The Church of Regulation

It never ceases to amaze me how many Americans, even those who claim to be conservatives, are more than willing to surrender their freedoms when it comes to government regulations. There seems to be an almost religious conviction that causes otherwise intelligent people to convince themselves that government can (much less will) “protect” them from harm. Worse, these same people seem utterly oblivious to the most basic economic principle of all, that there is no free lunch.

It doesn’t matter whether it’s the minimum wage (government mandating that an employer pay more for labor than it is worth in the market) or regulating the prices of goods and services (government mandating that a business charge less than it costs to produce a product or service). No matter what, to these folks, government knows best.

Invariably, the “justification” for such damaging government interference has nothing whatsoever to do with economic realities. Instead, the cry is that some particular wage is not “fair” or that the cost of a product or service is not “affordable” (a preposterous concept – EVERYTHING is affordable to someone – Bentley and Mercedes sell every car they make…every year). But the truly frustrating aspect of such discussions is that no one wants to ask the question, what does this (regulation) cost?

Every increase in the minimum wage costs some low skilled worker his or her job. Always. And the ripple effect through the entire economic landscape is seldom immediately visible, but is cumulatively destructive. That we still have people who cannot grasp this fundamental economic reality is a testament to the inadequacy of economics education in our school system.

Government mandates to power companies to reduce coal use (the most cost-efficient electrical power on the planet) and replace it with a certain percentage of solar and/or wind power (which cannot possibly be cost-competitive) is raising the cost of energy for every home-owner and business in America. This means not only higher heating and air conditioning bills – it raises the cost of every product you buy.

Ethanol mandates have disastrously affected food prices, not just in America, but world wide. Here again, how could you not realize what forcing fuel refiners to incorporate an additive that nobody asked for (other than farmers and agribusinesses, that is) would do? By diverting so many acres of farmland to Ethanol corn, the completely predictable result has been soaring feed corn prices, as well as similar increases in things like soy beans.

And since corn is involved in so many food products, whether as feed for animals or as an actual component, the result (again, totally predictable to anyone with an ounce of economic sense) has been relentlessly rising food prices. Yet the average (read: “low information”) voter never connects the dots between liberal policies and higher food bills. They just keep voting for the same Democrats who cause the problems.

Speaking of food, let’s take something as simple as those silly labels on just about every food product, telling us the calorie, protein, carbohydrate and vitamin count for a supposedly typical (usually absurdly small) portion. The cost of the label itself is minimal – all food products have a label anyway, so adding some information to it is no big deal. But where did that information come from?

The answer is, testing. VERY expensive testing. And not just once, but on an ongoing basis (to conform to those obnoxious government “regulations”). Think for a moment about what that involves. Laboratory personnel, whether direct employees (as in some huge food processors) or independent contractors as are hired by smaller, “mom-and-pop” food producers who couldn’t possibly retain permanent staff. Once again, the enormous cost of this testing is passed on to you, the consumer.

By the way, are you really stupid enough to believe that every piece of steak you eat was actually personally inspected by some FDA worker bee? Of course not. But suggest eliminating, or at least, drastically scaling back ANY government regulatory agency, and you will get howling predictions of unsafe food (or dirty air, polluted water, and on and on). But why DO so many people accept massive government bureaucracies monitoring every aspect of their lives?

It is nothing less than the worship of government, as if an army of (usually union) bureaucrats are somehow more trustworthy than an employee of a private company. I’ve heard people actually justify their faith on the basis that “government workers don’t care about money – they only want to help people. Not like those people in private companies – they only care about profits.”

Now, aside from the fact that government workers today (both Federal and State) earn far more than their counterparts in the private sector, this view illustrates the huge disconnect some people have with economic reality. A government worker has no incentive to satisfy the customer – where else can you go? The DMV stories we’ve all heard are a perfect illustration of this principle.

Meanwhile, a private business has a vested interest in doing what is best for their customers. In the food industry particularly, selling tainted products for example, would cost them millions, not just in law suits, but in lost business. Good companies treat their customers, and by necessity their employees, well. It is good business to do so. Regulatory agencies add nothing to our safety, and are superfluous at best.

After all,  if anyone in the private sector commits fraud or any other criminal act, they can be prosecuted. If some business dumps toxic waste in our streams, they can be criminally prosecuted, or sued in civil court. If a business negligently injures workers, they can be held liable. We do not need an EPA, OSHA, FDA, or any of the other agencies on the endless list of Federal and state government bureaucracies that have grown like weeds on the landscape of our nation.

But in the Religion of Regulation, private industry is populated with nothing but evil, greedy, heartless robots, who wake up every morning wondering how they can “rip off” their customers. Sadly, TV and movies today inundate audiences with just such false stereotypes, lending legitimacy to the warped view of those “99%” and “Occupy” losers you see “protesting” the success of others.

After all, it’s easier to tell yourself that the reason you have achieved less in life than someone else is that successful people got where they are because they somehow  “took advantage” of others. Better than facing the harsh reality that they are smarter than you, more dedicated than you, more ambitious than you, more hard-working than you, and more willing to take risks than you.

And now we have Obamacare, the regulatory equivalent of Hurricane Katrina.