As I was thinking about regulatory agencies the other day, it struck me how much similarity there is between the way the FDA works and the way gun control laws work. Mostly because both try to stop law breakers by adding more laws, which ends up doing little but placing added burdens on the law abiding while doing little or nothing to deter criminals.

I have written a lot about gun control, so I will probably not make more than a token gesture at describing the basic problems. However, as gun control serves as a pattern for any number of failed regulatory schemes, I feel the need to provide at least the basics.

The problem with gun control is that society can be divided into roughly two groups. First, there are law abiding citizens who follow the rules, and then there are criminals. Now, the purpose of gun control, at least the purpose most often put forward¹, is that we need to keep guns out of the hands of criminals. However, the problem is that the basic attribute of criminals is that they do not obey laws. So, passing a law to stop criminals is a futile gesture, as criminals do not obey laws. In the end, what gun control laws do is disarm law abiding citizens, who need guns to defend themselves, while doing nothing to stop criminals, who now face a disarmed populace.

And it was precisely this pattern which came to mind when I sat down to write about the futility of the FDA.

The basic concept of the FDA is that there are people out there who would knowingly sell unsafe food and drugs. At the time this was a problem not only of fraud but of poverty. At the turn of the century we were a much poorer society and so products were often offered that the more affluent would find unpalatable, but, due to price concerns, were sufficient for the poorer members of society. So, at the time, the FDA was not quite the same as gun control. It was more akin to minimum wage, or banning of pay day loans (See  "When Help Hurts"), basically telling the poor they could not exercise certain options, even if they found them adequate. There was also a small element of cartelization, as medical societies sought to exclude patent medicines, though that battle had been largely fought and won on the state level several decades before².

But today the FDA does largely follow the FDA model. For example, in medicine there are two types of vendors, those with a product proved effective in clinical trials and those who do not. Most of the latter are outright con men looking for a buck, but a few others are sincere promoters of unproven remedies. However, for the moment, let us ignore the sincerely offered but unproven remedies. We are left with con men and drug companies. The con men continue to offer drugs on the market, even with the FDA, as they are con men. They either use the "herbal supplement" dodge, or set up shop in Mexico or the Caribbean, or they just set up shell company after shell company, staying one step ahead of the arrest warrant. The FDA does not deter them, as they are knowingly committing fraud, which would be illegal even without the FDA.

On the other hand, we have the pharmaceutical companies. They make a living by offering quality drugs that really cure illnesses. They do not even offer a drug up to the FDA until they perform countless tests to determine it is both safe and effective. However, what does the FDA then do? Requires them to again prove the drug is safe and effective, using different FDA-specific standards. In other words, they take drugs that the best minds in research are convinced are beneficial, and keep them off the market for years while tests are repeated, at great cost, and then, to add insult to injury, prevent more of those drugs from being used at all³.

The point being that the laws only serve to keep legitimate drugs off the market, while doing nothing to ban fraudulent remedies. However, because the public thinks the FDA protects them, those bogus remedies are now presumed to be safe and beneficial, as the FDA would not allow anything bad to get to market. So, as with the gun control laws, the public is intellectually disarmed and the criminals are given an advantage. In this case however, there is the added harm of useful drugs being kept off the market for years or, in many cases, forever, and, because of the cost of gaining approval and the risk of a drug being denied, useful drugs with too few customers are never developed, while less profitable areas of drug research are ignored as the costs could never be covered.

There is only one area in which the FDA may be beneficial, and even the benefit that can be claimed could be achieved more easily with less intrusive laws. That is the category I ignored, those who believe in a remedy that is untested. Ideally, I would allow such remedies on the market (as I described in "Medical Regulations" and "Medical Regulation II"), so long as no false claims were made. But, if we want to ban all drugs that do not pass testing requirement, we do not need the FDA, all we need is a law defining trial requirements. Rather than implement massive regulatory agencies, simply require that studies be performed under medical supervision. That would be enough to keep most such unproven remedies off the market while not keeping legitimate drugs unavailable⁴.

The reason I find the FDA so pointless is that drug companies have an interest in promoting only effective drugs. I know many characterize them as greedy, pushing harmful or ineffective drugs, but outside of the paranoid fringe, does anyone believe that? The drug companies would be ruined were they found to be promoting ineffective cures, or knowingly pushing unsafe medicines. The liability suits alone would destroy them. They, like any manufacturer, has an interest in providing for consumer desires to the best of their ability, if only to prevent competitors from driving them from the market⁵. And so, despite the beliefs of many that only the FDA keeps drug companies honest, in truth the market keeps the drug companies honest, not the FDA.

