Why Regulate at All?

Steve Forbes pens a bizarre column at Fox News in praise of Donald Trump as a "deregulator." Yes, it commits the usual conservative sin of conceding the whole argument by speaking of "excessive" government regulation, but the piece comes across as to me a unique cocktail of damning by faint praise and gross understatement. First, we have the following:

Image by Gardner Wheeler, via Unsplash, license.

One example of the president delivering his deregulation promise came in late May when the U.S. Department of Transportation and Federal Railroad Administration abandoned a costly regulatory proposal issued by President Barack Obama.

The measure would have forced private freight railroad carriers to continue operating with two people in a locomotive cab. This proposed Obama, anti-business mandate was always wrongheaded, and its revocation carries important lessons for how best to regulate.

Okay, good. The President ended some blatant featherbedding. Forbes gives no figure on cost savings versus railroad expense, so it is not clear how much this actually helped the railroads. Forbes does note that the regulators had no safety data demonstrating a need for the extra employees they would have had to pay, so there is that.

But if I try to put myself in the shoes of an average reader, I can more easily see "fewer jobs" and have little clue about "increased investment capital" for the railroads. In other words, that potential benefit of deregulation is lost on me. (And the fact remains that some people probably lost their jobs.) That said, I'm open to the argument that perhaps I'm being hard on Forbes. And he does argue that what's good for the railroads is good for the rest of the economy.

Let's put that aside for a moment, or even assume that Forbes made a clearer-cut case that this regulatory move really helped the railroads. We still have the following:

Rather than bow to narrow labor interests, regulators would be better served stating the goals and letting industries figure out the best ways to achieve them. [We don't need a bureaucrat to say, "Get me and my stuff there quickly, safely, and cheaply." -- ed]

This would encourage innovation and avoid the constant problems of regulators always being behind the curve when it comes to newer and better practices.

The Trump Transportation Department deserves immense credit for turning rhetoric into action.

A nanny-ish, we-know-best mentality on a decision better left to the private market is simply unneeded as railroads continue to set all-time safety records -- a result of private investments averaging $25 billion in recent years.

Indeed, as the American Action Forum outlined, "regulators should not impose specific and costly mandates when lacking evidence they will solve a problem. Regulators should also be mindful of the implications today's regulatory decisions will have on future innovation, particularly when evidence suggests those innovations could improve safety."

I'll give one cheer to Trump -- whose regulation of foreign trade (aka tariffs) threatens to easily wipe out any of the gains intimated above. But doesn't the above make the whole premise of government regulation in the least bit questionable? Wouldn't investors not want to lose their money in the form of accidents, a reputation ruined by a poor safety record, or damages from lawsuits? And if regulators are perpetually "behind the curve" regarding safety and are making decisions on things "better left to the private market," why have them at all?

-- CAV