Mad RegulationMike Rappaport

Say there is some problem that affects the private market — for example, the sale of meats with Mad Cow Disease.  So the government steps in and decides to test, or require testing of, cows.  Most people support these actions. 

Of course, a free market fan might (or might not) argue that such government testing is problematic, since it might be too restrictive or too costly.  Yet, most people would probably say that the problem seems to warrant the solution and ask what is so wrong with being safe.  (Of course, excessive testing requirements can be very dangerous.  It appears that the FDA kills many people each year by delaying or preventing good drugs from getting to the market sooner.  But let’s put that aside.)

But government does not limit itself to protecting consumers from this one danger.  It also steps in and tries to control the market more generally.  So the government has determined that testing for mad cow is a good thing, but only up to a point.  Some private companies wanted to test for mad cow, but the government said no: that would be too much testing and a bad thing.  In this case, fortunately a court told the government, no.  (Fortunately as a policy matter; I don’t know the law.)

The point here is that the government rarely just steps in in a limited way.  Once it steps in, it often feels the need — legitimately or not — to start regulating things all over the place.  Wisdom when it comes to regulation must take this into account, and must not, as is so often done, assume it away.