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The “Would Have Banned” Label

Shared Article from mason.gmu.edu/~rhanson

The "Would Have Banned" Label

Government regulators often ban products they claim to be of especially low quality....

Robin Hanson @ mason.gmu.edu

So imagine a broad new law, perhaps a constitutional amendment, which prohibits regulators from banning any product without substantial use externalities. Instead, imagine a single standard icon, perhaps a skull and crossbones, a dead cat, or a big BAD, which says We regulators would have banned this product, except that’s not constitutional now. Don’t buy it. (Further imagine a small educational campaign to ensure that everyone understands this icon.)

With ideal regulators, this new label should convey as much information as banning would have, and so roughly rational consumers should be no worse off. If regulators are far from ideal, the worst that regulators can do is just waste their funding (since consumers can always ignore them). And in either case, consumer liberty would be expanded.

. . . If consumer irrationality is the real issue here, then I sure wish ban advocates would describe their theory of consumer mistakes in more detail, so we could do some experiments to test those theories. It is also not clear why regulators should be more rational, or that irrational voters would support bans by regulators whose labels they wouldn’t believe.

–Robin Hanson, The Would Have Banned Label
June 19, 1996.

Of course, really laws are the wrong way to go about just about anything, and there’s no good reason why it should be any business of the law to make producers print Banned In The Beltway tags on their products, at least not any more reason than they should be forced to print any other palooka’s opinions about their products. But, is there any solid, non-control-freak argument for thinking that this solution has any defects that would make it less desirable than the current prohibitionist approach to regulating low-quality products? If so, what’s the argument?

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  1. Lori

    Par for the pro-market course, I guess, whenever it’s businesspeople whose ox gets gored, they’re being “forced” into something or other. I don’t like to imagine a consumer marketplace without ingredients lists, or the low-res approximation of macronutrient profile under the heading “Nutrition Facts.” I don’t consider facts of this type to be some palooka’s opinions, although I don’t entirely trust them to be facts, either. But that’s a role for “trust but verify,” not “deregulate even further.” The food vendors, when they’re not crying bloody murder about how expensive one square inch of paper is (capitalists are such victims!) they’re claiming that the identity of their ingredients is some kind of trade secret. If there’s one good thing about laissez-faire free market dogma, at least it’d be a wild west of “trade secrets are what you can get away with.” More valuable to me than an ingredients list would be a laboratory assay describing in detail the chemical composition of a product; ideally a very detailed report based on a large number of samples. I suppose free marketeers such as yourself are fine with that so long as the entities publishing the reports are in the private sector. Whatever. Sector fetishism, I think, addresses mostly non-central questions. Glorifying the private sector is basically Reaganism. While I’m still nominally a “left libertarian,” I’ve definitely reached a point where I’m far more interested in grand alliances of the left half of the political compass to defeat the right half, than bottom half against top half. The fourth quadrant can go eff itself, they were always a bunch of social darwinist asshats anyway.

    • Rad Geek

      More valuable to me than an ingredients list would be a laboratory assay describing in detail the chemical composition of a product;

      I think that would be great.

      I suppose free marketeers such as yourself are fine with that so long as the entities publishing the reports are in the private sector.

      Yes, I think this is a job either for existing independent watchdog groups, testing labs, certification boards and professional associations (there are lots), or else new groups custom built for the purpose.

      I think it’s a problem for government agencies to be tasked with it, (1) because of moral problems with government assuming this kind of investigatory and regulatory role, (2) because of practical problems with entrusting government agencies to maintain produce reliably accurate results and useful information, and especially with entrusting them to maintain independence from industry, in the absence of open market competition, and (3) because of political problems with entrusting government agencies to stick to the job of testing and writing up results, without the usual bureaucratic problems of mission creep, expanding fiefdoms, etc. I don’t think it should be a surprise to find that some people think government agencies are really kind of piss poor at maintaining independence from industry or performing socially useful tasks without these kind of predictable failure modes; if that be Reaganism, well then let us make the best of it.

    • Rad Geek

      But that’s a role for trust but verify, not deregulate even further.



      (1) I don’t see how this is responsive to anything in the original article I linked to. The argument of that article isn’t to get rid of an attitude of trust but verify towards vendors; the point Hanson made, specifically, was that you can get the informative function of verification without the police function of prohibition. So the suggestion (his suggestion) was to expand labeling requirements, not to contract them.

      (2) I don’t see how this is responsive to my brief side commentary on palookas and their opinions on products. My point was that if government agencies are entitled to demand that producers stick labels on their products, then any independent body, in government or out of it, is equally entitled on the same grounds to require posting of the same kinds of information, warnings, or assessments.[*]

      In any case, the interesting debate here is whether or not the verify bit depends on the regulate bit here, or whether you can get just as much or better verification without the regulatory scaffolding around it. If you need the regulation to get the verification, then we could argue about the trade-offs involved. But first you’d need to show that the regulation actually is a prerequisite; that’s not a premise that you can get for free. If you don’t need the regulation to get the verification, if it can be achieved through some other means (e.g. grassroots monitoring and activism) then it seems like that’s a perfectly good reason to give up on the regulation without too much worry. Isn’t it?

    • Rad Geek

      [*] This might well turn out to be true in some cases — it might sometimes be true if an outside expert or tester has determined something important about your product that some prospective buyers ought to know about, then maybe it would be an act of culpable negligence not to inform them. But if this is true, then I would insist that it comes from the finding itself, and cannot depend on the political position of the person who made the finding.

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