Business, Government and the Public, by Murray Weidenbaum
Bowden, G.T.
BOOKS IN REVIEW - "Business, Government and the Public, by Murray Weidenbaum" money necessarily improve their diet. Food stamps "quite reasonably permit people to use the money saved by stamps on other purposes....The USDA can give someone food stamps; it cannot thereby make...
...We know that Galbraith is a scholar: He has been a professor at Harvard...
...It is claimed at the outset that the strategy of the book is to study the influence of economic ideas on social actions and institutions: "First, Adam Smith, Ricardo and Malthus, then the impact of their systems...
...At best, the treatment could hardly have been adequate...
...But, as Weidenbaum observes, many social goals can be achieved most efficiently by business enterprise in the private sector...
...The Institute estimated that the proposed standards could raise the price of a $100 gasoline-powered rotary mower to as much as $186...
...Let me count the ways...
...A large percentage in any given generation rises from a lower wealth class, and has in this century, I would add, in spite of progressive taxation...
...Surelyeconomic and social mobility have declined...
...But membership in this group, contrary to popular belief, is neither stable nor self-perpetuating...
...Weidenbaum examines many examples of this invasion by government regulators into the realm of business management...
...The purported "basic theme" of The Age of Uncertainty is to "contrast the great certainties in economic thought in the last century with the great uncertainty with which problems are faced in our time...
...Thus, we can enthusiastically advocate stringent controls to avoid infant crib deaths without simultaneously supporting a plethora of detailed federal rules and regulations dealing with the color of exit lights and the maintenance of cuspidors...
...The system prevents rather than enhances "equality of opportunity" and upward economic mobility...
...and the treatment of these writers, like that of all others in the book, is heavily biographical and anecdotal...
...and because of their ignorance of business operations, regulators apply these rules with expensive and in some cases unworkable rigidity...
...It can innovatively add to theory, it can fruitfully apply analysis, it William R. Allen is professor of economics at UCLA and president of the International Institute for Economic Research...
...One sees the huge interest and dividend incomes of those who already possess wealth...
...Push mowers would increase in price between 30 and 74 pertent....The largest price rises, in the range of 35 to 86 percent, would occur on manual-start push rotary motors [mowers...
...A great deal of research is now being done on the costs of accidents and of their prevention by safety regulations, but apparently no studies of the comparative costs of better law enforcement are being made...
...The problem goes beyond the skyrocketing administrative costs of regulatory agencies (rising from $1.9 billion in 1974 to $2.8 billion in 1976...
...He also wonders about occupational safety and health regulations, pointing out that in 1974 the average cost of OSHA (Occupational Safety and Health Administration) compliance ranged from $35,000 for a company with up to 100 employees to over $4.5 million for a company with 5,000 employees...
...Yet, according to the Council on Wage and Price Stability, there is no research evidence for the health or safety value of either standard...
...if so, he makes it strikingly obvious that professional integrity is not everything...
...He speaks of writing "careful essays," of making "a central point briefly and with accuracy and clarity," of having "added something that is accurate to knowledge...
...Bowden is Director of Educational Relations for AT&T...
...Smith is allotted a scattered half-dozen pages, Malthus less than one, and Ricardo fewer than two...
...one-third of the book is taken up with photographs—some in living color—including one showing the author's initials carved on a barn door...
...with respect to the British-produced TV series from which this book is chopped, he speaks of the "genius" of the BBC lying "in the quality of the people it attracts...
...Professor Lebergott discloses, for those who cannot conceive of solving social problems save by direct government intervention, that a mere $1.4 billion of milk and vitamins would bring every poor family up to the U.S...
...For larger firms the costs are correspondingly higher...
...BOOK REVIEW Business, Government and the Public Murray L. Weidenbaum / Prentice-Hall / $12.95 G.T...
...This is especially true of safety regulations, which protect consumers by denying them—particularly the poor—the opportunity to purchase relatively dangerous or shoddy, but also much cheaper, products...
...It is not hard to imagine the concern of textile industry management on learning that NIOSH's director, Dr...
