How to Succeed in Regulation Without Really Trying

That government regulation makes as well as hurts businesses is not news to economists and political scientists. Nor is it to politicians, whatever their declared ideology, however dumb they pretend to be in public. Is it news to the American public, at least to the public that seeks smaller government and complains about regulation and interference?

Yes and no. Part of the basic problem we’re all facing in the near-term future is that most of us, across the political spectrum, emotionally and politically classify government action differently based on a sort of dog’s breakfast of ideas, assumptions and intuitions. Consider some of the following:

The New York Times Magazine recently ran a story on the battle over fire retardant chemicals in furniture and clothing that recounted a history of divergent consumer crusades, competing teams of experts and industries with incommensurable relationships to past, present and future regulations. The more recently mobilized crusaders have been able to enlist the support of predictably simple-minded figures like Nicolas Kristof to move the regulatory momentum in their direction, which will probably also shift both the funding and marketability of related work by experts. Peel it back a layer, though, and the same sort of lightly neurotic middle-class consumers who tweet and Facebook furiously away every time the New York Times gives them another thing to worry about are only the successors to earlier generations of parental or domestic consumers who often demanded the very regulations that recent advocates condemn so furiously. When I was young, imaginations were haunted was stories of children whose pajamas or Halloween costumes burst into spectacular infernos at the mere thought of a candle; now we’re told to fear that cancer is seeping into our couch potato pores from a cushion full of chemicals.

It’s not that either scenario is pure fiction: the peer-reviewed science behind both concerns often traces back to perfectly sincere efforts by researchers that is as good–or bad–as the experimental design and instrumentation of any given moment allows. Nor, as the fevered imagination of the dafter kind of libertarianism might suggest, is there some diabolical regulator waiting for a chance to spring upon the free market and wrap it in the chains of socialist drudgery. Regulation creates entrepreneurial opportunities, and that’s part of where the problem comes in. Dictate that some consumer goods should retard fires, and you instantly bring a whole new business to life. Provided that the products that are being regulated have a strong built-in demand, it might be a win-win opportunity: nobody’s going to stop buying couches or pajamas if they cost a bit more due to new chemicals. If the new regulated product is manifestly less desirable, pleasurable or useful, that’s another matter altogether, but even that’s an opportunity for the entreprenurial beneficiary of the regulation: who will be the first to make couches with chemicals comfortable, or food without a restricted additive tasty or pretty again?

The idea that regulation abstractly harms or restricts business is a shibboleth. Regulations that can’t be met, regulations that are enforced capriciously or unevenly, regulations that make the problem they set out to address worse: those are real issues. But these are not problems that arise abstractly or generically from the concept of regulation itself.

The problem is that the flip approach, from technocrats, is no more comforting. The typical policy-wonk technocrat shaves his utilitarianism into smaller and smaller wisps of dust, always assuming that sober officials, sensible experts and good science in the absence of crass politics and corrupt money will let us calibrate our scales to a sufficiently fine point that we can always know whether it’s better to have three more ignited Underoos or twenty more cancer cases than we would have otherwise. This is one of the wellsprings of populist irritation with the generalized concept of regulation: a suspicion that spectacular narratives of risk, often emotionally powerful to some vocal crusader due to their personal experience, are being directed to the maintenance of elaborate networks of regulation that work with small effect sizes and diminishing returns. The narrative intensity of the crusades and the political economy of expert research are ill-matched in affect and habitus, but each depends upon the other. Even the current Republican Party, marshaled against “smart, elite people” and “fact-checking”, can’t really detach entirely from the proposition that some expertise, somewhere, licenses its arguments against specific policy and regulation. They might be the worst case, but everyone has their own precious everyday world that they will seek to reproduce even when the scales of expertise seem to tilt against them. For example, whatever the flaws of the much-discussed Stanford study on organic food, it seems entirely possible to me that much of what is believed about such food by its consumers would be reinvented and resurrected in the face of almost any finding that diminished those beliefs–and I say that as someone who will often buy food with some version of those beliefs lurking within my preferences.

In cases where effect sizes are small, where the authority of science is easily captured by both funding and narrative, where the choices before us drearily compact into dark and Grinchly caves of icy utilitarianism, maybe we could all just relax about “regulation”, and understand that however the calculations and policies get made, somebody’s going to make some money and none of us will be altogether that different when we go to bed that night. Where it really matters for larger publics is a choice that might be described as concerning regulation is in fact nothing so ordinary or trivial. Say, for example, in this NYT story on high-frequency trading. Here the difference between one regime and another is economically momentous–but more importantly, the basic issue is not some small calculus of greatest good for greatest number, but fundamental questions of trust, investment in the long-term, and justice. Whether couches are more comfortable and (possibly) slightly more flammable or whether the complex etiology of cancer gets a slight shift at the cost of killing a line of business is one thing. Whether a small group of algorithmically-equipped parasites kill their host outright while putting the entire global economy at profound risk is another. If we could give up dumb talk about regulation or “the size of government”, we might have a chance to more clearly discern when we’re in more serious terrain that publics must forcefully engage and leave some of the rest to the background sussurus of businesses, officials and consumers rubbing up against one another.