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Economic Controls Turn Regular People Into Criminals

– January 14, 2019
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Part of the underlying drama of the show The Americans is that we know how it ends up. The glorious communist utopia of the Soviet Union, to which the main protagonists have devoted their lives as undercover spies, goes belly up at the end. Which is to say: they seem to be wasting their lives on a lost cause. The viewer knows this going in. The characters do not. They continue to believe they are working for the great cause.

You can summarize every domestic economic policy of Russia following the Bolshevik Revolution through 1991 as an attempt to salvage the unsalvageable. The attempt began in 1922 with the New Economic Policy, an expedient to save lives following the disastrous wartime socialism. It continued all the way through Nikita Khrushchev’s attempt to create a pricing system for planned markets. Even Mikhail Gorbachev’s reforms were intended to save the system from itself.

In the period covered by the show, Soviet elites had come to the conclusion that communism was failing for one main reason: corruption. The goal of the secret police, then, was to find the people who were doing bad things not allowed by law and prosecute them. Surely more force would lead to more compliance, which would then cause the central plan to work. You can look at this today and think: how ridiculous can you get? Obviously the whole model was wrong and needed to be upended. But it’s not so easy to throw out one model, and, along with it, the entire intellectual apparatus that backed it.

That Soviet communism persisted 74 years, and that people even today subscribe to the socialist model of economic organization, is a perverse tribute to the power of an idea.

In one scene, the Soviet secret police have in their interrogation room a woman who works at a grocery store. It appears that she had been gathering some of the food and exchanging it for goods and services on the side. This is corruption. To the astonishment of the investigators, the captured woman admits everything. She says, very nonchalantly, that this is how business is done in Russia. Everyone is involved — for the purpose of surviving. If you are not involved in this gray market, you are not taking care of your family or yourself. If this is corruption, she says, the entire country is guilty.

She continues to make the most salient point of all. She says that the secret police and the party elites do not understand anything about how the people live. They already get their provisions. They have special access. They are not fighting for their lives. They are taken care of in a special way. The people, on the other hand, are not so lucky. They have to be scrappy and deceptive  just to survive. The elites need to understand this, else they risk losing control over the entire system.

The investigators stare at her blankly in silence.

This scene from the show struck me as true. Everything I’ve heard from Soviet, Polish, East German, and Romanian friends who lived through this era confirms this. The law existed on paper, but its  only social purpose was to reveal where the landmines in social and economic life were. There was no question of compliance. So-called honesty — a life without “corruption” — meant that you could not thrive, and often that you could not eat.

How Foreign Is This?

The Soviet case we tend to look at as foreign and strangely unfamiliar. But the more you study the history of politics, and the history and operation of states, the more you discover that the differences between them are a matter of degree and not kind. The ruling class enjoys privileges that the people do not. When laws and regulations become too costly, and too inconsistent with people’s desire for a better life, they are ignored, even at personal peril.

I’m thinking of cases of this in the United States today. We have a drinking age of 21, unusually high compared to the rest of the world. That puts the U.S. in the 6 percent of nations with such extreme laws. They are not obeyed. Everyone knows it. College has become a cesspool of binge drinking. Everyone knows it. As enforcement has intensified, kids have found private places to drink. They are not safe. Everyone knows it.

So far as I know, there is no politically serious movement to change this. We have a model in our heads that says kids should not drink until they are 21. No amount of experience can seem to shake our sense that this is a realizable goal.

Another case concerns pot. Richard Nixon declared war on this plant with full confidence that he could win. It didn’t happen. Now the decriminalization movement has made huge gains. It is probably affecting even your community. The town in which I’m currently writing has a new pot shop that opened just a few days ago. The lines to get in are around the block. The population had been for decades threatened with jail. Millions have gotten caught up in the drug war. And yet, exhaustion has finally arrived and the laws are changing.

It was widespread disobedience, and the grotesqueries of hypocrisy, that finally made the difference. At some indiscernible and unpredictable point, laws that are universally ignored or at least carefully avoided come under pressure. Regimes have to adapt or risk their very credibility. Enforcement only goes so far. When the anomalies in the theory that backs the law or regulation pile too high, something has to give.

I can think of a thousand such cases in the U.S. today, some large regulations but millions of small ones too. Everything in our bathrooms has been degraded by them. Our kitchens. Our gasoline. Our food supply. Crazy labor regulations gum up the employment market. And while the current administration is deregulating some things, it is adding more in the form of interventions in trade relationships, imposing taxes in the form of tariffs. Every one of these economic controls is enforced by coercion, which is to say, at the point of a gun.

Why are the efforts at deregulation taking so long? The woman in the show revealed the truth. These interventions affect the ruling class far less than the people, both in the sense that they are not the ones starting the business and in the sense that they have better connections to stay out of trouble. For everyone else, every regulation is another tripwire to fall from compliance to criminality.

When government regulates and legislates, it is not causing some imagined form of social uplift for the masses toiling under the terrible demands of freedom. It is instead making more criminals out of people who just want to live a better life.

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Jeffrey A. Tucker

Jeffrey A. Tucker is Editorial Director for the American Institute for Economic Research. He is the author of many thousands of articles in the scholarly and popular press and eight books in 5 languages, most recently The Market Loves You. He is also the editor of The Best of Mises. He speaks widely on topics of economics, technology, social philosophy, and culture. He is available for speaking and interviews via his email.  Tw | FB | LinkedIn
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