I have written many times about the futility of consumer protection laws,most recently in "Bad Economics Part 5", "Bad Economics Part 2", "Bad Economics Part 3" and "Gun Control, The FDA and Regulating the Law Abiding", not to mention my earlier arguments in "To Correct Debra Saunders" and "When Help Hurts". I also dealt with some specific aspects of medial regulation in "Medical Regulations" and "Medical Regulation II". However, despite all the writing I have done on this topic, I still feel as if I have not fully explained the utter futility of such regulations, and the simple solutions which would make all such regulation absolutely pointless. In other words, I have not thoroughly made my case for the simple, freedom-based solution which would ensure a market which protected consumer interests, while providing just as much protection against fraud as the present system. And so, despite all the previous essays on the same topic, I have decided to once again revisit this topic and write about both the futility of regulatory action, and the mistake concept that regulation is the best, or only, way to protect consumers.

First, let me establish one simple principle. Consumers are capable of acting in their own interest, and in taking reasonable precautions. I know many regulatory laws are based on precisely the opposite premise, but I would argue reality provides two arguments against the assumption of consumer incompetence. First, the fact that Consumer Reports continues to exist, and that review sites on-line thrive shows that people take an interest in researching their purchases, which shows they do make reasonable efforts to find out what they are buying before making a purchase. And, if they do so for a $10 or $15 CD, a $30 appliance or a $40 video game, odds are good they would do as much, or more, for a larger purchase. Second, if the state really believed people could not make even simple decisions for themselves, or could not take even basic precautions, then it would not allow them any freedoms and would treat them as asylum inmates. That we do not do so shows we understand people really do behave sensibly, and the state uses the assumption of incompetence selectively to eliminate freedoms. (Or, possibly, the people who assume incompetence in others are inconsistent in applying their own beliefs. While ironic that those assuming superiority are themselves inconsistent and irrational, it does seem a likely explanation in at least some cases. See "Contradictory World Views".)

So, based on the evidence of our own senses, and the behavior of those who argue to the contrary, we have to agree that people take at least some basic precautions when making purchases or otherwise acting in their own interest. I am not making any excessive claims here, not claiming everyone acts perfectly rationally, or that the best choice will always be made. All we need to agree upon is, on average, in the majority of cases, people tend to act reasonably, avoid products they have disliked or heard criticized and otherwise try to achieve the best results for the money they spend. Agreeing on that point alone is more than enough to support my arguments.

(One side issue we need to address is the power of advertising. We need not get into a huge debate over the power of advertising, or some absurd Derren Brown tinged debate on the power of subliminal messages. The sole point upon which we need to agree is the one I made in "Regulated Speech". That is that advertising is not magic. You may or may not be able to shape behavior through advertising, but, at some point, you still need to fulfill some need to continue to sell a product. If your product has absolutely no appeal, or satisfies no known need, or is clearly inferior to alternatives, or absurdly overpriced, advertising will not save it. If we agree on that, then the issue of advertising can be safely ignored, as only the magical school of thinking about advertising, postulating that advertising can create needs or force consumers to ignore their own experiences, presents any difficulty for my arguments.)

So, having established that ground level of agreement, let us look at consumer protection via regulation and ask, what does it accomplish, how well doe sit accomplish it, and is there any less intrusive or more efficient way to accomplish the same goals.

I suppose the best starting point is the earliest of regulatory agencies. Those would be the FDA and the ICC. These were the first real regulators, established even before the beginning of government centralization in the teens (the Federal Reserve, the income tax, the direct election of senators, and so on). Even before the dawn of the 20th century. In fact, in the past, I have listed the creation of these agencies, along with the creation of the antitrust laws, as the dawn of big government. ("A Passing Thought") Since then, I have argued that perhaps Lincoln is a better starting point ("The Best Historical Example"), but the creation of these two agencies definitely was some sort of landmark, and so their stated missions do provide us a good way to decide what the purpose of regulatory agencies might be.

