Why government "regulation" is a stupid idea

Businesses, they say, need oversight to protect consumers from unsafe or unhealthy products, protect the environment, protect workers, etc. Therefore, we need agencies of government bureaucrats enforcing long lists of standards designed by the bureaucrats.

But the question is: who regulates the regulators? The politicians? Well, who regulates the politicians? The voters? Well, who regulates the voters? The voters are hardly experts on all this stuff they are expected to "manage" via the people they vote for. The chief problem with the whole regulatory concept is that government is a monopoly and monopolies are inherently inefficient. There is no mechanism within a monopoly to allow successes to out-compete failures; thus, there is no meritocracy. The fact that it is "nonprofit" solves nothing; you can not have a system of meritocracy and excellence with no competition, no creative destruction, no mechanism for bad ideas and incompetent or corrupt people to fail. Typically, when these agencies fail, they get more money and power.

Therefore, we can logically expect that the FDA, the EPA, the SEC or any other such will be utterly ineffective at achieving their supposed objectives. Indeed, in reality, these organizations usually act as a protective device for favored businesses within the industries they "regulate." Indeed, one can make a very good argument that that is what they were designed for in the first place.

In contrast, in the marketplace, competition allows successful ideas and people and organizations that satisfy their customers to out-compete failures. This alone provides a strong incentive to achieve most of the objectives allegedly sought by regulatory agencies: safe, high quality goods and services, etc. In addition, a fully laissez-faire economic regime would have private oversight and certification organizations, such as Underwriter's Laboratories or the Better Business Bureau, which, due to being competitive, would become successful on the basis of merit, acquiring a positive reputation, and satisfying consumers. Investors, lenders, and insurance and credit rating agencies would provide another check on poor business practices. The strict protection of private property would internalize externalities in such matters as pollution. Finally, lawsuits, including bilateral class action suits, would protect against fraud, contract violation, and malfeasance.

"Free market," after all, doesn't mean lawlessness or "no rules" but rather very strong laws protecting the person and property of all individuals. That is a much for effective means for ensuring good business practices than trusting a monopoly of arbitrary and largely unaccountable bureaucrats to take care of everything for everybody.

 

I would suggest looking at some of the Industry when their was no regulation Particularly the meat processing factories. Very gross. The industry will not police themselves and they have proved this throughout history.

I will take regulation for certain standards any day of the week.

 

[ame="http://www.youtube.com/watch?v=EU_4vanP04I"]Free to Choose Part 7: Who Protects the Consumer Featuring Milton Friedman - YouTube[/ame]

 

I think the point he was trying to make is that many products today get away with being dangerous like bovine somatotropin, while they try to regulate smaller businesses or home owners for far minor offenses.

I'd say the larger issue though is enforcing regulations against companies that break the law. Currently today it is extremely hard to do but government regulation isn't very effective when they are bought privately to not enforce it. The profit motive and free market is just as ineffective system worse if the legal system became private. Otherwise once again the power becomes centralized.

I'd rather we live in a totally decentralized world public or private centralization is always a bad idea. Local federations and communes should take the responsibility of regulation and enforcement seizing criminal property and stopping if there are no alternatives.

 

Oh ok, I would agree with that then.

 

If not the government then who? Who exactly would make sure water is clean? Stop pollution? Make sure food producers don't cut corners on safety? Are there actual free market agencies that do all these things? And where would they get their authority if not the government?

(These aren't rhetorical questions, I'm actually asking lol)

 

The fight to protect the rights of consumers ought to happen in four places. First, it ought to happen on the retail shelf, when consumers decide what to buy. Second, it ought to happen in the workplace, when workers should refuse to produce unsafe products even if their management tells them to do so. Third, it ought to happen in the regulator's office, when the regulators enforce product safety laws. Finally, it ought to happen at the voting booth, when consumers vote to elect politicians who will remove corrupt regulators from the bureaucracy.

Trusting any one or two of those filters is a bad idea. All four of them are important, and ought to be mutually correcting.

