Is there a limit to the anti-regulation stance and if so, what is that limit?

Economics Political Theory
1

TL;DR: Is there a limit to the anti-regulation stance and if so, what is that limit? Curious to hear a minarchist perspective as well as an ancap (though I think I know the answer for the ancap position.)

Context: A classmate of mine asked me this question from the Austrian point of view. Before I respond, I wanted to gather thoughts from the folks on the board, perhaps there is an answer out on the board that is better than one I can develop. Here is the text of the question:

I could pretend that this questions is for the broader forum users, but, it’s really posted at Jonathan.

The recent forum activity got me thinking about the Austrian’s anti-regulation stance. It appears to be pretty absolute as in “Each and every act of government regulation constitutes, no matter what noble intentions for social betterment such regulation may reflect, an act of interference with the spontaneous market process generated by entrepreneurial competition.” I did some Googling, and some proponents of the Austrian point of view even seem to argue that slavery was a valid economic paradigm.

So, as the resident spokesmen for Austrian theory, I wanted to ask your interpretation of the following sorts of government “interference” and what the Austrian take is on regulations such as:

  • Requiring auto manufacturer’s to install seatbelts and other safety related items
  • Safety regulations such as flying hours, pilot training, etc. for the airline industry
  • Testing on the drug development process such as the FDA approval process
  • Labeling of products that have carcinogenic or otherwise dangerous materials
  • Permitting for things such as building nuclear power plants in the midst of population centers
  • The banning of materials such as asbestos
  • Anti-monopolistic laws
  • Truth in advertising laws
  • And, well, how about child labor and slavery?

Are regulations such as these really supposed to be just market driven? (…) Is there a limit to the anti-regulation stance and if so, what is that limit?

No need for a point by point refutation, but if there are any that pique your interest or you have clever responses to, do share. Thanks:).

2

First off, why did your friend put “interference” in scare quotes?

Here’s my take on each item:

“Requiring auto manufacturer’s [sic] to install seatbelts and other safety related items”

In a free-market society, if someone has a car that lacks certain safety features, car-insurance and/or health-insurance companies could choose: to insure him at higher premiums; refuse to cover certain types of injuries (namely those that are mitigated by the safety features), perhaps depending on the circumstances; or not insure him at all. Moreover, it could end up that giving someone a ride in an “unsafe” car would be considered negligence, perhaps even criminal negligence.

“Safety regulations such as flying hours, pilot training, etc. for the airline industry”

Again, it’s a matter of insurance and (criminal) negligence claims.

“Testing on the drug development process such as the FDA approval process”

Health-insurance companies could refuse to pay for certain drugs or other treatments if they don’t meet certain standards.

“Labeling of products that have carcinogenic or otherwise dangerous materials”

If the hazardous nature of the material was known beforehand, I’d say this is a matter of either criminal (i.e. willful) negligence or downright fraud.

“Permitting for things such as building nuclear power plants in the midst of population centers”

Liability insurance would be an issue here. If you build the power plant sufficiently far enough away from population centers, the damage in the event of a meltdown or waste leak would be less expensive.

“The banning of materials such as asbestos”

I don’t think any materials could be banned outright, but the liability insurance associated with handling/using a material could be unaffordable for just about anyone.

“Anti-monopolistic laws”

Price-fixing, cartels, and preferential business practices don’t constitute aggression or fraud against anyone. Furthermore, in the absence of the state, there would always be (legally speaking) freedom of entry and exit in the marketplace.

“Truth in advertising laws”

I think fraud claims would be an issue here – perhaps an even bigger issue than it is today.

“And, well, how about child labor and slavery?”

Child labor would not be banned outright, but health and/or liability insurance for children working under certain conditions may be extremely expensive. Then again, how are children entitled to not work?

Slavery per se wouldn’t exist IMO, but voluntary indentured servitude could. I think the only cases of involuntary indentured servitude would be outlaws forced to work off their restitution debts.

