Safety, at what price?

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James K

James is a government policy analyst, and lives in Wellington, New Zealand. His interests including wargaming, computer gaming (especially RPGs and strategy games), Dungeons & Dragons and scepticism. No part of any of his posts or comments should be construed as the position of any part of the New Zealand government, or indeed any agency he may be associated with.

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370 Responses

  1. Avatar greginak says:

    Before talking about how I’m not really buying her argument i’d like to note one of the more general issues she mentions. She talks about local knowledge being superior to the knowledge of central regulators since people know about the specifics of their locality better than people far away. Up to a point i can see that but i think that is far overstated and getting less salient as the world gets more closely knit together. We live in a world where people move across country commonly. They bring their practices with them and many methods are far more widespread then not. Two examples: first, airlines. There are very much local differences in weather but standards are national and international. This is vital to a world where pilots fly all over the country and world. It also makes it easier for mechanics and pilots since they don’t have a zillion local standards to keep track of. Second example, my FIL just retired and is doing Habitat for Humanity construction projects around the country. All his previous construction experience had been here in AK. But he is using similar techniques and tools all around the country Yes again there are some local differences in what needs to be done in a house in Florida compared to AK, but the safety stuff is the same. Well except for our mosquitoes being worse than everyplace else.

    Okay, i didn’t really buy her piece. I actually don’t think point 1 should be taken or not at least with serious qualifications. It depends largely on what safety regs you are talking about. If we are talking about OSHA safety regs for coal miners then they don’t’ benefit rich folk at all and very likely rich people working for rich corporations are working their butts off to limit those regs which benefit poor and middle class people. Those coal miners might choose to work hazardous jobs if that is their only option, but probably really like making them safer also. Rear cameras on cars is a decent example on her side but she really doesn’t see how a lot of worker safety benefits the poor and middle class at the expense of the rich. This is far more of a mixed bag then she sees.

    On point 2, the poor will choose less safety if that is their only option. But they often want safety to. Often the trade off is actually the rich/business using their power to make safety too expensive for poor people or not wanting safety for others to come out of their deep pockets. You can certainly find examples to back up what you are saying, but i think there are also plenty that contradict your argument. I’ve nattered on long enough for a Saturday night. If i hadn’t already watched the new Dr Who episode i’d be watching that instead of this.Report

    • Avatar Miss Mary in reply to greginak says:

      I don’t know, I’m consistently surprised at how many “poorer” people make comments against safety regulations. It seems like common sense to me that increasing safety standards in coal mines, for example, would be supported by the miners, but then you hear/see that worker saying that policy makers are just making it more difficult for him to get his job done and he now fears this will put his source of income at risk. But they’re trying to help save your life!

      Here in the northwest there is a big debate on whether or not people want coal to be exported through here. There are a bunch of people who seem to be (blindly?) supporting the idea because they or their loved ones can/will get a job out of it. I find myself saying, “yes, but…” to both sides.Report

      • Avatar Kazzy in reply to Miss Mary says:

        “It seems like common sense to me that increasing safety standards in coal mines, for example, would be supported by the miners, but then you hear/see that worker saying that policy makers are just making it more difficult for him to get his job done and he now fears this will put his source of income at risk.”

        Because god forbid the companies that employ these people enact the safety standards without then trying to squeeze the cost difference out of their employees.Report

        • Avatar Barry in reply to Kazzy says:

          And I’m certain that the companies involved don’t tell their employees that these regulations threaten their jobs, even when they don’t.

          I’m going to add – what value is there from posting anything by a Koch-funded glibertarian at George Mason? Unless and until it’s been vetted by others, it should be thrown on the trash heap.Report

          • Avatar Kimmi in reply to Barry says:

            Naturally he’s just got a job. Just like Jason who posts here.
            Not that we need to listen to folks who have had “more than a job” for the Kochs…

            … credibility, am I right?Report

          • Avatar Dave in reply to Barry says:

            Unless and until it’s been vetted by others, it should be thrown on the trash heap.

            Interesting. I’ve seen creationists use that ploy about everything evolution-related. You wouldn’t want to be seen taking a page from THAT playbook, would you?

            Nevermind. Carry on…Report

            • Avatar Kimmi in reply to Dave says:

              Do you have any clue how many different ways the current global warming models are wrong?

              Don’t mean there’s not global warming, but does mean any prediction comes with a “did someone else say that too???”Report

            • Avatar Stillwater in reply to Dave says:

              Creationists can say that essays about evolution haven’t been vetted, but that doesn’t make the claim true. I don’t see how the analogy works.Report

      • Avatar DavidTC in reply to Miss Mary says:

        I really wish people were taught basic economics in school.

        There seems to be this rather absurd idea that _everyone_ has bought into that businesses are operated in some sort of ‘fixed profit’ mode, a concept that they are attempting to make X dollars profit and if the government makes them do something that reduces that amount, they will either raise prices or cut salaries.

        In the _actual_ world, businesses cut salaries and raise prices exactly as much as they can get away with. Pricing, of both goods and services and of salaries, is entirely set by supply and demand, and has fuck-all to do with any sort of expenses in any direct sense.

        Now, obviously, things are priced _above_ the expense required to make them, it would be a rather stupid business plan to sell them for less. So that, plus some amount of profit, is the price the market set, so in turn that’s what businesses sell them for _in_ the market. But there’s some sort of mental confusion infecting almost _everyone_ that ‘how much something costs to make plus a set amount of money’ is how prices are determined, so adding to ‘how much something costs’ will make prices go up, like it’s some sort of dial. Add two dollars to the cost, add two dollars to the price. Uh….no. Really, no.

        I mean, seriously, I heard people laughing at the Papa John’s guy when he claimed he’d have to raise pizza prices by 11 cents a pizza to provide health care, which is, yes, stupid, but _I_ was laughing at the idea that he already had the ability to raise prices by 11 cents and had…decided (?) not to do it? But would decide otherwise if something else happened? What? Huh? I don’t even know… That is not how pricing works.

        Now, what could happen, if no place provided health care, that all pizza places now have an addition 11 cents per pizza, which makes it likely that, _eventually_, pizza will end up averaging 11 cents more. OTOH, if there are _already_ pizza places paying for health care, then that isn’t going to do anything.

        But corporations stand there and keep repeating ‘We pass taxes on to customers’ and ‘We pass safety expenses on to employees’ and everyone buys it, and not a single person asks ‘Wait, if they do that, then why are they _lobbying_ against such expenses? Why do they care?’

        Likewise, why do they want tax breaks for their industry? Under _their_ logic, won’t that just result in the entire industry charging people less, and the industry making the same amount.

        Of course it doesn’t. We really need to teach people how ‘pricing’ works in school.Report

        • Avatar Stillwater in reply to DavidTC says:

          That might all be true. But just because people prefer an unsafe job over marginally higher wages doesn’t mean that the result is rational. Or efficient. Collective action problems are real things.Report

          • Avatar DavidTC in reply to Stillwater says:

            I don’t understand your response.

            While I am against saying ‘The conditions the poor live under isn’t crappy enough’ (Which is basically what the article argues.)…

            …my point was actually there’s no evidence that the poor would actually _save_ any money, or actually get _paid_ more, by reducing safety regulations. It would go straight into corporate profits.

            Before we argue that ‘The poor should be able to save $2000 by buying cars without airbags’, we need to realize that car companies will make cars without airbags, saving themselves $2000, and then sell them for _$500_ less, because, why the fuck not? Why would they lower prices more than that? That’s enough to get the poor to leap on board.

            And the shitty food that the poor, and _only_ the poor, already buy…why would they change their prices at all? The entire market, as a whole, would instantly relax safety standards on the crappy stuff…and leave prices the same.

            Prices are not based on manufacturing cost. Prices are based on how much people are willing to pay for something. The poor, as they don’t have much money, already have very little choices, and almost everything they buy is an immediate necessity. Supply is the same, and as the poor won’t be (and can’t be) ‘less willing’ to buy the stuff (Aka, demand will be the same) that means that the _price_ will be the same. Prices are not set by a profit fairy adding X% to the cost of manufacturing.

            So, yes, I agree with you. It’s not worth reducing safety standards to ‘help the poor spend less money’, which is a rather idiotic goal. I was just saying that I don’t actually thing reducing safety standards will _do_ that in the first place!Report

            • Avatar Stillwater in reply to DavidTC says:

              I was just saying that I don’t actually thing reducing safety standards will _do_ that in the first place!

              Oh! That’s a good point. Like a really good point! I agree you, and thanks for pointing it out. And if you’re right, then the argument is mute, as they say.Report

            • Avatar Kazzy in reply to DavidTC says:

              “…my point was actually there’s no evidence that the poor would actually _save_ any money, or actually get _paid_ more, by reducing safety regulations. It would go straight into corporate profits.”

              Which, to me, points to a broader problem. One we can’t legislate away.

              I don’t ask or expect that companies operate at a loss, doing what they do out of the goodness of their heart. But when they’ll jump through hoops to inch up massive profits by 1% when opting not to do so could greatly improve the lives of their employees… it makes me wonder about the morals and values we as a society hold.Report

              • Avatar Brandon Berg in reply to Kazzy says:

                The thing is, this isn’t true. You don’t earn high profits by having low costs. Making paper is not necessarily a less profitable business than making yachts, for example (maybe it is, but not because yachts are more expensive). You earn high profits by having lower costs than your competitors.

                If government imposes a regulation that increases costs across the industry, then profits in that industry will be temporarily lowered, but only temporarily. Investors aren’t going to continue pouring money into an underperforming industry, so eventually the industry’s supply curve shifts left due to disinvestment (possibly hastened by the exit of marginally profitable producers). This causes prices to rise, and the industry’s ROI rises until it’s back in line with other industries.

                This isn’t to say that regulation doesn’t hurt businesses and investors. It does, because a falling tide lowers all boats. The cost of making something rises, so the market for that good shrinks. Everyone participating in that market—investors, workers, consumers—is made worse off as a result.

                To take an extreme example, suppose the government imposes a regulation that results in cars costing ten million dollars each to manufacture. The market for cars virtually disappears. Consumers are hurt because they can’t afford to buy cars. Workers are hurt because they’re out of a job. Investors are hurt because they have to liquidate their investments in car manufacturing at a loss. Real-world regulations impose lesser costs, but they still get spread around.Report

            • Avatar Brandon Berg in reply to DavidTC says:

              Prices are not based on manufacturing cost. Prices are based on how much people are willing to pay for something.

              Prices are based on both manufacturing cost (supply) and how much people are willing to pay (demand).

              I swear, reading your comments is like watching a blooper reel from the history of left-wing thought.Report

              • Avatar DavidTC in reply to Brandon Berg says:

                “Manufacturing cost’ is not what ‘supply’ means. ‘Supply’ is the amount a seller is willing to sell at a specific price. I don’t understand how you misstated that when you stated demand correctly. (Supply and demand are the same thing, but flipped around.)

                Supply _can_ change based on manufacturing cost. Or it might not change in any noticeable amount, because of other things.

                For example, selling an airbag-less car (in addition to that model with it) is going to require more work on the part of the car maker. They have to make that car, label it, also ship it to dealers along with the airbag model. Or perhaps they don’t expect it will sell, in which case, hey, look, no supply.

                Saying ‘Supply is equal to this one part of supply, and thus if it goes up supply will go up’ is nonsense. Supply is half a dozen different things, some of which is just random guesses on the part of the manufacturer. You can even get weird fuckup where supply moves the ‘wrong way’.

                And one of the contributing factors, I must point out, is the price of related products, which is especially relevant to my ‘store brand cereal’ example. Almost nothing else matters there for price…the seller is going to price it almost entirely based on what the name brand cost.

                Meanwhile, as I pointed out, the _demand_ of the poor is very inelastic for necessities and they will buy the cheapest damn thing possible.Report

        • Avatar Kimmi in reply to DavidTC says:

          The ones taht lobby against it are running quasi-monopolies. Monopolies charge what the market can bear, and literally can’t raise prices.

          frosh game theory.Report

    • Avatar James K in reply to greginak says:

      She talks about local knowledge being superior to the knowledge of central regulators since people know about the specifics of their locality better than people far away.

      The classic example user for anti-central authority is that fact that knowledge of people’s preferences are bound up inside people’s own heads, which makes nay regulatory effort an exercise in trying to work out what people actually want. Like you, I think the local regulation vs. central version of this argument is not terribly persuasive. I very much doubt my Mayor knows significantly more about me than my Prime Minister.

      It depends largely on what safety regs you are talking about.

      I think it’s fair to say she has a stronger case with product safety than safety in employment.

      On point 2, the poor will choose less safety if that is their only option. But they often want safety to.

      That’s true, but safety vs. money isn’t an artificial choice. Many things can be made arbitrarily safer (if you’re prepared to bear the cost), and generally speaking making something safer means better engineering, which means greater cost. That cost has to be borne by someone, and who bears it is not really under the government’s control.

      The issue here is the incidence of the regulation. This is similar to the idea of the incidence of taxation that I’ve discussed in a previous post.

      Even if the wealthy shareholders are the ones who who legally bear the mandate to make their product safer, that cost will end up moving up and down the supply chain, and some of it is going to stick to workers (through lower wages) and consumers (through higher prices). Short of having the taxpayers bear the costs (or breaking the market entirely, which is a really bad idea) there’s no way to stop this from happening.

      Everyone has to make a choice of safety vs. cost, no matter how rich or poor they are. Given the marginal dollar has greater value to a poor person than a rich one (this is most of the justification for welfare), poor people will stop buying safety before richer people will.Report

      • Avatar greginak in reply to James K says:

        I think there is a better argument that at some advanced level of safety each new reg can only make very small improvements while the costs may still be high.Report

        • Avatar Mad Rocket Scientist in reply to greginak says:

          This! For any given industry/product, there is a point of diminishing returns on safety per dollar spent implementing it given the current state of the art.

          Think cars – For years seat belts were the best thing going to make cars safer. The technology at the time could do more, but only by adding more structure/mass to the car, thus increasing it’s cost to purchase and operate.

          Then we got good at designing crumple zones, and crash testing. Along came airbags & computers & new plastics/composites. Suddenly cars got much, much safer. The cost to purchase went up, as did the cost of ownership, but the safety improvements were so good that it was worth it. I was more likely to be killed in the 1972 Ford Country Squire Wagon I learned to drive in than I would be in my 2006 Subaru Outback – which is half the size & weight.Report

          • Avatar Kimmi in reply to Mad Rocket Scientist says:

            Americans are stupid people. Safest car is fastest car.
            Perhaps this is funny to you, but “loaded up” car is slower and less maneuverable.

            Safety gear in cars doesn’t fix physics. Pretending that you’re fixing physics is dumb.Report

            • Avatar NoPublic in reply to Kimmi says:

              Americans are stupid people. Safest car is fastest car.
              Perhaps this is funny to you, but “loaded up” car is slower and less maneuverable.

              Um. No.

              If you want to simplify to that level, safest car is driven by safest driver. No amount of safety equipment is more valuable than the 3lbs between your ears. If that fails, and you’re in an imminent collision status, *sometimes* speed can lessen your risk. Sometimes traction is better than speed. Sometimes maneuverability. Sometimes mass. Sometimes you’ll fare better in a rear-wheel drive car than a front-wheel drive one. Sometimes not. Modern passenger cars are compromise systems designed around the 99% of cases and hoping you never see the 1%.Report

            • Avatar Mad Rocket Scientist in reply to Kimmi says:

              Errr, huh?Report

    • Avatar NewDealer in reply to greginak says:

      I think “rich” people means upper-middle class liberal professionals, not the Koch brothers. Remember, the libertarian and conservative wings have convinced themselves that a Wills and Trust Lawyer or Graphic Designer in Mill Valley is the real enemy. The Koch brothers and Mitt Romney are men of the people.Report

    • Avatar Mad Rocket Scientist in reply to greginak says:

      I believe she does qualify that not every regulation is a case of elite preference translating into law. A prime example of the kind of regulations she is talking about is something like mandating backup cameras in cars. They can help to prevent cars from running over small children, but they increase the cost of the car by $X. Such a push is made by middle class people, who can easily afford the $X, without thinking about the cost to lower income families who now have to buy equipment they may not want, or need.Report

      • As NaPP commenters are probably tired of hearing, I have been moving for the last couple months. The laws necessitating that baby child seats be in the back proved to be something of an inconvenience. Had I not been as lucky as I am (a spouse to watch the baby, an SUV to pack the stuff), it would have proven to be much, much more difficult.

        Of course, baby seats in the back are a good thing! They’re safer for the baby! Law or not, it’s what I would do 99% of the time. But because of the law, I have to do it 100% of the time. It’s easy for someone who has the money to hire movers, or who like me can handle it by moving nights after the baby is asleep, to think “Well of course it should be mandated because driving with the baby in the front seat even once is too dangerous.”

        But there are costs. These costs are easier for some people to bear than others.Report

        • Avatar NewDealer in reply to Will Truman says:

          I agree with everything you say here but this regulation is not about the adults, it is about the baby.

          Baby’s can’t give preferences or say they don’t mind being in the front. There are adults who would just keep them in front and possibly not even in a baby seat because it is more convenient for said adults.

          The regulations are to prevent the adults above from doing that and keep the baby safe despite said inconvenience.

          Also who can tell when that one percent of the time is really going to be safe or not.Report

          • Avatar Will Truman in reply to NewDealer says:

            That’s the main reason why I am not as up-in-arms about it as I am. Whereas I would only consider putting the child in front under very narrow circumstances, others would because they’re want to coo at the baby (creating multiple dangers).

            It’s one of those things that is indicative of a cultural problem. We shouldn’t need a law because people should use better judgment. They don’t, so we have a law.Report

            • That said, there are times when safety has to be balanced with other considerations, even when it comes to children. It’s not enough to say “This will save lives!” How many lives? To what cost or inconvenience?Report

              • Avatar NewDealer in reply to Will Truman says:

                I think that the issue is that you tell lives saved by the silence in stories of lives died.

                This could make it seem like the regulations are useless but I imagine we would see a lot more stories of deaths if the regulations were not in place.

                A lack of those stories is success.Report

              • Avatar Will Truman in reply to NewDealer says:

                Well, we can look at the plummeting of automobile deaths and fatalities and it would not be unreasonable to believe that regulations at least had a hand in that. That doesn’t change the overall equation, though: lives saved and injuries prevented versus the costs of the regulation (financial and otherwise).Report

              • Avatar Mad Rocket Scientist in reply to Will Truman says:

                There are other considerations beyond even that. Such as, will this regulation change behavior in an inadvertent way? I recall studies that suggest that the presence of safer cars contributes to riskier driving habits.

                I see the push for mandating backup cameras to save the handful of children, without any thought for to how such a camera modifies our habits. I got a new car this year, it has a camera. Handy little thing, let’s me maneuver my Tribeca in such tight spaces! Also gives me a nasty case of tunnel vision, because it’s easy to focus on the screen in the dash, and forget to swing your head about and look around. Almost backed over one of the neighbor kids on his way to school because I failed to look around.

                What was that old saw about the best automobile safety feature being a 12″ spike in the center of the steering wheel?Report

              • Avatar Barry in reply to James K says:

                It’s rather funny; I read the original article by Peltzman, and a take-down.

                And it’s even funnier today, in the Kahneman-Terversky Era.Report

      • Avatar Kimmi in reply to Mad Rocket Scientist says:

        Man, is she stupid or what???????
        Such things get mandated by insurance companies.
        Who else has the fundamental interest to rope together people…?Report

  2. Avatar George Turner says:

    The FAA did something like this when they calculated that requiring small children to have their own seats would result in more deaths, since it would cost more for a family to fly and thus more families would take trips in cars instead of airliners.Report

  3. Avatar Rod Engelsman says:

    I have yet to read the piece, perhaps when I’m done driving for the day I can get to it, and with the proviso that intellectual honesty requires me to evaluate such claims on their merits, I do have to note the following:

    It just seems awfully convenient, bordering on incredible, that any and every policy that the rich folk are opposed to because it might cost them a buck or two, just happens to also be horrible, mean, nasty, and just no damn good for the poor. At least according to propaganda mills like GMU and right-wing think-tanks.

    I approach such studies with skeptical caution.Report

    • Avatar KatherineMW in reply to Rod Engelsman says:

      It just seems awfully convenient, bordering on incredible, that any and every policy that the rich folk are opposed to because it might cost them a buck or two, just happens to also be horrible, mean, nasty, and just no damn good for the poor. At least according to propaganda mills like GMU and right-wing think-tanks.

      Bingo.Report

    • Avatar Brandon Berg in reply to Rod Engelsman says:

      You find it hard to believe that regulations that make it more expensive to produce consumer goods hurts the poor as well as the wealthy? Do you also find it hard to believe that sales taxes raise costs for both the poor and the wealthy?Report

      • Avatar Rod Engelsman in reply to Brandon Berg says:

        “Conservatives know the cost of everything and the value of nothing.”

        Her thesis, for the abstract of the paper is…

        […]By focusing on the mitigation of low-probability risks with higher cost, regulation reflects the preferences of high-income households and effectively redistributes wealth from the poor to the middle class and the rich.

        … which isn’t really the same thing you’re saying here.

        My point, that others here seem capable of grasping, is that a common meme that has risen up lately among libertarian/conservative pundits and “analysts” is that policy “X,” that they oppose, is disproportionally harmful to the poor. Progressive taxes hurt the poor. Fed policies hurt the poor. Minimum wages hurt the poor. Regulations hurt the poor. Etc., etc. etc.

        I didn’t just fall off the turnip truck. I’ve been conversing/arguing with libertarians for over twenty years now. The difference is that back in the day they were pretty honest about not really giving a crap about poor people. Now they claim to do so, fervently and with great passion, but their policy prescriptions are exactly the same as they’ve ever been. It all strikes me as more than a little disingenuous.