 

That is the entire problem. no one regulates the regulators.

Take OSHA inspectors and their regulations. they are outdated, stupid and not needed. however it depends upon what inspector you get to fine you etc.

The fact is, you have OSHA inspectors fining companies, when the inspectors themselves have never operated machinery or whatever it is the company uses.

yet they dictate what they should be doing. and most of the time the fines are very steep.

OSHA is hurting american manufacturing and business in general.

 

It seems to me that we tend to swing from one extreme to another. I think we need some fair regulations.. and that we can have them without violating the rights of business or individuals. But over regulation can have an undesired effect, too. And that is where we seem to be, now. The whole purpose of govt, imo, is to protect the 'people' from the powerful & exploitative. But they have shifted to being in bed with the exploiters.

We can't let industrialists exploit the people. And we can't let the govt oppress the people promoting statism. Reasonable, fair regulations can be made to protect the rights of workers, the environment, & posterity. But the statists have tried to exploit those regulations to increase their power & influence. We can have personal liberty based regulations. Let's don't throw out the baby with the bathwater.

 

All I know is that the rivers and the air are a lot cleaner than they were when I was a youngster. All it took was about 40 years and a zillion pages of regulations.

I would like them to stay that way so I am all for regulation.

 

I could be remembering incorrectly, but didn't you complain in another thread about the reducing standard of living we've seen over the last couple of decades?

 

There isn't anyone else. Every country that has an economy and a business sector has regulations because it is regulations, themselves, that define and establish and legislate the business style/model. So this talk of pro/con regulations is adolescent inanity.

 

Yes, the unassailable argument for regulation: a fictional diatribe penned by a socialist muckraker. Even if everything Updike wrote was true, even Updike admitted that the industry had regulation then, writing about the government inspectors at the end of the meatpacking line and how they failed to do anything!

The Updike argument doesn't address what I said. I doesn't show how a monopoly of regulators makes anything better. It doesn't offer any mechanism for why regulation by monopoly would function on any level. Has it worked in giving us disgusting, cruel factory farms in which chickens have their beaks cut off and wallow in their own filth? A diet of empty carbs and processed sugars and the rampant diabetes that has arisen from it?

This is the argument I always hear. Nothing explaining how the mechanism of monopoly regulation works, just the assumption that it does. "The industry will not police itself"? The regulators don't police it!

 

What do you mean by "criminal property"?

Markets cannot "centralize" in the sense you mean unless they're closed to competition. If they're open to competition, whenever a firm fails to satisfy its customers, it will lose business to another firm.

 

"...in the marketplace, competition allows successful ideas and people and organizations that satisfy their customers to out-compete failures. This alone provides a strong incentive to achieve most of the objectives allegedly sought by regulatory agencies: safe, high quality goods and services, etc. In addition, a fully laissez-faire economic regime would have private oversight and certification organizations, such as Underwriter's Laboratories or the Better Business Bureau, which, due to being competitive, would become successful on the basis of merit, acquiring a positive reputation, and satisfying consumers. Investors, lenders, and insurance and credit rating agencies would provide another check on poor business practices. The strict protection of private property would internalize externalities in such matters as pollution. Finally, lawsuits, including bilateral class action suits, would protect against fraud, contract violation, and malfeasance."

 

So the regulators regulate the businesses, the politicians regulate the regulators, and the voters regulate the politicians? Who regulates the voters? And it's turtles all the way down.

Monopolies can not function efficiently, no matter how they're structured, because they're not held accountable what they do. Voters are not held accountable for what they do, even you assume regulators are, which I don't (most regulators are hired civil servants and embedded for life). In contrast, in the marketplace, competition for consumers and investors, as well as the risk of lawsuits for violation of others' rights, holds all individuals and organizations accountable.

 

What do you mean by "fair regulations"? What do you mean by "exploit"? I say the only exploitation is violations of person and property and the only regulation we need is to forbid violations of person and property.

 

Yes, the classic capitalist apologetics at work. "It must be a lie!" "He was a bad man!" "It's complex!"

