Chapter dzǹ: Is Ļere a Bias Toward Overregulation? ȂȃȀproperty rather than outright public purchase—may seem the economi-
cal and expedient thing to do in the individual case. Yet in contributing
to an atmosphere of uncertainty, it can have grave repercussions in the
long run.
An advocate of limited government cannot specify just what non-gov-
ernmental solution to a problem might have been found if it had not been
crowded out. An economist sympathetic to the market can explain how
entrepreneurs have incentives to seek unfilled wants and ways of filling
them, but he cannot predict what unfilled wants are going to be filled,
and how and when.ȁȄHence his position seems complacent; it reeks of
the ivory tower. In contrast, the interventionist position looks concrete,
active, practical, and down-to-earth.
Here I am in danger of being misunderstood. While I deplore reg-
ulating voluntary transactions that are not immoral and that adults are
undertaking with their eyes open, the case is different with hidden safety
or health hazards or with the imposition of costs onto innocent third par-
ties. I have qualms about cold-turkey deregulation in such cases. Yet over
the long run, phasing out government regulation could open the way for
entrepreneurial discovery of alternatives that we can hardly imagine in
advance. Such alternatives might, for example, include inspection and cer-
tification by specialist firms, as well as regulations imposed by insurance
companies as a condition of insurance. My emphasis, however, is not on
predicting alternative approaches but on their unpredictability and on how
central control can forestall their discovery.ȁȅ
ȁȄSee HayekȀȈȆȂ, especially the section headed “Freedom can be preserved only by
following principles and is destroyed by following expediency,” pp.Ȅȅ–ȄȈ. Hayek reminds
us that the benefits of civilization rest on using more knowledge than can be deployed
in any deliberately concerted effort. “Since the value of freedom rests on opportunities
it provides for unforeseen and unpredictable actions, we will rarely know what we lose
through a particular restriction of freedom.” Any restriction will aim at some foreseeable
particular benefit, while what it forecloses will usually remain unknown and disregarded.
Deciding each issue on its own apparent merits means overestimating the advantages of
central direction.
ȁȅIsrael M. Kirzner explains how regulation can impede the process of discovery. His
concern, however, is not so much with alternative solutions to problems taken under the
government’s wing as, rather, with discovery of new and better goods and services and pro-
duction methods. Furthermore, regulation diverts entrepreneurs’ energies from seeking
discoveries of these constructive kinds into coping with or circumventing the regulations
themselves. See KirznerȀȈȆȈ, esp. chap.ȃ.