Masters, Servants and Government Regulation of the Digital Media

The Gillard government is now in possession of two separate reviews of the Australian media industry. The first is the Convergence Review commissioned by Communications Minister Stephen Conroy. That review deals with how the media is to be regulated as digital, print, and television media ‘converge.’ That report is also beyond the scope of this article. I haven’t read it and don’t have anything to say about.

The Finkelstein Report — or the Report of the Independent Inquiry into the Media and Media Regulation — is a different creature altogether. It was also commissioned by Minister Conroy, and was published in late February. The contents of that report are now generating a little more scrutiny, and I’d like to add to that today.

I’ll argue that both reports are being brandished as clubs with which to beat down the expression of independent opinion in Australia. This is a long-term goal of certain types of people who are upset with the way the media industry has evolved. It is no longer possible for one centrally planned, carefully orchestrated narrative to dominate the media landscape and influence what people think about current events by controlling what they read and see.

You can imagine how deeply upsetting this must be for people who are used to telling other people what to think. It’s a threat to the status quo. The threat is that the publication of news and opinion will no longer be tightly controlled and regulated by people with mostly the same point of view. It will be a free, open, and critical market. For some people, this evolution is dangerous.

Those who want to go back to the way things were — when Big Media existed in a cosy relationship with Big Government — are using recent events (Gina Rinehart’s bid for board seats at Fairfax and the case of Peter Slipper) as a kind of causus belli to launch an attack on the independence of the media. Rather than more voices and more independence, they really want more of the same: everyone forced to toe the same party line.

Being a financial newsletter writer, I wouldn’t normally have a dog in the fight between the Big Media and Big Government. But when Big Government makes an attack on Big Media because it doesn’t like the coverage its getting — and that’s what this latest assault on the media is — then anyone who values free speech and independent thought is forced to speak up and tell the government to back off.

More government regulation of the media is most certainly not in the public interest. That deliberate turn of phrase is designed to disguise the real intent of the regulatory push: to marginalise and constrain the ability of independent media to criticise government or conventional wisdom. This isn’t about more ‘free and fair expression of opinion’. It’s about silencing critics.

One definition of a paradox is a statement that’s self contradictory. The ‘public interest test’ is therefore a paradox. It’s really a ‘self-interest’ test where the government and its regulators reserve the right to tell the media how they can operate. This is paradoxical because the advocates of greater media regulation claim that the media’s role in a democratic society is more important than profit or business. Thus, the government must regulate the media more rigidly to ensure the media can hold the government more accountable to voters and citizens.

Does that make logical sense to anyone?

The advocates for more regulation in and out of government have made the absurd argument that in order for the media to a better job of protecting democracy and holding the government accountable, it must be regulated by the government and its proxies, who will have the ability to impose fines, compel apologies, force retractions from the media, and give others the ‘right of reply’.

The only place this kind of upside-down-logic could possibly make sense is in Wonderland, after Alice has fallen through the looking glass. That’s the world where language only means what the speaker wants it to mean, even if that’s not what he’s said. If that sounds confusing and impossible, take a moment to read the exchange between Alice and Humpty Dumpty below.

Humpty Dumpty took the book and looked at it carefully. ‘That seems to be done right —’ he began.

 ‘You’re holding it upside down!’ Alice interrupted.

 ‘To be sure I was!’ Humpty Dumpty said gaily as she turned it round for him. ‘I thought it looked a little queer. As I was saying, that seems to be done right — though I haven’t time to look it over thoroughly just now — and that shows that there are three hundred and sixty-four days when you might get un-birthday presents —’

 ‘Certainly,’ said Alice.

 ‘And only one for birthday presents, you know. There’s glory for you!’

 ‘I don’t know what you mean by “glory”,’ Alice said.

 Humpty Dumpty smiled contemptuously. ‘Of course you don’t — till I tell you. I meant “there’s a nice knock-down argument for you!”‘

 ‘But “glory” doesn’t mean “a nice knock-down argument”,’ Alice objected.

 ‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

 ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’

 ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.’

When you control the language people are allowed to use, you control their thoughts to some extent too. Humpty Dumpty’s subjective view of what words mean would be laughable if it weren’t backed up with an implicit threat. He wants to be the ‘master’ of the language. The ‘master’ gets to determine what words mean, and thus what ideas you can construct using those words.

