The World We Are Losing

North’s law of bureaucracy is as follows:

“There is no government regulation, no matter how plausible it initially appears, that will not eventually be applied by some bureaucrat in a way that defies common sense.”

For a regulation that makes considerable sense, it may take months or even years for the right bureaucrat to come along. But not always.

Last Friday evening, my wife returned from a trip to California. On Saturday, she began to unpack her bag. Not bags — just one relatively small one. It actually fits in an overhead bin. For the sake of this report, I’m glad that she didn’t do that with this bag.

She noticed that the edge of the bag was torn. I thought this might have been the work of the famous gorilla in the old American Tourister luggage TV commercial. But then she said, “the lock is broken.” I told her: “It’s probably the new flight security rules that went into effect on January 1. The inspectors broke the lock and got into the bag.”

She opened it. Sure enough, she found a slip of paper. I reprint it here.

Transportation Security Administration

Notification of Baggage Inspection

To protect you and your fellow passengers, the Transportation Security Administration (TSA) is required by law to inspect all checked baggage. As part of this process, some bags are opened and physically inspected. Your bag was among those selected for physical inspection.

During the inspection, your bag and its contents may have been searched for prohibited items. At the completion of the inspection, the contents were returned to your bag, which was resealed with a temper-evident seal.

If the TSA screener was unable to open your bag for inspection because it was locked, the screener may have been forced to break the locks on your bag. TSA sincerely regrets having to do this, and has taken care to reseal your bag upon completion of inspection. However, TSA is not liable for damage to your locks resulting from this necessary security precaution.

As for the slash in the bag, who knows? The gorilla left no note of explanation.

You had better calculate this travel expense into the budgets of your flights from now on.

Upstairs in the terminal gates, the security people make searches of passengers. Searches are required to be random, for to go after some of Ann Coulter’s famous “swarthy men” would be to violate people’s rights on a racial basis, which is not allowed, rather than violating people’s rights on a non-racial basis, which is required by law. So, to maintain the illusion of randomness in a world of surveillance cameras, government data bases, and other profiling technologies, they have to conduct random searches.

During World War II, the British cracked the Germans’ military code. The Brits knew the times and routes of the oil tankers that were to supply Rommel’s forces in Africa. To keep the Germans from figuring out that their code had been broken, the British would send a reconnaissance plane, which would make itself visible to the men on the tankers, and then run for cover. The plane would send a message announcing the whereabouts of the tanker. The Germans on the tanker would conclude that they had been spotted from the air. What bad luck! If they radioed home, they would tell the command that they had been spotted. Then a British submarine would sink the tanker. The Germans never did alter the code.

The reconnaissance plane was part of the deception. So are the random searches of passengers and bags. They are to provide camouflage: (1) from voters who demand action; (2) from lawyers who might otherwise initiate lawsuits on behalf of their swarthy clients — on the basis of racial profiling. Anyone who really expects searches like these to protect airliners is so abysmally dense that he might as well be a Congressman.

The other purposes of the new surveillance system relate more to controlling average people than catching terrorists.


It is obvious that it’s time to sell your high-priced Samsonite luggage at a garage sale and use the money to buy a replacement bag at the local Salvation Army. If you don’t, then don’t lock the bag. If you have a really secure bag, it’s going to be a target. The airline baggage handling systems have been under fire from Congress. So, in order to prove that they’re on the job, the security people are going to have their lock picks and lock clippers in full-time use.

The public will probably roll over and play dead. To complain would be to call into question the Homeland Security program and the steady jettisoning of the right of privacy. The agents of the government are becoming invasive on the official basis of protecting us from terrorism. Yet the enormous security state that had been created after World War II proved incompetent with respect to 9-11. So, it is being rewarded with larger budgets and more power.

In the name of protecting us from invaders, our privacy is being invaded by the protectors. There is not much doubt that the voters accept this rationale. Men have been assured by governments down through history, “An honest person has nothing to hide.” Are we also to believe that an honest person has no need for locks on his luggage?

It’s not just luggage locks. It is also locks on our communications, such as our e-mail. A vast surveillance system already exists. Cameras located on highways monitor automobile licenses. The city of London is about to launch a major experiment : photographing the license plates of the 250,000 cars that enter the central part of the city every day, comparing these images to a data base of car owners who have paid a five pound per day entrance fee. We know that the technology exists to monitor faces in stadium-size crowds. In airports around the world, video cameras survey faces and match them with a data base of suspected terrorists and criminals. Don’t call it profiling. Call it mug-shotting. The world portrayed in the recent movie, “Minority Report,” where private and public eyeball-recognition software is universal, is already here in terms of the absence of legal restraints. Iris-recognition technology now exists in an early form. An initial market is airport security.

As the price of anything falls, more of it is demanded. In this category place surveillance. As the price of anything rises, less of it is demanded. In this category place privacy. At some price, it’s available, but the price is too high for most people. The very rich use these techniques. Criminals use them. Tax-evaders use them. But innocent people don’t.

So, what do we learn from these two laws of economics? This: the new technology will lower the surveillance-per-victim cost. This technology will be used on innocent people. When organizations buy this equipment, they will use it. They must justify the expense. But to put this equipment to use, the managers must re-define what constitutes suspicious behavior. That which used to be regarded as unsuspicious — at the older, higher price of surveillance — will now be defined as suspicious.

This is not mere theory. It is happening now. Every time we go into an airport, we can see the future.

We are told by officials that we need a national identification card. We already have one: a driver’s license with a photo image. Try to get onto an airplane if you don’t have one. Did this system prevent 9-11? Of course not. But it gets Americans to line up. This is the desire of every bureaucrat: to get people to line up. If scarce resources are not allocated by price, they must be allocated by standing in line. Bureaucrats don’t allocate by price — at least not in public.


Americans think they can hide money in foreign accounts. With the steady erosion of banking privacy in international markets, it is becoming expensive and difficult to hide the movement of digital money. I think it is close to impossible, especially since 9-11. This is why Al-Qaeda and other Islamic terrorist groups don’t use wire transfers. Islam has an ancient system of credit-transfer that is not digital. The system is called hawala. There is a complex body of law governing the exchanges.

The acknowledged masters of foreign exchange are Jews who are involved in the international diamond trade. All transactions are in cash. All are sealed by verbal contracts. There is an industry-wide court system. No member of the guild ever takes a compatriot into the civil courts. Violations mean exclusion from the guild. This system has been operating for a thousand years. Magna Carta? Late-comers!

If you use cash, you forfeit interest payments. But at 1% per annum, this return may not be worth forfeiting the use of currency. The price of remaining in currency is falling. The benefits in terms of privacy and buying things at a discount are rising. We do not see this, but we can surmise on the basis of economics that it exists on the black market. This is a market without taxes. The average guy isn’t in this market. The main participants are poor people, working-class immigrants, and rich people who are involved in illegal or unreported trades.

That’s why the average Joe is the real target of all this recent clamp-down in security. The system is aimed at him because it’s cheaper to aim it at him. Like the drunk who searches for his dropped key in the area close to the street lamp, so is the government’s new system of surveillance. The drunk won’t find his lost key, but at least he won’t risk tripping in the dark. Bureaucrats don’t get into trouble for not finding keys. They risk hitting a brick wall in their careers when they trip in the dark. Their goal is to install more lampposts.

January 9, 2003

Gary North is the author of Mises on Money. Visit For a free subscription to Gary North’s twice-weekly economics newsletter, click here.

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