        During the run-up to the 2000 election, GWB was campaigning on a promise to lower taxes because at the time, the economy was booming and the Feds were running a surplus. His argument was that the government was keeping too much of our money. Then just prior to the election the tech bubble burst and he assumed office at the outset of a recession. His policy prescription? The exact same tax cut package he campaigned on when the economy was looking entirely different. This told me that his motivation and rationale for the tax cuts had absolutely nothing to do with the state of the economy. Same sort of deal here.Report

      • Avatar Barry in reply to Brandon Berg says:

        “You find it hard to believe that regulations that make it more expensive to produce consumer goods hurts the poor as well as the wealthy? Do you also find it hard to believe that sales taxes raise costs for both the poor and the wealthy?”

        Yes, we believe that it’s *possible*.
        That doesn’t mean that we accept every PR document produced.Report

      • Avatar Kimmi in reply to Brandon Berg says:

        TVA.
        are we done yet?Report

    • Avatar DavidTC in reply to Rod Engelsman says:

      Indeed. Why _shouldn’t_ the poor be allowed to live in rotted half-collapsed houses and eat meat-slurry discarded by from the pet food factory because it was too old?

      We _all_ know this is where things will end up.

      And wouldn’t _that_ be for the best? Because the alternative is homelessness and starvation. We are complete unable to solve the problem of the poor in any manner than making things incredibly cheap for them.

      In fact, why do they even need houses? Can’t they just sleep in the factory and eat factory slop?

      If a rising tides lifts all boats, well, the people without boats are drowning. And while lowering the floor of the ocean may result in the poor taking longer to hit it, but it’s still the bottom, they’re still drowning, and it takes fucking longer to get back to the surface.

      Heaven forbid we just throw them a goddamn life raft instead of inventing ways for their sinking to be less work.

      Oh, incidentally, people. You want to make things cheaper for the _poor_? How about, I dunno, doing something about payday loans and whatnot? And giving them the ability to actually borrow money? The poor actually spend _more_ money on basic shit than the middle class do, because they end up buying it hand to mouth and the absolute cheapest thing, which breaks immediately. Some sort of system where the poor could actually _borrow_ money at a reasonable rate to cover expenses would save them a fuckload more than supposedly paying them $10 more a day because of lack of safety regulations. (Which would not happen anyway, because pricing does not work like that.)Report

      • Avatar Mr. Blue in reply to DavidTC says:

        Heaven forbid we just throw them a goddamn life raft instead of inventing ways for their sinking to be less work.

        We’re actually taking up the liferaft that they might otherwise be able to get because, you know, we’re just not sure it saves them enough money.

        In Texas, people with cars that get them to and from work can’t actually drive them because they fail safety inspection. So they have to spend money they don’t have in order meet someone else’s definition of safety. Maybe this is for their own good, but let’s not pretend that there aren’t tradeoffs here. Let’s not pretend that the tradeoffs aren’t going to disproportionately hit those that can’t afford the nice stuff that people like me can afford.

        Another great example…

        How about, I dunno, doing something about payday loans and whatnot? And giving them the ability to actually borrow money?

        Payday loans are what give them the ability to borrow money. Liberals want to take away that option. This is probably a better example than safety inspections.Report

        • Avatar Brandon Berg in reply to Mr. Blue says:

          In Texas, people with cars that get them to and from work can’t actually drive them because they fail safety inspection.

          Depending on what exactly we’re checking for, this could be less about paternalism than about externalities. It seems to me that most problems that make a car dangerous to the driver also make it dangerous to people in other cars.

          Ideally this would be regulated by insurance rather than by the state, since insurance companies have an incentive to price the externalities correctly.Report

          • Avatar Mr. Blue in reply to Brandon Berg says:

            Yeah. It wasn’t the greatest example because of that.

            But at age thirty-muttermutter, I can afford to replace that very mild crack in my windshield. Ten years ago, I was only able to get my car back on the road because my parents loaned me the money. My only other option would have been… a payday loan.Report

            • Avatar Mr. Blue in reply to Mr. Blue says:

              Okay, “very mild” may be an understatement. But only a fraction of it was in the line of view. I guess the concern is that it’ll spread. Which it would have,eventually. But maybe by then I would have had money saved up for it.Report

              • Avatar Michael Cain in reply to Mr. Blue says:

                Or that it will fail catastrophically at highway speeds, as such sometimes do, causing you to cross the dividing line and kill the family of four approaching from the opposite direction. Small chance, but enormous consequence. I’d be happy to let you drive with the big crack across the windshield — if you’ll accept the $100 fine for being caught going faster than say 35 mph.Report

              • Avatar Mr. Blue in reply to Michael Cain says:

                *Finally* It let me back on. Wahoo! (Thanks WT)

                Most states get by just fine without safety inspections. That provides greater versatility for people who can’t afford repairs. Which mostly isn’t people with money. I said in my original comment that maybe it was a good idea regardless. Just also saying that it’s something that hits those without money harder than it hits those with money.Report

              • Avatar Mike Schilling in reply to Mr. Blue says:

                it’s something that hits those without money harder than it hits those with money.

                Unlike …. dammit, there must be something.Report

          • Avatar Stillwater in reply to Brandon Berg says:

            A well regulated insurance industry, being necessary to the security of a free state…Report

        • Avatar zic in reply to Mr. Blue says:

          Have you ever actually been, you know, poor? I don’t mean just shy of cash for a few months, I mean bone-grindingly poor as a way of life?

          Because I honestly don’t think you know what you’re talking about here, with the exception of junk car costs. And there, the even bigger problem is the moving violations that such a car garners; the ticket fees, lost day at work, etc. plus the cost of the replacing the burnt-out tail light that got you pulled over in the first place.Report

          • Avatar Mr. Blue in reply to zic says:

            I have been poor for stretches, but have been fortunate enough not to be for a prolonged period of time.

            The same principles apply, though. Yeah, it sucks and can be expensive to get pulled over. You usually don’t have to miss work for it, but you can be stuck with the cost of the ticket plus the cost of the repair. That’s a good reason to get it fixed, if you can. There’s also social responsibility and all that. Like Brandon pointed out, maybe not the best example on my part.

            However, absent inspection, you have greater versatility to hold off and take your chances. If it’s a busted tail-light, drive as little as possible at night. Drive as little as possible period. Cross your fingers. The required inspection adds yet another layer of offense if you can’t afford to get it fixed. The cost of the ticket for the busted tail light, the cost of repairs, and the cost of a ticket for lacking registration.

            Either way, it’s an issue that hits the cash-strapped more than it hits those who see a broken tail light and can get it fixed right away. [ed note: Posted by proxy]Report

            • Avatar zic in reply to Mr. Blue says:

              Poor people don’t want payday loans; that’s for folk who have enough of a regular income to have a hope of paying the loan back. That’s why payday lenders are so common around military bases, men and women serving can get the money together eventually. Poor people can’t.Report

              • Avatar NewDealer in reply to zic says:

                The payday loan places in SF tend to be in areas where the chronically unemployed hang out for most of the day. There are at least two distinct places I can think of.Report

              • Avatar zic in reply to NewDealer says:

                You might find this Federal Reserve paper interesting:
                http://www.federalreserve.gov/pubs/feds/2009/200933/index.html

                Some clips from it:

                Payday loan customers are required to have a bank account and a job (or other regular source of income). The largest payday lender in the U.S., Advance America, reports that it does not undertake any evaluation of a customer’s creditworthiness in deciding whether to approve a loan application.8 The company does, however, take into consideration the customer’s income in determining the size of the loan. Although payday lenders generally do not obtain credit reports on their loan applicants, some lenders subscribe to a service that provides information about a potential customer’s prior payday borrowing and repayment behavior.9

                The highest concentrations of payday lending stores on a per capita basis are in those southern states that do not explicitly or effectively prohibit payday lending – Alabama, South Carolina, Tennessee, Mississippi and Louisiana.

                Using credit score data obtained from Equifax, figure 6 shows the share of each county’s population with either no credit score or a credit score that would typically place them in the subprime market. The concentration of these credit-challenged individuals is highest in some of the same states that have high concentrations of AFSPs, notably Georgia, South Carolina and Mississippi. This suggests that AFSPs may tend to locate in areas where demand for their services is likely to be high because a significant portion of the population does not have access to more traditional sources of credit.

                And the conclusion:

                Consistent with the prior research, I find that AFSPs are more prevalent in areas where a large percentage of the population is black or lacks a high school diploma. However, contrary to previous studies, I find that AFSPs generally avoid the poorest areas and areas with high concentrations of Hispanics. Credit scores are found to be a strong predictor of AFSP concentration: counties where a larger percentage of the population has no credit score have a greater density of all three types of AFSPs examined, while counties where a larger percentage of the population has a credit score that would place them in the subprime category have increased concentrations of both payday lenders and pawnshops. This finding suggests that AFSPs may simply locate where the demand for their services is likely to be greatest because a significant portion of the population does not qualify for more mainstream (and less expensive) forms of credit. However, further research is needed to more fully assess the competing claims made by industry critics and supporters regarding the behavior of AFSPs. Finally, state laws and regulations governing AFSPs appear to have a significant effect on the number of AFSPs per capita. More stringent limits on the interest rates that can be charged on payday loans (pawn loans) are associated with significantly fewer payday lenders (pawnshops) per capita.

                Report

              • Avatar BlaiseP in reply to zic says:

                Although payday lenders generally do not obtain credit reports on their loan applicants, some lenders subscribe to a service that provides information about a potential customer’s prior payday borrowing and repayment behavior

                Heh. That service is called TeleCheck and I just got finished writing some interfaces to it.Report

              • Avatar zic in reply to BlaiseP says:

                The geographic study is interesting; it suggests studying if Payday lender thrive in areas were that correspond to regions that were red-lined for mortgages.Report

        • Avatar Creon Critic in reply to Mr. Blue says:

          Liberals want to take away that option.

          Postal banking instead of payday loans for the unbanked and underbanked. Take away the exploitative option and replace it with one that doesn’t take advantage of people in difficulty.

          I really don’t understand the ennobling of predatory relationships that grind the vulnerable party down. I hadn’t responded to James K mentioning the word evil before, it seems suited to these desperate exchanges.Report

          • Avatar Brandon Berg in reply to Creon Critic says:

            And yet, for all the overwrought rhetoric about “predatory lending,” has anyone figured out, and actually implemented, a better way to make small, short-term loans to people with bad or no credit? If payday lenders are making extraordinary profits, then surely someone could offer better terms and corner the market. How has nobody taken advantage of this amazing business opportunity?Report

              • Avatar Brandon Berg in reply to NewDealer says:

                I’m not familiar with the details of microcredit, but I don’t think the loans are typically made for as short a term as payday loans (two weeks, typically). The thing that gives payday loans such high APRs is the fact that the administrative overhead, which is more or less invariant with respect to the term of the loan, is annualized from a two-week basis. A $15 fee on a $100 loan is really not that unreasonable, when you factor in rent, administration, losses, and collection expenses, but the APR looks terrible because you’re annualizing a two-week loan. The APR formula was meant to be applied to multi-year loans, not two-week loans.Report

            • The loans are only one aspect of the issue. The larger issue is the provision of financial services more broadly. Why should those least able to afford it pay the most for basic financial services like check cashing, wire transfers, and loans of relatively small sums?

              Mr. Blue said liberals want to take away the payday loans as if liberals didn’t offer any replacement. I think liberals would favor a public option for financial services like postal banking, an option that many other developed countries have used. Also, an option that reduces the risk of one-off lending by putting the lender and borrower in a longer relationship. Payday lenders might still exist, but they’d face some discipline when faced with a competitor whose object was more public service oriented.

              That last bit, public service oriented, is probably the largest division. As a liberal, I’m going to answer the question “is access to financial services a human right?” yes, and proceed to suggest frameworks that open that access up. Whether or not there are business opportunities is beside the point to me, the point is the provision of a needed service to a vulnerable population on reasonable terms.Report

              • Avatar DavidTC in reply to Creon Critic says:

                Exactly. Payday loans are just the worse of it, being so obviously abusive. So I’d like a serious answer to a question. Let me explain:

                Lending is no longer working off people depositing money in banks. Instead, banks dick around with that money by putting it in crazy investments, secure in the fact they can get money to loan to other people from the _Fed_ loaning them money. (This is why we get no fucking interest on deposits anymore.)

                Conclusion: Banks no longer need our money to make loans. Loans would exist without our money in banks.

                Question: Why on earth should we still have a system of banks to operate our checking accounts?

                Seriously. Someone tell me the answer to that. Someone tell me why it wouldn’t be more sane to simply give our money to the government, and have them hold it for us? (Which is, uh, actually what’s going on now, anyway. It’s just held by the Fed in the name of the bank.) What possible purpose, economically, are _checking accounts_ in banks serving?(1)

                Besides being willing to invest _our money_ in random shit, that is, which appears to provide no benefit to us, so fuck that reason. And besides having some way for banks to suck our money way in random fees and other bullshit?

                Please note I’m not saying we should ban banks offering private checking accounts or whatever, I’m asking a question as to the actual harm the country would suffer if the government started offering checking accounts and 90% of people switched to them.

                Also note that I know ‘the Fed’ and ‘the government’ aren’t the same thing, I just don’t actually care whose doing this. Or, hell, some sort of entity like the Post Office, created to operate separately and be self funded. Or as was suggested elsewhere, just _use_ the Post Office.

                1) I explained the ‘Where loans really come from’ thing because whenever I ask this question people go ‘So they can loan them out to other people.’, which means they’ve been watching too much It’s a Wonderful Life and do not understand how it currently works. Banks _used_ to lend your money out. Currently, banks are big investment houses that just happen to hold our money and have a direct line to the Fed to borrow money from.Report

              • Avatar Mr. Blue in reply to Creon Critic says:

                If you want to set up something that would render payday lenders obsolete, I’d focus on that. I’m not sure I’m sold, but it catches my interest. The evilness of payday institutions or banks in general doesn’t.

                My main concern is that we do something to knock the payday lenders out of business and call it a victory for consumer rights. That you might have other ideas that would make this a less bad thing than I envision is good, but I don’t really want to touch payday lenders until something else is already in place. At which point, they’ll either reform themselves as you say or go out of business.Report

              • Avatar Creon Critic in reply to Mr. Blue says:

                Mr. Blue, fair enough. Evil is probably not the most constructive word for this discussion. I used it only because James K used it in the recent post on sweatshops. I’d tend to focus on the perils of desperate exchange and the need for third party scrutiny in relationships with particularly acute power imbalances.Report

              • Avatar Brandon Berg in reply to Creon Critic says:

                My point is that you shouldn’t need a public option. If payday lending is really “predatory” or “exploitative,” then they must be making very high profits, right? So there should be plenty of room for someone to step in with an alternative that offers much better terms and still earn a good ROI.

                The obvious question is, why hasn’t that happened? Without major barriers to entry, it’s very difficult to maintain extraordinary profits. So the answer is likely either that there are extraordinary barriers to entry, or that payday lenders do not in fact make extraordinary profits, and are offering the best terms they can reasonably be expected to offer given the features of the market in which they operate.

                Why should those least able to afford it pay the most for basic financial services like check cashing, wire transfers, and loans of relatively small sums?

                Because they have the least to offer, obviously. If you’re keeping a minimum of $1000 in your checking account at all times, the bank can use that money to earn interest to pay the fees you would otherwise have to pay. If you’re just cashing your paycheck and walking out with the cash, the bank needs to charge a fee to make a profit.

                It’s one thing to say that we should subsidize financial services for the poor. But if you’re going to say that subsidies are necessary, then that’s an implicit acknowledgement that it’s not profitable to offer financial services to the poor on terms you would find acceptable, and you should drop the inflammatory rhetoric about “predatory relationships.”Report

              • I think we’re going to continue to disagree as to when a relationship can be deemed exploitative/predatory. I have a particular vision of social justice, human rights, etc., etc., that would mark off price gouging and sweatshops, for instance, as exploitative and predatory. It does not hinge on return on investment. As you say those least able to afford financial services have the least to offer. It is in that context that they are limited to a series of choices that extract costly concessions and tend to put them at further disadvantage.

                The consequences for the party with less bargaining power, in a structurally less advantageous position, that’s what I’m looking at when I’m calling a particular arrangement predatory or exploitative. There’s a lot more about the capability approach, primary goods, and what establishing a floor for human dignity looks like, but those are the basic contours of where I’m coming from. Again, this thread began, for me, with Mr. Blue’s claim about liberals taking away the payday loan option as if there wasn’t a replacement or any underpinnings for why payday loans might be identified as problematic.

                Do you believe the US currently provides a satisfactory answer to the problem of millions of unbanked and underbanked households? I’m going to guess that your threshold for when a public option is required is a lot higher than mine.Report

            • Avatar Dave in reply to Brandon Berg says:

              Thank you for the material I needed to write a post of my own. This is an interesting conversation but it is lacking key elements. Give me a few days.Report

          • Avatar Mr. Blue in reply to Creon Critic says:

            If we can come up with something that makes payday lending obsolete, and it’s financially viable, I’m totally down with that. I think we should do that before trying to ban them or force regulations on them that have the same effect as banning them.Report

        • Avatar DavidTC in reply to Mr. Blue says:

          In Texas, people with cars that get them to and from work can’t actually drive them because they fail safety inspection. So they have to spend money they don’t have in order meet someone else’s definition of safety. Maybe this is for their own good, but let’s not pretend that there aren’t tradeoffs here. Let’s not pretend that the tradeoffs aren’t going to disproportionately hit those that can’t afford the nice stuff that people like me can afford.

          You’re going to have to explain what the hell you mean by ‘safety inspections’. I’ve never had to have any sort of safety inspection of my vehicle in my state of Georgia. Emission inspection in metro areas, yes, safety inspection, no.

          And driving around unsafe cars has rather obvious implications for everyone, assuming by ‘safety’ you actually mean _safety_.

          Payday loans are what give them the ability to borrow money. Liberals want to take away that option. This is probably a better example than safety inspections.

          Payday loans exist to fill a void that the giant banks are purposefully avoiding because, wait for it, they own the payday lenders.

          There is absolutely no reason that poor people could not get short term loans with reasonable interest except that banking is an oligarchy and small banks do not exist anymore. (Please note that by ‘reasonable’ interest, I mean something like 15% interest, or Fed+10%, not the 300% or more interest that payday lenders have.)

          Oh, and, of course, now the banks actually have gotten into payday lending…by being as abusiveness with the interest as traditional payday lenders, while _also_ having direct access to their customers bank accounts. (Which rather demolishes the entire excuse of ‘we might not get paid back’ used by traditional payday lenders to justify absurd interest rates.) Oh, and they’ve found more ways to be abusive, taking the entirety of money out of customer’s amount exactly a month later and hitting them with penalties for overdrafts.

          For some completely inexplicable reason, no bank has bothered to create any sort of loan for the poor with a reasonable interest rate and reasonable monthly withdrawals from the customers account. For _some_ reason, nowhere exists where poor people can say ‘Hey, I’m short $100 this month due to car payments, can I borrow $100 and pay you $28 for the next four months? I have direct deposit to your bank, you know I have a job and I’m good for it.’

          No, instead, the poor borrow $100 one month, the bank attempts to suck out $130 exactly a month later, it’s not there, the banks hits them with an overdrafts, etc…

          I see no reason to explain why this is a problem, why this is deliberately abusive behavior by the oligarchs who own our banking industry (Which we just fucking bailed out.) of the most vulnerable people in society who literally have no other choices. Either you understand the problem or you don’t.

          Incidentally, I did not actually suggest banning payday lending. I suggested ‘doing something’ about it. Like, you know, making it conform to the same rules about interest rates that everyone else has to.Report

          • Avatar zic in reply to DavidTC says:

            DavidTC, inspections are required by some states, not by others; same goes with auto insurance. It’s state law, just like driver’s licences.Report

          • Avatar Mr. Blue in reply to DavidTC says:

            Like Zic says, some states – and sometimes certain places within states – require safety inspections in addition to emission inspections.

            Sticking payday lenders with the same regulations as regular loans will effectively kill them. Payday loans are a different bird. They’re short-term, focused on those least likely to be able to pay up, and are super-convenient with late hours and such.

            From what you say, it sounds like there is room for an entrepreneur to come in and make these short term loans at a more reasonable rate while making a profit. I gotta admit some skepticism. Such a void would have been filled by now. If not by one of the big banks, then by Walmart or something. That it hasn’t tells me it’s more complicated than that.Report

            • Avatar DavidTC in reply to Mr. Blue says:

              Walmart actually does that. Except it’s called a Walmart Credit Card.

              Credit cards are basically the very thing I was talking about. It’s lending money to the poor, at (mostly) reasonable interest rates, which turn out to be somewhere between 20% to 30%.

              The problem is that no one does that short term. And note by ‘no one’ I mean ‘nowhere that actual poor people can find and use’. It might actually exist, I don’t know. (The payday lenders have very good SEO, so I can’t find any useful results.)

              Banks refuse to do it, because they make a lot more money by instead having their own customers sign up with a payday lender, and then bounce a check or get a overdraft. Hey, look, they just made $30 instead of that $3 in interest. (Ah, perverse incentives, how we love you. It is so awesome that your bank wants you to spend more than you have so they can hit you with fees. There’s no way that could ever go wrong.)

              And Walmart is not actually allowed to make loans, for some reason, except via issuing a credit card. There’s all sorts of weird regulation there, which somehow allows payday lenders to exist but not Walmart loans.

