging in budget legerdemain to hide the cost of government actions, and employing incrementalism to obscure ultimate goals and costs.
Political actors also hike "the costs of acting on private perceptions of appropiate government functions and policies," writes the author. For instance, bureaucracies inappropriately implement broad interpretations of statutory authority, shifting the burden to opponents of their actions. Politicians establish barriers to alternative political action, such as third parties. Officials use their power (such as Internal Revenue Service audits) to punish dissident elements.
Other strategies include enlisting private individuals and institutions to promote or enforce expanded government authority. Spreading the costs of government programs as widely as possible. Reinterpreting the law to discourage popular legal and political challenges. And manipulating rules, such as congressional committee jurisdiction, to discourage challenges even from other political actors.
It's an imposing list. How legislators have used them all makes up the heart of the book. The acceptance of Social Security, the author writes, is largely based on the fact "that the entire program, from its inception to the present, has been built on political transaction-cost manipulation." Tactics include false analogies to insurance, splitting employer and employee "contributions," obscuring costs, and engaging in simple propaganda.
The chapter on withholding illustrates just how adept the political class is at out-maneuvering the public. The income tax was enacted only because most people assumed that they would never have to pay it. Withholding was sold as a reasonable compromise between the existing system (pay after taxes were due) and the proposal to make people pay twice during the transition (both 1942's payment and 1943's withholding).
A grateful public accepted Congress' generous decision to "cancel" 1942's tax obligations. The latter step, writes the author, "was absolutely critical to and perhaps the main cause of public acceptance of income tax withholding." Much the same story recurs with public education, health care, federal surveillance, and the deterioration of the rule of law. Now, she warns, "the American people have developed an astonishing habit of acquiescence."
Any friend of liberty is likely to be depressed after finishing this book. The author is not without hope but, she writes: "Renewing liberty will be a tremendous struggle, requiring the best in each of us to make it happen." Like those who signed the Declaration of Independence, we will have to "choose to commit 'our lives, our fortunes, and our sacred honor' to that noble effort."

Doug Bandow is a Senior Fellow at the Cato Institute and the author of "The Politics of Envy: Statism as Theology."

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