Topic: Regulatory Studies

Should We Execute Bad Regulators?

I just sent this letter to the editor of the Washington Post:

The lack of outrage about China’s horrific execution of a corrupt food and drug regulator in a recent editorial [“Rough Justice,” July 14] was itself outrageous.
 
Zheng Xiaoyu was put to death for (allegedly) taking bribes that enabled unsafe products to reach the market. The death toll thus far is hundreds of lives lost in China and Panama.
 
Dr. David A. Kessler was commissioner of the U.S. Food and Drug Administration (FDA) from 1991 through 1996. In 1988, researchers at Harvard University had demonstrated that widespread use of aspirin at the onset of a heart attack and daily for 30 days afterward could save 5,000 lives per year in the United States. Yet Dr. Kessler’s FDA refused to let aspirin manufacturers advertise that extremely important information until 1996. That policy resulted in as many as 30,000 unnecessary deaths during Dr. Kessler’s tenure. No one has ever accused Dr. Kessler of taking bribes. But he surely benefited personally from his position and from his aggressive regulatory policies, going on to be named dean of Yale University’s medical school.
 
If Dr. Kessler’s political opponents in the U.S. government had put Dr. Kessler to death for his actions as a regulator, I think the Post would denounce his execution as barbaric. But then why be so blithe about an equally barbaric execution in China?

I’m used to people valuing the lives of the FDA’s Type I victims more than the lives of its Type II victims. But valuing the lives of Type I victims more than the lives of the regulators themselves is a new one by me.

Science, Values and Politics

Today’s NYT features a front page, above-the-fold story about former surgeon general Richard Carmona’s charge that the Bush administration interfered with his office by (in the words of the NYT) ”repeatedly [trying] to weaken or suppress important public health reports because of political considerations.” He made the charge yesterday in testimony before the House Committee on Oversight and Government Reform.

Carmona described Bush administration behavior that ranged from petty (urging him not to attend Special Olympics events because of the Kennedy family’s connection to the program) to outright worrisome (directing him, again in the words of the NYT, “to put political considerations over scientific ones”). His claims add to the image of a Bush White House in which political considerations and ideology trump all others.

However, Carmona’s prepared statement suggests that the Bushies aren’t the only folks caught up in ideology.

Carmona considers himself a person of science, and scientists have an important role in policymaking. They try to determine the existence of various empirical relationships (e.g., certain emissions trap heat in the atmosphere; exposure to tobacco smoke increases the risk of cancer) and use those determinations to make predictions about the future (e.g., ongoing emission of greenhouse gases at certain levels will affect the climate; reduced tobacco use will decrease the incidence of cancer). In this way, science informs policymaking by predicting the outcomes of various policy choices.

But though science informs policy choices, it cannot make those choices. Science is a non-normative endeavor, and cannot answer such questions as whether climate change should be avoided, and whether reducing tobacco use should be used as a means to reduce the incidence of cancer. Those are the subject of value judgments — and, for public decisions, of politics.

Many “people of science” do not appreciate this limit on science’s role in policymaking. They assume that once a relationship is established scientifically, policy choices cogently follow. In making this assumption, they enter their own value judgments as suppressed premises in their analyses. Many doctors see bad health outcomes as not just undesirable, but so undesirable that they should be avoided even at high costs; many environmental scientists have the same opinion about environmental damage. Hence, they would argue that “objective, nonpartisan science” calls for policies to limit greenhouse emissions and reduce smoking. In fact, science can do no such thing; value judgments call for (or against) various choices.

To better understand this, consider the role of a doctor. Five separate times in his testimony, Carmona refered to the surgeon general as “the nation’s doctor” (conjuring the image of 300 million Americans sticking out their collective tongues and saying “ahh”). I trust my doctor to make a scientific determination of the state of my health and to lay out various courses of action concerning my health (e.g., lose weight, take medication, exercise more, quit smoking). But I am the one who sets policies concerning my health — I decide whether the costs of some course of action (e.g., the side effects of some drug, or the pleasure forgone by dieting) is worth the health benefits. Likewise, public health policy should be set by elected representatives who are directly accountable to the citizenry, not by “the nation’s doctor.”

But Carmona apparently wants the surgeon general to become a policymaker. He told the House committee:

[T]he Surgeon General [should] speak and act openly and as often as necessary on contemporary health and scientific issues so as to improve the health, safety, and security of the nation.

Indeed, that role may be too modest for Carmona’s surgeon general; he repeatedly argued that the surgeon general should “serve the people and the world.” He offered lawmakers a five-point plan for the U.S. Public Health Service that included the following:

  • Recognize and plan for the fact that tomorrow’s best hope to achieve millennium goals, extinguish asymmetries, eradicate social injustices, and make the world [a] healthier, safer and more secure place may be the newer, softer force projection of health diplomacy via prospective ongoing sustainable missions globally.