Much of the language used to advocate for more media regulation is equally subjective and dangerous in nature. Words like fair, accurate, public interest, socially responsible, independence, accountability, and diversity are all difficult to define in a legal sense. What usually happens is that a committee of unelected, government-appointed people gets to decide what those words mean.

A small group of people, in other words, becomes master over what words means. That group of people is given enforcement power. This is coercion plain and simple. Objective rules — laws over defamation, false reporting, and other illegal activity — are replaced by committees of men and women. That’s a bad development for any liberal democracy.

If you think I’m exaggerating or melodramatic, then let’s go straight to the source. I’ve excerpted portions of the Finklestein Report that I believe prove three points.


  1.  First, the motive of the report has always been to give the government cover to restrict free expression. This motive is transparent in the elevation of ‘social benefits’ over ‘free speech’.
  2. Second, the report fundamentally misunderstands the changing digital media landscape and advocates for an authoritarian regulation. 
  3. Third, some of the reports advocates have a not-so-secret agenda to obtain taxpayer funding for media operations that lose money. They want their subjective world-views subsidised by the taxpayer because they can’t compete in the free market of ideas. It is rent seeking disguised as wise public policy, through and through.


Before I get into those three points I should say two things. First, everyone is always biased. The idea that there is a so-called objective media that reports only facts and news is ridiculous. The mere act of selecting what IS news and what to report is an editorial decision. Judgement is exercised by a publisher or editor to determine what the public should know.

Granted, some stories aren’t selected. Fires, natural disasters, and calamities of any sort don’t require much judgement. They get reported on because they’re news. This won’t change with media reform and because of that it will disguise the naturally coercive nature of this regulation.

Media reform in its current form is designed to ensure that the news gets reported in the way some people want it reported. This doesn’t remove bias. It institutionalises it.

Not that I’m a fan of Big Media. There’s no doubt that the media acts in its own commercial interests. Shareholders wouldn’t have it any other way. This is not an exercise in defending Fairfax and News Corp from big bad government. Instead, I think you’ll see that the business model of the Old Media has been decimated by the Internet. The Old Media knows this and that’s why both companies have made big restructuring moves in the last month.

Curiously, it’s the government that has a problem with this. While the Old Media tries to adapt to a world where information has become a commodity and people have more choice than ever when it comes to getting news and opinion, the government is going in the other direction. It wants everyone to get the same information from a few trusted, respected institutions which it can regulate, control, and influence to its own ends.

But as I said, you shouldn’t take my word for it. It’s all there in black and white in the report itself. So let’s have a look at some of what I think are the key passages and what they tell you about the real motives, goals, and desires of media critics.

‘The Democratic Indispensability of a Free Press’

After all the preliminaries and introductions, the report really gets rolling in chapter 2. That chapter is a called ‘The Democratic Indispensability of a Free Press.’ In leisurely and scholarly fashion, the chapter explores past academic explanations for the ‘indispensability of a free press.’

Those reasons include: the search for truth, promoting democratic discourse, something about ‘self-fulfilment and autonomy,’ and the role of the press as the ‘fourth estate,’ or as government watchdog on behalf of the People.

It’s interesting reading if you’re into a tour of what academics have said about the press. But by the time you get to section 47 of chapter two, you’ll realise you’ve been hoodwinked. That section has the subhead, ‘Whatever the rationale, free speech is not absolute’. It soon becomes clear that despite all the informative and delightful history, the real purpose of this section is to make the case against free speech and lay the groundwork for oversight and government supervision on behalf of the ‘public interest’.

Here is the relevant section, with my emphasis added:

Whatever view one takes of why, in a democracy, free speech and a free press perform such an important, if not a critical, function, it is almost universally accepted that there are circumstances in which free speech and a free press should be subject to restriction.  Whether there should be restraint will depend upon the time, place, manner and content of the expressive act in question. In a liberal democracy, when there are competing private or public interests at stake, the social benefits of those interests may be more important than the benefit of free speech.

Did you see what they did there?

That last line sets up a false conflict between ‘competing private and public interests’. This is formulated in a way that makes the press the enemy of what’s good for the public. But who decides what’s good for the public? Public servants of course!

