That truth should be silent I had almost forgot.
Antony and Cleopatra,  Act 1, Scene 2

Unsilent Truth
September 2, 2019

The laws of regulation


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LAST MONTH A SOCIALIST (of the Fabian sort, as it happens) posted a message on Facebook commenting on assertions that appeared on a website that is pleased to call itself a news site and its content news stories. The particular subject had to do with OxyContin and some legal maneuverings of Purdue Pharma.

The socialist in question wrote, "CLEARLY, the 'free market' (or even the less-than-free market we have) allows big, dangerous corporations to get away with KILLING people for years before litigation finally obtains some sort of belated redress. This is one reason why STRONG protections (i.e., REGULATIONS) are essential in some areas. Many people for some reason believe that ALL such protections are bad."

I applaud the writer for noticing that what we have in the United States is not a free market. But it appears from this and other postings of his that he has no understanding whatever of what a free market is or what it could look like. He also seems to have no familiarity with even the most elementary arguments concerning regulation, leading me to wonder what effort he has ever made to familiarize himself with the subject. In replying to him, one might begin by remarking that litigation that takes years to provide "some sort of belated redress" may very well be a consequence of such regulations as are already in place; and, it is worth remembering, such delays are a foreseeable malady in any nation in which (1) there are sufficiently many lawyers that they can form a powerful lobby to function as a barricade to tort reform, and in which (2) it is mostly lawyers who, as lobbyists, bureaucrats, and elected politicians, pass the applicable laws and regulations.

But there are principles regarding regulation which are much more important than those two, and that our Fabian should understand should he ever take it into his mind to apply himself. They are not complicated laws of economics that require years of study to master. And they are not contingent; these laws are inherent in the nature of regulation, and therefore inescapable.

(1) Regulations always increase costs. That is the point of regulation, after all. Regulation is usually intended to deter some kind of action, and you deter an action by making it costly.

Regulated bodies do their best to "pass on" the costs to others, but even if they are partly successful, they cannot be wholly successful. They must restructure themselves in some way in order to "pass on" those costs. Even if all they do is make a candy bar slightly smaller, they must retool all their equipment to resize it and to make the wrapper smaller. And they must hire someone to supervise whatever other changes may be necessary.

Moreover, no matter what they do to "pass on" the costs to others, there is no reason whatever to think that their sales will remain the same. Once any change is made to the cost of a product to the customer, there exists the certainty that sales will be affected.

(2) The regulation of one industry necessarily benefits some other industry. Thus, the anti-nuclear protests, which resulted in a halt to building nuclear reactors in the United States, served to benefit the oil, gas, and coal industries. Those suppliers of electricity benefited from constraints on a major competitor that kept it from expanding. Current left-wing sentiments against the coal industry will similarly benefit the oil and gas industries, and are intended to benefit the so-called renewable-energy suppliers.

(3) It follows from #1 that smaller, marginal companies will not be able to absorb the costs of regulation as well as larger companies are. Some of them will go out of business; some of them will be swallowed up by their larger competitors; and the few that survive will be in a weaker position when the next set of regulations is passed.

(4) And it follows from #3 that regulation favors and must always favor existing larger corporations, i.e., the companies that can afford the increased costs, including the cost of lawyers to handle whatever litigation follows.

Thus regulation weakens small businesses, where it does not destroy them, and so contributes to the rise of oligopolies, if not monopolies.

Our socialist friend, therefore, is advocating the monopolization of the economy and the dominance of the very corporations he accuses of being willing to kill people.

We can allow him the fantasy that only good people will be in regulatory positions. But nothing will prevent the consequences I just listed. Since he is a Fabian, he recognizes that changes must take place over a relatively long period of time, and during that time he and his fellows will probably find it necessary to advocate subsidies of this sort and exemptions of that sort in order to stymie the rise of the monopolistic corporations. That is, he will have to advocate favoring this one or that one to offset the consequences of the dynamic he has set in motion. And those who receive those favors will certainly be those who have succeeded in getting the regulators' attention, which is to say, those who have influence.

In other words, his system will of necessity create a basis for political corruption.

It is for such reasons (and others) that "Many people for some reason believe that ALL such protections are bad." People, that is, who are not happy about monopolies and oligopolies and influence and pull-peddling and crony corruption. People who see that in order to have a society in which you don't have such companies, you need to withdraw from such companies the cornerstone of their existence, which is to say, governmental regulation.

It may be that our socialist — unlike the people he is implicitly disparaging — is perfectly comfortable with all the developments I have outlined as necessary bumps on the road to the socialism he supports. One cannot, after all, make an omelette without raising hens. And monopoly corporatism is one of the hens one must raise in order to make the omelette of socialism. But if that is his position, he should probably stop complaining about the behavior of corporate-state businesses, which, after all, are only doing what he needs them to do in order to achieve the ends he supports. Ω

September 2, 2019

To the editor ...

When I spoke to one of my doctors a couple of months ago about opioid-based medications, he lamented the legal inability of physicians to prescribe certain medications as they once could. As a chronic kidney-stone producer, I've ingested a fair amount of oxycodone over my extensive lifetime without accumulating any significant side effects or any addictive qualities ... much like the majority of medically prescribed opiate patients. And here is where my doctor's real concern chimed in: "What am I going to do for those people whose chronic pain doesn't respond to anything else? You know what's going to happen? I'm going to see an increase in suicides."

Maybe they can regulate a reduction of suicides while they're at it.

I hate government with every cell in my body.

Peter Kozma
Fort Myers, Fla.
September 3, 2019

Published in 2019 by WTM Enterprises.

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