Counterproductive Reform
Chapter 31 Of The Australian Achievement: From Bondage To Freedom by LJM Cooray

The values and institutions of the western democratic order contain internal mechanisms for renewal, reform and change. But the mechanisms are ignored by reformists who want to use the power of government and the bureaucracy to affect change. As a consequence of regulationist programs, the opportunity for genuine evolutionary change and reform has been lost. The proper bases for and context within which reform and change should be effected have been referred to above (see sections 5.4, 16, 18.5 and 26). There is another dimension on which the coercive utopians often focus. They argue that modern conditions demand change. Modernism requires changes and legislation is frequently necessary, but the changes desired by many (so called) reformists consist of social engineering. They consequently confuse modernisation with social engineering. Social engineering packages are passed off to the public as modernisation.

The common law was developed in relation to the practical problems and experiences of human beings on a case by case situation in a pragmatic fashion. The law was developed in the context of real situations and problems. This is in direct contrast to the modern reform process. Reformists (divorced from real situations) operate in ivory towers, dreaming up solutions for human problems, without an understanding of human nature and human life. The reformists are much more divorced from the realities of life than the common law judges. The common law judges were compelled to deliver their judgements based on community standards in the light of real human situations and problems. Common law provided for the change which took place. See further section 18.2.

The values and institutions of the western democratic order have provided for change. Again, it must be repeated that it is in the context of freedom that change takes place. The " reformist" bureaucracies are not generating change. They are causing stagnation and even regression. This is not to deny that there must be change and reform. Modernism brings its own problems. But the problems must be looked at in the light of the accumulated wisdom and foolishness of the ages. Frequent tampering with the rules by over-ambitious reformists endangers the whole development that began with the renaissance and received a new lease of life from the industrial revolution.

The extent of government control of the economy has, in the last 30 years, increased from 28% to 44%. See section 26. Government regulations affect every aspect of life. Government regulations are drafted by human beings and human beings have their imperfections and fallibilities. The growth of bureaucratisation and government has put the whole system into reverse. This has been discernible from the 1960's. It has strangled the relative freedom that has been responsible for the growth of production and that fostered development. There is a correlation between the growth of government and the increase of poverty. This is illustrated by recent studies in America. There is a correlation between increasing government regulation and welfare on the one hand and the increase in the incidence of poverty on the other. There is a correlation between the growth of government and unemployment (one of the causes of unemployment being the regulation and taxation of business which big government imposes). There is a correlation between the decline of family and religion and the rise of problems relating to drugs and crime, particularly amongst young people. There is a correlation between freedom and limited government and reduction of inequality and progress.

Supporters of the values and institutions of the western democratic order can identify with some of the concerns for, and the analysis of, human problems and suffering on which reformists focus. The point of difference between the interventionist reformists and liberals lies on the grounds that

  1. the former's policies often are based on unachievable standards and an absence of understanding of human interaction
  2. their emphasis on the power of law to achieve those ends.

The consequence is that the reformists' efforts invariably create more problems than they solve.

The supporter of freedom may often agree with the sensible reformist in his analysis of problems — but would argue that an attempt to use law made by imperfect humans and administered by imperfect bureaucrats and judges is often counter productive. Thus, for example, a supporter of freedom may be equally as concerned as a regulationist about discrimination against women but would see the need for education rather than regulation. He would doubt the wisdom of special legislation and suggest the better enforcement of the general law because legislation in such situations will lead to discrimination and create more problems than it solves.

The reformists do focus on genuine problems, injustices and inequalities. They have made a contribution to the establishment of equality of opportunity, in the context of their concern for the underprivileged and the disabled. However, the problem today is that they exaggerate and distort such problems and they get away with these approaches because the challenge and counter arguments are very weak. Their solutions are not infrequently impractical, utopian and counter productive. It is the counter productive aspects of reforms which must be highlighted. By trying to achieve too much through over regulation and over taxation, they miss out on the practical and constructive reforms which can be effected. The words "counter productive" emphasise that, whilst the reforms may yield certain benefits, they are counter-balanced and over-balanced by the disadvantages which are not foreseen or, if foreseen, are brushed aside when the reforms are drafted. They become visible when the reforms are implemented but the counter productive aspects of reforms are seldom properly highlighted.

An example would be the vast sums of money spent on Aboriginal welfare, a very small part of which actually reaches the intended beneficiaries. The major part of the money is being creamed off by bureaucrats, academics, researchers, social workers and by persons of mixed white and Aboriginal parentage who have few or limited contacts with the life and culture of Aborigines.

The basic problems are compounded by a demanding populace and pressure groups who want just about everything. These groups are encouraged by activists and politicians. Individuals and groups (radical and conservative alike) make increasing demands on government and employers, without considering the overall implications — From where will the government get the funds? What will be the effects of more taxation on individuals and business? What will be the effects of higher wages on profitability of business enterprises and levels of employment?

Australia's ills are attributed to changes abroad as well as to lack of will, failure of nerve, moral decay, selfishness and laziness, and the shattering of community feeling. One can find signs of all of these, but the key may be something else: the fact that the regulationists and welfarists are encouraging the people to ask for just about everything from the government without considering or fully understanding the costs. They want freedom as well as order, individual liberty as well as equality, safety as well as the benefits of risk taking, a wide-open society as well as less crime, material wealth as well as spiritual worth — without stopping to think that each of these values takes something away from the other. To use an ungainly but accurate expression, they have forgotten the trade-offs.

