Regulation, Freedom, and Costs

When, in a past life, I was teaching courses in business law, I would sometimes encounter a student who would opine that government regulation was the opposite of freedom.

“Oh, really?” I would respond, seizing a teachable moment.  “Would you say stoplights are a form of government regulation?”

After a moment of head-scratching, I could expect a muffled reply.  “I guess so.”

“Well of course they are,” I would say.  “And so are speed limits and that silly government regulation that requires us to drive on the right-hand side of the road, at least in the United States.”

Everyone got the point.  But I didn’t let the conversation stop there.

“I think we all can agree that a red light limits my freedom.  It says that government–usually in the form of a police officer–has the right to arrest me if I ignore it and keep driving through the intersection.  Right?”

The student nodded.

“But if we didn’t have stoplights or stop signs, then we might expect intersections to stay endlessly clogged, so that city driving would be much harder than it already is.  Or, to put the matter another way, we could argue that stoplights and stop signs actually increase our freedom, because they make driving more predictable for all of us.”

At which point, I could expect the student to fight back along the following lines.

“But I wasn’t talking about stoplights.  I was talking about the stupid government regulations that cost businesses so much money.”

Now it was my turn to nod.  “I know what you’re saying.  There are some really stupid regulations out there.  My point, though, is that I believe almost every regulation starts with someone who thinks the regulation will increase their own freedom even though it might limit someone else’s.  In other words, before we can label a regulation as being pro-freedom or anti-freedom we need to look at whose freedom is involved.”

The student shrugged.  Maybe my teaching was having an effect.

“So, for example, if government tells a manufacturing plant that it must reduce its levels of carbon emission, that regulation definitely limits that business’s freedom.  But it might increase the public’s freedom to breathe clean air.  Make sense?”

A nod.  But then a comment.  “Not all regulations are that easy.”

“Exactly right,” I said.  “That’s why we have to examine each regulation carefully before we can draw any conclusions about how whose freedom is being limited, whose freedom is being expanded, and whether the benefits are worth the costs.  It can be a difficult analysis.”

“Is this going to be on the exam?”

“You can count on it.”