The failure of regulation

Daniel Oliver

July 28, 1993|By Daniel Oliver

OVER the past few decades Americans have witnessed a surge in the number of government regulations designed -- purportedly -- to make life better. But there's one thing that those regulations have in common: They've failed.

In the 1950s, for example, tobacco firms competed to reduce the tar and nicotine content of cigarettes, resulting in 30 to 40 percent reductions in these substances. But in 1960 the Federal Trade Commission (FTC) prevented the industry from making tar and nicotine claims. The result: Tobacco firms stopped competing to reduce those substances. Only after an outcry from the American Cancer Society and other public-service organizations did the FTC reverse its position. Tobacco firms once again competed to reduce tar and nicotine content, and smoking became less dangerous.

Another example: Certain programs designed to help farmers limit how much of a specific agricultural product can be produced or imported. These limitations make consumers pay more for agricultural products. Congress' audit agency, the General Accounting Office, reported in May that the federal program restricting sugar imports costs consumers $1.4 billion per year in higher grocery bills. And that's just one of many such restrictions.

Not all destructive regulations are national. In New York, a state law protected citizens from "destructive competition" in the milk industry. Because producers in other states were barred from selling milk in the state, New York's cartel of milk producers grew rich off inflated milk prices. When milk from New Jersey finally was allowed to be sold in New York City, the price dropped by as much as 70 cents per gallon.

The Environmental Protection Agency (EPA) is busy chasing a small Vermont company that sells cedar blocks with the slogan "Moths hate the fresh woody scent." The company, according to the EPA, failed to list the cedar block's ingredients, failed to list the product's toxicity and provided inadequate directions for using the blocks of wood.

The New York Times recently ran a story about the Mississippi town of Columbia, which is nearing completion of a $20 million EPA cleanup project. Soil tests had turned up traces of compounds the federal government defines as hazardous -- though the amount of the offending material discovered was only about two ounces per ton of soil. Some experts said the best way to cure the problem was simply to spread a layer of cleaner soil on top of the contaminated soil -- at a cost of only $1 million. But the EPA insisted on the most expensive solution: dig up more than 12,500 tons of soil and haul it away to a commercial dump in Louisiana. The EPA's goal in all of this: to make the dirt so safe that a human could eat half a teaspoon every month for 70 years and not get cancer.

In Florida, the owner of a silk-screening company was fined by the Occupational Safety and Health Administration for not having a comprehensive "hazardous communications" program for his employees -- both of them, part-timers at that.

Such horror stories become more numerous as the federal regulatory regime expands. The Federal Register, the encyclopedia of all federal regulations, now contains more pages than at any time since the Carter presidency. In 1992 the government employed an all-time high of 122,406 regulators.

The good news is that even champions of ever-more government regulations can change. Former presidential candidate George McGovern was mugged by reality last year when his Connecticut business went bankrupt, partly as a result of the regulatory burden. As he wrote at the time, "I . . . wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day." Too bad all politicians can't have that experience before they come to Washington.

Daniel Oliver is a senior fellow at the Heritage Foundation, a think tank. From 1986 to 1989 he was chairman of the Federal Trade Commission.

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