Of Regulatory Law

I imagine that most of my readership will be familiar with the term “regulatory law,” or at least its definitions, and if not that, then at least its currently existing examples. When I speak of regulatory law, I am speaking of laws imposed (either by a collective will or by coercion of a ruler) on the public, which seek to regulate certain activities in order to prevent certain corruption, excesses, and other undesirable effects. A regulation is not a prohibition — it doesn’t cut off the stream, so much as it narrows the channel. The idea behind a regulatory law is that to cut it off completely, or to let it flow unhindered, that both of these extreme policies are either impractical, impossible, or produce more harm than good.

A good example of regulatory law would be an act proposed by congress that limits the amount of forests logging companies are allowed to cut down. If they allowed loggers to cut down as many trees as they want,Of Regulatory Law Articles the result would be heavy and damaging deforestation; whereas if they didn’t allow any loggers to cut down any trees, the result would be a lack of available timber. One option damages the ecology, the other damages economy. Some may say that the law being passed is a compromise between environmentalists and business executives, but this isn’t exactly accurate. A congressman or senator might look at the situation and feel both the needs of environment and economy, and feel that such an act regulating the lumber economy would produce the greatest benefit for the nation.

An example of a restriction, or a “prohibitory law,” would be nearly any form of crime that has existed for the past millenium: threatening someone’s life, attacking someone unprovoked and without cause, killing someone, stealing someone’s property, etc., etc.. There is no leeway with any of these crimes. As far as the law is concerned, there is just cause in completely cutting off the flow of any of these actions from happening. And the legislators have just cause to believe their decision is right. Here, I hope I have clarified the difference between a regulation and a prohibition, and the importance of recognizing the difference. As my readership should be well aware: I have written at length elsewhere about basic functions, mechanics, and behaviors of the economy, responses and reactions to certain stimuli by economic agents, etc., etc.. And, as well, I have also proposed certain ideas and thoughts that could be manipulated by statesmen to enact a much more just form of political economy. By the term “a just political economy,” I am implying an economic system where wealth distribution aims closer towards those who produce the wealth (the real meaning of justice), while mainting a higher, more dignified regard for personal rights of the individual. I am not going to describe any of these suggested reforms right here, because they are available to my readers and I have succinctly made my point about the difference of regulation and prohibition.

Regulatory law is where Socialism meets Liberalism; or what might be called the highest form of Liberalism, the lowest form of Socialism.

Human society and its laws may accurately be called a translation of personal society and ethics. The rulings of a society’s high courts and congresses usually reflect some degree the opinion of the people in that society. Humans have used regulation as a personal ethic in countless cases. There is the often-quoted, ill-practiced “all things in moderation” — what some have mistaken as an equivalent for “abstinance.” As a very simple example, take a man who will drink only six beers every night, and not allow himself to drink more than this. His reasons might be plenty and quite justified. Perhaps the desire to intoxicate is still present after six beers, but after six beers, the intoxication obtained is displeasurable or overly-impacting. Or, perhaps, the desire to intoxicate is even more present, and the pleasure obtained from drinking more than six beers is even greater, but this man knows that it will only bring him pain, misery, and a hell of a hangover in the morning — so, he makes a logical decision and decides to set a limit for himself; he refuses to drink more than six beers. Maybe this is an incredible person, and he is capable of restricting himself to only six beers even in social situations where everyone else drinks three times as much as he does. Whatever the reason or desire, it is quite clear that this man has put a regulation on himself: he has decided that to let some of the water flow in the riverbed is better than either no water or all the way. Essentially, regulatory law operates as a restriction to a desire that would otherwise cause greater harm than good. From man’s ability to tame, conquer, and regulate his own desires so as to create the greater good for himself and his conscience, there arrose laws from man’s society on restricting certain behaviors. And this, my dear reader, is regulatory law.

