Government Regulations Revisited

Tibor R. Machan

You might not think it considering my relentless concerns about the growing power of government, but I am not a pessimist. There are many areas of life where liberty is making advances--e.g., gays are no longer being so persistently harasses by government and even the obscene "war" on drugs may eventually give way much saner policies. But in the economic realm, where it causes so much direct damage to us all, government's interference is on the rise.

Yet many people do not fully appreciate how that interference is evident throughout the economic sphere. As a friend recently pointed out to me, many people believe that government regulation of business, industry, the various professions and so forth is but a legitimate effort to carry out the fundamental task of a government, which is the protection of our basic rights. Government regulation, according to this view, amounts to no more than shielding Innocent citizens from "the bad guys," say the likes of Bernard Madoff or the Enron team of corporate rogues.

How, then, could most people appreciate that government regulation amounts to what I have for years called petty tyrannies? All those regulators are like the cop on the beat, standing there to repel crime. Isn't that so?

There are elements of the regulatory system that do function like that, yes. For example, the SEC (Securities and Exchange Commission) polices corporate fraud, among other things, which is indeed one legitimate function of the government of a free country. And other regulatory agencies, too, do some things that amount to rights protection--for example, the FCC (Federal Communications Commission) prevents invasions by some broadcasters of others on the electromagnetic spectrum or the airwaves.

But the bulk of government regulation is very different. It involves regulation or regimentation, leading various professions by the hand to act in accordance with various codes or rules that are intended to preempt any malpractice. That is to say, such regulations target innocent people in the various professions, mostly in business but also in medicine or farming, so that the professionals avoid malpractice, so they are prevented from doing anything wrong--dangerous or hazardous. The FDA (Food and Drug Administration) is a clear case in point--their edicts to drug manufacturers and researchers is all about guiding the conduct of the people working in the industry, as is OSHA's (Occupational Safety and Health Administration).

Government regulations are, in the main, preventive measures which is why I refer to them as a species of prior restraint and policies that aren't compatible with the principles of a free country. These principles prohibit controlling people's conduct unless the people have been shown to have done something wrong. Government regulations are more akin to the policies of a police state, where the government regiments the population so as to make sure everyone is acting correctly, properly.

Measures like such regimentation are attractive because many people believe that governments are highly qualified to supervise what we do, as if they were like our parents or teachers or coaches. But the plain fact is that government is simply a bunch of other people, with no special qualifications to run our lives, to supervise us all. Many of the American Founders and various prominent presidents were aware of this so that, for example, Abraham Lincoln wrote that “No man is good enough to govern another man, without that other’s consent.”

Not only is government regulation unjust because it places some people in a position to rule others--albeit always with the excuse that this serves the public interest--but it is most often quite ineffective. Government regulators are frequently captive to the very industries they are meant to steer straight. They don't actually know much about the industries or professions they are required to regulate--for example, the SEC had no clue at all about derivatives when all the financial shenanigans occurred over the last few years. Or, as with the FDA, the regulators are so afraid of risks that they themselves facilitate illness and even death by policies that delay the availability of medicines.

As usual, the immoral turns out also to be largely impractical. And this exactly how it is with government regulations.