One man's thoughts on Regulation
June 8th 2010 02:16
Do we really solve the problems of humanity by giving one small group of imperfect humans (i.e. politicians) vast control over the rest of us? And here's my reasoning - If a business does something I don't like (BP Oil Spill), then I can quit buying that company's product and show it that I don't like the way it does business. But, if the government does something that I don't like, what recourse do I have? If I quit paying my taxes, they send a taxman to my door, and ultimately a policeman with a gun to take my money by force. So you're probably asking what my solution is, and it's got two very simple parts.
First, we remove/repeal all the limits that the politicians have so graciously put in place to protect their campaign contributors in all the various realms of business. This government supplied protection must end. The people must be allowed to make the companies pay dearly for mistakes, otherwise we will be at their mercy (Like we are right now).
Second, we let the marketplace dictate which businesses survive. The consumers will not do business with companies that do bad things. Whether they are harming the environment or making things that turn out to harm us, the consumers have historically punished businesses that they don't like. This form of regulation is well expressed as 'The customer knows best'.
So, by now most of you are rolling your eyes and making that sound with your tongue. But hear me out. This form of regulation causes lenders and potential investors to protect themselves from retaliation of angry consumers. Sometimes it is regulated by direct oversight, or they require the business to purchase insurance. This, in turn, leads to regulation by insurance companies who have their own money at stake and thus are motivated to properly regulate the companies they cover.
A good example of this is the product testing company Underwriters Laboratories. Insurance companies will only insurance products that test safe through them.
Now, I am not saying that we should be completely free of regulation. A totally free market economy would actually have multiple levels of regulation. It would be impossible to have a regulation free society, if only because consumers, lenders, investors and insurance companies would always take to control what businesses do, even if the Government does nothing.
At this point you need to answer a few questions -
1) Does the state have a role to play, beyond providing a court system for determining legal liability when there is evidence that a product or service causes harm?
2) Do we really need politicians and bureaucrats to craft regulations that prejudge whether a product or service is potentially harmful, and that dictate how this risk must be mitigated?
However, before you can answer these questions, you need to really look at your own fundamental beliefs with these tough questions -
1) Will the politicians and bureaucrats who devise these regulations be liable for the mistakes they make, in the same way that businesses are held liable by consumers, investors, lenders, insurance companies, and courts of law?
2) Can you fire politicians and bureaucrats who regulate incompetently?
3) Will politicians and bureaucrats have to personally pay the cost of any harm they cause, the way businesses must?
4) What do you do if politicians and bureaucrats abuse their power of regulation in order to reward friends and punish enemies? And not just one, but an entire majority of them!
5) What recourse do you have if politicians and bureaucrats use their vast power and resources to serve their own selfish interests?
To me the scariest one is the last one, because there are so many examples of it already happening, like the cap on Oil Spill damages that congress passed so many years ago. The government has tens of thousands of business regulations on the books and yet we still have economic meltdowns and environmental catastrophes year after year, all caused because the regulations favored one company over another, or one investment over another or something else over yet another.
To me, the government has shown themselves to be incompetent at regulation and it's time to try something new.
It all comes back to my original question at the beginning.
Do we really solve the problems of humanity by giving one small group of imperfect humans (i.e. politicians) vast control over the rest of us?
I say NO!
Second, we let the marketplace dictate which businesses survive. The consumers will not do business with companies that do bad things. Whether they are harming the environment or making things that turn out to harm us, the consumers have historically punished businesses that they don't like. This form of regulation is well expressed as 'The customer knows best'.
So, by now most of you are rolling your eyes and making that sound with your tongue. But hear me out. This form of regulation causes lenders and potential investors to protect themselves from retaliation of angry consumers. Sometimes it is regulated by direct oversight, or they require the business to purchase insurance. This, in turn, leads to regulation by insurance companies who have their own money at stake and thus are motivated to properly regulate the companies they cover.
Now, I am not saying that we should be completely free of regulation. A totally free market economy would actually have multiple levels of regulation. It would be impossible to have a regulation free society, if only because consumers, lenders, investors and insurance companies would always take to control what businesses do, even if the Government does nothing.
At this point you need to answer a few questions -
1) Does the state have a role to play, beyond providing a court system for determining legal liability when there is evidence that a product or service causes harm?
2) Do we really need politicians and bureaucrats to craft regulations that prejudge whether a product or service is potentially harmful, and that dictate how this risk must be mitigated?
However, before you can answer these questions, you need to really look at your own fundamental beliefs with these tough questions -
1) Will the politicians and bureaucrats who devise these regulations be liable for the mistakes they make, in the same way that businesses are held liable by consumers, investors, lenders, insurance companies, and courts of law?
2) Can you fire politicians and bureaucrats who regulate incompetently?
3) Will politicians and bureaucrats have to personally pay the cost of any harm they cause, the way businesses must?
4) What do you do if politicians and bureaucrats abuse their power of regulation in order to reward friends and punish enemies? And not just one, but an entire majority of them!
5) What recourse do you have if politicians and bureaucrats use their vast power and resources to serve their own selfish interests?
To me the scariest one is the last one, because there are so many examples of it already happening, like the cap on Oil Spill damages that congress passed so many years ago. The government has tens of thousands of business regulations on the books and yet we still have economic meltdowns and environmental catastrophes year after year, all caused because the regulations favored one company over another, or one investment over another or something else over yet another.
To me, the government has shown themselves to be incompetent at regulation and it's time to try something new.
It all comes back to my original question at the beginning.
Do we really solve the problems of humanity by giving one small group of imperfect humans (i.e. politicians) vast control over the rest of us?
I say NO!
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