Last week, I wrote about how governments don’t seek to seize the means of production any more. Instead, they grasp at the means of regulation, trying to deprive their political opponents of economic and social wiggle-room. I also discussed a few well-known instances of regulatory vengeance – a couple from the US, and one from the UK. In all cases, liberty was the loser.
This week, I’m going to outline a true story of regulatory vengeance, one that’s unfolding as we speak in the wake of Tony Abbott’s election win in Australia. Here, it’s the political right engaging in the vengeance, and lefties who invited the behavior by fiddling too fixedly with the levers of power while they had their hands on them.
A bit of background
One way to injure something you dislike – particularly a company in the business of selling things – is to stop buying its products or for its employees to go out on strike. This, in legal terms, is a primary boycott. It is legal in every developed country.
Another way to injure the target company is to convince its suppliers to stop trading with it, or to encourage its suppliers’ employees to go out on strike. The latter sometimes follows the former. This, in legal terms, is a secondary boycott. It is only legal sometimes: the trade union and business versions – called “sympathy strikes” and “restraint of trade” – are usually illegal.
However, unions are greatly weakened from their 1970s heyday, and, crucially, no longer operate in “closed shops,” where in order to get the job, one had to join the union. And social media – as Chris Berg points out - is now a marvelous tool for effective secondary boycotting.
The Australian case study
Environmentalists had some notable regulatory successes during the life of the previous parliament. Perhaps the most contentious “win” was a ban on live animal exports to various Islamic countries. This had serious knock-on effects in agriculture (which, in Australia, is not subsidized) and cost a lot of people their jobs. That win (and others like it) was thanks to secondary boycotting campaigns run by activist organizations.
…Which means the newly elected Liberal (read conservative) government is now going to make secondary boycotts illegal for green groups, not just unions and businesses. Previously, environmental activism enjoyed a statutory exemption.
Well done, greenies. When you were regulating various farmers and loggers out of existence, those farmers and loggers were plotting their regulatory revenge.
Everybody, step away from the levers of power
My view is similar, although not identical, to Chris Berg’s. I think secondary boycotts are often completely daft and destructive. They should not, however, be illegal. They are the price we pay for two things.
1. Freedom of speech. If you don’t like somebody’s product, you should be free to say so and, if desired, organise around that dislike.
2. The privilege of limited liability. The modern company is a tremendous force multiplier for investment – especially small investment – allowing ordinary people to participate in commerce to a degree unheard of in the past. However, limited liability also hides the true level of risk attached to equity investments. It’s a great privilege and should not be abused: owners must be accountable to their customers.
However, everyone needs to be aware that regulatory overreach can result in regulatory blow-back. Let this case study in regulatory vengeance be a lesson to you all.