Editorial
Regulation, Kobe Beef – and the Titanic, Too
What do Kobe Beef and the Titanic have in common? They both are the subjects of articles this week that deal with regulation.
Regulatory democracy is surely a meme of the 20th century, what we call a dominant social theme of a global power elite. These individuals work through government to pass laws and regulations that benefit them and help with the expansion of global governance.
Government is the key to a kind of new world order. And government around the world continues to grow.
The justification for big government is its ability to counteract "market failure" and ensure that private enterprise does not take advantage of the larger public. But this is surely a promotional theme rather than an evident reality.
What disciplines the market is the Invisible Hand of competition. Unfortunately, that hand is lacking when it comes to government solutions.
Because government officials and regulators are immune to competition, the solutions offered by the bureaucracy are never tempered by real-life implementation.
It is only when disaster strikes that regulations tend to be scrutinized. And usually when this occurs, regulations are found to be wanting – and then new ones are passed!
But in truth, regulation is a very ineffective way of providing "market discipline." The private sector itself is very effective at providing scrutiny of failing or corrupt businesses – if it is allowed to operate.
But the problem is that when government takes over the watchdog function, private forms of business scrutiny tend to fall away. The force of officialdom – and the modern legal system – drives them out.
Two articles appeared recently that bear out this sort of perspective. The first one is perhaps the more compelling because it deals directly with the issues I've mentioned and has caused a minor stir in this age of regulatory adulation.
It appeared in the Wall Street Journal and was entitled, "The Real Reason for the Tragedy of the Titanic." The article's official reason for appearing was that we are approaching the 100-year anniversary of the Titanic's sinking.
But the article itself was actually an important one because it used the accident to make a larger point about the inefficiency of regulation at a time when Western societies are generally engaged in generating yet more regulatory complexity.
The article explores why there were not enough lifeboats on the Titanic and concludes that the owners of the Titanic had provided enough lifeboats to satisfy the current regulatory standard but no more.
The regulators themselves were complacent and those building the Titanic were content to provide what was officially necessary rather than what might have been prudent. Regulation, one could say, had made them complacent. The article concludes as follows:
This is a distressingly common problem. Governments find it easy to implement regulations but tedious to maintain existing ones—politicians gain little political benefit from updating old laws, only from introducing new laws.
And regulated entities tend to comply with the specifics of the regulations, not with the goal of the regulations themselves. All too often, once government takes over, what was private risk management becomes regulatory compliance.
It's easy to weave the Titanic disaster into a seductive tale of hubris, social stratification and capitalist excess. But the Titanic's chroniclers tend to put their moral narrative ahead of their historical one.
At the accident's core is this reality: British regulators assumed responsibility for lifeboat numbers and then botched that responsibility. With a close reading of the evidence, it is hard not to see the Titanic disaster as a tragic example of government failure.
This article makes good points, in my view. But it is not the only one focused on regulation this week. Over at Forbes, we find an article entitled, "The Kobe Beef Lie."
The article points out that while there is a large business in the US (in particular) providing Kobe Beef, there is actually no such thing as Kobe Beef. The reason that an entire industry has taken root in the US has to do with regulation rather than reality. Here's the key point the article makes:
"How is this possible?" you ask, when you see the virtues of Kobe being touted on television food shows, by famous chefs, and on menus all over the country? A dozen burger joints in Las Vegas alone offer Kobe burgers. Google it and you will find dozens of online vendors happy to take your money and ship you very pricey steaks. Restaurant reviews in the New York Times have repeatedly praised the "Kobe beef" served at high-end Manhattan restaurants. Not an issue of any major food magazine goes by without reinforcing the great fat Kobe beef lie. So how could I possibly be right?
The answer is sadly simplistic: Despite the fact that Kobe Beef, as well as Kobe Meat and Kobe Cattle, are patented trademarks in Japan, these trademarks are neither recognized nor protected by U.S. law. As far as regulators here are concerned, Kobe Beef, unlike say Florida Orange Juice, means almost nothing (the "beef" part should still come from cows). Like the recent surge in the use of the unregulated label term "natural," it is an adjective used mainly to confuse consumers and profit from that confusion.
