In a number of previous essays ("Greed Versus Evil", "Fairness and the Free Market", "Child Labor and the Industrial Revolution", "Who Is Safer?") I have argued that it is in the interest of employers to maintain a safe workplace. Just as employers would love to pay nothing for labor, but pay a reasonable wage out of self interest, I believe employers would love to pay nothing for safety measures, but will instead take reasonable precautions because they must to maintain their workforce.As with so many facets of the free market, the selfish interests of employers, coupled with employees who watch out for their own selfish interests, and other unknown individuals who will attempt to exploit any potential to earn additional profits, employers are driven to enact safety measures commensurate with the wealth of the economy and the safety expectations of the employees.

But I am sure there are many who have treated my previous assertions with skepticism. We have been so long accustomed to the belief that sinister employers intend to do harm ("Evil and Greed") and are only prevented by the benevolent intervention of government and unions, that we have become almost unable to accept the argument that employers might voluntarily impose safety measures on their own¹. That being the case, I have decided to revisit this topic one more time.

First, I hope to elaborate upon the basic argument, and the one which seems least acceptable to many listeners. With any luck, by building upon the original argument, adding a much more thorough analysis, I will be able to address at least some of these objections. But, as the original argument doubtless will not satisfy everyone, especially those convinced of the evil motives of employers, I will also look at a number of other forces at work. I will look at the workers themselves, and the role they play in determining safety measures. I will also look at the many competitors, and the role they play in ensuring safety is relatively uniform across the market. I will also look at the economy as a whole, and the role society's wealth plays in determining what is and is not acceptable, and how that is established. And finally I will look at another reason even the most greedy employer might impose safety measures upon himself, and the benefits it could bring him.

Let us look at the most simple argument, the one upon which I have relied most up to this point. Workers, even in the most unskilled positions, gain value over time. In most cases this is due to increasing familiarity with the job duties, improving skills and better work habits, but even in the most unskilled position imaginable, one so lacking in skill requirements that a new worker could perform equally well², will still be more valuable after being employed for some time. How so? On a most basic level the employer develops knowledge of the employees' characteristics, knowing which are more or less reliable, which can be entrusted with which tasks, who needs more or less supervision and so on. Gaining such knowledge of new employees takes time, and that is costly, so even this basic knowledge of existing employees makes them more valuable.

And, of course, there are the costs of bringing on replacements. Even in a totally unskilled job there is a period in which the employee becomes familiar with his duties, his coworkers, his supervisors and so on. Yes, it is shorter the lower the level of skill, but there are still costs. No job is so lacking in skill that there is not some learning curve. And during that period, the employee is effectively less productive, often producing a negative profit for a time.

All of which is a long winded way of saying that employers have a financial interest in keeping the same body of workers. Now, admittedly it is subject to cost-benefit analysis, as are all business decisions, but the cost of new employees is relatively high, and most basic job safety measures are relatively low. Of course an employer will not pay a huge sum to prevent a relatively remote risk³, but he will be more than happy to pay a small amount to remove some risk which could require hiring and training new staff. This incentive may not inspire employers to provide all the safety measures demanded by government⁴ (considering the inefficiency of government regulation, it is hard to imagine any system which would), but it will clearly persuade them to provide protection against the most easily prevented and most probably risks.

But let us move beyond that original argument. If it has not persuaded my readers by now, I don't think any additional argument will be persuasive. Instead, let us look at other factors at work in maintaining workplace safety under a free market.

The most basic difference under a free market as opposed to one with government regulation is the recognition by individuals that they must provide for their own protection. While government regulation is, in practice, a poor source of protection ("Bad Economics Part 12", "Gun Control, The FDA and Regulating the Law Abiding"), people have been persuaded that it is, and so they tend to rely on inadequate government protection and take few or no steps to ensure their own protection. Even when they are confronted with blatantly unsafe conditions, the response is rarely the rational choice to leave the job and seek other employment, instead, as is normal under an interventionist regime, they attempt to use the government to force the employer to change behaviors⁵.

Under a free market, individuals will be well aware of the need to protect themselves, as well as being used to using their power to refuse to contract in order to protect their interests. ("In Praise of Contracts") And that means that if a company refuses to provide safety measures which employees consider adequate, the employer will find he has to either pay more for labor or do without, both of which will serve to convince him to improve his safety measures. Of course, those who believe in government will argue that individuals will not have that option, as they will somehow be forced to either take the bad job or go without. But that perspective is simply wrong. While government intervention does create chronic long term unemployment, under normal, free market circumstances, labor is the one commodity for which there is infinite demand ("Bad Economics Part 14"), and thus, unless we have government meddling, the idea that a single company, or even a handful of companies, would be "the only game in town" is just absurd⁶.