And the purpose of these two agencies do cover two thirds of the gamut of regulatory goals. The FDA exists ensure that goods are "safe and effective". In other words, to ensure quality. And the ICC existed, until relatively recently, primarily to prevent providers from charging "too much". In other words, its function was to ensure a "fair" price. Those two goals, "quality" goods and "fair" prices, are two of the three most common regulatory goals. The remaining goal being "protecting workers" from employer "exploitation". There are a host of other minor regulatory goals (environmental protection, for example, or "smart growth"), but most regulation tends to fall into the three broad goals of ensuring quality, fair prices and preventing worker exploitation. (We will look at other goals at the end of this post¹.)

So, let us look at those three broad goals and ask ourselves how the regulators go about ensuring the desired results, whether the solutions adopted work, and whether alternate solutions exist.

I discussed the topic of safe and effective goods before², but as it is one of the principle goals of most regulation, I will deal with it again. Basically, we need to divide the market into two types of sellers, and divide one of those groups into two groups as well. First, we can divide all sellers into those who are legitimate sellers, who hope to make money through the sale of legitimate goods to customers who desire them, and then there are the con artists, those who hope to sell substandard goods, or no goods at all, or else to convince consumers to buy some good, which, while functional, will not resolve the need claimed. In short we have legitimate and fraudulent sellers. And, among the legitimate sellers, we have two categories, those who sell goods whose suitability is recognized by established authorities and those who sell goods whose suitability is disputed³. Because there are two different type of regulatory concerns here, we will need to look at two different types of regulation. First, regulation to prevent fraudulent sellers and, second, regulation intended to prevent the sale of ineffective, controversial or unsafe products.

As far as fraud is concerned, regulation is almost useless. Fraudulent products were illegal prior to regulation and are illegal now. Selling  a product through false claims has always been illegal, and the remedy has always been prosecution after the fact. And regulation doe snot change this, mainly because those selling fraudulent products do not go through regulatory agencies. Just look at the many case histories on Quackwatch.org or similar sites. The fraudulent goods have been sold without regulatory approval, with the sellers changing names of products and companies to stay ahead of prosecution. In other words, outright fraud works the same with or without regulation, and so regulatory agencies do nothing to stop fraud.

So, how does regulation work in terms of legitimate sellers?

Well, let us look first at those selling products whose legitimacy is agreed by all involved. (In other words, let us ignore for now products called "quackery" by established practitioners, as we will deal with that later.) Does regulation help us to ensure that those hoping to sell legitimate products do not sell unsafe or ineffective products? Does it help prevent excessive claims? Is it useful? And is there an easier answer?

First, let us dismiss the idea that regulation makes false claims harder. Yes, regulatory agencies control what can be said in advertising, but often the arcane rules, far from making it more clear, make the information less informative. As I pointed out in "Why Regulation Makes So Little Sense":

For those curious about the answers to my questions [about the various names for ham-like products], here is a quote from wikipedia:

Fresh ham is an uncured hind leg of pork. Country Ham is uncooked, cured, dried, smoked-or-unsmoked, made from a single piece of meat from the hind leg of a hog or from a single piece of meat from a pork shoulder. Smithfield ham, a country ham, must be grown and produced in or around Smithfield, Virginia, to be sold as such. For most other purposes, under US law, a "ham" is a cured hind leg of pork that is at least 20.5% protein (not counting fat portions) and contains no added water. However, "ham" can be legally applied to such things as "turkey ham" if the meat is taken from the thigh of the animal. If the ham has less than 20.5% but is at least 18.5% protein, it can be called "ham with natural juices". A ham that is at least 17.0% protein and up to 10% added solution can be called "ham—water added". Finally, "ham and water product" refers to a cured hind leg of pork product that contains any amount of added water, although the label must indicate the percent added ingredients. If a ham has been cut into pieces and moulded, it must be labelled "sectioned and formed" or "chunked and formed".

Clear as day, isn't it?

As you can see, many times the byzantine rules of the regulator do not make the facts easier for consumers to understand,  but instead simply make sure that the information complies with rules no one outside of the bureaucracy understand.

