Columnist Joe Nocera goes for the heart of the libertarian/right-wing Republican fetish of deregulation in his piece The Baby Formula Barometer.
So problem No. 1: At a time when China is trying to build a domestic economy to match its export economy, there is a complete lack of faith in Chinese companies. “It is not about branding,” an American businessman living in Shanghai told me (he feared consequences to his business if he let me use his name). Rather, he said, there is a sense among consumers that no matter what the industry, too many Chinese businesspeople are willing to scam their own customers to make a buck.
With corner-cutting deeply ingrained as a Chinese business practice, it’s really up to the government to change that ethos through regulation and enforcement. But while the central government is more than happy to pass nice-sounding laws, there is virtually no enforcement, and no real culture of regulation either. That’s problem No. 2. Provincial governments that are supposed to oversee, say, the food supply, are often either in on the scam, or look the other way because they fear that a crackdown might impede economic growth. And officials are evaluated almost exclusively on the basis of growth. Problem No. 3: bad incentives.
And if your car does break down in six months because a supplier sold faulty parts — or your child dies from tainted infant formula? There’s not a thing you can do. Yes, when a big scandal breaks, some crooks go to prison, but even the biggest scandals don’t lead to systematic change. Nor is there any way to seek recompense in the courts; in the West, that has long served to help keep companies on the straight and narrow. The lack of a real rule of law is problem No. 4.
In addition to the problems of doing business with a country that’s products are so suspect their own people don’t want to buy them but this country welcomes these same products tariff-free with minimal inspection n the name of Free Trade this lack of government involvement in a libertarian’s dream.
In the United States, of course, it has become religion among conservatives to denounce regulation, saying it stifles business and hinders economic growth. But consider: At the turn of the last century, America was as riddled with scam artists as China is today. Snake oil salesmen — literally — abounded. Food safety was a huge issue. In 1906, however, Upton Sinclair published “The Jungle,” his exposé-novel about the meatpacking industry. That book, pointed out Stanley Lubman, a longtime expert in Chinese law, in a recent blog post in The Wall Street Journal, is what propelled Theodore Roosevelt to propose the Food and Drug Administration. Which, in turn, reformed meat-processing — among many other things — and gave consumers confidence in the food they ate and the products they bought.
Here’s hoping policymakers wake up before our kids don’t. As far as deregulation being a religion among conservatives, I hope they join REM in Losing My Religion.