Equality of opportunity and provision for the genuinely underprivileged are within the rationale of the liberal system. The emphasis of the reformists is no longer on merely providing for the really poor and reducing inequality. The emphasis is no longer on extending avenues for equality of opportunity, but is directed towards equality as a goal — towards providing equality of outcome. The movement is now for equality and for the elimination of economic and social privilege, disparity and exploitation, which has very fundamental implications for freedom and enterprise. This is accompanied by the resounding cliched phrases and arguments which go with the egalitarian message, and the envy and hatred of success, capitalism and wealth, even when privilege is based on effort and ability.

A significant aspect of this movement is the increasing body of non-Marxists and anti-Marxists within all the political parties who are striving towards unrealisable ideals.

The contemporary challenge is posed by unrealistic aspirations towards equality, democracy, justice, accountability, peace, etc, unreasoned attacks on authority, law and order, hierarchical structures, family, free enterprise and the profit motive and the call for elimination of economic and social privilege, disparity and exploitation and so on, which all have as their necessary consequence the need for more government activity, more government funding and ever decreasing levels of freedom. A society that places equality above freedom, as history has shown, ends up losing both.

The critical spirit has spawned analyses of human situations. From it has sprung the naive belief that where there is a problem there is a solution and the machinery for implementing the solution is government money plus bureaucratic regulation. A great deal is said about the supposed crisis of capitalism. But capitalism has, in the sense of free enterprise, died long ago in the over regulated economies of so-called capitalist countries. The real crisis is of the mixed economy, with too many government inputs, excessive welfarism, juvenile ideas of justice and equality and the weakening of free enterprise, which is slowly becoming incapable of supporting the expansion and development that it has engendered in the last one hundred years or so.

The reformists argue that a contrary approach to theirs overlooks human need. The answer is that those who are advocating unrealistic levels of expenditure and regulation by government do not realise that, notwithstanding the apparent benefits of such activities and payments, in the long run the recipients and the public are likely to suffer as the productive sectors of the economy become less able to function effectively. The consequence is that the recipients, particularly the poor, end up worse off than they were before. The effects of many reform movements are counter productive. This is not confined to the economic area. The peace movement, children's rights, affirmative action, the attempts to weaken discipline and authority, conservation, attacks against the family, educational reform and anti-hierarchy movements are all examples of critical perspectives which make some genuine points but which, when pushed beyond reason and commonsense, have counter productive effects and result in counter productive change.

Milton Friedman said in the Preface to William E Simon,A Time for Truth, Sydney (1978) xii:

The view that if there is a problem, if there is something wrong, the way to deal with it is to pass a law, set up a governmental agency (staffed, of course, by the intellectuals urging this solution), and use the police power of the State to correct it, is a superficially appealing view. It is simple, as well as simple-minded, and appeals to our natural impulse to take personal credit for the good things that happen and blame a "devil" for the bad things — ... that freedom and competition are far more effective than the visible hand of the bureaucrat is a sophisticated, subtle view which is far harder to get across. It requires thought, not reason, to comprehend. It does not lend itself to ringing phrases, to high-flowered sentiment, to promises to particular people or particular groups. Moreover, the market has no press agents who will trumpet its successes and gloss over its failures; the bureaucracy does.

A perceived market failure or injustice within capitalism is for some a reason for government activity. Such advocates do not realise that the choice is between the imperfect market (subject to investigative reporting, which is an important barrier upon actions) and imperfect legislators and imperfect bureaucratic activity. If a rational choice is made, bearing in mind the record of bureaucracies and government commercial enterprises, there will be a great deal less pressure for government activity and funding. Many academic, media and bureaucratic studies are published about the abuses which exist within the liberal democratic order. By comparison there are few studies of the abuses which exist within government bureaucracies and particularly within government commercial enterprises. A better sense of perspective will be obtained if there is a greater focus on such aspects.

While conscious of acts of injustice which are perpetrated under private enterprise, the regulationists are unwilling to realise that the alternative to private enterprise is public enterprise, which is invariably worse in most respects. If the economic cake is to provide shares to the underprivileged it must grow in size. The enemies of the free society distrust wealth. But that wealth must be created — and it is created by entrepreneurs. The coercive utopians are talkers and planners but not creators and doers. Their policies of excessive government regulation and over-taxation have, in the latter half of this century, had the consequence of preventing the size of the economic cake from expanding, even of making it smaller. They seem blind to the reality that their policies based on hatred of capitalism, lead to a smaller economic cake — and that the smaller economic cake is not even more fairly divided. A great deal of money is creamed off by the bureaucracy and special interest groups and does not reach the poor and underprivileged sections of the community.

It is necessary to understand western history and tradition, its achievements and its failures before any type of reform is likely to be successful. Reform movements have proceeded essentially by focusing on existing problems without consideration of the existing advantages. This has been the route to a great deal of counter-productive reform. Productive reform must be based on:

  1. an understanding of and a pride in the achievements of the order and its dynamics
  2. a realistic and common sense awareness of the weaknesses
  3. the wisdom to realise the weaknesses that can be reformed by law and those which cannot
  4. a recognition of the role of education as distinct from regulation