What you fail to understand about those who support regulation is that they do not view the mere existence of regulators as sufficient--they demand that the regulators also do their jobs. There is a very large amount of progressive literature detailing the failure of government agencies to act in the name of the people... this is not literature intended to persuade people to throw in the towel and accept the poor conditions, it's literature intended to spur people to demand action!

There's nothing a progressive hates more than a government official abusing his privilege or failing to uphold his responsibilities, because it makes the whole enterprise stink of inefficacy and corruption.

The government does not hold a monopoly on regulation. Private companies are free to exceed government safety regulations. The fact that they usually don't is just indication of the need for regulators who actually do their jobs. It is possible to have a functional government that doesn't cleave to corruption. It requires dedicated house-cleaning, but most importantly it requires leaders with a philosophy that promotes good government rather than leaders who believe that government is inherently a failure. You can never get the conviction required to clean house if you think the whole enterprise is destined for failure. It's why Republicans view failure in every government program they create--because they create them with the intent that they will fail.

The existence of factory farms represents the failure of legislation, not the failure of regulation. The antidote for this is not giving private industry free reign to set its own conditions, the answer to this is electing officials who actually care about making the government work correctly! Not merely serving corporate interests. Progressives of the early 20th century, for all their many faults, understood that much.

The regulators have, at times, actually policed industry. That time has long since passed, mainly due to decades of practical non-regulation by a succession of leaders disinterested in actually promoting useful, functional government services.

 

It doesn't take a zillion pages of regulations to keep rivers clean. All it takes is consistent protection of private property rights. Polluting other peoples' air and water is a property rights violation. In fact, the only reason things became so polluted in the first place was because the government stopped enforcing ancient common law prohibitions against such activities in the name of "the common good."

Then, after they'd let everything get disgracefully polluted, they came in the zillion pages and pretended to be the Savior. The Savior, as usual, from problems they themselves had caused.

Remember, most environmental problems are, at root, expressions of the tragedy of the commons.

 

How about we replace all the regulations we have now with one regulation saying, "All violations of the absolute sovereign right of every individual to his person and justly acquired property are forbidden"?

 

That is ultimately the fundamental political question in all philosophies. Capitalists, fascists, and other authoritarians believe that elites (be they in business or politics) should regulate the voter. Anarchists, socialists, and other democrats believe that the voters need no regulation--that they are the final consumers of regulation, and therefore the final voice on whether it is acceptable or not.

History has shown that statement false. Accountability is usually at odds with efficiency. The most efficient systems are often the systems that are least participatory or accountable. They are often conflicting objectives--systems where everyone has a voice and everyone can participate are often highly inefficient systems requiring a large amount of communication and consensus-building effort. That does not make them bad systems--I would prefer a participatory but inefficient system over one that produces somewhat more.

You are essentially complaining that the current state capitalist system does not adequately regulate itself through its state organ. That is essentially the same as observing that business cannot adequately regulate itself. The government is perfectly capable of adequately regulating business, but we have had a succession of government leaders disinterested in the prospect. It is a lot of hard work, and potentially politically unpopular (because it upsets elites, and elites control much of the voting public).

The notion that the lawsuits of a few individuals will really hold corporations accountable without the government taking the side of the individuals is laughable. The legal resources those individuals have to muster makes such stories heroically epic, and rare. That's why the few examples of individuals successfully suing large corporations for reparations are so often repeated and glorified--because it's incredibly hard to do.

In practice, the marketplace does not behave as you describe. In practice, markets inevitably give up competition for collusion, and collectively use their immense economic power to control the government--to undermine the voter's say in political matters. That is why the voters seem unable to effectively control anything.

 

But the point is that they can't do the job you want them to do. It's not a question of getting the right guy or the right regulation. It's much for fundamental than that. The system renders it inherently unworkable because the system is a monopoly and monopolies have no mechanism to structure themselves meritocratically.

It is destined for failure because it's a monopoly. Destined to fail at the things you want it to do at least. Although most regulations are very successful at protecting large, favored businesses while crushing their smaller competitors.