...A free market...
...can effectively exposit the most useful thought available...
...Similarly, he would encourage indirect but powerful control incentives such as the "use of 'sumptuary' excise taxation, as we have grown accustomed to in the cases of tobacco products and alcoholic beverages ...to alter basic production and consumption patterns...
...Professor Weidenbaum argues that as a result of this invasion, a "managerial revolution is now underway, a silent bureaucratic revolution, in the course of which much—but certainly not all—of the decision-making in the American corporation is shifting...from the professional management selected by the corporation itself to the vast cadre of government regulators who are influencing and often controlling the key managerial decisions of the typical business firm...
...Don't be too sure...
...This is illustrated by the activities of the OSHA research department, NIOSH (National Institute for Occupational Safety and Health...
...it cannot thereby make him consume the right nutrients...
...BOOK REVIEW The Age of Uncertainty John Kenneth Galbraith / Houghton Mifflin / $17.95 William R. Allen Once again we are the beneficiaries of the wit and wisdom, the erudition and analytic prowess of John Kenneth Galbraith...
...There are more G.T...
...From there, others may proceed with the root canal work...
...Weidenbaum proposes not to do away with regulation, but to reduce direct controls and substitute, wherever feasible, economic incentives...
...If Professor Lebergott does not sound the deepest springs of government policy, the beliefs and attitudes they presuppose, his contribution is extremely valuable nonetheless...
...There is another aspect of this invasion: conflicts of interest that bias the formulaThe American Spectator December 1977 37 tion of OSHA standards...
...today, but not an expedient one," since, he reasons, confiscation entails only a mechanical tinkering with our already progressive tax rates...
...For one thing, the line of causation—if any well-behaved relationship exists—between changing ideas and changing circumstances might run in either direction or in both directions...
...How callous and insensitive can the man be...
...This time he Thinks Really Big...
...Professor Lebergott shows that for well over a century the top wealth holders have maintained (not increased) their "share" of the national wealth...
...Perhaps we need to examine the blithe assumption that taxation should be an instrument of gleichshaltung and not merely a means of raising the rental payment for government services rendered...
...One does not see the obstacles which progressive income taxes present to those building their fortunes from a more modest base...
...Without better knowledge our intentions will lead to more government interference with the internal decisions of management...
...If that program were ended one of the most complete foods would be cheaper, and could be more widely consumed by the poor...
...For example, rather than mandating a certain level of pollution abatement, he would make it more expensive for a business to use a high-pollution product or service than a low-pollution one...
...And when the productivity of business declines as it tries to cope with misguided, excessive regulation, the desirable aims of sound regulation become that much harder to realize...
...Although it is difficult to estimate the total cost of complying with many OSHA standards and regulations, the industrial cost of the existing OSHA noise standard (a maximum level of 90 decibels during an eight-hour working day) is estimated at $13 billion...
...Peter J. Nord, was also to be on the ILGOVU payroll...
...After two years of full operation, however, OSHA has had no discernible impact—the number of job-related injuries and illnesses actually increased from 5.6 million in 1972 to 5.9 million in 1973...
...But what about the morality of the progressive principle, or of taxation itself...
...How are we to take the measure of a sophisticated book by a scholar...
...Cheaper still, why not abolish the government's control of milk prices...
...But there are difficulties...
...Moreover, the review of classical economic theory presented here isabsurdly brief, suggesting the profundity of Winnie the Pooh...
...For budgetary reasons, NIOSH "signed an agreement with the Amalgamated Clothing Workers Union to conduct a study of safety and health hazards in the clothing industry...
...tions against those who would waste the nation's resources...
...thus "OSHA-mandated efforts are...limited to the remaining four percent of disability-caused absenteeism...
...This does not necessarily mean more data—the government is already faced with too much—but better data concerned with costs and benefits, not with justifying the survival of a regulatory staff or acceding to pressures that are against the public interest...
...Professor Lebergott occasionally avoids examining the "philosophical-ethical"premises of social policy...