But, of course, many will claim that those are extreme cases, and in many other cases regulation does prevent excessive claims. Without regulation, food and drug makers would be claiming all manner of false health benefits. However, I disagree. As I plan to show, sellers will take pains to ensure that their products are of a high enough quality to retain customers. Part of that involves making sure the products live up to their advertising claims. So, when I get to that argument, I also intend to show that worries about "false advertising" are overblown at least as much as other worries.

Let us start with some points I made in "Planning For Imperfection", "Fairness and the Free Market" and "Greed Versus Evil", as well as elsewhere. The free market is a system organized on one simple principle, it channels the most selfish instincts of man into helping his fellows. No matter how greedy, no matter how unscrupulous, when a man has only control over his own body and assets, and lacks the governmental power to compel others using force, as well as being prevented from violating the rights of others, he has only one route to satisfying his wants, and that is to provide for the wants and needs of others. And the more individuals he can satisfy, as well as the more urgently felt the needs, the more compensation he can expect. And so, the more utterly selfish the individual, the more likely he will be to provide for the most acutely felt need of the greatest number of his fellow men. In short, the free market turns our basest instincts into acts which serve the highest good.

Which brings me to my argument that regulation is futile, because the same results could be achieved without any intervention at all. In fact, nothing more than simple self-interest on the part of sellers would produce results superior to the regulatory agencies we now have.

Let us first look at the regulatory agencies. Let us take, for example, the FDA. Yes, they require the vendors to produce tests showing drugs work. But vendors would test their drugs anyway, and would likely only market those that work, as doctors are unlikely to prescribe pharmaceutical unsupported by any valid research. So, with or without the FDA, drugs would be tested for effectiveness, and only those showing promise would be marketed.

Similarly, testing for safety would take place with or without the FDA, as, again, doctors want to know the drugs they prescribe are safe, or at least the benefits justify the risk. But even more than that, pharmaceutical companies would want to test drugs so as to avoid any potential liability. So, with or without the FDA there would be extensive testing for safety as well.

But the FDA has one aspect the free market would not. Uncertainty. In the free market, if a drug proved effective and safe, then it would go to market. So pharmaceutical companies could know their more promising drugs would be eventually put into production. The FDA provides no such guarantees. A drug can test as effective and safe, and yet the institutional pressures within the FDA could cause regulators to reject the drug, causing a safe and effective drug to be held off the market⁴. As a consequence, drug companies are reluctant to put money into drugs with small potential for profit, be it for rare diseases, or conditions which are less severe and so unable to support the high costs entailed by the risk of random FDA rejection.

So, the pressures of the market would force drug companies to run all the tests the FDA would, yet would also allow the companies the security of also trying to develop drugs which would currently not be profitable because of the risk of FDA rejection.

Now, some will argue with me and say drug companies would not test unless forced to do so. They would claim the drug companies would rather market inferior, ineffective and unsafe drugs to make a huge profit. But such arguments make little sense. Yes, in today's climate, with prescription drug laws and heavy regulation, drug companies do form a cartel with limited competition, but even within the very small present market there is enough competition for generic drugs, and drugs no longer patented that destroying one's reputation for a "quick buck" would cost more than it could possibly earn. Even if you made $100 million on a bogus drug, the loss of sales on every other drug for the time the public recalls your misbehavior would be ten or twenty times that. And, if there were a truly free market, then likely the company would simply go under. Despite the belief many have that companies can "make a killing" through shoddy goods, the truth is, the public recalls such acts, and the loss of confidence costs more than any such action could earn.

And that is why I say advertising restrictions are pointless as well. Yes, companies might lie about their products, but if they do, doubtless a competitor, or journalist, or blogger, or someone, will call them on it eventually. And once they do, the cost will more than make up for any profits. Just as with marketing substandard goods, lying in ads is likely to bring so much grief that no quick profits would make it worthwhile. Those who think companies can make a "quick buck" on lies or bad products show a ridiculously short-term thought process. And companies which are large enough to engage in such acts are hardly the ones likely o share in that sort of short-term thinking.

