Chris Berg, a guy who views deregulation the same way I view taxing things (pro), has an odd piece in The Drum this morning.
Berg argues that government regulation is to blame for the White Star Line’s decision to send the Titanic out to sea with too few life boats aboard. Specifically, he blames the mandated minimum number of life boats that large ships of the day were required to carry. The minimum was out-dated and didn’t scale up. Regulations required that ships in excess of 10 000 tonnes must carry a minimum of sixteen lifeboats, but there was no additional requirement for super-large ships.
The argument, if I understand it correctly, is that the shipowners (and, implicitly, the passengers) placed undue faith in the regulators, believing that they must be benevolent overseers whose judgement it wasn’t wise to question. As Berg puts it:
There was, simply, very little reason to question the Board of Trade’s wisdom about lifeboat requirements. Shipbuilders and operators thought the government was on top of it; that experts in the public service had rationally assessed the dangers of sea travel, and regulated accordingly. Otherwise why have the regulations at all?
So the argument is that the regulation wasn’t seen for what it was, a minimum number of lifeboats, but rather misinterpreted as a guideline for an appropriate number of lifeboats. If the Board of Trade was willing to let you set sail with sixteen lifeboats, why add a seventeenth?
His argument rests on the presumption that people will not take greater precautions than required by law. Is that really the case? The law requires that we wear seat belts in our cars, for example, but it doesn’t require that we have air bags. Most new cars nevertheless come equipped with air bags. Why, following Berg’s logic, don’t people accept the wise beneficence of regulators? Seat belts are required, but air bags are not; why, then, do car manufacturers sell cars equipped with air bags? Why do people pay a premium for those cars?
On Berg’s account, we should expect that the proportion of cars that have air bags would actually be higher without the seat belt rule. Unable to defer to the judgement of regulators, people would have to form their own judgements about the appropriate level of car safety. Is this really plausible? It’s not to me. When I look around, I don’t see people sticking to legal minima just because they’re there. If it makes sense to exceed a minimum requirement, people will generally do so. To believe otherwise is usually the preserve of people on the left of politics, who see a role for regulators when self-interest can’t be relied upon to generate an outcome that’s socially ideal.