Also note the use of subjective, poorly defined language. The ‘social benefits’ of the ‘public interests at stake’ may be ‘more important’ than ‘the benefit of free speech’. How would you even go about figuring out what that meant?

Well, maybe you’re not supposed to figure out what it means. Maybe you’re supposed to believe there are ‘social benefits’ to the ‘public interest’ which eclipse and are ‘more important than the benefit of free speech’. You should probably just let somebody else figure it all out. Or just shut up and do what you’re told.

I realise my view on free speech may seem radical to some Australians. There is no protection of free speech at the Federal level in Australia. In the United States, of course, the right to free speech is enumerated in the first amendment to the Constitution. This, by the way, is not the government giving you the right to say whatever you like. It’s the Constitution saying that you are born with that right and no government can take it from you, or give it back with conditions.

Of course in US legal history there ARE prohibitions on free speech. The classic example is that you can’t shout ‘fire!’ in a crowded theatre. As the Finklelstein Report says, there are circumstances where free speech can be restricted. The law courts concur.

But we have yet to see a law court assert that the ‘social benefits’ of the ‘public interest’ are ‘more important’ that the ‘benefits of free speech’. The benefits of free speech, or ‘social benefits’ aren’t the issue at all here. The issue is free speech. Do Australians have it or not? Is the government conjuring up a test where it could deny the media free speech on some ‘social benefits’ basis?

Think about what that means for a moment. It doesn’t really matter where you are on the political spectrum. If you accept that the government can impose some higher standard on when speech should be free and when it should not, you accept the principle that you don’t have a right to free speech. You leave it for the people in government to decide what’s best. That’s hardly democratic. It’s hardly free. And it’s hardly speech.

Resorting to moral imperatives for the purpose of coercion is the sure sign of an intellectual bully. It’s someone’s way of trying to win an argument by suggesting that if you disagree, you’re morally inferior.

 Theories of the Press

There’s more evidence that the purpose of the report is to set up a false choice between ideas of the press and then make us chose the one favoured by the report. The section I’m referring to here is the ‘Theories of the Press’ section. This is also at the end of chapter 2.

Briefly, Finklestein quotes academic research and describes four basic theories of how the press exists as an institution in the modern world. Those theories are:

Authoritarianism: where the press is the propaganda arm of the coercive State

  1. Libertarian: a free, unregulated marketplace of ideas
  2. Social Responsibility: found in democracies, where the press has large freedoms but is regulated to ensure fairness, lack of bias, and high ethical standards
  3. Communism: the press is free to report on the triumphs of the State and the inevitable failure of capitalism, which is obviously riddled with inherent contradictions


I have no idea if this is what the academic literature actually says. I’m taking Finklestein’s word for it. But it’s again quite clear to see that the argument has been constructed in a way to make us choose one option over all the others, and make it seem inevitable.

The Authoritarian and Communist approaches are dismissed out of hand as not being compatible with liberal society. That leaves the Libertarian and Social Responsibility views. Now we’re getting somewhere!

Or are we? Really, you can tell by now we’re headed to the Social Responsibility theory. This is bound to conform in some way with the idea that the ‘social benefits’ of press regulation outweigh the ‘benefits of free speech’. But let’s take a look at how the report dismisses the Libertarians anyway. I’ve edited down the report’s summary for the sake of brevity. Emphasis added is mine:

 ‘The two democratic models, Libertarian and Social Responsibility theories, are of more relevance to Australia, and there is a lineage connecting the two. Libertarian theory was developed in the period of the Enlightenment, when there was a plethora of competing small presses, and their main product was opinion rather than what we would recognise as news.

 The theory was informed by a liberal belief that truth would emerge from the clash of competing opinions, and by a belief in the ‘self-righting’ capacities of public debate to ensure that in rational and reasoned discourse, error would be vanquished. It was analogous to the free market theories of Adam Smith where an ‘invisible hand’ would lead to optimal economic outcomes for all because each individual could be relied upon to behave rationally in his own interests.

 However, Libertarian theory was to prove inadequate in the face of new forces created by industrialisation of the press and by the realities of 19th and 20th century media economics. While it is changes in the media which have largely been focused upon as causing Libertarian theory to decline in applicability, the changes in government were equally radical and far-reaching. The growth of the welfare state, the increasing public role in health and education, the growing complexity of economic management, the size of urban societies and increasing globalisation and environmental issues — all these have made government larger and more complicated.

