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Week of 4 July 2022: Asphyxiation by Regulation

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A little regulation is probably good, but a lot of regulation chokes business to death.

If one looks back one hundred to one hundred and fifty years, we see that much of the modern regulatory environment in the United States grew out of the post-Civil War era. It started in commerce and transportation. For instance, the US Congress passed the Interstate Commerce Act in 1887. This act allowed Congress to set up mechanisms to regulate railroad freight rates. The point was to regulate the monopolistic practices of the railroads.

This was closely followed by the Sherman Antitrust Act of 1890 which was directed towards business practices that prohibited or stifled competition.

Prior to these acts, the United Kingdom initiated regulations for human working conditions in coal mines. The Mines and Collieries Act of 1842 prohibited girls and women from working in coal mines and set a minimum age for boys at 10 years. One of the issues in the prudish Victorian era that assured passage of this bill was that "the women and girls were working bare-chested in trousers, making them unsuitable to be mothers."

In the US, the landmark regulations for worker safety were adopted in the Occupational Safety and Health Act of December 29, 1970. This was after I had started to work (man, I am old!).

The Environmental Protection Agency was created on December 2, 1970, by President Nixon. December of 1970 was momentous on the regulatory front.

From news reports Paperitalo archives on PaperMoney (see it appears we still have a long way to go in employee safety.

On the environmental regulatory front, it appears that we have reached the point in cleanup where we are straining the gnats out of the ocean. Yes, there are many egregious environmental problems deserving much attention on the nightly news, but there are equally many areas where your humble columnist feels we have gone overboard.

But the point for this column is this. Seldom in any area, be it finance, business, safety or the environment do regulations ever retreat. There are always more and more and more.

It seems as though there is seldom a cost/benefit analysis involved in increasing regulations. I concur when it comes to human safety, but I often wonder when it comes to environmental issues if we have not gone overboard in places.

For instance, should I have to pay more for a certain grade of paper because the people that live near a mill that has been in business for over fifty years are offended (but not harmed) by the smell that mill emits? Correcting such matters has a cost, and for a person of my age, the perspective I have plays into my consideration.

By reference, I remember when the air in Charleston, West Virginia had something of an orangish hue, and it was impossible to keep paint on the houses there due to the airborne chemicals. Now, it is pretty clear that such conditions were offensive, perhaps even downright dangerous. However today there are many issues people who apparently were raised in pristine glass bubbles want modified or corrected.

Unfortunately, like all matters, there is no such thing as a free lunch. That $10 million of special equipment required to clean up the aesthetics will show up in the cost of goods sold, and hence come out of your and my pockets.

Where does it stop?

Be safe and we will talk next week.


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