106. "Out From Under Those Government Forms" Newsday, (December 13, 1977).

Once in a while one cannot escape the feeling that particular public policies are the handiwork of persons whose usual work is dreaming up bumper stickers, fortunes for Chinese cookies, book jacket blurbs and Madison Avenue jingles. How otherwise could one account for our fondness for short, flashy formulations that trivialize highly complex issues?

“Deregulation” is a prime example. It is shorter than a slogan. It has a liberating, anti-Big Government emotive ring. It is politically popular on the right, left and center. The groups lined up in favor of deregulation of airlines, for example, include the American Conservative Union, the National Association of Manufacturers, Ralph Nader’s Aviation Consumer Action Project and Common Cause.

Deregulation first gained favor during the Ford administration. It lost nothing in appeal, and gained less in recognition of the complexity of the issues involved, in the transition to the Carter administration.

On the face of it, the idea is straightforward enough. The nation is being strangled by thousands upon thousands of government regulations. The Internal Revenue Service code alone runs to 1,500 pages. The Occupational Safety and Health Administration regulations cover 330-odd pages.

For even a small business to comply would require it to have one or more full-time lawyers at hand to figure out the implications of all these governmental do’s and don’t’s for, say, a small Chinese laundry or an Italian restaurant. Moreover, it is easy to show that each added page of regulations exacts a cost (e.g., the steel industry feels that the regulations curbing pollution are one factor among several which render it unable to compete with imported steel). Last, given the volume and scope of regulations, any enterprising journalist, or politician playing to the galleries, can come up with some absurd ones.

For instance: Did you know that one OSHA regulation requires workers to wear heavy-duty ear plugs to screen out the noise of certain machines, while another insists that these machines be equipped with a bell to call attention to abnormal, dangerous conditions?

Did you realize as well that U.S. airlines and railroads cannot drop a stop, raise or lower the price of a fare, alter relations among classes of services or change practically anything else, without prior Washington approval?

Granted that some regulations are excessive, others petty, and that there are probably too many of them (although most are very poorly enforced and hence exist largely on paper)– what would be the effect of slashing regulations (as distinct from some limited careful pruning)?

The first to object would be many (albeit not all) businessmen, who are fond of the theory of a free market system but wisely leery of it in practice. The reason is that when competition becomes an unregulated free-for-all, businesses tend to undermine each other by cutting prices to the point that longer-run costs, such as investments in capital and research, are sharply reduced to allow them to undersell the competition. Next to go is quality, which is less visible and measurable than quantity.

Fair trade laws and price regulation exist, among other reasons, to protect business against its own tendency to maximize short-run profits at the cost of longer-run health and survival. Typically, Frank Borman, the president of Eastern Airlines, opposes deregulation of his industry. He states that it would lead to marked domination by the airlines with the largest financial resources; i.e., de facto monopoly control of the market and deterioration of services.

Second, practically every set of regulations represents a social value, even if attention to that value does put a crimp on economic rationality, narrowly conceived. Thus, the requirements of the Food and Drug Administration exist to protect consumers from toxic chemicals, unsafe drugs and other hazards. OSHA seeks to protect workers from hazardous working conditions, which abound; the Energy Research and Development Administration– to conserve energy; the Environmental Protection Agency– to safeguard the environment; and so on.

Arguments against government regulation in these areas are often but a slightly veiled attack against the social values involved in favor of greater profit for stock-holders and, sometimes though not always, more jobs for workers. (Often disregarded is that there are jobs in environmental protection, manufacture of safer cars and so on.)

A somewhat different, but no less common, line of argument is that if the goals of regulation are worth achieving, they can be achieved without regulation, via personal decision-making in the market place. In other words: If consumers really want safer products, let them buy only products that meet their standards of safety and boycott the unsafe ones, and business will respond to the consumer demand for safe products. Similarly, if no worker would work in an unsafe factory, manufacturers would be forced to make their plants safe or go out of business.

The fact is, most consumers, workers and citizens are unable to get information about the dangers they face; most chemicals in most products have not been tested for carcinogenic effects. And most corrective activities require public– not individual– action. If all lakes, rivers, waterways are becoming polluted, moving from one community to another will not clear them up.

The best suggestion to emerge from the outcry against regulations is to replace some of them with incentives– tax credits, subsidies, or other economic rather than purely administrative or legislative steps– that would motivate rather than compel business to act with greater social responsibility.

For instance, if corporations which do the polluting were to be fined a specific amount, and the funds used to reward corporations that curbed pollution, regulation would not be necessary. Control is achieved here indirectly, by changing the calculations of the corporations, making it less attractive to pollute. In this way, the heavy hand of direct government interest is explicitly prohibiting certain acts, in this case pollution, is avoided.

It should be noted first, though, that Congress is much quicker to approve tax rebates, credits and the like than it is to look with favor on surcharges and fines, if it approves such schemes at all. The tax on gas guzzlers to finance rebates for buyers of economical autos was killed by Congress. So were other such energy-related schemes– leading us to the prospect of having to use regulatory power to curb consumption of gas.

Second, while surely some social purposes might be accomplished through regulation, it would entail a monumental filing of forms and the hiring of numberless authorities and inspectors to verify them. To manage such a scheme, it goes without saying, would take a huge bureaucracy that dwarfs today’s FDA or OSHA.

In the meantime, let’s be cautious. Before we throw out regulation, let us see whether incentives work effectively to protect workers, consumers and their environment.

The Communitarian Network
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