[Vision2020] Savior state.

[heirdoug at netscape.net]

Another little article I found interesting>

Laws versus Progress

The law I refer to throughout this article is not the criminal law, not 
the law of trespass or property or divorce, and not the law of torts. 
The law referred to here is a law such as that requiring a motor to be 
of a specified efficiency. It is a law saying that a doctor must have a 
license before practicing. It is a law against cannabis consumption, or 
a law stating how large a gauge should be. In most instances, these are 
not laws against crimes or laws that deal with dispute resolution. They 
are laws that restrict, control, or regulate a wide variety of 
production and consumption activity. They are laws that trench upon 
economic activities. They are economic regulations.

Why law kayos markets
A law (or regulation) has many attractions to the uneducated, the 
naïve, the thoughtless, to those who are innocent of economics, and to 
those under the influence of false conceptions. It’s simple. It’s 
clear. It’s direct. It’s identifiable. Problems demand solutions; they 
demand action. The law is visible action. We can read about the law 
being made. We can hear and see the lawmakers in their work. We 
participate in the process if we have a mind to. After the final votes 
are cast, the newspapers, talk shows, blogs, and periodicals tell us 
what it means. We know something has been done, and we think this is 
good even if the law is imperfect. A law makes us feel sure that the 
problem has been addressed. We feel sure of results. By its nature, the 
law identifies itself with progressiveness, with action, and with 
getting things done.
How frightful our ignorance is! How horrified we would be if we knew 
that the laws we support make our problems worse. How dismayed we would 
be if we discovered that time, patience, and doing nothing but allowing 
individuals to work by themselves on the problems would have alleviated 
them.
But no. Instead we see that the law invokes power, and power makes 
things happen. If we want energy efficiency, pass a law and mandate it. 
Manufacturers will have to make their engines more efficient. If we 
want less energy loss, pass a law and mandate tighter windows or more 
insulation or more efficient furnaces. Builders will have to obey. 
Sure, prices may rise, we will have to pay, but we will save energy. 
The law solves our problems. We can see that it does. If new problems 
should arise, pass new laws. What’s to stop us? We feel good. We are 
doing something, and we do not want to hear anything that might disturb 
us in the comfort of our belief.
If a law should have problems, this does not disturb our sleep. It’s 
part of the game, isn’t it? Is there any perfect process? Are we not 
making progress, and are we not passing more and more laws?
By such logic and belief, the law is become mankind’s main tool of 
progress. Our wise laws are what drive progress onwards. So we think, 
and so we err. Our machines have advanced faster than our thinking has.
The free market has no such obvious attractions, it being a hidden, 
almost underground set of decisions and exchanges that mostly go 
unreported and unnoticed. What is the free market anyway? It’s 
basically anarchy, people deciding for themselves. What could such an 
unplanned process produce except a stack of problems that require 
sorting out, that beg for a rational plan? Why would anyone favor chaos 
over a plan or a law? Where’s the blueprint? Where’s the direction? 
What say do we have over the results? How can we be sure the results 
will be what we want? Why should we trust manufacturers to do the right 
thing? Don’t they exploit workers? Don’t they pollute? Don’t they 
produce defective and unsafe products? Aren’t they run by greedy 
wealthy people who only want more and more?
The market is diffuse: hundreds and thousands of decentralized 
decisions with no apparent plan and no apparent goal. We feel powerless 
and uncertain of what is happening. Where’s the action? Are we to sit 
around like passive dolts? Where is our control over the market?

Where is our assurance?
The law is an easier sell. One can quickly make a plausible positive 
case. The market is a harder sell. One must make a defensive case 
against the legion of critics who hate it. Then, on to the positive 
case, which is tough, especially when the prospect is sold on the 
effectiveness of laws. Reading I, Pencil is not enough. "Well, that’s 
all well and good for pencils, but not for energy efficiency. That’s 
too important to be left to oil companies. We need to do something!" 
For many people, general principles simply do not exist or they take a 
back seat to strong emotion. Feelings come first, but even emotional 
people can dredge up objections to markets. They see an infinite number 
of special cases. We do not have an infinite amount of time to persuade 
them.