Now, an obvious question right now might be: why? Why should we study regulatory law? What purpose and, effectively, what use could it possibly offer us? To answer these questions, allow me to say this much. It is quite clear to all of us that we live in a changing world that has been evolving since the dawn of time. Cultures, customs, sciences, and practices have been adaptating to new environments, assimilating to new people, and reaching exitinction when the will to evolve was as weak as the will to survive. For as long as mankind has been around, we have striven to improve ourselves, and for as long as mankind has been a collective, we have striven to improve ourselves and those around us. At least, this can be honestly said of all individuals who have been honest, thoughtful, and humane. As we have each personally evolved to regulate our own behaviors and to control our habits in a way that is most beneficial to us, so too has society created regulations and restrictions and prohibitions. However, these regulations are not as simple or as complete as a few sentences can make them seem to be. There are many implications, many unseen effects, many subtle variations to the overall mechanics of the Beast. It is the purpose of this essay to study these often overlooked effects that regulatory law can have.

The reason why regulatory law exists, obviously, is to create an overall positive impact upon society. For example, the Minimum Wage Law as it exists is there for the sole purpose of putting more money in to the pockets of the laborers. This has been viewed in the eyes of many liberal and progressive reformers as an overall good. (Needless to say, there are Conservatives and Right-Wingers who believe that the laborers are undeserving of the wealth they create — but, I have spitted them plenty elsewhere.) There is also the Usury Law, a law that regulates the interest rate of loans. It is common that the Usury Law prevents an interest rate being higher than 50%. So, if you borrowed $500, depending on the state you lived in, for the loan you could only be charged $250, or a total of $750 once you pay it all back. There are Libertarians who attack the Usury Law, arguing that it is an unnecessary interference in the economy by the government, but it is viewed by the majority as an acceptable, agreeable regulation that creates an overall positive impact on society. There are environmental regulations, such as how many trees may be cut down per year, protecting the world’s natural habitat. However, as it so happens, most regulatory laws are found in effecting the economy, but their principle is just as strong in any other field.

The positive impact of regulation can easily be seen. However, there are many unforeseen negative effects that can be caused by regulation. For example, as a pure hypothetical, perhaps the higher the minimum wage is increased, the more businesses will fire employees. I imagine that many hired hands perform very simple, very basic functions (the integrity that is Capitalism) from everything from busting tables to handing out free candy samples to obnoxious children from consumerist parents. These employees would have their jobs at staket he most, because the actions they perform at their job are much more dispensible than those of the clerk, the manager, and the many other occupations responsible for production and distribution. And, in a world economy where every corporation is trying to maximize profits and minimize costs, of course those employees with near-useless job status will be at risk for losing employment with an increase in minimum wage. Or, perhaps, if the American government decides to enact a law requiring every manufacturing plant to have safe and clean working conditions, then companies will move overseas, forcing children to work for pennies an hour in hazardous work — as we currently see happening in our world today. Perhaps a local government will enact a law requiring every employee of every trade to be provided with a full medical plan and a full dental plan. And, while the intentions of this law may be to help the downtrodden, the effect could be an increased unemployment. With unemployment on the rise, workers who have a job are more willing to hang on to their employment. They would willingly take pay cuts, or work extra hours, if it meant they can keep their job. Essentially, the effect of the law would lower pay and jobs. While the laws of the collective will of the people can regulate certain actions and try as hard as possible to create a more just society, it must be understood that every person is an individual, operating according to their own interests. To the Capitalist class, their interest is a maximization of profit and a minimization of cost; they will constantly strive towards these two things (which are interchangeable almost). While the law can restrict how far the Capitalist class attempt to pursue their interests, the law cannot change their interests — unless, of course, a system of Communism were adopted.

