Tag: regulation

Leviathan Unchained

Harold Meyerson, writing in The American Prospect argues that Americans are “hypocrites” because we dislike regulations in general, but like specific regulations:

Last Thursday, the Pew Research Center for the People and the Press released a survey that revealed what Pew termed “Mixed Views of Government Regulation.” But “mixed,” in this case, means anti-regulatory in matters of ideology and pro-regulatory in practice. Asked whether they believed that government regulation of business was necessary to protect the public or that such regulation usually does more harm than good, just 40 percent answered that regulation was necessary, while 52 percent said it did more harm than good.

But then came the specifics. Pew asked whether federal regulations should be strengthened, kept as is, or reduced in particular areas. When it came to food production and packaging, 53 percent said strengthen, 36 percent said keep as is, and just 7 percent said reduce. In environmental safeguards, the breakdown was 50 percent strengthen, 36 percent keep as is, 17 percent reduce. In car safety and efficiency, the split was 45, 42, and 9 percent. In workplace safety and health, it was 41, 45, and 10 percent. And with prescription drugs, it was 39, 33, and 20 percent.

This is hardly a new discovery—public opinion polls have shown similar results for decades. In general, Americans dislike government regulations, but they want stronger regulations in specific areas.

The Overreaches of the Regulatory State

Meyerson thinks that this is hypocrisy and that Americans are “in denial.” Meyerson misses the point:
when Americans are directly effected by regulations, they oppose them. But it’s easy for Americans to want those “other guys” to be regulated. And in fact, the numbers are not that heavily weighted towards more regulation. A plurality thinks that there’s too much regulation, a slightly larger plurality thinks that there are two little. A smaller plurality thinks that the amount of regulations are fine the way they are. Together, the number of people who want fewer regulations or the status quo outnumber those who want to expand the regulatory state.

And as the regulatory state grows and the state and federal level, we will likely see the number of people wanting to roll back government regulation rise. Take these examples:

A preschooler at West Hoke Elementary School ate three chicken nuggets for lunch Jan. 30 because the school told her the lunch her mother packed was not nutritious.

The girl’s turkey and cheese sandwich, banana, potato chips, and apple juice did not meet U.S. Department of Agriculture guidelines, according to the interpretation of the person who was inspecting all lunch boxes in the More at Four classroom that day.

The Division of Child Development and Early Education at the Department of Health and Human Services requires all lunches served in pre-kindergarten programs — including in-home day care centers — to meet USDA guidelines. That means lunches must consist of one serving of meat, one serving of milk, one serving of grain, and two servings of fruit or vegetables, even if the lunches are brought from home.

When home-packed lunches do not include all of the required items, child care providers must supplement them with the missing ones.

Imagine what will happen when something like that becomes commonplace. It’s one thing for a government regulator to go after “big corporations” with stupid and destructive regulations. But the second those stupid and destructive regulations effect the average American, it will be time to break out the tar and feathers.

And the school-lunch police aren’t the only example of regulatory insanity going on in America today.As one Nevada farmer found out, the regulatory state doesn’t give a damn about common sense or your rights:

I can’t tell you how sick to my stomach I was watching that first dish of Mint Lamb Meatballs hit the bottom of the unsanitized trash can. Here we were with guests who had paid in advance and had come from long distances away anticipating a wonderful dining experience, waiting for dinner while we were behind the kitchen curtain throwing it away! I know of the hours and labor that went into the preparation of that food. We asked the inspector if we could save the food for a private family event that we were having the next day. (A personal family choice to use our own food.) We were denied and she was insulted that we would even consider endangering our families health. I assured her that I had complete faith and trust in Giovanni our chef and the food that was prepared, (obviously, or I wouldn’t be wanting to serve it to our guests).

I then asked if we couldn’t feed the food to our “public guests” or even to our private family, then at least let us feed it to our pigs. (I think it should be a criminal action to waste any resource of the land. Being dedicated to our organic farm, we are forever looking for good inputs into our compost and soil and good food that can be fed to our animals. The animals and compost pile always get our left over garden surplus and food. We truly are trying to be as sustainable as possible.) Again, a call to Susan and another negative response. Okay, so let me get this right. So the food that was raised here on our farm and selected and gathered from familiar local sources, cooked and prepared with skill and love was even unfit to feed to my pigs!?! Who gave them the right to tell me what I feed my animals? Not only were we denied the use of the food for any purpose, to ensure that it truly was unfit for feed of any kind we were again threatened with police action if we did not only throw the food in the trash, but then to add insult to injury, we were ordered to pour bleach on it.

