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Elon Musk and the Economics of Resistance

Summary:
Elon Musk seems engaged in resistance against government controllers, those whom people softly, politely, and incorrectly call “regulators.” A Wall Street Journal story recently explained how, not content to publicly cross swords with the untouchable Securities and Exchange Commission, the famous entrepreneur has also refused to obey injunctions of other regulators, “ignored enforcement attempts,” and refused government inspectors access to his large factory in Nevada (Susan Pulliam et al., “Elon Musk’s War on Regulators,” April 28, 2021). The subtitle of the article reads: The Tesla and SpaceX chief courts conflict with an alphabet soup of government agencies—and generally gets away with it. It is not sure that Mr. Musk is defending a principle of private property

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Elon Musk seems engaged in resistance against government controllers, those whom people softly, politely, and incorrectly call “regulators.” A Wall Street Journal story recently explained how, not content to publicly cross swords with the untouchable Securities and Exchange Commission, the famous entrepreneur has also refused to obey injunctions of other regulators, “ignored enforcement attempts,” and refused government inspectors access to his large factory in Nevada (Susan Pulliam et al., “Elon Musk’s War on Regulators,” April 28, 2021). The subtitle of the article reads:

The Tesla and SpaceX chief courts conflict with an alphabet soup of government agencies—and generally gets away with it.

It is not sure that Mr. Musk is defending a principle of private property and economic freedom. He has not shied from government subsidies. “99.9% of the time,” he tweeted, “I agree with regulators.” But whatever his motives, his resistance is refreshing. If he pursues it successfully, libertarians and other lovers of individual liberty will be indebted to him.

The reason is that resistance to mounting regulations and controls creates a disincentive for Leviathan to impose them in the first place. At least that would seem to be true in a free and peaceful society where individuals are more jealous of their liberty than governments are of their power.  In other types of society, resistance can instead provoke more repression or even generate a dynamics of civil war. (Economists have used “reaction functions” to explore this sort of dynamics: see Kenneth Boulding, Conflict and Defense: A General Theory [Harper, 1962], pp. 24-29 for the simplest model.)

The possibility of stopping the encroachments of government through resistance has been invoked by Anthony de Jasay:

Self-imposed limits on sovereign power can disarm mistrust, but provide no guarantee of liberty and property beyond those afforded by the balance between state and private force.

What de Jasay meant by “private force” certainly includes the standing obstacle of decentralized and private institutions but also the actual capacity of physically resisting the expansionary power of the state, democratic or not.

This capacity requires individuals and organizations powerful enough to resist. Otherwise, we will meet the problem of collective action: free riders will wait for their neighbors to take the risk. (See the classic book of Mancur Olson, The Logic of Collective Action [Harvard University Press, 1971].) Note that the limits of collective action also affect voting not only because a minority cannot win against a tyrannical majority but also because of other problems in democratic politics, of which voters’ ignorance (rational and not) is not the least one (see my forthcoming “The Impossibility of Populism,” in the Fall issue of The Independent Review).

An interesting example of the capacity to resist (or at least its belief) is given in the delicious 1906 book of historian Marc Chassaigne, La lieutenance générale de police de Paris (The General Police Lieutenancy of Paris). The modern police as we know it, powerful and intrusive, may have been born in Paris when, in 1667, King Louis XIV created the General Police Lieutenancy of Paris. The nascent police spied enthusiastically on the population, but the surveillance was mainly aimed at common criminals. Nobles did not fear the Paris police, even if the king loved to be informed on their personal affairs. And here is the example: policemen tried to stay clear of the Hôtel de Soissons, domain of the Princess of Carignan, lest they were insulted or worse. Is Elon Musk an attenuated version of the Princess of Carignan?

The economics of resistance to tyranny is complex. Resistance against the rule of law, as opposed to resistance to an arbitrary ruler, can be counterproductive. The purpose of the rule of law was to deliver us from the rule of men and it would be a disastrous consequence if resistance should bring us back under the latter. But note that Musk’s resistance remains within the legal system. And we may wonder whether the current level of regulation and control is consistent with the rule of law or represents the rule of men in disguise. Another factor to consider: the later the resistance comes, the more costly it is likely to be.

Federal regulations alone only contain more than one million restrictions as measured by the use of such words as “shall,” “must,” and “prohibited.” In Federalist No. 62, Madison did not quite imagine what Americans (and other people in the West) have become accustomed to:

The internal effects of a mutable policy are still more calamitous. It poisons the blessing of liberty itself. It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?

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