James Leroy Wilson's blog

Monday, June 02, 2008

Real Regulation

Today's Downsizer-Dispatch . . .

Quote of the Day:

In a truly free market, there is no restriction, imposed cost, or arbitrary subsidy on peaceful and honest enterprise. The U.S.A. has never in its history had a truly free market. - Economist Fred Foldvary

Subject: Real Regulation

In a true free market (something we've never had) businesses have a clear incentive to provide safety, so they won't lose customers and employees to their competitors. More importantly . . .

In a true free market businesses are legally liable for the safety of their products, services, and work-places. To limit this liability businesses seek insurance. The insurance providers then do oversight to limit their own risk of loss by making sure that products, services, and work-places, are in fact safe.

This free-market approach to safety regulation is what funds the existence -- even in our current un-free market -- of something like Underwriter's Laboratory (UL). UL tests product safety in order to protect insurers from losses. The result is increased safety for you.

The other approach to safety is one driven by top-down regulations and inspections provided by unaccountable bureaucrats and paid for with tax dollars. The problem with this system is that it greatly muddies the water as to whom is actually liable for safety failures.

If Underwriter's Laboratory makes a mistake, it pays a big price, out of its own pocket. But if, for instance, the Federal Aviation Administration (FAA) makes a mistake, it doesn't pay any price at all.

In the year 2000 it was discovered that . . .

  • Between 1,800 and 2,000 mechanics were falsely certified by St. George Aviation in the late 1990's.
  • Eight years later, the FAA has found and re-tested only 700 of these mechanics, and most of these received only partial tests.
  • The failure rate was 36% among those re-tested.
  • This rate suggests there may be 400 or more unqualified mechanics still working in the airline industry, and the FAA is doing almost nothing about it. Source: Cybercast News Service

When will the FAA pay a price for this failure? Probably never. As a coercion-enforced monopoly the government rarely has to pay any price for failure. Instead, the FAA may get a larger budget so, supposedly, it can do better in the future. Worse still . . .

If an airline wants to protect itself against FAA incompetence it will have to pay extra for insurance and underwriting oversight, while still submitting to the FAA's regulations and inspectors. This is a cost most airline's can't afford, so we end up with only the FAA's incompetent and unaccountable "protections."

Meanwhile, businesses have an incentive to game the system, using their political clout to gain favorable treatment from government regulators and government-imposed limits on their liability.

So-called government regulation is a fraud. We need less fake regulation by government, and more Real Regulation by the free market. DownsizeDC.org has a proposal that will give you exactly that. It's called the "Write the Laws Act" (WTLA).

  • WTLA would reduce the burden of incompetent government regulations while making businesses more accountable to their customers.
  • The WTLA strips unelected bureaucracies such as the FAA of their law-making powers, and restores to Congress the full responsibility for all rule making, in keeping with the Constitution's separation of powers.
  • Congress won't have the time or knowledge to create complicated regulations, so there will be fewer of them, and those that do exist may work better. Instead, businesses will be legally liable for their failures, and regulated by insurance underwriting.
  • This would reduce the cost you pay for ineffective government regulations, while also making you safer.

To learn more about the Write the Laws Act, click here.

And please tell Congress to introduce and pass the Write the Laws Act.

Use your personal comments to tell Congress that the FAA's mishandling of the flight mechanics testing scandal is evidence that bureaucrats are incapable of keeping the people safe. Tell them that only a free market, legal liability, and insurance underwriting, can hold businesses accountable and keep consumers safe. Tell them you have more faith in groups like Underwriters Laboratory than you do in government regulators like the FAA.

You can send your message here.

In addition, this message is also posted on our blog, and you can leave comments there if you so desire.

Thank you for being a part of the growing Downsize DC Army.

James Wilson & Perry Willis
Assistant to the President & Communications Director
DownsizeDC.org

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