How to think about regulation

If not for regulation by The State regulation many people believe companies would run wild, wrecking the environment, and selling us bad food, deadly drugs,  and harmful products. It would be silly to claim these things never happen. After all….

  • Not all people are good
  • People who are mostly good aren’t consistently good
  • And sometimes people simply make mistakes, out of ignorance or sloth

But politicians and bureaucrats are people too, and subject to these same failings. Do we really solve the problem of human imperfection by giving one group of imperfect people power over the rest? To this we might add “Is there any form of human being more imperfect than the politician?”

Don’t think only of the politicians you like. Think also of the politicians you hate. Do you really want them to have power over others?
I think a strong case can be made that the worst politicians have done far more harm than the worst business people. After all, the power scales are so vastly different….

  • Politicians and bureaucrats have a monopoly to initiate force
  • They have access to vastly greater resources than even the largest company
  • They cannot easily be fired, unlike a business

This makes it reasonable to ask…

  • Can anything other than politicians and bureaucrats regulate how business people behave, and if so….
  • How do these non-state forms of regulation compare to what The State provides?

Consider these answers . . .

Consumers regulate businesses

  • Consumers punish every company that sells a bad product or service
  • They also spread the word about bad companies to other customers
  • And many people refuse to do business with companies that harm the environment

This form of regulation is enshrined in the proverb “The customer is always right.” And, because of this…

Investors and lenders also regulate businesses

They do this to protect their investments from retaliation by angry customers. Sometimes this regulation involves direct oversight, and sometimes it involves the purchase of insurance, which then leads to….

Regulation by insurance companies

Unlike politicians and bureaucrats, insurance companies have their own money at stake. This motivates them to regulate the companies they cover. One way they do this is through product-testing using firms like Underwriter’s Laboratory, or NSF International.

Legal liability also regulates businesses

This liability is determined through due process in a court. This differs from The State’s regulation in a crucial way. State regulation attempts to prejudge which products and services may be harmful, and to dictate how this danger must be mitigated, in advance. This sounds good, but it has serious problems, as I’ll show below. By contrast, legal liability presumes that a product or service is “innocent” until there’s evidence of harm. This is the commercial equivalent of the principle we know from criminal law — “innocent until proven guilty.”

The above points debunk a widely believed myth

A completely free market would NOT be devoid of regulation. Instead, it would have multiple forms of regulation. In fact . . .
It’s inherently impossible to have a de-regulated society. Consumers, investors, lenders, and insurance companies will always take steps to control what businesses do, even if The State does nothing. So…

Does The State really have a role to play in regulating business?

Do we really need politicians and bureaucrats to prejudge whether a product or service is harmful, and dictate how that risk must be mitigated? This depends on how you answer questions that are even more basic….

  • Can you fire politicians and bureaucrats who create defective regulations?
  • Will politicians and bureaucrats have to personally pay the cost of any harm they cause, the way a business must?
  • What do you do if politicians and bureaucrats design regulations to benefit their friends?

These are powerful questions. But they’re really just another form of our first question…

Do you solve the problem of human imperfection by giving one small group of imperfect people power over the rest?

I say the answer is no. The real problem is not how to regulate businesses, but how to regulate politicians and bureaucrats.

  • They are the monopoly.
  • Their power to initiate force is inherently criminal
  • They have vastly more resources than any company
  • They are vastly more difficult to control

In fact, The State is essentially anarchistic. It is regulated by no one.

In conclusion:

  • The State is a monopoly — regulate it!
  • Politicians and bureaucrats have only one tool — initiated force. Remove this power!
  • Businesses are peaceful and voluntary. Leave their regulation to consumers, investors, competition, and insurance companies.

For a concrete example of the points made above, please read my essay about “The Jungle” rsz_1sinclair_-_jungle_bindingby Upton Sinclair.

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Copyright (c) 2010 by Perry Willis. Permission to distribute this blog post for educational purposes is granted, if done with attribution to the author and the Zero Aggression Project. Permission to use for commercial purposes is denied. You can find a full explanation of our copyright policy here.

Show Comments 28


  1. I LOVE this! It is in line with Marshall Rosenberg’s Nonviolent Communication, or Compassionate Communication principles which I have been studying – also based on EMPATHY. THANK YOU FOR THIS WEBSITE AND FORUM.

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      1. Thank you, Perry. Here are some quotes by Marshall B. Rosenberg that you might enjoy. Have you read any of his books?
        “All violence is the result of people tricking themselves into believing that their pain derives from other people and that consequently those people deserve to be punished.”
        ― Marshall B. Rosenberg, Nonviolent Communication: A Language of Life
        “Peace requires something far more difficult than revenge or merely turning the other cheek; it requires empathizing with the fears and unmet needs that provide the impetus for people to attack each other. Being aware of these feelings and needs, people lose their desire to attack back because they can see the human ignorance leading to these attacks; instead, their goal becomes providing the empathic connection and education that will enable them to transcend their violence and engage in cooperative relationships.”
        ― Marshall B. Rosenberg, Speak Peace in a World of Conflict: What You Say Next Will Change Your World
        “Now, with regard to the people who have done things we call “terrorism,” I’m confident they have been expressing their pain in many different ways for thirty years or more. Instead of our empathically receiving it when they expressed it in much gentler ways — they were trying to tell us how hurt they felt that some of their most sacred needs were not being respected by the way we were trying to meet our economic and military needs — they got progressively more agitated. Finally, they got so agitated that it took horrible form.”
        ― Marshall B. Rosenberg, Speak Peace in a World of Conflict: What You Say Next Will Change Your World
        “At the core of all anger is a need that is not being fulfilled.”
        ― Marshall B. Rosenberg, Nonviolent Communication: A Language of Life

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    2. good comment – geting involved TOGETHER with people from all the various sorts of value systems/cultures and other fragments of our human family is exactly what we all need in order to make this world better than our present ruling class wants it to be !

  2. Hi Perry. If there are no particular safety laws, and someone is harmed by a product, what is used in the courts to judge if/how a product was responsible for the harm? If a product hurts someone, what set of guidelines does a jury or judge use to determine if the product was safe or not? I agree with your entire website, so I’m not challenging the above. I’ve never had something like this happen to me so I’m trying to think through what I would do if a product that has never hurt anyone hurt me and I needed to sue. The threshold of product safety can’t be set arbitrarily by the govt, but then who sets it?

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      Great question Michael. Thanks for asking it. The plaintiff will present evidence that the product caused him or her harm. A jury will decide if the product really did cause harm, and what the compensation will be. Sometimes advertising claims will be used as part of the evidence. “They said the product would do this, but it did something else instead.” Of course…

      The harm done will have to be significant before a plaintiff or group of plaintiffs will see value in taking a case to court. Often a producer will make good on a defective product without court action, or the harm done by a bad product will be so small as to merit only two kinds of action — no longer doing business with that supplier, and/or telling everyone about your bad experience. After decades of experience as a consumer reporter John Stossel concluded that bad companies tend to go out of business quickly. This is one of the market’s methods of regulation — the “death penalty” for bad products.

      Hope these answers help?

      1. You mention “a jury will decide”. Problem there is the jury is very often misguided and already indoctrinated. The jury is corrupted by preconceived notions and well established biases. For example, most people who sit on juries in this country have been indoctrinated with the notion that it is perfectly alright for insurance companies to engage in [illegal] discrimination based on gender, age, etc. And, all insurance companies do it! The jurors cannot conceive of the [correct] notion that insurance companies are violating the law by discriminating based on age, gender, personal life-styles. Somehow insurance companies get a free pass. The general public is fickle and tainted and therefore unqualified to decide on the matter of insurance company practices.

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          Utopia is not one of the options. Bad as they are, juries are better than politicians and bureaucrats, and they would be better still if THE LAW didn’t constantly give them bad instructions.

  3. Jim, Perry,
    Great article!
    It makes the very point that Alfred G. Cuzan made in his brilliant paper “Do We Ever Really Get Out of Anarchy?” [https://mises.org/library/do-we-ever-really-get-out-anarchy]
    Of course we don’t. The choice is between political anarchy, where ONE party gets to enjoy anarchic privileges, or market anarchy, where MULTIPLE entities operate in rational competition.

  4. If we are sovereign beings, beings who think, then we are never totally ruled, even though it may appear so. For example, do we ever know what a person is thinking, even as we are able to predict actions over and over based on the past? Is the last thought/action a 100% predictor? Or has there been an inner unconscious mental operation going on that results in a surprising sudden change? This might be called a “tipping point”, slow enlightenment that takes time to manifest but does so suddenly.
    I have noticed this in poker. An uninformed action with painful results may seem unavoidable by the actor. However, eventually, the bad habit (action) may suddenly change. The actor finally learns from experience.

    As the US Empire/Police State gets more & more draconian, will there be a sudden backlash? Or will there be a slow, steady withdrawal of consent by the victims until society breaks up into many groups and collapses into more independent groups, more dependent groups, and mixed groups, like the USSR?

