The Role of Government: FDA etc.

[Publius]

A private association, the ASME (American Society of Mechanical Engineers) developed a specification or code to both dictate proper manufaturing and testing techniques to confirm that such vessels were designed to withstand their design specifications. That code was entirely voluntary, that is, a customer could request a vessel be "code stamped" or not, and was entirely audited and controlled by independant inspection and certification reports. That code is still in use today, and is still completely voluntary, and pressure vessel are now more ubiquitous in society then ever (think of every air conditioner, every water heater, every propane cylinder, etc. in addition to industrial vessels).

But isn't the code adopted by the states and federal government as a standard? I'm not sure just how voluntary it is, if the code must be followed if you are going to have any business with the state. I found this old story from 1922 about this topic. It was the ASME itself that was looking for state action to coordinate inspections of old boilers by private companies. This organization has some info on how private inspection agencies, Federal Inspection Agencies, are accredited by the government. So its not really an example of private enterprise regulating itself.

[Publius]

We already do. When I buy any electrical device I pay for the little UL sticker on it that says it's safety has been tested. Again, trillions of examples of safety supplied by private industry. UL is not corrupted and no one short circuits the system. And UL would never consider it because their entire livelihood banks on teh prospect that they remain uncorrupted. If they were to be discovered to be approving inherently unsafe materials in some sort of backroom deal, that little seal, that brand, which today means so much to so many companies would lose all its value. Please read Alan Greenspan's article in Capitalism the Unknown Ideal.

Not sure this is a good example of what you are trying to demonstrate. Although UL is a tremendous company that has created standards of quality that are universally respected, it is still one of several companies, known as Nationally Recognized Testing Laboratories, approved for such testing by the U.S. federal agency OSHA. So there are federal standards it must comport with. Now this doesn't mean that UL is not a great example of the government outsourcing inspections to private firms to create efficiencies and innovations.

[KendallJ]

But isn't the code adopted by the states and federal government as a standard? I'm not sure just how voluntary it is, if the code must be followed if you are going to have any business with the state. I found this old story from 1922 about this topic. It was the ASME itself that was looking for state action to coordinate inspections of old boilers by private companies. This organization has some info on how private inspection agencies, Federal Inspection Agencies, are accredited by the government. So its not really an example of private enterprise regulating itself.

Well the question regarded how such standards and would arise in private industry, and this contines to be an example of how that happens. ASME had standards regarding the testing of boilers as far back as the 1860's. The code itself predated your article by almost a decade.

The laws that govern states may apply to certain types of vessels, but do not apply to all vessels that see pressure service, to that end are still voluntary. I used to build chemical plants for a living. Many vessels do not have to be code stamped or built to code, and whether it is done so or not is up to the owner.

Finally, simply because something goes into law does not mean that it was that law which brought about today's practice. That is the assumption made in all of htese examples where laws were enacted later.

In order to actually show that, you'd have to show data regarding the indicence before and after and preferrably a control case showing corresponding rates of improvement in a free market case given exaclty the same time and context. Free market failure is never proven, just hysteria, and hype. And looking back over decades, the conventional wisdom is that the law wouldn't be there if it wasn't "needed" somehow.

Go into the late 1800's and you see examples of the free market regulating itself. Starting in about 1890-the early 1900's you see slew of regulatory legislation and the pattern is the same. Someone points to graphic examples of failure, the more graphic, the better, and because they are graphic. and cost-benefit doesn't weigh into it at all. Then make it public, and campaign for legislation. The article you cite is a perfect example. Please see the quote by Fred R. Low, Chairman of the Society's Power Test Codes Committee:

A broad service that confronts the National Board of Boiler and Pressuer Vessel Inspectors is the furninshing of statistics of the boiler power of the country. Nobidy knows today anywhere near how many boilers there are in the United States, how old they are, what proportion of them explode or anything about it.

Pardon me, but what would any such evaluation of the adoption of codes be based upon? Let's adopt the code and then see if there is a problem.

Edited June 15, 2008 by KendallJ

[gags]

The Enron, financial auditor debacle is not an example of the free market gone amock, but aperfect example of why financial regulation of industry can't prevent such things from happening, but the free market could. IF there were less auditing (i.e. meeting arbitrarily-imposed reporting requirements) and more insider trading, Enron would never have gotten as far as it did.

KJ, do you mind fleshing this out a little bit more when you have the time? Alternatively, is there something you can point me to that discusses these issues from a free market perspective?

Thanks.

[D'kian]

Alternatively, is there something you can point me to that discusses these issues from a free market perspective?

Thanks.

I'm sure I read a lot about it at Capitalism magazine http://www.capmag.com