The Culprits Behind Over Regulation


We are hearing much this campaign season from the Republicans about the heavy burden government regulation puts on business.  Apparently, regulation is so onerous that it’s almost not worth going into business in the first place.  The Republicans also claim to be speaking on behalf of small businesses, though given the extent to which they suck up to and are financed by really big businesses, which often drive locals out of business, one wonders if this claim is not a little disingenuous.

While particular regulations are often defended by Democrats and advocates, there has been little discussion of the historical reasons for regulation in the first place.  How did we get to this dark age of over-regulation?  When did the anti-business conspiracy get started and who started it?

Well, basically, it got started by people who were being harmed by business.  Early on, well before the industrial revolution, customers were getting gypped by merchants who were not giving honest weight and measure; butchers were putting their thumbs on the scale.  Hence, weights and measures had to be standardized and regulated by law.  I’m sure that today’s butchers and grocers find it inconvenient to be visited by inspectors from the department of weights and measures, and perhaps that causes them to complain about over regulation.

The industrial revolution opened up previously unimagined opportunities to make big profits.  Big profits are easier to rake in if you can work your employees 14 hours a day, 7 days a week; and if you can get their children to work the same schedule for half the wage, all the more to put in your pockets.  There are still today some throwbacks who lament overtime pay and child labor laws as an infringement on liberty.

Likewise, if you are a manufacturer of such consumer goods as ground meat, children’s pajamas, pharmaceuticals, or automobiles, it is easier to make big money if you don’t have to worry about salmonella, fires, side effects, or air pollution—or at least it may appear to be easier.  It is quite easy to dismiss the concerns of the stumblebums when you’re checking your bottom line.

Look at how mightily the automobile industry resisted regulations to make cars safer by installing seat belts, steering columns that would not impale the driver in head-on collisions, air bags, and emissions controls.  As a percentage of the total population of the United States, deaths by traffic accident have dropped by 50% since 1950.  Our air is also considerably less smoggy.  Yet look at how they continue the struggle against continued improvement in gas mileage, despite the fact that such improvement seems to be a major selling point to potential buyers.

Federal regulation of banks and other financial institutions did not originate in a desire to Stalinize the industry.  It emerged from the frustration and despair of ordinary people who lost their savings, their homes, and their jobs because of the shenanigans of Wall Street tycoons, and the frustration deepened when people realized that the tycoons did not actually make anything—they just gambled with other people’s money, and when they lost (which they do repeatedly and often), they still got richer.  It is a particularly weird kind of game when the biggest losers are not even in the game, like losing at roulette even though you’ve never been to Vegas.

One could fill an encyclopedia with examples of how government regulation has improved the lives of everyone without having any negative impact on corporate profits.  Indeed, when customers trust the product, they are much more willing to buy it.  But the point here is that the reason for regulation is not left-wing or socialist or communist conspiracy, nor a plot to take away our sacred liberties.  The reason is business itself.  Through shoddiness, cheating, rapaciousness, and disregard for everyone else and disregard for everything but profit, businesses have brought regulations on themselves.  So, if over-regulation is really the problem that Republicans and their corporate patrons claim it is, they must look in the mirror to find the true culprit.

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