  5. What a simplistic joke… you ignore the reality that the big money in business BUYS the wrong-doing of govt.. so your assertion that bad people in govt are the biggest evil is WRONG… the bad people in govt with those evil powers were PUT THERE BY THE BAD PEOPLE IN BIG MONEY BUSINESS specifically for doing those evil things….. so your formula defending ‘business’ is absurdly simplistic……

    1. MJ,
      I think you’re misreading several key principles.
      To anarchists, and certainly to Austrians, the success or failure of government does not depend on whether good or bad agents run it. As von Mises said, even angels, if they were endowed only with human reason, could not form a perfect government [https://mises.org/library/two-masterpieces-mises].
      As for “big money” putting bad agents in government, neither anarchists nor Austrians are promoters of “big money.” Both have ever been antagonists of corporatism, cronyism, and the essentially fascist union of big money and big government. “Voluntaryists” support business that achieves its “bigness” without the interventions of government.

  6. Did I miss the one agency not regulated? While the FED is not a government agency, it is unregulated. Am I on target? Or is it the Pentagon?

    1. Pentagon is regulated which why dems are replacing top brass positions so they can be controlled in certain aspects that only Democrat leaders want.

  7. Remedyatlaw.us deserves your scrutiny. I took on BestBuy as an experiment. I hit them with two affidavits about their masking policy which denied entry to people who did not want to wear a cloth diaper on their faces. I then took them to small claims court. The commissioner ran over my due process rights including my motion to Claim and Exercise Constitutionally Secured Rights. Now, I am taking action against the judge. IF I can force these courts to become actual Article III Common Law courts, we would have the power of paper. This is worthy of your scrutiny.

  8. For a couple centuries and still, to some extent, in our day, in most of the world, there’s another unregulated segment: Mental Health. Some government regulations deal with medicine in general, but until recently psychiatry operated outside their realm. They’ve been free to kill, kidnap, etc. They’ve referred objections to special courts run BY psychiatrists or rubber-stamping their actions. A person could be pulled out of his/her home and imprisoned indefinitely with no legal means to object, could be given ect (and, earlier, lobotomy) with no recourse before and little remaining strength to object after. Take a look at what Ewen Cameron got away with at McGill in Toronto, and similar “deep sleep” practitioners in the U.S.A. and Australia. Rape of patients went unpunished until recently. It’s a long story, but that was entirely a self-(un)regulated sector. When Hitler wanted to slaughter populations, he turned to the psychiatrists. The shinks at their Berlin headquarters had written to Hitler–a petition to begin killing off the “useless eaters” (in the late 1930s). Hitler stuck it in a drawer, said the German people weren’t ready for it. The shrinks began their Holocaust WITHOUT Hitler’s approval, started starving (and gassing!) their patients (killed over 200,000 before the end of the war). Hitler, observing that the public didn’t object, decided to go ahead with his “final solution” (see the book, “The Men Behind Hitler”). When he set up the first “camp” (Dachau), he called upon 4 of the leading psychiatrists to organize it–they designed the killing ovens, the whole works, and were involved in creating the death camps as well (Dachau, for political prisoners mainly, was not ONLY for killing, and had more survivors then the dedicated death camps created only for “eugenic” purposes). Nearly all of the psychiatrists most intimately involved in the Holocaust were ignored by the later war-crime trials. A few token shrinks were killed. (American psychiatry had a military shrink there to make sure most were not charged.) The shrinks who’d put the Holocaust together for Hitler mostly lived on, not only not prosecuted, but becoming, up until the 1970s, the heads of the German equivalent of the American Psychiatric Assn. The World Federation of Mental Hygiene officials decided in 1946 to change their name to The World Federation of Mental Health, because Hitler had given “Hygiene” a bad name. Psychiatry IS a eugenics movement. In the USSR Stalin and others since used psychiatry almost entirely as a political device for massive deprogramming of dissenters. Only in the past ten years or so have various groups publicized what was done in asylums, and some have been closed down. You could argue that “mental health” is a tool of government (and it is: It developed under Bismarck, who wanted authority for classifying humans as animals (he needed cannon fodder), but it’s also the case that governments are the tools of psychiatrists: quite apart from lobbying (with pharmaceutical money), psychiatrists TREAT politicians, even presidents, and their families, have even more data than J. Edgar Hoover for blackmail, and can use drugs freely to control them. Please take a look at how this segment of society works and the likelihood of ANY form of government to survive long while this “mental health” system operates as this one does. (CCHR has the best documentation on this. Also, some of the patient-rights groups have collected lots of it.)

    1. Dean: No “special rights” are needed. We are all unique, one of a kind, never to be seen again once we die. Therefore, “patient-rights”, “gay-rights”, and so forth fall under “human rights”, i.e., individual rights.
      Denial of rights is common and inhumane. Our species can’t survive it. That’s why we need to stop it before we self-destruct. We can start by identifying and overcoming superstition, especially, “The Most Dangerous Superstition” (by Larken Rose). The worship of consensus as if it were a magic short-cut to knowledge that justified denial of rights is called “democracy”, and those who ask to be granted the political power to initiate violence, threaten, promise to enforce “the will of the people”. With the authority, i.e., moral exemption, granted by the strength acquired from mass forfeit of sovereignty to them, the self-sacrifice, the self-enslavement originates. .

