In “
There’s No Such Thing as an Unregulated Market,”
I claimed that regulation by market forces works better — gets better
results for society — than government regulation. But why does
government regulation work so poorly?
In government, the regulators themselves are in practice unregulated.
Their accountability goes the wrong way — upward to politicians rather
than downward to the public.
Regulation is so bad in our overregulated economy because our regulators are unregulated.
Consider the regulation of school quality. For decades, Americans
have deplored the low quality of our government-regulated schools, as
compared to the higher quality of our market-regulated private-sector
schools.
A Nation at Risk (National Commission on Excellence in
Education) asserted in 1983 that “if an unfriendly foreign power had
attempted to impose on America the mediocre educational performance that
exists today, we might well have viewed it as an act of war.”
Since then, nothing material has changed. There are some superb
government schools, but there are also many in poor areas that are
atrocious, and even average-quality government schools produce mediocre
education at high cost. For example, in my hometown, the Baltimore City
Public Schools spent $15,464 per child in the 2010–11 academic year.
Meanwhile, the median tuition charged by private schools attended by
students receiving partial scholarships from the Children’s Scholarship
Fund (CSF) Baltimore was $5,050 total. (A scholarship of, say, $1,000 at
the median-tuition school would mean the child’s family would have to
pay only $4,500.) And these are schools considered so much better by the
children’s parents that they willingly pay out-of-pocket to send their
children there. The numbers are not directly comparable because many of
the CSF Baltimore schools include only grades K–8, while the Baltimore
City Public Schools include high schools, which are more expensive.
Nevertheless, the numbers suggest that Baltimore could get better
schooling for less than half of what’s spent in
government schools, if only the quality of those schools were decently regulated.
A properly regulated schooling industry would offer a wide range of
approaches to K–12 education, would quickly weed out bad schools and
teachers, and over time would weed out mediocre schools and teachers. It
would reward good schools and teachers. It would foster innovation in
curricula, school organization, and the use of information technology.
It would lower costs and increase choice.
But we don’t have a properly regulated system. Those who regulate the quality of our government schools do it badly. Why?
Because those regulators are themselves unregulated. Officially, they
are regulated from above by the political process, but the political
process is so ineffective at regulating regulators that they are
essentially unregulated. They are not accountable to the public in any
meaningful way.
Consider how government school quality is supposedly regulated.
Suppose that, somewhere in the country, instruction of children in
government schools is poor. Suppose further that money is not the
problem, as in my hometown of Baltimore, where per-pupil funding is
nearly the highest in the state, and far higher than the average tuition
in private-sector schools in the same area.
Who is immediately responsible for regulating — that is, for
improving and keeping at a high level — the quality of instruction? The
principals are. It’s their job to make sure the teachers do a good job.
But not all principals do a good job of making sure the teachers do a
good job. They may allow poor instruction to continue because they lack
the necessary authority, or experience, or competence, or motivation, or
support from their own superiors. Whatever the reasons may be, when
principals don’t do a good job, who is accountable? Who or what should
regulate principals’ performance?
The school board should. It hires the principals; it is supposed to
make sure the principals are getting good performance from teachers so
that students can learn. But suppose the school board does a bad job —
how is its performance to be regulated? A bad school board might not
recognize the problems in its schools. It might be friendly with poor
principals. Or it might be doing the best it can, but be so tied down by
the teachers’ union contract that it can’t require the changes it
thinks are needed. Or, despite the best will in the world, the board
might simply not know what to do to improve a mediocre school district.
Whatever the reason, in such cases the unsatisfactory performance of the
school board must not be tolerated. The school board itself must be
regulated, held accountable, and required to do a better job. Who or
what is to do that?
The essential structure of government regulation
remains the same, no matter how many layers of government overseers are
added on.
In most states, school board members are democratically elected, so
the citizens of the district, in their capacity as voters, are
responsible for regulating school board quality. If a particular board
is doing a poor job, then voters should vote its members out and vote in
a good board — one that can recognize problems in its districts and
schools, resist the temptation to hire (or not fire) personal friends,
stand up to
teachers’ unions, and, most essentially, know enough about teaching, learning, and school management to regulate well the schools it oversees.
But voters as a whole are unlikely to be sufficiently well informed
and motivated to hold school boards to account at the ballot box. While
some voters have children in their government schools, most do not.
Also, voters realize that any
one person’s vote is unlikely to decide an election,
and researching different candidates’ qualifications and positions
takes time. Hence, it does not make sense for most voters to inform
themselves of candidates’ qualifications. They are rationally ignorant
about the needs or problems of their local school system and the
qualifications of the school board candidates.
