Tag Archives: regulation

Struggling Against Impotence

A friend of mine who lives in Wisconsin sent me a link to a story in his local paper, reporting on a study about hormone levels in the waterways. 

“All over the country, chemicals known to disrupt or act like hormones seem to have permeated the waters and may be harming wildlife — or people.

‘The more you know, the more scared you are,’ said Kimberlee Wright, executive director of the Wisconsin-based nonprofit law center Midwest Environmental Advocates.”

Just one more example of our human interdependence and individual powerlessness–an example to join with random terrorist attacks like the most recent example from Boston, industrial accidents like the one that leveled much of a small Texas town last week, the periodic outbreaks of e coli caused by contaminated foodstuffs….the list goes on.

In a country and culture that has always emphasized individual responsibility and self-determination, the increasing evidence of our individual impotence is particularly disorienting and destabilizing. We are forcibly reminded that we have few alternative to collective measures–government measures–to protect us. We have to trust that those we entrust with responsibility for public health and safety are doing their jobs properly–that police and OSHA investigators and FDA inspectors are well-trained and honest, and that there are enough of them.  In our complex modern world, the only alternative to that trust is withdrawal from the human “grid”–retreat into the woods somewhere, and a life without modern amenities.

No one likes feeling impotent. I have a hunch that much of the “crazy” we see around us–the anti-government “patriots,” the conspiracy theory wackos, the stereotypical angry old white guys–is a response to those feelings of impotence. The notion that we actually have to rely upon our common institutions, the constant reminders that our common lives are complicated and interwoven, and that we require a social infrastructure upon which to “stand on our own two feet” is particularly galling to people who grew up in a less interdependent time. It’s one more element of the dizzying change that confuses and infuriates them.

The reality is, in today’s world, we can’t afford to make government small enough to drown in a bathtub. As unwelcome as that truth is, we need agencies with the authority to require safe factories, to prevent harmful discharges in our waterways, to ensure the food at the supermarket is uncontaminated…Instead of starving government, we need to make sure that it is doing what it is supposed to do–and only those things–and doing them well.



Live and Let Live in a Connected World

Watching the Indiana legislature is sort of like driving past a big wreck….hard not to slow down and stare, even when you know you should look away. The debate over a measure intended to close down “clinics” (aka Planned Parenthood) by requiring them to build mini-hospitals and force patients to undergo two trans-vaginal ultrasounds got me thinking more generally about the nature of law in our contemporary society.

I often tell students that the underlying premise of the Bill of Rights is “live and let live.” There was a libertarian philosophy that heavily influenced our approach to government, a respect for the individual right to personal autonomy, best summed up as: people have a right to live their lives as they see fit, so long as they don’t harm the person or property of a non-consenting other, and so long as they are willing to extend an equal right to self-determination to others.

The seeming simplicity of that construct belies the difficulty Americans have had in applying it. The confounding issue is the nature of harm (and sometimes, as in the so-called “abortion wars,” the definition of “person”).

Smoking is a good example. If you are an adult, the government has no business interfering with your choice to engage in a bad habit. When it became known that passive smoke is harmful, however, the government was justified in stepping in with regulations intended to protect non-smokers from the effects of your bad habit. Seat belts are a more dicey proposition; there is an argument that drivers who fail to buckle up sustain more injuries in accidents, thus driving up the insurance premiums for everyone else, but that’s a pretty speculative harm on which to base a fairly substantial intrusion.

The problem is, as a society, we are becoming more and more connected. Increasingly, the actions of one person affect many others, and if those actions threaten some sort of harm, we look to government to intervene. Worse, the Puritans who have always been a part of American culture remain with us, insistent scolds who want government-as-moral-nanny-state, government that both protects us from ourselves and prevents us from sinning (as they define sin).

We may never agree on where to draw the line. Government surely has the right to tell us we can’t rob the local liquor store, and it just as surely has no right to insist that we eat our broccoli, but between those poles lies great conflict.

We need to become much more thoughtful about the nature of the harms that justify government interventions in our lives. I understand the ongoing debates about abortion–those debates spring from very different beliefs about “personhood.” Seat belts, not so much.


The Frame Game

It’s a new year, and with it has come a whole new crop of state and local elected officials. It’s early, but the signs are not auspicious.

