Chapter dzǹ: Is Ļere a Bias Toward Overregulation? ȂȂȈeconomic and social system, may get made by default as the cumulative
result of piecemeal decisions whose combined tendencies were not real-
ized when they were made.
ŒŞōœřőŚŠōŠŕśŚ ŎōŐ ōŚŐ œśśŐ
Closely related to dispersion of decisionmaking among persons and over
time is dispersion of responsibility. Ļings that would be considered mor-
ally reprehensible if done by a single decisionmaker escape moral con-
demnation when done by government, since it is not apparent where the
responsibility lies. Examples are our inflation mess, the quasi-repudiation
of government debt, the taxation of phantom earnings and phantom cap-
ital gains, even when the taxpayer has suffered a real loss and even when
he has suffered it on bonds of the government itself, and the government’s
continued pushing of its savings bonds.
Fragmentation of decisionmaking is not to be condemnedtout court.
In many cases, keeping decisions close to the affected level will improve
the cost-benefit confrontation. Furthermore, it helps preserve freedom.
In fact, this is one of the chief arguments for the market as opposed to
government control.ȁȂ
ŏŞśţŐŕŚœ śšŠ
Another disadvantage of routine reliance on government to suppress all
bad and promote all good is that it tends to freeze out alternative solu-
tions to the problems tackled. It can hamper diverse initiatives and exper-
imentation. It can crowd out private activity by taxing away funds that
ȁȂ“Ļe system of direct regulation cannot allow flexibility in the application to indi-
vidual cases because favoritism cannot be distinguished from flexibility and diversity of
conditions cannot be distinguished from caprice. Ļe price system, however, possesses
this remarkable power: if we make an activity expensive in order to reduce its practice,
those who are most attached to the practice may still continue it. It is the system which
excludes from an industry not those who arrived last but those who prize least the right to
work in that industry. It is the system which builds roads by hiring men with an aptitude
for road-building, not by the corvée of compulsory labor” (StiglerȀȈȆȄ, p.Ȃȅ).
Ļe recent gasoline shortage and proposals to deal with it by rationing or by making
everybody forgo driving one day a week, or the nonsystem of rationing by inconvenience,
all illustrate Stigler’s points about regulation versus the market. Regulation cannot take
into account the detailed personal knowledge that people have about their own needs and
wants and circumstances.