Government standards
Consider this innocuous quote from this article about organic certification:
The FDA systematically attempts to limit Type II errors -- errors when a dangerous drug is released as safe -- but in so doing they make more Type I errors, preventing safe drugs from reaching the market. Type II mistakes will kill consumers and damage a company (see Merck's recent experience with FDA-approved drugs), Type I mistakes will allow consumers to die and cost drugs makers money, but neither one has any effect on the FDA. If they make too many of the latter, nobody gets excited but libertarians, and if they make too many of the former, they simply ask for more money and power.
Considering the FDA's long history of errors, they have never seen anything but expansion. Saccharin was once thought to be so dangerous that they were tempted to ban it, but stopped because the dieters of America were too politically powerful. Later, it turned out to be dangerous only to male rats. Silicon breast implants have never been linked to disease by any peer-reviewed study, but the FDA commissioner's word was all it took to kill Dow-Corning and its life-saving hydrocephalic shunts. The FDA has no concern for its own reputation as a reputation provider because it has a legal monopoly on its role. But even more pernicious is the fact that the FDA brooks no competition on its role of information gatekeeper. It doesn't allow, for example, advertisement of off-label uses for drugs, many of which become more important than the original application. You as a consumer are not allowed to consult other, more stringent standards, or other more permissive standards.
The other main problem with government acting as reputation-maker is that the likelihood of it becoming co-opted over time approaches 100%. The FDA and several other agencies are accused of having become too lax all the time, probably because it may sometimes be true. While it's tempting to conclude that this is the result of the current Administration's closeness with business, that is misleading. In fact, the previous administration faced the same accusations with some of its regulatory obligations. 100% of the corporate scandals in recent years occurred during the previous administration's tenure, yet were prosecuted during this one, so both sides are guilty, primarily because career bureaucrats hold the real power.
Of course, co-opting theories make the poor assumption that the standards weren't created for the regulated industry in the first place. Gabriel Kolko has done yeoman's work in documenting the history behind the FDA, the ICC, and other regulatory bodies (see his provocatively-title Triumph of Conservatism and Railroads and Regulation). All you really need to know is the fact that they are granted the power to regulate minimum prices to realize that the regulations are meant to help the regulated industry. That, I think, is exactly the problem when it comes to the government getting involved in establishing and enforcing standards with respect to sweatshops: there are protectionist unions and companies willing to work together to keep foreign competitors out and to keep new domestic competitors from arising.
"Currently, 'certified organic' indicates that the farming methods employed were verified by one of the approximately 40 private or state certification programs nationwide. Genetically engineered foods cannot be currently labeled as 'organic.' [emphasis added]Government standards have a tendency not only to drive out private standards, many of them tougher and in vigorous and useful competition with one-another, but they also have a tendency to become co-opted by precisely the industry they are attempting to regulate for the purpose of limiting competition. Private standard-makers tend to go broke when they let this happen to themselves. I don't want to spend too much time on this, as it has been adequately covered elsewhere, but I do want to point out a few reasons why I wouldn't want to rely on government standards.
"Many certifiers are concerned that the proposed USDA federal regulations will make it illegal for them to uphold stricter standards than what the USDA allows. Currently, organic standards vary among certification boards. California and Oregon have tough standards, while several states such as Illinois, have vague or nonexistent standards."[emphasis added]
The FDA systematically attempts to limit Type II errors -- errors when a dangerous drug is released as safe -- but in so doing they make more Type I errors, preventing safe drugs from reaching the market. Type II mistakes will kill consumers and damage a company (see Merck's recent experience with FDA-approved drugs), Type I mistakes will allow consumers to die and cost drugs makers money, but neither one has any effect on the FDA. If they make too many of the latter, nobody gets excited but libertarians, and if they make too many of the former, they simply ask for more money and power.
Considering the FDA's long history of errors, they have never seen anything but expansion. Saccharin was once thought to be so dangerous that they were tempted to ban it, but stopped because the dieters of America were too politically powerful. Later, it turned out to be dangerous only to male rats. Silicon breast implants have never been linked to disease by any peer-reviewed study, but the FDA commissioner's word was all it took to kill Dow-Corning and its life-saving hydrocephalic shunts. The FDA has no concern for its own reputation as a reputation provider because it has a legal monopoly on its role. But even more pernicious is the fact that the FDA brooks no competition on its role of information gatekeeper. It doesn't allow, for example, advertisement of off-label uses for drugs, many of which become more important than the original application. You as a consumer are not allowed to consult other, more stringent standards, or other more permissive standards.
The other main problem with government acting as reputation-maker is that the likelihood of it becoming co-opted over time approaches 100%. The FDA and several other agencies are accused of having become too lax all the time, probably because it may sometimes be true. While it's tempting to conclude that this is the result of the current Administration's closeness with business, that is misleading. In fact, the previous administration faced the same accusations with some of its regulatory obligations. 100% of the corporate scandals in recent years occurred during the previous administration's tenure, yet were prosecuted during this one, so both sides are guilty, primarily because career bureaucrats hold the real power.
Of course, co-opting theories make the poor assumption that the standards weren't created for the regulated industry in the first place. Gabriel Kolko has done yeoman's work in documenting the history behind the FDA, the ICC, and other regulatory bodies (see his provocatively-title Triumph of Conservatism and Railroads and Regulation). All you really need to know is the fact that they are granted the power to regulate minimum prices to realize that the regulations are meant to help the regulated industry. That, I think, is exactly the problem when it comes to the government getting involved in establishing and enforcing standards with respect to sweatshops: there are protectionist unions and companies willing to work together to keep foreign competitors out and to keep new domestic competitors from arising.
Labels: decentralization, philosophy, politics
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