This matters because the reason food lovers and expense account diners want Kobe beef, and are willing to pay a huge premium for it, is because of the real Kobe's longstanding reputation for excellence. The con the US food industry is running is leading you to believe that what you are paying huge dollars for – like the $40 NYC "Kobe" burger – is somehow linked to this heritage of excellence. It's not.
Here we see, once again, that regulation has results that are far different than might have been expected. Regulatory authorities have allowed regulations to be used to create a faux-industry that likely would not otherwise exist – or certainly not in its current brazen condition.
In the modern age's hyper-regulatory environment, such distortions prosper because regulations undermine private watchdog efforts without effectively replacing them.
Ultimately, every regulation is a price fix – transferring wealth from those who create it to those who don't and may not know how to use it. Regulations, by definition, create market distortions.
The idea is that these distortions are predictable and that they will create predictable – and laudable results. But we can see in the case of Kobe Beef that they have helped create an artificial industry. In the case of the Titanic, regulations indirectly led to the deaths of some 1,500 innocents.
Regulation removes market discipline and rarely if ever works as advertised. Human action – human nature, in fact – almost guarantees that regulations will be subverted and their impact redirected.
In fact, regulations are part of a larger syndrome called "regulatory capture" in which the largest players in any industry utilize regulations to create barriers to entry and other advantageous facilities.
We write a lot about the Internet Reformation at this website – a knowledge environment being created by free-market thinking enhanced by current technologies.
We've predicted that the promotional memes of the elite – when it comes to regulation and much else – will come under increased scrutiny in the 21st century, much as traditional cultural assumptions became subject to scrutiny after the advent of the Gutenberg Press.
Such trends are hard to define, but it is a process that may be ongoing. Markets work better than government. Private sector competition is surely preferable to dysfunctional regulation.
The 20th century saw the overwhelming growth of "regulatory democracy." Hopefully, the 21st century shall moderate (or even reverse) this growth.
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Posted by victorbarney on 04/14/12 11:36 AM
"What do Kobe Beef and the Titanic have in common? They both are the subjects of articles this week that deal with regulation." Anthony, another great article by you. Unlike our very "first" American government it certainly is evident now that government means REGULATION! It's all about the GOVERNMENT, not about "we the people," as orginally intended, isn't it? AND, I MIGHT ADD: "WE THE PEOPLE" EVEN VOTED TO HAVE DONE WHAT IS BEING DONE! You figure. Just saying...
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Posted by fireberries on 04/14/12 12:14 PM
Your observations about minimal lifeboats on the Titanic intrigue and also trigger another question:
Could it be that "regulations" meant lifeboats only for first class, perhaps even second class passengers, but not lower class, unprivileged, "expendable" passengers? For example, First Class Titanic passengers Lord and Lady Duff Gordon took seats in their lifeboat as a matter of routine expectation.
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Posted by amanfromMars on 04/14/12 12:17 PM
Talking of rules and regulations, as we are, here is some real spooky virtual deja-vu, Anthony, also busting some myths pimped by the serially psychotic and decidedly deceitful?
[quote]amanfromMars 14 April 2012 at 3:16 pm …… has a pleasant edutaining rave on Click to view link
Methinks all here, and especially those who would be thinking that the West has a lot to teach the East about human rights and the wonderful benefits of a capitalist/mercantalist pseudo-democracy with its crooked markets and selective justice systems ….. for surely no one actually believes that politicians and money lenders and rule makers give a toss for what you would be thinking or wanting ….. need to realise that they are a prime example of a successful brainwashing program, ably aided and abetted by their own compliance and complicity in not thinking about how things are done, on a global Great Game scale.
