IMPRIMIS - Hillsdale College, Hillsdale. MI

I recommend that everyone subscribe to the free monthly letter from Hillsdale.edu Each issue is an excellent essay or take from a lecture. Here, I summarize several excellent speechs and essays. As I have time I will add more of these speeches and essays.

John Marini
- Budget Battles and the Growth of the Administrative State,
Imprimis Vol. 42, No.10, Oct 2013

The Administrative state is what Philip Bobbitt termed - the Managerial State - in his important book Shield of Achilles.

It is one of the three competing theoretical and actual alternatives of government organization he foresaw competing in 21st century.
It is the long time existing mode in much of Europe, especially France, Germany and the EU bureaucracy
The second mode is the mercantile state of which examples are China, Korea, Japan, Singapore
Until now the U.S. remains an entrepreneurial state.
Prof. Bobbitt predicted the conflict between these three conceptions on the proper legitimate role of the state and the theories promulgated to justify it would be the central conflict of the early 21st century - and so it has come to pass years after he wrote.

But as Dr. Marini describes in this article, the U.S. is rapidly becoming an administrative - managerial state.

In this essay he focuses on the manner in which this has been taking place due to the transference of political power - budgets - from Congress to the Executive.

But he does not delve into the longer term history of this development

The fundamental problem of the administrative state is that no one can administer millions of individuals as individuals. Ludwig von Mises wrote the definitive study of this back in the 1920's - Human Action - and Frederick Hayek repeatedly pointed to the problem including in his great Road to Serfdom in the 1940's.

What makes it impossible to function as an administrative state and preserve human freedom is the impossibility of a centralized planning agency to know the facts relating to the conditions and desires of millions of individuals. That is, even in static conditions. But of course the conditions and desires of individuals constantly change and their future is unknown at the present even for the individuals themselves.

Hence, the best a centralized planning agency can do is ignore individuals and instead create groups - categories - and impute membership of all individuals into these categories. That is on the demand side - On the supply side the state must limit the choices available in any set of decisions to a very few, designed by the genius of the state officials. Thus as one of many examples we see for health/medical decisions something like Obamacare.
And for financial industry the increasing mass of government regulations that both reduce the number of financial operators and reduce the variety of options each remaining entity can select has made financial industry more fragile. This is one reason that in the last 5 or 6 years the number of independent banks in the U.S.has decreased by 3 or 4 thousand while the total assets of the remaining large banks has increased massively.
The same procedure is taking place in both college and K-12 education - one recent government expansion is to limit government subsidized student tuition to only those colleges that conform to prescribed government regulations.
Of course the energy industry has long been subjected to increasing government control. The current administration was shocked when the oil and gas industry exploded in new production on private land while the government was curtailing production on federal controlled land. Typically now, the administration is both claiming hypocritically that it is responsible for the resulting production and impact on gasoline prices and simultaneously seeking new claims of legitimacy in creating rules to control the same.

Naturally planners and regulators have a deep psychological aversion to seeing their plans and regulations fail. It is quite frustrating. Among other things it impacts on their self-esteem - something they tout as a critical issue when promulgating regulations on others. But as fast as administrators dream up new regulations individuals find new ways to avoid them. History shows the student the remarkable ways governments and citizens sparred over taxes. When the British government put a tax on ownership of clocks people got rid of theirs and checked the local pub when they wanted to find the time. The government tried to tax certain popular decorative styles on porcelain people quickly shifted their productions. Most successful was the general tax on salt since everyone needed that. But taxes levied on the number of windows in a cottage had a predictable result.

I read today that yesterday on the Sunday news one of the chief architects of Obama care repeatedly defended the President's statement that no one would loose their doctor or hospital that they wanted. He insisted over and over that the statement is correct - what the President meant is that individuals will still be able to chose these if they want, it is only a matter of paying a lot more to exercise the privilege - even though the newly available options will themselves be more expensive for anyone now receiving a government subsidy. Semantics or obfuscation - your choice.

Meanwhile we see before our eyes the results of the administrative - managerial state in Europe with states like France already confiscating over 50% of annual GDP and providing limited options for individuals. Now the EU bureaucrats are talking about adding a direct tax on existing wealth (not income) since 'financial repression' alone cannot hope to keep up with expenses. Another tax in the offing is a levy on each financial transaction including buying or selling a security. In the U.S. the government has already expanded the list of 'too big to fail' entities to the largest insurance companies and is now proposing to add the companies in the mutual fund industry like Fidelity and Vanguard -plus hedge funds.