Do laws create inventions?
If we were all transported back to the year 1600, we would not be so 
anxious to pass laws to solve problems. We would find out how hard life 
is without the machines we now take for granted. In 1600 the machine 
that drove the Industrial Revolution, the steam engine, didn’t exist. 
In 1600, would we turn to lawyers to give comfort to our lives, or 
would we be financing inventors of new machines? We owe a great deal to 
inventors whose aptitudes and drives often surfaced before the age of 
10. In the case of James Watt (1736-1819), he was 6, and he had little 
formal education. Why do we turn to lawyers today as much as we do? 
Have we gone mad?
In 1878, Robert Henry Thurston published the first edition of A History 
of the Growth of the Steam-Engine. His 1902 edition begins with Hero of 
Alexandria (ca. 200 B.C.) whose book "Pneumatics" treats of earlier 
discoveries plus his own. Hero was a pupil of Ctesibus, an engineer who 
invented a keyboard instrument called a Hydraulis, the precursor to the 
organ. Hero’s book shows clear knowledge of steam driven devices and 
other machines, 78 of them.
In the 1600's a number of inventors (Edward Somerset, Samuel Morland, 
Thomas Savery, and John Desaguliers) advanced the knowledge of the 
principles underlying what would become the steam engine, and they 
built various devices, usually unsafe and of very high cost. Somerset, 
the second Marquis of Worcester, expended his personal fortune in 
building a steam engine and seeking a commercial success that he failed 
to attain. He died poor. King Charles II (1630-1685), having a great 
interest in science, underwrote a laboratory whose Master Mechanic was 
Sir Samuel Morland. Morland, who also spent his own money, took up 
where Worcester had left off. Meanwhile English miners were 
encountering water that needed to be drained by some means. "They were, 
therefore, by their necessities stimulated to watch for, and to be 
prepared promptly to take advantage of, such an invention when it 
should be offered them." Thomas Savery invented an arrangement of 
paddlewheels to drive vessels. It was rejected by the British Admiralty 
and the Navy Board who wrote: "What have interloping people, that have 
no concern with us, to do to pretend to contrive or invent things for 
us?" Savery went on to build and advertise a steam-engine. He knew of 
the need for such a machine in the mines. "Savery spent considerable 
time in planning his engine and perfecting it, and states that he 
expended large sums of money upon it." His engines, although small, 
uneconomical, and rather unsafe (they lacked a safety valve), were used 
in mines. Desaguliers, an associate and supporter of Newton, added the 
safety valve. Thereafter, a number of figures sought to improve 
Savery’s design. However, none succeeded in anything beyond a small 
scale and none developed a true engine that took a force at one end and 
transmitted it to a resistance at the other end.
The efforts made in the 1600's led to real commercial success early in 
the 1700's. "The man who finally effected a combination of the elements 
of the modern steam-engine, and produced a machine which is 
unmistakably a true engine...was THOMAS NEWCOMEN, an ‘iron-monger’ and 
blacksmith of Dartmouth, England." Newcomen is described as follows: 
"His position in life was humble and the inventor was not then looked 
upon as an individual of even possible importance in the community. He 
was considered as one of an eccentric class of schemers, and of an 
order which, concerning itself with mechanical matters, held the lowest 
position in the class."
Improvements came quickly. An early model was "only capable of 6, 8, or 
10 strokes in a minute, till a boy, named Humphrey Potter, in 1713, who 
attended the engine, added (what he called a scoggan) a catch, that the 
beam always opened, and then it would go 15 or 16 strokes a 
minute...Potter’s rude valve-gear was soon improved by Henry 
Beighton..." By 1769 another engineer, John Smeaton, had determined 
better proportions for the Newcomen engine which had come into wide use 
to drain mines. A small engine with a 10-inch diameter cylinder and a 
3-foot stroke could do the work of lifting almost 3 million pounds of 
water one foot using a bag of coal weighing 84 pounds. Later in the 
century larger engines were used in waterworks, mills, blast furnaces, 
and draining in the Netherlands.
James Watt, whose mechanical interests took him in the direction of the 
steam engine, began working on improving it in 1764 at the University 
of Glasgow. "Perceiving that steam, weight for weight even, was a 
vastly greater absorbent and reservoir of heat than water, Watt saw 
plainly the importance of taking greater care to economize it than had 
previously been customary." To improve the engine’s efficiency, he 
conducted a range of controlled scientific experiments on heat loss, 
discovering that three-fourths of the steam was wasted. Then, in the 
words of Watts, "I had gone to take a walk on a fine Sabbath 
