Government Regulations Protect Our Freedom

A few years ago, the nonprofit I ran commissioned an artist to make a mural on the outside of our building using ceramic tiles. The end product was amazing. But the money we used to pay for it came from a local government program in support of public art and was subject to all kinds of regulations that – at one point – I thought might upend the whole project. For example, it required the artist to purchase his materials from competitive bid, including women and minority-owned businesses, and that we document that the hourly wages we paid to the artist met the minimums set by the Fair Labor Standards Act (even though we’d commissioned a contracted amount up front).

Eventually we were able to find work-arounds for these regulations, but it is something that, as someone who ran a small business for over 20 years, I ran into several times. So I am not completely immune to the arguments Republicans make about the burden imposed by government regulations. But I constantly weighed that with the higher good most of those regulations were designed to accomplish. For example: I support any effort to ensure that women and minority-owned businesses compete on an equal playing field – especially when it is my tax dollars that are being spent.

In the latest issue of the Washington Monthly, Daniel Carpenter reviews the book No Freedom Without Regulation: The Hidden Lesson of the Subprime Crisis by Professor Joseph William Singer of Harvard Law School. In it, he turns the argument we usually hear from Republicans about how government regulations rob us of our freedom on its head. For example:

When the state sets minimum standards of safety and transparency for the manufacture and sale of consumer products, it affords me the freedom to buy a toaster oven without first hiring a lawyer to read the fine print and an electrician to look over the specs to make sure it won’t catch on fire. Other restrictions protect us from negative externalities. Building codes may limit my neighbor’s ability to contract for the construction of a house with cheap material and bad wiring, but it protects my house from the fire likely to erupt in his.

He then gets to the heart of the issue: the subprime crisis.

He quotes Elizabeth Warren’s observation that subprime mortgages are the moral equivalent of exploding toasters. Those who sold subprime mortgages justified them at the time as helping lower-income families achieve the dream of homeownership. In fact, the various deceptions built into them hurt not only the borrowers—many of whom were in fact not low income—but also the financial institutions that purchased the mortgages, communities with high rates of foreclosure, and the rest of us who lost jobs, income, and wealth in the recession that resulted.

In other words, failure to regulate mortgages robbed an awful lot of people up and down the income scale of their financial freedom.

While it’s true that regulations can impose inconveniences on businesses, that is a small price to pay for the kind of freedom they protect.

Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly.