Free To Choose: a personal Statement

I,
p.
16
We cannot indeed depend on benevolence for our dinner—but
can we depend wholly on Adam Smith's invisible hand? A long
line of economists, philosophers, reformers, and social critics have
said no. Self-love will lead sellers to deceive their customers. They
will take advantage of their customers' innocence and ignorance
to overcharge them and pass off on them shoddy products. They
will
cajole customers to buy goods they do not want. In addition,
the critics have pointed out, if you leave it to the market, the out-
come may affect people other than those directly involved. It may
affect the air we breathe, the water we drink, the safety of the
foods we eat. The market must, it is said, be supplemented by
other arrangements in order to protect the consumer from him-
self and from avaricious sellers, and to protect all of us from the
spillover neighborhood effects of market transactions.
These criticisms of the invisible hand are valid, as we noted in
Chapter 1. The question is whether the arrangements that have
been recommended or adopted to meet them, to supplement the
market, are well devised for that purpose, or whether, as so often
happens, the cure may not be worse than the disease.
This question is particularly relevant today.
A movement
launched less than two decades ago by a series of events—the
publication of Rachel Carson's
Silent
Spring,
Senator Estes
Kefauver's investigation of the drug industry, and Ralph Nader's
attack on the General Motors Corvair as "unsafe at any speed"—
has led to a major change in both the extent and the character of
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190
FREE TO CHOOSE: A Personal Statement
government involvement in the marketplace—in the name of pro-
tecting the consumer.
From the Army Corps of Engineers in 1824 to the Interstate
Commerce Commission in 1887 to the Federal Railroad Ad-
ministration in 1966, the agencies established by the federal gov-
ernment to regulate or supervise economic activity varied in scope,
i mportance, and purpose, but almost all dealt with a single in-
dustry and had well-defined powers with respect to that industry.
From at least the ICC on, protection of the consumer—primarily
his pocketbook—was one objective proclaimed by the reformers.
The pace of intervention quickened greatly after the New Deal
—half of the thirty-two agencies in existence in 1966 were created
after FDR's election in 1932. Yet intervention remained fairly
moderate and continued in the single-industry mold. The Federal
Register, established in 1936 to record all the regulations, hear-
ings, and other matters connected with the regulatory agencies,
grew, at first rather slowly, then more rapidly. Three volumes,
containing 2,599 pages and taking six inches of shelf space,
sufficed for 1936; twelve volumes, containing 10,528 pages and
taking twenty-six inches of shelf space, for 1956; and thirteen
volumes, containing 16,850 pages and taking thirty-six inches
of shelf space, for 1966.
Then a veritable explosion in government regulatory activity
occurred. No fewer than twenty-one new agencies were established
in the next decade. Instead of being concerned with specific in-
dustries, they covered the waterfront: the environment, the pro-
duction and distribution of energy, product safety, occupational
safety, and so on. In addition to concern with the consumer's
pocketbook, with protecting him from exploitation by sellers,
recent agencies are primarily concerned with things like the con-
sumer's safety and well-being, with protecting him not only from
sellers but also from himself.'
Government expenditures on both older and newer agencies
skyrocketed—from less than $1 billion in 1970 to roughly $5
billion estimated for 1979. Prices in general roughly doubled, but
these expenditures more than quintupled. The number of govern-
ment bureaucrats employed in regulatory activities tripled, going
from 28,000 in 1970 to 81,000 in 1979; the number of pages in

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