Which brings us to the topic of food. As I said, the US was different in 1890, we were much less wealthy. We are now a rich culture, able to afford not just sufficient food, but quality food. If you have bought food in the past few decades, you must notice how much competition centers on quality, rather than price. That being the case, is there any incentive to sell substandard food? One does not get a customer base overnight, you need to build one, and without a customer base, your substandard food just won't sell. So, to get rich selling inferior food, one would have to first spend a long time selling good food, then suddenly sell bad, making a quick profit, but at the expense of ruining that hard-won reputation, which seems unlikely to say the least.

Of course, one could also sell counterfeit food, sell inferior products mislabeled as a known brand. But the FDA would not be able to stop that. It is simple fraud, and was illegal before the FDA and is illegal now without them.

Which brings me back to my point, that the FDA, by and large, does nothing that could not be accomplished by simple laws against fraud, perhaps with a few other simple changes to the laws. It sounds good on paper, just like gun control, but in the end, just like gun control laws, it does nothing to deter law breakers, but instead provides them with a patina of respectability which helps them in their law breaking.

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1. There is a second group which argues even law abiding citizens can't be trusted with guns. But as that has proven politically unpopular, you do not hear it as much. Sometimes among themselves gun control advocates will admit to this motive, and sometimes honest liberals will admit it in conversation, but politicians largely avoid making such statements. (See "The Weakest Gun Control Argument", "Nuclear Disarmament and Gun Control " and "Arrogance and Gun Control".)

2. I discussed this before in "Professional Education", "Business Licensing and Regulation", "Medical Regulations" and "Medical Regulation II". People tend to think of medical licensing in terms of modern medicine and quacks. But at the time licensing was developed, the "legitimate" medical field was performing bleedings and giving mercury based purgatives, making it hard to say they were "more helpful" than the herbal alternatives. Yes, by the 1900's modern medicien was taking shape, but there were still many barbarisms in conventional medicine. So it is not a clear cut picture of legitimate doctors and quacks so much as medical societies with political pull. For example, homeopathic remedies were included in the regulations because of strong congressional supporters, despite a lack of support among the medical societies. That alone should show how little these laws had to do with "science" and how much they had to do with using political influence to protect one's position. (See  "Anti-Business Businesses ".)

3. I discussed in "Another Thought on Regulation" and "The Endless Cycle of Intervention" the impetus to ban drugs at the FDA, the pressures which make it more likely a drug will be denied rather than approved, despite its benefits. So I will not bother to repeat that argument here. (Some related points are raised in "The Inevitability of Bureaucratic Management in Government Enterprises" and "The Inherent Disappointment of Authoritarianism".)

4. I would personally prefer we not provide control over medical access to any group, but allow competent adults to decide, even if we think their choice is a "quack" cure. But, again, I have described my beliefs at great length elsewhere, so I won't repeat those arguments again.

5. Our medical regulatory regime does keep true competitive forces from existing. But there are still enough medical equivalents that one company could dirve another from certain markets (eg. antiinflammatories, antibiotics). So there is still an incentive to keep one's reputation good.

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POSTSCRIPT

In addition to the articles cited above, I wrote "Bad Economics Part 5" on the pointlessness of consumer protection. It also contains a number of links to articles which help support the thesis of this post. I also discussed similarly futile regulations in "Insider Trading".

POSTSCRIPT II

I have long made a simple argument about gun control's ineffectiveness. If you have something valuable, say the contents of a bank vault, and wish to protect it, do you put up signs saying "please do not rob me"? Or do you hire armed guards? If the latter, then why do you think gun control, which effectively amounts to putting up a sign, would work? And the same applies to the FDA. If someone is already going to risk arrest by knowingly selling fraudulent cures, then why would it deter them to add another law? They already know they are breaking a law, why would it make them uncomfortable to know they are breaking another? Especially when the original fraud statutes carry long prison sentences, while the regulatory codes usually have nothing worse than a fine, or a minimal jail term.

This is not to argue that we should not pass laws making bad actions illegal. My point is that regulatory laws, such as gun control or FDA regulation end up being a burden on the law abiding, while doing nothing to stop crimes. Instead, we would be better off ensuring we arrest law breakers and keep them in jail, rather than pass overbroad regulatory measures which stop no one but the honest.