Blue or Green on Regulation?

In re­cent posts, I have pre­dicted that, if not oth­er­wise pre­vented from do­ing so, some peo­ple will be­have stupidly and suffer the con­se­quences: “If peo­ple have a right to be stupid, the mar­ket will re­spond by sup­ply­ing all the stu­pidity that can be sold.” Peo­ple mis­in­ter­pret this as in­di­cat­ing that I take a policy stance in fa­vor of reg­u­la­tion. It in­di­cates no such thing. It is meant purely as guess about em­piri­cal con­se­quences—a testable pre­dic­tion on a ques­tion of sim­ple fact.

Per­haps I would be less mis­in­ter­preted if I also told “the other side of the story”—in­veighed at length about the rea­sons why bu­reau­crats are not perfect ra­tio­nal­ists guard­ing our net best in­ter­ests. But ideally, I shouldn’t have to go to such lengths. Ideally, I could make a pre­dic­tion about a strictly fac­tual ques­tion with­out this be­ing in­ter­preted as a policy stance, or as a stance on log­i­cally dis­tinct fac­tual ques­tions.

Yet it would ap­pear that there are two and only two sides to the is­sue—pro-reg­u­la­tion and anti-reg­u­la­tion. All ar­gu­ments are ei­ther al­lied sol­diers or en­emy sol­diers; they fight on one side or the other. Any al­lied sol­dier can be de­ployed to fight any en­emy sol­dier and vice versa. What­ever ar­gu­ment pushes one side up, pushes the other side down.

I un­der­stand that there are con­tin­u­ing fights about reg­u­la­tion, that this bat­tle is viewed as im­por­tant, and that peo­ple caught up in such bat­tle may not want to let a pro-Green point go past with­out par­ry­ing with a Blue coun­ter­point. But these bat­tle re­flexes have de­vel­oped too far. If I re­mark that vic­tims of car ac­ci­dents in­clude minor chil­dren who had to be pushed scream­ing into the car on the way to school, any­one who is anti-reg­u­la­tion in­stantly sus­pects me of try­ing to pull out an emo­tional trump card. But I was not try­ing to get cars banned. I was try­ing to make a point about how emo­tional trump cards fail to trump the uni­verse.

I have pre­vi­ously pre­dicted on the strictly fac­tual mat­ter of whether, in the ab­sence of reg­u­la­tion, peo­ple will get hurt. (Yes.) I have also in­di­cated as a mat­ter of moral judg­ment that I do not think they de­serve to get hurt, be­cause be­ing stupid is not the same as be­ing mal­i­cious. Fur­ther­more there are such things as minor chil­dren and pedes­tri­ans.

I shouldn’t have to say this, but ap­par­ently I do, so, for the record, here is “the other side of the story”:

The FDA pre­vents 5,000 ca­su­alties per year but causes at least 20,000-120,000 ca­su­alties by de­lay­ing ap­proval of benefi­cial med­i­ca­tions. The sec­ond num­ber is calcu­lated only by look­ing at de­lays in the in­tro­duc­tion of med­i­ca­tions even­tu­ally ap­proved—not med­i­ca­tions never ap­proved, or med­i­ca­tions for which ap­proval was never sought. FDA fatal­ities are com­pa­rable to the an­nual num­ber of fatal car ac­ci­dents, but the noneffects of med­i­ca­tions not ap­proved don’t make the evening news. A bu­reau­crat’s chief in­cen­tive is not to ap­prove any­thing that will ever harm any­one in a way that makes it into the news­pa­per; no other cost-benefit calcu­lus is in­volved as an ac­tual ca­reer in­cen­tive. The bu­reau­cracy as a whole may have an in­cen­tive to ap­prove at least some new prod­ucts—if the FDA never ap­proved a new med­i­ca­tion, Congress would be­come sus­pi­cious—but any in­di­vi­d­ual bu­reau­crat has an un­limited in­cen­tive to say no. Reg­u­la­tors have no ca­reer mo­tive to do any sort of cost-benefit calcu­la­tion—ex­cept of course for the easy ca­reer-benefit calcu­la­tion. A product with a failure mode spec­tac­u­lar enough to make the news­pa­pers will be banned re­gard­less of what other good it might do; one-rea­son de­ci­sion­mak­ing. As with the FAA ban­ning toe­nail clip­pers on planes, “safety pre­cau­tions” are pri­mar­ily an os­ten­ta­tious dis­play of costly efforts so that, when a catas­tro­phe does oc­cur, the agency will be seen to have tried its hard­est.

Govern­ment = or­di­nary hu­man fal­li­bil­ity + poor in­cen­tives + or­ga­ni­za­tional over­head + guns.

But this does not change the con­se­quences of non­reg­u­la­tion. Chil­dren will still die hor­rible deaths in car ac­ci­dents and they still will not de­serve it.

I un­der­stand that de­bates are not con­ducted in front of perfectly ra­tio­nal au­di­ences. We all know what hap­pens when you try to trade off a sa­cred value against a non­sa­cred value. It’s why, when some­one says, “But if you don’t ban cars, peo­ple will die in car crashes!” you don’t say “Yes, peo­ple will die hor­rible flam­ing deaths and they don’t de­serve it. But it’s worth it so I don’t have to walk to work in the morn­ing.” In­stead you say, “How dare you take away our free­dom to drive? We’ll de­cide for our­selves; we’re just as good at mak­ing de­ci­sions as you are.” So go ahead and say that, then. But think to your­self, in the silent pri­vacy of your thoughts if you must: And yet they will still die, and they will not de­serve it.

That way, when Se­bas­tian Thrun comes up with a scheme to au­to­mate the high­ways, and claims it will elimi­nate nearly all traf­fic ac­ci­dents, you can pay ap­pro­pri­ate at­ten­tion.

So too with those other hor­rible con­se­quences of stu­pidity that I may dwell upon in later posts. Just be­cause (you be­lieve) reg­u­la­tion may not be able to solve these prob­lems, doesn’t mean we wouldn’t be very in­ter­ested in a pro­posal to solve them by other means.

Peo­ple are hurt by free mar­kets, just as they’re hurt by au­to­mo­biles—torn up by huge pow­er­ful mind­less ma­chines with im­perfect hu­man op­er­a­tors. It may not be the course of wis­dom to fix these prob­lems by re­sort­ing to the blunt sledge­ham­mer of ban-the-bad-thing, by wish­ing to the fairy god­mother of gov­ern­ment and her magic wand of law. But then peo­ple will still get hurt. They will lose their jobs, lose their pen­sions, lose their health in­surance, be ground down to bloody stumps by poverty, per­haps die, and they won’t de­serve it ei­ther.

So am I Blue or Green on reg­u­la­tion, then? I con­sider my­self nei­ther. Imag­ine, for a mo­ment, that much of what the Greens said about the down­side of the Blue policy was true—that, left to the mercy of the free mar­ket, many peo­ple would be crushed by pow­ers far be­yond their un­der­stand­ing, nor would they de­serve it. And imag­ine that most of what the Blues said about the down­side of the Green policy was also true—that reg­u­la­tors were fal­lible hu­mans with poor in­cen­tives, whack­ing on del­i­cately bal­anced forces with a sledge­ham­mer.

Close your eyes and imag­ine it. Ex­trap­o­late the re­sult. If that were true, then… then you’d have a big prob­lem and no easy way to fix it, that’s what you’d have. Does this uni­verse look fa­mil­iar?