John Steele Gordon
Entrepreneurship in American History,
Imprimis, Vol 43, No 2, Feb. 2014

This essay is a summary of Dr. Gordon's book - An Empire of Wealth. He frequently writes in Barron's about episodes in American economic history. He begins by defining'entrepreneur' as one who begins manages and assumes the risk for a new entreprise.
"The activity of entrepreneurshhip, of course, is much older, going back to ancient times. as for America, our nation was founded, quite literally, by entrepreneurs".
See Landes on the history of enrepreneurship since Mesopotamia and Bobbitt for discussion of America as an entrepreneural market-state today. Dr. Gordon's example 'literal' is the founding of Jamestown by entrepreneurs seeking to create profit and wealth by developing gold mines in America. When there was no gold to be found they had to turn to agriculture and nascent industries. He uses the example to discuss the creation of 'joint stock companies' and explain how significant these were in spreading risk.

An important point, "It has not been nearly well enough noted that the American colonies, while many ended up in royal hands, were not founded by the English state. Several, such as Massachusetts Bay, Plymonth, and Virginia, were founded by profit-seeking corporations". Others, such as Pennsylvania and Maryland, were founded by proprietors".

He continues with many examples of the role and results of entrepreneurs in the colonies. For instance, he mentions that "By the end of the colonial era, the colonies were producing one-seventh of the world's pig iron. A little over 100 years later, the U.S. was producing more iron and steel than Britain and Germany combined, and producing them so efficiently that we were an exporter to those countries".

Again, "By the time the 13 colonies declared independence, they were, after only 169 years, the richest place on earth per capita".

He discusses causes. "Nothing encourages entrepreneurial activity more than the freedom to take risk". And then "A second great spur to entrepreneurship is the freedom to fail". He names the names of several individuals and their companies as example of these points.

"In 1982 it took $82 million to have a place on the Forbes list. Today it takes over $1.3 billion".

His conclusion: "The opportunities for people with ideas and a willingness to take risks are plentiful in America, and there is plenty of capital available to bring those ideas to life. So the future of entrepreneurship in this most entrepreneural of countries remains bright. The only fear is that an overbearing government, bent on managing the American economy - supposedly for the good of all, but actually for the benefit of bureaucrats and politicians - will strangle the goose that has laid so many golden eggs. That is always a danger, for government is just as subject to the law of self-interest as the marketplace. "Government regularly displays an incompetence so extraordinary that reform becomes possible. We are witnessing such a display now with the launch of Obamacare. Obamacare, of course, seeks to rid one-sixth of the American economy of even a vestige of entrepreneurship and turn it over to the public sector".

He notes that he is an optimist. Well, so far the efforts to reform have not been very successful in ridding Washington of its quicksand.

Philip Hamburger
The History and Danger of Administrative Law,
Imprimis, Vol. 43, No 9, Sept. 2014

This is another exceptionally important essay. Dr. Hamburger shows that Dr. Marini is, in a sense, behind the times in that the U.S. Already IS an Administrative - that is managerial 'state'. This extract from a speech is a fine summary of his important book - Is Administrative Law Unlawful?

- Dr. Hamburger writes: "There are many complaints about administrative law - including that it is arbitrary, that it is a burden on the economy, and that it is an intrusion on freedom. The question I will address here is whether administrative law is unlawful, and I will focus on constitutional history".

His fundamental point is that administrative law is the current resurgence of the medieval and early modern theory of the sovereign's 'prerogative' - that is the theory that claimed that a sovereign by right had the unlimited power (absolutism) to rule by edict. He traces the historical record to show that the English Parliament repeatedly declared such 'prerogative' to be 'unconstitutional' in terms of the common law of England.

"Administrative law is commonly defended as a new sort of power, a product of the 19th and 20th centuries that developed to deal with the problems of modern society in all its complexity. From this perspective, the Framers of the Constitution could not have anticipated it and the Constitution could not have barred it. What I will suggest, in contrast, is that administrative power is actually very old. It revives what used to be called prerogative, or absolute power, and it is thus something that the Constitution centrally prohibited."

