The Governmental Regulation vs. Litigation Spectrum


Tod Kelly

Tod is a writer from the Pacific Northwest. He is also serves as Executive Producer and host of both the 7 Deadly Sins Show at Portland's historic Mission Theatre and 7DS: Pants On Fire! at the White Eagle Hotel & Saloon. He is  a regular inactive for Marie Claire International and the Daily Beast, and is currently writing a book on the sudden rise of exorcisms in the United States. Follow him on Twitter.

Related Post Roulette

18 Responses

  1. Avatar Tom Van Dyke says:

    Is regulation for preventing the bad or to enhance the good as well? This is where one’s political philosophy comes in, about regulation’s essential purpose.

    Of course some regulations are necessary: people cheat. The question is whether we impose regulation with regret, or with gusto.Report

    • Avatar Kimmi in reply to Tom Van Dyke says:

      I don’t think that question matters. We still get fire escapes, regardless of whether you’re fuming mad that an entire building of people burned to ashes, or whether you’re “regretting” the extra expense of fire escapes on all buildings in america.Report

    • Sticking with preventing the bad is generally the best idea, IMO.

      Regulation that enhances the good is much less likely to be effective, and much more likely to have unintended consequences.

      It’s a lot like “targeted tax cuts”, that way.Report

      • Avatar Tod Kelly in reply to Pat Cahalan says:

        Obligatory “Reference-that-no-one-but-me-and-like-five-other-people-will-even-get” starts… now:

        This question reminds me of the book Witches Abroad by Terry Pratchett. In the fairytale city of Genua, the evil ruler makes a series of regulations designed to make the city happier. So all innkeepers must by fat and jolly, and toy makers must tell stories to the children and whistle all the live long day. There is a hysterical yet chilling scene where a toy maker who doesn’t know any stories and can’t whistle – but knows how to makes toys – is brought up on charges, convicted, and sent off to be tortured.Report

  2. Avatar Jib says:

    In the very early days of railroads, a RR could pick and choose what they customers they would serve and who they would not. It did not take long in such a case for every biz in a town that was served by one RR to all be owned by the RR. This was immensely profitable for RR but crippled the overall economy by restricting competition. This lead to the ‘common carrier’ regulation that said RR must accept the same cargo from all people who wanted to ship and must charge the same price for shipping the same cargo to all people. This meant RR were no longer maximizing their potential profitability but the economy as whole was better off.

    (if you think this example is old history then you have not been paying attention to what the people who control the fiber on the internet have been trying to do)

    The entire history of this country, including the very libertarian 19th century, has been about the govt laying out the ground rules in an industry and then letting companies compete. Sometimes done right, most often a very corrupt activity but always it has been this way. To think this will change is to engage in Utopian thinking.

    What we can do is try to make the process less corrupt. Regulation should be about what we want to make utility, to be provided as close to cost as we can, vs what we want to let the market fight over.

    Make no mistake, regulation will always be used to pick winners or losers unless you believe in Utopian fantasies i.e. THIS TIME WILL BE DIFFERENT.Report

    • Avatar DensityDuck in reply to Jib says:

      How did common-carrier legislation “pick winners or losers”?Report

      • Avatar Mad Rocket Scientist in reply to DensityDuck says:

        Common-Carrier itself doesn’t, but regulation in general can be used to pick winners & losers, usually by raising the barrier to entry so high as to prevent smaller competitors from getting a foothold in an established market (see the CPSIA, or Jaybirds example of needing permission for other nearby businesses to open a business).

        We should also note that probably 95% of anti-business regulations are local, not federal. The bad thing about federal regulation is that it raises the barrier everywhere, whereas local regulations just choke out new business in small areas.Report

  3. Avatar The New York Crank says:

    When the doctrinaire Republican right has finished with us, there will be no more balance between regulation and litigation. Litigation for product liability (or malpractice, for that matter) will be outlawed. The only ones subject to litigation will be you and I, for failure to pay up whatever the unregulated banks demand of us.

    Yours very crankily,
    The New York CrankReport

  4. Avatar Silver Wolf says:

    Remember that oversight will also (more likely) prevent the tragedy from occuring while litigation only compensates for the result. An ounce of prevention and all that.Report

  5. Avatar E.C. Gach says:

    This is a great reminder that non-regulations can result in many of the same things that actual regulations lead to.

    This is why I have a problem with Ron Paul’s position on pollution, i.e. battle it out in the courts over property damage claims.

    One, that ends up being retroactive instead of preventative. Yes, it will incentivize people not to pollute, i.e. damage other people’s property, but we know that humans aren’t always rational. And once the damage is done, it’s done.

    Second, this results in cost shifting rather than cost controlling. A lot of libertarian/free market reforms seem to be that way. There are plenty of genuinely efficient and reasonable ones, but plenty of others as well that simply shift costs around rather than actually decrease or get rid of them all together.Report

  6. “We have a tendency to think that in industrialized countries governmental intervention either exists and costs go up, or it doesn’t and costs go down. But in a democratic society there are always two competing mechanisms to ensure against corporate malfeasance: government oversight, and litigation. These two mechanisms exist on opposite sides of a seesaw; as the costs associated with one increase, the costs associated with the other decrease”

    In a perfect democracy of just people, we’d have a one-to-one trade-off. Arguably, having the government bear the majority of the cost is the more egalitarian way to hedge against corporate malfeasance. But this is a false dichotomy: we have a system in the United States that manages to incorporate both a regulatory structure that often encourages malfeasance if it is not the agent of malfeasance itself and a legal system that is not worth its cost and that generally serves anti-egalitarian purposes.Report

    • we have a system in the United States that manages to incorporate both a regulatory structure that often encourages malfeasance if it is not the agent of malfeasance itself and a legal system that is not worth its cost and that generally serves anti-egalitarian purposes.

      CC, can you explain?Report

  7. Avatar Christopher Carr says:

    For example: safety, IP, and zoning regulations benefit established players and cartels. We discussed this a lot on my and Jaybird’s posts over the weekend. At the same time, the poor have the drug war and incompetent public defenders to deal with, among other things.

    We actually have policies that redistribute in the opposite direction, and we have a lot of them.Report

  8. Avatar MFarmer says:

    There’s also the mental mistake of thinking that without government regulation there would be no regulation. I haven’t read all the comments, so if someone brilliant has beat me to this brilliant point, I apologize. And before someone brings up Upton Sinclair and the Jungle, my point is more nuanced and up-to-date.Report