Nor is this a static situation. As the economy becomes more prosperous, it will become easier to provide better safety⁷, and workers will come to expect those improvements from ever smaller and less wealthy employers. A similar process will also come into play with technological improvements. In both cases, as it becomes easier to provide safer workplaces, workers will come to expect those improvements, and employers who hope to hire new employees, or even keep their current staff, will have no choice but to embrace the expected safety measures.

Nor are employers and workers the only two whose selfish interests drive workplace safety. There are also competitors, and, beyond them, everyone else in the world, as anyone could be a potential competitor (just as I mentioned in "Fairness and the Free Market" and "Exploited Labor" with regard to wages). Even were an employer willing to risk his staff, and the staff members, for whatever reason, were willing to work with substandard safety, there is always the possibility someone could open up a new plant, with better safety, and sue that appeal to steal away the best workers. Just as such a threat prevents substandard wages, it also keeps working conditions up to the prevailing standards. (Or, on the other hand, keeps the combination of wages and working conditions constant throughout the market, as employees may at times accept money in exchange for less satisfactory working conditions.) In fact, this is one of the main reasons I doubt that a closed market could maintain substandard conditions for even a short time. With the possibility of poaching the best workers by investing nothing more than the standard amount spent on safety, it would make a market far too appealing. And thus, no matter what the circumstances, the existence of nearly infinite potential competitors make it a massive risk to maintain standards below the norm.

Nor do the arguments end there. As with any market factor, there are literally infinite reasons one could choose to act or not, and the pressures which encourage a specific action are nearly as numerous. To provide just one additional example, let us look at another selfish motive for the employer. Some safety measures are not an ongoing cost, but require only a one time investment, or perhaps a periodic expenditure, perhaps on equipment. However, because workers base their employment decisions on a number of factors, and often will accept a lower wage if other job conditions are superior, an employer may find that making such a one time investment may yield enough in reduced wages (or alternately by keeping wages the same, in better output due to the ability to hire and retain superior workers) that it is worthwhile to improve safety as a money saving measure. It is just one example, and clearly does not apply in all circumstances, but it is just one of many situations where the presumption that employers have no reason to care about worker safety is proved false.

Hopefully this longer explanation has managed to convince a few more readers that the reliance on government for safety is a bad idea, that private employers, if left alone and granted a free market in which to operate, will maintain a reasonable environment for their workers out of nothing more than self interest, while workers and competitors will provide additional incentives should self interest prove insufficient.

But this argument is not limited to safety. The same principle applies to many more matters where the conventional wisdom argues that regulation is necessary. Elsewhere I have written rather extensively about the ways in which the free market ensures that wages reflect the productivity of the worker (including capital investments, of course -- see "Fairness and the Free Market" and "Capital Investment"), and yet we still hear again and again that wages are "unfair" and that the government needs to intervene. In fact, that seems to be the pattern in every industry imaginable, for every topic conceivable, the market, left alone⁸, tends to produce results reflecting the realities of economic activity, paying based upon productivity and the wants of the consumers, yet because these results do not meet the arbitrary assumptions of some individual ("Moral For Me, But Not For Thee", "The Inherent Disappointment of Authoritarianism"), they are deemed "unfair"⁹, and the market ends up being made much worse in an effort to make it match those assumptions.

I won't go into great detail here, as I covered it so fully in "Planning For Imperfection", "Greed Versus Evil", "In Praise of Contracts",  "Production and Consumption ", "Capitalism and Its Consequences " and "Clarifying a Reality of Capitalism", but the basic pattern is this. Free agreement between individuals takes place only when both are happy with the results, and thus generally produces a net gain for the system. As a result, anything which interferes with the process tends to produce a net loss. So long as you believe people are generally competent, capable of learning, and that the satisfaction of individual wants is the purpose of the economy, you must argue that such interventions are destructive, and individual freedom is the ideal solution.

