Hayek defined the Rule of Law as meaning that "government in all its actions is bound by rules fixed and announced beforehand - rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one's individual affairs on the basis of this knowledge...Within the known rules of the game, the individual is free to pursue his personal ends and desires, certain that the powers of government will not be used deliberately to frustrate his efforts." The Rule of Law provides a stable environment for all of man's myriad interactions, whether economic or otherwise, as well as the legal framework most conducive to freedom. Such a principle requires the state to limit itself to establishing formal rules that apply generally, to all persons, irrespective of time or circumstance, and those rules that are the must likely to benefit all of the people affected by them.
Contrast this principle with the concept of economic and social planning. In a planned system in which the goal is equality of outcome and distributive justice, the state is required to produce the same result for different people and, as a necessity, it must treat them differently. After all, in an imperfect world, some people are born healthy, but others sick, and some are intelligent and others not. Some people have the advantages of good parents, live in lands that are safe from natural disasters, and pass their entire lives without a significant illness or injury. Accordingly, a planned system can only pursue an equality of outcome and level the playing field by elevating those less fortunate or less endowed with superior characteristics, knowledge, skills, and talents. In short, it must offer the disadvantaged group some form of subsidy, typically, financial or legal in nature. However, there are both intended and unintended consequences of that action. Because the state has limited resources, it must first choose which of the groups it will benefit. This requires discriminating against on or more groups who either will not be the recipients of the subsidy or from which the material resources or wealth will be taken in order to benefit the less advantaged group. Moreover, the beneficiary of the subsidy will have an incentive not to achieve equality on their own since he/she is being sustained, in whole or in part, by the state. The government may reach a point at which it cannot remove the benefit because doing so will leave the beneficiary destitute or unable to fend for his/herself. At such time, it must adjust its laws, rules, and regulations to redirect or siphon more funds or resources from other groups. Ultimately, the Rule of Law is undermined as the planning authority must continuously adjust the laws to meet the various circumstances and changing needs of its beneficiaries, whose needs are often in conflict with the needs of others.
One way planned systems attempt to address these ever-changing circumstances is to delegate the law-making authority to agencies, bureaus, committees, and departments. The goal is efficiency. In theory, the legislature in a planned system does not have to debate and pass a law everytime that it is compelled to respond to a pressing need - it can merely defer to the bureaucrats who bear that responsibility. However, deferral to such a group only serves to make government action more arbitrary because, now, instead of having an elected legislature make the decisions, the rules are developed and implemented by unelected government employees who are politically-appointed and are not accountable to anyone other than the party in power. Rarely does anyone in the general public take the opportunity to learn what regulations are passed although it is certain that, at some point, they will feel the rules' effects, often without knowing the party responsible.
The legislature in a planned system is doomed to irrelevance. They are viewed as incompetent because, due to conflicting ideas of what priorities should take precedence, who should be the recipients of government benefits, and what actions should be taken, they will be slow to act and even slower to adjust to changes in circumstances. As noted above, bureaucracies, with their legions of so-called experts, are imbued with plenary authority with little legislative oversight to carry out the state's political goals. Unfortunately for advocates of this system, bureaucracies naturally only larger to combat the ever-growing list of problems that need immediate redress. This accretion of size and levels of structure leads to further inertia. At some point, the disgruntled masses of government beneficiaries cry out for someone to step up and do something. Almost invariably, that person is a dictator. Suddenly, things are getting done as the dictator, usually under the auspices of reform, implements sweeping reform, all of which is certain to grow the size of government and expand its intrusion into citizens' lives.
This scenario has played out time and time again. Carl Schmitt, the legal theorist of National Socialism, contrasted the National Socialist ideal of gerechte Staat (the "just state") with the concept of Rechstaat (the Rule of Law) and concluded that the type of justice that opposes formal justice must necessarily require discrimination against certain persons. I don't think that I need to elaborate on how those thoughts became actions.
More significantly, we see the same derogation of the Rule in Law in the last two Administrations. Billion dollar bailouts benefited some Wall Street entities, but did not benefit others nor did they extend to industries other than the financial industry. GM and Chrysler receive bailouts, while Ford does not (at least, not directly. Although not a technical government bailout, many firms, including Ford, McDonald's, Toyota, and GM received huge low interest loans from the Federal Reserve). Some companies receive exemptions from Obamacare (a decision based solely on authority delegated to the Department of Health and Human Services who has no regulatory criteria with which to determine who is eligible for an exemption). The green industry received government subsidies, while the oil industry did not. States whose employees are predominantly members of government employee unions received government stimulus money while non-unionized employees did not. Of course, all of these allocations of taxpayer funds are based on politics and reveals the corrupt nature of our government and its leaders, but, ultimately, the biggest blow to our freedom is that the Rule of Law has been persistently undermined and disregarded. A precedent has been established that says that there are no formal rules restricting government, that it can do whatever it deems necessary to further its own political goals. In the final analysis, a foundation has been laid for unbridled tyranny.
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