You might like to mull over the following ……
amanfromMars ….says on Click to view link
This paragraph ……. 'Unless restrained by this court, Aereo's unlawful conduct causes plaintiffs to lose control over the dissemination of their copyrighted programming, disrupts their relationships with licensed distributors and viewers and usurps their right to decide how and on what terms to make available and license content over new internet distribution media. That constitutes irreparable harm and Aereo's service should be enjoined,' …. which Bruce Keller, their lawyer, wrote the federal judge presiding over the litigation, is only the tip of the iceberg for what he really means to say but is probably instructed not to make obvious and reveal, is this version of the statement …… 'Unless restrained by this court, Aereo's unlawful conduct causes plaintiffs to lose control over the dissemination of their subliminal brainwashing programs, disrupts the relationship with government approved quacks and ignorant and susceptible to grooming viewers and usurps their right to decide how and on what terms to make available and license content over new internet distribution media. That constitutes irreparable harm and Aereo's service should be enjoined,'
And yes, present services do constitute and cause irreparable harm, for television is perceived of by the masses as showing reality whenever in actual fact it just displays a staged program to imprint a particular and peculiar view of a foreign digitally mastered world with participating state and non-state actors and extras.
Or are you going to tell us all that it is completely different, and that is not what television is primarily used for …. to brainwash nations and the masses with misleading information in service of a status quo political and politically incorrect social agenda?
Yeah, right on, Big Brother, pull this one, it's got bells on it ….. Ding a ling, a ling a dong!
In a nutshell, your life is decided upon and taken care of in the Creative Command of IT and InterNetworking Communications and IntelAIgent Communities which deliver the simplest of titanic tasks… Control through Words to Power Controlled Worlds, or if you are into Great Game Play, Control of Words in New World Orders in Order to Control Powerful New Worlds ….. and those who can supply that sublime content to media for broadband casting, is that which rules every aspect of your present existence and either enslaves you or frees you to do as is arranged for you?
And shared as a question, as you may doubt it. However, there is no question of doubt in the minds of those who so easily wield ITs powers. Indeed, some would always welcome the fact that such a state of affairs is comprehensively disbelieved as it extraordinarily renders to them an absolute freedom to do exactly as they please …… and for that they thank you.
Now you know why there is such a rush by governments and security services to know what everyone is doing on the internet trying to ensnare data centres as proxy state surveillance agents, passing on as much hoovered up information/data/metadata as they can phish and pluck out of the ether?
But it will not change anything substantially for intelligent analysis of random information gathered and/or provided … for intelligence services are constantly being bombarded and betatested with baited information and sensitive intelligence for evidence of the future facilities/abilities needed for stealthy virtual leadership and an overwhelming fitness for universal good purpose ….. appears to be far too slow off the mark in identifying itself as being engaged in the new novel processes and ProgramMING, and that may be evidence of it being missing wholesale from present services.
A question for Loughside [5] and Legoland [6] to ponder, methinks. And Mr Allen too, now that he appears to be fully recovered and presumably firing on all cylinders. [/quote]
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Posted by clark on 04/14/12 02:00 PM
"Governments find it easy to implement regulations but tedious to maintain existing ones"
This seems to be yet another example, as if you needed to see more:
Traceability for Livestock Moving Interstate and … 'Chicken Crimes.'
Click to view link
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Posted by Kriss Robin on 04/14/12 02:03 PM
May I politely ask, where did consent come from, if not from the People?
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Posted by seer on 04/14/12 02:26 PM
So much said that some has to be true. The elite certainly have used governments to their advantage for centuries. The British elite in America demanded that their plantations be exempt from colonial defense taxes for which they would benefit. But... ."But in truth, regulation is a very ineffective way of providing "market discipline." The private sector itself is very effective at providing scrutiny of failing or corrupt businesses - if it is allowed to operate."
The Proof of this Private sector CONTROL is NOT Presented by DB. I will point to a few examples of the contrary: Enron, Worldcom, Madoff, Big Banks (derivatives, sub-prime mortgages, predatory lending) and The Savings & Loan problems in the late 1980's.
Reply from The Daily Bell
Gee, Seer ... The SEC gave Madoff a free-ride for years and everyone he conned assumed he was an honest man. Why? Because he took care to involve himself DEEPLY in the regulatory structure. It supported him and promoted him. He derived terrific credibility from it. But you knew that, didn't you ... Didn't you? ...
