As Filthy As We Want To Be

Regulation.

To many people, "regulation" is a dirty word. Regulation can be, when used appropriately, actually a good thing, and a necessary thing. But, Why? Why do I need the government to tell me what to do, or, what not to do?

Good question.

As individuals, we typically try to do what is best for ourselves. Companies or businesses try to do what is best for their business. What I mean by "best" is that these entities act to maximize their utility, and minimize their costs.

In a truly "Free Market," the true costs of our choices will NOT be manifest in the prices we pay for products or services. For example, the cost of a Dell computer does not represent the true cost of that computer. There are hidden costs. Several components of computers are produced from toxic substances. The production of some components may result in the creation of toxic substances. The disposal of those products is probably not reflected in the overall cost of the computer. Our computers would cost more if the cost of the proper disposal was figured into the cost of the computer.

Gasoline prices do not reflect the true cost of the environmental impact of the carbon monoxide entering into the atmosphere from cars and trucks burning gasoline.

Regulation steps in because people and industry have proven unable or unwilling to take steps to protect other people or industries from bad choices.

Regulation is not about harming a particular industrial sector. Regulation is about protecting people and industries in that sector or in other sectors.

If businesses and industries (essentially, people, because people make the decisions) made choices to protect the interests of others in adequate ways, regulation would not be necessary.

From an economic stand-point, two ways exist to manage corporate behaviors. First, a tax. Taxes are increased or levied against activities in order to dissuade behavior, or to provide monies to aid in clean-up should damage occur. Taxes have the distinction of occurring before any event occurs. The drawback of taxes is that the corporation may feel that since taxes are paid for clean-up, they can continue to act irresponsibly.

The other option is a Fine. Fines work on the back-end. A corporation may choose to manage their risk better because they know that a fine could cost them millions of dollars, or, as has happened in a few cases, completely put them out of operation. However, some companies will leverage the risk of fines versus the cost of doing business, and may act to continue to make bad choices. Fines resulting from risky behaviors maybe seen as affordable compared to the loss of revenues.

In an industry as dangerous and environmentally damaging as Coal, regulation is not only a good thing, but should be mandatory. Safety and health is paramount, for the workers, the workers families, and the communities that exist in and around coal mines. To remove regulation essentially provides coal mine operators Carte Blanche to "soil the nest" of everyone in proximity to a coal mine. Removal of regulation is both short-sighted and dangerous.

Finally, perhaps Chairman Jim Gooch was not correctly quoted. The management of Interstate Commerce is a mandate of our Federal Government. That a coal mine only provides coal to a local community is a disingenuous argument, knowing full well that coal from eastern Kentucky travels throughout the region, the United States, and potentially globally. The Federal Government, under a few different Constitutional paragraphs, has the right to manage national energy policy.