Monday, January 01, 2018

A Behavior Of Bureaucracies

The more government attempts to regulate businesses, the more those will in turn attempt to influence its decisions. (Paraphrase of Bowdoin Political Science professor Jean M Yarborough.)

Seems obvious when you put it that way, doesn't it? The proposed regulations might be necessary, thoughtfully-crafted, and good, but their designers should be aware what they are encouraging at each successive step. The other possibility would be for businesses to just wait around until those nice government people told them what the new rules are. "I'm sure they have everyone's best interest at heart and will come up with a good plan." The regulators see themselves this way, certainly, though I hardly imagine they would like to see it put so bluntly. The conversation would turn quickly then to how irresponsible it would be to let businesses be unregulated, because they don't have the public interest at heart. Why, they might do anything if we didn't rein them in. Yes, true, they might.  So might you, which is why we are suspicious of your motives as well. The more you insist you are the disinterested arbiters - which is what you are supposed to be, but all humans fall short of that - the more we know that you are lying about at least one thing: yourself.


Sam L. said...

And the Big Guys will seek Regulatory Capture, to make fairly sure the regs are written in their favor, and not that of the little guys.

Texan99 said...

Gotta have laws, or those businessmen will act in their best interests! The thing is, as long as they're not engaging in fraud or violence, what I want from businessmen is precisely that they will act in their best interest: to do whatever it takes to get me to enter into a voluntary business transaction with them. The bureaucrats, in contrast, aren't interested at all in getting my consent, or at least no more often than they're required to hold an election, and even then they're equally happy whether they won my vote or just got me outvoted by other people. A businessman has to continue to care about my individual decision--a nightmare for a bureaucrat. The businessman is fine with a variety of opinions, but the bureaucrat needs uniformity and compulsion.

Assistant Village Idiot said...

T99's comment puts me in mind of CS Lewis's quote about tyrants. “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. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be "cured" against one's will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals.”

Earl Wajenberg said...

"Gotta have laws, or those businessmen will act in their best interests! The thing is, as long as they're not engaging in fraud or violence, what I want from businessmen is precisely that they will act in their best interest: to do whatever it takes to get me to enter into a voluntary business transaction with them."

But the business is not even trying to act in your interest, not even supposed to act in your interest. And plenty of history shows some of them, at least, will use fraud at the drop of a hat to get you to enter into a transaction with them. Look at the fairly recent history of the tobacco industry.

"A businessman has to continue to care about my individual decision."

No, they don't, not if they have acquired a monopoly or otherwise insulated themselves from your decisions, as they perpetually try to do.

Texan99 said...

Sure, they'll try that, but without government intervention they're very unlikely to succeed. I have all kinds of excellent tools to use against someone who attempts a monopoly, unless he gets the power of the state behind him. Against the state's monopoly power, I have very few good tools.

I'm never going to have the luxury of dealing solely with people who will never try to pull a fast one on me. I consent to government in part because I know some people will use fraud or violence if they can get away with it. The question isn't whether I believe everyone will be my benefactor, it's whether I'm more likely to have trouble with one kind than another. My experience tells me that dealing with mayhem from businessmen is child's play next to dealing with mayhem from bureaucrats.

Earl Wajenberg said...

What are the excellent tools for dealing with a monopoly?

Texan99 said...

Starting a competing business, or finding someone who can, even if it means going far afield to find him. There are even legal means to unlock any monopoly that doesn't enjoy state protection. If I can't immediately find a business that competes in the exactly the same product, I can change to an alternative product, or find a way to do without the product, just as I would a product I desired but couldn't afford. If a monopoly is offering an important enough service, and doesn't have state protection, someone always eventually starts offering competition. The only exception I know to this rule comes from the state, which can enforce a monopoly even in an essential service, indefinitely.

Laura said...

Let me add a few more methods to Texan99's:
-- boycott or other market actions against the abuser [e.g. conflict diamond boycotts]
-- import products from abroad, or outsource to foreign competitors; in some cases, virtualizing the service or implementing it with code (possibly hosted overseas) in lieu of the "analog" way [e.g. Uber breaking taxi monopolies]
-- take action under any of the anti-trust laws (either as a private party or by lobbying the FTC, public prosecutors, or the legislature) for anti-competitive behavior, collusion, price fixing, formation of a cartel, etc. [e.g. FTC lawsuits on collusion/fraud in the mortgage market, lawsuits over for-profit diploma mills]
-- take action through labor laws or strikes/sitdowns, if the behavior involves abuse of employees or workplace violations [e.g. Verizon strike]
-- buy stock in the offender and pursue shareholder activism to change corporate behavior; or alternately, be a shareholder activist in a potential competitor and press for another company to enter the market or acquire a participant [e.g. Southwest entering an airline market]
-- improve the exchange of pricing data between market participants, if the problem is opacity or control of information. [e.g. almost anything on the Internet: ebay, consumer ratings sites, travel sites, etc.]

Do look at the tobacco industry: look really hard at how they're currently trying to use their particular carve-out at the FDA to stop "vaping" (which is significantly safer, medically, than smoking, and in fact is a good method for quitting smoking gradually). But, due to their "monopoly" on nicotine delivery methods, they can stop their addicted consumers from making a better choice. (Better for the rest of us too-- no second hand smoke! No fires! No smell!)

All of these methods have been used to break monopolies in the recent past, here in the USA. We Americans can fix it, if our government doesn't stop us! Look at places where a partial or full exemption from anti-trust is granted: insurance, utilities, broadband, prescription drugs, occupational licensing, heck, even major league sports! That's where the abuse comes, the gigantism comes, the unaccountability comes.

Assistant Village Idiot said...

I still hold to the principle of low-hanging fruit. The first set of regulations usually comes in because things have gone terribly wrong (or used to - the desire to regulate new technology when we only suspect what might go wrong is part of the mission creep of bureaucrats) and produces good results at first pass. Truth in advertising, basic sanitary standards for food plants or restaurants replace caveat emptor situations where it really was horribly inefficient for us to monitor the background of everyone we have transactions with. The theory that we'd all be better off doing that homework ourselves falls apart when we no longer all live in the same village. I really don't want to buy fourteen variations on Consumer Reports to navigate my life. In saving me that much time, which none of us were going to spend anyway (how closely do you read those software agreements? Yeah, I thought so.), thyose regulations absolutely do increase my safety.

The difficulty comes when the reformers think they can get that much improvement again, with their second set of improved regulations. They can't. It's diminishing returns. Many problems can't be solved, only managed - and that's fine.

I don't know how you set up a system of telling the regulators "you've only got one shot at this, then no new rules for ten years. And the ones you just put in get sunsetted." (I think that's a legitimate neologism, because the meaning is clear.) But the first set often does clean up a lot of the meat-packers, or the sexual assaults, or the product hazards. It just doesn't repeat indefinitely.

Korora said...

Earl, the whole point of this post is this (in the immortal words of Decimus Iūnius Iuvenālis): "quis* custōdiet ipsōs custōdēs?" (Who will guard [these] same guards?) While the sort of guarding Iuvenālis was talking about simply isn't done anymore, the principle is clear: Put someone in a position of trust as needed, but hold them accountable.

*In Latin one apparently only ever capitalizes proper nouns, never sentence-initial other words.

Christopher B said...

Framing the choice as between any and all regulation anyone deems proper and no regulation at all is a dishonest debate tactic. The choice is always whether or not new regulation is necessary, proper, and worth its second order effects.

Texan99 said...

So appointing Pruitt is not the same as Somalia?