What To Do About Regulation In The US

Listening to the radio yesterday, I heard a sound bite from a republican congresswoman who claimed that government enforced regulations on such things as food safety were stifling the economy.  I understand that she feared for the the well being of her precious deity (the economy) but I can’t help but feel she would find these regulations more than necessary if one of her friends or family members had died from eating tainted food at a restaurant or supermarket.  So, do such organizations as the FDA, OSHA or the EPA really burden the economy?

In one sense, yes they do.

Food preparation and safety standards mean corporations must spend money to ensure they do not sell products that will kill you or give you cancer.  Since they must legally ensure their products are safe, they view this as a negative cost, regardless of the externalities involved.  Thus, those who believe the economy is more important than the lives of the American people see these regulations as detrimental to the economy.  They believe that market forces like supply and demand would obligate businesses to provide a safe product to the customer based on the belief that people will not buy a product that has killed other people.  There are two obvious problems with this rational:  first, the regulations exist to make sure nobody dies in the first place.  Second, the people who only have enough money to buy the cheapest foods available will not be able to afford to discriminate between expensive, safe food and cheap questionable food.  This is already evidenced by the numbers of people who grocery shop at discount and dollar stores.

But there is truth in the claim that regulation does cost money and may consequently prevent certain business ventures from happening.  The current system of regulations is largely ineffectual due to under funding and loopholes sprinkled throughout various legislation.  For some people, the answer to this is more legislation and more regulation.  However, a patchwork set of rules cannot be repaired by more patches.  Perhaps we should consider eliminating up front regulation.  Consider the following proposal:

Imagine we are looking at all the businesses that produce or process food.  They are largely regulated by the FDA.  Thus, they must meet certain safety requirements for the food and products the provide.  In 2010 the FDA requested a budget of 3.2 billion dollars.  This minor sum -in comparison to a US budget of 3.55 trillion dollars (that is to say, the FDA budget is 0.1% of the total budget)- is meant to ensure the food, cosmetic, and pharmaceutical safety of 307 million Americans.  Though it seems a paltry and insufficient sum, it is too much.  So, what if rather than having laws that require businesses to meet certain safety standards, we eliminate those laws.  In such a system, a business could sell you food that has been sprayed with toxic chemicals and pesticides, canned goods made in filthy factories, and meat that may have sat in a hot warehouse for who knows how long.  The risk is yours to take.  This is the system initially proposed by many republicans and libertarians.  They believe that people will not buy these goods after a few people die from consuming them.  I propose taking this idea a step further however.

We eliminate the safety requirements imposed by law and legislation and leave the responsibility to the business, as outlined above.  There are no random inspections or specific safety measures mandated by the government.  Rather we will use a system of consequence.  For example, if Tyson sells a chicken product that kills one person, they will be fined $1 billion dollars and pay $1 billion to the family of the deceased.  we can make that a base fine for each casualty.  If their product only hospitalizes a person, they will be fined $250 million dollars, they will pay out $250 million dollars to the victim, and they will provide full health coverage for life for the victim and their immediate family, regardless of sexual orientation.  These numbers are large, but that is the point.  They are to act as a deterrent from these irresponsibly businesses and corporations.  There is no safety mandates, no bureaucracy, only consequence.  Thus, Tyson can decide just how much they want to invest on safety or what processes may be more efficient for them.  Regardless of the industry being regulated, these fines must be large enough to deter them from harmful behavior.

So, let us listen to those who believe that regulation is harming our economy.  Though they conveniently ignore a nation like Germany who has similar or more comprehensive regulation and yet does not have a failing economy, we can consider their proposal.  However, we the people must also demand that they consider us when they try to help businesses.  Maybe the existing system of regulations has not been effective enough.  Lets try something new.

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