We must understand and accept that the law, or at least regulatory law, is incapable of determining the conscience for each person. If, for example, we increase the minimum wage, then the response of the Capitalist class could be to lay off their employees. Or, if we restrict how many trees the lumber companies can cut down, they might simply expand their business to other industries that exploit the environment. It’s simply a possibility. The reason why any of these things might very well be true in practice is because of the interests of those the law is trying to control — interests that cannot be eliminated by the word of any law. (Again, except the law of a true Communism — turning every person in to an employee and an employer.) So, we see, the intentions of the regulatory laws might very well be misguided. The result of these regulations could very well be a reverse impact. I imagine, for example, that if the minimum wage were raised to $100 an hour, unemployment would skyrocket and the economy would be reduced to shambles. While the intention of this law was to help the poor man, its result would be harm towards the poor as well as an obstacle in front of the rich. Needless to say, a minimum wage of only $6 or $7 an hour is considered by many to have a positive impact on the economy and the lifestyle of the working class. However, there are those Conservatives who would argue with us that the minimum wage has done nothing but harm to the American working man, that it is the enemy of everything good and honest. To those Conservatives who criticize the labor laws directed towards protecting the Proletariat, I must say this…

Among the Conservative vote, we hear a non-stop cry that the Laissez Faire system has always been strong, effective, making proud nations, making proud people. They will tell us over and over, that the only system of economy that can work is a system where the right to private property is completely respected. These regulatory laws that try to control the economy and help the worker only hinder him. But, my dear readers, these Conservatives are lying to you, and you should never forget that if there are enemies of progress, they are allies with such creatures. Never forget that your ancestors broke their bones and shed their blood working 16 hour shifts as carriage drivers, factory workers, personal servants. Do not forget that it was among your grandfather and your great grandfather’s kind that children were sent to work in mills, losing arms to sawblades and losing spirit to the whip of a floorman. As an American, you can never forget that your ancestors were once immigrants, speaking an unfamiliar tongue, practicing unfamiliar religions, alone and afraid. And never forget, that it was under these conditions that every person in poverty was turned in to a virtual slave. To be a good economist, one must also be a good historian. Those of the Conservative ilk are incapable of operating as either. They were quick to forget the sufferings of their own blood when it meant satisfying their desires at a cost to others.

Yes, there was once a time when men and women had to work upwards of 12 hours a day, in total darkness, loud machinery deafening them, and dangerous equipment threating their life and limb. We are out of those dark ages, but the Capitalist class has simply brought those crimes to foregin lands where it is permitted. Perhaps the Conservative would have us believe that it took 300 years for the human heart to actually develop to the point where Capitalists wouldn’t prey on their workers? Perhaps they would truly have us believe, that all these regulatory laws, banning child labor and abetting the downtrodden, that all of these laws had absolutely no effect in stopping a dehumanizing economy? Perhaps it was simply a random growth spurt in conscience that brought it all to an end, not completely unlike waking up to a wetdream. These Conservative “economists” are liars and friends of thieves. Few of their words can be trusted.

There are positive impacts and potentially bad impacts of regulatory law. Restricting yearly lumber harvest might force consumers to get their lumber overseas, harming our own economy. Increasing minimum wage could cost jobs. Etc., etc.. However, just because there is a could in there does not mean that it most certainly does, or that it most certainly does not. With as much knowledge and wisdom as history has provided us, we are more apt to believe that these regulatory laws are more likely to improve the place of society than they are to harm it. However, this does not mean that certain regulations don’t harm the economy and the general welfare. I imagine that there are plenty of laws out there that restrict and regulate, and their only impact is a negative one for everyone in society. The argument intrinsically boils down to this: what is the deference between impact of regulatory law? How do we know that the regulation is either too high, or too low, in regards to society? How is it with every regulation? Is there a point at which the intended positive effect of a regulation is maximized and the unintended negative effect of a regulation is minimized? That is what the study of regulatory law is now reduced to.

The question now at hand is the matter of the deference of the impact. When questioning the validity of new regulatory law, what is it that we will ask? First, we want to know how much society will be offset from its current rule mechanics. For example, in the late eighteen hundreds, to fend off a cut in the profits by unions, many businesses refused to hire anyone who was part of a union. Through this technique, many companies and businesses managed to keep costs down by paying their employees less and keep profits up by alternating workers in sixteen hour shifts. When congressman gathered to debate a ban on this blacklisting of union workers (“yellow-dogging”), the first thing they would want to know (besides who is influencing them through bribes and political tactics), is what effect this ban would have on the majority of the population — what effect it would have on the greater good. From any position that takes reason and logic as their basis for decisions, we would deduct that such a ban on yellow-dogging would hamper the way in which businesses operated, but once the changes were accepted, the living and working conditions of the workers (and that would also be the general population) would increase dramatically. What is it that made us accept such a proposition? That the results of it passing would create a greater good than any other proposed legislation at that time, as far as the matters of economics and regulatory law went.

