In defense of common sense
As you might expect, readers of the Economist are generally less supportive of government regulation than, perhaps, readers of this blog. A survey on the Economist Web site has the anti-regulation side ahead 55 percent to 45 percent. Of course, the poll is meaningless. What is important is the debate that’s taking place in this country over the shift towards sensible regulation in the public interest. Ed Mierzwinski (left), U.S. PIRG’s consumer program director, has jumped into the fray with a well-reasoned defense of government regulation. As Mierzwinski points out, the purpose of regulation isn’t to constrain the market but to “preserve investors’ confidence, prevent monopoly and other market failures, and protect public health and safety, to name a few.”
I agree with Mierzwinski that you’re fooling yourself if you believe that corporations, unfettered by government regulations, will always act in the public interest. There are just too many examples of companies that waited years to inform the U.S. Consumer Product Safety Commission of dangerous products.
As Mierzwinski writes (his full comments can be found here):
There is something wrong with a society that cannot protect its weakest and most vulnerable, whether it is financial consumers or investors who lose their homes or retirement savings due to the unregulated excesses of the market, or whether it is children who choke or suffer acute illnesses from dangerous unregulated toys containing lead and other toxic chemicals.
Government intervention to establish rules that attenuate the worst risks and protect the most vulnerable ultimately result in a better world for everyone. Well-regulated markets ultimately reduce overall risk and reallocate the remaining risk away from the vulnerable—children, homeowners, retirees and taxpayers—and onto the would-be masters of the universe in corporate boardrooms and on Wall Street, where it belongs.
(Via U.S. PIRG Consumer Blog)