Saturday, February 2, 2013

Regulation: A Nation Divided

An immersion blender is a kitchen gadget most people never encounter until receiving one as a wedding gift.  My husband and I had dinner with another newlywed couple and got into a discussion about the merits of this wonder tool and the vats of cream of vegetable soup we have been creating. Our friends warned us that immersion blenders are a danger in disguise, according to the New York Times, and have resulted in numerous traumatic hand injuries.

More informative than the Times article is its comment thread, which is 335 comments long and reveals a nation starkly divided on regulatory philosophy. Comments range from this:
It's articles like this that often cause Americans to be the laughing stock of the world. Would you reach inside a blender with your hands? Pluck a twig from a powered chainsaw? Lick the blade of a knife? Wash your dog in the washer? We all do silly things and get hurt in stupid ways (don't I know it!), but really, do these things really need to be spelled out?
Sometimes there's just no cure for someone's careless mistake, it's no one's fault but one's own, and it's where Darwin intervenes.
To this:
Accidents happen and one must always be careful around such potentially dangerous tools, but this is clearly a case of irresponsible product design. They need to fix this and prevent any more of these frightening occurrences. As for the people in this thread that think this only happens to "stupid" and "careless" people, think again. Accidents happen for many reasons and they may very well happen to you one day... It is clearly a badly designed product and needs to be changed. If it takes lawyers and lawsuits to do that then I'm all for it.
Economists tend to think that the main challenge when it comes to regulation is to properly understand the system to be regulated and properly design the regulations so that they effectively alleviate problems with the system without causing undesirable side effects. The immersion blender story is so striking because this is not the case at all. It is a simple mechanical system that is perfectly well understood. The proposed regulations requiring interlocks or a different handle design are also perfectly understood because they are also simple and mechanical. Everyone can agree that requiring a design change would prevent some of these finger injuries. And yet they cannot agree about whether a design change should be required. The comment writers vehemently defend their pro- or anti-regulation stance. Some argue that accidents can happen to anyone and we need protection against scenarios that make accidents more likely. They want regulations requiring safety features added to the blenders and clearer warning labels. Others argue that the blender is not the problem; stupid people who do stupid things with the blender are the problem. Presented with the same facts, people tell different stories.

We will never be able to understand the workings of the economy or the financial sector as well as a mechanical tool. But we think that, as long as we work toward that goal, we can come closer to perfect regulatory design. Unlikely. Even when people agree on what regulation will do, they disagree on what it should do.


  1. but it's inconsistent. poll a broad set of anti-regulation people (not just internet libertarian firebrands), and i'd expect you'd find a plurality, even a majority, in favor of killing people AS A PRECAUTION against future harm, if the state is doing the killing, and the people to be killed are outsiders.

    you could see the iraq invasion, for instance, as a gigantic regulatory overreach, fettering hundreds of thousands of innocent people with loss of life; to many americans this was justified as either precautionary, or (more often, actually) retaliation for entirely different malefactors' crime on 9/11.

    there's an ugly intersection here, where people give each other permission to be stupid, then shrug off murdering hundreds of thousands of people as a mistake to learn from.

  2. I think the example is a good one when illustrating certain attitudes and biases towards the role of regulation.

    However, in the case of the economy, it is a bit misleading. What we are dealing with there in many cases is purposeful fraud, mislabeling of risk, and predatory criminal behaviour.

    If the blender company had created a product that did not work, that was grossly misdesigned and badly manufactured, that in many cases did not work as advertised, and was supported by a well funded campgaign of deception and bribery, then the comparison might be more apropos.

    The 'rational expectations' model has its allure, and is fatally flawed.


Comments appreciated!