Sunday, May 23, 2010

Why Libertarianism Doesn’t Work, Part N+a

But first – Why Regulation can Work, Part M+b (Part M+a is here):

Nobel Prize winning economist Paul Krugman just had a post, "Why Does Regulation Work?".  In reply, a commenter wrote, "Oil is washing up on Louisiana's beaches, yet Paul Krugman declares that 'regulation works'."

O.k., let's talk about this.

First I would note that if there were no regulation at all it would be far worse. These disasters would be far more frequent and severe. Fly-by-Night drillers would be setting up everywhere, and good luck suing them; they wouldn't have nearly enough assets to pay for their massive damage.

But a huge point is not that regulation always works well (overall), but that we have the option of it working well (overall). This is an option voters have, and it's very important that voters know their options. If they don't want regulation to work well, if they want it to work horribly, and be dismantled, then vote for the party that wants it, and government in general, to work horribly and be dismantled, the Republicans. They'll appoint Brownies, political hacks, cronies, and others who will make the regulation as ineffective as they can get away with. And, at the same time, they'll pass laws to just dismantle the regulation directly.

But, we do also have the option to vote for the other major party. And if we do, then there's a long history of strong regulation being highly successful, and implemented in a competent, objective, professional way.

There are myriad examples from the New Deal until the start of the modern Republican era in 1980. Perhaps most notable is the strong regulation of finance that led to the great moderation, and an era of unprecedentedly high evenly spread growth that created the great middle class.

Another example is one Krugman brought up:
Well, here’s the thing: regulation demonstrably does work where tort law doesn’t. Consider the environmental issue: in reality, the perpetrators of oil spills never pay most of the cost; but in reality, environmental regulation has led to much cleaner air and water. (Look up the history of Los Angeles smog or the fate of Lake Erie if you don’t believe me.)
So, we can have regulation that works; it's our choice; the option does exist; all it takes is voting Democrats into power. When we choose to vote Republican, regulation (and government in general) works far worse; it's severely degraded. When we vote Democrat it works, overall, well, or very well. And history shows this.

Now to Why Libertarianism Doesn’t Work, Part N+a (which is related to the above):

In Part N+1, Krugman wrote, "A few days ago I put up a post about how libertarians say we don’t need government regulation, because tort law will do the trick..." He then pointed out, "in practice, politicians will find ways to shield the powerful, as illustrated by the $75 million cap on damage payments from oil spills."

I'd like to really get into the meat of this with another example: vaccines.

The no regulation / just litigation, libertarian approach says, don't force people to get polio vaccinations, or subsidize them, just sue the person who gave you polio.

Ok, first it's almost surely impossible, or nearly impossible, to prove in court someone gave you polio. And, it also may be incredibly costly to prove this in court even if you could. There are lawyer costs, investigator costs, your time costs, and all of the court costs; judges, jurors, facilities, security, enforcement of rulings, etc.

And, as if that's not enough, second, the person who gave you polio probably doesn't have anywhere near enough money to fully compensate you for the costs and misery of a lifetime of polio.

By contrast, requiring that all children have polio vaccinations before they can attend school, and/or the government paying the cost of the vaccination, is very easy and inexpensive.

Remember the old saying, an ounce of prevention is equal to a pound of cure? The libertarians essentially want no prevention (regulation, subsidization, etc.) and only cure (litigation), even for things that are impossible to cure, or incredibly expensive to cure, but relatively cheap to prevent.


2 comments:

Morgan Warstler said...

Just a small note to show how far off you are. People like you never think about about how profitable a given situation you name is...

Polio:

"ALL CUSTOMERS MUST SHOW THEIR PROOF OF POLIO SHOTS TO ENTER."

"ALL CHILDREN ATTENDING THIS SCHOOL MUST HAVE POLIO SHOT."

Would you eat there? Would you check before sending your kid? You take my point? ANY negative condition quickly becomes a positive way to gain business.

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