              (Oddly enough, Walmart is considering getting into mortgages for some reason. Ans Sam’s Club is offering small business loans. These are presumably different than payday loans.)Report

              • Avatar Mr. Blue in reply to DavidTC says:

                If Walmart offers a sufficient substitute, then why does anyone go to payday lenders?Report

              • Avatar DavidTC in reply to Mr. Blue says:

                Because getting credit cards takes time, and you usually can’t pay your rent with them.

                A major problem of being poor is the lack of _time_. Most of the people who borrowed from a payday lender could _probably_ borrow the money elsewhere. (1)

                The problem is that they don’t have the time to figure anything out, because they’re working two part time jobs and can’t afford day care and the goddamn banks decided to start closing at 3:30 in the fucking afternoon. (Seriously, what the hell is going on with that?) Also they tend to be poorly informed about their options. And the car broke down and needs a new transmission and they don’t get paid until next week, and their existing credit cards are maxed out.

                There’s a reason payday lenders are open 24/7. (And I’d have no problem with their costs being somewhat higher. But not the absurd abusive shit they pull.)

                1) And the remainder are such poor risks that _no_one _ should be loaning them money. No, those people are not ‘helped’ by a payday lender…having one more month before running out money, while racking up an absurdly large debt that is just going to balloon each month they can’t pay it is not actually ‘helpful’ in any sense of the word. (‘Help, help, the room I’m standing in is filling with water!’ ‘Here’s a large block of ice you can lay on to keep from drowning!’)Report

              • Avatar Mr. Blue in reply to DavidTC says:

                My sympathy starts to wane with “they don’t have time to go to Walmart.” Maybe there’s more to it? Are Walmart credit activities limited to particular times of the day? Maybe Walmart can expand its hours. But then, maybe they’d have to charge more. Hmmm.

                That their existing cards are maxed out suggests deeper problems. It means that they’re probably not good bets to loan money to at rates you would consider reasonable.

                And “They’re better off not borrowing the money because they can’t pay it back” seems like a determination somebody else should make.Report

              • Avatar DavidTC in reply to Mr. Blue says:

                My sympathy starts to wane with “they don’t have time to go to Walmart.” Maybe there’s more to it? Are Walmart credit activities limited to particular times of the day? Maybe Walmart can expand its hours. But then, maybe they’d have to charge more. Hmmm.

                Erm, I don’t think I was very good at explaining that. Walmart _barely_ offers credit cards. You have to find a Walmart with a ‘MoneyCenter’, which I’ve never seen. (I think you can apply online, but I only know that because I actually searched for ‘walmart loans’. They don’t mention anything about this in the store that I’ve seen.) I just mentioned Walmart because you asked why they don’t do loans.

                That their existing cards are maxed out suggests deeper problems. It means that they’re probably not good bets to loan money to at rates you would consider reasonable.

                Or it just means that banks see no point in extending more credit to them when they can just wait and hit them with fees.

                Like I keep saying, banks have a perverse incentive to _not_ lend money to the poor.

                If the bank is _really_ lucky, their customer will go to a payday loan place (Or now get one from them), which will attempt to automatically repeatedly deduct the loan amount from their bank account in a month, result in multiple fees from that alone!

                If the bank is not lucky, well, that person will just run out of money, and the bank can hit them with a fee for that.

                And, of course, it’s nearly impossible to get banks to stop letting people automatically attempt to pull money from your account, hitting you with a fee each time.

                Will you at least acknowledge that this is a pretty surreal conflict of interest? That banks are not operating honestly, and have absolutely no incentive offer a loan they can make $5 on when instead they can repeatedly make $30 on overdraft fees? Will you admit that this is _not_ a good way to structure things, and thanks to our megabanks, there is very little completion in banking?

                And “They’re better off not borrowing the money because they can’t pay it back” seems like a determination somebody else should make.

                Uh, yeah. That’s my point. The people who go to payday lenders are one of two types of people:

                1) reasonable-ish credit risks, that _should_ be able to get a loan somewhere for 30% or maybe 40%, but because our society likes to prey on poor people, they cannot.

                2) People who, under no circumstances, should be able to get a loan, because they will _not_ be able to repay it. It is actually a _bad_ thing for them to get a loan. All that will accomplish is to start lumping on absurd amounts of more debt. There’s a _reason_ it’s illegal to loan money to people you know cannot pay it back. (And banks would not, in fact, loan to such people, no matter what the interest rate. Payday lenders, however, are not very good at risk determination.)Report

          • Avatar George Turner in reply to DavidTC says:

            Incidentally, I did not actually suggest banning payday lending. I suggested ‘doing something’ about it. Like, you know, making it conform to the same rules about interest rates that everyone else has to.

            And there’s the disconnect. By making them conform to the same rules as regular banks, you’re effectively banning them because the default rate on the loans is so high that such businesses would collapse when stripped of the higher interest rates, leaving nothing to take their place. If you could successfully run such an operation at lower interest rates then some of the existing companies would just lower their interest rates to gain market share, taking over the industry. If they raised their rates again, new companies would beat them because there are very low barriers to entry in such businesses. Heck, immigrant mom and pop store owners could do it out of their cash registers.

            The fact is, at times we are all payday loan operators when required, to friends, roommates, and whatnot. It’s just that to make a living at it you have to make loans to a lot of people, and often those people default, so to stay in business you’re going to have to charge enough to cover the losses.Report

            • Avatar DavidTC in reply to George Turner says:

              By making them conform to the same rules as regular banks, you’re effectively banning them because the default rate on the loans is so high that such businesses would collapse when stripped of the higher interest rates, leaving nothing to take their place.

              We can actually figure out the ‘correct’ interest rate, because we have another example of lending to the poor: Credit cards.

              Granted, those people possibly aren’t _quite_ as poor as the people being loaned to by payday lender, but the fact is that credit cards tend to be below 30% interest, and there’s really no way that 700% interest can be reasonable. 45%, maybe. You want to argue 60%, fine. But 700% is insane.

              At a loan period of one month, that means each of them pays $30 on every $100. Which means statistically, mean they expect literally three out of ten of the people they lend to never pay them a single dime, and the remainder to pay them on time, with no late fees or rollovers!

              Of course, the payday industry will claim the default rate is somewhere between 10%-20%, but that’s an outright lie, because they’re including ‘rollovers’ as defaults. (And you will notice 700% is _still_ too high by 10%. No, 10% profit a month on loans is not normal.) The average amount of rollovers for loans is something like 2, which means that, of the loans that get paid back, people average paying back $165 for that $100 loan.

              And, hilariously, payday lenders probably do have a lot of their loans default that normal banks would not have made…because they were idiotic loans to start with. Because they don’t bother to check the riskiness of borrowers because they are making so much money. They don’t _need_ to make sure of anything.

              If they raised their rates again, new companies would beat them because there are very low barriers to entry in such businesses. Heck, immigrant mom and pop store owners could do it out of their cash registers.

              The barrier to entry to lending money is pretty high. You need to have enough money to make enough loans to actually cover the statistical spread.

              It’s like operating a casino. You cannot start a casino with $10,000 in cash, with $100 bets. Even if your house advantage is 2%, you could indeed lose the entire $10,000 through sheer chance at the start and then you can’t make any more bets to recoup the money and you’re completely fucked.

              There’s probably some banking terminology to cover that, but I don’t know what it is.

              Now, _eventually_, the payday loan problem will correct itself. Some sort of entity with ethics and money will start the ball rolling. That is, in fact, what the suggestion the Post Office do it is about.

              But, like I said, part of the problem is that the _obvious_ people to do it, the banks, have created a system where they profit from payday lenders. No one else actually _has_ any sort of infrastructure to hold money and assess risk and do all the other banky things that loans require. (Payday lenders, for example, do not actually calculate interest rates, or figure out risk.)Report

            • Avatar Kimmi in reply to George Turner says:

              No, you’re the schlemiel who makes payday loans.

              When we make loans, we extract… higher prices than money. Pride, Dignity… stuff like that.
              (can post vids if you’d like).Report

          • Avatar Dave in reply to DavidTC says:

            Payday loans exist to fill a void that the giant banks are purposefully avoiding because, wait for it, they own the payday lenders.

            Do you have any links to support this assertion? I’d just like to know who owns what.Report

          • Avatar LWA in reply to DavidTC says:

            “Incidentally, I did not actually suggest banning payday lending.”
            Maybe they should.

            The question I think we should be asking is, does it serve the public interest interest rates above a certain level to be allowed to exist?

            Do exhorbitant interest rates help or harm the public economy?Report

            • Avatar Kimmi in reply to LWA says:

              Harm. sucks money out of good business into stupid business.Report

            • Avatar Dave in reply to LWA says:

              I’ll suggest banning them.Report

              • Avatar BlaiseP in reply to Dave says:

                Well, we used to have laws against gambling and loan sharking. As with illegal drugs, we’d only drive the high-risk market underground. I don’t have a good answer to it but if you’re shopping coverage for your high-risk venture at Lloyds of London, you’re also among sharks.

                As I’ve said elsewhere, we’ve got a fundamental problem in the USA: our financial industry sector has arranged for the abolishment of sound regulation which would have attenuated some of our current troubles. Our government has gone a-borrowing overseas when they ought to have arranged to pay their bills from their own accounts. Our entire financial ecosystem has turned us into a nation of borrowers and not of savers and investors. We spend too much and get too little benefit from it.

                All truisms, to be sure. We’re the best house in a bad neighbourhood, here in the USA. But we’re not going to eliminate corporate loan sharks, not while the bumfuzzled body politic doesn’t act in its own best interests, making our politicians do their jobs, behave responsibly, quit taking corporate payoffs and start taking the long term view. This is a nation that’s gotten so stupid, we now allow all the governments to run the crookedest Numbers Game in town, all these State Lotteries. Anyone with two semesters of algebra would know it’s a racket. We get the government we deserve.Report

              • Avatar Dave in reply to BlaiseP says:

                BlaiseP,

                Well, we used to have laws against gambling and loan sharking. As with illegal drugs, we’d only drive the high-risk market underground.

                I’d call it legalized loan sharking, but you do have a good point about driving people underground. I’m up to my eyeballs in various sources at the moment so I may have more to say later.Report

          • Avatar Maribou in reply to DavidTC says:

            At least in Canada, the place “where poor people can say ‘Hey, I’m short $100 this month due to car payments, can I borrow $100 and pay you $28 for the next four months? I have direct deposit to your bank, you know I have a job and I’m good for it” is often a credit union.Report

        • Avatar George Turner in reply to Mr. Blue says:

          Well, the point is to make sure we burden the poor with lots of requirements they can’t afford and then carefully monitor what kind of private services they use (such as payday loans) so we can invent reasons to stop them for their own good.

          “Of all tyrannies a tyranny sincerely exercised for the good of its victim may be the most oppressive. It may 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.” – C. S. Lewis

          The reason it’s important to recognize that there’s a point where a safety regulation crosses the line and starts doing more harm than good is that without such a realization, people will urge regulators to go way across the line because they don’t think such a line even exists.

          If we set a safe limit of uranium exposure at zero, all food would be banned, but fortunately we would die of dehydration before we starved to death. If we set the limit somewhat higher then only the rich people could afford food and water. There is a sliding scale of costs and benefits.Report

      • Avatar Stillwater in reply to DavidTC says:

        Some sort of system where the poor could actually _borrow_ money at a reasonable rate to cover expenses would save them a fuckload more than supposedly paying them $10 more a day because of lack of safety regulations. (Which would not happen anyway, because pricing does not work like that.)

        Do you mean going against market principles to provide low interest rates to high risk individuals via government intervention? Something like that? Those incentives are whacked.

        Man, I wish they taught basic economics in school.Report

        • Avatar DavidTC in reply to Stillwater says:

          Do you mean going against market principles to provide low interest rates to high risk individuals via government intervention?

          I did not say ‘low’ interest rates. I said _reasonable_ interest rates. 15%. 30%. 45% I don’t care. Whatever the risk is. You know, ones that are actually in line in the amount of risk poor people present, and not crazy-ass 700% interest rates.

          If you are making loans with a 700% interest rate, either those loans are in line with the risk and you are making loans to non-existent people who are dying of cancer in two weeks, and should probably stop loaning money to such absurdly high risks, _or_ the loans are nowhere in line with the risk.

          Likewise, there is absolutely no real reason to ever have loans with exactly one repayment point of a single month. This makes people have to pay _more_ money at once _than the entire principle of the loan_. That is functionally insane…if they didn’t $200 last month, how the fuck would they have $260 this month? That makes no sense… _unless_ the purpose of that is to cause them to default on the loan, hit them with penalties, and roll over to another month.

          There _are_ actual ways to calculate the amount of interest, vs. the amount of repayment, to be assured that, statistically, you make money. Payday loans are fucking nowhere near that, at all. (And they’re even worse than the calculations would imply, because, like I pointed out, they’re rigged to come due all at once, so people _can’t_ pay them back. But even _with_ the deliberately high level of default, they _still_ are completely out of scope.)

          The reason the payday loan industry exists is that banking industry has deliberately refrained from providing poor people loans, not that that is a reasonable amount of interest to charge poor people. The reason banks stay out of the market is that they make so much money from payday loans. They own payday lenders, they make money from overdrafts, etc. And now, they’re actually entering the payday lender market themselves!

          Of course, more ethical smaller banks could provide loans and stop this nonsense, pretending such an entity as ‘smaller banks’ and/or ‘ethical banks’ existed.Report

          • Avatar Jim Heffman in reply to DavidTC says:

            You’re begging the question of whether the rates are reasonable.

            “Unreasonable” and “really high” are not synonyms.Report

          • Avatar George Turner in reply to DavidTC says:

            The apparent interest rate is also a function of the default rate and the durationof the loan. If you’re making one-year loans and 10% of the people run off, you’d have to charge an 11% annual interest rate to break even. If 10% of the people run off on a one-day loan (in an “I’ll pay you back tomorrow” business), you have to make the 11% back each day, so when expressed as an annual rate it looks absolutely insane (around 4000% interest) even though in both cases you’re just charging them $11 for a $100 loan.

            Thus a payday loan will never look like a home loan or a car loan.Report

            • Avatar DavidTC in reply to George Turner says:

              Which would be a reasonable point if there was actually some demand for 1-day or, in this case, one month loans. There is not.

              The _payday_ companies are the ones that have structured their loans in such a way that they ‘have to’ charge absurd amount of interest. Which, incidentally, seems equivalent with banks in your example, but really isn’t, because neither banks nor payday lenders aim exactly at ‘getting their money bank’, they obviously aim higher…and if only 9% run off on their loan instead of 10%, banks make 1% of what they, on average, have lent out to people each day, whereas payday lenders would make 365%!

              It’s all well and good to say ‘The interest is correct for such a risky loan of such a short term’, but the question then arises so ‘So if there would be less interest on longer term loans, thus resulting in lower payments, thus resulting in _more_ people paying back their loan, why does such a loan not exist?’

              In fact, payday are structured _to_ cause defaults. There’s absolutely no reason to assume that someone who does not have $X, where X is close to their monthly salary, one month will suddenly have $X*1.50 next month. Or even $X*1.20. Even some sort of ‘short term’ payment plan should have that being paid off over six months, in amounts lower than the original loan.

              Such a loan does not exist because payday lenders _want_ people to be unable to pay, so they can roll over the loan each month, keep charging more fees. And banks are happily collecting fees from the bounced payments.

              And this is ignoring two issues on top of that:

              a) Payday lenders are so massively profitable they’re utterly reckless, lending money to people who never should have gotten loans. ‘Haha, jokes on the payday people’, people think, ignoring the fact that someone having debts they cannot possibly be pay back and get absurdly worse each month makes it nearly impossible for people to recover from poverty. There’s a reason we make it illegal for banks to loan money they know cannot be paid back, and it’s not to protect the banks.

              b) Payday lenders are actually charging rather high rates _even if_ you take their amount of defaults into account. 700% interest rate, with a repayment in a month, will break even if about _three out of ten_ people won’t pay back their loan, and the rest will pay back only that original loan. In reality, about one out of ten default, and another two out of ten end up in a downward spiral where they pay three or four times their loan.Report

        • Avatar Barry in reply to Stillwater says:

          “Of all tyrannies a tyranny sincerely exercised for the good of its victim may be the most oppressive. It may 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.” – C. S. Lewis

          Riiiiiiiiiiiiiiiiggggggggggggggghhhhhhhhhhhhhhhhhhhhhht.

          He wrote this in the age of Hitler and Stalin (please don’t pretend that Stalin was trying to help people).Report

          • Avatar BlaiseP in reply to Barry says:

            That worthy gentleman also said, if memory serves, that experience is the most brutal of teachers. But he does teach.

            It seems to me The Almighty speaks to us in more than the writings of some itinerant Judeans and Greeks, the record of His interactions with man. But it’s not set up as a biology or physics textbook. The Almighty’s works are also made manifest in mathematics and physics. Reality is so heartless, so brutal. Some of us learn and others just will cling to outdated maxims and nostrums though all the evidence contradicts them.Report

          • Avatar Jaybird in reply to Barry says:

            (please don’t pretend that Stalin was trying to help people).

            Barry, this may come as a complete surprise to you but, at the time, people were arguing that Stalin was doing a better job of helping his people than Whichever President or Whichever Prime Minister.Report

            • Avatar Chris in reply to Jaybird says:

              The Soviets under Stalin had industrialized a huge complex of nations, helped to suppress ethnic conflict across a wide swath of Asia and Europe, brought a giant peasant class into the 20th century (something that, to some extent, China is still trying to do more than 60 years after its revolution), and defeated the Nazis. It seems reasonable that someone at that time who either wasn’t aware of what Stalin was doing to the Kulaks and to political dissenters, or didn’t believe what he or she heard about such things, might think that Stalin was actually helping his people a great deal. You and I have the gift of hindsight.Report

  4. Avatar zic says:

    My younger son was certified in OSHA safety regs while in college, it was required as part of earning his degree. And the results have been very surprising; he brings what he learned to everything he does; he thinks through accomplishing complicated tasks with the notion of ‘safety’ built in to the ‘how do I do this?’ planning. From small things, doing the same motion over and over in the kitchen, to large, lifting an engine out of a car, his approach is shaped by the notion that safety matters, and that planning for safety should be as important as planning any part of a task.

    This, from a kid who will ride down the street on one wheel of his bike; usually the front wheel, and launch himself off a jump, blind, to land a fiberglass board on snow, maybe ice, 40 feet below.

    Before he took the OSHA class, I was, like many people, of a mind that it was burdensome.

    Now, I’m of a mind that most objection is actually ignorance. And ignorance is burdensome.Report

    • Avatar James K in reply to zic says:

      I’m sure that’s useful, but of course training people to do that cost money, and much of that cost is going to be borne by consumers in higher prices.

      Also, Thomas’s article is at least as much about product safety.Report

      • Avatar BlaiseP in reply to James K says:

        The insurers will look at the accident statistics and charge higher premiums. Safety saves money. Where do you get these ideas from?Report

        • Avatar Michael Cain in reply to BlaiseP says:

          Safety saves money.

          Absolutely. My father spent 20 years working for an insurance company that wrote a lot of liability coverage and workers comp for small businesses, school districts, etc. His job title said “Safety Engineer,” which was for the most part touring the buildings, poking in corners, checking flow rates on fire hydrants, and a long list of other details, and applying a lot of common sense. He lived by the motto, “The cheapest claim is the one we don’t have to pay.” Dinner-time conversations at our house often started with, “You’ll never guess what I found today…”Report

        • Avatar Stillwater in reply to BlaiseP says:

          The insurers will look at the accident statistics and charge higher premiums. Safety saves money.

          Only if insurance is required Blaise. You gotta see the big picture here!Report

        • Avatar zic in reply to BlaiseP says:

          Yes. And I’d point out that because he’s certified, employers get a break on their insurance rates.Report

        • Avatar Brandon Berg in reply to BlaiseP says:

          Safety saves money.

          Up to a point. Then it doesn’t.Report

        • Avatar James K in reply to BlaiseP says:

          Are you suggesting all safety always saves money? Because if not, there are going to be trade-offs at some point.Report

          • Avatar Mike Schilling in reply to James K says:

            Of couse there are trade-offs, but they’re not always in the direction of saving up-front costs by not requiring safety.Report

            • They don’t need to always be cost vs. safety for Thomas’s point to be valid, presumably profit-seeking companies would embrace any improvement that would make their product cheaper. So long as sometimes there’s a trade-off between safety and cost, Thomas’s point is valid.Report

          • Avatar BlaiseP in reply to James K says:

            Just stop. This SPC and actuarial science thing is obviously a bit beyond you. This is getting embarrassing. Safety isn’t a matter of Trade-Offs. Get that through your head. It’s a matter of cause and effect and all that Non Obvious Statistical Stuff.Report

            • Avatar James K in reply to BlaiseP says:

              Are you or are you not suggesting that increasing safety never increases costs. A yes or no answer is all I require.Report

              • Avatar BlaiseP in reply to James K says:

                Safety reduces costs.Report

              • Avatar James K in reply to BlaiseP says:

                Always and everywhere, no exceptions?Report

              • Avatar Stillwater in reply to James K says:

                Always and everywhere, no exceptions?

                There is a limit, no doubt. So there are exceptions. What determines the limit? Well, ideally, it would be a cost-benefit analysis given a specific type of harm. A policy resulting from that analysis would be justified if it actually promotes the desired outcome directly (by imposing those conditions on manufacturers, say) or indirectly by permitting potential victims to seek redress via the courts.

                But disputing whether or not there are exceptions to the general rule that “safety reduces costs” seems to me to undermine the thesis presented in the OP, which is that loosening safety regulations fully generally (rather than on a case by case basis!) would help the poor. Especially if we’re not viewing this under ceteris paribus conditions.

                I mean, surely there’s a way to make the OP argument go thru on a trivial level: ceteris paribus!, for any particular retail item X, reducing the production cost of X will lower the retail price of X; and given that the poor have less spending power than the rich, a lower price of X will make the poor better off.

