Cause -- or Apt Analogy?

Via Hacker News, I have come across a short blog post at City Lab asserting that the Great Molasses Flood, which happened in Boston a century ago, "ushered in the era of modern regulation." This is interesting to me, and not just because of the following, which I noted fairly recently:

Image via Wikipedia

Part of the problem is that our regulatory authorities combine several types of activities, ranging from the completely illegitimate; through those that need doing, but not by government; to providing a proper and necessary legal framework for a certain type of activity: (1) completely illegitimate central planning (such as the kind that makes "Uber for flight" illegal); (2) activity that standards bodies, watchdog groups or the like can and should be doing, instead of the government, such as establishing best practices for dealing with volcanic ash; and (3) adapting the law as necessary when new technology raises a question about, say the limits of property rights. Even in the last case, I doubt a full-blown regulatory agency would always (ever?) be necessary. [links omitted, bold added]

Considering what a wide net the term "regulation" casts, you can probably see a few problems with (or at least questions about) the following:

In the immediate aftermath of the disaster, some 120 lawsuits involving victims of the incident were rolled into a class-action suit against Purity Distilling Company and its parent company, United States Industrial Alcohol. The resulting investigation, which lasted six years and included testimony from more than 3,000 witnesses, proved disastrous for the alcohol distributor: USIA was shown to have "engaged no one with any engineering or architectural expertise to review the plans created by Hammond Iron Works, either in the planning stage or after construction, nor had they asked other experts inside USIA to analyze the construction," according to a remarkably deep look at the legal proceedings published by the Daily Kos. Not only did USIA fail to conduct regular inspections of the tank during and after construction, but the company's leadership summarily ignored concerns from both inside and outside the organization regarding the safety of the project.

...

Bolstering [defense attorney Charles] Choate's efforts was the fact that the disaster struck at a time when the Supreme Court was already pushing a lax legal and regulatory environment for businesses, wherein companies could effectively count on avoiding liability or responsibility in the courtroom... [bold added]

Although I am neither a historian nor a legal expert, I am aware of wrong-headed "pro-business" measures from earlier eras that remind me of such an anarchic -- a better term for this situation than laissez-faire -- legal environment. At one time, for example, property rights to riverbeds were taken away from their owners so companies could dump waste into them without fear of being sued. (Please see this correction.) This led to pollution problems that were wrongly blamed on capitalism and used to justify regulations on how companies deal with waste -- among many other things. If, as Ayn Rand once put it, "Capitalism is a social system based on the recognition of individual rights, including property rights," it does not include relieving businessmen of liability for clear negligence (e.g., not following well-known engineering best practices --- which, by the way, don't require government bureaucrats to establish).

So, at minimum, both of these are questionable: (a) the implication that the  situation that caused the flood is exemplary of "capitalistim," and (b) the idea that the needed remedy is an overbearing regulatory apparatus that makes it impossible to know whether one is committing a crime at any given moment.

It may well be true that this case, say, was (or is being) used to sway the public in favor of more government regulation. Whatever the case, if we are to truly learn from history, we must not uncritically accept the all-too-common idea that the alternative was and is either anarchism -- or an all-pervasive regulatory state.

-- CAV

Updates

1-15-19: Added parenthetical note pointing to post on downstream peroperty rights.