Regulation

In a free market economy, governments regulate certain aspects of the economy for the good of consumers, of workers, and even of business owners. Although the motto of pure capitalism is laissez-faire—“leave it alone!”—even Adam Smith (the foremost proponent of capitalism) recognized that government regulation was needed for capitalism to succeed among imperfect people.

How do governments acquire the authority to regulate the economy—or, for that matter, to make any laws telling people how to live their lives? The many theories about government and the source of its authority can be sorted into three general categories: strong people seize authority and use their strength to tell others what to do, people give authority to the government to ensure safe and productive lives, or governmental authority comes from God and is given by God to those who rule.

These three theories can be combined. For example, some might believe that strong people seize authority and become rulers (“caudillos”) but that people allow that to happen and have the power to prevent a strong leader from arising or to transfer power from one strong leader to another. Likewise, some people (this author included) agree that government authority comes from God (as described in Romans 13:1-7) but that it is bestowed through the people; therefore, the people have a God-given right to overthrow one government and replace it with another when the first government is no longer using divine authority in a God-pleasing manner.

Under some theories, government must be strong so it can accomplish its purposes. Under other theories, government should be limited by the people so it does not rob them of their rights. One approach says that some problems are too big to be handled by anyone other than the government; another approach says that too much government is the biggest problem. Thomas Hobbes described government as a necessary evil, a monster that must be fed and maintained, but that also must be watched constantly and controlled to keep the monster from causing too much trouble and destruction.

So, governments make rules on behalf of their citizens. They inspect food and other products to be sure that they are safe and uncontaminated. They ensure that workplaces are safe and that workers are being treated fairly. They prohibit monopolies, trusts, and cartels, breaking apart businesses that otherwise could take advantage of customers and workers. They protect the air and land and water from pollution. They zone some areas for industry, some for sales, some for homes and neighborhoods, and some for parks and natural preserves.

All these regulations are part of the social contract, an agreement between the people and the government. The government claims strips of land from landowners, develops them as roads, demands that travelers move from place to place only on those roads, restricts the speed and other behavior of travelers (fining lawbreakers when they are caught), and charges for the use of the roads with taxes, licenses, and tolls. Most citizens accept the government’s right to do these things because we need roads; many kinds of trouble would follow if each citizen traveled from place to place as he or she wished, without government roads and without traffic laws.

Within that social contract, disagreements arise and compromises much be reached about the level of government regulation and the details of that regulation. Which pollution standards are beneficial, and which are excessive? Excessive regulations are costly to businesses and consumers. They can rob the economy of jobs and businesses. Yet insufficient regulation leaves people in danger of being poisoned by pollution. Likewise, minimum wage laws are controversial. Some people insist they are needed to reduce or prevent poverty; others say they increase poverty by raising prices and by persuading businesses to hire fewer workers, replacing them with affordable machines. Lawmakers must consider all sides of such a debate. They must decide for themselves which regulations help the people and which are excessive. They must vote according to those decisions, and they must explain their votes to the voters who will decide if those lawmakers keep their jobs or will be replaced.

Some regulation is needed. Some regulation is beneficial. When the government assumes the job of controlling the economy, the people suffer. When the government uses its power to make decisions that are better made by the business owners, the people suffer. A free market, regulated but not controlled by governmental laws, historically works better than a socialist system in which the government manages the economy. J.

On tariffs–and a proposal

I wrote yesterday about globalization to provide a context for today’s post about tariffs. A tariff is a tax assessed by a government upon imports. Governments assess taxes to gain money, of course, but the purpose of a tariff is often more than income. Tariffs add to the cost of imported items, making it easier for similar items made in the country to compete for buyers.

In theory, if the United States government wants to help wine makers in the United States, the government can place a tariff on French wine, making French wine more expensive than California wine. Some buyers will still prefer the French wine, even if it costs more than the California wine. Others will switch to California wine to save money.

In theory, if the United States government wants to help car makers in the United States, the government can place a tariff on Japanese cars and German cars, making them more expensive than American cars. Some buyers will still prefer the Japanese cars or the German cars, even if they cost more than the American cars. Others will switch to American cars to save money.

As I indicated yesterday, because of globalization it is difficult to measure how American a car is. Manufacturers have headquarters in several cities around the world, and their major shareholders come from various countries. Factories for parts and factories for assembly are also scattered around the world. Writing a tariff law that helps preserve American jobs in the automotive industry is far more difficult than it sounds.

In addition, when one country starts increasing tariffs, other countries often follow suit. Given the above examples, France and Germany and Japan very likely would place tariffs on American products, which would cancel the benefits the United States hoped to gain by its new tariffs.

Meanwhile, I also made the point that building factories in other countries seems to cost America jobs, but that is not necessarily so. At the same time that the company that built the factory is trying to lower its costs and save its customers money, it is also paying workers in that other country, people who might use some of their income to buy products made in the United States.

Why is it less expensive to pay workers in other countries than in the United States? The United States has stricter laws about minimum wages and benefits than most other countries. The United States has stricter laws about safety in the workplace than most other countries. The United States has stricter laws against pollution than most other countries. We cannot force other countries to adopt laws like ours, and we would not want to lower our standards so far that pollution increases, that workplaces are unsafe, or that workers cannot survive on the wages they are paid. Some compromises undoubtedly can be made in these areas—some regulations probably are excessive. But removing all such regulations would be bad for workers in the United States.

