Lost lives the real costs of regulator overreach

Every once in a while, one encounters the perfect example of the folly, naivete and hubris of an ivory-tower academic. A case in point was a March 24 New York Times op-ed ("Three Cheers for the Nanny State") by Bowdoin College philosophy professor Sarah Conly, who lauded the sort of governmental overprotectiveness and intrusion into our lives that defines the "nanny state."

Conly defended New York City Mayor Michael Bloomberg's proposed ban on large "sugary drinks" as a paradigm of appropriate, health- promoting governmental intrusiveness. She believes that "successful paternalistic laws are done on the basis of a cost-benefit analysis" and that "[m]aking these analyses is something the government has the resources to do."

The government might have the requisite resources but, in fact, federal agencies frequently screw up, misrepresent or actually fudge cost-benefit analyses. The Environmental Protection Agency is notorious for this. In one analysis by the Office of Management and Budget, of the 30 least-cost-effective regulations throughout the government, the EPA had imposed no fewer than 17.

For example, an EPA rule finalized in February 2012 that created new emissions standards for coal- and oil-fired electric utilities belied sound cost-benefit analysis. According to an analysis by Diane Katz and James Gattuso of the Heritage Foundation, "The benefits are highly questionable, with the vast majority being unrelated to the emissions targeted by the regulation. The costs, however, are certain: an estimated $9.6 billion annually. The regulations will produce a significant loss of electricity- generating capacity, which [will] undermine energy reliability and raise energy costs across the entire economy."

How big a deal is a little gratuitous, save-us-from-ourselves regulation? Very big. The diversion of resources to comply with regulation – good, bad or indifferent – exerts an "income effect" that reflects the correlation between wealth and health. It is no coincidence that richer societies and segments of the population have lower mortality rates than do poorer ones.

To deprive communities of wealth, therefore, is to compromise their health, because wealthier individuals are able to purchase better health care, enjoy more nutritious diets and lead generally less-stressful lives. Conversely, the deprivation of income itself has adverse health effects – for example, an increased incidence of stress-related problems, including ulcers, hypertension, heart attacks, depression and suicides.

Although it is difficult to quantify precisely the relationship between mortality and the deprivation of income, academic studies suggest as a conservative estimate that approximately every $7 million of regulatory costs will induce one additional fatality through this indirect "income effect." Because unnecessary deaths are the real costs of regulators' "erring on the side of safety," excessive regulation has been dubbed "statistical murder."

Conly harbors many naive ideas about the role of government, such as that it exists to "help us get where we want to go." By that, she means, "It's not always worth it to intervene, but sometimes, where the costs are small and the benefit is large, it is. That's why we have prescriptions for medicine. And that's why, as irritating as it may initially feel, the soda regulation is a good idea."

Where is the analysis that demonstrates that the soda regulation's health benefits outweigh the costs of a compliance and enforcement apparatus?

Conly observes that "[s]ome of us can drive safely at 90 mph, but we're bound by the same laws as the people who can't, because individual speeding laws aren't practical." It is also because unsafe drivers impose a cost on the rest of us that can't be easily avoided except by speed limits and other regulation.

But the health effects of obesity or other imprudent lifestyle choices impose a cost on the rest of society only because we, as a society, have chosen to pay the health costs of those who make injudicious choices. Only this kind of circular reasoning can justify electoral majorities' forcing costs on us and then curtailing our lifestyle choices on the grounds that those costs are too great.

Conly asks, "Do we care so much about our health that we want to be forced to go to aerobics every day and give up all meat, sugar and salt?" Her answer is "No." But why not? Why is coercion off- limits for these behaviors and preferences while Conly's favored strictures are OK? Conly concludes that by letting the government nannies dictate our choices, "We feel as if we lose some dignity. But that's the way it is, and there's no dignity in clinging to an illusion." In fact, people find more dignity in making and being responsible for their own choices.

Henry I. Miller is a physician and molecular biologist and a fellow at Stanford University's Hoover Institution. He was the founding director of the FDA's Office of Biotechnology from 1989- 93. Gregory Conko is executive director of the Competitive Enterprise Institute.