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.
- 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,
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
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
"The activity of entrepreneurshhip, of course, is much older, going back
to ancient times. as for America, our nation was founded, quite literally, by
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
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.
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
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
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
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
"The United States Constitution echoes this". (Parliamentary
"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
"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".