However, consider another regulation that one might propose. Consider this: all food producing, processing, and distributing businesses are required to pass a new series of cleanliness tests. The aim of the regulatory law is clear: it wants to protect consumers (and thereby protecting the general public) from being sold harmful or potentially hazardous products. Concerns about the presence of mercury in fish sold for consumption, the presence of lead in paint, the presence of waste product in meat and other foods — all of these concerns brought about reforms to protect the consumers from purchasing something that might seriously harm them. By passing a regulation that demands extreme cleanliness, the aim is not indifferent: it is to protect the consumer, and thereby protecting the average citizen. However, if the new, proposed legislation is so strict that it seriously inhibits production of food, then its effect will be overall harm. Perhaps it requires a degree of clean in foods that few food producers or processors will be able to uncover. Perhaps the managers of those factories don’t know what technology is necessary to implement to keep the degree of clean that the law requires. Perhaps producers will respond by relocating for countries with more reasonable legislation. Perhaps producers will lay off their employees, harming the working class. Perhaps distributors will raise their prices, harming the working class in another way. Perhaps the time to adaptate and conform to the new standard will take such a long time that the variety of food and available products will be strictly limited for years. Perhaps all this and more could happen with legislation that is as strict as this.

The most unreasonable of right wing ideologists will claim that all regulation leads towards waste and unnecessary hindrances in the economy, while the most unreasonable of left wing ideologists will claim that regulations never cause any disturbance to the economic flow. A thoughtful position in the middleground is the most effective stance here. Not simply because compromises can be healthy or useful, but because all of the available evidence shows to us how regulatory law protects the public (minimum wage law, etc.) as much as it can harm the public (restrictions on the availability of medicines/drugs, etc.). The recurring theme of this paper, between the historical examples and the hypothetical scenarios, is that some regulations are helpful while others are harmful — and, as far as an understanding of political economy goes, there is a way to predict or foretell which regulatory law will be beneficial or harmful to the overall well-being of a population.

Assume then, for a hypothetical example, that there is not an absurdly strict standard applied to the producers of food. Perhaps they are restricted in creating food in an atmosphere that requires bleach water, and not an autoclav — perhaps this small hindrance to the food-processing sector creates an enormous relief to the entire working population. Then, as a political theorist might say, the legislation was a complete success in its intentions. The question we want the answer to is this: how do you know when a regulation is excessive or light — when it is overdone or underdone? Whatever answer anyone is willing to give, no matter how educated they are, I doubt that it will be a short time before the results of this question can be reduced to a theorem, or even an experimental and partially accurate formula. There are other questions we can ask, other investigations we can pursue, that will help us answer the question of whether a regulatory law will satisfy its intended purpose. For example, we can ask: would the financial requirements put on the Capitalist class be too demanding? (i.e. Does the manufacturing industry make enough profit to spend some of its revenues on machine guards, to protect the bodies of their workers from serious injury? Will car producers simply lay off workers and increase prices if we demand they sell safe cars?) We can ask: is this action we take something that will satisfy the needs of the people? (i.e. Is a $50 business fine enough for failure to pay employees on time? Is a restricted mercury level in fish of only 2% and below safe enough for consumers?) We can ask: what period of time are we looking at before the economy stabilizes again after we pass this legislation? (i.e. Will there be an unreasonable burden on factory workers, when 50% of them will be temporarily out of work for only six months, while factories begin using safe methods of production? Will the economy become stagnant for several years while a system for recording and viewing corporate accounting processes is developed?)