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Posted by tjdetmers on 04/14/12 03:08 PM
You raise some interesting points. There are many people that believe buying "name brand" puts a healthy distance between themselves and the riff raff of third class. These same people would be properly horrified that such a distance existed on the Titanic. Regulations are like permission to stop thinking for yourself. The media reinforces this in a paternalistic fashion. The 9/11 myth flies in the face of physics... ..but it is almost sacriligous to question the official line. The facts at Fukishima are not even close to what is put out there for us to believe. Click to view link
Technology is a two edged sword, and so is Truth. It behooves each of us to search for Truth and celebrate and share it when we find it. Thank you DB for the part you play.
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Posted by misterkel on 04/14/12 03:41 PM
DB is not carefully reading your answer. You're basically saying that 'Yes - regulation can be used for corporate corruption, but business self-regulation can also be corrupt.' I agree - if global businesses want to engage in corruption for profit - they will not limit themselves to using only gov't regs, then somehow magically be destroyed if they try it in a free market. It's Harry Potter thinking. So, DB criticizes you for agreeing that - yes, Madoff used the regulators and was in bed with them - then DB ignores your actual point - businesses can, have and will engage in large-scale corruption by their own self-regulatory processes. There's pretty much no debate with a free market ideologue - only and always, the free market is PERFECT. It NEVER makes a mistake. That's impossible.
Proof?
Yeah, I'm pretty much tired of the cult of Adam Smith which cannot seem to question any of its assumptions. Too bad - analysis of some of the problems is insightful, but the 'free market' cultishness leaves me rejecting the DB generally. It's just way too dogmatic, the arguments contrived and forced to always favor this 'free market' thing, whatever that even means. It almost makes me wonder if this site is... well - just another elite meme!
Reply from The Daily Bell
"Proof? ... Yeah, I'm pretty much tired of the cult of Adam Smith which cannot seem to question any of its assumptions."
Ah, more profundity. Please explain how a free market makes "mistakes." And while you are at it, explain how regulators regulate. In other words, what is the process they adhere to. How did Frank and Dodd come up with THEIR bill. Or Glass and Steagall.
Perhaps you can educate us.
Every regulation is a price fix, transferring wealth from those who create it to those who haven't and may not know what to do with it.
Regulatory capture is a fact.
Regulations hardly EVER work as advertised because of what Mises analyzed as Human Action.
Rebut all this if you can. Doubt we'll hear from you again ...
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Posted by nithsdale on 04/14/12 04:58 PM
Regulations are put in place by governments to get a share of the profits and assets beyond the tax income they receive. As business prospers, all governments assert they are the public and therefore must have more of a share since they represent so many.
They get away with this posture not because some elite puts them up to it but because some savvy aspirant for office puts out an enticing "extra" for his supporters to share... .like give away programs they can join or well paid government positions in which they can do minimal work for maximum gains!
The so called elites are in the same boat as the rest of us... forced to accept the reality of givernment, the people "elected" to steer ir! This is true of "democracy" and royalty and dictatorship. If you do business in an area, you must play by the rules set.
There has never been a truly free market anywhere. The good businessman uses whatever advantage he can find to make his wares more saleable and that means affordable too. If people are drawn to some acme of perfection, he will approximate it to insure his base, and hope to grow as they flock to his offerings. It is not his duty to change their minds. What they want they get. That covers Titanic and Kobe Beef!
Reply from The Daily Bell
Nithsdale, you almost made sense!
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Posted by Niklaus on 04/14/12 05:18 PM
The sinking of the Titanic (aliased Olympic) may have been an insurance scam under the direction of J.P. Morgan:
Click to view link
Reply from The Daily Bell
Yes, it is hard to avoid such theories these days. We don't know ...
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Posted by NAPpy on 04/14/12 06:10 PM
Wow... just... wow.
Every company you mentioned benefited from beneficial regulations, subsidies, and cozy government crony contracts.
You should be ashamed of yourself.
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Posted by NAPpy on 04/14/12 06:13 PM
When has there ever, in the history of the world, been a society that insisted on sanctioning voluntary transactions only? That society is the free market we propose. That society has never existed.
Nice strawman argument.
By the way--what do you stand for?
