From the comment section of Diatribe’s blog Personal Responsibility Darwin states:

As to my previous points, the reason that illegal businesses are relevant to this discussion is that those businesses are only illegal due to interference in the free market by the government. Making a type of commerce completely illegal is by definition interfering with the free market.

As for whether having a government outlawing these things actually reduces thier frequency, of course it does. Makign something illegal doesn’t prevent local people from acting to stop it; in fact it makes it much much easier, since instead of trying to organize a large and long-standing boycott, they can simply report these illegal businesses to the authoirities as soon as they find them.

Okay I think I see what you are saying about the relevance of illegal business to our discussion. You seem to be suggesting that the federal government is more efficient at illegalizing activities then a local government. If you are saying this then I would probably have to disagree. The legislative body at the federal level must deal with a multitude of attitudes and values of many different people in writing legislation. This will necessarily require the law to be watered down in comparison to local legislative body writing law for the local town with much more homogenous group of people.

The question becomes, does enacting laws at the federal government for any given illegal behavior reduce that crime more so in any given region then would laws passed by the local legislators in that region? I think the answer must be no. From the fact that law enforcement is handled at the city and state level, to the fact local legislator are much more likely to be able to customize the law in a way that gets greater complicity from the people in that region.

If we bring it back to the sweatshop argument the question transforms into is reduction in sweatshops greater in federal bans or local bans? Clearly I’m going to argue that at the local level you will see a larger reduction particularly because for such a law to pass the majority would of have to of given their permission for it anyway. Thus most people in that community already disapprove of sweatshops and therefore will work with local police to stop these illegal businesses. At the federal level, it may be the case that the law passed without the approval of this community. If so, then on both the local law enforcement and civilian level you are going to see resentment which will translate into reluctance and apathy in enforcing those laws.

Taking this back to business, it’s the case that my ability to affect a larger corporation is lacking significantly. But I have no more power over the federal government. The problem with the federal government is that it’s the only game in town while large corporations must compete with each other. Granted the federal government must be used to bust trusts, but so long as this occurs, then while I can’t control a mega corporation, I also don’t have to abide by their decisions. This is mostly certainly not the case with the federal government.

Let’s take an example. Nebraska passed a constitutional amendment banning same-sex marriage. Since this was an amendment it required the people to directly vote in support or against the amendment. The population approved by over 70%, a rather convincing majority. Inevitably this was challenged at the federal level and the judge found that it was unconstitutional. This ruling forces the majority of people in a region to abide by a law they disagree with. They have no choice. They can’t ban same sex marriage even though this is the will of the people.

Within Nebraska we can imagine two competing companies both producing paper products (I watched The Office last night). One company decides to set a policy that doesn’t hire people of same-sex marriage while one favors couples of same-sex marriage. Provided that both companies are equal in every other way it’s obvious that within Nebraska one has a choice who to get their paper from. Those that are strongly against same sex marriage can go to one company and those in favor can go to the other. Most of the people, not really interested in making a political statement with the purchasing of their paper, will probably split evenly between the two companies. However, the free markets don’t force those that disagree with the policies of that company to purchase from them.

The free markets work as a way of accommodating variation by customizing what is produced to match the needs of the individual. In cases where a mega-corporation begins to standardize what is produced in such a way that variation in the demands of individuals is not met, the markets give a strong incentive to entrepreneurs to start companies that will diversify the supply. The federal government absolutely has no power to do this at all and more to the point is that it’s undesirable to have the federal government giving preferential treatment to some people over others. That is most certainly a recipe for corruption. We already see it in pork barrel earmarks.

I already know what you are thinking, that we have recourse at the federal level. We simply elect politicians that will pass the laws we favor. Such an argument fails recognize the intrinsic nature of law. Law must be applied to everyone equally. If you get your law passed then those that opposed it will still have it applied to them. No matter what, in law, groups of people will be dissatisfied with the passing of any law. Currently, there is a very real threat that the majority of Americans would approve a constitutional amendment banning same-sex marriage. We would both be part of that dissatisfied group lacking a substantial recourse.

What free markets produce does not have to apply to everyone. Standardizing products simply creates groups of dissatisfied people that a savvy entrepreneur will convert into happy consumers by supplying their demand. In this way, the market allows all people to be happy. The government can’t afford this kind specificity since it obviously must avoid the internal contradictions, and accompanying corruption, such customization would demand.

More generally we see how local government and free markets are preferable to the federal government. In both cases they are much more capable of tailoring what they produce to the demands of the individual. Federal government is specifically designed to not work this way. In cases were we want immutable laws that are guaranteed to all citizens we should look to the federal government. When we want to leave it up to the individual we kindly ask the federal government to step aside and let business and local government provide the services the individual requires, be it goods, service, laws, or enforement.

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