Page images
PDF
EPUB

industry, but only with the segment of operations which falls under their jurisdiction. This limitation prevents the agency from developing too close a concern with the overall well-being of any company or industry. Rather, it may result in total lack of concern about the effects of its actions on a specific company or industry.

If any special interest may come to dominate such an agency, it is the one that is preoccupied with its specific task-environmental cleanup, elimination of job discrimination, establishment of safe working conditions, reduction of product hazards, and so forth. Thus, the basic mission of the industry to provide goods and services to the public may get little attention. And matters broader than the specific charter of the regulating agency-such as productivity, economic growth, employment, effect on overall living standards, inflationary impacts-also may be ignored. At times the process may seem to be epitomized by the proverbial dentist who sees his patient as merely two rows of teeth surrounded by a mass of miscellaneous material.

The result may be a reversal of the traditional situation. Rather than being dominated by a given industry, the newer type of federal regulatory activity is far more likely to utilize the resources of various industries, or to ignore their needs, to further the specific objectives of the agency. My personal study of the activities of these new regulatory agencies reveals many negative aspects of considerable importance.

I do not quarrel with the intent of the new wave of federal regulation: safer working conditions, better products for the consumer, eliminating discrimination in employment, reducing environmental pollution, and so forth. And the programs established to deal with these problems have at times yielded significant benefits. But no realistic evaluation of government regulation comfortably fits the notion of benign and wise officials making altogether sensible decisions in the society's greater interests. Instead we find waste, bias, stupidity, concentration on trivia, conflicts among the regulators, and, worst of all, arbitrary and uncontrolled power.

The agencies carrying out federal regulation are proliferating. In the past decade alone we have seen the formation of the Consumer Product Safety Commission, the Environmental Protection Agency, the Federal Energy Administration, the Cost Accounting Standards Board, the National Bureau of Fire Prevention, the Mining Enforcement and Safety Administration, the National Highway Traffic Safety Administration, and the Occupational Safety and Health Administration, to cite the better-known ones.

The administrative cost of this army of enforcers (approximately $3 billion a year to support a regulatory work force in excess of 74,000) is quite substantial (see table on page 5). But that expense is only the tip of the iceberg. It is the costs imposed on the private sector that are really large, the added expenses-which inevitably are passed on to customers-of complying with government directives. A direct cost of government controls is the growing paperwork burden imposed on business firms: the expensive and time-consuming process of submitting reports, making applications, filling out questionnaires, replying to orders and directives, and appealing some of the regulatory rulings in the courts. There now are 5,146 different types of approved government forms. Individuals and business firms spend millions and millions of work-hours a year filling them out.

Another hidden cost of federal regulation is the reduced rate of technological innovation. The longer it takes for some change to be approved by a federal regulatory agency-a new product or a more efficient production process, the less likely it is that the change will be made. A recent case is the new asthma drug beclomethasone dipropionate (let us call it BD). Although this drug has been used by millions of asthma patients in the United Kingdom, it still has not received the approval of the U.S. Food and Drug Administration. BD is described as a safe and effective replacement for the drugs which are now administered to chronic asthma patients, but without the adverse side effects of the drugs now in use in the United States. Unlike BD, the steroids currently used in this country, such as prednisone, can stunt growth in children, worsen diabetes, and increase weight through water retention. The delaying procedures of the FDA not only are increasing costs to drug manufacturers, but also are preventing American consumers from having access to BD.

The large private costs of government regulation sometimes arise from the attitudes of the regulators. Take the question of industrial noise. Reluctant to depend on earplugs and similar hearing protectors, EPA and OSHA are mandating extremely expensive engineering changes. The cost to industry of achieving the current ninetydecibel OSHA standard is estimated at “only” $13 billion. EPA, however, is attempting to obtain a quieter eighty-five-decibel level, at an estimated cost of $32 billion.