There was nothing wrong with the food, other than it didn’t meet the purely bureaucratic whims of the health inspector. And this wasn’t one deranged idiot going off on a whim: the state health inspector was constantly on the phone with her superior, who not only ratified each decision, but was apparently calling the shots.

This is the face of government regulation in America: it’s not about protecting people, it’s about power and control. Was the state protecting that elementary school student from anything? No, the options she was later given were worse than what her parents had packed. Was there any danger to the guests of that Nevada farmer? No, but because the government doesn’t want any deviation from their narrow rules, they acted like tinpot dictators and made the farmers throw away the food and pour bleach on it.

In a sane world, the people responsible for those decisions would be fired immediately. But this is not a sane world. It’s a world where too much power has been abdicated, too much common sense abandoned, and too much authority ceded ever upwards. And that is why Americans hate regulation—and as more Americans experience this kind of rampant idiocy, the number of Americans who see the regulatory state as the enemy will only increase.

And when Americans say that there are too many regulations on small business, they are absolutely right. Take for example what happened to a small business trying to operate a beer garden in Arlington, Virginia. Government bureaucrats at the local level are ofter just as rapacious and just as foolhardy as their compatriots on the state and federal level. For another example, watch this video outlining the many needless hurdles a small business owner has to go through to open an ice cream parlor in San Francisco.

We talk about how important it is to foster the growth of small businesses and how critical it is to get Americans working again. But as the above examples demonstrate, our system of massive government overregulation costs jobs and takes thousands of dollars out of the economy and into the hands of the government apparatchiks who administer this maddening system.

So yes, it’s easy for the average American to say that someone else should be regulated—given that the media has turned big corporations into mustache-twirling villains at every opportunity it’s no wonder that a plurality support more regulation. But when Americans look at the issue of regulation holistically, they see the reality that regulations hurt more people than they protect.

Meyerson thinks that the problem with America is that government isn’t powerful enough. But a government powerful enough to make BP, GE, or any other company do whatever government wants is a government that is powerful enough to make you do whatever government wants. And that doesn’t even get into a discussion of regulatory capture. Big business doesn’t hate government regulation—they’ve learned to use it as a cudgel to beat down competition before they can rise up to challenge the established players. That beer garden in Virginia can’t afford an army of lawyers and lobbyists to negotiate with the regulators—but a chain restaurant can. What is the result of this nonsensical regulatory overreach? Fewer small business and more powerful big ones.

American’s aren’t hypocrits—at least not in the way Meyerson accuses them of being. Rather, Americans need to understand that the same sort of regulatory insanity that causes schoolchildren to be given chicken nuggets or farmers to have to throw away perfectly good food is no less idiotic and no less harmful when it’s applied to big corporations.

Why Small Government Is Better For The Little Guy

Hardvard economist Edward L. Glaeser has a fascinating and provocative piece on what he calls “small government egalitarianism”:

In the 20th century, President Woodrow Wilson campaigned on a “New Freedom,” opposing Teddy Roosevelt’s big-government Progressivism. While Roosevelt wanted the government to manage monopolies, Wilson wanted trust-busting and less protectionism. Wilson perceptively noted the dangers of too much government: “If the government is to tell big business men how to run their business, then don’t you see that big business men have to get closer to the government even than they are now?”

Wilson’s warning could not be more prescient. Look at the “stimulus” bill snaking its way through Congress. It is positively loaded with pork for special interests, handout for big donors, and only a fraction of it will go to the sort of crucial infrastructure projects that were supposed to be its very purpose. The “stimulus” bill could not be a better example of why Big Government hurts the poor. Even setting aside the issue of whether government spending creates jobs at all, this bill certainly won’t put enough people to work to make even a dent in the skyrocketing unemployment lines. Instead, billions of dollars will go to the politically well-connected and unscrupulous. The difference between Bill Blogojevich and most of Congress is that Blagojevich got caught.

Small government is good government. Small government helps the American worker because it does not allow the kind of concentrations of power that we have now. Why do big corporations spend billions on lobbying Congress to tilt the law in their favor? Because Congress has the power to tilt the laws in their favors. The reason why the Founders deliberately created a limited government of enumerated powers is to prevent the kind of naked interest-buying that we see now. The more power you give the government, the more incentives there are for government to use their power for their own advantage.

With Congress’ approval at a historic low, the idea that the case for small government is no longer worth making seems absurd. If anything, now is the best time to push a vision for a government that is smaller, more responsible, and more accountable. That such a government would ultimately be more equitable is a beneficial side-effect.