3

Libertarians are not opposed. to regulation but regulation exogenous to the market. Libertarians are entirely comfortable with regulation that is endogenous, in fact they revel in it and spend most of their time describing it and extholing it.

4
  • Requiring auto manufacturer’s to install seatbelts and other safety related items

Making uniform standards for safety requirements (or whatever they claim for it) does not, in fact, make people safer. What it does is eliminate safety as a point of competition, forcing all auto-makers to utilize the same general schema for ‘safety’. Likewise many of these requirements may interfere or make to costly the implementation of other design features which would, in fact, make individuals safer. It will also prevent entry into the market of competitors who can not afford these particular features. And why is safety the be all and end all, anyways? Whose business is it if I choose to reduce my chance of death in an auto collision by 12%? For that matter, I would also legalize drunk driving.

  • Safety regulations such as flying hours, pilot training, etc. for the airline industry

See the point above about reducing competition, blocking innovation and raising costs. Pilots can get their certification privately and be bonded/insured.

  • Testing on the drug development process such as the FDA approval process

The FDA kills far more people by preventing effective drugs from coming on the market than it has ever saved. The FDA is murder by proxy, plain and simple. For actual certification we can have private agencies who have an incentive to be correct and reliable, rather than some fiat political CYA agency whose primary requirement is that they be lobbied for.

  • Labeling of products that have carcinogenic or otherwise dangerous materials

This should be a matter of legal custom to the people involved, but is is vastly overdone to the point where it is counter-productive: there are so many inane warning labels that no one pays attention to any of them.

  • Permitting for things such as building nuclear power plants in the midst of population centers

Nuclear power plants are safer than any other power technology, less pollutant and more reliable. You’re in more danger driving than you are from a nuclear power plant. Even 3 Mile Island was harmless, and such an event is not even possible with modern reactors.

  • The banning of materials such as asbestos

Outrageous. Asbestos isn’t even dangerous unless you’re saturated with it. Furthermore it should be up to individuals whether they use or do not use it.

  • Anti-monopolistic laws

You mean anti-competition laws! These are horrendous, all they do is prevent capital formation, protect inefficient management from buyouts (much as ‘insider trading’ regulations do) and protect inefficient firms from upstart competitors.

  • Truth in advertising laws

The government is useless and laughable as a judge for anything regarding truth. Rank hypocrisy, and furthermore accuracy in contract and exchange is a normal part of contract and torts. We do not need the woodpeckers in congress for this. Arbitration agencies will do much better.

  • And, well, how about child labor and slavery?

Aside from indentured servitude, on which there is disagreement, slavery is obviously illegal. Children should be able to work if they want to. It will teach them some skills and, in places like Bangladesh, their only other alternatives are starvation or prostituition. I don’t know about you but a ‘sweatshop’ sounds mighty appealing given those options.

5

- Requiring auto manufacturer’s to install seatbelts and other safety related items

Pointless. I barely ever wear my seatbelt in the first place, and, even though it’s probably a bad habit to have, people should be able to determine how much safety they pay for, whether that’s a seatbelt or airbags or anything else.

- Safety regulations such as flying hours, pilot training, etc. for the airline industry

Pointless. No one should be able to tell a pilot how often he flies except the company for which he works. As for training, it’s also up to the company. It’s the same thing as believing in state-mandated driver’s licenses. Do you really think the DMV employees know when someone’s ready to drive? If a company is safe with the pilot flying their multi-million-dollar plane, I feel comfortable.

- Testing on the drug development process such as the FDA approval process

So long as the FDA doesn’t use my money and doesn’t require medicines/drugs to be approved, then I’m fine with it because it would be like any other market-oriented accreditation agency.

- Labeling of products that have carcinogenic or otherwise dangerous materials

I think companies will do that on their own now that we have so much technology and so many ways for third parties to find this out. At this point, the government’s food labels tend to be very misleading.