...important, hidden costs: Every new regulation increases the cost of production, and this additional expense must be passed on to consumers in the form of higher prices...
...He aims to explain the essence of world history—largely a story of capitalistic insensitivity and wickedness, abetted by classical economics—during the last two centuries...
...Galbraith gives no hint that genuine scholars have wrestled with this subtle problem in the sociology of knowledge...
...Perhaps Galbraith actually considers all this to be judiciously evenhanded...
...This is said with typical and becoming modesty, for Galbraith here speaks only of the rest of us: He is not at all uncertain in facing the problems of our time...
...Thus, rules tend to be written in much more detail than is necessary, realistic, or economically worth the effort...
...Not yet, at any rate...
...But in truth, Galbraith is not so much funny as unamusingly ludicrous...
...And we know that this is a sophisticated book: It is a Book-of-the-Month-Club selection, and it is praised by Leonard Silk of the New York Times...
...He sees this revolution as "neither deliberate nor violent," but nevertheless "forcing a fundamental change in the structure of our society...
...Mill gets one-quarter of a page and Marshall a bare trace) and the marginalists are not mentioned at all, Veblen is blessed with an admiring four pages, Marx with eighteen, Lenin with seven, and Keynes with fourteen...
...Moreover, the rate for "lost workday" cases in the manufacturing sector rose 7.1 percent during that same period...
...An observation by the medical director of Exxon illustrates the overkill nature of this invasion...
...Weidenbaum thinks the latter costs would be much smaller...
...For example, as Weidenbaum points out: The Stanford Research Institute has estimated that the mandatory safety standards developed by Consumers Union for the [Consumer Product Safety] Commission would add $250 million to the price tag for power lawn mowers and put 25 companies out of business...
...But, as in most things in life, the sensible questions are not matters of either/or, but rather of more or less and how...
...His probing factual presentation exposes the cavities...
...According to Weidenbaum, the choice of rules and regulations is too often made by persons who do not understand the activity they are trying to regulate...
...Through prodigious effort, a real scholar might have prepared a fascinating exploration of the alleged theme: the degeneration of 19th-century assurance and optimism into 20th-century uncertainty...
...Cheaper mowers tend to be less safe than more expensive models, but Weidenbaum asks us to consider whether greater safety is worth the higher prices...
...To reduce the costs of regulation, Weidenbaum proposes more imaginative ways of approaching . problems...
...e.g., compare the costs of more complicated and expensive auto-safety devices with the costs of more effective enforcement oftraffic laws against speeding or drunk driving...
...While the volume fails spectacularly by such criteria, its author does appear to have a sense of humor...
...There are serious questions as to what rules to set, how detailed they should be, and how they should be administered...
...Surely the rich have gotten richer, while the poor have gotten poorer...
...While the whole of the classical and neoclassical survey fits into an unsympathetic dozen pages (J.S...
...He reports that non-occupational diseases and injuries account for about "96 percent" of the employee time lost due to disability...
...The cost of a slightly more rigorous maximum level of 85 decibels, proposed by the Environmental Protection Agency, is estimated at approximately $32 billion...
...Bowden In this new book on government regulation, Murray Weidenbaum starts with a refreshing outlook: Unless you are an anarchist you believe that the government should set the rules for society...
...To this end, he urges that government retreat from forms of regulation that require intervention in internal business decision-making...
...A society acting through government can and should act to protect consumers against rapacious sellers, individual workers against unscrupulous employers, and future genera...
...If these efforts were effective in reducing the four percent, the cost could be somewhat (but not much) justified...
...nutrition average (assuming they ate the stuff...
...And there is the degeneration of Galbraith's own approach of focusing on 38 The American Spectator December 1977...
...As Weidenbaum points out, the real challenge is to build up our knowledge of the trade-offs between the costs and benefits of both existing regulations and proposals for new regulations so that legislators and regulators can make better decisions...
...I was distressed to hear him say, for instance, that "confiscation of the rich would be a moral policy in the U.S...
Vol. 11 • December 1977 • No. 2
