Regulations Punish the Virtuous

by | Apr 9, 2012

We are often told that government regulations are necessary to protect consumers from unscrupulous businesses: The only thing worse than regulations is the absence of them. Without government regulation, how can you know if food, water, medicine, everything you use in your daily life is safe? How can you be sure of anything, unless some […]

We are often told that government regulations are necessary to protect consumers from unscrupulous businesses:

The only thing worse than regulations is the absence of them. Without government regulation, how can you know if food, water, medicine, everything you use in your daily life is safe? How can you be sure of anything, unless some uninterested third party is making sure that things are as they should be?

Consider what this really means: without government regulations we are too stupid to know the difference between Coke and gasoline, between fresh vegetables and rotting produce, between aspirin and arsenic. Without government regulations we are simply helpless pawns at the mercy of greedy corporations.

Consider further the claim that career politicians and bureaucrats are an “uninterested third party.” If this is true, then why does every regulation expand the political power of those who enact the regulations? Are we really to believe that those who make a living imposing controls and restrictions on others aren’t interested in expanding their power? The fact is, those with political power are anything but uninterested–they are keenly interested in gaining greater power, and that is precisely what they do.

Certainly, some individuals make poor decisions. Some put their money into investments that they do not understand. Some eat poorly or drink to excess. Some stay in abusive relationships. But the fact that some individuals make unwise decisions does not justify imposing restrictions and controls on all individuals.

Government regulations do not protect the unwise (just ask those who invested with Bernie Madoff and Richard Stanford); government regulations punish the rational. To understand this, let us look at the nature of government regulations.

Land-use regulations prohibit individuals from using their property as they judge best; instead, they can only use their property as government officials decide. Drug regulations prohibit manufacturers from marketing products that they judge to be safe and effective; instead, they must navigate a multi-year approval process mandated by the FDA. Labor regulations prohibit employers and employees from freely negotiating terms of employment; instead, employers must negotiate with labor union leaders, and union members must accept the results regardless of their own judgment. In each of these examples, regulations prohibit individuals from acting on their own judgment. Indeed, this is the essence of regulations–individuals must act according to the dictates and demands of regulators, no matter their own desires, values, or judgment.

But what happens when the regulators are wrong (which is very often the case)? What happens when some innovator, such as Jeff Bezos or Steve Jobs, wants to do something that isn’t approved by the regulators? In short, they must subvert their own judgment to that of the regulators. They must act, not according to their own trail blazing vision, but according to the status quo as entrenched by regulations.

Pioneers such as John Rockefeller, Thomas Edison, Bill Gates, and Steve Jobs see opportunities and truths long before others. Why should the judgment of these giants be subjugated to petty bureaucrats? Why should any individual be forced by government to sacrifice his own judgment, to ignore his own conclusions, to act contrary to what he believes is best for his life? What would our lives be like if men like Rockefeller, Edison, Gates, and Jobs had to take orders from the likes of Barney Frank, Nancy Pelosi, and Al Gore?

While there is no rational reason for regulations, advocates for government prohibitions and mandates certainly try to justify their interventions. As frequently as they tell us that regulations protect us, they also tell us that each individual must make sacrifices for the “general welfare” or the “public interest.” We must put aside our own personal desires, values, and judgments in deference to the “will of the people.” But since “the people” can’t vote on every issue, creatures such as Harry Reid, Charlie Rangel, and Anthony Weiner will speak for us. They will issue commands and edicts to which we all must bow, no matter our own judgment. They will tell us to how to live our lives. And if their plans for our lives happen to disagree with our own, they have the coercive power of government to settle the issue.

When government attempts to protect us from making unwise decisions, it does so by limiting the choices available to us. Because some individuals might abuse drugs or use them improperly, all individuals are forced to obtain government permission to use these life-saving products. Because some individuals might take out mortgages that they cannot afford, all individuals are forced to meet more rigorous standards. But government cannot eliminate the irrational, nor should it attempt to do so. The only proper and moral purpose of government is the protection of individual rights–the moral right of each individual to act according to his own judgment, so long as he respects the mutual rights of others.

This does not mean that individuals will be left to the mercy of unscrupulous and dishonest businesses. It means that individuals must take responsibility for their choices and actions. It means that individuals must obtain the information necessary to make informed decisions. Even in today’s heavily regulated marketplace, there is an abundance of resources providing such information.

Private businesses and organizations such as the Better Business Bureau, Consumers Union, and Good Housekeeping test products and provide reports on businesses. Websites such as and Angie’s List allow consumers to review products and service providers. Organizations such as Underwriters Laboratories and MET Labs provide product safety testing. Today, a consumer who seeks to be informed about a product, service, or business has no shortage of resources. And unlike politicians and bureaucrats, these businesses and organizations are truly “uninterested third parties.” Their reputation and success depends on providing unbiased information. If they compromise their integrity, their very existence is put into jeopardy.

Importantly, these private businesses and organizations cannot impose their conclusions or standards upon others. No matter how highly Consumers Union rates a product, it cannot prevent manufacturers from making competing products; nor can it prevent consumers from purchasing those products. In other words, absent the coercive power of government, individuals are free to act on their own judgment. Each individual is free to buy the products and services that he thinks are best for his life, no matter who or how many disagree.

Brian Phillips is the founder of the Texas Institute for Property Rights. Brian has been defending property rights for nearly thirty years. He played a key role in defeating zoning in Houston, Texas, and in Hobbs, New Mexico. He is the author of three books: Individual Rights and Government Wrongs, The Innovator Versus the Collective, and Principles and Property Rights. Visit his website at

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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