I wonder what could be done to help fight this. Not just for alcohol, but regulatory capture in general. Network neutrality is in the same boat. Other than having a generic consumer advocate lobbying group, what could be done?
Fix campaign financing laws to limit the power of money in politics. The only reason the politicians listen to the impassioned few over the apathetic many is because the impassioned few are willing to supply the money needed to get reelected. Fix that, and politicians will start representing the interests of the broadest swathe of the electorate or, gasp, voting with their conscience based on what seems like the right thing to do.
Sadly, we seem to be going the opposite direction on this at the moment.
A recent and relevant approach to addressing campaign finance is Lawrence Lessig's MayDay [1] movement, which is sort of a SuperPAC virus (a SuperPAC to end SuperPACs).
That's true -- but implicit in that statement is that regulation is never desirable. What about situations where government regulation is desirable or necessary (e.g. limitations on environmental pollution)?
> but implicit in that statement is that regulation is never desirable.
Not exactly. What's implicit in that statement is that a structure with the physical ability to create and enforce regulations will probably create some effective regulations, and some ineffective regulations. Just like how a market will probably lead to some efficient outcomes, and some inefficient outcomes (i.e. market failures).
So the question becomes which structure (government or markets) can do better overall, or if there's some way to combine the two such that you get "the best of both worlds" which is better than an all-or-nothing approach. My belief is that markets can do better overall than a pure command economy or a mixed economy, primarily because governments (at least modern republics) are, at the end of the day, somewhat subject to market forces in the form of elections, lobbying, personal incentives of government officials, etc., This makes the whole "let's use government to solve some common market failures" idea seem fairly silly to me. If we as a society can't aggregate our desires effectively enough to avoid a market failure (e.g. to fund a public good, like a highway system [0]), why should we expect to be able to aggregate our desires effectively enough to give legal authority to an organization to use violence to avoid a market failure?
[0] Using the broader definition of "public good" that includes club goods, and assuming the highway system isn't so congested that it can be considered rivalrous.
How would a Free (as opposed to 'free' with regulations attached) market limit industrial pollution (some contaminations of which aren't discovered until almost a century after the original contamination[0])?
In a Free market, how does an individual litigate against a multinational oil company that spills 17-30 million gallons of oil into a major metropolitan area[1]? (Very slowly: litigation has been ongoing with nearly no developments in the last 9 years except to drop Chevron)
In a Free market, who sues the coal plants when entire uninhabited ecosystems are poisoned with lead, mercury, and sulfuric acid?
In a Free market, who do you sue when global temperatures rise by 5C and flood major metropolitan areas?
What market forces are at work when an entity will be defunct by the time the repercussions of its actions come to light?
In a free market, property rights are more extensive than in a highly regulated market, so tort law serves many of the purposes that regulators and federal agencies currently do.
When a multinational company causes damage to a harbor, beach, ecosystem or city, damaged parties can file suit for compensation. A harbor authority may have provided a guarantee to assume responsibility for environmental problems, in order to be granted the relevant rights of way, or it may be on the other side of the law, filing suit against a company which has damaged its income stream. Landowners or municipalities can file suit for damage caused to a beach, and fishermen, environmental tour companies, or governments can file suit for damage to ecosystems.
In the United States, the EPA has absolved many companies of any responsibility, or at least greatly diminished the corporations' costs, by depriving damaged parties of a cause of action, as the EPA has the sole responsibility for many forms of pollution, and their regulation.
Free markets are not very different from mixed systems in dealing with issues like climate change, but they do make it plain to each individual that they are directly responsible for the outcomes which come to pass. This responsibility is more effective in regulating action than one might think.
In a market system, entities at fault may be defunct by the time the repercussions of their actions are apparent; on the other hand, politicians are rarely held to account on any single issue, and they are often more ephemeral than large corporations; the bureaucrats responsible for regulation are never held to account for any results at all.
In a free market, property rights are more extensive than in a highly regulated market, so tort law serves many of the purposes that regulators and federal agencies currently do.
So how does a small property owner fund decade-long litigation against a giant corporation?