 Its most serious limitation was its incapacity to provide a response to the issues of monopoly, the sharp increase in entry costs for newspapers, and the different ingredients of commercial and market success. It turned out that in the ‘marketplace of ideas’ there was inequality, abuse of power, intellectual squalor, avid interest in scandal, an insatiable appetite for entertainment and other debasements and distortions undreamed of by Milton.

While there was still talk of media as a check on government, it could also be charged that the media could seek to bully government.  The extent to which the various agencies of officialdom now report on themselves and each other has meant that while the state has become larger, it has also generated more checks and balances. On top of these economic and technological challenges to Libertarian theory, the intellectual climate of the 20th century was radically different from that of the 17th and 18th centuries when Libertarian ideals flourished. The new intellectual climate placed higher store in collectivist, societal values and less on individualistic values

 In this climate, publishers began to acknowledge that their right to exercise freedom of the press brought with it responsibilities to society. At the same time, democratic societies remained committed to the principles of free expression that underpinned Libertarian theory. This commitment was retained as Social Responsibility theory emerged. The essential new element that Social Responsibility theory brought was that of reciprocity between the press and society.

 It became accepted that in return for the privileges that the press had acquired (these are described in Section 5 of this report) it owed society a responsibility to discharge the functions for which the privileges had been granted. Chief among them was to provide reliable information that allowed the citizen to participate in the political and economic life of the nation, and provide a forum for the exchange of ideas.

Let’s see if we can quickly summarise that then. The Libertarian model worked for awhile, but then it stopped working for the following reasons:

The ‘new forces of industrialisation

  • More complex government
  • Its inability to ‘provide a response’ to issues like ‘monopoly,’ ‘entry costs,’ and ‘the different ingredients of commercial and market success
  • More ‘checks and balances’ because government agencies now report on themselves
  • A new, collectivist intellectual climate
  • The Spiderman-like acknowledgement that with great rights come great responsibilities

No one could write that and take it as a serious argument. The only way those arguments can stand is if no one reads the report and knows they’ve been made. Or, the only reason for making such weak arguments is to set them up in comparison to the arguments for a ‘Social Responsibility’ theory, which, of course, is just what happens next in the report. Remember, this kind of reasoning is the basis for all the recommendations made in the report.

But rather than just being dismissive of it, I should point out how amazing it is that the whole report has missed the significance of digital publishing. The cost of production and distribution of on-line media has been liberated from the tyranny of the printing press. If you have a modem, a keyboard, and an opinion, you can be a publisher.

In other words, today is a perfect mirror of the free-wheeling, free market media conditions that prevailed when the libertarian theory of the media held sway. Finklestein seems to have totally missed that, or been deeply disturbed by the idea of anyone in a democracy being able to say and report what they want…and let the marketplace sort things out.

There are two issues here, one serious and one not serious. The serious issue is that news gathering takes money. Real news gathering is not based on opinions. It’s based on reporters and journalists investigating a story, asking questions, and sometimes travelling long distances to do this.

This kind of news gathering can only be done at a commercial level by a few institutions. With the revenue model of the modern print press in tatters, the budget for honest-to-goodness newsgathering is under immense pressure. This is the commercial problem they must sort out.

It’s probably fair to say that bloggers and on-line opinion writers are not, in general, news gatherers. Many of them are responding to stories originated by the mainstream press, but providing a different spin or analysis. This is a symbiotic relationship. But we shouldn’t forget the importance of having businesses capable of breaking the news.

But the bright side is that everyone with a mobile phone is now a potential news gatherer. Even the papers and broadcasters realise this now, with their constant solicitation of viewer pictures, comments, and eye-witness reports. This seems to me to be a return to the Libertarian model, where there are many sources to choose from.

Is that a burden? Does that make the press less trustworthy? Does that make news a commodity? I don’t know. But I for one am glad to have access to hundreds of thousands of opinions and ideas. That’s real diversity. And no one controls that agenda or manages ‘the narrative’ of what the public should be paying attention to. That’s probably what really bothers the Statists and Central Planners.