afternoon...I was thinking upon the engine at the time...when the idea 
came into my mind that, as steam was an elastic body, it would rush 
into a vacuum, and, if a communication were made between the cylinder 
and an exhausted vessel, it would rush into it, and might there be 
condensed without cooling the cylinder." Keeping the cylinder hot 
increased the engine’s efficiency.
It would take years more, until the years 1775–1785, for Watt to 
perfect the engine, and only with the help of financing by several 
partners, the last being a manufacturer named Matthew Boulton, known as 
an "ingenious, honest, and rich man." Boulton contributed directly in 
many significant ways to the success of the enterprise.
In the 1800's, many inventors applied the steam engine to 
transportation: carriages, trains, and ships. More than a few 
steam-carriages plied the roads of England. Although commercial success 
was not marked, they survived and seemed destined for wide use. In the 
1830's, steam carriages ran a number of routes between cities and 
within cities. Several factors doomed them: "Hostile legislation 
procured by opposing interests, and the rapid progress of 
steam-locomotion on railroads, caused this result." Thurston’s account 
of the inventions and development of steam-locomotives and trains 
between 1800 and 1840 makes no mention of a government role except to 
say that there were so many private ventures in England that the 
government began some authorization. Rail development was market-driven 
in this era.
John Fitch in 1785 sought financing for a steamboat from Congress and 
was turned down. After New Jersey granted him sole rights for steam 
navigation on its waterways, he formed a company and raised money. He 
succeeded in building several boats that carried passenger traffic 
several thousand miles between Philadelphia and Trenton without 
accident. As with rail and steam-carriages, many individual inventors 
created new and various designs, often seeking patents for them. Henry 
Bell built a working craft and then applied to the British Admiralty in 
1800 and 1803 for aid; he was unable to convince the Admiralty of the 
practicability and utility of steam vessels. Undeterred by early heavy 
losses, by 1815 he was operating a successful passenger venture with 
several boats.
Robert Fulton’s early experiments and trials occurred in France. He 
achieved some success in 1803 with a boat on the Seine. "The experiment 
was successful, but it attracted little attention, notwithstanding the 
fact that its success had been witnessed by the committee of the 
Academy...and by officers on Napoleon’s staff." Later "Fulton 
endeavored to secure the pecuniary aid and the countenance of the First 
Consul, but in vain." After securing a long-term monopoly right to New 
York waterways, later broken by the free market competition of 
Cornelius Vanderbilt, Fulton used the Boulton-Watt steam-engine to 
build and launch a successful craft (133 feet long) in 1807 that ran 
 from New York City to Albany, 150 miles in 32 hours. In 1814 Congress 
bought a steam-vessel for the Navy.
Subsequently, it was John Stephens and especially his son Robert L. 
Stevens who "made many extended and most valuable, as well as 
interesting, experiments on ship-propulsion, expending much time and 
large sums of money on them..." These brought in the standard American 
river-boat. Robert "began working in his father’s machine-shop in 1804 
or 1805, when a mere boy..." He was 17, and in 1807 he and his father 
built the Phoenix, the first steamship to navigate the ocean. By 1838, 
the Sirius and the Great Western, owned and operated by the British 
American Steam Navigation Company and the Great Western Steamship 
Company, respectively, crossed the Atlantic in 15 days at average 
speeds of 8.03 and 8.66 knots.
In much of history, pure free markets do not prevail. Various 
governments and laws intervene. The history of the invention and 
development of the steam engine is no exception, but, Thurston’s 
history reveals that the drive and dedication to invent arose from 
inventors, not from edicts of the state commanding that machines be 
invented with greater efficiency or from research and development funds 
coerced from taxpayers. The inventors typically devoted their lives and 
often their fortunes to their inventions. At times they were rebuffed 
in efforts to secure government support. Numerous private companies 
formed and sought commercial success without government subsidy, 
direction, or regulation. Numerous unheralded advances were made by 
mechanics, engineers, boys and young men who worked with these machines 
on a daily basis. The market produced more and more efficient engines.
The market also produced more and more safe steam-engines. One study 
reports: "Yet the reality remained that steamboats were a comparatively 
safe mode of transportation. In 1838, the worst year for steamboat 
explosions (relative to the amount of tonnage in service), 342 people 
died in twelve explosions, a far cry from the more than 1,000 
fatalities on American sailing vessels lost at sea in 1839."

