Note: For some inexplicable reason, this post “pasted over” yesterday’s post, “A Note on Capitalism, Socialism, Economics, and Catholic Social Thought.” I have since retrieved and re-posted the original. However, there may still be some errors with respect to links to that post. My apologies.
Following up on yesterday’s post, “A Note on Capitalism, Socialism, Economics, and Catholic Social Thought,” I want to make clear that my hyper-simplified example using the Affordable Care Act was not intended to come within a continent of capturing the entire regulatory picture surrounding insurance and health care. Simplification has its benefits, but also its costs—as a friend of mine noted when he offered some critical remarks on the sufficiency of my example. So, in the interest of not tethering myself to the complex health-care market, let me use an example from a world I know a bit more about: aviation. After that, I’ll say a few more things on regulation and Catholic Social Thought (CST).
When looking at any extant regulatory scheme and the costs and benefits associated with it, prudence dictates that we first ask whether the means fits the end and, if it does not, what—if anything—can be done about it. Unfortunately, due a number of political realities I won’t go into here, regulatory reform, or what some people refer to (inaccurately) as “deregulation,” too often involves solving a regulatory failure with more regulation. For instance, in the United States, all American air carriers must be at least 75% owned, and under the “actual control,” of U.S. citizens. While there are a number of contestable policy justifications in place for this regulatory requirement, one of its major negative consequences is that U.S. airlines are cutoff from foreign capital markets. And because the U.S. rule—commonly referred to as the “nationality rule”—is also embedded in every air services agreement the U.S. has signed with foreign partners, crossborder mergers and acquisitions between U.S. and foreign airlines are all but impossible. This has prevented major international carriers like United, Delta, and American Airlines from establishing autonomous global route networks. Instead they have had to forge business partnerships with their foreign competitors—a practice which, in normal circumstances, should raise antitrust concerns. However, because of the ownership regulatory requirement, the Department of Transportation has ostensibly solved the matter by being vested with the authority to grant antitrust immunity to these intercarrier arrangements, effectively shielding them from antitrust scrutiny while raising all sorts of concerns that the measure is harmful to consumers. There is a good argument to be made that relaxing foreign investment strictures (i.e., rolling back the degree of regulation over airlines’ ownership profiles) would be a simpler and more effective means to upholding the stability and competitiveness of U.S. airlines rather than layering on another regulatory scheme which, understandably, raises the hackles of consumer groups, labor, and antitrust enforcers.
This is what I am referring to when I talk about not solving regulatory failures (or, at least, problems) with more regulation. This, I think, is something that proponents of CST would do well to reflect on. Those who take a neoliberal/libertarian approach to markets often use innumerable examples of regulatory failures to justify their policy preferences—and they have a point. Regulation can be a messy business and it is true that the American administrative state is bloated beyond justification. And so when proponents of CST constantly call for more regulation or more entitlement programs, they are seen, rightly or wrongly, as trying to justify the status quo with CST. Regrettably, that “charge” will continue to stick so long as Catholics who claim to be faithful to the Church’s magisterium insist on digging their heels into the dirt on this matter, claiming, for example, that all who oppose expanding the Environmental Protection Agency’s powers “hate the environment” or that those who are skeptical about the efficacy of certain labor regulations “despise workers and the poor.” Nonsense. There is a vast difference between saying environmental and labor regulations are bad absolutely as opposed to recognizing that perhaps the current scheme of environmental and labor regulations that we have in place need to be rethought (and, in some circumstances, reduced or eliminated).
Part of what CST envisions, through the principle of subsidiarity, is that when there is a need for regulatory protections for certain classes, or controls on certain sectors of the economy, they should be handled at the lowest level possible. Somewhat ironically, it is those Catholics who privilege economic liberalism over CST who seem to be the staunchest defenders of subsidiarity. (Depressingly, that is the only principle of CST many of them seem interested in defending.) They are not wrong to do so; we—Catholics faithful to the magisterium—are wrong to ignore it.
As a final point, those interested in this topic may wish to read an earlier post of mine, “A Note on Regulation, Cost-Benefit Analysis, and CST,” and the articles I link to there.