And that brings me to the one issue where the regulators do perform an action the free market would not, but one I argue may not be as beneficial as some suggest. And that is the control of products which are not accepted by mainstream science, for example medical treatments which have been labeled "quack" cures.  In this one aspect regulation would produce results different than the free market, as regulators do prevent the sale of these products, while the free market would allow for any consensual exchange between individuals, whether supported by science or not.

Now, I know some will find this troubling, that people could buy quack cures, but to me it seems perfectly appropriate. The question we should be asking is, what is the purpose of government? To protect us against force and fraud? Or to tell us what we should do? If we are adults who can decide for ourselves, one thing we have to be allowed is to make mistakes. Even if it might harm us, we have to be allowed to make choices. If not, then why not follow the logic to its conclusion and have our every action controlled by the government to produce optimal results? So long as you think you are better suited to control your life than the government is, you have to allow that others, even if you disagree with their decisions, are better suited to run their lives as well. And that means you have to allow them to do things you find incorrect, and that includes choosing to reject science you find convincing, even making choices everyone else on earth finds irrational. (I wrote at great length on this topic in "The Right Way" and "The Danger Inherent in Banning "Bad Ideas"", arguing that lacking absolute certainty, any prohibition runs the risk of banning a superior choice. But even ignoring that, the fac tis, as long as we believe others to be competent adults, there is no way to justify telling them what to do. And if we find one, then does it not also justify others telling us what to do?)

So, yes, there is one area where the free market is "inferior" in the eyes of some, but I still contend that is actually a benefit. But, ignoring that for the moment, in every other way, the free market is clearly superior. It would still create conditions requiring manufacturers to provide safe and effective products, and without the added risk of banning safe and effective products that the FDA and its ilk entail. So, excluding "quack cures" and "unapproved" products, there is nothing to argue for the regulatory solution. And, in terms of quackery, I would argue that, in a free society, we cannot use our own beliefs as a substitute for the choices of others. Even if our belief have scientific backing to show they are "objectively right", the fact remains that an individual still knows his own subjective valuations best, and so he should be allowed to make his own choices, even if outsiders see it as harmful to him. Forcing others to "do the right thing" is in no way consistent with either a free society or recognition of individual rights.

That brings me to the second category of regulation, though one recently finding less favor. That is the regulation of prices, intended to ensure "fair pricing". Obviously this has not been a popular topic since the 1980's, when deregulation began, as evidenced by the demise of the ICC, the elimination of many fare setting and rate setting bodies, and a host of other changes in favor of market pricing. Still, there remain countless areas where price fixing remains popular, though done quietly. For example, utilities still have to get rates approved by various boards in almost all markets. Similarly, interest on loans is commonly capped in many states. And, despite disastrous results in decades past, rents are still regulated in a number of cities.

I could take a long time to point out the problems of price fixing, but let us start with something every ECON 101 class covers, and which no one has ever challenged. Prices are not arbitrary, they are established by the interaction of supply and demand. When prices are established at the point where supply and demand meet, then the market will clear. If prices are too high, then goods remain unsold. When too low, then there is unmet demand. And so, by setting prices too low (which is inevitably what regulators do⁵), there will be much more demand than supply, meaning people will buy more of a good than they normally would, meaning some get too much, and the rest get none.

I wrote about setting prices in a number of posts, such as "Saving Us From Lower Prices","Price Gouging", "Greed Versus Evil", "D i c k Morris Gets His Economics Wrong Again", and others, so I won't go into great detail, but let me make a few points about government attempts to establish prices below market and the likely consequences. I will start with two real world examples (rent control and utilities) and then speak in more general terms.