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Posted by Danny B on 04/14/12 06:40 PM
Great Bell, since nobody has posted anything, I guess that I should state the obvious.
First, let me give an example. This is statistics from a trade magazine,
Fleet Maintenance.
In the state of New Jersey, it costs $ 1,095,000 a year to maintain one mile of 2 lane state highway. California spends about $ 885,000. $ 90,000 just for administrative costs. I believe that it was South Dakota or Georgia that spends just $ 39,000.
The vast majority of these people are paid just to write reports and look busy. The more laws are on the books, the easier it is to look busy. I believe that much of the regulatory morass is there just to create jobs for lawyers. The U.S. has 3% of the world's population and 50% of the world's lawyers. Creating jobs for people who have no particular skill is secondary.
California debt issuance increased 74.1 % this year over last year.
Click to view link
California's total debt is $ 612 billion.
Click to view link
The do-gooders and the redistributionists pat themselves on the back at all the improvements that they have created. Sure, the towering edifice of regulations creates jobs for people who have no niche in the private sector but, at what cost.
Tax receipts are way down,,, debt issuance is up 74%.
That isn't going to go on for much longer.
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Posted by tjdetmers on 04/14/12 10:14 PM
Very intersting... ... and unfortunately... ..very believable. The wreck may yet give up the truth.
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Posted by amanfromMars on 04/14/12 10:33 PM
[quote]The sinking of the Titanic (aliased Olympic) may have been an insurance scam under the direction of J.P. Morgan:
Click to view link ….. Posted by Niklaus on 04/14/12 05:18 PM
Reply from The Daily Bell
Yes, it is hard to avoid such theories these days. We don't know ... [/quote]
Hmmm? ….. A century old former exercise with a post modesn mirror in the Twin Towers 911 operation? What a cookie idea/crazy theory.
Of course, all that really matters is not what may or may not have happened at any time or in any place in the past, but what is shared today, and every other subsequent day/zeroday, to shape tomorrow and every other tomorrow ... . for creations and living in the future.
Indeed, as the Present instantly becomes the Past, is the Future the only realistic thing which virtually exists and can be used and/or abused to create AIReality with the sharing of communications with attractive ideas which can be widely supported. Failing that, are ideas and future plans opposed and conflicts caused ….. which is surely the result of really dim-witted and primitive thinking, and in their prime/sub-prime movers, evidence indisputable of a lack of SMART intelligence ability and facility. Taken to darker extremes would many conclude evidence of the presence of madness and badness/evil and illness and a pathetic sadness, with love missing in sub-prime individual movers and shakers.
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Posted by Jones on 04/15/12 03:12 AM
yadda, yadda, yadda, Keep the rodents running in the wheel. Most everything today is a lie or distortion of some sort designed to achieve an end... And that end is not for your benifit.
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Posted by elray on 04/15/12 03:26 AM
Come on folks we can regulate the world to be a better place, can't we ?
New Regulation: #1912-MGY.
10% of all profits derived from the use of the word "Titanic" will go to the families of survivors.
Whats that you say, The above can't be a "Regulation", not in our modern world.
But I thought a good regulation was: "Efficient regulations are defined as those where the total benefits to some people exceed the total costs to others."
Ok, Yes thats right, but Elray you are getting it backwards, reg's are used to facilitate to movement of cash from the masses to the elite not the other way round.
"The economics of regulation, in the sense of the application of law by government that is used for various purposes, such as centrally-planning an economy, remedying market failure, enriching well-connected firms, or benefiting politicians. It is not considered to include voluntary regulation that may be accomplished in the private sphere."
Links:
Click to view link
Click to view link
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Posted by amanfromMars on 04/15/12 04:05 AM
Yes, it may very well be, Jonesy. But you know what happens whenever just one element of truth is exposed and expanded upon? The whole crazy edifice, built upon lies and distortions of some sort designed to achieve an end which is not truly beneficial, collapses spectacularly ... .. titanically ... ... . colossally.
