Thursday September 27th, 2012 informationliberation.com
The Regulatory State -- Behind the Myth (Kevin Carson)
A colleague at Center for a Stateless Society recently brought to my attention a story from late last year about unusually high concentrations of severe illness in the area surrounding a Crossett, Ark. paper mill. Members of eleven out of fifteen homes on Penn Road have died of cancer, and respiratory distress is common.

The local cluster of illness is controversial because the mill was owned by Georgia-Pacific, a subsidiary of Koch Industries. As a result of waste dumped in a local channel (near Penn Road) by the Georgia-Pacific mill, Crossett has one of the highest concentrations of carcinogens of any community in the United States. “Crossett crud” is the local name for the black scum on the surface of the channel, and the vapors which rise from it and drift across people’s yards.

Koch Industries’ “Koch Facts” website, in attempting to rebut the claims, repeatedly asserts that the Georgia-Pacific mill’s treatment of effluent “[meet] all limits required by our regulatory permits,” that “our emissions are permitted and monitored based on state and federal regulatory permits.” The plant is “in full compliance with the terms of the permit,” which the website describes as “protective of the river.”

This line of defense should come as no surprise. Richard Telofski, a leading consultant on combating what his corporate clientele calls “cybersmear,” advises corporations to “debunk” accusations of pollution and other malfeasance by stating that they are in full compliance with all federal and state regulatory standards.

Of course anyone familiar with the history of the regulatory state, as recounted by radical historians like the New Leftist Gabriel Kolko, will know that’s exactly what the regulations are there for. First of all, they provide an official seal of approval, much like the quality and safety codes of trade associations. But since, unlike with trade associations, individual firms are not allowed to defect from compliance with the regulatory regime, the regulations do not become an issue of cost competition between firms.  The cost of compliance is borne across the entire industry, and passed on to consumers as a simple cost-plus markup.

Second, compliance with the regulatory standard — which is typically a dumbed-down least common denominator far, far below the standards of common law tort liability — serves as a safe harbor against civil litigation. The regulatory standard — which is, after all, based on (ahem) “sound science” — trumps any more stringent legal standard of liability. So long as a company’s emissions comply with the EPA’s limit on parts per billion of this or that toxic chemical, it doesn’t matter if the entire town has asthma and breaks out in painful lumps.

Finally, compliance with the regulatory standard can sometimes protect a company from even voluntary competition by other firms in an industry that choose to adhere to a more stringent standard of safety or quality. For example, Monsanto has successfully pursued court remedies in some jurisdictions against dairies and other food producers that advertise their products as free from Genetically Modified Organisms or recombinant Bovine Growth Hormone. And the big meat packers have won USDA sanctions against smaller packers that advertise their voluntary adherence to a more stringent inspection regime against “mad cow disease” than is required by law.

In all these cases, simply advertising one’s voluntary adherence to a more stringent standard than is required by government regulations is treated as “food libel” or “product disparagement.” That is, it implies that a competitor’s products that just meet the ordinary standard are inferior to one’s own, despite the competitor being in full compliance with legal reguirements (which — again — are based on “sound science”).

Despite the official mythology in the public school American history books — TR the Great Trustbuster, the Muckrakers, Upton Sinclair, and all the rest of it — the main function of the regulatory state is to protect the regulated industries.
_
Kevin Carson is a senior fellow of the Center for a Stateless Society (c4ss.org) and holds the Center's Karl Hess Chair in Social Theory. He is a mutualist and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman: Ideas on Liberty and a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation, and his own Mutualist Blog.