Dr. Hamburger explains what administrative law means. It is the replacement of the legislative power and responsibility of Congress, the replacement of the executive power and responsibility of the President's executive branch, and the judicial power and responsibility of the courts all by the centralized power of administrative bureaucratic agencies - what recently is being termed 'the deep state'. This was expressly prohibited in the Constitution because its authors were well experienced in the struggle against monarchs' claim for sovereign prerogative that was exercised through similar administrative bodies outside Parliament.

He writes: "The Constitution authorizes two avenues of binding power - acts of Congress, and acts of the courts.... "The Constitution authorizes three types of power, - legislative power is located in Congress, executive power is located in the president and his subordinates, and the judicial power is located in the courts". "Rather than being a modern, post-constitutional American development. I argue that the rise of administrative law is essentially a reemergence of the absolute power practiced by pre-modern kings".

"The Prerogative Power of Kings"

From the view- point of a student of history this and the following section are wonderful. Dr. Hamburger describes in detail two separate historical period and their results. First, he cites specific cases with the dates and names, of English monarchial assertions of prerogative power and the organs such as the Star Chamber through which he exercised it and then the Parliamentary acts that prohibited this.

"The United States Constitution echoes this". (Parliamentary prohibitions)
"Americans were very familiar with absolute power. They feared this extra-legal, supra-legal and consolidated power because they knew from English history that such power could evade the law and override all legal rights". .. "It is no surprise, then, that the United States Constitution was framed to bar this sort of power".

"The Rise of Absolutism in America"

This section is even better in that it is not so well known to American students and it is much more pervasive than even Dr. Hamburger discusses in this speech, and as it has affected almost all American academic study since the 1890's.

"Absolute power circled back from the continent through Germany, and especially through Prussia. There, what once had been the personal prerogative power of kings became the bureaucratic administrative power of the states". In the 19th century the Prussians "became the primary theorists of administrative power, and many of them celebrated its evasion of constitutional law and constitutional rights".
"German theory would become the intellectual source of American administrative law. Thousands upon thousands of Americans studied administrative power in Germany, and what they learned there about administrative power became standard fare in American universities".

The totality of the situation was and is much broader than only administrative law. The origin of the influence was the Prussian victory over France and Bismarck's policies which enabled the Prussian king to become the German emperor. This is seen, for instance, in the military influence, not only in strategic concepts and organizations but even in uniforms copied from the Prussians. It it pervasive in many academic fields such as economics, political science, anthropology, sociology, philosophy, education, banking, archeology, linguistics, psychology, and more. The last decades of 19th century were a high mark era for the influence of German scholarship in very many academic fields. It is reflected right out of the academic professional journals and literature in which we see German dominant influence.

Dr. Hamburger continues: 'The Progressives, moreover, understood what they were doing, For example, in 1927, a leading Progressive theorist openly said that the question of whether an American administrative officer could issue regulations was similar to the question of whether pre-modern English kings could issue binding proclamation".

But then they realized they better not advertise such antecedents to royal prerogative or German theories and practice, but rather claim all 'progressive' goals were modern necessities and New responses to New social demands.

He continues: "In this way, over the past 120 years, Americans have reestablished the very sort of power that the Constitution most centrally forbade. Administrative law is extra-legal in that it binds through other mechanisms - not through statute but through regulations - and not through decisions of courts but through other-adjudications. It is supra-legal in that it requires judges to put aside their independent judgment and defer to administrative power as if it were above the law - which our judges do far more systematically than even the worst of 17th century English judges. And it is consolidated in that it combines the three powers of government - legislative, executive, and judicial - in administrative agencies".

Dr. Hamburger continues with more description of the results of the expansion of administrative law. "The United States Constitution expressly bars the delegation of legislative power". "The Framers understood that delegation had been a problem in English constitutional history and the word 'all' was placed in the Constitution precisely to bar it". Administrative law "subjects Americans to adjuciation without real judges, without juries, without grand juries, without full protection again self-incrimination. and so forth".

"In sum, the conventional understanding of administrative law is utterly mistaken. It is wrong on the history and oblivious to the danger. That danger is absolutism: extra-legal, supra-legal, and consolidated power".