In some states, state departments of education take responsibility
for regulating school boards. In extreme cases, a state government
bureaucracy takes over underperforming schools or school districts and
installs new management. But state departments of education may also
perform well or badly, for the same reasons school boards do. Who or
what regulates the state departments of education? Well, the state
legislatures do. And if a state legislature is doing a poor job of
regulating the department of education, again it falls to the citizens,
in their capacity as voters, to vote out the legislators who are not
regulating the departments of education well and to vote in new
legislators who will. But here again, most voters know little to nothing
about their representatives’ or candidates’ positions on or competence
in education policy.
We can add to the mix the federal government’s participation with President Bush’s
No Child Left Behind policy, President Obama’s Race to the Top policy, the push to implement
Common Core,
and, most recently, the Every Student Succeeds Act signed by President
Obama on December 15, 2015. The essential structure of government
regulation of schooling remains the same, however, no matter how many
layers of government overseers are added on. Government schooling is
regulated in a monolithic, top-down manner by a chain of political
authority. Teachers are regulated by principals, who are regulated by
school boards, who are regulated by state departments of education, who
are regulated by state legislators, who are regulated by voters.
Where, in all this, are the parents, the people with the most
knowledge of their children’s needs and the greatest incentive to see
them educated well? Ultimately, parents do have some decision-making
authority over the government schools their children attend: they vote.
But what a dreadfully attenuated control that gives them: only once
every two years do they have any actual choice that affects this
political structure. That choice is generally among candidates who may
know or care little about education, and whose positions on a host of
other issues those parents must consider also. And each voter’s vote has
a vanishingly small chance of deciding the election.
Government schooling is regulated in a monolithic, top-down manner by a chain of political authority.
With government regulation of schooling, each higher level of
regulatory responsibility is ever more distant from the students,
classrooms, and teachers. At every remove from principal to school board
to department of education, the regulators have less and less knowledge
of the students, the teachers, the school’s culture, and teaching
itself. At every remove, the incentives to act become more about
politics and less about learning.
What all this means in practice is that the regulators of government
school quality are really not regulated at all. The system does not
force principals and school boards and legislatures to regulate well or
to replace them if they don’t.
The same problem afflicts the regulation of all sorts of industries:
- Taxi and rideshare regulators in many cities actively harm the public interest by impeding ridesharing services such as Uber and Lyft. They get away with this breach of duty because they are, in practice, unregulated by state legislatures.
- The FDA, in practice unregulated by Congress, misregulates new drug development so badly that it can take 10 years and over a billion dollars for a new medicine to be developed and brought to market.
- Wrongheaded bank capital regulation encouraged banks to load up on
mortgage-backed securities during the housing boom and so aggravated the
financial crisis
that followed, but Congress does not meaningfully regulate the
regulators responsible: the Fed, the Office of the Comptroller of the
Currency, and the FDIC.
- Occupational licensing boards
routinely protect incumbent practitioners by blocking newcomers with
excessively strict requirements, thereby harming the public with higher
prices and fewer choices. These boards are in practice not regulated by
their state legislatures.
Ironically, regulation is so bad in our overregulated economy because our regulators are unregulated.
There is a better way:
regulation by market forces.
Regulators need not be accountable upward to ever more distant layers
of a political bureaucracy and thence to the public as voters, who get
to choose only every couple of years. In free markets, those who
regulate are accountable downward to the public as customers, who choose
day to day or even moment to moment, and thereby regulate the
regulators very closely indeed.
Howard Baetjer Jr. is a lecturer in the department of
economics at Towson University and a faculty member for seminars of the
Institute for Humane Studies. He is the author of
Free Our Markets: A Citizens’ Guide to Essential Economics.
Studies
have shown that affectionate touch actually boosts the body’s levels
of oxytocin, a hormone that influences bonding and attachment. In a
committed relationship between two adult partners, physical intercourse
is often a cornerstone of the relationship. However, intercourse
should not be the only method of physical intimacy in a relationship.
Regular, affectionate touch—holding hands, hugging, or kissing—is
equally important. 
Each
of us is a little different in how we best receive information. Some
people might respond better to sight, sound, or touch. Your partner’s
responses may be different from yours. Take some time to learn your
partner’s cues, and be sure to communicate your own as well. For
example, one person might find a brief massage after a stressful day a
loving mode of communication—while another might just want to talk over
a hot cup of tea. 