Appearances deceive
Appearances are deceiving. The world appears flat, but it’s round. The 
sun seems to orbit the earth, but the earth goes around the sun. 
Mandated gun locks decrease safety, not increase it. Highway safety 
laws decrease safety, not increase it. (In 1966 Congress passed a law 
to increase highway safety. It created the National Highway Traffic 
Safety Administration. This was at a time when America had the safest 
roads in the world. In 2003 America ranked ninth among 30 OECD 
countries.) Laws to increase drug safety take more lives than they save 
by delaying the approval of sound drugs or preventing their use 

altogether. Laws passed to liberate Iraqis lead to the deaths of half a 
million of them.
The anarchic free markets chug along. No laws exist to feed New York, 
London, and Paris, but they get fed. No law mandates that gasoline 
stations appear in convenient locations, but they do. No law mandates 
that computers provide more and more efficient information storage at 
lower and lower cost, but they do. No law stipulates that supermarkets 
stock fast foods, flowers, ice cream, cheeses from all over the world, 
and drug pharmacies, but many do. No law says that fish frys shall 
appear on Fridays or that they shall be served with cole slaw, but they 
do; and in places far, far from oceans. No law says that the DVD shall 
replace the videotape, but it does. No law mandates the electric 
breadmaker made in Korea, but it appears anyway.
Congress has decided that progress is defined by energy efficiency. 
Washington mandates that all appliances shall henceforth have more 
efficient motors. This can be done. It will be done. Engineers can do 
it. But at what cost? Lawyers don’t know the costs, and they can’t 
judge the costs if they tried. They can’t tell how greatly the 
increased costs impair the values of the goods to us the consumers. 
They can’t tell how the manufacturers will respond to the increased 
costs by cheapening other aspects of the product. They can’t tell how 
many fewer items will be produced when the prices rise.
Lawmakers are insulated. If they blunder, who is going to know? Who is 
going to call them on it? It may take months or years before the 
ill-effects become clearly visible, and even then they can deflect 
criticism from themselves and blame others. During their term of 
office, a great deal will happen. Who is going to pin the blame on them 
for some particular law they passed? Who is going to trace down the 
manifold consequences of their laws? If they throw sand in the gears of 
progress, who will hold them responsible?
Lawyers and lawmakers are not manufacturers. They are not in the 
business of satisfying our wants and needs. They are clueless when it 
comes to the goods we are buying. They take up space in an office and 
write laws. They don’t produce anything. They don’t respond to the 
ever-changing realities of the marketplace. They gum up the works.
Appearances deceive. Laws impede progress, while free markets boost 
progress. Laws are authority in action, and authority’s aim is not the 
satisfaction of the needs of the general public. They usually aim to 
shift wealth to a favored few. We can have more and more laws or we can 
have progress, but we can’t have both. We especially cannot have 
progress when lawmakers decide for us what progress is and pass laws to 
get it.

