The Legal-Political Environment Is More Powerful in Shaping Society Than Personal Character

by Max Borders

Somewhere in the Blue Ridge Mountains, good people are growing marijuana. Just like people who toil to bring up tobacco or turnips, these folks work hard to support their families. They make their living supplying a market—marijuana users. The activity creates no victims.

But the Drug War—our legal-political environment—turns these good people into de jure criminals. One might argue that a marijuana grower is someone who lacks character. And certainly there are circumstances under which he may lack character. Maybe he has threatened another grower over “territory.” Maybe he has lied to his neighbors about his work. But we have to ask: Would these character deficiencies exist in a different legal-political environment—such as one in which marijuana is legal? This grower, while he may have other character flaws, would be far less likely to threaten or lie if marijuana were legal.

Now consider Janet. People think she’s lazy. And maybe she is. She hasn’t worked for two years. When asked why she doesn’t work, she says “there aren’t any jobs.” But when you press her, it turns out a few positions are available nearby—jobs for which she’s qualified—only she would have to work the second shift. Adjusting her justification, Janet says she’s waiting for the “right” job. It turns out there are plenty of jobs across the state line, 100 miles away. Janet doesn’t want to move. Still, why doesn’t she just take what work she can get?

Janet is on unemployment. She is being paid the same amount to do nothing as she would be to work the second shift or to move out of state. The incentives of the legal-political environment are powerful. Her laziness is real. But it is a byproduct of a legal framework that guarantees generous benefits for inaction. Some people of good character can overcome these incentives, but most cannot. The welfare state will write a million more such stories.

Personal character is no doubt a powerful determinant in the health of a society. Our legal institutions and our mores are interrelated. But I urge you to think about Ice-T’s words:

“Don’t hate the player, hate the game.”

The rules of the game (the legal-political environment) are a more powerful determinant of society than the better angels of our nature. Eventually, the rules overwhelm a people. Again: we need people of character. We’ll need them to help us rebuild from our economic malaise. When Martin Luther King, Jr., changed minds about Jim Crow, legal changes followed. If Ron Paul can vote his conscience for 30 years, other legislators can be inspired to so the same.

But these are the exceptions. The rule is: rules matter.

The legal-political environment is powerful even within a single organization. Consider the Freeman interview of Paul Green, Jr.,  a “colleague” at a company with no structural hierarchy. There are leaders, but no bosses nor managers—and no employee is kept back by a title. People are rewarded for their effort and ideas, so the sky’s the limit. No one can tell you what to do, but people will tell you when you need to pull your weight.

At Morning Star there are two guiding principles: “Don’t harm or threaten harm against another colleague” and “Honor your obligations.” When people sign on with the company, they commit contractually to these principles and to a culture of “total responsibility.” Total responsibility means that if you see something you think needs changing so the company will achieve its mission, you have total responsibility to act. Given these rules, how do you think the employees behave?

Paul Green, Jr., says:

People recognize immediately that success will come only as a result of what you do: You are generally unimpeded by bureaucracy or stifling regulation that might keep you from whatever measure of success that you want to achieve…. It all flows out of your drive, commitment, hard work, and ingenuity.

And—surprise—we’ve found that that kind of success, the kind that is unquestionably the result of your blood, sweat, and tears, is incredibly invigorating. Our colleagues fall in love with it, and embrace it almost universally. And, anecdotally, I see that it affects the way they live their daily lives outside of work—their relationships with others in the community, friends, families, and other businesses.

One can guess that in organizations that are bureaucratic, top-down, and layered with managers, there is a lot of buck-passing, shirking, backbiting, and politicking. These environments are rarely conducive to cultivating personal character.

Now, let me leave you with a thought experiment—one I hope will test your ideas about character in a crony-capitalist world.

Pretend you own a flange company. You have $1 million to invest. In his book Government’s End, Jonathan Rauch writes:

For $1 million you could hire one of the best lobbyists in Washington. This fellow is a former staff member of the House Valve and Flange Subcommittee: He knows the legislators, he knows the issues, and he is persuasive and ingenious. With his help, you could invest some of your $1 million in campaign contributions to members of the Valve and Flange Subcommittee. Though you can’t count on buying anyone’s vote, your money would buy you access, which your competitor might not enjoy. Your lobbyist and your PAC might win you a tax break, a subsidy, or, best of all (because it’s least visible to the public), a law or regulation hobbling mini-flange mills. Any such tax break, subsidy, or regulation could easily be worth, say, $10 million a year.

So here’s the question: Are you going to invest in capital improvements or in a lobbyist?

Before you answer, let me add something to Rauch’s thought experiment. Suppose you know your competition is already paying a lobbyist. The bill could kill your business. The prize for successful lobbying is $50,000 for every dollar invested. Whatya gonna do? Like it or not, you’re in a lobbying arms race. It’s winner-take-all. Does character tell you to fight for your business, or refuse to play the game?

The rules of the game—the legal-political environment—are a powerful set of incentives. They can make or break people of character. It all depends on which rules are in place.

Max Borders is the editor of The Freeman and the author of Superwealth.