One of the first official pronouncements from Indiana’s newly inaugurated Governor was a solemnly-delivered promise to stop regulating—to cease issuing administrative rules except when “absolutely necessary.” Cynics noted that the language of the executive order pretty much anticipated business as usual, but they missed the point of the exercise, which was to confirm the new Governor’s conservative, small-government “bona fides.”  And what better way to accomplish that than by demonstrating his profound misunderstanding of his own job responsibilities and the role of the state in the operation of the market?

What is the proper role of government in a capitalist system? It is to act as “umpire” or referee, ensuring that everyone plays by the rules. Wasn’t it Teddy Roosevelt who reminded us that monopolies distort markets? If one company can dominate a market, that company can dictate prices and other terms with the result that free-market transactions—defined as exchanges between a willing buyer and a willing seller both of whom possess the necessary relevant information—will no longer be a genuinely voluntary transaction.

If Manufacturer A can avoid the cost of disposing of the waste produced by his factory by dumping it into the nearest river, he will be able to compete unfairly with Manufacturer B, who is following the rules governing proper waste disposal.

If Chicken Farmer A is able to control his costs and gain market share by failing to keep his coops clean and his chickens free of disease, unwary consumers will become ill.

Most economists agree that in order for markets to operate properly, government must act as an “umpire” in such situations, assuring a level playing field.  They use the term “market failure” to describe  three situations in which Adam Smith’s “invisible hand” doesn’t work: when monopolies or corrupt practices replace competition; when so-called “externalities” like pollution harm people who aren’t party to the transaction (who are neither buyer nor seller); and when there are “information asymmetries,” that is, when buyers don’t have access to information they need to bargain in their own interest.

Policymakers and economists may disagree about the need for particular regulations, or the optimum number of regulations, or the relative costs and benefits of suggested regulations, but most do agree that capitalism requires appropriate regulation. Unregulated markets can lead to a very different system, a system about which I have previously blogged, called corporatism. In corporatist systems, government regulations favoring powerful corporate interests are the result of lobbying by corporate and monied special interests that stand to benefit from them. You might think of it as a football game where one side has paid the umpire to make calls favorable to that team.

The rhetorical framework employed by Governor Pence, where the forces of Leviathan–defined as the government in which he serves–are in opposition to the creative energy of the market, has been a staple of American politics for at least three decades. Unfortunately, it’s an incomplete and misleading framework, and its continued use undermines both the government’s ability to do its job and, ironically, citizens’ ability to impose appropriate limits on government authority.

American politics has devolved into an exchange of bumper-sticker slogans and labels barely masquerading as discussion. Terms like capitalist, fascist, socialist and communist are used as epithets by people who rather clearly have no real acquaintance with the elements of those economic philosophies. The result is a discourse that has more in common with a mud fight than a debate, a faux “conversation” where everyone is talking nonsense, but it really doesn’t matter because no one is listening anyway.

Those of us who teach public administration talk a lot about transparency. An essential element of that transparency is a “back to basics” honest discussion about the role of government. Americans may be talking a lot, but we are not having that discussion.

It’s seductively easy to blame “Washington” or “government” or “the Statehouse” for doing too much or not doing enough or doing the wrong things. It’s a lot more difficult to have an adult discussion with one’s constituents about the complexities and ambiguities of decision-making in the administrative state. I get that: no one was ever elected using a campaign slogan proclaiming “On the one hand…but on the other hand..” (I know. I once tried.)

Until we elect people who are willing to have that honest discussion, however, we will continue to see officeholders—many of whom have spent their entire lives in government—rhetorically biting the hand that feeds them, and continuing to undermine the enterprise they claim to serve by mischaracterizing the questions we face.

Government officials do not face a choice between regulation and the free market. They face a much more difficult question: which regulations will protect the operation of the market and ensure a level playing field? How much is enough, and how much is too much? What are the costs and what are the benefits? Who will bear those costs?

Elected officials who don’t understand that this is the question aren’t likely to endorse sensible answers.


It All Depends on What Your Definition of “Job” is….

I’m getting tired of politicians piously declaiming that “government can’t create jobs.” (That statement is generally followed by that candidate’s jobs plan. Irony, anyone?)

The truth is that even if you reject the notion that public policy can create an atmosphere that facilitates job creation, government is a huge employer. Almost one of every five American workers is employed in the public sector – working in our schools, colleges, universities, police and fire departments, and providing many other vital public services. One of the biggest drags on employment since the start of the Great Recession–one of the reasons that job creation has not been more robust–is that state and local governments have laid off so many of those public sector workers. Such job growth as has occurred has been almost entirely in the private sector .

