Regulation should be by Act of Parliament and Rule of Law


It is very difficult for me to write about the need for some regulation. After all, it is precisely this that has allowed the large state to mushroom. Supposedly, all the quangoes and agencies are protecting us. However, high taxation and intrusive regulations, often laid down by extra-parliamentary bodies, are a high price to pay for the establishment of a level playing-field in the market. The market will never have a fully level playing-field, it is true, but I am going to surprise some people on this site by arguing that some regulation is needed. But I will also argue that what regulation there is needs to be by Act of Parliament, without regulatory bodies to enforce it or lay down regulations not approved by the Crown in Parliament, and that the Rule of Law means, not rule “by regulation”, but rule by proper accountable laws that can then be upheld in the court system. The main purpose of this article is to “think aloud” and thereby provoke discussion of a key issue for libertarians.

Many libertarians come across as adopting a glib tone in response to a large range of related issues, arguing that the free market will resolve all questions and allow society to function well, almost without any regulation at all. I am reminded of China’s free-for-all style of capitalism, where products can contain poisons leading to large numbers of child deaths, and yet no real remedy is available through the existing political or judicial system. There has to be some law, in order to have a rule of law. And what I am proposing is consonant with a small state spending 5-10% of GDP as in the nineteenth century.

Furthermore, however worthily intended, I would like to limit the quantity of legislation. I see no reason for Parliament to sit for long periods; my understanding is that each session of parliament was relatively short in ancient times, and I would like to see parliament meet for no more than a couple of weeks in each quarter. Given that we have a common law, there is simply no need for vast quantities of legislation. A further advantage of a parliament that rarely meets is that parliamentary salaries, housing allowances and expenses are not required.

But some things do need to be regulated, and this should be by Act of Parliament. There should be no secondary legislation whatsoever, and regulatory bodies should not be required. The individual citizen can use the civil law as he sees fit to defend his interests. Part of the reason why I feel doubtful that all activities of the state can be accomplished by civil society is the lack of a decent cultural environment in England today. The “chavs” are here, in force, and the only reason why Asbos were introduced is because the behaviour of millions of Englishmen warranted it. That is not to say that I view Asbos as the correct policy response. In particular, the way they individually tailor a law or order to fit the particular recalcitrant individual is contrary to the rule of law. And in general, we need to think about how to raise children that grow up not to behave like “chavs”.

The state has played a role in fostering social fragmentation, in particular with the way the benefits system encourages unmarried motherhood, but also the way in which state-funded media and education systems are used to encourage behavioural problems. But it would be glib to state that the moment the state withdraws from social security, broadcast propaganda and education, behavioural standards will revert to the mean. The “chavs” are the new mean. It would be a long process to recreate the bands of society and culture that eventually helped to produce the type of individual who, as was said in America in the 1950s, had a “policeman in his own head”.

Personally, I feel that relatively little “policing” work is genuine policing nowadays. In the 1950s, when estates were patrolled, the local “bobby” could give a nuisance individual a clip round the ear, and suggest to his parents that a good hiding was in order. I would like to see this type of policing restored. I recently myself became the victim of a nuisance neighbour who has begun to play loud music. I have not spoken to my neighbour, simply because I presume that people who behave like chavs are aware their behaviour is inconsiderate, but simply don’t care. To speak to such a neighbour would be to invite an escalation in bad behaviour. What is the solution? I don’t have one, and I don’t think anyone has one, but in the old days the police could be contacted to deal with the neighbour, but now such behaviour is the preserve of the council. The council’s response is to build up a case against the individual over a period of weeks, before imposing a noise abatement order. But clearly this presumes that the decent householder is willing to put up with bad behaviour for weeks. Probably a better solution is local bobbies to deal with nuisance individuals in an ad hoc way, and for the householder to be able to sue the landlord/owner of the property for damages.

So we are in the chav society, the Jeremy Kyle Show society, where a sudden withdrawal of the state could potentially lead to a creation of Derek Jarman’s Jubilee in England. Better solutions are needed by libertarians than the simplistic assumption that civil society will rush in where the state withdraws. A number of options, such as estates hiring their own private-sector patrol teams (instead of the local constabulary), could be looked at, but there are a number of problems, including what to do where an individual household did not agree to the local arrangement. Another way of tackling the issue would be assign bobbies on the beat to all neighbourhoods, and for them to patrol all the time, and to separate such policing from relative small criminal investigation units that dealt with major crimes. Most libertarians support free availability of drugs, which would probably reduce some types of crime, but probably also grossly increase lower-level nuisance crimes. This illustrates the difficulty for me of creating a free society in a society where cultural standards have been abandoned.

Another problem for me is the “rip-off Britain”. The individual citizen often feels helpless in the face of businesses that no longer operate as they once would have. When I took the train over Christmas, I found the final leg of my journey had to be by taxi, owing to a “strike”, and yet the train company told me they would not refund my fare. If you apply for a mortgage you face large and meaningless “arrangement fees”, often more than £1000. Banks are trying to impose “account fees”. You phone up companies, and find yourself put through to call centres in India. In my case, an Indian operative kept telling me I could not have a print-out of my US dollar account that I needed for my accountant, as the bank had decided that, as it was used only once every couple of months, the account was inactive, and the computer system did not permit a print-out to be sent out. I felt angry that someone based abroad could make such a decision, and that I could not speak to anyone in the UK about it, and only after many hours of phone calls did I get what I needed.

Reading of apartment management fees in the press the other day, I was struck by how many businesses today have become “cowboy”, “fly by night” operations, charging whatever fees they like for nothing. Isn’t it the same people who move from wheel-clamping operations to apartment management and then into nursing home management, partly profiteering on the back of the taxpayer, but often exploiting people in situations where the taxpayer is not picking up the bill?