                Now all you have to do is assert the triviality that eliminating safety regulations on X will reduce the cost of X, generalize this over all Xs, and BAM!, you get your conclusion! Eliminating all safety regulations helps the poor!

                But even you don’t think that’s a good argument, do you? Doesn’t that prove too much?Report

              • Avatar Stillwater in reply to Stillwater says:

                {{I mean, apart from lots of other objections that have been made on this thread.}}Report

              • Avatar Stillwater in reply to Stillwater says:

                And one other thing: I think everyone of the premises in the argument I presented above has been challenged on this thread. So at the very least, every claim made in the argument – if I’m presenting it accurately – is being disputed. MikeS, DavidCT, zic, LWA, BlaiseP… have all made what seem to me like either decisive counterarguments, or arguments that have at least shifted the burden of proof.Report

              • Avatar BlaiseP in reply to James K says:

                See, here’s what you’re NOT getting. Safety prevents a Chain of Catastrophe from forming. Safety isn’t some abstraction. It prevents an understood condition from forming.

                Now I presume some people out there think they can be saved from alien mind control by forming up Reynolds Tin Foil hats. But unless there’s a proven risk, there’s no actual safety improvement.

                Some people are very worried about running over their kids in the driveway, a demonstrable risk. So car manufacturers have started implementing obstacle detection to prevent it. Every time an insurance firm sees such an improvement, they take a look at their actuarial tables and say “well this is a delightful bit of progress, this car is less likely to run over children.” — and lower their rates accordingly.

                But it doesn’t actually stop the car from running over those kids. This sort of tech just provides some sort of warning. Until the tech actually stops the disaster chain from forming, you haven’t really prevented anything yet. We haven’t gotten to the point where we can prevent people from exceeding the speed limits on residential streets, which is where most children have bad encounters with cars because we haven’t invented the ball that won’t roll out into the street. There’s still risk. There’s always risk.

                The only way you, or Thomas, could possibly say safety measures increase costs is if the tech didn’t actually save anyone. In the case of the Tin Foil Hat safety measures, the actuary can’t find any instances of actual aliens, though our mental health facilities provide ample testimonial evidence of alien mind control. Such “safety” measures only increase costs because they don’t actually increase safety.

                But after that innumerate nonsense about floor lighting in aircraft, I don’t think she can be trusted with numbers. Nor can your point about safety increasing costs be sustained. Put aside the problem of loss of life and limb, though firms are routinely sued for negligence on that basis. Safety decreases costs because it prevents costly disasters.Report

              • Avatar James K in reply to BlaiseP says:

                The only way you, or Thomas, could possibly say safety measures increase costs is if the tech didn’t actually save anyone.

                What!? The only possible interpretation I have for this sentence is that you don’t know the difference between costs and benefits.

                Making something safer takes work. There’s engineering, and process management and training and possibly extra materials costs involved. These resources do not spring from nothing, they must be acquired, which is where the cost comes in.

                Conversely, a safety feature reduces the expected loss of life and/or injury. That is the benefit. Whether a given safety precaution is justified depends on how large the costs are relative to the benefits.

                But here’s the trick, some of those costs are subjective. For example, the pain and suffering caused by a lost limb. How much is that worth? Well it depends on the person. Not only that, but risk-return tradeoffs vary from person too. Some people like to gamble, others prefer to play it safe. One of the factors controlling this trade-off is how much money you have. When you’re struggling to make ends meet, a few extra dollars in your pocket is far more appealing than if you are comfortably off.

                I honestly don’t see how I can better explain this, and I briefly taught stuff like this to people. Undergraduates too. Things have costs, and they have benefits, and whether the one is worth the other is in part a subjective question. Actuarial tables are useful in informing this decision, but cannot accurately capture the full diversity of human preferences..Report

              • Avatar BlaiseP in reply to James K says:

                James, based on what you’ve said, it’s perfectly obvious you don’t understand the basis of risk analysis. This may come across as condescending, at this point I don’t care. You mean well enough — you just don’t grasp how safety reduces costs and enhances risk taking.

                The insurance industry arose alongside commerce. No insurance, no commerce. Start there. Risk equals profit. Insurance mitigates the consequences of risk taking.

                And stop with the weasel words like “extra”. You dragged this aircraft floor lighting argument in here like a dog bringing in a dead rabbit. Now defend it. There’s nothing Extra about those floor lights.

                There is no “trick” in any of this. An insurance policy will pay off or a jury verdict will decide on a dollar sum for the loss of life or limb. Whatever that sum might be, it’s not zero. That’s a cost for whoever has to write the check, not some subjective hooey. If you don’t want to engineer safety into your products, hey, just fire your corporate attorney if you don’t want him to tell you about those costs.

                Safety saves money. It’s called “prevention payoff” What are you teaching those kids anyway? Actuarial tables are driven by facts. It’s true, some people are stupid. Often they make the worst possible decisions based on fallacious cost/benefit analysis. And any talk about how engineering safety into a product is merely adding costs is equally short-sighted and equally fallacious.Report

              • Avatar Jim Heffman in reply to BlaiseP says:

                “but people DIIIIEEEEEEEEE” is not an argument. It’s pure gut-driven emotional appeal, the same level of argument as an antiabortionist waving a picture of a disembowled fetus.Report

              • Avatar Mike Schilling in reply to BlaiseP says:

                And to the extent that poor people die in greater numbers, the effect is to raise per capita wealth, which makes everyone better off.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                Grade A peasant. Grade ’em like beef. All those snack foods, they oughta be pretty well marbled.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                Now have I made the But People Die argument, Heffman? I have not. So stop waving your hands around. People die, corporations get sued. Do pay attention. There are costs associated with getting sued, especially if the court finds against you.Report

              • Avatar Kimmi in reply to BlaiseP says:

                Jim,
                people die. thus we lose all the capital/intelligence we have put into training said person to do something.Report

              • Avatar James K in reply to BlaiseP says:

                You know, I think we might be making progress here.

                Yes, safety saves money. It also costs money. You’re certainly right that working out which is which is matter of arithmetic, no complicate analysis there.

                But, juries will not usually fully compensate people for their losses. If you lose your arm, the jury will come up with a number to compensate you with, but who can say the true value of your arm but you? Not everyone feel the same about the prospect of losing an arm. Some people will inevitably feel that an amount of money is not worth losing an arm, so they will want products that are even safer than the actuarial cost-benefit analysis suggests. Since this extra safety won’t meet the actuarial cost-benefit test for a business, they would have to charge more for such a product.

                There is a point up to which safety features make thing cheaper, the benefits exceed the cost. But beyond a certain point, they don’t, and yet there still may be demands to make the product safer still. This is where we reach the trade-off between cost and risk.Report

              • Avatar zic in reply to James K says:

                The measures to increase safety are known up-front costs.

                The benefits are a negative; safety increases prevent things from happening that would be bad, so we don’t actually know the ‘savings’ that they might produce except through statistical analysis of the delta of pre-regulation/post-regulation; and even then, there are odd things like better, safer roads leads to less-safe driving habits.Report

              • Avatar BlaiseP in reply to zic says:

                This has been very well understood since the beginning of insurance. It is not only expected, but desired. As commerce expanded and more risk was created, a market for risk itself emerged, diverging as did commerce itself. Insurance backed the great voyages to India: risk still equals profit and there’s money to be made in risk as surely as in any other market.

                This doesn’t mean that folks should go tearing down the highway, driving like idiots, bolstered by some false sense of security. Force still equals mass times acceleration all seven days of the week. But the first high-speed highway in the USA, Highway 1, was created by the automobile manufacturers and dealers: their cars were capable of driving at higher speeds, if only they weren’t humping and bumping down some cow path.Report

      • Avatar zic in reply to James K says:

        Thomas’s article is at least as much about product safety.

        This is the great mystery to me. Without regulation, who’s responsible? The company that puts bright red lead-based paint on the block or the parent who buys the block for their child? If this simple thing is not regulated — I mean we know lead is bad for small children. We know that curtailing exposure to lead may have led to a decrease in crime. We know all sorts of benefits of not having two-year olds chomp on sweet-tasting lead-encrusted stuff.

        So without regulatory certainty for parents here, who’s responsible? How does that work? Does each family have to sue for damages if their child is exposed, or do they have to have a hand-dandy home safety test, and test each thing that comes through the door? Who, exactly, is supposed to hold the manufacturers of toxic and dangerous products responsible? Does receiving justices require resources to be able to afford a top-notch attorney, limiting it to the haves, while the have-nots become must suffer for foolish purchases?

        Most people complain about safety regulations in terms of work-place regulation because that’s where they feel it as a burden. Consumer-products safety is less a concern to the general public because nobody wants arsenic in their toothpaste, cholera in their soda, fan blades that chop off children’s fingers, or rat feces in their french fries.

        I’m open to get rid of fire-retardent pajamas, and I do rip the tags off my mattresses and pillows.Report

      • Avatar DRS in reply to James K says:

        I’m sure that’s useful, but of course training people to do that cost money, and much of that cost is going to be borne by consumers in higher prices.

        Well, you know what? As a conservative I have no problem paying a fair price for a product that includes proper training so that workers are safe. A higher price is not the end of the world, and a company that values its employees is more likely to be a company that values good products too.

        The Walmart-ization of America has not been good for Americans, I’m thinking.Report

        • Avatar Mr. Blue in reply to DRS says:

          As a conservative…

          I’ve seen you refer to yourself as a conservative on here a number of times, but I can’t recall you ever having taken the conservative (or libertarian) side of any debate. I thought it was a Canadian thing, but then I saw you didn’t like Harper much.

          So out of curiosity, on what contemporary issues do you have conservative views? Agree with the Republicans over the Democrats? Canadian Conservatives over the Liberals? American conservatives over liberals?Report

          • Avatar Brandon Berg in reply to Mr. Blue says:

            I assumed she meant social conservative.Report

          • Avatar DRS in reply to Mr. Blue says:

            I don’t see how any sane person can agree with the Republicans about anything. Half the time they don’t agree with themselves about anything, even while they’re insisting that they’ve been consistent for decades. Agreeing with Republicans is an effort of will requiring therapy and medication.

            Canadian Conservative Party members are basically watered-down Republicans right now. The party in its current forms is formally less than a decade old and its uneasy marriage between Central Canadian pragmatists and Western Canadian Alberta-firsters and populists has worked only because the federal Liberals utterly collapsed and the Conservatives are in power. At the moment, personal loyalty to Harper (who arranged the merger between the Reform and the old Progressive Conservative Party) is the cement holding things together. And that’s not the same thing as consistent policies or political philosophy.

            Harper has changed direction many times in the past 20 years (and yes, I did know him personally in a professional capacity in the late ’80’s to early ’90’s – Ottawa is a small town – and he’s not a pleasant man and not at all the policy wonk he likes to project himself as) and he’s increasingly annoying that small but vocal rump in his caucus that doesn’t understand why a PM who’s claimed he’s a true social conservative will not allow any discussion about legal abortion or gay marriage. These MP’s now realize they’ll never make cabinet and they’re tired of being ignored.

            But overall, I don’t view being a conservative as requiring loyalty to any mere political party. If you want a politician I agree with, here he is: http://en.wikipedia.org/wiki/George_Savile,_1st_Marquess_of_HalifaxReport

    • Avatar Jim Heffman in reply to zic says:

      “Before he took the OSHA class, I was, like many people, of a mind that it was burdensome.

      Now, I’m of a mind that most objection is actually ignorance. And ignorance is burdensome.”

      Yep; it might suck to have to put on the respirator every time you’re just gonna paint a two-inch panel, but it sucks worse to have polyurethane coat the inside of your lungs.Report

  5. Avatar KatherineMW says:

    I don’t buy the idea. We can equally consider unsafety a negative externality – the business doesn’t pay the full cost of producing a product that is unsafe and causes people to be harmed or killed, but it does derive profit from the lower cost of making an unsafe device. We require companies to produce reasonably safe products for the same reasons we require them to control and clean up their pollutants – because it is unethical and uneconomic for them to transfer the costs of activities that harm others onto the broader public.

    Saying “it’s okay to make things that are more unsafe for the poor, and just make safe things for the middle class and rich” and trying to couch it as ethics, is deplorable. It’s an open statement that the lives of the poor have a lower equivalent monetary value than the lives of the rich.

    What we need isn’t to get rid of safety regulations. What we need is for the poor to not be poor; for everyone to be able to afford to both remain safe and health, and provide for the other needs of their lives. The ‘direct transfers’ method is the best of the alternatives offered, as the reason for the existence of poverty is not an insufficient amount of goods and wealth, but the fact that the vast majority of those goods and wealth are concentrated in the hands of a tiny minority. The even better option is to rewire our economic system so that it is no longer designed to concentrate wealth in the hands of a tiny minorityReport

    • Avatar LWA in reply to KatherineMW says:

      Concern trolling about The Poors is the latest strategy of the conservative/ libertarians. Its the economic equivalent of “Black people are the real racists”.Report

      • Avatar Stillwater in reply to LWA says:

        Concern trolling about The Poors is the latest strategy of the conservative/ libertarians.

        Maybe. But I think that’s a case that needs to be made after considering the arguments they’re making. I don’t think James is concern trolling by presenting an argument that safety regulations impact the Poors more than the Richies. To me, it’s an interesting argument, but isn’t a complete argument. And James offered so solutions to correct for various imbalances that might/do result.Report

        • Avatar Jaybird in reply to Stillwater says:

          What I don’t like about “concern trolling” is that it, effectively, handwaves an argument away because Person P is a member of Group G and since we know that Group G doesn’t give a shit about the poor, not like us, we know that Person P’s argument isn’t sincere… and since it’s not sincere, we don’t have to deal with it.

          I mean, I’m not a big fan of the “but I care oh, so *VERY* *VERY* *VERY* much!” argument on the part of Group Gsub1 in the first place and don’t see it as an argument in itself the way that a lot of Group Gsub1 members seem to (or, at least, see it as admirable)… it seems to me that the accusation of “concern trolling” is a continuation of this argument/sentiment: Someone who cares has automatic standing. Someone who disagrees, fundamentally, with someone who cares but still claims to care? They must be “concern trolling”.Report

          • Avatar BlaiseP in reply to Jaybird says:

            This Diana Thomas paper is absolute nonsense from top to bottom. She can’t even apply statistics correctly, is blankly ignorant of how safety mechanisms evolve in the real world — or even comprehend why poor people drive on bald tires, knowing it’s dangerous and also knowing the rent has to get paid.

            You’re right about one thing. This isn’t really Concern Trolling. Concern trolling attempts to weasel into the means of an agreement with a cause to subvert its ends. This is more properly designated as Innumerate Nonsense.Report

          • Avatar Stillwater in reply to Jaybird says:

            Well, I sorta agree. Concern trolling is a real thing in this world. I’m with you that it’s not a useful way to respond to an argument, especially when it’s an attempt to handwave that argument away.

            I agree with Blaise below the most, tho. The argument summarized in the OP isn’t concern trolling, it’s just not a very good argument. Maybe it could be made better.Report

            • Avatar zic in reply to Stillwater says:

              I could make it better over and over. There’s a lot of regulation that is designed to protect someone besides the consumer in the guise of the consumer’s best interest. I gave the example of flame-retardant sleepwear for children above. I don’t know about you, but my kids slept in ‘cotton longjohns’ because that sleepwear seemed pretty toxic. But some chemical company that produces the flame-retarding treatment to pj’s is definitely benefitting. Or car seats.

              We all want to keep our kids safe. I can’t help but notice that about the mid-19780’s, the size of car seats increased so that you needed a minivan to comfortably put one in and out. These were also the profitable cars made by American manufacturers; the smaller cars were money losers. Interestingly, car-seat standards didn’t increase in Europe; and I haven’t heard that there was a problem because of this.

              The food service industry is loaded with interesting standards that are cost-prohibitive and often unneeded for a small mom/pop food business but make complete sense for a large scale fry-shop, to a net effect of preventing many start-ups from ever starting.

              Point being that much of the ‘regulatory burden’ that drives costs up for ‘poor people’ exists not because it’s good regulation, but because it’s regulatory capture that’s benefitting some rich person.Report

              • Avatar Stillwater in reply to zic says:

                Point being that much of the ‘regulatory burden’ that drives costs up for ‘poor people’ exists not because it’s good regulation, but because it’s regulatory capture that’s benefitting some rich person.

                Given this, let’s take James argument to it’s logical conclusion and completely dismantle all governmental regulation (except direct harms, obvious externalities, etc). So, no more overly-big car seats and the like. This would benefit poor people, wouldn’t it? It would benefit the poor more than the rich, yes?Report

              • Avatar zic in reply to Stillwater says:

                I don’t know.

                But I do know that many large companies pay many millions to lobbyists each year. There’s obviously some benefit to that expense. And that benefit only begins with the legislative process; it’s fully realized in the rule-making stage; and this is the most unappreciated portion of how a law, a regulation, turns into something that’s actually used.Report

              • Avatar LWA in reply to Stillwater says:

                “It would benefit the poor more than the rich, yes?”

                NO. Emphatically, demonstrably, no.

                It benefits anyone who benefits from the stability and certainty that safety brings.
                From my own field- real estate investing is a wildly speculative and risky field; between buying a piece of land and receiving the rents from what you build, is often a matter of years, and there are a million things that can go wrong in between.

                How does having less assurance about subsurface toxins, defective construction materials and machines, less knowledge about the professional standards of the engineering design team bring any benefit whatsoever to the investor?

                The original building codes developed in the late 19th century were primarily advocated by insurance companies and developers, who were tired of the unexpected and catastrophic losses that came from building collapses and fires.

                Did only the poor suffer from the consequences of the Chigago Fire? From levee collapses, from food poisoning outbreaks and epidemics?Report

              • Avatar zic in reply to LWA says:

                Thank you LWA.

                I think my perspective is that not all regulation is the same; some is subject to more capture then others. But for there to be capture, generally there’s some underlying public good. It is not easy.Report

              • Avatar Stillwater in reply to LWA says:

                You’re saying that dismantling regulations would hurt the wealthy more than the poors. That’s interesting.

                I wonder if their isn’t some other confusion driving some of this. A first order, price-at-market conception of harm (or help), and second order conditions that harm or help. It seems like the argument in the OP presumes that the entire calculus of harm can be reduced to price-at-market considerations and the resulting trade-offs, but leaves out regulatory regimes that are effectively necessary for wealthy people to generate wealth.Report

              • Avatar Stillwater in reply to Stillwater says:

                I see that zic already made that argument. sorry zic!Report

              • Avatar zic in reply to Stillwater says:

                Still, I do not think that’s the case; though I’m not sure who you’re replying to here.

                I would say that good regulation helps the wealthy in many ways (beyond particular interest regulatory capture) by creating a more level field for investment.

                I would also say it protects individuals from needless harm in the workplace and from consumer goods.

                Additionally, I would say that regulation of dangerous materials impacts an entire supply chain, and creates standards of handling throughout that chain that benefit anyone who might be involved with it in production and end use; and that is generally a net benefit.

                Finally, I would say that regulation protects the commons; including things like ground water supplies and tree frogs, who, while they might have lovely voices, don’t have a voice in the regulatory process.Report

              • Avatar Stillwater in reply to Stillwater says:

                I do not think that’s the case

                What, in particular? I said that there are two conceptions of harm in play: those that are reduced to price-at-market, and those that create conditions for markets to function properly.

                I also said that LWA seemed to be arguing that the wealthy would be hurt more than the poors if all regulation was dismantled.Report

              • Avatar zic in reply to LWA says:

                I stand corrected, Still.

                It’s a difficult conversation because so many things are being conflated; economic harm to differing classes of people, work safety, environmental safety, and consumer safety.

                That’s a lot of eggs in one discussion basket.

                Plus I still want someone to explain how, in a world without this regulation, remedy for wrong functions.Report

              • Avatar Stillwater in reply to zic says:

                No worries. I’ve been adopting a devils advocate roll to get past the “concern trolling” complaints, and that might have been confusing. I also agree with your worry here about regulations being necessary to remedy market-oriented harms.Report

              • Avatar George Turner in reply to Stillwater says:

                But there’s a point you can cross where regulation increases both the cost and uncertainty.

                Take subsurface toxins, for example. If the standards are too stringent then you run a high risk that you’ll lose not only your real-estate investment, but possibly be liable for total cleanup costs, just because someone once dumped a can of paint in the yard and the EPA wants to call in bulldozers and crews in hazmat suits.

                Instead of increasing security, the regulations can start increasing risk. What’s the risk that the Army Corps of Engineers will declare this a wetland? What’s the risk that the EPA will find a rare tree frog? What’s the risk that there was a gas station on the property back in the 1930’s and the EPA will require monitoring and cleanup?Report

              • Avatar Patrick Cahalan in reply to George Turner says:

                Er, if there was a gas station on the property in the 1930s and there’s all kinds of crap in the soil, I – personally, mind you – would want that cleaned up.Report

              • Sure. But would you rather pay X dollars for that land and pay to have it cleaned up or would you rather pay Y dollars for a different parcel?Report

              • Avatar Patrick Cahalan in reply to Patrick Cahalan says:

                That depends on whether or not Y-X > what it costs to clean it up, and why I’m buying the land in the first place, I’d guess.Report

              • Yeah, of course. There are prices that would make me say “you know what? I’m going to buy that land and clean it up!”

                And there are prices that make me say “someone should clean that up!”Report

              • Avatar Patrick Cahalan in reply to Patrick Cahalan says:

                Oh, let me clarify:

                There are prices that make me say, “I’ll buy that land and clean it up!” and there are prices that make me say, “I don’t think anybody’s going to buy that land and clean it up” and somewhere in between there there is likely a price at which I expect the person selling the land to “forget” that it needs to be cleaned up.

