From: solman@athena.mit.edu (Jason W Solinsky)
Newsgroups: alt.politics.elections
Subject: Re: Regulations
Date: 13 Apr 92 05:16:53 GMT
Distribution: usa
Organization: Massachusetts Institute of Technology

In article <1992Apr12.183814.10604@cunixf.cc.columbia.edu>, egl1@cunixf.cc.columbia.edu (Elizabeth G. Levy) writes:

|> I don't expect the construction yard near my house to be a dangerous
|> place.  Shouldn't I have the confidence to walk by?  Should I instead
|> go around in fear of some catastrophe striking, one that could have
|> been prevented by some safety regulation?

If there is no limit on corporate liability, and you are killed by negligence,
SOMEBODY is going to have the rest of their life ruined. Even if the only
penalties are economic. People don't want to be tossed out in the street, due to
their negligence. This makes them CAREFUL.

|> Out of curiousity, if voters want more health and safety regulations,
|> would you give it to them?

This is just what I think should happen. If the voters vote through legislation,
then its theirs. Until we started getting liberal Supream Courts and the 16th
Amendment, our country was run as I describe. The voters chose to give it up.


|> Nearby town almost gets wiped
|> out because the company hired workers ignorant of the safety precautions.
|> (I'm referring to this month's Harper's article on how Reagan era
|> deregulation and union-busting has been responsible for the rash of
|> oil refinery explosions in the past 6 years.)  This is cost effective
|> for the company.  Not only do they pay these workers a third less in wages,
|> they don't have to pay the usual benefits (insurance and pension).

If you wipe uot a town there are usually billions of dollars in damages to pay
(unless its in India where Union Carbide got off [nearly] scot-free. But that's
due to a horrible legal system). More than most companies can afford. With
unlimited liability, the people responsible are guaranteed to have their lives
ruined.

Note that there would be some regulations. To avoid the unlimited liability, most
companies would take out bankruptcy insurance, and you'd better believe that
people with money do a good job of investigating things. Compare that to the job
government does.

|> Further, having these safety regulations does not necessarily reduce
|> productivity. 

Yes, you can incroporate it into the equation. It would just increase the level
of safety spending at which the company makes the most profit. You can count on
the company to spend this amount on its own. It likes profit.

|> Don't forget the equations you pick up in an econ class DO have
|> political assumptions behind them.  What's the cost of a human life?
|> For my life, it'd be somewhat less than costing a company a little
|> inconvenience.

It's seems that the courts value human lives at between 5 and 100 million
dollars. That's enough money to guarantee safety.

|> I know some of the bankruptcy
|> laws are out of date, or at least don't allow creditors to remove
|> bad management.  There should be reform.  However, bankruptcy laws
|> exist to protect people who lose their shirts because of events
|> outside their control.  They shouldn't be tossed out.

If people are in danger of losing their shirts, then they should have to pay a
fee to cover the loses of others who do lose their shirts. Sort of like the way
the FDIC insures people that their savings are not wiped out, organizations would
be created to insure investors that their company's debt does not wipe them
out... at a price. This price would be set, by how fundamentally solvent, the
insurance company thinks the company is (like life insurance is set by how
healthy they think you are.) Naturally companies would try to minimize this fee,
and one way to do this is prevent liabilities by making things safer. The
difference here, is that the people enforcing this safety have real motivation,
profit.

As far as the management of companies going broke, you can bet that the
bankruptcy insurance company that holds the policy to a company that is going
broke, will make sure that as much money is salvaged as possible... because every
cent lost, comes out of their pockets.

Jason W. Solinsky