by Richard North

Note: Assuming that product regulation is necessary, I agree with Richard. Indeed, since product regulation is, given the current intellectual climate, inevitable, he has a point that we should spell out how this is to be done outside the European Union.

This being said, I deny that product regulation by the State is necessary. Here are some brief objections:

1. If people really want to save money from lower power consumption, they will buy the relevant products. It is up to the manufacturers to make their case by advertising. If people like high power consumption for whatever reason, that is their concern. The overall costs of using vacuum cleaners and kettles with high power consumption should not be regarded as unavoidable externalities. We should instead look at the current model of supplying electricity via centralised and state-regulated or state-owned distribution networks. Rather than cry “market failure,” we should consider how all costs can be internalised.

2. Bearing in mind how regulations are generally made – bureaucratic sloth and ignorance, producer capture, outright corruption, and so forth – we should be dubious about any case made for product regulation. If products are safer or cheaper as a result, that is at best an accidental side effect of the process.

3. Even supposing a regulation achieves its stated purpose, it should be resisted. States rely on legitimation ideologies. Most of these ideologies include the claim that state regulation works in the public interest. Being able to show a regulation that does this is useful propaganda for a system that, as a whole, is both exploitative and inefficient. Let me give an example. It may be that, had the British Government taken an active interest, during the 1840s, in telling the railway companies where to build their lines, we could have had a better network than we did in fact get. However, the propaganda value of successful state direction would have offset any gains from efficiency by giving us a bigger State by 1870 than we had. Going back to Richard’s point, HMG imposes much greater costs on the country than vacuum cleaners that may use up more electricity than they technically require. SIG

EU regulation: trading standards

A fascinating commentary from James Dyson gives a new edge to the vacuum cleaner controversy. Far from considering a 1600W cap on domestic machines an attack on our way of life, as some have asserted, Dyson actually wanted the limit to be dropped to 700W, and complains that this was blocked by a “handful of German manufacturers”.

Dyson also challenges the testing methodology, arguing that machines should be tested with dust in them. He also wanted the energy consumption, waste, landfill and cost of vacuum cleaner bags and filters to be included in the energy rating.

However, on this, he was outvoted by a handful of German vacuum cleaner manufacturers, many of whom make vacuum cleaners with large motors that use bags, and therefore lose suction when loaded with dust.

“Washing machines are tested with washing in them, cars are tested with people in them, and fridges are tested with food in them. But when it came to our request to test vacuum cleaners with dust in them, the big German block of manufacturers complained”, Dyson explains.

He then goes on to add: “If German companies go on dominating European legislation, that’s a very good reason not to be in Europe. If they’re not going to listen to us, we shouldn’t be in there”.

And there we get a glimpse of trade politics, where the “standards war” is an unremitting part of the conflict that passes for trade negotiations. The Germans tend to be rather good at it because they take their trade politics more seriously and, unlike the British, tend to make membership of trade bodies compulsory.

Basically, whoever can rig the standards to suit themselves can gain a trading advantage – to which effect it is often worth investing a great deal in the Brussels regulatory machine. A relatively small expenditure in the right places can deliver more in terms of increased market share than a massively expensive advertising campaign.

What is interesting, though, is that we don’t have Dayson complaining about standards and regulation – quite the reverse: he wants more rigorous standards and tighter regulation. What he actually complains of is the German domination of European legislation. “That’s a very good reason not to be in Europe”, he says. “If they’re not going to listen to us, we shouldn’t be in there”.

And, if we can get past the hyperventilation about “state interference” and “meddling bureaucrats” is where we need to be. As I point out in a comment on my previous post, the debate is being distorted by the use of value-laden, pejorative phrasing.

The fact is that regulatory intervention in product standards is a fact of life in almost every country in the world. Even in the land of the free, the United States, there are moves afoot to set energy efficiency standards for vacuum cleaners, in this case, through the American Society for Testing and Materials (ASTM).

As to implementation and enforcement, there are different models. These range from voluntary standards and civil liability codes, to legislative adoption of standards produced by trade bodies, to regulatory codes produced by the legislative bodies themselves – or any combination thereof. Nevertheless, in the US, Federal and State governments are fully involved in the product regulation business.

A more creative way of looking at the process of product regulation, I assert, is by comparing the regulators with the referee and linesmen in a football match. These officials are not players, but are essential for the proper conduct of the business, aka game.

In this, it is possible to argue about the precise rules, about the decisions of the officials, and about the competence and motives of any one official (or even group of officials). But no one in their sane mind would argue for an unregulated game.

On the other hand, in certain quarters, it is fashionable to argue that any amount of regulation of business is wrong. We thus see the response to any intervention provoking foam-flecked invective of an intensity that is quite frightening.

This leaves little room, then, for discussion over the quality and type of regulation, the regulation of the regulators, their accountability and all the other related issues. We never get past the dull, limp-minded assertions that all regulation is “unnecessary”, that the “market” will resolve all problems, and that all regulators are “jobsworths”.

And that is why, in part, the eurosceptic movement finds it hard to progress. It is locked into its own set of brain-dead mantras, and cannot begin to look at the world and work out how to manage it in the absence of the EU. As a result, it lacks credibility. By comparison, to many ordinary people, it makes the EU look to be a sensible and necessary organisation.

This is where we come back to Mr Dyson. He points up one of the flaws in the EU system, but there are many others, enough to support the case that we should leave the EU. But do please recognise the irony: Dyson wants to leave the EU because their standards are not tight enough.

Fully to justify leaving, though, we need a properly worked-out alternative. It is no use launching off into the realms of fantasy, arguing that we can dispense with the bulk of the regulatory code. We can’t, so the management of trade regulation in a post-exit UK becomes an essential part of any settlement.

In terms of product standards, I have already argued that I would prefer no direct EU involvement, instead using UNECE as a possible developmental host. However, there are also problems with that organisation, the resolution of which requires the widest possible exploration and debate.

But if the commentariat can’t get over its hang-ups on regulation, the debate can’t even get started. If instead, we remain locked in this sterile, self-defeating loop, haunted by ghosts of “meddling bureaucrats”, we are going nowhere.