Rent control is probably the best example of the effects of price controls, as it shows the effects of price controls on an existing market, and the effect on those entering the market after controls are enacted. When a city enacts price controls, the first effect is that any exemptions are mercilessly exploited. If luxury apartments are exempt, then as many apartments as possible will try to price themselves into that market. The rest will slowly begin to disappear. As price controls reduce profits, the owners will begin to refuse to make repairs. They will also try to stop renting apartments, either converting to condos, or keeping empty apartments off market until they can sell the whole building. Those who cannot do so may even abandon their apartments. At the same time, as apartment with rent control are not profitable, new apartments will not come on the market, except in exempted categories. And so, in the end, the one certain outcome of rent control will be a severe shortage of the goods the government was trying to ensure "access" for the poor.

Utilities fare slightly better, if only because government creates the monopoly and so cannot blame the utilities the way they can "greedy landlords". So utilities usually have prices fixed close to the costs of production so the power companies do make a profit. Or, in some markets, tax monies are used to subsidize below-market prices, in order to keep utilities cheap while allowing them to remain in business. In the first case, the outcome is generally shoddy service, gradual brownouts and other problems, and eventually the collapse  of the system, as the low profits make it impossible to repair, maintain and build new infrastructure and plant. In the latter case, utilities tend to thrive, but they have other problems. First, as their income is largely political, rather than driven by their customer base, they tend to be both non-responsive to customers, and over conscious of political issues. They tend to heavily support the party in power, making part of their subsidy effectively a slush fund for sitting politicians. Finally, because they have no real market forces affecting them, they tend to end up running in the bureaucratic manner I described in "The Inevitability of Bureaucratic Management in Government Enterprises"⁶.

And those two examples show what price fixing does. It basically either creates a shortage, or it has to subsidize prices with tax money, producing worse results at a higher price than the free market would. (Even if the government wanted to subsidize utilities for the poor, it would be more efficient to give them a stipend, rather than make utilities quasi-governmental agencies.) On the other hand, the free market itself ensures low prices by the simple expedient of greed. If a given firm prices a good too high, a competitor will make money by undercutting him. Or, if there is no current competitor, the high profits will attract investors who will back a new competitor. Either way, prices will stay as close as possible to costs, as any difference creates a profit potential that human greed will not let stand. Only when the government prevents entry into a market will such opportunities not be exploited⁷.

In other words, there is no need to regulate prices provided there is a free market without regulatory barriers to entry. So long as firms can freely enter the market, greed will ensure prices are as low as possible given costs and other market factors. Any attempt to lower prices below that will not create cheaper goods, but will simply destroy the market. So the free market creates the lowest possible prices, while regulation actually creates conditions which either create shortages or restrict competition, allowing prices to rise ABOVE market prices⁸.

And that brings us to the third regulatory interest, the protection of workers from employers. I have written on this as well, many times, both in context of international trade and worker protection alws. (See ""Exploiting Workers?", "Fairness and the Free Market", "Capital Investment", "Exploited Labor" and "Child Labor and the Industrial Revolution".) And, as should be clear from the many paragraphs above, I  am not convinced regulation produces many results the free market would not. And the results it does produce which differ are uniformly harmful.

Let us look at beneficial regulation. For example, the end of child labor.  The fact is, child labor was a reality not of "sweatshops" but of all history until recent times. In fact, in agrarian societies it is still the norm. Children work, as their labor is necessary in poor countries. And so child labor ended, not because of government, but because society became wealthy enough they no longer needed children to support themselves. In addition, as industrial work became more productive and required higher skills, child labor was no longer feasible. And so, even before the state stepped in, child labor had begun to vanish. The same with the 40 hour week, and many other "reforms".

The fact is simple. Employers want to keep their workers in condition to perform their tasks. While rabble rousers pretend employers would work labor to death and just replace them, the fact is a reliable worker with years of job skills is valuable to an employer. Even unskilled labor is more valuable if proven reliable than an unknown new worker. So employers want their labor to be healthy and eager to work. Of course they balance the cost of this against the benefits, and so in poorer times, the cost of safety was too high for a lot of expenditure. But today, with the huge amount of capital invested in labor, it is in the interest of employers to do all they can to keep workers healthy, happy and interested. And so, without government, employers would still take steps to create a safe workplace and to keep workers happy⁹.