The essential questions we have for any regulation bill are as follows: (1) Can the group being regulated still act and operate with the new regulation? (2) Will the regulation simply have a reverse impact as opposed to the intended one? (3) Is the regulation fitting to the problem that the legislature is trying to cure? And, finally, (4) How long will it take for the regulated group to catch up to the new standards — and are the new standards so high that they put an unreasonable burden on the regulated class, in a way that directly harms the class the regulation is attempting to protect? These are simply some of the questions that can be asked, and some of the areas that should be researched, when a new regulation bill is up for proposal. I think the basic purpose of regulatory law is a practical one. It does not intend to create utopian dreams or offer that “pie in the sky” to the people. Rather, it works with what the world already is, and offers the next step in reform. The desired ends of regulatory law are the same as the ends of any good-intended law: to improve the current social system, so that the rights of all are better protected, and the happiness of the majority increased.

One of the primary arguments against any regulatory law, particularly from the conservative viewpoint, is that the reverse impact is the only thing that will ever happen. Or, at least they propose, the reverse impact is the result only most of the time. Needless to say, this argument is false. However, the conservatives do bring up a valid point — there are cases where the reverse impact is the only one ever seen. (However, very rarely does congress consider the kind of radical legislation that would ever throw our economy into chaos and disorder. A person working full-time on minimum wage, for example, is still living below the poverty level. And yet, right-wing ideologists will profess “the system is working,” based solely on the evidence that we have what might rightly be called “self-perpetuating misery.”) In those cases where there is legitimate fear that a regulatory law only partly satisfies the above questions with positive answers, there are ways to prevent a reverse impact. For example, a check could be included the bill. Perhaps it is a minimum wage increase, and perhaps the fear is that it will take longer than six months for the economy to adaptate to the new increase. Until that time, there is a suspicion that unemployment will dramatically rise, putting unbareable constraints on the working class. The bill could include a check for this. For example, this might be included: “If, after the period of six months, unemployment has gained 2% from the initial introduction of this bill, then the minimum wage will be brought back down to the previous level.” Or, if there is serious doubt about the legislation, one might include: “If, at any time after the passage of this bill, unemployment rises an addition 6%, the minimum wage will be brought back down to the previous rate.”

Of course, even with our anti-reverse impact checks, there is still cause for worry. There might be a reverse, reverse impact. That is to say, billion-dollar corporations might look at this legislation and purposely create the condition that ends it. They might try to raise unemployment by laying off all their workers, simply for the law to revert back to the previous minimum wage — and increase their profits once again. However, this scenario is very unlikely. There are always rules that govern a Capitalist economy. Among those rules, there is this one stern law: your business must grow, develop, and evolve today, because if it does not, the competition will have your income. No matter how big or powerful or mighty a business might believe itself to be, if it ever takes the road of dying, decay, and stagnation, simply to overthrow domestic policy, I assume it will soon find itself filing for bankruptcy. Still, though, Capitalist entities have managed to artificially create so many conditions. Coal tycoons in the 1800’s managed to create an artificial winter, by cutting the production of coal down considerably, just to raise the price. Whether thousands of people would freeze to death was not something ever brought up at their corporate meetings. They would analyze a million reports, receipts, and progress charts — but between the numbers, they never would look for the toll of misery they created.

So, by including anti-reverse impact checks, legislaters can feel more confident that the regulatory laws they pass have the intended and not the reversed and unintended impact. But, then again, capitalists could respond to the legislation by trying to create the condition that would end the regulatory laws. Perhaps one of the ways to create the best regulatory law checks, is to have the condition that ends the law be based on several variables. For a minimum wage increase bill, for example, it could take into consideration unemployment, gross national product, average income of the working class, among others. It might say, for example, that every 1% of unemployment will ad two points to the condition of ending the law, every $1 increase in the average workers income will deduct two points to that condition, and every additional so much money to the gross national product will deduct one point from the condition. Once the condition reaches 15 or 20 points, the minimum wage is set back to the original. Or, perhaps congress could appoint a council to examine certain aspects of the economy, and then publish a biweekly report on the situation. And after each report comes out, congress can then decide to cancel the legislation and go back to the original situation in the economy. These are just tactics and ideas for implementing regulatory laws in the most practical and useful manner, anyway. It is up to congressmen, senators, and statesmen to honestly look at their people, their county, and make decisions that will improve the lives of all.

