Editorial: When to Regulate?


One axiom of democracy is that you can’t have reliable freedom without the law.


We all learn the story of the New Deal in American history classes. Roosevelt developed the idea that people would be “freer” if government guaranteed the stability of certain institutions. For example, we developed bank deposit insurance. A more elaborate idea was social security. People could be “freer” if government did more to take care of the elderly, leaving adult children with fewer filial obligations. It got more complicated during WWII as private business developed the concept of workplace provided health insurance.


Today, that is still a largely accepted notion, most of all with liberal democrats, less so with conservatives and rejected by libertarians. Social security and Medicare cannot provide security forever, and so the idea of personal responsibility for managing assets becomes important.


There are a few issues today where the basic problem of regulation is faced. Timothy Carney will argue in a book due summer 2006 that big business often manipulates the spin in order to obtain regulation favorable to itself—the corporate welfare, pork problem.


Take, for example, the debate over Network Neutrality today. This is one of those issues where competing positions buy time spots on the air to water down the issues to the simplest possible platitudes. If you leave the Net completely unregulated, will innovation and market pressures keep the playing field level enough for newbies? That’s the libertarian notion. There are lots of arguments about some big businesses wanting to legislate neutrality to keep cable companies from charging them for less efficiently used bandwidth. It’s hard to tell if the end result of deregulation would be excluding smaller operations that used to depend on free entry. It doesn’t sound likely.


Small operations face a variety of potential pressures. Some could be the indirect effects of regulation well intended to protect children, reduce spam, prevent identity theft, and even protect national security. An important concept is protecting communications providers from incidental downstream liability. But without legislated “neutrality” communications providers could become wary of continuing to do business with more controversial small subscribers who present a heckling risk – for example, who attract spammers to spoof their email or domain names. Yet, this kind of problem is ultimately amenable to technological solution and overregulation could prevent.


Of course, the issue is “free speech” – but free speech in the context of how the public perceives the speaker(s). The Internet and associated technological developments have given non-conformist people new ways to establish themselves without paying their dues to established social hierarchies. And that very subtle point disturbs a lot of people.


The other end of the scale on regulation is, of course, government regulation of social arrangements – a bit topic elsewhere on this site and in my books. A core concept in libertarianism is freedom to contract; let the tort system enforce contracts and use statutory law as little as possible. Of course, this can invite frivolous litigation, and lead to calls for laws to limit litigation to protect freedom. When are you protecting freedom? Take marriage. Is marriage just to be a private civil contract between consenting adults (the objectivist, libertarian view), or a social institution given deep meaning by the law, possibly at the expense of those who don’t participate?


Whether government regulation hinders you or frees you seems to depend upon which side of the bed you got up in.


©Copyright 2006 by Bill Boushka, subject to fair use


Book mentioned above: Carney, Timothy P.  The Big Ripoff: How Big Government and Big Business Steal Your Money. New York: Wiley, John & Sons, available July 11, 2006.


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