                Usually the problem is that middle one, there.

                To the extent that the second one occurs and that oftentimes people engaging in this sort of chicanery are also good enough at it to get away with it, I can see an argument being made that soil samples must be done for certain types of purchases.Report

              • Avatar Kimmi in reply to Patrick Cahalan says:

                Jay,
                That depends. Do you have a stapler gun on premises?Report

              • Avatar BlaiseP in reply to George Turner says:

                In point of fact, you’d go to the EPA, (I did a gig for an outfit which did just such assays in Mpls/St Paul) and get what’s known as a BEA: a baseline environmental assessment. You are then completely exempted from liability.

                I sure wish some of the people who invoke the august acronym EPA had a clue what they actually do and how they operate.Report

              • Avatar George Turner in reply to BlaiseP says:

                And if you didn’t bother to go $800 or so out of pocket for a BEA, like 99% of Americans (or all those who don’t live in Michigan), what happens?

                (Fortunately my geologist housemate carries out just such environmental studies, so he could probably cut me a deal.)Report

              • Avatar Patrick Cahalan in reply to BlaiseP says:

                You mean you bought something without verifying its suitability for its intended purpose and now you’re mad that the government is getting in your way?

                This sounds an awful lot like, “If the government can’t protect me from everything, it has no business protecting anybody from me”, George.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                Well, George, I just don’t know. Call it part of closing costs or whatever you’d like. Itemise it next to title search and the home inspection.

                And for the record, don’t spout off about 99% of anything or anyone without the data to support it.Report

              • Avatar 975 in reply to Stillwater says:

                let’s take James argument to it’s logical conclusion and completely dismantle all governmental regulation

                Is that really the logical conclusion?Report

              • Avatar DavidTC in reply to zic says:

                Flame retardant clothing for kids has always been a completely baffling concept.

                In an actual house fire, people do not die from fire. If you die in a house fire, you wan around dodging flames until you passed out, then you died from smoke inhalation/suffocation, _then_ you caught on fire. Everyone knows this. I don’t know when they started teaching the ‘stay low to the ground and crawl out of the fire’ idea, but this is very basic stuff that I learned when I was like eight.

                And when you’re _not_ in a house fire, why the hell are you putting your clothing up to an open flame?

                Yes, it’s for ‘children’, who can be stupid…but the thing about flame retardant clothing is that it still transfer heat just fine. It’s not fricking asbestos. So, again, why are you holding an open flame so close to your body?

                And parents, why on earth are you allowing your children to be so close to an open flame? What sort of shitty parenting is going on there that they’re playing around inside the fireplace, or holding a lit candle up to their clothing?

                And, BTW, it’s not like ‘sleeve caught on fire’ is going to kill someone, anyway. Wouldn’t be fun, but probably not lethal.

                Flame retardant clothing makes sense if you’re a priest who wears long billowing robes and lights candles. Or for firefighters. Or for something like a wedding train or any other piece of clothing that is so long it is not really in control of the person wearing it.

                It makes no sense at all for children’s pajamas.Report

              • Avatar Jim Heffman in reply to DavidTC says:

                Clearly you hate children and want them to die in a fire. You horrible person. How can you live with yourself. I bet you voted for George Bush in 2008.Report

          • Avatar Kazzy in reply to Jaybird says:

            Am I understanding it correctly that liberals here are objecting to this article because a conservative wrote a piece about supporting the poor in a way that might also benefit some rich people?Report

            • Avatar LWA in reply to Kazzy says:

              Well, you are on to us.

              The author seizes the moral high ground by giving poor people the freedom to buy tainted milk, and us liberals are left gnashing our teeth over the fact that we can’t stick it to The Man.Report

              • Avatar Kazzy in reply to LWA says:

                LWA,

                I’m really trying to understand. As someone who self-identifies as liberal, my question was free of snark.

                As I see it, it is not that anyone is advocating for selling poison milk to poor folks. Rather, it is being said that relaxing safety standards might be a benefit to poor people. Using the milk example, doing so might raise the likelihood of buying tainted milk from .01% to .03%, which would be balanced by lowered prices for milk, allowing more people to buy milk, those who already can afford milk to buy other things, and to overall improve their quality of life, though some folks will see a greatly lowered quality of life, perhaps death, because of the greater likelihood of tainted milk.

                No one wants to force poor people to buy tainted milk. But there is an argument that poor people should have the same opportunity to make the same cost-versus-safety decision that middle-income and rich people get to make. They can still buy safer milk for the same price, or they can opt to buy cheaper milk, do something with the savings, and expose themselves to greater risk. Much the same way non-poor folk can spend extra on ever-safer products.Report

              • Avatar LWA in reply to Kazzy says:

                OK here’s my non-snarky response.

                Allowing people to produce tainted milk damages all of us.
                When there is a catastrophe- a building fire, a food poisoning event, an auto fatality- it directly and measurable causes harm to every single member of society.

                You can see it in the statistics that are bandied about after a disaster- that a single bridge closure cost X dollars of lost productivity, or a power outage cost Y amount in lost revenue or whatever.

                Even if people are freely choosing to buy tainted milk, when the inevitable roll of the dice comes up snake eyes, how do we contain the damage?
                If a worker is sick for 2 weeks, who compensates his employer who misses a deadline because his guy was out? When nationwide a million people miss a collective 5 million sick days a year, who makes up the tax revenue they would have generated? Why do insurance companies give rate breaks to companies that offer health programs to their workers?

                Our lives and choices are inextricably intertwined with those around us. Thats why the “lets give poor people the freedom to buy tainted milk” argument is so fatuous- not just its insincerity but its glib assumption that we live atomized existances, detached from the larger society in which we live.Report

              • Avatar Kazzy in reply to LWA says:

                Great points. Now, do you see why the argument you put forth here is much better than your previous one…

                “Concern trolling about The Poors is the latest strategy of the conservative/ libertarians. Its the economic equivalent of “Black people are the real racists”.”

                Maybe the author of the piece is dead wrong… but to assume concern trolling because of her political ideology gets us no where. Assume she really *does* want to benefit the poor… show her why her preferred policy fails to do that… then shower her policies that really would do that… and hope she signs on. And, *boom*, you’ve now got a political ally from across the aisle.Report

              • Avatar LWA in reply to Kazzy says:

                I am happy to make a convert, and my gentlemanly sense of civility wants to assume the best intentions of others.

                But lets take the libertarians on their own terms.
                Is compassion for the plight of the poor a mainstay of libertarian thought?
                Is improving the lives and outcomes of the weak and vulnerable in society a priority of libertarian advocacy?

                Have they clearly articulated a vision of collective responsibility and duty to others, that would motivate a policy based on benefitting the poor?
                Scratch that- do they even acknowledge that such a thing exists?

                Or rather, do they constantly hold that people should not be protected from the outcome of their choices no matter how awful?

                If for example, when a poor person failed to buy fire protection service in Kentucky, isn’t it completely fair and accurate to say that the libertarian response was a shrug of the shoulders?

                How can any person advocate for the freedom of the poor to buy tainted milk or not buy fire protection, (on the grounds of compassion) then shrug off the outcome?

                This simply isn’t even remotely logical. This isn’t a sort of logic error that requires higher level mathematical process arguments to suss out- this is the sort of stupendous non sequiter that is insulting to the reader, all the more so coming from people who have convinced us of their intelligence and literacy by tossing around the most erudite references to economics and philosophy.

                No, they have built their brand carefully and well, and “compassion” is not one of their core competancies.

                Calling it concern trolling, a political slight of hand, is in fact the most gentlemanly way to characterize it.Report

              • Avatar Kazzy in reply to Kazzy says:

                Let me ask this, LWA…

                When you come across an article, such as the one Jason shared here, do you take the time to determine how the author self-identifies politically if you do not already know?Report

              • Avatar zic in reply to Kazzy says:

                Kazzy, Some of this isn’t about how the author self-identifies; it’s about the ideology of the publisher, and establishing if that organization contributes bias that should be considered as you read. And in the case of research, there are always concerns of bias of the funding organization.Report

              • Avatar Kazzy in reply to Kazzy says:

                Zic,

                But accusations of concern trolling question the integrity of the author. To label an argument as such is to label it as disingenuous.

                This piece, its author, and her publisher may indeed be wrong. They may be so as a function of an unknown bias. That does not mean they are being disingenuous or that they should be treated as unserious just because of a broader ideology that they subscribe to.Report

              • Avatar Dave in reply to Kazzy says:

                But accusations of concern trolling question the integrity of the author. To label an argument as such is to label it as disingenuous.

                It also shows a complete lack of class.Report

              • Avatar Kimmi in reply to Kazzy says:

                There are some people I would never want on my side. Some are too stupid, some are too nearsighted… and some would knife me just for spite (literally).Report

              • Avatar Stillwater in reply to Kazzy says:

                I have a different take on that Dave. I think that handwaving an argument away because it’s viewed as concern trolling does a disservice to the person putting that argument forward because presumably the “concern trolling” argument is obviously unsound. And if it’s obviously unsound, then its unsoundness ought to be *really easy* to demonstrate. Especially it it’s an empirically based argument.

                Usually, tho, concern trolling and the accusation of concern trolling is a smack – one that’s supposed to sting! – against ideological presuppositions. Those are harder to identify, of course, and insofar as those presuppositions are merely assumed and not clearly articulated, they are effectively used to justify not only why one side is right, but also why the *other* side is wrong. But of course, that begs the question and leads to animosity.

                It’s like telling libertarians/liberals that they’re wrong about something *because* they don’t accept liberal/libertarian premises rather than *despite* not accepting liberal/libertarian premises.Report

              • Avatar Stillwater in reply to Kazzy says:

                Well, not that different I guess. You’re right that it isn’t classy.Report

              • Avatar zic in reply to LWA says:

                There’s also the market response. During the spinach/melon/hamburger (and on and on) scares, people stop purchasing. Or many people. And product that’s perfectly safe rots; the producers suffering.Report

              • Avatar James K in reply to LWA says:

                All of that may be true, but that still brings us back to how much safety to require. Surely you’re not proposing the maximum safety possible? And if you’re not, then the question arises of where to draw the line? And not everyone is going to draw the line in the same place because while some costs are easy to set fairly objectively, some costs and risks can’t be. At that point it’s a matter of pure preference. And if the poor tend to have different preferences to the rich, that raises some social issues, does it not?Report

              • Avatar James K in reply to Kazzy says:

                Yay! Someone actually got what the argument is!

                If I had a prize to give you, I would.Report

              • Avatar Michael Drew in reply to Kazzy says:

                They can still buy safer milk for the same price, or they can opt to buy cheaper milk, do something with the savings, and expose themselves to greater risk.

                For some products, those will be the options; for others, practices will just cluster around whatever the new standard is. There’s no guarantee the market will produce a range milks with varying, and transparently knowable, levels of risk of illness attached. Lower the standard, and it might be that (nearly or functionally all) milk producers just slap the “Government-Certified Safe” label on all the new milk.

                I guess I see two forms of the argument, a hard and a soft, then. The soft would be, okay, where that kind of transparency will (more or less immediately) emerge in markets resulting from newly lowered standards, then the minimum levels should be lowered to “the preferences of the poors,” but where not, not. The hard version would be, “The whole point is to lower the safety level to respond to what we know to be a greater preference to hold on to a nickel among the poors, since isn’t that what you guys are saying public policy should be all about, huh, aren’t ya? (Or alternatively, “…because there really is a loss of utility there that should be more attended to because the poor face utility deficit compared to the rich.) — and as far as everyone with more money having to drink less safe milk than you’d like because of lack of varying safety levels (sure, options might exist now, but in many places those might only be high-end organic and standard-issue mass market, and given those choices, you’re gonna go standard), well you guys can just wait until the risk analysts get the standard-issue milk production practices up to around where you want them, or until the market provides a sufficiently graduated range of milk safety levels so that you can get what you want, if it does.”

                …All of which is in addition to the fact that the argument works on a two-preference/two-level model that, while it does show that the current regulation level costs some (poor) consumers money for milk safety that they’d rather spend on other things, also shows that any other level would too. Once you set the level to “would please the poors,” you could use it again to show that you’re still costing the poorers money that they’d rather spend on something else. And so on with the poorer-than-poorers. The result the argument actually gives is, “no standards, assuming the market can give you information about how safe what it’s offering is” (which is an assumption that is used in the argument, to say that the rich can more or less get as safe of stuff as they want without any mandates anyway). If the argument is that “mandates should be set where market transparency about safety breaks down,” I could get on board with that perhaps, or at least assess it. But I don’t see it anywhere; I had to infer it.Report

              • Avatar Patrick Cahalan in reply to Michael Drew says:

                There’s no guarantee the market will produce a range milks with varying, and transparently knowable, levels of risk of illness attached.

                Judging from the wrangling on the GMO thread, I’d guess you can just say that there is a guarantee it won’t.

                “Why do I need to label my milk as not gold safe!? The odds of any one person getting ill from my milk are nearly infinitesimal!”Report

              • Avatar zic in reply to Patrick Cahalan says:

                Milk appears throughout this thread as an example of safety regulation, or lack thereof.

                I grew up milking cows; between 80 and 120 of them every morning before school, and again in the afternoon after. I also had responsibility for sanitation of milking equipment on weekends and vacations; that’s cleaning and sanitizing all systems, pipes, hoses, tanks, etc. that the milk touched.

                Milk is produced under a variety of state laws as well as federal; so the regulation will vary.

                But here, at that time, we could sell directly to customers. People would come with their bottles, and we’d fill them up, and this was at a fraction of the cost in the grocery store, but double what we’d get per pound and ratio of butterfat from the dairy that purchased our milk in bulk.

                Shortly after I left home, the rules were changed, in the interest of consumer safety, and direct sales of raw milk were outlawed.

                This had an interesting unintended consequence: the levels of barn hygiene and equipment sanitation dropped; the probability of taint greatly increased because all milk produced was being sold to another institution that would have to both test and pasteurize it. While there might be some increase in milk safety as a result of the regulation, from my experience (and that of numbers of small farmers I know,) curtailing direct sales to customers decreased diligence of sanitation and hygiene, and likely increased the potential of contamination.Report

            • Avatar NewDealer in reply to Kazzy says:

              The problem is that we don’t think that the author’s arguments will really benefit the poor. At least not enough to scrap what the regulations are for.

              Yes, safety and regulation does increase the price of the things. I will admit that but I think the benefits of the regulations outweigh the additional costs. Maybe a car is 1 percent more expensive because of various safety mechanisms and such but that how many lives were saved from these costs. How many faulty cars were prevented from reaching the market?

              How many people did not receive food born illnesses because of regulations in the Pure Food and Drug Act?

              How many worker’s have been saved from injury and death because serious industrial accidents because of laws mandating safe work places?

              When we hear about things like mining disasters, we almost always next hear about how the owners played it fast and loose with the safety regulations.Report

              • Avatar Kazzy in reply to NewDealer says:

                ND,

                I think there are legitimate arguments against the author’s preference. But what it seemed people were doing in this particular subthread was dismissing it out of hand because it was penned by a conservative. Surely a conservative can’t advocate for the poor!

                Partisan politics can be really silly… conservatives get raked over the coals by liberals for ignoring the poor. Then, when they do advocate a policy they believe will support the poor (even if they are wrong int hat regard), they are criticized for concern trolling.Report

              • Avatar Jim Heffman in reply to Kazzy says:

                Or they’re accused of “just digging for votes”. Because, y’know, it’s impossible for the people on Team Red to actually believe in equality or anything like that. Those are Team Blue things! Team Red isn’t allowed to have them, because otherwise what’s the difference between Team Red and Team Blue?Report

              • Avatar James K in reply to NewDealer says:

                But we’re not actually discussing scrapping all regulation. The only people on this thread raising that possibility are the people opposing it.

                The question is, how much safety should we require, not whether we should require some level of safety.Report

    • Avatar James K in reply to KatherineMW says:

      We can equally consider unsafety a negative externality – the business doesn’t pay the full cost of producing a product that is unsafe and causes people to be harmed or killed, but it does derive profit from the lower cost of making an unsafe device.

      It’s only an externality is people other than the end user(s) are at risk, since the end -user is in a contractual nexus with the seller.

      It’s an open statement that the lives of the poor have a lower equivalent monetary value than the lives of the rich.

      It’s just a statement that money is worth more to poor people than rich people. This is one of the primary justification for welfare, and I was under the impression it was pretty uncontroversial on the left.

      What we need isn’t to get rid of safety regulations. What we need is for the poor to not be poor; for everyone to be able to afford to both remain safe and health, and provide for the other needs of their lives.

      I’m all for eliminating poverty (if only we could figure out how), and in fact I included “direct transfers to the poor” in my list of policy implications. But no matter how rich you are there will still be a trade-off at the margin between safety and cost to be made, and richer people will still choose more safety than poorer people.Report

      • Avatar zic in reply to James K says:

        It’s only an externality is people other than the end user(s) are at risk, since the end -user is in a contractual nexus with the seller.

        What? This is nonsense.

        Purchasing a product is not a contract. A contract requires a signed agreement. I’m not really sure what a ‘contractual nexus with the seller’ means, but if the sale is a contract and the seller has failed to disclose all information that might be of concern to someone’s health or safety, then has the seller violated the contract, since there’s no actual contract signed?

        What of the responsibility with resale? Goods typically pass through a chain of ownership; one that frequently begins in the manufacturing process, and then continues after sale to an end user in the form of resale; a used car, a used book, a garage-sale appliance.Report

        • Avatar Matty in reply to zic says:

          I’m pretty sure that as widely understood in law a contract is an agreement to exchange value independent of the form that agreement takes. “I’ll give you a dollar for it” “OK” is still a contract even if nothing is signed.Report

          • Avatar zic in reply to Matty says:

            Again, there are disclosure problems here; some that rise to the level of voiding contract without regulation to determine the necessary level of disclosure. Additionally, for many businesses, a regulatory environment would be preferred to full disclosure because they have a interest in protecting trade secrets; it’s preferable to have their business regulated than revealed.Report

          • Avatar Stillwater in reply to Matty says:

            I think you guys are talking about two different things here. Matty, you’re talking about the promise to pay for a good received (or handing the thing over on receipt of cash). zic, it seems to me, is talking about the legal and ultimately cultural norms that are tacitly included in the promise to exchange cash for a good.Report

            • Avatar zic in reply to Stillwater says:

              More specifically, I want to know is, without the legal regulatory framework, how are damages determined, how are remedies applied.

              I’ve been trying to figure this out for years, I’ve repeatedly asked professed Libertarians, starting on McArdle’s blog, pre disqus. The only thing that makes sense to me is a world where legal precedence has no bearing, and activist judges are constantly having to decide between two parties, one or both of whom feel they’ve been damaged in some way.

              Regulation actually creates cultural norms that smooth these things out; it provides grease for the wheels of commerce. It protects investment. It creates a common platform of baseline expectations upon which to make deals, to work, to consume, and invest. In many ways, the freemarket exists because of regulation.Report

          • Avatar NewDealer in reply to Matty says:

            Unless the good is worth more than 500 dollars, then you need a written contract in order to satisfy the Statute of Frauds.

            A receipt counts as a contract.

            Product Liability (for injuries because of defects) is generally considered a matter of strict liability in the United States.Report

        • Avatar James K in reply to zic says:

          It’s not, I just had to leave for work, so I didn’t have enough time to explain it properly.

          By “contractual nexus” I mean that the parties are transacting with each other. This means that any costs they inflict on each other are not external, since they occur inside of a contract (and yes, simply buying a good is a contract, for this purpose at least).

          There may be issues of bargaining power, or asymmetric information, but not externalities.Report

  6. Avatar LWA says:

    Is the premise here that product safety regulation benefits no one but the end user?

    Product safety regulations mitigating risk, which makes consuming easier.

    Oftentimes there are arguments made that burdening corporations with the consequences of risk- such as strenuous consumer safety liability- causes them to become risk-averse and unwilling to produce new products or expand. They hoard cash and are unwilling to make new ventures.

    All of which is demonstrably true, and holds true for consumers as well.

    If every food purchase, every product purchase becomes a life and death crapshoot, can’t we expect consumer behavior to change?Report

    • Avatar James K in reply to LWA says:

      The issue here is in the margins. No one’s saying a product should be maximally dangerous, but there is a trade-off between degrees of safety and degrees of cost. And different people will find different trade-offs to be the best balance. And it turns out rich people tend, on average, to prefer more safety.

      The question here is not whether every product should be an accident waiting to happen, but how much safety we want to require in our products. That’s a question with a non-obvious answer.Report

      • Avatar zic in reply to James K says:

        At the margins, it’s in a manufacturer’s interest to not disclose those tradeoffs; at least in the short term.

        In the long term, as those tradeoffs compound, as enough people suffer consequence of the tradeoffs, it may prove the short-term marginal gain was actually a loss.Report

      • Avatar BlaiseP in reply to James K says:

        Erm. The answer might not seem obvious — unless you’ve actually worked with statistical process control and know what an Ishikawa Diagram entails or how a Catastrophe Chain is assembled. You haven’t even asked the right question: safety isn’t a How Much question. But then, you’d have to understand SPC to understand why it’s a dumb question. For want of a nail, etc.

        Math is hard. Process control is hard. But there are people out there who do this for a living. You have it exactly backwards. Failure is more expensive than safety. Ask Boeing. One lithium battery burns and it’s cost Boeing multiple millions of dollars every day. One battery.Report

        • Avatar George Turner in reply to BlaiseP says:

          Well, I think Boeing was foolish in choosing a battery type that is notorious for catching fire instead of using slightly heavier batteries like NiCd or lead acid. The weight difference hardly amounts to a single passenger and a seat, yet grounded their whole fleet for months when ALL the seats sat empty. Not every part of an aircraft needs to use the latest, cutting edge technologies, especially an aircraft that isn’t trying to push the performance envelope.Report

      • Avatar LWA in reply to James K says:

        So the point here is that the costs and benefits to regulations should be cautiously evaluated so that we end up with regulations that provide a desired amount of safety, while minimizing the cost?

