Tocqueville and regulation

Niall Ferguson pines for the laissez-faire days of a relatively primitive society

Dean Baker slices up Niall Ferguson’s latest op-ed in The Wall Street Journal—this one about how over-regulated the U.S. supposedly is.

Baker writes that “It’s fair to say that just about everything in the piece is wrong,” and he’s right:

Ferguson then cites a number of hack studies that find enormous costs to regulation. The main trick in this sort of study is to add up every possible cost associated with restrictions without taking account of the benefits of these regulations.

Suppose we had a new law that allowed oil, gas, and other mineral companies to dig up anyone’s property without any compensation whatsoever. This would undoubtedly lead to huge growth in these extractive industries and a big gain in GDP that the Fergusons of the world would celebrate.

Of course there would be no accounting of the destruction to people’s property or the loss in value they may experience as a result of having an oil rig next to their front porch.

But what baffled me about Ferguson’s op-ed is how he compares the present-day United States to the U.S. Tocqueville found in the 1830’s without acknowledging some rather basic differences between the agrarian country of two centuries ago and the post-industrial one of today.

“Instead of joining together to get things done, Americans have increasingly become dependent on Washington,” he writes, without bothering to think about why the state has grown.

Unlike Frenchmen, (Tocqueville) continued, who instinctively looked to the state to provide economic and social order, Americans relied on their own efforts. “In the United States, they associate for the goals of public security, of commerce and industry, of morality and religion. There is nothing the human will despairs of attaining by the free action of the collective power of individuals.”

The U.S. was a virtually unoccupied country in 1830, with just 7 people living in the average square mile. Its biggest city, New York, was about the size of modern-day Fayetteville, North Carolina, and Boston was the size of 2013 Bismarck, North Dakota.

We now have about 89 people per square mile, despite having since doubled in land mass. Population density increases anonymity and makes it harder for neighbors to get together for that barn-raising or whatever its modern urban equivalent would be. Yoga-studio erecting?

Density and urbanization also means that what you do is exponentially more likely to affect your neighbors than it was when the average family had half a section. And the technology we have today is far more powerful and potentially dangerous than anything they had back then.

Extensive regulation then is a natural byproduct of densification and modernization, which are themselves natural byproducts of the free-market capitalism Ferguson espouses.

If Ferguson wants 1830s-style regulation and associational life, he needs a Jeffersonian agrarian republic. I very much doubt he wants that.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,