Which brings me to the other kind of labor law, the one that prevents "exploitation" workers would voluntarily accept. For instance, minimum wage laws, or laws preventing working beyond a set number of hours. The existence of such laws admits that there are workers who would agree to work for lower wages or work longer hours, otherwise there would be no need to prohibit it. But, by banning these acts, the government does not protect workers, they simply deny them a choice. If I am a worker, with minimal skills, who cannot get hired at the minimum wage, I may take a job at lower pay to prove myself. Except the state makes that illegal. And that leaves me with no options, as no one will hire me for more. In other words, minimum wage does not protect me, it prices me out of the market, leaving me unemployed.

And that is the problem with such protection. It tries to "protect" against things the lawmakers think "bad", but which the workers and employers obviously do not. It is yet another example of trying to protect workers from themselves, and as with all such laws, leaves everyone less happy. (See "When Help Hurts") Under a free market, employees could decide whetehr or not to work for less or work longer hours. Employers would not pay less arbitrarily, as if they pay too little, another employer will raise wages and steal underpaid employees. No, they would only pay low wages for low value workers. But by ending minimum wage, we would allow such low value workers to work, rather than remain unemployed. Similarly, by allowing longer hours, those employees willing to work more hours, or employers willing to pay what it would cost to get someone to work such hours, could do so, rather than being denied the choice as someone thinks it "wrong." In other words, without regulation, we would treat everyone as competent adults, who can make choices, rather than as children who have to be told what to do.

And, having dealt with the big three regulatory areas, let me look briefly at other regulation, environmental, zoning and so on. In most cases, such laws are, again, efforts to protect people from themselves, or to prevent acts someone thinks "bad", such as building fuel refineries. In most cases, they simply represent a violation of property rights. Nor are they necessary. In most cases, old laws existed which served the same purpose. A factory which made one's property filthy could be sued for nuisance, for sizable sums in some cases.  However, in such cases, the remedy rested, not with the government, but with the private individual who suffered the harm. And, more importantly, it was not speculative and preemptive, one had to wait until harm was done and then sue.

On the other hand, that was a good thing, as it meant, rather than preventing actions which might be harmless, it was only actions which proved damaging which ended up costing companies. The preventative action, which did exist, was exercised by the companies themselves, which, aware they could be sued, took steps to ensure they would not face such suits. Or, if they feared such suits, to buy up the properties of those likely to sue. And so, rather than a government agency issuing blanket prohibitions, the old system relied upon self-restraint and suits to collect damages for real, proven harm.

And that may be the best capsule summary of the problem with regulation. The free market, and all the remedies and incentives it supplies, relies upon people to exercise control over their own actions, and then to punish real wrong doers after the harm is done. Regulation attempts to prevent any harm before it happens, and as a result denies people opportunities as well as prohibiting actions which will in all likelihood be harmless.

So, I suppose, if you are a fan of extreme risk-aversion, willing to sacrifice your options and prohibit even legitimate activities, just to avoid even the slightest risk of harm (and recognize that even then harm might still happen), then maybe you will find regulation beneficial. If you would rather enjoy freedom, and grant it to everyone, and only punish those who do harm after the harm has been proved, then regulation definitely seems a very bad way to achieve that end.
 
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1. In some ways, the alternate goals simply expand the "consumer protection" goals to non-consumers. After all, environmental laws simply expand the consumer and worker safety concerns to the public at large. Then again, there are some alternate concerns in these additional regulations, such as "wise use of resources" which go far beyond traditional regulation, and so deserve to be handled separately.

2. My previous discussions can be found in my posts "Gun Control, The FDA and Regulating the Law Abiding", "Bad Economics Part 5", "Insider Trading" and "A Strange Industry, or, When the Market "Breaks Down"". There are many others, but those cover the topic pretty fully, and the articles linked in those posts can fill in the remaining details.

3. This is most easily seen in the medical arena, where conventional medical treatment makes up the first category, while the second is made up of the many other treatments which are not recognized by the medical community. On the other hand, medicine is not the only area where this occurs. For instance, many believe in perpetual motion machines, or diet aids, and the effectiveness of both are disputed by experts, so this can occur in many areas of human endeavor. Right now we regulate only a limited number of products for effectiveness, but the logic could obviously be extended to other areas.

