During Judge Gorsuch’s recent confirmation hearing, Democrat Senators expressed concern that Gorsuch did not display sufficient sympathy for ‘the little guy.’ If these Senators are really concerned about the little guy, however, why do they continue to support and expand the massive regulatory state that keeps the little guy down?
The fact is that regulation typically hurts the little guy. Regulation does this by raising the prices of goods and services. Sometimes regulation raises prices by stifling competition. Classic examples include telephone service and airlines prior to the 1980s. Regulation also raises prices by banning cheap versions of a good, often in the name of safety, leaving the consumer no choice other than a more expensive version.
This phenomenon was on vivid display when I visited Mexico a couple of years ago. In Mexico, the most common car on the road is the Nissan Tsuru, which is almost identical to the “B13” Nissan Sentra that was sold in the United States from 1991 through 1994. At first, I thought all those Sentras on the road were remarkably well-preserved specimens from over 20 years ago. But in fact, the B13 Sentra is still produced in Mexico to this day. Until 2011, it was the best-selling car in Mexico.
The appeal of the B13 Sentra is that it is pretty reliable, but most of all it is cheap. The car sells brand new for only about $7,000 or $8,000. Of course the car is very basic; you roll down the window yourself, and the car does not offer the most modern safety features such as side air bags or anti-lock brakes. Allegedly for safety reasons, the car cannot therefore legally be sold in the United States. A B13 Sentra purchased in Mexico also cannot legally be imported or registered in the United States.
Many Americans might like to have the opportunity to buy a brand new car for less than $8,000. Those people would typically be of modest means. You know, the little guy. But the government says, no, the car is not sufficiently safe.
Of course, the B13 Sentra was safe enough in 1994, but the government has since moved the goal post. And some people in the U.S. today are still driving B13s from the 1990s that are grandfathered.
More to the point, shouldn’t a free-born citizen get to decide how much safety he or she wants to purchase? In other contexts, people are perfectly free, as they should be, to take risks. For instance, some people like to go snowmobiling. Others increase their risk by taking a job on an Alaskan crab boat. Still others take their lives in their hands by following the government’s dietary guidelines. What sense does it make that a free-born person can choose to climb Mount Everest, but cannot choose to drive a B13 Sentra?
And now government regulation has finally caught up with the B13 even in Mexico. Nissan will be forced to halt production in May.
[Y]ou will no longer be able to buy a 25-year-old Sentra brand new anymore. And it’s all because of the meddling government.
Mexico recently passed new safety regulations, and without airbags or anti-lock brakes, those requirements spell doom for the Nissan Tsuru.
So farewell, B13 Nissan Sentra. You had a good 25-year run, and we will always remember you fondly. When you get to where you’re going, say hello to the original Volkswagen Beetle for us!
The safety regulations don’t just violate principles of liberty, they hurt the poor economically by adding several thousand dollars to the price of a car. The case of the B13 Sentra is instructive because it reveals just how cheap cars might be if not for government regulation.
The phenomenon is a general one; regulation almost always has the effect of increasing prices not decreasing them. For instance, one of the main reasons why health insurance is so expensive is due to regulations that mandate what the insurance must cover. State-level regulations require health plans to cover things that people don’t want or don’t need, like psychiatric treatment or post-natal care. The government effectively bans people from purchasing a cheap bare-bones plan. Instead of letting citizens decide for themselves, the government forces people to buy more health insurance than they want.
Rich people can easily afford the higher prices imposed by regulations. But for the poor, the cumulative effect of higher prices significantly degrades their standard of living.
I once had the misfortune of having lunch with someone who was a big fan of regulation. She was telling me the whole time how great regulation is for ‘consumers.’ She voted for Ralph Nader. Oh, and not so incidentally, she was rich.