        Because thats not the post that I read- what I read was:

        Therefore the poor could be made better off by loosening safety regulation

        C'mon- own your argument. If you believe that the poor are better off with less regulation, explain why you think so.

        How will the lives of the poor be improved, when their level of risk exposure is increased?
        Are you seriously arguing, for example, that non-USDA inspected milk, cars lacking seatbelts, and lead based paint will all be cheaper, and therefore the poor will be able to send their kids to college, or something?Report

        • Avatar LWA in reply to LWA says:

          Maybe somebody can fix my formattingReport

        • Avatar James K in reply to LWA says:

          So the point here is that the costs and benefits to regulations should be cautiously evaluated so that we end up with regulations that provide a desired amount of safety, while minimizing the cost?

          That’s mostly what I’m arguing, but with three extra points.
          1) The relative merits of safer goods and cheaper goods are subjective, like all such trade-offs.
          2) Poorer people are likely to prefer lower costs relative to richer people, since having a few extra dollars matters more if you don’t have every dollars to begin with.
          3) This means that if the government sets safety regs to please the middle class and rich, the poor might find themselves in more financial trouble than they would be in otherwise.

          Note that this argument doe snot require eliminating all safety regulations. Hell, I suggested a couple of options that wouldn’t reduce safety standards at all.Report

          • Avatar Michael Drew in reply to James K says:

            If you’re referring to the options offered to “the less libertarian among us” in the OP, as I read it, two out of three of them would in fact eliminate such standards, if by standards we mean ones that manufacturers actually have to follow. Unless I’m misunderstanding the subsidy option, the proposal there is to incentivize safety standards but to get rid of the requirements (or was it just to offer compensating subsidies, but to keep the requirements? And in any case isn’t “fining failure to comply by X and offering a subsidy of Y to compliers” functionally equivalent to “fining failure to comply by X+Y,” which, for that matter is functionally equivalent to “offering all compliers a subsidy of X+Y”?). Is it not?

            And the multiple-level certification suggestion either does or doesn’t a) keep a mandatory lowest-level certification which b) is either more, less, or equally stringent as whatever mandatory standard currently exists in that production sphere. The bottom line being, it either does or it doesn’t lower the whatever the currently mandated standard is, and if it doesn’t, then what does it really change other than offering optional certifications for higher standards of product safety (which I think is a good idea, but which doesn’t save the poor any money if it isn’t accompanied by a drop in the non-optional level)?

            The only one of the three that appears to me to make any sense as an offset to the regressive economic effect of mandatory safety regulations that doesn’t do that by lowering the mandated safety level is the direct transfer option. Which I am certainly on board with. Perhaps Mercatus will come out with that proposal later this week.;)Report

            • Avatar James K in reply to Michael Drew says:

              You can play with the level of subsidy to ensure you get the level of safety you want, who cares if people are technically legally required to do something, so long as they actually do it.Report

              • Avatar Michael Drew in reply to James K says:

                Well, I thought you did.Report

              • Avatar Michael Drew in reply to James K says:

                …But to be clear, when you say “wouldn’t reduce safety standards at all” you mean, “Would reduce (or eliminate) mandatory regulations, but would maintain the “standards” as guidelines that producers would a) get paid to meet, and b) could then brag about meeting”?

                Anyway, who cares who cares – I’m still at the stage of not understanding what your proposals actually are.

                Also note that you said, “Note that this argument does not require eliminating all safety regulations. Hell, I suggested a couple of options that wouldn’t reduce safety standards at all.” Do both of those bolded words imply that producers are “technically legally required to do something” – or not? Or does one, and the other not? I’m kind of lost. It doesn’t seem to me that any argument requires eliminating all safety requirements (which might be things that “technically legally require [someone] to do something…”?) but this one might recommend it. And if it does, it could still separately be the case that you suggested a couple of options that wouldn’t reduce safety standards (what practices actually get used) at all, but that that those very options call for eliminating all regulations that technically legally require producers to do something, because, “who cares if people are technically legally required to do something, so long as they actually do it.”

                So does a regulation legally require producers to do something, and if so, what does the fact that you could recommend options that don’t reduce safety standards at all have to do with whether an argument requires that safety regulations be eliminated, if standards differ from regulations in exactly that way (i.e. they don’t necessarily technically require anyone to do anything)?Report

              • Avatar Jim Heffman in reply to Michael Drew says:

                ” I’m still at the stage of not understanding what your proposals actually are.”

                His proposal is that “safety at any price” and “poor people should be able to buy things” are mutually exclusive, and that we need to be aware that there’s a tradeoff between the two. If we want to introduce a price floor through safety regulation then we need to recognize that some people will be below that floor.Report

              • Avatar Kimmi in reply to Jim Heffman says:

                this assumes no governmental action to raise people above that floor.

                WithOUT that, you get kids dying of tooth infections.

                With that, you get?? More Taxes for Mr. Koch!Report

              • Avatar Michael Drew in reply to Jim Heffman says:

                This is incorrect. He makes three concrete proposals to the less libertarian among us in the OP. You can read them there. I just don’t understand exactly what they entail.Report

  7. Avatar NewDealer says:

    Like Rod, LWA, and Katherine, I am highly skeptical of this study and most studies that come from libertarian and right-wing think tanks for the reasons already mention. The studies always seem to:

    1. Prove what the Koch Brothers and other Captains of Industry want. The studies always seem to start with a conclusion and then work backwards to prove it. This makes it the academic equivalent of propaganda.

    2. I love how the wealthy Koch brothers are really the true allies of the poor. Who are the wealthy people that the author is talking about? Are they those dreaded New York-San Francisco elites with their wine, cheese, NPR, and locally sourced foods? I love how the libertarian and right-wing managed to turn upper-middle class incomed professionals into horrible aristocrats but the Koch brothers are really just men of the people. The author is no different than the middle class and wealthy she deplores, she just pretends otherwise.

    3. Why do libertarians seem to forget about such lovely events in history like The Triangle Factory fire? Or various recent mine collapses?

    4. A one percent increase in a cost to a car does not seem to make the object out of reach for many people.Report

    • Avatar James K in reply to NewDealer says:

      1 & 2)You’re reading far more into this than is actually there. I’ll note they didn’t include a term for “is one of the Koch brothers” in their estimate of the income elasticity of demand for safety.

      3) No safety and less safety are not the same thing.

      4) The first 1% probably won’t change much. How about the second 1%, or the 20th or the 90th? There is always a way to make it safer, and each increase in safety will make things a little more expensive. The question in play here is how much safety do we want to require, not should there be any at all.Report

    • Avatar George Turner in reply to NewDealer says:

      From 1980 to 2000 the average inflation adjusted price of a car went up 31%, not 1%. Not all of this was due to safety, but much of it was, from airbags to emission controls (which are indirect safety mechanisms because we regard pollution as an environmental safety issue).

      It is an easy exercise to price most people out of the market with a safety standard, such as requiring rocket powered zero-zero ejection seats for cars. People who can already afford their own private jets would of course be unphased by such a standard and would think ejection seats are really cool. Everybody else would have to walk. Yet not building Ford Pintos that exploded was trivially cheap (a few cents extra) yet wasn’t done. Right now the low-hanging fruit on car safety probably involves cell phones and alcohol, yet we still balk at the solutions while moving towards side-impact airbags.Report

  8. Avatar zic says:

    Perhaps this discussion needs to be balanced with another concept: regulatory certainty. That’s my term for it; if there’s a better, please provide it.

    When I say ‘regulatory certainty,’ I mean that a well-established regulatory environment provides certainty to investors; certainty that their investment is being somewhat protected by the regulatory environment in which the investment functions. The easiest way to explain this is by looking at failures of regulatory certainty, and my favorite example would be the Deep Horizon explosion. At the time, BP was considered a safe investment, and I’d argue that part of that was that deep-water drilling was a well-regulated industry. Did the disaster in the gulf reveal that the industry was poorly regulated, that the regulations were easy to short-cut? Did that spur some shifting of capital out of the industry? It certainly caused a lot of folks to dump their shares of BP.

    I’ve never seen an analysis of how regulation — or even the perception of regulation — encourages investment; yet I think it’s an important part of investor decision; regulations that are well designed and fairly enforced protect investments, they don’t just subtract from the bottom line.Report

    • Avatar zic in reply to zic says:

      Edit: I’d add perception that it was a well-regulated industry to At the time, BP was considered a safe investment, and I’d argue that part of that was that deep-water drilling was a well-regulated industry. Report

    • Avatar LWA in reply to zic says:

      You touch on an important point- businesses themselves are the beneficiaries of regulatory certainty; Whether it is real estate investors who enjoy the safety and certainty that the buildings they buy aren’t firetraps ready to collapse, or the manufacturer who purchases materials, safe in the knowledge they have recourse if they turn out to be shoddy or defective, the benefits of regulation accrue not to “the poor” but to everyone, and most of all to the middle class and rich.

      Not surprising that those same people support it overwhelmingly.Report

    • Avatar James K in reply to zic says:

      I don’t see anything to argue with here, but that’s not really what this post is about. Once you’ve decided to regulate, there remains the question of exactly what standards you are going to set. That is the point where Thomas’s paper becomes relevant.Report

  9. Avatar BlaiseP says:

    Diana Thomas is, to put it plainly, a perverter of statistics.

    Examples of regulation that target even lower initial annual risks are floor emergency lighting on airplanes and regulations regarding seat-cushion flammability. The initial annual death rate associated with an absence of floor emergency lighting on airplanes was estimated at roughly 2.2 in 100 million or 0.00022 in 10,000 of exposed population (Morrall 2003).

    On June 2, 1983 19:00 hours, Air Canada Flight 797 caught fire aloft at 33,000 feet over Louisville, KY. Smoke filled the aircraft. Captain Donald Cameron made an emergency landing into Cincinnati/Northern Kentucky International Airport, his vision severely impeded by the smoke. When the cabin doors were opened, an immediate flashover conflagration burst out, burning 23 of the 41 passengers alive and injuring 16. Captain Cameron lapsed into unconsciousness and was pulled to safety by his first officer Claude Ouimet.

    Air Canada Flight 797 led to numerous regulatory changes. Smoke detectors were installed in lavatories. Halon fire extinguishers became mandatory. Fire suppression became a part of standard training. Passengers were expected to operate exit doors, which is why you hear that bit on every flight about changing seats with someone who can do so. Fire retardant materials became standard.

    And floor lighting became standard.

    An aircraft fire aloft is no respecter of persons. Fire kills rich and poor alike. There were 41 passengers and five crew for a total of 46 souls on board Air Canada Flight 797. Outcomes: 23 fatalities, 16 injuries, 23 survivors. You do the math. Somewhat higher than 2.2 in 100 million.Report

    • Avatar Stewart in reply to BlaiseP says:

      And we lost Stan Rogers; far too high a priceReport

    • Avatar Chris in reply to BlaiseP says:

      Her use of logic is flawed, so her conclusions are silly. That’s what I took away from this. For example, she conflates private spending by one family with public spending spread across all taxpayers. And she assumes that if low-income people move to high-income neighborhoods (which they would if they could, we can assume), high-income people won’t just move to higher-income neighborhoods (which they would). Her arguments don’t simply make making “taboo tradeoffs,” they don’t make rational tradeoffs.Report

      • Avatar James K in reply to Chris says:

        What she was doing is called shadow pricing, or trying to put a price to something for which no market exists. You usually do this by looking at behaviour in another market and trying to filter out the value of the thing you are interested in. Thomas is not actually suggesting that all poor people should move into richer neighbourhoods.Report

    • Avatar Jim Heffman in reply to BlaiseP says:

      Modern American mothers drive their children to school rather than letting them walk to the bus stop. They do not permit their children to play outside unsupervised. This is due to fear of sexual predators.

      This is seen as an example of how silly, frivolous, and foolishly risk-averse modern Americans have become.

      Which side do you think is correct?Report

      • Avatar Chris in reply to Jim Heffman says:

        Modern American mothers drive their children to school rather than letting them walk to the bus stop. They do not permit their children to play outside unsupervised.

        Modern American people just make shit up?

        Seriously, almost all of the kids I’ve known since my son was in Kindergarten have walked to the bus stop, or walked all the way to school, without adult supervision, played outside without adult supervision, and have generally done most things without adult supervision. Hell, it wasn’t uncommon for me to be the only adult at the neighborhood pool some evenings back in my old neighborhood. You must be thinkin’ of somewhere else.Report

    • Avatar 975 in reply to BlaiseP says:

      How ironic. The commenter calls the article’s author a “perverter of statistics,” and then “proves” it with an anecdote, although the value of statistics is precisely that they are more analytically meaningful than mere anecdotes.

      If you begin by assuming the worst about others, begin with the assumption that they’re always being dishonest, then you’ll never be able to actually listen to them and have a thoughtful conversation with them.Report

  10. Avatar Stillwater says:

    Given their constraints, the poor demand less safety than the rich.

    Yeah, that’s the important premise. The word “demand” is an interesting one, of course, because it’s ambiguous. Poor people might demand safety constraints in the fully general sense, even tho their marginal utility is raised by choosing work without safety constraints. So its’ entirely consistent to say that poor people demand safety constraints and even while they demand no safety constraints. That is, if they had the options available to rich people, their market preferences very well might match those of wealthy people.

    And that distinction, or ambiguity, is precisely where these discussions split along the standard divisions. Market oriented folks think that the only conception of demand is the expression of preferences in the market place. But if poor people are excluded from expressing their preferences because of (relative) economic disadvantage, then their revealed preferences are necessarily restricted and incomplete.

    On the other side of the equation, employers (and others) often “exploit” (in some none pejorative meaning of that word) poor people’s relative economic disadvantage to leverage their lack of options against the provision of safety standards and other compensation in the work place. That exercise seems deliberate, from my point of view – and I hope that market orentied folks won’t disagree with me about that (profit motive and all).Report

  11. Avatar Matty says:

    My experience is that larger employers often go beyond the requirements of safety regulations. Not in making things safer but in requiring that everything be recorded so if anything goes wrong they can use company policy as a defence. It is not enough to require employees to drive safely they must complete at least two forms saying they will and another to say they have checked the car is safe to drive for each journey. Even if it is the same car and the gap between journeys has been less than an hour still confirm again on paper that the tires are not bald.Report

  12. Avatar clawback says:

    In typical Mercatus Center style, there’s not much to point to in this paper that’s actually false. It’s simply standard analysis. Yes, regulations have costs. Yes, safety is a regular good, and many safety measures are of fixed or nearly fixed cost, so the burden is regressive. Yes, there are certainly examples of bad regulations to be cherry-picked and subsequently mocked. She even acknowledges the economies of scale from many regulations, though just barely; the absurdness of a world in which engineers have to design, manufacturers have to build, marketers have to market, and retailers have to stock, say, multiple models of toaster ovens, some with grounded plugs and some without, is not emphasized here. Still, it is acknowledged.

    The only specific error I see is the failure to distinguish regulations to protect users from those to mitigate externalities. She cites the proposal to mandate rear-view cameras on cars as a supposed example of poor people paying for rich people’s preferences; as if a feature intended to prevent you from backing your car over my kid is some kind of luxury item for you. This is not to say such a regulation shouldn’t still meet reasonable standards for cost; but the distinction should be made.

    Still, on the whole there’s not much here that’s plainly false. In typical Mercatus style, the real work of the piece is left to sensational conclusions as embodied in the title.Report

    • Avatar George Turner in reply to clawback says:

      Well, clearly there are many cases where everyone would see the truth of it, and it’s easy to toss out hypotheticals (adding so many airbags that car prices double, leaving the poor riding bicycles through city traffic).

      But if regulators were always good, logical, and mathematically rigorous about safety we wouldn’t be having this discussion. The issue arises because some of them act like hall monitors who would keep everyone locked in school till 5:00 PM because someone spilled a soda in the hall and created a slipping haazard.

      There are many cases where a pure pursuit of safety produces outcomes that none of us would accept, even though we’d all be safer, such as reducing traffic deaths by entirely eliminating traffic and making everyone walk to work, costing 2 or 3 hours a day of our free time and thus shortening our “free-time lives” by 20 or 30 percent. Fortunately cooler heads usually prevail in consumer safety because pissing off the populace isn’t a good strategy in a democracy.

      But when we get away from consumer products and into things like fuel and food, things get much sketchier. Often the lives saved become “virtual”, based on spreadsheets and models, while the costs remain real. How much should electric rates go up to save one theoretical life, or just make us feel better about mountain top removal by condemning more miners to work underground instead of on top? How much should fresh fruit prices increase to avoid a potential minor exposure to a pesticide before poor people quit buying fruit and start living on beans and potatoes? It’s one thing to be willing to pay for organic free-range chicken, it’s another to mandate that everybody has to pay for it, too, or go without.Report

  13. Avatar Chris says:

    James, you may find this, as well as the rest of the literature on “taboo tradeoffs” interesting (maybe I’ll submit a guest post on it in 2019).Report

  14. Avatar Jim Heffman says:

    “Her argument runs as follows:
    1.Safety regulation is set to please the wealthy and middle class, who hold most of the political influence.
    2.Given their constraints, the poor demand less safety than the rich.
    3.Therefore the poor could be made better off by loosening safety regulation.”

    This is the same argument people make about why Third World sweatshops are actually good.Report

  15. Avatar Kolohe says:

    It takes 27 signatures to register your car in Afghanistan. Thank Allah it’s not 26, otherwise the carnage in that country would be unimaginable.Report

  16. I think the premise behind the post – that the poor bear a bulk of the cost of safety regulations – is quite true. It’s really hard for me to understand how it could be otherwise. People with money can afford nice things that are well clear of any government requirement.

    Because of that, however, a lack of regulation hits the same groups. Those with money can more easily avoid borderline products to begin with.

    The first is why we should evaluate safety regulations closely for necessity and without good reason we should stand back. The second, though, makes it important to act when there is an imperative.

    Of course, it’s knowing when there is an imperative that’s the hard part.Report

    • Avatar Michael Drew in reply to Will Truman says:

      In other words, it’s not clear why the argument doesn’t apply to regulations however stringent they are, and thus doesn’t advocate eliminating safety regulations altogether (let everyone buy just as dangerous of stuff as they want; the market will give them the information the need to decide (or perhaps help achieving that is the most we should be considering doing viz. intervention), and once that’s done, who are we to say they shouldn’t fill their lives with products just as dangerous as they would like?: they’ll reveal their preferences through buying choices), rather than applying to regulations that are this stringent while suggesting that that level of stringency is a good level to have.Report

      • I’m not sure I follow. So my response may be to something you’re not saying.

        I think the argument that the poor are most likely to pay disproportionately for regulations is true. I don’t think this means we should never do it, because they pay disproportionately for lack-of-regulation, too. They’re more likely to end up with the unsafe products.

        I think that we are sometimes not looking closely enough at how the costs are borne by people who are not in our financial situation. DRS talks about how she would be happy to pay more if it means a safer product. Me, too, most of the time. But for some people, the “paying more” is harder to do. We should be careful about how much we’re willing to demand that others pay for their own safety.

        BUT… no… that is not a universal argument against any and all regulation. Sometimes there are externalities. Sometimes the cost is so minor compared to the benefits (cars should be required to have seat belts) that I feel much more comfortable making the demand.

        This is the terrain the battle is fought on. One side brings up the costs (financial and otherwise), one side brings up the benefits, and one side wins and the other side loses. I would guess that I fall more towards regulation-skepticism than you do, though more on the side of safety in comparison to James K. But I could be wrong. I don’t think there’s a hard right answer, most of the time.

        Except seat belts.Report

        • Avatar Michael Drew in reply to Will Truman says:

          I’m setting externalities aside here, as I take James to be doing. We’re talking about product safety and understanding that as the safety of the consumer of the product from… whatever factor about the product might affect just the purchaser/willing consumer thereof. Externalities are over there, which regulations might.

          The point is that there’s nothing special about poor people, and there aren’t just two groups – poors and not-poors. What there are are are people with consumption preferences. Why should a rich person who would like to buy a product for little money that has been produced with little attention to product safety be prevented from doing so? Do they have a lesser right to retain that surplus than a poor person who would like to buy a product for a little more money that is probably a little safer? James’ argument is that they do – that all the other poor people’s higher likelihood to value that extra dollar or however much more than the modicum of risk abatement justifies setting the standard where they all would prefer it. But, again, there aren’t two kinds of people. There are poor people who would like to save another fifty cents. And they’re poor too – maybe poorer than the poor person who wanted to spend for the safety! Again, we’re setting externalities aside, and just think about this as a cinsumption question. I understand that you have some level where it starts to make sense to you, as I have mine – but is this Mercatus argument helping you find that argument? Why don’t we owe the poor person who wants to spend still less than what we arrive at as “the preference of the poors” that extra quarter or dime (or ten bucks on a microwave, or whatever)? The argument gives a compelling reason why the mandatory standard shouldn’t simply match the consumption preference of the affluent (I haven’t read the paper, so i don;t know what it does to establish that that, or something else, actually is the level the standards tend to sit at), but it does that by giving a compelling reason why there shouldn’t be any mandatory standard at all: the market manages to give affluent people the information they need to buy products that are as safe as they want them to be for the money; why shouldn’t everyone at every price point be allowed to use market information rather than government mandate to decide how much of their consumption dollar to put toward product safety, versus other product features, or other products?Report

          • Avatar Michael Drew in reply to Michael Drew says:

            …sorry, paragraph 1 was meant to go on – externalities are over there, which we might agree justify some constant level of regulation (call it an “externality floor”) that doesn’t fluctuate with this question about how safe or risky the purchaser of the product would like the product to be just viz. their own marginal preference not to be injured.Report

        • Avatar Michael Drew in reply to Will Truman says:

          I don’t think there’s a hard right answer, most of the time.