So, instead of just being the nation’s doctor (with policymaking power), Carmona’s surgeon general would be a force projector for the world.

Carmona is correct that politicians should not interfere with the scientific analysis of the surgeon general — the surgeon general should follow an empirical question wherever the science leads. And he may even state his personal opinion — couched as such — on the value judgments that ensue from the science. But the surgeon general should not supplant the politicians in making public policy decisions, nor supplant private individuals in making personal health decisions. And, of course, the surgeon general should not doctor scientific findings to conform them to his own value judgments.

Regulatory Madness

In researching my new bulletin, Milk Madness, the weirdest document I came across was this 2003 note from then New York Attorney General, Eliot Spitzer.

Spitzer was going after retailers of milk for “price gouging,” or charging prices that were “excessive.”

Talk about regulatory chutzpah. The federal government runs a milk cartel system, called “marketing orders,” which has the direct goal of raising prices. A federal price support program and import barriers are designed to raise milk prices. It has been federal policy for 70 years to screw milk consumers for the benefit of milk producers.

And the government of New York is going after retailers for overcharging? 

New Cato Paper on RomneyCare

Today, Cato releases a new paper on the Massachusetts health plan by David Hyman, a Cato adjunct scholar and professor of law & medicine at the University of Illinois.  Hyman’s paper is titled, “The Massachusetts Health Plan: The Good, the Bad, and the Ugly.” 

Here’s an excerpt:

Although the legislation, as Stuart Altman put it, “is not a typical Massachusetts-Taxachusetts, oh-just-crazy-liberal plan,” there is enough “bad” and “ugly” in the mix to raise serious concerns, particularly when the desire to overregulate the health insurance market appears to be hard-wired into Massachusetts policymakers’ DNA…

If we want to make health insurance more affordable and avoid the “bad” and the “ugly” of the Massachusetts plan, Congress—or, barring that, individual states—should consider a “regulatory federalism” approach.

Chocolate Chutzpah

Americans love their chocolate. So it’s no surprise that one of the most-read pages currently on the New York Times’ website is Monday’s op-ed decrying a proposal to change federal regulations on what can be legally labeled “chocolate.”

Under Food and Drug Administration regulations, “chocolate” must contain crushed cacao beans and may contain a short list of other ingredients, including spices, nuts, sweeteners, and dairy products. Confections that do not comply with those regulations cannot carry the “chocolate” label.

Some candymakers have petitioned the FDA to expand the list of allowable additives to include various fats. If that happens, chocolatiers could substitute cheaper vegetable oils for expensive cocoa butter — the fat in cacao beans that provides chocolate’s melt-in-your-mouth texture. By substituting away from cocoa butter, confectioners would lower their production costs,  which would lead to greater profit margins or, if the candymakers compete on price, lower chocolate’s price to consumers.

To be clear, chocolatiers can already make this substitution, but the resulting product cannot legally be called “chocolate.” A rose by any other name may smell as sweet, but “chocolate-like candy” apparently doesn’t sell as well as “chocolate.”

That brings us to the NYT op-ed, penned by Mort Rosenblum. He laments:

The proposal would widen the gap between good and awful. Industrial food companies could sell their waxy [confections] for less. But purveyors of the real thing have no corners to cut. While discerning chocoholics will fork over whatever it takes, those who can’t pay will never know chocolate.

As a chocophile, I sympathize with Rosenblum’s opinion of the would-be chocolates. But his lament is difficult to square with chocolate’s history, its current market trend, and basic economics.

When edible chocolate first appeared in the mid-19th century, the high price of cacao made it an endulgence for only the wealthy. Fortunately, the confection became more affordable a few decades later when chocolate makers started mixing in cheaper additives. The most important of those was milk, first popularized by the Swiss entrepreneur Daniel Peter (with help from a powdered milk maker named Henri Nestlé). In the United States, Milton Hershey experimented with the same idea, resulting in his affordable and popular ”great American chocolate bar.” Some Rosenblum predecessor likely complained that the added milk and sugar meant that consumers “will never know chocolate,” but it’s difficult to see Peter’s and Hershey’s creations as anything but a benefit to the consumer.

Nor did milk chocolate lead consumers to turn away from “real” chocolate. Until Monday’s NYT op-ed, recent news coverage on the chocolate industry has trumpeted the strong market trend toward premium chocolate. With plenty of Hershey’s, Whitman’s, and Russell Stover’s on the market, Americans nonetheless are buying more See’s, Godiva, and Lindt’s, and are searching for chocolate bars with higher and higher cacao content. And the large chocolate manufacturers are responding to the demand for premium chocolate.

