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The Regulatory State

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If you listened to Hewitt and Arnn yesterday (subscription required) you heard a lot about the Churchillian vision for a united Europe and what the European Union has actually become.  Hewitt kept discussing Brexit in terms of throwing off the regulatory state.  With Obamacare, people are sort of getting a taste of the regulatory state – but even that is indirect, coming to the average consumer in the form of longer lines, higher co-pays and more costly insurance.  The European regulatory state is far more onerous, but it too remains relatively unobtrusive to the average consumer.

As a consultant to manufacturers, many of whom sell their goods into Europe, I have a taste of the European regulatory state that I thought I would share.  Most people have heard about “conflict diamonds.”  That is to say diamonds mined in countries that are in a state of conflict with the West in some fashion, they engage in slavery or other generally considered illicit practices.  There was a DiCaprio movie about them some years ago and the Brosnan Bond film “Die Another Day” was about Bond uncovering a huge operation for laundering such diamonds and then using the profits to conquer the world.  Well, there are more than just conflict diamonds, there are conflict minerals generally, and thus in steps the EU.  (For the record, Dodd-Frank contained conflict mineral provisions as well, but it was tacking on to an existing EU effort.)

For some of the more rare metals on the planet, there are major sources in the areas that the West deems unsuitable for doing business with where they are mined as ores that qualify as conflict minerals.  The EU wants to make sure no such metals make their way into the hands of their precious citizens lest they be tainted with the illicit practices of the other.  And so come regulations on conflict minerals.  Now, unlike diamonds which have a fairly short path to market, passing through only a few hands, ores that become metals pass through countless hands.  The ore must be refined, and the resulting ingots further refined depending on use.  The resulting metal may then be alloyed and the subsequent alloys shaped, cut and pass through the hands of several distributors before they make their way to the manufacturer that puts them in consumer goods, generally electronics.  There is no need to set up a laundering scheme because the marketplace itself launders the ores so thoroughly that they are virtually impossible to trace.  Unless, of course your are an EU bureaucrat and then you figure it is a “simple” matter of setting up a tracing system.

So now, every person or company in that train through which the ore becomes metal becomes parts becomes goods travels have to certify, on paper and in a database, that the products they buy and make do not contain conflict minerals.  For a small electronics manufacturer, say $20-30 million dollars a year gross sales, with 10% of their business selling into Europe, that works out to roughly one 4-drawer filing cabinet of paperwork annually.  For their suppliers and their suppliers suppliers the burden is heavier still.

To draw an analogy, suppose in a effort to control the laundering of cash used in drug crimes, the federal government required that you be able to certify that every piece of currency in your possession  had never been used in a drug transaction.  (In 1994 the 9th Circuit determined that at least 75% of currency had seen drugs at some point.)  Thus every dollar bill would have to be accompanied by a certificate from the person that gave it to you, and attached to that certificate would be a certificate from the person that gave it to them, and so on and so on and so on.  Further, you would have to provide such a certificate to the person you gave it to.  Get’s out of hand pretty quickly, doesn’t it?

That’s the regulatory state.

I don’t think any of us want to enrich bad guys by buying products they have profited in, but at some point we are letting the bad guys control how we do things rather than punishing them for not following our rules.  Yeah, I can see where that is something people might want to throw off.

Such things are coming in the US.  California’s “Green Chemistry Initiative” is a similar regulatory scheme designed to keep from consumers any taint of certain materials deemed dangerous, even if there is no proof that in the form they reach the consumer they are in the least bit toxic.  The coal regulations of the Obama administration are not of the same schema, but they come from the same over-controlling impulse.  It is as if they intend to keep us “pure” even if we have no interest in such purity.  There is some point where the human being would rather be a little impure than put up with this over-burdensome nonsense.

Built into this over-controlling impulse in the regulatory state is a fundamental misunderstanding of human nature – that we can somehow make ourselves pure.  God created us to be creatures of free will.  The overarching narrative of the Bible is that we used our will to rebel and God tried to get us to behave by rules upon rules.  Eventually He decided that wasn’t working and went about the sacrificial work of remaking us.  No regulatory state can keep us pure.  Only the sacrifice of Christ can purify us.

No wonder the regulatory state is so often the godless state.


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