The Miracle of Government Regulation

Are there any "good guys" in government (or elsewhere) these days?

To listen to the crop of presidential candidates this year, you'd think government on all levels is a total drag on the economy and if you'd just eviscerate it and starve it via budget cutbacks, the private sector would explode creating millions of jobs and an economic nirvana.

An editorial in today's (October 14th) Wall Street Journal talked about 81,405 pages of government regulations being added to the Federal Register last year, at a "total cost to the economy of $1.7 trillion a year" (although no source is cited for this figure).

Coincidentally today, I had the chance to listen to Steven Berlin Johnson, author of "Where Good Ideas Come From".  Steven was speaking at the Code for America Summit in San Francisco [a wonderful gathering of innovators inside and outside government - I've blogged about Code for America before and I'll do so again shortly].

Johnson related the story of U.S. Airways Flight 1549, which made an emergency landing in the Hudson River after striking a flock of geese upon takeoff from New York's JFK Airport. The incident was dubbed the "miracle on the Hudson" because no one died - or was even seriously hurt - in this near tragedy. Great credit for that result goes to a true hero of aviation, Captain “Sully” Sullenberger.

But Johnson made another point - the incident really could be called the "Miracle of Government Regulation" and another hero is the Chicken Gun. The Chicken Gun fires chicken carcasses into jet engines to test their abilities to withstand bird strikes. Such testing is required by the Federal Aviation Administration before it will certify jet engines and airplanes. Flight 1549's engines were certified in 1996 and, after the goose strike, simply shut down, rather than flying apart or exploding when they ingested geese.

Thank you FAA and your regulations and engine certification processes!

(Note and confession: I shamelessly stole the title of this blog from Johnson’s presentation at Code for America.)

As we know, there are a whole host of federal regulations relating to aircraft and flying. And those regulations contribute to an air safety record which has been phenomenally successful.

Would any of us want to get in an aircraft or fly without these FAA regulations in force?   Of course not!

No doubt the FAA are "good guys".

Today's same Wall Street Journal edition carried a front page photo and headline regarding the conviction of Raj Rajaratnam for insider trading. Raj gets 11 years in prison for using insider information to manipulate stock prices and make himself (and friends) rich. Also in the Journal are pictures of Bernie Madoff, sent to prison for 150 years for his Ponzi scheme, and Jeffrey Skilling of Enron sent to prison for 24 years for all the accounting and other shenanigans at Enron in the early 2000's.

Here we have three individuals who hurt every one of us Americans.

We all own stocks in one way or another, and insider stock trading takes money from our pockets and puts it in Raj Rajaratnam's.

Skilling was especially evil.  Skilling and Ken Lay of Enron tried to corner the market for electricity, driving up prices nationwide. Many investor and publicly-owned utilities, including Seattle City Light and Snohomish Public Utility District, went heavily into debt as a result, to pay for the artificially inflated prices created by this criminal.

Thanks to various Federal laws and regulations, these monsters and many others who have sapped our economy of money and jobs are in prisons. Is insuring the fairness of the "playing field" of business and the financial markets a "drag" on the economy? I think not! Bring on the regulators!

In just one more example, think about automobile gas mileage. Would any car maker willingly invest tons of money into improving gas mileage without government regulation?  Undoubtedly NOT. They’d continue to produce gas-guzzlers, which would use a lot more petroleum, further enriching the oil companies, who willingly would pull it out of the ground at whatever price, increasing our dependence on imported oil, while at the same time increasing air pollution. That’s the cheap way to do business and make tons of money, despite all the deleterious effects.

I could go on-and-on about the miracles of government regulation which keep our water clean, make sure that sewage is purified rather than being dumped raw into rivers, keep working conditions in farms and factories safe, provide for safe automobiles and highways, reduce the risk of disease and contamination in our food supply, and much much more.

How does this relate to being a City government CIO?

Amazingly, I'm a regulator too! I and my department regulate cable television franchises for the people of Seattle, making sure that cable TV and telecomm companies build out all areas of the City, not such affluent ones where the companies can make a lot of money. We also require low-income and senior discounts, and a basic cable rate of $12 a month or less. We require, through a cable customer bill of rights, that customers be treated fairly and with dignity.  These are regulations which make cable television available to almost everyone.

I'm sure there are useless or burdensome government regulations, but I think most regulators are really the "good guys".

Hey, Editors at the Journal, if business people and the financiers and corporate executives on Wall Street would police and regulate themselves (and many of them - especially small business people - do), if they would not pollute the air and water creating superfund sites, would not use inside information to manipulate stock prices and enrich themselves, and would build safe homes and cars which are frugal with gas and low polluting, maybe we wouldn't need so much regulation by governments.

Until that day arrives, I will proudly talk about the "Miracle of Government Regulation" and I would not want my family living in these United States without it.