Thursday, December 16, 2010

The Petitionary State

For much of history, governments existed as a Petitionary State. Subjects would petition their sovereign for privileges, rights and favors. The king or the duke would either grant a right or lift a burden. For example, Joseph Nasi was granted the wine trade monopoly with Moldavia by the Ottoman State. And through petitions and bribes, Jewish and Christian communities were temporarily relieved of Islamic prohibitions against building new (non-Muslim) houses of worship. The petitionary state increased the wealth and loyalty that the sovereign commanded and the dependency of their subjects. The most troubling aspect of this system was its arbitrary nature and incompatibility with the rule of law. Rather than depend on clear rules that applied to all subjects, at all times, the state functioned according to the whims of the ruler(s). And to a large degree, the generation of wealth depended more on the good graces of the ruler(s) and less on the ability of an individual to competitively provide goods and services. Needless to say, this retarded the economic development and creation of wealth in the Ottoman Empire and other petitionary states.

The founding father did more that any other rulers, via the establishment of limited, constitutional government to limit the petitionary elements of the state. Although corruption and favoritism in the application of the law certainly did exist, a regimen of official favors, privileges and penalties did not. And the limited size and scope of the American Government limited the incentives and capacity of citizens and rulers to engage in petitionary activities. So, while some groups and individuals did grow wealthy through their ties to rulers, the majority of individuals thrived or languished through their own efforts. This is a major factor in the legal and economic development of the United State.
Over time the American Government has increasingly become a Petitionary State. An increasing number of individuals, groups and special interests petition the state for economic and social intervention on their behalf. Politicians have increased their power and popularity by promising individuals health care, housing, education and a host of other goods and services. Special interests are promised subsidies. And ethno-political groups seek special privileges, such as educational and contract set asides via the petitionary state. In general, Democrats are more inclined to promote this vision of the state. In practice, select subsidies can benefit the general public, but in realitylobbying play a huge role in determining which industries and companies receive the good graces of the state.

In a less direct fashion, many Republicans have depended on the petitionary state to increase their power and popularity. The expanding regimen of favors and entitlements naturally imposes a large fiscal and regulatory burden on productive individuals and companies. No good or service is free, you cannot give to one without taking from another. But, rather than fight the petitionary state, most Republicans have opted to grant selective exemptions to politically connected groups, individuals and industries. A prime example is seen in tax breaks granted to the oil and coal industries. And a more populist and democratic version of this policy is seen in the broad tax breaks that Republicans have promoted, even in the face of spiralling debt.

In order to avoid Glenn Beckian histrionics, I will admit that the modern version of the petitionary state is vastly more benign and democratic than its earlier incarnations. But, it has led to aberrations like corporate welfare and unsustainable spending. In the context of highly competitive political races, Democrats have continuously increased the size of entitlements, while Republicans have simultaneously lowered taxes. With neither side willing to alienate the electorate by seriously curbing spending or raising taxes, the predictable result is a national debt that is spiralling out of control. Eventually entitlements will contract, while taxes will surge, leaving sovereigns unable to fulfill the petitions of their enfeebled, entitled and dependent subjects.

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