Why deregulation has gone too far: toxic drugs, tainted meat, exploding airplanes, and other dangers of unfettered capitalism

Washington Monthly, July-August, 1998 by Robert Worth

Fix It

When you look at the human damage weak regulation can do, the question becomes not whether to regulate at all but how to do it better. Sadly, there's plenty of evidence that our regulatory process could use a good kick in the pants. U.S. environmental law, for instance, looks pretty good on the books. But the EPA's inspector general recently detailed a list of leaky sewage plants, belching factories, and dump sites that are in violation of the law. "If one state clearly has more relaxed standards, then businesses might flee to those states," Phillip Wardwell, a state environmental official in New Mexico, told The New York Times. "That's exactly the function of the federal agency, to head off that race to the bottom."

This touches on a crucial truth about regulation: No one, particularly in America, wants to be the one sucker who's playing by the rules. Unfortunately, our federal agencies often don't enforce them. Eighteen years after the landmark Superfund legislation was passed for cleaning up toxic waste sites, 63 percent of the nation's 1,359 official Superfund sites haven't been touched. And if you think that's just an issue of old zinc smelters and mines that no one ever goes near, think again. For years, managers at Connecticut's Millstone nuclear power broke federal safety rules on the handling of fuel rods, cooling pipes, gauges, and filters, and punished workers who tried to warn them about the dangers involved. Ultimately the government had to spend $750 million to bring the plant up to speed and re-educate its managers -- money that would have been saved if everyone had respected the regulations in the first place.

In some cases, regulators fail to do their job because they're too friendly with the industry they're supposed to be policing. In the past few years the number of deaths in charter and commercial bus accidents has nearly doubled. That's partly because the Department of Transportation does a poor job of inspecting the buses. But it may also have something to do with the fact that in 24 states, charter bus companies are allowed to inspect their own buses, as "20/20" recently reported.

You might answer that bus companies have a pretty strong incentive to keep their buses in good shape. After all, they look bad when even one bus goes careening off the road and kills a group of schoolchildren. But the fact is that bus lines, like all private companies, are competing for market share, and struggling to get as much use as they can out of every tire, axle, and muffler. This is where the remorseless logic of deregulation kicks in: There will always be people willing to pay a little less for a cheaper bus ride. And there will always be someone willing to serve that market. If you doubt it, remember the word "Valujet."

The Valujet crash and others like it might never have happened if the Federal Aviation Administration were not so eager to please the airline industry. In fact, until recently the FAA was officially charged with promoting aviation as well as safety. This dual mission has contributed to countless air disasters, including the crash of Flight 800, which exploded in midair in July 1996 when a spark in its center-wing fuel tank ignited. Investigators at the National Transportation Safety Board (which has never suffered from the FAA's identity crisis) had been pushing the FAA to develop a fuel-tank design that would eliminate the danger for years. The FAA had resisted them, not because it wasn't technologically feasible, but because it would cost money. Ironically, the charges leveled at the FAA in the wake of Flight 800 echoed those made against the CAB in 1978: They had become yes-men for the industry.