Before ending this piece, there are some arguments from opponents that I’d like to address. First and foremost, there is the Capitalist argument. Obscure philosophers and billionaire semi-philanthropists will offer this argument: “Property is sacred. It must be kept private and always private. What a man wishes to do with his wealth is his own business, and every regulation put on his wealth is just another unjust invasion to his property.” Honestly, I believed this argument for a very long time. After much consideration, much research, and many thoughtful processes, I changed my stance on the issue. Before private property existed (at least, in the modern sense of the term “private property”), there was a system in effect known as Feudalism, or what historians call Manorialism. In this system, the average workers were serfs. They did not have the right to marry whom they wished, nor did they have the right to leave their homes, nor did they have a right to the wealth they created. In effect, they were slaves to a system that they never gave their consent to. Their lives were governed by vassals, lords, and kings. Political theorists of both the Capitalist and Socialist camp will agree wholeheartedly that the Feudal system was a menace to the people. It stripped them of all rights and burdened them with all responsibilities. Time would wear on, and change through revolution and insurrection occured.

For the longest time, during the entire lifespan of all these serfs, people were brought up to believe and defend to the death the idea that god gave mandate to the kings to operate this way — that the tradition and heritage people have in this system should be undying. Whether another system of social organization would improve the happiness and lives of the people was not the question they faced. To them, it was a matter of justice, of what is right and what is wrong, of what god has intended for his creation. “Perhaps,” these masters of the feudal age would argue, “Perhaps it is true that another system would make more people happy, and would create a better sense of peace and togetherness and brotherhood. Whether there is another system out there that would eliminate human suffering is of no consequence to me. For the way things are is the most just order; it is the means of existence and organization that the lord has intended, and to disagree with what god intended would only be the most severe blasphemy.” We look to the past, we see these men stuck in their ways, clinging to their system of slavery, and it almost feels like we are looking in to the eyes of the Capitalist class and their defenders. The Capitalist’s words are almost identical to those of the Feudal lord: “It is not a matter of happiness or social equity. It is a matter of what belongs to me and not to anyone else. It is a matter of my right to property, and the fact that nobody else has any right to my property.” As a Communist, my argument has always been clear: Private property is theft.

To both the Capitalist and the Feudalist, I must say this: “What is right and what is wrong are ideas that have changed with every generation, with every culture, with every people. What is just and unjust, what is ethical and unethical, what is moral and immoral, all words to implicate the ‘should’ and the ‘should not’ — these are all things that have always changed. Today, we are standing on the dawn of a new era, a new world, and if we are smart and determined enough, a new way of social organization. If we are masters of our own fate and our own destiny, let us choose for ourselves what is right and what is wrong. These are words you will find in the heart of every thoughtful observer: what is right is what creates happiness, and what is wrong is what creates suffering. The greatest right is the right that causes the greatest happiness; the greatest wrong is the injustice that causes the greatest misery. Capitalist economics then, must be among the greatest wrongs, and any reform to this system must be considered one of the greatest rights. These are the rights of the people, determined by what will satisfy their cravings for happiness, for peace, for equity, for justice. Yes, the old way must be done away with, the way so many older ways have been done away with. And it must be done away with on the sole argument that the happiness, the independence, and the justice of the people will be maximized.”

There is another argument from the Capitalist arena that comes from more sophisticated bunch: the economists. Their argument has been that free trade can only improve a nation. Therefore, in following that logic, many economists and members of the Capitalist group have argued that the trade that is freest is also the most effective. Free Trade, they argue, allows nations producing different goods to exchange these goods with countries that cannot produce such commodities. To quote Nicholas Barbon…

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