Politically, the Republicans should be doing what Sen. McCain threatened to do and “make famous” every single pork-barrel project in the “stimulus” bill. The message here is simple: tens of thousands of Americans are losing their jobs every day and Congress is paying off its campaign contributors with pork. Americans should be disgusted by the performance of Congress right now. The myth that this trillion-dollar boondoggle is anything but a case of Congress acting like robber barons of old should be laid to rest. Congress wants to claim that they’re “creating jobs”, but instead they’re giving more and more cash to the same politically well-connected actors.

This is precisely why small government is so crucial to having a more equitable society. If Congress were only allowed to spend money on truly national projects there would be no ability to send pork to campaign contributors. Big Government does not produce an more equitable society, it rewards those who side with the politically powerful. Small government benefits the people because it doesn’t allow Congress to game the system to benefit their own interests.

Take a simple but common example. When new regulations come down from all the federal agencies, have John and Jane Doe on Main Street had any opportunity to shape that new rule? Of course not, even if they compulsively wade through each daily edition of the massive Federal Register to see what rules are being proposed the most they can realistically do is send a strongly worded letter. Can Washington interest groups shape that rule? They pay lobbyists great amounts of money to do exactly that. Can business interests shape that rule? Absolutely, and they have their own army of lobbyists for just that purpose. So is it any shock that John and Jane Doe are under-represented in the process?

It’s a myth that “big business” and powerful special interests love small government and hate regulation. Why should they? They have the clout in Congress to make sure that the regulation benefits them. They can use their political connections to steer millions of taxpayer dollars to them. They can benefit from the access they have to Congress and even the White House. They know that P.J. O’Rourke’s great maxim is correct: “when buying and selling is legislated, then the first thing to be bought and sold are legislators.” The bigger and more intrusive government is, the higher the barriers to new competitors. Look at the most heavily-regulated markets in this country: they tend to be dominated by a handful of large players who can use their access to lobby government to keep those regulations in place. They benefit the most from the regulatory state, and they have every interest in seeing Big Government stay big.

If you’re a little player, like a “Mom and Pop” operation, forget it. The costs of regulatory compliance are too high. If you can’t afford the lobbyists, you can’t play the game, and you get squashed.

That is why we need smaller, less intrusive, and more accountable government. We need to reduce the incentives for the big players to game the system and increase the chances for small players to enter the market. That way the benefits go to the best and the brightest, not the most politically well-connected.

Here is where liberalism fundamentally gets it wrong: government regulation of the market will never produce equality. It will only benefit the big players. If we want a more egalitarian and equitable society we cannot put in place barriers that keep the small players out. Glaeser is right, and the case for small-government egalitarianism is one that needs to be made now more than ever.

More On Why Regulation Reduces Competitiveness

Glenn Reynolds republishes an interesting email on how Sarbanes-Oxley compliance impacts technical workers:

It got much worse after Sarbanes-Oxley. Suddenly we revamped all our processes to include “separation of duties” and other constraints ostensibly to prevent the merest possibility of fraud. But not really of course: really to provide ass-coverage at every level. But this applies as well in all sorts of situations where fraud is not an issue, like developers testing their code. The effect where I work has been disastrous.

People respond to incentives, and incentives were distorted at every level by SOX requirements.

That’s precisely the problem. Sarbanes-Oxley was the financial equivalent of the PATRIOT Act—a piece of federal legislation rushed through in the face of a crisis that gave broad powers to federal agencies with little oversight so that Congress could say that they “did something.” Even while both were reactions to legitimate crises, their effects have far-reaching well beyond their original purposes. SOX has added millions of compliance costs to all sorts of businesses, and it’s small- to medium-sized businesses that bear the brunt of this. IBM can pay millions for regulatory compliance. Joe’s Computer Equipment cannot.

Congress needs to consider the economic effects of legislation like SOX first. The problem is that nobody actually reads these bills, and even if they did they don’t have the analytic will to understand them. Congresspeople, being politicians, tend to react to emotional stories rather than hard data. Congressional staffers tend to do the same. It’s hard to concern yourself about future competitiveness when you have to deal with constituents who lost all their money to Enron.

The sad part of all this is that things have to get markedly worse before they’re at all likely to get better. Congress will only react when there’s a crisis. A political Machiavellian would try to manufacture one, but even when there’s a real crisis on the horizon, Congress doesn’t react unless it’s imminent. (Think Social Security.) Things won’t get better until Asia starts eating America’s lunch. Even worse is that the day in which that starts happening may be within our lifetimes.