The Law of Unintended Consequences Part 2: Red Tape and Loopholes

I’ll begin this sermon with a phrase: “The Lord giveth, and the Lord taketh away.” The Lord in this case is Congress.

Once upon a time, this country swam in red tape—regulation of all sorts—because big business was few and far between, and the few consumers weren’t spending enough to keep big business in business. When the Industrial Revolution occurred and world wars came and went, small industries couldn’t be helped from sprouting—all of a sudden, there was a need for it.

Then came the free markets, trade, and the ultimate hole-puncher: Congress. Where red tape wasn’t relaxed or eliminated completely, Congress invented a way around it.

When the garden of business wasn’t growing fast enough, or with strong enough plants, Congress tried to encourage growth through the fertilizers of tax incentives, subsidies, new regulation, or new layers of red tape.

One day, the little guy, Joe Consumer, got tired of shaking his fist and shouting, “What about me?” and started looking into ways he could use those punched holes in the red tape for himself. Congress even went so far as to spell out ways that Joe could take advantage of the rules and loopholes by making the tax code available to the public. Several authors have simplified the tax code into comprehensible volumes by year, and separate agencies were set up just for small business navigation alone.

Joe began to read and inform himself, eagerly seeking ways to get rewarded with something for nothing (or very little).

Joe’s neighbor, John couldn’t be bothered to read such a large amount of fine print, and went on to form activist groups and agendas based on the emotions he felt just from hearing about issues affecting the common man. As a result, Joe and John formed radically different views of the same issue—one from a logical, informed point of view based on fact; another from a reflexive, emotional point of view based on very little actual research. John has fallen victim to the hype and spin machines.

As a result, Joe tends to look at red tape as an opportunity for reward. John looks at it as a punishment and needless deterrent. Obviously, Joe has found the holes, and John thinks they aren’t the right size—either too big or too small. Joe is reaping the rewards of red tape and loopholes, and John is wallowing in misery, calling for the government to bail him out because he can’t understand the fine print. John's favorite saying is "there ought to be a law."

Every game comes with instructions. You have to learn them in order to play, and you have to learn the inherent loopholes in order to be successful. In the end, game winners have learned the secrets of success—the loopholes, the exceptions, and the contrarian moves that keep his competition off guard. It’s called “winning strategy.”

How do you look at red tape, especially in this country? Our red tape is the holiest, meaning full of loopholes, and even the lowliest immigrant is able to spot them and benefit. This is why we’re flooded with illegal immigrants—people who spotted an opportunity, and went for it at any cost.

By turning a blind eye to our borders, Congress is rewarding the opportunistic and punishing the protectionist. Justice may wear a blindfold, but Liberty has her eyes and arms wide open.