- Permitting for things such as building nuclear power plants in the midst of population centers

They would have to pay for insurance and maintain that they aren’t aggressing against anyone else’s property.

- The banning of materials such as asbestos

A lot of products in our foods right now are harmful, but they aren’t banned. A lot of them are subsidized and even ‘necessary’ now that other products have been regulated to the point of not being able to break even off selling them. Just take HFCS and sugar.

- Anti-monopolistic laws

Nothing will protect against a monopoly better than the free market where everyone can compete the shit out of each other.

- Truth in advertising laws

You’ll have to expand on this. If you tell someone they’re buying something when they’re really buying something different, that’s fraud.

- And, well, how about child labor and slavery?

Child labor went away because of how much capital families acquired. They didn’t need children to work once it was possible for only one parent to work while the family remained prosperous. And slavery goes against self-ownership, so it would be an act of aggression. Plus, laws that prohibit younger kids from working are bullshit. I could have made so much money working at the age of 13 when all I did was go home and watch TV instead.

6
  • Requiring auto manufacturer’s to install seatbelts and other safety related items

Consumers don’t want to die if they get in a car accident. It is incredible to assert that the government cares more for the safety of drivers than they care for their own safety.

  • Safety regulations such as flying hours, pilot training, etc. for the airline industry

Same as above. Pilots and passengers don’t want to die. Plane owners don’t want to lose costly equipment.

  • Testing on the drug development process such as the FDA approval process

Consumers don’t want to die from untested drugs. Incredible to assert FDA cares more for drug consumers than they care for themselves.

  • Labeling of products that have carcinogenic or otherwise dangerous materials

Consumers don’t want to die or be sickened from hidden ingredients or impure products.

  • Permitting for things such as building nuclear power plants in the midst of population centers

Enforce strict legal liability. If the nuclear plant melts down, the owners are liable for the murder of local residents and other damages. I can’t imagine why I would want to voluntarily take on such risks when I can just move the plant a few miles down the road. Much cheaper and less risky to avoid population.

  • The banning of materials such as asbestos

The language of banning materials has always struck me as filled with hubris. The wild cannabis of the world trembles in their stalks at the heady banishments pronounced by DEA!

Enforce strict legal liability. Asbestos is a known carcinogen. If you insulate your building with it, you’re liable for any sickness caused by it.

  • Anti-monopolistic laws

“Anti-large-market-share laws” is more correct. Large market shares are generally a political phenomenon, hence the need for more political laws to resolve the problems created by other political laws (Mises’ law of increasing government-market interference). True monopoly is the result of legal barrier to entry to a market and these barriers are only erected by governments serving private special interests.

… gotta run, might respond more later.

Clayton -

7

nirgrahamUK: “Libertarians are not opposed. to regulation but regulation exogenous to the market. Libertarians are entirely comfortable with regulation that is endogenous, in fact they revel in it and spend most of their time describing it and extholing it.”

That’s a great way to describe it.

8

Thanks all for sharing each of your perspectives on this.

9

Autolykos perspective describes how a free market would function in lieu of a State. Much of the time, it is difficult for a non-Austrian/free marketer to envision how a free market society would actually work, as its workings do not necessarily apparent in todays market.

Ricky James Moore II suggests that government laws and/or entities may actually make things worse as opposed to better. This is an interesting argument.

Brian Anderson questions the effectiveness of such laws in the first place. Do the laws really do what the laws are intended to? Most likely not.

Clayton takes on the consumer perspective. Isn’t the consumer king after all? If the consumer doesn’t desire it in the marketplace, they would not purchase it in the first place.

