Saturday, January 31, 2009


A Disagreement on the Efficacy of Government Regulation

Over at Env-Econ, some of the commenters were taking pot shots at the free market in the wake of the salmonella outbreak from the Georgia peanut butter plant. (Incidentally that is a factory I'm talking about, not a photosynthetic organism that secretes peanut butter.) I said:

Ah yes, I think we had this same argument with the tomatoes.

I oppose government regulations because (a) they waste taxpayer money and (b) don't keep us safe. In fact they give a false sense of security and crowd out private certification mechanisms because people assume "the government is taking care of this."

How can we distinguish my theory from your guys'? What happened here perfectly fits my worldview.

In contrast, your worldview would be better supported if we had no government regulation of food safety and then somebody got sick from tainted food.

I'll try it a different way: Suppose for the sake of argument that I'm right. What better evidence could I find, to document I'm right, than to show that businesses (or Bernie Madoff) get away with ridiculous things even amidst the allegedly vital government regulation?

My favorite response:


Have you ever thought to back test your theory by looking back on history before we had all this pesky regulation? Did you know there was a time when it didn't exist? Are you aware that virtually all of it was AS A RESULT of far worse abuses of the public trust than this peanut fiasco? Your absurd assertion that regulation does not protect us can only be supported by willful ignorance of history. It is factually untrue and that's not a matter of opinion. Homework assignment #1 read Updike's "The Jungle".

If I felt like it I could list literally hundreds of cases of regulation dramatically reducing public harm and with a little more work I could support ever assertion with statistics to prove it. Consider just the example of Airline safety. Look at the deaths per passenger mile flown, and try to explain that dramatic fall with anything other than FAA regulation and enforcement.

Tell whomever that John Updike did not write "The Jungle."

Upton Sinclair wrote "The Jungle," and he was a muckraking socialist.
This isn't the first time that I've seen someone cite The Jungle as evidence for some historical problem. Do they realize that it's actually a work of fiction?

Also, when I read The Jungle it did not challenge my worldview at all; I saw government corruption as the ultimate problem afflicting the protagonist.
One of the best responses to The Jungle-thesis-of-regulation is from Gary Libecap:

The rise of the Chicago packers and the origins of meat inspection and antitrust

To wit, The Jungle was written in 1906. How can it explain the Meat Inspection Act of 1891? It can't. So, we need another explanation, which is found in the article (preview: it's rent seeking and regulatory capture).
Yeah, man, don't you just hate when someone's entire response is it give you a reading assignment that you've already read and assimilated, thinking that you haven't? I'm glad you'd never resort to doing that, Bob.
Silas, I didn't tell you to read Ronald McDonald's theorem on externalities, did I? And I didn't literally state the post hoc ergo puke fallacy, did I?

That's why I was amused.

And folks, I appreciate the suggestions, but you're dealing with a professional here. (Well, actually no one pays me to argue with those guys.) If you click on the link you can see how the debate unfolded.

"Your guys'"

...and you complain about grammar? How is this remotely correct? I know that the traditional "your" is numerically ambiguous, so clearly you need to embrace the southern contraction of "y'all's" :)
I agree, Bob; there's lots of people who just don't understand markets and how government is often the enemy of consumers and in the pocket of big firms.
Bob_Murphy: Sure, you got the name of the paper's author correct. However, you turned out to misunderstand what my position actually was, despite my having stated it several times, thus revealing that you were responding almost completely out of ignorance and therefore wasting your time and mine.

That's supposed to be better somehow?
Bob, since you're not getting paid by the Mises Institute to smack down people on blogs, you should probably just direct your rabid hordes of readers to do the job for you (to save time).

For instance, I left the following comment at the link you provided:

"It's funny how people call libertarians ideologues. Sure, we have an ideology. But don't for a second pretend that you don't.

We get ideological in favour of small government. Whereas everyone else gets ideological in favour of massive, out of control Leviathan taking people's money.

There are only two choices here: the way of the market, or the way of the corrupt politicians and bureaucrats. Clearly, you guys prefer getting screwed over by politicians and bureaucrats."
you should probably just direct your rabid hordes of readers to do the job for you (to save time).

Pick me, pick me - I wanna be one of Murphy's Minions too!
How planes got safer?

Besides, planes not crashing are cheaper than planes crashing.

I'm always baffled by how stupid the arguments of statist ideologists can become.

Something else: if the worst case of no government is Somalia, and the worst case of government is Stalin's USSR... i wonder what somebody would pick.
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