Freeman

ARTICLE

Government Isnt Living Up to Its Contract

OCTOBER 01, 1990 by ROGER KOOPMAN

Mr. Koopman is a businessman in Bozeman, Montana.

When you mention the word “contract,” it doesn’t evoke instant excitement. Most of us associate contracts with banks, car dealers, realtors, and the like, and think of them in terms of payment plans and other financial obligations. But in reality, a contract exists whenever two or more parties agree to be bound by a mutual arrangement—which may or may not take written form. Contracts, therefore, are a basic expression of voluntary actions, free agency, and free will. They are the mortar that holds together a peaceful and free society. Without contractual relationships, there would be neither order nor freedom of choice.

The Constitution is an excellent example of a contract, whereby the people contract the specific services of the federal government and establish strict prohibitions on governmental power to safeguard their liberties. Both sides are required to honor the letter of the agreement, but the relationship set forth in this document makes clear who (i.e., the people) is the superior party, and who is serving whom.

Marriage can be viewed as a contract between two people. While, in a civil sense, all marriages have a certain commonality, they are also highly individualistic “contracts,” reflecting the values, religious beliefs, personalities, and so on, of the husband and wife. Business relationships, likewise, are contractual in nature, whether written or verbal. So, in the same sense, are employer-employee relationships.

Contracts imply several things: 1) that the relationship was entered into with the full knowledge of the individuals, 2) that it was arrived at freely, without force or coercion, and 3) that the relationship was perceived by all parties as beneficial. For a contract to be valid, then, there can be no interference by outside parties.

Obviously, freedom of contract is essential to an open, competitive, exchange economy. The entire system Of free market transactions is based on contracts. The strength of this system is its diversity, and the extent to which it maximizes individual choice and personal freedom.

But somewhere in our history we began to accept, ever so slowly, the notion that government (our Constitutional servant), has the right to interfere with the contracts of free people. I’m sure the argument in the beginning was the same as the arguments are now, as all levels of government continue to erode our ability to contract freely with anyone for anything. The rationale is always that it is for the “public good.”

Funny though—I’ve never met one of those “publics.” I know that I’m not one, and as I look around, all I ever see are individuals, never publics. Maybe they’re kind of like leprechauns, these publics, and the only ones who can spot them are politicians. They’re always being talked about by the politicians, and all the laws seem to be passed in their behalf. They must have hired a great lobbyist l

But stop and consider all the ways that government denies the individual his right to determine his contracts with others. Take employment relationships, for example. Do Americans still have the right to form whatever mutually beneficial relationship they choose when they go to work for someone or hire someone? Of course not. Our “servant” government doesn’t permit us, bemuse they have a “better idea” in mind. So they force wage minimums on us that extinguish many jobs altogether. They force worker’s compensation insurance on us, even if the individual worker would rather pass on that “benefit” and take other benefits or higher wages instead. They force unemployment insurance on us in the same way. Do we have a choice, as employees, to opt for a different policy from the private sector—or to choose no policy at all?

What kind of choice can we make about the 15.3 percent we and our employer together must contribute to Social Security? Do we have the opportunity to design an alternative retirement program with our employer? And what about overtime arrangements? Who decides all of that on ouremployment contract? The government again, because we “publics” can’t be trusted to know what’s best for us.

And this just scratches the surface in one area of our lives. You would be hard pressed to find any area of our existence where Big Brother doesn’t close off our options and dictate what kinds of contracts we are allowed. Just pause and think about it.

Then reflect on what this is saying about you as a person. How independent are you? How free are you to pursue your own happiness? How able are you to control your own destiny when your government all but writes your life’s contracts? And how much longer are you willing to sit back and watch other people you don’t even know role your life?

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October 1990

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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