Another problem with regulation is it tends to hit after the fact. Remember Enron? It folded in 2001, taking billions of dollars with it. Investors had poured their money into the stock, even though it was unclear what, exactly, the company did. Enron’s collapse also destroyed Arthur Anderson, the accounting firm that had signed off on its books.
That alone would have been enough to fix up the accounting industry. After all, no company wants to go out of business. However, Congress wanted to chime in, too. It passed Sarbanes-Oxley, a bill meant to guarantee companies would provide honest financial reports.
But the main result of the law has been to make it more difficult to launch a business here. Wall Street was once king of the Initial Public Offering, but these days many companies choose to be listed in London or Hong Kong so they can avoid American regulatory red tape.
“Sarbanes-Oxley was an overreaction to the aftermath of the Insanity.com era,” John Fitzgibbon Jr. of IPOscoop.com said a couple of years ago. “It’s added a lot of expenses onto these companies.” And the long-term effects of this over-regulation are yet to be felt.
To come back to food, of course everyone wants to know that everything we eat is clean and safe. But there’s no way the government could even afford to hire enough people to inspect every apple picked, every tomato shipped and every lettuce leaf on every sandwich. If it tried to do so, suddenly a salad would be so expensive nobody would ever buy one.
Yet our food supply is safer than ever in human history. Farmers and companies strive to supply safe, healthy food, and they’re doing so every day. The days of the stomach-turning Chicago packing houses described in Upton Sinclair’s “The Jungle” are long over, and never coming back.
The best way to make our food safer and our lives better is, ironically, to keep regulators out of our kitchens, out of our homes and out of our lives. What will protect us in the future is free-market policies.