Of course, those who argue for intervention deny some or all of these truths. (See "Liberalism, Its Origins and Consequences - Preface", as well as  "The Citizen Dichotomy", "Arrogance and Gun Control", "The Essence of Liberalism", "Man's Nature and Government", "In A Nutshell", "Cognitive Dissonance Part 2", "The Right Way", "The Danger Inherent in Banning "Bad Ideas"", "Contradictory World Views" ,  "Deadly Cynicism", "Those Other People", "Our View of Our Fellow Citizens", "Seeing People as Stupid" and "Arrogance".) They argue that humans are incompetent to recognize their own wants, or that they fail to learn from experience. Or, perhaps they admit that humans know their wants, but that those wants are divorced from their "real needs". ("The Most Misleading Word", "Government Intervention and the Purpose of Government", "Liberalism, Its Origins and Consequences - Chapter 5 - We Don't Need No Education") In any case, they try to say that the economy does not work as it appears to function every day. And, as a result, they conclude that we must intervene.

And so, in the end, I guess it all comes down to one's beliefs. Do you think other humans recognize their own wants and, in general, can learn from past mistakes? Or do you think they are incompetent? Unable to recognize their own wants? Or incapable of ever learning? Is the economy to be measured by how well it satisfies our wants¹⁰? Or is it established to fulfill some vaguely defined "needs"? And, if so, what are those needs, and how do we measure them?

So long as you believe individuals are competent, are mostly like you, can recognize those wants, and that such wants are the purpose of the economy, then you must argue against such interventions. On the other hand, if you support such interventions, whether you know it or not, you are implicitly arguing that others are not competent to make their own decisions, cannot recognize their own wants, and need to be controlled by those who "know best". ("The Right Way", "Who Does It Harm?")

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1. I discussed elsewhere ("You Lose When You Think You Win", "Why We Lose", "Giving Away the Game", "Of Wheat and Doctors", "Selling Yourself Cheap", "The FairTax's Liberal Assumptions", The Difficulty of Principle", "What We Deserve", "What is Wrong with Us", "Pyrrhic Victories") the tendency of the right to accept far too many arguments of the left. Be it the argument for managed currency, the defense of "reasonable regulation" of banking, or the demand for government safety guidelines, we tend to accept arguments we should reject. In this case, it is possible (as with public education -- "A Thought on Public Education") that sheer age has made the argument resistant to criticism. Still, we should not accept ti so unquestioningly. But that seems to be one of the most common problems with conservatives, an inability to stick to our own principles, at least not consistently.

2. I deny that such a position actually exists. Even if a job involves nothing but screwing a bolt onto a nut, one still can develop some skills, both improved manual dexterity and decisions about the most efficient way to arrange the equipment, parts and the rest of the work space. So even if a job seems completely devoid of skill, there are still improvements which can be made, and which are discovered with time. (As an individual who held a number of "unskilled" positions, from janitor to dish washer, and who also trained the retarded to perform such tasks ["retarded" was the PC term at the time, so please no offended comments about my terminology], I am well aware how many improvements can be made in the performance of even the most simple tasks.)

3. As I described in "Who Is Safer?", the government is not constrained by cost-benefit analysis. (A point I also made in "Bureaucratic Management", "The Bureaucratic Mind", "Bureaucracy Revisited", "The Inevitability of Bureaucratic Management in Government Enterprises" and "Bureaucratic Management and Self-Policing".) The government does not base safety measures on a sound analysis of the cost and risk, for several reasons. First, they do not care how much they force companies to spend. Second, they are more driven by avoiding blame than anything else, making them overestimate risks. But most of all, as their rules apply to the entire industry, they cannot do the rational cost-benefit analysis an individual company could. They must come up with a "one size fits all" solution ( "Real Life and Regulation", "My Political Philosophy", "Consolidation and Diffusion"), and, as a consequence, they tend to err on the side of excessive caution (and cost), imposing burdens on companies out of proportion to the harm prevented.

4. On the other hand, thanks to government's tendency to make arbitrary decisions, with no way to determine what is justified and what is not ("The Inevitable Corruption of Protectionism"), it is quite possible that companies seeking to make quick profits could induce regulators to waive even basic requirements. ("Transparency, Corruption and Reform", "Bureaucratic Management and Self-Policing", "Anti-Business Businesses", "Who Is Safer?") Under a free market, this would not work, as employees would be used to guarding their own interests. Now, relying on the government for protection, such schemes can sometimes succeed. And, as I discussed before, schemes which would be pointless under a free market are profitable for some under interventionist regimes, making such actions more probable. But that may require its own post, as the fact that corruption is more likely with regulation than without often confuses those who accept the conventional wisdom.

