Happy Monday to all you FRians! As always, Monday’s post was written by Stephen Hall. Thanks, Stephen!!
There is a frequent objection wielded against libertarians by conservatives in the vein of liberals, which is really to say that liberals have successfully conned conservatives on a matter of principle regarding the history and nature of regulation itself.
The problem at hand is the illusion that certain regulations are not merely helpful but necessary for the safety, security, and overall health of society.
The illusion is created due to the timing of the creation of the regulations at such a time as the problem the regulations were designed to combat were already in the process of being resolved and ameliorated.
For instance, as incomes across the industrialized world were increasing, and parents had more resources for the family that no longer required children to work to help support the family, is when the nations decide to pass child labor laws.
The same is true for the maximum hour and minimum wage laws which get enacted only after wages have generally risen above the new minimum wage and the workers themselves whether through social convention or collective bargaining agreements had negotiated shorter work weeks, and a number of companies had learned from various studies that their productivity was actually greater at lower costs.
As knowledge increases in the general population about food hygiene and the invention of refrigeration dramatically decreased the incidence of food borne illnesses, the government steps in to create a federal agency just to oversee that slaughterhouses and meat-packing plants follow the standards which had already become the norm of the industry.
The list could go on for some length across many different fields of human endeavor, because there are a plethora of regulations which were not created until after the object of the regulation had already become widespread and the industry standard.
In fact, I cannot think of a single example where this was not the case that the regulation merely followed new techniques and innovation as a lagging indicator of what was possible and indeed what was good company policy by regulation became what was state required regulation.
There have been a few attempts by legislatures and agencies to dictate as a matter of policy improvements in one industry or another before such advances were practicable, economical, or even feasible, but with disastrous results.
These are always held up as examples of government overreach, excessive regulation, or unintended consequences and never the examples of “necessary regulation” which is used to justify continuous government oversight of the commerce of a nation.
The regulatory world abounds int evil doers, ne’er-do-wells, Seneca oil salesmen and charlatans. It must, or there is no real need for the regulators.
The regulators themselves are the greatest of these snake oil salesmen, telling you the taxpayer that if it was not for their product, the governmental agency rules and regulations of the bureaucracy that those sly, deceitful peddlers would skin the very last farthing from your moth-eaten purses.
They would have you believe that your local butcher is trying his best to unload upon you the rancid, spoiled meat he was unable to sell, just to make a quick buck while your family gets ill and malnourished.
That shyster of a boss is going to make you work fourteen to sixteen hours a day, paying you just enough to barely feed yourselves so that you can stumble back to work the following day until you drop from starvation at your workstation only to be swept out with the day’s garbage.
Your doctor is purposely withholding the cure for that disease or condition which you have acquired just so that he can keep charging you to pay for his summer home in Florida, and would sell you nothing but placebos at inflated prices, if left to his own practice.
Your neighbors must really be scoundrels.
It is a good thing the government is there to protect you.
However, let us take a look at the economics of the situation from the perspective of that common peddler.
If a man is selling, whatever it is that he is selling, perhaps apples, then is it in his best interest to knowingly and willfully sell to you rotten apples? I mean he has a barrel full of apples, and if some of them are bad he’s not going to be able to sell them all if he doesn’t sell the rotten ones too.
After all, is the peddler not out to maximize his profits? That is what we are told by the modern economists that every peddler does, sets out to maximize his profits. (The conniving little peddler.)
Of course, a rational person would realize that if he sold rotten apples, such a peddler would quickly gain a reputation for so doing, and no one would trust apples bought from that peddler.
But let us interject another apple seller into the equation. The peddler who throws away the bad apples, and sells only the good, will not only have repeat customers the other peddler does not, but can even charge more for his apples because of his reputation for quality.
Market forces do not naturally favor the dishonest peddler of shoddy merchandise in the long run, and in the short run only the dishonest peddler who is fleet of foot and can outrun the angry mob stands much of a chance.
Once competition has driven the dishonest peddlers from the street, along comes the apple inspector to tell the public that rotten apples should never be sold (something everyone already knew) and for the meager price of a one farthing tax on every apple he will punish any peddler found to be selling rotten apples and randomly inspect apple barrels to make sure the peddlers are being honest.
Thus, all of the bad apples, and bad apple peddlers are driven from the market by the apple inspection regulation . . . having already previously been driven from the market by their competitors. A triumph of regulation.
In the words of Sun Tzu, to be perfect in defense, defend where no one is attacking. To be perfect in regulation, regulate where the problem is already solved. Again, we have the logical fallacy that because we do not see rotten apples being sold, the regulation must be working to keep rotten apples off of the market shelves.
Except, of course, from time to time you will buy a rotten apple which fell through the inspection process whether that process is from the peddler or from the inspector. No system is perfect. Every so often you will have a dishonest apple peddler, and the regulation does not stop that.
So what has the regulation purchased? Apples are more expensive, but no more healthy than before.
It is true that in changing times, as technology changes and new practices are adopted regulation of the emerging standard as universally required will force some of the laggards to adapt or be put out of business.
It is debatable whether this temporary benefit to the hinterlands of chasing off the late adopter of new practices is beneficial or detrimental in the long run as it also reduces competition which is the leading driver of innovation and improvement itself.
You may ask yourself just how unsafe would your world be without all of the federal and state regulation. I imagine that if all of the regulation, each and every regulation in existence, would disappear tomorrow, not one person would notice any difference at all with the singular exception of lower prices/taxes.
