Tuesday, June 15, 2010

Orwellian nonsense

This contradictory argument comes from an op-ed by Gerald O'Driscoll Jr. from the Cato Institute. It was published in the Wall Street Journal Monday June 14(subscription required):

Government regulation is intended to protect the public interest against bad or irresponsible behavior by private parties. In the case of offshore drilling, the federal government has assumed the role of solving a collective action problem. Potentially all Americans benefit from the drilling, but those living in coastal areas suffer disproportionate harm from mishaps. The government theoretically negotiates on their behalf and establishes rules to protect them.

The Gulf oil spill and the global financial crisis both demonstrate the failings of big government.
Obviously, regulation failed. By all accounts, MMS operated as a rubber stamp for BP. It is a striking example of regulatory capture: Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public. That conclusion is precisely the same for the financial services industry.

His conclusion is what you would expect of a free market ideologue: since regulation was ineffective in the BP case, let's get rid of all regulation. It doesn't work anyway. Let's take that argument to its reductio ad absurdem:

1. People die from bad food and drugs despite the FDA. Let's abolish it.
2. There's still pollution despite the Clean Air Act. It should go ASAP.
3. Some people go to the Cato Institute website and don't embrace libertarianism. The website might as well be shut down.
4. All this spending on the military and there's all these evil guys in North Korea, Iran, etc.. Time to privatize the armed forces.

Another question... what exactly is meant by "big" government. How is that label determined? Is it the amount of agencies, the size of the budget, what exactly?

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