Those public sector jobs (we used to call them “public service” jobs) have become a handy target for ideologues who rant about bloated government and overpaid public sector workers, but the inconvenient truth is that modern society requires educators and police officers and people who work at the BMV. When their ranks get too thin, we complain about government inefficiency, or insufficient public safety, or classrooms that are too large.

A modern, complex society requires an agency that monitors the environment, that oversees food and drug quality (more meningitis, anyone?) and performs numerous other tasks that individuals in urban environments cannot do individually. Unfortunately, we still need soldiers. All these people may be bloated bureaucrats in the public imagination, but when that schoolteacher or firefighter is furloughed, we are suddenly faced with reality.

Of course, even the politicians who are fond of declaiming that government can’t create jobs betray their hypocrisy by accusing “big government” of killing jobs with taxes and regulation. Their claim–implicit and explicit–is that lower taxes and less regulation will foster job growth. But when tax cuts imperil our ability to provide essential services, jobs go elsewhere. When we go too far with deregulation, we get more instances like the recent deaths from meningitis.

I know it isn’t as satisfying as making sweeping proclamations about the evils of government and the glories of the private sector, but we need to admit that modern life is complicated. We need the right levels of taxes, the proper regulation. Those things need to be carefully calibrated to achieve our goals, not subjected to simple-minded “either-or” formulations.

And we need to laugh out loud the next time a political figure says that government doesn’t create jobs.

You’ll Never Get Your Hair Cut in this Town Again

Recently, a colleague of mine was asked to research the impact of professional licensing laws and to report her findings to a legislative study committee. Licensing laws have steadily proliferated—in1970, about 10% of the American workforce required a license of some sort in order to earn a living; by 2000, that percentage had doubled to 20%. It is now estimated to be around 29%.

Lest we think of these requirements as evidence of “big brother” or the much-deplored (and largely fanciful) triumph of an insatiable governmental regulatory fervor, most of these rules are the result of lobbying efforts by the occupational groups being regulated. The result is that Indiana—like many states—requires that workers be licensed before they can shampoo or braid your hair, hypnotize you, or decorate your family room.

Licensing laws are justified by concerns for public safety. We license doctors because most patients lack the knowledge to spot charlatans, and the consequences of what academics call “information asymmetry” can be fatal. We license architects and engineers because building collapses are similarly consequential. This justification seems weaker when we get to shampoo girls and interior decorators.

There is statistical evidence that licensing acts as a barrier to entry into a profession, and also as a barrier to labor mobility (since states have different requirements, licenses are considerably less portable than one might imagine). There is also clear evidence that licensing raises consumer prices—depending upon the profession, those increases range from 4-35%.

The study committee was weighing these benefits and burdens, and considering whether other means of protecting consumers in lower-risk situations might be more cost-effective. Certification, for example, might offer a middle ground. Physicians with specialties use this approach—they have numerous board certifications that are administered by professional organizations. Government isn’t involved, and taxpayers don’t pay the administrative costs, but consumers have the benefit of information about that particular doctor’s training and expertise.

Enter political reality.

Facebook postings warned of disease spread by unclean cosmetic instruments. Tweets went out to rally those in the affected occupations. On the day of the hearing, swarms of scissors-wielding hairdressers (and for all I know, livid interior designers and angry hypnotists) descended on the Indiana Statehouse. My colleague, somewhat shell-shocked, reported that those whose scissors were confiscated by security were furious—evidently it hadn’t occurred to them that weapons couldn’t be taken into the Statehouse. She may have to leave town to get her hair cut after this, and she wasn’t even there to advocate de-regulation; she was just reporting what the relevant research showed.

I am not a betting woman, but I’d give odds against any change in the status quo. As any political scientist can confirm, it is easier to stop change than to effect it.

There are a couple of lessons here, for those interested in reality, rather than the ideologies of Right or Left.

The Right needs to admit that government regulations are just as likely to be a product of the economic self-interest of the regulated industry as the expression of authoritarian impulses. At the state level, much of the drumbeat for licensure reflects the (understandable) belief that one’s occupation should be elevated to the status of a profession; much more comes from a less noble desire to restrict entry and increase profits.

The lesson for the Left is that regulations do, in fact, increase costs, and that they are not always the best way to achieve public goods. The perceived benefits in public safety must be weighed against those costs.

The lesson for my colleague is to avoid angry hairdressers brandishing scissors.