It’s the Overregulation, Stupid

David Arkush with Public Citizen’s “Congress Watch” wrote an opinion piece for Politico in which he criticizes Republican plans to reign in government regulation:

These should be tough times for deregulators, who critics now link to a host of recent calamities: a massive oil spill, an economic collapse that has cost millions of jobs, countless food and toy recalls and repeated tragedies in mines and other workplaces.

Much of Congress’s activity over the past few years has been dedicated to cleaning up these messes — equipping agencies like the Food and Drug Administration and the Consumer Product Safety Commission with the resources and laws they need to keep Americans safe.

So why, in the past week alone, have House Republicans held four hearings attacking government regulations?

Maybe because government regulations stunt job growth, Mr. Arkush.  The EPA, for one, is moving to establish a “cap and trade” system even though the proposal failed in Congress.  These kinds of regulatory overreach don’t just hurt the economy, but they also are unconstitutional.  If the federal government can enforce laws that FAIL to pass in Congress, we might as well just abolish Congress and let Obama become King Obama.

Deregulation did not cause the oil spill.  Regulations that forced drilling in deep water did.  Typically, oil companies like drilling in shallow water.  It is cheaper, safer, and if an accident happens, it is easier to clean up.  But environmentalist wackos forced drilling out of the shallow water and into the deep.  In deep water, oil wells are hard to cap, so when the spill started, it took forever to fix.  If the government allowed drilling in shallow water, the accident never would have happened.

With the economic collapse, it was the government forcing companies to give loans to poor people that created the housing mess.  Not only did they force banks to give loans to people with bad credit, but by backing these loans, the government encouraged even more of them.  Fannie Mae and Freddie Mac had a larger role in the financial collapse than Goldman Sachs did.

As for the food and toy recalls, who actually thinks that the government can keep as safe from everything?  I certainly don’t.  That’s why the American people need to take more responsibility instead of asking Uncle Sam to become a nanny.  The private sector, instead of relying on the FDA, should work more towards providing safe products.  For example, grocery stores should be checking to make sure that food is safe.

By the way, how many people were killed by bad food and bad toys?  I don’t think the government, with its infinite wisdom, could possibly have save any of those people.

We have too much regulation.  Every year the government piles on thousands of new regulations.  Most of these don’t really make life any better, they just create a hassle for private enterprise.  Some regulations, I will admit, are necessary.  But many of the new regulations created by the EPA, for example, will only hurt our country.  When regulators take policy decisions out of the hands of Congress, we no longer live in a Republic, but in an oligarchy run by so-called experts.

UPDATE: David Wilens, writing for Capitalism Magazine, explains why regulations aren’t necessary:

In contrast with proper laws, regulations (which are also called ‘laws’ to package-deal them with proper laws) do not protect individual rights.

Rather, they order a business to follow certain procedures when conducting their affairs.  For example, some regulations may tell businesses how to value their assets when doing their accounting.  Other regulations may tell businesses how to design mechanical devices or what fuel mileage the cars they produce must get.  Still others may order them to use certain materials when making clothing or specify procedures to be followed when making food products.  Still others may tell businesses how securities are to be bought and sold.  Today there are a myriad of regulations controlling almost all aspects of commerce.

Governments justify the passage of regulations on the grounds that they are necessary to protect the “general welfare” or the “public interest” by specifying procedures that ban dangerous products and deceptive trade practices.  And to many people, this sounds credible and regulations seem like a good idea.  However, the truth is that regulations are not made by anyone who knows how to keep people safe other than by banning the initiation of physical force.  There is no special governmental “know-how” that justifies bureaucrats coercively micromanaging others’ lives, regulating businesses or making products safer or better or whatever with “governmental oversight”.  Governments, for example, do not know how to build cars or trade securities or make food or clothing or anything else better than the private sector companies who make these things know how to do them.  For this reason, regulations do not make businesses more efficient or their products safer or of better quality.  All regulations do is cause businesses to adopt inferior procedures, destroying their profitability and success at producing quality values thereby.

If regulations do not protect individual rights or make businesses’ products safer or otherwise better, then why are they passed – and why do they proliferate?  The truth is that  regulations allow governments to effectively take control of businesses, along with their revenues and productive talent thereby.  The justification for doing so is the ethics of altruism – more specifically, that private businesses do not have a moral right to exist for their own sake, by governing their own affairs and generating profits for their owners.  Instead, businessmen are morally obligated to live for the sake of, and therefore use their productive talents for the sake of, some entity other than themselves and their business entities.  The entity may be God, the state, or “society” – with, of course, the government doing the regulating as God’s, the state’s, or “society”‘s de facto spokesman.

In a capitalist society there is no justification for regulations.  If a business negligently, knowingly, intentionally or recklessly acts in a way that violates others’ rights, it should be prosecuted and held accountable; it should not be ‘regulated’.  For example, if a car company creates or markets unsafe models that cause injury or death to others or their property, such as the Ford Pinto during the 1970’s, the solution is to convict and imprison the officers and engineers who knowingly approved the dangerous design and levy heavy fines against the company; it is not to start telling all car companies how to design their gas tanks or chassis or engine blocks or whatever.  If a CEO of a major corporation directs the accountants to “cook the books” by greatly overvaluing assets and causes the company’s bankruptcy, as was done at Enron Corporation, the solution is to prosecute the CEO and the accountants for fraud; it is not to start specifying how all companies are to conduct their accounting procedures (as the American Federal Government did with the Sarbanes-Oxley Act).

As for deterring future violations of rights by others, whether they be businesses or individuals, this will be accomplished by holding the violators of rights accountable for their actions.  In this manner inferior and dangerous business practices will be abandoned, and be replaced with safer and better ones over time.

In sum, businesses (like individuals) should be held accountable for violating others’ rights – but no, they should not be ‘regulated’.


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