Which brings us nicely to the subject of Special Sensitive Secret IntelAIgent Services and AIR&dDevelopments in Virtual Turing Machines ... ... ... . with Beta MasterClasses and Fleets of CyberIntelAIgent Beings majoring in the manipulation of MetaDataBase for Control of the Future and Human Perception with the Provision of NEUKlearer HyperRadioProActive Sees, which easily destroy false dichotomies and houses of empire built upon fabricated foundations which do not bear the weight of enlightening knowledge and exposure to ancient and modern truths.
And what would one think of governments and/or systems, which when advised of the opportunity to utilise such knowledge for the betterment of everything, choose to ignore it and even actively try to repress it, because of the universal significance of what it and IT can do ... ... .. and would be presently doing for they have no power of control over that which they have chosen to ignore in the desperate hope that the problem disappears, whilst all available evidence and intelligence being delivered to them indicates the problem is growing at an exponential rate, and is definitely, singularly theirs, and there is no solution to save them in their present systems configurations with the failed intelligence they are using, and the falsified intelligence and crazy rigged market tales they are spreading to try and prevent the inevitable collapse of a corrupted dream?
Methinks then is it a case of Bye Bye, Baby, although not nearly as pleasant as depicted here ... ... . http://youtu.be/2MdhjnYhiEQ
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Posted by MetaCynic on 04/15/12 01:57 PM
It looks like the paper churning staff of regulatory agencies is just a less transparent counterpart of one person being paid to dig a hole and then another paid to fill it back up. In both instances lots of work appears to be going on, but nothing of value is created. In fact regulatory activity is much worse that digging and filling holes. The latter consumes wealth while the former not only consumes wealth, it aggressively interferes with the creation of wealth.
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Posted by John the Just on 04/15/12 05:09 PM
'Please explain how a free market makes *mistakes*.'
This challenge from DB to misterkel caught my attention as I was marveling at the brouhaha generated by DB's innocently connecting a couple of disparate points. The Titanic and Kobi Beef are somehow related - who would have thought?
Quite obviously the Free Market cannot make a mistake. That would be like asserting that the planet made a mistake when Vesuvius or Katrina destroyed patches of the Earth. But that might not be the rhetoric point to be made.
Man is nothing if not inventive. Taking on Mother Nature has been one of Man's greatest ongoing enterprises. And that is not to suggest that Mother Nature is wrong. It's just that a little tinkering with the dikes in New Orleans might have lessened the tragedy of Katrina. Some day we may be able to release the pressure of magma gradually rather than watching Mother Nature lay waste to another Pompeii.
I have a good friend whose basic argument in favor of Socialism - when I point out that stealing from some in order to benefit others is not a good policy - is that 'Yeah, but Big Business gets most of the loot, and the little guy is left to starve!' It's an emotionally appealing argument, but it doesn't satisfactorily address the problem of stealing for me.
Any good Libertarian, Free Marketer, Anarcho-Capitalist, Volunteerist, etc, would look at the idea of the Market making a mistake as ridiculous. But any Statist, Socialist, Communist, Elitist, Social Engineer, etc, would know he could make the Market better for everybody, if just given the chance.
My point in this round-about comment is that Regulation as such is not necessarily bad - even Government regulation - neither is a totally hands-off policy as regards Government and the Market. It's when Force is applied to an otherwise peaceful Exchange between a willing buyer and a willing seller, that problems arise. And the Force can be from either the Government, or from an individual or cabal of individuals seeking advantage for themselves in the Market.
Interestingly in the case of the Titanic and Kobi Beef, the problems arise from the public's inattention to the Exchange they are entering into, because of a misplaced confidence in Government's Market interference. Since their Nanny Government regulates seemingly every facet of their lives, they think that getting on a ship is a safe thing to do, or chomping down on a hamburger they shelled out 40 bucks for was a wise market decision.
My friend would say that obviously there needs to be more regulation - to cover these anomalous exceptions of Government protection for us all. I tend to favor Human Natarchy: the acknowledgement, categorization, and relaxing into who we are, without forcing the issue. Let Sovereign Individuals be as wise or foolish as they may be; the Invisible Hand of Human Nature will deliver what we want better than any enforcement of a Utopia.
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