Thomas Sowell's column from last week does a marvelous job of pointing out the obvious. He has to, though, because so many just don't get it.
Within a week of each other, two earthquakes struck on opposite sides of the world — an earthquake measuring 6.5 on the Richter scale in California and a 6.6 earthquake in Iran. But, however similar the earthquakes, the human costs were enormously different.
The deaths in Iran have been counted in the tens of thousands. In California, the deaths did not reach double digits. Why the difference? In one word, wealth.
Wealth enables homes, buildings and other structures to be built to withstand greater stresses. Wealth permits the creation of modern transportation that can quickly carry people to medical facilities. It enables those facilities to be equipped with more advanced medical apparatus and supplies, and amply staffed with highly trained doctors and support staff.
Those who disdain wealth as crass materialism need to understand that wealth is one of the biggest life-saving factors in the world. As an economist in India has pointed out, "95 percent of deaths from natural hazards occur in poor countries."
This will be good to keep in mind as the nation debates beef regulation in the wake of the mad cow scare. How much testing is enough? Some will thoughtlessly argue that any amount of regulation is justified. The problem with over-regulation, not just in the beef industry, is that it tends to raise prices. Higher prices make us all poorer. Sowell's column points out that poverty kills.
As regulation causes the price of beef to increase, fewer people can afford to buy it. Even in a wealthy country like the USA some people on the margin will struggle to feed their families, so higher beef prices will contribute to more malnutrition, which leads to more disease, birth defects and the like. Over-regulation kills even more surely than under-regulation.
Wealth is a noble goal.
Interesting argument. Of course, if you're using the premise that wealth is a life-saver, then that premise can just as easily (or more easily) be used to argue FOR regulations.
Just as wealth saves us from earthquakes because we can build more expensive housing (with building codes determined through regulations, BTW), we are wealthy enough to have safe food by spending more on testing, whereas poor countries will not have the wealth to spend on regulation and testing and therefore will die by the thousands from an epidemic of variant Creutzfeldt-Jakob disease (caught by surprise after years because of the long incubation period).
Again, following Sowell's point with the earthquakes and buildings, surely the wealth that "enables homes, buildings and other structures to be built to withstand greater stresses" are therefore more expensive. Don't these higher prices in homes make us poorer? Doesn't this mean that those on the margin will end up homeless and unable therefore in more danger?
And for those on the margin when it comes to nutrition, is a lack of beef going to cause death? In a wealthy country where so many other foods are available?
While I agree that wealth is a noble goal, and over-regulating is bad, I'm not sure that using Sowell's approach in this way holds up.
When it comes to food products, I think there is a lot of over-regulation, and there is some free-market self-regulating that can go on (eg., after going through serious salmonella poisoning from eggs, I've developed my own ideas of what kinds of egg-producers I will trust to purchase from). However, it's very hard for a consumer/business relationship to deal with something like mad cow (where a business could operate unsafely and profitably for many years before any problem was detected in the market).
It's rather a generalization to say that higher prices make everyone poorer. On our family wheat farm in Larned, Kansas, we'd jump for joy for higher wheat prices. If the prices went up, someday we might net more than $1000 on a bumper crop on 206 acres.
Higher oil prices mean more money for corn farmers due to increased ethanol demand (Hence Sen. Daschle's support for the pork-laden energy bill).
Not that I want to pay more for everything, I'm just saying that higher prices are not always a bad thing.
And regulation is not always a cause for high prices. Sometimes the lack of regulation is the culprit (e.g. Enron, energy prices, and California). Sometimes it's the mismanagement of regulation that causes higher prices. I for one am happy to take comfort in the fact that most buildings are not going to fall down on my head if a gust of wind comes up, because I know they were built to a certain standard and then inspected for quality. On the other hand, suspending construction on a building for six months while waiting for the inspector to show up is a bad thing.
To make a long opinion short, people should stop oversimplifying. There is a happy medium somewhere between crippling fascist oppression and complete anarchy, and that happy medium is gonna involve some rules, regulations, and standards.
Posted by: Michael Ditto at January 8, 2004 02:24 AMI agree with most of that, Michael. The question is how to arrive at the proper level of regulation.
To bring it back to the original point of wealth vs regulation, I'll point out that in poor, unregulated countries the wealthy live in safer houses than the rest of the population. They do so because they can, not because they are compelled to. The rest live in unsafe conditions because they have to choose between poor housing or no housing at all.
Even in the wealthiest countries, (hey, that's us!) we choose our level of safety. We could build safer houses, made of thick steel girders and brick. It would save lives to do so. It would also make it so most people couldn't afford to buy them, so let's hope that sort of thing isn't forced on us by regulation.