[blocks in formation]
[blocks in formation]

Agriculture
Health, Education and Welfare
Interior
Justice
Labor
Transportation
Treasury
Civil Aeronautics Board
Commodity Future Trading Commission
Consumer Product Safety Commission
Equal Employment Opportunity Commission
Federal Communications Commission
Federal Energy Administration
Federal Power Commission
Federal Trade Commission
International Trade Commission
Interstate Commerce Commission
National Labor Relations Board
National Transportation Safety Board
Nuclear Regulatory Commission
Securities and Exchange Commission
All other agencies

19 42 33 38 27 32 7

381
189

79
383
397
234
320
85
11
37
60
208
50
36
45
10
50
70
10
198
49
23

38

127
49
37
41

9
47
63
10
139
45
21

55

8 80 35 17

Total

1,979

2,599

2,925

Regulating Toilets

The Council on Wage and Price Stability has urged both OSHA and EPA to study the costs and benefits of the standards. It points out that lowering allowable noise from ninety to eighty-five decibels would cost industry $19,828 a person-a sum more than adequate to provide comfortable and effective personal hearing protectors. But cost apparently is not an important factor to federal regulators.

The lack of attention to the costs of regulation gives bureaucrats the opportunity to engage in all sorts of trivia. What size to establish for toilet partitions? How big is a hole? (It depends where it is.) When is a roof a floor? What colors to paint various parts of a building? How frequently are spittoons to be cleaned? The public's taxes actually support people who are willing to establish and administer regulations dealing with these burning issues.

Consider the plight of the small businessman who tries to deal with the Occupational Safety and Health Administration (OSHA) rules without paying for expensive outside assistance. The puzzlement over OSHA regulations extends to Chairman Robert Moran of the Occupational Safety and Health Review Commission, the independent agency created to hear appeals from rulings by OSHA inspectors. After citing one vague standard, he lamented:

What do you think it tells us to do?
I have no idea-and I don't think OSHA could tell
you either, before an inspection, citation, complaint,
hearing and post-hearing brief.
I submit that there isn't a person on earth who can be
certain he is in full compliance with the requirements
of this standard at any particular point of time.

The operation of the Occupational Safety and Health Act provides a pertinent example of how government regulation can lose sight of the basic objective. A company which invites OSHA to the plant to tell management which practices to revise to meet the agency's standards lays itself open to citations for infractions of OSHA rules and regulations. The law makes no provision for socalled courtesy inspections. To get around the problem, one regional office of OSHA has come up with a beautifully bureaucratic solution. They suggest that companies take photographs of their premises and send them to OSHA for off-site review. After all, if the inspectors do not actually “see" the violations, they cannot issue citations for them!

Conflicts among Regulations

The proliferation of government controls has, perhaps inevitably, led to internal conflicts. In some cases, the rules of a given agency work at cross-purposes with each other. OSHA mandates back-up alarms on vehicles at construction sites. Simultaneously the agency, to protect employees against noise, requires them to wear earplugs that can make it extremely difficult to hear the alarms. More serious and more frequent are the contradictions between the rulings of two or more government agencies where the regulated have little recourse. Federal food standards require meat-packing plants to be kept clean and sanitary. Surfaces which are most easily cleaned are usually tile or stainless steel. However, these are highly reflective of noise, and may not meet OSHA noise standards.

A controversy over rest rooms furnishes another example of conflict among regulations; it also demonstrates that common sense is in short supply in the administration of government controls. The Labor Department, carrying out its weighty responsibilities under the Occupational Safety and Health Act, has provided industry with detailed instructions concerning the size, shape, dimensions, and number of toilet seats. For well-known biological reasons, it also requires some type of lounge area to be adjacent to women's rest rooms.

However, the EEOC has entered this vital area of governmentbusiness relations and requires that male toilet and lounge facilities must be equal to the women's. Hence, either equivalent lounges must be built adjacent to the men's toilets or the women's lounges must be dismantled, OSHA and state laws to the contrary notwithstanding. To those who may insist that nature did not create men and women with exactly identical physical characteristics and needs, we can only reply that regulation, like justice, must be blind.

Uncontrolled Power of Government Regulators

The instances of government regulators' waste and foolishness pale into insignificance when compared to the arbitrary power they can exert. To cite a member of the Consumer Product Safety Commission, “any time that consumer safety is threatened, we're going to go for the company's throat.” That this statement is not merely an overblown metaphor can be seen by examining the case of Marlin Toy Products of Horicon, Wisconsin.

The firm's two main products, Flutter Ball and Birdie Ball, were plastic toys that originally held plastic pellets that rattled. This led

« PreviousContinue »