10

Yes, and with an emphasis on the application of this observation to bolstering a general skepticism towards the government’s advertised aims in regulating the marketplace. The claim is constantly made that such regulations are meant to protect consumers. It’s like outlawing the drinking of strychnine and claiming that such a law will save lives, such a claim is absurd on its face. Since the government’s advertised aims in regulating are almost invariably absurd, the government is either perpetually confused about its own true aims (unlikely… is the Pentagon, for example, confused about its aims? If not, how is it that the rest of the government has come under such a cloud of confusion as to be unable to ascertain that its most basic aims are frustrated by the very measures it implements to supposedly achieve those aims? e.g. the drug war) or it is concealing its true aims and advertising the “general welfare” because the people would be less than inclined to go along with the regulations if they correctly understood their true aim.

Read Rothbard’s Anatomy of the State. There’s also an online lecture of his where he talks about this subject in a very humorous way.

Clayton -

11

Yes, in general that is what I believe. Many types of legislation are meant to protect consumers when all they do is give the illusion of protection. As for accreditation agencies, they will spring up in the free market, especially with how far we’ve come using the internet. It’d be like if the government were to establish a law so that kids could only hang out with the friends for 5 hours per week so they’d be home studying instead. What the law would probably do is force kids to sit at home and mess around doing other stuff, procrastinating more than they would if they were just given time outside to relax. With pilot training, it’s the same for medical licensing. Medical licensing is the government’s ‘guarantee’ that no bad doctors will practice medicine. But bad doctors still get through the system, and many would-be good doctors might quit. I’m a pre-medicine student right now, and I absolutely hate school. I love learning about surgery, but I’m learning how to look through microscopes and how electrons shift between different atoms on molecules. I don’t need to know that stuff, yet I’m wasting $20,000+ every year to get a bullshit graduation certificate so that I can spend hundreds of thousands of dollars at another government-mandated medical school. It misallocates resources and people from where they should be to what they find worth their time.

12

I don’t think it’s quite as simple or Machiavellian. People who get into government usually believe government works. They engage in cognitive dissonance and rationalization to cover their opportunism, but they usually honestly believe that their brand of tyranny is ‘real’ freedom.

Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.

  • C.S. Lewis
13

Those at the top must always know precisely what they are about, else they will have already been pushed out by someone else less inclined to romantic delusions. The lower layers are much more complex but the Prince is all about one thing and one thing only: extracting maximum resources from the subject population and expanding the borders as wide as possible.

Clayton -

14

Those at the top must always know precisely what they are about, else they will have already been pushed out by someone else less inclined to romantic delusions. The lower layers are much more complex but the Prince is all about one thing and one thing only: extracting maximum resources from the subject population and expanding the borders as wide as possible.

I think you underestimate the natural instints of human beings for social climbing and power management; much less their ability to rationalize. Yes, Obama is a complete hypocrite - but I bet you he honestly is anti-war. He’s just great at making excuses, which in fact makes him more effective at power plays. A priest is far more convincing if he accepts his religion as true, even if he uses it for self-serving and contradictory ends. The ability to compartmentalize one’s thinking is very common in sociopaths and revolutionaries. Look at John Adams.

15

wow, never thought about this in such a way! Thanks.

16

wow, never thought about this in such a way! Thanks.

I owe the insight to Gabriel Kolko’s The Triumph of Conservatism. Regulation is, objectively, a cartelization device. It reduces competition and lowers quality.

17

I was thinking about this question related to this post: "Does Austrian economics oppose such regulations?”

My thought on this question is that it Austrian Economic Theory in itself does not support or oppose such regulations, but rather Austrians (individuals who follow Austrian Economic Theory) and Austrian Political Theory do usually oppose it. Yes, the two are tightly intertwined. However, more precisley, Austrian Economic Theory can inform ones understanding of economics thus influencing ones political theory, or Austrian Political Theory. Austrian Economic Theory itself is value-free, but rather provides a basis for understanding the beneficial or detrimental effects of regulations upon society and the marketplace.

So, to be precise, and combine several insights garnered from this thread, Austrian Economic Theory does not support or oppose regulations, but Austrians and Austrian Political Theory would oppose regulations exogenous to the market yet are comfortable with regulation that is endogenous to it.

