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The Demise of Contracts and Law

The consequence of letting the government rule by fiat i.e. crisis management, is the deterioration of law and order.

The road that leads to this dungeon is the inept premise that contracts need not be honored if some “higher” purpose is at stake.  We saw this explicitly unfolding with the “request” by Timothy Geithner for the government to have the power to reduce the debt to creditors of troubled giants “too big to fail.

Think about what this would do to the credit markets.  Would you be willing to enter a contract with a corporation that could be ordered to pay only a portion of the money you were owed?  The normal risk of entering a contract no matter how well understood and described turns away the wary.  A contract that has a hidden possibility of a sudden government intervention makes it even more risky and especially so when the government explains that under law it can intervene if it deems it to be necessary.  When a major portion of the government’s role is to decipher and enforce contracts, what would such policy do to that which the government is responsible for.  The very instruments that are designed to uphold agreements would be arbitrary documents subject to government bureaucrat’s whim.  This is what the founding fathers tried to avoid in creating a country of laws and not men.  You would think people who enter government service in the United States would understand this is fundamental to their jobs.  Like the capitulation of President Bush to nationalization, the grab for power by Geithner is a complete relapse to bullying to get results, albeit poor ones.

I have yet to hear a politician state,” This is something the government should not be involved in and I want no part of it.”  This is because the politicians think they are able to handle any situation even though they have no training or talent to do so.  The roar of the hapless mob is all they need to encourage them to take on issues they are ill informed on and have no idea what action, if any, is appropriate.  This is the state we find ourselves with an unlimited government that has overstepped its bounds and created a financial mess they want to blame on free enterprise which they killed several decades ago.  This concentration on “bonuses” while ignoring the greater amounts that disappeared is simply a diversion with a place to point fingers at even though the bonuses were described in a contract and approved by Congress.  One of the admonitions of a lawyer is to always read the fine print.  Of all the lawyers in Congress not one read the bill in its entirety before signing on to it.  Shouldn’t they pass a law requiring them to read before they sign?  Why must a private citizen buckle up to protect his own life while a Congressperson can sign a law they haven’t read which may affect the lives and well being of millions of Americans?  To talk of responsibility and wanting more power when they cannot even read a bill before it is passed is unconscionable.   To talk about bad financial management in the private sector while they cozy up to 20 Trillion in debt is unfathomable.

All the present moves by the government to deal with the crisis they created by distorting the housing and credit market with the purpose of getting everyone in the home ownership mode are going to take us further into the abyss of chaos. They are undermining the validity of contracts, the value of the currency, the credibility of the nation, the confidence of the nation, the political support they want and the foundations this country began with.  All this because they want to make a” better” world where egalitarianism rules, redistribution can be done with impunity and they will sit on a throne of status and admiration for the little people to adulate.

The American people have been too generous, too long in their appraisal of the political mind.  They have believed the man on the stump who promises what he cannot deliver.  They have excused the tax cheat who when nominated for IRS ruler is exonerated as exceptional and talented.  They have gritted their teeth with each tax increase thinking the politicians and the bureaucrats know better where that money should go than themselves.  They have been asked to sacrifice and never questioned what sacrifices the politicians were making ( which were none).

One can always say it is time to start saying no and tossing incumbents ( which wouldn’t be bad idea).  The fact is that time will come whether it is orchestrated by an impassioned essay or an outrageous piece of legislation.  The corruption and incompetence cannot go on indefinitely.  We have what is accurately deemed a mixed economy.  It is a mixture of controls and freedoms.  This state is temporary as Ludwig Von Mises accurately observed and will either move toward more freedom or more controls.  A movement toward more freedom ( less controls) is the road to capitalism.  A movement towards more controls ( less freedom) is the road to Socialism or more precisely some form of statism such as Communism, Fascism or authoritarianism.

The law by way of the Constitution keeps reigns on government and this is the instrument that must be constantly reworked as fissures appear to allow government to seep into the fields of endeavor it is not, by nature, equipped or inclined to interfere in.  If the purpose of the Constitution is not revered, then the structure of the Constitution cannot stand.  This self restriction by government of its own activities is necessary to perpetuate a sound government.  It is for its own good that it puts a “seat belt” on whenever it drafts, reads or passes a law.  For without this requirement the law which it creates, interprets and enforces will cease to have credibility.  If laws can be broken by those in power it only becomes a matter of time until interpretation and enforcement become subjective and confusing.  This is third world politics characterized by despotism, cronyism, bribery and injustice.  This is the long term consequences of undermining the law while trying to expand political power with whimsical exceptions.  If the sanctity of the contract can be undermined by government decree then freedom to agree and trade has been placed on the sacrificial altar and the blackness of disorder is ascending.

The law that doesn’t protect contracts has nothing to stand on.  Enlistments, oaths and payments are endangered.  Trade is suspicious and limited. All transactions take on the substance of political promises which everyone knows are simply spoken to gain power.  The honor and honesty of a civilized nation cannot stand on such a poor foundation just as a currency cannot retain value without backing.  The analogy of crumbling when basic foundations are undermined is accurate.  The eroding forces working on this crumbling is coming from voices standing under the structures.  Yet they will not admit they are acting in a destructive manner.  They are asking for more power to destroy what they did not build and are not entitled to reduce to rubble.  It is from our agreement ( a contract of sorts) that they must acquire this power.  We have read the document and the answer is a clear and resounding. “NO.

The opinions expressed in this commentary are solely those of the author and are not not necessarily either shared or endorsed by iPatriot.com.

Dale Netherton

Author of four published books, former Marine, forester, former plant services manager,former KT facilitator, former campgound builder and manager, handyman now retired to writing , chess , golf and fishing. ISU graduate, M.B.A. from Nova University and longtime supporter of ARI. http://www.amazon.com/Dale-L.-Netherton/e/B00G1T6A26/ref=dp_byline_cont_book_1

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