From Freedom to Following Rules

For most of the USA’s history, transactions occurred based on pragmatic experience.  Society was shaped by countless voluntary transactions based on the accumulated knowledge gained through experience, largely free from government interference. Frederick Hayek stated “all the famous early law-givers did not intend to create new law but merely to state what law was and had always been.”  For example, for decades, experience had shown that to remain strong, banks needed a certain capital base, and to lend money to buy a house, banks required that the recipient of the loan have a 10 percent down payment (so they would have a vested interest in the property, and to show they had the self-discipline to manage a budget to save up the down payment) and that payments not to exceed 30 percent of income.  This kept foreclosures at a minimum.   “New” law was written requiring banks to change their policies, not based on what worked, but to make the housing market more “fair” and to increase home ownership, and this new law did not take into account what experience had shown to be successful, but instead was based on how bureaucrats envisioned how things “should” be.  The result was the real estate bubble that ended with the financial meltdown of 2007. The “Affordable Health Care Act” is the latest huge law written by our ruling elite which will replace largely voluntary transactions between doctors and patients with detailed laws that all caregivers and patients must follow…forget voluntary transactions based on years of experience.  More and more, voluntary transactions, based on knowledge gained through experience, are being replaced by very detailed, specific laws, written and implemented by an elite few who think that their limited knowledge can construct a society of rules that is superior to a free society.  We are quickly turning away from what has made the USA prosperous, and so far, the results are not favorable.

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