Wednesday, February 4, 2015

Deep Thoughts with Thom Tillis

Bringing the blog out of semi-retirement just for newly-elected Senator Thom Tillis, proudly representing my home state by taking a stand against hand-washing:
Speaking at the Bipartisan Policy Center, Tillis recounted a story from 2010. “I was having a discussion with someone, and we were at a Starbucks in my district, and we were talking about certain regulations where I felt like ‘maybe you should allow businesses to opt out,'" he said. When the conversation turned to restaurant regulations, Tillis recalled saying, “I don’t have any problem with Starbucks if they choose to opt out of this policy as long as they post a sign that says ‘We don’t require our employees to wash their hands after leaving the restroom.’ The market will take care of that. It’s one example.”
Democrats are having a pretty good laugh about this, Republicans are annoyed that no one's paying attention to the moral of Tillis's little parable (see above: "The point here is not a revolutionary movement to fight for the freedom of diners to serve you feces with your Denver omelet. The idea is that, even in the most extreme or absurd situations, the common sense of Americans and the self-correcting nature of the free market take care of many woes.").

But what no one seems to be saying is that his example is actually a perfect illustration of why regulation sometimes is needed. After all, requiring Starbucks to post a sign describing its hand-washing policies, as Tillis suggests, is a form of regulation, almost exactly as onerous as straightforwardly requiring employees to wash their hands. And that sign is necessary because even Thom Tillis does not expect Consumer Reports to follow individual employees into the bathroom, monitor their hand-washing activity, and publish their findings, all in the service of the golden and glorious ideal of perfect market information. That Which Happens In Bathrooms is pretty much the definition of asymmetric market information, and therefore precisely the kind of thing we need regulation in order to correct if we're going to avoid suboptimal market outcomes, e.g., consumers ingesting feces.

It's pretty telling that Thom Tillis, trying to explain why government solutions are unnecessary, could himself only resolve the Great Bathroom Hygiene Conundrum by resorting to a government solution. Sure, his uses information and the other uses a straight-up mandate, but tomato, tomahto, right? I'd personally advise him to think even more deeply about this important policy question -- maybe he'll start to wonder if he's hit upon something pretty fundamental about the role of the government in the marketplace. And then maybe, like, announce his support for annuity disclosure regulations or something. We can dream?

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