I will assume that your question refers to damages caused to a "small property owner" by a multinational corporation.
There are a few alternatives:
1) When large corporations do anything, it is usually on a grand scale, so it is likely that the "small property owner" can find a number of neighbours similarly affected, and join in a class-action lawsuit, to defray the costs.
2) If the "small property owner" is very sure of victory in the courts, they can take out a loan, to finance their legal costs, which they may be able to recover from the respondent at a later date.
3) The "small property owner" may find a lawyer willing to do the work pro-bono, or on a contingency basis.
4) Some "small property owner[s]" may represent themselves in court; this is not as uncommon as some think, and many people present their case well without a credential-ed lawyer.
The most likely outcome is a settlement in any case, as no corporation wishes to gain a reputation that it is unwilling to clean up its own mess, and a drawn-out court battle would not be very productive.
When private costs (potential liability of losing a lawsuit in re pollution) are lower than the cost of negative externalities (disease, cancer, obliterated ecosystems), you have a classic market failure. You can make lawsuits easier to win or you can impose artificial limits on the private entities impacted. I'd prefer the one that leads to less lawyers.
Well, for one thing, litigation (like virtually all goods) would be a lot cheaper. But I think a better rhetorical way to answer your question is by proposing another: how does a small property owner currently fund decade-long litigation against a giant corporation, or a government?
[can't directly reply to nickff..hm, thread too deep?]
In the dream libertarian world of Free Market, every agent has perfect knowledge for every decision they make, courts never make mistakes, transgressors are always held liable, and pot is legal.
I'm assuming they'd probably have to sell themselves into sexual bondage to pay for the lawyer costs, but nickff does outline some interesting options!
1) a number of neighbors who are affected ... and every single one of them has time to go through a two decade lawsuit that they'll likely lose.
2) Okay, they can take out some legal financing. If they're sure to win. Because property owners in this magical world always win when a third party dumps polycyclic aromatic hydrocarbons into their well. I'd like to see a world where someone can get legal financing for what will end up being a $500m (in costs) lawsuit with a payout of maybe $50m (for the litigant, minus lawyer fees.. well, shit). The deeper pocket always wins. Except in Libertarian Land, where the government (which enforces the decision of the courts) doesn't have a monopoly on violence. So I guess it's actually who owns the most Abrams tanks that wins.
3) The small property owner may find a lawyer willing to do 10 years of discovery, 5 years of trials, and 20 years of appeals pro bono. #goodluckwiththat
4) There are some notable pro se litigants! Edward Lawson was the defender in 1983 Kolender v. Lawson and won (cannot be arrested merely for refusing to present identification. Pretty sure that one doesn't hold water anymore though). Robert Kearns fought Ford and Chrysler pro se over windshield wipers. On the other hand, while "it happens more than you'd think," it wins "a lot less than you'd think." I guess in Everything's Fair universe, where not having domain knowledge of 150 years of legal precedent is not a factor, it might win a little bit more often.
>no corporation wishes to gain a reputation that it is unwilling to clean up its own mess
Hahahahaha. Nah, that never happens. Nope. Buddy (and I know I'm not you're buddy), don't drive through coal country. Or eastern TN. Have a nice swim in the Gowanus Canal, and have a sip of sludge from Newtown Creek. Lie down for a little while in this little autobody shop in Queens - you'll only get 300rems a year. Corporations get the reputation that they won't clean up their mess all the time. And you know what happens?
They fucking rebrand.
Strong property rights Free Market randroids live in a perpetual bubble of warped 'insight', where litigation always ends in justice and juries are never tampered with and everything is always discovered in discovery because nobody ever holds things back.
Can you explain how a government, particularly a modern republic that is at least ostensibly formed through consent of the governed, elections, etc., can solve these problems? I'm looking for a specific mechanism by which the people, who you claim are incapable of making correct decisions in a market, can make correct decisions when it comes to electing a government.
I don't claim The People are incapable of making correct decisions in a market. I only claim that they are irrational actors, and the hypothesis of Free Market sans regulations should probably be tested in some manner before being confirmed theory by its pious adherents.