5. This too is a good topic for a future post. Under the free market, employees and customers change the behavior of companies by quitting or refusing to take jobs, or by refusing to buy goods or services. It is a perfectly non-coercive means to alter behavior. The employer can then choose to continue in his old manner, and accept the consequences, or change and improve his circumstances. Under an interventionist system, this does not happen. Instead individuals involve the government, which then forces the employer to behave in ways he would not choose, effectively violating his rights to property, contract, even liberty. It is a tremendous difference between the two systems, the difference between persuasion and coercion, and one I would like to examine in detail in a future post.

6. It is possible that in very small markets, during a period when safety standards are changing, for a time a firm could hold out against such changes, relying on the relatively small market and low profits for protection. But, as time and experience makes such improvements both more common and cheaper, it will become less feasible to continue to hold out, and eventually even the smallest market will either change or face external competition. (Not to mention the fact that freedom of mobility means even the smallest market cannot rely on a pool of workers remaining in the area if conditions do not improve.) Some may object to this, and argue we need government intervention to remedy such situations. However I think this impatience is misguided. We cannot destroy the entire economy simply because we cannot accept a less than perfect situation for a period of time. For more on this see "The Threat of Perfection" and "Utopianism and Disaster".

7. We can see this in the rapid improvement in safety, as well as things like working hours, working conditions, and child labor, in the industrial world. People forget that child labor was not invented by sweat shops, but was a fact of life throughout history, on farms, in cities, everywhere. Only with increasing wealth did child labor become possible to eliminate. What is impressive is how quickly the wealth of the industrial revolution eliminated not only child labor, but much of the squalor, unsanitary conditions and unsafe machinery of the early industrial period. While government claims credit, in reality it was mostly improving wealth and technology which made these changes possible. (See "Child Labor and the Industrial Revolution".)

8. Once the government intervenes, a new problem arises. Then the failures of the intervention are themselves blamed on the free market ("How To Blame the Free Market", "Bad Economics Part 17") and new interventions are added to "correct" problems caused by the original intervention. ("Recipe For Disaster", "The Endless Cycle of Intervention",  "The Cycle of Compassion", "Government Quackery")

9. To be completely fair, there are times when fate may produce results which were unforeseen and unpreventable. Most of the time, this is not the case, or at least some general precautions could have mitigated the disaster. ("Subsidizing Irresponsibility and Poor Planning") However, from time to time there is true, unavoidable bad luck. The problem with this is that, though it is regrettable, trying to "fix" the bad luck simply makes things even worse, taking one individual's bad luck and spreading it around, while also magnifying the results, making the whole economy even less satisfactory. ("Life Is Not Fair - And Trying To Make It So Makes Things Worse") So, though it is regrettable that bad luck occurs, there is nothing that can be done, at least nothing that is the province of government. ("Doing Something", ""Doing Something" Revisited", "What We Deserve",  "Don't Blame the Politicians", "Who Is To Blame?", "What is Wrong with Us", "The Single Greatest Weakness", "The Difficulty of Principle", "Damn the Torpedoes!", "An Analogy For Government") There is an alternative, though one oddly rarely discussed, and dismissed out of hand if it comes up. That is private action, which is both voluntary and does not produce the negative "ripple effect" of coerced government action. ("Private Charity", "Private Charity Take Two", "Liberalism's False Dichotomy", "Zero Tolerance and Big Government", "Overly Simplified Economics and Confused Interpretations")

10. I won't argue this here in detail, but it seems common sense to me that the economy succeeds to the degree it fulfills wants. After all, we work to fulfill wants. We trade to better fulfill wants. From our individual perspective, the economy succeeds as we satisfy more wants, or satisfy the same wants better. So why would that rule change when we move to the aggregate economy? Actually that may make yet another good post in the future.

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POSTSCRIPT

I have too many posts that might be relevant to this topic to list them all here. However, as regulatory matters seem to be central to this argument, I think it may be useful to list a few of my more general posts on regulation and its shortcomings. So, for those curious about my earlier arguments, I recommend "Gun Control, The FDA and Regulating the Law Abiding", "Professional Education", "Licensing", "Business Licensing and Regulation", "Bad Economics Part 12", "Real Life and Regulation" and "Insider Trading".

POSTSCRIPT II

As mentioned in the footnotes, there are a few upcoming posts that this one inspired. Among them are posts on the way intervention produces the corruption that it supposedly prevents, the difference in the way the free market and government intervention change behaviors, that is the difference between persuasion and coercion, and the argument that something true for an individual must also be true for a group (specifically, the individual perspective on the economy and the collective view of the aggregate economy).