          Shorter me above is that I’m jsut saying that this Mercatus argument doesn’t help us with that at all. Yes, by assuming two sets of preferences (those of the “wealthy and middle class” as just one set and then those of the poor as just one set), and two possible levels of regulations (one suiting the first set of preferences above; one suiting the second), it shows that, if we assume we’d prefer to please the poor (that’s where the liberal concern troll bells ring, though it’s right and fair to say that the marginal-value-of-a-dollar argument actually is a good argument so long as everyone agrees to let it apply everywhere it applies, ahem), then we should.. go ahead and please the poor. The problem is that there aren’t two sets of preferences and two regulations levels. There’s a sliding scale. Reset the levels, and the argument works all over again. It provides one no purchase as to where to set the levels other than lower. That means it’s an argument to eliminate them. Unless the argument is that at lower levels, market transparency in information about risk clouds up. In which case, that’s the thing that tells you where to set mandates, not “where it suits the poors.” If that’s the argument in the report, then that’s the argument in the report – again, I haven’t read it. But that factor makes no appearance in the OP that I saw.Report

        • I’m not talking externalities, either. I’m talking about pure nannyism (put one way) or consumer protection (put another) for its own sake. Externalities are not unimportant, but I think focusing on them too much can lead us to make some rather bogus argument. (For years, I had a negative externality argument in favor of motorcycle helmet laws. The more I thought about it, the more I didn’t damn fools to die just because they weren’t wearing a helmet and the externality argument was truly bogus. That’s not a case of consumer protection, per se, but it’s applicable to this discussion in other ways.)

          I think the reason for my own focus on how these things impact the poor is paternalistic in nature. With excessive regulation, I expect the wealthy to more easily be able to afford the costs or bear the consequences of failing to abide by it. If the case of too little regulation, I expect the wealthy to more easily be able to balance the risks with the rewards.

          The Mercatus argument (which I’ve been familiar with long before this) affects my thinking on a couple of levels. First, consumer safety protections are often geared expressly as a defense of the poor (the payday lending conversation above being an example of this) and it’s worthwhile to remember the other side of that.

          But for me personally? It tracks to an evolution of my thinking over the last five or ten years. Which is that the wealthy and poor are different in many ways. And that I can get too comfortable in my upper-middle class orbit and forget that the effects of laws and regulations, and the lack of the same, have different effects on people more on the margins than I am and am ever likely to be.Report

          • Avatar Michael Drew in reply to Will Truman says:

            Not that you have to have a clear position in this respect, but I’m having trouble understanding where you stand in relation to James’ basic thrust here. But to step back for a a second, to understand what James is saying, I think you have to understand that something you give in your initial comment as a prime consideration actually is in direct conflict with the very core of James’ point. It’s this, and I’m going to add emphases:

            The first is why we should evaluate safety regulations closely for necessity and without good reason we should stand back. The second, though, makes it important to act when there is an imperative.

            A crucial premise of James’ argument here is that regulation levels that have consumer safety in mind are fundamentally consumption preferences enacted into law. There’s no fundamental necessity or objective best level – it;s just, hey how many extra cents do you want to pay. Since we know that our milk (just to stick with the milk example) is overwhelmingly safe, we know we’re operating well on the “safe,” or, to use your term “excessive,” or “unnecessary” side of any critical dropoff point – and we’re not even sure there is any such natural point. It could just be a more or less steady scale of increasing risk that proceeds right up to (and past) the point where the risk to the producers of providing milk any riskier than that becomes anti-profitable given the liability regime (which is separate from the regulatory regime, though probably influenced by it). The point is that, critical to James’ and Mercatus’ insight is that there isn’t a “necessary” or “highly sensible” place to set (eg.) milk safety regulations; it’s just, “Where do you want it and how does that relate to the milk you’d prefer to buy.” Now, that could be different in different product markets (i.e. there could be product-related reasons to set regs in certainplaces rather than preference-related reasons), but to the extent it’s different, then to that extent the Mercatus argument gets sidelined. James & Mercatus are explicitly saying that this is really all about preferences & *not* about determining an objectively rational place to put the regulations. That absent some critical drop-off relating to the product itself (that the market won’t respond to by settling naturally on the safe side of said drop-off), the question is really about who you want, or think it’s right, to most please, not about finding some necessary or imperative level for them to be at – those are usually illusory.Report

            • Avatar Michael Drew in reply to Michael Drew says:

              Agh, quote ends at the paragraph break.Report

            • Sorry, I missed this.

              A crucial premise of James’ argument here is that regulation levels that have consumer safety in mind are fundamentally consumption preferences enacted into law. There’s no fundamental necessity or objective best level – it;s just, hey how many extra cents do you want to pay.

              All of this sounds reasonable to me. I’d say that they are (or ought to be) beyond my personal consumption preferences, but which consumption preferences of others I think should not be legal. To use the milk example, a consumption preference that says “I don’t care if the milk hasn’t been kept at such-and-such temperature throughout the distribution process, I’ll take my chances!” does not strike me as a consumption preference worthy of protection. “I would want be able to buy and consume raw milk” does.

              James & Mercatus are explicitly saying that this is really all about preferences & *not* about determining an objectively rational place to put the regulations.

              I can’t say that I disagree with this either. I don’t know that there is an objectively rational place since it is all dependent on subjective value tradeoffs. Cost versus safety. That doesn’t deprive one of a point of view. to the extent that James and Mercatus are using this to argue that “Hey, since there is no natural and objective place to start and stop regulation, we shouldn’t regulate anything…” well, I disagree with that. I don’t think there has to be an objective place in order for regulation to be justified.

              To go back to my seatbelt, it’s not objectivity that tells me “Yes, it’s okay to require $x be spent on every car made in order to assure the presence of seat belts.” It’s that I believe $x on every car is worth it to make sure that there is at least the opportunity for people to buckle up (and/or to allow us to mandate it).

              That absent some critical drop-off relating to the product itself (that the market won’t respond to by settling naturally on the safe side of said drop-off), the question is really about who you want, or think it’s right, to most please, not about finding some necessary or imperative level for them to be at – those are usually illusory.

              I think the “who” ought to be a part of the equation, but I wouldn’t say it’s the entirety of the equation. There is also the “what”, sometimes regardless of the “who.”Report

        • Avatar George Turner in reply to Will Truman says:

          But Will, motorcycles don’t need no stinkin’ seatbelts!

          And not even the rich could afford a motorcycle that had enough safety features to actually be safe because it wouldn’t even be a motorcycle anymore. But if we could make one with 360 degree obstacle radar, road sensors, computer overrides, and some sort of foam dispenser that added $30,000 to the cost, should we mandate it? A safety advocate might look at the list of motorcycle deaths and think “I can fix this!” A realist would realize that they’re just outlawing motorcycles for everyone except the rich, and that the customer base of motorcycle riders either has a very high acceptance of risk (the old riders) or a very unrealistic evaluation of their mortality (the young riders).

          Getting to Michael Drew’s point about letting the market decide, even under such a system one of the key things in a market is honest information (price, features, etc). We don’t mandate that all beef must be grade A, but we do mandate that all beef be inspected and graded. The problem is that unless we make it that simple, the scheme will likely fall short of intentions because nobody reads through all the warning labels. Heck, we don’t even read the directions. One of the market benefits of safety regulations, when done properly, is simplicity. The less research the consumer has to do before making an informed decision, the better. We don’t have to worry about gotcha’s, figuring out which local products we can and can’t eat without spending our entire vacation on the toilet. Yet by clearly marking the product both consumers and producers can benefit. When I buy meat from “the rescue section” of the meat aisle, I know it’s getting close to the margins but am happy, if not overjoyed, with the excellent price. When I’m sometimes disappointed, if not horrified (a pot roast that smelled like a dead body no matter what I did), I didn’t blame the store for selling bad meat. But if the labels were confusing, or too detailed to fathom, I’d get burned all the time. If my choice was taken away by only selling the freshest meat, I couldn’t score great deals in rescue section. I’d have to buy cuts worthy of the White House.

          So there’s a place where a more complex market in safety would provide useful choice and increase well being (and family economics), and a place where it could cross the line into added confusion and harsh lessons in savings or inattention, depending on the clarity and logic of the standards and labeling.Report

          • Avatar BlaiseP in reply to George Turner says:

            That’s bass-ackward. There’s no elimination of risk, only attenuation. And FYI “Grade A” is only a measure of carcase maturity. You pay for marbling in beef. That’s grading such as Prime, Choice, Select and such. Eat lots of Prime Beef and that marbling will stack up in your arteries, a point which might not work out to Measurable Benefit by some measures.

            But back to your motorcycle example. The insurance company doesn’t care if you ride one. They’ll charge you rates proportional to the risks. That’s why they exist, they know the risks, you want to ride the motorcycle, you get a policy and pay, everyone’s happy.

            And for what it’s worth, the safety advocate knows it’s a matter of how many miles you drive, not the motorcycle itself, which determines your insurance rates. Those pesky realist numbers just do keep cropping up to wreck these convenient and conspiratorial arguments. Sorta like how much of that Prime beef you eat. Realism strikes again.

            The entire insurance industry arose to deal with the problem of risk. Those warning labels? Mostly for insurance purposes. The market doesn’t decide that. The actuaries do. They like all these new technologies, once they understand the odds. And believe me when I say it’s not those pesky Consumer Advocates who drive this regulatory crap. Those schnooks never accomplish anything. It’s the insurance industries who drive it.Report

            • Avatar Jim Heffman in reply to BlaiseP says:

              Soooooo your point is that it’s entirely possible to privatise risk and allow the market to create a solution that incorporates voluntarily-risky behavior?

              That’s kind of not what you’ve been saying through this whole discussion so far.Report

              • Avatar BlaiseP in reply to Jim Heffman says:

                Now that’s an interesting problem. Glad you brought it up. Yes, the insurers are behind a great many of these regulations. It’s all related to liability. They coordinate with government to get surprisingly onerous regulations applied to their customers.

                While we’re in question asking mode, who do you think came up with the seat belt laws? Or helmet laws? You don’t really think that was just a bunch of private citizens doing that, do you? Do you have any idea how much influence the insurance industry has over the legislative process, at all levels?

                Why do you think only the government does flood insurance these days? Because Allstate damned near went broke.

                The health insurers only allow doctors and hospitals to only perform procedures for which they have meaningful data, even if more efficacious cures and procedures have been found. There’s more regulation than government regulation, you know.Report

              • Avatar Kimmi in reply to BlaiseP says:

                … otherwise known as “folks couldn’t afford the cost for flood insurance”Report

              • Avatar Jim Heffman in reply to BlaiseP says:

                “The health insurers only allow doctors and hospitals to only perform procedures for which they have meaningful data”

                “Off-label”. Doctors will do things with pharmaceuticals that the package has a black-box warning to never do.Report

              • Avatar BlaiseP in reply to Jim Heffman says:

                You’re a doctor, too?Report

              • Avatar Jim Heffman in reply to BlaiseP says:

                I know this might come as a massive shock but you are not the only person in the world who knows things.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                I had no idea that doctors routinely use pharmaceuticals against contraindications, Dr. Heffman. This is, indeed, revelatory. Let’s just see what happens if I shove this haemorrhoid suppository up your nose. Stop squirming and hold still. There may be some benefit but we won’t know until we try…. progress o’ science, donchaknow.Report

              • Avatar zic in reply to BlaiseP says:

                Enough. Stop it, both of you.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                You’re no fun any more, Zic. I’m trying to advance the cause of science by finding Alternative Uses for Physick. Oh what sad times are these when passing ruffians can say Ni at will to Old Gentlemen. There is a pestilence upon this land! nothing is sacred. Even those who arrange and design Alternative Uses for Physick are under considerable economic stress at this point in time.Report

              • Avatar zic in reply to BlaiseP says:

                I almost went blind from one of those alternate physicks.

                I find it enormously funny that we Americans pay extra for the privilege of being the first large-scale test of any damned thing that gets approved; the pool used to identify those potential ‘off label’ uses, and call it ‘the best medicine in the world.’

                But I am not one bit fun when it comes to name calling, and not afraid to put on my Mother suit (a black and white stripped shirt, silver whistle, and bright-red lead-enhanced lipstick) and call for a time out.Report

              • Avatar Stillwater in reply to BlaiseP says:

                Maybe Jim’s younger than you. Disrespect is a generational thing. Goddam kids.Report

              • Avatar Dave in reply to BlaiseP says:

                Enough. Stop it, both of you.

                Wait, I thought that was my job!!!! 😉Report

  17. Avatar Mike Schilling says:

    I find the argument given to be a special case of the principle:

    (1) Everything leads to sub-optimal trade-offs for low-income people.

    To the extent that food labeling is under-regulated, who is most likely to buy the low-cost food made of sawdust, paraffin, and food coloring? Not wealthy foodies. To the extent that furnaces are under-regulated,leading to cut-rate models that feed gas after the pilot goes out, where are they going to be installed? Not in McMansions. Who holds the credit cards that charge $50 for going $2 above the credit limit? Not stockbrokers.

    If regulations against tainted food are relaxed, who’s going to be able to call in sick with food poisoning vs. who’s going to lose their jobs over a missed day? If auto safety is relaxed, causing serious injury, who has the medical insurance to deal with the results and who’s bankrupted by them?

    It’s difficult to be impressed by a report, even one from a well-known university, that’s just figuring out that being poor sucks,Report

    • Everything leads to sub-optimal trade-offs for low-income people.

      Pretty much, no one can have as much of everything as they want, but poor people have it harder.

      To the extent that food labeling is under-regulated, who is most likely to buy the low-cost food made of sawdust, paraffin, and food coloring?

      I agree, but the tricky part is figuring out what constitutes “under-regulated”. Different levels of regulation produce different risks and costs. There is no objectively correct way of reconciling these risks and costs so it becomes a matter of preferences.

      It’s difficult to be impressed by a report, even one from a well-known university, that’s just figuring out that being poor sucks

      It is a reasonably obvious point, but given the heat this thread has generated, perhaps it’s not obvious enough.Report

      • Avatar Mike Schilling in reply to James K says:

        Perhaps I can put this more neatly in the shape of a syllogism:

        P1. Poor people bear the costs of anything more heavily than the wealthy do.
        P2. Over-regulation has costs.
        C. Poor people bear the costs of over-regulation more heavily than the wealthy do.

        Corollary (left as an exercise): Poor people bear the costs of under-regulation more heavily than the wealthy do.Report

        • Avatar Michael Drew in reply to Mike Schilling says:

          Solution: remedy poor people’s lack of money by giving them money. (One of James’s proffered remedies to the specific problem of regulation’s unequally-borne costs, I’d note, but one, it’s also fair to note, that is equally useful in allaying the inequality with which the poor bear so many other costs.) Another way to state this is that the primary problem the poor face, and the primary way they differ from everyone else – this a corollary to Hemingway – is that they have less money than everyone else does.Report

        • Avatar BlaiseP in reply to Mike Schilling says:

          Heh. The poor live demonstrably shorter lives. That actuarial fact is certain to be improved if only we were to reformulate sausage to include more healthful sawdust.Report

      • Avatar BlaiseP in reply to James K says:

        There is no objectively correct way of reconciling these risks and costs so it becomes a matter of preferences.

        … objectively correct. A precious moment.

        There are ways of reconciling these risks and costs. They come under the headings of Statistical Process Control and Actuarial Science. And the heat generated hereabouts are the calories of that wonderful physics experiment, the friction under the little block as it is pulled up the inclined plane of science.Report

        • Avatar James K in reply to BlaiseP says:

          Those will tell you what the trade-off is, but not how to resolve it. Because there’s nothing that can tell you how to resolve it without resorting to preferences.Report

          • Avatar BlaiseP in reply to James K says:

            I must now hold you to your own words. You said “objectively correct”. When I point out there are such objective measures, in direct contradiction to your point which said there weren’t, now it’s about preferences. You can have your preferences. You do not get to choose your facts.Report

            • Avatar James K in reply to BlaiseP says:

              True, but trivial, I’m not disputing facts exist. To use an example you’ve already identified, an insurance company can tell you riding a motor bike is riskier than driving a car. They can even tell you how much riskier, and sign a dollar value to it based on their expected losses if you ride one. What they can’t tell you is whether the additional risk is worth it to you or not because that partially depends on things like your appetite for risk, and how much you enjoy riding a motor bike.

              There are two kinds of question here:
              1 “What are my expected health costs if I ride a motor bike?”. Given a state of knowledge, there is a correct answer to this question that any competent actuary can figure out.

              2 “Should I ride a motor bike?” This kind of question cannot be answered by any actuary, it can only be answered by the person asking it, because you have to know the person’s preferences to reach an answer. The answer to question 1 matters in answering this question (facts matter, here we agree), but isn’t enough by itself to answer question 2.Report

              • Avatar BlaiseP in reply to James K says:

                Your premise starts with “Safety, at what price?” It seems we know how to determine that price. Now allow me to correct Diana Thomas’ — and by proxy your — theses.

                Safety regulation is not set to please the wealthy and middle class, but is in fact driven by objective determination of prevention payoffs via actuaries. Insurance, not industry, and certainly not the consumer — drives such regulation.

                The poor live riskier lives by definition, not because they demand less safety. They drive on bald tires, given the Hobson’s Choice of paying the rent or running the risk of a high-speed rollover accident.

                The poor would be made substantially worse off by loosening safety regulations. Their lives are already filled with risk: deregulation would by definition add to their total risk exposure.

                Now these are the facts. Take the wreckage of your argument where someone might not know how risk is determined or the risk exposure of poor people.Report

              • Avatar Jim Heffman in reply to BlaiseP says:

                “Safety regulation is not set to please the wealthy and middle class, but is in fact driven by objective determination of prevention payoffs via actuaries.”

                So…because insurance companies can determine the statistical likelihood of a motorcycle rider having an accident, it is therefore justifiable for the government to ban construction of oil pipelines.

                And because she weighs the same as a duck, she is made of wood, and therefore a witch.Report

              • Avatar Kimmi in reply to Jim Heffman says:

                They did a whole hell to ban cigarette smoking, didn’t they?
                (totally on the insurance companies).

                I don’t argue one way or another about risk. I just say, if you want to have more risk, it’s simple: get rid of insurance companies.Report

              • Avatar George Turner in reply to James K says:

                Despite what you claim, insurance companies can’t give the true future costs, they can only estimate them. Did any insurance company see the hot coffee payout McDonald’s was going to get hit with? Not likely. Did they accurately project the risk of the housing market crashing? Not even close. They insure against risk just like they insure against someone having a perfect NCAA bracket. They crunch numbers and take a risk that they’ll beat the odds, that the die won’t come up snake eyes. There’s a reason many people equate it with gambling, because the two fields are highly related, based on statistics and past performance.

                But note that gambling on sports has such a high variability that it’s not considered a stable business, as the outcomes depend too much on personal performance that can’t be reliably gauged. Similarly, and actuarial might be able to statistically describe the population of motorcycle riders, but he’d have to observe a particular rider’s performance to tell you what the risk to that rider might be. The rider could be as cautious as a bunny rabbit or crazy as Hunter S. Thompson, and the same estimate of risk cannot be accurate for both.

                And all this assumes that the cost to the insurance company is an accurate reflection of the cost to society, or to the individuals affected. Sometimes the award is bizarrely high, sometimes it is low. Earlier in our legal history it was almost impossible to win a damage award against a railroads and other industries, so their insurance costs would’ve been low. Does that mean the early trains were actually safer, even as they ran over countless pedestrians?

                Depending on the legal environment, the costs incurred can be entirely divorced from the risk of injury and death since the numbers we agree to pay out is entirely subjective. A jury might add up a person’s expected lifetime earnings, they might tack on millions for pain and suffering, or they might pay for limbs like they were just a piece of meat. In the past we’ve done all those things. Yet the accidents that resulted in those wildly varying costs in the different legal and social environments could have had exactly the same risk of occuring. The insurance rates change to reflect court awards, and can fluctuate wildly for products whose actual risks didn’t change at all.Report

              • Avatar BlaiseP in reply to George Turner says:

                What? That’s complete nonsense. McDonald’s had over 700 coffee burn claims filed against it before this claim and was well aware that its coffee was burning people all over the country. It had already paid out over $500,000 due to prior burn injuries.

                And don’t drag in the housing crash. It’s already been established in fact that the Wall Street operators were creating hazard — in a deregulated environment of over the counter transactions — using false risk criteria. So much for that crap.

                Similarly, and actuarial might be able to statistically describe the population of motorcycle riders, but he’d have to observe a particular rider’s performance to tell you what the risk to that rider might be. The rider could be as cautious as a bunny rabbit or crazy as Hunter S. Thompson, and the same estimate of risk cannot be accurate for both.

                Once again, it’s Statistics Time… let’s all sing the little song, boys and girls…. “l sub x are the people still alive, d sub x are the people who will die”

                Humph. Don’t you know how this song goes, boys and girls? I thought everyone knew that song. Let’s bring Actuarial Al over here, he’ll teach it to us all.

                Actuarial Al says we don’t look at any one bad boy or good boy in a life pool. Actuarial Al says we derive Lambda the Hazard Function from how many of them end up in the ambulance, not before they climb on the motorcycle. He’s very sensible that way. We don’t call boys and girls bad before they do bad things. That would be unfair. And also unscientific.Report

              • Avatar George Turner in reply to George Turner says:

                Cute, but actuarial Al is a gambler, which is why you can insure just about anything – just like you can bet on just about anything. It’s unrelated to actual risk of injury, it’s only related to expectancy of a payout.

