Sunday, March 01, 2009

By Guaranteeing Against Risk, Government MAXIMIZES Deaths and Injuries

Had a little piece in the News and Observer today. The prompt was the AM2PAT debacle, where dirty and contaminated syringes continued to be sold long after several people had gotten sick, or even died.

They (N&O) edited it quite a bit. (Fair enough, have to make it fit, no complaints.)

But this is the slightly longer version, with more explanation:

At present, we have the worst health, safety, and drug regulation system that I can imagine. We spend a great deal of money, consumers are not safe, and the system of inspections and regulations burden business unnecessarily.

Imagine that there were NO regulations, of any kind, on drugs or food. (This was true for much of human history, of course, and is true now in many countries). Would production and trade in these goods cease? No, what would happen is that people would rely on brand name, reputation, and repeat business. We would buy from a local butcher we trusted, and buy a brand name drug company. Private certification commitments, like those made by Consumer Reports or Underwriters Laboratory, would become very important. Within two years or so, the system would be SAFER than it is now.

Or, imagine that we had a real system of inspections, with an FDA that was incentivized to conduct real investigations, and to protect public safety. That might work, too.

What we have, instead, is a system with three features. These features interact to create a serious public health danger. Unless something changes, we are going to face injuries and deaths in the thousands, not just the dozens like with AM2PAT.

Feature 1: Government promises perfect safety and zero risk. This means that people stop buying brand name products, and buy the cheapest, often imported, product that they can find.

Feature 2: The government promise of perfect safety crowds out the responsible brand names. Frivolous and intrusive regulations raise the cost of doing business honestly, so that the firms that would actually try to supply high quality products are crowded out of the market by low cost competitors. Surviving firms cut corners, and produce dangerous and adulterated products. Consumers ignore brand name, and quality considerations, because they think that the government is doing all the work of taking risk out of the process.

Feature 3: It is impossible for government to carry out its promise of zero risk, even in the best of circumstances. There are too many producers, and products.
It makes no sense for consumers to think that brand names don't matter, and that quality can be ignored. Worse, our government under the Bush administration actually seemed intent on making the "government is incompetent" prediction even more true than it has to be. Our system of inspecting drugs and food is rotten, full of incompetence, corruption, and bureaucratic inertia.

The result is that neither markets nor government can solve the problem. But the root of the problem is the false promise of zero risk. Consumers have to recognize that they have some responsibility to make good choices, to inspect labels, and to buy brand name products.

Governments cannot protect us against all risks, even if they perform perfectly. And they don't perform perfectly.

1 comment:

Juris Naturalist said...

If it can work with health care why can't it work with banks? Or why not privatize the central bank?