Angina Monologue 25

His Majesty was snorting at his newspaper when I brought him his pancake this morning.

It’s my Friday off, so he gets the full weekend breakfast menu, which I think I’ve described before. The only variation this morning was that I ran across a package of bacon in the “Manager’s Special” section of our grocery that had been marked down to $0.99. That was too good a deal to refuse, even if the bacon did look a touch superannuated. I was planning to cook the spit out of it anyway.

See here, Lord Vader. The “Dear Abby” column today isn’t even worth commenting on directly. It’s a bigwig fire chief writing Abby to remind her readers to install smoke detectors, and Abby nodding sagely in agreement.

Thirty years ago, this would haver been a perfectly reasonable thing. The technology was new and its favorable cost/benefit ratio was not generally appreciated. Getting the word out made sense.

But that was thirty years ago. Nowadays, continuing to lecture on smoke detectors is simply interfering with the sublime process of natural selection.

His Majesty has never suffered fools gladly.

This is relevant to our presidential campaign, which incidentally is gaining traction. Sooner or later the more libertarian wing of the Republican Party is going to try to ask us hard questions about government regulation. They already mistrust us, inasmuch as they instinctively mistrust anyone with Lord in their business titles. Mr. Koch is helping but we need to do our part.

Fortunately I am Darwinian in my instincts, which aligns me closely with much of the libertarian movement, and this should help. I will focus on health and safety regulations, for which two questions are relevant:

1. Is the regulation in question aimed at protecting the health or safety of third parties who have no control over the allegedly unsafe or unhealthy activity? Does it ameliorate the risk in the least intrusive way reasonably possible? (I know that sounds like two questions, but they’re so closely intertwined they really count as one long question.)
2. Is the regulation in question aimed at allegedly unsafe or unhealthy activities that are very difficult for private parties to adequately monitor? Does it monitor the activity in the least intrusive and most narrowly defined way adequate to minimize the risk?

If the proposed or reviewed regulation cannot provide a solid Yes to either of these questions, out it goes.

Implicit in these questions is that the threat to health or safety must be significant. I am not going to ban bacon because of an alleged 18% increased risk of colon cancer. Speaking of which … this is delicious. I thought you were avoiding bacon purchases because of the escalating cost?

Er … this was a special deal I Force-negotiated with the grocer, just this one time, as a special treat for you. Uh huh.

I would hate to think that you bought me bacon that was cheap only because it was nearing its expiration date. Though, of course, when it’s cooked properly, that makes absolutely no difference, so all I ask is that I not know about it.

I could almost swear I saw the slightest twinkle in his eye. His Majesty always seems to know what I’ve really been up to.

Another implicit aspect of these questions is the Reasonable Man that seems to have disappeared from the tort system. It is quite possible that there are people stupid enough to not know that smoke detectors are a good idea. That is not sufficient reason to mandate them. Question 2 asks whether a reasonable man of ordinary prudence is capable of monitoring the alleged unsafe or unhealthy practice, not whether even the stupidest man can see the danger where it exists.

I anticipate that Question 1 will be all right with libertarians. Libertarians tend to understate external costs, but they at least pay lip service to the concept, and I can quote out of their own literature in support of this question. The only difficulty I foresee is that libertarians often claim to believe that the tort system is a better recourse for recovering external costs than regulation, but I am sufficiently sympathetic to that view myself that I think we can bulldoze past it. The right recourse to mine spills, for example, probably is a lawsuit — and it’s not like a mining company that can show it scrupulously avoided regulatory violations will actually be able to use that as any defense in a suit. So why bother with the regulations?

It sounds like the answer to Question 1 will almost always be No, then.

It will often be No; not always. Regulation is the low-cost mechanism for reducing third-party risk when that risk is diffuse and the benefit of the activity to its immediate participants is high. There are lots of situations like that.

You’ve just articulated the case for air-quality regulations.

Yes. I have.

Question 2 will be a bit stickier, because caveat emptor seems to be such a big part of the libertarian ethos. I will point out that few among even the most reasonable and prudent of homeowners are equipped to do a microorganism assay on a carton of milk to ensure it has been properly handled on its long passage from the cow to the homeowner’s refrigerator. USDA regulations are quite reasonable in that respect, though, as I’ve pointed out elsewhere, those properly belong to Commerce.

I foresee two problems. First, and less important, is that we’ve already articulated a position against Commerce regulating anything that doesn’t actually cross state lines. Most milk is locally produced and consumed because of its high perishability.

Lord Vader, the day when New York City had numerous dairies in its outlying neighborhoods is long gone. Our own milk may come from local contented cows, but a good share of the population now consumes milk that has crossed state lines.

Of course, a lot of these regulations should be handled at the state level, and we will not fail to point that out. It will win favor with both libertarians and particularists.

The second problem is that libertarians favor private Consumer Reports-style evaluations over government evaluations. They will argue that private certifying agencies should be checking the milk, in return for consumer subscriptions.

The problem is that with commodities, the knowledge that the product is of high quality is a public good. This applies more to durable consumer goods that are mass produced, of course. Even more to intellectual property: The knowledge that the latest release of the TotalView debugger is a steaming pile is a perfect example of a public good.

I’m astonished at how much His Majesty knows about what goes on at my workplace.

What about INPO?

You refer to the U.S. nuclear power industry’s self-regulation organization, which often imposes stricter standards on its participants than does the NRC.

The situation is somewhat unique. When a dairy sells contaminated milk, the public does not generally turn against dairy products. This is not true of nuclear power; a screwup at one plant endangers the future of the entire industry. This gives players in the industry a very strong incentive to monitor each other, which I’m not sure exists in any other industry.

Still, it’s a fascinating example. We will follow INPO with great interest.

I’m left wondering: What are some concrete examples of regulations acceptable by your criteria?

Air quality regulations. Water quality regulations, because of the monopoly aspects of most water suppliers. (But not monitoring of private wells.) Some hospital regulations, particularly those aimed at preventing epidemics from spreading. There really aren’t any lack of examples.

Examples the other way about as well. Smoke detector regulations. Seat belt laws. Helmet laws. Automobile roadworthiness.

How about TSA?

There are so many problems with TSA that it will be a long time before we even reach the question of whether the government should be screening passengers. But I think the 9/11 terrorists showed pretty conclusively that there is an external cost to poor security on airlines, so in principle I approve of a competent TSA. Our campaign will be centered on their stunningly intrusive methods rather than their mere existence. This is an example where Question 1 is answered in the negative only because the agency fails the “in the least intrusive manner” test.

Really, though, most of the problems with federal regulations is that they are federal. Apply the “something must actually cross a state line” rule, and the federal government suddenly is relieved of most of its present regulatory obligations. Leaving it much freer to properly execute the ones it properly owns.

His Majesty finished his bacon and went off to prune some more bonsai.