And that’s the second issue. Finklestein’s rejection of the Libertarian model is philosophical, not practical. He doesn’t like the Libertarian model because it’s messy, democratic, and does not lead to a consistent narrative which advocates for an explicit kind of collectivist social change through the law. He doesn’t want media accountability or fairness. Supporters of this view want control over the main channel for distributing ideas to the public so they can advocate their own subjective ideas.

This is about masters and servants. The report has a whole section on ‘Social Responsibility’ theory. But this is the view you encounter every day from government. I will not address it here. You’re well familiar with it already.

In the Libertarian worldview, every man is his own master but lives under the rule of Law. That worldview is not compatible with servitude. And that’s why people whose goal in life is to tell you how to live are now eager to tell you what you can read and how you can think. They want to be masters. Your master.

Rent Seekers Submissions

It’s unfair to attribute arguments to unnamed people. So let’s look at one final issue and name some names. This issue is whether the digital age has made ‘quality journalism’ so difficult to produce at a profit that some sort of government assistance is required. Section 12:58 of the report reads as follows:


The Inquiry received 12 other submissions from a diverse range of people and organisations which, taken together, broadly asserted that the rise of new communication technologies had significantly affected the ability of major news media outlets to invest in quality journalism, and that this merited some form of government support or intervention.



There’s the rub. Let’s use this whole inquiry as a way of getting tax-payers to fund our own subjective view of the world. Perhaps the Markets and Money should have made a submission!

Alas, we did not. So who died? The twelve submissions were from:

The Media Entertainment and Arts Alliance

  1. SBS
  2. Senator Bob Brown
  3. Eric Beecher
  4. Peter Browne
  5. The Global Mail
  6. Stephen Mayne
  7. Margaret Simons
  8. Wendy Bacon
  9. Bill Birnbauer,
  10. Brian McNair and Chris Nash
  11. Penny O’Donnell and David McKnight,

To their credit, submissions from Fairfax Ltd. and News Ltd. both rejected the idea of government funded press. But not everyone did.

Now, we should say we didn’t read each and every one of the 12 submissions which the report cites as favouring public assistance. But the spirit of them is probably best captured by this comment from Erich Beecher in September 2011. Beecher wrote:

 ‘If government support becomes the only way to maintain ‘public trust’ journalism — just as government support is the primary funding source of the arts, culture, museums and libraries — surely that’s preferable to watching it disappear.

Notice that was written well before the Peter Slipper affair or Gina Rinehart’s move on Fairfax. And notice again the wishes, desires, and feelings of the public are divined by one man or a group of people and placed ahead of the nebulous benefit of ‘free speech’. This is about subsidising a particular worldview, not about public trust.

There are other statements from other submissions which follow in this vein. Peter Browne of the Swinburne Institute for Social Research wrote:

 ‘Given the importance of the press in our democratic system, it does not seem unreasonable to suggest that newspapers or media organisations more generally, should explicitly be regarded as meeting these various criteria for charitable status.

The press is so important to modern democracy it should be eligible for charitable status. I’m not sure if that’s a suggestion that the press should be a non-profit enterprise, or that it should receive the charity of tax-payers because of the seriousness of its social mission. Of course only the money losing ventures would be deserving (and needful) of charity.

Dr Margaret Simons, a former journalist with the Age and the Australian who now writes for Crikey, wrote the following in her submission to the Inquiry:


There is no denying the broad public interest in an accountable media following recognised standards. The advance from the pre-printing press society towards the wide availability of reliable, verified information collected and curated by professional journalists was a major advance in human civilisation. It made democracy possible. It remains essential to the healthy functioning of democracy.

Yet sadly there is also no denying that history tells us we can’t rely on the industry to adequately support its own self-regulation.

Recognising that there are no perfect solutions, I favour guaranteed arms’ length government funding for the Australian Press Council, combined with long term funding agreements from the industry.


What does it mean for the media to be ‘accountable’? Is it not accountable already, subject to libel laws and defamation suits when found to be in the wrong? Aren’t these ‘recognised standards’ already the law? And is there really ‘no denying the broad public interest’ in undefined standards?

Was democracy only possible with the help of professional journalists? Was Socrates a journalist then?