4. I won't go into it here, but the FDA has pressure to deny drugs more than approve. As I discussed in "The Endless Cycle of Intervention", "Another Thought on Regulation" and "Medical Regulations", rejecting a safe drug carries little risk, but accepting a dangerous drug, even with the best tests showing it safe, can end a career. So the pressures on the FDA tend to favor rejection of even safe and effective drugs.

5. If, for the sake of argument, regulators set the price too high, it would mean either goods would remain unsold (if sellers had to charge the exact price) or sellers would charge the market price and the regulation would be pointless. And, if they set the price at market, then it would be pointless as well, until conditions changed, at which time it would be as if the price were fixed too high or low, depending on how the market shifted.

6. To read the story of how price fixing and subsidies were responsible for foiling efforts at nominal deregulation in Maryland, read "Bad Economics Part 3".

7. It is interesting that the free market is often blamed for monopolies and other closed markets, as well as exploiting consumers. Such conditions can only be created by the government excluding firms from entry into the market. So, while the free market gets the blame, it is the government which creates the conditions. See "Cheap Lighters, Overseas Dumping and Monopolies", "Bad Economics Part 2" and "How To Blame the Free Market".

8. This does not mean at any given moment the free market will have the optimal price. Prices tend toward the price of production, but there is always some lag as market conditions change. However the free market creates conditions where responses to change come most swiftly, so it is still more responsive than any alternative system. So it makes no sense to criticize the free market for not producing the ideal results, but only tending toward them, as no system produces the ideal results.

9. We will deal with environmental laws later, but as I mentioned in  "Greed Versus Evil", even environmental laws are part of this logic, as most workers live near their place of work. So poisoning the local air or water will result in lost labor which is more costly than disposing of waste in most cases. Not to mention liability. Even without the present environmental law setting, nuisance suits, or other suits over loss of use and enjoyment could bankrupt a company if they paid too little attention to the environment.

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POSTSCRIPT

The earlier Bad Economics posts were:

Bad Economics Part 1 - A discussion of how prices disprove theories of resource depletion
Bad Economics Part 2 - A debunking of the many theories based on "defective" or "damaging" competition
Bad Economics Part 3 - An examination of the many absurd claims about deregulation
Bad Economics Part 4 - An examination of problems with economic studies and empirical evidence
Bad Economics Part 5 - An examination of consumer protection and the harm it does to consumers and others
Bad Economics Part 6 - A rebuttal of claims offered in support of various types of farm price supports and other aid
Bad Economics Part 7 - A discussion of what inflation is and is not
Bad Economics Part 8 - A discussion what our money really is and is not
Bad Economics Part 9 - A refutation of the common belief that "thinking outside the box" is inherently valuable
Bad Economics Part 10 - A refutation of the theory that there is "waste" which can be eliminated from the free market
Bad Economics Part 11 - Bankruptcies, Bruises, Fevers and Extinctions - Examining how perspective makes events good or bad

You can also read them in reverse order, starting with part 11, as each post contains links to the previous chapters.

POSTSCRIPT II

Note that installment 13 will likely also be the second installment in the upcoming series "The Sky's Not Falling". As the same post is appropriate for both series, I believe I will include it in each one, as "The Sky's Not Falling Part 2" and "Bad Economics Part 13".

POSTSCRIPT III

Note, my mention above of Quackwatch.org does not mean I endorse all of their positions. I find much, though not all, of their conclusions about the science behind various medical procedures valid. (I differ on their position on mental illness - see "Mental Illness".) However, as I made clear in "Medical Regulations" and "Medical Regulation II", as well as  "Professional Education", "Licensing", "Business Licensing and Regulation", "Bad Economics Part 5" and "Gun Control, The FDA and Regulating the Law Abiding", I do not agree with their position on the licensing of physicians and the control of access to devices and pharmaceuticals.