Chapter dzǹ: Is Ļere a Bias Toward Overregulation? ȂȃȄşšřřōŞť
Ļe private sector is routinely made the target of regulation because of
externalities, meaning cases in which the persons who decide on some
activity or its scale decide wrongly because they do not themselves bear
or take full account of all of its costs and benefits.ȂȁHow ironic, then,
routinely to expect a solution from government! Government is the pro-
totypical sector in which decisionmakers donottake accurate account of
all the costs as well as all the benefits of each activity. Ļe fragmenta-
tion of decisionmaking and responsibility goes part way toward explain-
ing this condition, along with the kinds of opportunities and incentives
that bureaucrats, politicians, legislative staff members, judges, and citizens
have.
It is difficult to compare even the relatively direct and obvious costs
and benefits of an individual government policy action. It is practically
impossible to assess the indirect and long-run consequences of individ-
ual actions and of their aggregate, including their effects on the drift
of policy and on the character of the economic and social system. Ļe
aggregate of activities all appearing individually desirable may itself turn
out quite undesirable. Hence the importance of frankly allowing consid-
erations of political philosophy into policy discussions. Broad principles
should count, including a principle of skepticism about government activ-
ity. Even when no strong and obvious disadvantages are apparent, there
is presumption (though a defeasible one) against each new government
function. Ļe pragmatic, “realistic” approach of considering each individ-
ual function separately and narrowly, on its own supposed merits, is fatally
flawed.
Our Founding Fathers accepted the concept of human rights that gov-
ernment should not violate. Ļat concept need not be based on mysticism.
It follows from a version of rules-utilitarianism (as distinguished from act-
utilitarianism). As John Stuart Mill argued (inUtilitarianism, chapterȄ,
writing when the word “justice” had not yet been stretched into useless-
ness for all but emotive purposes), unswervingly to put respect for justice
ahead of what might be called narrow expediency is a rule of topmost util-
ity (or expediency in a broad and deep sense). I believe it can be shown
that respect for and basing policy on certain rights and values, like justice,
ȂȁExternalities are due, anyway, not to the very logic of the market system but to
difficulties and costs of fully applying that system, including property rights, to the cases
in question.