On regulatory capture
Sure as hell the government doesn't work for you or me, unless one of us has a massive trust fund and is just keeping quiet about it.
For those just joining us, we spent an obsessive amount of time reviewing scientific papers and reports about masks in order to learn… what? That nothing our various government health agencies are telling us makes any sense.
[Note: This post covers some topics in economics and politics and I can’t pipe alcoholic beverages to you via broadband, so instead I put together a playlist on Spotify that will make you feel a little disoriented instead. If you don’t have an account with Spotify then you’ll need to self-medicate.
If you just hit the play button it plays a preview of each song, which is incredibly annoying. Click the thing at the top right to launch Spotify.
If I have done my work correctly this playlist will make you wonder why you are even reading this article.]
Getting back to the business of government…
It’s not just the mask thing that’s crazy. In an earlier post titled Desperate measures we discussed a 2019 report1 by the World Health Organization on the use of non-pharmaceutical measures during a pandemic. Their section on limiting public gatherings is amazing, if we use ‘amazing’ as a synonym for ‘useless.’
After reviewing hundreds of citations, they found three papers they thought were worth including. Two of those are about the 1918 flu pandemic (so, something really recent and relevant) and the third was about “pilgrims” attending World Youth Day 20082. More kids sleeping in the gym got the sniffles compared to kids sleeping in classrooms.
I’m not making that last one up. That’s a real article in a real journal and the WHO really referenced it. Here’s a direct quote from the report to give you an idea of the doublespeak involved (page 101 of the Annex):
Avoiding crowding including separating people into small groups or cancelling public gatherings is an effective intervention to prevent the spread of influenza. However, the effects of measures to avoid crowding in reducing transmission is uncertain.
What? The effects are uncertain but they’re also effective? And they got this from 100 year old reports and a school sleepover? They repeatedly recommend something while admitting there’s almost no evidence it actually works. I’m not kidding - their references are two papers about the 1918 flu, and one article essentially about kids on a school trip.
This was the best evidence the WHO could find to support prohibiting mass gatherings, yet as I type this the entire nation of Australia is on a lockdown more strict than that time the sketchy kid smuggled LSD into the middle school sock hop.
The obvious question is “so then why are we doing all these silly things?”
Fauci, Birx, Walensky and the rest of the wacky crew aren’t stupid, but they’re also not smart enough to pull off a prank this complex so we have to consider the possibility that they are actually serious.
The decisions coming out of your government aren’t random and they aren’t actually nonsensical - they just seem that way if we don’t understand the actual goals. But before we get to that we need to learn how government really works. There are a lot of parts to this story and I have no idea what order to cover them in, but we have to start somewhere.
So let’s start by discussing something economists call regulatory capture.
What is regulatory capture and can you please make this not boring?
No. Sorry. The boring-ness of this topic far outstrips my meager talents. I can type complete sentences and tie four useful knots3, and that’s about all I’m good for.
The idea of regulatory capture was first articulated by George Stigler in his article The Economics of Information4, published in 1961.
Will Kenton on Investopedia gives a concise summary5 so I’ll just quote him:
Regulatory capture is an economic theory that says regulatory agencies may come to be dominated by the industries or interests they are charged with regulating. The result is that an agency, charged with acting in the public interest, instead acts in ways that benefit incumbent firms in the industry it is supposed to be regulating.
Which is a long way to say that a lot of government regulatory agencies don’t work for you and me, but are effectively just an arm of the companies they “regulate.”
[That’s called using scare quotes6. I put quotes around “regulate” because I’m being sarcastic, something I totally never do except maybe in every single post.]
How does this work? A few ways, really. The metaphorical revolving door between government and industry is one way. Spend a few years as a big ol’ softy, pushover of a regulator and get rewarded with a cushy job as Executive Vice President of Company Jet Maintenance.
Or maybe you get a seat on the board of directors of Pfizer - like Scott Gottlieb, who went there almost directly after resigning as FDA commissioner in 2019 to “spend more time with his family.7” It’s like he wants me to use the metaphor of Pfizer being his real family. This stuff writes itself.
Or better still, just let “industry groups” write the regulations. This makes the whole thing into a big game of Calvinball8.
Business leaders will talk incessantly about the need to reduce regulations but in fact they love the regs. Why? Because thick volumes of obscure and ever-changing regulations make it nearly impossible for someone to start a new company in their field.
For a small company the cost of following regulations is a large part of their overall budget - economists call this a “barrier to entry” in that market. Investopedia rescues me again with an intelligible explanation9:
Barriers to entry is an economics and business term describing factors that can prevent or impede newcomers into a market or industry sector, and so limit competition. These can include high start-up costs, regulatory hurdles, or other obstacles that prevent new competitors from easily entering a business sector. Barriers to entry benefit existing firms because they protect their market share and ability to generate revenues and profits.
Basically the large company can afford the extra expense and the small company can’t.
The best part is that so many of these rules are for “safety.” Imagine being CEO of the little startup that’s arguing against following safety regulations. This does not make you especially popular with your market (or even your own mother).
Well why can’t we have Congress or somebody useful write laws that make sense and stop all this?
Well, it turns out that Congress doesn’t really work for you or me either. How bad is it? Really bad.
In Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens10, Martin Gilens and Benjamin Page looked at how much influence different groups have over government policy in America. They looked at average citizens, people they classify as economic elites, and interest groups. They further divided interest groups into two subgroups, mass-based or business-oriented.
[Mass-based essentially means people whose Twinkie budget can make or break their portfolio. You know, ordinary folks. Business-oriented would be the people who own Twinkie factories.]