                But if you insist that insurance rates are a real reflection of risk, why don’t we just make the world perfectly safe by having Mitch McConnell pass a law absolving all producers of legal liability (much as they’ve done for gun manufacturers) so that companies couldn’t lose in court, dropping their insurance rates to zero as if they had sovereign immunity? Then all products would be 100% safe!

                In the real world, the science of risk remains divorced from insurance in many areas because although scientists might conclude that chemical X is adding Y number of cancers to the overall population, there’s no way to convince a jury that anyone’s particular case of cancer is primarily because of chemical X, for thousands and thousands of chemicals X.Report

              • Avatar BlaiseP in reply to George Turner says:

                Actuarial Al doesn’t gamble. He’s an oddsmaker. Big difference.

                What is this hooey about making the world Perfectly Safe? There is no such thing as a perfectly safe world. I have already laid out the case that insurance and capitalism grew up side by side, going back to Babylon, a society much given to accurate calculation and prediction. The Chinese also insured caravans on the Silk Road. Commerce is absolutely dependent upon insurance: if we were to do as you propose, capitalism would crumble to shit and ruin in minutes. Not hours, minutes.

                In the real world, I get paid to implement policy based on rulesets driven by data. Risk can be calculated and profits can be made, provided decisions are based on sound probabilities and agnostic data. My clients do exceeding well, thank you very much. They are not driven by idealism but by the relentless pursuit of profit, attenuating risk where they can, taking risk where they can’t.

                As for chemical interactions, stop gumming up the works with talk about product liability in hypothetical cases. I, for one, favour tort reform at a number of levels. But when it comes to McDonald’s settling with 700 litigants and you come around to badger me with questions about what the insurance industry could have reasonably foreseen, do try and see reason, George. They not only could have foreseen, they knew and did nothing. So yeah, I think McDonald’s deserved the spanking they got.Report

              • Avatar George Turner in reply to George Turner says:

                Oh, so Al is just the bookie. Around here we have tons of people with extremely elaborate systems for assessing odds. The horse tracks love them. No matter how much mathematics goes into calculating the odds, it is still gambling, which is risking money on the outcome of future events. The probability theories it’s based on were developed to beat card games and roulette tables in Monaco by people like Cardano, Fermat, and Pascal, but since getting beat up by large Italians would be the outcome of overwhelming success, focus quickly shifted to insurance, where people don’t want to need a payout.

                Capitalism does not depend on insurance. That’s just a side industry for companies that would rather hedge against risk in small increments. If the expected payouts are small enough to absorb or the risks too unlikely then many companies don’t bother covering them, which is one reason why asteroid insurance or copying machine insurance isn’t a hot item.

                If the risks are too difficult to assess then companies go ahead and take the risk because no insurance company would touch them. Apple certainly didn’t have a multi-billion dollar insurance policy to cover the possibility that the iPod or iPhone would flop. That’s just a risk companies take. So most everyone just carries fire (thanks to Ben Franklin’s efforts) and now car and medical insurance. The original role, shipping insurance, isn’t that important unless you’re shipping expensive cargos by sea, especially through pirate infested waters. Aside from insuring ships at sea, almost nobody involved with capitalism carried any kind of insurance until fire insurance was offered in the late 1600’s, and even it was extremely uncommon until much later.

                And since McDonald’s had only paid out $500,000 on 700 suits, wouldn’t a person good at math calculate the average payout per suit as $714 based on a huge set of data points? Oh, wait, the original award was $3 million, exceeding statistical expectations by a factor of over 4,000. Even our local folks who bet on the ponies don’t usually screw up that badly, kind of like when you said:

                And don’t drag in the housing crash. It’s already been established in fact that the Wall Street operators were creating hazard — in a deregulated environment of over the counter transactions — using false risk criteria [em mine]. So much for that crap.

                So if insurance is so scientific, how could there be something called a “false risk criteria”? Our local gamblers make lots of excuses that sound way more sophisticated than that. In fact, the housing crash was caused in large part by the insurance market for the tranches of mortgages, which was being stupidly thought of as a measure of the actual, real world risks instead of an educated bet by a bunch of people working in a different office who didn’t have a good historical data set either.

                If you looked at payouts, you’d think the most dangerous things ever invented by man are probably fake boobs and fireproof insulation. Somehow I don’t think that’s the case.Report

              • Avatar BlaiseP in reply to George Turner says:

                Around my shop, we manage actual risk. Calling it gambling if you wish, risk taking, gambling, if you’re ignorant enough to conflate the two, be my guest at the Kiddie Table over there and learn the little song. I don’t have time to teach it.

                Capitalism is absolutely dependent on insurance. I’m not going to argue this either. It flies in the face of both history and probability.

                There are markets for unassessible risk. Lloyds of London is just one such insurer. No insurer will bet on the profitability of a product or service. That’s just barking crazy talk: there’s no data to support a risk assessment. Wanna bet on future profitability? Buy the stock. Apple would certainly have insured its facilities and its shipments. It’s reduced risk via multiply sourcing its components to attenuate problems created by supply chain disruption.

                You got caught out saying something about how McDonald’s insurers couldn’t possibly have known what was up. So don’t say anything more about McDonald’s. The more you say, the dumber you sound.

                Your local gamblers are idiots. I think these lotteries are the greatest taxes on stupidity and innumeracy ever invented. We could probably replace the income tax with lotteries if you are any guide to Reg’lar Joe’s comprehension of statistical hypothesis testing. While Moody’s and the rest of these jackasses were stamping these shitty mortgages AAA, nobody was doing any risk analysis. They were, in fact, betting on the odds of the entire market moving in one direction or the other, not realising they all had their appendages in each others’ asses, with not a goddamn clue as to their actual risk exposure.Report

              • Avatar Kimmi in reply to George Turner says:

                Insurance is also known as hedging. My company insures itself through betting in the stock market.Report

              • Avatar George Turner in reply to George Turner says:

                The gamblers who don’t think they’re gambling are the ones with the problem. I’m sure there are some actuarials who don’t realize that one of their company’s major exposures is a bet that there won’t be category 5 hurricane landfall in central Florida in the next 15 years, much less two in a row, but it is what it is, and when they lose such bets they often have to restructure their policies and raise their rates while relying on secondary insurance or a government bailout to cover their own losses. And just like casinos, they have to always be on the lookout for customers who are trying to game the system.

                And if capitalism is completely dependent on insurance, and the only kind of insurance people could get prior to the London fire was to cover long-distance transport, who was making all the stuff that was getting shipped?

                No insurer will bet on the profitability of a product or service. That’s just barking crazy talk: there’s no data to support a risk assessment.

                And yet that is the biggest and most important risk that companies make under capitalism, and they do it completely uninsured, and they do it all the time. Uninsurable risk isn’t an obstacle to capitalism. For large companies some types of minor insurance aren’t even necessary since the company can directly absorb the statistically expected losses just as well as an insurance company can, and with no overhead costs, because their risk pool is already as big as a small insurance firm’s. Early shipping companies did just that, spreading their cargos across multiple hulls traveling multiple routes. In other news, Bill Gates doesn’t actually need to buy health insurance. If he gets sick he can just buy a hospital chain.

                As for McDonald’s insurers, if they’d never faced such a lawsuit then there would indeed be nothing to base their insurance rates on (much like an alien invasion to eliminate Big Macs). But they had data on a large set of 700 cases, so they knew both the rate and costs of such accidents. Then a case came up that was to cost them six times more than the previous 700 cases combined.

                In car insurance terms, that’s like a jury deciding that someone’s replacement fender on their Ford Festiva should be made out of gold coated titanium with diamond inlays. It’s not something that could be reasonably foreseen because it’s dependent on the whim of a jury (later a judge knocked the settlement down to $20,000, because $3 million for spilling a cup of coffee was just crazy).

                But awards can get even crazier. A boy in Texas who was set on fire was awarded $370 million in expenses and $150 billion dollars in punative damages. Thank goodness no insurance company was on the hook for that one.

                We can use all sorts of statistical models to try and describe what happens in our financial world, including predictions about the future, but we shouldn’t become so blind as to assume that the numbers are the real truth. They are abstractions we use to make calculations easier. Often the numbers can ignore or mask underlying complexities, such as trends that haven’t shown up yet (like a downturn in the economy and the housing market where almost all the people in a high-risk tranche start to default in unison), or that 12 jurors in Texas will do something absolutely insane, or that some new regulation will put a whole industry on the hook for almost limitless liabilities.Report

              • Avatar BlaiseP in reply to George Turner says:

                Please. You’re sure there are actuaries and underwriters who don’t know and can’t calculate the probabilities of a hurricane over 15 years. Who are these guys?

                Now, George, I did say an insurer isn’t going to insure your profits.

                The rest of that is awkward Google-fu. Numbers are the only tools we have to assess risk. Don’t try that bafflegap about Underlying Complexities. That’s what numbers are for.Report

              • Avatar George Turner in reply to George Turner says:

                There are NO underwriters, actuaries, or even hurricane scientists who can accurately assess the risk of hurricane landfalls 15 years out. If you find one, please contact NOAA and the Nobel Prize committee, because it would be the most important breakthrough in the history of science and mathematics.

                Numbers are not the only tool we use to assess risk. A far more important tool is intelligence, specifically the knowledge of when a number can be rationally justified and when there’s not enough understanding of the inputs to make a decision with any certainty regarding values, error bars, and unknowns that may render the whole effort meaningless no matter how many papers and sophisticated techniques leads to it.

                Predicting the future state of a dynamic chaotic system where all the drivers aren’t fully understood is just such an area, which is hurricane predictions can be easily off by an order of magnitude.

                Engineers are a group that is keenly aware that their predictions are based on assumptions. “IF this mathematical model of the dynamics is accurate, THEN this set of numbers describes things – otherwise it will possibly explode.” Much of risk modeling fails the test of underlying assumptions about the randomness of the inputs. Forces and events in the real world usually have non-random causes due to relations we haven’t yet fathomed. Given our ignorance, we often model these as random inputs even though the assumption can’t be rigorously supported. This sometimes leads to catastrophic mistakes which are explained in hindsight. Actuaries don’t get into these issues because they’re not trying to unlock the fundamental nature of the universe or open up new fields of fundamental mathematics. They’re not trying to make breakthroughs in our understanding of equine physiology and psychology, they’re just trying to cover the spread.Report

              • Avatar Kimmi in reply to George Turner says:

                It’s also related to price of payout. if that goes infinite, you don’t insure nothing. Because are you stupid???Report

  18. Avatar Rod Engelsman says:

    Some thoughts…

    Does safety cost more? Ceterus paribus… maybe. It depends on how the additional safety margin is achieved. If it’s a matter of adding a new feature, then yes. But you can conceivably make a car safer by putting a smaller engine in it so the top speed is lower. Higher safety with lower cost. Other times safety can be achieved by redesigning the product in a simple way that doesn’t necessarily increase production costs.

    It’s also not necessarily the case that poorer folks actually pay the same for the added safety. Take cars for example again. If the government mandates a new safety device, say side airbags, poor people will hardly be impacted at all. Why? Because poor people, by and large, don’t buy new cars. They can’t afford new cars. They buy used cars. And not three-year-old, off-lease cars either, but ten, fifteen, twenty-year old cars that cost a small fraction of the price of a new car. By the time cars with that safety feature dribble down into the used market the added marginal cost of that safety feature has been discounted drastically, perhaps to zero. So they get the benefit for almost nothing, but they have to wait a while to enjoy it.

    As others have noted, poorer folks suffer disproportionally from the consequences of increased safety risk as well. If your thesis (which isn’t the Mercatur author’s primary thesis) is that safety vs. cost is a trade-off… well, duh. I’m just not sure how much that insight buys you. Given the notorious difficulty with which even very informed consumers have in rationally evaluating risk (driving vs. flying for example) it’s not clear to me what exactly “revealed preferences” are actually revealing, other than perhaps desperation among the poor.Report

  19. Avatar Damon says:

    Didn’t read all the comments as there were so many, but I doubt this was covered: the unintended consecquences of other regulation on saftey. Example: First generation airbags.

    Let’s take automobile fuel efficiency. There are only a few ways to improve the MPG on a car: smaller engine, lighter weight, etc. If you’re pulling out mass in a car to reduce weight, it has less ability to protect the occupants.Report

    • Avatar BlaiseP in reply to Damon says:

      Were this true, heavier vehicles would be safer than lighter vehicles, across the board. And this isn’t true. If the only factor is weight, all other things being equal, we might be able to make such a correlation because in a contest between a heavier and lighter vehicle, the heavier one wins: F=MA. For obvious reasons, we can’t make such a comparison: vehicles evolve and not all crashes subsume into this model.

      What with the application of supercomputers to vehicle design and crash simulation, we’ve been able to both reduce weight and improve crash safety. Robotic welding has made previously-impossible assembly techniques possible, the monocoque design has done for cars what it did for aircraft: the skin is now a structural component.Report

      • Avatar Jim Heffman in reply to BlaiseP says:

        “Were this true, heavier vehicles would be safer than lighter vehicles, across the board. And this isn’t true.”

        This sounds like a statistically-supportable statement, and didn’t I just get yelled at for making strong statements without providing support?

        “What with the application of supercomputers to vehicle design and crash simulation”

        This is the kind of thing that someone who’s never actually run DYTRAN would say. And no, the fact that you typed it into Google just now doesn’t make you an expert.Report

        • Avatar BlaiseP in reply to Jim Heffman says:

          It is statistically supportable. Simple physics. Rollover accidents would vary with center of gravity. I don’t run crash simulations. I write AI rulesets for insurance firms and do integration work. I deal with underwriters and policy analysts and fraud detection. I just finished up a money laundering detection system. I couldn’t give a shit what DYTRAN is, or, for that matter, what you have to say about it.Report

          • Avatar Jim Heffman in reply to BlaiseP says:

            “It is statistically supportable.”

            I don’t see no link there, sport.

            “I don’t run crash simulations.”

            That’s bloody obvious. Otherwise you wouldn’t be talking about how Magic Computers Solved Everything.Report

            • Avatar Kimmi in reply to Jim Heffman says:

              Do you want me to link you to the stock market price of iron and steel?
              … cause I can. We used to make cars out of that, ya know? My da, as I referenced, still has one of those…Report

            • Avatar BlaiseP in reply to Jim Heffman says:

              Heh. You stick to what you know. Which ain’t insurance, Heffman. You don’t see any links? That’s fine. You don’t see much of anything beyond your own nose. I survived a total front end crash and I can tell you, Honda Motors saved my life.Report

        • Avatar Kimmi in reply to Jim Heffman says:

          Jim,
          My da has a 3 ton vehicle at home. Nobody makes ’em like that anymore. They’ve got PR pictures of it going off a 100 foot cliff, and the person (stuntman) inside walking out unscathed. Car was fine too.

          They dont’ make ’em like that anymore.

          Care to guess why?Report

      • Avatar Damon in reply to BlaiseP says:

        And all that extra engineering and cost has kept MPG very close to what it was decades ago and increased the price significantly. I got 42 MPG on my 85 Honda Civic SI. How many cars get that now with all the airbags and backup cameras, and lane drift warnings? So we spend all this money and time and we’re still no better off MPG-wise.Report

    • Avatar Kimmi in reply to Damon says:

      Actually it has more. more maneuverability.

      Of course, training people to not stomp on the brakes takes actual work.

      Dodge first!Report

  20. Avatar zic says:

    Who said anything about eliminating regulation?

    That’s James K, comment linked.

    So lets talk about re-evaluating regulation. I’m game. I think an ongoing metric for review should be built in from the start. I think it should include some sort of analysis to examine for regulatory capture that gives unfair advantage to specific stake holders. And I think government should pay to do this. That last? That’s always the nub.

    But when you’re talking about eliminating regulation, and it’s biased with the presumption that regulation is bad and increases costs, I’ve got a problem. Regulation is both good and bad; it saves money, it protects people, it rent seeks, it fosters innovation and it slows innovation. It’s all those things.

    We waist so much time pissing over this.

    If you or any Libertarian or Conservative or Progressive or Liberal or Anarchist or Dog Catcher wants to discuss the importance of evaluating and revamping regulation for it’s actual value, I’m all game. But don’t start from the presumption that it’s a burden without proffering that it’s also a benefit. As a liberal, I detest that its presumed I love all regulation, always want more, and think it the answer to all problems. Hogwash. But I see there is good benefit from good regulation, harm from bad, and capture constantly; I see a need for regulatory evaluation, something we rarely discuss.

    Regulation is a one-by-one thing; each has its own merits and demerits, both. Talking about it as as an abstract just leads to these pissing contests.Report

    • Avatar Dave in reply to zic says:

      Regulation is a one-by-one thing; each has its own merits and demerits, both. Talking about it as as an abstract just leads to these pissing contests.

      +1,000,000,000,000,000

      Everyone gets wet. No one learns a damn thing.Report

    • Avatar James K in reply to zic says:

      I think an ongoing metric for review should be built in from the start. I think it should include some sort of analysis to examine for regulatory capture that gives unfair advantage to specific stake holders.

      That sounds like a fine idea.

      But when you’re talking about eliminating regulation, and it’s biased with the presumption that regulation is bad and increases costs, I’ve got a problem. Regulation is both good and bad; it saves money, it protects people, it rent seeks, it fosters innovation and it slows innovation. It’s all those things.

      Yes indeed. Some regulations are on balance good, some are on balance bad and some are arguable. I prefer to get specific about regulation when I can too.Report

      • Avatar Stillwater in reply to James K says:

        James, just want to point out you’re now rejecting the argument you cited in the OP. And I don’t mean for that to sound like a gotcha-thingy. Rather, that the words used in the OP implied that a fully general “loosening” of safety regulations would make the poor “better off”. Among other criticisms, that’s what people (primarily liberals, I think) have been objecting to. But you seem to agree with liberals criticisms about the OP argument, and not the (libertarian?) author.Report

        • Avatar Jim Heffman in reply to Stillwater says:

          “the words used in the OP implied that a fully general “loosening” of safety regulations would make the poor “better off”.”

          If you look at green light in the right way, you can see blue. That does not mean that green light is actually blue.Report

          • Avatar Stillwater in reply to Jim Heffman says:

            But the light in the OP was green, not blue! Go read it again. It was a fully general claim: “the poor could be made better off by loosening safety regulation.”

            Now, if you read that as implying nuances that weren’t stated in the argument, I think you’re the one seeing the wrong color.Report

            • Avatar zic in reply to Stillwater says:

              Which seems ironic, since the #1 recommendation in the original story seemed to be (as I recall) spend $6,000/year more than you already spend on rent move to a safer neighborhood; there was no ‘government regulation’ involved in that at all.

              Unless she’s also proposing the government create a new tax subsidy to pay all poor families living in bad neighborhoods an un-earned income tax credit so that they can move. . .

              I guess she also suggested loosening the regulation on day care centers.

              But she didn’t mention the ways large corporations might rent seek in this loosening process. But oh, how they love them, Shall we count the ways?Report

            • Avatar James Hanley in reply to Stillwater says:

              It was a fully general claim: “the poor could be made better off by loosening safety regulation.”

              And you can’t just back off, after all the additional comments James has written here repeatedly explaining that he didn’t mean loosening/eliminating all regulation, and say, “OK, so there was an implicit “some” before “safety” in his original comment? You have to insist that his original comment must be taken in exactly one way only, and that one way is the most extreme and uncharitable reading, so that everything he says after that is a “rejection” of his original argument?

              And you do this while claiming to not be playing “gotcha?”

              I’ve seen you do this before, where you insist that your reading of a person’s words are what they had to have really meant, or that they must be bound to your particular reading? While your readings are generally plausible, the fact remains that they are your readings, not necessarily the author’s, nor even of all other commenters. Why don’t you ask if that’s what the person really means? Or look at their subsequent comments and instead of identifying them as a rejection of the original argument, treat them as a further development of that argument, providing more context, depth, detail, and nuance?

              You’re being very uncharitable.Report

              • Avatar zic in reply to James Hanley says:

                I charitably welcome you back, Prof. Hanley. I’m glad to see your post.

                And suggest the problem here ‘loosening’ without focus on the methods of loosening; something that does, to my mind, suggest eliminating instead of evaluating.

                What is the criteria for evaluating ‘loosening?’ Who does this loosening balance safety while limiting or eliminating rent seeking? How much does it cost to go through this process? Who are the judges?Report

        • Avatar James K in reply to Stillwater says:

          That’s certainly not an implication I intended. My exact words were”Therefore the poor could be made better off by loosening safety regulation”, I intended could to be the operative word there. If there are any existing safety regulations that have regressive effects, then is is true that “the poor could be made better off by loosening safety regulation”, could meaning that not just any loosening will benefit the poor, otherwise I’d have said “the poor would be made better off by loosening safety regulation”.

          I apologise sincerely if this didn’t come through to the readers. I had hoped I’d built up some cred as being more nuanced than a “deregulate all the things” sort of libertarian. Clearly I need to be more exact in the future.

          Honestly I find stuff like this interesting because it’s rare you see distributional consequences of policy discussed in public in any but the most simplistic terms. It’s rare to see more sophistication than the Marxist Dialectic, which is the bluntest of blunt instruments.Report

          • Avatar Stillwater in reply to James K says:

            I apologise sincerely if this didn’t come through to the readers.

            I don’t think it’s anything to apologize for. It’s not like you were actively trying to dupe liberals or were being deliberately obtuse. You wrote something that appeared to you to clearly articulate proposition P, and liberals – pretty consistently – understood it to mean proposition R. Or a range of Rs.Report

      • Avatar zic in reply to James K says:

        So you would like to see a process in place, maybe something like this?Report

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