Some years ago I wrote an article titled “The Gun behind the Law.” (Not online, but it appears in The Politics of Freedom.) It began with a photograph of 50 or so helmeted policemen storming the doors of a large and institutional building. As it turned out, the photograph depicted a bank nationalization in Peru during the first and disastrously leftist presidency of Alan Garcia. I noted that the Peruvians were helping us understand the real import of the term “bank nationalization”: “What really occurred there is that some people forced other people to give up their property at the point of a gun….As the bankers of Peru have learned, every law is enforced at the point of a gun.”
And I noted that things are very different here: “When we Americans hear the words ‘bank nationalization,’ we are apt to imagine a piece of paper being signed by a bank president and a deputy assistant treasury secretary.”
Well, I was a little off. It was actually nine bank presidents and the secretary himself. But the general scene was right:
The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.
“They weren’t allowed to negotiate. Mr. Paulson requested that each of them sign. It was for their own good and the good of the country, he said, according to a person in the room.”
At least one banker objected. “But by 6:30, all nine chief executives had signed — setting in motion the largest government intervention in the American banking system since the Depression.”
And all without any need for armed police takeovers of the banks. Nice and peaceful like. And no doubt some of the bankers were just delighted to get billions of dollars from the taxpayers. For those who didn’t want to be working for the government, the points I made in that long-ago article are still valid:
The gun is evident in the picture [from Peru], but it is no less real when an American is forced to give up his property by a law or regulation. Such commonly used terms as “national economic policy,” “social regulation,” “revenue enhancement,” “profamily legislation,” and “minimum-wage law” all obscure the simple fact that some people are forcing others to do as they’re told.
But Peru is not the United States, it will be said; our government would never send riot troops to take over a bank. That is largely because it wouldn’t have to—Americans don’t resist the demands of government. What would happen if they did?…
If more Americans decided to ignore absurd, special-interest, and counterproductive laws, it would soon be apparent that physical force lies behind the Federal Register. Does anyone believe that Americans would pay a large percentage of their income to the federal government if not for the ultimate threat of imprisonment and violence?
As the bankers of Peru have learned, every law is enforced at the point of a gun—a fact we should carefully consider when we are tempted to conclude that some perceived problem should be solved by enacting a law.