Mobile phone companies charge huge and outrageous roaming fees. It is idle and factually false to claim that left to their own devices, the phone companies will eliminate these. I have even been shocked that BT refuses to connect calls to directory enquiry services other than their own. When I contacted Oftel to ask why all phones could not dial all numbers, I was sent a leaflet from BT. Yet my point was that if Oftel was the regulator, why wasn’t BT told that in the direct dial world, all phones can dial all numbers, and—end of discussion, BT would just have to do as it was told.

I do not believe that in a libertarian world all regulation could or should be eliminated. I am not talking about sheafs of regulation, and certainly not about regulations that have not gone through parliament or that are issued or administered by regulatory bodies, but I do mean that some high-profile abuses could become political issues, and that a rarely-meeting parliament could pass legislation, and then leave it to the citizen to sue where necessary. I do not admire the US-style overly-litigious culture, and would like to see some limits to prevent vexatious litigation, as, in particular, a free-market health system that allowed for poorly grounded suits against hospitals and doctors would simply see health charges soar. Without evidence of malpractice, the strong presumption must be that doctors do their best for their patients. I resent being put through to India to deal with a UK company, and I would like the practice banned. And without a penny-by-penny breakdown of exactly what mortgage arrangement fees, overdraft charges, apartment management fees and the like were actually for, I would regard such fees as fraudulent.

There is a clear risk that the approach I am outlining—and I am only talking about the occasional law—would lead to rule by unelected judges, freely legislating from the bench on what companies could charge for their services. Statute legislation needs to be drawn up with little latitude for interpretation, unlike the common law, but I think if a number of key abuses were outlawed in one law, it could provide the basis for closing down a host of regulatory bodies (the Office of Fair Training and the like) and allow for a reduction in the size of the state.

Another problem is that previously state-run bodies continue to be run along the same lines in the private sector, especially where they are natural monopolies. The behaviour of the unions in the railway industry in one example where the public-sector mentality remains in full swing. Look at how the government “allows” the rail companies to raise their prices by double-digit percentages each year: is it not clear that, without regulation, the prices would be going even higher? As monopolies, it may seem to the rail companies that they can price their tickets as high as they like, within the bounds of current regulation. I can’t understand why the prices need to rise each year above inflation: if they do have to, would it not be better to cut salaries? Union activity has worked to ensure that salaries for many menial jobs are often in excess of white-collar salaries, and there is plenty of room for a large cut. Personally I think striking workers should be sacked, their pensions cancelled and their access to public social security curtailed for life. After all, what do they think this is? That we, the public, have to just pay whatever they want?

It is not clear to me what the libertarian answer to these issues is. Another example is the way headteachers often now award themselves salaries of over £200K, despite their failing schools. Even were education to be provided, it is likely that most parents would have few viable choices for the education of their children (eg, they could go to one of, say, three local schools), and the privatised schools would operate as a cartel, with high fees charged by them all. Could salaries for the teachers, including the head teacher, be determined by a vote of the parents (and the parents alone) at the parent and teacher association? The parents would then be deemed to be “hiring” the staff, and could not pitch the salaries so low that good staff could not be hired, but the more flagrant and kleptocratic abuses would be constrained.

Ultimately, I don’t have a good answer to all these issues. There would still be abuses in a libertarian society, and there would be political demands that they were dealt with. It would be possible for a small state to prevent the worst abuses by the rule of law, and for the privatisation of state roles to be done in a way that prevented the current managerial elite from continuing to screw the public, or screwing the public even more in the absence of regulatory bodies. The thing is made more difficult by the fact that the people of our country do not know how to behave any longer—which is why the state came in so triumphantly in the first place. I explained in a previous post why I think the managerial elite (straddling the public/private sector divide) is the problem, and not just “the state”. By focusing just on the state, we may miss the fact that the same managerial elite manages the private sector. Ultimately, libertarianism attacks problems politically rather than socially and culturally, and yet, how do we create a free society without the old bourgeois elite and its social and cultural values?

2 responses to “Regulation should be by Act of Parliament and Rule of Law

  1. A serious and thoughtful piece there.

    I am inclined to agree that a ‘watchman’ State is the least bad outcome to be aimed for. As for your observations about the behaviour of businesses, yes, if possible businesses will happily treat customers like dirty. Forming cosy ‘associations’ against the customers is a fact that was recognised by Adam Smith. The simple disappearance of the State would no end that, however, i think you will find that competition is often limited, allowing these abuses, by government interventions which stifle market entry and innovation. As such, the cutting back of government will often improve the situation.

    A minimalist State would be a good answer to these problems (not a total solution, but a workable answer). However, we all know the tendency for the State to grow, regardless of how small and constrained it may originally be.

    A matter worth pondering.

  2. The challeneg, then, for libertarians, many (but not by any means all) of whom believe in the logic of a minimal state is to define a way whereby the State could be constrained as a “watchman” with limited powers to prevent “preventable evils” while not being allowed to get big.

    It strikes me that Marx himself, with his phrase “The State will wither away”, perhaps even wanted this, but got carried away witht he drunkenness of managerialist power to “do change”.

    I find myself falling into the same dangerous thoughts, with my wish to be Sean Gabb’s Principal-Secretary-of-State-For-War-and-Foreign-Relations-including-The-Home-Office. I laughingly call it the Boromir-Trap. For that’s what it is.

    But perhaps the difference is that Marx Was Wrong, and I Am Right….

    Perhaps there is not any way to manage a modern functioning complex civilisation, without some sort of a state behind it. But perhaps that’s because such a thing engenders enemy-states, in the pre-capitalist-barbarian-phase of life, who need to kill it to “get the stuff”.