Salt iodization as market failure - Part II

From my previous post on this subject, the evidence seems overwhelming that the iodization problem is more complex than can be summarized with the term, "market failure":

• Iodized salt is not the only source of iodine: iodine is for sale in underdeveloped areas, but is also underconsumed.
  
• Iodized salt is available in places where there is no government mandate.
  
• Iodine intake is falling in industrial societies despite knowledge and wide availability and even government iodization mandates.
  
• Iodine overdoses are a real problem in places where iodization has been mandated.
  
• There are genuine historical reasons for mistrusting government regulation of salt.

I think by now the generous reader would agree that iodization is not a market failure as generally understood, and/or the particular theory of market failure used here is not sufficiently developed. The specific market failure here seems to be a problem of information perfection, but neither consumers nor regulators have that perfect knowledge in either the developing or the developed countries. The one thing that we have seen is that when a large scale movement creates an increased demand for iodine, consumers will buy it, and demand will wane when the perceived need wanes. That is tautological. But assuming the experts are correct, a society whose consumption is not what the experts think it ought to be needs to be convinced to change. Such widespread change is created by shifting values or reference points. There are both private and public mechanisms for shifting those references, so this is a debate on how to conduct such a debate.

As my wife has suggested to me, sometimes the benefit of judicial activism is to foster discussion of problems in need of solution. You could interpret this as creating a new Schelling Point. So too, regulations. However, I hold that a new problem may be created by the means by which reference points are established: not only do consumers change their attitudes, but society as a whole establishes a new reference point for solving problems. Regulation itself becomes a mechanism for establishing Schelling Points -- a "Schelling Means" as it were. Prior to the regulatory or paternalist state, society relied on such means as association, argument, proselytization. One-on-one discussion and public oration were the primary means to moving Schelling Points; in Tocqueville's terms,

The Americans make associations to give entertainments, to found seminaries, to build inns, to construct churches, to diffuse books, to send missionaries to the antipodes; in this manner they found hospitals, prisons, and schools. If it is proposed to inculcate some truth or to foster some feeling by the encouragement of a great example, they form a society. Wherever at the head of some new undertaking you see the government in France, or a man of rank in England, in the United States you will be sure to find an association.

In the post-Progressive era, we increasingly rely on mass marketing and authoritarian pronouncement.

I think the advantages of the old system over the new are many, though not perfect. The organic system relies on consensus and does not punish nonconformists. Insofar as the nonconformists are occasionally correct to resist the new paradigm, it rewards them. The mass, like the experts, is not always correct. The organic means requires strong argument from smart people to overcome objections to change. This requires the facts to be weighed carefully and weeds out the bad arguments in the process. As might be realized, however, the organic Schelling Means is slow.

The regulatory Schelling Means is fast and inexpensive. In fact, it would be fastest to grant large amounts of power to a vanishingly small number of people in order to drastically reduce the social cost of decision-making. Call them what you will - a council, a cabinet, an executive committee, technical experts (Hayek's term), an executive - decision-making is less costly the fewer people involved. This was the Federalist argument for organizing the United States as a federal system, using representation and a strong executive. It was also the German Romantic argument for getting rid of the parliamentary "debate societies":

"The more the linguistic Babel corroded and disorganized parliament, ..."

"The restrictions of speech imposed on the Kaiser by the Reichstag angered me greatly because they emanated from a source which in my opinion really hadn't a leg to stand on, since in a single session these parliamentarian imbeciles gabbled more nonsense than a whole dynasty of emperors, including its very weakest numbers, could ever have done in centuries."

Those are, of course, the foundation for the Fuhrerprinzip from a book written by the most famous advocate eight years before he came into power. Hitler was by no means the originator of the idea, nor was he the last advocate. Thus, this is no reducto ad Hitlerum, but just as people in North America have forgotten the scourge of goiter, so much of the world has forgotten the problems of concentrated political power. Even Marx and Engels warned against "parliamentary cretinism", the unfortunate conviction that a parliamentary majority was the ticket to utopia, but their intellectual heirs took their warning in the opposite direction and accepted the same German Romantic solution that Herr Hitler did.

This is why I distrust utilitarianism in and rationalism of the public sphere. Yes, government action can be less costly and faster than organic change. More lives may be spared in the short run. But society itself is changed and perhaps not in a good way as the Schelling Means is shifted from one that is more democratic and consensus-oriented to one that is more authority- and action-oriented and therefore more tolerant or even demanding of executive action. De Tocqueville had this pegged, too: "The more [government] stands in the place of associations, the more will individuals, losing the notion of combining together, require its assistance: these are causes and effects that unceasingly create each other." The paradigm is shifted from one of consensus and argument to one of decree and punishment. Advocates of the regulatory model - one generally finds them in the partisan camps of the two main parties - may not favor the police state, but they certainly favor a police state.