We Solve More Problems Than We Create

Worth A Look, Environment, Frontier Centre

Danish political scientist Bjorn Lomborg, who became a punching bag for environmental activists after he challenged the popular wisdom that the natural environment is deteriorating, recently granted a fascinating interview to Wall Street Journal editorial board member Kimberley Strassel. He repeated the theme of his controversial book, The Skeptical Environmentalist: Far from continually degrading the environment, “our history shows that we solve more problems than we create.”

Mr. Lomborg does recognize that safeguarding public health and the environment requires both resources and resourcefulness from the lawmakers and bureaucrats who must address the world’s most challenging problems — emerging and established infectious diseases, famine and malnutrition, water shortages, and so on. The essence of this problem-solving, he believes, is the setting of priorities and the search for efficient, cost-effective ways to accomplish major international health, economic and environmental goals.

My suggestion for a cheap, highly leveraged and cost-effective intervention is to reform government regulation to make it more scientific, logical and responsive to society’s and individuals’ needs.

Among many activists, regulators and legislators, there is a pervasive myth that a little over-regulation never hurt anybody. But a “little” here and a “little” there adds up. The reality is that today regulation exacts societal costs whose magnitude is almost unimaginable. According to a recent analysis from the Competitive Enterprise Institute, U.S. regulatory costs in 2005 were approximately $1.13 trillion, equal to almost half of all of the government’s discretionary, entitlement and interest spending ($2.47 trillion), and much larger than the sum of all corporate pre-tax profits — $874 billion. Much of the expenditure on regulation is ill-spent on (to paraphrase Mr. Lomborg) the most expensive cures that do the least good.

The direct and indirect expenses related to government regulation — whether good, bad, or indifferent — also exert an “income effect,” which reflects the correlation between wealth and health. The accumulation of wealth by societies is necessary to fund medical research, build schools, support infrastructure and sanitation — and to improve environmental amenities.

Sometimes, a given risk is so great that even costly regulation may prove to be well worth the price, but too often the greater harm is from the regulatory requirements themselves. For example, a 2001 EPA rule requiring municipalities to reduce the amount of naturally occurring arsenic in drinking water from an already low level to an even lower one prevents approximately twenty-three to thirty-three cancer deaths each year. However, achieving such a reduction is tremendously expensive, and high natural arsenic levels occur most frequently in the largely poor, rural areas of the American southwest where, according to a study by the American Enterprise Institute and Brookings Institution, the regulation could actually lead to more deaths than it would save. Public health resources would have to be diverted from more cost-effective uses such as ambulance service and health care, and the higher price of public water would cause some consumers to resort to less expensive, but untreated, well water that poses considerable bacteriological health risks — and which still contains the higher natural level of arsenic. Such consumers are made worse off by public policy based on the presumption that additional regulation must lead to additional safety. “Regulatory overkill” is no exaggeration.

There is no paucity of targets for regulatory reform. Internationally, we could get rid of existing or imminent bans of important chemicals in cases where the proscriptions accomplish little or nothing for human health or the environment. Examples include the prohibitions on the pesticides DDT (under the UN’s Persistent Organic Pollutants Treaty) and methyl bromide (under the UN’s Montreal Protocol, intended to reduce ozone depletion). Another is the excessive regulation by national regulators and a host of UN agencies of biotechnology used in agriculture and food production. Yet another is California’s notorious Proposition 65, the prototype of costly, ill-conceived regulation. Its one-size-fits-all approach has resulted in “warning” signs in most commercial establishments, from supermarkets and pet stores to hotel lobbies, proclaiming that consumers of their products or services may be exposed to chemicals that can cause cancer or birth defects although in the overwhelming majority of cases there’s no hint of risk greater than, say, the household cleaners in the average home.

All of these examples are hugely net-negative to society.

But how do we achieve the needed reforms? After all, individuals and organizations usually act in ways that favor their own self-interest, and self-interest for regulators means more responsibilities, larger budgets and grander bureaucratic empires. Too often, it is these goals — instead of the public interest — that shape policy. Moreover, many regulatory agencies — especially those within the UN — are in thrall to the most extreme, anti-technology, anti-business, anti-capitalistic elements of society.

Mr. Lomborg is a realist. He doesn’t expect miracles from political leaders and bureaucrats, hoping instead for “getting it slightly less wrong.” An appropriately modest proposal from the skeptical environmentalist.

Henry I. Miller, a physician and fellow at the Hoover Institution, headed the FDA’s Office of Biotechnology from 1989 to 1993. Barron’s selected his most recent book, “The Frankenfood Myth…” one of the 25 Best Books of 2004