As we split a piece of tiramisu that served as his birthday cake, I asked my 83-year-old entrepreneur friend Joe what type of business he would recommend going into today. Joe is an optimist. He left high school without earning a diploma to volunteer for World War II. After suffering an injury, he was discharged from the Army and succeeded in starting a business in a WASP-Republican town that didn't think highly of Italian-Catholic-Democrats like him. And he's done very well in real estate and the stock market too. When this overachiever responded, "I wouldn't go into business today," my jaw almost landed in my plate.
"You just don't know what government is going to do tomorrow," said Joe, who reflects the image of God in that he is a rational planner. In essence, he pointed out that it's difficult for business owners to make plans when the government is meddling so much in the economy.
Our conversation took place just a few days before the 2,300-page financial reform bill passed Congress---2,300 pages! According to The Wall Street Journal, "It will affect everything from debit cards to Wall Street traders." And who will make sure this bill is faithfully executed? Will it be President Obama as provided for in Article II of the Constitution? Not really. The largely unaccountable Federal Reserve, which fueled the current financial mess, will control the reins. And what about the 2,000-page healthcare bill? Who gets to determine how to implement it? Most of the administrative power resides with the unelected secretary of Health and Human Services and her 64,750 bureaucrats.
As with so many of today's usurpations of constitutional authority, our modern "administrative state" had its genesis in the early progressive movement and President Woodrow Wilson's administration. The 28th president believed the Founders' vision of constitutional government couldn't keep up with modern times, and that the country would be better served by a professional class of administrators sheltered from the political process---and the accountability it provides. Today, Congress and the president write and pass laws, and bureaucrats write and enforce regulations to determine congressional intent.
There are significant constitutional, worldview, and economic problems associated with the administrative state. It makes a mess of the Constitution's separation of powers by combining executive, legislative, and judicial authority within insulated government agencies. There's a worldview problem, too: Wilson believed that bureaucrats had evolved to a higher moral plane than politicians and that they would leave their political biases and personal interests in the parking lot. The Founders, on the other hand, understood man's sinful nature and installed a system of checks and balances as a restraint. Finally, the administrative state creates chaos for the economy. For example, entrepreneurs will be affected by the thousands of pages of new regulations associated with the new healthcare and financial reform laws. Having confidence that business laws will remain stable is an important part of the risk-taking calculus. It makes sense that my friend Joe advises against going into business today. He thinks it's best to wait five years to let the economy stabilize.
Man is a rational actor who reflects the image of God. Our federal government, however, is frustrating man's natural desire to make sound economic plans. I'm hoping the economy will be much better by the time Joe and I share a piece of tiramisu on his 88th birthday.