Can government regulation of thought and print ever be at arms’ length? Or will it always come with strings, agendas and penalties?

I have no doubt many of the submissions are full of useful insights from people who’ve worked in and around the Australian media for many years; certainly for many more years than myself. And issues like journalistic ethics are always going to be part of the industry.

But the more you look at the report and the submissions to it, the more it looks like a hamfisted attempt to prevent a digital revolution which removes control of ‘the narrative’ from the powers that be and places it in the hands of the people.

This seems like just the sort of development that advocates for diversity and democracy would embrace.

Instead, they’ve reacted with a regulatory fist to the keyboard. And they’ve done so unnecessarily. The current laws on libel and defamation are more than adequate to address the concerns forwarded in light of the Slipper affair. That shows that there’s a deeper, more profound agenda to the complaint.

That’s not good for free speech. That’s not good for the media. It’s not good for Australians. And it’s not good for Australia.

This is a simple contest between free speech and government control.

The question then, is which is to be master?



Dan Denning

for Markets and Money 

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Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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8 Comments on "Masters, Servants and Government Regulation of the Digital Media"

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Wow! A great effort and I will be reading this for quite some time. Please don’t let it drop off your masthead. I’m itching to get at the Jefferson-Hamilton thing but I need to get my thoughts together, look to what others bring, and I’m inclined to think I might get a lead from this above. I’ll do that before I start throwing stuff at Teddy Roosevelt again. But then again I can’t leave today with throwing someone else’s perceptive bucket at that toad.

Commercial providence has an undeclared hand in here too.

There is so much material potential here it is hard to know where to start. The medieval era western intellectual agenda of those developing semantics, and the dark places within the estates that the academic institutions were seeking for themselves is one stream. They lent heavily on Machiavelli yet appeared to me to look upon his work as a mere toolbox. I recall a sort of fireside chat communique to the Australian public service issue by the loathesome former Finance Minister Lindsay Tanner. It was available online and it was a departmental website that was covering public service reform but… Read more »

Here is another noteworthy reference that includes “the international community”

Rob CA

Control the language, control the thinking.

Take Global Warming for example: Didn’t warm so call it climate change (because it will always change so it must be happening.

Carbon dioxide becomes carbon emissions, carbon emissions becomes carbon, carbon becomes carbon pollution, carbon pollution becomes “pollution”. Hands up. Whose for “pollution”? Answer: No one! So bring on the tax please!

Defending a free press is right up there with apple pie; who isn’t for it? But, nagging away in the back of the mind are images. What’s happened in the UK, for example. Roger Ailes’s blatant, and self professed abuse of media freedom with Fox News, for another. It’s the same old story. Everyone, including the press, wants to talk freedom, but strangely, they’re not so eager to talk responsibility. I assert that you are oversimplifying by presenting it as a this or that choice. Are you saying that there is no abuse of media power? Are you suggesting that… Read more »
I am going to let this sit for a while. There is no other issue other than the executive’s intention to regain control of all media. The reason I linked the government examination on issues of scrutiny in the digital age and brought it forward as a western liberal regime issue is because the fact that there has been almost a total lack of press freedom in respect of executive responsibility and accountability under constitutional law in western countries. The Australian press especially has played in a smaller and smaller zone since the 1980’s concentrated only within the safe areas… Read more »
Douglas (surname not for publication)
Douglas (surname not for publication)
I always mentally note when an Aussie begins to talk about free speech as a right. Nothing more than an urban myth really. Commerce is restrained by regulation on top of regulation. When politicians have to comply with accountability laws I will support it. When government argues that they must regulate media accountability the alarm bells should ring very loudly. Some may even have a thought about drawing a connection between the purported social goods of gun control and this call for media regulation. It never was about gun control just control (moving forward that is). Most alarming is that… Read more »
truth and integrity
Who is the master and who is the servant? Governments in a democratic society are supposed to be administering laws in government to protect the underprivileged and unfortunate; children, mothers and the persecuted not the bureaucrats and tyrants. It was once the ten commandments but how many follow these simple commands. How can people follow the complex laws man has devised? There are literally millions of contradictory laws to petrify the individual at the hands of the collective. The collective talk of social responsibility when as leaders of the their families they are unable to discipline their children or even… Read more »
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