18

My thought on this question is that it Austrian Economic Theory in itself does not support or oppose such regulations, but rather Austrians (individuals who follow Austrian Economic Theory) and Austrian Political Theory does. Yes, the two are tightly intertwined.

Although some disagree I would say Austrian Economics is a wertfreiheit science. However, this does not render it irrelevant to policy or legal theory. To a consequentialist theory of morals it has obvious consideration; to a deontic theory of morals it can help instruct one know where to look for the correct theory and to a more Aristotilian view of morals consequences form an important part of judging an act.

I would also note that consequentialism and deontic ethics are not compatible, one could believe that a pareto-superior increase in wealth is either a priori or prima facie good and therefor economic arguments would have a bearing on what is good; i.e. if being richer is good in itself then how to get rich is obviously not something you can dismiss ‘justice though the Heavens fall’. It reminds me of what Deng Xiaopeng said, "To be poor is not socialism, to be rich is glorious.’ He effectively inverted the Maoist scale of values from being normative about means to being normative about ends.

19

I agree that much of the inherent drive to power is sheer instinct… if you’ve ever worked a job you know how good people are at office politics! It seems to me that nearly everyone - however smart or dumb they may be in other ways - is a natural elite of social status climbing.

I don’t consider the US President qua US President to be one of “those at the top.” The Bushes are near the top but that would be the case whether or not they had held the US Presidency. It is my view that the pinnacles of power are private property and occupied by the monarchs that survived the 20th century war in Europe, the Vatican and other merchant-elites that have come into their own as financial/economic monarchs. I hold this position as an extension of the Hoppean argument that monarchy is preferable to democracy… I think not only is it preferable to democracy it is in every way superior* to democracy so that any form of “representative” government which engages in power-sharing or distribution of power must ultimately be annexed to or subjugated by a monarchical government, whether formally or through “back-channels”. This is because a monarchical government will inevitably out-pace a distributed government by virtue of its inherently conservative nature.

Democracy is such a poor form of government, in fact, that I consider the project of “democratizing” a nation to be a preliminarty step to its subjugation. Why else should a foreign power go to the bother and expense of imposing democracy on a nation? Democratizing by mobilizing populist sentiment within the nation is much cheaper than outright conquest and rule.

Well, the psychology of it is of little interest to me. I can imagine a tyrant who is a perfectly normal, well-adjusted human being.

Clayton -

*I mean “superior” in the amoral sense of “the Roman army is superior to the Carthaginians”.

20

I hope the OP doesn’t mind my temporary hijack (although the following questions are relevant to the flow of the thread):

  1. A few people mentioned expensive insurance schemes to prevent improper health and safety procedures; how is this enforced? Or do the firms employ these schemes in the case of a consumer injury, under which circumstance, the consumer may sue them for insurance presumably through an arbitrator of some kind.

  2. A few people talked about children being able to enter labour agreements as though they were able to make rational decision making but, as Mises explains (Human Action), “Beings of human descent” possess the necessary “statutes and biology [which] consider them to be men [but]they lack the essential feature of humanity”. An example is “[t]he newborn child”, who is not able to act to better his/her own conditions; “It has not yet gone the whole way from conception to the full development of its human qualities.” Presumably, if the child takes it upon himself to find a job, he is acting purposefully but how do we know he has not been manipulated by his parents into working in coal mines, say?

  3. In regards to autonomy for market, by extension, autonomy must also be provided for the family unit, no? What about the more controversial issue of child abuse?

  4. If I am able to voluntarily enter servitude on any basis of contractual arrangement, by extension, I should also be able to indefinite servitude, in which case, would I be at my employer’s indefinite disposal? Would I be permitted to simply leave and break the terms of contract (and presumably face court charges from my ex-employer) or would my employer be able to use physical force to detain my body?