  9. You mention insurance companies. Insurance companies are inherently evil, criminals. For one thing who regulates the insurance companies? The insurance commissions of the state. Who runs this bureau? Insurance companies! Conflict of interest, anyone? When was the last time you heard of the consumers having a say in the insurance industry? The insurance companies regulate themselves. Yeah, right! Another thing, insurance companies are, and have been, exempt from laws that the rest of us must follow. Example: Discrimination is not only the general practice, it is ignored by the government that is supposed to enforce anti-discrimination laws. Discrimination based on gender, age, marital status, personal life-styles. The insurance companies are breaking the law and getting away with it. Another thing. Insurance companies have State enforced monopolies. The consumer cannot opt out. Insurance is pretty much required, in most cases by law. It’s time to end this monopoly and criminality once and for all!

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      Insurance companies would be far less evil if the politicians weren’t enabling their evil.

  10. Washington DC has circumvented the Constitution and citizens do not mind since the “old white slave owners” must have been stupid. Obvious students are not taught in public school and the praising of teachers as “heroes” we heard daily from the media yet none and not even teachers know the definition of “hero”. Obvious as well that ignorance and trust in government has paved the way for the downhill slide we are on now. Govt is your nanny and are experts on all things wrong. So they appoint themselves as regulators. Another obvious is the DEA. They need drug sales to keep the billion dollar budgets so they make few arrests. FBI is accountable to no one and can do as they please to anyone. Police as well. You all know police police put their lives on the line. Wrong! Police officer is a safe job, #22 on the list. The dangerous jobs are lumberjack and construction. Do they get tax payer dollars for large salaries all the benefits, early retirement with pay and keep the benefits? No. Regulators would not come within miles of those crews since regulators are useless or cause jobs to disappear. Regular people cannot start a business because government wants money in advance, license, insurance, etc so forget that.
    Forest fires are not climate change but the US Forest Service acting as though the forest is theirs and they let blow downs and dead wood pile up so a natural and needed forest fire is not a quick event it is a firestorm from hell and happening often not because of climate but because mismanagement which Mother Nature had done that job for centuries.
    Regulate politicians and also call them Public Servants again because that is who they are. TERM LIMITS nips corruption in the bud. Get rid of money draining police forces and go back to the elected sheriff for law enforcement.
    Government cannot solve any problem but cause them.
    We need oversight by committees of citizens and not the upstanding ones but honest ones.
    Regulate nothing and let citizens decide. Sell garbage then you are out of business whereas regulators can take pay offs. I have seen corruption right up close and ask me to tell you about it and I will tell you but you will not touch it because you will lose your job reporting it.
    I have been and my spouse has been victimized and what did discrimination laws do for us? Nothing. Except ruin our lives, health and relationship. Not good for senior citizens. And when you accuse police they investigate themselves. Why do police departments have “weapons of war”? Quick, tell me. CSPD has over 400 M-16s. Why? The governor wants us disarmed, what is he afraid of? Not AIDS obviously. His millions got him the job and he as was Hickenlooper are idiots and dictators.
    Government regulators recently found a drug company shipped too many “opioids so fined the company a feww million dollars. The End. But where were regulators before the shipments left? Did the shipments get retrieved? No. There is your “regulation” at work-collect fines and move on.

  11. Could probably think of other examples, but what comes to mind is all the junk food businesses are selling. Consumers are doing a terrible job of regulating that! Not sure what the answer is other than education. But it is difficult to “educate” against businesses that rake in billions and thus have a great deal of influence.

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      Consumers may be bad at regulating their own tastes, but it doesn’t follow that politicians and bureaucrats should be allowed to dictate taste.

    2. Consumers are not children needing to be overruled, forced by a few “enlightened”. It sometimes seems impossible to educate (wake up) those who are living a lie (defending an illusion) to their death (and yours). But if we value the political axiom that all are sovereign (equal), then we must respect everyone’s right to their beliefs, however flawed, “IF” they do the same. Of course, a person who demands rights for themselves, can not violate the rights of others. That wouldn’t be rational, sane. They would need to face their contradiction, one way or another, but that is a political (social) issue when it impinges on others’ rights.
      I watched 65 years as consumers slowly boycotted conventional, processed foods. I stopped growing organically in ’07 because I could finally buy enough to satisfy. Every year it gets better.

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