Actually, factory farms represent the success of regulation, in that the effect of the regulations is to crush small farms in favor of Monsanto, et al.

And as I pointed out in the OP, the free market isn't about letting businesses set their own rules. It's about letting consumers set the rules of businesses by choosing which ones to patronize within a legal structure that forbids fraud and all violations of property and contract rights.

 

And some of us believe that consumers are the final consumers, and they should get the final voice, which is how the market operates.

And the voting majorities should butt out of the decisions of consumers.

In government that may be true--perhaps. But I don't want an efficient government, but that would just make it more efficient at producing the bad things it tends to produce. But it is not true in the marketplace: businesses are forced to be efficient in servicing consumers precisely because they are held accountable by consumers if they don't. In the marketplace, the consumer is king.

I never said businesses can adequately regulate themselves. I said that government, being a monopoly, is incapable of regulating businesses or itself. Competition is capable of regulating businesses. Competition would also be capable of regulating government, except that government is a monopoly and therefore shielded from proper regulation

So you're saying because the government-monopolized courts are biased that means we need government-monopolized regulators? Of course, I'd have a voluntary, competing court system, as well.

However, even a monopoly court system is relatively more efficient because it judges things on a case by case basis, focusing on whether some individual's rights were actually violated. Regulations, in contrast, are arbitrary, one-size-fits-all rules enforced without any regard to whether someone is actually being victimized or not. The same regulation may be too strict in one area, too lenient in another, and wholly inapplicable in a third.

It is true that wealthy people would have more resources than the poor in legal disputes, but that is also true in regards to controlling both elections and regulators. I have yet to find any system that eliminates that risk; even communism didn't do it. Group action, as with class action lawsuits, could, however, eliminate much of that disparity. There are far more poor people than rich people.

I have yet to see such a thing as a purely free market monopoly. Monopolies require the initiation of force and free market forbid the initiation of force. As for them controlling the state, isn't that another argument against the idea that you can use the state as a tool to help the "masses." I also have yet to see such a thing as a state that was not biased in favor of the rich and influential.

 

You have proposed no reason why that ought to be so. You have offered no mechanism that prevents a meritocratic organization. It seems rather self-evident that monopolies can be structured meritocratically. Moreover, I would point out that regular house-cleaning by accountable political figures would definitely be a method of meritocratic organization--those who do not hold their position based on merit would be pruned from the organization on a regular basis, and those who do serve based on merit would rise to fill the vacuum through internal seniority hiring.

Your assertion of this belief does not make it fact. These is no particular reason that monopolies must be nonfunctional, even if we were to accept your bizarre and unfounded claim that regulatory agencies are monopolies. It seems rather absurd to claim that an organization with establishes a minimum representation of the people's interest in industry is a monopoly, given that the organizations they regulate are free to exceed those standards.

Provide a mechanism why this must be so; give a reason for your belief, not merely additional talking points and self-definitional jargon.

No, it represents a failure of legislation not regulation, because it is the legislation that outlines the boundaries by which the regulators can operate, the the large companies have clearly carved out the exceptions they enjoy. That is not actual regulation. It is not the public's regulation that is defined by Monsanto or other large businesses. Progressives understood this rather simple concept quite clearly. I know it is difficult for you to understand, but the fact that it is enacted by the government does not make it the people's will... progressivism is about returning the government's functions to those defined and demanded by the people. Progressive regulation is the sort created by public demand... regressive regulation--the type we have int he US, the type you rail against--is defined by those it is supposed to regulate.

The problems you describe, the issues you describe, are entirely related to regressive regulation--not the progressive regulation that liberals promote.

That is sheer insanity. You propose to separate the public from business, by creating these private fiefdoms that none may touch, yet insist that this is merely to allow the public to "set the rules of businesses." You deny the direct methods by which this might be accomplished, and instead trust to the rather nebulous indirect method of market preference. A wholly inadequate method fraught with structural issues relating to fundamental informational disparities.

 

Magic invisible market fairies of course!