My buddy sent me a link to Wayne Grudem’s book Politics – According to the Bible. After skimming through the book I see, what I would argue are, errors in his reasoning on many different topics. That’s not to say that he doesn’t have some good stuff in this book. I’m sure he does. And, I’m admitting up front that I haven’t read it. But, some of his points just jumped out at me immediately as being poorly argued. This post could have easily been titled “Grudem on Money” or “Grudem on Public Choice” or “Grudem on” any number of other things. This is the first one that jumped out at me though, so I’ll address it. He says:
All modern societies have come to agree that we need some government regulations to prevent fraud and injustice in business transactions. It is necessary, for example, for government to enforce contracts(so that people have to keep the agreements they make). And it is necessary for governments to impose some health and safety standards on the sale of medicines and foods or other products such as bicycles and cars. It is necessary for government to enforce health and cleanliness regulations on public restaurants. And some government regulation is necessary for weights and measures, so that the gasoline pump really does put one gallon of gasoline in my car when one gallon registers on the dial, and so that a gallon of milk really does contain one gallon of milk. Such regulations and others like them are necessary because it would simply be impractical, if not impossible, for individuals to attempt to check all such things for themselves before buying an item.
So that’s Grudem’s argument in favor of certain government regulation as “necessary.” Let’s analyze his main position first, and then we’ll dive into those specific examples he gave next time.
“All modern societies have come to agree that we need some government regulations to prevent fraud and injustice in business transactions.”
There are a few problems with this statement in the way he means it. Firstly, just because lots of people agree on something doesn’t mean it’s true, or accurate. This should be more clear now than ever before in light of the global warming “consensus” that ended up being a total fraud. And, isn’t that the constant cry of the atheist: “everyone agrees that macro-evolution is true, so you’re crazy not to accept it.” Consensus on any topic isn’t an argument. It’s just a state of affairs.
But, even in light of that, it isn’t clear to me that there is a general consensus on the necessity of government regulation anyway. Just because a certain state of affairs exists(in this case government regulations exist in almost all developed countries), it doesn’t mean that there is a corresponding agreement among those that are subject to it that it’s the best state of affairs. In fact, if you interviewed individual businesses within each sector of the economy, I bet you’d find that every one would say the regulations they fall under are unnecessary. Talk to any businessman you know and listen to how they rail against burdensome government oversight. The “agreement” that Grudem speaks of seems only to exist within the realm of those doing the regulating.
This leads into the second problem with Grudem’s statement. He says that government regulation is necessary to “prevent fraud and injustice in business transactions.” Again, if you talk to business owners about their respective business sectors you will hear them complain about how ineffective the regulations they face are. They would argue that it’s not regulations that ensure a quality product. It’s their customers and competition. In other words, it’s the market, not the government that keeps constant pressure on businesses to ensure product quality. Grudem even ascents to this later in the same section:
(a) A free market is better than government control at producing goods and services. The economic “goods” that the free market produces are of better quality, at a lower price, and are the goods that people actually want rather than the goods that some government agency tells them they should want. This can be seen by numerous examples in recent history.
So his position appears to be that the market, as opposed to government, provides superior products at superior prices, but also would cheat their customers with low quality products at unsatisfactory prices without government control. Huh?
And the other side of that is the assumption that government regulations actually do what they say they will do. The old axiom that “ought” implies “can” comes in to play here. If government regulation is necessary, then it seems one of the prerequisites for that necessity is that those regulations are actually capable of achieving the intended results. In fact, this is rarely the case. Any person on the street can cite you multiple examples of how government regulation has failed. Whether its Bernie Madoff, Enron or any one of a hundred more small scale examples, the government routinely shows that it’s inherently incapable of acting as an appropriate check on market fraud.
We’ll go into more detail tomorrow.