You ask a very difficult question, and I know not the answer.
It's fairly obvious the regulatory bodies that exist today are corrupted.
Perhaps some sort of regulatory body that, per industry, is charged with prosecuting these types of lawsuits. A matrimony of lawyers and scientists-of-the-field instead of lawyers and business-people-of-the-field, perhaps: A bevy of prosecutorial lawyers governed by a board of scientists of the given field.
An EPA governed by environmental scientists instead of .. oh, wait! The last few directors of the EPA _have_ been environmental scientists. Perhaps if the agency had teeth and claws instead of throw pillows and accusatory fingers. But the cries of woe from Big Chemical if that ever came to pass! It would be so unfair!
An FCC governed by communications and data scientists instead of telecommunications lobbyists.
An FDA governed by doctors, toxicologists and clinical nutritionists.
But you asked specifically about electing a government. Again, I never claimed that The People are incapable of making correct decisions in a market, only that The People are, at the individual level, irrational actors without perfect knowledge of said market.
Gauss's law predicts that we will never, with a democracy or a republic, have a perfect government. We will, on the other hand, never have a truly deplorable government. We will just have an average government. We won't pick the best people for the job -- or, usually the worst. We'll pick the middle of the road, the mediocre, the Just Average, the fellow we'd like to have a beer with.
You ask about correctness -- how do you determine correctness? How do you determine that every choice was made without error? I suppose you could relegate the governing body to software written in Scheme - at least then you could prove that the software is correct!
But correct is, probably, not quite the word you were looking for.
But, as I understand it, you're suggesting that they can produce a government which is on average less irrational than themselves without a government. I don't understand what mechanism exists that should make us expect that this is possible.
> Perhaps some sort of regulatory body that, per industry, is charged with prosecuting these types of lawsuits.
At the end of the day, society has to figure out how to appoint these people. This doesn't break out of the problem of people being irrational.
> An FCC governed by communications and data scientists instead of telecommunications lobbyists. An FDA governed by doctors, toxicologists and clinical nutritionists.
A reasonable-sounding idea, but how can you implement it in real life, given that people are irrational?
> Gauss's law predicts that we will never, with a democracy or a republic, have a perfect government. We will, on the other hand, never have a truly deplorable government. We will just have an average government.
I can agree with that, but that's not what's important. What's important (to me) is whether having a government is better than not having a government. Not whether the perfect government is better than not having a government (which, is pretty much the case by definition of "perfect"). Not whether a truly deplorable government is worse than not having a government (which again is the case by definition). But whether the government which we can reasonably expect to have in real life (which is similar to saying "the average government) is better than the government-less society which we can reasonable expect to have in real life.
> How would a Free (as opposed to 'free' with regulations attached) market limit industrial pollution (some contaminations of which aren't discovered until almost a century after the original contamination[0])?
That's hardly a fair question, because if the contamination so aren't even discovered for a century, there's very little any society ("free" or governed) can do.
> If we as a society can't aggregate our desires effectively enough to avoid a market failure (e.g. to fund a public good, like a highway system [0]), why should we expect to be able to aggregate our desires effectively enough to give legal authority to an organization to use violence to avoid a market failure?
What if the problem isn't inability to effectively aggregate desires, its inability to redistribute externalized cost to reflect those aggregated desires absent an entity with the particular set of features to which we give the name "government"? It seems to me that you've constructed a false (and rather unusual) notion of the source of market failure designed specifically to rebut the argument that government can be a solution to market failure.
Right, so you are using equivocation -- using the same term with two different meanings -- when you use "effectively aggregate our desires". In one use, it means "internalize externalities". In other, it means, well, its not really clear what it means specifically in terms of forming a government -- but its clear it doesn't mean internalize externalities since that's what the government is intended to do, not what is done to form it -- but you use the same term to misleading pretend its the same problem.
We have a long way to go before we have to worry about the small number of situations where regulation may be necessary. I think we should focus on all the obviously bad regulations (like those at issue in this story) before we start to tackle the more justifiable ones.