Misdirected energy
The One Hundred Second Congress of the United States of America at the 
second session begun and held at City of Washington on Friday, the 
third day of January, one thousand nine hundred and ninety-two gave us 
"An Act to provide for improved energy efficiency."
The word "provide" means supply or furnish what is desired or needed. 
The Act did not purport to supply any needs. Only free markets can do 
that. It purported to "provide for" a need, namely, higher energy 
efficiency. It claimed to set forth actions that, if followed, would 
accomplish this goal. Why? Why would it do this when history shows that 
the people unaided by such direction are perfectly capable of 
determining their own desired levels of energy efficiency and of 
supplying their own energy requirements?
And why would Congress decide that the people of the United States must 
be forced to withdraw resources from activities of their own choice and 
devote them instead to another set, one that would supposedly raise 
energy efficiency? How could Congress possibly determine that such 
massive interferences with the liberty and property of Americans were 
in any sense "good"? How could such an obviously communistic or 
socialistic scheme be enacted by the leader of the "free" world?
And even if every provision of the Act were dutifully carried out, 
would the result actually be of any value? The Act declined to define 
"energy efficiency," but the provisions aim at energy efficiency in 
purely technical terms, that is, a lower input of resources while 
achieving the same level of services or outputs. But such a definition 
is senseless because it makes no reference to financial criteria such 
as the costs of the more efficient technologies. How can Congress 
legislate for the General Welfare without considering financial 
criteria? What sense does such an energy law striving for technical 
efficiency even make? If we have to pay an extra $1,000 for a furnace 
with 10 percent greater efficiency, is it worth it to us? We might be 
better off investing in Toyota stock, and the energy savings made by 
that company might be far greater than what the Department of Energy is 
dictating.
If the goal was to decrease the dependency of the U.S. on foreign 
imports of oil, why was this the goal? Does that goal make any sense? 
Why can’t individual consumers and businesses gauge the risks of being 
dependent on foreign sources of supply and act accordingly? Why can’t 
they develop alternative supply sources and networks? And has this 
legislation succeeded? Aren’t imports even larger today than 15 years 
ago? Whatever happened to nuclear power?

Conclusion
What we are observing in these United States is a blinded behemoth of a 
state that lurches from one supposed crisis to the next while trampling 
underfoot the people under its aegis. Crises are imagined or 
manufactured. They are advertised and disseminated. Drastic solutions 
are proposed and enacted. We seem to have lost touch with reality, to 
have gone mad.
Paradoxically, the ungoverned and anarchic free market is a far more 
sane institution, rooted firmly in the reality of value, cost, price, 
and profit; more firmly and quickly cognizant of any development 
anywhere in the world that might affect sales; more responsive to 
consumer demand and welfare than any government ever has been or can be.
Washington and the people seem to have abandoned sense and logic, to 
have given themselves up to abiding fears, and to be thrashing around 
mindlessly. One looks in vain for any semblance of calmness, maturity, 
cool-headedness, good judgment, restraint, and patience. When it seems 
to surface, it dissipates as quickly as hearing the bearers open their 
mouths and speak their minds. Out come the same tired and worn out 
nostrums and slogans that got us into our current predicaments: more 
laws, more programs, more fixes, and less progress.
One gets the feeling that Washington has swallowed a bottle of 
amphetamines. I keep waiting for this hyped-up episode of lawmaking to 
cease. I have been waiting patiently since the 1960's when, in my adult 
life, the nation began seriously to run off the rails. It hasn’t got 
back on track yet.
I wait for the day that our speechifying officials speak the word 
"Repeal." Repeal anything, ladies and gentlemen, but repeal. Start 
somewhere and repeal. Begin the journey back to progress. Repeal. 
Repeal. Repeal.

Michael S. Rozeff is the Louis M. Jacobs Professor of Finance at 
University at Buffalo.

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