So essentially they are looking at four influence groups, (1) average citizens, (2) the interest groups that represent average citizens, (3) economic elites, and (4) the interest groups that represent economic elites.
From the abstract:
Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.
How substantial are these differences? Well, the average citizen (that’s us) turns out to matter not at all:
When the alignments of business-oriented and mass-based interest groups are included separately in a multivariate model, average citizens’ preferences continue to have essentially zero estimated impact upon policy change, while economic elites are still estimated to have a very large, positive, independent impact.
So the preferences of average citizens as individuals have almost no impact on government policy, while the preferences of economic elites have a very strong impact on policy. Even when citizens organize themselves into interest groups, this only results in a small increase in influence on policy. Business interest groups don’t exercise as much influence as individual economic elites, but significantly more than mass-based interest groups.
Blah blah blah what’s the simple version?
Well, to illustrate with some specific examples of who influences health policy:
Bill Gates has a very large influence
The American Medical Association has a smaller but still significant influence (because they represent elites)
Children’s Health Defense has only a small amount of influence (they’re awesome but they represent us little people)
Average voters have no influence at all
So Americans can elect Democrats one cycle, and Republicans the next, with no impact on actual policy. Regardless of which party the people put in charge of Congress and the Presidency, the Bill Gateses and the AMAs of the world determine law and policy. From this perspective there are not two parties at all, there is just one – call it the Uniparty.
To the elites who control it, the American Congress is a single entity and its actions are guided first and foremost by the elites, then by elite organizations. Public interest groups occasionally get a few Twinkie crumbs. You and I don’t even get to lick the wrappers.
The journalist Sharyl Attkisson, relaying her experience talking to members of Congress, explained this in really blunt terms in a thread on Twitter:
1-I’ll try to be simple and clear. According to the members themselves, leadership of both political parties are co-opted by special and corporate interests whom they rely on for political donations.
2-They solicit & collect the donations to stay in power. In return, they let the special interests write laws. They agree to hold some hearings and block others. They promise to launch investigations and hearings that benefit the interests; and block ones that don’t.
3-Despite the daily political rancor, they're basically in it together. Whether you like or hate Trump, the fact that he was outside this structure was the big reason they were out to get him. It wasn’t really because of his personality or demeanor. That was the excuse they used.
4-When honest members of Congress from either party don't go along with the conflicted leadership, they suffer the wrath, lose their spots on committees, and get "primaried" by their own party in the next election.
5-So this extra-Constitutional system of govt. feeds itself, serves the special money interests (not the people), and erases those who try to operate outside of it.
6-I've done interviews with members of both parties detailing this. Some of them are on camera and have appeared on my program discussing the quotas of $ they have to raise for the party, and the pay for play.
I highly recommend following Sharyl Atkisson’s work for a more erudite take on politics, partly because she knows what erudite means and I don’t. But mostly because there aren’t many journalists left and we need to see them before they’re all extinct.
But what does this all mean?
Here’s a really concise summary:
The most accurate understanding of the U.S. government is that the entire thing operates under a form of regulatory capture.
Laws and regulations alike are designed to benefit specific people, sometimes at the expense of other people. Federal agencies (all of them) serve the interests of the elites - who aren’t you and me.
It also means that these “health orders” from folks like the CDC might not be about health at all. More about that later, this is already long enough for today.
Ugh. Next time we’ll watch a really stupid movie while we work. Finding one will be easy - I have Netflix, who decided the quality of work coming out of the film industry wasn’t bad enough so they started making their own content.
If the Spotify link didn’t work for you, here’s a small reward for making it all the way to the end. Stay Up by All My Friends Hate Me, available on an awesome free music service called Jamendo: https://www.jamendo.com/track/1696409/stay-up
Non-pharmaceutical public health measures for mitigating the risk and impact of epidemic and pandemic influenza; World Health Organization 2019. ISBN: 978-92-4-151683-9.
https://www.who.int/influenza/publications/public_health_measures/publication/en/
Staff M, Torres MI. An influenza outbreak among pilgrims sleeping at a school without purpose built overnight accommodation facilities. Commun Dis Intell Q Rep. 2011 Mar;35(1):10-5. PMID: 21698978.
https://pubmed.ncbi.nlm.nih.gov/21698978/
Half Hitch, Tautline Hitch, Figure-8 and Bowline.
https://www.netknots.com/rope_knots
Stigler, George J. “The Economics of Information.” Journal of Political Economy, vol. 69, no. 3, University of Chicago Press, 1961, pp. 213–25.
http://www.jstor.org/stable/1829263
Link for page:
https://www.investopedia.com/terms/r/regulatory-capture.asp
Archived page:
https://web.archive.org/web/20211101170031/https://www.investopedia.com/terms/r/regulatory-capture.asp
https://www.merriam-webster.com/dictionary/scare%20quotes
Link for page:
https://www.businessinsider.com/scott-gottlieb-goes-from-fda-commissioner-to-pfizer-board-member-2019-6
Archived page:
https://web.archive.org/web/20211113070957/https://www.businessinsider.com/scott-gottlieb-goes-from-fda-commissioner-to-pfizer-board-member-2019-6
Link for page:
https://calvinandhobbes.fandom.com/wiki/Calvinball
Archived page:
https://web.archive.org/web/20211116125843/https://calvinandhobbes.fandom.com/wiki/Calvinball
Link for page:
https://www.investopedia.com/terms/b/barrierstoentry.asp
Archived page:
https://web.archive.org/web/20211107161532/https://www.investopedia.com/terms/b/barrierstoentry.asp
Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens
Gilens and Page, Cambridge University Press, 2014
https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B