31 Aug 2008

Why Government Regulations Keep Us Less Safe

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I am a very “extreme” (I prefer the term “consistent”) advocate of free markets. Not only do I think the private sector should provide 100% of the schooling services in a country, but I also think the government shouldn’t be in the business of guaranteeing product safety. For a quick exposition of my views relating to air travel safety and the TSA, see this article. And for a deeper treatment, buy the Best Economics Book Ever.

Basically, my point is that there’s nothing magical about government inspectors; any experts whom the government could hire, so too could the private sector. The crucial difference is that a private rating agency would go out of business if (like the FDA) it erroneously told people to stop eating tomatoes, etc., time after time. In contrast, government agencies get more funding after they screw up. If a plane crashes and records reveal shoddy maintenance logs, this is chalked up to “the free market,” even though that plane was operating under the protective oversight of the FAA.

Now, one of the best objections to my way of thinking is that, on the surface, it seems nothing is preventing these private sector analogs of the FAA, FDA, etc. from arising. According to this line of thinking, the addition of a layer of government regulators can’t possibly hurt (except for false alarms and the waste of tax dollars if the government regulators are truly redundant). But their presence can’t make us less safe, my critics claim.

Well it turns out government agencies do make us more insecure. When the government decides to “guarantee” safety in a particular area, it doesn’t want some other competing group showing it up. In the weekend (Aug. 30-31) Wall Street Journal, page A2, there is a story, “Private Mad-Cow Tests Can Be Banned, Court Says.” It’s short so I’ll just type in the whole thing, bold is mine:

A federal appeals court said the government can prohibit meat packers from testing their animals for mad-cow disease.

Because the Agriculture Department tests only a small percentage of cows for the rare but deadly disease, Kansas meatpacker Creekstone Farms Premium Beef of Arkansas City, Kan., wants to test all of its cows. The government says it can’t.

Larger meat companies worry that if Creekstone is allowed to perform the test and advertise its meat as safe, they could be forced to do the expensive test, too.

The U.S. Court of Appeals for the District of Columbia Circuit on Friday overturned a lower-court ruling that would have cleared the way for the testing. The appeals court said restricting the test is within the scope of the government’s authority.

Ah, this is just a great illustration of how things really work in the world. Far from the government chafing huge corporations with its noble efforts to save the public, on the contrary the government is in league with big business. The free market doesn’t lead to rampant sickness and accidents, it takes the government to suppress the natural free market reactions to such inefficient outcomes.

I can understand a teenager who thinks politicians are really trying to help. But how can grown men and women actually believe that politicians will side with them, and not the huge corporations that fund their campaigns?

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