New Threats to Freedom Essay Contest

I ran across an essay contest based on the book New Threats to Freedom, whereby undergraduate and graduate students are able to respond to assertions made in the book and in video entries for a shot at a $5000 scholarship. The deadline is March 31 and the link is here for anyone thinking of entering.

I chose to respond to video entitled Max Borders on Regulation. In the video, commentator Max Borders tells a story of his frustration with the red tape surrounding his attempt to sell homemade barbecue sauce at the local market, and how this minor example is indicative of institutionalized regulation that stifles innovation. The text of my 482-word essay follows.


The Necessity of Regulation

In responding to Max Border's call for less regulation, we will begin with a story that started three decades ago. President Reagan's administration repealed many of the laws set in place after the Great Depression that prevented financial institutions from expanding and involving themselves in higher-yield but higher-risk ventures. Businesses like savings & loans were now free to engage in riskier investments with the promise of reimbursement if these investments failed which encouraged both poor investments and owner corruption, leading to the economic recession of the early nineties. In 1999 the Clinton administration allowed banks and insurance companies to form single entities. Add Wall Street corporate greed and it was only a matter of time before these attempts at generating more wealth through risky investments would come crashing down in September 2008. Now it is 2011 and millions of ordinary people's investments and jobs have disappeared while federal debt grows exponentially to repair the same corporations that helped start the whole mess.
Regulation ensures economic fairness and consumer safety. We can all agree that the sometimes-intrusive presence of government is probably better than the alternative of complete lawlessness. Government itself is a form of self-regulation – we need to be protected from those who might harm or swindle us, so we institute a system of laws and leaders who enforce the rules. Consumer regulation is a newer phenomenon which largely came about one hundred years ago during the Progressive Era. We decided the meatpacking industry should not make sausages out of the refuse of butcher shop floors, so the predecessor of the modern Food and Drug Administration was created. Standard Oil could artificially raise prices for its product simply because they had cornered the market until the Sherman Antitrust Act broke up the monopolies. Ralph Nader's publishing of the motor vehicles industry's knowledge of their unsafe products resulted in mandatory safety protocols like airbags in all cars.
Now let's return to Mr. Borders' failed hope to get a little income from selling his barbecue sauce at the farmer's market. The “red tape” that Mr. Border encountered that kept him from selling homemade barbeque sauce was put into place to protect consumers from possible health hazards, and not, as he says, to keep cottage industries from challenging large-scale companies. Millions of individuals create their own wares for sale in local and even national markets and are still able to abide by health regulations with a little money and effort. Safety standards are in place to prevent people from unknowingly or otherwise sell products that are harmful. If there happened to be salmonella bacteria on Mr. Borders' kitchen counter, then the “red tape” would not prevent him from unknowingly selling contaminated barbecue sauce at the farmers' market. Regulations are in place to keep the people protected and the producers accountable, and are therefore necessary in today's world of globalized finance and consumption.