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The Two Faces of Regulation

Posted by MacZad
Jul 18 2012

Government regulation actually has two faces though only one of them gets hyped.

Big corporations cry that there's too much regulation, "Just free us from regulation and we'll create jobs," they say, which is bunk as job creation is not their forte. The regulations that they're referring to are those government rules that protect the health, environment, workers and public. What they are seeking is the shifting of costs from them to the public and taxpayers. However, it turns out that some of the regulations that they object to can actually save them money .

How about the other face of regulation, those rules that business doesn't talk about? Business really like the rules that the government promulgates at the behest of industry associations. While there are legitimate reasons for many of these, others simply limit competition by restricting entry into certain businesses or require citizens to purchase products or services that are of little or no benefit to them or society - only businesses benefit. Here are two fresh examples:

  1. To comply with federal and state regulations residents with irrigation water meters in my town of 140,000 are required to have backflow devices (estimated installed cost - $200) and now to have them inspected annually at a cost of about $50. However, According to Causes of Outbreaks Associated with Drinking Water in the United States from 1971 to 2006 only one hundred and six people in the US died from all drinking water illnesses during that 35 year period or about 3 deaths per year. When the data in the report is further analyzed for deaths possibly related to backflow devices it turns out that these devices and inspections thereof will, at best, save one life in the town about every 8800 years. Don't you suspect that the Water and Wastewater Equipment Manufacturers Association and the American Backflow Prevention Association were instrumental in getting these regulations codified?

  2. In North Carolina there was recently a legislative proposal to eliminate the requirement for motor vehicles less than 3 years old to undergo an annual safety inspection at a cost of $13.60 (or $30 if the emissions test is required). While it was clear to almost everyone that the inspection of new vehicles was unnecessary the owners of the safety inspection businesses objected to the change stating that it would hurt their businesses, and it was defeated. Update 8/3/12: I guess that I will have to find another example for despite the indication that it was defeated in committee this legislation was resurrected and passed.

  3. Here's a quote from Bloombegr View's excellent article on restrictive state licensing laws: "The average cosmetologist in the U.S. trains for 372 days before earning a license. The average emergency medical technician spends 33 days in training. --- The disparity merely confirms what a muddle the process of occupational licensing is." Yup, it's the old story of using the states' power to limit competition; businesses love it. Update 9/30/12.

So the next time you hear the corporate world whining about too many regulations remember that their complaints are self-serving for they don't want to eliminate the many Rent-Seeking regulations that they helped create to benefit them.


Categories: Opposing Plutocracy and Corporatocracy, Seeking Better Governance