Americans generally want to save money. They are happy with stores that keep their prices low. Yet most Americans do not wish other people to suffer for our prosperity. When we hear of sweatshops where workers are abused, underpaid for their work, and forced to endure unsafe conditions at work, we would prefer not to finance those sweatshops by purchasing their products. Yet how can we know which of the things we buy were assembled by suffering workers? And how can we be sure that our boycott of such products will improve working conditions in these other countries? If the factories close, how will their workers find income to stay alive?

This leads me to a proposal. I suggest that the United States Department of Commerce (DoC) create a team of investigators to inspect factories in other countries, particularly factories owned and operated by corporations based, at least in part, in the United States. These investigators could not force their way into factories; they would need to be invited by the owners of the factories. But those factories that passed inspection would be allowed to carry a seal of approval on their products. The inspection would ensure that workers at the factory receive enough money for the workers to live in their communities (which would probably still be far less than minimum wages in the United States). The inspection would ensure that working conditions at the factory are safe. The inspection would ensure that the factory is not polluting the air, the water, or any other part of their environment—not necessarily according to the measures of American law, but still within the capabilities of the company that owns the factory.

Congress then could place tariffs on products that do not carry that seal of approval from the DoC. The lack of a seal of approval would be the result of failing to pass inspection or the result of failing to permit inspection. Using the seal without having passed inspection would result in higher penalties, whether higher tariffs or higher taxes on the United States property owned by the corporation to blame.

Of course the salaries, the benefits, the office space, and the travel expenses of this new branch of the DoC would need to be added to the national budget. I expect some of those expenses would be offset by the new tariff. At the same time, this tariff would benefit two groups of workers. It would benefit American workers, who would have reduced competition from overseas factories that underpay and mistreat their workers. It would also benefit the workers in other countries because corporations would be more motivated to improve their salary scales and the safety of their factories. My suggestion would be good for America and good for the world. J.

It’s not fair!

Anyone who has raised children or has spent time around children has heard many times the complaint, “It’s not fair!” Children seem to have a strong sense of right and wrong and claim to be able to perceive injustice, although sometimes it seems that the words “It’s not fair!” really mean, “That’s not what I want.”

As people mature, they come to learn that life is often unfair. Suffering often seems meaningless. Bad people get away with their crimes, while people trying their best to be good have severe problems. Some behavior may increase the chance of certain diseases, but there are always some people who engage in that behavior without harm to themselves and others who contract the disease without increasing their risk by what they do.

Bad behavior has been compared to pollution, which damages the environment and causes all to suffer; yet the suffering caused by that pollution is random and not fair. Sometimes it is worse than random. The owner and managers of a factory may decide to cut corners even though their poor policy pollutes the community’s drinking water. The owner and manager can afford to buy bottled water, but the rest of the people in the community have no choice but to drink the polluted water.

This problem has been recognized for a long time. Psalm 72 describes the problem, speaking of the “prosperity of the wicked,” noticing that “they have no struggles…they are free from common human burdens.” “Always free of care, they go on amassing wealth.”

Some people say that random suffering occurs because God is not good. Others say that God himself is good but that he does not care about the people living in this world. Still others say that God cares, but that he is not strong enough to defend all his people from suffering and from the power of evil. For those who believe that God is good and that God cares and that God is almighty, random suffering can be a challenge to faith and to trust in God.

Imagine a world that was perfectly fair. Imagine that no one suffered except as a consequence of his or her own bad behavior. I could not hurt you with a weapon and you could not hurt me; we could only hurt ourselves. No one would succeed in lying or in stealing, but whenever a person tried to lie or to steal, that person would suffer for that misbehavior. If you saw a person in distress, you would know that such a person was getting what he or she deserves. When you met a person with no problems, you would know that you are in the presence of someone you can trust.

How would you fare in such a world? Have you always been truthful with every word you have spoken? Have you never taken anything that does not belong to you? Have you been content with what you have? Have you always tried to help other people around you? Have you always given God the honor he deserves?

Unless your life is flawless, you do not really want to live in a world that is perfectly fair. For that matter, God does not want to be perfectly fair to you. God designed a world in which people do not get what they deserve because he wanted us to be able to help each other. More than that, God wanted to be able to help us. He wanted to be able to rescue us from the punishment we deserve for all our misbehavior in his world.

Jesus of Nazareth deserved nothing but good. He honored God in heaven and obeyed all his commands. He was kind and helpful to the people around him. He always spoke the truth. He never tried to take anything that did not belong to him. He never hurt another person by deliberate cruelty or by carelessness.

In a world of perfect fairness, nothing bad could happen to Jesus. Yet Jesus had enemies who opposed him and wanted to destroy him. They arrested him and accused him of crimes. They lied about him and abused him. They condemned him, and then they delivered him to the Roman authorities, telling even more lies about him. The Roman authorities mocked Jesus, tortured him, and killed him. They nailed him to a cross, sending him to the kind of death reserved in Roman law for only the worst of criminals.

In a world that is perfectly fair, such things could not happen. Jesus did not want to be perfectly fair. He wanted to rescue you and me from the punishment we deserve. He wants to give us the rewards for perfect goodness that only he deserves. God designed a world in which suffering and evil can be unfair so that God could be unfair to us. God wanted to treat us far better than we deserve to be treated.

When you face a situation that is unfair, you can stamp your feet and cry like a child. You also can remember that not all injustice is bad for you. God was unfair to Jesus for your benefit. God is unfair to you; that is good news for you. Allow the injustice of this world to remind you of the perfect love of God and his injustice on your behalf. Know that Jesus is never going to stop being unfair to you for your benefit.

J.