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Krugman's Apologetic for Government Regulation
May 28, 2012
Paul Krugman, not unpredictably, once again (in The New York Times, Monday, May 14, 2012) went to bat to hit a home run for government regulation of, well, everyone (except the members of his own profession, namely, eggheads). His piece is titled "Why We Regulate" but fails to address the most fundamental issues, namely: Who is the "we" in his essay? And why would "we" be wiser and more virtuous than those whom "we" regulate?
Are there, as is implicit in Krugman's thinking, two classes of human beings, the regulators who are superior and the regulated who are prone to vice and stupidity? Somehow this issue never gets addressed by him and his allies. Nor do they seem to cope with the critique from public choice theorists such as Nobel Laureate Jim Buchanan, et al., who have pointed out that regulators and other government personnel are motivated pretty much as we all are, and will use their station to advance their preferred goals, not some vague notion of the public interest (which no one has ever managed to identify precisely enough). Since, however, they have political and often unchecked power as well as sovereign immunity − they cannot be sued since they are "us" − they are far more inclined to malpractice than are the regulated (who mostly make mistakes but are rarely out and out mendacious).
I have studied government regulation of business for decades − even co-edited, with a fine economist, the late M. Bruce Johnson, the book Rights and Regulation (1983) which explores the topic from a great variety of perspectives, pro and con. Okay, never mind. I am and maybe so was Professor Johnson too low ranked to be worthy of Krugman's attention. However, Professor James Buchanan and other public choice scholars are formidable within the terms that Krugman should take seriously. (Krugman got his Nobel for some technical work he did, which is rightly admired across the discipline, while Buchanan advanced a general theory in political economy and got the Nobel for that feat, something Krugman ought to recognize by dealing with Buchanan's argument!)
The ordinary issue to be addressed by champions of government regulation of business is, of course, this: Who are these people to qualify as regulators − i.e., dictators − of millions of citizens engaged in business? When the interstate commerce clause was included in the US Federal Constitution by the framers, "to regulate" was widely taken to mean "to regularize." This makes sense since the helter skelter economic policies among the several colonies had to be regularized once the colonies were united. A free market, more or less, was created without duties and tariffs and such. It is only some among the framers who took "regulation" to mean "manipulation" or "dictation." But that is how the term got interpreted in the New Deal.
But in a free society no such regulation, nor such regulators, make any sense, not when the citizens are all equally endowed by basic rights that no one may violate. Government intrusion in business does, however, violate those rights.
Sadly, there hadn't been sufficient influential protest against the changed usage of "regulate" and the ideological direction of the FDR era was inclined toward top down economic management. Yet, folks like Professor Krugman ought to take up the task of examining government regulation of commerce more fundamentally, more deeply, than simply to accept a highly ideology laden version of the term.
I have no idea what reasoning might lie behind the fact that Krugman & Co. do not embark upon a serious examination of government intrusion in business, never ask just who are these people they wish to entrust with the power to order their fellow citizens about. I have my suspicions but I do not wish to deploy the ad hominem approach Krugman himself is so fond of when he deals with his intellectual adversaries.