From an economic perspective, this makes perfect sense. Consumers shift from a product to its substitute because they find the substitute preferable. In the case of the would-be chocolates, consumers would shift away from “real” chocolates because they prefer either the price or the taste of the new confections. Rosenblum makes clear his opinion that “real” chocolate is far better tasting, so only consumers with a strong concern about price would make the switch. Those consumers would not fail to “know chocolate” — they just would be unwilling to pay its price. Meanwhile, people who do prefer “real” chocolate — people who happily pay chocolate’s current price — will go on paying that price to enjoy the food of the gods.

A concern that Rosenblum’s op-ed could have raised is that consumers may be misled as to the nature of the candy bar they are purchasing if the “chocolate” regulation is amended as proposed. But even that concern seems hollow. As noted above, premium chocolates are currently en vogue, and the chocolate bars in the checkout lines at my Trader Joe’s boldly advertise their cacao content (some topping 85%). If the federal government were to change the chocolate regulations, quality chocolatiers would quickly respond with labels telling consumers that their chocolates contain no “foreign fats.”

Rosenblum’s op-ed is a fun and informative read, but the alarm it raises is, well, hard to swallow.

And now, I think I’ll head across the street to the CVS and grab a Ritter Sport bar.

Regulatory Burden Reaches Record Level

George W. Bush has been a big spender, but he also is increasing the burden of government in other ways. As explained in a piece for Investor’s Business Daily, government red tape has climbed to all-time highs:

…there is much more to government’s reach in the economy than direct spending. The costs to the public of complying with federal health, safety, environmental and economic regulations appear nowhere in the federal budget. Economist Mark Crain’s research for the U.S. Small Business Administration finds that in 2006 regulatory compliance cost Americans $1.14 trillion. Astoundingly, that approaches half of last year’s total federal spending of $2.6 trillion, and exceeds 9% of U.S. GDP… Agencies publish regulations in the Federal Register, the daily depository of all federal rules and regulations. In 2006, the Register swelled to 74,937 pages, the second-highest level in history (the highest was 2004). Within those pages, agencies issued 3,718 final rules. …the 60-plus federal departments, agencies, and commissions are at work on 4,052 more rules. Of these, agencies report 139 are “economically significant,” which means they will cost at least $100 million — often far, far beyond — while 787 are expected to affect small businesses. …Almost 4,000 new rules every year is a lot of “regulation without representation.”

The House Votes on Cloning: Good News! Bad News!

Last Wednesday the House held a surprise vote on Rep. DeGette’s (D-Colorado) Human Cloning Prohibition Act of 2007. The bill that would prohibit reproductive, but not therapeutic cloning was defeated by only nine votes. That same morning, the White House issued a “Statement of Administrative Policy” declaring “The President unequivocally opposes all forms of human cloning” and that the President would veto any bill that allows even therapeutic cloning. The good news is that the House bill did not pass. The bad news is that Congress, the President, and a dozen or so states would like to ban at least some forms of cloning.

The Act would have prohibited human cloning which it defines as “the implantation of the product of human somatic cell nuclear transfer technology into a uterus or the functional equivalent of a uterus.” It would have prohibited both actual human cloning and any “attempt to perform” human cloning. The bill did not define “equivalent of a uterus” or what would constitute and “attempt” to perform human cloning. Vagueness is a problem in all efforts to ban cloning because of the possible chilling effects such prohibitions can have on scientific advancements. Ten years in prison or a ten million dollar fine would be a harsh penalty to pay for a misunderstanding of scientific motives.

Science is no longer something done in the basement of a mad scientist’s mansion. Scientific inquiry requires teams of researchers with universities or research institutions to back them. It is possible to conceive of one mad scientist or even one mad scientist who convinces another to go along, but a whole team of mad scientists? That is not only highly unlikely, but nearly impossible. The only way something that horrific could conceivably happen is if government sponsored a highly top secret project. No one in the private sector could command that amount of secrecy without the public finding out what was going on.

This isn’t the first time there have been efforts to ban new reproductive technologies for fear of mad scientist and monster babies. There were cries to ban in vitro fertilization (IVF) in the 1970s, but Congress never passed any such laws, and the research proceeded without the creation of any “monster babies,” only millions of happy infertile couples who now have children – children, who by most estimates, have fewer birth defects than children born without the assistance of reproductive technologies.

Cloning is an integral part of several potential medical advances. It is essential to embryonic stem cell therapies, potential infertility therapies, and possible genetic therapies. The best course of action for the federal government is no action at all. If we are lucky, Congress and the President will remain at loggerheads long enough for cloning to continue to play its part in the advancement of science. But, what might happen at the state level is another story.